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.

DECISION
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 PBMs 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 AIDCs 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 court [4] 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.
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. x x x x. [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
claims 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.
xxxxxxxxx
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 x x x x x x.
Article 121 of the Family Code provides that The conjugal
partnership shall be liable for: x x x (2) All debts and obligations
contracted during the marriage by the designated Administrator-
Spouse for the benefit of the conjugal partnership of gains x x
x. 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 BY 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 x x x.
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
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. Osmea,[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 wifes own
property, which, like those of her husbands, 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)
x x x 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 x x x x
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 latters 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 Chings acting as surety redounded to
the benefit of the 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.
xxxxxxxxx
 x x x. 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-appellants 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. x x x x x x. [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 husbands 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. Osmea, 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 x x x 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 husbands 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 x x x 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 x x x 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 extended by
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 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.
x x x 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 suretys 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 husbands 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 partnerships 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 companys 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
petitioners 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, (Chairman), Melo, Puno, and Mendoza, JJ., concur.
SECOND DIVISION

[G.R. No. 114791. May 29, 1997]

NANCY GO AND ALEX GO, petitioners, vs. THE HONORABLE

COURT OF APPEALS, HERMOGENES ONG and JANE C.
ONG, respondents.
 DECISION
ROMERO, J.:

No less than the Constitution commands us to protect marriage as an

inviolable social institution and the foundation of the family. In our society,
[1]

the importance of a wedding ceremony cannot be underestimated as it is

the matrix of the family and, therefore, an occasion worth reliving in the
succeeding years.
It is in this light that we narrate the following undisputed facts:
Private respondents spouses Hermogenes and Jane Ong were married
on June 7, 1981, in Dumaguete City. The video coverage of the wedding
was provided by petitioners at a contract price of P1,650.00. Three times
thereafter, the newlyweds tried to claim the video tape of their wedding,
which they planned to show to their relatives in the United States where
they were to spend their honeymoon, and thrice they failed because the
tape was apparently not yet processed. The parties then agreed that the
tape would be ready upon private respondents return.
When private respondents came home from their honeymoon, however,
they found out that the tape had been erased by petitioners and therefore,
could no longer be delivered.
Furious at the loss of the tape which was supposed to be the only
record of their wedding, private respondents filed on September 23, 1981 a
complaint for specific performance and damages against petitioners before
the Regional Trial Court, 7 Judicial District, Branch 33, Dumaguete
th

City. After a protracted trial, the court a quo rendered a decision, to wit:

WHEREFORE, judgment is hereby granted:

1. Ordering the rescission of the agreement entered into between plaintiff

Hermogenes Ong and defendant Nancy Go;

2. Declaring defendants Alex Go and Nancy Go jointly and severally liable to

plaintiffs Hermogenes Ong and Jane C. Ong for the following sums:

a) P450.00, the down payment made at contract time;

b) P75,000.00, as moral damages;

c) P20,000.00, as exemplary damages;

d) P5,000.00, as attorneys fees; and

e) P2,000.00, as litigation expenses;

Defendants are also ordered to pay the costs.

SO ORDERED.

Dissatisfied with the decision, petitioners elevated the case to the Court
of Appeals which, on September 14, 1993, dismissed the appeal and
affirmed the trial courts decision.
Hence, this petition.
Petitioners contend that the Court of Appeals erred in not appreciating
the evidence they presented to prove that they acted only as agents of a
certain Pablo Lim and, as such, should not have been held liable. In
addition, they aver that there is no evidence to show that the erasure of the
tape was done in bad faith so as to justify the award of damages. [2]

The petition is not meritorious.

Petitioners claim that for the video coverage, the cameraman was
employed by Pablo Lim who also owned the video equipment used. They
further assert that they merely get a commission for all customers solicited
for their principal.
[3]

This contention is primarily premised on Article 1883 of the Civil Code

which states thus:

ART. 1883. If an agent acts in his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither have such persons
against the principal.

In such case the agent is the one directly bound in favor of the person with whom
he has contracted, as if the transaction were his own, except when the contract
involves things belonging to the principal.

xxx xxx xxx

Petitioners argument that since the video equipment used belonged to
Lim and thus the contract was actually entered into between private
respondents and Lim is not deserving of any serious consideration.In the
instant case, the contract entered into is one of service, that is, for the
video coverage of the wedding. Consequently, it can hardly be said that the
object of the contract was the video equipment used. The use by
petitioners of the video equipment of another person is of no consequence.
It must also be noted that in the course of the protracted trial below,
petitioners did not even present Lim to corroborate their contention that
they were mere agents of the latter. It would not be unwarranted to assume
that their failure to present such a vital witness would have had an adverse
result on the case. [4]
 As regards the award of damages, petitioners would impress upon this
Court their lack of malice or fraudulent intent in the erasure of the
tape. They insist that since private respondents did not claim the tape after
the lapse of thirty days, as agreed upon in their contract, the erasure was
done in consonance with consistent business practice to minimize losses. [5]

We are not persuaded.

As correctly observed by the Court of Appeals, it is contrary to human
nature for any newlywed couple to neglect to claim the video coverage of
their wedding; the fact that private respondents filed a case against
petitioners belies such assertion. Clearly, petitioners are guilty of actionable
delay for having failed to process the video tape. Considering that private
respondents were about to leave for the United States, they took care to
inform petitioners that they would just claim the tape upon their return two
months later. Thus, the erasure of the tape after the lapse of thirty days
was unjustified.
In this regard, Article 1170 of the Civil Code provides that those who in
the performance of their obligations are guilty of fraud, negligence or delay,
and those who is any manner contravene the tenor thereof, are liable for
damages.
In the instant case, petitioners and private respondents entered into a
contract whereby, for a fee, the former undertook to cover the latters
wedding and deliver to them a video copy of said event. For whatever
reason, petitioners failed to provide private respondents with their tape.
Clearly, petitioners are guilty of contravening their obligation to said private
respondents and are thus liable for damages.
The grant of actual or compensatory damages in the amount
of P450.00 is justified, as reimbursement of the downpayment paid by
private respondents to petitioners. [6]

Generally, moral damages cannot be recovered in an action for breach

of contract because this case is not among those enumerated in Article
2219 of the Civil Code. However, it is also accepted in this jurisdiction that
liability for a quasi-delict may still exist despite the presence of contractual
relations, that is, the act which violates the contract may also constitute
a quasi-delict. Consequently, moral damages are recoverable for the
[7]

breach of contract which was palpably wanton, reckless, malicious or in

bad faith, oppresive or abusive. [8]

Petitioners act or omission in recklessly erasing the video coverage of

private respondents wedding was precisely the cause of the suffering
private respondents had to undergo.
As the appellate court aptly observed:
Considering the sentimental value of the tapes and the fact that the event therein
recorded a wedding which in our culture is a significant milestone to be cherished
and remembered could no longer be reenacted and was lost forever, the trial court
was correct in awarding the appellees moral damages albeit in the amount
of P75,000.00, which was a great reduction from plaintiffs demand in the
complaint, in compensation for the mental anguish, tortured feelings, sleepless
nights and humiliation that the appellees suffered and which under the
circumstances could be awarded as allowed under Articles 2217 and 2218 of the
Civil Code. [9]

Considering the attendant wanton negligence committed by petitioners

in the case at bar, the award of exemplary damages by the trial court is
justified to serve as a warning to all entities engaged in the same
[10]

business to observe due diligence in the conduct of their affairs.

The award of attorneys fees and litigation expenses are likewise proper,
consistent with Article 2208 of the Civil Code.
[11]

Finally, petitioner Alex Go questions the finding of the trial and appellate
courts holding him jointly and severally liable with his wife Nancy regarding
the pecuniary liabilities imposed. He argues that when his wife entered into
the contract with private respondent, she was acting alone for her sole
interest.[12]

We find merit in this contention. Under Article 117 of the Civil Code
(now Article 73 of the Family Code), the wife may exercise any profession,
occupation or engage in business without the consent of the husband. In
the instant case, we are convinced that it was only petitioner Nancy Go
who entered into the contract with private respondent. Consequently, we
rule that she is solely liable to private respondents for the damages
awarded below, pursuant to the principle that contracts produce effect only
as between the parties who execute them. [13]

WHEREFORE, the assailed decision dated September 14, 1993 is

hereby AFFIRMED with the MODIFICATION that petitioner Alex Go is
absolved from any liability to private respondents and that petitioner Nancy
Go is solely liable to said private respondents for the judgment
award. Costs against petitioners.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-26270 October 30, 1969

BONIFACIA MATEO, ET AL., petitioners,

vs.
GERVASIO LAGUA, ET AL., respondents.

Pedro P. Tuason for petitioners.

Isaiah Asuncion for respondents.

REYES, J.B.L., J.:

This is a petition for review of the decision of the Court of Appeals (In CA-G.R. Nos. 30064-R and
30065-R), raising as only issue the correctness of the appellate court's reduction of a donation
propter nuptias, for being inofficious.

The established facts of this case are as follows:

Cipriano Lagua was the original registered owner of 3 parcels of land situated in Asingan,
Pangasinan, referred to as Lot No. 998, with an area of 11,080 sq.m., more or less and covered
by O.C.T. No. 362; Lot No. 6541, with an area of 808 sq.m., more or less, covered by O.C.T. No.
6618; and Lot No. 5106, with an area of 3,303 sq.m., covered by O.C.T. No. 8137. Sometime in
1917, Lagua and his wife Alejandra Dumlao, in a public instrument, donated Lots 998 and 6541
to their son Alejandro Lagua, in consideration of the latter's marriage to Bonifacia Mateo. The
marriage was celebrated on 15 May 1917, and thereafter, the couple took possession of the
properties, but the Certificates of Title remained in the donor's name.

In 1923, the son, Alejandro, died. His widow, Bonifacia Mateo, and her infant daughter lived with
her father-in-law, Cipriano Lagua, who then undertook the farming of the donated lots. It seems
that at the start, Cipriano Lagua was giving to Bonifacia the owner's share of the harvest from the
land. In 1926, however, Cipriano refused to deliver the said share, thus prompting Bonifacia to
resort to the Justice of the Peace Court of Asingan, Pangasinan, from where she obtained a
judgment awarding to her possession of the two lots plus damages.

On 31 July 1941, Cipriano Lagua, executed a deed of sale of the same two parcels of land in
favor of his younger son, Gervasio. This sale notwithstanding, Bonifacia Mateo was continuously
given the owner's share of the harvest until 1956, when it was altogether stopped. It was only
then that Bonifacia Mateo learned of the sale of the lots to her brother-in-law, who had the sale in
his favor registered only on 22 September 1955. As a consequence, TCT Nos. 19152 and 19153
of the Register of Deeds of Pangasinan were issued to Gervasio.

Bonifacia Mateo and her daughter, Anatalia, assisted by her husband, Luis Alcantara, went to the
Court of First Instance of Pangasinan (Civil Case No. T-339), seeking annulment of the deed of
sale in favor of Gervasio Lagua and for recovery of possession of the properties. On 3 January
1957, judgment was rendered in the case

... declaring the sale executed by Cipriano Lagua in favor of the other defendants,
Gervasio Lagua and Sotera Casimero, as null and void and non-existent; ordering the
Register of Deeds for the Province of Pangasinan, to cancel Transfer Certificates of Title
Nos. 19152 and 19153; condemning the defendants to pay jointly and severally to the
plaintiffs the sum of P200.00; ordering the defendants Gervasio Lagua and Sotera Lagua
to vacate and deliver the possession over the two parcels of land to the plaintiffs, and to
pay the costs of this suit.

The decision became final, and Bonifacia Mateo, and her daughter, Anatalia Lagua, were
installed in possession of the land.
On 18 August 1957, the spouses Gervasio Lagua and Sotera Casimero commenced in the
Justice of the Peace Court of Asingan, Pangasinan, an action against Bonifacia Mateo and her
daughter for reimbursement of the improvements allegedly made by them on Lots 998 and 6541,
plus damages. Dismissed by the Justice of the Peace Court for being barred by the judgment in
Civil Case No. T-339, therein plaintiffs appealed to the Court of First Instance of Pangasinan
where the case was docketed as Civil Case No. T-433. At about the same time, another case
was filed, this time by Gervasio Lagua and Cipriano Lagua, for annulment of the donation of the
two lots, insofar as one-half portion thereof was concerned (civil Case No. T-442). It was their
claim that in donating the two lots, which allegedly were all that plaintiff Cipriano Lagua owned,
said plaintiff not only neglected leaving something for his own support but also prejudiced the
legitime of his forced heir, plaintiff Gervasio Lagua.

Being intimately related, the two cases were heard jointly. On November 12, 1958, while the
cases were pending final resolution, plaintiff Cipriano Lagua died. On 23 December 1960, the
court rendered a single decision dismissing Civil Case No. T-433 for lack of cause of action,
plaintiffs spouses Gervasio Lagua and Sotera Casimero having been declared possessors in bad
faith in Civil Case No. T-339 and, therefore, not entitled to any reimbursement of the expenses
and improvements put up by them on the land. The other suit, Civil Case No. T-442, was,
likewise, dismissed on the ground of prescription, the action to annul the donation having been
brought only in 1958, or after the lapse of 41 years. Defendants' counterclaims were similarly
dismissed although they were awarded attorneys' fees in the sum of P150.00.

Plaintiffs appealed the decision to the Court of Appeals (CA-G.R. Nos. 30064 and 30065-R).
Said tribunal, on 18 March 1966, affirmed the ruling of the trial court in Civil Case No. T-433
denying plaintiffs' claim for reimbursement of the improvements said to have been made on the
land. In regard to the annulment case (C.F.I. No. T-442), however, the Court of Appeals held that
the donation to Alejandro Lagua of the 2 lots with a combined area of 11,888 square meters
execeeded by 494.75 square meters his (Alejandro's) legitime and the disposable portion that
Cipriano Lagua could have freely given by will, and, to the same extent prejudiced the legitime of
Cipriano's other heir, Gervasio Lagua. The donation was thus declared inofficious, and
defendants-appellees were ordered to reconvey to plaintiff Gervasio Lagua a portion of 494.15
square meters to be taken from any convenient part of the lots. The award of attorneys' fees to
the defendants was also eliminated for lack of proper basis.

Bonifacia Mateo, et al., then resorted to this Court, assailing the decision of the Court of Appeals
insofar as it ordered them to reconvey a portion of the lots to herein respondent Gervasio Lagua.
It is petitioners' contention that (1) the validity of the donation proper nuptias having been finally
determined in Civil Case No. T-339, any question in derogation of said validity is already barred;
(2) that the action to annul the donation, filed in 1958, or 41 years after its execution, is abated by
prescription; (3) that a donation proper nuptias is revocable only for any of the grounds
enumerated in Article 132 of the new Civil Code, and inofficiousness is not one of thorn; and (4)
that in determining the legitime of the Lagua brothers in the hereditary estate of Cipriano Lagua,
the Court of Appeals should have applied the provisions of the Civil Code of 1889, and not Article
888 of the new Civil Code.

Petitioners' first two assigned errors, it may be stated, are non-contentious issues that have no
bearing in the actual controversy in this case. All of them refer to the validity of the donation a
matter which was definitively settled in Civil Case No. T-339 and which, precisely, was declared
by the Court of Appeals to be "beyond the realm of judicial inquiry." In reality, the only question
this case presents is whether or not the Court of Appeals acted correctly in ordering the reduction
of the donation for being inofficious and in ordering herein petitioners to reconvey to respondent
Gervasio Lagua an unidentified 494.75 square-meter portion of the donated lots.

We are in accord with the Court of Appeals that Civil Case No. 442 is not one exclusively for
annulment or revocation of the entire donation, but of merely that portion thereof allegedly
trenching on the legitime of respondent Gervasio Lagua;1 that the cause of action to enforce
Gervasio's legitime, having accrued only upon the death of his father on 12 November 1958, the
dispute has to be governed by the pertinent provisions of the new Civil Code; and that a
donation proper nuptias property may be reduced for being inofficious. Contrary to the views of
appellants (petitioners), donations proper nuptias (by reason of marriage) are without onerous
consideration, the marriage being merely the occasion or motive for the donation, not its causa.
Being liberalities, they remain subject to reduction for inofficiousness upon the donor's death, if
they should infringe the legitime of a forced heir.2

It is to be noted, however, that in rendering the judgment under review, the Court of Appeals
acted on several unsupported assumptions: that the three (3) lots mentioned in the decision
(Nos. 998, 5106 and 6541) were theonly properties composing the net hereditary estate of the
deceased Cipriano Lagua; that Alejandro Lagua and Gervasio Lagua were his only legal heirs;
that the deceased left no unpaid debts, charges, taxes, etc., for which the estate would be
answerable.3 In the computation of the heirs' legitime, the Court of Appeals also considered only
the area, not the value, of the properties.

The infirmity in the above course of action lies in the fact that in its Article 908 the new Civil Code
specifically provides as follows:

ART. 908. To determine the legitime, the value of the property left at the death of the
testator shall be considered, deducting all debts, and charges, which shall not include
those imposed in the will.

To the net value of the hereditary estate, shall be added the value of all donations by the
testator that are subject to collation, at the time he made them.

In other words, before any conclusion about the legal share due to a compulsory heir may be
reached, it is necessary that certain steps be taken first. The net estate of the decedent must be
ascertained, by deducting an payable obligations and charges from the value of the property
owned by the deceased at the time of his death; then, all donations subject to collation would be
added to it. With the partible estate thus determined, the legitimes of the compulsory heir or heirs
can be established; and only thereafter can it be ascertained whether or not a donation had
prejudiced the legitimes. Certainly, in order that a donation may be reduced for being inofficious,
there must be proof that the value of the donated property exceeds that of the disposable free
portion plus the donee's share as legitime in the properties of the donor.4 In the present case, it
can hardly be said that, with the evidence then before the court, it was in any position to rule on
the inofficiousness of the donation involved here, and to order its reduction and reconveyance of
the deducted portion to the respondents.

FOR THE FOREGOING CONSIDERATIONS, the decision of the Court of Appeals, insofar as
Civil Case No. 442 of the court a quo is concerned, is hereby set aside and the trial court's order
of dismissal sustained, without prejudice to the parties' litigating the issue of inofficiousness in a
proper proceeding, giving due notice to all persons interested in the estate of the late Cipriano
Lagua. Without costs.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Teehankee and
Barredo, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-12093 June 29, 1959

ESTANISLAO SERRANO, plaintiff-appellant,
vs.
MELCHOR SOLOMON, defendant-appellee.

Constante Pimentel for appellant.

Faustino B. Tobia, Eufrecino T. Tagayana, Pedro R. Arce and Emmanuel U. Ujano for appellee.

MONTEMAYOR, J.:

Estanislao Serrano is appealing the decision of the Court of First Instance of Ilocos Sur, Judge
Jose G. Bautista presiding, declaring null and void the supposed donation propter nuptias on
which his complaint was based and dismissing the later upon motion of the defendant. The
motion for dismissal was filed before the hearing but the trial court deferred action upon it until
after submission of evidence by the parties. Said parties entered into a stipulation of facts after
which they declined to submit any other evidence except Exhibit "A", the supposed deed of
donation propter nuptias, the translation of which, for purposes of reference, is reproduced
below:

That, I Melchor Solomon, single, Filipino, of legal age, native of the municipality of Sinait,
province of Ilocos Sur and residing at present in Sinait, having decided to get married
with the consent of my parents, brothers, or sisters and relatives, have announced and
manifested my determination and desire to Mr. Estanislao Serrano to whose family the
flower I intend to win belongs, namely Miss Alejandria Feliciano single, born in Hawaii but
is actually residing in Cabugao, Ilocos Sur.

This ardent desire favored by good luck and accepted by the noble lady the one
concerned, is to be realized and complied with under agreement or stipulation which
affirms, promotes and vivifies the union. This agreement donating all my exclusive
properties in order that we shall have a basic capital for our conjugal life and in order that
there will be ready maintenance and support of offsprings has come out voluntarily and
expontaneously from me, I the very one concerned.

These which I am donating my exclusive properties because I have honestly acquired the
same with the sweat of my brows and I donate them gladly, to wit . . .;

The referred to properties are donated in accordance with the existing laws of the
Philippines and our children out of the wedlock will be the ones to inherit same inherit
same with equal shares. But if God will not bless our union with any child one half of all
my properties including the properties acquired our conjugal union will be given the
(to) my brothers or sisters or their heirs if I, the husband will die before my wife and if my
beloved wife will die before me, one half of all my properties and those acquired by us
will be given to those who have reared my wife in token of my love to her. . . . (Emphasis
supplied)

Alejandria Feliciano, whose father went to Hawaii to seek his fortune and who until now resides
there, had been left to her father's friend named Estanislao Serrano who took care of and raised
her from the age 12 until she reached womanhood. On June 21, 1948, defendant Melchor
Solomon married Alejandria. On the same day of the marriage but before the marriage ceremony
he executed the alleged Deed of Donation, Exhibit "A" above reproduced. Less than nine months
after marriage, or rather on March 2, 1949, Alejandria died without issue. Several months
thereafter Estanislao Serrano commenced the present action to enforce and implement the terms
of the alleged donation particularly that portion thereof to the effect that if Alejandria died before
her husband Melchor and left no children, then one half of Melchor's properties and those
acquired by him and his wife would be given to those persons who had raised and taken care of
her namely, Estanislao Serrano.
Acting upon the motion for dismissal the trial court found that the donation could not be regarded
as a donationpropter nuptias for the reason that though it was executed before the marriage, it
was not made in consideration of the marriage and, what is more important, that the donation
was not made to one or both of the (marriage) contracting parties, but to a third person.

After a careful study of the case, we fully agree with the trial court. Article 1327 of the Old Civil
Code reads:

Art. 1327. Donations by reasons of marriage are those bestowed before its celebration in
consideration of the same, upon one or both of the spouses.

This article was reproduced in the Civil Code under Article 126. Whether we apply Article 1327
for the reason that the document Exhibit "A" was executed in 1948 before the promulgation of the
New Civil Code in 1950 or whether we apply Article 126 of the New Civil Code the result would
be the same.

Was the donation made in considerations of the marriage between Melchor and Alejandria or
was it made consideration of the death of either of them in the absence of any children? True,
the Deed of Donation was executed on the occasion when they married. But, the marriage in
itself was not the only consideration or condition under which terms of the donation would be
carried out. The marriage would have to be childless and one of the spouses would have to die
before the other before the donation would operate. So, strictly, speaking, the donation may not
be regarded as one made in consideration of the marriage.

But assuming for the moment that it was made in consideration of the marriage, still, we have the
fact that the donation was being made not in favor of Alejandria, the wife, but rather in favor of
those who acted as her parents and raised her from girlhood to womanhood in the absence of
her father. That does not place it within the provisions of Article 1327 and Article 126 of the Old
Civil Code and the New Civil Code, respectively. Manresa, in his commentary on Article 1327 of
the Civil Code says the following:

Donations excluded are those (1) made in favor of the spouses after the celebration of
marriage; (2) executed in favor of the future spouses but not in consideration of the
marriage; and (3) granted to persons other than the spouses even though they may be
founded on the marriage (6 M. 232).

Having come to the conclusion that the Deed of Donation does not fulfill the requirements of a
donation propter nuptias and that it might be considered a donation inter vivos, can it be
considered valid and effective? Hardly, because it was never accepted by the donee either in the
same instrument or donation or in a separate document as required by law.

Again, may the donation be regarded a donation mortis causa, and given effect? The answer has
to be in the negative for the reason that this Tribunal has heretofore consistently held that a
donation to take effect after the death of the donor, is equivalent to a disposition or bequest of
property by last will, an it should be executed in accordance with the requisites and strict
provisions governing the execution wills;1 and Exhibit "A" does not fulfill said requirements.
Moreover, in the present case, the donor is still alive and naturally, even if the donation were
otherwise valid, still, the time and occasion have not arrived for considering its operation and
implementation.

In view of the foregoing, the appealed decision is hereby affirmed, with costs.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Concepcion, Endencia and Barrera, JJ., concur.
 EN BANC

G.R. No. 17430 May 31, 1922

In the matter of the estate of Geronima Uy Coque, deceased.

ANDREA UY COQUE, ET AL., petitioners-appellees,
vs.
JUAN NAVAS L. SIOCA, special administrator of the estate of Geronima Uy Coque,
deceased, opponent-appellant.

Crossfiled & O'Brien for appellant.

Ruperto Kapunan for appellees.

OSTRAND, J.:

This is an appeal from an order of the Court of First Instance of Samar, admitting a will to
probate.

The validity of the will is attacked on the ground that the testatrix was mentally incapacitated at
the time of its execution and on the further ground that it was not executed on the form
prescribed by section 618 of the Code of Civil Procedure as amended by Act No. 2645,

The transcript of the testimony taken in the probate proceedings not appearing in the record, we
cannot review the findings of the court below as to the sanity of the testatrix. This leaves for our
consideration only the question as to whether the omission of certain formalities in the execution
of the will are fatal to its validity.

Section 618 of the Code of Civil Procedure as amended by Act No. 2645 reads:

No will, except as provided in the preceding section, shall be valid to pass any estate,
real or personal, nor charge or affect the same, unless it be written in the language or
dialect known by the testator and signed by him, or by the testator's name written by
some other person in his presence, and by his express direction, and attested and
subscribed by three or more credible witnesses in the presence of the testator and of
each other. The testator or the person requested by him to write his name and the
instrumental witnesses of the will, shall also sign, as aforesaid, each and every page
thereof, on the left margin, and said pages shall be numbered correlatively in letters
placed on the upper part of each sheet. The attestation shall state the number of sheets
or pages used, upon which the will is written, and the fact that the testator signed the will
and every page thereof, or caused some other person to write his name, under his
express direction, in the presence of three witnesses, and the latter witnessed and
signed the will and all pages thereof in the presence of the testator and of each other.

The formal deffects of the will in question occur in its attestation clause which, in translation, read
as follows:

We, the undersigned witnesses of this will, state that it has been shown to us by the
testatrix as her last will and testament. And as she cannot sign her name, she asked that
Mr. Filomeno Piczon sign her name in the presence of each of us, and each of us, the
witnesses, also signed in the presence of the testatrix.

It will be noted that the attestation clause does not state the number of pages contained in the
will nor does it state that the witnesses signed in the presence of each other. Neither do these
facts appear in any other part of the will.
Statutes prescribing the formalities to be observed in the execution of wills are very strictly
construed. As stated in 40 Cyc., at page 1097, "A will must be executed in accordance with the
statutory requirements; otherwise it is entirely void. All these requirements stand as of equal
importance and must be observed, and courts cannot supply the defective execution of a will. No
power or discretion is vested in them, either to superadd other conditions or dispose with those
enumerated in the statutes."

This court has also frequently held that a will should not be probated unless in its execution there
has been a strict complaince with all the requisites prescribed in section 618 of the Code of Civil
Produre. It is true that in the case of Abangan vs. Abangan (40 Phil., 476) the court upheld the
validity of a will consisting of only two pages, the first containing all the testamentary dispositions
and being signed by the testator at the bottom and by both the testator and the witnesses in the
margin, the second page containing only the attestaiton clause with the signatures of the
witnesses at the bottom but without marginal signatures. The decision was based on the ground
that it could not have been the intention of the legislator to require, as an essential to the validity
of the will, that all the signatures appear twice on the same page as such a requirement would be
entirely purposeless. This decision is no doubt sound; that in statutory construction the
evident intent of the legislator controls will probably not be disputed.

But it must not be forgotten that in construing statutory provisions in regard to the formal
requisites of a will, we are seeking to ascertain the intent, of the legislator and not that the
testator; the latter's intention is frequently defeated through non-observance of the statue.

The purpose of the Legislature in prescribing the rather strict formalities now required in the
execution of a will are clearly revealed by comparing section 618, supra, as originally enacted
with the amended section quoted above. The original section reads:

No will, except as provided in the preceding section, shall be valid to pass any estate,
real or personal, nor charge or affect the same, unless it be in writing and signed by the
testator, or by the testator's name written by some other person in his presence, and by
his express direction, and attested and subscribed by three or more credible witnesses in
the presence of the testator and of each other. The attestation shall state the fact that the
testator signed the will, or caused it to be signed by some other person, at this express
direction, in the presence of three witnesses, and that they attested and subscribed it is
his presence and in the presence of each other. But the absence of such form of
attestation shall not render the will in valid if it is proven that the will was in fact signed
and attested as in this section provided.

The amendments or changes introduced by Act No. 2645 are (a) that the will must now be
executed in a language or dialect known to the testator; (b) that the testator and witnesses must
sign each page on the left margin; (c) that the pages be numbered correclatively; (d) that the
attestation clause shall state the number sheets or page used in the will and (e) that it must
appear from the attestation clause itself that the testator and witnesses signed in the form and
manner required by law and that is this can no longer be proven by evidence aliunde.

The changes mentioned under (d) and (e) are the only ones which need be considered in the
present case. The purpose of requiring the number of sheets to be stated in the attestation
clause is obvious; the document might easily be so prepared that the removal of a sheet would
completely change the testamentary dispositions of the will and in the absence of a statement of
the total number of sheets such removal might be effected by taking out the sheet and changing
the numbers at the top of the following sheets or pages. If, on the other hand, the total number of
sheets is stated in the attestation clause the falsification of the document will involve the inserting
of new pages and the forgoing of the signatures of the testator and witnesses in the margin, a
matter attended with much greater difficulty.
The purpose of the new requirement that it must appear in the attestation clause that the testator
and the witnesses signed in the presence of each other and that the fact cannot be proved by
evidence aliunde is, perhaps, less obvious, but, in view of the well-known unreliability of oral
evidence, it is clear that a statement in the attestation clause will afford more satisfatory evidence
of the fact to be proven. In any event, the fact that the old rule in regard to admissibility or oral
evidence to prove that the testator and witnesses signed in the manner prescribed by the law
evidently had been found unsatisfactory and was deliberately varied by amendment shows that
the Legislature attached importance to the mater. If so, the courts will not be justified in
enervating the amendment by too liberal a construction.

We therefore hold that the two defects noted in the attestation clause of the alleged will renders it
null and void and that it cannot be admitted to probate. The order appealed from is reversed with
the costs against the appellee. So ordered.

Araullo, C.J., Avancea, Villamor and Romualdez, JJ., concur.

IRST DIVISION

[G.R. No. 154645. July 13, 2004]

MILAGROS JOAQUINO a.k.a. MILAGROS J.

REYES, petitioner, vs. LOURDES REYES,
MERCEDES, MANUEL, MIRIAM and RODOLFO JR. -- all
surnamed REYES,respondents.

DECISION
PANGANIBAN, J.:

Though registered in the paramours name, property acquired with the

salaries and earnings of a husband belongs to his conjugal partnership with
the legal spouse. The filiation of the paramours children must be settled in
a probate or special proceeding instituted for the purpose, not in an action
for recovery of property.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of
[1]

Court, seeking to nullify the February 4, 2002 Decision and the August 14,[2]

2002 Resolution of the Court of Appeals (CA) in CA-GR CV No.

[3]

45883. The CA disposed as follows:

WHEREFORE, premises considered, the appeal is hereby partially DENIED and

the Decision dated May 30, 1994, of the Regional Trial Court of Pasay City,
Branch 111 in Civil Case No. 9722-P is MODIFIED to read, as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the
defendant as follows:

a. Declaring the house and lot registered under Transfer Certificate of Title No.
90293 (26627-A) of the Registry of Deeds of Metro Manila, District IV as
conjugal partnership property of the late Spouses Rodolfo and Lourdes Reyes;

b. Ordering the [petitioner] to surrender possession of said subject property,

pursuant to the applicable law on succession, to the respective estates of the late
Rodolfo Reyes and Lourdes Reyes and to pay a reasonable rental ofP10,000.00 a
month, to the same juridical entities, upon their failure to do so until possession of
the property is delivered; and

c. To pay [respondents] attorneys fees in the sum of P20,000.00 and to pay the
costs.
[4]

The questioned Resolution, on the other hand, denied petitioners

Motion for Reconsideration.

The Facts

The CA narrated the facts as follows:

[Respondents] filed a Complaint for reconveyance and damages, dated January 23,
1982, before the Court of First Instance of Rizal, containing the following
allegations:

x x x The complaint alleges that [respondent] Lourdes P. Reyes is the widow of

Rodolfo A. Reyes who died on September 12, 1981; that [respondents] Mercedes,
Manuel, Miriam and Rodolfo, Jr. are the legitimate children of [respondent]
Lourdes P. Reyes and the deceased Rodolfo A. Reyes; that for years before his
death, Rodolfo A. Reyes had illicit relations with [petitioner] Milagros B.
Joaquino; that before his death, x x x Rodolfo A. Reyes was Vice President and
Comptroller of Warner Barnes and Company with an income of P15,000.00 a
month and, after retirement on September 30, 1980, received from said company
benefits and emoluments in the amount ofP315,0[1]1.79; that [respondent] wife
was not the recipient of any portion of the said amount.

The complaint further alleges that on July 12, 1979, a [D]eed of [S]ale of a
property consisting of a house and lot at BF Homes, Paraaque, Metro Manila was
executed by the spouses Ramiro Golez and Corazon Golez in favor of [petitioner]
Milagros B. Joaquino for which Transfer Certificate of Title No. 90293 of the
Register of Deeds of Metro Manila, District IV was issued in the name of
[petitioner] Milagros B. Joaquino; that the funds used to purchase this property
were conjugal funds and earnings of the deceased Rodolfo A. Reyes as executive
of Warner Barnes and Company as [petitioner] Joaquino was without the means to
pay for the same; that [petitioner] executed a Special Power of Attorney in favor of
Rodolfo A. Reyes to mortgage the property to Commonwealth Insurance
Corporation in order to pay the balance of the purchase price; that said Rodolfo A.
Reyes executed a mortgage in favor of Commonwealth Insurance Corporation
for P140,000.00 and to guaranty payment thereof, he secured a life insurance
[policy] with Philam Life Insurance Corporation for the said amount, assigning the
proceeds thereof to Commonwealth Insurance Corporation; that the monthly
amortizations of the mortgage were paid by said Rodolfo A. Reyes before his death
and at the time of his death, the outstanding balance of P110,000.00 was to be paid
out of his Philam Life Insurance [p]olicy.

The complaint finally alleges that the deceased had two cars in [petitioners]
possession and that the real and personal properties in [petitioners] possession are
conjugal partnership propert[ies] of the spouses Lourdes P. Reyes and Rodolfo A.
Reyes and one-half belongs exclusively to [respondent] Lourdes P. Reyes and the
other half to the estate of Rodolfo A. Reyes to be apportioned among the [other
respondents] as his forced heirs. [Respondents] therefore, pray that the property
covered by T.C.T. No. 90293 be declared conjugal property of the spouses Lourdes
P. Reyes and Rodolfo A. Reyes and that [petitioner] be ordered to reconvey the
property in [respondents] favor; that the two cars in [petitioners] possession be
delivered to [respondents] and that [petitioner] be made to pay actual,
compensatory and moral damages to [respondents] as well as attorneys fees.

xxxxxxxxx

[Petitioner] eventually filed her Answer, dated August 1, 1982, the allegations of
which have been summarized by the trial court in the following manner:

In her Answer, [petitioner] Milagros B. Joaquino alleges that she purchased the
real property in question with her own exclusive funds and it was only for
convenience that the late Rodolfo Reyes facilitated the mortgage over the same;
that although the late Rodolfo Reyes paid the monthly amortization of the
mortgage as attorney-in-fact of [petitioner], the money came exclusively from
[her].

[Petitioner] further alleges in her answer, by way of special and affirmative

defenses, that during all the nineteen (19) years that [she] lived with Rodolfo
Reyes from 1962 continuously up to September 12, 1981 when the latter died,
[petitioner] never had knowledge whatsoever that he was married to someone else,
much less to [respondent] Lourdes P. Reyes; that [petitioner] was never the
beneficiary of the emoluments or other pecuniary benefits of the late Rodolfo
Reyes during his lifetime or after his death because [she] had the financial capacity
to support herself and her children begotten with the late Rodolfo
Reyes. [Petitioner] prays for a judgment dismissing [respondents] complaint and
for the latter to pay unto [petitioner] moral and exemplary damages in such
amounts as may be determined during the trial, including atto[r]neys fees and the
costs of the suit. x x x.

xxxxxxxxx

On February 2, 1993, [respondent] Lourdes Reyes died.

Subsequently, the trial court granted the complaint based on the following factual
findings:

Lourdes Reyes was legally married to Rodolfo Reyes on January 3,

1947 in Manila. They have four children, namely: Mercedes, Manuel, Miriam and
Rodolfo Jr., all surnamed Reyes and co-[respondents] in this case. Rodolfo Reyes
died on September 12, 1981. At the time of his death, Rodolfo Reyes was living
with his common-law wife, Milagros Joaquino, x x x with whom she begot three
(3) children namely: Jose Romillo, Imelda May and Charina, all surnamed Reyes.

During his lifetime, Rodolfo Reyes worked with Marsman and Company and later
transferred to Warner Barnes & Co., where he assumed the position of Vice-
President [Comptroller] until he retired on September 30, 1980. His monthly salary
at Warner Barnes & Co. was P15,000.00 x x x and upon his separation or
retirement from said company, Rodolfo Reyes received a lump sum
of P315,011.79 in full payment and settlement of his separation and retirement
benefits.

During the common-law relationship of Rodolfo Reyes and [petitioner] Milagros

Joaquino and while living together, they decided to buy the house and lot situated
at No. 12 Baghdad Street, Phase 3, BF Homes, Paraaque, Metro Manila. A Deed of
Absolute Sale dated July 12, 1979 was executed in favor of [petitioner] Milagros
Joaquino and Transfer Certificate of Title No. S-90293 covering the said property
was issued in the name of [petitioner only] onJuly 20, 1979.

To secure the finances with which to pay the purchase price of the property in the
amount of P140,000.00, [petitioner] executed on July 20, 1979, a Special Power of
Attorney in favor of Rodolfo A. Reyes for the latter, as attorney-in-fact, to secure a
loan from the Commonwealth Insurance Company. An application for mortgage
loan was filed by Rodolfo Reyes with the Commonwealth Insurance Company and
a Real Estate Mortgage Contract was executed as collateral to the mortgage
loan. The loan was payable in ten (10) years with a monthly amortization
of P1,166.67. The monthly amortizations were paid by Rodolfo Reyes and after his
death, the balance of P109,797.64 was paid in full to the Commonwealth Insurance
by the Philam Life Insurance Co. as insurer of the deceased Rodolfo A. Reyes. [5]
 On appeal to the CA, petitioner questioned the following findings of the
trial court: 1) that the house and lot had been paid in full from the proceeds
of the loan that Rodolfo Reyes obtained from the Commonwealth Insurance
Company; 2) that his salaries and earnings, which were his and Lourdes
conjugal funds, paid for the loan and, hence, the disputed property was
conjugal; and 3) that petitioners illegitimate children, not having been
recognized or acknowledged by him in any of the ways provided by law,
acquired no successional rights to his estate.

Ruling of the Court of Appeals

Affirming the RTC, the CA held that the property had been paid out of
the conjugal funds of Rodolfo and Lourdes because the monthly
amortizations for the loan, as well as the premiums for the life insurance
policy that paid for the balance thereof, came from his salaries and
earnings. Like the trial court, it found no sufficient proof that petitioner was
financially capable of buying the disputed property, or that she had actually
contributed her own exclusive funds to pay for it. Hence, it ordered her to
surrender possession of the property to the respective estates of the
spouses.
The appellate court, however, held that the trial court should not have
resolved the issue of the filiation and the successional rights of petitioners
children. Such issues, it said, were not properly cognizable in an ordinary
civil action for reconveyance and damages and were better ventilated in a
probate or special proceeding instituted for the purpose.
Hence, this Petition. [6]

Issues

Petitioner submits the following issues for the Courts consideration:

I.

Whether or not it has been indubitably established in a court of law and trier of
facts, the Regional Trial Court, that petitioners three [3] illegitimate children are x
x x indeed the children of the late Rodolfo Reyes.

II.

Whether or not it is legally permissible for [respondents] to make a mockery of the

law by denying [the] filiations of their [two] 2 illegitimate sisters and one [1]
illegitimate brother when in fact the very complaint filed by their mother, the
lawful wife, Lourdes[,] shows that her husband Rodolfo had illicit relations with
the petitioner Milagros and had lived with her in a house and lot at Baghdad Street.

III.

Whether or not the fact that the Court of Appeals made a finding that the house and
lot at Baghdad Street are conjugal property of lawfully wedded Rodolfo and
Lourdes including the insurance proceeds which was used to pay the final bill for
the house and lot, this will prevail over Articles 19 and 21 of the Civil Code.

IV.

Whether or not the Supreme Court should enforce the rule that the parties to a
lawsuit should only tell the truth at the trial and in [their] pleadings x x x.

V.

Whether or not the legitimate children of the late Rodolfo Reyes should respect
their fathers desire that his illegitimate children should have a home or a roof over
their heads in consonance with his duty to love, care and provide for his children
even after his death.
[7]

The issues boil down to the following: 1) the nature of the house and lot
on Baghdad Street (BF Homes Paraaque, Metro Manila); and 2) the
propriety of ruling on the filiation and the successional rights of petitioners
children.

The Courts Ruling

The Petition is devoid of merit.

First Issue:
The Conjugal Nature of the Disputed Property

Before tackling the merits, we must first point out some undisputed
facts and guiding principles.
As to the facts, it is undisputed that the deceased Rodolfo Reyes was
legally married to Respondent Lourdes Reyes on January 3, 1947. It is [8]

also admitted that for 19 years or so, and while their marriage was
subsisting, he was actually living with petitioner. It was during this time, in
1979, that the disputed house and lot was purchased and registered in
petitioners name.
 Plainly, therefore, the applicable law is the Civil Code of
the Philippines. Under Article 145 thereof, a conjugal partnership of gains
(CPG) is created upon marriage and lasts until the legal union is dissolved
[9]

by death, annulment, legal separation or judicial separation of

property. Conjugal properties are by law owned in common by the
[10]

husband and wife. As to what constitutes such properties are laid out in
[11]

Article 153 of the Code, which we quote:

(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;

(2) That which is obtained by the industry, or work, or as salary of the spouses, or
of either of them;

(3) The fruits, rents or interests received or due during the marriage, coming from
the common property or from the exclusive property of each spouse.

Moreover, under Article 160 of the Code, all properties of the marriage,
unless proven to pertain to the husband or the wife exclusively, are
presumed to belong to the CPG. For the rebuttable presumption to arise,
however, the properties must first be proven to have been acquired during
the existence of the marriage. [12]

The law places the burden of proof on the plaintiffs (respondents

[13]

herein) to establish their claim by a preponderance of evidence -- [14]

evidence that has greater weight or is more convincing than that which is
offered to oppose it. [15]

On the other hand, Article 144 of the Civil Code mandates a co-
[16]

ownership between a man and a woman who are living together but are not
legally married. Prevailing jurisprudence holds, though, that for Article 144
to apply, the couple must not be incapacitated to contract marriage. It has [17]

been held that the Article is inapplicable to common-law relations

amounting to adultery or concubinage, as in this case.The reason therefor
is the absurdity of creating a co-ownership in cases in which there exists a
prior conjugal partnership between the man and his lawful wife. [18]

In default of Article 144 of the Civil Code, Article 148 of the Family Code
has been applied. The latter Article provides:
[19]

Art. 148. In cases of cohabitation not falling under the preceding Article, only the
properties acquired by both of the parties through their actual joint contribution of
money, property, or industry shall be owned by them in common in proportion to
their respective contributions. In the absence of proof to the contrary, their
contributions and corresponding shares are presumed to be equal. The same rule
and presumption shall apply to joint deposits of money and evidence of credit.
If one of the parties is validly married to another, his or her share in the co-
ownership shall accrue to the absolute community or conjugal partnership existing
in such valid marriage. If the party which acted in bad faith is not validly married
to another, his or her share shall be forfeited in the manner provided in the last
paragraph of the preceding Article.

The foregoing rules on forfeiture shall likewise apply even if both parties are in
bad faith.

Thus, when a common-law couple have a legal impediment to

marriage, only the property acquired by them -- through their actual joint
contribution of money, property or industry -- shall be owned by them in
common and in proportion to their respective contributions.
With these facts and principles firmly settled, we now proceed to the
merits of the first issue.
The present controversy hinges on the source of the funds paid for the
house and lot in question. Upon the resolution of this issue depends the
determination of whether the property is conjugal (owned by Rodolfo
and Lourdes) or exclusive (owned by Milagros) or co-owned by Rodolfo
and Milagros.
The above issue, which is clearly factual, has been passed upon by
both the trial and the appellate courts, with similar results in favor of
respondents. Such finding is generally conclusive; it is not the function of
this Court to review questions of fact. [20]

Moreover, it is well-settled that only errors of law and not of facts are
reviewable by this Court in cases brought to it from the Court of Appeals or
under Rule 45 of the Rules of Court. This principle applies with greater
[21]

force herein, because the CA came up with the same factual findings as
those of the RTC.
Even then, heeding petitioners plea, we have gone through the
pleadings and the evidence presented by the parties to find out if there is
any circumstance that might warrant a reversal of the factual
findings.Unfortunately for petitioner, we have found none.
Indeed, a preponderance of evidence has duly established that the
disputed house and lot was paid by Rodolfo Reyes, using his salaries and
earnings. By substantial evidence, respondents showed the following facts:
1) that Rodolfo was gainfully employed as comptroller at Warner, Barnes
and Co., Inc. until his retirement on September 30, 1980, upon which he
received a sizeable retirement package; 2) that at exactly the same time
[22]

the property was allegedly purchased, he applied for a mortgage loan --

[23] [24]

intended for housing -- from the Commonwealth Insurance Company; 3)

[25]

that he secured the loan with a real estate mortgage over the same[26]
property; 4) that he paid the monthly amortizations for the loan as well as[27]

the semi-annual premiums for a Philam Life insurance policy, which he

[28]

was required to take as additional security; and 5) that with the proceeds of
his life insurance policy, the balance of the loan was paid to
Commonwealth by Philam Life Insurance Company. [29]

All told, respondents have shown that the property was bought during
the marriage of Rodolfo and Lourdes, a fact that gives rise to the
presumption that it is conjugal. More important, they have established that
the proceeds of the loan obtained by Rodolfo were used to pay for the
property; and that the loan was, in turn, paid from his salaries and earnings,
which were conjugal funds under the Civil Code.
In contrast, petitioner has failed to substantiate either of her claims --
that she was financially capable of buying the house and lot, or that she
actually contributed to the payments therefor.
Indeed, it does not appear that she was gainfully employed at any time
after 1961 when the property was purchased. Hearsay are the
[30]

Affidavits and the undated Certification she had presented to prove that
[31] [32]

she borrowed money from her siblings and had earnings from a jewelry
business. Respondents had not been given any opportunity to cross-
examine the affiants, who had not testified on these matters. Based on the
rules of evidence, the Affidavits and the Certification have to be rejected. In
fact, they have no probative value. The CA was also correct in
[33]

disregarding petitioners allegation that part of the purchase money had

come from the sale of a drugstore four years earlier.
[34]

Under the circumstances, therefore, the purchase and the subsequent

registration of the realty in petitioners name was tantamount to a donation
by Rodolfo to Milagros. By express provision of Article 739(1) of the Civil
Code, such donation was void, because it was made between persons who
were guilty of adultery or concubinage at the time of the donation.
The prohibition against donations between spouses must likewise
[35]

apply to donations between persons living together in illicit relations;

otherwise, the latter would be better situated than the former. Article 87 of
[36]

the Family Code now expressly provides thus:

Art. 87. Every donation or grant of gratuitous advantage, direct or indirect,

between the spouses during the marriage shall be void, except moderate gifts
which the spouses may give each other on the occasion of any family rejoicing.The
prohibition shall also apply to persons living together as husband and wife without
a valid marriage. (Italics supplied)

Regarding the registration of the property in petitioners name, it is

enough to stress that a certificate of title under the Torrens system aims to
protect dominion; it cannot be used as an instrument for the deprivation of
ownership. It has been held that property is conjugal if acquired in a
[37]

common-law relationship during the subsistence of a preexisting legal

marriage, even if it is titled in the name of the common-law wife. In this [38]

case, a constructive trust is deemed created under Article 1456 of the Civil
Code, which we quote:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it
is, by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes.

The registration of the property in petitioners name was clearly

designed to deprive Rodolfos legal spouse and compulsory heirs of
ownership. By operation of law, petitioner is deemed to hold the property in
trust for them. Therefore, she cannot rely on the registration in repudiation
of the trust, for this case is a well-known exception to the principle of
conclusiveness of a certificate of title. [39]

Second Issue:
Ruling on Illegitimate Filiation
Not Proper

It is petitioners alternative submission that her children are entitled to a

share in the disputed property, because they were voluntarily
acknowledged by Rodolfo as his children. Claiming that the issue of her
childrens illegitimate filiation was duly established in the trial court, she
faults the CA for ruling that the issue was improper in the instant case.
Her position is untenable.
Indeed, it has been ruled that matters relating to the rights of filiation
and heirship must be ventilated in the proper probate court in a special
proceeding instituted precisely for the purpose of determining such
rights. Sustaining the appellate court in Agapay v. Palang, this Court
[40] [41]

held that the status of an illegitimate child who claimed to be an heir to a

decedents estate could not be adjudicated in an ordinary civil action which,
as in this case, was for the recovery of property.
Considerations of due process should have likewise deterred the RTC
from ruling on the status of petitioners children. It is evident from the
pleadings of the parties that this issue was not presented in either the
original or the Supplemental Complaint for reconveyance of property and
[42] [43]

damages; that it was not pleaded and specifically prayed for by petitioner in
her Answers thereto; and that it was not traversed by respondents Reply
[44]

to the Supplemental Complaint. Neither did

[45]
petitioners
Memorandum, which was submitted to the trial court, raise and discuss
[46]

this issue. In view thereof, the illegitimate filiation of her children could not
have been duly established by the proceedings as required by Article 887
of the Civil Code. [47]

In view of the foregoing reasons, the CA cannot be faulted for tackling

the propriety of the RTCs ruling on the status of the children of petitioner,
though she did not assign this matter as an error. The general rule -- that
only errors assigned may be passed upon by an appellate court admits of
exceptions. Even unassigned errors may be taken up by such court if the
consideration of those errors would be necessary for arriving at a just
decision or for serving the interest of justice. [48]

The invocation by petitioner of Articles 19 and 21 of the Civil Code is

[49] [50]

also unmeritorious. Clearly, the illegitimate filiation of her children was not
the subject of inquiry and was in fact not duly established in this
case. Thus, she could not have shown that respondents had acted in bad
faith or with intent to prejudice her children. These are conditions
necessary to show that an act constitutes an abuse of rights under Article
19. She also failed to show that respondents -- in violation of the
[51]

provisions of Article 21 of the Civil Code -- had acted in a manner contrary

to morals, good customs or public policy.
Moreover, we note that the issue concerning the applicability of Articles
19 and 21 was not raised by petitioner in the trial court or even in the
CA. Hence, she should not be permitted to raise it now. Basic is the rule
that parties may not bring up on appeal issues that have not been raised on
trial.[52]

WHEREFORE, the Petition is hereby DENIED, and the assailed

Decision and Resolution of the Court of Appeals AFFIRMED. Costs against
petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna,
JJ., concur.

SECOND DIVISION

[G.R. No. 116668. July 28, 1997]

ERLINDA A. AGAPAY, petitioner, vs. CARLINA (CORNELIA) V.

PALANG and HERMINIA P. DELA CRUZ, respondents.
 DECISION
ROMERO, J.:

Before us is a petition for review of the decision of the Court of Appeals

in CA-G.R. CV No. 24199 entitled Erlinda Agapay v. Carlina (Cornelia)
Palang and Herminia P. Dela Cruz dated June 22, 1994 involving the
ownership of two parcels of land acquired during the cohabitation of
petitioner and private respondents legitimate spouse.
Miguel Palang contracted his first marriage on July 16, 1949 when he
took private respondent Carlina (or Cornelia) Vallesterol as a wife at the
Pozorrubio Roman Catholic Church in Pangasinan. A few months after the
wedding, in October 1949, he left to work in Hawaii. Miguel and Carlinas
only child, Herminia Palang, was born on May 12, 1950.
Miguel returned in 1954 for a year. His next visit to the Philippines was
in 1964 and during the entire duration of his year-long sojourn he stayed in
Zambales with his brother, not in Pangasinan with his wife and child. The
trial court found evidence that as early as 1957, Miguel had attempted to
divorce Carlina in Hawaii. When he returned for good in 1972, he refused
[1]

to live with private respondents, but stayed alone in a house in Pozorrubio,

Pangasinan.
On July 15, 1973, the then sixty-three-year-old Miguel contracted his
second marriage with nineteen-year-old Erlinda Agapay, herein
petitioner. Two months earlier, on May 17, 1973, Miguel and Erlinda, as
[2]

evidenced by the Deed of Sale, jointly purchased a parcel of agricultural

land located at San Felipe, Binalonan, Pangasinan with an area of 10,080
square meters. Consequently, Transfer Certificate of Title No. 101736
covering said rice land was issued in their names.
A house and lot in Binalonan, Pangasinan was likewise purchased on
September 23, 1975, allegedly by Erlinda as the sole vendee. TCT No.
143120 covering said property was later issued in her name.
On October 30, 1975, Miguel and Cornelia Palang executed a Deed of
Donation as a form of compromise agreement to settle and end a case filed
by the latter. The parties therein agreed to donate their conjugal property
[3]

consisting of six parcels of land to their only child, Herminia Palang.

[4]

Miguel and Erlindas cohabitation produced a son, Kristopher A. Palang,

born on December 6, 1977. In 1979, Miguel and Erlinda were convicted of
Concubinage upon Carlinas complaint. Two years later, on February 15,
[5]

1981, Miguel died.

On July 11, 1981, Carlina Palang and her daughter Herminia Palang de
la Cruz, herein private respondents, instituted the case at bar, an action for
recovery of ownership and possession with damages against petitioner
before the Regional Trial Court in Urdaneta, Pangasinan (Civil Case No. U-
4265). Private respondents sought to get back the riceland and the house
and lot both located at Binalonan, Pangasinan allegedly purchased by
Miguel during his cohabitation with petitioner.
Petitioner, as defendant below, contended that while the riceland
covered by TCT No. 101736 is registered in their names (Miguel and
Erlinda), she had already given her half of the property to their son
Kristopher Palang. She added that the house and lot covered by TCT No.
143120 is her sole property, having bought the same with her own
money. Erlinda added that Carlina is precluded from claiming aforesaid
properties since the latter had already donated their conjugal estate to
Herminia.
After trial on the merits, the lower court rendered its decision on June
30, 1989 dismissing the complaint after declaring that there was little
evidence to prove that the subject properties pertained to the conjugal
property of Carlina and Miguel Palang. The lower court went on to provide
for the intestate shares of the parties, particularly of Kristopher Palang,
Miguels illegitimate son. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered-

1) Dismissing the complaint, with costs against plaintiffs;

2) Confirming the ownership of defendant Erlinda Agapay of the residential lot

located at Poblacion, Binalonan, Pangasinan, as evidenced by TCT No. 143120,
Lot 290-B including the old house standing therein;

3) Confirming the ownership of one-half (1/2) portion of that piece of agricultural

land situated at Balisa, San Felipe, Binalonan, Pangasinan, consisting of 10,080
square meters and as evidenced by TCT No. 101736, Lot 1123-A to Erlinda
Agapay;

4) Adjudicating to Kristopher Palang as his inheritance from his deceased father,

Miguel Palang, the one-half (1/2) of the agricultural land situated at Balisa, San
Felipe, Binalonan, Pangasinan, under TCT No. 101736 in the name of Miguel
Palang, provided that the former (Kristopher) executes, within 15 days after this
decision becomes final and executory, a quit-claim forever renouncing any claims
to annul/reduce the donation to Herminia Palang de la Cruz of all conjugal
properties of her parents, Miguel Palang and Carlina Vallesterol Palang, dated
October 30, 1975, otherwise, the estate of deceased Miguel Palang will have to be
settled in another separate action;

5) No pronouncement as to damages and attorneys fees.

SO ORDERED. [6]

On appeal, respondent court reversed the trial courts decision. The

Court of Appeals rendered its decision on July 22, 1994 with the following
dispositive portion:

WHEREFORE, PREMISES CONSIDERED, the appealed decision is hereby

REVERSED and another one entered:

1. Declaring plaintiffs-appellants the owners of the properties in question;

2. Ordering defendant-appellee to vacate and deliver the properties in question to

herein plaintiffs-appellants;

3. Ordering the Register of Deeds of Pangasinan to cancel Transfer Certificate of

Title Nos. 143120 and 101736 and to issue in lieu thereof another certificate of title
in the name of plaintiffs-appellants.

No pronouncement as to costs. [7]

Hence, this petition.

Petitioner claims that the Court of Appeals erred in not sustaining the
validity of two deeds of absolute sale covering the riceland and the house
and lot, the first in favor of Miguel Palang and Erlinda Agapay and the
second, in favor of Erlinda Agapay alone. Second, petitioner contends that
respondent appellate court erred in not declaring Kristopher A. Palang as
Miguel Palangs illegitimate son and thus entitled to inherit from Miguels
estate. Third, respondent court erred, according to petitioner, in not finding
that there is sufficient pleading and evidence that Kristoffer A. Palang or
Christopher A. Palang should be considered as party-defendant in Civil
Case No. U-4625 before the trial court and in CA-G.R. No. 24199. [8]

After studying the merits of the instant case, as well as the pertinent
provisions of law and jurisprudence, the Court denies the petition and
affirms the questioned decision of the Court of Appeals.
The first and principal issue is the ownership of the two pieces of
property subject of this action. Petitioner assails the validity of the deeds of
conveyance over the same parcels of land. There is no dispute that the
transfers of ownership from the original owners of the riceland and the
house and lot, Corazon Ilomin and the spouses Cespedes, respectively,
were valid.
The sale of the riceland on May 17, 1973, was made in favor of Miguel
and Erlinda. The provision of law applicable here is Article 148 of the
Family Code providing for cases of cohabitation when a man and a woman
who are not capacitated to marry each other live exclusively with each
other as husband and wife without the benefit of marriage or under a void
marriage. While Miguel and Erlinda contracted marriage on July 15, 1973,
said union was patently void because the earlier marriage of Miguel and
Carlina was still susbsisting and unaffected by the latters de
facto separation.
Under Article 148, only the properties acquired by both of the parties
through their actual joint contribution of money, property or
industry shall be owned by them in common in proportion to their
respective contributions. It must be stressed that actual contribution is
required by this provision, in contrast to Article 147 which states that efforts
in the care and maintenance of the family and household, are regarded as
contributions to the acquisition of common property by one who has no
salary or income or work or industry. If the actual contribution of the party is
not proved, there will be no co-ownership and no presumption of equal
shares.[9]

In the case at bar, Erlinda tried to establish by her testimony that she is
engaged in the business of buy and sell and had a sari-sari store but [10]

failed to persuade us that she actually contributed money to buy the subject
riceland. Worth noting is the fact that on the date of conveyance, May 17,
1973, petitioner was only around twenty years of age and Miguel Palang
was already sixty-four and a pensioner of the U.S.
Government. Considering her youthfulness, it is unrealistic to conclude that
in 1973 she contributed P3,750.00 as her share in the purchase price of
subject property, there being no proof of the same.
[11]

Petitioner now claims that the riceland was bought two months before
Miguel and Erlinda actually cohabited. In the nature of an afterthought, said
added assertion was intended to exclude their case from the operation of
Article 148 of the Family Code. Proof of the precise date when they
commenced their adulterous cohabitation not having been adduced, we
cannot state definitively that the riceland was purchased even before they
started living together. In any case, even assuming that the subject
property was bought before cohabitation, the rules of co-ownership would
still apply and proof of actual contribution would still be essential.
Since petitioner failed to prove that she contributed money to the
purchase price of the riceland in Binalonan, Pangasinan, we find no basis
to justify her co-ownership with Miguel over the same.Consequently, the
riceland should, as correctly held by the Court of Appeals, revert to the
conjugal partnership property of the deceased Miguel and private
respondent Carlina Palang.
Furthermore, it is immaterial that Miguel and Carlina previously agreed
to donate their conjugal property in favor of their daughter Herminia in
1975. The trial court erred in holding that the decision adopting their
compromise agreement in effect partakes the nature of judicial confirmation
of the separation of property between spouses and the termination of the
conjugal partnership. Separation of property between spouses during the
[12]

marriage shall not take place except by judicial order or without judicial
conferment when there is an express stipulation in the marriage
settlements. The judgment which resulted from the parties compromise
[13]

was not specifically and expressly for separation of property and should not
be so inferred.
With respect to the house and lot, Erlinda allegedly bought the same
for P20,000.00 on September 23, 1975 when she was only 22 years
old. The testimony of the notary public who prepared the deed of
conveyance for the property reveals the falsehood of this claim. Atty.
Constantino Sagun testified that Miguel Palang provided the money for the
purchase price and directed that Erlindas name alone be placed as the
vendee. [14]

The transaction was properly a donation made by Miguel to Erlinda, but

one which was clearly void and inexistent by express provision of law
because it was made between persons guilty of adultery or concubinage at
the time of the donation, under Article 739 of the Civil Code. Moreover,
Article 87 of the Family Code expressly provides that the prohibition against
donations between spouses now applies to donations between persons
living together as husband and wife without a valid marriage, for [15]

otherwise, the condition of those who incurred guilt would turn out to be
better than those in legal union.
[16]

The second issue concerning Kristopher Palangs status and claim as

an illegitimate son and heir to Miguels estate is here resolved in favor of
respondent courts correct assessment that the trial court erred in making
pronouncements regarding Kristophers heirship and filiation inasmuch as
questions as to who are the heirs of the decedent, proof of filiation of
illegitimate children and the determination of the estate of the latter and
claims thereto should be ventilated in the proper probate court or in a
special proceeding instituted for the purpose and cannot be adjudicated in
the instant ordinary civil action which is for recovery of ownership and
possession. [17]

As regards the third issue, petitioner contends that Kristopher Palang

should be considered as party-defendant in the case at bar following the
trial courts decision which expressly found that Kristopher had not been
impleaded as party defendant but theorized that he had submitted to the
courts jurisdiction through his mother/guardian ad litem. The trial court
[18]

erred gravely. Kristopher, not having been impleaded, was, therefore, not a
party to the case at bar. His mother, Erlinda, cannot be called his
guardian ad litem for he was not involved in the case at bar. Petitioner adds
that there is no need for Kristopher to file another action to prove that he is
the illegitimate son of Miguel, in order to avoid multiplicity of
suits. Petitioners grave error has been discussed in the preceeding
[19]

paragraph where the need for probate proceedings to resolve the

settlement of Miguels estate and Kristophers successional rights has been
pointed out.
WHEREFORE, the instant petition is hereby DENIED. The questioned
decision of the Court of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.
Regalado, (Chairman), Puno, and Mendoza, JJ., concur.
Torres, Jr., J., on leave.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-23002 July 31, 1967

CONCEPCION FELIX VDA. DE RODRIGUEZ, plaintiff-appellant,

vs.
GERONIMO RODRIGUEZ., ET AL., defendants-appellees.

Ozaeta, Gibbs and Ozaeta for plaintiff-appellant.

Sycip, Salazar, Luna and Associates and Carolina C. Grio-Aquino for defendants-appellees.

REYES, J.B.L., J.:

This is an appeal by Concepcion Felix Vda. de Rodriguez from the decision of the Court of First
Instance of Bulacan in Civil Case No. 2565, which she commenced on May 28, 1962, to secure
declaration, of nullity of two contracts executed on January 24, 1934 and for recovery of certain
properties.

The facts of this case may be briefly stated as follows:

Concepcion Felix, widow of the late Don Felipe Calderon and with whom she had one living
child, Concepcion Calderon, contracted a second marriage on June 20, 1929, with Domingo
Rodriguez, widower with four children by a previous marriage, named Geronimo, Esmeragdo,
Jose and Mauricio, all surnamed Rodriguez. There was no issue in this second marriage.

Prior to her marriage to Rodriguez, Concepcion Felix was the registered owner of 2 fishponds
located in the barrio of Babagad, municipality of Bulacan, Bulacan province. with a total area of
557,711 square meters covered by OCT Nos. 605 and 807. Under date of January 24, 1934,
Concepcion Felix appeared to have executed a deed of sale conveying ownership of the
aforesaid properties to her daughter, Concepcion Calderon, for the sum of P2,500.00, which the
latter in turn appeared to have transferred to her mother and stepfather by means of a document
dated January 27, 1934. Both deeds, notarized by Notary Public Jose D. Mendoza, were
registered in the office of the Register of Deeds of Bulacan on January 29, 1934, as a
consequence of which, the original titles were cancelled and TCT Nos. 13815 and 13816 were
issued in the names of the spouses Domingo Rodriguez and Concepcion Felix.
On March 6, 1953, Domingo Rodriguez died intestate, survived by the widow, Concepcion Felix,
his children Geronimo Esmeragdo and Mauricio and grandchildren Oscar, Juan and Ana,
surnamed Rodriguez, children of a son, Jose, who had predeceased him.

On March 16, 1953, the above-named widow, children and grandchildren of the deceased
entered into an extra-judicial settlement of his (Domingo's) estate, consisting of one-half of the
properties allegedly belonging to the conjugal partnership. Among the properties listed as
conjugal were the two parcels of land in Bulacan, Bulacan, which, together with another piece of
property, were divided among the heirs in this manner:

WHEREAS, the parties have furthermore agreed that the fishpond covered by TCT Nos.
13815, 13816 and 24109 of the Office of the Register of Deeds of Bulacan, containing an
area of 557,971 sq. m., which is likewise the conjugal property of the deceased and his
surviving spouse; 1/2 of the same or 278,985.5 sq. m. belongs to said Concepcion Felix
Vda. de Rodriguez, as her share in the conjugal property; and 3/4 of the remaining half or
209,239.125 sq. m. are transferred in full ownership to Geronimo Rodriguez, Esmeragdo
Rodriguez and Mauricio Rodriguez, share and share alike, while the other 1/4 or
69,746.375 sq. m. of the said remaining half goes in equal shares to Oscar Rodriguez,
Juan Rodriguez and Ana Rodriguez.

As a result of this partition, TCT Nos. 13815 and 13816 were cancelled and TCT Nos. T-11431
and T-14432 were issued in the names of the said heirs of the deceased.

On March 23, 1953, in a power of attorney executed by the children and grandchildren of
Domingo Rodriguez, Concepcion Felix Vda. de Rodriguez was named their attorney in-fact,
authorized to manage their shares in the fishponds (Exh. 4).

On July 2, 1954, the heirs ended their co-ownership by executing a deed of partition, dividing and
segregating their respective shares in the properties, pursuant to a consolidation and subdivision
plan (PCS-3702), in accordance with which, Concepcion Felix Vda. de Rodriguez obtained TCT
No. T-12910, for the portion pertaining to her (Exh. L), while TCT No. T-12911 was issued to the
other heirs, for their shares. This latter title was subsequently replaced by TCT No. 16660 (Exh.
M).

On October 12, 1954, the Rodriguez children executed another document granting unto the
widow lifetime usufruct over one-third of the fishpond which they received as hereditary share in
the estate of Domingo Rodriguez, which grant was accepted by Concepcion Felix Vda. de
Rodriguez.

Then, in a contract dated December 15, 1961, the widow appeared to have leased from the
Rodriguez children and grandchildren the fishpond (covered by TCT No. 16660) for a period of 5
years commencing August 16, 1962, for an annual rental of P7,161.37 (Exh. 5). 1wph1.t

At about this time, it seemed that the relationship between the widow and her stepchildren had
turned for the worse. Thus, when she failed to deliver to them the balance of the earnings of the
fishponds, in the amount of P3,000.00, her stepchildren endorsed the matter to their lawyer who,
on May 16, 1962, sent a letter of demand to the widow for payment thereof. On, May 28, 1962,
Concepcion Felix Vda. de Rodriguez filed the present action in the Court of First Instance of
Manila naming as defendants, Geronimo Rodriguez, Esmeragdo Rodriguez, Oscar Rodriguez,
Concepcion Bautista Vda. de Rodriguez, as guardian of the minors Juan and Ana Rodriguez,
and Antonio Diaz de Rivera and Renato Diaz de Rivera, as guardians of the minors Maria Ana,
Mercedes, Margarita, Mauricio, Jr. and Domingo (Children of Mauricio Rodriguez who had also
died).

The action to declare null and void the deeds of transfer of plaintiff's properties to the conjugal
partnership was based on the alleged employment or exercise by plaintiff's deceased husband of
force and pressure on her; that the conveyances of the properties from plaintiff to her
daughter and then to the conjugal partnership of plaintiff and her husband are both without
consideration; that plaintiff participated in the extrajudicial settlement of estate (of the deceased
Domingo Rodriguez) and in other subsequent deeds or instruments involving the properties in
dispute, on the false assumption that the said properties had become conjugal by reason of the
execution of the deeds of transfer in 1934; that laboring under the same false assumption,
plaintiff delivered to defendants, as income of the properties from 1956 to 1961, the total amount
of P56,976.58. As alternative cause of action, she contended that she would claim for her share,
as surviving widow, of 1/5 of the properties in controversy, should such properties be adjudged
as belonging to the conjugal partnership. Thus, plaintiff prayed that the deeds of transfer
mentioned in the complaint be declared fictitious and simulated; that the "Extrajudicial Settlement
of Estate" be also declared null and void; that TCT No. 16660 of the Registry of Deeds of
Bulacan be cancelled and another one be issued in the name of plaintiff, Concepcion Felix Vda.
de Felix; that defendants be ordered to pay plaintiff the sum of P56,976.58, with legal interest
thereon from the date of the filing of the complaint, and for appropriate relief in connection with
her alternative cause of action.

In their separate answers, defendants not only denied the material allegations of the complaint,
but also set up as affirmative defenses lack of cause of action, prescription, estoppel and laches.
As counterclaim, they asked for payment by the plaintiff of the unpaid balance of the earnings of
the land up to August 15, 1962 in the sum of P3,000.00, for attorney's fees and expenses of
litigation.

On October 5, 1963, judgment was rendered for the defendants. In upholding the validity of the
contracts, the court found that although the two documents, Exhibits A and B, were executed for
the purpose of converting plaintiff's separate properties into conjugal assets of the marriage with
Domingo Rodriguez, the consent of the parties thereto was voluntary, contrary to the allegations
of plaintiff and her witness. The court also ruled that having taken part in the questioned
transactions, plaintiff was not the proper party to plead lack of consideration to avoid the
transfers; that contracts without consideration are not inexistent, but are only voidable, following
the ruling in the case of Concepcion vs. Sta. Ana (87 Phil. 787); that there was ratification or
confirmation by the plaintiff of the transfer of her property, by her execution (with the other heirs)
of the extrajudicial settlement of estate; that being a voluntary party to the contracts, Exhibits A
and B, plaintiff cannot recover the properties she gave thereunder. Plaintiff's alternative cause of
action was also rejected on the ground that action for rescission of the deed of extrajudicial
settlement should have been filed within 4 years from its execution (on March 16, 1953).

From the decision of the Court of First Instance, plaintiff duly appealed to this Court, insisting that
the conveyances in issue were obtained through duress, and were inexistent, being simulated
and without consideration.

We agree with the trial Court that the evidence is not convincing that the contracts of transfer
from Concepcion Felix to her daughter, and from the latter to her mother and stepfather were
executed through violence or intimidation. The charge is predicated solely upon the improbable
and biased testimony of appellant's daughter, Concepcion C. Martelino, whom the trial court,
refused to believe, considering that her version of violence and harassment was contradicted by
Bartolome Gualberto who had lived with the Rodriguez spouses from 1917 to 1953, and by the
improbability of Rodriguez threatening his stepdaughter in front of the Notary Public who ratified
her signature. Furthermore, as pointed out by the appealed decision, the charge of duress should
be treated with caution considering that Rodriguez had already died when the suit was brought,
for duress, like fraud, is not to be lightly paid at the door of men already dead. (Cf. Prevost vs.
Gratz, 6 Wheat. [U.S.] 481, 498; Sinco vs. Longa, 51 Phil. 507).

What is more decisive is that duress being merely a vice or defect of consent, an action based
upon it must be brought within four years after it has ceased;1 and the present action was
instituted only in 1962, twenty eight (28) years after the intimidation is claimed to have occurred,
and no less than nine (9) years after the supposed culprit died (1953). On top of it, appellant
entered into a series of subsequent transactions with appellees that confirmed the contracts that
she now tries to set aside. Therefore, this cause of action is clearly barred.

Appellant's main stand in attacking the conveyances in question is that they are simulated or
fictitious, and inexistent for lack of consideration. We shall examine each purported defect
separately.

The charge of simulation is untenable, for the characteristic of simulation is the fact that the
apparent contract is not really desired or intended to produce legal effects or in way alter the
juridical situation of the parties. Thus, where a person, in order to place his property beyond the
reach of his creditors, simulates a transfer of it to another, he does not really intend to divest
himself of his title and control of the property; hence, the deed of transfer is but a sham. But
appellant contends that the sale by her to her daughter, and the subsequent sale by the latter to
appellant and her husband, the late Domingo Rodriguez, were done for the purpose of
converting the property from paraphernal to conjugal, thereby vesting a half interest in
Rodriguez, and evading the prohibition against donations from one spouse to another during
coverture (Civil Code of 1889, Art. 1334). If this is true, then the appellant and her daughter must
have intended the two conveyance to be real and effective; for appellant could not intend to keep
the ownership of the fishponds and at the same time vest half of them in her husband. The two
contracts of sale then could not have been simulated, but were real and intended to be fully
operative, being the means to achieve the result desired.

Nor does the intention of the parties to circumvent by these contracts the law against donations
between spouses make them simulated ones.

Ferrara, in his classic book, "La Simulacion de los Negocios Juridicos" (Sp. trans, 1926), pp. 95,
105, clearly explains the difference between simulated transactions and transactions in fraudem
legis:

Otra figura que debe distinguirse de la simulacion es el fraus legis. Tambien aqui se da
una gran confusion que persiste aun en la jurisprudencia, apegada tenazmente a
antiguos errores. Se debe a Bahr el haber defendido con vigor la antitesis teorica que
existe entre negocio fingido y negocio fraudulento y haber atacado la doctrina comun
que hacia una mescolanza con los dos conceptos.

Se confunde dice (2) , el negocio in fraudem legis con el negocio simulado; aunque
la naturaleza de ambos sea totalmente diversa. El negocio fraudulento no es, en
absolute, un negocio aparente. Es perfectamente serio: se quiere realmente. Es mas, se
quiere tal como se ha realizado, con todas las consecuencias que correspondent a la
forma juridica elegida. Muchas veces, estas consecuencias con incomodas para una u
otra de las partes, aunque serian mucho mas incomodas las consecuencias que lievaria
consigo el acto prohibido.

xxx xxx xxx

El resultado de las precedentes investigaciones es el siguiente el negocio simulado

quiere producir una apariencia; el negocio fraudulente, una realidad; los negocios
simulados son ficticios, no queridos; los negocios in fraudem son serios, reales, y
realizados en tal forma por las partes para consequir un resultado prohibido: la
simulacion nunca es un medio para eludir la ley sino para ocultar su violation. La
transgresion del contenido verbal e inmediato de la norma se encubre bajo el manto de
un negocio licito, lo cual no altera el caracter del contra legem agere. Tan verdad es, que
si se ha redactado una contra-escritura que documentary y declara la verdadera
naturaleza del negocio realizado, no queda mas que aplicar pura y simplementela
prohibicion.
 Tambien el fraude quiere perjudicar la ley, pero emplea para ello medios diversos y
sigue distintos caminus. No oculta el acto exterior, sino que lo deja claro y visible,
tratando de huir sesgadamente de la aplicacion de la ley merced a una artistica y sabia
combinacion de varios medios juridicos no reprobados.

Appellant invokes our decision in Vasquez vs. Porta, 98 Phil. 490, but to no purpose. The
mortgage and foreclosure sale involved in that case were typical simulations merely apparent but
not really intended to produce legal effects, as approved by the Court's finding that the alleged
creditor and buyer at the foreclosure sale "Porta himself ostensibly acknowledged by his inertia
in allowing the doctor (alleged mortgagor debtor) to exercise dominical power thereon without
any protest on his part." (cas. cit., p. 495). Not only this, but the mortgagor's wife, when her
husband died, "found among his papers Porta's cancellation of the mortgage in his favor and the
draft of the complaint for foreclosure." Plainly, the precedent cited is here inapplicable.

Were the two conveyances from appellant to her daughter and from the latter to the spouses
Rodriguez void ab initio or inexistent for lack of consideration? We do not find them to be so. In
the first transaction, the price of P2,500.00 is recited in the deed itself (Exh. A); in the second
(Exh. B), the consideration set forth is P3,000.00. Now, Article 1274 of the Civil Code of 1889 (in
force when the deeds were executed) provided that

In onerous contracts the cause is understood to be, for each contracting party, the
prestation or promise of a thing or service by the other. (emphasis supplied.)

Since in each conveyance the buyer became obligated to pay a definite price in money, such
undertaking constituted in themselves actual causa or consideration for the conveyance of the
fishponds. That the prices were not paid (assuming ad arguendo that Concepcion Martelino's
testimony, to this effect is true) does not make the sales inexistent for want of causa. As ruled
in Enriquez de la Cavada vs. Diaz, 37 Phil. 982, "the consideration (causa) need not pass from
one (party) to the other at the time the contract is entered into x x x . The consideration need not
be paid at the time of the promise. The one promise is a consideration for the other."

What would invalidate the conveyances now under scrutiny is the fact that they were resorted to
in order to circumvent the legal prohibition against donations between spouses contained in
Article 1334, paragraph 1, of the Civil Code of 1889, then prevailing. That illegal purpose tainted
the contracts, for as held by the Spanish Tribunal Supreme in its decision of 2 April 1941.

ha de ser reputado ineficaz, por exigencias includibles del caracter social y moral del
Derecho, todo contrato que persiga un fin ilicito o immoral, sea cualquiera el medio
empleado por los contratantes para lograr esa finalidad, no justificada por un interes
digno de ser socialmente protegido.

The illicit purpose then becomes illegal causa within the terms of the old Civil Code, for as
declared by the same Spanish Court in its decision of 14 December 1940

toda vez que lo que caracteriza fundamentalmente la ilicitud de la causa es la lesion de

un interos general juridica 6 moral.

a ruling reiterated in the decision of 2 April 1941 when the Court ruled:

El concepto de la causa ilicita, tal como la desenvuelve y aplica con gran amplitud y
flexibilidad la doctrina moderna, permite cobijar, no solo las convenciones ilicitas por
razon de su objeto o de su motivo ... sino tambien multiples convenciones que no
encerrando en si ningun elemento de directa antijuricidad son ilicitas por el matiz
immoral que reviste la operation en su conjunto x x x .
Unfortunately for herein appellant, in contracts invalidated by illegal subject matter or illegal
causa, Articles 1305 and 1306 of the Civil Code then in force apply rigorously the rule in pari
delicto non oritur action, denying all recovery to the guilty parties inter se. And appellant is clearly
as guilty as her husband in the attempt to evade the legal interdiction of Article 1334 of the Code,
already cited. Wherefore, her present action to reivindicate the, conveyed properties was
correctly repulsed by the Court below.

Art. 1306. If the act which constitutes the illicit consideration is neither a crime nor a
misdemeanor, the following rules shall be observed:

1. When both parties are guilty, neither of them can recover what he may have given by
virtue of the contract, or enforce the performance of the undertaking of the other party;

xxx xxx xxx

That Article 1306 applies to cases where the nullity arises from the illegality of the consideration
or the purpose of the contract was expressly recognized by this Supreme Court in Gustilo vs.
Maravilla, 48 Phil. 449-450.2

Finally, it cannot be denied that plaintiff-appellant had knowledge of the nullity of the contract for
the transfer of her properties in 1934, because she was even a party thereto. And yet, her
present action was filed only on May 28, 1962 and after the breaking up of friendly relations
between her and defendants-appellees. Appellant's inaction to enforce her right, for 28 years,
cannot be justified by the lame excuse that she assumed that the transfer was valid. Knowledge
of the effect of that transaction would have been obtained by the exercise of diligence. Ignorance
which is the effect of inexcusable negligence, it has been said, is no excuse for laches. (Go Chi
Gun, etc., et al. vs. Co Cho, et al., G.R. No. L-5208, Feb. 28, 1955). Even assuming for the sake
of argument that appellant held her peace, during the lifetime of her husband, out of legitimate
fear for her life, there is no justification for her future to bring the proper action after his death in
1953. Instead, she entered into a series of agreements with herein appellees, the children of her
husband by a prior marriage, of partition, usufruct and lease of their share in the fishponds,
transactions that necessarily assumed that Rodriguez had acquired one-half of the litigated
fishponds. In the circumstances, appellant's cause has become a stale demand and her conduct
placed her in estoppel to question the Validity of the transfer of her properties. (Manila, et al. vs.
Galvan, et al., G.R. No. L-23507, May 24, 1967; Perez vs. Herranz, 7 Phil. 695-696).

In view of the foregoing, the decision appealed from is affirmed. Costs against appellant
Concepcion Felix Vda. de Rodriguez. So ordered.

Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Concepcion, C.J. and Dizon, J., are on leave.

THIRD DIVISION

PHILIP MATTHEWS, G.R. No. 164584

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - CHICO-NAZARIO,
VELASCO, JR.
 NACHURA, and
PERALTA, JJ.

BENJAMIN A. TAYLOR and JOSELYN Promulgated:

C. TAYLOR,
Respondents. June 22, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Assailed in this petition for review on certiorari are the Court of Appeals
(CA) December 19, 2003 Decision[1] and July 14, 2004 Resolution[2] in CA-
G.R. CV No. 59573. The assailed decision affirmed and upheld the June 30,
1997 Decision[3] of the Regional Trial Court (RTC), Branch 8, Kalibo, Aklan in
Civil Case No. 4632 for Declaration of Nullity of Agreement of Lease with
Damages.

On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British

subject, married Joselyn C. Taylor (Joselyn), a 17-year old Filipina.[4] On June
9, 1989, while their marriage was subsisting, Joselyn bought from Diosa M.
Martin a 1,294 square-meter lot (Boracay property) situated at Manoc-
Manoc, Boracay Island, Malay, Aklan, for and in consideration
of P129,000.00.[5] The sale was allegedly financed by Benjamin.[6] Joselyn and
Benjamin, also using the latters funds, constructed improvements thereon and
eventually converted the property to a vacation and tourist resort known as the
Admiral Ben Bow Inn.[7] All required permits and licenses for the operation of
the resort were obtained in the name of Ginna Celestino, Joselyns sister.[8]

However, Benjamin and Joselyn had a falling out, and Joselyn ran away with
Kim Philippsen. On June 8, 1992, Joselyn executed a Special Power of Attorney
(SPA) in favor of Benjamin, authorizing the latter to maintain, sell, lease, and
sub-lease and otherwise enter into contract with third parties with respect to
their Boracay property.[9]
On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee,
entered into an Agreement of Lease[10] (Agreement) involving the Boracay
property for a period of 25 years, with an annual rental of P12,000.00. The
agreement was signed by the parties and executed before a Notary Public.
Petitioner thereafter took possession of the property and renamed the resort as
Music Garden Resort.

Claiming that the Agreement was null and void since it was entered into by
Joselyn without his (Benjamins) consent, Benjamin instituted an action for
Declaration of Nullity of Agreement of Lease with Damages[11] against Joselyn
and the petitioner. Benjamin claimed that his funds were used in the acquisition
and improvement of the Boracay property, and coupled with the fact that he was
Joselyns husband, any transaction involving said property required his consent.

No Answer was filed, hence, the RTC declared Joselyn and the petitioner in
defeault. On March 14, 1994, the RTC rendered judgment by default declaring
the Agreement null and void.[12] The decision was, however, set aside by the CA
in CA-G.R. SP No. 34054.[13] The CA also ordered the RTC to allow the
petitioner to file his Answer, and to conduct further proceedings.

In his Answer,[14] petitioner claimed good faith in transacting with

Joselyn. Since Joselyn appeared to be the owner of the Boracay property, he
found it unnecessary to obtain the consent of Benjamin. Moreover, as appearing
in the Agreement, Benjamin signed as a witness to the contract, indicating his
knowledge of the transaction and, impliedly, his conformity to the agreement
entered into by his wife. Benjamin was, therefore, estopped from questioning
the validity of the Agreement.

There being no amicable settlement during the pre-trial, trial on the merits
ensued.

On June 30, 1997, the RTC disposed of the case in this manner:

WHEREFORE, premises considered, judgment is hereby rendered in

favor of the plaintiff and against the defendants as follows:

1. The Agreement of Lease dated July 20, 1992 consisting of

eight (8) pages (Exhibits T, T-1, T-2, T-3, T-4, T-5, T-6 and
 T-7) entered into by and between Joselyn C. Taylor and
Philip Matthews before Notary Public Lenito T. Serrano
under Doc. No. 390, Page 79, Book I, Series of 1992 is
hereby declared NULL and VOID;

2. Defendants are hereby ordered, jointly and severally, to

pay plaintiff the sum of SIXTEEN THOUSAND
(P16,000.00) PESOS as damages representing unrealized
income for the residential building and cottages computed
monthly from July 1992 up to the time the property in
question is restored to plaintiff; and

3. Defendants are hereby ordered, jointly and severally, to

pay plaintiff the sum of TWENTY THOUSAND
(P20,000.00) PESOS, Philippine Currency, for attorneys
fees and other incidental expenses.

SO ORDERED.[15]

The RTC considered the Boracay property as community property of Benjamin

and Joselyn; thus, the consent of the spouses was necessary to validate any
contract involving the property. Benjamins right over the Boracay property was
bolstered by the courts findings that the property was purchased and improved
through funds provided by Benjamin. Although the Agreement was evidenced
by a public document, the trial court refused to consider the alleged
participation of Benjamin in the questioned transaction primarily because his
signature appeared only on the last page of the document and not on every page
thereof.

On appeal to the CA, petitioner still failed to obtain a favorable decision. In

its December 19, 2003 Decision,[16] the CA affirmed the conclusions made by
the RTC. The appellate court was of the view that if, indeed, Benjamin was a
willing participant in the questioned transaction, the parties to the Agreement
should have used the phrase with my consent instead of signed in the presence
of.The CA noted that Joselyn already prepared an SPA in favor of Benjamin
involving the Boracay property; it was therefore unnecessary for Joselyn to
participate in the execution of the Agreement.Taken together, these
circumstances yielded the inevitable conclusion that the contract was null and
void having been entered into by Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in this petition for review
on certiorari based on the following grounds:
4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN
TAYLOR IS NOT REQUIRED IN THE AGREEMENT OF LEASE
DATED 20 JULY 1992. GRANTING ARGUENDO THAT HIS
CONSENT IS REQUIRED, BENJAMIN TAYLOR IS DEEMED TO
HAVE GIVEN HIS CONSENT WHEN HE AFFIXED HIS
SIGNATURE IN THE AGREEMENT OF LEASE AS WITNESS IN
THE LIGHT OF THE RULING OF THE SUPREME COURT IN
THE CASE OF SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO.
141323, JUNE 8, 2005.

4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT

OF LEASE IS THE EXCLUSIVE PROPERTY OF JOCELYN C.
TAYLOR, A FILIPINO CITIZEN, IN THE LIGHT OF
CHEESMAN VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.

4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE

96 OF THE FAMILY CODE OF THE PHILIPPINES WHICH IS A
PROVISION REFERRING TO THE ABSOLUTE COMMUNITY
OF PROPERTY. THE PROPERTY REGIME GOVERNING THE
PROPERTY RELATIONS OF BENJAMIN TAYLOR AND
JOSELYN TAYLOR IS THE CONJUGAL PARTNERSHIP OF
GAINS BECAUSE THEY WERE MARRIED ON 30 JUNE
1988 WHICH IS PRIOR TO THE EFFECTIVITY OF THE
FAMILY CODE. ARTICLE 96 OF THE FAMILY CODE OF
THE PHILIPPINES FINDS NO APPLICATION IN THIS CASE.

4.4. THE HONORABLE COURT OF APPEALS IGNORED THE

PRESUMPTION OF REGULARITY IN THE EXECUTION OF
NOTARIAL DOCUMENTS.

4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS

UPON THE COUNTERCLAIM OF PETITIONER DESPITE THE
FACT THAT IT WAS NOT CONTESTED AND DESPITE THE
PRESENTATION OF EVIDENCE ESTABLISHING SAID
CLAIM.[17]

The petition is impressed with merit.

In fine, we are called upon to determine the validity of an Agreement of Lease

of a parcel of land entered into by a Filipino wife without the consent of her
British husband. In addressing the matter before us, we are confronted not only
with civil law or conflicts of law issues, but more importantly, with a
constitutional question.

It is undisputed that Joselyn acquired the Boracay property in 1989. Said

acquisition was evidenced by a Deed of Sale with Joselyn as the vendee. The
property was also declared for taxation purposes under her name. When Joselyn
leased the property to petitioner, Benjamin sought the nullification of the
contract on two grounds: first, that he was the actual owner of the property since
he provided the funds used in purchasing the same; and second, that Joselyn
could not enter into a valid contract involving the subject property without his
consent.
The trial and appellate courts both focused on the property relations of
petitioner and respondent in light of the Civil Code and Family Code
provisions. They, however, failed to observe the applicable constitutional
principles, which, in fact, are the more decisive.

Section 7, Article XII of the 1987 Constitution states:[18]

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

Aliens, whether individuals or corporations, have been disqualified from

acquiring lands of the public domain. Hence, by virtue of the aforecited
constitutional provision, they are also disqualified from acquiring private
lands.[19] The primary purpose of this constitutional provision is the
conservation of the national patrimony.[20] Our fundamental law cannot be any
clearer. The right to acquire lands of the public domain is reserved only to
Filipino citizens or corporations at least sixty percent of the capital of which is
owned by Filipinos.[21]

In Krivenko v. Register of Deeds,[22] cited in Muller v. Muller,[23] we had the

occasion to explain the constitutional prohibition:

Under Section 1 of Article XIII of the Constitution, natural

resources, with the exception of public agricultural land, shall not be
alienated, and with respect to public agricultural lands, their
alienation is limited to Filipino citizens. But this constitutional
 purpose conserving agricultural resources in the hands of Filipino
citizens may easily be defeated by the Filipino citizens themselves
who may alienate their agricultural lands in favor of aliens. It is partly
to prevent this result that Section 5 is included in Article XIII, and it
reads as follows:

Section 5. Save in cases of hereditary succession, no private

agricultural land will be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or hold lands of the
public domain in the Philippines.
This constitutional provision closes the only remaining avenue
through which agricultural resources may leak into aliens hands. It
would certainly be futile to prohibit the alienation of public
agricultural lands to aliens if, after all, they may be freely so alienated
upon their becoming private agricultural lands in the hands of
Filipino citizens. x x x

xxxx

If the term private agricultural lands is to be construed as not

including residential lots or lands not strictly agricultural, the result
would be that aliens may freely acquire and possess not only
residential lots and houses for themselves but entire subdivisions, and
whole towns and cities, and that they may validly buy and hold in
their names lands of any area for building homes, factories, industrial
plants, fisheries, hatcheries, schools, health and vacation resorts,
markets, golf courses, playgrounds, airfields, and a host of other uses
and purposes that are not, in appellants words, strictly agricultural.
(Solicitor Generals Brief, p. 6) That this is obnoxious to the
conservative spirit of the Constitution is beyond question.[24]

The rule is clear and inflexible: aliens are absolutely not allowed to acquire
public or private lands in the Philippines, save only in constitutionally
recognized exceptions.[25] There is no rule more settled than this constitutional
prohibition, as more and more aliens attempt to circumvent the provision by
trying to own lands through another. In a long line of cases, we have settled
issues that directly or indirectly involve the above constitutional provision. We
had cases where aliens wanted that a particular property be declared as part of
their fathers estate;[26] that they be reimbursed the funds used in purchasing a
property titled in the name of another;[27] that an implied trust be declared in
their (aliens) favor;[28] and that a contract of sale be nullified for their lack of
consent.[29]
In Ting Ho, Jr. v. Teng Gui,[30] Felix Ting Ho, a Chinese citizen, acquired a
parcel of land, together with the improvements thereon. Upon his death, his
heirs (the petitioners therein) claimed the properties as part of the estate of their
deceased father, and sought the partition of said properties among
themselves. We, however, excluded the land and improvements thereon from
the estate of Felix Ting Ho, precisely because he never became the owner
thereof in light of the above-mentioned constitutional prohibition.

In Muller v. Muller,[31] petitioner Elena Buenaventura Muller and respondent

Helmut Muller were married in Germany. During the subsistence of their
marriage, respondent purchased a parcel of land in Antipolo City and
constructed a house thereon. The Antipolo property was registered in the name
of the petitioner. They eventually separated, prompting the respondent to file a
petition for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said property. In
deciding the case in favor of the petitioner, the Court held that respondent was
aware that as an alien, he was prohibited from owning a parcel of land situated
in the Philippines. He had, in fact, declared that when the spouses acquired the
Antipolo property, he had it titled in the name of the petitioner because of said
prohibition. Hence, we denied his attempt at subsequently asserting a right to
the said property in the form of a claim for reimbursement. Neither did the
Court declare that an implied trust was created by operation of law in view of
petitioners marriage to respondent. We said that to rule otherwise would permit
circumvention of the constitutional prohibition.
In Frenzel v. Catito,[32] petitioner, an Australian citizen, was married to Teresita
Santos; while respondent, a Filipina, was married to Klaus Muller. Petitioner
and respondent met and later cohabited in a common-law relationship, during
which petitioner acquired real properties; and since he was disqualified from
owning lands in the Philippines, respondents name appeared as the vendee in
the deeds of sale. When their relationship turned sour, petitioner filed an action
for the recovery of the real properties registered in the name of respondent,
claiming that he was the real owner. Again, as in the other cases, the Court
refused to declare petitioner as the owner mainly because of the constitutional
prohibition. The Court added that being a party to an illegal contract, he could
not come to court and ask to have his illegal objective carried out. One who
loses his money or property by knowingly engaging in an illegal contract may
not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,[33] petitioner (an
American citizen) and Criselda Cheesman acquired a parcel of land that was
later registered in the latters name. Criselda subsequently sold the land to a third
person without the knowledge of the petitioner. The petitioner then sought the
nullification of the sale as he did not give his consent thereto. The Court held
that assuming that it was his (petitioners) intention that the lot in question be
purchased by him and his wife, he acquired no right whatever over the property
by virtue of that purchase; and in attempting to acquire a right or interest in
land, vicariously and clandestinely, he knowingly violated the Constitution;
thus, the sale as to him was null and void.

In light of the foregoing jurisprudence, we find and so hold that Benjamin

has no right to nullify the Agreement of Lease between Joselyn and
petitioner. Benjamin, being an alien, is absolutely prohibited from acquiring
private and public lands in the Philippines. Considering that Joselyn appeared to
be the designated vendee in the Deed of Sale of said property, she acquired sole
ownership thereto. This is true even if we sustain Benjamins claim that he
provided the funds for such acquisition. By entering into such contract knowing
that it was illegal, no implied trust was created in his favor; no reimbursement
for his expenses can be allowed; and no declaration can be made that the subject
property was part of the conjugal/community property of the spouses. In any
event, he had and has no capacity or personality to question the subsequent
lease of the Boracay property by his wife on the theory that in so doing, he was
merely exercising the prerogative of a husband in respect of conjugal
property. To sustain such a theory would countenance indirect controversion of
the constitutional prohibition. If the property were to be declared conjugal, this
would accord the alien husband a substantial interest and right over the land, as
he would then have a decisive vote as to its transfer or disposition. This is a
right that the Constitution does not permit him to have.[34]

In fine, the Agreement of Lease entered into between Joselyn and petitioner
cannot be nullified on the grounds advanced by Benjamin. Thus, we uphold its
validity.

With the foregoing disquisition, we find it unnecessary to address the

other issues raised by the petitioner.
 WHEREFORE, premises considered, the December 19, 2003 Decision
and July 14, 2004 Resolution of the Court of Appeals in CA-G.R. CV No.
59573, are REVERSED and SET ASIDEand a new one is
entered DISMISSING the complaint against petitioner Philip Matthews.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-43257 February 19, 1937

MARGARITA QUINTOS DE ANSALDO and ANGEL A. ANSALDO, plaintiffs-appellees,

vs.
THE SHERIFF OF THE CITY OF MANILA, FIDELITY & SURETY COMPANY OF THE
PHILIPPINE ISLANDS and LUZON SURETY COMPANY, defendants-appellants.

Ross, Lawrence and Selph for appellants.

Angel A. Ansaldo for appellees.

ABAD SANTOS, J.:

Upon the express guaranty of the appellant Fidelity & Surety Company of the Philippine Islands,
the Philippine Trust Company granted Romarico Agcaoili a credit in current account not to
exceed at any one time P20,000. Appellee Angel A. Ansaldo, in turn, agreed to indemnify the
Fidelity & Surety Company of the Philippine Islands for any and all losses and damages that it
might sustain by reason of having guaranteed Agcaoili's obligations to the said Philippine Trust
Company. Agcaoili defaulted, and the surety company, as his guarantor, paid the Philippine Trust
Company the sum of P19,065.17. Thereafter, the surety company brought an action against the
appellee Angel A. Ansaldo for the recovery of the said sum of P19,065.17, and after obtaining a
judgment on its favor, caused the sheriff of the City of Manila to levy on the following properties:

The joint savings account in the name of Angel A. Ansaldo and Margarita Quintos de
Ansaldo in the said Bank of the Philippine Islands amounting to P165.84.

Upon learning of the action taken by the sheriff, appellees filed with him a third party claim
alleging that the money on which he levied execution was the property of the conjugal
partnership existing between the said appellees and not liable for the payment of personal
obligations of the appellee Angel A. Ansaldo; but upon execution of an indemnity bond by the
appellant Luzon Surety Company, the sheriff retained the money in his possession.

Subsequently, appellees instituted an action against the appellants in the Court of First Instance
of Manila to have the execution levied by the sheriff declared null and void. The court below
granted the relief prayed for and sentenced the appellants, jointly and severally, to pay the
appellees the sum of P636.80 with interest thereon at the rate of ten per centum per annum from
June 6, 1934 until paid, and the costs of suit.

As stated by counsel for the appellants, the question involved in this appeal is whether a joint
savings account and a joint current account, in a bank, of a husband and his wife are liable for
the payment of the obligation of the husband.
It is undisputed that the sum of P636.80 which is now in controversy was derived from the
paraphernal property of the appellee, Margarita Quintos de Ansaldo, the wife of the other
appellee Angel A. Ansaldo. It therefore belongs to the conjugal partnership of the said spouses.
(Civil Code, art. 1401.)

The provision of article 1408 of the Civil Code to the effect that the conjugal partnership shall be
liable for all the debts and obligations contracted during the marriage by the husband must be
understood as subject to the qualifications established by article 1386 of the same Code, which
provides that:

The fruits of the paraphernal property cannot be subject to the payment of personal
obligations of the husband, unless it be proved that such obligation were productive of
some benefit to the family.

The meaning of this article is clarified by reference to the first paragraph of the preceding article
1385 which reads as follows:

The fruit of the paraphernal property form part of the assets of the conjugal partnership
and are subject to the payment of the debts and expenses of the spouses.

Construing the two article together, it seems clear that the fruits of the paraphernal property
which become part of the assets of the conjugal partnership are not liable for the payment of
personal obligations of the husband, unless it be proved that such obligations were productive of
some benefit to the family.

In the case now before us no attempt has been made to prove that the obligations contracted by
the appellee, Angel A. Ansaldo, were productive of some benefit to his family. It is, however,
claimed that, as the sum of P636.80 has become the property of the conjugal partnership, at
least one-half thereof was property levied on execution, as the share of the appellee Angel A.
Ansaldo. This contention is without merit. The right of the husband to one-half of the property of
the conjugal partnership does not vest until the dissolution of the marriage when the conjugal
partnership is also dissolved. (Civil Code, arts. 1392 and 1426.)

Counsel for the appellants call attention to the fact that in the third party claim filed with the
sheriff of the City of Manila by the appellees, the latter did not allege that the money on which the
sheriff levied execution was property belonging exclusively to the appellee Margarita Quintos de
Ansaldo. Counsel contend that, as it was then claimed that the said amount of P638.80 was
conjugal property, appellees are now in estoppel to claim that the same sum was not conjugal
property but paraphernal property of the appellee Margarita Quintos de Ansaldo for the
appellants are arguing from a wrong premise. Appellees do not contend that said sum of
P636.80 is not conjugal property. They contend that while it forms part of the assets of the
conjugal partnership under article 1385 of the Civil Code, it could not be levied upon, because it
was not applicable to this case.

The judgment appealed from is affirmed with costs against the appellants. So ordered.

Avancea, C.J., Villa-real, Imperial, Diaz, Laurel and Concepcion, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 160762 May 3, 2006

Spouses JOSEPHINE MENDOZA GO & HENRY GO, Petitioners,
vs.
LEONARDO YAMANE, Respondent.

DECISION

PANGANIBAN, CJ:

Property purchased by spouses during the existence of their marriage is presumed to be

conjugal in nature. This presumption stands, absent any clear, categorical, and convincing
evidence that the property is paraphernal. Conjugal property cannot be held liable for the
personal obligation contracted by one spouse, unless some advantage or benefit is shown to
have accrued to the conjugal partnership.

The Case

Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the
November 22, 2002 Decision2 and the September 17, 2003 Resolution3 of the Court of Appeals
(CA) in CA-GR CV No. 60939. The assailed Decision disposed as follows:

"WHEREFORE, premises considered, the Decision appealed from is hereby REVERSED and
SET ASIDE. The Sheriff's Certificate of Sale dated August 12, 1981 and the Final Sheriff's
Certificate of Sale dated August 26, 1982 are declared NULL and VOID."4

The CA denied reconsideration in its September 17, 2003 Resolution.

The Facts

The undisputed factual findings of the CA are as follows:

"Involved in the suit is a 750 square meters (sic) parcel of lot located at Res. Sec. 'K', Baguio
City, registered in the name of Muriel Pucay Yamane, wife of Leonardo Yamane, [respondent]
herein, under Transfer Certificate of Title No. 12491.

"As a result of a motion for execution of a charging lien filed by Atty. Guillermo F. De Guzman in
Civil Case No. 1841, entitled 'Florence Pucay De Gomez, Elsie Pucay Kiwas and Muriel Pucay
Yamane v. Cypress Corporation,' which said counsel handled for the plaintiffs therein, hereinafter
collectively referred to as the Pucay sisters, the subject property was levied to satisfy the lien for
attorney's fees in the amount of P10,000. The said property was scheduled to be sold at public
auction on August 11, 1981.

"Four days prior to the auction sale, [respondent] filed a Third-Party Claim with the Office of the
Provincial Sheriff to stop the public auction on the ground that the subject property is conjugal
property and, therefore, should not be held answerable for the personal obligation of the Pucay
sisters. However, the Sheriff proceeded with the auction sale despite [respondent's] protest. The
subject property was sold to spouses Josephine [and] Henry Go (or [petitioners]) as highest
bidder. No redemption having been made during the one-year period, a Final Sheriff's Certificate
of Sale was eventually issued on August 26, 1982 conveying and transferring the said property to
[petitioners].

"On September 4, 1984, [respondent] filed a Complaint with the Regional Trial Court of Baguio
City, docketed as Civil Case No. 417-R, against [petitioners] and Sheriff Melgar for annulment
and cancellation of auction sale upon the same ground stated in the abovementioned third-party
claim. Citing the Order of the Regional Trial Court of Baguio City, Branch V in LRC Case No.
2288, which ordered the cancellation of TCT No. 12491 and directed the Register of Deeds to
issue new title in the name of Josephine Go x x x, [petitioners] moved to dismiss the complaint
on the ground of res judicata. In the Order dated November 28, 1984, the motion was denied by
the trial court.

"In their Answer filed on December 10, 1984, [petitioners] denied the material allegations of the
complaint and interposed the following special affirmative defenses: that the cause of action was
barred by prior judgment; that [respondent] has not pursued any lawful remedy to annul the
execution proceeding; that there is no flaw or irregularity in the auction sale; and that since the
execution sale was made in accordance with Section 21, Rule 39 of the Revised Rules of Court,
it is deemed final and any irregularity committed in the course thereof will not vitiate its validity.

"On December 28, 1984, Muriel likewise lodged a Complaint for Damages, docketed as Civil
Case No. 505-R, against [petitioners] and Atty. Guillermo De Guzman alleging, in gist, fraud,
misrepresentation, manipulation and unlawful acts of the defendants in causing the levy of the
subject property with an estimated commercial value ofP200,000 as against a charging lien in the
amount of P10,000.

"In its May 27, 1985 Order, the trial court ordered the joint hearing of Civil Cases Nos. 417-R and
505-R. On August 30, 1985, Muriel was declared non-suited for failure to appear in the hearing
despite due notice. As a consequence, Civil Case No. 505-R was dismissed on October 15,
1985."5

In its Decision6 dated March 25, 1998, the Regional Trial Court (RTC) of Baguio City, Branch 4,
held that the subject parcel of land was the paraphernal property of the late Muriel Pucay
Yamane -- spouse of respondent -- and was not their conjugal property. The appearance of his
name on the Transfer Certificate of Title (TCT) was deemed to be merely descriptive of the civil
status of the registered owner, his late wife. Hence, finding that he had no legal standing to
question the auction sale or to pray for its annulment or cancellation, the RTC dismissed the
case for lack of merit.

Upon receipt of the RTC Decision on April 8, 1998, respondent filed a Motion,7 in which he
prayed that he be allowed to file his Motion for Reconsideration of the Decision, on or before May
30, 1998. The trial court granted8his Motion; received the Motion for Reconsideration,9 which was
filed on May 28, 1998; and eventually denied it in its Order dated June 5, 1998.10 He then
elevated the matter to the CA on June 15, 1998.

Ruling of the Court of Appeals

The CA reversed the RTC's Decision. The Sheriff's Certificate of Sale dated August 12, 1981,
and the Final Sheriff's Certificate of Sale dated August 26, 1982, were declared null and void.

According to the appellate court, property acquired during marriage is presumed to be conjugal,
unless the exclusive funds of one spouse are shown to have been used for the purpose. That the
land was acquired during the spouses' coverture was sufficiently established by the TCT and the
Deed of Absolute Sale, both indicating that Muriel Pucay Yamane was "married to Leonardo
Yamane"; and by the undisputed testimony of the previous owner, Eugene Pucay. Because of
petitioners' failure to establish that the land in question had been acquired by Muriel using her
exclusive funds, the CA concluded that the contested land was conjugal property.

The appellate court further held thus:

"x x x [T]he disputed property being a conjugal property of [respondent] and his wife, and absent
any showing of some advantage or benefit that accrued to their conjugal partnership from the
transaction between the Pucay sisters and Atty. De Guzman, the public auction sale of the
subject property in favor of [petitioners] is null and void."11
Hence, this Petition.12

Issues

Petitioners submit the following issues for our consideration:

"I. The Court of Appeals gravely erred in taking cognizance of the appeal and in not
dismissing the same, despite the fact that the respondent failed to perfect his appeal
within the 15-day reglementary period set by the Rules of Court.

"II. The Court of Appeals gravely erred in declaring the subject property as conjugal
property, despite the existence of clear evidence showing that the subject property is the
exclusive paraphernal property of Muriel who, even during her lifetime, always claimed
the said property as her own exclusive paraphernal property and not as property co-
owned with her husband, the respondent herein. 1avv phil.net

"III. The Court of Appeals, assuming, ex grati argumenti, that the subject property is
conjugal property between respondent and Muriel, gravely erred in ruling that the same
cannot answer for the charging lien of Atty. Guillermo de Guzman in Civil Case No.
1841."13

In the main, they posit two issues. They raise, first, the procedural question of whether the CA
erred in giving due course to respondent's lapsed appeal; and, second, the substantive issue of
whether the subject property is conjugal or paraphernal.

The Court's Ruling

The Petition has no merit.

Procedural Issue:

Whether Respondent's Appeal Should Be Given Due Course

Petitioners contend that the CA erred in giving due course to the appeal filed by respondent
beyond the 15-day reglementary period.

Concededly, he received a copy of the RTC Decision on April 8, 1998. He had, therefore, until
April 23, 1998, within which to file an appeal. Prior to the latter date, however, he moved that his
new counsel be allowed to file a motion for reconsideration on May 30, 1998. It was eventually
filed on May 28, 1998, but was denied. Respondent subsequently filed a Notice of Appeal on
June 15, 1998. By this time, the original period to appeal had expired. It should be clear that the
Rules prohibit an extension to file a motion for reconsideration.14

The perfection of an appeal in the manner and within the period prescribed by the Rules of Civil
Procedure is not only mandatory, but also jurisdictional; and the lapse of the appeal period of
fifteen days deprives a court of the jurisdiction to alter a final judgment.15

There have been exceptions, however, in which the Court dispensed with technical infirmities
and gave due course to tardy appeals. In some of those instances, the presence of any justifying
circumstance recognized by law -- such as fraud, accident, mistake or excusable negligence --
properly vested the judge with discretion to approve or admit an appeal filed out of time.16 In
other instances, lapsed appeals were allowed in order to serve substantial justice, upon
consideration of a) matters of life, liberty, honor or property; b) the existence of special or
compelling circumstances; c) the merits of the case; d) causes not entirely attributable to the fault
or negligence of the party that would be favored by the suspension of the rules; e) the failure to
show that the review being sought was merely frivolous and dilatory; and f) the fact that the other
party would not be unjustly prejudiced.17

Indeed, in some exceptional cases, the Court has allowed the relaxation of the rules regulating
the reglementary periods of appeal. These exceptions were cited in Manila Memorial Park
Cemetery v. CA,18 from which we quote:

"In Ramos vs. Bagasao, the Court excused the delay of four days in the filing of the notice of
appeal because the questioned decision of the trial court had been served upon appellant
Ramos at a time when her counsel of record was already dead. The new counsel could only file
the appeal four days after the prescribed reglementary period was over. In Republic vs. Court of
Appeals, the Court allowed the perfection of an appeal by the Republic despite the delay of six
days to prevent a gross miscarriage of justice since the Republic stood to lose hundreds of
hectares of land already titled in its name and had since then been devoted for public purposes.
In Olacao vs. National Labor Relations Commission, a tardy appeal was accepted considering
that the subject matter in issue had theretofore been judicially settled with finality in another case,
and a dismissal of the appeal would have had the effect of the appellant being ordered twice to
make the same reparation to the appellee."19

We believe that a suspension of the Rules is similarly warranted in the present controversy. We
have carefully studied the merits of the case and noted that the review being sought has not
been shown to be merely frivolous and dilatory. The Court has come to the conclusion that the
Decision of the RTC, Branch 4 (in Civil Case No. 417-R), must be set aside. It would be far better
and more prudent to attain the ends of justice, rather than to dispose of the case on technicality
and cause grave injustice in the process. Thus, we would rather excuse a technical lapse and
afford respondent a review of the case on appeal.

Substantive Issue:

Paraphernal or Conjugal?

The purchase of the property had been concluded in 1967, before the Family Code took effect on
August 3, 1988.20 Accordingly, the transaction was aptly covered by the then governing
provisions of the New Civil Code. On the latter basis, therefore, we shall resolve the issue of the
nature of the contested property.

Article 160 of the New Civil Code provides that "all property of the marriage is presumed to
belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband
or to the wife."21 As a conditio sine qua non for the operation of this article in favor of the conjugal
partnership,22 the party who invokes the presumption must first prove that the property was
acquired during the marriage.23

In other words, the presumption in favor of conjugality does not operate if there is no showing
of when the property alleged to be conjugal was acquired.24 Moreover, the presumption may be
rebutted only with strong, clear, categorical and convincing evidence.25 There must be strict proof
of the exclusive ownership of one of the spouses,26 and the burden of proof rests upon the party
asserting it.27

The CA committed no error in declaring that the parcel of land belonged to the conjugal
partnership of Spouses Muriel and Leonardo Yamane. They acquired it from Eugene Pucay on
February 27, 1967,28 or specifically during the marriage.29 We then follow the rule that proof of the
acquisition of the subject property during a marriage suffices to render the statutory presumption
operative. It is clear enough that the presently disputed piece of land pertains to the conjugal
partnership.
Petitioners concede that the property was acquired during the subsistence of the marriage of
Muriel to respondent.30 Nonetheless, they insist that it belonged exclusively to her for the
following reasons:

First. Respondent never denied nor opposed her claim in Civil Case No. 505-R, which
she had filed during her lifetime; or in AG-GR Sp. No. 01616 (entitled "Muriel Pucay
Yamane v. Josephine Go"), that the disputed parcel of land was her exclusive
paraphernal property. They allege that his failure to file a denial or opposition in those
cases is tantamount to a judicial admission that militates against his belated claim.

Second. The Deed of Absolute Sale of the property is in the sole name of Muriel.
Petitioners posit that, had the spouses jointly purchased this piece of land, the document
should have indicated this fact or carried the name of respondent as buyer.

Third. The failure of respondent to redeem the parcel of land within the redemption period
after the auction sale indicated that he was not its co-owner.

We will discuss the three arguments seriatim.

Unilateral Declaration

Respondent's interest cannot be prejudiced by the claim of Muriel in her Complaint in Civil Case
No. 505-R that the subject parcel of land was her paraphernal property. Significantly, the nature
of a property -- whether conjugal or paraphernal -- is determined by law and not by the will of one
of the spouses.31 Thus, no unilateral declaration by one spouse can change the character of a
conjugal property.32

Besides, the issue presented in Civil Case No. 505-R was not the nature of the subject piece of
land being levied upon, but whether Atty. Guillermo de Guzman was entitled to a charging lien. In
that case, Muriel claimed that she had not officially retained him as counsel, and that no lawyer-
client relationship had been established between them.33

Deed and Title in the Name of One Spouse

Further, the mere registration of a property in the name of one spouse does not destroy its
conjugal nature.34Hence, it cannot be contended in the present case that, simply because the title
and the Deed of Sale covering the parcel of land were in the name of Muriel alone, it was
therefore her personal and exclusive property. In concluding that it was paraphernal, the trial
court's reliance on Stuart v. Yatco35 was clearly erroneous.

As stated earlier, to rebut the presumption of the conjugal nature of the property, petitioners must
present clear and convincing evidence. We affirm and quote below, for easy reference, the
relevant dispositions of the CA:

"x x x. We are unable to go along with [petitioners'] contention that the subject property was
acquired by Muriel with her exclusive funds. Mere registration of the contested property in the
name of the wife is not sufficient to establish the paraphernal nature of the property. This reminds
Us of the teaching in the recent case of Diancin v. Court of Appeals, that all the property acquired
by the spouses, regardless of in whose name the same is registered, during the marriage is
presumed to belong to the conjugal partnership of gains, unless it is proved that it pertains
exclusively to the husband or to the wife. To quote:

"As a general rule, all property acquired by the spouses, regardless of in whose name the same
is registered, during the marriage is presumed to belong to the conjugal partnership of gains,
unless it is proved that it pertains exclusively to the husband or to the wife. In the case at bar, the
fishpond lease right is not paraphernal having been acquired during the coverture of the marriage
between Matilde and Tiburcio, which was on April 9, 1940. The fact that the grant was solely in
the name of Matilde did not make the property paraphernal property. What was material was the
time the fishpond lease right was acquired by the grantee, and that was during the lawful
existence of Matilde's marriage to Tiburcio.

"x x x [T]his presumption is rebuttable, but only with strong, clear and convincing evidence. The
burden of proving that the property belongs exclusively to the wife rests upon the party asserting
it. Mere assertion of the property's paraphernal nature is not sufficient."

"The record as well as the foregoing established jurisprudence lead us to conclude that the
contested property was indeed acquired during the marriage of herein [respondent] and Muriel.
To prove that it is nonetheless paraphernal property, it is incumbent upon [petitioners] to adduce
strong, clear and convincing evidence that Muriel bought the same with her exclusive funds.
[Petitioners] failed to discharge the burden. Nowhere in the evidence presented by them do We
find any indication that the land in question was acquired by Muriel with her exclusive funds. The
presumption not having been overthrown, the conclusion is that the contested land is conjugal
property."36

Non-Redemption After the Auction Sale

The non-redemption of the property by respondent within the period prescribed by law did not, in
any way, indicate the absence of his right or title to it. Contrary to petitioners' allegation, the fact
is that he filed a Third-Party Claim37 with the sheriff, upon learning of the levy and impending
auction sale. This fact was specifically admitted by petitioners.38 Respondent claimed that the
parcel of land was conjugal, and that he could not answer for the separate obligation of his wife
and her sisters.39 Notwithstanding his claim, the disputed piece of land was sold at a public
auction on August 11, 1981. Consequently issued were a Sheriff's Certificate of Sale dated
August 12, 1981, and a Final Sheriff's Certificate of Sale dated August 26, 1982.40

Likewise, in his Opposition (Answer) to the Petition in LRC File Adm. Case No.
2288,41 respondent raised the issue of the conjugal nature of the property and reserved his right
to file an independent action to annul the auction sale. In its March 30, 1983 Order,42 however,
Branch 5 of the RTC of Baguio City did not rule on either the actual ownership or the nature of
the parcel of land. Rather, it granted the Petition to issue a new certificate of title in favor of
Petitioner Josephine Mendoza Go. It found that, under Section 75 of Presidential Decree 1529,
respondent had no legal standing to question the auction sale, because he was not the
registered owner of the property. Instead, his right to prove his claim in a separate and
independent action was upheld.43 Thus, he instituted the present case for annulment and
cancellation of the auction sale.

The foregoing points clearly explain the failure of respondent to redeem the property. Misplaced
is petitioners' emphasis on his failure to do so within the period required by law, because
redemption in this case would have been inconsistent with his claim that the sale was
invalid.44 Redemption would have served as an implied admission of the regularity of the sale
and estopped him from later impugning its validity on that ground.45

Since petitioners have failed to present convincing evidence that the property is paraphernal, the
presumption that it is conjugal therefore stands. The next question before us is, whether the
charging lien of Atty. de Guzman may be properly enforced against the piece of land in question.

Charging Lien Not Chargeable Against Conjugal Property

It is indisputable that the services of Atty. de Guzman were acquired during the marriage of
respondent and Muriel. The lawyer's legal services were engaged to recover from Cypress
Corporation (in Civil Case No. 1841) the balance of the purchase price of the sale of the
exclusive property of Muriel and her sisters.46 The recovery was done during the marriage.47

The CA elucidated on this matter as follows:

"x x x. The contract or transaction between Atty. De Guzman and the Pucay sisters appears to
have been incurred for the exclusive interest of the latter. Muriel was acting privately for her
exclusive interest when she joined her two sisters in hiring the services of Atty. De Guzman to
handle a case for them. Accordingly, whatever expenses were incurred by Muriel in the litigation
for her and her sisters' private and exclusive interests, are her exclusive responsibility and
certainly cannot be charged against the contested conjugal property.

"Even on the remote assumption that the conjugal property could be held liable, levy on
execution of the same property should still be denied in accordance with the ruling in Luzon
Surety Co., Inc. v. De Garcia that before a conjugal property could be held liable for the
obligation contracted by a spouse, there must be a showing of some advantage or benefit that
accrued to the conjugal partnership. Concededly, the burden is on the [petitioners] to prove that
the services rendered by Atty. De Guzman in handling Civil Case No. 1841 for the Pucay sisters
had, somehow, redounded to the benefit of the conjugal partnership of herein [respondent] and
Muriel. This onus, [petitioners], however, failed to discharge."48

We find no reason to deviate from the CA's findings, which are amply supported by evidence.
The expenses incurred by Muriel for the recovery of the balance of the purchase price of her
paraphernal property are her exclusive responsibility.49 This piece of land may not be used to pay
for her indebtedness, because her obligation has not been shown to be one of the charges
against the conjugal partnership.50 Moreover, her rights to the property are merely inchoate prior
to the liquidation of the conjugal partnership.

Under the New Civil Code, a wife may bind the conjugal partnership only when she purchases
things necessary for the support of the family, or when she borrows money for that purpose upon
her husband's failure to deliver the needed sum;51 when administration of the conjugal
partnership is transferred to the wife by the courts52 or by the husband;53 or when the wife gives
moderate donations for charity.54 Failure to establish any of these circumstances in the present
case means that the conjugal asset may not be bound to answer for Muriel's personal obligation.

The power of the court in executing judgments extends only to properties unquestionably
belonging to the judgment debtor alone.55 In this case, therefore, the property -- being conjugal in
nature -- cannot be levied upon.56

WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.

SO ORDERED.

FIRST DIVISION

ARCADIO and MARIA LUISA G.R. No. 160347

CARANDANG,

Petitioners, Present:
 PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
- versus -
CALLEJO, SR., and

CHICO-NAZARIO, JJ.

HEIRS OF QUIRINO A. DE
GUZMAN, namely: MILAGROS DE
GUZMAN, VICTOR DE GUZMAN,
Promulgated:
REYNALDO DE GUZMAN, CYNTHIA
G. RAGASA and QUIRINO DE
GUZMAN, JR.,
November 29, 2006
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari assailing the Court of Appeals

Decision[1] and Resolution affirming the Regional Trial Court (RTC) Decision
rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred
to as spouses Carandang] jointly and severally liable for their loan to Quirino A.
de Guzman.

The Court of Appeals summarized the facts as follows:

 [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well
as corporate officers of Mabuhay Broadcasting System (MBS for brevity), with
equities at fifty four percent (54%) and forty six percent (46%) respectively.

On November 26, 1983, the capital stock of MBS was increased,

from P500,000 to P1.5 million and P345,000 of this increase was subscribed by [the
spouses Carandang]. Thereafter, on March 3, 1989, MBS again increased its capital
stock, from P1.5 million to P3 million, [the spouses Carandang] yet again subscribed
to the increase. They subscribed to P93,750 worth of newly issued capital stock.

[De Guzman] claims that, part of the payment for these subscriptions were
paid by him, P293,250 for the November 26, 1983 capital stock increase and P43,125
for the March 3, 1989 Capital Stock increase or a total of P336,375. Thus, on March
31, 1992, [de Guzman] sent a demand letter to [the spouses Carandang] for the
payment of said total amount.

[The spouses Carandang] refused to pay the amount, contending that a pre-
incorporation agreement was executed between [Arcadio Carandang] and [de
Guzman], whereby the latter promised to pay for the stock subscriptions of the
former without cost, in consideration for [Arcadio Carandangs] technical expertise,
his newly purchased equipment, and his skill in repairing and upgrading
radio/communication equipment therefore, there is no indebtedness on their part
[sic].

On June 5, 1992, [de Guzman] filed his complaint, seeking to recover

the P336,375 together with damages. After trial on the merits, the trial court
disposed of the case in this wise:

WHEREFORE, premises considered, judgment is hereby

rendered in favor of [de Guzman]. Accordingly, [the spouses
Carandang] are ordered to jointly and severally pay [de Guzman], to
wit:

(1) P336,375.00 representing [the spouses Carandangs] loan

to de Guzman;
 (2) interest on the preceding amount at the rate of twelve
percent (12%) per annum from June 5, 1992 when this complaint
was filed until the principal amount shall have been fully paid;

(3) P20,000.00 as attorneys fees;

(4) Costs of suit.

The spouses Carandang appealed the RTC Decision to the Court of

Appeals, which affirmed the same in the 22 April 2003 assailed Decision:

WHEREFORE, in view of all the foregoing the assailed Decision is hereby

AFFIRMED. No costs.[2]

The Motion for Reconsideration filed by the spouses Carandang was

similarly denied by the Court of Appeals in the 6 October 2003 assailed
Resolution:

WHEREFORE, in view thereof, the motion for reconsideration is hereby

DENIED and our Decision of April 22, 2003, which is based on applicable law and
jurisprudence on the matter is hereby AFFIRMED and REITERATED.[3]

The spouses Carandang then filed before this Court the instant Petition
for Review on Certiorari, bringing forth the following issues:

I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST
ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997
RULES OF CIVIL PROCEDURE.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS

FINDING THAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE,
CONTRARY TO EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE
PERTAINING TO LOANS.

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

FINDING THAT THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF
PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON EVIDENCE.

IV.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF
CIVIL PROCEDURE.

V.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND
SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE.[4]
Whether or not the RTC Decision is void for
failing to comply with Section 16, Rule 3 of the
Rules of Court

The spouses Carandang claims that the Decision of the RTC, having been
rendered after the death of Quirino de Guzman, is void for failing to comply
with Section 16, Rule 3 of the Rules of Court, which provides:

SEC. 16. Death of party; duty of counsel. Whenever a party to a pending

action dies, and the claim is not thereby extinguished, it shall be the duty of his
counsel to inform the court within thirty (30) days after such death of the fact
thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action.

The heirs of the deceased may be allowed to be substituted for the

deceased, without requiring the appointment of an executor or administrator and
the court may appoint a guardian ad litem for the minor heirs.

The court shall forthwith order the legal representative or representatives to

appear and be substituted within a period of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or

if the one so named shall fail to appear within the specified period, the court may
order the opposing party, within a specified time, to procure the appointment of an
executor or administrator for the estate of the deceased and the latter shall
immediately appear for and on behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the opposing party, may be recovered as
costs.

The spouses Carandang posits that such failure to comply with the above
rule renders void the decision of the RTC, in adherence to the following
pronouncements in Vda. de Haberer v. Court of Appeals [5] and Ferreria v. Vda.
de Gonzales[6]:

Thus, it has been held that when a party dies in an action that survives and no order
is issued by the court for the appearance of the legal representative or of the heirs
of the deceased in substitution of the deceased, and as a matter of fact no
substitution has ever been effected, the trial held by the court without such legal
representatives or heirs and the judgment rendered after such trial are null and void
because the court acquired no jurisdiction over the persons of the legal
representatives or of the heirs upon whom the trial and judgment would be
binding.[7]

In the present case, there had been no court order for the legal
representative of the deceased to appear, nor had any such legal representative
appeared in court to be substituted for the deceased; neither had the complainant
ever procured the appointment of such legal representative of the deceased,
including appellant, ever asked to be substituted for the deceased. As a result, no
valid substitution was effected, consequently, the court never acquired jurisdiction
over appellant for the purpose of making her a party to the case and making the
decision binding upon her, either personally or as a representative of the estate of
her deceased mother.[8]

However, unlike jurisdiction over the subject matter which is conferred

by law and is not subject to the discretion of the parties,[9] jurisdiction over the
person of the parties to the case may be waived either expressly or
impliedly.[10] Implied waiver comes in the form of either voluntary appearance
or a failure to object.[11]

In the cases cited by the spouses Carandang, we held that there had
been no valid substitution by the heirs of the deceased party, and therefore
the judgment cannot be made binding upon them.In the case at bar, not only
do the heirs of de Guzman interpose no objection to the jurisdiction of the
court over their persons; they are actually claiming and embracing such
jurisdiction. In doing so, their waiver is not even merely implied (by their
participation in the appeal of said Decision), but express (by their explicit
espousal of such view in both the Court of Appeals and in this Court). The heirs
of de Guzman had no objection to being bound by the Decision of the RTC.
 Thus, lack of jurisdiction over the person, being subject to waiver, is a
personal defense which can only be asserted by the party who can thereby
waive it by silence.

It also pays to look into the spirit behind the general rule requiring a
formal substitution of heirs. The underlying principle therefor is not really
because substitution of heirs is a jurisdictional requirement, but because non-
compliance therewith results in the undeniable violation of the right to due
process of those who, though not duly notified of the proceedings, are
substantially affected by the decision rendered therein.[12] Such violation of
due process can only be asserted by the persons whose rights are claimed to
have been violated, namely the heirs to whom the adverse judgment is sought
to be enforced.

Care should, however, be taken in applying the foregoing

conclusions. In People v. Florendo,[13] where we likewise held that the
proceedings that took place after the death of the party are void, we gave
another reason for such nullity: the attorneys for the offended party ceased to
be the attorneys for the deceased upon the death of the latter, the principal x
x x. Nevertheless, the case at bar had already been submitted for decision
before the RTC on 4 June 1998, several months before the passing away of de
Guzman on 19 February 1999. Hence, no further proceedings requiring the
appearance of de Guzmans counsel were conducted before the promulgation
of the RTC Decision. Consequently, de Guzmans counsel cannot be said to have
no authority to appear in trial, as trial had already ceased upon the death of de
Guzman.

In sum, the RTC Decision is valid despite the failure to comply with
Section 16, Rule 3 of the Rules of Court, because of the express waiver of the
heirs to the jurisdiction over their persons, and because there had been,
before the promulgation of the RTC Decision, no further proceedings requiring
the appearance of de Guzmans counsel.
 Before proceeding with the substantive aspects of the case, however,
there is still one more procedural issue to tackle, the fourth issue presented by
the spouses Carandang on the non-inclusion in the complaint of an
indispensable party.

Whether or not the RTC should have

dismissed the case for failure to state a cause
of action, considering that Milagros de
Guzman, allegedly an indispensable party,
was not included as a party-plaintiff

The spouses Carandang claim that, since three of the four checks used to
pay their stock subscriptions were issued in the name of Milagros de Guzman,
the latter should be considered an indispensable party. Being such, the
spouses Carandang claim, the failure to join Mrs. de Guzman as a party-
plaintiff should cause the dismissal of the action because (i)f a suit is not
brought in the name of or against the real party in interest, a motion to dismiss
may be filed on the ground that the complaint states no cause of action.[14]

The Court of Appeals held:

We disagree. The joint account of spouses Quirino A de Guzman and

Milagros de Guzman from which the four (4) checks were drawn is part of their
conjugal property and under both the Civil Code and the Family Code the husband
alone may institute an action for the recovery or protection of the spouses conjugal
property.

Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that x x
x Under the New Civil Code, the husband is the administrator of the conjugal
partnership. In fact, he is the sole administrator, and the wife is not entitled as a
matter of right to join him in this endeavor. The husband may defend the conjugal
partnership in a suit or action without being joined by the wife. x x x Under the
Family Code, the administration of the conjugal property belongs to the husband
 and the wife jointly. However, unlike an act of alienation or encumbrance where the
consent of both spouses is required, joint management or administration does not
require that the husband and wife always act together. Each spouse may validly
exercise full power of management alone, subject to the intervention of the court in
proper cases as provided under Article 124 of the Family Code. x x x.

The Court of Appeals is correct. Petitioners erroneously interchange the

terms real party in interest and indispensable party. A real party in interest is
the party who stands to be benefited or injured by the judgment of the suit, or
the party entitled to the avails of the suit.[15] On the other hand,
an indispensable party is a party in interest without whom no final
determination can be had of an action,[16] in contrast to a necessary party,
which is one who is not indispensable but who ought to be joined as a party if
complete relief is to be accorded as to those already parties, or for a complete
determination or settlement of the claim subject of the action.[17]

The spouses Carandang are indeed correct that (i)f a suit is not brought
in the name of or against the real party in interest, a motion to dismiss may be
filed on the ground that the complaint states no cause of action.[18] However,
what dismissal on this ground entails is an examination of whether the parties
presently pleaded are interested in the outcome of the litigation,
and notwhether all persons interested in such outcome are actually
pleaded. The latter query is relevant in discussions concerning indispensable
and necessary parties, but not in discussions concerning real parties in
interest. Both indispensable and necessary parties are considered as real
parties in interest, since both classes of parties stand to be benefited or injured
by the judgment of the suit.

Quirino and Milagros de Guzman were married before the effectivity of

the Family Code on 3 August 1988. As they did not execute any marriage
settlement, the regime of conjugal partnership of gains govern their property
relations.[19]

All property acquired during the marriage, whether the acquisition

appears to have been made, contracted or registered in the name of one or
both spouses, is presumed to be conjugal unless the contrary is
proved.[20] Credits are personal properties,[21] acquired during the time the loan
or other credit transaction was executed. Therefore, credits loaned during the
time of the marriage are presumed to be conjugal property.

Consequently, assuming that the four checks created a debt for which
the spouses Carandang are liable, such credits are presumed to be conjugal
property. There being no evidence to the contrary, such presumption subsists.
As such, Quirino de Guzman, being a co-owner of specific partnership
property,[22] is certainly a real party in interest. Dismissal on the ground of
failure to state a cause of action, by reason that the suit was allegedly not
brought by a real party in interest, is therefore unwarranted.

So now we come to the discussion concerning indispensable and

necessary parties. When an indispensable party is not before the court, the
action should likewise be dismissed.[23] The absence of an indispensable party
renders all subsequent actuations of the court void, for want of authority to
act, not only as to the absent parties but even as to those present. [24] On the
other hand, the non-joinder of necessary parties do not result in the dismissal
of the case. Instead, Section 9, Rule 3 of the Rules of Court provides for the
consequences of such non-joinder:

Sec. 9. Non-joinder of necessary parties to be pleaded. Whenever in any

pleading in which a claim is asserted a necessary party is not joined, the pleader
shall set forth his name, if known, and shall state why he is omitted. Should the
court find the reason for the omission unmeritorious, it may order the inclusion of
the omitted necessary party if jurisdiction over his person may be obtained.

The failure to comply with the order for his inclusion, without justifiable
cause, shall be deemed a waiver of the claim against such party.

The non-inclusion of a necessary party does not prevent the court from
proceeding in the action, and the judgment rendered therein shall be without
prejudice to the rights of such necessary party.
 Non-compliance with the order for the inclusion of a necessary party
would not warrant the dismissal of the complaint. This is an exception to
Section 3, Rule 17 which allows the dismissal of the complaint for failure to
comply with an order of the court, as Section 9, Rule 3 specifically provides for
the effect of such non-inclusion: it shall not prevent the court from proceeding
in the action, and the judgment rendered therein shall be without prejudice to
the rights of such necessary party. Section 11, Rule 3 likewise provides that the
non-joinder of parties is not a ground for the dismissal of the action.

Other than the indispensable and necessary parties, there is a third set
of parties: the pro-forma parties, which are those who are required to be
joined as co-parties in suits by or against another party as may be provided by
the applicable substantive law or procedural rule.[25] An example is provided by
Section 4, Rule 3 of the Rules of Court:

Sec. 4. Spouses as parties. Husband and wife shall sue or be sued jointly,
except as provided by law.

Pro-forma parties can either be indispensable, necessary or neither

indispensable nor necessary. The third case occurs if, for example, a husband
files an action to recover a property which he claims to be part of his exclusive
property. The wife may have no legal interest in such property, but the rules
nevertheless require that she be joined as a party.

In cases of pro-forma parties who are neither indispensable nor

necessary, the general rule under Section 11, Rule 3 must be followed: such
non-joinder is not a ground for dismissal. Hence, in a case concerning an action
to recover a sum of money, we held that the failure to join the spouse in that
case was not a jurisdictional defect.[26] The non-joinder of a spouse does not
warrant dismissal as it is merely a formal requirement which may be cured by
amendment.[27]
 Conversely, in the instances that the pro-forma parties are also
indispensable or necessary parties, the rules concerning indispensable or
necessary parties, as the case may be, should be applied. Thus, dismissal is
warranted only if the pro-forma party not joined in the complaint is an
indispensable party.

Milagros de Guzman, being presumed to be a co-owner of the credits

allegedly extended to the spouses Carandang, seems to be either an
indispensable or a necessary party. If she is an indispensable party, dismissal
would be proper. If she is merely a necessary party, dismissal is not warranted,
whether or not there was an order for her inclusion in the complaint pursuant
to Section 9, Rule 3.

Article 108 of the Family Code provides:

Art. 108. The conjugal partnership shall be governed by the rules on the
contract of partnership in all that is not in conflict with what is expressly determined
in this Chapter or by the spouses in their marriage settlements.

This provision is practically the same as the Civil Code provision it superceded:

Art. 147. The conjugal partnership shall be governed by the rules on the
contract of partnership in all that is not in conflict with what is expressly determined
in this Chapter.

In this connection, Article 1811 of the Civil Code provides that [a]
partner is a co-owner with the other partners of specific partnership
property. Taken with the presumption of the conjugal nature of the funds used
to finance the four checks used to pay for petitioners stock subscriptions, and
with the presumption that the credits themselves are part of conjugal funds,
Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged
credit.

Being co-owners of the alleged credit, Quirino and Milagros de Guzman

may separately bring an action for the recovery thereof. In the fairly recent
cases of Baloloy v. Hular[28] and Adlawan v. Adlawan,[29] we held that, in a co-
ownership, co-owners may bring actions for the recovery of co-owned
property without the necessity of joining all the other co-owners as co-
plaintiffs because the suit is presumed to have been filed for the benefit of his
co-owners. In the latter case and in that of De Guia v. Court of Appeals,[30] we
also held that Article 487 of the Civil Code, which provides that any of the co-
owners may bring an action for ejectment, covers all kinds of action for the
recovery of possession.[31]
In sum, in suits to recover properties, all co-owners are real parties in
interest. However, pursuant to Article 487 of the Civil Code and relevant
jurisprudence, any one of them may bring an action, any kind of action, for the
recovery of co-owned properties. Therefore, only one of the co-owners,
namely the co-owner who filed the suit for the recovery of the co-owned
property, is an indispensable party thereto. The other co-owners are not
indispensable parties. They are not even necessary parties, for a complete
relief can be accorded in the suit even without their participation, since the
suit is presumed to have been filed for the benefit of all co-owners.[32]

We therefore hold that Milagros de Guzman is not an indispensable

party in the action for the recovery of the allegedly loaned money to the
spouses Carandang. As such, she need not have been impleaded in said suit,
and dismissal of the suit is not warranted by her not being a party thereto.

Whether or not respondents were able to

prove the loan sought to be collected from
petitioners

In the second and third issues presented by the spouses Carandang, they
claim that the de Guzmans failed to prove the alleged loan for which the
spouses Carandang were held liable. As previously stated, spouses Quirino and
Milagros de Guzman paid for the stock subscriptions of the spouses
Carandang, amounting to P336,375.00. The de Guzmans claim that these
payments were in the form of loans and/or advances and it was agreed upon
between the late Quirino de Guzman, Sr. and the spouses Carandang that the
latter would repay him. Petitioners, on the other hand, argue that there was an
oral pre-incorporation agreement wherein it was agreed that Arcardio
Carandang would always maintain his 46% equity participation in the
corporation even if the capital structures were increased, and that Quirino de
Guzman would personally pay the equity shares/stock subscriptions of
Arcardio Carandang with no cost to the latter.

On this main issue, the Court of Appeals held:

[The spouses Carandang] aver in its ninth assigned error that [the de
Guzmans] failed to prove by preponderance of evidence, either the existence of the
purported loan or the non-payment thereof.

Simply put, preponderance of evidence means that the evidence as a whole

adduced by one side is superior to that of the other. The concept of preponderance
of evidence refers to evidence that is of greater weight, or more convincing, than
that which is offered in opposition to it; it means probability of truth.

[The spouses Carandang] admitted that it was indeed [the de Guzmans] who
paid their stock subscriptions and their reason for not reimbursing the latter is the
alleged pre-incorporation agreement, to which they offer no clear proof as to its
existence.

It is a basic rule in evidence that each party must prove his affirmative
allegation. Thus, the plaintiff or complainant has to prove his affirmative allegations
in the complaints and the defendant or respondent has to prove the affirmative
allegations in his affirmative defenses and counterclaims.[33]
 The spouses Carandang, however, insist that the de Guzmans have not
proven the loan itself, having presented evidence only of the payment in favor
of the Carandangs. They claim:

It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr.
A decides to pay for Mr. Bs obligation, that payment by Mr. A cannot, by any stretch
of imagination, possibly mean that there is now a loan by Mr. B to Mr. A. There is a
possibility that such payment by Mr. A is purely out of generosity or that there is a
mutual agreement between them. As applied to the instant case, that mutual
agreement is the pre-incorporation agreement (supra) existing between Mr. de
Guzman and the petitioners --- to the effect that the former shall be responsible for
paying stock subscriptions of the latter. Thus, when Mr. de Guzman paid for the
stock subscriptions of the petitioners, there was no loan to speak of, but only a
compliance with the pre-incorporation agreement.[34]

The spouses Carandang are mistaken. If indeed a Mr. A decides to pay

for a Mr. Bs obligation, the presumption is that Mr. B is indebted to Mr. A for
such amount that has been paid. This is pursuant to Articles 1236 and 1237 of
the Civil Code, which provide:

Art. 1236. The creditor is not bound to accept payment or performance by a

third person who has no interest in the fulfillment of the obligation, unless there is a
stipulation to the contrary.

Whoever pays for another may demand from the debtor what he has
paid, except that if he paid without the knowledge or against the will of the debtor,
he can recover only insofar as the payment has been beneficial to the debtor.

Art. 1237. Whoever pays on behalf of the debtor without the knowledge or
against the will of the latter, cannot compel the creditor to subrogate him in his
rights, such as those arising from a mortgage, guarantee, or penalty.
 Articles 1236 and 1237 are clear that, even in cases where the debtor
has no knowledge of payment by a third person, and even in cases where the
third person paid against the will of the debtor, such payment would produce a
debt in favor of the paying third person. In fact, the only consequences for the
failure to inform or get the consent of the debtor are the following: (1) the
third person can recover only insofar as the payment has been beneficial to the
debtor; and (2) the third person is not subrogated to the rights of the creditor,
such as those arising from a mortgage, guarantee or penalty.[35]

We say, however, that this is merely a presumption. By virtue of the

parties freedom to contract, the parties could stipulate otherwise and thus, as
suggested by the spouses Carandang, there is indeed a possibility that such
payment by Mr. A was purely out of generosity or that there was a mutual
agreement between them. But such mutual agreement, being an exception to
presumed course of events as laid down by Articles 1236 and 1237, must be
adequately proven.

The de Guzmans have successfully proven their payment of the spouses

Carandangs stock subscriptions. These payments were, in fact, admitted by the
spouses Carandang. Consequently, it is now up to the spouses Carandang to
prove the existence of the pre-incorporation agreement that was their defense
to the purported loan.

Unfortunately for the spouses Carandang, the only testimony which

touched on the existence and substance of the pre-incorporation agreement,
that of petitioner Arcardio Carandang, was stricken off the record because he
did not submit himself to a cross-examination of the opposing party. On the
other hand, the testimonies of Romeo Saavedra,[36] Roberto S.
Carandang,[37]Gertrudes Z. Esteban,[38] Ceferino Basilio,[39] and Ma. Luisa
Carandang[40] touched on matters other than the existence and substance of
the pre-incorporation agreement. So aside from the fact that these witnesses
had no personal knowledge as to the alleged existence of the pre-
incorporation agreement, the testimonies of these witnesses did not even
mention the existence of a pre-incorporation agreement.
Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa
Carandang even contradicted the existence of a pre-incorporation agreement
because when they were asked by their counsel regarding the matter of the
check payments made by the late Quirino A. de Guzman, Sr. in their behalf,
they said that they had already paid for it thereby negating their own defense
that there was a pre-incorporation agreement excusing themselves from
paying Mr. de Guzman the amounts he advanced or loaned to them. This basic
and irrefutable fact can be gleaned from their testimonies which the private
respondents are quoting for easy reference:

a. With respect to the testimony of Ma. Luisa Carandang

Q: Now, can you tell this Honorable Court how do you feel with respect to the
Complaint of the plaintiff in this case charging you that you paid for this year
and asking enough to paid (sic) your tax?

A: We have paid already, so, we are not liable for anything payment (sic).[41]

b. With respect to the testimony of Arcadio Carandang

Q: How much?

A: P40,000.00 to P50,000.00 per month.

Q: The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts
issued for the payment of your shares; which receipts were marked as
Exhibits G to L (Plaintiff).
 Im showing to you these receipts so marked by the plaintiff as their exhibits which
were issued in the name of Ma. Luisa Carandang, your wife; and also,
Arcadio M. Carandang. Will you please go over this Official Receipt and state
for the records, who made for the payment stated in these receipts in your
name?

A: I paid for those shares.[42]

There being no testimony or documentary evidence proving the

existence of the pre-incorporation agreement, the spouses Carandang are
forced to rely upon an alleged admission by the original plaintiff of the
existence of the pre-incorporation agreement.

Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted
the existence of the pre-incorporation agreement by virtue of paragraphs 13
and 14 of their Answer and paragraph 4 of private respondents Reply.

Paragraphs 13 and 14 of petitioners Answer dated 7 July 1992 state in full:

13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant

Arcadio M. Carandang to a joint venture by pooling together their technical
expertise, equipments, financial resources and franchise.Plaintiff proposed
to defendant and mutually agreed on the following:

1. That they would organize a corporation known as Mabuhay Broadcasting

Systems, Inc.

2. Considering the technical expertise and talent of defendant Arcadio M.

Carandang and his new equipments he bought, and his skill in repairing and
modifying radio/communication equipments into high proficiency, said
defendant would have an equity participation in the corporation of 46%, and
plaintiff 54% because of his financial resources and franchise.
 3. That defendant would always maintain his 46% equity participation in the
corporation even if the capital structures are increased, and that plaintiff
would personally pay the equity shares/stock subscriptions of defendant
with no cost to the latter.

4. That because of defendants expertise in the trade including the marketing

aspects, he would be the President and General Manager, and plaintiff the
Chairman of the Board.

5. That considering their past and trustworthy relations, they would maintain
such relations in the joint venture without any mental reservation for their
common benefit and success of the business.

14. Having mutually agreed on the above arrangements, the single proprietorship of
plaintiff was immediately spun-off into a corporation now known as
Mabuhay Broadcasting System, Inc. The incorporators are plaintiff and his
family members/nominees controlling jointly 54% of the stocks and
defendant Arcadio M. Carandang controlling singly 46% as previously
agreed.[43]

Meanwhile, paragraphs 3 and 4 of private respondents Reply dated 29 July

1992 state in full:

3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only

insofar the plaintiff and defendant Arcadio M. Carandang organized a corporation
known as Mabuhay Broadcasting Systems, Inc.Plaintiff specifically denies the other
allegations in paragraph 13 of the Answer, the same being devoid of any legal or
factual bases. The truth of the matter is that defendant Arcadio M. Carandang was
not able to pay plaintiff the agreed amount of the lease for a number of months
forcing the plaintiff to terminate lease. Additionally, the records would show that it
was the defendant Arcadio M. Carandang who proposed a joint venture with the
plaintiff.
 It appears that plaintiff agreed to the formation of the corporation
principally because of a directive of then President Marcos indicating the need to
broaden the ownership of radio broadcasting stations. The plaintiff owned the
franchise, the radio transmitter, the antenna tower, the building containing the
radio transmitter and other equipment. Verily, he would be placed in a great
disadvantage if he would still have to personally pay for the shares of defendant
Arcadio M. Carandang.

4. Plaintiff admits the allegations in paragraph 14 of the Answer.[44]

In effect, the spouses Carandang are relying on the fact that Quirino de
Guzman stated that he admitted paragraph 14 of the Answer, which
incidentally contained the opening clause (h)aving mutually agreed on the
above arrangements, x x x.

Admissions, however, should be clear and unambiguous. This purported

admission by Quirino de Guzman reeks of ambiguity, as the clause (h)aving
mutually agreed on the above arrangements, seems to be a mere introduction
to the statement that the single proprietorship of Quirino de Guzman had been
converted into a corporation. If Quirino de Guzman had meant to admit
paragraph 13.3, he could have easily said so, as he did the other paragraphs he
categorically admitted. Instead, Quirino de Guzman expressly stated the
opposite: that (p)laintiff specifically denies the other allegations of paragraph
13 of the Answer.[45] The Reply furthermore states that the only portion of
paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and
only insofar as it said that Quirino de Guzman and Arcardio Carandang
organized Mabuhay Broadcasting Systems, Inc.[46]

All the foregoing considered, we hold that Quirino de Guzman had not
admitted the alleged pre-incorporation agreement. As there was no admission,
and as the testimony of Arcardio Carandang was stricken off the record, we are
constrained to rule that there was no pre-incorporation agreement rendering
Quirino de Guzman liable for the spouses Carandangs stock subscription.The
payment by the spouses de Guzman of the stock subscriptions of the spouses
Carandang are therefore by way of loan which the spouses Carandang are
liable to pay.

Whether or not the liability of the spouses

Carandang is joint and solidary

Finally, the Court of Appeals also upheld the RTC Decision insofar as it
decreed a solidary liability. According to the Court of Appeals:

With regards (sic) the tenth assigned error, [the spouses Carandang]
contend that:

There is absolutely no evidence, testimonial or documentary, showing that

the purported obligation of [the spouses Carandang] is joint and solidary. x x x

Furthermore, the purported obligation of [the spouses Carandang] does not

at all qualify as one of the obligations required by law to be solidary x x x.

It is apparent from the facts of the case that [the spouses Carandang] were
married way before the effectivity of the Family Code hence; their property regime
is conjugal partnership under the Civil Code.

It must be noted that for marriages governed by the rules of conjugal

partnership of gains, an obligation entered into by the husband and wife is
chargeable against their conjugal partnership and it is the partnership, which is
primarily bound for its repayment. Thus, when the spouses are sued for the
enforcement of the obligation entered into by them, they are being impleaded in
their capacity as representatives of the conjugal partnership and not as independent
debtors, such that the concept of joint and solidary liability, as between them, does
not apply.[47]

The Court of Appeals is correct insofar as it held that when the spouses
are sued for the enforcement of the obligation entered into by them, they are
being impleaded in their capacity as representatives of the conjugal
partnership and not as independent debtors. Hence, either of them may be
sued for the whole amount, similar to that of a solidary liability, although the
amount is chargeable against their conjugal partnership property. Thus, in the
case cited by the Court of Appeals, Alipio v. Court of Appeals,[48] the two sets of
defendant-spouses therein were held liable forP25,300.00 each, chargeable to
their respective conjugal partnerships.

WHEREFORE, the Decision of the Court of Appeals, affirming the

judgment rendered against the spouses Carandang, is hereby AFFIRMED with
the following MODIFICATION: The spouses Carandang are ORDERED to pay the
following amounts from their conjugal partnership properties:

(1) P336,375.00 representing the spouses Carandangs loan to Quirino

de Guzman; and
(2) Interest on the preceding amount at the rate of twelve percent
(12%) per annum from 5 June 1992 when the complaint was filed
until the principal amount can be fully paid; and
(3) P20,000.00 as attorneys fees.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-22383 October 6, 1924

THE PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.
MARGARITA QUINTOS E YPARRAGUIRRE and ANGEL A. ANSALSO, defendants-
appellants.
Angel A. Ansaldo for appellants.
Roman J. Lacson for appellee.

VILLAMOR, J.:

The appellants pray for the dismissal of the complaint with costs against the plaintiff, alleging that
the judgment appealed from is erroneous: (1) Because it holds that the document Exhibit A does
not contain anything that makes the plaintiff agent of the defendants; (2) because it finds without
any ground that the defendant were husband and wife when they executed said document; (3)
because upon this finding, it considers unnecessary to discuss whether or not the obligation
evidence by said document is solidary between the defendants (4) because to maintain such
opinion amounts to compelling the defendants to comply with said obligation in a manner distinct
from that stipulated in the contract; and (5) because it sanctions an arbitrary, unjust and illegal
procedure.

The Honorable Pedro Concepcion, judge, who tried this case, rendered decision in the following
terms:

The plaintiff seeks to recover of the defendants the sum of P31,785.96, the amount of an
alleged overdraft against them and in favor of the plaintiff bank, with interest thereon at 8
per cent per annum from October 1, 1922.

It appears from the evidence that in a document dated June 20, 1918, the Philippine
National Bank granted the defendants a credit to the amount of P31,284, and to secure
the payment thereof, as well as the interest and costs, the defendants mortgaged and
pledged to the bank certain certificates of one hundred fifty-eight shares of stock of the
Bank of the Philippine Islands of the nominal value of P200 each. Later on, a certificate of
fifty shares and another of forty were substituted by others of 10 and 30 shares,
respectively. Besides these shares, the defendants delivered to the bank, as additional
securities, fifty shares of stock of the "Compaia Naviera" of the nominal value of P100
each; eighty shares of stock of the Davao Agriculture and Commercial Company of P100
each, and 10 second liberty bonds. These bonds were sold by the plaintiff bank on or
before August 19, 1922, having realized the sum of P2,360 from the sale thereof. (Exhibit
3.)

On August 21, 1920, the herein defendant, Mr. Angel Ansaldo, in his answer to a letter of
the bank addressed to him or to his wife, his codefendant Margarita Q. de Ansaldo,
stated, as may be seen in Exhibit B, that the balance in his current account in favor of
said bank in the sum of P33,558.445 on July 31, 1920, had been examined by him and
found correct. This balance with the interest due from the said date up to September 30,
1922, amounted to P41,212.05 and after deducting the credit and deposits from August
1, 1920, to September 30, 1922, which amount to P9,426.09, there remains a balance of
P31,785.96, payment of which is claimed in the complaint.

And the complaint was filed because between April 2, 1921, and July 22, 192, the date of
the letter Exhibit 6, the defendant Mr. Ansaldo was several times required to pay his debt,
the securities given having been found to be insufficient to secure the payment of his
obligations, but the defendants failed to give the new additional securities demanded.

The defendants discuss in the first place the nature of the obligation sued on, maintaining
that the same is not of a solidary nature because, say they, there is nothing in it that
expressly determines said character, and therefore it binds only those who have
contacted the same to the extent of their share in said obligation; and in connection with
this point it was attempted to prove that the defendant Margarita Q. de Ansaldo, making
use of the credit granted, has received from the bank only the sum of P10,000 (Exhibit 5).
As an answer to the question raised the attorney for the bank calls attention to Exhibit A
where it appears that the defendant Angel A. Ansaldo "and or" Margarita A. de Ansaldo,
both or either of them indiscriminately, could sign checks against the bank in their current
account.

The court is of the opinion that it is not necessary to discuss whether the obligation in
question is solidary or joint, because in either case this debt is in the last analysis
chargeable to the conjugal partnership of the defendant spouses. According to article
1408 of the Civil Code, all the debts and obligations contracted during the marriage by
the husband, as well as those incurred by the wife in those cases in which she may
legally bind the partnership, are chargeable to the conjugal partnership. In the instant
case, the defendant Margarita Q. de Ansaldo joined her husband in the execution of the
document, evidencing the obligation in question, on June 20, 1918, Exhibit A. (See
Joaquin vs. Avellana, 11 Phil., 249; Fulgencio vs. Gatchalian, 21 Phil., 252;
Falcon vs. Manzano, 15 Phil., 441.)

Another question raised, although indirectly, by the defendants is that, this being, as it is,
a case of a loan for an indefinite period of time they were not asked to pay in accordance
with law, articles 313 and 316 of the Code of Commerce. This contention is untenable.
Under the provision of section 33 of Act No. 2938, amending the charter of the Philippine
National Bank, if, from any cause whatsoever, any of the securities specified for the loans
provided for therein, or accepted by said bank as security for loans should decline or
depreciate in market value wholly or in part, said bank may demand additional securities
or may forthwith declare such obligation due and payable; and it is a fact admitted by the
defendants themselves that the securities given by them have suffered a considerable
depreciation and it is a fact proven that they were required to give additional securities
but failed to do so.

If the securities were found to have depreciated in value, say the defendants, "the plaintiff
bank's remedy was the one provided in the document executed by the defendants in its
favor and in accordance with its own charter." According to the contract, it may hold or
sell the securities above mentioned although as an agent (articles 1710, 1713, 1714,
1718, 1719, and 1796 of the Civil Code); and in accordance with its charter (section 42,
Act No. 2612), said sale may be ordered 15 days after a demand in writing is made upon
the debtor to increase the amount thereof, if in the meantime said debtor should have
failed to comply with this requirement . . . "The plaintiff, say they, cannot be considered
authorized to be negligent, as soon as it shall have learned that the securities had begun
to depreciate, as compared with the value they had when they were delivered; for then it
neither would comply with the agency stipulated in the document in its favor, which would
render it liable, nor could in justice claim from the debtor what by its own negligence it
may have failed to receive." As an answer to this, it may be said that:

". . . it must be borne in mind that it is a recognized doctrine in the matter of

suretyship that with respect to the surety, the creditor is under no obligation to
display any diligence in the enforcement of his rights as a creditor. His mere
inaction, indulgence, passiveness, or delay in proceeding against the principal
debtor, or the fact that he did not enforce the guaranty or apply to the payment of
such funds as were available, constitute no defense at all for the surety, unless
the contract expressly requires diligence and promptness on the part of the
creditor, which is not in the case in the present action." (Clark vs. Sellner, 42
Phil., 384.

Furthermore, there is nothing in the document evidencing the contract which makes the
plaintiff, as the defendants believe, their agent with the obligation to sell the securities to
the document, has a right, not an obligation, to elect to enforce the securities in the
manner it now does by bringing this action.
 As to the amount of the obligation, the defendants argue that the acknowledgment of the
debit balance on July 31, 1920, in the amount of P33,548.55, (Exhibit B), is not any
evidence that may legally bind the defendant Margarita Q. de Ansaldo, who has not
accepted it as correct. The truth, however, is that the defendant Mr. Ansaldo who gave
his conformity with the aforesaid balance is the husband of the other defendant and the
legal manager of the property of the conjugal partnership which is liable for the payment
of this debt.

The interest computed was likewise discussed in this case, the defendants claiming that
the same was not fixed with their consent, nor does there exist, say they, any proof that it
was ever fixed by the Board of Directors of the bank. It appears, however, from the
evidence of the plaintiff that the National Bank had authorized various officers thereof to
fix certain rate of interest on certain occasions; as for instance, the rate of interest for the
months of August to September, 1920, was raised from 12 to 8 per cent. At all events, we
believe that the defendants have no right to raise this question because they have paid
interest at the rate of 9 per cent per annum, as appears from the document marked
Exhibit I.

For all of the foregoing, judgment is rendered sentencing the defendants to pay the
plaintiff bank the sum of thirty-one thousand seven hundred eighty-five pesos and ninety-
six centavos (P31,785.96), with interest thereon at the rate of 8 per cent per annum from
October 1, 1922, until full payment, with the costs; in case of failure to pay, let the
certificates of shares described in Exhibit A be sold, and if the proceeds of the sale of
said shares are not sufficient to cover the whole amount of the debt, let an execution
issue against any property of the conjugal partnership of the defendants and, in default
thereof, against the private property of each of them, sufficient to cover the whole amount
of the balance that may be remaining unpaid.

So ordered.

Manila, P. I., February 5, 1924.

(Sgd.) PEDRO CONCEPCION

Judge

As the transcript of the testimony of the witnesses was not forwarded to this court, we cannot,
according to the constant jurisprudence of this court, review the evidence and so we have to
abide by the findings of fact set forth in the judgment of the trial court.

We agree with the appellants that, according to the contract of pledge Exhibit A, attached to the
complaint, the defendants authorized the plaintiff to act as their agent with full power and
authority to dispose of the effects pledged in the manner stipulated in said contract; but it
appears that the plaintiff had also an option, not an obligation precisely, to enforce the securities
given.

The question whether or not appellants executed the aforesaid document Exhibit A as husband
and wife was decided by the trial court in the sense that the defendant appellant Mr. Ansaldo is
the husband of the other defendant Doa Margarita Q. e Iparraugirre. For the reason above
given we cannot alter this finding of the trial court and consequently if the defendants are
husband and wife, it is immaterial whether the debt was contracted by one or the other, for in
either case as the debt was contracted during the marriage of the defendants it must be paid for
the account of the conjugal partnership in accordance with article 1408 of the Civil Code. 1awph!l.net

After a thorough study of the judgment appealed from, we do not find therein any substantial
error that justifies the reversal thereof and therefore the same must be, as is hereby, affirmed
with costs against the appellants. So ordered.
Johnson, Street, Malcolm, Avancea, Ostrand and Romualdez, JJ., concur.

DECISION UPON MOTION FOR RECONSIDERATION

December 10, 1924.

VILLAMOR, J.:

In view of the juridical importance of the question raised in this motion, wherein it is maintained
that the obligation of the defendants is chargeable to the conjugal partnership, and not to the
private property of the spouses, and much less to the private property of Margarita Quintos de
Ansaldo, we deem it well to enlarge upon our decision published October 6, 1924.

It will be remembered that the defendants signed a document of pledge in favor of the plaintiff
Philippine National Bank to secure the payment of a loan in current account to the amount of
P31,284. In said document it does not clearly appear that the signers were husband and wife,
although there is proof in the record tending to show their civil status as husband and wife. Nor
does its appear in the said document that the signers have bound themselves solidarily to pay
the debt owing to plaintiff.

The judgment appealed from, affirmed by this court in a decision published October 6, 1924,
sentences the defendants to pay the plaintiff bank the sum of thirty-one thousand seven hundred
eighty-five pesos and ninety-six centavos (P31,785.96) with interest thereon at 8 per cent per
annum from October 1, 1922, until full payment, with the costs; providing that, in default of
payment, the certificates of shares described in Exhibit A must be sold, and in case the proceeds
of the sale were not sufficient to cover the whole amount of the debt, an execution shall issue
against the property of the conjugal partnership of the defendants, and, if no such property was
found, then against any private property of each of them sufficient to cover the whole amount of
the balance remaining unpaid.

There can be no doubt that the property pledged being insufficient, the property of the conjugal
partnership is liable for this obligation in accordance with article 1408 of the Civil Code, because
the same was contracted by the spouses during the marriage; but in default of property of the
conjugal partnership (Article 1401), what is the liability of the spouses as to the private property
(article 1396) of each of them?

In this jurisdiction we do not believe that a similar question was heretofore ever raised and
decided, and so far as the research of the write hereof discloses, it finds no precedent in the
Spanish jurisprudence.

By express provision of the Civil Code, the conjugal partnership begins to exist at the celebration
of the marriage, and the separation of the properties between the spouses shall take place
(article 1432) only when it is expressly stipulated in the marriage settlement, or is judicially
decreed, or in the case provided in article 50 of the Code. This conjugal partnership however, is
confined to the properties mentioned in article 1401 of the Civil Code, to wit: (a) Those acquired
by onerous title during the marriage at the expense of the common property whether the
acquisition is made for the community or for only one of them; (b) those obtained by the industry,
salary or labor of the spouses or any of them; (c) the fruits, rents or interest received or accruing
during the marriage, from the common or the private property of each of the spouses. The
partnership does not produce the merger of the properties of each spouse. Each of them,
notwithstanding the existence of the partnership, continues to be the owner of what he or she
had before contracting marriage, as well as of what he or she may have acquired later by
lucrative title, by right of redemption, or by exchange with his or her property, or by purchase with
his or her money.
The ganancial partnership, to use the expression of Mr. Manresa, is the same conjugal
partnership constituted, in its economical aspect, under the system established by the law as
suppletory. It is, therefore, formed by the husband and the wife, each with his or her own
property and with his or her own debts. The legislator does not intend to effect a mixture or
merger of those debts of properties between the spouses. The partnership maintains the
separation of the properties brought by each spouse from those that he or she may substitute for
them, or privately acquire afterwards by lucrative title.

Under the provisions of the Code it appears evident that the conjugal partnership does not
produce the merger of properties, nor does it cause the personality of the wife to disappear; on
the contrary, the law established absolute separation of capitals a complete independence of
the capital account from the account of benefits pertaining to the conjugal partnership, all of
which constitutes a unsurmountable obstacle to the presumption of solidarity between spouses.

The question submitted to our consideration presupposes the insolvency of the conjugal
partnership, and as there is no presumption of solidarity of property between the spouses, the
question may be asked, What liability do the partners have with respect to the debts of the
partnership? The legal provisions about conjugal partnership, contained in chapter 5, title 3, book
4, of the Civil Code, do not give an adequate answer to this question; so that we have to resort to
other sources for a solution thereof. Mr. Manresa already indicates in his commentaries on article
1395 that in view of the provisions of the Code regarding conjugal partnership, "the cases will be
rare wherein there would be any need to resort to the suppletory rule of the contract of
partnership; but the law, which does not in any manner pretend having provided for all the
questions that may present themselves in the practice, points out new sources of law to which
resort must be made in order to solve doubtful cases, situations or circumstances not provided in
articles 1392 to 1431." The case now before us is one of them, which requires, in order to be
solved, a resort to the rule on the contract of partnership, prescribed in article 1698, which
provides that the partners are not solidarily liable with respect to the debt of the partnership, and
none can bind the others by a personal act, if they have not given him any power therefor.

The aforecited provision negativating solidarity in the liability of the partners is a consequence of
the conclusive rule of article 1137, of general application to all kinds of obligation, to the effect
that in obligations created by the will of the parties, solidarity will exist only when it is expressly
determined in the title thereof, giving them such a character. Therefore if solidarity exists only by
stipulation, or by law, it is evident that the partner cannot be solidarity liable for the debts of the
partnership, because, as Manresa says, there is no legal provision imposing such burden upon
him, and because the same is not only not authorized by the contract of partnership, but is
contrary to the nature thereof, for gain being the consideration of the obligation, the latter cannot
be extended beyond the interest that the partner may have therein which is proportional to his
share.

Taking into account that the contract of pledge signed by the defendants does not show that they
have contracted a solidary obligation, it is our opinion, and so decide, that the properties given as
pledge being insufficient, the properties of the conjugal partnership of the defendants are liable
for the debt to the plaintiff, and in default thereof, they are jointly liable for the payment thereof.

It being understood that the judgment appealed from is modified in the sense above stated, the
motion of the appellants is denied. So ordered.

Johnson, Street, Malcolm, Avancea, Ostrand and Romualdez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION
G.R. No. L-25788 April 30, 1980

PACIFICO C. DEL MUNDO, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, ANTONIO, EUGENIA, DELFIN and MARCIANA,
all surnamed ALVAREZ, and SIMPLICIO BALCOS, respondents.

Manuel P. Dumatol for petitioner.

Balcos & Salazar for respondents.

DE CASTRO, J.:

Petitioner seeks in this petition for certiorari to reverse in toto the decision of the Court of Appeals
promulgated on 3 January 1966 in CA-G. R. No. 28276-R, entitled "Antonio Alvarez, Eugenia
Alvarez, Delfin Alvarez, Marciana Alvarez, and Simplicio Balcos, plaintiffs-appellants vs. Isidra de
la Cruz, Teodora Alvarez and Pacifico C. del Mundo, defendants-appellees, the dispositive
portion of which reads: 1

WHEREFORE, the extrajudicial partition executed by Isidra de la Cruz and

Teodora Alvarez on July 31, 1956 acknowledged before Notary Public Benjamin
N. Domingo and recorded as document No. 143 on page 43, book 1, series of
1956 of his notarial registry, copy of which is attached to the records and marked
as Exhibit G is hereby declared null and void and of no force nor effect.

Transfer Certificate of Title No. 32529 of the land records for Quezon City is
hereby declared cancelled and of no force and effect. In lieu thereof, the Register
of Deeds of Quezon City is hereby ordered to issue a new Transfer Certificate of
Title in the names of Antonio Alvarez, Eugenia Alvarez, Delfin Alvarez, as co-
owners pro indiviso in the following proportions: To each of Antonio, Eugenia,
Delfin, Marciana and Teodora all surnamed Alvarez, 13/75 share in full ownership
and 2/75 share in naked ownership, to Isidra de la Cruz 10/75 share in full.

The Court of Appeals found undisputed the following facts. 2

Plaintiffs (herein private respondents) Antonio, Eugenia, Delfin and Marciana all
surnamed Alvarez are legitimate children of Agripino Alvarez and his first wife
Alejandra Martin. After the death of Alejandra Martin, Agripino Alvarez married
Isidra de la Cruz in February 1927 and they had one child named Teodora
Alvarez.

On December 23, 1947, Agripino Alvarez died intestate, survived by his widow
Isidra and his five children, the four plaintiffs and Teodora.

On July 31, 1956, a public instrument entitled 'Extra-judicial Partition with

Absolute Sale of Shares' was executed by the widow Isidra and her daughter
Teodora Alvarez (Exhibit G) wherein, after reciting that they are 'the legal and
absolute heirs, the first being the wife and the second, is the daughter of the
deceased Agripino Alvarez', they adjudicated to themselves in equal shares the
property covered by Transfer Certificate of Title No. 42562 of the land records for
Rizal and in the same instrument, both Isidra and her daughter Teodora sold the
entire property to Pacifico C. del Mundo who registered the instrument in August
 1956. As a result of such registration, Transfer Certificate of Title No. 32529 of
the land records for Quezon City was issued in the name of del Mundo.

On February 10, 1958, the children of Agripino by his first wife sold to Simplicio
Balcos four tenths (4/10) undivided share in the property in question (which they
claim as their share in the estate of their father). The deed of sale has never been
registered.

On May 31, 1958, said children by the first marriage of Agripino Alvarez and their
vendee Simplicio Balcos brought the present action against Isidra de la Cruz and
her daughter Teodora Alvarez as well as against the vendee Pacifico del Mundo
before the Court of First Instance of Rizal asking that judgment be rendered:

1. Declaring the Extra-Judicial Partition with Absolute Sale of Shares Annex 'B',
null and void;

2. Declaring null and void T.C.T. No. 32529, Registry of Deeds for Quezon City,
and reviving T.C.T. No. 42562, Registry of Deeds for the Province of Rizal;

3. Declaring the plaintiffs Alvarez' entitled to an undivided share of 1/10 each of

the lot in question with right to dispose of the same;

4. Ordering the defendant Pacifica C. del Mundo, married to Ester dela Cruz and
plaintiff Simplicio Balcos to enter into and agreement or extra-judicial petition of
the property in accordance with their participation as purchasers of the shares of
the original heirs;

5. Ordering the defendants to pay attorney's fees in the sum of P1,000.00 and to
pay the costs.

After trial the Court of First Instance of Rizal rendered its decision 3 dated 20 June 1960 dismissing
private respondents' complaint, holding that the property in question is the paraphernal property of
Isidra de la Cruz.

Their motion for reconsideration of the above decision having been denied, private respondents
appealed to the Court of Appeals the dispositive portion of whose decision was quoted at the
beginning of this decision, said Court sustaining the appeal thereby reversing the judgment of the
lower court.

Only petitioner Pacifico del Mundo filed a motion for reconsideration which was, however, denied
by the Court of Appeals on 21 February 1966. 4 Hence, the instant petition filed by him to review the
5
decision of the appellate court, following assignment of errors.

THE COURT OF APPEALS ERRED IN DECLARING THE PROPERTY IN

QUESTION AS CONJUGAL PROPERTY OF AGRIPINO ALVAREZ AND ISIDRA
DE LA CRUZ AND NOT AS PARAPHERNAL PROPERTY OF ISIDRA DE LA
CRUZ ALONE.

II

THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION OF

TRANSFER CERTIFICATE OF TITLE NO. 32529 OF THE REGISTRY OF
 DEEDS OF QUEZON CITY WHICH IS IN THE NAME OF HEREIN PETITIONER
APPELLANT.

III

THE COURT OF APPEALS ERRED IN ORDERING THE REGISTER OF DEEDS

OF QUEZON CITY TO ISSUE A NEW TRANSFER CERTIFICATE OF TITLE IN
THE NAMES OF ANTONIO ALVAREZ, EUGENIA ALVAREZ, DELFIN
ALVAREZ, MARCIANA ALVAREZ AND TEODORA ALVAREZ AS CO-OWNERS
PRO-INDIVISO IN THE FOLLOWING PROPORTIONS: TO EACH OF
ANTONIO, EUGENIA, DELFIN, MARCIANA AND TEODORA, ALL SURNAMED
ALVAREZ, 13/75 SHARE IN FULL OWNERSHIP AND 2/75 SHARE IN NAKED
OWNERSHIP: TO ISIDRA DE LA CRUZ, 10/75 SHARE IN FULL.

The pivotal question thus presented in this petition is whether the property formerly covered by
Transfer Certificate of Title No. 42562 (Rizal) now Transfer Certificate of Title No. 32529
(Quezon City) is the conjugal property of Agripino Alvarez and Isidra de la Cruz or the
paraphernal property of the latter alone. Petitioner maintains that it is the paraphernal property of
Isidra de la Cruz as ruled by the lower court because of two grounds, namely: 6 "(1) the admission
by Agripino Alvarez in Exhibit F, the deed of sale executed by Simplicio Dantes and Emilia Rivera of
the property in question to Isidra de la Cruz, that the said property is Isidras paraphernal property';
and (2) the said admission operates as estoppel against Agripino Alvarez and/or his heirs, namely,
the respondents-appellees in the instant case, from claiming any interest in said property, adverse to
that of Isidra de la Cruz and/or transferee or persons privy to her.

Private respondents, on the other hand, seek to uphold the decision of the respondent Court of
Appeals which, as aforestated, ruled in favor of the conjugal nature of the property and
discredited the evidence of petitioner, as well as that of his co-defendants in the court a quo,
regarding the purchase of the property by Isidra de la Cruz prior to her marriage with Agripino, by
saying, inter alia that: 7

... If the sale by Juan Dantes and his wife to Isidra is true and was really not
reduced to writing for the reasons given by Simplicio, why is it that Juan Dantes,
in executing the deed of sale in favor of Simplicio stated in the deed of sale that
he sold the entire lot of over three hectares to Simplicio instead of stating that he
previously sold a portion thereof to Isidra and the remainder to Simplicio? Had
this been stated in the deed of sale to Simplicio, there would have been no need
for Simplicio to execute Exhibit F in favor of Isidra de la Cruz.

Moreover, if the property was really sold by Juan Dantes to Isidra in 1920 or
1921. as claimed by the defendants, why is it that in Exhibit F, Simplicio did not
state so? Simplicio stated in said document (Exhibit F) that he was the one
selling the lot to Isidra. Had he stated that he was merely transfering to Isidra the
smaller lot which was not actually purchased by him from Juan Dantes, there
would have been no necessity of making it appear in Exhibit F that the money
used by Isidra was her own paraphernalia property.

Apparently, the question is factual for it involves an examination of the probative value of the
evidence Presented by the litigants or any of them, 8 in order to determine the true nature of the
property in question. While as a rule, the findings of fact of the Court of Appeals are final and
conclusive and cannot be reviewed on appeal to this Court, one of the recognized exceptions to said
rule is when the conclusion made is manifestly mistaken. 9 We are of the opinion that the ruling of the
Court of Appeals is not persuasive, and We are accordingly constrained to hold that it is in error in
concluding that the property in question is conjugal.

The testimony of Marcelo Bernal, which "was wholly corroborated by Simplicio Dantes and
Valentina San Andres" as correctly observed by the lower court, 10 anent the sale of the
questioned property to Isidra in 1920 or 1921 when the latter was then single, it having been admitted
that Agripino married Isidra only in February 1927, appears to be unrebutted by the private
respondents. They place reliance mainly on the deed of sale 11 executed by Simplicio Dantes and his
wife in favor of Isidra de la Cruz, when the latter was already married and where in said deed, no
mention was made about the sale by the original owners to Isidra. They lose sight of the fact,
however, that this deed of sale was executed only for the purpose of recognizing or confirming the
verbal sale made by the original owners to Isidra in 1920 or 1921, long before her marriage to
Agripino in February 1927. This is the very reason why Agripino had to sign in said deed of sale,
declaring that "the money with which Lot No. 1189-C was purchased from the spouses Simplicio
Dantes and Emilia Rivera is her own money, and does not belong to our conjugal property, and
therefore, the said Lot No. 1189-C, is her, Isidra's paraphernal property" (sic). 12 The declaration
aforequoted is of the highest evidentiary value being one against the declarant's own interest. It may
well be presumed that Agripino would not have made the said declaration unless he believed the
same to be true, prejudicial as it is to his children's interests as his heirs, with his first wife. Good faith
is always to be presumed, and a person always takes ordinary care of his concerns. 13 Against these
presumptions, the contrary must be clearly established and proven by sufficient evidence, which is
clearly wanting in the instant case. No explanation was given why the aforesaid declaration should not
be given due weight. It is significant to note that the same was made on 28 February 1941 or more
than six (6) years prior to Agripino's death on 23 December 1947 without his having repudiated the
same. Neither did the private respondents, as heirs, question said declaration. Agripino was,
therefore, clearly in estoppel to deny his declaration. As such, he can lay no claim nor interest in the
questioned property, nor can the private respondents do so, for the person from whom they claim to
have succeeded to the property had no title thereto. Estoppel is effective even on successors in
interest. 14

Moreover, when the question is exclusively between husband and wife, or between one of them
and the heirs of the other, the admission or acknowledgment of one spouse that the money used
to purchase the property came from the other spouse, is evidence against the party making the
admission or his heirs. 15 Likewise, where the husband has been a party to an act of purchase of
immovable property in the name of his wife, which recited that the purchase was made with
paraphernal funds, and that the property was to be and remain paraphernal property, neither he nor
his heirs can be permitted to go behind the deed and contest the wife's title to the property by claiming
that it is conjugal. 16Since the property is the paraphernal property of Isidra, the same having been
acquired by her prior to her marriage with Agripino 17 and having been purchased with her exclusive
or private funds 18 any declaration to the contrary made by her, as well as that of her child, cannot
prevail nor change the character of the property in question. The extra-judicial partition was evidently
an expedient only to facilitate the sale without giving rise to any question as to the legality of the
transmission of the property to Isidra and his daughter, as the death of Agripino Alvarez may
occasion, for the better protection of the vendee, the petitioner herein. If the property were conjugal
the private respondents would have been made parties to the extra-judicial partition and made
signatories thereto. As the Court of First Instance aptly observed.

The Court believed that the Deed of Extra-Judicial Partition submitted in the case
at bar cannot affect or change the paraphernal character of the property in
question. ... Since the deceased Agripino Alvarez has formally and categorically
declared that he has no right or interest whatsoever in the property in question,
the same being paraphernal it follows that his heirs, the plaintiffs herein, have not
inherited any portion or right in the property, as the heirs merely step into the
shoes of the decedent.

Moreover, the law does not provide that separate property becomes conjugal
simply by reason of an extra-judicial partition after the death of one spouse, or by
erroneous conclusions or declarations made later. The Court has noticed that
defendant Isidra de la Cruz affixed only her thumb-mark on the deed of extra-
judicial partition it is therefore obvious that she is illiterate and does not know the
technical intricacies of the law of property. Reason and justice demand that acts
done beyond the manifest understanding of illiterates must not be used to deprive
them of their acquired rights or their property, or as a weapon to work injustice
upon them Hence, the Court is of the opinion that in the instant case the money
 used in the purchase chase of the property subject of litigation is the exclusive
money of defendant Isidra de la Cruz.

From what has been said on the foregoing, We find the first two assigned errors t be well taken.
Since the property involved in this case is the paraphernal property of Isidra, it follows that the
Court of Appeals erred in ordering the cancellation of transfer Certificate of Title No. 32529 of the
Registry of Deeds of Quezon City which is in the name of herein petitioner. The sale between
Isidra and herein petitioner is a perfectly valid sale, although in the document drawn 19 the
property was erroneously treated as conjugal. No valid reason is shown to invalidate the same,
especially so where the persons, herein private respondents, claiming to be entitled to a portion
thereof have been shown to have neither interest nor title thereto.

And finally, the third assigned error is likewise meritorious. As stated beforehand, the Court of
Appeal found that the property in litigation is the conjugal property of the spouses Agripino
Alvarez and Isidra de la Cruz. Granting that finding to be true, said Court should have first
liquidated the conjugal partnership of the spouses and adjudicate one half of the property in favor
of the surviving spouse Isidra, in full ownership; 20 and the other half, to the deceased husband's
heirs, wherein Isidra shall likewise be entitled to a portion thereof in usufruct equal to that
corresponding by way of legitime to each of the legitimate children or descendants who has not
received any betterment 21to be taken from the third at the free disposal of the deceased
parent. 22 This, said Court did not do. Instead, in designating the fractional shares of Agripino's heirs, it
had treated the property as his capital alone. The dispositive portion, therefore, is in conflict with the
basic finding of said Court, which actuation was branded by the petitioner as a showing of "seeming
partiality. 23 Hence, the questioned decision is a nullity, giving justification for its reversal and for Us to
revert to that of the lower court.

UPON THE FOREGOING CONSIDERATIONS, the decision appealed from should be, as it is
hereby, REVERSED and the complaint filed by the private respondents' DISMISSED. No
pronouncements as to costs.

SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

SECOND DIVISION

[G.R. No. 153802. March 11, 2005]

HOMEOWNERS SAVINGS & LOAN BANK, petitioner, vs. MIGUELA

C. DAILO, respondent.

DECISION
TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court, assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 59986
rendered on June 3, 2002, which affirmed with modification the October 18,
1997 Decision[2] of the Regional Trial Court, Branch 29, San Pablo City, Laguna in
Civil Case No. SP-4748 (97).
 The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8,
1967. During their marriage, the spouses purchased a house and lot situated at
Barangay San Francisco, San Pablo City from a certain Sandra Dalida. The subject
property was declared for tax assessment purposes under Assessment of Real
Property No. 94-051-2802. The Deed of Absolute Sale, however, was executed only
in favor of the late Marcelino Dailo, Jr. as vendee thereof to the exclusion of his
wife.[3]
On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of
Attorney (SPA) in favor of one Lilibeth Gesmundo, authorizing the latter to obtain a
loan from petitioner Homeowners Savings and Loan Bank to be secured by the
spouses Dailos house and lot in San Pablo City. Pursuant to the SPA, Gesmundo
obtained a loan in the amount of P300,000.00 from petitioner. As security therefor,
Gesmundo executed on the same day a Real Estate Mortgage constituted on the
subject property in favor of petitioner. The abovementioned transactions, including
the execution of the SPA in favor of Gesmundo, took place without the knowledge
and consent of respondent.[4]
Upon maturity, the loan remained outstanding. As a result, petitioner instituted
extrajudicial foreclosure proceedings on the mortgaged property. After the
extrajudicial sale thereof, a Certificate of Sale was issued in favor of petitioner as the
highest bidder. After the lapse of one year without the property being redeemed,
petitioner, through its vice-president, consolidated the ownership thereof by
executing on June 6, 1996 an Affidavit of Consolidation of Ownership and a Deed of
Absolute Sale.[5]
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her
visits to the subject property, respondent learned that petitioner had already
employed a certain Roldan Brion to clean its premises and that her car, a Ford
sedan, was razed because Brion allowed a boy to play with fire within the premises.
Claiming that she had no knowledge of the mortgage constituted on the subject
property, which was conjugal in nature, respondent instituted with the Regional Trial
Court, Branch 29, San Pablo City, Civil Case No. SP-2222 (97) for Nullity of Real
Estate Mortgage and Certificate of Sale, Affidavit of Consolidation of Ownership,
Deed of Sale, Reconveyance with Prayer for Preliminary Injunction and
Damagesagainst petitioner. In the latters Answer with Counterclaim, petitioner
prayed for the dismissal of the complaint on the ground that the property in question
was the exclusive property of the late Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision on October 18, 1997.
The dispositive portion thereof reads as follows:

WHEREFORE, the plaintiff having proved by the preponderance of evidence the

allegations of the Complaint, the Court finds for the plaintiff and hereby orders:

ON THE FIRST CAUSE OF ACTION:

1. The declaration of the following documents as null and void:

 (a) The Deed of Real Estate Mortgage dated December 1, 1993
executed before Notary Public Romulo Urrea and his notarial
register entered as Doc. No. 212; Page No. 44, Book No. XXI,
Series of 1993.

(b) The Certificate of Sale executed by Notary Public Reynaldo

Alcantara on April 20, 1995.

(c) The Affidavit of Consolidation of Ownership executed by the

defendant

(c) The Affidavit of Consolidation of Ownership executed by the

defendant over the residential lot located at Brgy. San Francisco,
San Pablo City, covered by ARP No. 95-091-1236 entered as
Doc. No. 406; Page No. 83, Book No. III, Series of 1996 of
Notary Public Octavio M. Zayas.

(d) The assessment of real property No. 95-051-1236.

2. The defendant is ordered to reconvey the property subject of this complaint to

the plaintiff.

ON THE SECOND CAUSE OF ACTION

1. The defendant to pay the plaintiff the sum of P40,000.00 representing the
value of the car which was burned.

ON BOTH CAUSES OF ACTION

1. The defendant to pay the plaintiff the sum of P25,000.00 as attorneys fees;

2. The defendant to pay plaintiff P25,000.00 as moral damages;

3. The defendant to pay the plaintiff the sum of P10,000.00 as exemplary

damages;

4. To pay the cost of the suit.

The counterclaim is dismissed.

SO ORDERED. [6]

Upon elevation of the case to the Court of Appeals, the appellate court affirmed
the trial courts finding that the subject property was conjugal in nature, in the
absence of clear and convincing evidence to rebut the presumption that the subject
property acquired during the marriage of spouses Dailo belongs to their conjugal
partnership.[7] The appellate court declared as void the mortgage on the subject
property because it was constituted without the knowledge and consent of
respondent, in accordance with Article 124 of the Family Code. Thus, it upheld the
trial courts order to reconvey the subject property to respondent. [8] With respect to the
damage to respondents car, the appellate court found petitioner to be liable therefor
because it is responsible for the consequences of the acts or omissions of the
person it hired to accomplish the assigned task.[9] All told, the appellate court affirmed
the trial courts Decision, but deleted the award for damages and attorneys fees for
lack of basis.[10]
Hence, this petition, raising the following issues for this Courts consideration:

1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE

MARCELINO DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER
THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.

2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR

THE PAYMENT OF THE LOAN OBTAINED BY THE LATE MARCELINO
DAILO, JR. THE SAME HAVING REDOUNDED TO THE BENEFIT OF THE
FAMILY. [11]

First, petitioner takes issue with the legal provision applicable to the factual
milieu of this case. It contends that Article 124 of the Family Code should be
construed in relation to Article 493 of the Civil Code, which states:

ART. 493. Each co-owner shall have the full ownership of his part and of the fruits
and benefits pertaining thereto, and he may therefore alienate, assign or mortgage
it, and even substitute another person in its enjoyment, except when personal rights
are involved. But the effect of the alienation or the mortgage, with respect to the
co-owners, shall be limited to the portion which may be allotted to him in the
division upon the termination of the co-ownership.

Article 124 of the Family Code provides in part:

ART. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. . . .

In the event that one spouse is incapacitated or otherwise unable to participate in

the administration of the conjugal properties, the other spouse may assume sole
powers of administration. These powers do not include the powers of disposition or
encumbrance which must have the authority of the court or the written consent of
the other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. . . .

Petitioner argues that although Article 124 of the Family Code requires the
consent of the other spouse to the mortgage of conjugal properties, the framers of
the law could not have intended to curtail the right of a spouse from exercising full
ownership over the portion of the conjugal property pertaining to him under the
concept of co-ownership.[12] Thus, petitioner would have this Court uphold the validity
of the mortgage to the extent of the late Marcelino Dailo, Jr.s share in the conjugal
partnership.
In Guiang v. Court of Appeals,[13] it was held that the sale of a conjugal property
requires the consent of both the husband and wife.[14] In applying Article 124 of the
Family Code, this Court declared that the absence of the consent of one renders the
entire sale null and void, including the portion of the conjugal property pertaining to
the husband who contracted the sale. The same principle in Guiang squarely applies
to the instant case. As shall be discussed next, there is no legal basis to construe
Article 493 of the Civil Code as an exception to Article 124 of the Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In
the absence of a marriage settlement, the system of relative community or conjugal
partnership of gains governed the property relations between respondent and her
late husband.[15] With the effectivity of the Family Code on August 3, 1988, Chapter 4
on Conjugal Partnership of Gains in the Family Code was made applicable to
conjugal partnership of gains already established before its effectivity unless vested
rights have already been acquired under the Civil Code or other laws. [16]
The rules on co-ownership do not even apply to the property relations of
respondent and the late Marcelino Dailo, Jr. even in a suppletory manner. The
regime of conjugal partnership of gains is a special type of partnership, where the
husband and wife place in a common fund the proceeds, products, fruits and income
from their separate properties and those acquired by either or both spouses through
their efforts or by chance.[17] Unlike the absolute community of property wherein the
rules on co-ownership apply in a suppletory manner,[18] the conjugal partnership shall
be governed by the rules on contract of partnership in all that is not in conflict with
what is expressly determined in the chapter (on conjugal partnership of gains) or by
the spouses in their marriage settlements.[19] Thus, the property relations of
respondent and her late husband shall be governed, foremost, by Chapter 4
on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the rules
on partnership under the Civil Code. In case of conflict, the former prevails because
the Civil Code provisions on partnership apply only when the Family Code is silent
on the matter.
The basic and established fact is that during his lifetime, without the knowledge
and consent of his wife, Marcelino Dailo, Jr. constituted a real estate mortgage on
the subject property, which formed part of their conjugal partnership. By express
provision of Article 124 of the Family Code, in the absence of (court) authority or
written consent of the other spouse, any disposition or encumbrance of the conjugal
property shall be void.
The aforequoted provision does not qualify with respect to the share of the
spouse who makes the disposition or encumbrance in the same manner that the rule
on co-ownership under Article 493 of the Civil Code does. Where the law does not
distinguish, courts should not distinguish.[20] Thus, both the trial court and the
appellate court are correct in declaring the nullity of the real estate mortgage on the
subject property for lack of respondents consent.
Second, petitioner imposes the liability for the payment of the principal obligation
obtained by the late Marcelino Dailo, Jr. on the conjugal partnership to the extent
that it redounded to the benefit of the family.[21]
 Under Article 121 of the Family Code, [T]he conjugal partnership shall be liable
for: . . . (3) Debts and obligations contracted by either spouse without the consent of
the other to the extent that the family may have been benefited; . . . . For the subject
property to be held liable, the obligation contracted by the late Marcelino Dailo, Jr.
must have redounded to the benefit of the conjugal partnership. There must be the
requisite showing then of some advantage which clearly accrued to the welfare of
the spouses. Certainly, to make a conjugal partnership respond for a liability that
should appertain to the husband alone is to defeat and frustrate the avowed
objective of the new Civil Code to show the utmost concern for the solidarity and
well-being of the family as a unit.[22]
The burden of proof that the debt was contracted for the benefit of the conjugal
partnership of gains lies with the creditor-party litigant claiming as such.[23] Ei incumbit
probatio qui dicit, non qui negat (he who asserts, not he who denies, must
prove).[24] Petitioners sweeping conclusion that the loan obtained by the late
Marcelino Dailo, Jr. to finance the construction of housing units without a doubt
redounded to the benefit of his family, without adducing adequate proof, does not
persuade this Court. Other than petitioners bare allegation, there is nothing from the
records of the case to compel a finding that, indeed, the loan obtained by the late
Marcelino Dailo, Jr. redounded to the benefit of the family. Consequently, the
conjugal partnership cannot be held liable for the payment of the principal obligation.
In addition, a perusal of the records of the case reveals that during the trial,
petitioner vigorously asserted that the subject property was the exclusive property of
the late Marcelino Dailo, Jr. Nowhere in the answer filed with the trial court was it
alleged that the proceeds of the loan redounded to the benefit of the family. Even on
appeal, petitioner never claimed that the family benefited from the proceeds of the
loan. When a party adopts a certain theory in the court below, he will not be
permitted to change his theory on appeal, for to permit him to do so would not only
be unfair to the other party but it would also be offensive to the basic rules of fair
play, justice and due process.[25] A party may change his legal theory on appeal only
when the factual bases thereof would not require presentation of any further
evidence by the adverse party in order to enable it to properly meet the issue raised
in the new theory.[26]
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-55322 February 16, 1989

MOISES JOCSON, petitioner,

vs.
HON. COURT OF APPEALS, AGUSTINA JOCSON-VASQUEZ, ERNESTO
VASQUEZ, respondents.
Dolorfino and Dominguez Law Officers for petitioner.

Gabriel G. Mascardo for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court of the decision of the
Court of Appeals in CA- G.R. No. 63474, promulgated on April 30, 1980, entitled "MOISES
JOCSON, plaintiff-appellee, versus AGUSTINA JOCSON-VASQUEZ and ERNESTO VASQUEZ,
defendant-appellants," upholding the validity of three (3) documents questioned by Moises
Jocson, in total reversal of the decision of the then Court of First Instance of Cavite, Branch I,
which declared them as null and void; and of its resolution, dated September 30, 1980, denying
therein appellee's motion for reconsideration.

Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the only surviving
offsprings of the spouses Emilio Jocson and Alejandra Poblete, while respondent Ernesto
Vasquez is the husband of Agustina. Alejandra Poblete predeceased her husband without her
intestate estate being settled. Subsequently, Emilio Jocson also died intestate on April 1, 1972.

As adverted to above, the present controversy concerns the validity of three (3) documents
executed by Emilio Jocson during his lifetime. These documents purportedly conveyed, by sale,
to Agustina Jocson-Vasquez what apparently covers almost all of his properties, including his
one-third (1/3) share in the estate of his wife. Petitioner Moises Jocson assails these documents
and prays that they be declared null and void and the properties subject matter therein be
partitioned between him and Agustina as the only heirs of their deceased parents.

The documents, which were presented as evidence not by Moises Jocson, as the party assailing
its validity, but rather by herein respondents, are the following:

1) "Kasulatan ng Bilihan ng Lupa," marked as Exhibit 3 (pp. 12-13, Records) for

the defendant in the court a quo, dated July 27, 1968. By this document Emilio
Jocson sold to Agustina Jocson-Vasquez six (6) parcels of land, all located at
Naic, Cavite, for the sum of ten thousand P10,000.00 pesos. On the same
document Emilio Jocson acknowledged receipt of the purchase price, thus:

Na ngayon, alang-alang sa halagang SAMPUNG LIBONG PISO (P10,000)

salaping Pilipino na aking tinanggap ng buong kasiyahan loob at ang
pagkakatanggap ay aking hayagang inaamin sa pamamagitan ng kasulatang ito,
sa aking anak na si Agustina Jocson, na may sapat na gulang, mamamayang
Pilipino, asawa ni Ernesto Vasquez, at naninirahan sa Poblacion, Naic, Cavite, ay
aking ipinagbile ng lubusan at kagyat at walang ano mang pasubali ang
nabanggit na anim na pirasong lupa na nasa unang dahon ng dokumentong ito,
sa nabanggit na Agustina Jocson, at sa kaniyang tagapagmana o makakahalili at
gayon din nais kong banggitin na kahit na may kamurahan ang ginawa kong
pagbibile ay dahilan sa ang nakabile ay aking anak na sa akin at mapaglingkod,
madamayin at ma-alalahanin, na tulad din ng isa ko pang anak na lalaki. Ang
kuartang tinanggap ko na P10,000.00, ay gagamitin ko sa aking katandaan at
mga huling araw at sa aking mga ibang mahahalagang pangangailangan.
[Emphasis supplied]

Na nais ko ring banggitin na ang ginawa kong ito ay hindi labag sa ano mang
batas o kautusan, sapagkat ang aking pinagbile ay akin at nasa aking pangalan.
Ang mga lupang nasa pangalan ng aking nasirang asawa ay hindi ko ginagalaw
ni pinakikialaman at iyon ay dapat na hatiin ng dalawa kong anak alinsunod sa
umiiral na batas (p. 13, Records.)
 2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968, marked as Exhibit 4 (p.
14, Records). On the face of this document, Emilio Jocson purportedly sold to
Agustina Jocson-Vasquez, for the sum of FIVE THOUSAND (P5,000.00)
PESOS, two rice mills and a camarin (camalig) located at Naic, Cavite. As in the
first document, Moises Jocson acknowledged receipt of the purchase price:

'Na alang-alang sa halagang LIMANG LIBONG PISO (P5,000.00) salaping

Pilipino na aking tinanggap ng buong kasiyahan loob sa aking anak na Agustina
Jocson .... Na ang halagang ibinayad sa akin ay may kamurahan ng kaunti ngunit
dahil sa malaking pagtingin ko sa kaniya ... kaya at pinagbile ko sa kaniya ang
mga nabanggit na pagaari kahit na hindi malaking halaga ... (p. 14, Records).

3) Lastly, the "Deed of Extrajudicial Partition and Adjudication with Sale, "dated
March 9, 1969, marked as Exhibit 2 (p. 10-11, Records), whereby Emilio Jocson
and Agustina Jocson-Vasquez, without the participation and intervention of
Moises Jocson, extrajudicially partitioned the unsettled estate of Alejandra
Poblete, dividing the same into three parts, one-third (1/3) each for the heirs of
Alejandra Poblete, namely: Emilio Jocson, Agustina Jocson-Vasquez and Moises
Jocson. By the same instrument, Emilio sold his one- third (1/3) share to Agustin
for the sum of EIGHT THOUSAND (P8,000.00) PESOS. As in the preceding
documents, Emilio Jocson acknowledged receipt of the purchase price:

Now for and in consideration of the sum of only eight thousand (P8,000.00)
pesos, which I, the herein Emilio Jocson had received from my daughter Agustina
Jocson, do hereby sell, cede, convey and transfer, unto the said Agustina
Jocson, her heirs and assigns, administrators and successors in interests, in the
nature of absolute and irrevocable sale, all my rights, interest, shares and
participation, which is equivalent to one third (1/3) share in the properties herein
mentioned and described the one third being adjudicated unto Agustina Jocson
and the other third (1/3) portion being the share of Moises Jocson. (p. 11,
Records).

These documents were executed before a notary public. Exhibits 3 and 4 were registered with
the Office of the Register of Deeds of Cavite on July 29, 1968 and the transfer certificates of title
covering the properties therein in the name of Emilio Jocson, married to Alejandra Poblete," were
cancelled and new certificates of title were issued in the name of Agustina Jocson-Vasquez.
Exhibit 2 was not registered with the Office of the Register of Deeds.

Herein petitioner filed his original complaint (Record on Appeal, p. 27, Rollo) on June 20,1973
with the then Court of First Instance of Naic, Cavite (docketed as Civil Case No. TM- 531), and
which was twice amended. In his Second Amended Complaint (pp. 47-58, Record on Appeal),
herein petitioner assailed the above documents, as aforementioned, for being null and void.

It is necessary to partly quote the allegation of petitioner in his complaint for the reason that the
nature of his causes of action is at issue, thus:

8. [With regard the first document, that] the defendants, through fraud, deceit,
undue pressure and influence and other illegal machinations, were able to
induce, led, and procured their father ... to sign [the] contract of sale ..., for
the simulated price of P10,000.00, which is a consideration that is shocking to the
conscience of ordinary man and despite the fact that said defendants have no
work or livelihood of their own ...; that the sale is null and void, also, because it is
fictitious, simulated and fabricated contract x x x (pp. 52-53, Record on Appeal).
[Emphasis supplied]

xxx xxx xxx

 12. [With regards the second and third document, that they] are null and void
because the consent of the father, Emilio Jocson, was obtained with fraud,
deceit, undue pressure, misrepresentation and unlawful machinations and
trickeries committed by the defendant on him; and that the said contracts
are simulated, fabricated and fictitious, having been made deliberately to exclude
the plaintiff from participating and with the dishonest and selfish motive on the
part of the defendants to defraud him of his legitimate share on said properties
[subject matter thereof]; and that without any other business or employment or
any other source of income, defendants who were just employed in the
management and administration of the business of their parents, would not have
the sufficient and ample means to purchase the said properties except by getting
the earnings of the business or by simulated consideration ... (pp. 54-55, Record
on Appeal). [Emphasis supplied]

Petitioner explained that there could be no real sale between a father and daughter who are
living under the same roof, especially so when the father has no need of money as the properties
supposedly sold were all income-producing. Further, petitioner claimed that the properties
mentioned in Exhibits 3 and 4 are the unliquidated conjugal properties of Emilio Jocson and
Alejandra Poblete which the former, therefore, cannot validly sell (pp. 53, 57, Record on Appeal).
As far as Exhibit 2 is concerned, petitioner questions not the extrajudicial partition but only the
sale by his father to Agustina of the former's 1/3 share (p. 13, Rollo).

The trial court sustained the foregoing contentions of petitioner (pp. 59-81, Record on Appeal). It
declared that the considerations mentioned in the documents were merely simulated and
fictitious because: 1) there was no showing that Agustina Jocson-Vasquez paid for the
properties; 2) the prices were grossly inadequate which is tantamount to lack of consideration at
all; and 3) the improbability of the sale between Emilio Jocson and Agustina Jocson-Vasquez,
taking into consideration the circumstances obtaining between the parties; and that the real
intention of the parties were donations designed to exclude Moises Jocson from participating in
the estate of his parents. It further declared the properties mentioned in Exhibits 3 and 4 as
conjugal properties of Emilio Jocson and Alejandra Poblete, because they were registered in the
name of "Emilio Jocson, married to Alejandra Poblete" and ordered that the properties subject
matter of all the documents be registered in the name of herein petitioners and private
respondents.

On appeal, the Court of Appeals in CA-G.R. No. 63474-R rendered a decision (pp. 29-42, Rollo)
and reversed that of the trial court's and ruled that:

1. That insofar as Exhibits 3 and 4 are concerned the appellee's complaint for
annulment, which is indisputably based on fraud, and undue influence, is now
barred by prescription, pursuant to the settled rule that an action for annulment of
a contract based on fraud must be filed within four (4) years, from the discovery
of the fraud, ... which in legal contemplation is deemed to be the date of the
registration of said document with the Register of Deeds ... and the records
admittedly show that both Exhibits 3 and 4, were all registered on July 29, 1968,
while on the other hand, the appellee's complaint was filed on June 20, 1973,
clearly beyond the aforesaid four-year prescriptive period provided by law;

2. That the aforesaid contracts, Exhibits 2, 3, and 4, are decisively not simulated
or fictitious contracts, since Emilio Jocson actually and really intended them to be
effective and binding against him, as to divest him of the full dominion and
ownership over the properties subject of said assailed contracts, as in fact all his
titles over the same were all cancelled and new ones issued to appellant
Agustina Jocson-Vasquez ...;
 3. That in regard to Exhibit 2, the same is valid and subsisting, and the partition
with sale therein made by and between Emilio Jocson and Agustina Jocson-
Vasquez, affecting the 2/3 portion of the subject properties described therein
have all been made in accordance with Article 996 of the New Civil Code on
intestate succession, and the appellee's (herein petitioner) remaining 1/3 has not
been prejudiced (pp. 41-42, Rollo).

In this petition for review, Moises Jocson raised the following assignments of errors:

1. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING

THAT THE SUIT FOR THE ANNULMENT OF CONTRACTS FILED BY
PETITIONERS WITH THE TRIAL COURT IS "BASED ON FRAUD" AND NOT
ON ITS INEXISTENCE AND NULLITY BECAUSE OF IT'S BEING SIMULATED
OR FICTITIOUS OR WHOSE CAUSE IS CONTRARY TO LAW, MORALS AND
GOOD CUSTOMS?

II. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING

THAT THE COMPLAINT FILED BY PETITIONER IN THE TRIAL COURT IS
BARRED BY PRESCRIPTION?

III. HAS THE RESPONDENT COURT OF APPEALS ERRED IN NOT

DECLARING AS INEXISTENT AND NULL AND VOID THE CONTRACTS IN
QUESTION AND IN REVERSING THE DECLARING DECISION OF THE TRIAL
COURT? (p. 2, Rollo)

I.

The first and second assignments of errors are related and shall be jointly discussed.

According to the Court of Appeals, herein petitioner's causes of action were based on fraud.
Under Article 1330 of the Civil Code, a contract tainted by vitiated consent, as when consent was
obtained through fraud, is voidable; and the action for annulment must be brought within four
years from the time of the discovery of the fraud (Article 1391, par. 4, Civil Code), otherwise the
contract may no longer be contested. Under present jurisprudence, discovery of fraud is deemed
to have taken place at the time the convenant was registered with the Register of Deeds (Gerona
vs. De Guzman, No. L-19060, May 29,1964, 11 SCRA 153). Since Exhibits 3 and 4 were
registered on July 29, 1968 but Moises Jocson filed his complaint only on June 20, 1973, the
Court of Appeals ruled that insofar as these documents were concerned, petitioner's "annulment
suit" had prescribed.

If fraud were the only ground relied upon by Moises Jocson in assailing the questioned
documents, We would have sustained the above pronouncement. But it is not so. As pointed out
by petitioner, he further assailed the deeds of conveyance on the ground that they were without
consideration since the amounts appearing thereon as paid were in fact merely simulated.

According to Article 1352 of the Civil Code, contracts without cause produce no effect
whatsoever. A contract of sale with a simulated price is void (Article 1471; also Article 1409 [3]]),
and an action for the declaration of its nullity does not prescribe (Article 1410, Civil Code; See
also, Castillo v. Galvan, No. L-27841, October 20, l978, 85 SCRA 526). Moises Jocsons saction,
therefore, being for the judicial declaration of nullity of Exhibits 3 and 4 on the ground of
simulated price, is imprescriptible.

II.

For petitioner, however, the above discussion may be purely academic. The burden of proof in
showing that contracts lack consideration rests on he who alleged it. The degree of proof
becomes more stringent where the documents themselves show that the vendor acknowledged
receipt of the price, and more so where the documents were notarized, as in the case at bar.
Upon consideration of the records of this case, We are of the opinion that petitioner has not
sufficiently proven that the questioned documents are without consideration.

Firstly, Moises Jocson's claim that Agustina Jocson-Vasquez had no other source of income
other than what she derives from helping in the management of the family business (ricefields
and ricemills), and which was insufficient to pay for the purchase price, was contradicted by his
own witness, Isaac Bagnas, who testified that Agustina and her husband were engaged in the
buy and sell of palay and rice (p. 10, t.s.n., January 14, 1975). Amazingly, petitioner himself and
his wife testified that they did not know whether or not Agustina was involved in some other
business (p. 40, t.s.n., July 30, 1974; p. 36, t.s.n., May 24, 1974).

On the other hand, Agustina testified that she was engaged in the business of buying and selling
palay and rice even before her marriage to Ernesto Vasquez sometime in 1948 and continued
doing so thereafter (p. 4, t.s.n., March 15, 1976). Considering the foregoing and the presumption
that a contract is with a consideration (Article 1354, Civil Code), it is clear that petitioner
miserably failed to prove his allegation.

Secondly, neither may the contract be declared void because of alleged inadequacy of price. To
begin with, there was no showing that the prices were grossly inadequate. In fact, the total
purchase price paid by Agustina Jocson-Vasquez is above the total assessed value of the
properties alleged by petitioner. In his Second Amended Complaint, petitioner alleged that the
total assessed value of the properties mentioned in Exhibit 3 was P8,920; Exhibit 4, P3,500; and
Exhibit 2, P 24,840, while the purchase price paid was P10,000, P5,000, and P8,000,
respectively, the latter for the 1/3 share of Emilio Jocson from the paraphernal properties of his
wife, Alejandra Poblete. And any difference between the market value and the purchase price,
which as admitted by Emilio Jocson was only slight, may not be so shocking considering that the
sales were effected by a father to her daughter in which case filial love must be taken into
consideration (Alsua-Betts vs. Court of Appeals, No. L-46430-31, April 30, 1979, 92 SCRA 332).

Further, gross inadequacy of price alone does not affect a contract of sale, except that it may
indicate a defect in the consent, or that the parties really intended a donation or some other act
or contract (Article 1470, Civil Code) and there is nothing in the records at all to indicate any
defect in Emilio Jocson's consent.

Thirdly, any discussion as to the improbability of a sale between a father and his daughter is
purely speculative which has no relevance to a contract where all the essential requisites of
consent, object and cause are clearly present.

There is another ground relied upon by petitioner in assailing Exhibits 3 and 4, that the properties
subject matter therein are conjugal properties of Emilio Jocson and Alejandra Poblete. It is the
position of petitioner that since the properties sold to Agustina Jocson-Vasquez under Exhibit 3
were registered in the name of "Emilio Jocson, married to Alejandra Poblete," the certificates of
title he presented as evidence (Exhibits "E', to "J', pp. 4-9, Records) were enough proof to show
that the properties covered therein were acquired during the marriage of their parents, and,
therefore, under Article 160 of the Civil Code, presumed to be conjugal properties.

Article 160 of the Civil Code provides that:

All property of the marriage is presumed to belong to the conjugal partnership,

unless it be proved that it pertains exclusively to the husband or to the wife.

In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23 SCRA 637, 644, We
held that:
 Anent their claim that the shares in question are conjugal assets, the spouses
Perez adduced not a modicum of evidence, although they repeatedly invoked
article 160 of the New Civil Code which provides that ... . As interpreted by this
Court, the party who invokes this presumption must first prove that the property in
controversy was acquired during the marriage. In other words, proof of
acquisition during the coverture is a condition sine qua non for the operation of
the presumption in favor of conjugal ownership. Thus in Camia de Reyes vs.
Reyes de Ilano [62 Phil. 629, 639], it was held that "according to law and
jurisprudence, it is sufficient to prove that the Property was acquired during the
marriage in order that the same may be deemed conjugal property." In the recent
case ofMaramba vs. Lozano, et. al. [L-21533, June 29, 1967, 20 SCRA 474], this
Court, thru Mr. Justice Makalintal, reiterated that "the presumption under Article
160 of the Civil Code refers to property acquired during the marriage," and then
concluded that since "there is no showing as to when the property in question
was acquired...the fact that the title is in the wife's name alone is determinative."
Similarly, in the case at bar, since there is no evidence as to when the shares of
stock were acquired, the fact that they are registered in the name of the husband
alone is an indication that the shares belong exclusively to said spouse.'

This pronouncement was reiterated in the case of Ponce de Leon vs. Rehabilitation Finance
Corporation, No. L-24571, December 18, 1970, 36 SCRA 289, and later in Torela vs. Torela, No.
1,27843, October 11, 1979, 93 SCRA 391.

It is thus clear that before Moises Jocson may validly invoke the presumption under Article 160
he must first present proof that the disputed properties were acquired during the marriage of
Emilio Jocson and Alejandra Poblete. The certificates of title, however, upon which petitioner
rests his claim is insufficient. The fact that the properties were registered in the name of "Emilio
Jocson, married to Alejandra Poblete" is no proof that the properties were acquired during the
spouses' coverture. Acquisition of title and registration thereof are two different acts. It is well
settled that registration does not confer title but merely confirms one already existing (See Torela
vs. Torela, supra). It may be that the properties under dispute were acquired by Emilio Jocson
when he was still a bachelor but were registered only after his marriage to Alejandra Poblete,
which explains why he was described in the certificates of title as married to the latter.

Contrary to petitioner's position, the certificates of title show, on their face, that the properties
were exclusively Emilio Jocson's, the registered owner. This is so because the words "married to'
preceding "Alejandra Poblete' are merely descriptive of the civil status of Emilio Jocson Litam v.
Rivera, 100 Phil. 354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143; Magallon v.
Montejo, G.R. No. L-73733, December 16, 1986, 146 SCRA 282). In other words, the import
from the certificates of title is that Emilio Jocson is the owner of the properties, the same having
been registered in his name alone, and that he is married to Alejandra Poblete.

We are not unmindful that in numerous cases We consistently held that registration of the
property in the name of only one spouse does not negate the possibility of it being conjugal (See
Bucoy vs. Paulino, No. L-25775, April 26, 1968, 23 SCRA 248). But this ruling is not inconsistent
with the above pronouncement for in those cases there was proof that the properties, though
registered in the name of only one spouse, were indeed conjugal properties, or that they have
been acquired during the marriage of the spouses, and therefore, presumed conjugal, without the
adverse party having presented proof to rebut the presumption (See Mendoza vs- Reyes, No. L-
31618, August 17, 1983, 124 SCRA 154).

In the instant case, had petitioner, Moises Jocson, presented sufficient proof to show that the
disputed properties were acquired during his parents' coverture. We would have ruled that the
properties, though registered in the name of Emilio Jocson alone, are conjugal properties in view
of the presumption under Article 160. There being no such proof, the condition sine qua non for
the application of the presumption does not exist. Necessarily, We rule that the properties under
Exhibit 3 are the exclusive properties of Emilio Jocson.
There being no showing also that the camarin and the two ricemills, which are the subject of
Exhibit 4, were conjugal properties of the spouses Emilio Jocson and Alejandra Poblete, they
should be considered, likewise, as the exclusive properties of Emilio Jocson, the burden of proof
being on petitioner.

ACCORDINGLY, the petition is DISMISSED and the decision of the Court of Appeals is
AFFIRMED.

SO ORDERED.

Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.

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 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 () 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. 1w ph1.t

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 () 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 () 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 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-16991 March 31, 1964

ROBERTO LAPERAL, JR., ET AL., plaintiffs-appellants,
vs.
RAMON L. KATIGBAK, ET AL., defendants-appellees.

William H. Quasha and Associates for plaintiffs-appellants.

Bausa, Ampil and Suarez for defendant-appellee Evelina Kalaw Katigbak.
Ramon L. Katigbak in his own behalf as defendant-appellee.

REGALA, J.:

This is an appeal from a decision of the Court of First Instance of Manila declaring the property
covered by TCT No. 57626 in the City of Manila to be the separate or paraphernal property of the
defendant-appellee Evelina Kalaw. Plaintiffs-appellants, the spouses Laperal, disagree with the
said finding. Hence they appealed from the said decision. They maintain that the realty in
question, with its improvements and income, are conjugal assets of the spouses Evelina Kalaw
and Ramon Katigbak.

This litigation is a sequel to the one instituted by the Laperals against Katigbak and Kalaw way
back in August, 1950. In that case, Civil Case No. 11767 of the Court of First Instance of Manila,
the Laperals sought from the therein defendants "recovery of P14,000 evidenced by various
promissory notes executed in favor of the Laperals by Katigbak, and for the return of jewelry
valued at P97,500.00, delivered by the Laperals to Katigbak for sale on commission, or a total of
P111,500.00." On November 1, 1950, upon a confession of judgment by Katigbak, the trial court
rendered judgment against him to pay the Laperals the sum of P14,000.00, and to return the
jewelry involved, or in lieu thereof, to pay plaintiffs P97,500.00, with interest from August 8, 1950.

About a month after this decision was rendered, Kalaw filed a complaint against her husband
Katigbak, for "judicial separation of property and separate administration," docketed as Civil
Case No. 12860, of the Court of First Instance of Manila. Prior to the trial, Katigbak and Kalaw
submitted an agreement or stipulation of facts on the basis of which, the court granted the prayer
for the "judicial separation of property and separate administration."

On February 1, 1955, the Laperals filed another complaint against Kalaw and Katigbak, Civil
Case No. 25235 in the Court of First Instance of Manila, seeking among other things, annulment
of the proceedings had in Civil Case No. 12860 for "judicial separation of property and separate
administration," to enforce the judgment secured by the Laperals in Civil Case No. 11767 on the
fruits of Kalaw's paraphernal property, and to secure a ruling declaring the real property covered
by TCT No. 57626 as conjugal property of Katigbak and Kalaw. After trial, the court dismissed
the complaint, which dismissal the Laperals appealed to this Court. Acting on the same, We
rendered judgment under G.R. No. L-11418, promulgated on December 27, 1958, the pertinent
portion of which reads:

However, our holding does not write a finis to the case. Because the trial court held that
the conjugal partnership was not liable, it naturally, saw no reason or necessity for ruling
upon the other issues involved, such as the legality of the proceedings in Civil Case No.
12860 for the dissolution of the conjugal partnership and whether or not the property
covered by Transfer Certificate of Title No. 57626 belongs to the conjugal partnership.

In conclusion we hold that while the fruits of the paraphernal property of Kalaw are not
liable for the enforcement of the obligations contracted by Katigbak, nevertheless, the
conjugal properties are. 1wph1.t

The case is hereby ordered remanded for further proceedings to make trial court, the
latter to make the necessary findings indicated and then render a decision on the basis of
said findings in accordance with our decision. No costs.
In compliance with the above endorsement, the trial court, after submission by the parties of their
respective memoranda, there being already sufficient evidence in the record rendered judgment
declaring the property covered by TCT No. 57626 as paraphernal. Hence, this appeal.

The facts upon which trial court predicated its conclusion that the realty in question is
paraphernal are as follows:

For the reason that it established, without contradiction in the records that the spouses Ramon
Katigbak and Evelina Kalaw were married in 1938 (tsn, p. 20, hearing of Jan. 31, 1956) and
neither of them had brought properties unto the marriage that Ramon's occupation was that of
Asst. Atty. of the Bank of the Phil. Islands wherein his monthly salary P200.00 (id); that the
property under TCT No. 57626 was registered in the name of "Evelina Kalaw-Katigbak, married
to Ramon Katigbak" on December 6, 1939, only two years after marriage and the property was
and is in Calle Evangelista, which was and is a business district; the Court, not withstanding the
presumption that all properties acquired during the marriage are conjugal, is led to believe that,
as Evelina declares, her mother Pura Villanueva was the one that had bought property for her
and had placed it only in her name as the practice of her mother; that is, buying properties
placing them directly in the names of her children; and this is recognized by Article 1448; and the
Court is all the more led to the conclusion when it sees that Ramon Katigbak, in the same year
1939, that is, long before the spouses had come to the parting of ways, made a manifestation
that he had no interest in the properties

Ramon Katigbak, the husband of the vendor signed this document only for the purpose of
assisting his wife but he has no interest in the property.

(Sgd.) Ramon L. Katigbak

(Exh. 5-a, p. 189, Record)

As this case is before Us now, therefore, the issue is whether or not the above findings warrant a
rejection of the presumption that the property disputed, for the reason that it was acquired during
the marriage, is conjugal.

We find for the appellee.

There is no denying that all properties acquired during the marriage are, by law, presumed
conjugal. (Art. 160, Civil Code) The presumption, however, is not conclusive but merely
rebuttable, for the same law is un equivocal that it exists only "unless it be proved that it (the
property) belongs exclusively to the husband or the wife." And, examining the records and
evidence in this suit, We hold that this is a case where the presumption has been sufficiently and
convincingly disproven.

The facts recited by the trial judge in explanation of his view that the property in dispute is
paraphernal despite its having been acquired during coverture, impress Us as adequate and
conclusive. As a matter of fact, the factors he took into account in rejecting the presumption, on
the whole, tally with Our own views in the cases of Casiano v. Samaniego, 30 Phil. 135
and Coingco v. Flores, 82 Phil. 284.

In the Casiano case, the deeds to the property in question were in the name of the defendant
who testified that they were "purchased by her mother for herself" and that the purchase price
was paid with money furnished by her mother. On the foregoing, the trial judge rendered
judgment in favor of the defendant, and declared the real properties to be paraphernal. On
appeal to this Court, declaring the ruling as essentially factual, We said:

We do not question the correctness of the doctrine contended for, but we think it is
sufficient to say that the legal presumption established by article 1407 of the Civil Code
has been overcame by the evidence of record. There is nothing in the record which
 would justify us in disturbing the findings, of the trial judge as to the credibility of the
witnesses called by the defense, and if we believe the defendant herself there can be no
doubt the land in question was purchased for the wife with her own separate funds.

It should be further noted that the husband in the aforecited case, apart from relying on the
presumption established by the Civil Code, sought to show the conjugal nature of the disputed
property by presenting a number of documentary evidence. He exhibited, for instance, "certified
copies of reports on file in the City Assessor's Office showing that the land was assessed in his
name; a certified copy of an inspector's report in which the name of the husband appears as the
owner; and, a tax declaration made in November, 1905, relating to the property in dispute, in the
name of the husband." Yet, even then, this Court declined to give effect to the presumption as
the wife's evidence to the contrary were more preponderant. In the present case, on the other
hand, We note that other than invoking the presumption, the burden of denying the evidence so
presented was shifted to the appellant. In this latter task, the appellant failed completely.

Again, in the Coingco case, We ruled:

The second question raised in the motion for reconsideration is, whether the presumption
that the properties in litigation are conjugal properties because they were acquired during
the coverture may be sufficiently rebutted by any one of the following facts: (1) the titles
to them are in the name of wife alone; (2) that the husband gave his marital consent to
their being mortgaged by the wife; (3) that the wife financially able to buy those
properties. While it is true that each one of them, taken separately, may not be sufficient
to overcome the above-quoted presumption established by Art. 14 of the Civil Code, it is
nonetheless true that all of them taken together, with all the other facts and
circumstances established by the evidence, might be, and were, considered by the lower
court as sufficient to rebut the same presumption.

In the case before Us now for review, the deed to the disputed land is in the name of the wife. At
the time of its purchase, the property was already of such substantial value as admittedly, the
husband, by himself could not have afforded to buy, considering that singular source of income
then was his P200.00 a month salary from a Manila Bank. As in the Casiano case, supra, the
defendant herein testified, and was believe by the trial court, that the purchase price was furnish
by her mother so she could buy the property for herself. Furthermore, it was established during
the trial that it was a practice of defendant's parents to so provide their children with money to
purchase realties for themselves.

These facts, quite obviously, more than measure up to the circumstances obtaining in the two
cases previous cited wherein We held the conjugal presumption to have been rebutted.

IN VIEW OF THE FOREGOING, the judgment of the lower Court declaring the property covered
by TCT No. 57626 of the Register of Deeds of Manila as paraphernal is hereby affirmed, with
costs against the appellants.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Barrera, Paredes and Makalintal, JJ., concur.
Padilla, Bautista Angelo and Dizon, JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 89667 October 20, 1993

JOSEPHINE B. BELCODERO, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, et al., respondents.

Jaime I. Infante and Joanes G. Caacbay for petitioners.

Lamberto C. Nanquil & Associates Law Office for private respondents.

VITUG, J.:

This case involves the question of ownership over a piece of land acquired by a
husband while living with a paramour and after having deserted his lawful wife and children. The
property had been bought by the husband on installment basis prior to the effectivity of the Civil
Code of 1950 but the final deed, as well as the questioned conveyance by him to his common
law spouse, has ensued during the latter Code's regime. Now, of course, we have to likewise
take note of the new Family Code which took effect on 03 August 1988.

Let us begin by paraphrasing the factual findings of the appellate court below.

The husband, Alayo D. Bosing, married Juliana Oday on 27 July 1927, with whom he had three
children, namely, Flora, Teresita, and Gaido. In 1946, he left the conjugal home, and he forthwith
started to live instead with Josefa Rivera with whom he later begot one child, named Josephine
Bosing, now Josephine Balcobero.

On 23 August 1949, Alayo purchased a parcel of land on installment basis from the Magdalena
Estate, Inc. In the deed, he indicated his civil status as, "married to Josefa R. Bosing," the
common-law wife. In a letter, dated 06 October 1959, which he addressed to Magdalena Estate,
Inc., he authorized the latter to transfer the lot in the name of his "wife Josefa R. Bosing." The
final deed of sale was executed by Magdalena Estate, Inc., on 24 October 1959. A few days
later, or on 09 November 1959, Transfer Certificate of Title No. 48790 was issued in the name of
"Josefa R. Bosing, . . . married to Alayo Bosing, . . ."

On 06 June 1958, Alayo married Josefa even while his prior marriage with Juliana was still
subsisting. Alayo died on 11 march 1967. About three years later, or on 17 September 1970,
Josefa and Josephine executed a document of extrajudicial partition and sale of the lot in
question, which was there described as "conjugal property" of Josefa and deceased Alayo. In
this deed, Josefa's supposed one-half (1/2) interest as surviving spouse of Alayo, as well as her
one-fourth (1/4) interest as heir, was conveyed to Josephine for a P10,000.00 consideration,
thereby completing for herself, along with her one-fourth (1/4) interest as the surviving child of
Alayo, a full "ownership" of the property. The notice of extrajudicial partition was published on 04,
05 and 06 November 1970 in the Evening Post; the inheritance and estate taxes were paid; and
a new Transfer Certificate of Title No. 198840 was issued on 06 June 1974 in the name of
Josephine.

On 30 October 1980, Juliana (deceased Alayo's real widow) and her three legitimate children
filed with the court a quo an action for reconveyance of the property. On the basis of he above
facts, the trial court ruled in favor of the plaintiffs, and it ordered that

. . . Josephine Bosing executed a deed of reconveyance of the property in

question to the legal heirs of the deceased Alayo D. Bosing, and that both
defendants pay, jointly and severally, actual damages by way of attorney's fees
and expenses in litigation, TEN THOUSAND (P10,000.00) PESOS as moral
damages, pus TEN THOUSAND (P10,000.00) PESOS exemplary damages to
prevent future frauds.
The defendants went to the Court of Appeals which affirmed the trial court's order for
reconveyance but reversed the decision on the award for damages, thus

WHEREFORE, the judgment appealed from is hereby AFFIRMED insofar as

defendant Josephine Bosing is ordered to execute a deed of reconveyance of the
property granting the same to the legal heirs of the deceased Alayo D. Bosing,
and REVERSED insofar as it awards actual, moral and exemplary damages. 1

Hence, the instant petition for review 2 submitting that

1. THE RESPONDENT COURT ERRED IN NOT HOLDING THAT THE ACTION

FOR RECONVEYANCE HAD LONG PRESCRIBED.

2. THE RESPONDENT COURT ERRED IN FINDING THAT, THE ACTION FOR

RECONVEYANCE IS BASED UPON AN IMPLIED OR CONSTRUCTIVE
TRUST.

3. THE RESPONDENT COURT ERRED IN NOT HOLDING THAT, THE

PROPERTY IN QUESTION BELONGS EXCLUSIVELY TO THE PETITIONERS.

4. THE RESPONDENT COURT ERRED IN NOT GRANTING PETITIONER'S

MOTION FOR NEW TRIAL BASED ON NEWLY DISCOVERED EVIDENCE,
AND LIKEWISE ERRED IN HOLDING THAT EVEN IF A NEW TRIAL IS
GRANTED THE SAME WOULD NOT SERVE A USEFUL PURPOSE.

We rule for affirmance.

The first three issues are interrelated, and the same will thus be jointly discussed.

Whether the property in question was acquired by Alayo in 1949 when an agreement for its
purchase on installment basis was entered into between him and Magdalena Estate, Inc., or in
1959 when a deed of sale was finally executed by Magdalena Estate, Inc., the legal results would
be the same. The property remained as belonging to the conjugal partnership of Alayo and his
legitimate wife Juliana. Under both the new Civil Code (Article 160) and the old Civil Code
(Article 1407), "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." This presumption
has not been convincingly rebutted.

It cannot be seriously contended that, simply because the property was titled in the name of
Josefa at Alayo's request, she should thereby be deemed to be its owner. The property
unquestionably was acquired by Alayo. Alayo's letter, dated 06 October 1959, to Magdalena
Estate, Inc., merely authorized the latter to have title to the property transferred to her name.
More importantly, she implicitly recognized Alayo's ownership when, three years after the death
of Alayo, she and Josephine executed the deed of extrajudicial partition and sale in which she
asserted a one-half (1/2) interest in the property in what may be described as her share in the
"conjugal partnership" with Alayo, plus another one-fourth (1/4) interest as "surviving widow," the
last one-fourth (1/4) going to Josephine as the issue of the deceased. Observe that the above
adjudication would have exactly conformed with a partition in intestacy had they been the sole
and legitimate heirs of the decedent.

The appellate court below, given the above circumstances, certainly cannot be said to have been
without valid basis in concluding that the property really belonged to the lawful conjugal
partnership between Alayo and his true spouse Juliana.
As regards the property relation between common-law spouses, Article 144 of the Civil Code
merely codified the law established through judicial precedents under the old code (Margaret
Maxey vs. Court of Appeals, G.R. No. L-45870, 11 May 1984). In both regimes, the co-ownership
rule had more than once been repudiated when either or both spouses suffered from an
impediment to marry (Jeroniza vs. Jose, 89 SCRA 306). The present provisions under Article 147
and Article 148 of the Family Code did not much deviate from the old rules; in any case, its
provisions cannot apply to this case without interdicting prior vested rights (Article 256, Family
Code).

It was at the time that 'the adjudication of ownership was made following Alayo's demise (not
when Alayo merely allowed the property to be titled in Josefa's name which clearly was not
intended to be adversarial to Alayo's interest), that a constructive trust was deemed to have been
created by operation of law under the provisions of Article 1456 of the Civil Code.

Article 1456. If the property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.

The applicable prescriptive period for an action seeking a reconveyance of the property by the
beneficiaries thereof is ten (10) years (Article 1144, Civil Code). Ordinarily, that period starts from
the establishment of the implied trust being the day when the cause of action would be
considered to have accrued (Article 1150, Civil Code). Unfortunately for Josefa and Josephine,
however, the property involved in this case is a realty titled under the Torrens System. The
prescriptive period is thus to be counted from the time the transaction affecting the property is
registered with the corresponding issuance of a new certificate of title. 3 Between the time Transfer
of Certificate of Title No. 198840 was issued on 06 June 1974, and the filing of the action for the
reconveyance of the property with the court a quo on 30 October 1980, barely a period of six (6) years
and four (4) months had elapsed. The case has accordingly been initiated seasonably.

The four-year prescriptive period, mentioned in passing by the petitioners, would have had some
value and relevance had the private respondents or their predecessor in interest been parties to
the extrajudicial partition and sale. In that event, the latter's action could only then be predicated
on a vitiation of consent 4 where the applicable statutory limitation would be four years. 5

The last issue raises the supposed error in the rejection of a new trial on the basis of newly
discovered evidence. We concur with the resolution of the appellate court below (on appellants'
[petitioners herein] motion for reconsideration thereat), thus

Appellants' prayer for a new trial based upon what they claim is newly discovered
evidence deserves scant consideration.

Appellant proposes to prove (1) that Josefa Bosing sold certain property for
P8,000.00 in 1948 and was therefore in a financial position to make the payments
to Magdalena Estate Inc. and (2) that appellee Juliana Bosing got married in
1961 to one Burayos Ballit, and thus, "forfeited" her right to the conjugal
partnership.

The first ground is not meritorious. It is not newly discovered evidence. As

described in appellants' Motion the documents were "not discovered or
considered as necessary evidence during the trial of the case below" by the
former counsel; it is therefore more properly considered as forgotten evidence,
which the appellant knew or should have known during the trial (Tesoro vs. Court
of Appeals, 54 SCRA 296; Republic vs. Vda. de Castelvi, 58 SCRA 336).
Moreover, assuming the sale is proven, it does not follow that the proceeds were
used to pay the lot in question; the payments were made in installments, not in
one lump sum.
 Neither is the second ground deserving of merit. Assuming that the marriage to
Ballit in 1961 is duly proven, and that this provided a cause for legal separation
and consequent disqualification of the guilty spouse to succeed to the husband's
intestate estate under Article 1002 of the Civil Code, the fact remains that no
action for legal separation was brought by the husband during his lifetime and
within the period provided by law. It is too late to raise the issue at this time.

Accordingly, assuming that the Motion for New Trial complies with the formal
requisites for such motion (See Minister of Natural Resources vs. Heirs of Orval
Hughes, et al., G.R. No. 62662, prom. November 12, 1987), a question We don't
find necessary to decide, a new trial would not serve a useful purpose in altering
the result of the questioned decision.

WHEREFORE, the decision appealed from in the instant petition for review on certiorari is
AFFIRMED.

SO ORDERED.

Feliciano, Bidin, Romero and Melo, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 132955 October 27, 2006

ORLANDO VILLANUEVA, petitioner,

vs.
HON. COURT OF APPEALS and LILIA CANALITA-VILLANUEVA, respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for review under Rule 45 of the Rules of Court assails the January 26, 1998
Decision1 of the Court of Appeals in CA-G.R. CV No. 51832, affirming with modification the
Decision2 dated January 12, 1996 of the Regional Trial Court of Valenzuela, Metro Manila,
Branch 172 in Civil Case No. 3997-V-92 (a) dismissing petitioner's petition for the annulment of
his marriage to private respondent and (b) ordering him to pay moral and exemplary damages,
attorneys fees and costs. Also assailed is the March 5, 1998 Resolution3 denying petitioners
motion for reconsideration.

The antecedent facts are as follows:

Petitioner Orlando Villanueva and private respondent Lilia Canalita-Villanueva got married on
April 13, 1988 in Puerto Princesa, Palawan. On November 17, 1992, Orlando filed with the trial
court a petition for annulment of his marriage alleging that threats of violence and duress forced
him into marrying Lilia, who was already pregnant; that he did not get her pregnant prior to the
marriage; that he never cohabited with her after the marriage; and that he later learned that
private respondent's child died during delivery on August 29, 1988.4

In her answer with compulsory counterclaim,5 Lilia prayed for the dismissal of the petition,
arguing that petitioner freely and voluntarily married her; that petitioner stayed with her in
Palawan for almost a month after their marriage; that petitioner wrote letters to her after he
returned to Manila, during which private respondent visited him personally; and that petitioner
knew about the progress of her pregnancy, which ended in their son being born prematurely.
Private respondent also prayed for the payment of moral and exemplary damages, attorneys
fees and costs.

On January 12, 1996, the trial court rendered judgment the dispositive portion of which states:

WHEREFORE, judgment is hereby rendered as follows:

1) Dismissing the above-entitled case; and

2) Ordering the plaintiff to pay the defendant moral damages in the amount of
P100,000.00, exemplary damages in the amount of P50,000.00, and attorney's fees in
the amount of P20,000.00, plus the costs of suit.

SO ORDERED.6

The Court of Appeals affirmed the trial courts dismissal of the petition and the award of
attorneys fees and costs, but reduced the award of moral and exemplary damages to
P50,000.00 and P25,000.00, respectively. The Court of Appeals denied petitioners motion for
reconsideration, hence, the instant petition for review based on the following assigned errors:

I. THE RESPONDENT COURT OF APPEALS COMMITTED A GRAVE ABUSE OF

DISCRETION IN NOT GRANTING THE ANNULMENT OF MARRIAGE THE CONSENT
OF THE PETITIONER HAVING BEEN OBTAINED BY FRAUD, INTIMIDATION AND
UNDUE AND IMPROPER PRESSURE AND INFLUENCE PLUS THE FACT THAT
THERE WAS NO COHABITATION WHATSOEVER BETWEEN PETITIONER AND
PRIVATE RESPONDENT.

II. THE RESPONDENT COURT OF APPEALS COMMITTED GROSS ERROR IN

AWARDING MORAL AND EXEMPLARY DAMAGES AS WELL AS ATTORNEY'S FEES,
SAID AWARDS NOT BEING THOSE ALLOWED BY LAW.7

The issues for resolution are (a) whether the subject marriage may be annulled on the ground of
vitiated consent; and (b) whether petitioner should be liable for moral and exemplary damages as
well as attorneys fees and costs.

The petition is partly granted.

Factual findings of the Court of Appeals, especially if they coincide with those of the trial court, as
in the instant case, are generally binding on this Court.8 We affirm the findings of the Court of
Appeals that petitioner freely and voluntarily married private respondent and that no threats or
intimidation, duress or violence compelled him to do so, thus

To begin with, We are at once disturbed by the circumstance that despite the alleged
coerced consent which supposedly characterized his marriage with Lilia on April 13,
1988, it was only on November 17, 1992 or after a span of not less than four (4) years
and eight (8) months when Orlando took serious step to have the same marriage
annulled. Unexplained, the prolonged inaction evidently finds basis in Lilias allegation
that this annulment suit was filed by Orlando solely in the hope that a favorable judgment
thereon would bolster his defense, if not altogether bring about his acquittal in the
criminal case for bigamy which was then already pending against him. Unfortunately,
however, let alone the fact that the criminal case was admittedly decided ahead with a
judgment of conviction against Orlando x x x even the very outcome of the present case
disappointed his expectation. At this late, with his appeal in the bigamy case still pending
with this Court x x x Orlando must be hoping against hope that with a decree of
annulment ensuing from this Court, he may yet secure an acquittal in the same bigamy
charge. Viewed in this perspective, the instant appeal is, therefore, understandable.

But even in terms of merit, the recourse must have to fall.

Appellant anchored his prayer for the annulment of his marriage on the ground that he
did not freely consent to be married to the appellee. He cited several incidents that
created on his mind a reasonable and well-grounded fear of an imminent and grave
danger to his life and safety, to wit: the harassing phone calls from the appellee and
strangers as well as the unwanted visits by three men at the premises of the University of
the East after his classes thereat, and the threatening presence of a certain Ka Celso, a
supposed member of the New Peoples Army whom appellant claimed to have been
hired by appellee and who accompanied him in going to her home province of Palawan
to marry her.

The Court is not convinced that appellants apprehension of danger to his person is so
overwhelming as to deprive him of the will to enter voluntarily to a contract of marriage. It
is not disputed that at the time he was allegedly being harassed, appellant worked as a
security guard in a bank. Given his employment at that time, it is reasonable to assume
that appellant knew the rudiments of self-defense, or, at the very least, the proper way to
keep himself out of harms way. For sure, it is even doubtful if threats were indeed made
to bear upon appellant, what with the fact that he never sought the assistance of the
security personnel of his school nor the police regarding the activities of those who were
threatening him. And neither did he inform the judge about his predicament prior to
solemnizing their marriage.

Appellant also invoked fraud to annul his marriage, as he was made to believe by
appellee that the latter was pregnant with his child when they were married. Appellants
excuse that he could not have impregnated the appellee because he did not have an
erection during their tryst is flimsy at best, and an outright lie at worst. The complaint is
bereft of any reference to his inability to copulate with the appellee. His counsel also
conceded before the lower court that his client had a sexual relationship with the appellee
x x x. He also narrated x x x that sometime in January 1988, he and the appellee went to
a hotel where "the sexual act was consummated, with the defendant on top" x x x.

Instead of providing proofs that he was tricked into marrying his wife, appellant resorted
to undermining the credibility of the latter by citing her testimony that her child was born,
and died, on August 29, 1989, a year off from August 29, 1988, the date of fetal death as
appearing in the registry of deaths of the Office of the Civil Registrar of Puerto Princesa
City x x x.

To Our mind, appellant cannot make capital of the lapse because it is inconsequential, as
there is no controversy regarding the date of death of appellees fetus. Nevertheless,
during the continuation of the cross-examination of the appellee, she declared that her
child was prematurely born on August 29, 1988, matching the date in the certification of
the Civil Registrar x x x. The Court is not prepared to disbelieve the appellee and throw
overboard her entire testimony simply on account of her confusion as to the exact date of
 the death of the fetus, especially when she herself had presented documentary evidence
that put August 29, 1988 as the date her fetus died.

Appellants propensity to rely on his perceived weakness of the appellees evidence

continues in his argument that if indeed there is truth to her claim that she was
impregnated sometime in December 1987, then she could not have a premature delivery
on August 29, 1988, as she had testified during the trial, because the 35-week period of
pregnancy is complete by that time. Whether the appellees impression that she had
delivered prematurely is correct or not will not affect the fact that she had delivered a
fetus on August 29, 1988. In the light of appellants admission that he had a sexual
intercourse with his wife in January 1988, and his failure to attribute the latters
pregnancy to any other man, appellant cannot complain that he was deceived by the
appellee into marrying her.

Appellant also puts in issue the lower courts appreciation of the letters allegedly written
by him to the appellee. During his cross-examination, when confronted with thirteen (13)
letters, appellant identified the seven (7) letters that he sent to the appellee, but denied
the remaining six (6) x x x. The letters admitted by the appellant contained expressions of
love and concern for his wife, and hardly the rantings of a man under duress. During the
re-direct examination, however, appellant suddenly changed mind and denied authorship
of those seven (7) letters, claiming that he was forced to admit them because he was
threatened with harm by the appellee. If he was laboring under duress when he made the
admission, where did he find the temerity to deny his involvement with the remaining six
(6) letters? The recantation can only be motivated by a hindsight realization by the
appellant of the evidentiary weight of those letters against his case.

As to the second assignment of error, appellant cannot claim that his marriage should be
annulled due to the absence of cohabitation between him and his wife. Lack of
cohabitation is, per se, not a ground to annul a marriage. Otherwise, the validity of a
marriage will depend upon the will of the spouses who can terminate the marital union by
refusing to cohabitate. The failure to cohabit becomes relevant only if it arises as a result
of the perpetration of any of the grounds for annulling the marriage, such as lack of
parental consent, insanity, fraud, intimidation, or undue influence x x x. Since the
appellant failed to justify his failure to cohabit with the appellee on any of those grounds,
the validity of his marriage must be upheld.9

We also agree that private respondent is entitled to attorneys fees. Article 2208 (11) of the Civil
Code provides that attorneys may be awarded where the court deems it just and equitable under
the circumstances, as in the instant case.

We, however, delete the award of moral and exemplary damages for lack of factual and legal
basis. There is nothing in the records or in the appealed decision that would support an award of
moral damages. In justifying the award, the Court of Appeals merely said thus:

It is not difficult to imagine the suffering of the appellee from the baseless portrayal of her
by the appellant as the perpetrator of fraudulent schemes to trap an unwilling mate. x x
x10

However, the aforesaid finding is only a supposition as it has no reference to any testimony of
private respondent detailing her alleged physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury as would entitle her to moral damages.

In Mahinay v. Velasquez, Jr.,11 we held that:

 In order that moral damages may be awarded, there must be pleading and proof of moral
suffering, mental anguish, fright and the like. While respondent alleged in his complaint
that he suffered mental anguish, serious anxiety, wounded feelings and moral shock, he
failed to prove them during the trial. Indeed, respondent should have taken the witness
stand and should have testified on the mental anguish, serious anxiety, wounded feelings
and other emotional and mental suffering he purportedly suffered to sustain his claim for
moral damages. Mere allegations do not suffice; they must be substantiated by clear and
convincing proof. No other person could have proven such damages except the
respondent himself as they were extremely personal to him.

As private respondent is not entitled to moral damages, a fortiori, she is not entitled to exemplary
damages. This is clear in Article 2234 of the Civil Code, which provides:

ART. 2234. While the amount of the exemplary damages need not be proved, the plaintiff
must show that he is entitled to moral, temperate or compensatory damages before the
court may consider the question of whether or not exemplary damages should be
awarded. In case liquidated damages have been agreed upon, although no proof of loss
is necessary in order that such liquidated damages may be recovered, nevertheless,
before the court may consider the question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he would be entitled to moral, temperate
or compensatory damages were it not for the stipulation for liquidated damages.

Hence, exemplary damages is allowed only in addition to moral damages such that no exemplary
damages can be awarded unless the claimant first establishes his clear right to moral
damages.12 In the instant case, private respondent failed to satisfactorily establish her claim for
moral damages, thus she is not likewise entitled to exemplary damages.

WHEREFORE, the petition is PARTLY GRANTED. The January 26, 1998 Decision of the Court
of Appeals in CA-G.R. CV No. 51832 affirming with modification the January 12, 1996 Decision
of the Regional Trial Court of Valenzuela, Metro Manila, Branch 172 in Civil Case No. 3997-V-92
dismissing petitioners petition for the annulment of his marriage with private respondent,
is AFFIRMED. However, the award of moral and exemplary damages is DELETED for lack of
basis.

SO ORDERED.

Panganiban, C.J. (Chairperson), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-39587 March 24, 1934

ALEKO E. LILIUS, ET AL., plaintiffs-appellants,

vs.
THE MANILA RAILROAD COMPANY, defendant-appellant.

Harvey and O'Brien for plaintiffs-appellants.

Jose C. Abreu for defendant-appellant.

VILLA-REAL, J.:
This case involves two appeals, one by the defendant the Manila Railroad Company, and the
other by the plaintiffs Aleko E. Lilius et al., from the judgment rendered by the Court of First
Instance of Manila, the dispositive part of which reads as follows:

Wherefore, judgment is rendered ordering the defendant company to pay to the plaintiffs,
for the purposes above stated, the total amount of P30,865, with the costs of the suit.
And although the suit brought by the plaintiffs has the nature of a joint action, it must be
understood that of the amount adjudicated to the said plaintiffs in this judgment, the sum
of P10,000 personally belongs to the plaintiff Sonja Maria Lilius; the sum of P5,000, to
the plaintiff Brita Marianne Lilius; the sum of P250, to Dr. Marfori of the Calauan Hospital,
Province of Laguna, and the balance to the plaintiff Aleko E. Lilius.

In support of its appeal, the appellant the Manila Railroad Company assigns nine alleged errors
committed by the trial court in its said judgment, which will be discussed in the course of this
decision.

As a ground of their appeal, the appellants Aleko E. Lilius et al., in turn, assign two alleged errors
as committed by the same court a quo in its judgment in question, which will be discussed later.

This case originated from a complaint filed by Aleko E. Lilius et al., praying, under the facts
therein alleged, that the Manila Railroad Company be ordered to pay to said plaintiffs, by way of
indemnity for material and moral damages suffered by them through the fault and negligence of
the said defendant entity's employees, the sum of P50,000 plus legal interest thereon from the
date of the filing of the complaint, with costs.

The defendant the Manila Railroad Company, answering the complaint, denies each and every
allegation thereof and, by way of special defense, alleges that the plaintiff Aleko E. Lilius, with the
cooperation of his wife and coplaintiff, negligently and recklessly drove his car, and prays that it
be absolved from the complaint.

The following facts have been proven at the trial, some without question and the others by a
preponderance of evidence, to wit:

The plaintiff Aleko E. Lilius has, for many years, been a well-known and reputed journalist, author
and photographer. At the time of the collision in question, he was a staff correspondent in the Far
East of the magazines The American Weekly of New York and The Sphere of London.

Some of his works have been translated into various languages. He had others in preparation
when the accident occurred. According to him, his writings netted him a monthly income of
P1,500. He utilized the linguistic ability of his wife Sonja Maria Lilius, who translated his articles
and books into English, German, and Swedish. Furthermore, she acted as his secretary.

At about 7 o'clock on the morning of May 10, 1931, the plaintiff, his wife Sonja Maria Lilius, and
his 4-year old daughter Brita Marianne Lilius, left Manila in their Studebaker car driven by the
said plaintiff Aleko E. Lilius for the municipality of Pagsanjan, Province of Laguna, on a sight-
seeing trip. It was the first time that he made said trip although he had already been to many
places, driving his own car, in and outside the Philippines. Where the road was clear and
unobstructed, the plaintiff drove at the rate of from 19 to 25 miles an hour. Prior thereto, he had
made the trip as far as Calauan, but never from Calauan to Pagsanjan, via Dayap. He was
entirely unacquainted with the conditions of the road at said points and had no knowledge of the
existence of a railroad crossing at Dayap. Before reaching the crossing in question, there was
nothing to indicate its existence and inasmuch as there were many houses, shrubs and trees
along the road, it was impossible to see an approaching train. At about seven or eight meters
from the crossing, coming from Calauan, the plaintiff saw an autotruck parked on the left side of
the road. Several people, who seemed to have alighted from the said truck, were walking on the
opposite side. He slowed down to about 12 miles an hour and sounded his horn for the people to
get out of the way. With his attention thus occupied, he did not see the crossing but he heard two
short whistles. Immediately afterwards, he saw a huge black mass fling itself upon him, which
turned out to be locomotive No. 713 of the defendant company's train coming eastward from Bay
to Dayap station. The locomotive struck the plaintiff's car right in the center. After dragging the
said car a distance of about ten meters, the locomotive threw it upon a siding. The force of the
impact was so great that the plaintiff's wife and daughter were thrown from the car and were
picked up from the ground unconscious and seriously hurt. In spite of the efforts of engineer
Andres Basilio, he was unable to stop the locomotive until after it had gone about seventy meters
from the crossing.

On the afternoon of the same day, the plaintiff's entered St. Paul's Hospital in the City of Manila
where they were treated by Dr. Waterous. The plaintiff Aleko E. Lilius suffered from a fractured
nose, a contusion above the left eye and a lacerated wound on the right leg, in addition to
multiple contusions and scratches on various parts of the body. As a result of the accident, the
said plaintiff was highly nervous and very easily irritated, and for several months he had great
difficulty in concentrating his attention on any matter and could not write articles nor short stories
for the newspapers and magazines to which he was a contributor, thus losing for some time his
only means of livelihood.

The plaintiff Sonja Maria Lilius suffered from fractures of the pelvic bone, the tibia and fibula of
the right leg, below the knee, and received a large lacerated wound on the forehead. She
underwent two surgical operations on the left leg for the purpose of joining the fractured bones
but said operations notwithstanding, the leg in question still continues deformed. In the opinion of
Dr. Waterous, the deformity is permanent in character and as a result the plaintiff will have some
difficulty in walking. The lacerated wound, which she received on her forehead, has left a
disfiguring scar.

The child Brita Marianne Lilius received two lacerated wounds, one on the forehead and the
other on the left side of the face, in addition to fractures of both legs, above and below the knees.
Her condition was serious and, for several days, she was hovering between life and death. Due
to a timely and successful surgical operation, she survived her wounds. The lacerations received
by the child have left deep scars which will permanently disfigure her face, and because of the
fractures of both legs, although now completely cured, she will be forced to walk with some
difficulty and continuous extreme care in order to keep her balance.

Prior to the accident, there had been no notice nor sign of the existence of the crossing, nor was
there anybody to warn the public of approaching trains. The flagman or switchman arrived after
the collision, coming from the station with a red flag in one hand and a green one in the other,
both of which were wound on their respective sticks. The said flagman and switchman had many
times absented himself from his post at the crossing upon the arrival of a train. The train left Bay
station a little late and therefore traveled at great speed.

Upon examination of the oral as well as of the documentary evidence which the parties
presented at the trial in support of their respective contentions, and after taking into consideration
all the circumstances of the case, this court is of the opinion that the accident was due to
negligence on the part of the defendant-appellant company, for not having had on that occasion
any semaphore at the crossing at Dayap, to serve as a warning to passers-by of its existence in
order that they might take the necessary precautions before crossing the railroad; and, on the
part of its employees the flagman and switchman, for not having remained at his post at the
crossing in question to warn passers-by of the approaching train; the stationmaster, for failure to
send the said flagman and switchman to his post on time; and the engineer, for not having taken
the necessary precautions to avoid an accident, in view of the absence of said flagman and
switchman, by slackening his speed and continuously ringing the bell and blowing the whistle
before arriving at the crossing. Although it is probable that the defendant-appellant entity
employed the diligence of a good father of a family in selecting its aforesaid employees,
however, it did not employ such diligence in supervising their work and the discharge of their
duties because, otherwise, it would have had a semaphore or sign at the crossing and, on
previous occasions as well as on the night in question, the flagman and switchman would have
always been at his post at the crossing upon the arrival of a train. The diligence of a good father
of a family, which the law requires in order to avoid damage, is not confined to the careful and
prudent selection of subordinates or employees but includes inspection of their work and
supervision of the discharge of their duties.

However, in order that a victim of an accident may recover indemnity for damages from the
person liable therefor, it is not enough that the latter has been guilty of negligence, but it is also
necessary that the said victim has not, through his own negligence, contributed to the accident,
inasmuch as nobody is a guarantor of his neighbor's personal safety and property, but everybody
should look after them, employing the care and diligence that a good father of a family should
apply to his own person, to the members of his family and to his property, in order to avoid any
damage. It appears that the herein plaintiff-appellant Aleko E. Lilius took all precautions which his
skill and the presence of his wife and child suggested to him in order that his pleasure trip might
be enjoyable and have a happy ending, driving his car at a speed which prudence demanded
according to the circumstances and conditions of the road, slackening his speed in the face of an
obstacle and blowing his horn upon seeing persons on the road, in order to warn them of his
approach and request them to get out of the way, as he did when he came upon the truck parked
on the left hand side of the road seven or eight meters from the place where the accident
occurred, and upon the persons who appeared to have alighted from the said truck. If he failed to
stop, look and listen before going over the crossing, in spite of the fact that he was driving at 12
miles per hour after having been free from obstacles, it was because, his attention having been
occupied in attempting to go ahead, he did not see the crossing in question, nor anything, nor
anybody indicating its existence, as he knew nothing about it beforehand. The first and only
warning, which he received of the impending danger, was two short blows from the whistle of the
locomotive immediately preceding the collision and when the accident had already become
inevitable.

In view of the foregoing considerations, this court is of the opinion that the defendant the Manila
Railroad Company alone is liable for the accident by reason of its own negligence and that of its
employees, for not having employed the diligence of a good father of a family in the supervision
of the said employees in the discharge of their duties.

The next question to be decided refers to the sums of money fixed by the court a quo as
indemnities for damages which the defendant company should pay to the plaintiffs-appellants.

With respect to the plaintiff-appellant Aleko E. Lilius, although this court believes his claim of a
net income of P1,500 a month to be somewhat exaggerated, however, the sum of P5,000,
adjudicated to him by the trial court as indemnity for damages, is reasonable.

As to the sum of P10,635 which the court awards to the plaintiffs by way of indemnity for
damages, the different items thereof representing doctor's fees, hospital and nursing services,
loss of personal effects and torn clothing, have duly been proven at the trial and the sum in
question is not excessive, taking into consideration the circumstances in which the said
expenses have been incurred.

Taking into consideration the fact that the plaintiff Sonja Maria Lilius, wife of the plaintiff Aleko E.
Lilius is in the language of the court, which saw her at the trial "young and beautiful and the
big scar, which she has on her forehead caused by the lacerated wound received by her from the
accident, disfigures her face and that the fracture of her left leg has caused a permanent
deformity which renders it very difficult for her to walk", and taking into further consideration her
social standing, neither is the sum of P10,000, adjudicated to her by the said trial court by way of
indemnity for patrimonial and moral damages, excessive. In the case
of Gutierrez vs. Gutierrez(56 Phil., 177), the right leg of the plaintiff Narciso Gutierrez was
fractured as a result of a collision between the autobus in which he was riding and the
defendant's car, which fractured required medical attendance for a considerable period of time.
On the day of the trial the fracture had not yet completely healed but it might cause him
permanent lameness. The trial court sentenced the defendants to indemnify him in the sum of
P10,000 which this court reduced to P5,000, in spite of the fact that the said plaintiff therein was
neither young nor good-looking, nor had he suffered any facial deformity, nor did he have the
social standing that the herein plaintiff-appellant Sonja Maria Lilius enjoys. 1vvphi1.ne+

As to the indemnity of P5,000 in favor of the child Brita Marianne Lilius, daughter of Aleko E.
Lilius and Sonja Maria Lilius, neither is the same excessive, taking into consideration the fact that
the lacerations received by her have left deep scars that permanently disfigure her face and that
the fractures of both her legs permanently render it difficult for her to walk freely, continuous
extreme care being necessary in order to keep her balance in addition to the fact that all of this
unfavorably and to a great extent affect her matrimonial future.

With respect to the plaintiffs' appeal, the first question to be decided is that raised by the plaintiff
Aleko E. Lilius relative to the insufficiency of the sum of P5,000 which the trial court adjudicated
to him by way of indemnity for damages consisting in the loss of his income as journalist and
author as a result of his illness. This question has impliedly been decided in the negative when
the defendant-appellant entity's petition for the reduction of said indemnity was denied, declaring
it to be reasonable.

As to the amount of P10,000 claimed by the plaintiff Aleko E. Lilius as damages for the loss of his
wife's services in his business as journalist and author, which services consisted in going over
his writings, translating them into English, German and Swedish, and acting as his secretary, in
addition to the fact that such services formed part of the work whereby he realized a net monthly
income of P1,500, there is no sufficient evidence of the true value of said services nor to the
effect that he needed them during her illness and had to employ a translator to act in her stead.

The plaintiff Aleko E. Lilius also seeks to recover the sum of P2,500 for the loss of what is called
Anglo-Saxon common law "consortium" of his wife, that is, "her services, society and conjugal
companionship", as a result of personal injuries which she had received from the accident now
under consideration.

In the case of Goitia vs. Campos Rueda (35 Phil., 252, 255, 256), this court, interpreting the
provisions of the Civil Marriage Law of 1870, in force in these Islands with reference to the
mutual rights and obligations of the spouses, contained in articles 44-48 thereof, said as follows:

The above quoted provisions of the Law of Civil Marriage and the Civil Code fix the
duties and obligations of the spouses. The spouses must be faithful to, assist, and
support each other. The husband must live with and protect his wife. The wife must obey
and live with her husband and follow him when he changes his domicile or residence,
except when he removes to a foreign country. . . .

Therefore, under the law and the doctrine of this court, one of the husband's rights is to count on
his wife's assistance. This assistance comprises the management of the home and the
performance of household duties, including the care and education of the children and attention
to the husband upon whom primarily devolves the duty of supporting the family of which he is the
head. When the wife's mission was circumscribed to the home, it was not difficult to assume, by
virtue of the marriage alone, that she performed all the said tasks and her physical incapacity
always redounded to the husband's prejudice inasmuch as it deprived him of her assistance.
However, nowadays when women, in their desire to be more useful to society and to the nation,
are demanding greater civil rights and are aspiring to become man's equal in all the activities of
life, commercial and industrial, professional and political, many of them spending their time
outside the home, engaged in their businesses, industry, profession and within a short time, in
politics, and entrusting the care of their home to a housekeeper, and their children, if not to a
nursemaid, to public or private institutions which take charge of young children while their
mothers are at work, marriage has ceased to create the presumption that a woman complies with
the duties to her husband and children, which the law imposes upon her, and he who seeks to
collect indemnity for damages resulting from deprivation of her domestic services must prove
such services. In the case under consideration, apart from the services of his wife Sonja Maria
Lilius as translator and secretary, the value of which has not been proven, the plaintiff Aleko E.
Lilius has not presented any evidence showing the existence of domestic services and their
nature, rendered by her prior to the accident, in order that it may serve as a basis in estimating
their value.

Furthermore, inasmuch as a wife's domestic assistance and conjugal companionship are purely
personal and voluntary acts which neither of the spouses may be compelled to render (Arroyo vs.
Vazquez de Arroyo, 42 Phil., 54), it is necessary for the party claiming indemnity for the loss of
such services to prove that the person obliged to render them had done so before he was injured
and that he would be willing to continue rendering them had he not been prevented from so
doing.

In view of the foregoing considerations this court is of the opinion and so holds: (1) That a
railroad company which has not installed a semaphore at a crossing an does not see to it that its
flagman and switchman faithfully complies with his duty of remaining at the crossing when a train
arrives, is guilty of negligence and is civilly liable for damages suffered by a motorist and his
family who cross its line without negligence on their part; (2) that an indemnity of P10,000 for a
permanent deformity on the face and on the left leg, suffered by a young and beautiful society
woman, is not excessive; (3) that an indemnity of P5,000 for a permanent deformity on the face
and legs of a four-year old girl belonging to a well-to-do family, is not excessive; and (4) that in
order that a husband may recover damages for deprivation of his wife's assistance during her
illness from an accident, it is necessary for him to prove the existence of such assistance and his
wife's willingness to continue rendering it had she not been prevented from so doing by her
illness.

The plaintiffs-appellants are entitled to interest of 6 percent per annum on the amount of the
indemnities adjudicated to them, from the date of the appealed judgment until this judgment
becomes final, in accordance with the provisions of section 510 of Act No. 190.

Wherefore, not finding any error in the judgment appealed from, it is hereby affirmed in toto, with
the sole modification that interest of 6 per cent per annum from the date of the appealed
judgment until this judgment becomes final will be added to the indemnities granted, with the
costs of both instances against the appellant. So ordered.

Malcolm, Hull, Imperial, and Goddard, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-4085 July 30, 1952

AGAPITO LORENZO, ET AL., petitioners,

vs.
FLORENCIO NICOLAS ET AL., respondents.

Engracio F. Clemena and Senon S. Ceniza for petitioners.

Bustos and De Guzman for respondents.

PADILLA, J.:
This is a petition for a writ of certiorari to review a judgment of the Court of Appeals the
dispositive part of which reads, as follows:

IN VIEW HEREOF, the Court reverses the judgement appealed from, with respects to
Parcels Nos. 5 and 6, declares the same to be paraphernal properties of the deceased
Magdalena Clemente; declares the sale (Exhibit D) made by Magdalena Clemente in
favor of the Defendants-Appellants of said Parcel of Land No. 6, on June 26, 1916,
binding lawful and effective; orders the partition by and among the plaintiffs and
defendants of Parcels of Land Nos. 2, 3 and 4, in the proportion of one-half () for the
Plaintiffs and the other half () for the Defendants; dismisses the complaint, with respect
to Parcels of land Nos. 1, 5, 6 and 7, without special pronouncement as to costs; orders
the Defendants to pay to the conjugal partnership one-half of the whole amount paid to
the Bureau of Lands, with legal interest thereon, from the date of the filing of the
complaint, after deducting from said amount the initial payments made on the said lots
Nos. 5 and 6; and further orders the Plaintiffs to pay to pay the Defendants the sum of
P50.00, representing of the attorneys' fees paid by said Defendants in connection with
parcel No. 2.

The facts of the case as found by the Court of Appeals are as follows:

Prior to 1910, Magdalena Clemente was the surviving widow of the deceased Gregorio
Nicolas, Manuel Lorenzo, former husband of the deceased Carlosa Santamaria, was also
at that time a widower. On January 16, 1910, Magdalena Clemente and Manuel Lorenzo
contracted marriage. Manuel Lorenzo died on January 7, 1929, while Magdalena died on
January 31, 1934. During their coverture, the two had no children. In his first marriage,
however, Manuel Lorenzo left, as heirs, the plaintiffs Agapito and Marcela Lorenzo and
Policarpio Lorenzo, deceased, who had been succeeded by his children, the plaintiffs
Faustina, Federico, Guillermo and Manuel all surnamed Lorenzo; while Magdalena
Clemente, in her first marriage, left as heirs, the deceased Gerardo Nicholas, father of
the defendants Florencio, Elena, Felix, Trinidad, Cecilia and Basilisa, all surnamed
Nicolas. . . . .

xxx xxx xxx

As to Parcel of land No. 6. This parcel of land which is lot No. 72 of the Friars Land
Subdivision in Guiguinto, Bulacan, was purchased in her own name by Magdalena
Clemente, for her own exclusive benefit on October 17, 1908 (Exhibit 7), prior to her
marriage with Manuel Lorenzo. She had paid the sum of P169.16 on account of the
purchase price before her marriage with Lorenzo and, according to the terms of the
contract of the sale, the balance of P833.32 was payable on installments, namely:
P25.32 on June 1, 1909, and the balance in annual payment of P42.00 each, payable on
the first day of June of each year, plus interest of 4% per annum.

The receipts, evidencing the payments of these installments (Exhibits I-A to I-M),
presented by Plaintiffs themselves, demonstrate that they were paid in her own name.
On August 21, 1928, the deed of final conveyance was executed in the sole favor of
Magdalena Clemente, notwithstanding the fact that Manuel Lorenzo was then alive. This
parcel of land was registered under the Torrens System, in the exclusive name of
Magdalena Clemente. The real estate tax receipts, covering this particular parcel, are
under the exclusive name of Magdalena Clemente. The presumption of continuity of
condition is also in favor of Magdalena Clemente. The status of the land from the time
she acquired it and before her marriage to Lorenzo, contained until it is otherwise
changed, for it is presumed that a thing once proved to exist continues as long as is
usual with things of that nature. All the acts just mentioned are also acts of ownership.
And again, it is to be presumed that a person is the owner of a property from exercising
acts of ownership over it [Sec. 69 (j) (dd), Rule 123; Heirs of Junero vs. Lizares, 17 Phil.,
112]. These are presumptions which the plaintiffs should but failed to rebut. And Manuel
Lorenzo, indoubtedly recognizing that Magdalena Clemente had the right of ownership
over the land, did not even as much as care to place the title to the land in the name of
the conjugal partnership, even after the payment of the installments paid by Magdalena
Clemente during the marriage. However, the evidence is not clear as to the source of the
money with which the payment of the installments was made, except the advanced
payment, which was admittedly paid from her own purse. "Any useful expenditures made
for the benefit of the separate property of either one of the spouses by means of the
advances made by the partnership or by the industry of the husband or wife, are
partnership property." (Art. 1404, Civil Code). The amount spent for the payments of
installments due during the marriage, or obligations affecting the separate property of
Magdalena Clemente, is certainly a useful expenditures because it preserves her right to
the ownership of the land, and is, therefore, a credit which belongs to the conjugal
partnership, and must be reimbursed to it by her. (9 Manresa, 606; 5 Sanchez Roman,
840.) In other words, while the ownership of the land remains with Magdalena Clemente,
the conjugal partnership is entitled to the reimbursement of paid installments. (Ona vs.
Regala, 58 Phil. 881.)

The learned trial court sustained plaintiffs pretension on the strength of Article 1407 of
the Civil Code which declares that "all the property of the spouses shall be deemed
partnership property, in the absence of proof that it belongs exclusively to the husband or
to the wife", thereby establishing a presumption which may be "overcome by the
introduction of competent evidence to the contrary" (Casino vs. Samaniego, 30 Phil.,
135). We hold that the evidence adduced to rebut this presumption, is not only most
competent but also convincing, as has heretofore been discussed.

As to Parcel of land No. 5. This parcel was also purchased by Magdalena Clemente
from the Bureau of Lands on October 17, 1908 (Exhibit E), for P967.16, of which amount
P116.84 had previously been paid by her, before her marriage to Manuel Lorenzo.
According to the terms of the sale, the balance of P850.32 was payable by installments:
namely, P52.32 on June 1, 1909, and P42.00 annually on June 1, of each succeeding
year. Payments on account of the installments were made by her, the receipts therefor
were issued in her own name by the Bureau of Lands (Exhibits I-A to I-M). On October 7,
1933 or 4 years after the death of Manuel Lorenzo, the final, certificate of sale was
executed by the Director of Lands in her favor and in her name. By virtue thereof,
Transfer Certificate of Title No. 13269 was issued in the sole name of Magdalena
Clemente. The legal principles hereinabove discussed apply with equal force to this
parcel of land No. 5.

On October 12, 1932, parcel of land No. 6, together with lots Nos. 226 and 216 of the
Friars Lands Subdivision in Guiguinto, were conveyed in absolute sale for valuable
consideration by Magdalena Clemente in favor of herein Defendants (Exhibit J). The trial
court considered the sale as having been made in bad faith and consequently annulled
the same. In view of our conclusion, that parcels Nos. 5 and 6 are paraphernal properties
of Magdalena Clemente, further discussion of this assignment of error would be deemed
unnecessary. However, we propose to pass upon this point in order to settle, once and
for all, the validity of the sale which is precisely one of the basis of Defendant's title to the
lands under litigation. The sale took place about 3 years after Manuel Lorenzo's death
on January 7, 1921 it was duly registered in the Registry of Deeds of Bulacan, and the
corresponding T.C.T. No. 17786 was issued in their favor, Aside from the presumption of
good faith, connection with this transaction (Art. 434, Civil Code), there is no evidence at
all showing that defendants were aware of the flaw in the title of their immediate
transferor, Magdalena Clemente. At the time of the purchase of this parcel of land,
Defendants did not have any notice of the claim or interest of the herein Plaintiffs over
the said property. The price was paid. During the lifetime of Magdalena Clemente,
Plaintiffs did not dispute at all her exclusive right over said land, and it was only two years
after her death that they filed the claim against the Defendants. Fraud in the transaction
 should be proven clearly; it should not solely be predicated upon a mere presumption
arising from the relationship of the vendor and the vendees. Defendants took possession
of the land completely relying upon the fact that it was the sole property of Magdalena
Clemente. Furthermore, every purchaser of registered land should take and hold the
same free and clear from any and all prior claims, liens and encumbrances, except those
set forth in the decree of registration and those expressly mentioned in the Land
Registration Act as having been preserved against it. (Sec. 39, Act No. 496; De Jesus vs.
City of Manila, 29 Phil., 73; Anderson & Co. vs. Garcia, 64 Phil., 506.) No such claim,
liens or encumbrances are set forth on the certificate of title.

Plaintiffs tried to prove fraud by the presentation of Exhibit 1, the deed of sale in 1934, in
favor of Martina Rodrigo of the parcel of land No. 7. This deed does not in any way prove
fraud in the sale of parcels of land Nos. 1 and 6, for this deed refers only to parcel No. 7,
as to which, Plaintiffs' complaint had been dismissed by the trial court. The imputation of
fraud is belied by the statement in Exhibit J that lot No. 216 was sold to Martina Rodrigo
for the purpose only of defraying the expenses of the last illness of Magdalena Clemente.
The court below, by dismissing the complaint as to parcel No. 7 covered by the deed of
sale, Exhibit J, impliedly recognized the validity of the said deed of sale, Exhibit J.

It is, therefore, evident that the annullment of the deed of sale, Exhibit J, by the court a
quo, is an error. In view of this conclusion, the query posed by Defendants, whether in an
action for partition, the question of the nullity of Exhibit J. on the ground of fraud, can be
drawn collaterally, need not to be determined. The same thing may be said with respect
to the question of estoppel by laches raised by the Defendants.

In support of the petition for review the petitioners claim that:

(a) That the Honorable Court of Appeals in declaring parcels of land Nos. 5 and 6
paraphernal properties of the deceased Magdalena Clemente has committed an error of
law.

(b) That the Honorable Court of Appeals has committed an error which amounts to
serious abuse of discretion by declaring that parcels of land Nos. 5 and 6 were acquired
by Magdalena Clemente before her marriage to Manuel Lorenzo..

(c) That the Honorable Court of Appeals has committed an error which amounts to a
grave abuse of discretion by not declaring the deed of sale Exhibit "J" null and void.

So the petitioners question only the correctness of the judgment of the Court of Appeals as to
parcels Nos. 5 and 6 held to be paraphernal properties of the late Magdalena Clemente
reversing the judgment of the Court of First Instance of Bulacan which held that they were
conjugal, The third assignment of error involves a question of fact.

Upon the presumption that the parcels of land Nos. 5 and 6 continued to be the exclusive
properties of Magdalena Clemente until shown otherwise and because she had paid the sum of
P116.84 for parcel No. 5 and P169.16 for parcel No. 6 before her marriage to the late Manuel
Lorenzo, the ancestor of the petitioners, from whom they claim the deprive their rights to one-half
of the parcels of land, the Court of Appeals is of the opinion that they were paraphernal
properties of the late Magdalena Clemente. What she had paid during coverture for said parcels
of land was declared conjugal and deemed useful expenditures for which the conjugal
partnership is entitled to reimbursement.

The two parcel of land in question were part of the Friar Lands the alienation of which is provided
for in Act No. 1120.

Section 11 of Act No, 1120 provides:

 Should any person who is the actual and bona fide settler upon and occupant of any
portion of said land . . . desire to purchase the land so occupied by him, he shall be
entitled to do so at the actual cost thereof to the Government, and shall be allowed ten
years from the date of purchase within which to pay for the same in equal annual
installments, if he so desires, all deferred payments to bear interest at the rate of four per
centum per annum.

Section 12 of the same Act partly provides:

. . . When the cost thereof shall have been thus ascertained the Chief of the Bureau of
Public Lands shall give the said settler and occupant a certificate which shall set forth in
detail that the Government has agreed to sell to such settler and occupant the amount of
land so held by him, at the prize so fixed, payable as provided in this Act ... and that upon
the payment of the final installment together with all accrued interest the Government will
convey to such settler and occupant the said land so held by him by proper instrument of
conveyance, which shall be issued and become effective in the manner provide in
section one hundred and twenty-two of the Land Registration Act. . . . .

Section 16 thereof in part provides:

In the event of the death of a holder of a certificate the issuance of which is provided for
in section twelve hereof, prior to the execution of a deed by the Government to any
purchaser, his window shall be entitled to received a deed of the land stated in the
certificate upon showing that she has complied with the requirements of law for the
purchase of the same. In case a holder of a certificate dies before the giving of the deed
and does not leave a widow, then the interest of the holder of the certificate shall
descend and deed shall issue to the persons who under the laws of the Philippine Islands
would have taken had the title been perfected before the death of the holder of the
certificate, upon proof of the holders thus entitled of compliance with all the requirements
of the certificate. . . .

From these provision it is apparent that the pervading legislative intent is to sell the friar lands
acquired by the Government to actual settlers and occupants of the same. In case of death of a
holder of a certificate which is only an agreement to sell it is not the heirs but the widow who
succeeds in the parcels of land to be sold by the Government. Only do the heirs succeed in the
rights of the deceased holder of a certificate if no widow survives him. The fact that all receipts
for installments paid even during the lifetime of the late husband Manuel Lorenzo were issued in
the name of Magdalena Clemente and that the deed of sale or conveyance of parcel No. 6 was
made in her name in spite of the fact that Manuel Lorenzo was still alive shows that the two
parcels of land belonged to Magdalena Clemente. The petitioner, the heirs of the late Manuel
Lorenzo, are not entitled to one-half of the two parcels of land. But the installments paid during
coverture are deemed conjugal, there being no evidence that they were paid out of funds
belonging exclusively to the late Magdalena Clemente.

Upon these grounds and reasons the judgment of the Court of Appeals under review is affirmed,
without cost.

Paras, C.J., Feria, Pablo, Bengzon, Tuason, Montemayor and Bautista Angelo, JJ., concur.

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. 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.

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.

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.

Narvasa, C.J., Paras and Padilla, 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.:

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. 1wph1.t

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.
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 fortiorishould 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.

FIRST DIVISION

JOSEFA BAUTISTA FERRER, G.R. No. 166496

Petitioner,

Present:

PANGANIBAN, C.J.
Chairperson,
- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

SPS. MANUEL M. FERRER

Promulgated:
& VIRGINIA FERRER and
November 9, 2006
SPS. ISMAEL M. FERRER and

FLORA FERRER,

Respondents.
x- - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 DECISION

CHICO-NAZARIO, J.:

Before this Court is an Appeal by Certiorari which assails the Decision[1] of the
Court of Appeals dated 16 August 2004 in CA-G.R. SP No. 78525, reversing and
setting aside the Order[2] dated 16 December 2002 of the Regional Trial Court
(RTC), Mandaluyong City, Branch 212 in Civil Case No. MC02-1780. The Court
of Appeals ordered the dismissal of the Complaint[3] filed by petitioner Josefa
Bautista Ferrer against respondents Sps. Manuel M. Ferrer and Virginia Ferrer,
and Sps. Ismael M. Ferrer and Flora Ferrer in the aforesaid Civil Case No.
MC02-1780.
In her Complaint for payment of conjugal improvements, sum of money,
and accounting with prayer for injunction and damages, petitioner alleged that
she is the widow of Alfredo Ferrer (Alfredo), a half-brother of respondents
Manuel M. Ferrer (Manuel) and Ismael M. Ferrer (Ismael). Before her marriage
to Alfredo, the latter acquired a piece of lot, covered by Transfer Certificate of
Title (TCT) No. 67927.[4] He applied for a loan with the Social Security System
(SSS) to build improvements thereon, including a residential house and a two-
door apartment building. However, it was during their marriage that payment
of the loan was made using the couples conjugal funds. From their conjugal
funds, petitioner posited, they constructed a warehouse on the lot. Moreover,
petitioner averred that respondent Manuel occupied one door of the
apartment building, as well as the warehouse; however, in September 1991, he
stopped paying rentals thereon, alleging that he had acquired ownership over
the property by virtue of a Deed of Sale executed by Alfredo in favor of
respondents, Manuel and Ismael and their spouses. TCT No. 67927 was
cancelled, and TCT. No. 2728 was issued and registered in the names of
respondents.

It is petitioners contention that on 2 October 1989, when her husband

was already bedridden, respondents Ismael and Flora Ferrer made him sign a
document, purported to be his last will and testament. The document,
however, was a Deed of Sale covering Alfredos lot and the improvements
thereon. Learning of this development, Alfredo filed with the RTC of Pasig, a
Complaint for Annulment of the said sale against respondents, docketed as
Civil Case No. 61327.[5] On 22 June 1993, the RTC dismissed the same.[6] The
RTC found that the terms and conditions of the Deed of Sale are not contrary
to law, morals, good customs, and public policy, and should be complied with
by the parties in good faith, there being no compelling reason
under the law to do otherwise. The dismissal was affirmed by the Court of
Appeals. Subsequently, on 7 November 1994, this Court, in G.R. No. L-117067,
finding no reversible error committed by the appellate court in affirming the
dismissal of the RTC, affirmed the Decision of the Court of Appeals.[7]

Further, in support of her Complaint, petitioner alluded to a portion of the

Decision dated 22 June 1993 of the RTC in Civil Case No. 61327, which stated,
to wit:

In determining which property is the principal and which is the

accessory, the property of greater value shall be considered the
principal. In this case, the lot is the principal and the improvements
the accessories. Since Article 120 of the Family Code provides the
rule that the ownership of accessory follows the ownership of the
principal, then the subject lot with all its improvements became an
exclusive and capital property of Alfredo with an obligation to
reimburse the conjugal partnership of the cost of improvements at
the time of liquidation of [the] conjugal partnership. Clearly, Alfredo
has all the rights to sell the subject property by himself without need
of Josefas consent.[8]

According to petitioner, the ruling of the RTC shows that, when Alfredo
died on 29 September 1999, or at the time of the liquidation of the conjugal
partnership, she had the right to be reimbursed for the cost of the
improvements on Alfredos lot. She alleged that the cost of the improvements
amounted to P500,000.00; hence, one-half thereof should be reimbursed and
paid by respondents as they are now the registered owners of Alfredos lot. She
averred that respondents cannot claim lack of knowledge about the fact that
the improvements were constructed using conjugal funds as they had occupied
one of the apartment buildings on Alfredos lot, and even paid rentals to
petitioner. In addition, petitioner prayed that respondents be ordered to
render an accounting from September, 1991, on the income of the boarding
house constructed thereon which they had appropriated for themselves, and
to remit one-half thereof as her share. Finally, petitioner sought from
respondents moral and exemplary damages, litigation and incidental expenses.

For their part, respondents filed a Motion to Dismiss,[9] contending that

petitioner had no cause of action against them, and that the cause of action
was barred by prior judgment.

On 16 December 2002, the RTC rendered an Order,[10] denying the

Motion to Dismiss. According to the RTC, no pronouncement as to the
improvements constructed on Alfredos lot has been made in Civil Case No.
61327, and the payment of petitioners share in the conjugal partnership
constitutes a separate cause of action. A subsequent Order[11] dated 17 January
2003 was issued by the RTC, denying respondents Motion for Reconsideration.

Aggrieved, respondents elevated the case to the Court of Appeals by

way of a Petition for Certiorari, alleging grave abuse of discretion amounting to
lack or excess of jurisdiction on the RTC in denying the dismissal.

On 16 August 2004, the Court of Appeals rendered a Decision granting the

Petition. It held that petitioners Complaint failed to state a cause of action. The
appellate court rationalized as follows:

[W]e believe that the instant complaint is not the proper action for
the respondent to enforce her right of reimbursement of the cost of
the improvement[s] on the subject property. As correctly pointed
 out by the petitioners, the same should be made and directed in the
settlement of estate of her deceased husband Alfredo Ferrer
pursuant to Article 129[12] of the Family Code. Such being the case, it
appears that the complaint herein fails to state a cause of action
against the petitioners, the latter not being the proper parties
against whom the subject action for reimbursement must be
directed to. A complaint states a cause of action where it contains
three essential elements of a cause of action, namely: (1) the legal
right of the plaintiff; (2) the correlative obligation of the defendant,
and (3) the act or omission of the defendant in violation of said legal
right.If these elements are absent, the complaint becomes
vulnerable to a motion to dismiss on the ground of failure to state a
cause of action. Albeit the respondent herein has the legal right to
be reimbursed of the cost of the improvements of the subject
property, it is not the petitioners but the estate of her deceased
husband which has the obligation to pay the same. The complaint
herein is therefore dismissible for failure to state a cause of action
against the petitioners. Needless to say, the respondent is not
without any further recourse as she may file her claim against the
estate of her deceased husband.

In light of the foregoing, we find that the public respondent

committed grave abuse of discretion in denying the petitioners
motion to dismiss for failure to state a cause of action.[13]

Aggrieved, petitioner filed a Motion for Reconsideration

thereon. However, on 17 December 2004, the Court of Appeals rendered a
Resolution[14] denying the motion.

Hence, the present recourse.

 Petitioner submits the following grounds for the allowance of the instant
Petition, to wit:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT

PETITIONERS COMPLAINT FAILS TO STATE A CAUSE OF ACTION
AGAINST THE RESPONDENTS, THE LATTER NOT BEING THE PROPER
PARTIES AGAINST WHOM THE SUBJECT ACTION FOR
REIMBURSEMENT MUST BE DIRECTED TO.

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE

PUBLIC RESPONDENT, HON. RIZALINA T. CAPCO-UMALI, COMMITTED
GRAVE ABUSE OF DISCRETION IN DENYING THE [RESPONDENTS]
MOTION TO DISMISS FOR FAILURE TO STATE A CAUSE OF ACTION.[15]

Both arguments raise the sole issue of whether the Court of Appeals
erred in dismissing petitioners Complaint for failure to state a cause of action.

Section 1(g) Rule 16[16] of the 1997 Rules of Civil Procedure makes it clear that
failure to make a sufficient allegation of a cause of action in the complaint
warrants the dismissal thereof. Section 2, Rule 2 of the 1997 Rules of Civil
Procedure defines a cause of action as the act or omission by which a party
violates the right of another. It is the delict or the wrongful act or omission
committed by the defendant in violation of the primary right of the plaintiff.[17]

A cause of action has the following essential elements, viz:

(1) A right in favor of the plaintiff by whatever means and under whatever law
it arises or is created;
(2) An obligation on the part of the named defendant to respect or not to
violate such right; and
 (3) Act or omission on the part of such defendant in violation of the
right of the plaintiff or constituting a breach of the obligation
of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages or other
appropriate relief.[18]

A complaint states a cause of action only when it has the three

indispensable elements.[19]

In the determination of the presence of these elements, inquiry is

confined to the four corners of the complaint. Only the statements in the
Complaint may be properly considered.[20] The absence of any of these
elements makes a complaint vulnerable to a Motion to Dismiss on the ground
of a failure to state a cause of action.[21]

After a reading of the allegations contained in petitioners Complaint, we

are convinced that the same failed to state a cause of action.

In the case at bar, petitioner asserts a legal right in her favor by relying
on the Decision of the RTC in Civil Case No. 61327. It can be recalled that the
aforesaid case is an action for Annulment filed by Alfredo and petitioner
against the respondents to seek annulment of the Deed of Sale, executed by
Alfredo in respondents favor and covering the herein subject premises. The
Complaint was dismissed by the RTC, and subsequently affirmed by the Court
of Appeals and by this Court in G.R. No. L-117067.

According to petitioner, while the RTC in Civil Case No. 61327 recognized
that the improvements constructed on Alfredos lots were deemed as Alfredos
exclusive and capital property, the court also held that petitioner, as Alfredos
spouse, has the right to claim reimbursement from the estate of Alfredo. It is
argued by petitioner that her husband had no other property, and his only
property had been sold to the respondents; hence, she has the legal right to
claim for reimbursement from the respondents who are now the owners of the
lot and the improvements thereon. In fine, petitioner asseverates that the
Complaint cannot be dismissed on the ground of failure to state a cause of
action because the respondents have the correlative obligation to pay the
value of the improvements.

Petitioner was not able to show that there is an obligation on the part of
the respondents to respect or not to violate her right. While we could concede
that Civil Case No. 61327 made a reference to the right of the spouse as
contemplated in Article 120[22] of the Family Code to be reimbursed for the
cost of the improvements, the obligation to reimburse rests on the spouse
upon whom ownership of the entire property is vested. There is no obligation
on the part of the purchaser of the property, in case the property is sold by the
owner-spouse.

Indeed, Article 120 provides the solution in determining the ownership

of the improvements that are made on the separate property of the spouses at
the expense of the partnership or through the acts or efforts of either or both
spouses. Thus, when the cost of the 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. The subject property was
precisely declared as the exclusive property of Alfredo on the basis of Article
120 of the Family Code.

What is incontrovertible is that the respondents, despite the allegations

contained in the Complaint that they are the buyers of the subject premises,
are not petitioners spouse nor can they ever be deemed as the owner-spouse
upon whom the obligation to reimburse petitioner for her costs rested. It is the
owner-spouse who has the obligation to reimburse the conjugal partnership or
the spouse who expended the acts or efforts, as the case may be. Otherwise
stated, respondents do not have the obligation to respect petitioners right to
be reimbursed.

On this matter, we do not find an act or omission on the part of respondents in

violation of petitioners rights. The right of the respondents to acquire as
buyers the subject premises from Alfredo under the assailed Deed of Sale in
Civil Case No. 61327 had been laid to rest. This is because the validity of the
Deed of Sale had already been determined and upheld with finality. The same
had been similarly admitted by petitioner in her Complaint. It can be said, thus,
that respondents act of acquiring the subject property by sale was not in
violation of petitioners rights. The same can also be said of the respondents
objection to reimburse petitioner. Simply, no correlative obligation exists on
the part of the respondents to reimburse the petitioner. Corollary thereto,
neither can it be said that their refusal to reimburse constituted a violation of
petitioners rights. As has been shown in the foregoing, no obligation by the
respondents under the law exists. Petitioners Complaint failed to state a cause
of action against the respondents, and for this reason, the Court of Appeals
was not in error in dismissing the same.
WHEREFORE, the Petition is DENIED. The Decision dated 16 August 2004 and
the Resolution dated 17 December 2004 of the Court of Appeals in CA G.R. SP.
No. 78525 are AFFIRMED.Costs de oficio.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

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 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 Malonevs. 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-28589 January 8, 1973

RAFAEL ZULUETA, ET AL., plaintiffs-appellees,

vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.

Alfredo L. Benipayo for plaintiffs-appellee Rafael Zulueta and Carolina Zulueta.

Justo L. Albert for plaintiff-appellee Telly Albert Zulueta.

V.E. del Rosario and Associates and Salcedo, Del Rosario, Bito, Misa and Lozada for defendant-
appellant.

RESOLUTION

CONCEPCION, C.J.:

Both parties in this case have moved for the reconsideration of the decision of this Court
promulgated on February 29, 1972. Plaintiffs maintain that the decision appealed from should be
affirmed in toto. The defendant, in turn, prays that the decision of this Court be "set aside ... with
or without a new trial, ... and that the complaint be dismissed, with costs; or, in the alternative,
that the amount of the award embodied therein be considerably reduced." .

Subsequently to the filing of its motion for reconsideration, the defendant filed a "petition to annul
proceedings and/or to order the dismissal of plaintiffs-appellees' complaint" upon the ground that
"appellees' complaint actually seeks the recovery of only P5,502.85 as actual damages,
because, for the purpose of determining the jurisdiction of the lower court, the unspecified sums
representing items of alleged damages, may not be considered, under the settled doctrines of
this Honorable Court," and "the jurisdiction of courts of first instance when the complaint in the
present case was filed on Sept. 30, 1965" was limited to cases "in which the demand, exclusive
of interest, or the value of the property in controversy amounts to more than ten thousand pesos"
and "the mere fact that the complaint also prays for unspecified moral damages and attorney's
fees, does not bring the action within the jurisdiction of the lower court."

We find no merit in this contention. To begin with, it is not true that "the unspecified sums
representing items or other alleged damages, may not be considered" for the purpose of
determining the jurisdiction of the court "under the settled doctrines of this Honorable Court."
In fact, not a single case has been cited in support of this allegation.

Secondly, it has been held that a clam for moral damages is one not susceptible of pecuniary
estimation. 1 In fact, Article 2217 of the Civil Code of the Philippines explicitly provides that "(t)hough
incapable of pecuniary computation, moral damages may be recovered if they are the proximate
result of the defendant's wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary"
pursuant to Article 2216 of the same Code "in order that moral ... damages may be adjudicated."
And "(t)he assessment of such damages ... is left to the discretion of the court" - said article adds -
"according to the circumstances of each case." Appellees' complaint is, therefore, within the original
jurisdiction of courts of first instance, which includes "all civil actions in which the subject of the
litigation is not capable of pecuniary estimation." 2

Thirdly, in its answer to plaintiffs' original and amended complainants, defendant had set up a
counterclaim in the aggregate sum of P12,000, which is, also, within the original jurisdiction of
said courts, thereby curing the alleged defect if any, in plaintiffs' complaint. 3

We need not consider the jurisdictional controversy as to the amount the

appellant sues to recover because the counterclaim interposed establishes the
jurisdiction of the District Court. Merchants' Heat & Light Co. v. James B. Clow &
Sons, 204 U.S. 286, 27 S. Ct. 285, 51 L. Ed. 488; O. J. Lewis Mercantile Co. v.
Klepner, 176 F. 343 (C.C.A. 2), certiorari denied 216 U.S. 620, 30 S Ct. 575, 54
L. Ed. 641. ... . 4

... courts have said that "when the jurisdictional amount is in question, the tendering
of a counterclaim in an amount which in itself, or added to the amount claimed in the
petition, makes up a sum equal to the amount necessary to the jurisdiction of this
court, jurisdiction is established, whatever may be the state of the plaintiff's
complaint." American Sheet & Tin Plate Co. v. Winzeler (D.C.) 227 F. 321, 324. 5

Thus, in Ago v. Buslon, 6 We held:

... . Then, too, petitioner's counterclaim for P37,000.00 was, also, within the
exclusive original jurisdiction of the latter courts, and there are ample precedents
to the effect that "although the original claim involves less than the jurisdictional
amount, ... jurisdiction can be sustained if the counterclaim (of the compulsory
type)" such as the one set up by petitioner herein, based upon the damages
allegedly suffered by him in consequence of the filing of said complaint
"exceeds the jurisdictional amount." (Moore Federal Practice, 2nd ed. [1948], Vol.
3, p. 41; Ginsburg vs. Pacific Mutual Life Ins. Co. of California, 69 Fed. [2d] 97;
Home Life Ins. Co. vs. Sipp., 11 Fed. [2d]474; American Sheet & Tin Plate Co.
vs. Winzeler [D.C.], 227 Fed. 321, 324; Brix vs. People's Mutual Life Ins. Co., 41
P. 2d. 537, 2 Cal. 2d. 446; Emery vs. Pacific Employees Ins. Co., 67 P. 2d. 1046,
8 Cal. 2d. 663).
Needless to say, having not only failed to question the jurisdiction of the trial court either in
that court or in this Court, before the rendition of the latter's decision, and even subsequently
thereto, by filing the aforementioned motion for reconsideration and seeking the reliefs therein
prayed for but, also, urged both courts to exercise jurisdiction over the merits of the case,
defendant is now estopped from impugning said jurisdiction. 7

Before taking up the specific questions raised in defendant's motion for reconsideration, it should
be noted that the same is mainly predicated upon the premise that plaintiffs' version is inherently
incredible, and that this Court should accept the theory of the defense to the effect that petitioner
was off-loaded because of a bomb-scare allegedly arising from his delay in boarding the aircraft
and subsequent refusal to open his bags for inspection. We need not repeat here the reasons
given in Our decision for rejecting defendant's contention and not disturbing the findings of fact of
His Honor, the Trial Judge, who had the decided advantage denied to Us of observing the
behaviour of the witnesses in the course of the trial and found those of the plaintiffs worthy of
credence, not the evidence for the defense.

It may not be amiss however, to stress the fact that, in his written report, made in transit from
Wake to Manila or immediately after the occurrence and before the legal implications or
consequences thereof could have been the object of mature deliberation, so that it could, in a
way, be considered as part of the res gestae Capt. Zentner stated that Zulueta had been off-
loaded "due to drinking" and "belligerent attitude," thereby belying the story of the defense about
said alleged bomb-scare, and confirming the view that said agent of the defendant had acted out
of resentment because his ego had been hurt by Mr. Zulueta's adamant refusal to be bullied by
him. Indeed, had there been an iota of truth in said story of the defense, Capt. Zentner would
have caused every one of the passengers to be frisked or searched and the luggage of all of
them examined as it is done now before resuming the flight from Wake Island. His failure to
do so merely makes the artificious nature of defendant's version more manifest. Indeed, the fact
that Mrs. Zulueta and Miss Zulueta were on board the plane shows beyond doubt that Mr.
Zulueta could not possibly have intended to blow it up.

The defense tries to explain its failure to introduce any evidence to contradict the testimony of
Mr. Zulueta as to why he had gone to the beach and what he did there, alleging that, in the very
nature of things, nobody else could have witnessed it. Moreover, the defense insists, inter alia,
that the testimony of Mr. Zulueta is inherently incredible because he had no idea as to how many
toilets the plane had; it could not have taken him an hour to relieve himself in the beach; there
were eight (8) commodes at the terminal toilet for men ; if he felt the need of relieving himself, he
would have seen to it that the soldiers did not beat him to the terminal toilets; he did not tell
anybody about the reason for going to the beach, until after the plane had taken off from Wake.

We find this pretense devoid of merit. Although Mr. Zulueta had to look for a secluded place in
the beach to relieve himself, beyond the view of others, defendant's airport manager, whom Mr.
Zulueta informed about it,soon after the departure of the plane, could have forthwith checked the
veracity of Mr. Zulueta's statement by asking him to indicate the specific place where he had
been in the beach and then proceeding thereto for purposes of verification.

Then, again, the passenger of a plane seldom knows how many toilets it has. As a general rule,
his knowledge is limited to the toilets for the class first class or tourist class in which he is.
Then, too, it takes several minutes for the passengers of big aircrafts, like those flying from the
U.S. to the Philippines, to deplane. Besides, the speed with which a given passenger may do so
depends, largely, upon the location of his seat in relation to the exit door. He cannot go over the
heads of those nearer than he thereto. Again, Mr. Zulueta may have stayed in the toilet terminal
for some time, expecting one of the commodes therein to be vacated soon enough, before
deciding to go elsewhere to look for a place suitable to his purpose. But he had to walk, first,
from the plane to the terminal building and, then, after vainly waiting therein for a while, cover a
distance of about 400 yards therefrom to the beach, and seek there a place not visible by the
people in the plane and in the terminal, inasmuch as the terrain at Wake Island is flat. What is
more, he must have had to takeoff part, at least, of his clothing, because, without the facilities of
a toilet, he had to wash himself and, then, dry himself up before he could be properly attired and
walk back the 400 yards that separated him from the terminal building and/or the plane.
Considering, in addition to the foregoing, the fact that he was not feeling well, at that time, We
are not prepared to hold that it could not have taken him around an hour to perform the acts
narrated by him.

But, why asks the defendant did he not reveal the same before the plane took off? The
record shows that, even before Mr. Zulueta had reached the ramp leading to the plane, Capt.
Zentner was already demonstrating at him in an intemperate and arrogant tone and attitude
("What do you think you are?), thereby impelling Mr. Zulueta to answer back in the same vein. As
a consequence, there immediately ensued an altercation in the course of which each apparently
tried to show that he could not be cowed by the other. Then came the order of Capt. Zentner to
off-load all of the Zuluetas, including Mrs. Zulueta and the minor Miss Zulueta, as well as their
luggage, their overcoats and other effects handcarried by them; but, Mr. Zulueta requested that
the ladies be allowed to continue the trip. Meanwhile, it had taken time to locate his four (4)
pieces of luggage. As a matter of fact, only three (3) of them were found, and the fourth
eventually remained in the plane. In short, the issue between Capt. Zentner and Mr. Zulueta had
been limited to determining whether the latter would allow himself to be browbeaten by the
former. In the heat of the altercation, nobody had inquired about the cause of Mr. Zulueta's delay
in returning to the plane, apart from the fact that it was rather embarrassing for him to explain, in
the presence and within the hearing of the passengers and the crew, then assembled around
them, why he had gone to the beach and why it had taken him some time to answer there a call
of nature, instead of doing so in the terminal building.

Defendant's motion for reconsideration assails: (1) the amount of damages awarded as
excessive; (2) the propriety of accepting as credible plaintiffs' theory; (3) plaintiffs' right to recover
either moral or exemplary damages; (4) plaintiffs' right to recover attorney's fees; and (5) the
non-enforcement of the compromise agreement between the defendant and plaintiff's wife, Mrs.
Zulueta. Upon the other hand, plaintiffs' motion for reconsideration contests the decision of this
Court reducing the amount of damages awarded by the trial court to approximately one-half
thereof, upon the ground, not only that, contrary to the findings of this Court, in said decision,
plaintiff had not contributed to the aggravation of his altercation or incident with Capt. Zentner by
reacting to his provocation with extreme belligerency thereby allowing himself to be dragged
down to the level on which said agent of the defendant had placed himself, but, also, because
the purchasing power of our local currency is now much lower than when the trial court rendered
its appealed decision, over five (5) years ago, on July 5, 1967, which is an undeniable and
undisputed fact. Precisely, for this reason, defendant's characterization as exorbitant of the
aggregate award of over P700,000 by way of damages, apart from attorney's fees in the sum of
P75,000, is untenable. Indeed, said award is now barely equivalent to around 100,000 U. S.
dollars.

It further support of its contention, defendant cites the damages awarded in previous cases to
passengers of airlines, 8 as well as in several criminal cases, and some cases for libel and slander.
None of these cases is, however, in point. Said cases against airlines referred to passengers who
were merely constrained to take a tourist class accommodation, despite the fact that they had first
class tickets, and that although, in one of such cases, there was proof that the airline involved had
acted as it did to give preference to a "white" passenger, this motive was not disclosed until the trial in
court. In the case at bar, plaintiff Rafael Zulueta was "off-loaded" at Wake Island, for having dared to
retort to defendant's agent in a tone and manner matching, if not befitting his intemperate language
and arrogant attitude. As a consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta had
boomeranged against him (Zentner), in the presence of the other passengers and the crew. It was,
also, in their presence that defendant's agent had referred to the plaintiffs as "monkeys," a racial insult
not made openly and publicly in the abovementioned previous cases against airlines.

In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft and its
passengers, but to retaliate and punish him for the embarrassment and loss of face thus suffered
by defendant's agent. This vindictive motive is made more manifest by the note delivered to Mr.
Zulueta by defendant's airport manager at Wake Island, Mr. Sitton, stating that the former's stay
therein would be "for a minimum of one week," during which he would be charged $13.30 per
day. This reference to a "minimum of one week" revealed the intention to keep him there
stranded that long, for no other plane, headed for Manila, was expected within said period of
time, although Mr. Zulueta managed to board, days later, a plane that brought him to Hawaii,
whence he flew back to the Philippines, via Japan.

Neither may criminal cases, nor the cases for libel and slander cited in the defendant's motion for
reconsideration, be equated with the present case. Indeed, in ordinary criminal cases, the award
for damages is, in actual practice, of purely academic value, for the convicts generally belong to
the poorest class of society. There is, moreover, a fundamental difference between said cases
and the one at bar. The Zuluetas had a contract of carriage with the defendant, as a common
carrier, pursuant to which the latter was bound, for a substantial monetary considerationpaid by
the former, not merely to transport them to Manila, but, also, to do so with "extraordinary
diligence" or "utmost diligence." 9 The responsibility of the common carrier, under said contract, as
regards the passenger's safety, is of such a nature, affecting as it does public interest, that it "cannot
be dispensed with" or even "lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise." 10 In the present case, the defendant did not only fail to comply with its
obligation to transport Mr. Zulueta to Manila, but, also, acted in a manner calculated to humiliate him,
to chastise him, to make him suffer, to cause to him the greatest possible inconvenience, by leaving
him in a desolate island, in the expectation that he would be stranded there for a "minimum of one
week" and, in addition thereto, charged therefor $13.30 a day.

It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts,
pursuant to Article 2231 of our Civil Code, except when the defendant has acted with "gross
negligence," and that there is no specific finding that it had so acted. It is obvious, however, that
in off-loading plaintiff at Wake Island, under the circumstances heretofore adverted to,
defendant's agents had acted with malice aforethought and evident bad faith. If "gross
negligence" warrants the award of exemplary damages, with more reason is its imposition
justified when the act performed is deliberate, malicious and tainted with bad faith. Thus,
in Lopez v. PANAM, 11 We held:

The rationale behind exemplary or corrective damages is, as the name implies, to
provide an example or correction for public good. Defendant having breached its
contracts in bad faith, the court, as stated earlier, may award exemplary damages
in addition to moral damages (Articles 2229, 2232, New Civil Code.)

Similarly, in NWA v. Cuenca, 12 this Court declared that an award for exemplary damages was
justified by the fact that the airline's "agent had acted in a wanton, reckless and oppressive manner" in
compelling Cuenca, upon arrival at Okinawa, to transfer, over his objection, from the first class, where
he was accommodated from Manila to Okinawa, to the tourist class, in his trip to Japan, "under threat
of otherwise leaving him in Okinawa," despite the fact that he had paid in full the first class fare and
was issued in Manila a first class ticket.

Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not liable for
exemplary damages owing to acts of his agent unless the former has participated in said acts or
ratified the same. Said case involved, however, the subsidiary civil liability of an employer arising from
criminal acts of his employee, and "exemplary damages ... may be imposed when the crime was
committed with one or more aggravating circumstances." 14 Accordingly, the Rotea case is not in
point, for the case at bar involves a breach of contract, as well as a quasi-delict.

Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be equated with the case
at bar. The Palisoc case dealt with the liability of school officials for damages arising from the death of
a student (Palisoc) due to fist blows given by another student (Daffon), in the course of a quarrel
between them, while in a laboratory room of the Manila Technical Institute. In an action for damages,
the head thereof and the teacher in charge of said laboratory were held jointly and severally liable
with the student who caused said death, for failure of the school to provide "adequate supervision
over the activities of the students in the school premises," to protect them "from harm, whether at the
hands of fellow students or other parties." Such liability was predicated upon Article 2180 of our Civil
Code, the pertinent part of which reads:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.

xxx xxx xxx

Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they
remain in their custody.

xxx xxx xxx

Obviously, the amount of damages warded in the Palisoc case is not and cannot serve as the
measure of the damages recoverable in the present case, the latter having been
caused directly and intentionally by an employee or agent of the defendant, whereas the student
who killed the young Palisoc was in no wise an agent of the school. Moreover, upon her arrival in
the Philippines, Mrs. Zulueta reported her husband's predicament to defendant's local manager
and asked him to forthwith have him (Mr. Zulueta) brought to Manila, which defendant's
aforementioned manager refused to do, thereby impliedly ratifying the off-loading of Mr. Zulueta
at Wake Island.

It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta was bound to
be present at the time scheduled for the departure of defendant's plane and that he had,
consequently, violated said contract when he did not show up at such time. This argument might
have had some weight had defendant's plane taken off before Mr. Zulueta had shown up. But the
fact is that he was ready, willing and able to board the plane about two hours before it actually
took off, and that he was deliberately and maliciously off-loaded on account of his altercation with
Capt. Zentner. It should, also, be noted that, although Mr. Zulueta was delayed some 20 to 30
minutes, the arrival or departure of planes is often delayed for much longer periods of time.
Followed to its logical conclusion, the argument adduced by the defense suggests that airlines
should be held liable for damages due to the inconvenience and anxiety, aside from actual
damages, suffered by many passengers either in their haste to arrive at the airport on scheduled
time just to find that their plane will not take off until later, or by reason of the late arrival of the
aircraft at its destination.

PANAM impugns the award of attorney's fees upon the ground that no penalty should be
imposed upon the right to litigate; that, by law, it may be awarded only in exceptional cases; that
the claim for attorney's fees has not been proven; and that said defendant was justified in
resisting plaintiff's claim "because it was patently exorbitant."

Nothing, however, can be farther from the truth. Indeed apart from plaintiff's claim for actual
damages, the amount of which is not contested, plaintiffs did not ask any specific sum by way of
exemplary and moral damages, as well as attorney's fees, and left the amount thereof to the
"sound discretion" of the lower court. This, precisely, is the reason why PANAM, now, alleges
without justification that the lower court had no jurisdiction over the subject matter of the present
case.

Moreover, Article 2208 of our Civil Code expressly authorizes the award of attorney's fees "when
exemplary damages are awarded," as they are in this case as well as "in any other case
where the court deems it just and equitable that attorney's fees ... be recovered," and We so
deem it just and equitable in the present case, considering the "exceptional" circumstances
obtaining therein, particularly the bad faith with which defendant's agent had acted, the place
where and the conditions under which Rafael Zulueta was left at Wake Island, the absolute
refusal of defendant's manager in Manila to take any step whatsoever to alleviate Mr. Zulueta's
predicament at Wake and have him brought to Manila which, under their contract of carriage,
was defendant's obligation to discharge with "extra-ordinary" or "utmost" diligence and, the
"racial" factor that had, likewise, tainted the decision of defendant's agent, Capt. Zentner, to off-
load him at Wake Island.

As regards the evidence necessary to justify the sum of P75,000 awarded as attorney's fees in
this case, suffice it to say that the quantity and quality of the services rendered by plaintiffs'
counsel appearing on record, apart from the nature of the case and the amount involved therein,
as well as his prestige as one of the most distinguished members of the legal profession in the
Philippines, of which judicial cognizance may be taken, amply justify said award, which is a little
over 10% of the damages (P700,000) collectible by plaintiffs herein. Indeed, the attorney's fees
in this case is proportionally much less than that adjudged in Lopez v. PANAM 16 in which the
judgment rendered for attorney's fees (P50,000) was almost 20% of the damages (P275,000)
recovered by the plaintiffs therein.

The defense assails the last part of the decision sought to be reconsidered, in which relying
upon Article 172 of our Civil Code, which provides that "(t)he wife cannot bind the conjugal
partnership without the husband's consent, except in cases provided by law," and it is not
claimed that this is one of such cases We denied a motion, filed by Mrs. Zulueta, for the
dismissal of this case, insofar as she is concerned - she having settled all her differences with
the defendant, which appears to have paid her the sum of P50,000 therefor - "without prejudice
to this sum being deducted from the award made in said decision." Defendant now alleges that
this is tantamount to holding that said compromise agreement is both effective and ineffective.

This, of course, is not true. The payment is effective, insofar as it is deductible from the award,
and, because it is due (or part of the amount due) from the defendant, with or without its
compromise agreement with Mrs. Zulueta. What is ineffective is the compromise agreement,
insofar as the conjugal partnership is concerned. Mrs. Zulueta's motion was for the dismissal of
the case insofar as she was concerned, and the defense cited in support thereof Article 113 of
said 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." This provision, We held,
however, refers to suits in which the wife is the principal or real party in interest, not to the case
at bar, "in which the husband is the main party in interest, both as the person principally
aggrieved and as administrator of the conjugal partnership ... 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 the conjugal partnership," to which the amounts recoverable for
breach of said contract, accordingly, belong. The damages suffered by Mrs. Zulueta were mainly
an in accident of the humiliation to which her husband had been subjected. The Court ordered
that said sum of P50,00 paid by PANAM to Mrs. Zulueta be deducted from the aggregate award
in favor of the plaintiffs herein for the simple reason that upon liquidation of the conjugal
partnership, as provided by law, said amount would have to be reckoned with, either as part of
her share in the partnership, or as part of the support which might have been or may be due to
her as wife of Rafael Zulueta. It would surely be inane to sentence the defendant to pay the
P700,000 due to the plaintiffs and to direct Mrs. Zulueta to return said P50,000 to the defendant.

In this connection, it is noteworthy that, for obvious reasons of public policy, she is not allowed by
law to waive her share in the conjugal partnership, before the dissolution thereof. 17 She cannot
even acquire any property by gratuitous title, without the husband's consent, except from her
ascendants, descendants, parents-in-law, and collateral relatives within the fourth degree. 18

It is true that the law favors and encourages the settlement of litigations by compromise
agreement between the contending parties, but, it certainly does not favor a settlement
with one of the spouses, both of whom are plaintiffs or defendants in a common cause, such as
the defense of the rights of the conjugal partnership, when the effect, even if indirect, of the
compromise is to jeopardize "the solidarity of the family" which the
law 19 seeks to protect by creating an additional cause for the misunderstanding that had arisen
between such spouses during the litigation, and thus rendering more difficult a reconciliation between
them.

It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that neither is there
any evidence that the money used to pay the plane tickets came from the conjugal funds and
that the award to Mrs. Zulueta was for her personal suffering or injuries. There was, however, no
individual or specific award in favor of Mrs. Zulueta or any of the plaintiffs. The award was made
in their favor collectively. Again, in the absence of said proof, the presumption is that the purpose
of the trip was for the common benefit of the plaintiffs and that the money had come from the
conjugal funds, for, unless there is proof to the contrary, it is presumed "(t)hat things have
happened according to the ordinary course of nature and the ordinary habits of life." 20 In fact
Manresa maintains21 that they are deemed conjugal, when the source of the money used therefor is
not established, even if the purchase had been made by the wife. 22 And this is the rule obtaining in
the Philippines. Even property registered, under the Torrens system, in the name of one of the
spouses, or in that of the wife only, if acquired during the marriage, is presumed to belong to the
conjugal partnership, unless there is competent proof to the contrary. 23

PANAM maintains that the damages involved in the case at bar are not among those forming
part of the conjugal partnership pursuant to Article 153 of the Civil Code, reading:

ART. 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;

(2) That which is obtained by the industry, or work, or as salary of the spouses, or
of either of them;

(3) The fruits, rents or interests received or due during the marriage, coming from
the common property or from the exclusive property of each spouse.

Considering that the damages in question have arisen from, inter alia, a breach of plaintiffs'
contract of carriage with the defendant, for which plaintiffs paid their fare with funds presumably
belonging to the conjugal partnership, We hold that said damages fall under paragraph (1) of
said Article 153, the right thereto having been "acquired byonerous title during the marriage ... ."
This conclusion is bolstered up by Article 148 of our Civil Code, according to which:

ART. 148. The following shall be the exclusive property of each spouse:

(1) That which is brought to the marriage as his or her own;

(2) That which each acquires, during the marriage, by lucrative title;

(3) That which is acquired by right of redemption or by exchange with other

property belonging to only one of the spouses;

(4) That which is purchased with exclusive money of the wife or of the husband.

The damages involved in the case at bar do not come under any of these provisions or of the
other provisions forming part of Chapter 3, Title VI, of Book I of the Civil Code, which chapter is
entitled "Paraphernal Property." What is more, if "(t)hat which is acquired by right of redemption
or by exchange with other property belonging to only one of the spouses," and "(t)hat which is
purchased with exclusive money of the wife or of the husband," 24belong exclusively to such wife or
husband, it follows necessarily that that which is acquired with money of the conjugal partnership
belongs thereto or forms part thereof. The rulings in Maramba v. Lozano 25 and Perez v.
Lantin, 26 cited in defendant's motion for reconsideration, are, in effect, adverse thereto. In both cases,
it was merely held that the presumption under Article 160 of our Civil Code to the effect that all
property of the marriage belong to the conjugal partnership does not apply unless it is shown that it
was acquired during marriage. In the present case, the contract of carriage was concededly entered
into, and the damages claimed by the plaintiffs were incurred, during marriage. Hence, the rights
accruing from said contract, including those resulting from breach thereof by the defendant, are
presumed to belong to the conjugal partnership of Mr. and Mrs. Zulueta. The fact that such breach of
contract was coupled, also, with a quasi-delict constitutes an aggravating circumstance and can not
possibly have the effect of depriving the conjugal partnership of such property rights.

Defendant insists that the use of conjugal funds to redeem property does not make the property
redeemed conjugal if the right of redemption pertained to the wife. In the absence, however,
of proof that such right of redemption pertains to the wife and there is no proof that the
contract of carriage with PANAM or the money paid therefor belongs to Mrs. Zulueta the
property involved, or the rights arising therefrom, must be presumed, therefore, to form part of
the conjugal partnership.

It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and moral damages"
awarded to a young and beautiful woman by reason of a scar in consequence of an injury resulting
from an automobile accident which disfigured her face and fractured her left leg, as well as caused
a permanent deformity, are her paraphernal property. Defendant cites, also, in support of its
contention the following passage from Colin y Capitant:

No esta resuelta expresamente en la legislacion espaola la cuestion de si las

indemnizaciones debidas por accidentes del trabaho tienen la consideracion de
gananciales, o son bienes particulares de los conyuges.

Inclinan a la solucion de que estas indemnizaciones deben ser consideradas

como gananciales, el hecho de que la sociedad pierde la capacidad de
trabajocon el accidente, que a ella le pertenece, puesto que de la sociedad son
losfrutos de ese trabajo; en cambio, la consideracion de que igual manera que
losbienes que sustituyen a los que cada conyuge lleva al matrimonio como
propiostienen el caracter de propios, hace pensar que las indemnizaciones que
vengana suplir la capacidad de trabajo aportada por cada conyuge a la sociedad,
debenser juridicamente reputadas como bienes propios del conyuge que haya
sufrido elaccidente. Asi se llega a la misma solucion aportada por la
jurisprudencia francesca. 28

This opinion is, however, undecisive, to say the least. It should be noted that Colin y Capitant
were commenting on the French Civil Code; that their comment referred to indemnities due in
consequence of "accidentes del trabajo "resulting in physical injuries sustained by one of the
spouses (which Mrs. Zulueta has not suffered); and that said commentators admit that the
question whether or not said damages are paraphernal property or belong to the conjugal
partnership is not settled under the Spanish law. 29 Besides, the French law and jurisprudence to
which the comments of Planiol and Ripert, likewise, refer are inapposite to the question under
consideration, becausethey differ basically from the Spanish law in the treatment of the property
relations between husband and wife. Indeed, our Civil Code, like the Spanish Civil Code, favors the
system of conjugal partnership of gains. Accordingly, the former provides that, "(i)n the absence of
marriage settlements, or when the same are void, the system of relative community or conjugal
partnership of gains ... shall govern the property relations between" the spouses. 30 Hence, "(a)ll
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." 31

No similar rules are found in the French Civil Code. What is more, under the provisions thereof,
the conjugal partnership exists only when so stipulated in the "capitulaciones matrimoniales" or
by way of exception. In the language of Manresa
 Prescindimos de los preceptos de los Condigos de Francia, Italia, Holanda,
Portugal, Alemania y Suiza, porsue solo excepcionalmente, o cuando asi se
pacta en las capitulaciones, admiten el sistema de gananciales. 32

Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered
for physical injuries suffered by the wife. In the case at bar, the party mainly injured, although not
physically, is the husband.

Accordingly, the other Philippine cases 33 and those from Louisiana whose civil law is based
upon the French Civil Code cited by the defendant, which similarly refer to moral damages due to
physical injuries suffered by the wife, are, likewise, inapplicable to the case at bar.

We find, therefore, no plausible reason to disturb the views expressed in Our decision
promulgated on February 29, 1972.

WHEREFORE, the motions for reconsideration above-referred to should be, as they are hereby
denied.

Makalintal, Zaldivar, Fernando, Makasiar, Antonio and Esguerra, JJ., concur.

Castro and Teehankee, JJ., took no part.

Barredo, J., voted to modify the judgment by reducing the amount of the awarded damages and
individualizing the same, and now reserves the filing of a separate concurring and dissenting
opinion in support of his vote.

EN BANC

G.R. No. L-38052 December 23, 1933

CONCEPCION ABELLA DE DIAZ, Plaintiff-Appellee,

vs. ERLANGER & GALINGER, INC., ET AL., defendants.
ERLANGER & GALINGER, INC., Appellant.

Vicente Ribaya and J.A. Wolfson for appellant.

Manly and Reyes and Norberto Romualdez for appellee.

HULL, J.:

Erlanger & Galinger, Inc., secured a judgment in civil case No.

3722 of the Court of First Instance of Albay against Domingo
Diaz, the husband of the plaintiff herein, and on an execution
issued to enforce the above-mentioned judgment, the sheriff
levied on certain properties. chanroble svirtualawl ibra ry chan roble s virtual law lib rary

Plaintiff thereupon brought this action in the Court of First

Instance of Camarines Sur alleging that the properties which had
been levied upon were her own paraphernal property. chanro blesvi rt ualawlib ra ry chanrobles vi rt ual law li bra ry

The court issued a temporary injunction and after hearing,

declared that the properties levied upon were paraphernal, that
the obligation which was the basis of the judgment was a
personal obligation of the husband, and that under article 1386 of
the Civil Code, the fruits of the paraphernal property of the wife
were exempt from execution in this case. The court held that all
the property was unlawfully levied upon and made the
preliminary injunction permanent. chanroblesv irt ualawli bra ry chanrob les vi rtual law lib rary

Defendant appeals, and the first question for consideration is

whether buildings erected on paraphernal property of the wife
with the private funds of the wife are exempt from execution for
the debts contracted by the husband. Article 1404 of the Civil
Code provides:

ART. 1404. Any useful expenditures made for the benefit of the
separate property or either one of the spouses by means of
advances made by the partnership, or by the industry of the
husband or wife, are partnership property. chanroble svirtualawl ibra ry chan roble s virtual law lib rary

Buildings constructed during the marriage on land belonging to

one of the spouses shall also belong to the partnership, but the
value of the land shall be paid to the spouse owning the same.

We shall not disturb the findings of fact of the trial court that a
commercial building, the camarin, and the granary, the buildings
in dispute, were build on the lands of appellee with the appellee's
own personal money. At first view there is no limitation on the
second paragraph of the above-quoted article, but Manresa in his
Commentaries, volume 9, page 608, holds that if the building is
constructed by the owner of the land with her private money, the
building does not belong to the partnership but to the owner of
the land, and no reason occurs to us why such holding is not a
correct and just interpretation of this section. We therefore
concur with the trial court that these buildings are not subject to
levy and sale in this case.
chanroblesv irt ualawli bra ry chan robles v irt ual law l ibra ry
As to the items of palay and lumber, we are not convinced from
the evidence that they belong exclusively to appellee, but on then
contrary, we believe that they are part of the conjugal property
(article 1407, Civil Code). Likewise, as to the Buick automobile.
While it may be true that at the time of their marriage, the wife
had an automobile, that automobile has long since passed out of
existence, and the mere fact that each successive car was turned
in as part of the purchase price of a new car, would not make
every automobile in the future paraphernal, but on the contrary,
it becomes conjugal and responsible for the debts of the
partnership. chanro blesvi rt ualawlib ra ry chan robles v irt ual law li bra ry

As above stated, the trial court relied to a great extent in its

judgment on article 1386 of the Civil Code which reads:

ART. 1386. The fruits of the paraphernal property cannot be

subject to the payment of personal obligations of the husband,
unless it be proved that such obligations were productive of some
benefit to the family.

It will therefore be necessary to consider briefly the transaction

out of which arose the judgment, the basis of the existing writ of
execution. The husband, Domingo Diaz, while a member of the
Legislature, secured the passage of Act. No. 2644 granting to his
brother a franchise to construct and operate an electric light plant
at Tabaco, Albay. Domingo Diaz purchased from Erlanger &
Galinger, Inc., machinery and equipment for the construction and
installation of the plant, and judgment was obtained by Erlanger
& Galinger, Inc., against Diaz for the balance of the purchase
price.
chan rob lesvi rtualaw lib rary cha nrob les vi rtua l law lib rary

Appellee contends that she was opposed to her husband's going

into the electric light business and that therefore the business
was a personal one of his and not an enterprise of the conjugal
partnership. Such contention is fundamentally erroneous. The
husband, as the manager of the partnership (article 1412, Civil
Code), has the 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. chanroble svirtualawl ibra ry chanrob les vi rtual law lib rary
The obligation, not being a personal one of the husband, article
1386 has no application, and any property belonging to the
conjugal partnership must be held liable to seizure. chanroblesvi rt ualawlib ra ry chanrob les vi rtual law lib rary

In the preliminary injunction which was made permanent by the

trial court, appellant and the sheriff were forbidden to attempt to
collect by legal process any of the rents or fruits of the
paraphernal property. As the fruits of the paraphernal property
belonged to the conjugal partnership, they are responsible for the
debts of that partnership. The injunction is too broad and must be
modified. chan roblesv irtualawli bra ry chan roble s virtual law l ibra ry

The judgment of the Court of First Instance of Camarines Sur is

affirmed so far as it relates to the ownership of the buildings. As
to the other items, including the rents of the paraphernal
property, it is reversed. The case will be remanded to the Court of
First Instance of Camarines Sur for action in conformity with this
opinion. No expression as to costs. So ordered. chanroble svirtualawl ibra ry chan roble s virtual law l ibra ry

Malcolm, Villa-Real, Abad Santos, and Butte, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-61464 May 28, 1988

BA FINANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing business
under the name and style of A & L INDUSTRIES), respondents.

GUTIERREZ, JR., J.:

This is a petition for review seeking to set aside the decision of the Court of Appeals which
affirmed the decision of the then Court of First Instance of Manila, dismissing the complaint
instituted by the petitioner and ordering it to pay damages on the basis of the private
respondent's counterclaim.

On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the
amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and as
representative of the A & L Industries. Respondent Yulo presented an alleged special power of
attorney executed by his wife, respondent Lily Yulo, who manages A & L Industries and under
whose name the said business is registered, purportedly authorizing Augusto Yulo to procure the
loan and sign the promissory note. About two months prior to the loan, however, Augusto Yulo
had already left Lily Yulo and their children and had abandoned their conjugal home. When the
obligation became due and demandable, Augusto Yulo failed to pay the same.

On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto and
Lily Yulo on the basis of the promissory note. It also prayed for the issuance of a writ of
attatchment alleging that the said spouses were guilty of fraud in contracting the debt upon which
the action was brought and that the fraud consisted of the spouses' inducing the petitioner to
enter into a contract with them by executing a Deed of Assignment in favor of the petitioner,
assigning all their rights, titles and interests over a construction contract executed by and
between the spouses and A. Soriano Corporation on June 19, 1974 for a consideration of
P615,732.50 when, in truth, the spouses did not have any intention of remitting the proceeds of
the said construction contract to the petitioner because despite the provisions in the Deed of
Assignment that the spouses shall, without compensation or costs, collect and receive in trust for
the petitioner all payments made upon the construction contract and shall remit to the petitioner
all collections therefrom, the said spouses failed and refuse to remit the collections and instead,
misappropriated the proceeds for their own use and benefit, without the knowledge or consent of
the petitioner.

The trial court issued the writ of attachment prayed for thereby enabling the petitioner to attach
the properties of A & L Industries. Apparently not contented with the order, the petitioner filed
another motion for the examination of attachment debtor, alleging that the properties attached by
the sheriff were not sufficient to secure the satisfaction of any judgment that may be recovered
by it in the case. This was likewise granted by the court.

Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusta
Yulo and she are husband and wife, the former had abandoned her and their children five (5)
months before the filing of the complaint; that they were already separated when the promissory
note was executed; that her signature in the special power of attorney was forged because she
had never authorized Augusto Yulo in any capacity to transact any business for and in behalf of
A & L Industries, which is owned by her as a single proprietor, that she never got a single
centavo from the proceeds of the loan mentioned in the promissory note; and that as a result of
the illegal attachment of her properties, which constituted the assets of the A & L Industries, the
latter closed its business and was taken over by the new owner.

After hearing, the trial court rendered judgment dismissing the petitioner's complaint against the
private respondent Lily Yulo and A & L Industries and ordering the petitioner to pay the
respondent Lily Yulo P660,000.00 as actual damages; P500,000.00 as unrealized profits;
P300,000.00 as exemplary damages; P30,000.00 as and for attorney's fees; and to pay the
costs.

The petitioner appealed. The Court of Appeals affirmed the trial court's decision except for the
exemplary damages which it reduced from P300,000.00 to P150,000.00 and the attorney's fees
which were reduced from P30,000.00 to P20,000.00.

In resolving the question of whether or not the trial court erred in holding that the signature of
respondent Lily Yulo in the special power of attorney was forged, the Court of Appeals said:

The crucial issue to be determined is whether or not the signatures of the

appellee Lily Yulo in Exhibits B and B-1 are forged. Atty. Crispin Ordoa, the
Notary Public, admitted in open court that the parties in the subject documents
did not sign their signatures in his presence. The same were already signed by
the supposed parties and their supposed witnesses at the time they were brought
to him for ratification. We quote from the records the pertinent testimony of Atty.
Ordoa, thus:
 Q. This document marked as Exhibit B-1, when this was
presented to you by that common friend, June Enriquez, it was
already typewritten, it was already accomplished, all typewritten.?

A. Yes, sir.

Q And the parties had already affixed their signatures in this

document?

A. Yes, sir.

Q. In this document marked as Exhibit B although it appears here

that this is an acknowledgment, you have not stated here that the
principal actually acknowledged this document to be her voluntary
act and deed?

A This in one of those things that escaped my attention. Actually I

have not gone over the second page. I believed it was in order I
signed it. (TSN pp. 13-14, Hearing of Nov. 26, 1976).

The glaring admission by the Notary Public that he failed to state in the
acknowledgment portion of Exhibit B-1 that the appellee Lily Yulo acknowledged
the said document to be her own voluntary act and deed, is a very strong and
commanding circumstance to show that she did not appear personally before the
said Notary Public and did not sign the document.

Additionally, the Notary Public admitted that, while June Enriquez is admittedly a
mutual friend of his and the defendant Augusta Yulo, and who is also an
instrumental witness in said Exhibit B-1., he could not recognize or tell which of
the two signatures appearing therein, was the signature of this June Enriquez.

Furthermore, as the issue is one of credibility of a witness, the findings and

conclusions of the trial court before whom said witness, Atty. Crispin Ordoa, the
Notary Public before whom the questioned document was supposedly ratified
and acknowledged, deserve great respect and are seldom disturbed on appeal
by appellate tribunals, since it is in the best and peculiar advantage of
determining and observing the conduct, demeanor and deportment of a particular
witness while he is testifying in court, an opportunity not enjoyed by the appellate
courts who merely have to rely on the recorded proceedings which transpired in
the court below, and the records are bare of any circumstance of weight, which
the trial court had overlooked and which if duly considered, may radically affect
the outcome of the case.

On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her
signature in Exhibit B-1, presented in court a handwriting expert witness in the
person of Police Captain Yakal Giron of the Integrated National Police Training
Command, and who is also a Document Examiner of the same Command's
Crime Laboratory at Fort Bonifacio, Metro Manila. His experience as an examiner
of questioned and disputed documents, in our mind, is quite impressive. To
qualify him as a handwriting expert, he declared that he underwent extensive and
actual studies and examination of disputed or questioned document, both at the
National Bureau of Investigation Academy and National Bureau of Investigation
Questioned Document Laboratory, respectively, from July 1964, up to his
appointment as Document Examiner in June, 1975, and, to further his experience
along this line, he attended the 297th Annual Conference of the American Society
of Questioned Docurnent Examiners held at Seattle, Washington, in August
 1971, as a representative of the Philippines, and likewise conducted an
observation of the present and modern trends of crime laboratories in the West
Coast, U.S.A., in 1971; that he likewise had conducted actual tests and
examination of about 100,000 documents, as requested by the different courts,
administrative, and governmental agencies of the Government, substantial
portions of which relate to actual court cases.

In concluding that the signatures of the appellee Lily Yulo, in the disputed
document in question (Exh. B-1), were all forgeries, and not her genuine
signature, the expert witness categorically recited and specified in open court
what he observed to be about twelve (12) glaring and material significant
differences, in his comparison of the signatures appearing in the genuine
specimen signatures of the said appellee and with those appearing in the
questioned document (Exhibit B-1). Indeed, we have likewise seen the supposed
notable differences, found in the standard or genuine signatures of the appellee
which were lifted and obtained in the official files of the government, such as the
Bureau of Internal Revenue on her income tax returns, as compared to the
pretended signature of the appellee appearing in Exhibits B, B-1. It is also
noteworthy to mention that the appellant did not even bother to conduct a cross-
examination of the handwriting expert witness, Capt. Giron, neither did the
appellant present another handwriting expert, at least to counter-act or balance
the appellee's handwriting expert.

Prescinding from the foregoing facts, we subscribe fully to the lower court's
observations that the signatures of the appellee Lily Yulo in the questioned
document (Exh. B-1) were forged. Hence, we find no factual basis to disagree.
(pp. 28-30, Rollo)

As to the petitioner's contention that even if the signature of Lily Yulo was forged or even if the
attached properties were her exclusive property, the same can be made answerable to the
obligation because the said properties form part of the conjugal partnership of the spouses Yulo,
the appellate court held that these contentions are without merit because there is strong
preponderant evidence to show that A & L Industries belongs exclusively to respondent Lily Yulo,
namely: a) The Certificate of Registration of A & L Industries, issued by the Bureau of
Commerce, showing that said business is a single proprietorship, and that the registered owner
thereof is only Lily Yulo; b) The Mayor's Permit issued in favor of A & L Industries, by the
Caloocan City Mayor's Office showing compliance by said single proprietorship company with the
City Ordinance governing business establishments; and c) The Special Power of Attorney itself,
assuming but without admitting its due execution, is tangible proof that Augusto Yulo has no
interest whatsoever in the A & L Industries, otherwise, there would have been no necessity for
the Special Power of Attorney if he is a part owner of said single proprietorship.

With regard to the award of damages, the Court of Appeals affirmed the findings of the trial court
that there was bad faith on the part of the petitioner as to entitle the private respondent to
damages as shown not only by the fact that the petitioner did not present the Deed of
Assignment or the construction agreement or any evidence whatsoever to support its claim of
fraud on the part of the private respondent and to justify the issuance of a preliminary
attachment, but also by the following findings:

Continuing and elaborating further on the appellant's mala fide actuations in

securing the writ of attachment, the lower court stated as follows:

Plaintiff not satisfied with the instant case where an order for
attachment has already been issued and enforced, on the
strength of the same Promissory Note (Exhibit"A"), utilizing the
Deed of Chattel Mortgage (Exhibit "4"), filed a foreclosure
 proceedings before the Office of the Sheriff of Caloocan
(Exhibit"6") foreclosing the remaining properties found inside the
premises formerly occupied by the A & L Industries. A minute
examination of Exhibit "4" will show that the contracting parties
thereto, as appearing in par. 1 thereof, are Augusto Yulo, doing
business under the style of A & L Industries (should be A & L
Glass Industries Corporation), as mortgagor and BA Finance
Corporation as mortgagee, thus the enforcement of the Chattel
Mortgage against the property of A & L Industries exclusively
owned by Lily T. Yulo appears to be without any factual or legal
basis whatsoever. The chattel mortgage, Exhibit "4" and the
Promissory Note, Exhibit A, are based on one and the same
obligation. Plaintiff tried to enforce as it did enforce its claim into
two different modes a single obligation.

Aware that defendant Lily Yulo, filed a Motion to Suspend

Proceedings by virtue of a complaint she filed with the Court of
First Instance of Caloocan, seeking annulment of the Promissory
Note, the very basis of the plaintiff in filing this complaint,
immediately after the day it filed a Motion for the Issuance of an
Alias Writ of Preliminary Attachment . . .Yet, inspite of the
knowledge and the filing of this Motion to Suspend Proceedings,
the Plaintiff still filed a Motion for the Issuance of a Writ of
Attachment dated February 6, 1976 before this court. To add
insult to injury, plaintiff even filed a Motion for Examination of the
Attachment Debtor, although aware that Lily Yulo had already
denied participation in the execution of Exhibits "A" and "B".
These incidents and actions taken by plaintiff, to the thinking of
the court, are sufficient to prove and establish the element of bad
faith and malice on the part of plaintiff which may warrant the
award of damages in favor of defendant Lily Yulo. (Ibid., pp. 102-
103).<re||an 1w>

Indeed, the existence of evident bad faith on the appellant's part

in proceeding against the appellee Lily Yulo in the present case,
may likewise be distressed on the fact that its officer Mr. Abraham
Co, did not even bother to demand the production of at least the
duplicate original of the Special Power of Attorney (Exhibit B) and
merely contended himself with a mere xerox copy thereof, neither
did he require a more specific authority from the A & L Industries
to contract the loan in question, since from the very content and
recitals of the disputed document, no authority, express or
implied, has been delegated or granted to August Yulo to contract
a loan, especially with the appellant. (pp. 33-34, Rollo)

Concerning the actual damages, the appellate court ruled that the petitioner should have
presented evidence to disprove or rebut the private respondent's claim but it remained quiet and
chose not to disturb the testimony and the evidence presented by the private respondent to
prove her claim.

In this petition for certiorari, the petitioner raises three issues. The first issue deals with the
appellate court's affirmance of the trial court's findings that the signature of the private
respondent on the Special Power of Attorney was forged. According to the petitioner, the Court of
Appeals disregarded the direct mandate of Section 23, Rule 132 of the Rules of Court which
states in part that evidence of handwriting by comparison may be made "with writings admitted or
treated as genuine by the party against whom the evidence is offered, or proved to be genuine to
the satisfaction of the judge," and that there is no evidence on record which proves or tends to
prove the genuineness of the standards used.

There is no merit in this contention.

The records show that the signatures which were used as "standards" for comparison with the
alleged signature of the private respondent in the Special Power of Attorney were those from the
latter's residence certificates in the years 1973, 1974 and 1975, her income tax returns for the
years 1973 and 1975 and from a document on long bond paper dated May 18, 1977. Not only
were the signatures in the foregoing documents admitted by the private respondent as hers but
most of the said documents were used by the private respondent in her transactions with the
government. As was held in the case of Plymouth Saving & Loan Assn. No. 2 v. Kassing (125 NE
488, 494):

We believe the true rule deduced from the authorities to be that the genuineness
of a "standard" writing may be established (1) by the admission of the person
sought to be charged with the disputed writing made at or for the purposes of the
trial or by his testimony; (2) by witnesses who saw the standards written or to
whom or in whose hearing the person sought to be charged acknowledged the
writing thereof; (3) by evidence showing that the reputed writer of the standard
has acquiesced in or recognized the same, or that it has been adopted and acted
upon by him his business transactions or other concerns....

Furthermore, the judge found such signatures to be sufficient as standards. In the case of Taylor-
Wharton Iron & Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:

When a writing is offered as a standard of comparison it is for the presiding judge

to decide whether it is the handwriting of the party to be charged. Unless his
finding is founded upon error of law, or upon evidence which is, as matter of law,
insufficient to justify the finding, this court will not revise it upon exceptions."
(Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuez v. Perry, 113 Mass,
274, 276.)

We cannot find any error on the part of the trial judge in using the above documents as standards
and also in giving credence to the expert witness presented by the private respondent whose
testimony the petitioner failed to rebut and whose credibility it likewise failed to impeach. But
more important is the fact that the unrebutted handwriting expert's testimony noted twelve (12)
glaring and material differences in the alleged signature of the private respondent in the Special
Power of Attorney as compared with the specimen signatures, something which the appellate
court also took into account. In Cesar v. Sandiganbayan (134 SCRA 105, 132), we ruled:

Mr. Maniwang pointed to other significant divergences and distinctive

characteristics between the sample signatures and the signatures on the
questioned checks in his report which the court's Presiding Justice kept
mentioning during Maniwang's testimony.

In the course of his cross-examination, NBI expert Tabayoyong admitted that he

saw the differences between the exemplars used and the questioned signatures
but he dismissed the differences because he did not consider them fundamental.
We rule that significant differences are more fundamental than a few similarities.
A forger always strives to master some similarities.

The second issue raised by the petitioner is that while it is true that A & L Industries is a single
proprietorship and the registered owner thereof is private respondent Lily Yulo, the said
proprietorship was established during the marriage and its assets were also acquired during the
same. Therefore, it is presumed that this property forms part of the conjugal partnership of the
spouses Augusto and Lily Yulo and thus, could be held liable for the obligations contracted by
Augusto Yulo, as administrator of the partnership.

There is no dispute that A & L Industries was established during the marriage of Augusta and Lily
Yulo and therefore the same is presumed conjugal and the fact that it was registered in the name
of only one of the spouses does not destroy its conjugal nature (See Mendoza v. Reyes, 124
SCRA 161, 165). However, for the said property to be held liable, the obligation contracted by the
husband must have redounded to the benefit of the conjugal partnership under Article 161 of the
Civil Code. In the present case, the obligation which the petitioner is seeking to enforce against
the conjugal property managed by the private respondent Lily Yulo was undoubtedly contracted
by Augusto Yulo for his own benefit because at the time he incurred the obligation he had
already abandoned his family and had left their conjugal home. Worse, he made it appear that he
was duly authorized by his wife in behalf of A & L Industries, to procure such loan from the
petitioner. Clearly, to make A & L Industries liable now for the said loan would be unjust and
contrary to the express provision of the Civil Code. As we have ruled in Luzon Surety Co., Inc. v.
De Gracia (30 SCRA 111, 115-117):

As explained in the decision now under review: "It is true that the husband is the
administrator of the conjugal property pursuant to the provisions of Art. 163 of the
new Civil Code. However, as such administrator the only obligations incurred by
the husband that are chargeable against the conjugal property are those incurred
in the legitimate pursuit of his career, profession or business with the honest
belief that he is doing right for the benefit of the family. This is not true in the case
at bar for we believe that the husband in acting as guarantor or surety for another
in an indemnity agreement as that involved in this case did not act for the benefit
of the conjugal partnership. Such inference is more emphatic in this case, when
no proof is presented that Vicente Garcia in acting as surety or guarantor
received consideration therefore, which may redound to the benefit of the
conjugal partnership.(Ibid, pp. 46-47).

xxx xxx xxx

xxx xxx xxx

In the most categorical language, a conjugal partnership under that provision is

liable only for such "debts and obligations contracted by the husband for the
benefit of the conjugal partnership." There must be the requisite showing then of
some advantage which clearly accrued to the welfare of the spouses. There is
none in this case.

xxx xxx xxx

Moreover, it would negate the plain object of the additional requirement in the
present Civil Code that a debt contracted by the husband to bind a conjugal
partnership must redound to its benefit. That is still another provision indicative of
the solicitude and tender regard that the law manifests for the family as a unit. Its
interest is paramount; its welfare uppermost in the minds of the codifiers and
legislators.

We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto Yulo
against his conjugal properties with respondent Lily Yulo. Thus, it follows that the writ of
attachment cannot issue against the said properties.

Finally, the third issue assails the award of actual damages according to the petitioner, both the
lower court and the appellate court overlooked the fact that the properties referred to are still
subject to a levy on attachment. They are, therefore, still under custodia legis and thus, the
assailed decision should have included a declaration as to who is entitled to the attached
properties and that assuming arguendo that the attachment was erroneous, the lower court
should have ordered the sheriff to return to the private respondent the attached properties
instead of condemning the petitioner to pay the value thereof by way of actual damages.

In the case of Lazatin v. Twao (2 SCRA 842, 847), we ruled:

xxx xxx xxx

... It should be observed that Sec. 4 of Rule 59, does not prescribed the remedies
available to the attachment defendant in case of a wrongful attachment, but
merely provides an action for recovery upon the bond, based on the undertaking
therein made and not upon the liability arising from a tortuous act, like the
malicious suing out of an attachment. Under the first, where malice is not
essential, the attachment defendant, is entitled to recover only the actual
damages sustained by him by reason of the attachment. Under the second,
where the attachment is maliciously sued out, the damages recoverable may
include a compensation for every injury to his credit, business or feed (Tyler v.
Mahoney, 168 NC 237, 84 SE 362; Pittsburg etc. 5 Wakefield, etc., 135 NC 73,
47 SE 234). ...

The question before us, therefore, is whether the attachment of the properties of A & L Industries
was wrongful so as to entitle the petitioner to actual damages only or whether the said
attachment was made in bad faith and with malice to warrant the award of other kinds of
damages. Moreover, if the private respondent is entitled only to actual damages, was the court
justified in ordering the petitioner to pay for the value of the attached properties instead of
ordering the return of the said properties to the private respondent Yulo ?

Both the trial and appellate courts found that there was bad faith on the part of the petitioner in
securing the writ of attachment. We do not think so. "An attachment may be said to be wrongful
when, for instance, the plaintiff has no cause of action, or that there is no true ground therefore,
or that the plaintiff has a sufficient security other than the property attached, which is tantamout
to saying that the plaintiff is not entitled to attachment because the requirements of entitling him
to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco, Revised Rules of
Court).

Although the petitioner failed to prove the ground relied upon for the issuance of the writ of
attachment, this failure cannot be equated with bad faith or malicious intent. The steps which
were taken by the petitioner to ensure the security of its claim were premised, on the firm belief
that the properties involved could be made answerable for the unpaid obligation due it. There is
no question that a loan in the amount of P591,003.59 was borrowed from the bank.

We, thus, find that the petitioner is liable only for actual damages and not for exemplary damages
and attorney's fees. Respondent Lily Yulo has manifested before this Court that she no longer
desires the return of the attached properties since the said attachment caused her to close down
the business. From that time she has become a mere employee of the new owner of the
premises. She has grave doubts as to the running condition of the attached machineries and
equipments considering that the attachment was effected way back in 1975. She states as a
matter of fact that the petitioner has already caused the sale of the machineries for fear that they
might be destroyed due to prolonged litigation. We, therefore, deem it just and equitable to allow
private respondent Lily Yulo to recover actual damages based on the value of the attached
properties as proven in the trial court, in the amount of P660,000.00. In turn, if there are any
remaining attached properties, they should be permanently released to herein petitioner.

We cannot, however, sustain the award of P500,000.00 representing unrealized profits because
this amount was not proved or justified before the trial court. The basis of the alleged unearned
profits is too speculative and conjectural to show actual damages for a future period. The private
respondent failed to present reports on the average actual profits earned by her business and
other evidence of profitability which are necessary to prove her claim for the said amount (See G.
A. Machineries, Inc. v. Yaptinchay, 126 SCRA 78, 88).

The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00 actual
damages representing unrealized profits, P150,000.00 for exemplary damages and P20,000.00
for attorney's fees. As stated earlier, the attached properties, should be released in favor of the
petitioner.

WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner is
ordered to pay the private respondent Lily Yulo the amount of SIX HUNDRED SIXTY
THOUSAND PESOS (P660,000.00) as actual damages. The remaining properties subject of the
attachment are ordered released in favor of the petitioner.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 79734 December 8, 1988

MARMONT RESORT HOTEL ENTERPRISES, petitioner,

vs.
FEDERICO GUIANG, AURORA GUIANG, and COURT OF APPEALS, respondents.

Isagani M. Jungco for petitioner.

FELICIANO, J.:

The present Petition for Review seeks to set aside the Decision dated 9 December 1986 of the
Court of Appeals in CA-G.R. CV 03299. The appellate court affirmed a Decision dated 31 May
1983 of Branch 83 of the Regional Trial Court of Olongapo City dismissing the complaint in Civil
Case No. 2896-C filed by petitioner company against private respondent spouses.

On 2 May 1975, a Memorandum of Agreement was executed between Maris Trading and
petitioner Marmont Resort Hotel Enterprises, Inc. ("Marmont"), a corporation engaged in the
hotel and resort business with office and establishment at Olongapo City. Under the agreement,
Maris Trading undertook to drill for water and to provide all equipment necessary to install and
complete a water supply facility to service the Marmont Resort Hotel in Olongapo, for a stipulated
fee of P40,000.00. In fulfillment of its contract, Maris Trading drilled a well and installed a water
pump on a portion of a parcel of land situated in Olongapo City, then occupied by respondent
spouses Federico and Aurora Guiang.

Five (5) months later, a second Memorandum of Agreement was executed between Maris
Trading and Aurora Guiang, with Federico Guiang signing as witness. This second agreement in
essential part read: 1
 That the First Party [Maris Trading] has dug, drilled and tapped water source for
Marmont Resort, located at Bo. Barretto, Olongapo City in accordance with their
agreement executed on May 2, 1975 and notarized before Isagani M. Jungco,
Notary Public and entered as Doc. No. 166; Page No. 135; Book No. XV; Series
of 1975.

That the First Party has erected, built and drilled for the water source of Marmont
Resort on the land owned by the Second Party [Aurora Guiang] at the corner of J.
Montelibano Street and Maquinaya Drive (Provincial Road) with the latter's
permission.

That for and in consideration of the sum of P1,500.00 the Second Party hereby
Sell, Transfer and Cede all possessory rights, interest and claims over that
portion of the lot wherein the water source of Marmont Resort is located unto and
in favor of Maris Trading.

After some time, the water supply of the Marmont Resort Hotel became inadequate to meet the
hotel's water requirements. Petitioner Marmont secured the services of another contractor (the
name of which was not disclosed), which suggested that in addition to the existing water pump, a
submersible pump be installed to increase the pressure and improve the flow of water to the
hotel. Accordingly, Juan Montelibano, Jr., manager of the Marmont Resort Hotel, sought
permission from the Guiang spouses to inspect the water pump which had been installed on the
portion of the land previously occupied by the spouses and to make the necessary additional
installations thereon. No such permission, however, was granted.

On 13 May 1980, petitioner Marmont filed a Complaint 2 against the Guiang spouses for damages
resulting from their refusal to allow representatives of petitioner and the second contractor firm entry
into the water facility site. The claimed damages were broken down as follows: (a) P10,000.00
representing the amount advanced in payment to the second contractor; (b) P40,000.00 representing
the total project cost of the installation made by Maris Trading: (c) P50,000.00 representing additional
expenses incurred and incidental losses resulting from failure of the original pump to cope with the
water requirements of the Marmont Resort Hotel; and (d) P10,000.00 for Attorney's fees.

In their Answer, 3 the Guiang spouses (defendants below) denied having had any previous
knowledge of the first Memorandum of Agreement and asserted that the second Memorandum of
Agreement was invalid for not having been executed in accordance with law. The spouses added a
counterclaim for damages in the amount of P200,000.00.

On 2 October 1980, at the pre-trial conference, the parties agreed on the following stipulation of
facts and issues embodied in a Pre-Trial Order: 4

III

In addition to the admission made elsewhere in their respective pleadings, the

parties entered into the following stipulation of facts:

1. Plaintiff is a corporation duly organized and existing under the

laws of the Philippines with office at Montelibano Street, Barrio
Barretto, Olongapo City;

2. The contract referred to in paragraph 2 of the complaint

between the plaintiff and Maris Trading is contained in a
document captioned Memorandum Agreement executed on May
2, 1975, a xerox copy of which is Annex 'A' of plaintiffs complaint;
 3. On October 7, 1975, the Maris Trading represented by Ceferino
Cabral and defendant Aurora Guiang entered into a memorandum
agreement;

4. The portion sold under Annex 'A' is still a part of the public
domain.

IV

The plaintiff marked the following exhibits in evidence:

Exhibit 'A'-Memorandum Agreement dated May 2, 1975

Exhibit 'B-Memorandum Agreement dated October 7, 1975

The issues left to be ventilated during the trial are the following:

1. Whether defendants has actually prohibited the plaintiff [from)

making repairs, [on] the pump constructed by Maris Trading for
the plaintiff under the agreement Exhibit 'A,' if so;

2. Whether defendants [have] the right to prohibit the Maris

Trading from performing the repairs and if not

3. Whether defendants are liable for damages under the human

relations provision of the Civil Code.

On I January 1980, the Guiang spouses moved to dismiss the Complaint. 5 The spouses there
assailed the validity of the second Memorandum of Agreement, alleging that the subject matter
thereof involved conjugal property alienated by Aurora Guiang without the marital consent of her
husband, Federico Guiang. Further, it was alleged that the land upon which the hotel's water supply
facility was installed-and which the Guiang spouses occupied-formed part of the public domain and
was then still the subject of a Miscellaneous Sales Application submitted by Federico Guiang. The
Motion to Dismiss, however, was denied by the trial court.

No evidence having been adduced by the Guiang spouses on their behalf, the case was
submitted for derision. On 31 May 1983, the trial court rendered a decision, 6 dismissing the
complaint. The trial court found that Aurora Guiang had validly alienated her rights over the disputed
portion of land to Maris Trading, but held that the evidence failed to show that Maris Trading, in turn,
had transferred such rights to petitioner Marmont.

Petitioner Marmont appealed to the Court of Appeals which affirmed the decision of the trial court
and dismissed the appeal for lack of merit. 7 The appellate court, citing Section 55, Rule 132 of the
Revised Rules of Court, held that the first and second Memoranda of Agreement could not legally be
considered by the court as included in the body of evidence of the case, as neither document had
been formally offered in evidence by either party. It also held that, in any event, neither document
showed that Marmont had in fact acquired from Maris Trading whatever rights the latter had over the
land in dispute.

In the instant Petition for Review, petitioner assigns the following errors: 8

1. The Court of Appeals erred in not considering the

Memorandum of Agreement of May 2, 1975 and 7 October 1975
as the same were already admitted in the pre-trial order; and
 2. The Court of Appeals erred in deciding that ownership belongs
to Maris Trading hence, private respondent Guiang can prohibit
Marmont Resort from entering the land.

We find for the petitioner.

Both the trial and appellate courts held that the first and second Memoranda of Agreement are
not properly considered as forming part of the record of this case, because neither had been
formally presented and offered in evidence at the trial of Civil Case No. 2896-C. The record
shows, however, as noted earlier, that at the pre-trial conference held on 2 October 1980, both
petitioner Marmont and respondent spouses had agreed upon a stipulation of facts and issues
recognizing the existence of those same two (2) agreements. Such stipulation of facts constitutes
a judicial admission, the veracity of which requires no further proof and which may be
controverted only upon a clear showing that such stipulation had been entered into through
"palpable mistake." On this point, Section 2, Rule 129 of the Revised Rules of Court provides:

Section 2. Judicial Admissions.--Admission made by the parties in

the pleadings, or in the course of the trial or other proceedings do
not require proof and cannot be contradicted unless previously
shown to have been made through palpable mistake. (emphasis
supplied)

There has been no showing and respondent spouses do not claim that "palpable mistake" had
intervened here, in respect of the formulation of the facts stipulated by the parties at the pre-trial
conference. Absent any such showing, that stipulation of facts is incontrovertible, 9 and may be
relied upon by the courts. 10 Respondent spouses are estopped from raising as an issue in this case
the existence and admissibility in evidence of both the first and second Memoranda of Agreement
which, having been marked as exhibits during pre-trial, properly form part of the record of this case,
even though not formally offered in evidence after trial. 11

We consider briefly respondent spouses' argument that the second Memorandum of Agreement
was invalid for having been executed by Aurora Guiang without the marital consent of Federico,
contrary to Articles 165 and 172 of the Civil Code.

Article 165 and 172 state the general principle under our civil law, that the wife may not validly
bind the conjugal partnership without the consent of the husband, who is legally the administrator
of the conjugal partnership. In this particular case, however, as noted earlier, the second
Memorandum of Agreement, although ostensibly contracted solely by Aurora Guiang with Maris
Trading, was also signed by her husband Federico, as one of the witnesses thereto. This
circumstance indicates not only that Federico was present during the execution of the agreement
but also that he had, in fact, given his consent to the execution thereof by his wife Aurora.
Otherwise, he should not have appended his signature to the document as witness. Respondent
spouses cannot now disown the second Memorandum of Agreement as their effective consent
thereto is sufficiently manifested in the document itself.

That the land in dispute was, at the time of execution of the second Memorandum of Agreement,
public land, is of no consequence here. Pending approval of Federico's Miscellaneous Sales
Application over said land, respondent spouses enjoyed possessory and other rights over the
same which could validly be assigned or transferred in favor of third persons. In this case,
respondent spouses chose to transfer such rights (over the portion upon which the water pump
was installed) to Maris Trading, as evidenced by the fourth paragraph of the second
Memorandum of Agreement, quoted earlier. Furthermore, assuming (though only for the sake of
argument) that the alienation to Maris Trading was legally objectionable, respondent spouses are
not the proper parties to raise the issue of invalidity, they and Maris Trading being in pari delicto.
Only the government may raise that issue.
Finally, respondent spouses allege that dismissal of the complaint by the trial court was not
improper as petitioner Marmont was not privy to the second Memorandum of Agreement, and
that accordingly, petitioner had no valid cause of action against respondents.

A closer scrutiny of the second and third paragraphs of the second Memorandum of Agreement
discloses that the first Memorandum of Agreement, including the obligations imposed thereunder
upon Maris Trading, had been acknowledged therein:

That the First Party (i.e., Maris Trading) has dug, drilled and tapped water source
for Marmont Resort, located at Bo. Barretto, Olongapo City in accordance with
their agreement executed on May 2, 1975 and notarized before Isagani M.
Jungco, Notary Public and entered as Doc. No. 166; Page No. 135; Book No. XV;
Series of 1975.

That the First Party has erected, built and drilled for the water source of Marmont
Resort on the land owned by the Second Party [respondent spouses] at the
corner of J. Montelibano Street and Maquinaya Drive (Provincial Road) with the
latter's permission;... (Emphasis supplied)

The above paragraphs establish, among other things, that construction work had been performed
by Maris Trading on the land occupied by respondent spouses; that such construction work had
been performed in accordance with terms and conditions stipulated in the first Memorandum of
Agreement and that the purpose of the work was to build a water supply facility for petitioner
Marmont. The same excerpts also show that the work so performed was with the knowledge and
consent of the Guiang spouses, who were then occupying the land.

It is clear from the foregoing stipulations that petitioner Marmont was to benefit from the second
Memorandum of Agreement. In fact, said stipulations appear to have been designed precisely to
benefit petitioner and, thus, partake of the nature of stipulations pour autrui, contemplated in
Article 1311 of the Civil Code.

A stipulation pour autrui is a stipulation in favor of a third person conferring a clear and deliberate
favor upon him, which stipulation is found in a contract entered into by parties neither of whom
acted as agent of the beneficiary.12 We believe and so hold that the purpose and intent of the
stipulating parties (Maris Trading and respondent spouses) to benefit the third person (petitioner
Marmont) is sufficiently clear in the second Memorandum of Agreement. Marmont was not of course a
party to that second Agreement but, as correctly pointed out by the trial court and the appellate court,
the respondent spouses could not have prevented Maris Trading from entering the property
possessory rights over which had thus been acquired by Maris Trading. That respondent t spouses
remained in physical possession of that particular bit of land, is of no moment; they did so simply
upon the sufferance of Maris Trading. Had Maris Trading, and not the respondent spouses, been in
physical possession, we believe that Marmont would have been similarly entitled to compel Maris
Trading to give it (Marmont) access to the site involved. The two (2) courts below failed to take
adequate account of the fact that the sole purpose of Maris Trading in acquiring possessory rights
over that specific portion of the land where well and pump and piping had been installed, was to
supply the water requirements of petitioner's hotel. That said purpose was known by respondent
spouses, is made explicit by the second Memorandum of Agreement. Maris Trading itself had no
need for a water supply facility; neither did the respondent spouses. The water facility was intended
solely for Marmont Resort Hotel. The interest of Marmont cannot therefore be regarded as merely
"incidental ." 13 Finally, even if it be assumed (for purposes of argument merely) that the second
Memorandum of Agreement did not constitute a stipulation pour autrui, still respondent spouses, in
the circumstances of this case, must be regarded as having acted contrary to the principles of
honesty, good faith and fair dealing embodied in Articles 19 and 21 of the Civil Code when they
refused petitioner Marmont access to the water facility to inspect and repair the same and to increase
its capacity and thereby to benefit from it. In so doing, respondent spouses forced petitioner Marmont
to locate an alternative source of water for its hotel which of course involved expenditure of money
and perhaps loss of hotel revenues. We believe they should respond in damages.
The evidence on record, however, appears insufficient for determination of the amount of
damages for which respondent spouses should be liable. For this reason, the Court is compelled
to remand this case to the trial court for determination of such damages in appropriate further
proceedings.

WHEREFORE, the Petition for Review on certiorari is hereby GRANTED. The Decision dated 9
December 1986 of the Court of Appeals in C.A. G.R. CV No. 03299, as well as the Decision
dated 31 May 1983 of the Regional Trial Court of Olongapo City in Civil Case No. 2896-C, are
REVERSED. This case is REMANDED to the trial court for determination, in further proceedings
consistent with this decision, of the amount of petitioner is entitled to receive from respondent
spouses.

No pronouncement as to costs.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 143382 November 29, 2006

SECURITY BANK and TRUST COMPANY, Petitioner,

vs.
MAR TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL J. LACSON and
RICARDO A. LOPA,Respondents.

DECISION

CORONA, J.:

May the conjugal partnership be held liable for an indemnity agreement entered into by the
husband to accommodate a third party?

This issue confronts us in this petition for review on certiorari assailing the November 9, 1999
decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 48107.

On May 7, 1980, respondent Mar Tierra Corporation, through its president, Wilfrido C. Martinez,
applied for aP12,000,000 credit accommodation with petitioner Security Bank and Trust
Company. Petitioner approved the application and entered into a credit line agreement with
respondent corporation. It was secured by an indemnity agreement executed by individual
respondents Wilfrido C. Martinez, Miguel J. Lacson and Ricardo A. Lopa who bound themselves
jointly and severally with respondent corporation for the payment of the loan.

On July 2, 1980, the credit line agreement was amended and increased to P14,000,000.
Individual respondents correspondingly executed a new indemnity agreement in favor of the
bank to secure the increased credit line.

On September 25, 1981, respondent corporation availed of its credit line and received the sum
of P9,952,000 which it undertook to pay on or before November 30, 1981. It was able to
pay P4,648,000 for the principal loan and P2,729,195.56 for the interest and other charges.
However, respondent corporation was not able to pay the balance as it suffered business
reversals, eventually ceasing operations in 1984.

Unable to collect the balance of the loan, petitioner filed a complaint for a sum of money with a
prayer for preliminary attachment against respondent corporation and individual respondents in
the Regional Trial Court (RTC) of Makati, Branch 66. It was docketed as Civil Case No. 3947.

Subsequently, however, petitioner had the case dismissed with respect to individual respondents
Lacson and Lopa,2 leaving Martinez as the remaining individual respondent.

On August 10, 1982, the RTC issued a writ of attachment on all real and personal properties of
respondent corporation and individual respondent Martinez. As a consequence, the conjugal
house and lot of the spouses Wilfrido and Josefina Martinez in Barrio Calaanan, Caloocan City
covered by Transfer Certificate of Title (TCT) No. 49158 was levied on.

The RTC rendered its decision3 on June 20, 1994. It held respondent corporation and individual
respondent Martinez jointly and severally liable to petitioner for P5,304,000 plus 12% interest per
annum and 5% penalty commencing on June 21, 1982 until fully paid, plus P10,000 as attorneys
fees. It, however, found that the obligation contracted by individual respondent Martinez did not
redound to the benefit of his family, hence, it ordered the lifting of the attachment on the conjugal
house and lot of the spouses Martinez.

Dissatisfied with the RTC decision, petitioner appealed to the CA but the appellate court affirmed
the trial courts decision in toto. Petitioner sought reconsideration but it was denied. Hence, this
petition.

Petitioner makes two basic assertions: (1) the RTC and CA erred in finding that respondent
corporation availed ofP9,952,000 only from its credit line and not the entire P14,000,000 and (2)
the RTC and CA were wrong in ruling that the conjugal partnership of the Martinez spouses
could not be held liable for the obligation incurred by individual respondent Martinez.

We uphold the CA.

Factual findings of the CA, affirming those of the trial court, will not be disturbed on appeal but
must be accorded great weight.4 These findings are conclusive not only on the parties but on this
Court as well.5

The CA affirmed the finding of the RTC that the amount availed of by respondent corporation
from its credit line with petitioner was only P9,952,000. Both courts correctly pointed out that
petitioner itself admitted this amount when it alleged in paragraph seven of its complaint that
respondent corporation "borrowed and received the principal sum of P9,952,000."6 Petitioner was
therefore bound by the factual finding of the appellate and trial courts, as well as by its own
judicial admission, on this particular point.

At any rate, the issue of the amount actually availed of by respondent corporation is factual. It is
not within the ambit of this Courts discretionary power of judicial review under Rule 45 of the
Rules of Court which is concerned solely with questions of law.7

We now move on to the principal issue in this case.

Under Article 161(1) of the Civil Code,8 the conjugal partnership is liable for "all debts and
obligations contracted by the husband for the benefit of the conjugal partnership." But when are
debts and obligations contracted by the husband alone considered for the benefit of and
therefore chargeable against the conjugal partnership? Is a surety agreement or an
accommodation contract entered into by the husband in favor of his employer within the
contemplation of the said provision?

We ruled as early as 1969 in Luzon Surety Co., Inc. v. de Garcia9 that, in acting as a guarantor or
surety for another, the husband does not act for the benefit of the conjugal partnership as the
benefit is clearly intended for a third party.

In Ayala Investment and Development Corporation v. Court of Appeals,10 we ruled that, if the
husband himself is the principal obligor in the contract, i.e., the direct recipient of the money and
services to be used in or for his own business or profession, the transaction falls within the term
"obligations for the benefit of the conjugal partnership." In other words, where the husband
contracts an obligation on behalf of the family business, there is a legal presumption that such
obligation redounds to the benefit of the conjugal partnership.11

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

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

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

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

RENATO C. CORONA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairperson

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA

Associate Justice Associate Justice
 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,

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 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 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.

SECOND DIVISION
DAVID V. PELAYO and LORENZA* B. G.R. No. 141323
PELAYO,

Petitioners, Present:

PUNO, Chairman,**

AUSTRIA-MARTINEZ,***

CALLEJO, SR.,

- versus - TINGA, and

CHICO-NAZARIO, JJ.

Promulgated:

MELKI E. PEREZ,

Respondent. June 8, 2005

x-----------------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking the reversal of
the Decision[1] of the Court of Appeals (CA) promulgated on April 20, 1999
which reversed the Decision of the Regional Trial Court (RTC) of Panabo,
Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution dated
December 17, 1999 denying petitioners motion for reconsideration.

The antecedent facts as aptly narrated by the CA are as follows:

David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11,

1988, conveyed to Melki Perez (Perez) two parcels of agricultural land (the lots)
situated in Panabo, Davao which are portions of Lot 4192, Cad. 276 covered by OCT
P-16873.

Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is
illegible witnessed the execution of the deed.

Loreza, however, signed only on the third page in the space provided for
witnesses on account of which Perez application for registration of the deed with
the Office of the Register of Deeds in Tagum, Davao was denied.

Perez thereupon asked Loreza to sign on the first and second pages of the
deed but she refused, hence, he instituted on August 8, 1991 the instant complaint
for specific performance against her and her husband Pelayo (defendants).

The defendants moved to dismiss the complaint on the ground that it stated
no cause of action, citing Section 6 of RA 6656 otherwise known as the
Comprehensive Agrarian Reform Law which took effect on June 10, 1988 and which
provides that contracts executed prior thereto shall be valid only when registered
with the Register of Deeds within a period of three (3) months after the effectivity of
this Act.

The questioned deed having been executed on January 10, 1988, the
defendants claimed that Perez had at least up to September 10, 1988 within which
to register the same, but as they failed to, it is not valid and, therefore,
unenforceable.
 The trial court thus dismissed the complaint. On appeal to this Court, the
dismissal was set aside and the case was remanded to the lower court for further
proceedings.

In their Answer, the defendants claimed that as the lots were occupied
illegally by some persons against whom they filed an ejectment case, they and Perez
who is their friend and known at the time as an activist/leftist, hence feared by
many, just made it appear in the deed that the lots were sold to him in order to
frighten said illegal occupants, with the intentional omission of Lorezas signature so
that the deed could not be registered; and that the deed being simulated and bereft
of consideration is void/inexistent.

Perez countered that the lots were given to him by defendant Pelayo in
consideration of his services as his attorney-in-fact to make the necessary
representation and negotiation with the illegal occupants-defendants in the
ejectment suit; and that after his relationship with defendant Pelayo became sour,
the latter sent a letter to the Register of Deeds of Tagum requesting him not to
entertain any transaction concerning the lots title to which was entrusted to Perez
who misplaced and could [not] locate it.

Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March
19, 1996, that the deed was without his wife Lorezas consent, hence, in light of Art.
166 of the Civil Code which provides:

Article 166. Unless the wife has been declared a non

compos mentis or a spendthrift, or is under civil interdiction or is
confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership without the
wifes consent . . .

it is null and void.

The trial court, finding, among others, that Perez did not possess, nor pay
the taxes on the lots, that defendant Pelayo was indebted to Perez for services
rendered and, therefore, the deed could only be considered as evidence of debt,
and that in any event, there was no marital consent to nor actual consideration for
 the deed, held that the deed was null and void and accordingly rendered judgment
the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering and

directing the defendants to pay plaintiff Melki Perez the sum of TEN
THOUSAND (P10,000.00) Pesos as principal with 12% interest per
annum starting from the date of filing of the complaint on August 1,
1991 until plaintiff is fully paid.

The defendants shall likewise pay to plaintiff the sum of

THREE THOUSAND (P3,000.00) as attorneys fees.

The court further orders that the Deed of

Absolute Sale, (Annex A) of the complaint and (Annex
C) of the plaintiffs Motion for Summary Judgment is
declared null and void and without force and it is
likewise removed as a cloud over defendants title and
property in suit. . . .[2]

The RTC Decision was appealed by herein respondent Perez to the CA.
Petitioners failed to file their appellees brief. The CA then promulgated its
Decision on April 20, 1999 whereby it ruled that by Lorenzas signing as witness
to the execution of the deed, she had knowledge of the transaction and is
deemed to have given her consent to the same; that herein petitioners failed
to adduce sufficient proof to overthrow the presumption that there was
consideration for the deed, and that petitioner David Pelayo, being a lawyer, is
presumed to have acted with due care and to have signed the deed with full
knowledge of its contents and import. The CA reversed and set aside the RTC
Decision, declaring as valid and enforceable the questioned deed of sale and
ordering herein petitioner Lorenza Pelayo to affix her signature on all pages of
said document.
 Petitioners moved for reconsideration of the decision but the same was
denied per Resolution dated December 17, 1999. The CA found said motion to
have been filed out of time and ruled that even putting aside technicality,
petitioners failed to present any ground bearing on the merits of the case to
justify a reversal or setting aside of the decision.

Hence, this petition for review on certiorari on the following grounds:

1. The CA erred in ignoring the specific provision of Section 6, in relation

to Section 4 of R.A. No. 6657 otherwise known as the Comprehensive Agrarian
Reform Law of 1988 which took effect on June 15, 1988 and which provides
that contracts executed prior thereto shall be valid only when registered with
the Register of Deeds within a period of three (3) months after the effectivity
of this Act.

2. The CA erred in holding that the deed of sale was valid and
considering the P10,000.00 adjudged by the trial court as Perezs remuneration
as the consideration for the deed of sale, instead of declaring the same as null
and void for being fictitious or simulated and on the basis of Art. 491, Par. 2 of
the New Civil Code which prohibits agents from acquiring by purchase
properties from his principal under his charge.

3. The CA made a novel ruling that there was implied marital consent of
the wife of petitioner David Pelayo.

4. Petitioners should have been allowed to file their appellees brief to

ventilate their side, considering the existence of peculiar circumstances which
prevented petitioners from filing said brief.
 On the other hand, respondent points out that the CA, in resolving the
first appeal docketed as CA-G.R. SP No. 38700[3] brought by respondent
assailing the RTC Order granting herein petitioners motion to dismiss, already
ruled that under R.A. No. 6657, the sale or transfer of private agricultural land
is allowed only when the area of the land being conveyed constitutes or is a
part of, the landowner-seller retained area and when the total landholding of
the purchaser-transferee, including the property sold, does not exceed five (5)
hectares; that in this case, the land in dispute is only 1.3 hectares and there is
no proof that the transferees (herein respondent) total landholding inclusive of
the subject land will exceed 5 hectares, the landholding ceiling prescribed by
R.A. No. 6657; that the failure of respondent to register the instrument was
not due to his fault or negligence but can be attributed to Lorenzas unjustified
refusal to sign two pages of the deed despite several requests of respondent;
and that therefore, the CA ruled that the deed of sale subject of this case is
valid under R.A. No. 6657.

Respondent further maintains that the CA correctly held in its assailed

Decision that there was consideration for the contract and that Lorenza is
deemed to have given her consent to the deed of sale.

Respondent likewise opines that the CA was right in denying petitioners

motion for reconsideration where they prayed that they be allowed to file
their appellees brief as their counsel failed to file the same on account of said
counsels failing health due to cancer of the liver. Respondent emphasized that
in petitioners motion for reconsideration, they did not even cite any errors
made by the CA in its Decision.

The issues boil down to the question of whether or not the deed of sale
was null and void on the following grounds: (a) for not complying with the
provision in R.A. No. 6657 that such document must be registered with the
Register of Deeds within three months after the effectivity of said law; (b) for
lack of marital consent; (c) for being prohibited under Article 1491 (2) of the
Civil Code; and (d) for lack of consideration.

We rule against petitioners.

The issue of whether or not the deed of sale is null and void under R.A.
No. 6657, for respondents failure to register said document with the Register
of Deeds within three months after the effectivity of R.A. No. 6657, had been
resolved with finality by the CA in its Decision dated November 24, 1994 in CA-
G.R. SP No. 38700.[4] Herein petitioners no longer elevated said CA Decision to
this Court and the same became final and executory on January 7, 1995.[5]

In said decision, the CA interpreted Section 4, in relation to Section 70 of

R.A. No. 6657, to mean thus:

. . . the proper interpretation of both sections is that under R.A. No. 6657,
the sale or transfer of a private agricultural land is allowed only when said land area
constitutes or is a part of the landowner-seller retained area and only when the total
landholdings of the purchaser-transferee, including the property sold does not
exceed five (5) hectares.

Aside from declaring that the failure of respondent to register the deed was
not of his own fault or negligence, the CA ruled that respondents failure to
register the deed of sale within three months after effectivity of The
Comprehensive Agrarian Reform Law did not invalidate the deed of sale as the
transaction over said property is not proscribed by R.A. No. 6657.

Thus, under the principle of law of the case, said ruling of the CA is now
binding on petitioners. Such principle was elucidated in Cucueco vs. Court of
Appeals,[6] to wit:
 Law of the case has been defined as the opinion delivered on a former
appeal. It is a term applied to an established rule that when an appellate court
passes on a question and remands the case to the lower court for further
proceedings, the question there settled becomes the law of the case upon
subsequent appeal. It means that whatever is once irrevocably established as the
controlling legal rule or decision between the same parties in the same case
continues to be the law of the case, whether correct on general principles or not, so
long as the facts on which such decision was predicated continue to be the facts of
the case before the court.

Petitioners not having questioned the Decision of the CA dated November 24,
1994 which then attained finality, the ruling that the deed of sale subject of
this case is not among the transactions deemed as invalid under R.A. No. 6657,
is now immutable.

We agree with the CA ruling that petitioner Lorenza, by affixing her

signature to the Deed of Sale on the space provided for witnesses, is deemed
to have given her implied consent to the contract of sale.

Sale is a consensual contract that is perfected by mere consent, which

may either be express or implied.[7] A wifes consent to the husbands
disposition of conjugal property does not always have to be explicit or set forth
in any particular document, so long as it is shown by acts of the wife that such
consent or approval was indeed given.[8] In the present case, although it
appears on the face of the deed of sale that Lorenza signed only as an
instrumental witness, circumstances leading to the execution of said document
point to the fact that Lorenza was fully aware of the sale of their conjugal
property and consented to the sale.
 In their Pre-Trial Brief,[9] petitioners admitted that even prior to 1988,
they have been having serious problems, including threats to the life of
petitioner David Pelayo, due to conflicts with the illegal occupants of the
property in question, so that respondent, whom many feared for being a
leftist/activist, offered his help in driving out said illegal occupants.

Human experience tells us that a wife would surely be aware of serious

problems such as threats to her husbands life and the reasons for such threats.
As they themselves stated, petitioners problems over the subject property had
been going on for quite some time, so it is highly improbable for Lorenza not to
be aware of what her husband was doing to remedy such problems.
Petitioners do not deny that Lorenza Pelayo was present during the execution
of the deed of sale as her signature appears thereon. Neither do they claim
that Lorenza Pelayo had no knowledge whatsoever about the contents of the
subject document. Thus, it is quite

certain that she knew of the sale of their conjugal property between her
husband and respondent.

Under the rules of evidence, it is presumed that a person takes ordinary

care of his concerns.[10] Petitioners did not even attempt to overcome the
aforementioned presumption as no evidence was ever presented to show that
Lorenza was in any way lacking in her mental faculties and, hence, could not
have fully understood the ramifications of signing the deed of sale. Neither did
petitioners present any evidence that Lorenza had been defrauded, forced,
intimidated or threatened either by her own husband or by respondent into
affixing her signature on the subject document. If Lorenza had any objections
over the conveyance of the disputed property, she could have totally refrained
from having any part in the execution of the deed of sale. Instead, Lorenza
even affixed her signature thereto.
 Moreover, under Article 173, in relation to Article 166, both of the New
Civil Code, which was still in effect on January 11, 1988 when the deed in
question was executed, the lack of marital consent to the disposition of
conjugal property does not make the contract void ab initio but merely
voidable. Said provisions of law provide:

Art. 166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband
cannot alienate or encumber any real property of the conjugal property without the
wifes consent. If she refuses unreasonably to give her consent, the court may
compel her to grant the same.

...

Art. 173. The wife may, during the marriage, and within ten years from the
transaction questioned, ask the courts for the annulment of any contract of the
husband entered into without her consent, when such consent is required, or any
act or contract of the husband which tends to defraud her or impair her interest in
the conjugal partnership property. Should the wife fail to exercise this right, she or
her heirs, after the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.

Hence, it has been held that the contract is valid until the court annuls
the same and only upon an action brought by the wife whose consent was not
obtained.[11] In the present case, despite respondents repeated demands for
Lorenza to affix her signature on all the pages of the deed of sale, showing
respondents insistence on enforcing said contract, Lorenza still did not file a
case for annulment of the deed of sale. It was only when respondent filed a
complaint for specific performance on August 8, 1991 when petitioners
brought up Lorenzas alleged lack of consent as an affirmative defense. Thus, if
the transaction was indeed entered into without Lorenzas consent, we find it
quite puzzling why for more than three and a half years, Lorenza did absolutely
nothing to seek the nullification of the assailed contract.
 The foregoing circumstances lead the Court to believe that Lorenza
knew of the full import of the transaction between respondent and her

husband; and, by affixing her signature on the deed of sale, she, in effect,
signified her consent to the disposition of their conjugal property.

With regard to petitioners asseveration that the deed of sale is invalid

under Article 1491, paragraph 2 of the New Civil Code, we find such argument
unmeritorious. Article 1491 (2) provides:

Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:

...

(2) Agents, the property whose administration or sale may have been entrusted to
them, unless the consent of the principal has been given;

...

In Distajo vs. Court of Appeals,[12] a landowner, Iluminada Abiertas,

designated one of her sons as the administrator of several parcels of her land.
The landowner subsequently executed a Deed of Certification of Sale of
Unregistered Land, conveying some of said land to her son/administrator.
Therein, we held that:
 Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not absolute. It does
not apply if the principal consents to the sale of the property in the hands of the
agent or administrator. In this case, the deeds of sale signed by Iluminada Abiertas
shows that she gave consent to the sale of the properties in favor of her son, Rufo,
who was the administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition contained in
Article 1491(2).[13]

The above-quoted ruling is exactly in point with this case before us.
Petitioners, by signing the Deed of Sale in favor of respondent, are also
deemed to have given their consent to the sale of the subject property in favor
of respondent, thereby making the transaction an exception to the general rule
that agents are prohibited from purchasing the property of their principals.

Petitioners also argue that the CA erred in ruling that there was
consideration for the sale. We find no error in said appellate courts ruling. The
element of consideration for the sale is indeed present. Petitioners, in
adopting the trial courts narration of antecedent facts in their
petition,[14] thereby admitted that they authorized respondent to represent
them in negotiations with the squatters occupying the disputed property and,
in consideration of respondents services, they executed the subject deed of
sale. Aside from such services rendered by respondent, petitioners also
acknowledged in the deed of sale that they received in full the amount of Ten
Thousand Pesos. Evidently, the consideration for the sale is respondents
services plus the aforementioned cash money.

Petitioners contend that the consideration stated in the deed of sale is

excessively inadequate, indicating that the deed of sale was merely simulated.
We are not persuaded. Our ruling inBuenaventura vs. Court of Appeals[15] is
pertinent, to wit:
 . . . Indeed, there is no requirement that the price be equal to the exact
value of the subject matter of sale. . . . As we stated in Vales vs. Villa:

Courts cannot follow one every step of his life and extricate
him from bad bargains, protect him from unwise investments,
relieve him from one-sided contracts, or annul the effects of foolish
acts. Courts cannot constitute themselves guardians of persons who
are not legally incompetent. Courts operate not because one person
has been defeated or overcome by another, but because he has
been defeated or overcome illegally. Men may do foolish things,
make ridiculous contracts, use miserable judgment, and lose money
by them indeed, all they have in the world; but not for that alone
can the law intervene and restore. There must be, in addition,
a violation of the law, the commission of what the law knows as
an actionable wrong, before the courts are authorized to lay hold of
the situation and remedy it.[16]

Verily, in the present case, petitioners have not presented proof that there has
been fraud, mistake or undue influence exercised upon them by respondent. It
is highly unlikely and contrary to human experience that a layman like
respondent would be able to defraud, exert undue influence, or in any way
vitiate the consent of a lawyer like petitioner David Pelayo who is expected to
be more knowledgeable in the ways of drafting contracts and other legal
transactions.

Furthermore, in their Reply to Respondents

[17]
Memorandum, petitioners adopted the CAs narration of fact that petitioners
stated in a letter they sent to the Register of Deeds of Tagum that they have
entrusted the titles over subject lots to herein respondent. Such act is a clear
indication that they intended to convey the subject property to herein
respondent and the deed of sale was not merely simulated or fictitious.
 Lastly, petitioners claim that they were not able to fully ventilate their
defense before the CA as their lawyer, who was then suffering from cancer of
the liver, failed to file their appellees brief. Thus, in their motion for
reconsideration of the CA Decision, they prayed that they be allowed to submit
such appellees brief. The CA, in its Resolution dated December 17, 1999, stated
thus:

By movant-defendant-appellees own information, his counsel received a

copy of the decision on May 5, 1999. He, therefore, had fifteen (15) days from said
date or up to May 20, 1999 to file the motion. The motion, however, was sent
through a private courier and, therefore, considered to have been filed on the date
of actual receipt on June 17, 1999 by the addressee Court of Appeals, was filed
beyond the reglementary period.

Technicality aside, movant has not proffered any ground bearing on the
merits of the case why the decision should be set aside.

Petitioners never denied the CA finding that their motion for

reconsideration was filed beyond the fifteen-day reglementary period. On that
point alone, the CA is correct in denying due course to said motion. The motion
having been belatedly filed, the CA Decision had then attained finality. Thus,
in Abalos vs. Philex Mining Corporation,[18] we held that:

. . . Nothing is more settled in law than that once a judgment

attains finality it thereby becomes immutable and unalterable. It may
no longer be modified in any respect, even if the modification is
meant to correct what is perceived to be an erroneous conclusion of
fact or law, and regardless of whether the modification is attempted to
be made by the court rendering it or by the highest court of the land.
 Moreover, it is pointed out by the CA that said motion did not present
any defense or argument on the merits of the case that could have convinced
the CA to reverse or modify its Decision.

We have consistently held that a petitioners right to due process is not

violated where he was able to move for reconsideration of the order or
decision in question.[19] In this case, petitioners had the opportunity to fully
expound on their defenses through a motion for reconsideration. Petitioners
did file such motion but they wasted such opportunity by failing to present
therein whatever errors they believed the CA had committed in its Decision.
Definitely, therefore, the denial of petitioners motion for reconsideration,
praying that they be allowed to file appellees brief, did not infringe petitioners
right to due process as any issue that petitioners wanted to raise could and
should have been contained in said motion for reconsideration.

IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of

the Court of Appeals dated April 20, 1999 and its Resolution dated December
17, 1999 are herebyAFFIRMED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-19346 May 31, 1965

SOLEDAD L. LACSON, ET AL., plaintiffs-appellees,

vs.
ABELARDO G. DIAZ, defendant-appellant.

Agustin Locsin for plaintiffs-appellees.

Abelardo G. Diaz in his own behalf as defendant-appellant.

BARRERA, J.:

The facts of this case are not disputed:

In connection with a final decision rendered by the Court of First Instance of Negros Occidental in
Civil Case No. 5790 (Soledad L. Lacson, et al. v. Abelardo G. Diaz), sentencing therein
defendant to pay the plaintiffs the sum of P97,532.93 with legal interest thereon from July 1,
1960 until fully paid, plus a sum equivalent to 25% of the total amount as attorney's fees, the
court issued a writ of execution on August 1, 1961. On August 7, 1961, the Provincial Sheriff of
Negros Occidental sent to the manager of Talisay-Silay Milling Company, wherein defendant
Diaz was employed, a notice to garnish one-third of his monthly salary and of any other personal
properties belonging to said defendant, to cover the total amount of P132,718.30.

Diaz filed with the court a motion to quash the writ of execution and to lift the notice of
garnishment (of his salary), on the ground that the same are not enforceable against his present
family. It was claimed that since the money-judgment arose out of a contract entered into by him
during his first marriage said judgment cannot be enforced against his salaries which form part of
the conjugal properties of the second marriage. Plaintiffs opposed this motion, for the reason that
re-marriage is not a cause for extinction of obligations. As his aforesaid motion after hearing was
denied by the court for lack of merit, the defendant instituted the present appeal.
1wph1.t

Appellant does not dispute the existence of the money-judgment against him in the amount
abovestated, which decision was rendered in 1947 and affirmed by the appellate court in 1950. It
appears, however, that appellant, who became a widower in 1951, remarried in 1960. The writ of
execution and notice of garnishment in this case were issued and implemented in 1961. It is now
contended that, as the conjugal partnership resulting of the second marriage is different from that
of the first marriage, during which existence the obligation arose, such obligation, as far as the
second conjugal partnership is concerned, is personal to the husband and cannot be charged
against the properties of the second union. And, since his salaries form part of the conjugal asset
the same cannot be garnished to satisfy his personal obligations. In support of this proposition,
appellant cites Article 163 of the new Civil Code and the ruling of this Court that the right of the
husband to one-half of the assets of the conjugal partnership does not vest until the dissolution of
the marriage.1

Article 163 of the new Civil Code relied upon by the appellant provides:

ART. 163. The payment of debts contracted by the husband or the wife before the
marriage shall not be charged to the conjugal partnership.

Neither shall the fines and pecuniary indemnities imposed upon them be charged to the
partnership.

However, the payment of debts contracted by the husband or the wife before the
marriage, and that of fines and indemnities imposed upon them, may be enforced against
the partnership assets after the responsibilities enumerated in article 161 have been
covered, if the spouse who is bound should have no exclusive property or if it should be
insufficient; but at the time of the liquidation of the partnership such spouse shall be
charged for what has been paid for the purpose above-mentioned.

As a general rule, therefore, debts contracted by the husband or the wife before the
marriage, 2 as well as fines and pecuniary indemnities imposed thereon, are not chargeable to
the conjugal partnership. However, such obligations may be enforced against the conjugal assets
if the responsibilities enumerated in Article 161 3 of the new Civil Code have already been
covered, and that the obligor has no exclusive property or the same is insufficient. Considering
that the enforceability of the personal obligations of the husband or 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.

In the instant case, although it is not controverted that there is due and owing the plaintiffs-
appellees a certain sum of money from the appellant-debtor a personal obligation yet, it has
not been established that the latter does not have properties of his own or that the same are not
adequate to satisfy appellees' claim. Furthermore, there is no showing that the responsibilities
named in Article 161 of the new Civil Code have already been covered in order that the personal
obligation of the husband may be made chargeable against the properties of the second
marriage.

IN VIEW OF THE FOREGOING CONSIDERATIONS, this case is hereby remanded to the court
of origin for further proceedings, in accordance with the aforestated observation. No costs. So
ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Paredes. Makalintal, Bengzon, J.P., and Zaldivar,
JJ., concur.
Concepcion, Dizon and Regala, JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 145222 April 24, 2009

SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners,

vs.
THE HONORABLE COURT OF APPEALS, Former Division, and ROMULO
NICOL, Respondents.

DECISION

TINGA, J.:

Before this Court is a petition for certiorari assailing the Decision1 of the Court of Appeals in CA-
G.R. CV No. 47029 and its Resolution denying the motion for reconsideration thereof.

The case stemmed from the following factual backdrop:

On 30 April 1984, Spouses Roberto and Venus Buado (petitioners) filed a complaint for damages
against Erlinda Nicol (Erlinda) with Branch 19 of the Regional Trial Court (RTC) of Bacoor,
Cavite, docketed as Civil Case No. 84-33. Said action originated from Erlinda Nicols civil liability
arising from the criminal offense of slander filed against her by petitioners.

On 6 April 1987, the trial court rendered a decision ordering Erlinda to pay damages. The
dispositive portion reads:

Wherefore, judgment is hereby rendered in favor of the plaintiff[s] and against defendant ordering
the latter to pay the former the amount of thirty thousand (P30,000.00) pesos as moral damages,
five thousand (P5,000.00) pesos as attorneys fees and litigation expenses, another five
thousand (P5,000.00) pesos as exemplary damages and the cost of suit.2

Said decision was affirmed, successively, by the Court of Appeals and this Court. It became final
and executory on 5 March 1992.

On 14 October 1992, the trial court issued a writ of execution, a portion of which provides:
Now, therefore, you are commanded that of the goods and chattels of the defendant Erlinda
Nicol, or from her estates or legal heirs, you cause the sum in the amount of forty thousand
pesos (P40,000.00), Philippine Currency, representing the moral damages, attorneys fees and
litigation expenses and exemplary damages and the cost of suit of the plaintiff aside from your
lawful fees on this execution and do likewise return this writ into court within sixty (60) days from
date, with your proceedings endorsed hereon.

But if sufficient personal property cannot be found whereof to satisfy this execution and lawful
fees thereon, then you are commanded that of the lands and buildings of said defendant you
make the said sum of money in the manner required by the Rules of Court, and make return of
your proceedings with this writ within sixty (60) days from date.3

Finding Erlinda Nicols personal properties insufficient to satisfy the judgment, the Deputy Sheriff
issued a notice of levy on real property on execution addressed to the Register of Deeds of
Cavite. The notice of levy was annotated on the Transfer Certificate of Title No. T-125322.

On 20 November 1992, a notice of sheriffs sale was issued.

Two (2) days before the public auction sale on 28 January 1993, an affidavit of third-party claim
from one Arnulfo F. Fulo was received by the deputy sheriff prompting petitioners to put up a
sheriffs indemnity bond. The auction sale proceeded with petitioners as the highest bidder.

On 4 February 1993, a certificate of sale was issued in favor of petitioners.

Almost a year later on 2 February 1994, Romulo Nicol (respondent), the husband of Erlinda
Nicol, filed a complaint for annulment of certificate of sale and damages with preliminary
injunction against petitioners and the deputy sheriff. Respondent, as plaintiff therein, alleged that
the defendants, now petitioners, connived and directly levied upon and execute his real property
without exhausting the personal properties of Erlinda Nicol. Respondent averred that there was
no proper publication and posting of the notice of sale. Furthermore, respondent claimed that his
property which was valued at P500,000.00 was only sold at a "very low price" of P51,685.00,
whereas the judgment obligation of Erlinda Nicol was only P40,000.00. The case was assigned
to Branch 21 of the RTC of Imus, Cavite.

In response, petitioners filed a motion to dismiss on the grounds of lack of jurisdiction and that
they had acted on the basis of a valid writ of execution. Citing De Leon v. Salvador,4 petitioners
claimed that respondent should have filed the case with Branch 19 where the judgment
originated and which issued the order of execution, writ of execution, notice of levy and notice of
sheriffs sale.

In an Order5 dated 18 April 1994, the RTC dismissed respondents complaint and ruled
that Branch 19 has jurisdiction over the case, thus:

As correctly pointed out by the defendants, any flaw in the implementation of the writ of execution
by the implementing sheriff must be brought before the court issuing the writ of execution.
Besides, there are two (2) remedies open to the plaintiff, if he feels that the property being levied
on belongs to him and not to the judgment debtor. The first remedy is to file a third-party claim. If
he fails to do this, a right is reserved to him to vindicate his claim over the property by any proper
action. But certainly, this is not the proper action reserved to the plaintiff to vindicate his claim
over the property in question to be ventilated before this court. As earlier stated, this case should
have been addressed to Branch 19, RTC Bacoor as it was that court which issued the writ of
execution.6

Respondent moved for reconsideration but it was denied on 26 July 1994.

On appeal, the Court of Appeals reversed the trial court and held that Branch 21 has jurisdiction
to act on the complaint filed by appellant. The dispositive portion reads:

WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. This case is
REMANDED to the Regional Trial Court of Imus, Cavite, Branch 21 for further proceedings.

SO ORDERED.7

Petitioners motion for reconsideration was denied on 23 August 2000. Hence, the instant petition
attributing grave abuse of discretion on the part of the Court of Appeals.

A petition for certiorari is an extraordinary remedy that is adopted to correct errors of jurisdiction
committed by the lower court or quasi-judicial agency, or when there is grave abuse of discretion
on the part of such court or agency amounting to lack or excess of jurisdiction. Where the error is
not one of jurisdiction, but of law or fact which is a mistake of judgment, the proper remedy
should be appeal. In addition, an independent action for certiorari may be availed of only when
there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.8

Nowhere in the petition was it shown that the jurisdiction of the Court of Appeals was questioned.
The issue devolves on whether the husband of the judgment debtor may file an independent
action to protect the conjugal property subject to execution. The alleged error therefore is an
error of judgment which is a proper subject of an appeal.

Nevertheless, even if we were to treat this petition as one for review, the case should still be
dismissed on substantive grounds.

Petitioners maintain that Branch 19 retained jurisdiction over its judgment to the exclusion of all
other co-ordinate courts for its execution and all incidents thereof, in line with De Leon v.
Salvador. Petitioners insist that respondent, who is the husband of the judgment debtor, is not
the "third party" contemplated in Section 17 (now Section 16), Rule 39 of the Rules of Court,
hence a separate action need not be filed. Furthermore, petitioners assert that the obligation of
the wife redounded to the benefit of the conjugal partnership and cited authorities to the effect
that the husband is liable for the tort committed by his wife.

Respondent on the other hand merely avers that the decision of the Court of Appeals is
supported by substantial evidence and in accord with law and jurisprudence.9

Verily, the question of jurisdiction could be resolved through a proper interpretation of Section 16,
Rule 39 of the Rules of Court, which reads:

Sec. 16. Proceedings where property claimed by third person.

If the property levied on is claimed by any person other than the judgment obligor or his agent,
and such person makes an affidavit of his title thereto or right to the possession thereof, stating
the grounds of such right or title, and serves the same upon the officer making the levy and a
copy thereof upon the judgment obligee, the officer shall not be bound to keep the property,
unless such judgment obligee, on demand of the officer, files a bond approved by the court to
indemnify the third-party claimant in a sum not less than the value of the property levied on. In
case of disagreement as to such value, the same shall be determined by the court issuing the
writ of execution. No claim for damages for the taking or keeping of the property may be enforced
against the bond unless the action therefor is filed within one hundred twenty (120) days from the
date of the filing of the bond.

The officer shall not be liable for damages for the taking or keeping of the property, to any third-
party claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any
third person from vindicating his claim to the property in a separate action, or prevent the
judgment obligee from claiming damages in the same or a separate action against a third-party
claimant who filed a frivolous or plainly spurious claim.

When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly
representing it, the filing of such bond shall not be required, and in case the sheriff or levying
officer is sued for damages as a result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages adjudged by the court shall be paid by the
National Treasurer out of such funds as may be appropriated for the purpose. (Emphasis
Supplied)

Apart from the remedy of terceria available to a third-party claimant or to a stranger to the
foreclosure suit against the sheriff or officer effecting the writ by serving on him an affidavit of his
title and a copy thereof upon the judgment creditor, a third-party claimant may also resort to an
independent separate action, the object of which is the recovery of ownership or possession of
the property seized by the sheriff, as well as damages arising from wrongful seizure and
detention of the property. If a separate action is the recourse, the third-party claimant must
institute in a forum of competent jurisdiction an action, distinct and separate from the action in
which the judgment is being enforced, even before or without need of filing a claim in the court
that issued the writ.101awphi 1.zw+

A third-party claim must be filed a person other than the judgment debtor or his agent. In other
words, only a stranger to the case may file a third-party claim.

This leads us to the question: Is the husband, who was not a party to the suit but whose conjugal
property is being executed on account of the other spouse being the judgment obligor,
considered a "stranger?"

In determining whether the husband is a stranger to the suit, the character of the property must
be taken into account. In Mariano v. Court of Appeals,11 which was later adopted in Spouses
Ching v. Court of Appeals,12 this Court held that the husband of the judgment debtor cannot be
deemed a "stranger" to the case prosecuted and adjudged against his wife for an obligation that
has redounded to the benefit of the conjugal partnership.13 On the other hand, in Naguit v. Court
of Appeals14 and Sy v. Discaya,15 the Court stated that a spouse is deemed a stranger to the
action wherein the writ of execution was issued and is therefore justified in bringing an
independent action to vindicate her right of ownership over his exclusive or paraphernal
property.lawphil.net

Pursuant to Mariano however, it must further be settled whether the obligation of the judgment
debtor redounded to the benefit of the conjugal partnership or not.

Petitioners argue that the obligation of the wife arising from her criminal liability is chargeable to
the conjugal partnership. We do not agree.

There is no dispute that contested property is conjugal in nature. Article 122 of the Family
Code16 explicitly provides that payment of personal debts contracted by the husband or the wife
before or during the marriage shall not be charged to the conjugal partnership except insofar as
they redounded to the benefit of the family.

Unlike in the system of absolute community where liabilities incurred by either spouse by reason
of a crime orquasi-delict is chargeable to the absolute community of property, in the absence or
insufficiency of the exclusive property of the debtor-spouse, the same advantage is not accorded
in the system of conjugal partnership of gains. The conjugal partnership of gains has no duty to
make advance payments for the liability of the debtor-spouse.
Parenthetically, by no stretch of imagination can it be concluded that the civil obligation arising
from the crime of slander committed by Erlinda redounded to the benefit of the conjugal
partnership.

To reiterate, conjugal property cannot be held liable for the personal obligation contracted by one
spouse, unless some advantage or benefit is shown to have accrued to the conjugal
partnership.17

In Guadalupe v. Tronco,18 this Court held that the car which was claimed by the third party
complainant to be conjugal property was being levied upon to enforce "a judgment for support"
filed by a third person, the third-party claim of the wife is proper since the obligation which is
personal to the husband is chargeable not on the conjugal property but on his separate property.

Hence, the filing of a separate action by respondent is proper and jurisdiction is thus vested
on Branch 21. Petitioners failed to show that the Court of Appeals committed grave abuse of
discretion in remanding the case toBranch 21 for further proceedings.

WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals is AFFIRMED.
Costs against petitioners.

SO ORDERED.

DANTE O. TINGA
Associate Justice

<p

WE CONCUR:</p

THIRD DIVISION

[G.R. No. 140153. March 28, 2001]

ANTONIO DOCENA and ALFREDA DOCENA, petitioners, vs. HON.

RICARDO P. LAPESURA, in his capacity as Presiding Judge of the
RTC, Branch III, Guian, Eastern Samar; RUFINO M. GARADO,
Sheriff IV; and CASIANO HOMBRIA, respondents.

DECISION
GONZAGA-REYES, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking the nullification of the Court of Appeals [1] Resolutions dated June 18, 1999
and September 9, 1999 which dismissed the Petition for Certiorari and
Prohibition[2] under Rule 65 and denied the corresponding motion for
reconsideration, respectively.
 The antecedent facts are as follows:
On June 1, 1977, private respondent Casiano Hombria filed a Complaint for
the recovery of a parcel of land against his lessees, petitioner-spouses Antonio and
Alfreda Docena.[3] The petitioners claimed ownership of the land based on
occupation since time immemorial.[4] A certain Guillermo Abuda intervened in the
case. In a Decision dated November 24, 1989, the trial court ruled in favor of the
petitioners and the intervenor Abuda.[5] On appeal, the Court of Appeals reversed
the judgment of the trial court and ordered the petitioners to vacate the land they
have leased from the plaintiff-appellant [private respondent Casiano Hombria],
excluding the portion which the petitioners reclaimed from the sea and forms part
of the shore, as shown in the Commissioners Report, and to pay the plaintiff-
appellant the agreed rental of P1.00 per year from the date of the filing of the
Complaint until they shall have actually vacated the premises.[6] The Complaint in
Intervention of Abuda was dismissed.[7]
On May 22, 1995, private respondent Hombria filed a Motion for Execution of
the above decision which has already become final and executory. [8] The motion
was granted by the public respondent judge, and a Writ of Execution was issued
therefor. However, the public respondent sheriff subsequently filed a Manifestation
requesting that he be clarified in the determination of that particular portion which
is sought to be excluded prior to the delivery of the land adjudged in favor of
plaintiff Casiano Hombria in view of the defects in the Commissioners Report and
the Sketches attached thereto.[9] After requiring the parties to file their Comment on
the sheriffs Manifestation, the public respondent judge, in a Resolution dated
August 30, 1996, held that xxx no attempt should be made to alter or modify the
decision of the Court of Appeals. What should be delivered therefore to the
plaintiff xxx is that portion leased by the defendant-appellees from the plaintiff-
appellant excluding the portion that the defendant-appellee have reclaimed from
the sea and forms part of the shore as shown in the commissioners report
xxx.[10]Pursuant to the Resolution, the public respondent sheriff issued an alias Writ
of Demolition. The petitioners filed a Motion to Set Aside or Defer the
Implementation of Writ of Demolition. This motion was denied by the public
respondent judge in an Order dated November 18, 1998, a copy of which was
received by the petitioners on December 29, 1998.[11] Also on December 29, 1998,
the public respondent judge, in open court, granted the petitioners until January 13,
1999 to file a Motion for Reconsideration.[12] On January 13, 1999, petitioners
moved for an extension of the period to file a motion for reconsideration until
January 28, 1999.[13] The motion was finally filed by the petitioners on January 27,
1999, but was denied by the trial court in an Order dated March 17, 1999.[14] A
copy of the Order was received by the petitioners on May 4, 1999.[15]
A Petition for Certiorari and Prohibition was filed by the petitioners with the
Court of Appeals, alleging grave abuse of discretion on the part of the trial court
judge in issuing the Orders dated November 18, 1998 and March 17, 1999, and of
the sheriff in issuing the alias Writ of Demolition. In a Resolution dated June 18,
1999, the Court of Appeals dismissed the petition on the grounds that the petition
was filed beyond the 60-day period provided under Section 4 of Rule 65 of the
1997 Revised Rules of Civil Procedure as amended by Bar Matter No. 803
effective September 1, 1998, and that the certification of non-forum shopping
attached thereto was signed by only one of the petitioners. [16] The Motion for
Reconsideration filed by the petitioners was denied by the Court of Appeals in a
Resolution dated September 9, 1999.[17]
Hence this petition.
The sole issue in this case is whether or not the Court of Appeals erred in
dismissing the Petition for Certiorari and Prohibition.
The petition is meritorious.
The Court of Appeals dismissed the Petition for Certiorari upon the following
grounds, viz: (1) the petition was filed beyond the 60-day period provided under
Sec. 4, Rule 65 of the 1997 Revised Rules of Civil Procedure as amended by Bar
Matter No. 803 effective September 1, 1998; and (2) the certification of non-forum
shopping was signed by only one of the petitioners.
Upon the first ground, the Court of Appeals stated in its Resolution dated June
18, 1999 that:

xxx the 60-day period is counted not from the receipt of the Order denying their
Motion for Reconsideration but from the date of receipt of the Order of November
18, 1998 which was on December 29, 1998, interrupted by the filing of the Motion
for Reconsideration on January 27, 1999. The Motion for Reconsideration was
denied in an Order dated March 17, 1999 received by the petitioners on May 4,
1999. Counting the remaining period, this petition should have been filed on June
4, 1999 but it was filed only on June 14, 1999 or ten (10) days beyond the 60-day
period computed in accordance with Bar Matter No. 803.

xxx xxx xxx[18]

The petitioners agree that the counting of the 60-day period should commence
on December 29, 1998, the date of the receipt by the petitioners of the assailed trial
court order, interrupted by the filing of a motion for reconsideration on January 27,
1999, and resume upon receipt by the petitioners of the denial of the motion by the
trial court on May 4, 1999; however, the petitioners contend that from December
29, 1998 up to January 27, 1999, only the 15-day period allowed for the filing of a
motion for reconsideration[19] should be deemed to have elapsed considering the
grant by the trial court of an extension of the period to file the motion until January
13, 1999. Hence, on May 4, 1999, the petitioners still had 45 days to file a petition
for certiorari and/or prohibition, and the filing made on June 14, 1999 was timely.
We hold that the Petition for Certiorari and Prohibition has been timely filed.
 A.M. No. 00-2-03-SC, which took effect on September 1, 2000, amended
Section 4 of Rule 65 of the 1997 Revised Rules of Civil Procedure [20] to provide
thus:

SEC. 4. When and where petition filed.-- The petition shall be filed not later than
sixty (60) days from notice of the judgment, order or resolution. In case a motion
for reconsideration or new trial is timely filed, whether such motion is required or
not, the sixty (60) day period shall be counted from notice of the denial of said
motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or
omissions of a lower court or of a corporation, board, officer or person, in the
Regional Trial Court exercising jurisdiction over the territorial area as defined by
the Supreme Court. It may also be filed in the Court of Appeals whether or not the
same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of
its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial
agency, unless otherwise provided by law or these rules, the petition shall be filed
in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling
reason and in no case exceeding fifteen (15) days. [Emphasis ours]

In the case of Systems Factors Corporation versus NLRC,[21] we held that the
abovequoted Resolution, being procedural in nature, is applicable to actions
pending and undetermined at the time of their passage. The retroactive application
of procedural laws such as this Resolution is not violative of any right of a person
who may feel adversely affected thereby, as no vested right may attach to nor arise
from procedural laws.[22] The ruling in the Systems Factors case was reiterated in
the recent case of Unity Fishing Development Corporation, et. al. vs. Court of
Appeals, et. al.[23] Applying the Resolution to the case at bar, the 60-day period for
the filing of a petition for certiorari and prohibition should be reckoned from the
date of receipt of the order denying the motion for reconsideration, i.e., May 4,
1999, and thus, the filing made on June 14, 1999 was well within the 60-day
reglementary period.
Anent the ground that the certification of non-forum shopping was signed by
only one of the petitioners, it is the contention of the petitioners that the same is
sufficient compliance with the requirements of Sections 1 and 2 of Rule 65
(Petition for Certiorari and Prohibition) in relation to Section 3 of Rule
46 (Original Cases Filed in the Court of Appeals). The petitioners argue that since
they are spouses with joint or indivisible interest over the alleged conjugal property
subject of the original action which gave rise to the petition for certiorari and
prohibition, the signing of the certificate of non-forum shopping by only one of
them would suffice, especially considering the long distance they had to travel just
to sign the said certificate.[24] Moreover, there is substantial compliance with the
Rules of Court where the certification was signed by the husband who is the
statutory administrator of the conjugal property.[25]
It has been our previous ruling that the certificate of non-forum shopping
should be signed by all the petitioners or plaintiffs in a case, and that the signing by
only one of them is insufficient. In the case of Efren Loquias, et. al. vs. Office of
the Ombudsman, et. al.,[26] we held that the signing of the Verification and the
Certification on Non-Forum Shopping by only one of the petitioners constitutes a
defect in the petition.[27] The attestation contained in the certification on non-forum
shopping requires personal knowledge by the party executing the same,[28] and the
lone signing petitioner cannot be presumed to have personal knowledge of the
filing or non-filing by his co-petitioners of any action or claim the same as or
similar to the current petition. To merit the Courts consideration, petitioners must
show reasonable cause for failure to personally sign the certification.
In the case at bar, however, we hold that the subject Certificate of Non-Forum
Shopping signed by the petitioner Antonio Docena alone should be deemed to
constitute substantial compliance with the rules.[29] There are only two petitioners in
this case and they are husband and wife. Their residence is the subject property
alleged to be conjugal in the instant verified petition. The Verification/Certification
on Non-Forum Shopping[30] attached to the Petition for Certiorari and Prohibition
was signed only by the husband who certified, inter alia, that he and his wife have
not commenced any other action or proceeding involving the same issues raised in
the petition in any court, tribunal or quasi-judicial agency; that to the best of their
knowledge no such action is pending therein; and that he and his wife undertake to
inform the Court within five (5) days from notice of any similar action or
proceeding which may have been filed.
The property subject of the original action for recovery is conjugal. Whether it
is conjugal under the New Civil Code or the Family Code, a fact that cannot be
determined from the records before us, it is believed that the certificate on non-
forum shopping filed in the Court of Appeals constitutes sufficient compliance
with the rules on forum-shopping.
Under the New Civil Code, the husband is the administrator of the conjugal
partnership.[31] In fact, he is the sole administrator, and the wife is not entitled as a
matter of right to join him in this endeavor.[32] The husband may defend the
conjugal partnership in a suit or action without being joined by the
wife.[33] Corollarily, the husband alone may execute the necessary certificate of
non-forum shopping to accompany the pleading. The husband as the statutory
administrator of the conjugal property could have filed the petition for certiorari
and prohibition[34] alone, without the concurrence of the wife. If suits to defend an
interest in the conjugal properties may be filed by the husband alone, with more
reason, he may sign the certificate of non-forum shopping to be attached to the
petition.
 Under the Family Code, the administration of the conjugal property belongs to
the husband and the wife jointly.[35] However, unlike an act of alienation or
encumbrance where the consent of both spouses is required, joint management or
administration does not require that the husband and wife always act together.
Each spouse may validly exercise full power of management alone, subject to the
intervention of the court in proper cases as provided under Article 124 of the
Family Code.[36] It is believed that even under the provisions of the Family Code,
the husband alone could have filed the petition for certiorari and prohibition to
contest the writs of demolition issued against the conjugal property with the Court
of Appeals without being joined by his wife. The signing of the attached certificate
of non-forum shopping only by the husband is not a fatal defect.
More important, the signing petitioner here made the certification in his behalf
and that of his wife. The husband may reasonably be presumed to have personal
knowledge of the filing or non-filing by his wife of any action or claim similar to
the petition for certiorari and prohibition given the notices and legal processes
involved in a legal proceeding involving real property. We also see no justifiable
reason why he may not lawfully undertake together with his wife to inform the
court of any similar action or proceeding which may be filed. If anybody may
repudiate the certification or undertaking for having been incorrectly made, it is the
wife who may conceivably do so.
In view of the circumstances of this case, namely, the property involved is a
conjugal property, the petition questioning the writ of demolition thereof originated
from an action for recovery brought against the spouses, and is clearly intended for
the benefit of the conjugal partnership, and the wife, as pointed out in the Motion
for Reconsideration in respondent court, was in the province of Guian, Samar,
whereas the petition was prepared in Metro Manila, a rigid application of the rules
on forum shopping that would disauthorize a husbands signing the certification in
his behalf and that of his wife is too harsh and is clearly uncalled for.
It bears stressing that the rules on forum shopping, which were designed to
promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and
legitimate objective.[37]
The petitioners motion for the issuance of a temporary restraining order to put
on hold the demolition of the subject property is principally anchored on their
alleged right to the nullification of the assailed orders and writs issued by the
public respondents.[38] As the existence of the right being asserted by the petitioners
is a factual issue proper for determination by the Court of Appeals, the motion
based thereon should likewise be addressed to the latter court.
WHEREFORE, premises considered, the petition is hereby GRANTED. The
Court of Appeals Resolutions dated June 18, 1999 and September 9, 1999 are
hereby SET ASIDE and the case is REMANDED to the Court of Appeals for
further proceedings.
 SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

Republic of the Philippines

SUPREME COURT
Baguio City

FIRST DIVISION

G.R. No. 107508 April 25, 1996

PHILIPPINE NATIONAL BANK, petitioner,

vs.
COURT OF APPEALS, CAPITOL CITY DEVELOPMENT BANK, PHILIPPINE BANK OF
COMMUNICATIONS, and F. ABANTE MARKETING, respondents.

KAPUNAN, J.:p

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
decision dated April 29, 1992 of respondent Court of Appeals in CA-G.R. CV No. 24776 and its
resolution dated September 16, 1992, denying petitioner Philippine National Bank's motion for
reconsideration of said decision.

The facts of the case are as follows.

A check with serial number 7-3666-223-3, dated August 7, 1981 in the amount of P97,650.00
was issued by the Ministry of Education and Culture (now Department of Education, Culture and
Sports [DECS]) payable to F. Abante Marketing. This check was drawn against Philippine
National Bank (herein petitioner).

On August 11, 1981, F. Abante Marketing, a client of Capitol City Development Bank (Capitol),
deposited the questioned check in its savings account with said bank. In turn, Capitol deposited
the same in its account with the Philippine Bank of Communications (PBCom) which, in turn, sent
the check to petitioner for clearing.

Petitioner cleared the check as good and, thereafter, PBCom credited Capitol's account for the
amount stated in the check. However, on October 19, 1981, petitioner returned the check to
PBCom and debited PBCom's account for the amount covered by the check, the reason being
that there was a "material alteration" of the check number.

PBCom, as collecting agent of Capitol, then proceeded to debit the latter's account for the same
amount, and subsequently, sent the check back to petitioner. Petitioner, however, returned the
check to PBCom.

On the other hand, Capitol could not, in turn, debit F. Abante Marketing's account since the latter
had already withdrawn the amount of the check as of October 15, 1981. Capitol sought
clarification from PBCom and demanded the re-crediting of the amount. PBCom followed suit by
requesting an explanation and re-crediting from petitioner.

Since the demands of Capitol were not heeded, it filed a civil suit with the Regional Trial Court of
Manila against PBCom which, in turn, filed a third-party complaint against petitioner for
reimbursement/indemnity with respect to the claims of Capitol. Petitioner, on its part, filed a
fourth-party complaint against F. Abante Marketing.

On October 3, 1989; the Regional Trial Court rendered its decision the dispositive portion of
which reads:

WHEREFORE, judgment is hereby rendered as follows:

1.) On plaintiffs complaint, defendant Philippine Bank of Communications is

ordered to re-credit or reimburse plaintiff Capitol City Development Bank the
amount of P97,650.00, plus interest of 12 percent thereto from October 19, 1981
until the amount is fully paid;

2.) On Philippine Bank of Communications third-party complaint third-party

defendant PNB is ordered to reimburse and indemnify Philippine Bank of
Communications for whatever amount PBCom pays to plaintiff;

3.) On Philippine National Bank's fourth-party complaint, F. Abante Marketing is

ordered to reimburse and indemnify PNB for whatever amount PNB pays to
PBCom;

4.) On attorney's fees, Philippine Bank of Communications is ordered to pay

Capitol City Development Bank attorney's fees in the amount of Ten Thousand
(P10,000.00) Pesos; but PBCom is entitled to reimbursement/indemnity from
PNB; and Philippine National Bank to be, in turn reimbursed or indemnified by F.
Abante Marketing for the same amount;

5.) The Counterclaims of PBCom and PNB are hereby dismissed;

6.) No pronouncement as to costs.

SO ORDERED. 1

An appeal was interposed before the respondent Court of Appeals which rendered its decision
on April 29, 1992, the decretal portion of which reads:

WHEREFORE, the judgment appealed from is modified by exempting PBCom

from liability to plaintiff-appellee for attorney's fees and ordering PNB to honor the
check for P97,650.00, with interest as declared by the trial court, and pay plaintiff-
appellee attorney's fees of P10,000.00. After the check shall have been honored
by PNB, PBCom shall re-credit plaintiff-appellee's account with it with the
amount. No pronouncement as to costs.

SO ORDERED. 2

A motion for reconsideration of the decision was denied by the respondent Court in its resolution
dated September 16, 1992 for lack of merit. 3

Hence, petitioner filed the instant petition which raises the following issues:
 I

WHETHER OR NOT AN ALTERATION OF THE SERIAL NUMBER OF A

CHECK IS A MATERIAL ALTERATION UNDER THE NEGOTIABLE
INSTRUMENTS LAW.

II

WHETHER OR NOT A CERTIFICATION HEREIN ISSUED BY THE MINISTRY

OF EDUCATION CAN BE GIVEN WEIGHT IN EVIDENCE.

III

WHETHER OR NOT A DRAWEE BANK WHO FAILED TO RETURN A. CHECK

WITHIN THE TWENTY FOUR (24) HOUR CLEARING PERIOD MAY RECOVER
THE VALUE OF THE CHECK FROM THE COLLECTING BANK.

IV

WHETHER OR NOT IN THE ABSENCE OF MALICE OR ILL WILL PETITIONER

PNB MAY BE HELD LIABLE FOR ATTORNEY'S FEES. 4

We find no merit in the petition.

We shall first deal with the effect of the alteration of the serial number on the negotiability of the
check in question.

Petitioner anchors its position on Section 125 of the Negotiable Instruments Law (ACT No.
2031) 5 which provides:

Sec. 225. What constitutes a material alteration. Any alteration which changes:

(a) The date;

(b) The sum payable, either for principal or interest;

(c) The time or place of payment;

(d) The number or the relations of the parties;

(e) The medium or currency in which payment is to be made;

(f) Or which adds a place of payment where no place of payment is specified, or

any other change or addition which alters the effect of the instrument in any
respect, is a material alteration.

Petitioner alleges that there is no hard and fast rule in the interpretation of the aforequoted
provision of the Negotiable Instruments Law. It maintains that under Section 125(f), any change
that alters the effect of the instrument is a material alteration. 6

We do not agree.

An alteration is said to be material if it alters the effect of the

instrument. 7 It means an unauthorized change in an instrument that purports to modify in any respect
the obligation of a party or an unauthorized addition of words or numbers or other change to an
incomplete instrument relating to the obligation of a party. 8In other words, a material alteration is one
which changes the items which are required to be stated under Section 1 of the Negotiable
Instruments Law.

Section 1 of the Negotiable Instruments Law provides:

Sec. 1. Form of negotiable instruments. An instrument to be negotiable must

conform to the following requirements:

(a) It must be in writing and signed by the maker or drawer;

(b) Must contain an unconditional promise or order to pay a sum certain in

money;

(c) Must be payable on demand, or at a fixed or determinable future time;

(d) Must be payable to order or to bearer; and

(e) Where the instrument is addressed to a drawee, he must be named or

otherwise indicated therein with reasonable certainty.

In his book entitled "Pandect of Commercial Law and Jurisprudence," Justice Jose C. Vitug
opines that "an innocent alteration (generally, changes on items other than those required to be
stated under Sec. 1, N.I.L.) and spoliation (alterations done by a stranger) will not avoid the
instrument, but the holder may enforce it only according to its original tenor." 9

Reproduced hereunder are some examples of material and immaterial alterations:

A. Material Alterations:

(1) Substituting the words "or bearer" for "order."

(2) Writing "protest waived" above blank indorsements.

(3) A change in the date from which interest is to run.

(4) A check was originally drawn as follows: "Iron County Bank, Crystal Falls,
Mich. Aug. 5, 1901. Pay to G.L. or order $9 fifty cents CTR" The insertion of the
figure 5 before the figure 9, the instrument being otherwise unchanged.

(5) Adding the words "with interest" with or without a fixed rate.

(6) An alteration in the maturity of a note, whether the time for payment is thereby
curtailed or extended.

(7) An instrument was payable "First Nat'l Bank" the plaintiff added the word
"Marion."

(8) Plaintiff, without consent of the defendant, struck out the name of the
defendant as payee and inserted the name of the maker of the original note.

(9) Striking out the name of the payee and substituting that of the person who
actually discounted the note.
 (10) Substituting the address of the maker for the name of a co-maker. 10

B. Immaterial Alterations:

(1) Changing "I promise to pay" to "We promise to pay", where there are two
makers.

(2) Adding the word "annual" after the interest clause.

(3) Adding the date of maturity as a marginal notation.

(4) Filling in the date of actual delivery where the makers of a note gave it with
the date in blank, "July ____."

(5) An alteration of the marginal figures of a note where the sum stated in words
in the body remained unchanged.

(6) The insertion of the legal rate of interest where the note had a provision for
"interest at _______ per cent."

(7) A printed form of promissory note had on the margin the printed words,
"Extended to ________." The holder on or after maturity wrote in the blank space
the words "May 1, 1913," as a reference memorandum of a promise made by him
to the principal maker at the time the words were written to extend the time of
payment.

(8) Where there was a blank for the place of payment, filling in the blank with the
place desired.

(9) Adding to an indorsee's name the abbreviation "Cash" when it had been
agreed that the draft should be discounted by the trust company of which the
indorsee was cashier.

(10) The indorsement of a note by a stranger after its delivery to the payee at the
time the note was negotiated to the plaintiff.

(11) An extension of time given by the holder of a note to the principal maker,
without the consent of a surety co-maker. 11

The case at bench is unique in the sense that what was altered is the serial number of the check
in question, an item which, it can readily be observed, is not an essential requisite for
negotiability under Section 1 of the Negotiable Instruments Law. The aforementioned alteration
did not change the relations between the parties. The name of the drawer and the drawee were
not altered. The intended payee was the same. The sum of money due to the payee remained
the same. Despite these findings, however, petitioner insists, that:

xxx xxx xxx

It is an accepted concept, besides being a negotiable instrument itself, that a

TCAA check by its very nature is the medium of exchange of governments (sic)
instrumentalities of agencies. And as (a) safety measure, every government
office o(r) agency (is) assigned TCAA checks bearing different number series.

A concrete example is that of the disbursements of the Ministry of Education and

Culture. It is issued by the Bureau of Treasury sizeable bundles of checks in
 booklet form with serial numbers different from other government office or
agency. Now, for fictitious payee to succeed in its malicious intentions to defraud
the government, all it need do is to get hold of a TCAA Check and have the serial
numbers of portion (sic) thereof changed or altered to make it appear that the
same was issued by the MEG.

Otherwise, stated, it is through the serial numbers that (a) TCAA Check is
determined to have been issued by a particular office or agency of the
government. 12

xxx xxx xxx

Petitioner's arguments fail to convince. The check's serial number is not the sole indication of its
origin.. As succinctly found by the Court of Appeals, the name of the government agency which
issued the subject check was prominently printed therein. The check's issuer was therefore
sufficiently identified, rendering the referral to the serial number redundant and inconsequential.
Thus, we quote with favor the findings of the respondent court:

xxx xxx xxx

If the purpose of the serial number is merely to identify the issuing government
office or agency, its alteration in this case had no material effect whatsoever on
the integrity of the check. The identity of the issuing government office or agency
was not changed thereby and the amount of the check was not charged against
the account of another government office or agency which had no liability under
the check. The owner and issuer of the check is boldly and clearly printed on its
face, second line from the top: "MINISTRY OF EDUCATION AND
CULTURE," and below the name of the payee are the rubber-stamped words:
"Ministry of Educ. & Culture." These words are not alleged to have been falsely or
fraudulently intercalated into the check. The ownership of the check is
established without the necessity of recourse to the serial number. Neither there
any proof that the amount of the check was erroneously charged against the
account of a government office or agency other than the Ministry of Education
and Culture. Hence, the alteration in the number of the check did not affect or
change the liability of the Ministry of Education and Culture under the check and,
therefore, is immaterial. The genuineness of the amount and the signatures
therein of then Deputy Minister of Education Hermenegildo C. Dumlao and of the
resident Auditor, Penomio C. Alvarez are not challenged. Neither is the
authenticity of the different codes appearing therein questioned . . . 13 (Emphasis
ours.)

Petitioner, thus cannot refuse to accept the check in question on the ground that the serial
number was altered, the same being an immaterial or innocent one.

We now go to the second issue. It is petitioner's submission that the certification issued by
Minrado C. Batonghinog, Cashier III of the MEC clearly shows that the check was altered. Said
certification reads:
 TO WHOM IT MAY CONCERN:

This is to certify that according to the records of this Office, TCAA PNB Check
Mo. SN7-3666223-3 dated August 7, 1981 drawn in favor of F. Abante Marketing
in the amount of NINETY (S)EVEN THOUSAND SIX HUNDRED FIFTY PESOS
ONLY (P97,650.00) was not issued by this Office nor released to the payee
concerned. The series number of said check was not included among those
requisition by this Office from the Bureau of Treasury.

V
e
r
y

t
r
u
l
y

y
o
u
r
s
,

(SGD.) MINRADO C. BATONGHINOG

C
a
s
h
i
e
r

I
I
I
1
4

Petitioner claims that even if the author of the certification issued by the Ministry of Education
and Culture (MEG) was not presented, still the best evidence of the material alteration would be
the disputed check itself and the serial number thereon. Petitioner thus assails the refusal of
respondent court to give weight to the certification because the author thereof was not presented
to identify it and to be cross-examined thereon. 15

We agree with the respondent court.

The one who signed the certification was not presented before the trial court to prove that the
said document was really the document he prepared and that the signature below the said
document is his own signature. Neither did petitioner present an eyewitness to the execution of
the questioned document who could possibly identify it. 16 Absent this proof, we cannot rule on the
authenticity of the contents of the certification. Moreover, as we previously emphasized, there was no
material alteration on the check, the change of its serial number not being substantial to its
negotiability.

Anent the third issue whether or not the drawee bank may still recover the value of the check
from the collecting bank even if it failed to return the check within the twenty-four (24) hour
clearing period because the check was tampered suffice it to state that since there is no
material alteration in the check, petitioner has no right to dishonor it and return it to PBCom, the
same being in all respects negotiable.

However, the amount of P10,000.00 as attorney's fees is hereby deleted. In their respective
decisions, the trial court and the Court of Appeals failed to explicitly state the rationale for the
said award. The trial court merely ruled as follows:

With respect to Capitol's claim for damages consisting of alleged loss of

opportunity, this Court finds that Capitol failed to adequately substantiate its
claim. What Capitol had presented was a self-serving, unsubstantiated and
speculative computation of what it allegedly could have earned or realized were it
not for the debit made by PBCom which was triggered by the return and debit
made by PNB. However, this Court finds that it would be fair and reasonable to
impose interest at 12% per annum on the principal amount of the check
computed from October 19, 1981 (the date PBCom debited Capitol's account)
until the amount is fully paid and reasonable attorney's fees. 17 (Emphasis ours.)

And contrary to the Court of Appeal's resolution, petitioner unambiguously questioned before it
the award of attorney's fees, assigning the latter as one of the errors committed by the trial
court. 18

The foregoing is in conformity with the guiding principles laid down in a long line of cases and
reiterated recently inConsolidated Bank & Trust Corporation (Solidbank) v. Court of Appeals: 19

The award of attorney's fees lies within the discretion of the court and depends
upon the circumstances of each case. However, the discretion of the court to
award attorney's fees under Article 2208 of the Civil Code of the Philippines
demands factual, legal and equitable justification, without which the award is a
conclusion without a premise and improperly left to speculation and conjecture. It
becomes a violation of the proscription against the imposition of a penalty on the
right to litigate (Universal Shipping Lines, Inc. v. Intermediate Appellate Court,
188 SCRA 170 [1990]). The reason for the award must be stated in the text of the
court's decision. If it is stated only in the dispositive portion of the decision, the
same shall be disallowed. As to the award of attorney's fees being an exception
rather than the rule, it is necessary for the court to make findings of fact and law
that would bring the case within the exception and justify the grant of the award
(Refractories Corporation of the Philippines v. Intermediate Appellate Court, 176
SCRA 539 [176 SCRA 539]).

WHEREFORE, premises considered, except for the deletion of the award of attorney's fees, the
decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
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 Pedros lot. The house was finished in
the early 1980s 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 Anns 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 with petitioners6 began transferring all their belongings from the house
to an apartment.

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 Attorneys 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 (P17,000.00) 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 (P 100,000.00) to plaintiff Mary Abrille as

moral damages.

4. C. Fifty Thousand Pesos (P50,000.00) to each of the four children as moral

damages, namely:

a) Ingrid Villa Abrille Fifty Thousand Pesos (P50,000.00), b) Ingremark Villa

Abrille Fifty Thousand Pesos (P50,000.00), c) Ingresoll Villa Abrille Fifty
Thousand Pesos (P50,000.00) and d) Ingrelyn Villa Abrille Fifty Thousand
Pesos (P50,000.00).

5. Ten Thousand Pesos (P10,000.00) 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 (P100,000.00) to plaintiff Mary Villa Abrille as

moral damages.

b) Fifty Thousand Pesos (P50,000.00) 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 (P10,000.00) 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 courts 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 Anns 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. 1av vphi1

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 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 spouses 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 husbands decision shall prevail, subject to
recourse to the court by the wife for proper remedy which must be availed of within five years
from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include 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 Anns 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 sellers 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 latters
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 Anns 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 Anns lawyer of her objection to the sale and yet they still proceeded to
purchase the property without Mary Anns 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 anothers expense, we sustain the
appellate courts 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.

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.

LEONARDO A. QUISUMBING
Acting Chief Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

FIRST DIVISION

[G.R. No. 109557. November 29, 2000]

JOSE UY and his Spouse GLENDA J. UY and GILDA L.

JARDELEZA, petitioners, vs. COURT OF APPEALS and
TEODORO L. JARDELEZA, respondents.

DECISION
PARDO, J.:

The case is an appeal via certiorari from the decision[1] of the Court of Appeals
and its resolution denying reconsideration[2] reversing that of the Regional Trial Court,
Iloilo, Branch 32[3] and declaring void the special proceedings instituted therein by
petitioners to authorize petitioner Gilda L. Jardeleza, in view of the comatose
condition of her husband, Ernesto Jardeleza, Sr., with the approval of the court, to
dispose of their conjugal property in favor of co-petitioners, their daughter and son in
law, for the ostensible purpose of financial need in the personal, business and
medical expenses of her incapacitated husband.
The facts, as found by the Court of Appeals, are as follows:

This case is a dispute between Teodoro L. Jardeleza (herein respondent)

on the one hand, against his mother Gilda L. Jardeleza, and sister and
brother-in-law, the spouses Jose Uy and Glenda Jardeleza (herein
petitioners) on the other hand. The controversy came about as a result of
Dr. Ernesto Jardeleza, Sr.s suffering of a stroke on March 25, 1991, which
left him comatose and bereft of any motor or mental faculties. Said Ernesto
Jardeleza, Sr. is the father of herein respondent Teodoro Jardeleza and
husband of herein private respondent Gilda Jardeleza.

Upon learning that one piece of real property belonging to the senior
Jardeleza spouses was about to be sold, petitioner Teodoro Jardeleza, on
June 6, 1991, filed a petition (Annex A) before the R.T.C. of Iloilo City,
Branch 25, where it was docketed as Special Proceeding No. 4689, in the
matter of the guardianship of Dr. Ernesto Jardeleza, Sr. The petitioner
averred therein that the present physical and mental incapacity of Dr.
Ernesto Jardeleza, Sr. prevent him from competently administering his
properties, and in order to prevent the loss and dissipation of the
Jardelezas real and personal assets, there was a need for a court-
appointed guardian to administer said properties. It was prayed therein that
Letters of Guardianship be issued in favor of herein private respondent
Gilda Ledesma Jardeleza, wife of Dr. Ernesto Jardeleza, Sr. It was further
prayed that in the meantime, no property of Dr. Ernesto Jardeleza, Sr. be
negotiated, mortgaged or otherwise alienated to third persons, particularly
Lot No. 4291 and all the improvements thereon, located along Bonifacio
Drive, Iloilo City, and covered by T.C.T. No. 47337.

A few days later, or on June 13, 1991, respondent Gilda L. Jardeleza

herself filed a petition docketed as Special Proceeding NO. 4691, before
Branch 32 of the R.T.C. of Iloilo City, regarding the declaration of incapacity
of Ernesto Jardeleza, Sr., assumption of sole powers of administration of
conjugal properties, and authorization to sell the same (Annex B). Therein,
the petitioner Gilda L. Jardeleza averred the physical and mental incapacity
of her husband, who was then confined for intensive medical care and
treatment at the Iloilo Doctors Hospital. She signified to the court her desire
to assume sole powers of administration of their conjugal properties. She
also alleged that her husbands medical treatment and hospitalization
expenses were piling up, accumulating to several hundred thousands of
pesos already. For this, she urgently needed to sell one piece of real
property, specifically Lot No. 4291 and its improvements. Thus, she prayed
for authorization from the court to sell said property.
The following day, June 14, 1991, Branch 32 of the R.T.C. of Iloilo City
issued an Order (Annex C) finding the petition in Spec. Proc. No. 4691 to
be sufficient in form and substance, and setting the hearing thereof for
June 20, 1991. The scheduled hearing of the petition proceeded, attended
by therein petitioner Gilda Jardeleza, her counsel, her two children, namely
Ernesto Jardeleza, Jr., and Glenda Jardeleza Uy, and Dr. Rolando Padilla,
one of Ernesto Jardeleza, Sr.s attending physicians.

On that same day, June 20, 1991, Branch 32 of the RTC of Iloilo City
rendered its Decision (Annex D), finding that it was convinced that Ernesto
Jardeleza, Sr. was truly incapacitated to participate in the administration of
the conjugal properties, and that the sale of Lot No. 4291 and the
improvements thereon was necessary to defray the mounting expenses for
treatment and Hospitalization. The said court also made the
pronouncement that the petition filed by Gilda L. Jardeleza was pursuant to
Article 124 of the Family Code, and that the proceedings thereon are
governed by the rules on summary proceedings sanctioned under Article
253 of the same Code x x x.

The said court then disposed as follows:

WHEREFORE, there being factual and legal bases to the petition dated
June 13, 1991, the Court hereby renders judgment as follows:

1) declaring Ernesto Jardeleza, Sr., petitioners husband, to be

incapacitated and unable to participate in the administration of conjugal
properties;

2) authorizing petitioner Gilda L. Jardeleza to assume sole powers of

administration of their conjugal properties; and

3) authorizing aforesaid petitioner to sell Lot No. 4291 of the Cadastral

Survey of Iloilo, situated in Iloilo City and covered by TCT No. 47337 issued
in the names of Ernesto Jardeleza, Sr. and Gilda L. Jardeleza and the
buildings standing thereof.

SO ORDERED.

On June 24, 1991, herein petitioner Teodoro Jardeleza filed his Opposition
to the proceedings before Branch 32 in Spec. Proc. Case No. 4691, said
petitioner being unaware and not knowing that a decision has already been
rendered on the case by public respondent.

On July 3, 1991, herein petitioner Teodoro Jardeleza filed a motion for

reconsideration of the judgment in Spec. Proc. No. 4691 and a motion for
consolidation of the two cases (Annex F). He propounded the argument
that the petition for declaration of incapacity, assumption of sole powers of
administration, and authority to sell the conjugal properties was essentially
a petition for guardianship of the person and properties of Ernesto
Jardeleza, Sr. As such, it cannot be prosecuted in accordance with the
provisions on summary proceedings set out in Article 253 of the Family
Code. It should follow the rules governing special proceedings in the
Revised Rules of Court which require procedural due process, particularly
the need for notice and a hearing on the merits. On the other hand, even
if Gilda Jardelezas petition can be prosecuted by summary proceedings,
there was still a failure to comply with the basic requirements thereof,
making the decision in Spec. Proc. No. 4691 a defective one. He further
alleged that under the New Civil Code, Ernesto Jardeleza, Sr. had acquired
vested rights as a conjugal partner, and that these rights cannot be
impaired or prejudiced without his consent. Neither can he be deprived of
his share in the conjugal properties through mere summary
proceedings. He then restated his position that Spec. Proc. No. 4691
should be consolidated with Spec. Proc. No. 4689 which was filed earlier
and pending before Branch 25.

Teodoro Jardeleza also questioned the propriety of the sale of Lot No.
4291 and the improvements thereon supposedly to pay the accumulated
financial obligations arising from Ernesto Jardeleza, Sr.s hospitalization. He
alleged that the market value of the property would be around Twelve to
Fifteen Million Pesos, but that he had been informed that it would be sold
for much less. He also pointed out that the building thereon which houses
the Jardeleza Clinic is a monument to Ernesto Jardeleza Sr.s industry,
labor and service to his fellowmen. Hence, the said property has a lot of
sentimental value to his family.Besides, argued Teodoro Jardeleza, then
conjugal partnership had other liquid assets to pay off all financial
obligations. He mentioned that apart from sufficient cash, Jardeleza, Sr.
owned stocks of Iloilo Doctors Hospital which can be off-set against the
cost of medical and hospital bills. Furthermore, Ernesto Jardeleza, Sr.
enjoys certain privileges at the said hospital which allows him to pay on
installment basis.Moreover, two of Ernesto Jardeleza Sr.s attending
physicians are his own sons who do not charge anything for their
professional services.

On July 4, 1991, Teodoro Jardeleza filed in Spec. Proc. No. 4691 a

supplement to his motion for reconsideration (Annex G). He reiterated his
contention that summary proceedings was irregularly applied. He also
noted that the provisions on summary proceedings found in Chapter 2 of
the Family Code comes under the heading on Separation in Fact Between
Husband and Wife which contemplates of a situation where both spouses
are of disposing mind. Thus, he argued that were one spouse is comatose
without motor and mental faculties, the said provisions cannot be made to
apply.

While the motion for reconsideration was pending, Gilda Jardeleza

disposed by absolute sale Lot No. 4291 and all its improvements to her
daughter, Ma. Glenda Jardeleza Uy, for Eight Million Pesos
(P8,000,000.00), as evidenced by a Deed Absolute Sale dated July 8, 1991
executed between them (p. 111, Rollo). Under date of July 23, 1991, Gilda
Jardeleza filed an urgent ex-parte motion for approval of the deed of
absolute sale.

On August 12, 1991 Teodoro Jardeleza filed his Opposition to the motion
for approval of the deed of sale on the grounds that: (1) the motion was
prematurely filed and should be held in abeyance until the final resolution of
the petition; (2) the motion does not allege nor prove the justifications for
the sale; and (3) the motion does not allege that had Ernesto Jardeleza, Sr.
been competent, he would have given his consent to the sale.

Judge Amelita K. del Rosario-Benedicto of Branch 32 of the respondent

Court, who had penned the decision in Spec. Proc. No. 4691 had in the
meantime formally inhibited herself from further acting in this case (Annex
I). The case was then reraffled to Branch 28 of the said court.

On December 19, 1991, the said court issued an Order (Annex M) denying
herein petitioners motion for reconsideration and approving respondent
Jardelezas motion for approval of the deed of absolute sale.The said court
ruled that:

After a careful and thorough perusal of the decision, dated June 20, 1991,
the Motion for Reconsideration, as well as its supplements filed by
oppositor, Teodoro L. Jardeleza, through counsel, and the opposition to the
Motion for Reconsideration, including its supplements, filed by petitioner,
through counsel, this Court is of the opinion and so holds, that her Honor,
Amelita K. del Rosario-Benedicto, Presiding Judge of Branch 32, of this
Court, has properly observed the procedure embodied under Article 253, in
relation to Article 124, of the Family Code, in rendering her decision dated
June 20, 1991.

Also, as correctly stated by petitioner, through counsel, that oppositor

Teodor L. Jardeleza does not have the personality to oppose the instant
petition considering that the property or properties, subject of the petition,
belongs to the conjugal partnership of the spouses Ernesto and Gilda
Jardeleza, who are both still alive.
In view thereof, the Motion for Reconsideration of oppositor Teodoro L.
Jardeleza, is hereby denied for lack of merit.

Considering the validity of the decision dated June 20, 1991, which among
others, authorized Gilda L. Jardeleza to sell Lot No. 4291 of the Cadastral
Survey of Iloilo, covered by Transfer Certificate of Title No. 47337 issued in
the names of Ernesto Jardeleza, Sr., and Gilda L. Jardeleza and the
building standing thereon, the Urgent Ex-Parte Motion for Approval of Deed
of Absolute Sale dated July 23, 1991, filed by petitioner, through counsel, is
hereby granted and the deed of absolute sale, executed and notarized on
July 8, 1991, by and between Gilda L. Jardeleza, as vendor, and Ma.
Glenda Jardeleza, as vendee, is hereby approved, and the Register of
Deeds of Iloilo City, is directed to register the sale and issue the
corresponding transfer certificate of title to the vendee.

SO ORDERED. [4]

On December 9, 1992, the Court of Appeals promulgated its decision reversing

the appealed decision and ordering the trial court to dismiss the special proceedings
to approve the deed of sale, which was also declared void.[5]
On December 29, 1992, petitioners filed a motion for reconsideration, [6] however,
on March 29, 1993, the Court of Appeals denied the motion, finding no cogent and
compelling reason to disturb the decision.[7]
Hence, this appeal.[8]
The issue raised is whether petitioner Gilda L. Jardeleza as the wife of Ernesto
Jardeleza, Sr. who suffered a stroke, a cerebrovascular accident, rendering him
comatose, without motor and mental faculties, and could not manage their conjugal
partnership property may assume sole powers of administration of the conjugal
property under Article 124 of the Family Code and dispose of a parcel of land with its
improvements, worth more than twelve million pesos, with the approval of the court
in a summary proceedings, to her co-petitioners, her own daughter and son-in-law,
for the amount of eight million pesos.
The Court of Appeals ruled that in the condition of Dr. Ernesto Jardeleza, Sr., the
procedural rules on summary proceedings in relation to Article 124 of the Family
Code are not applicable. Because Dr. Jardeleza, Sr. was unable to take care of
himself and manage the conjugal property due to illness that had rendered him
comatose, the proper remedy was the appointment of a judicial guardian of the
person or estate or both of such incompetent, under Rule 93, Section 1, 1964
Revised Rules of Court. Indeed, petitioner earlier had filed such a petition for judicial
guardianship.
Article 124 of the Family Code provides as follows:

ART. 124. The administration and enjoyment of the conjugal partnership

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

In the event that one spouse is incapacitated or otherwise unable to

participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include
the powers of disposition or encumbrance which must have the authority of
the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be
void. However, the transaction shall be construed as a continuing offer on
the part of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other spouse
or authorization by the court before the offer is withdrawn by either or both
offerors. (165a).

In regular manner, the rules on summary judicial proceedings under the Family
Code govern the proceedings under Article 124 of the Family Code. The situation
contemplated is one where the spouse is absent, or separated in fact or has
abandoned the other or consent is withheld or cannot be obtained. Such rules do not
apply to cases where the non-consenting spouse is incapacitated or incompetent to
give consent. In this case, the trial court found that the subject spouse "is an
incompetent" who was in comatose or semi-comatose condition, a victim of stroke,
cerebrovascular accident, without motor and mental faculties, and with a diagnosis of
brain stem infarct.[9] In such case, the proper remedy is a judicial guardianship
proceedings under Rule 93 of the 1964 Revised Rules of Court.
Even assuming that the rules of summary judicial proceedings under the Family
Code may apply to the wife's administration of the conjugal property, the law
provides that the wife who assumes sole powers of administration has the same
powers and duties as a guardian under the Rules of Court.[10]
Consequently, a spouse who desires to sell real property as such administrator
of the conjugal property must observe the procedure for the sale of the wards estate
required of judicial guardians under Rule 95, 1964 Revised Rules of Court, not the
summary judicial proceedings under the Family Code.
In the case at bar, the trial court did not comply with the procedure under the
Revised Rules of Court. Indeed, the trial court did not even observe the requirements
of the summary judicial proceedings under the Family Code. Thus, the trial court did
not serve notice of the petition to the incapacitated spouse; it did not require him to
show cause why the petition should not be granted.
Hence, we agree with the Court of Appeals that absent an opportunity to be
heard, the decision rendered by the trial court is void for lack of due process. The
doctrine consistently adhered to by this Court is that a denial of due process suffices
to cast on the official act taken by whatever branch of the government the impress of
nullity.[11] A decision rendered without due process is void ab initio and may be
attacked directly or collaterally.[12] A decision is void for lack of due process if, as a
result, a party is deprived of the opportunity of being heard.[13] A void decision may be
assailed or impugned at any time either directly or collaterally, by means of a
separate action, or by resisting such decision in any action or proceeding where it is
invoked.[14]
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals in CA-
G. R. SP No. 26936, in toto.
Costs against petitioners.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.
Republic of the Philippines
Supreme Court
Baguio City

THIRD DIVISION

SPOUSES ONESIFORO and G.R. No. 158040

ROSARIO ALINAS,
Petitioners, Present:
YNARES-SANTIAGO, J.
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
SPOUSES VICTOR and ELENA
ALINAS, Promulgated:
Respondents. April 14, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
praying that the Decision[1] of the Court of Appeals (CA) dated September 25, 2002,
and the CA Resolution[2] dated March 31, 2003, denying petitioners' motion for
reconsideration, be reversed and set aside.
The factual antecedents of the case are as follows.

Spouses Onesiforo and Rosario Alinas (petitioners) separated sometime in 1982,

with Rosario moving to Pagadian City and Onesiforo moving to Manila. They left
behind two lots identified as Lot 896-B-9-A with a bodega standing on it and Lot 896-
B-9-B with petitioners' house. These two lots are the subject of the present petition.

Petitioner Onesiforo Alinas (Onesiforo) and respondent Victor Alinas (Victor) are
brothers. Petitioners allege that they entrusted their properties to Victor and
Elena Alinas (respondent spouses) with the agreement that any income from rentals of
the properties should be remitted to the Social Security System (SSS) and to the Rural
Bank of Oroquieta City (RBO), as such rentals were believed sufficient to pay off
petitioners' loans with said institutions. Lot 896-B-9-A with the bodega was mortgaged
as security for the loan obtained from the RBO, while Lot 896-B-9-B with the house
was mortgaged to the SSS. Onesiforo alleges that he left blank papers with his signature
on them to facilitate the administration of said properties.

Sometime in 1993, petitioners discovered that their two lots were already titled in the
name of respondent spouses.

Records show that after Lot 896-B-9-A was extra-judicially foreclosed, Transfer
Certificate of Title (TCT) No. T-11853[3] covering said property was issued in the name
of mortgagee RBO on November 13, 1987. OnMay 2, 1988, the duly authorized
representative of RBO executed a Deed of Installment Sale of Bank's Acquired
Assets[4] conveying Lot 896-B-9-A to respondent spouses. RBO's TCT over Lot 896-B-
9-A was then cancelled and on February 22, 1989, TCT No. T-12664[5] covering said
lot was issued in the name of respondent spouses.

Lot 896-B-9-B was also foreclosed by the SSS and on November 17, 1986, the Ex-
Oficio City Sheriff of Ozamis City issued a Certificate of Sale[6] over said property in
favor of the SSS. However, pursuant to a Special Power of Attorney[7] signed
by Onesiforo in favor of Victor, dated March 10, 1989, the latter was able to redeem, on
the same date, Lot 896-B-9-B from the SSS for the sum of P111,110.09. On June 19,
1989, a Certificate of Redemption[8] was issued by the SSS.

Onesiforo's signature also appears in an Absolute Deed of Sale[9] likewise dated March
10, 1989, selling Lot 896-B-9-B to respondent spouses. The records also show a
notarized document dated March 10, 1989 and captioned Agreement[10] whereby
petitioner Onesiforo acknowledged that his brother Victor used his own money to
redeem Lot 896-B-9-B from the SSS and, thus, Victor became the owner of said lot. In
the sameAgreeement, petitioner Onesiforo waived whatever rights, claims, and interests
he or his heirs, successors and assigns have or may have over the subject
property. On March 15, 1993, by virtue of said documents, TCT No.
17394[11] covering Lot 896-B-9-B was issued in the name of respondent spouses.

On June 25, 1993, petitioners filed with the Regional Trial Court (RTC)
of Ozamis City a complaint for recovery of possession and ownership of their conjugal
properties with damages against respondent spouses.

After trial, the RTC rendered its Decision dated November 13, 1995, finding that:

1. Plaintiffs have not proven that they entrusted defendant spouses with the
care and administration of their properties. It was Valeria Alinas, their
mother, whom plaintiff Onesiforo requested/directed to take care of
everything and sell everything and Teresita Nuez, his elder sister, to whom
he left a verbal authority to administer his properties.

2. Plaintiffs have not proven their allegation that defendant spouses agreed to
pay rent of P1,500.00 a month for the occupancy of plaintiffs' house, which
rent was to be remitted to the SSS and Rural Bank of Oroquieta to pay off
plaintiffs' loan and to keep for plaintiffs the rest of the rent after the loans
would have been paid in full.

3. Plaintiff Onesiforo's allegation that defendants concocted deeds of

conveyances (Exh. M, N & O) with the use of his signatures in blank is not
worthy of credence. Why his family would conspire to rob him at a time
when life had struck him with a cruel blow in the form of a failed marriage
that sent him plummeting to the depths of despair is not explained and
likewise defies comprehension. That his signatures appear exactly on the
spot where they ought to be in Exhs. M, N & O belies his pretension that he
affixed them on blank paper only for the purpose of facilitating his sister
Terry's acts of administration.

This Court, therefore, does not find that defendant spouses had schemed to
obtain title to plaintiffs' properties or enriched themselves at the expense of
plaintiffs.[12]

with the following dispositive portion:

WHEREFORE, this Court renders judgment:
 1. declaring [respondents] Victor Jr. and Elena Alinas owners of
Lot 896-B-9-A with the building (bodega) standing thereon and
affirming the validity of their acquisition thereof from the Rural
Bank of Oroquieta, Inc.;

2. declaring [petitioners] Onesiforo and Rosario Alinas owners of

Lot 896-B-9-B with the house standing thereon,
plaintiff Onesiforo's sale thereof to defendants spouses without
the consent of his wife being null and void and defendant spouses'
redemption thereof from the SSS not having conferred its
ownership to them;

3. ordering [petitioners] to reimburse [respondents] Victor Jr. and

Elena Alinas the redemption sum of P111,100.09, paid by them
to the SSS (without interest as it shall be compensated with the
rental value of the house they occupy) within sixty days from the
finality of this judgment;

4. ordering [respondents] to vacate the subject house within thirty

days from receiving the reimbursement mentioned in No. 3
above; and

5. reinstating TCT No. T-7248 in the name of [petitioners]

and cancelling TCT No. T-17394 in the name of [respondents].

No costs.

SO ORDERED.[13]
Only respondent spouses appealed to the CA assailing the RTC's ruling that they
acquired Lot 896-B-9-B from the SSS by mere redemption and not by purchase. They
likewise question the reimbursement by petitioners of the redemption price without
interest.

On September 25, 2002, the CA promulgated herein assailed Decision,

the dispositive portion of which reads:

WHEREFORE, in view of the foregoing disquisitions, the first paragraph of

the dispositive portion of the assailed decision is AFFIRMED and the rest
MODIFIED as follows:

1. declaring [respondents] Victor Jr. and Elena Alinas owners of Lot 896-
B-9-A with the building (bodega) standing thereon and affirming the
 validity of their acquisition thereof from the Rural Bank of Oroquieta,
Inc.;

2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house

standing thereon to [respondents] in so far as Rosario Alinas, his wife's
share of one half thereof is concerned, of no force and effect;

3. ordering [petitioners] Rosario Alinas to reimburse [respondents] the

redemption amount of P55,550.00 with interest of 12% per annum from
the time of redemption until fully paid.

4. ordering the [respondents] to convey and transfer one half portion

of Lot 896-B-9-B unto Rosario Alinas, which comprises her share on the
property simultaneous to the tender of the above redemption price, both
to be accomplished within sixty (60) days from finality of this judgment.

5. in the event of failure of [respondents] to execute the acts as specified

above, [petitioner] Rosario Alinas may proceed against them under
Section 10, Rule 39 of the 1997 Rules of Civil Procedure.

6. on the other hand, failure of [petitioner] Rosario Alinas to reimburse

the redemption price within sixty (60) days from the finality of this
decision will render the conveyance and sale of her share by her husband
to [respondents], of full force and effect.

No costs.

SO ORDERED.[14]

Petitioners moved for reconsideration but the CA denied said motion per herein
assailed Resolution dated March 31, 2003.

Hence, the present petition on the following grounds:

The Honorable Court of Appeals abuse [sic] its discretion in disregarding the
testimony of the Register of Deeds, Atty. Nerio Nuez, who swore that the
signatures appearing on various TCTs were not his own;

The Honorable Court of Appeals manifestly abuse [sic] its discretion in

declaring the respondents to be the owners of Lot 896-B-9-A with the
building (bodega) standing thereon when they merely redeemed the property
and are therefore mere trustees of the real owners of the property;
 It was pure speculation and conjecture and surmise for the Honorable Court
of Appeals to impose an obligation to reimburse upon petitioners without
ordering respondents to account for the rentals of the properties from the
time they occupied the same up to the present time and thereafter credit one
against the other whichever is higher.[15]

The first issue raised by petitioners deserves scant consideration. By assailing the
authenticity of the Registrar of Deeds' signature on the certificates of title, they are, in
effect, questioning the validity of the certificates.

Section 48 of Presidential Decree No. 1529 provides, thus:

Sec. 48. Certificate not subject to collateral attack. - A certificate of title

shall not be subject to collateral attack. It cannot be altered, modified, or
cancelled except in a direct proceeding in accordance with law.

Pursuant to said provision, the Court ruled in De Pedro v. Romasan Development

Corporation[16] that:

It has been held that a certificate of title, once registered, should not
thereafter be impugned, altered, changed, modified, enlarged or diminished
except in a direct proceeding permitted by law. x x x

The action of the petitioners against the respondents, based on the material
allegations of the complaint, is one for recovery of possession of the
subject property and damages. However, such action is not a direct, but
a collateral attack of TCT No. 236044.[17] (Emphasis supplied)

As in De Pedro, the complaint filed by herein petitioners with the RTC is also one for
recovery of possession and ownership. Verily, the present case is merely a collateral
attack on TCT No. T-17394, which is not allowed by law and jurisprudence.

With regard to the second issue, petitioners claim that it was the CA which declared
respondent spouses owners of Lot 896-B-9-A (with bodega) is misleading. It was the
RTC which ruled that respondent spouses are the owners of Lot 896-B-9-A and,
therefore, since only the respondent spouses appealed to the CA, the issue of ownership
over Lot 896-B-9-A is not raised before the appellate court. Necessarily, the CA merely
reiterated in the dispositive portion of its decision the RTC's ruling on respondent
spouses' ownership of Lot 896-B-9-A.
 It is a basic principle that no modification of judgment or affirmative relief can
be granted to a party who did not appeal.[18] Hence, not having appealed from the RTC
Decision, petitioners can no longer seek the reversal or modification of the trial court's
ruling that respondent spouses had acquired ownership of Lot 896-B-9-A by virtue of
the sale of the lot to them by RBO.

Furthermore, the CA did not commit any reversible error in affirming the trial court's
factual findings as the records are indeed bereft of proof to support the petitioners
allegations that they left the care and administration of their properties to respondent
spouses; and that there is an agreement between petitioners and respondent spouses
regarding remittance to the SSS and the RBO of rental income from their
properties.Thus, respondent spouses may not be held responsible for the non-payment
of the loan with RBO and the eventual foreclosure of petitioners' Lot 896-B-9-A.

Petitioners do not assail the validity of the foreclosure of said lot but argues that
respondent spouses merely redeemed the property from RBO. This is, however, belied
by evidence on record which shows that ownership over the lot had duly passed on to
the RBO, as shown by TCT No. T-11853 registered in its name; and subsequently,
RBO sold the lot with its improvements to respondent spouses. Needless to stress, the
sale was made after the redemption period had lapsed. The trial court, therefore,
correctly held that respondent spouses acquired their title over the lot from RBO and
definitely not from petitioners.

However, with regard to Lot 896-B-9-B (with house), the Court finds it patently
erroneous for the CA to have applied the principle of equity in sustaining the validity of
the sale of Onesiforos one-half share in the subject property to respondent spouses.

Although petitioners were married before the enactment of the Family Code on August
3, 1988, the sale in question occurred in 1989. Thus, their property relations are
governed by Chapter IV on Conjugal Partnership of Gains of the Family Code.

The CA ruling completely deviated from the clear dictate of Article 124 of the Family
Code which provides:

Art. 124. The administration and enjoyment of the conjugal partnership

property shall belong to both spouses jointly. x x x
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include 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. x x x (Underscoring and emphasis supplied)

In Homeowners Savings & Loan Bank v. Dailo,[19] the Court categorically stated thus:

In Guiang v. Court of Appeals, it was held that the sale of a conjugal

property requires the consent of both the husband and wife. In applying
Article 124 of the Family Code, this Court declared that the absence of the
consent of one renders the entire sale null and void, including the
portion of the conjugal property pertaining to the husband who
contracted the sale. x x x

xxxx

x x x By express provision of Article 124 of the Family Code, in the absence

of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void. [20]

Thus, pursuant to Article 124 of the Family Code and jurisprudence, the sale of
petitioners' conjugal property made by petitioner Onesiforo alone is void in its entirety.

It is true that in a number of cases, this Court abstained from applying the literal import
of a particular provision of law if doing so would lead to unjust, unfair and absurd
results.[21]

In the present case, the Court does not see how applying Article 124 of the Family Code
would lead to injustice or absurdity. It should be noted that respondent spouses were
well aware that Lot 896-B-9-B is a conjugal property of petitioners. They also knew
that the disposition being made by Onesiforo is without the consent of his wife, as they
knew that petitioners had separated, and, the sale documents do not bear the signature of
petitioner Rosario. The fact that Onesiforo had to execute two documents, namely: the
Absolute Deed of Sale dated March 10, 1989 and a notarized Agreement likewise
dated March 10, 1989, reveals that they had full knowledge of the severe infirmities of
the sale. As held in Heirs of Aguilar-Reyes v. Spouses Mijares,[22] a purchaser cannot
close his eyes to facts which should put a reasonable man on his guard and still claim he
acted in good faith.[23] Such being the case, no injustice is being foisted on respondent
spouses as they risked transacting with Onesiforo alone despite their knowledge that the
subject property is a conjugal property.
Verily, the sale of Lot 896-B-9-B to respondent spouses is entirely null and void.

However, in consonance with the salutary principle of non-enrichment at anothers

expense, the Court agrees with the CA that petitioners should reimburse respondent
spouses the redemption price paid for Lot 896-B-9-B in the amount
of P111,110.09 with legal interest from the time of filing of the complaint.

In Heirs of Aguilar-Reyes, the husband's sale of conjugal property without the consent
of the wife was annulled but the spouses were ordered to refund the purchase price to
the buyers, it was ruled that an interest of 12% per annum on the purchase price to be
refunded is not proper. The Court elucidated as follows:

The trial court, however, erred in imposing 12% interest per annum on the
amount due the respondents. In Eastern Shipping Lines, Inc. v. Court of
Appeals, it was held that interest on obligations not constituting a loan or
forbearance of money is six percent (6%) annually. If the purchase price
could be established with certainty at the time of the filing of the complaint,
the six percent (6%) interest should be computed from the date the complaint
was filed until finality of the decision. In Lui vs. Loy, involving a suit
for reconveyance and annulment of title filed by the first buyer against the
seller and the second buyer, the Court, ruling in favor of the first buyer and
annulling the second sale, ordered the seller to refund to the second buyer
(who was not a purchaser in good faith) the purchase price of the lots. It was
held therein that the 6% interest should be computed from the date of the
filing of the complaint by the first buyer. After the judgment becomes final
and executory until the obligation is satisfied, the amount due shall earn
interest at 12% per year, the interim period being deemed equivalent to a
forbearance of credit.

Accordingly, the amount of P110,000.00 due the respondent spouses

which could be determined with certainty at the time of the filing of the
complaint shall earn 6% interest per annum from June 4, 1986 until the
finality of this decision. If the adjudged principal and the interest (or
any part thereof) remain unpaid thereafter, the interest rate shall be
twelve percent (12%) per annum computed from the time the
judgment becomes final andexecutory until it is fully satisfied.[24]

Thus, herein petitioners should reimburse respondent spouses the redemption price plus
interest at the rate of 6% per annum from the date of filing of the complaint, and after
the judgment becomes final and executory,the amount due shall earn 12% interest per
annum until the obligation is satisfied.
Petitioners pray that said redemption price and interest be offset or compensated against
the rentals for the house and bodega.

The records show that the testimonial evidence for rentals was only with regard to the
bodega.[25] However, the Court has affirmed the ruling of the RTC that Lot 896-B-9-A
with the bodega had been validly purchased by respondent spouses from the RBO and a
TCT over said property was issued in the name of respondent spouses on February 22,
1989. Testimonial evidence shows that the bodega was leased out by
respondent spouses only beginning January of 1990 when ownership had been
transferred to them.[26] Hence, any rentals earned from the lease of said bodega
rightfully belongs to respondent spouses and cannot be offset against petitioners'
obligation to respondent spouses.

As to rentals for Lot 896-B-9-B and the house thereon, respondent Victor testified that
they never agreed to rent the house and when they finally took over the same, it was
practically inhabitable and so they even incurred expenses to repair the house.[27] There
is absolutely no proof of the rental value for the house, considering the condition it was
in; as well as for the lot respondent spouses are occupying.

Respondent spouses, having knowledge of the flaw in their mode of acquisition,

are deemed to be possessors in bad faith under Article 526[28] of the Civil
Code. However, they have a right to be refunded for necessary expenses on the property
as provided under Article 546[29] of the same Code. Unfortunately, there is no credible
proof to support respondent spouses' allegation that they spent more
than P400,000.00 to repair and make the house habitable.

Set-off or compensation is governed by Article 1279 of the Civil

Code which provides, thus:

Article 1279. In order that compensation may be proper, it is

necessary:

1. That each one of the obligors be bound principally, and that he

be at the time a principal creditor of the other;

2. That both debts consist in a sum of money, or if the things due

are consumable, they be of the same kind, and also of the same
quality if the latter has been stated;

3. That the two debts be due;

 4. That they be liquidated and demandable;

5. That over neither of them there be any retention or controversy,

commenced by third persons and communicated in due time to
the debtor.

Therefore, under paragraph 4 of the foregoing provision, compensation or set-off is

allowed only if the debts of both parties against each other is already liquidated and
demandable. To liquidate means to make the amount of indebtedness or an obligation
clear and settled in the form of money.[30] In the present case, no definite amounts for
rentals nor for expenses for repairs on subject house has been determined. Thus, in the
absence of evidence upon which to base the amount of rentals, no compensation or set-
off can take place between petitioners and respondent spouses.

While the courts are empowered to set an amount as reasonable compensation to the
owners for the use of their property, this Court cannot set such amount based on mere
surmises and conjecture

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of

Appeals dated September 25, 2002 is MODIFIED to read as follows:

1. declaring respondent spouses Victor Jr. and Elena Alinas owners of Lot 896-
B-9-A with the building (bodega) standing thereon and affirming the validity of their
acquisition thereof from the Rural Bank ofOroquieta, Inc.;

2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house

standing thereon to respondent spouses null and void ab initio;

3. ordering petitioners to jointly and severally reimburse respondent spouses the

redemption amount of P111,110.09 with interest at 6% per annum from the date of
filing of the complaint, until finality of this decision. After this decision becomes
final, interest at the rate of 12% per annum on the principal and interest (or any
part thereof) shall be imposed until full payment;

4. ordering the respondent spouses to convey and transfer Lot 896-B-9-B to

petitioners and vacate said premises within fifteen (15) days from finality of this
Decision; and
 5. in the event of failure of respondent spouses to execute the acts as specified
above, petitioners may proceed against them under Section 10, Rule 39 of the 1997
Rules of Civil Procedure.

No costs.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
FIRST DIVISION

[G.R. No. 125172. June 26, 1998]

Spouses ANTONIO and LUZVIMINDA

GUIANG, petitioners, vs. COURT OF APPEALS and GILDA
CORPUZ, respondents.

DECISION
PANGANIBAN, J.:

The sale of a conjugal property requires the consent of both the husband and the
wife. The absence of the consent of one renders the sale null and void, while the
vitiation thereof makes it merely voidable.Only in the latter case can ratification cure
the defect.

The Case

These were the principles that guided the Court in deciding this petition for
review of the Decision[1] dated January 30, 1996 and the Resolution[2] dated May 28,
1996, promulgated by the Court of Appeals in CA-GR CV No. 41758, affirming the
Decision of the lower court and denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended
Complaint[3] against her husband Judie Corpuz and Petitioners-Spouses Antonio and
Luzviminda Guiang. The said Complaint sought the declaration of a certain deed of
sale, which involved the conjugal property of private respondent and her husband,
null and void. The case was raffled to the Regional Trial Court of Koronadal, South
Cotabato, Branch 25. In due course, the trial court rendered a Decision [4] dated
September 9, 1992, disposing as follows:[5]
 ACCORDINGLY, judgment is rendered for the plaintiff and against
the defendants,

1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh.
A) and the amicable settlement dated March 16, 1990 (Exh. B) as null and
void and of no effect;

2. Recognizing as lawful and valid the ownership and possession of plaintiff

Gilda Corpuz over the remaining one-half portion of Lot 9, Block 8, (LRC)
Psd-165409 which has been the subject of the Deed of Transfer of Rights
(Exh. A);

3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda and

Antonio Guiang the amount of NINE THOUSAND (P9,000.00) PESOS
corresponding to the payment made by defendants Guiangs to Manuel
Callejo for the unpaid balance of the account of plaintiff in favor of Manuel
Callejo, and another sum of P379.62 representing one-half of the amount
of realty taxes paid by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-
165409, both with legal interests thereon computed from the finality of the
decision.

No pronouncement as to costs in view of the factual circumstances of the

case.

Dissatisfied, petitioners-spouses filed an appeal with the Court of

Appeals. Respondent Court, in its challenged Decision, ruled as follows:[6]
WHEREFORE, the appealed decision of the lower court in Civil
Case No. 204 is hereby AFFIRMED by this Court. No costs
considering plaintiff-appellees failure to file her brief, despite notice.
Reconsideration was similarly denied by the same court in its assailed
Resolution:[7]
Finding that the issues raised in defendants-appellants motion for
reconsideration of Our decision in this case of January 30, 1996, to
be a mere rehash of the same issues which We have already
passed upon in the said decision, and there [being] no cogent
reason to disturb the same, this Court RESOLVES to DENY the
instant motion for reconsideration for lack of merit.

The Facts

The facts of this case are simple. Over the objection of private respondent and
while she was in Manila seeking employment, her husband sold to the petitioners-
spouses one half of their conjugal property, consisting of their residence and the lot
on which it stood. The circumstances of this sale are set forth in the Decision of
Respondent Court, which quoted from the Decision of the trial court, as follows: [8]
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally
married spouses. They were married on December 24, 1968 in
Bacolod City, before a judge. This is admitted by defendants-
spouses Antonio and Luzviminda Guiang in their answer, and also
admitted by defendant Judie Corpuz when he testified in court (tsn.
p..3, June 9, 1992), although the latter says that they were married
in 1967.The couple have three children, namely: Junie 18 years old,
Harriet 17 years of age, and Jodie or Joji, the youngest, who was 15
years of age in August, 1990 when her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie
Corpuz, with plaintiff-wife Gilda Corpuz as vendee, bought a 421 sq.
meter lot located in Barangay Gen. Paulino Santos (Bo. 1),
Koronadal, South Cotabato, and particularly known as Lot 9, Block
8, (LRC) Psd-165409 from Manuel Callejo who signed as vendor
through a conditional deed of sale for a total consideration
of P14,735.00. The consideration was payable in installment, with
right of cancellation in favor of vendor should vendee fail to pay
three successive installments (Exh. 2, tsn. p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz
sold one-half portion of their Lot No. 9, Block 8, (LRC) Psd-165409
to the defendants-spouses Antonio and Luzviminda Guiang. The
latter have since then occupied the one-half portion [and] built their
house thereon (tsn. p. 4, May 22, 1992). They are thus adjoining
neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She
was trying to look for work abroad, in [the] Middle
East. Unfortunately, she became a victim of an unscrupulous illegal
recruiter. She was not able to go abroad. She stayed for sometime in
Manila however, coming back to Koronadal, South Cotabato, x x x
on March 11, 1990. Plaintiffs departure for Manila to look for work in
the Middle East was with the consent of her husband Judie Corpuz
(tsn. p. 16, Aug.12, 1990; p. 10, Sept. 6, 1991).
After his wifes departure for Manila, defendant Judie Corpuz seldom
went home to the conjugal dwelling. He stayed most of the time at
his place of work at Samahang Nayon Building, a hotel, restaurant,
and a cooperative. Daughter Harriet Corpuz went to school at Kings
College, Bo. 1, Koronadal, South Cotabato, but she was at the same
time working as household help of, and staying at, the house of Mr.
Panes. Her brother Junie was not working. Her younger sister Jodie
(Joji) was going to school. Her mother sometimes sent them money
(tsn. p. 14, Sept. 6, 1991).
Sometime in January 1990, Harriet Corpuz learned that her father
intended to sell the remaining one-half portion including their house,
of their homelot to defendants Guiangs. She wrote a letter to her
mother informing her. She [Gilda Corpuz] replied that she was
objecting to the sale. Harriet, however, did not inform her father
about this; but instead gave the letter to Mrs. Luzviminda Guiang so
that she [Guiang] would advise her father (tsn. pp. 16-17, Sept. 6,
1991).
4. However, in the absence of his wife Gilda Corpuz, defendant
Judie Corpuz pushed through the sale of the remaining one-half
portion of Lot 9, Block 8, (LRC) Psd-165409. On March 1, 1990, he
sold to defendant Luzviminda Guiang thru a document known as
Deed of Transfer of Rights (Exh. A) the remaining one-half portion of
their lot and the house standing thereon for a total consideration
ofP30,000.00 of which P5,000.00 was to be paid in June ,
1990. Transferor Judie Corpuzs children Junie and Harriet signed
the document as witnesses.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to
cure whatever defect in defendant Judie Corpuzs title over the lot
transferred, defendant Luzviminda Guiang as vendee executed
another agreement over Lot 9, Block 8, (LRC) Psd-165408 (Exh. 3),
this time with Manuela Jimenez Callejo, a widow of the original
registered owner from whom the couple Judie and Gilda Corpuz
originally bought the lot (Exh. 2), who signed as vendor for a
consideration of P9,000.00. Defendant Judie Corpuz signed as a
witness to the sale (Exh. 3-A). The new sale (Exh. 3) describes the
lot sold as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from
the mass of evidence that the correct lot is Lot 8, Block 9, (LRC)
Psd-165409, the very lot earlier sold to the couple Gilda and Judie
Corpuz.
5. Sometime on March 11, 1990, plaintiff returned home. She found
her children staying with other households. Only Junie was staying
in their house. Harriet and Joji were with Mr. Panes. Gilda gathered
her children together and stayed at their house. Her husband was
nowhere to be found. She was informed by her children that their
father had a wife already.
6. For staying in their house sold by her husband, plaintiff was
complained against by defendant Luzviminda Guiang and her
husband Antonio Guiang before the Barangay authorities of
Barangay General Paulino Santos (Bo. 1), Koronadal, South
Cotabato, for trespassing (tsn. p. 34, Aug. 17, 1990). The case was
docketed by the barangay authorities as Barangay Case No. 38 for
trespassing. On March 16, 1990, the parties thereat signed a
document known as amicable settlement. In full, the settlement
provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children,
namely: Junie, Hariet and Judie to leave voluntarily the
house of Mr. and Mrs. Antonio Guiang, where they are
presently boarding without any charge, on or before April 7,
1990.

FAIL NOT UNDER THE PENALTY OF THE LAW.

Believing that she had received the shorter end of the bargain,
plaintiff went to the Barangay Captain of Barangay Paulino Santos to
question her signature on the amicable settlement. She was referred
however to the Officer-In-Charge at the time, a certain Mr. de la
Cruz. The latter in turn told her that he could not do anything on the
matter (tsn. p. 31, Aug. 17, 1990).
This particular point was not rebutted. The Barangay Captain who
testified did not deny that Mrs. Gilda Corpuz approached him for the
annulment of the settlement. He merely said he forgot whether Mrs.
Corpuz had approached him (tsn. p. 13, Sept. 26, 1990). We thus
conclude that Mrs. Corpuz really approached the Barangay Captain
for the annulment of the settlement. Annulment not having been
made, plaintiff stayed put in her house and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement
with a motion for the execution of the amicable settlement, filing the
same with the Municipal Trial Court of Koronadal, South
Cotabato.The proceedings [are] still pending before the said court,
with the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00
for the preparation of the Deed of Transfer of Rights, Exh.
A; P9,000.00 as the amount they paid to Mrs. Manuela Callejo,
having assumed the remaining obligation of the Corpuzes to Mrs.
Callejo (Exh. 3); P100.00 for the preparation of Exhibit 3; a total
of P759.62 basic tax and special educational fund on the
lot; P127.50 as the total documentary stamp tax on the various
documents; P535.72 for the capital gains tax; P22.50 as transfer tax;
a standard fee of P17.00; certification fee of P5.00. These expenses
particularly the taxes and other expenses towards the transfer of the
title to the spouses Guiangs were incurred for the whole Lot 9, Block
8, (LRC) Psd-165409.
 Ruling of Respondent Court

Respondent Court found no reversible error in the trial courts ruling that any
alienation or encumbrance by the husband of the conjugal property without the
consent of his wife is null and void as provided under Article 124 of the Family
Code. It also rejected petitioners contention that the amicable settlement ratified said
sale, citing Article 1409 of the Code which expressly bars ratification of the contracts
specified therein, particularly those prohibited or declared void by law.
Hence, this petition.[9]

The Issues

In their Memorandum, petitioners assign to public respondent the following

errors:[10]
I

Whether or not the assailed Deed of Transfer of Rights was validly

executed.
II

Whether or not the Court of Appeals erred in not declaring as

voidable contract under Art. 1390 of the Civil Code the impugned
Deed of Transfer of Rights which was validly ratified thru the
execution of the amicable settlement by the contending parties.
III

Whether or not the Court of Appeals erred in not setting aside the
findings of the Court a quo which recognized as lawful and valid the
ownership and possession of private respondent over the remaining
one half (1/2) portion of the subject property.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of
Transfer of Rights) was merely voidable, and (2) such contract was ratified by private
respondent when she entered into an amicable settlement with them.

This Courts Ruling

The petition is bereft of merit.

First Issue: Void or Voidable Contract?

Petitioners insist that the questioned Deed of Transfer of Rights was validly
executed by the parties-litigants in good faith and for valuable consideration. The
absence of private respondents consent merely rendered the Deed voidable under
Article 1390 of the Civil Code, which provides:
ART. 1390. The following contracts are voidable or annullable, even
though there may have been no damage to the contracting parties:
xxxxxxxxx
(2) Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper
action in court. They are susceptible of ratification.(n)
The error in petitioners contention is evident. Article 1390, par. 2, refers to
contracts visited by vices of consent, i.e., contracts which were entered into by a
person whose consent was obtained and vitiated through mistake, violence,
intimidation, undue influence or fraud. In this instance, private respondents consent
to the contract of sale of their conjugal property was totally inexistent or
absent. Gilda Corpuz, on direct examination, testified thus:[11]
Q Now, on March 1, 1990, could you still recall where you were?
A I was still in Manila during that time.
xxxxxxxxx
ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Maam.
Q Now, when you arrived at Koronadal, was there any problem which arose concerning
the ownership of your residential house at Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem which arose regarding my
residential house and lot because it was sold by my husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124 of
the Family Code, which was correctly applied by the two lower courts:
ART. 124. The administration and enjoyment of the conjugal
partnership property shall belong to both spouses jointly. In case of
disagreement, the husbands decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be
availed of within five years from the date of the contract
implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers
do not include the powers of disposition or encumbrance which must
have the authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition
or encumbrance shall be void. However, the transaction shall be
 construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract
upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors.(165a)
(Italics supplied)
Comparing said law with its equivalent provision in the Civil Code, the trial court
adroitly explained the amendatory effect of the above provision in this wise: [12]
The legal provision is clear. The disposition or encumbrance is
void. It becomes still clearer if we compare the same with the
equivalent provision of the Civil Code of the Philippines. Under
Article 166 of the Civil Code, the husband cannot generally alienate
or encumber any real property of the conjugal partnership without
the wifes consent. The alienation or encumbrance if so made
however is not null and void. It is merely voidable. The offended wife
may bring an action to annul the said alienation or
encumbrance. Thus, the provision of Article 173 of the Civil Code of
the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten
years from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into
without her consent, when such consent is required, or any
act or contract of the husband which tends to defraud her or
impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her
heirs after the dissolution of the marriage, may demand the
value of property fraudulently alienated by the husband.(n)
This particular provision giving the wife ten (10) years x x x during
[the] marriage to annul the alienation or encumbrance was not
carried over to the Family Code. It is thus clear that any alienation or
encumbrance made after August 3, 1988 when the Family Code
took effect by the husband of the conjugal partnership property
without the consent of the wife is null and void.
Furthermore, it must be noted that the fraud and the intimidation referred to by
petitioners were perpetrated in the execution of the document embodying the
amicable settlement. Gilda Corpuz alleged during trial that barangay authorities
made her sign said document through misrepresentation and coercion. [13] In any
event, its execution does not alter the void character of the deed of sale between the
husband and the petitioners-spouses, as will be discussed later. The fact remains
that such contract was entered into without the wifes consent.
In sum, the nullity of the contract of sale is premised on the absence of private
respondents consent. To constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2) object, and (3) consent,[14] the
last element being indubitably absent in the case at bar.
 Second Issue: Amicable Settlement

Insisting that the contract of sale was merely voidable, petitioners aver that it
was duly ratified by the contending parties through the amicable settlement they
executed on March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved
this issue in favor of the private respondent. The trial court correctly held:[15]
By the specific provision of the law [Art. 1390, Civil Code] therefore,
the Deed of Transfer of Rights (Exh. A) cannot be ratified, even by
an amicable settlement. The participation by some barangay
authorities in the amicable settlement cannot otherwise validate an
invalid act. Moreover, it cannot be denied that the amicable
settlement (Exh. B) entered into by plaintiff Gilda Corpuz and
defendant spouses Guiang is a contract. It is a direct offshoot of the
Deed of Transfer of Rights (Exh. A). By express provision of law,
such a contract is also void. Thus, the legal provision, to wit:
Art. 1422. A contract which is the direct result of a previous
illegal contract, is also void and inexistent. (Civil Code of the
Philippines).
In summation therefore, both the Deed of Transfer of Rights (Exh. A)
and the amicable settlement (Exh. 3) are null and void.
Doctrinally and clearly, a void contract cannot be ratified.[16]
Neither can the amicable settlement be considered a continuing offer that was
accepted and perfected by the parties, following the last sentence of Article 124. The
order of the pertinent events is clear: afterthe sale, petitioners filed a complaint for
trespassing against private respondent, after which the barangay authorities secured
an amicable settlement and petitioners filed before the MTC a motion for its
execution. The settlement, however, does not mention a continuing offer to sell the
property or an acceptance of such a continuing offer. Its tenor was to the effect that
private respondent would vacate the property. By no stretch of the imagination, can
the Court interpret this document as the acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the
challenged Decision and Resolution. Costs against petitioners.
SO ORDERED.
Davide, Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.
THIRD DIVISION

[G.R. No. 137675. December 5, 2000]

NOVERNIA P. NAGUIT, petitioner, vs. THE COURT OF APPEALS,
OSLER U. PADUA and NORBERTO B.
MAGSAJO, respondents.

DECISION
GONZAGA-REYES, J.:

In a decision rendered on 15 October 1991, the Regional Trial Court (RTC) of

Makati, Branch 133, found Rolando Naguit liable for violation of Batas Pambansa
Blg. 22, and ordered him to idemnify private respondent Osler U. Padua in the
amount of P260,000.00 and to pay the costs of the action (Criminal Case No. 90-
2645). A writ of execution was issued by said court on 23 June 1992 and pursuant
thereto, respondent Sheriff Norberto B. Magsajo levied upon a condominium unit
covered by Condominium Certificate of Title No. 7362 of the Registry of Deeds for
the City of Makati, which notice of levy was annotated at the back of the title.
Consequently, the property was sold at a public auction for P318,050.00 in favor of
private respondent, as the highest bidder. The certificate of sale was issued in the
name of private respondent and registered with the Registry of Deeds on 25 August
1994.
On 8 August 1995, petitioner filed a complaint with the RTC of Makati against
private respondent Padua and respondent Sheriff Magsajo for the annulment of sale
and for damages, with a prayer for the issuance of a writ of preliminary injunction in
order to enjoin the final conveyance of title over the condominium unit to private
respondent (Civil Case No. 95-1182). Petitioner claimed that the debt contracted by
her husband did not redound to the benefit of the family, nor was it made with her
consent, and therefore, should not be charged to the conjugal partnership of gains or
to her exclusive property; that the condominium unit levied upon and sold to private
respondent is her exclusive property, not the judgment obligors; and that
consequently, the levy and sale of the condominium unit are void.[1]
On 20 September 1995, Branch 136 of the RTC of Makati denied
petitioners prayer for the issuance of preliminary injunction, explaining that

The perceived anomaly in the auction sale of the property subject of this
case, which [is] claimed to be owned by the petitioner is a matter within the
competence of the Court which authorized the levy on execution of
judgment, of property of plaintiff in this case.

If plaintiff believes that there were irregularities in the auction sale of the
property subject of this case which [is] claimed to be owned by the
petitioner, the problems should have been threshed out before [the] RTC
Makati, Branch 133, which court authorized the levy on execution of
judgment of property of plaintiff in this case. Besides, the petitioner should
have elevated the matter to the higher tribunal, and seek proper injunctive
relief, and not to refer to this Court which does not exercise an appellate
authority over the court that issued the aforesaid writ of execution.
The Court agrees with the argument of the defendant that the present
action of the plaintiff in seeking relief with this Court is legally misplaced.

It is an elementary rule of procedure, which is too well settled to be ignored,

that trial courts have no power to interfere by injunction and are enjoined
from intervening with the proceedings of a co-equal, concurrent and
coordinate court of the same jurisdiction. [2]

On 5 July 1996, the trial court issued an order denying petitioners motion for
reconsideration and dismissing the case on the ground of lack of jurisdiction. [3] The
Court of Appeals upheld the trial courts decision to dismiss the case. In its decision
promulgated on 18 November 1998, the appellate court explained that since
petitioner is the spouse of the judgment debtor she cannot be considered a stranger
to the case wherein the writ of execution was issued and thus, she should have
presented her third-party claim therein. In the event that her claim is denied, only
then should petitioner bring the matter before the appellate court. [4] Petitioner filed a
motion for reconsideration, which was denied by the Court of Appeals on 9 February
1999.
Hence, the present petition, wherein petitioner asks that the 18 November 1998
Decision and 9 February 1999 Resolution of the Court of Appeals be set aside and
that the action for annulment of sale be tried on the merits.[5]
The petition is imbued with merit. A third-party claimants right to bring an
independent action to assert his claim of ownership over the properties seized is
sanctioned by Section 17 of Rule 39 of the old Rules of Civil Procedure, which
provides that

Proceedings where property claimed by third person. - If property levied on

be claimed by any other person than the judgment debtor or his agent, and
such person make an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serve the same upon
the officer making the levy, and copy thereof upon the judgment creditor,
the officer shall not be bound to keep the property, unless such judgment
creditor or his agent, on demand of the officer, indemnify the officer against
such claim by a bond in a sum not greater than the value of the property
levied on. In case of disagreement as to the value, the same shall be
determined by the court issuing the writ of execution.

The officer is not liable for damages, for the taking or keeping of the
property, to any third party claimant unless a claim is made by the latter
and unless an action for damages is brought by him against the officer
within one hundred twenty (120) days from the date of the filing of the
bond. But nothing herein contained shall prevent such claimant or any third
person from vindicating his claims to the property by any proper
action. [emphasis supplied] [6]

xxx xxx xxx

 The proper action mentioned in Section 17 would have for its object the recovery
of ownership or possession of the property seized by the sheriff, as well as damages
resulting from the allegedly wrongful seizure and detention thereof despite the third
party claim and it may be brought against the sheriff and such other parties as may
be alleged to have colluded with him in the supposedly wrongful execution
proceedings, such as the judgment creditor himself. If instituted by a stranger to the
suit in which execution has issued, such proper action should be a totally separate
and distinct action from the former suit.[7]
In addition to the filing of a proper action, the third-party claimant may also avail
of the remedy known as terceria, by executing an affidavit of his title or right of
possession over the property seized and serving the same upon the officer making
the levy and the judgment creditor. Thereafter, the officer shall not be bound to keep
the property, unless the judgment creditor or his agent indemnifies the officer against
such claim by a bond in a sum not greater than the value of the property levied
on. An action for damages may be brought against the officer within one hundred
twenty (120) days from the date of the filing of the bond.
These abovementioned remedies are cumulative and any one of them may be
resorted to by a third-party claimant without availing of the others. Thus, the
availment of the remedy of terceria is not a condition sine qua non to the filing of a
proper action. An independent action may be resorted to even before or without
need of filing a claim in the court which issued the writ.[8]
In the case at bar, petitioner filed an independent action for the annulment of the
certificate of sale issued in favor of private respondent, contending that the property
levied upon and sold to private respondent by virtue of the writ of execution issued in
Criminal Case No. 90-2645 was her exclusive property, not that of the judgment
obligor. Pursuant to our ruling in Sy v. Discaya,[9] petitioner is deemed a stranger to
the action wherein the writ of execution was issued and is therefore justified in
bringing an independent action to vindicate her right of ownership over the subject
property.
Contrary to the stand taken by the trial court, the filing of such an independent
action cannot be considered an encroachment upon the jurisdiction of a co-equal
and coordinate court. The court issuing the writ of execution may enforce its
authority only over properties of the judgment debtor; thus, the sheriff acts properly
only when he subjects to execution property undeniably belonging to the judgment
debtor. If the sheriff levies upon the assets of a third person in which the judgment
debtor has no interest, then he is acting beyond the limits of his authority and is
amenable to control and correction by a court of competent jurisdiction in a separate
and independent action.[10] This is in consonance with the well-established principle
that no man shall be affected by any proceeding to which he is a stranger. Execution
of a judgment can only be issued against a party to the action, and not against one
who has not yet had his day in court.[11]
WHEREFORE, the petition is GRANTED. The assailed decision and resolution
of the Court of Appeals, promulgated on 18 November 1998 and 9 February 1999,
respectively, are hereby SET ASIDE. This case is remanded to the trial court for
further proceedings.
SO ORDERED.
 Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24434 January 17, 1968

HEIRS OF PEDRO REGANON, JOVENCIA REGANON, MENCIA REGANON, JOSEFA

REGANON, VIOLETA REGANON, and FLORA REGANON, plaintiffs-appellees,
vs.
RUFINO IMPERIAL, defendant-appellant.

Torcuato L. Galon for plaintiffs-appellees.

V. Lacaya for defendant-appellant.

BENGZON, J.P., J.:

This is an appeal from the orders dated June 9, 1964, July 14, 1964 and August 11, 1964,
respectively, of the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II).

The facts of the case are admitted by both parties.

On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership
and possession of about one-hectare portion of a parcel of land (Lot No. 1 or Lot No. 4952,
situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of
7.9954 hectares), with damages, against Rufino Imperial.

Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8,
1963 filed a motion to declare the former in default. The trial court granted the motion in its order
dated April 10, 1963.

On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court acting
as Commissioner. The court a quo on May 6, 1963, rendered a decision declaring the plaintiffs
lawful owners of the land in question and entitled to its peaceful possession and enjoyment;
ordering defendant immediately to vacate the portion occupied by him and to restore the
peaceful possession thereof to plaintiffs; and sentencing defendant to pay plaintiffs the amount of
P1,929.20 and the costs.

On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution. This was
granted by the trial court in its order of December 9, 1963.

The Deputy Provincial Sheriff submitted on February 8, 1964 a sheriff's return of proceedings
reporting the garnishment and sale of a carabao and goat belonging to defendant for P153.00,
and the attachment and sale of defendant's parcel of land covered by Tax Declaration No. 4694,
situated in Sicet, Polanco, Zamboanga del Norte, for P500.00 both sales having been made to
the only bidder, plaintiffs' counsel Atty. Vic T. Lacaya.

On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-
Dipolog Branch the residuary estate of its former ward, Eulogio Imperial, in the sum of
P10,303.80, pursuant to an order of Branch I of the Court of First Instance of Zamboanga del
Norte in Sp. Proc. No. R-145.
On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant, executed a Deed
of Extrajudicial Partition of the residuary estate, wherein was apportioned P1,471.97 as
defendant Rufino Imperial's share.

Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for issuance
of an alias writ of execution and of an order directing the manager, or the representative, of the
Philippine National Bank-Dipolog Branch, to hold the share of defendant and deliver the same to
the provincial sheriff of the province to be applied to the satisfaction of the balance of the money
judgment. This was granted by the trial court (Branch II) in its order dated June 9, 1964.

On June 17, 1964, the Deputy Provincial Sheriff issued a sheriffs notification for levy addressed
to defendant, giving notice of the garnishment of the rights, interests, shares and participation
that defendant may have over the residuary estate of the late Eulogio Imperial, consisting of the
money deposited in the Philippine National Bank-Dipolog Branch.

Defendant, through counsel, appearing for the first time before the trial court, on June 24, 1964
filed a motion for reconsideration of the order dated June 9, 1964, and to quash the alias writ of
execution issued pursuant to it, to which plaintiffs filed their opposition on July 6, 1964. On July
14, 1964, the trial court denied defendant's aforesaid motion.

Defendant's second motion for reconsideration likewise having denied by the trial court in its
order of August 11, 1964, defendant appealed to Us, raising the following issues:

(1) Upon the death of a ward, is the money accumulated in his guardianship proceedings
and deposited in a bank, still considered in custodia legis and therefore cannot be
attached?

(2) Is the residuary estate of a U.S. veteran, which consists in the aggregate
accumulated sum from the monthly allowances given him by the United States Veterans
Administration (USVA) during his lifetime, exempt from execution?

Defendant-appellant argues that the property of an incompetent under guardianship is

in custodia legis and therefore can not be attached.

It is true that in a former case 1 it was held that property under custodia legis can not be attached.
But this was under the old Rules of Court. The new Rules of Court 2 now specifically provides for
the procedure to be followed in case what is attached is in custodia legis. 3 The clear import of
this new provision is that property undercustodia legis is now attachable, subject to the mode set
forth in said rule.

Besides, the ward having died, the guardianship proceedings no longer subsist:

The death of the ward necessarily terminates the guardianship, and thereupon all powers
and duties of the guardian cease, except the duty, which remains, to make a proper
accounting and settlement in the probate court. 4

As a matter of fact, the guardianship proceedings was ordered conditionally closed by Branch I of
the Court of First Instance of Zamboanga del Norte in which it was pending, in its order of
February 8, 1964, where it stated

In the meantime, the guardian Philippine National Bank is hereby directed to deposit the
residuary estate of said ward with its bank agency in Dipolog, this province, in the name
of the estate of the deceased ward Eulogio Imperial, preparatory to the eventual
distribution of the same to the heirs when the latter shall be known, and upon proof of
deposit of said residuary estate, the guardian Philippine National Bank shall forthwith be
 relieved from any responsibility as such, and this proceeding shall be considered closed
and terminated. 5

And the condition has long been fulfilled, because on March 13, 1964 the Philippine National
Bank-Manila deposited the residuary estate of the ward with the Philippine National Bank-
Dipolog Branch, evidenced by a receipt attached to the records in Sp. Proc. No. R-145. 6

When Eulogio Imperial died on September 13, 1962, the rights to his succession from the
moment of his death were transmitted to his heirs, one of whom is his son and heir,
defendant-appellant herein. 7 This automatic transmission can not but proceed with greater ease
and certainty than in this case where the parties agree that the residuary estate is not burdened
with any debt. For,

The rights to the succession of a person are transmitted from the moment of death, and
where, as in this case, the heir is of legal age and the estate is not burdened with any
debts, said heir immediately succeeds, by force of law, to the dominion, ownership, and
possession of the properties of his predecessor and consequently stands legally in the
shoes of the latter. 8

That the interest of an heir in the estate of a deceased person may be attached for purposes of
execution, even if the estate is in the process of settlement before the courts, is already a settled
matter in this jurisdiction. 9

It is admitted that the heirs of Eulogio Imperial, including herein defendant-appellant, have on
May 25, 1964 executed a Deed of Extrajudicial Partition. This instrument suffices to settle the
entire estate of the decedent provided all the requisites for its validity are fulfilled 10 even
without the approval of the court. Therefore, the estate for all practical purposes have been
settled. The heirs are at full liberty to withdraw the residuary estate from the Philippine National
Bank-Dipolog Branch and divide it among themselves. The only reason they have not done so is
because of the alleged illegal withdrawal from said estate of the amount of P1,080.00 by one
Gloria Gomez by authority of Branch I of the Court of First Instance of Zamboanga del Norte,
which incident is now on appeal before the Court of Appeals. This appeal, however, does not
detract any from the fact that the guardianship proceedings is closed and terminated and the
residuary estate no longer under custodia legis.

Finally, it is defendant-appellant's position that the residuary estate of Eulogio Imperial, a former
U.S. veteran, having been set aside from the monthly allowances given him by the United States
Veterans Administration (USVA) during his lifetime, is exempt from execution.

Any pension, annuity, or gratuity granted by a Government to its officers or employees in

recognition of past services rendered, is primordially aimed at tiding them over during their old
age and/or disability. This is therefore a right personalissima, purely personal because founded
on necessity. It requires no argument to show that where the recipient dies, the necessity
motivating or underlying its grant necessarily ceases to be. Even more so in this case where the
law 11 providing for the exemption is calculated to benefit U.S. veterans residing here, and is
therefore merely a manifestation of comity.

Besides, as earlier stated, the heirs of Eulogio Imperial, one of whom is appellant, have already
executed a Deed of Extrajudicial Partition the end result of which is that the property is no
longer the property of the estate but of the individual heirs. And it is settled that:

When the heirs by mutual agreement have divided the estate among themselves, one of
the heirs can not therefore secure the appointment of an administrator to take charge of
and administer the estate or a part thereof. The property is no longer the property of the
estate, but of the individual heirs, whether it remains undivided or not. 12
WHEREFORE, the orders appealed from are hereby affirmed, with costs against defendant-
appellant. So ordered.1wph1.t

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-34583 October 22, 1931

THE BANK OF THE PHILIPPINE ISLANDS, administrator of the estate of the late Adolphe
Oscar Schuetze,plaintiff-appellant,
vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.

Araneta, De Joya, Zaragoza and Araneta for appellant.

Attorney-General Jaranilla for appellee.

VILLA-REAL, J.:

The Bank of the Philippine Islands, as administrator of the estate of the deceased Adolphe Oscar
Schuetze, has appealed to this court from the judgment of the Court of First Instance of Manila
absolving the defendant Juan Posadas, Jr., Collector of Internal Revenue, from the complaint
filed against him by said plaintiff bank, and dismissing the complaint with costs.

The appellant has assigned the following alleged errors as committed by the trial court in its
judgment, to wit:

1. The lower court erred in holding that the testimony of Mrs. Schuetze was inefficient to
established the domicile of her husband.

2. The lower court erred in holding that under section 1536 of the Administrative Code
the tax imposed by the defendant is lawful and valid.

3. The lower court erred in not holding that one-half () of the proceeds of the policy in
question is community property and that therefore no inheritance tax can be levied, at
least on one-half () of the said proceeds.

4. The lower court erred in not declaring that it would be unconstitutional to impose an
inheritance tax upon the insurance policy here in question as it would be a taking of
property without due process of law.

The present complaint seeks to recover from the defendant Juan Posadas, Jr., Collector of
Internal Revenue, the amount of P1,209 paid by the plaintiff under protest, in its capacity of
administrator of the estate of the late Adolphe Oscar Schuetze, as inheritance tax upon the sum
of P20,150, which is the amount of an insurance policy on the deceased's life, wherein his own
estate was named the beneficiary.
At the hearing, in addition to documentary and parol evidence, both parties submitted the
following agreed statement of facts of the court for consideration:

It is hereby stipulated and agreed by and between the parties in the above-entitled action
through their respective undersigned attorneys:

1. That the plaintiff, Rosario Gelano Vda. de Schuetze, window of the late Adolphe Oscar
Schuetze, is of legal age, a native of Manila, Philippine Islands, and is and was at all
times hereinafter mentioned a resident of Germany, and at the time of the death of her
husband, the late Adolphe Oscar Schuetze, she was actually residing and living in
Germany;

2. That the Bank of the Philippine Islands, is and was at all times hereinafter mentioned a
banking institution duly organized and existing under and by virtue of the laws of the
Philippine Islands;

3. That on or about August 23, 1928, the herein plaintiff before notary public Salvador
Zaragoza, drew a general power appointing the above-mentioned Bank of the Philippine
Islands as her attorney-in-fact, and among the powers conferred to said attorney-in-fact
was the power to represent her in all legal actions instituted by or against her;

4. That the defendant, of legal age, is and at all times hereinafter mentioned the duly
appointed Collector of Internal Revenue with offices at Manila, Philippine Islands;

5. That the deceased Adolphe Oscar Schuetze came to the Philippine Islands for the first
time of March 31, 1890, and worked in the several German firms as a mere employee
and that from the year 1903 until the year 1918 he was partner in the business of Alfredo
Roensch;

6. That from 1903 to 1922 the said Adolphe Oscar Schuetze was in the habit of making
various trips to Europe;

7. That on December 3, 1927, the late Adolphe Oscar Schuetze coming from Java, and
with the intention of going to Bremen, landed in the Philippine Islands where he met his
death on February 2, 1928;

8. That on March 31, 1926, the said Adolphe Oscar Schuetze, while in Germany,
executed a will, in accordance with its law, wherein plaintiff was named his universal heir;

9. That the Bank of the Philippine Islands by order of the Court of First Instance of Manila
under date of May 24, 1928, was appointed administrator of the estate of the deceased
Adolphe Oscar Schuetze;

10. That, according to the testamentary proceedings instituted in the Court of First
Instance of Manila, civil case No. 33089, the deceased at the time of his death was
possessed of not only real property situated in the Philippine Islands, but also personal
property consisting of shares of stock in nineteen (19) domestic corporations;

11. That the fair market value of all the property in the Philippine Islands left by the
deceased at the time of his death in accordance with the inventory submitted to the Court
of First Instance of Manila, civil case No. 33089, was P217,560.38;

12. That the Bank of the Philippine Islands, as administrator of the estate of the
deceased rendered its final account on June 19, 1929, and that said estate was closed
on July 16, 1929;
13. That among the personal property of the deceased was found life-insurance policy
No. 194538 issued at Manila, Philippine Islands, on January 14, 1913, for the sum of
$10,000 by the Sun Life Assurance Company of Canada, Manila branch, a foreign
corporation duly organized and existing under and by virtue of the laws of Canada, and
duly authorized to transact business in the Philippine Islands;

14. That in the insurance policy the estate of the said Adolphe Oscar Schuetze was
named the beneficiary without any qualification whatsoever;

15. That for five consecutive years, the deceased Adolphe Oscar Schuetze paid the
premiums of said policy to the Sun Life Assurance Company of Canada, Manila branch;

16. That on or about the year 1918, the Sun Life Assurance Company of Canada, Manila
branch, transferred said policy to the Sun Life Assurance Company of Canada, London
branch;

17. That due to said transfer the said Adolphe Oscar Schuetze from 1918 to the time of
his death paid the premiums of said policy to the Sun Life Assurance Company of
Canada, London Branch;

18. That the sole and only heir of the deceased Adolphe Oscar Schuetze is his widow,
the plaintiff herein;

19. That at the time of the death of the deceased and at all times thereafter including the
date when the said insurance policy was paid, the insurance policy was not in the hands
or possession of the Manila office of the Sun Life Assurance Company of Canada, nor in
the possession of the herein plaintiff, nor in the possession of her attorney-in-fact the
Bank of the Philippine Islands, but the same was in the hands of the Head Office of the
Sun Life Assurance Company of Canada, at Montreal, Canada;

20. That on July 13, 1928, the Bank of the Philippine Islands as administrator of the
decedent's estate received from the Sun Life Assurance Company of Canada, Manila
branch, the sum of P20,150 representing the proceeds of the insurance policy, as shown
in the statement of income and expenses of the estate of the deceased submitted on
June 18, 1929, by the administrator to the Court of First Instance of Manila, civil case No.
33089;

21. That the Bank of the Philippine Islands delivered to the plaintiff herein the said sum of
P20,150;

22. That the herein defendant on or about July 5, 1929, imposed an inheritance tax upon
the transmission of the proceeds of the policy in question in the sum of P20,150 from the
estate of the late Adolphe Oscar Schuetze to the sole heir of the deceased, or the plaintiff
herein, which inheritance tax amounted to the sum of P1,209;

23. That the Bank of the Philippine Islands as administrator of the decedent's estate and
as attorney-in-fact of the herein plaintiff, having been demanded by the herein defendant
to pay inheritance tax amounting to the sum of P1,209, paid to the defendant under
protest the above-mentioned sum;

24. That notwithstanding the various demands made by plaintiff to the defendant, said
defendant has refused and refuses to refund to plaintiff the above mentioned sum of
P1,209;
 25. That plaintiff reserves the right to adduce evidence as regards the domicile of the
deceased, and so the defendant, the right to present rebuttal evidence;

26. That both plaintiff and defendant submit this stipulation of facts without prejudice to
their right to introduce such evidence, on points not covered by the agreement, which
they may deem proper and necessary to support their respective contentions.

In as much as one of the question raised in the appeal is whether an insurance policy on said
Adolphe Oscar Schuetze's life was, by reason of its ownership, subject to the inheritance tax, it
would be well to decide first whether the amount thereof is paraphernal or community property.

According to the foregoing agreed statement of facts, the estate of Adolphe Oscar Schuetze is
the sole beneficiary named in the life-insurance policy for $10,000, issued by the Sun Life
Assurance Company of Canada on January 14, 1913. During the following five years the insured
paid the premiums at the Manila branch of the company, and in 1918 the policy was transferred
to the London branch.

The record shows that the deceased Adolphe Oscar Schuetze married the plaintiff-appellant
Rosario Gelano on January 16, 1914.

With the exception of the premium for the first year covering the period from January 14, 1913 to
January 14, 1914, all the money used for paying the premiums, i. e., from the second year, or
January 16, 1914, or when the deceased Adolphe Oscar Schuetze married the plaintiff-appellant
Rosario Gelano, until his death on February 2, 1929, is conjugal property inasmuch as it does not
appear to have exclusively belonged to him or to his wife (art. 1407, Civil Code). As the sum of
P20,150 here in controversy is a product of such premium it must also be deemed community
property, because it was acquired for a valuable consideration, during said Adolphe Oscar
Schuetze's marriage with Rosario Gelano at the expense of the common fund (art. 1401, No. 1,
Civil Code), except for the small part corresponding to the first premium paid with the deceased's
own money.

In his Commentaries on the Civil Code, volume 9, page 589, second edition, Manresa treats of
life insurance in the following terms, to wit:

The amount of the policy represents the premiums to be paid, and the right to it arises
the moment the contract is perfected, for at the moment the power of disposing of it may
be exercised, and if death occurs payment may be demanded. It is therefore something
acquired for a valuable consideration during the marriage, though the period of its
fulfillment, depend upon the death of one of the spouses, which terminates the
partnership. So considered, the question may be said to be decided by articles 1396 and
1401: if the premiums are paid with the exclusive property of husband or wife, the policy
belongs to the owner; if with conjugal property, or if the money cannot be proved as
coming from one or the other of the spouses, the policy is community property.

The Supreme Court of Texas, United States, in the case of Martin vs. Moran (11 Tex. Civ. A.,
509) laid down the following doctrine:

COMMUNITY PROPERTY LIFE INSURANCE POLICY. A husband took out an

endowment life insurance policy on his life, payable "as directed by will." He paid the
premiums thereon out of community funds, and by his will made the proceeds of the
policy payable to his own estate. Held, that the proceeds were community estate, one-
half of which belonged to the wife.

In In re Stan's Estate, Myr. Prob. (Cal.), 5, the Supreme Court of California laid down the
following doctrine:
 A testator, after marriage, took out an insurance policy, on which he paid the premiums
from his salary. Held that the insurance money was community property, to one-half of
which, the wife was entitled as survivor.

In In re Webb's Estate, Myr. Prob. (Cal.), 93, the same court laid down the following doctrine:

A decedent paid the first third of the amount of the premiums on his life-insurance policy
out of his earnings before marriage, and the remainder from his earnings received after
marriage. Held, that one-third of the policy belonged to his separate estate, and the
remainder to the community property.

Thus both according to our Civil Code and to the ruling of those North American States where
the Spanish Civil Code once governed, the proceeds of a life-insurance policy whereon the
premiums were paid with conjugal money, belong to the conjugal partnership.

The appellee alleges that it is a fundamental principle that a life-insurance policy belongs
exclusively to the beneficiary upon the death of the person insured, and that in the present case,
as the late Adolphe Oscar Schuetze named his own estate as the sole beneficiary of the
insurance on his life, upon his death the latter became the sole owner of the proceeds, which
therefore became subject to the inheritance tax, citing Del Val vs. Del Val (29 Phil., 534), where
the doctrine was laid down that an heir appointed beneficiary to a life-insurance policy taken out
by the deceased, becomes the absolute owner of the proceeds of such policy upon the death of
the insured.

The estate of a deceased person cannot be placed on the same footing as an individual heir. The
proceeds of a life-insurance policy payable to the estate of the insured passed to the executor or
administrator of such estate, and forms part of its assets (37 Corpus Juris, 565, sec. 322);
whereas the proceeds of a life-insurance policy payable to an heir of the insured as beneficiary
belongs exclusively to said heir and does not form part of the deceased's estate subject to
administrator. (Del Val vs. Del Val, supra; 37 Corpus Juris, 566, sec. 323, and articles 419 and
428 of the Code of Commerce.)

Just as an individual beneficiary of a life-insurance policy taken out by a married person

becomes the exclusive owner of the proceeds upon the death of the insured even if the
premiums were paid by the conjugal partnership, so, it is argued, where the beneficiary named is
the estate of the deceased whose life is insured, the proceeds of the policy become a part of said
estate upon the death of the insured even if the premiums have been paid with conjugal funds.

In a conjugal partnership the husband is the manager, empowered to alienate the partnership
property without the wife's consent (art. 1413, Civil Code), a third person, therefore, named
beneficiary in a life-insurance policy becomes the absolute owner of its proceeds upon the death
of the insured even if the premiums should have been paid with money belonging to the
community property. When a married man has his life insured and names his own estate after
death, beneficiary, he makes no alienation of the proceeds of conjugal funds to a third person,
but appropriates them himself, adding them to the assets of his estate, in contravention of the
provisions of article 1401, paragraph 1, of the Civil Code cited above, which provides that "To the
conjugal partnership belongs" (1) Property acquired for a 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." Furthermore, such appropriation is a fraud practised upon the
wife, which cannot be allowed to prejudice her, according to article 1413, paragraph 2, of said
Code. Although the husband is the manager of the conjugal partnership, he cannot of his own
free will convert the partnership property into his own exclusive property.

As all the premiums on the life-insurance policy taken out by the late Adolphe Oscar Schuetze,
were paid out of the conjugal funds, with the exceptions of the first, the proceeds of the policy,
excluding the proportional part corresponding to the first premium, constitute community
property, notwithstanding the fact that the policy was made payable to the deceased's estate, so
that one-half of said proceeds belongs to the estate, and the other half to the deceased's widow,
the plaintiff-appellant Rosario Gelano Vda. de Schuetze.

The second point to decide in this appeal is whether the Collector of Internal Revenue has
authority, under the law, to collect the inheritance tax upon one-half of the life-insurance policy
taken out by the late Adolphe Oscar Schuetze, which belongs to him and is made payable to his
estate.

According to the agreed statement of facts mentioned above, the plaintiff-appellant, the Bank of
the Philippine Islands, was appointed administrator of the late Adolphe Oscar Schuetze's
testamentary estate by an order dated March 24, 1928, entered by the Court of First Instance of
Manila. On July 13, 1928, the Sun Life Assurance Company of Canada, whose main office is in
Montreal, Canada, paid Rosario Gelano Vda. de Schuetze upon her arrival at Manila, the sum of
P20,150, which was the amount of the insurance policy on the life of said deceased, payable to
the latter's estate. On the same date Rosario Gelano Vda. de Schuetze delivered the money to
said Bank of the Philippine Islands, as administrator of the deceased's estate, which entered it in
the inventory of the testamentary estate, and then returned the money to said widow.

Section 1536 of the Administrative Code, as amended by section 10 of Act No. 2835 and section
1 of Act No. 3031, contains the following relevant provision:

SEC. 1536. Conditions and rate of taxation. Every transmission by virtue of

inheritance, devise, bequest, gift mortis causa or advance in anticipation of inheritance,
devise, or bequest of real property located in the Philippine Islands and real rights in such
property; of any franchise which must be exercised in the Philippine Islands; of any
shares, obligations, or bonds issued by any corporation or sociedad anonimaorganized
or constituted in the Philippine Islands in accordance with its laws; of any shares or rights
in any partnership, business or industry established in the Philippine Islands or of any
personal property located in the Philippine Islands shall be subject to the following tax:

xxx xxx xxx

In as much as the proceeds of the insurance policy on the life of the late Adolphe Oscar
Schuetze were paid to the Bank of the Philippine Islands, as administrator of the deceased's
estate, for management and partition, and as such proceeds were turned over to the sole and
universal testamentary heiress Rosario Gelano Vda. de Schuetze, the plaintiff-appellant, here in
Manila, the situs of said proceeds is the Philippine Islands.

In his work "The Law of Taxation," Cooley enunciates the general rule governing the levying of
taxes upon tangible personal property, in the following words:

GENERAL RULE. The suits of tangible personal property, for purposes of taxation
may be where the owner is domiciled but is not necessarily so. Unlike intangible personal
property, it may acquire a taxation situs in a state other than the one where the owner is
domiciled, merely because it is located there. Its taxable situs is where it is more or less
permanently located, regardless of the domicile of the owner. It is well settled that the
state where it is more or less permanently located has the power to tax it although the
owner resides out of the state, regardless of whether it has been taxed for the same
period at the domicile of the owner, provided there is statutory authority for taxing such
property. It is equally well settled that the state where the owner is domiciled has no
power to tax it where the property has acquired an actual situs in another state by reason
of its more or less permanent location in that state. ... (2 Cooley, The Law of Taxation,
4th ed., p. 975, par. 451.)
With reference to the meaning of the words "permanent" and "in transit," he has the following to
say:

PERMANENCY OF LOCATION; PROPERTY IN TRANSIT. In order to acquire a situs

in a state or taxing district so as to be taxable in the state or district regardless of the
domicile of the owner and not taxable in another state or district at the domicile of the
owner, tangible personal property must be more or less permanently located in the state
or district. In other words, the situs of tangible personal property is where it is more or
less permanently located rather than where it is merely in transit or temporarily and for no
considerable length of time. If tangible personal property is more or less permanently
located in a state other than the one where the owner is domiciled, it is not taxable in the
latter state but is taxable in the state where it is located. If tangible personal property
belonging to one domiciled in one state is in another state merely in transitu or for a short
time, it is taxable in the former state, and is not taxable in the state where it is for the time
being. . . . .

Property merely in transit through a state ordinarily is not taxable there. Transit begins
when an article is committed to a carrier for transportation to the state of its destination,
or started on its ultimate passage. Transit ends when the goods arrive at their
destination. But intermediate these points questions may arise as to when a temporary
stop in transit is such as to make the property taxable at the place of stoppage. Whether
the property is taxable in such a case usually depends on the length of time and the
purpose of the interruption of transit. . . . .

. . . It has been held that property of a construction company, used in construction of a

railroad, acquires a situs at the place where used for an indefinite period. So tangible
personal property in the state for the purpose of undergoing a partial finishing process is
not to be regarded as in the course of transit nor as in the state for a mere temporary
purpose. (2 Cooley, The Law of Taxation, 4th ed., pp. 982, 983 and 988, par. 452.)

If the proceeds of the life-insurance policy taken out by the late Adolphe Oscar Schuetze and
made payable to his estate, were delivered to the Bank of the Philippine Islands for
administration and distribution, they were not in transit but were more or less permanently
located in the Philippine Islands, according to the foregoing rules. If this be so, half of the
proceeds which is community property, belongs to the estate of the deceased and is subject to
the inheritance tax, in accordance with the legal provision quoted above, irrespective of whether
or not the late Adolphe Oscar Schuetze was domiciled in the Philippine Islands at the time of his
death.

By virtue of the foregoing, we are of opinion and so hold: (1) That the proceeds of a life-
insurance policy payable to the insured's estate, on which the premiums were paid by the
conjugal partnership, constitute community property, and belong one-half to the husband and the
other half to the wife, exclusively; (2) that if the premiums were paid partly with paraphernal and
partly conjugal funds, the proceeds are likewise in like proportion paraphernal in part and
conjugal in part; and (3) that the proceeds of a life-insurance policy payable to the insured's
estate as the beneficiary, if delivered to the testamentary administrator of the former as part of
the assets of said estate under probate administration, are subject to the inheritance tax
according to the law on the matter, if they belong to the assured exclusively, and it is immaterial
that the insured was domiciled in these Islands or outside. 1awphil.net

Wherefore, the judgment appealed from is reversed, and the defendant is ordered to return to the
plaintiff the one-half of the tax collected upon the amount of P20,150, being the proceeds of the
insurance policy on the life of the late Adolphe Oscar Schuetze, after deducting the proportional
part corresponding to the first premium, without special pronouncement of costs. So ordered.

Avancea, C.J., Johnson, Street, Malcolm, Villamor, and Ostrand, JJ., concur.
 FIRST DIVISION

[G.R. No. 122749. July 31, 1996]

ANTONIO A. S. VALDES, petitioner, vs. REGIONAL TRIAL COURT,

BRANCH 102, QUEZON CITY, and CONSUELO M. GOMEZ-
VALDES, respondents.

DECISION
VITUG, J.:

The petition for review bewails, purely on a question of law, an alleged

error committed by the Regional Trial Court in Civil Case No. Q-92-12539.
Petitioner avers that the court a quo has failed to apply the correct law that
should govern the disposition of a family dwelling in a situation where a
marriage is declared void ab initio because of psychological incapacity on
the part of either or both of the parties to the contract.
The pertinent facts giving rise to this incident are, by and large, not in
dispute.
Antonio Valdes and Consuelo Gomez were married on 05 January
1971. Begotten during the marriage were five children. In a petition, dated
22 June 1992, Valdes sought the declaration of nullity of the marriage
pursuant to Article 36 of the Family Code (docketed Civil Case No. Q-92-
12539, Regional Trial Court of Quezon City, Branch 102). After hearing the
parties following the joinder of issues, the trial court, in its decision of 29
[1]

July 1994, granted the petition; viz:

"WHEREFORE, judgment is hereby rendered as follows:

"(1) The marriage of petitioner Antonio Valdes and respondent Consuelo Gomez-
Valdes is hereby declared null and void under Article 36 of the Family Code on the
ground of their mutual psychological incapacity to comply with their essential
marital obligations;

"(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela
Rosario shall choose which parent they would want to stay with.

"Stella Eloisa and Joaquin Pedro shall be placed in the custody of their mother,
herein respondent Consuelo Gomez-Valdes.
"The petitioner and respondent shall have visitation rights over the children who
are in the custody of the other.

"(3) The petitioner and respondent are directed to start proceedings on the
liquidation of their common properties as defined by Article 147 of the Family
Code, and to comply with the provisions of Articles 50, 51 and 52 of the same
code, within thirty (30) days from notice of this decision.

"Let a copy of this decision be furnished the Local Civil Registrar of Mandaluyong, Metro
Manila, for proper recording in the registry of marriages."[2] (Italics ours)

Consuelo Gomez sought a clarification of that portion of the decision

directing compliance with Articles 50, 51 and 52 of the Family Code. She
asserted that the Family Code contained no provisions on the procedure for
the liquidation of common property in "unions without marriage."
Parenthetically, during the hearing on the motion, the children filed a joint
affidavit expressing their desire to remain with their father, Antonio Valdes,
herein petitioner.
In an Order, dated 05 May 1995, the trial court made the following
clarification:

"Consequently, considering that Article 147 of the Family Code explicitly provides
that the property acquired by both parties during their union, in the absence of
proof to the contrary, are presumed to have been obtained through the joint efforts
of the parties and will be owned by them in equal shares, plaintiff and defendant
will own their 'family home' and all their other properties for that matter in equal
shares.

"In the liquidation and partition of the properties owned in common by the plaintiff and
defendant, the provisions on co-ownership found in the Civil Code shall apply."[3] (Italics
supplied)

In addressing specifically the issue regarding the disposition of the

family dwelling, the trial court said:

"Considering that this Court has already declared the marriage between petitioner
and respondent as null and void ab initio, pursuant to Art. 147, the property regime
of petitioner and respondent shall be governed by the rules on co-ownership.

"The provisions of Articles 102 and 129 of the Family Code finds no application since Article
102 refers to the procedure for the liquidation of the conjugal partnership property and
Article 129 refers to the procedure for the liquidation of the absolute community of
property."[4]

Petitioner moved for a reconsideration of the order. The motion was

denied on 30 October 1995.
 In his recourse to this Court, petitioner submits that Articles 50, 51 and
52 of the Family Code should be held controlling; he argues that:
"I

"Article 147 of the Family Code does not apply to cases where the parties are
psychological incapacitated.
"II

"Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code
govern the disposition of the family dwelling in cases where a marriage is declared
void ab initio, including a marriage declared void by reason of the psychological
incapacity of the spouses.
"III

"Assuming arguendo that Article 147 applies to marriages declared void ab

initio on the ground of the psychological incapacity of a spouse, the same may be
read consistently with Article 129.
"IV

"It is necessary to determine the parent with whom majority of the children wish to stay."[5]

The trial court correctly applied the law. In a void marriage, regardless
of the cause thereof, the property relations of the parties during the period
of cohabitation is governed by the provisions of Article 147 or Article 148,
such as the case may be, of the Family Code. Article 147 is a remake of
Article 144 of the Civil Code as interpreted and so applied in previous
cases; it provides:
[6]

"ART. 147. When a man and a woman who are capacitated to marry each other,
live exclusively with each other as husband and wife without the benefit of
marriage or under a void marriage, their wages and salaries shall be owned by
them in equal shares and the property acquired by both of them through their work
or industry shall be governed by the rules on co-ownership.

"In the absence of proof to the contrary, properties acquired while they lived
together shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be owned by them in equal shares. For purposes of this Article,
a party who did not participate in the acquisition by the other party of any property
shall be deemed to have contributed jointly in the acquisition thereof if the former's
efforts consisted in the care and maintenance of the family and of the household.
"Neither party can encumber or dispose by acts inter vivos of his or her share in the
property acquired during cohabitation and owned in common, without the consent
of the other, until after the termination of their cohabitation.

"When only one of the parties to a void marriage is in good faith, the share of the
party in bad faith in the co-ownership shall be forfeited in favor of their common
children. In case of default of or waiver by any or all of the common children or
their descendants, each vacant share shall belong to the respective surviving
descendants. In the absence of descendants, such share shall belong to the innocent
party. In all cases, the forfeiture shall take place upon termination of the
cohabitation."

This peculiar kind of co-ownership applies when a man and a woman,

suffering no legal impediment to marry each other, so exclusively live
together as husband and wife under a void marriage or without the benefit
of marriage. The term "capacitated" in the provision (in the first paragraph
of the law) refers to the legal capacity of a party to contract marriage, i.e.,
any "male or female of the age of eighteen years or upwards not under any
of the impediments mentioned in Articles 37 and 38" of the Code.
[7]

Under this property regime, property acquired by both spouses through

their work and industry shall be governed by the rules on equal co-
ownership. Any property acquired during the union is prima faciepresumed
to have been obtained through their joint efforts. A party who did not
participate in the acquisition of the property shall still be considered as
having contributed thereto jointly if said party's "efforts consisted in the care
and maintenance of the family household." Unlike the conjugal partnership
[8]

of gains, the fruits of the couple's separate property are not included in the
co-ownership.
Article 147 of the Family Code, in substance and to the above extent,
has clarified Article 144 of the Civil Code; in addition, the law now expressly
provides that
(a) Neither party can dispose or encumber by act inter vivos his or her
share in co-ownership property, without the consent of the other, during the
period of cohabitation; and
(b) In the case of a void marriage, any party in bad faith shall forfeit his
or her share in the co-ownership in favor of their common children; in
default thereof or waiver by any or all of the common children, each vacant
share shall belong to the respective surviving descendants, or still in default
thereof, to the innocent party. The forfeiture shall take place upon the
termination of the cohabitation or declaration of nullity of the marriage.
[9] [10]

When the common-law spouses suffer from a legal impediment to

marry or when they do not live exclusively with each other (as husband and
wife ),only the property acquired by both of them through theiractual
joint contribution of money, property or industry shall be owned in common
and in proportion to their respective contributions. Such contributions and
corresponding shares, however, are prima faciepresumed to be equal. The
share of any party who is married to another shall accrue to the absolute
community or conjugal partnership, as the case may be, if so existing under
a valid marriage. If the party who has acted in bad faith is not validly
married to another, his or her share shall be forfeited in the manner already
heretofore expressed. [11]

In deciding to take further cognizance of the issue on the settlement of

the parties' common property, the trial court acted neither imprudently nor
precipitately; a court which has jurisdiction to declare the marriage a nullity
must be deemed likewise clothed with authority to resolve incidental and
consequential matters. Nor did it commit a reversible error in ruling that
petitioner and private respondent own the "family home" and all their
common property in equal shares, as well as in concluding that, in the
liquidation and partition of the property owned in common by them, the
provisions on co-ownership under the Civil Code, not Articles 50, 51 and
52, in relation to Articles 102 and 129, of the Family Code, should aptly
[12]

prevail. The rules set up to govern the liquidation of either the absolute
community or the conjugal partnership of gains, the property regimes
recognized for valid and voidable marriages (in the latter case until the
contract is annulled ),are irrelevant to the liquidation of the co-ownership
that exists between common-law spouses. The first paragraph of Article 50
of the Family Code, applying paragraphs (2 ),(3 ),(4) and (5) of Article
43, relates only, by its explicit terms, to voidable marriages and,
[13]

exceptionally, tovoid marriages under Article 40 of the Code, i.e., the

[14]

declaration of nullity of a subsequent marriage contracted by a spouse of a

prior void marriage before the latter is judicially declared void. The latter is
a special rule that somehow recognizes the philosophy and an old doctrine
that void marriages are inexistent from the very beginning and no judicial
decree is necessary to establish their nullity. In now requiring forpurposes
of remarriage, the declaration of nullity by final judgment of the previously
contracted void marriage, the present law aims to do away with any
continuing uncertainty on the status of the second marriage. It is not then
illogical for the provisions of Article 43, in relation to Articles 41 and
[15]

42, of the Family Code, on the effects of the termination of a subsequent

[16]

marriage contracted during the subsistence of a previous marriage to be

made applicable pro hac vice. In all other cases, it is not to be assumed
that the law has also meant to have coincident property relations, on the
one hand, between spouses in valid and voidable marriages (before
annulment) and, on the other, between common-law spouses or spouses of
void marriages, leaving to ordain, in the latter case, the ordinary rules on
co-ownership subject to the provision of Article 147 and Article 148 of the
Family Code. It must be stressed, nevertheless, even as it may merely
state the obvious, that the provisions of the Family Code on the "family
home," i.e., the provisions found in Title V, Chapter 2, of the Family Code,
remain in force and effect regardless of the property regime of the spouses.
WHEREFORE, the questioned orders, dated 05 May 1995 and 30
October 1995, of the trial court are AFFIRMED. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 132529. February 2, 2001

SUSAN NICDAO CARIO, petitioner,

vs.
SUSAN YEE CARIO, respondent.

DECISION

YNARES-SANTIAGO, J.:

The issue for resolution in the case at bar hinges on the validity of the two marriages contracted
by the deceased SPO4 Santiago S. Cario, whose death benefits is now the subject of the
controversy between the two Susans whom he married. 1wphi1.nt

Before this Court is a petition for review on certiorari seeking to set aside the decision 1 of the
Court of Appeals in CA-G.R. CV No. 51263, which affirmed in toto the decision 2 of the Regional
Trial Court of Quezon City, Branch 87, in Civil Case No. Q-93-18632.

During the lifetime of the late SPO4 Santiago S. Cario, he contracted two marriages, the first
was on June 20, 1969, with petitioner Susan Nicdao Cario (hereafter referred to as Susan
Nicdao), with whom he had two offsprings, namely, Sahlee and Sandee Cario; and the second
was on November 10, 1992, with respondent Susan Yee Cario (hereafter referred to as Susan
Yee), with whom he had no children in their almost ten year cohabitation starting way back in
1982.

In 1988, SPO4 Santiago S. Cario became ill and bedridden due to diabetes complicated by
pulmonary tuberculosis. He passed away on November 23, 1992, under the care of Susan Yee,
who spent for his medical and burial expenses. Both petitioner and respondent filed claims for
monetary benefits and financial assistance pertaining to the deceased from various government
agencies. Petitioner Susan Nicdao was able to collect a total of P146,000.00 from MBAI,
PCCUI, Commutation, NAPOLCOM, [and] Pag-ibig, 3 while respondent Susan Yee received a
total of P21,000.00 from GSIS Life, Burial (GSIS) and burial (SSS). 4

On December 14, 1993, respondent Susan Yee filed the instant case for collection of sum of
money against petitioner Susan Nicdao praying, inter alia, that petitioner be ordered to return to
her at least one-half of the one hundred forty-six thousand pesos (P146,000.00) collectively
denominated as death benefits which she (petitioner) received from MBAI, PCCUI,
Commutation, NAPOLCOM, [and] Pag-ibig. Despite service of summons, petitioner failed to file
her answer, prompting the trial court to declare her in default.

Respondent Susan Yee admitted that her marriage to the deceased took place during the
subsistence of, and without first obtaining a judicial declaration of nullity of, the marriage between
petitioner and the deceased. She, however, claimed that she had no knowledge of the previous
marriage and that she became aware of it only at the funeral of the deceased, where she met
petitioner who introduced herself as the wife of the deceased. To bolster her action for collection
of sum of money, respondent contended that the marriage of petitioner and the deceased is
void ab initio because the same was solemnized without the required marriage license. In
support thereof, respondent presented: 1) the marriage certificate of the deceased and the
petitioner which bears no marriage license number; 5 and 2) a certification dated March 9, 1994,
from the Local Civil Registrar of San Juan, Metro Manila, which reads

This is to certify that this Office has no record of marriage license of the spouses SANTIAGO
CARINO (sic) and SUSAN NICDAO, who are married in this municipality on June 20, 1969.
Hence, we cannot issue as requested a true copy or transcription of Marriage License number
from the records of this archives.

This certification is issued upon the request of Mrs. Susan Yee Cario for whatever legal purpose
it may serve. 6

On August 28, 1995, the trial court ruled in favor of respondent, Susan Yee, holding as follows:

WHEREFORE, the defendant is hereby ordered to pay the plaintiff the sum of P73,000.00, half of
the amount which was paid to her in the form of death benefits arising from the death of SPO4
Santiago S. Cario, plus attorneys fees in the amount of P5,000.00, and costs of suit.

IT IS SO ORDERED. 7

On appeal by petitioner to the Court of Appeals, the latter affirmed in toto the decision of the trial
court. Hence, the instant petition, contending that:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE

FINDINGS OF THE LOWER COURT THAT VDA. DE CONSUEGRA VS. GSIS IS
APPLICABLE TO THE CASE AT BAR.

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPLYING EQUITY IN

THE INSTANT CASE INSTEAD OF THE CLEAR AND UNEQUIVOCAL MANDATE OF
THE FAMILY CODE.

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THE

CASE OF VDA. DE CONSUEGRA VS GSIS TO HAVE BEEN MODIFIED, AMENDED
AND EVEN ABANDONED BY THE ENACTMENT OF THE FAMILY CODE. 8

Under Article 40 of the Family Code, the absolute nullity of a previous marriage may be invoked
for purposes of remarriage on the basis solely of a final judgment declaring such previous
marriage void. Meaning, where the absolute nullity of a previous marriage is sought to be
invoked for purposes of contracting a second marriage, the sole basis acceptable in law, for said
projected marriage to be free from legal infirmity, is a final judgment declaring the previous
marriage void. 9 However, for purposes other than remarriage, no judicial action is necessary to
declare a marriage an absolute nullity. For other purposes, such as but not limited to the
determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of
property regime, or a criminal case for that matter, the court may pass upon the validity of
marriage even after the death of the parties thereto, and even in a suit not directly instituted to
question the validity of said marriage, so long as it is essential to the determination of the
case. 10 In such instances, evidence must be adduced, testimonial or documentary, to prove the
existence of grounds rendering such a previous marriage an absolute nullity. These need not be
limited solely to an earlier final judgment of a court declaring such previous marriage void. 11

It is clear therefore that the Court is clothed with sufficient authority to pass upon the validity of
the two marriages in this case, as the same is essential to the determination of who is rightfully
entitled to the subject death benefits of the deceased.

Under the Civil Code, which was the law in force when the marriage of petitioner Susan Nicdao
and the deceased was solemnized in 1969, a valid marriage license is a requisite of
marriage, 12 and the absence thereof, subject to certain exceptions, 13 renders the marriage void
ab initio. 14

In the case at bar, there is no question that the marriage of petitioner and the deceased does not
fall within the marriages exempt from the license requirement. A marriage license, therefore, was
indispensable to the validity of their marriage. This notwithstanding, the records reveal that the
marriage contract of petitioner and the deceased bears no marriage license number and, as
certified by the Local Civil Registrar of San Juan, Metro Manila, their office has no record of such
marriage license. In Republic v. Court of Appeals, 15 the Court held that such a certification is
adequate to prove the non-issuance of a marriage license. Absent any circumstance of
suspicion, as in the present case, the certification issued by the local civil registrar enjoys
probative value, he being the officer charged under the law to keep a record of all data relative to
the issuance of a marriage license.

Such being the case, the presumed validity of the marriage of petitioner and the deceased has
been sufficiently overcome. It then became the burden of petitioner to prove that their marriage is
valid and that they secured the required marriage license. Although she was declared in default
before the trial court, petitioner could have squarely met the issue and explained the absence of
a marriage license in her pleadings before the Court of Appeals and this Court. But petitioner
conveniently avoided the issue and chose to refrain from pursuing an argument that will put her
case in jeopardy. Hence, the presumed validity of their marriage cannot stand.

It is beyond cavil, therefore, that the marriage between petitioner Susan Nicdao and the
deceased, having been solemnized without the necessary marriage license, and not being one of
the marriages exempt from the marriage license requirement, is undoubtedly void ab initio.

It does not follow from the foregoing disquisition, however, that since the marriage of petitioner
and the deceased is declared void ab initio, the death benefits under scrutiny would now be
awarded to respondent Susan Yee. To reiterate, under Article 40 of the Family Code, for
purposes of remarriage, there must first be a prior judicial declaration of the nullity of a previous
marriage, though void, before a party can enter into a second marriage, otherwise, the second
marriage would also be void.

Accordingly, the declaration in the instant case of nullity of the previous marriage of the
deceased and petitioner Susan Nicdao does not validate the second marriage of the deceased
with respondent Susan Yee. The fact remains that their marriage was solemnized without first
obtaining a judicial decree declaring the marriage of petitioner Susan Nicdao and the deceased
void. Hence, the marriage of respondent Susan Yee and the deceased is, likewise, void ab initio.
One of the effects of the declaration of nullity of marriage is the separation of the property of the
spouses according to the applicable property regime. 16 Considering that the two marriages are
void ab initio, the applicable property regime would not be absolute community or conjugal
partnership of property, but rather, be governed by the provisions of Articles 147 and 148 of the
Family Code on Property Regime of Unions Without Marriage.

Under Article 148 of the Family Code, which refers to the property regime of bigamous
marriages, adulterous relationships, relationships in a state of concubine, relationships where
both man and woman are married to other persons, multiple alliances of the same married
man, 17 -

... [O]nly the properties acquired by both of the parties through their actual joint contribution of
money, property, or industry shall be owned by them in common in proportion to their respective
contributions ...

In this property regime, the properties acquired by the parties through their actual joint
contribution shall belong to the co-ownership. Wages and salaries earned by each party belong
to him or her exclusively. Then too, contributions in the form of care of the home, children and
household, or spiritual or moral inspiration, are excluded in this regime. 18

Considering that the marriage of respondent Susan Yee and the deceased is a bigamous
marriage, having been solemnized during the subsistence of a previous marriage then presumed
to be valid (between petitioner and the deceased), the application of Article 148 is therefore in
order.

The disputed P146,000.00 from MBAI [AFP Mutual Benefit Association, Inc.], NAPOLCOM,
Commutation, Pag-ibig, and PCCUI, are clearly renumerations, incentives and benefits from
governmental agencies earned by the deceased as a police officer. Unless respondent Susan
Yee presents proof to the contrary, it could not be said that she contributed money, property or
industry in the acquisition of these monetary benefits. Hence, they are not owned in common by
respondent and the deceased, but belong to the deceased alone and respondent has no right
whatsoever to claim the same. By intestate succession, the said death benefits of the deceased
shall pass to his legal heirs. And, respondent, not being the legal wife of the deceased is not one
of them.

As to the property regime of petitioner Susan Nicdao and the deceased, Article 147 of the Family
Code governs. This article applies to unions of parties who are legally capacitated and not barred
by any impediment to contract marriage, but whose marriage is nonetheless void for other
reasons, like the absence of a marriage license. Article 147 of the Family Code reads -

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively
with each other as husband and wife without the benefit of marriage or under a void marriage,
their wages and salaries shall be owned by them in equal shares and the property acquired by
both of them through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be
presumed to have been obtained by their joint efforts, work or industry, and shall be owned by
them in equal shares. For purposes of this Article, a party who did not participate in the
acquisition by the other party of any property shall be deemed to have contributed jointly in the
acquisition thereof if the formers efforts consisted in the care and maintenance of the family and
of the household.

xxx

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith
in the co-ownership shall be forfeited in favor of their common children. In case of default of or
waiver by any or all of the common children or their descendants, each vacant share shall belong
to the respective surviving descendants. In the absence of descendants, such share shall belong
to the innocent party. In all cases, the forfeiture shall take place upon termination of the
cohabitation.

In contrast to Article 148, under the foregoing article, wages and salaries earned by either party
during the cohabitation shall be owned by the parties in equal shares and will be divided equally
between them, even if only one party earned the wages and the other did not contribute
thereto. 19 Conformably, even if the disputed death benefits were earned by the deceased alone
as a government employee, Article 147 creates a co-ownership in respect thereto, entitling the
petitioner to share one-half thereof. As there is no allegation of bad faith in the present case, both
parties of the first marriage are presumed to be in good faith. Thus, one-half of the subject death
benefits under scrutiny shall go to the petitioner as her share in the property regime, and the
other half pertaining to the deceased shall pass by, intestate succession, to his legal heirs,
namely, his children with Susan Nicdao.

In affirming the decision of the trial court, the Court of Appeals relied on the case of Vda. de
Consuegra v. Government Service Insurance System, 20 where the Court awarded one-half of the
retirement benefits of the deceased to the first wife and the other half, to the second wife, holding
that:

... [S]ince the defendants first marriage has not been dissolved or declared void the conjugal
partnership established by that marriage has not ceased. Nor has the first wife lost or
relinquished her status as putative heir of her husband under the new Civil Code, entitled to
share in his estate upon his death should she survive him. Consequently, whether as conjugal
partner in a still subsisting marriage or as such putative heir she has an interest in the husbands
share in the property here in dispute.... And with respect to the right of the second wife, this
Court observed that although the second marriage can be presumed to be void ab initio as it was
celebrated while the first marriage was still subsisting, still there is need for judicial declaration of
such nullity. And inasmuch as the conjugal partnership formed by the second marriage was
dissolved before judicial declaration of its nullity, [t]he only just and equitable solution in this
case would be to recognize the right of the second wife to her share of one-half in the property
acquired by her and her husband, and consider the other half as pertaining to the conjugal
partnership of the first marriage. 21

It should be stressed, however, that the aforecited decision is premised on the rule which
requires a prior and separate judicial declaration of nullity of marriage. This is the reason why in
the said case, the Court determined the rights of the parties in accordance with their existing
property regime.

In Domingo v. Court of Appeals, 22 however, the Court, construing Article 40 of the Family Code,
clarified that a prior and separate declaration of nullity of a marriage is an all important condition
precedent only for purposes of remarriage. That is, if a party who is previously married wishes to
contract a second marriage, he or she has to obtain first a judicial decree declaring the first
marriage void, before he or she could contract said second marriage, otherwise the second
marriage would be void. The same rule applies even if the first marriage is patently void because
the parties are not free to determine for themselves the validity or invalidity or their marriage.
However, for purposes other than to remarry, like for filing a case for collection of sum of money
anchored on a marriage claimed to be valid, no prior and separate judicial declaration of nullity is
necessary. All that a party has to do is to present evidence, testimonial or documentary, that
would prove that the marriage from which his or her rights flow is in fact valid. Thereupon, the
court, if material to the determination of the issues before it, will rule on the status of the marriage
involved and proceed to determine the rights of the parties in accordance with the applicable
laws and jurisprudence. Thus, in Nial v. Bayadog, 23 the Court explained:
[T]he court may pass upon the validity of marriage even in a suit not directly instituted to question
the same so long as it is essential to the determination of the case. This is without prejudice to
any issue that may arise in the case. When such need arises, a final judgment of declaration of
nullity is necessary even if the purpose is other than to remarry. The clause on the basis of a
final judgment declaring such previous marriage void in Article 40 of the Family Code connoted
that such final judgment need not be obtained only for purpose of remarriage.

WHEREFORE, the petition is GRANTED, and the decision of the Court of Appeals in CA-G.R.
CV No. 51263 which affirmed the decision of the Regional Trial Court of Quezon City ordering
petitioner to pay respondent the sum of P73,000.00 plus attorneys fees in the amount of
P5,000.00, is REVERSED and SET ASIDE. The complaint in Civil Case No. Q-93-18632, is
hereby DISMISSED. No pronouncement as to costs. 1wphi1.nt

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-19565 January 30, 1968

ESTRELLA DE LA CRUZ, plaintiff-appellee,

vs.
SEVERINO DE LA CRUZ, defendant-appellant.

Estacion and Paltriguera for plaintiff-appellee.

Manuel O. Soriano and Pio G. Villoso for defendant-appellant.

CASTRO, J.:

The plaintiff Estrella de la Cruz filed a complaint on July 22, 1958 with the Court of First Instance
of Negros Occidental, alleging in essence that her husband, the defendant Severino de la Cruz,
had not only abandoned her but as well was mismanaging their conjugal partnership properties,
and praying for (1) separation of property, (2) monthly support of P2,500 during the pendency of
the action, and (3) payment of P20,000 as attorney's fees, and costs.

The court a quo forthwith issued an order allowing the plaintiff the amount prayed for as
alimony pendente lite, which however, upon defendant's motion, was reduced to P2,000.

On June 1, 1961 the trial court rendered judgment ordering separation and division of the
conjugal assets, and directing the defendant to pay to the plaintiff the sum of P20,000 as
attorney's fees, with legal interest from the date of the original complaint, that is, from July 22,
1958, until fully paid, plus costs. From this judgment the defendant appealed to the Court of
Appeals, which certified the case to us, "it appearing that the total value of the conjugal assets is
over P500,000".

The basic facts are not controverted. The plaintiff and the defendant were married in Bacolod
City on February 1, 1938. Six children were born to them, namely, Zenia (1939), Ronnie (1942),
Victoria (1944), Jessie 1945), Bella (1946), and Felipe (1948). During their coverture they
acquired seven parcels of land of the Bacolod Cadastre, all assessed at P45,429, and three
parcels of the Silay Cadastre, all assessed at P43,580. All these parcels are registered in their
names. The hacienda in Silay yielded for the year 1957 a net profit of P3,390.49.
They are also engaged in varied business ventures with fixed assets valued as of December 31,
1956 at P496,006.92, from which they obtained for that year a net profit of P75,655.78. The net
gain of the Philippine Texboard Factory, the principal business of the spouses, was P90,454.48
for the year 1957. As of December 31, 1959, the total assets of the various enterprises of the
conjugal partnership were valued at P1,021,407.68, not including those of the Top Service Inc.,
of which firm the defendant has been the president since its organization in 1959 in Manila with a
paid-up capital of P50,000, P10,000 of which was contributed by him. This corporation was the
Beverly Hills Subdivision in Antipolo, Rizal, the Golden Acres Subdivision and the Green Valley
Subdivision in Las Pias, Rizal, and a lot and building located at M. H. del Pilar, Manila
purchased for P285,000, an amount borrowed from the Manufacturer's Bank and Trust
Company.

The spouses are indebted to the Philippine National Bank and the Development Bank of the
Philippines for loans obtained, to secure which they mortgaged the Philippine Texboard Factory,
the Silay hacienda, their conjugal house, and all their parcels of land located in Bacolod City.

The essential issues of fact may be gleaned from the nine errors the defendant imputes to the
court a quo, namely,

1. In finding that the only visit, from May 15, 1955 to the rendition of the decision, made
by the defendant to the conjugal abode to see his wife was on June 15, 1955;

2. In finding that the letter exh. 3 was written by one Nenita Hernandez and that she and
the defendant are living as husband and wife;

3. In finding that since 1951 the relations between the plaintiff and the defendant were far
from cordial, and that it was from 1948 that the former has been receiving an allowance
from the latter;

4. In finding that the defendant has abandoned the plaintiff;

5. In finding that the defendant since 1956 has not discussed with his wife the business
activities of the partnership, and that this silence constituted "abuse of administration of
the conjugal partnerships";

6. In declaring that the defendant mortgaged the conjugal assets without the knowledge
of the plaintiff and thru false pretences to which the latter was prey;

7. In allowing the plaintiff, on the one hand, to testify on facts not actually known by her,
and, on the other hand, in not allowing the defendant to establish his special defenses;

8. In ordering separation of the conjugal partnership properties; and

9. In sentencing the defendant to pay to the plaintiff attorney's fees in the amount of
P20,000, with interest at the legal rate.1wph1.t

Two issues of law as well emerge, requiring resolution petition: (1) Did the separation of the
defendant from the plaintiff constitute abandonment in law that would justify a separation of the
conjugal partnership properties? (2) Was the defendant's failure and/or refusal to inform the
plaintiff of the state of their business enterprises such an abuse of his powers of administration of
the conjugal partnership as to warrant a division of the matrimonial assets?

The plaintiff's evidence may be summarized briefly. The defendant started living in Manila in
1955, although he occasionally returned to Bacolod City, sleeping in his office at the Philippine
Texboard Factory in Mandalagan, instead of in the conjugal home at 2nd Street, Bacolod City.
Since 1955 the defendant had not slept in the conjugal dwelling, although in the said year he
paid short visits during which they engaged in brief conversations. After 1955 up to the time of
the trial, the defendant had never visited the conjugal abode, and when he was in Bacolod, she
was denied communication with him. He has abandoned her and their children, to live in Manila
with his concubine, Nenita Hernandez. In 1949 she began to suspect the existence of illicit
relations between her husband and Nenita. This suspicion was confirmed in 1951 when she
found an unsigned note in a pocket of one of her husband's polo shirt which was written by
Nenita and in which she asked "Bering" to meet her near the church. She confronted her
husband who forthwith tore the note even as he admitted his amorous liaison with Nenita. He
then allayed her fears by vowing to forsake his mistress. Subsequently, in November 1951, she
found in the iron safe of her husband a letter, exh. C, also written by Nenita. In this letter the
sender (who signed as "D") apologized for her conduct, and expressed the hope that the
addressee ("Darling") could join her in Baguio as she was alone in the Patria Inn and lonely in "a
place for honeymooners". Immediately after her husband departed for Manila the following
morning, the plaintiff enplaned for Baguio, where she learned that Nenita had actually stayed at
the Patria Inn, but had already left for Manila before her arrival. Later she met her husband in the
house of a relative in Manila from whence they proceeded to the Avenue Hotel where she again
confronted him about Nenita. He denied having further relations with this woman.

Celia Baez, testifying for the plaintiff, declared that she was employed as a cook in the home of
the spouses from May 15, 1955 to August 15, 1958, and that during the entire period of her
employment she saw the defendant in the place only once. This declaration is contradicted,
however, by the plaintiff herself who testified that in 1955 the defendant "used to have a short
visit there," which statement implies more than one visit.

The defendant, for his part, denied having abandoned his wife and children, but admitted that in
1957, or a year before the filing of the action, he started to live separately from his wife. When he
transferred his living quarters to his office in Mandalagan, Bacolod City, his intention was not, as
it never has been, to abandon his wife and children, but only to teach her a lesson as she was
quarrelsome and extremely jealous of every woman. He decided to live apart from his wife
temporarily because at home he could not concentrate on his work as she always quarreled with
him, while in Mandalagan he could pass the nights in peace. Since 1953 he stayed in Manila for
some duration of time to manage their expanding business and look for market outlets for their
texboard products. Even the plaintiff admitted in both her original and amended complaints that
"sometime in 1953, because of the expanding business of the herein parties, the defendant
established an office in the City of Manila, wherein some of the goods, effects and merchandise
manufactured or produced in the business enterprises of the parties were sold or disposed of".
From the time he started living separately in Mandalagan up to the filing of the complaint, the
plaintiff herself furnished him food and took care of his laundry. This latter declaration was not
rebutted by the plaintiff.

The defendant, with vehemence, denied that he has abandoned his wife and family, averring that
he has never failed, even for a single month, to give them financial support, as witnessed by the
plaintiff's admission in her original and amended complaints as well as in open court that during
the entire period of their estrangement, he was giving her around P500 a month for support. In
point of fact, his wife and children continued to draw allowances from his office of a total ranging
from P1,200 to P1,500 a month. He financed the education of their children, two of whom were
studying in Manila at the time of the trial and were not living with the plaintiff. While in Bacolod
City, he never failed to visit his family, particularly the children. His wife was always in bad need
of money because she played mahjong, an accusation which she did not traverse, explaining
that she played mahjong to entertain herself and forget the infidelities of her husband.

Marcos V. Ganaban, the manager of the Philippine Texboard Factory, corroborated the
testimony of the defendant on the matter of the support the latter gave to his family, by declaring
in court that since the start of his employment in 1950 as assistant general manager, the plaintiff
has been drawing an allowance of P1,000 to P1,500 monthly, which amount was given
personally by the defendant or, in his absence, by the witness himself.
The defendant denied that he ever maintained a mistress in Manila. He came to know Nenita
Hernandez when she was barely 12 years old, but had lost track of her thereafter. His constant
presence in Manila was required by the pressing demands of an expanding business. He denied
having destroyed the alleged note which the plaintiff claimed to have come from Nenita, nor
having seen, previous to the trial, the letter exh. C. The allegation of his wife that he had a
concubine is based on mere suspicion. He had always been faithful to his wife, and not for a
single instance had he been caught or surprised by her with another woman.

On the matter of the alleged abuse by the defendant of his powers of administration of the
conjugal partnership, the plaintiff declared that the defendant refused and failed to inform her of
the progress of their various business concerns. Although she did not allege, much less prove,
that her husband had dissipated the conjugal properties, she averred nevertheless that her
husband might squander and dispose of the conjugal assets in favor of his concubine. Hence,
the urgency of separation of property.

The defendant's answer to the charge of mismanagement is that he has applied his industry,
channeled his ingenuity, and devoted his time, to the management, maintenance and expansion
of their business concerns, even as his wife threw money away at the mahjong tables. Tangible
proof of his endeavors is that from a single cargo truck which he himself drove at the time of their
marriage, he had built up one business after another, the Speedway Trucking Service, the
Negros Shipping Service, the Bacolod Press, the Philippine Texboard Factory, and
miscellaneous other business enterprises worth over a million pesos; that all that the spouses
now own have been acquired through his diligence, intelligence and industry; that he has steadily
expanded the income and assets of said business enterprises from year to year, contrary to the
allegations of the complainant, as proved by his balance sheet and profit and loss statements for
the year 1958 and 1959 (exhibits 1 and 2); and that out of the income of their enterprises he had
purchased additional equipment and machineries and has partially paid their indebtedness to the
Philippine National Bank and the Development Bank of the Philippines.

It will be noted that the plaintiff does not ask for legal separation. The evidence presented by her
to prove concubinage on the part of the defendant, while pertinent and material in the
determination of the merits of a petition for legal separation, must in this case be regarded
merely as an attempt to bolster her claim that the defendant had abandoned her, which
abandonment, if it constitutes abandonment in law, would justify separation of the conjugal
assets under the applicable provisions of article 178 of the new Civil Code which read: "The
separation in fact between husband and wife without judicial approval, shall not affect the
conjugal partnership, except that . . . if the husband has abandoned the wife without just cause
for at least one year, she may petition the court for a receivership, or administration by her of the
conjugal partnership property, or separation of property". In addition to abandonment as a
ground, the plaintiff also invokes article 167 of the new Civil Code in support of her prayer for
division of the matrimonial assets. This article provides that "In case of abuse of powers of
administration of the conjugal partnership property by the husband, the courts, on the petition of
the wife, may provide for a receivership, or administration by the wife, or separation of property".
It behooves us, therefore, to inquire, in the case at bar, whether there has been abandonment, in
the legal sense, by the defendant of the plaintiff, and/or whether the defendant has abused his
powers of administration of the conjugal partnership property, so as to justify the plaintiff's plea
for separation of property.

We have made a searching scrutiny of the record, and it is our considered view that the
defendant is not guilty of abandonment of his wife, nor of such abuse of his powers of
administration of the conjugal partnership, as to warrant division of the conjugal assets.

The extraordinary remedies afforded to the wife by article 178 when she has been abandoned by
the husband for at least one year are the same as those granted to her by article 167 in case of
abuse of the powers of administration by the husband. To entitle her to any of these remedies,
under article 178, there must be real abandonment, and not mere separation. 1 The abandonment
must not only be physical estrangement but also amount to financial and moral desertion.
Although an all-embracing definition of the term "abandonment " is yet to be spelled out in explicit
words, we nevertheless can determine its meaning from the context of the Law as well as from
its ordinary usage. The concept of abandonment in article 178 may be established in relation to
the alternative remedies granted to the wife when she has been abandoned by the husband,
namely, receivership, administration by her, or separation of property, all of which are designed
to protect the conjugal assets from waste and dissipation rendered imminent by the husband's
continued absence from the conjugal abode, and to assure the wife of a ready and steady source
of support. Therefore, physical separation alone is not the full meaning of the term
"abandonment", if the husband, despite his voluntary departure from the society of his spouse,
neither neglects the management of the conjugal partnership nor ceases to give support to his
wife.

The word "abandon", in its ordinary sense, means to forsake entirely; to forsake or renounce
utterly. 2 The dictionaries trace this word to the root idea of "putting under a bar". The emphasis is
on the finality and the publicity with which some thing or body is thus put in the control of another,
and hence the meaning of giving up absolutely, with intent never again to resume or claim one's
rights or interests. 3 When referring to desertion of a wife by a husband, the word has been
defined as "the act of a husband in voluntarily leaving his wife with intention to forsake her
entirely, never to return to her, and never to resume his marital duties towards her, or to claim his
marital rights; such neglect as either leaves the wife destitute of the common necessaries of life,
or would leave her destitute but for the charity of others." 4 The word "abandonment", when
referring to the act of one consort of leaving the other, is "the act of the husband or the wife who
leaves his or her consort wilfully, and with an intention of causing per perpetual
separation." 5 Giving to the word "abandoned", as used in article 178, the meaning drawn from
the definitions above reproduced, it seems rather clear that to constitute abandonment of the wife
by the husband, there must be absolute cessation of marital relations and duties and rights, with
the intention of perpetual separation.

Coming back to the case at bar, we believe that the defendant did not intend to leave his wife
and children permanently. The record conclusively shows that he continued to give support to his
family despite his absence from the conjugal home. This fact is admitted by the complainant,
although she minimized the amount of support given, saying that it was only P500 monthly.
There is good reason to believe, however, that she and the children received more than this
amount, as the defendant's claim that his wife and children continued to draw from his office
more than P500 monthly was substantially corroborated by Marcos Ganaban, whose
declarations were not rebutted by the plaintiff. And then there is at all no showing that the plaintiff
and the children were living in want. On the contrary, the plaintiff admitted, albeit reluctantly, that
she frequently played mahjong, from which we can infer that she had money; to spare.

The fact that the defendant never ceased to give support to his wife and children negatives any
intent on his part not to return to the conjugal abode and resume his marital duties and rights.
In People v. Schelske, 6 it was held that where a husband, after leaving his wife, continued to
make small contributions at intervals to her support and that of their minor child, he was not guilty
of their "abandonment", which is an act of separation with intent that it shall be perpetual, since
contributing to their support negatived such intent. In re Hoss' Estate, supra, it was ruled that a
father did not abandon his family where the evidence disclosed that he almost always did give
his wife part of his earnings during the period of their separation and that he gradually paid some
old rental and grocery bills.

With respect to the allegation that the defendant maintained a concubine, we believe, contrary to
the findings of the court a quo, that the evidence on record fails to preponderate in favor of the
plaintiff's thesis. The proof that Nenita Hernandez was the concubine of the defendant and that
they were living as husband and wife in Manila, is altogether too indefinite. Aside from the
uncorroborated statement of the plaintiff that she knew that Nenita Hernandez was her
husband's concubine, without demonstrating by credible evidence the existence of illicit relations
between Nenita and the defendant, the only evidence on record offered to link the defendant to
his alleged mistress is exh. C. The plaintiff however failed to connect authorship of the said letter
with Nenita, on the face whereof the sender merely signed as "D" and the addressee was one
unidentified "Darling". The plaintiff's testimony on cross-examination, hereunder quoted,
underscores such failure:

Q. You personally never received any letter from Nenita?

A. No.

Q. Neither have you received on any time until today from 1949 from Nenita?

A. No.

Q. Neither have you written to her any letter yourself until now?

A. Why should I write a letter to her.

Q. In that case, Mrs. De la Cruz, you are not familiar with the handwriting of Nenita. Is
that right?

A. I can say that Nenita writes very well.

Q. I am not asking you whether she writes very well or not but, my question is this: In
view of the fact that you have never received a letter from Nenita, you have ot sent any
letter to her, you are not familiar with her handwriting?

A. Yes.

Q. You have not seen her writing anybody?

A. Yes.

Anent the allegation that the defendant had mismanaged the conjugal partnership property, the
record presents a different picture. There is absolutely no evidence to show that he has
squandered the conjugal assets. Upon the contrary, he proved that through his industry and zeal,
the conjugal assets at the time of the trial had increased to a value of over a million pesos.

The lower court likewise erred in holding that mere refusal or failure of the husband as
administrator of the conjugal partnership to inform the wife of the progress of the family
businesses constitutes abuse of administration. For "abuse" to exist, it is not enough that the
husband perform an act or acts prejudicial to the wife. Nor is it sufficient that he commits acts
injurious to the partnership, for these may be the result of mere inefficient or negligent
administration. Abuse connotes willful and utter disregard of the interests of the partnership,
evidenced by a repetition of deliberate acts and/or omissions prejudicial to the latter. 7

If there is only physical separation between the spouses (and nothing more), engendered by the
husband's leaving the conjugal abode, but the husband continues to manage the conjugal
properties with the same zeal, industry, and efficiency as he did prior to the separation, and
religiously gives support to his wife and children, as in the case at bar, we are not disposed to
grant the wife's petition for separation of property. This decision may appear to condone the
husband's separation from his wife; however, the remedies granted to the wife by articles 167
and 178 are not to be construed as condonation of the husband's act but are designed to protect
the conjugal partnership from waste and shield the wife from want. Therefore, a denial of the
wife's prayer does not imply a condonation of the husband's act but merely points up the
insufficiency or absence of a cause of action. 1wph1.t
Courts must need exercise judicial restraint and reasoned hesitance in ordering a separation of
conjugal properties because the basic policy of the law is homiletic, to promote healthy family life
and to preserve the union of the spouses, in person, in spirit and in property.

Consistent with its policy of discouraging a regime of separation as not in harmony with
the unity of the family and the mutual affection and help expected of the spouses, the
Civil Code (both old and new) requires that separation of property shall not prevail unless
expressly stipulated in marriage settlements before the union is solemnized or by formal
judicial decree during the existence of the marriage (Article 190, new Civil Code, Article
1432, old Civil Code): and in the latter case, it may only be ordered by the court for
causes specified in Article 191 of the new Civil Code. 8

Furthermore, a judgment ordering the division of conjugal assets where there has been no real
abandonment, the separation not being wanton and absolute, may altogether slam shut the door
for possible reconciliation. The estranged spouses may drift irreversibly further apart; the already
broken family solidarity may be irretrievably shattered; and any flickering hope for a new life
together may be completely and finally extinguished.

The monthly alimony in the sum of P2,000 which was allowed to the wife in 1958, long before the
devaluation of the Philippine peso in 1962, should be increased to P3,000.

On the matter of attorney's fees, it is our view that because the defendant, by leaving the
conjugal abode, has given cause for the plaintiff to seek redress in the courts, and ask
for adequate support, an award of attorney's fees to the plaintiff must be made. Ample authority
for such award is found in paragraphs 6 and 11 of article 2208 of the new Civil Code which
empower courts to grant counsel's fees "in actions for legal support" and in cases "where the
court deems it just and equitable that attorney's fees . . . should be recovered." However, an
award of P10,000, in our opinion, is, under the environmental circumstances, sufficient.

This Court would be remiss if it did not, firstly, remind the plaintiff and the defendant that the law
enjoins husband and wife to live together, and, secondly, exhort them to avail of mutually,
earnestly and steadfastly all opportunities for reconciliation to the end that their marital
differences may be happily resolved, and conjugal harmony may return and, on the basis of
mutual respect and understanding, endure.

ACCORDINGLY, the judgment a quo, insofar as it decrees separation of the conjugal properties,
is reversed and set aside. Conformably to our observations, however, the defendant is ordered to
pay to the plaintiff, in the concept of support, the amount of P3,000 per month, until he shall have
rejoined her in the conjugal home, which amount may, in the meantime, be reduced or increased
in the discretion of the court a quo as circumstances warrant. The award of attorney's fees to the
plaintiff is reduced to P10,000, without interest. No pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Angeles
and Fernando, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-27879 March 15, 1928

JUAN SUMULONG, administrator-appellant,

vs.
CONCEPCION CEMBRANO, opponent-appellee.
Sumulong, Lavides and Hilado for appellant.
Eusebio Orense for appellee.

ROMUALDEZ, J.:

A scheme for the liquidation of the conjugal partnership of the deceased Trinidad H. Pardo de
Tavera and his surviving spouse Concepcion Cembrano, having been presented by the
administrator of the estate, to the Court of First Instance of Manila, the latter, on March 15, 1927,
decreed the following:

Wherefore, the inventories filed by the administrator are approved after the correction of
the clerical error in item 11 of the first inventory substituting 50 for 30 so that 50
obligations of the Ice Factory appear instead of 30, and also the accounts rendered by
the administrator to date; the administrator's motion of November 18, 1926, to include the
fruits and rents of the property at Nos. 77 and 83 San Vicente St., Binondo, Manila, is
denied; the scheme for the liquidation of the conjugal partnership presented by the
administrator is disapproved and he is ordered to liquidate the conjugal partnership in the
manner indicated herein, in pursuance whereof, he shall present the due liquidation and
partition of the conjugal property at the time of the decedent's deceased within the period
of fifteen days, including therein the fruits or income of said property from his death, and
the collation which each of the aforementioned children is bound to make.

Dissatified with said decree, the administrator appealed therefrom, alleging that the trial court
erred:

(1) In holding that Concepcion Cembrano, Tavera's widow, was entitled to an allowance
for subsistence from the conjugal partnership from 1913 to 1925, in spite of the fact that
during that time she lived away from the conjugal dwelling against her husband's will and
without judicial sanction.

(2) In holding that such allowance amounted to eight hundred pesos (P800) a month.

(3) In holding that during said separation the late husband, Dr. T. H. Pardo de Tavera,
managed his wife's paraphernal property and ordered the payment of an allowance for
subsistence to her.

(4) In failing to find that any right wife may have had to claim for support from the
conjugal partnership has already prescribed.

(5) In failing to hold that the rents from the wife's paraphernal property received by her
during the separation must be returned to the conjugal partnership.

(6) In failing to hold that the rents from said paraphernal property, even after the
husband's death, should continue to go to the conjugal partnership until the liquidation is
finally effected.

(7) In failing to require Concepcion Cembrano to reimburse the conjugal partnership in

the sum of P3,660.71, which was delivered to her by Jose V. Ramirez from the
partnership funds, in excess of the income of her paraphernal property.

(8) In holding that Dr. Tavera's children, Carlos, Alfredo, and Carmen, must reimburse
the conjugal partnership, various sums delivered to them by the said decedent, totalling
P31,952.97.

(9) In disapproving the liquidation presented by the appellant administrator.

 (10) In issuing its appealed order March 15, 1927, setting a new basis for the liquidation,
and awarding Concepcion Cembrano a participation in the partnership property greater
than that given to the husband or heirs by P53,313.77.

In 1884 Dr. Trinidad H. Pardo de Tavera and Concepcion Cembrano contracted marriage, each
having property. Three children were born of this union Carlos, Alfredo, and Carmen. During a
part of Doctor Tavera's life, his wife left the conjugal roof, but the regime of the legal conjugal
partnership to which the spouses had submitted With the marriage subsisting, he died on March
26, 1925, survived by her and their three children.

The first question raised is whether while living, as we have said, away from the conjugal roof,
the wife was entitled to support chargeable to the conjugal partnership.

Paragraph 5, article 1408 of the Civil Code says that the support of the family is chargeable to
the conjugal partnership. Here is what Manresa says in explaining the reason for his provision,
this scope and those included in this family support.

The support of the family includes the satisfaction of all its needs, the duty to supply
food or sustenance, dwelling, clothing and medical attendance as provided in article 142.
Mutual help and assistance is as much a duty of and between the spouses, as it is a duty
of parents to support and educate their children. It is but logical and natural that the
products of the labor and the fruits of the property, of the conjugal partnership be applied
to the fulfillment of these obligations.

This is the most sacred and important of all the obligations imposed in article 1408. The
others may sometimes fail, this one, never. It does not matter that the children may or
may not have property the usufruct whereof may appertain to the parents, just as it
matters not whether one of the spouses has any private property. The duty to support the
family and provide for the education of the children is absolutely indispensable and is
imposed upon the parents with overwhelming reality. (Emphasis ours.) (9 Manresa, Civil,
Code, 627, 628, Second Edition.)

While the marriage and the legal conjugal partnership subsist, the support of the spouses is a
charge against the partnership, "the most sacred and important of all the obligations imposed in
article 1408," to use Manresa'a language.

The rights established in said article of the Civil Code must be acknowledged and respected,
unless the law provides otherwise.

The mere fact of living away from the conjugal roof which cannot be presumed culpable when, as
in the instant case, there is no evidence of any fault or guilt on the part of the one who so lived,
does not constitute a reason for annuling the right to support granted in the aforementioned
article 1408 of the Civil Code.

Even with respect to the support which the spouses owe each other, provided elsewhere in the
said Code (art. 143), the fact of living apart, when it is not proved to be culpable does not
extinguish the obligation to support (art. 152, do., and correlative articles).

But we are not here concerned with the personal obligation of one spouse to support the other.
We are concerned with a wife's right enshrined by article 1408 of the Civil Code, to receive
support chargeable to the conjugal partnership while the marriage subsists and the legal regime
of the conjugal partnership prevails.

It is an undisputed fact of record that while, during her husband's lifetime, Concepcion Cembrano
did not live under the conjugal roof, their marriage subsisted and the legal regime of the conjugal
partnership prevailed.
The fact of not living under the conjugal roof is not one of the cases where the law relieves the
conjugal partnership from the obligations imposed in article 1408 of the Civil Code, as may be
seen from an examination of the different provisions contained in said fourth section (where the
said art. 1408 is), Chapter V, Title III, Book IV of the Civil Code, which deals with charges and
obligations of the conjugal partnership, and includes the articles from 1408 to 1411, inclusive.

Doctor Tavera must so have understood it when, at the time that his wife was already living away
from the conjugal dwelling, he himself, as shown by the record, willed that a monthly allowance
be paid to her, as in fact it was paid.

It is true that at first this monthly allowance was paid out of the appellee's paraphernal property
but when those funds ran short, the other funds under administration were drawn upon, "to
continue giving ther monthly sum," as Mr. Ramirez said (p. 38, t. s. n.). So much so that, as the
management of the paraphernal property was carried in a separate account, a time came when
said account showed a debit balance, which indicates Doctor Tavera's resolute intention that his
wife's monthly allowance should never fail. The fact that the amount of the allowance was
sometimes reduced by order of Doctor Tavera in order the better to regulate the management of
the conjugal partnership, does not in the least constitute a proof against his resolution carried
into effect to pay Concepcion Cembrano a monthly allowance for the latter's expenses.

This act of Doctor Tavera's constitutes a recognition of the appellee's right to receive support
chargeable to the conjugal partnership, and as such is a bar to the prescription alleged by the
appellant (art. 1948, Civil Code; sec. 50, Code of Civil Procedure). Besides, in regard to the
argument of prescription, it must be considered, as counsel for Concepcion Cembrano observes,
this is not, an action for support not paid, but for the compensation thereof with the amounts paid
to her as fruits and rents of her paraphernal property.

It has not been proved that Doctor Tavera discontinued managing his wife's paraphernal
property. The terms of document Exhibit A do not lead to this conclusion. The fact that a
separate account was opened for said property at Doctor Tavera's direction in 1915, does not
signify that he estopped managing it.

The lower court did not err, in our opinion, when it held that Concepcion Cembrano was entitled
to receive support from the conjugal partnership from the year 1913 to the year 1925. And
considering the social position of said family and the amount of the funds of the conjugal
partnership, we find no sufficient reason to change the amount fixed by the trial court as a
reasonable monthly allowance for the maintenance, dwelling, clothing and medical attendance of
the appellee.

Passing now to the sums advanced to the three children of said marriage, Carlos, Alfredo, and
Carmen it appears from summaries K, L, and M admitted as evidence that they are found in the
private account of the late Doctor Tavera. As is pointed out in the appellant's brief (p. 61.) it does
not appear that said sums were taken from the conjugal partnership funds, and that according to
said summaries, we must infer that the aforementioned sums were taken, not from the
partnership property spouses, but from the private funds of the said deceased.

Therefore, these three children cannot be required to bring into collation the respective sums
they received which are detailed in said summaries Exhibits K, L, and M.

We find no merit in the appellant's assignments of error except in the eight, which we find to be
well taken referring to the sums received from the deceased by his three children.

Wherefore, with the modification of the order appealed from that the three children shall not be
required to bring the P31,952.97 referred to be in said judgment into collation, the same is
hereby affirmed in all other respects, without costs. So ordered.
Johnson, Malcolm, Ostrand, Johns and Villa-Real, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. Nos. 78583-4 March 26, 1990

BENIGNO TODA, JR., petitioner,

vs.
COURT OF APPEALS and ROSE MARIE TUASON-TODA, respondents.

G.R. Nos.78696-7 March 26,1990

ROSE MARIE TUASON-TODA, petitioner,

vs.
BENIGNO TODA, JR., respondent.

Bautista, Picazo, Buyco, Tan & Fider for Benigno Toda, Jr. Belo, Abiera & Associates for
petitioner Rose Marie Tuason Toda.

REGALADO, J.:

These consolidated cases seek a review of the decision of the Court of Appeals
promulgated on January 29,1987 1 in CA-G.R. CV Nos. 06675 and 07936, the dispositive
portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Ordering the payment of the cash dividends declared on July 1, 1981

amounting to P2,191.62 and those declared on July 25, 1981 amounting to
P40,196.12 to Rose Marie Toda as her separate property. The cash
dividends declared on April 25, 1981 amounting to P37,196.30 (sic) are
hereby adjudicated to Benigno Toda, Jr. as his share in the conjugal
partnership assets; the portion of the order dated November 2, 1981 with
respect to the payment of the amount of P360,095.12 to Rose Marie T. Toda
is set aside;

2. Ordering the payment of the amount of P4,1623,982.24 to Rose Marie

Toda representing the balance of P15, 749,135.32 obligated to be paid as
estate taxes by Benigno Toda, Jr.;

3. Setting aside the order of the lower court dated June 2, 1982 directing
Benigno Toda, Jr. to pay interest and non-payment penalty of 18% and 5%,
respectively; and

4. Setting aside the order of the lower court directing the annotation of lien
on the property of Benigno Toda, Jr.

SO ORDERED.
Benigno Toda, Jr. (Benigno for brevity) and Rose Marie Tuason-Toda (Rose Marie for
brevity) were married on June 9, 1951 and were blessed with two children. Individual
differences and the alleged infidelity of Benigno, however, marred the conjugal union
thereby prompting Rose Marie to file on December 18, 1979 in the former Court of First
Instance of Rizal, 2 as Civil Case No. 35566, a petition for termination of conjugal partnership
for alleged mismanagement and dissipation of conjugal funds against Benigno.

After hearings were held, the parties in order to avoid further "disagreeable proceedings,"
filed on April 1, 1981 a joint petition forjudicial approval of dissolution of conjugal
partnership under Article 191 of the Civil Code, docketed as Special Proceeding No.
9478, 3 which was consolidated with the aforesaid civil case. This petition which was signed
by the parties on March 30, 1981, embodied a compromise agreement allocating to the
spouses their respective shares in the conjugal partnership assets and dismissing with
prejudice the said Civil Case No. 35566, CA-G.R. No. 11123-SP of the Court of Appeals and
G.R. No. 56121 of this Court. The said petition and the compromise agreement therein were
approved by the trial court in its order of June 9, 1981. 4

Thereafter, several orders were issued by the lower court pertaining to the interpretation
and implementation of the compromise agreement, as follows:

1. Order, dated November 20, 1981, ordering Benigno, inter alia, to pay
Rose Marie the cash dividends on the shares declared on April 25, 1981
amounting to P37,126.30; that declared on July 25, 1981 amounting to
P40,196.12; that declared on July 1, 1981, given on September 25, 1981
amounting to P2,191.62; and the payment of P360,095.12 to Rose Marie
which is the balance of P2 million paid on April 4, 1981; 5

2. Order, dated June 2, 1982, ordering Benigno to pay Rose Marie interest at
18% per annum on the amounts required to be paid in the order of
November 20,1981, as well as 5% non-payment penalty should the said
order of November 20,1981 be sustained on appeal; 6

3. Order, dated December 9, 1982, denying Benigno's motion to inhibit Judge

Rizalina Bonifacio Vera from hearing the case; 7

4. Order, dated March 1, 1983, ordering the annotation of a lien on certain

properties of Benigno as security for any and all amounts that he may
finally be ordered to pay to Rose Marie under the compromise
agreement; 8 and

5. Order, dated March 14, 1983, ordering Benigno to pay Rose Marie the
amount of P4,623,929.24, with interest and penalties thereon

at the rates stipulated in the compromise agreement from date of at the rates stipulated in
the compromise agreement from date of demand by Rose Marie. 9

The compromise agreement which, as earlier stated, was incorporated in the petition for
dissolution of the conjugal partnership and was approved by the court below, contains
the following stipulaitons:

xxx xxx xxx

4. For the best interest of each of them, petitioners have agreed to dissolve
their conjugal partnership and to partition the assets thereof, under the
following terms and conditions this document, a pleading, being
intended by them to embody and evidence their agreement;
(a) Petitioners as the parties hereto agree upon the dissolution of their
conjugal partnership during the marriage and further agree to obtain
judicial approval of their said agreement as provided by Article 191 of the
Civil Code.

(b) The following shall be adjudicated to petitioner Rose Marie Tuason-

Toda:

(1) Forty Million Peson (P40,000,000.00) to be paid as follows:

(a) Petitioner Benigno Toda, Jr. shall assume

the payment of the estate taxes, interest and
penalties thereon, pertaining to the estate of
petitioner Rose Marie Tuason Toda's late
brother Manuel Tuason, Jr. in the sum of
P15,749,135.32 as of March 31, 1981 all
interest and penalty charges after March 31,
1981 to be the responsibility of petitioner
Benigno Toda, Jr.

(b) P2,000,000.00 to be paid within 30 days

after signing of this agreement.

(c) The balance shall be paid within six (6)

months after date of signing of this agreement.
If not paid when due, the balance shall bear
interest at 18% per annum until paid and there
shall be a 5% non-payment penalty. The
proceeds from any sale of or loss with respect
to, Rubicon's shares in Philippine Air Lines,
Inc., shares of Cibeles Insurance Corporation
or Hermana Mayor shall be applied when
received against the aforesaid balance, except
to the extent such proceeds are used to satisfy
any other obligation under this agreement.

(2) All shares of stock in San Nguel Corporation registered

solely in the name of petitioner Rose Marie Tuason Toda
whether stock dividends or stocks acquired on pre-emptive
rights including those acquired in the names of both
petitioners Benigno Toda, Jr. and Rose Marie Tuason Toda
(whetherjointly or alternately 'and/or'), free from all liens and
encumbrances.

(3) All shares of stock in San Miguel Corporation acquired

whether as stock dividends of or on pre-emptive zighta
pertaining to the shares of stock in said corporation of
petitioner Rose Marie Tuason Toda's brother the late Manuel
Tuason, Jr. (of course, the original shares of the latter pertain
to petitioner Rose Marie Tuason Toda also), free from all
liens and encumbrances except for the estate tax lien.
Petitioner Rose Marie Tuason Toda hereby grants petitioner
Benigno Toda, Jr. an irrevocable proxy, for three years
through the 1983 stockholders' meeting whether annual or
special to elect directors for all shares of stock she owns
 directly or indirectly including those from the late Manuel
Tuason, Jr. in San Miguel Corporation.

(4) The Banaba Forbes Park conjugal dwelling and its

contents free from all liens and encumbrances except that
petitioner Benigno Toda, Jr. shall remove therefrom his
personal effects including furniture and appliances in his
study room and T.V. room and, from the family rooin, all
antiques, rugs, paintings of Old Fort Manila, books and
mementos. Petitioner Benigno Toda, Jr. commits that no
servant now living in the Tolentino street apartments shall be
evicted.

(5) The San Francisco apartment at Apartment 905, No. 1750

Taylor Street, San Francisco, California, U.SA., and its
contents, free from all liens and encumbrances, except that
petitioner Benigno Toda, Jr. shall remove therefrom his
personal effects.

(6) The artifacts already removed by petitioner Rose Marie

Tuason Toda from the Madrid Apartment at No. 4 San Pedro
de Valdivia. She shall return to it its silver ware, china ware,
paintings and etchings. She may retain the three fans
encased in glass and may remove her clothes, perfumes and
toiletries, the Sansa painting ofa shell dedicated to her, the
painting of the Madonna and tapestry hanging in her
bedroom, 5 Persian rugs, 1 writing desk and chair and the 2
lamps thereon and 1 lamp on the night table, and the
statuette given her by Hagedorn.

(7) Jewelry.

(8) Motor vehicles registered in her name.

(9) Within forty-five (45) days from signing of this agreement,

One Million Pesos (Pl,000,000.00) as attorneys' fees
petitioner Rose Marie Tuason Toda agreeing to hold
petitioner Benigno Toda, Jr. harmless from any claim fo
attorneys' fees and expenses that may be filed against the
conjugal partnership or herself for services rendered to her
in the prosecution of her claims against said conjugal
partnership or against petitioner Benigno Toda, Jr. or to
secure her paraphernal estate.

(10) Two shares with two lots in Valley Golf & Country Club.

(11) One share in Club Puerta de Hierro in Madrid, Spain if

there is one registered in petitioner Rose Marie Tuason
Toda's name.

(12) Share in Montemar Beach Club in Bagac, Bataan

petitioner Rose Marie Tuason Toda agreeing to assume the
balance of the acquisition cost thereof.

(c) All other properties of the conjugal partnership of whatever and

wherever located shall be adjudicated to petitioner Benigno Toda, Jr. even
 though acquired in the name of petitioner Rose Marie Tuason Toda or both
of them she undertaking to execute the corresponding deeds of
conveyances.

(d) Petitioner Benigno Toda, Jr. shall assume the payment of all conjugal
obligations, petitioner Rose Marie Tuason Toda representing and
warranting that she has no pending obligation or incurred no obligation
chargeable to the conjugal partnership except those listed in Annex 'A'
hereof.

If the Rosaria Apartment is subject to a mortgage loan and such loan is a

conjugal debt, petitioner Benigno Toda, Jr. shall assume such loan and
shall obtain the discharge of the mortgage.

(e) After the signing of this document:

(1) Each of them shall own, dispose of, possess, administer

and enjoy his or her separate estate, present and future,
without the consent of the other;

(2) All earnings from any profession business or industry

shall likewise belong to each of them respectively;

(3) All expenses and obligations incurred by each of them

shall be their respective and separate responsibilities.

(f) With the signing of this document, Civil Case No. 35566 of this same
Court, CA-G.R. No. 11123-SP and SC-G.R. No. L-56121 shall be deemed
dismissed with prejudice as between the parties hereto. 10

The parties then prayed that judgment be rendered:

(a) Approving the agreement for voluntary dissolution and partition of the
conjugal partnership;

(b) declaring the conjugal partnership of petitioners dissolved and

adjudicating to each of them his or her share in the properties and assets of
said conjugal partnership in accordance with the agreement embodied in
paragraph 4 hereof; and

(c) enjoining the parties to comply with the terms and conditions of the
aforesaid agreement.11

Ironically, the said agreement failed to fully subserve the intended amicable settlement of
all the disputes of the spouses. Instead, as lamented by the counsel of one of them, the
compromise agreement which was designed to terminate a litigation spawned two new
petitions, with each party initiating one against the other. Thus, illustrative of the saying
that a solution which creates another problem is no solution, the contradictory
interpretations placed by the parties on some provisions of the agreement resulted in
appeals to respondent court and, eventually, the present recourse to us.

Benigno appealed from the aforestated orders of the trial court of November 20, 1981,
June 2, 1982, December 9, 1982, March 1, 1983 and March 14, 1983 containing the
directives hereinbefore respectively set out. The same were disposed of by the Court of
Appeals as explained at the start of this decision.
Rose Marie now submits that the Court of Appeals erred:

1. In holding that the compromise agreement of the parties herein became

effective only after its judicial approval on June 9, 1981 and not upon its
execution on March 30,1981;

2. In setting aside the order of the lower court dated June 2, 1981 directing
Benigno to pay interest of eighteen percent and non-payment penalty of
five percent; and

3. In setting aside the order of the lower court directing the annotation of
Rose Marie's lien on Benigno's property. 12

On the other hand, Benigno contends in his present petition before us that:

1. The Court of Appeals erred on a question of law when it affirmed the

lower court's award of P4,623,929.24 without trial and evidence-taking and
overruled petitioner's claim of violation of his due process right;

2. The Court of Appeals erred on a question of law and due process when it
upheld the lower court's denial of petitioner's motion for her
inhibition/disqualification;

3. Since the document (the parties' compromise agreement) explicitly

provided for assumption of liability rather than agency to pay and since
there was no evidence-taking, the Court of Appeals finding of an agency to
pay is reviewable as a question of law; and

4. The Court of Appeals on a question of law involving the parol evidence

rule. 13

The award of cash dividends basically depends on the date of effectivity of the
compromise agreement as this will determine whether the same is conjugal property or
separate property of the spouses.

We are in agreement with the holding of the Court of Appeals that the compromise
agreement became effective only on June 9, 1981, the date when it was approved by the
trial court, and not on March 30,1981 when it was signed by the parties. Under Article 190
of the Civil Code, 14 "(i)n the absence of an express declaration in the marriage settlements,
the separation of property between spouses during the marriage shall not take place save in
virtue of a judicial order." Hence, the separation of property is not effected by the mere
execution of the contract or agreement of the parties, but by the decree of the court approving
the same. It, therefore, becomes effective on y upon judicial approval, without which it is
void. 15 Furthermore, Article 192 of said Code explicitly provides that the conjugal partnership
is dissolved only upon the issuance of a decree of separation of property.

Consequently, the conjugal partnership of Benigno and Rose Marie should be considered
dissolved only on June 9, 1981 when the trial court approved their joint petition for
voluntary dissolution of their conjugal partnership. Conformably thereto, the cash
dividends declared on July 1, 1981 and July 25,1981 in the amount of P2,191.62 and
P40,196.12, respectively, should pertain to Rose Marie; and that declared on April 2,5,
1981 in the amount of P37,126.30 ought to be paid to Benigno, pursuant to Paragraph 4 (c)
of the compromise agreement which awards to Benigno the conjugal assets not otherwise
specifically assigned to Rose Marie.
With respect to the amount of P360,095.12 which Benigrio deducted from the P2 million
supposed to be paid to Rose Marie, it is not clear from the records where said amount
came from. The Court of Appeals, in holding that it is conjugal and therefore belongs to
Benigno, presumed it to be in the nature of cash dividends declared prior to the approval
of the compromise agreement by reason of the fact that the amount was deducted by
Benigno from the P2 million which he paid on April 14,1981. While no sufficient proof was
adduced to conclusively explain such deduction, there exists the legal presumption that
all property of the marriage belongs to the conjugal partnership absent any proof that it is
the exclusive property of either spouse. 16 Since Rose Marie failed to prove that the amount
forms part of her paraphernal property, it is presumed to be conjugal property. Consequently,
Benigno is entitled to the said amount of P360,095.12, hence he rightfully deducted the same
from the amount due to Rose Marie.

The issue regarding the annotation of the lien on Benigno's properties has been mooted
by our resolution dated Aprjl 3, 1989 wherein, at his instance, we ordered the cancellation
thereof upon his posting of the corresponding bond. In our resolution of February 26,
1990, we noted Benigno's comphance, approved the bond he filed, and ordered the
cancellation of the hens annotated on the certificates of title of the propertiesinvolved.

Likewise, the order denying the motion to inhibit Judge Rizalina Bonifacio Vera has
become academic considering that she no longer presides over the court where the case
was filed. Besides, as correctly explained by respondent court, the groundfor inhibition
raised by Benigno is not valid it being merely on the basis of the judge having acquired
knowledge of the facts surrounding the agreement of the parties, hence she would be a
material witness to the issue of the true agreement which is contested by the parties.
However, those facts came to the knowledge of the judge in the course of her efforts to
effect a compromise between parties and are also known to the parties.This is not a
ground for disqualification; on the contrary, said, acts of the judge were in accord with the
rule encouraging compromises in litigations, especially between members of the same
family.

Anent the tax savings of P4,623,982.24 obtained by Benigno, we hold that this forms part
of the P40 million allocated to Rose Marie under paragraph 4 (b) (1) of the compromise
agreement.We give credit to the ratiocination thereon of the trial court as quoted with
approval by respondent court:

The records show that petitioner Benigno Toda, Jr. paid only Pl,125,152.48
in estate taxes, although the amount stated in the m Compromise
Agreement was P15,749,135.32. The balance of P4,623,929.24 is now being
claimed by both parties as aforestated. In the opinion of this court, the
pertinent terms of the Agreement as quoted, are clear and do not require
any interpretation. In brief, under, the Agreement, petitioner Rose Marie T.
Toda is adjudicated the fixed sum of P40 million, to be paid as follows: (a)
Payment by petitioner Benigno Toda, Jr. of the estate taxes, interests and
penalties thereon, pertaining to the estate of the late Manuel Tuason, Jr. in
the amount of Pl5,749,135.32 as of March 31, 1982; (b) P2 million within 30
days after signing of the Agreement; (c) the balance within six months after
date of signing of the Agreement. This Court notes that the amount of
taxes, interests and penalties is fixed at P15,749,135.32 and this figure was
provided by Benigno Toda, Jr. There is no provision as contended by
petitioner Benigno Toda, Jr. that the amount was only an assumed liability
and that he could attempt to reduce it by suit or compromise. It is clear that
if the amount of P4,623,929.24 is to be credited to Benigno Toda, Jr. then
the P40 million which petitioner Rose Marie T. Toda is to receive would be
short by that amount. This Court is also of the opinion that under the
Agreement, petitioner Benigno Toda, Jr. was constituted as agent to pay to
the government the liability of the estate of the late Manuel Tuason, Jr. in
 the fixed amount of P15,749,135.32 and if he was able to secure a reduction
thereof, then he should deliver to his principal such reduction... 17

We do not believe that Benigno was denied due process when the trial court resolved the
motion of Rose Marie for the payment of P4,623,982.24 without the benefit of a hearing.
The records disclose that the hearing thereon was postponed twice at the instance of
Benigno, which prompted the court to thereafter consider the motion submitted for
resolution on the basis of the allegations therein and the answer filed by counsel for both
parties. Benigno cannot now be heard to claim that he was deprived of his day in court.
Furthermore, respondent court correctly held that the issue involved was more of a
question of interpretation of a contract rather than a determination of facts. Benigno failed
to make a plausible showing that the supposed evidence he had intended to present, if
any, would not be merely collateral matters.

Considering that the amount of P4,623,982.24 actually forms an integral part of the P40
million (minus the lawful and authorized deductions that may be made therefrom) which
Benigno categorically undertook to pay to Rose Marie, the same must earn interest at the
rate of 18% per annum and 5% non-payment penalty, the same being included in and
within the contemplation of Paragraph 4 (b) (1) (c) of the compromise agreement. Said
provision of the agrdement provides for the payment of the interest and penalty upon
non-payment of the balance of the P40 million after the specific authorized deductions
therefrom. Since the amount of P4,623,982.24 was not to be lawfully deducted by Benigno,
as hereinbefore explained, it constitutes part of the contemplated contingent balance
which might tum out to be due to Rose Marie and, therefore, subject to the imposition of
said increments on Benigno's liability.

WHEREFORE, the judgment appealed from is hereby AFFIRMED, with the modification
that Benigno Toda, Jr. is hereby ordered to pay Rose Marie Tuason Toda interest at the
rate of a 18% per annum and 5% non-payment penalty on the tax savings of P4,623,982.24
from date of formal demand until the same is fully paid.

SO ORDERED.

Melencio-Herrrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

SECOND DIVISION

LOREA DE UGALDE, G.R. No. 130623

Petitioner,

Present:
CARPIO, J.,

Acting Chairperson,

CARPIO MORALES,

AZCUNA,*

- versus - TINGA, and

VELASCO, JR., JJ.

JON DE YSASI, Promulgated:

Respondent. February 29, 2008

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DECISION

CARPIO, J.:

The Case
Before the Court is a petition for review[1] assailing the 21 November
1996 Decision[2] and 2 September 1997 Resolution[3] of the Court of Appeals in
CA-G.R. CV No. 41121.

The Antecedent Facts

On 15 February 1951, Lorea de Ugalde (petitioner) and Jon

de Ysasi (respondent) got married before Municipal
Judge Remigio Pea of Hinigaran, Negros Occidental. On 1 March 1951,[4] Rev.
Msgr. Flaviano Arriola solemnized their church wedding at the San Sebastian
Cathedral in Bacolod City. Petitioner and respondent did not execute any ante-
nuptial agreement. They had a son named Jon de Ysasi III.

Petitioner and respondent separated sometime in April 1957.[5] On 26 May

1964, respondent allegedly contracted another marriage with Victoria Eleanor
Smith (Smith) before Judge Lucio M.Tanco of Pasay City. Petitioner further
alleged that respondent and Smith had been acquiring and disposing of real
and personal properties to her prejudice as the lawful wife. Petitioner alleged
that she had been defrauded of rental income, profits, and fruits of their
conjugal properties.

On 12 December 1984, petitioner filed a petition for dissolution of the conjugal

partnership of gains against respondent before the Regional Trial Court
of Negros Occidental, Bacolod City, Branch 48 (trial court). The case was
docketed as Special Proceedings No. 3330. In particular, petitioner asked for
her conjugal share in respondents inheritance as per the settlement of the
estate of respondents parents, Juan Ysasi[6] and Maria Aldecoa de Ysasi, who
died on 17 November 1975 and 25 February 1979, respectively.[7] Petitioner
also prayed for a monthly support of P5,000 to be deducted from her share in
the conjugal partnership; the appointment of a receiver during
the pendency of the litigation; the annulment of all contracts, agreements, and
documents signed and ratified by respondent with third persons without her
consent; and payment of appearance and attorneys fees.
Respondent countered that on 2 June 1961, he and petitioner entered into an
agreement which provided, among others, that their conjugal partnership of
gains shall be deemed dissolved as of 15 April 1957. Pursuant to the
agreement, they submitted an Amicable Settlement in Civil Case No.
4791[8] then pending before the Court of First Instance of Negros Occidental
(CFI). The Amicable Settlement stipulates:

2. That the petitioner shall pay the respondent the sum of THIRTY
THOUSAND PESOS (P30,000.00) in full satisfaction of and/or
consideration for and to cover any and all money and/or property
claims she has or may have against the petitioner in the future,
including but not limited to pensions, allowances, alimony, support,
share in the conjugal property (if any), inheritance, etc.;

3. That for and in consideration of the foregoing premises and the

payment of THIRTY THOUSAND pesos (P30,000.00), the receipt of
which sum is hereby acknowledged and confessed by and to the
entire satisfaction of the respondent, she hereby completely and
absolutely transfer, convey, assign, set over, waive, remise, release
and forever quitclaim, unto petitioner, his successors and
administrators, any and all rights, claims and interests which the
respondent has or may hereafter have against the petitioner arising,
directly or indirectly, from the fact that the petitioner and
respondent were married on March 1, 1951, including but not
limited to any and all money and/or property claims mentioned in
the paragraph immediately preceding;

4. That, except with reference to the custody of the boy, the parties
herein hereby waive any and all rights to question the validity
and effectivity of the provisions of this amicable settlement, as well
as the right to raise these matters on appeal[.][9]
In its Order[10] dated 6 June 1961, the CFI approved the Amicable Settlement.

Respondent further alleged that petitioner already obtained a divorce from

him before the Supreme Court of Mexico. Petitioner then contracted a second
marriage with Richard Galoway (Galoway).After Galoways death, petitioner
contracted a third marriage with Frank Scholey. Respondent moved for the
dismissal of the petition for dissolution of the conjugal partnership of gains on
the grounds of estoppel, laches, and res judicata.

In his Supplemental Affirmative Defense, respondent alleged that the marriage

between him and petitioner was void because it was executed without the
benefit of a marriage license.

The Ruling of the Trial Court

On 22 November 1991, the trial court[11] rendered judgment as follows:

WHEREFORE, after collating the evidence, the evidence for the

respondent is preponderant to prove his affirmative and special
defenses that the petition does not state a sufficient cause of
action. On these bases and under the doctrine of res judicata, the
petition is hereby DISMISSED. Without pronouncements as to costs
and attorneys fees.

SO ORDERED.[12]

The trial court ruled that the existence of a conjugal partnership of gains is
predicated on a valid marriage. Considering that the marriage between
petitioner and respondent was solemnized without a marriage license, the
marriage was null and void, and no community of property was formed
between them. The trial court further ruled that assuming that the marriage
was valid, the action was barred by res judicata. The trial court noted that
petitioner and respondent entered into an amicable settlement in Civil Case
No. 4791. The amicable settlement was approved by the CFI and petitioner
may no longer repudiate it. Finally, the trial court ruled that there was no proof
to show that during their union, petitioner
and respondent acquired properties.

Petitioner appealed from the trial courts Decision before the Court of Appeals.

The Ruling of the Court of Appeals

On 21 November 1996, the Court of Appeals affirmed the trial courts Decision.

The Court of Appeals ruled that the absence of a marriage license is fatal and
made the marriage between petitioner and respondent a complete
nullity. Hence, the trial court did not err in finding that there was no conjugal
partnership of gains between petitioner and respondent. The Court of Appeals
further ruled that the compromise agreement is a valid contract between
the parties Since the compromise agreement was entered into freely,
voluntarily, and with the full understanding of its consequences, it is conclusive
and binding on the parties. The Court of Appeals also ruled that the action was
barred by laches since it was filed by petitioner 23 years from the time the CFI
approved the additional amicable settlement in Civil Case No. 4791. The Court
of Appeals sustained the trial courts ruling that respondents right over the
estate of his deceased parents was only inchoate and there was no evidence
that petitioner and respondent acquired any property that could be considered
conjugal.
Petitioner filed a motion for reconsideration. In its 2 September 1997
Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition before this Court, raising the following assignment of
errors:

The lower court erred in ruling that since the marriage of the
plaintiff and respondent was void due to the absence of a marriage
license, no conjugal partnership arose from their union.

The lower court erred in ruling that the amicable settlement in Civil
Case No. 4791 bars all claims by the plaintiff under the principle
of res judicata.

The lower court erred in ruling that respondents right to [the] estate
of his deceased parents was merely inchoate, thus, no property
devolved to respondent and no conjugal partnership was formed.

The lower court erred in ruling that the appellants petition did not
sufficiently state a cause of action.[13]

The Issue

The issue in this case is whether the Court of Appeals committed a reversible
error in affirming the trial courts Decision which dismissed the action for
dissolution of conjugal partnership of gains.

The Ruling of this Court

The petition is without merit.

Validity of Petitioner and Respondents Marriage

is the Subject of a Different Court Proceeding

Special Proceedings No. 3330 is an action for Dissolution of Conjugal

Partnership of Gains. In its 22 November 1991 Decision, the trial court ruled
that the existence of conjugal partnership of gains is predicated on a valid
marriage. The trial court then proceeded to rule on the validity of petitioner
and respondents marriage. The trial court ruled that it was shown by
competent evidence that petitioner and respondent failed to obtain a marriage
license. Hence, the marriage between petitioner and respondent was null and
void, and no community of property was formed between them.

The trial court exceeded its jurisdiction in ruling on the validity of petitioner
and respondents marriage, which was only raised by respondent as a defense
to the action for dissolution of the conjugal partnership of gains. The validity of
petitioner and respondents marriage was the subject of another action, Civil
Case No. 430 for Judicial Declaration of Absolute Nullity of Marriage before the
Regional Trial Court of Himamaylan, Negros Occidental, Branch 55. In a
Decision[14] dated 31 May 1995, Civil Case No. 430 was resolved, as follows:

In this jurisdiction it is required, except in certain cases, that the

marriage license must first be secured by the parties and shown to
the judge before the latter can competently solemnize the
marriage. In this present case, none was ever secured. Failure to
comply with the formal and essential requirements of the law
renders the marriage void ab initio. Since void marriage can be
assailed anytime as the action on assailing it does not prescribe, the
plaintiff is well within his right to seek judicial relief.
 WHEREFORE, premises considered[,] judgment is hereby rendered
declaring the marriage between JON A. DE YSASI and LOREA DE
UGALDE as NULL and VOID AB INITIO. The Local Civil Registrar for
the Municipality of Hinigaran is hereby directed to cancel the entry
of marriage between JON A. DE YSASI and LOREA DE UGALDE from
the Marriage register and to render the same of no force and effect.

Lastly, furnish copy of this decision the National Census and

Statistics Office, Manila, to make the necessary cancellation of the
entry of marriage between the plaintiff and the defendant.

SO ORDERED.[15]

No appeal or motion for reconsideration of the 31 May 1995 Decision in Civil

Case No. 430 has been filed by any of the parties, and a Certification of finality
was issued on 20 November 1995.Thus, the marriage between petitioner and
respondent was already judicially annulled as of 20 November 1995. The trial
court had no jurisdiction to annul again in Special Proceedings No. 3330 the
marriage of petitioner and respondent.
Conjugal Partnership of Gains Dissolved

in Civil Case No. 4791

The finality of the 6 June 1961 CFI Order in Civil Case No. 4791 resulted in the
dissolution of the petitioner and respondents conjugal partnership of gains.
Petitioner and respondent were married on 15 February 1951. The applicable
law at the time of their marriage was Republic Act No. 386, otherwise known
as the Civil Code of the Philippines (Civil Code) which took effect on 30 August
1950.[16] Pursuant to Article 119 of the Civil Code, the property regime of
petitioner and respondent was conjugal partnership of gains, thus:

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

Article 142 of the Civil Code defines conjugal partnership of gains, as follows:

Art. 142. By means of the conjugal partnership of gains the husband

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

Under Article 175 of the Civil Code, the judicial separation of property results
in the termination of the conjugal partnership of gains:

Art. 175. The conjugal partnership of gains terminates:

(1) Upon the death of either spouse;

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

(3) When the marriage is annulled;

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

supplied)

The finality of the 6 June 1961 Order in Civil Case No. 4791 approving
the parties separation of property resulted in the termination of the conjugal
partnership of gains in accordance with Article 175 of the Family Code. Hence,
when the trial court decided Special Proceedings No. 3330, the conjugal
partnership between petitioner and respondent was already dissolved.

Petitioner alleges that the CFI had no authority to approve the Compromise
Agreement because the case was for custody, and the creditors were not given
notice by the parties, as also required under Article 191 of the Civil
Code. Petitioner cannot repudiate the Compromise Agreement on this
ground. A judgment upon a compromise agreement has all the force and effect
of any other judgment, and conclusive only upon parties thereto and their
privies, and not binding on third persons who are not parties to it.[17]

The Amicable Settlement had become final as between petitioner and

respondent when it was approved by the CFI on 6 June 1961. The CFIs approval
of the Compromise Agreement on 6 June 1961resulted in the dissolution of the
conjugal partnership of gains between petitioner and respondent on even
date.
WHEREFORE, we DENY the petition. We AFFIRM the result of the 21
November 1996 Decision and of the 2 September 1997 Resolution of the Court
of Appeals in CA-G.R. CV No. 41121.

SO ORDERED.
 ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

VIRGILIO MAQUILAN, G.R. NO. 155409

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
DITA MAQUILAN, Promulgated:
Respondent. June 8, 2007
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DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under

Rule 45 of the Rules of Court assailing the Decision [ 1] dated August
30, 2002 promulgated by the Court of Appeals (CA) in CA -G.R. SP
No. 69689, which affirmed the Judgment on Compromise
Agreement dated January 2, 2002 of the Regional Trial Court
(RTC),Branch 3, Nabunturan, Compostela Valley, and the RTC
Orders dated January 21, 2002 and February 7, 2002 (ORDERS)
in Civil Case No. 656.

The facts of the case, as found by the CA, are as follows:

Herein petitioner and herein private respondent are
spouses who once had a blissful married life and out of
which were blessed to have a son. However, their once
sugar coated romance turned bitter wh en petitioner
discovered that private respondent was having illicit
sexual affair with her paramour, which thus, prompted the
petitioner to file a case of adultery against private
respondent and the latters paramour. Consequently, both
the private respondent and her paramour were convicted of
the crime charged and were sentenced to suffer an
imprisonment ranging from one (1) year, eight (8) months,
minimum of prision correccional as minimum penalty, to
three (3) years, six (6) months and twenty one (21) day s,
medium of prision correccional as maximum penalty.

Thereafter, private respondent, through counsel, filed a

Petition for Declaration of Nullity of Marriage,
Dissolution and Liquidation of Conjugal Partnership of
Gains and Damages on June 15, 2001 with the Regional
Trial Court, Branch 3 of Nabunturan, Compostela Valley,
docketed as Civil Case No. 656, imputing psychological
incapacity on the part of the petitioner.

During the pre-trial of the said case, petitioner and private

respondent entered into a COMPROMISE AGREEMENT in
the following terms, to wit:

1. In partial settlement of the conj ugal partnership of

gains, the parties agree to the following:

a. P 5 0 0 ,0 0 0 .0 0 o f t he mo n e y d ep o si ted i n t h e
b an k j o i nt l y i n t he na m e o f t h e sp o u se s s hal l
b e wit hd r a wn a nd d ep o si ted i n fa vo r a nd i n
tr us t o f t heir co m mo n ch ild , Ne il Maq u il a n,
wi t h t he d ep o si t i n t h e j o i nt a cco u nt o f t he
p ar ti es .
 T he b alance o f such d ep o sit, which p resently
st a nd s a t P 1 ,3 1 8 ,0 4 3 .3 6 , s h al l b e wi t hd r a wn
and d i vid ed eq u al l y b y t he p art ie s;

b. T he s to r e t ha t is n o w b e i n g o cc up ied b y th e
p lai n ti f f s ha ll b e al lo t ted to her wh i le t h e
b o d eg a s hal l b e fo r t he d e fe nd a n t. T he
d ef e nd a n t s h al l be p aid the sum
o f P 5 0 ,0 0 0 .0 0 a s h is s h a re i n t h e sto c ks o f t he
sto r e i n f ul l set tl e me n t t her eo f.

T he p la i nti f f s ha ll b e allo wed to o c c up y t he

b o d eg a u n ti l t he t i me t he o wn e r o f t h e lo t o n
wh ic h it st a nd s s ha ll co n str u ct a b u ild i n g
th er eo n ;

c. T he mo to r c yc le s s hal l b e d i v id ed b e t we e n t h e m
s uc h t h at t he Ka wa s a ki s ha ll b e o wn ed b y t he
p lai n ti f f wh i le t he Ho n d a Dre a m s hal l b e fo r
th e d e f e nd a n t;

d . T he p a s se n ge r j eep s ha ll b e fo r t h e p la i nt i ff
wh o s ha ll p a y t he d e fe nd a nt t he s u m
o f P 7 5 ,0 0 0 .0 0 a s h is s h are t her eo n a nd i n fu ll
se tt le me n t t her eo f;

e. T he ho u s e a nd lo t s ha ll b e to t he co m mo n c h il d .

2. This settlement is only partial, i.e., without prej udice

to the litigation of ot her conj ugal properties that
have not been mentioned;

x x x x

The said Compromise Agreement was given judicial

imprimatur by the respondent judge in the
assailed Judgment On Compromise Agreement, which
was erroneously datedJanuary 2, 2002. [ 2 ]

However, petitioner filed an Omnibus Motion

dated January 15, 2002, praying for the repudiation of the
Compromise Agreement and the reconsideration of the
Judgment on Compromise Agreement by the respondent
judge on the grounds that his previous lawyer did not
intelligently and judiciously apprise him of the
consequential effects of th e Compromise Agreement.

The respondent Judge in the assailed Order

dated January 21, 2002, denied the aforementioned
Omnibus Motion.

Displeased, petitioner filed a Motion for Reconsideration

of the aforesaid Order, but the same was denied in the
 assailed Order dated February 7, 2002. [ 3 ] (Emphasis
supplied)

The petitioner filed a Petition for Certiorari and Prohibition with

the CA under Rule 65 of the Rules of Court claiming that the RTC
committed grave error and abuse of discretion amounting to lack or
excess of jurisdiction (1) in upholding the validity of the
Compromise Agreement dated January 11, 2002; (2) when it held in
its Order dated February 7, 2002 tha t the Compromise Agreement
was made within the cooling-off period; (3) when it denied
petitioners Motion to Repudiate Compromise Agreement and to
Reconsider Its Judgment on Compromise Agreement; and (4) when
it conducted the proceedings without the appeara nce and
participation of the Office of the Solicitor General and/or the
Provincial Prosecutor. [ 4]

On August 30, 2002, the CA dismissed the Petition for lack of

merit. The CA held that the conviction of the respondent of the
crime of adultery does not ipso factodisqualify her from sharing in
the conjugal property, especially considering that she had only been
sentenced with the penalty of prision correccional, a penalty that
does not carry the accessory penalty of civil interdiction which
deprives the person of the rights to manage her property and to
dispose of such property inter vivos; that Articles 43 and 63 of the
Family Code, which pertain to the effects of a nullified marriage
and the effects of legal separation, respectively, do not apply,
considering, too, that the Petition for the Declaration of the Nullity
of Marriage filed by the respondent invoking Article 36 of the
Family Code has yet to be decided, and , hence, it is premature to
apply Articles 43 and 63 of the Family Code; that, although
adultery is a ground for legal separation, nonetheless, Article 63
finds no application in the instant case since no petition to that
effect was filed by the petitioner against the respondent; that the
spouses voluntarily separated their property through their
Compromise Agreement with court approval under Article 134 of
the Family Code; that the Compromise Agreement, which embodies
the voluntary separation of property, is valid and binding in all
respects because it had been voluntarily entered into by the parties;
that, furthermore, even if it were true that the petitioner was not
duly informed by his previous counsel about the legal effects of the
Compromise Agreement, this point is untenable since the mistake or
negligence of the lawyer binds his client, unless such mistake or
negligence amounts to gross negligence or deprivation of due
process on the part of his client; that these exceptions are not
present in the instant case; that the Compromise Agreement was
plainly worded and written in simple language, which a person of
ordinary intelligence can discern the consequences thereof, hence,
petitioners claim that his consent was vitiated is highly incredible;
that the Compromise Agreement was made during the existence of
the marriage of the parties since it was submitted during
the pendency of the petition for declaration of nullity of marriage;
that the application of Article 2035 of the Civil Code is misplaced;
that the cooling-off period under Article 58 of the Family Code has
no bearing on the validity of the Compromise Agreement; that the
Compromise Agreement is not contrary to law, morals, good
customs, public order, and public policy; that this agreement may
not be later disowned simply because of a change of mind; that the
presence of the Solicitor General or his deputy is not indispensable
to the execution and validity of the Compromise Agreement, since
the purpose of his presence is to curtail any collusion betw een the
parties and to see to it that evidence is not fabricated, and, with this
in mind, nothing in the Compromise Agreement touches on the very
merits of the case of declaration of nullity of marriage for the court
to be wary of any possible collusion; a nd, finally, that the
Compromise Agreement is merely an agreement between the parties
to separate their conjugal properties partially without prejudice to
the outcome of the pending case of declaration of nullity of
marriage.
Hence, herein Petition, purely on questions of law, raising the
following issues:

I.

WHETHER OF NOT A SPOUSE CONVICTED OF

EITHER CONCUBINAGE OR ADULTERY, CAN STILL
SHARE IN THE CONJUGAL PARTNERSHIP;

II
 WHETHER OR NOT A COMPROMISE AGREEMENT
ENTERED INTO BY SPOUSES, ONE OF WHOM W AS
CONVICTED OF ADULTERY, GIVING THE
CONVICTED SPOUSE A SHARE IN THE CONJUGAL
PROPERTY, VALID AND LEGAL;

III

WHETHER OR NOT A JUDGMENT FOR ANNULMENT

AND LEGAL SEPARATION IS A PRE -REQUISITE
BEFORE A SPOUSE CONVICTED OF EITHER
CONCUBINAGE OR ADULTERY, BE DISQUALIFIED
AND PROHIBITED FROM SHARING IN THE
CONJUGAL PROPERTY;

IV

WHETHER OR NOT THE DISQUALIFICATION OF A

CONVICTED SPOUSE OF ADULTERY FROM SHARING
IN A CONJUGAL PROPERTY, CONSTITUTES CIVIL
INTERDICTION. [ 5 ]

The petitioner argues that the Compromise Agreement should

not have been given judicial imprimatur since it is against law
and public policy; that the proceedings where it was approved
is null and void, there being no appearance and participation
of the Solicitor General or the Provincial Prosecutor; that it
was timely repudiated; and that the respondent, having been
convicted of adultery, is therefore disqualif ied from sharing in
the conjugal property.
The Petition must fail.
The essential question is whether the partial voluntary separation of
property made by the spouses pending the petition for declaration of
nullity of marriage is valid.

First. The petitioner contends that the Compromise Agreement is

void because it circumvents the law that prohibits the guilty spouse,
who was convicted of either adultery or concubinage, from sharing
in the conjugal property. Since the respondent was convicted of
adultery, the petitioner argues that her share should be forfeited in
favor of the common child under Articles 43(2) [ 6 ] and 63 [ 7 ] of the
Family Code.

To the petitioner, it is the clear intention of the law to disqualify

the spouse convicted of adultery from sharing in the conjugal
property; and because the Compromise Agreement is void, it never
became final and executory.
Moreover, the petitioner cites Article 2035 [ 8] of the Civil Code and
argues that since adultery is a ground for legal separation, the
Compromise Agreement is therefore void.

These arguments are specious. The foregoing provisions of the law

are inapplicable to the instant case.

Article 43 of the Family Code refers to Article 42, to wit:

Article 42. The subsequent marriage referred to in the

preceding Article [ 9 ] shall be automatically terminated by
the recording of the affidavit of reappearance of the absent
spouse, unless there is a judgment annulling the previous
marriage or declaring it void ab initio.

A sworn statement of the fact and circumstances of

reappearance shall be recorded in the civil registry of the
residence of the parties to the subsequent marriage at the
instance of any interested person, with due notice to the
spouses of the subsequent marriage and without prejudice
to the fact of reappearance being judicially determined in
case such fact is disputed.

where a subsequent marriage is terminated because of the

reappearance of an absent spouse; while Article 63 applies to the
effects of a decree of legal separation. The present case involves a
proceeding where the nullity of the marriage is sought to be
declared under the ground of psychological capacity.

Article 2035 of the Civil Code is also clearly inapplicable. The

Compromise Agreement partially divided the properties of the
conjugal partnership of gains between the parties and does not deal
with the validity of a marriage or legal separation. It is not among
those that are expressly prohibited by Article 2035.
Moreover, the contention that the Compromise Agreement is
tantamount to a circumvention of the law prohibiting the guilty
spouse from sharing in the conju gal properties is
misplaced. Existing law and jurisprudence do not impose such
disqualification.

Under Article 143 of the Family Code, separation of property may

be effected voluntarily or for sufficient cause, subject to judicial
approval. The questioned Compromise Agreement which was
judicially approved is exactly such a separation of property allowed
under the law. This conclusion holds true even if the proceedings
for the declaration of nullity of marriage was still
pending. However, the Court must stress that this voluntary
separation of property is subject to the rights of all creditors of
the conjugal partnership of gains and other persons with
pecuniary interest pursuant to Article 136 of the Family Code.
Second. Petitioners claim that since the proceedings before the RTC
were void in the absence of the participation of the provincial
prosecutor or solicitor, the voluntary separation made during
the pendency of the case is also void. The proceedings pertaining to
the Compromise Agreement involved th e conjugal properties of the
spouses. The settlement had no relation to the questions
surrounding the validity of their marriage. Nor did the settlement
amount to a collusion between the parties.

Article 48 of the Family Code states:

Art. 48. In all cases of annulment or declaration of

absolute nullity of marriage, the Court shall order the
prosecuting attorney or fiscal assigned to it to appear on
behalf of the State to take steps to prevent collusion
between the parties and to take care that the evide nce is
not fabricated or suppressed. (Emphasis supplied)
Section 3(e) of Rule 9 of the 1997 Rules of Court provides:

SEC. 3. Default; declaration of.- x x x x

xxxx
 (e) Where no defaults allowed. If the defending party
in action for annulment or declaration of nullity of
marriage or for legal separation fails to answer, the court
shall order the prosecuting attorney to investigate
whether or not a collusion between the parties exists if
there is no collusion, to intervene for the State in order
to see to it that the evidence submitted is not
fabricated. (Emphasis supplied

Truly, the purpose of the active participation of the Public

Prosecutor or the Solicitor General is to ensure that the interest of
the State is represented and protected in proc eedings for annulment
and declaration of nullity of marriages by preventing collusion
between the parties, or the fabrication or suppression of
evidence. [ 1 0] While the appearances of the Solicitor General and/or
the Public Prosecutor are mandatory, the failure of the RTC to
require their appearance does not per se nullify the Compromise
Agreement. This Court fully concurs with the findings of the CA:

x x x. It bears emphasizing that the intendment of the law

in requiring the presence of the Solicitor General and/or
State prosecutor in all proceedings of legal separation and
annulment or declaration of nullity of marriage is to curtail
or prevent any possibility of collusion between the parties
and to see to it that their evidence respecting the case is
not fabricated. In the instant case, there is no exigency for
the presence of the Solicitor General and/or the State
prosecutor because as already stated, nothing in the subject
compromise agreement touched into the very merits of the
case of declaration of nullity of marriage for the court to
be wary of any possible collusion between the parties. At
the risk of being repetiti[ve], the compromise agreement
pertains merely to an agreement between the petitioner and
the private respondent to separate their conjugal properties
partially without prejudice to the outcome of the pending
case of declaration of nullity of marriage. [ 1 1 ]

Third. The conviction of adultery does not carry the accessory of

civil interdiction. Article 34 of the Revised Penal Code provides for
the consequences of civil interdiction:
 Art. 34. Civil Interdiction. Civil interdiction shall deprive
the offender during the time of his sentence of the rights of
parental authority, or guardianship, either as to the person
or property of any ward, of marital authority, of the right
to manage his property and of th e right to dispose of such
property by any act or any conveyance inter vivos.
Under Article 333 of the same Code, the penalty for adultery
is prision correccional in its medium and maximum periods. Article
333 should be read with Article 43 of the same Cod e. The latter
provides:

Art. 43. Prision correccional Its accessory penalties. The

penalty of prision correccional shall carry with it that of
suspension from public office, from the right to follow a
profession or calling, and that of perpetual special
disqualification from the right of suffrage, if the duration
of said imprisonment shall exceed eighteen months. The
offender shall suffer the disqualification provided in this
article although pardoned as to the principal penalty,
unless the same shall hav e been expressly remitted in the
pardon.

It is clear, therefore, and as correctly held by the CA, that the crime
of adultery does not carry the accessory penalty of civil interdiction
which deprives the person of the rights to manage her property and
to dispose of such property inter vivos.

Fourth. Neither could it be said that the petitioner was not

intelligently and judiciously informed of the consequential effects
of the compromise agreement, and that, on this basis, he may
repudiate the Compromise Agreement. The argument of the
petitioner that he was not duly informed by his previous counsel
about the legal effects of the voluntary settlement is not
convincing. Mistake or vitiation of consent, as now claimed by the
petitioner as his basis for repudia ting the settlement, could hardly
be said to be evident. In Salonga v. Court of Appeals, [ 1 2 ] this Court
held:

[I]t is well-settled that the negligence of counse l binds the

client. This is based on the rule that any act performed by
a lawyer within the scope of his general or implied
 authority is regarded as an act of his client. Consequently,
the mistake or negligence of petitioners' counsel may
result in the rendition of an unfavorable judgment against
them.

Exceptions to the foregoing have been recognized by the

Court in cases where reckless or gross negligence of
counsel deprives the client of due process of law, or when
its application "results in the outright deprivation of one's
property through a technicality." x x x x [ 1 3 ]

None of these exceptions has been sufficiently shown in the present

case.

WHEREFORE, the Petition is DENIED. The Decision of the Court

of Appeals is AFFIRMED with MODIFICATION that the subject
Compromise Agreement isVALID without prejudice to the rights of
all creditors and other persons with pecuniary interest in the
properties of the conjugal partnership of gains.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-23235 August 27, 1925

JOSE M. PRADO, administrator of the estate of Maria Prado, deceased, plaintiff-appellant,

vs.
CASIMIRO NATIVIDAD, defendant-appellee.

Gregorio Perfecto for appellant.

Manly, Goddard and Lockwood for appellee.

VILLA-REAL, J.:

Casimiro Natividad and Maria Prado contracted marriage in the month of May, 1889. Casimiro
Natividad brought to the marriage some real properties which he had received from his mother
as his future share in her inheritance. Maria Prado did not bring anything. During the marriage
the spouses acquired on different dates real and personal properties. On April 27, 1904, Maria
Prado died from pulmonary tuberculosis in Manila, where she had been taken for treatment.

On the 14th day of February, 1917, Jose Maria Prado, in his capacity as administrator of the
estate of the deceased Maria Prado, filed a complaint in the Court of First Instance of Camarines
Sur against Casimiro Natividad, wherein he alleged that the latter had refused to make an
liquidation of the estate of the conjugal partnership brought into existence by the marriage of
Casimiro Natividad and the deceased Maria Prado and which was dissolved by the death of the
latter, and prayed the court for judgment, decreeing the liquidation of said partnership,
adjudicating to the plaintiff administrator one-half of the conjugal property described in the
complaint with its products, that is to say, one-half of P26,125, Philippine currency, with the costs
of the action.

In answer to the complaint, Casimiro Natividad admitted the allegations contained in the first,
second, and third paragraphs thereof and denied generally and specifically all the rest, and as
special defense alleged: (1) That the plaintiff had no legal capacity to sue and maintain this actin;
(2) that the estate of the conjugal partnership constituted between him and his deceased wife
Maria Prado had already been liquidated, no conjugal property having been found to exist, but a
loss of P10,000: (3) that the heirs of Maria Prado owe him the sum of P1,460; and (4) that the
action brought by the plaintiff has already prescribed.

The plaintiff, in reply to the answer, denied each and every allegation contained in the first,
second, third, and fourth paragraphs thereof.

After trial, the lower court rendered judgment, holding that no residue existed which should be
divided between the husband and the heirs, and dismissing the complaint.

From this judgment the plaintiff Jose Maria Prado took an appeal by bill of exceptions, assigning
to the judgment of the trial court, as the basis of his appeal, four supposed errors which may be
reduced to the following: First, its failure to decree the liquidation of the conjugal partnership
formed by the spouses Casimiro Natividad and Maria Prado; second, the fact of the lower court
having taken into account the value of the property of the conjugal partnership at the time of the
acquisition thereof, and not of its liquidation: and third, the fact of its having taken into
consideration the supposed debt of P17,428.98.

The complaint filed herein contains a detailed statement of the movable and immovable
properties that were acquired during marriage. At the trial of the case, evidence was introduced
tending to show the existence of said properties with their prices and fruits. Also evidence was
introduced in an attempt to show the true expenses incurred during the administration of the
conjugal partnership. With that evidence in the record, it is not necessary to order the defendant,
in his capacity as administrator of the estate of said partnership, to make a formal liquidation
thereof; because what was done during the trial of the case amounts to a liquidation, and to
make another one would be to do double work, and would give rise to new controversies when
the liquidation is submitted for the contesting thereof by the adverse party. The trial court has not,
therefore, committed any error in not ordering a formal liquidation.

As to the appraisal of the real property of the conjugal partnership, it is not the purchase, but the
market, or in default thereof, the assessed, value at the time of the liquidation that must be taken
into account. (Art. 1428 in connection with art. 1367 of the Civil Code.) Urban, as well as rural,
property has its value in the market which rises and falls according to the movement of the
population, market, and trade, and it is not just nor equitable that the conjugal partnership should
not share the advantages or disadvantages that those fluctuations give to its property.

The evidence shows that during the marriage the spouses began to build a house of strong
materials which remained unfinished until the dissolution of the conjugal partnership by the death
of the wife Maria Prado, and cost P3,000. Upon the death of Maria Prado the defendant had the
building finished, spending P2,000 more out of his own money. At the termination of the house, it
was assessed at P10,654, its value having, therefore, increased by P5,654, of which increase
P3,392.40 must correspond to the P3,000 which was the cost of the house not finished at the
death of Maria Prado, making a total of P6,391.40. The lands in Burobandan which were
acquired during marriage, had an area of 15 hectares approximately. After the dissolution of the
conjugal partnership the defendant acquired 80 hectares more which added to the 15 hectares
formed a single tract of 95 hectares which was assessed at P9,500, of which P1,500 correspond
to the 15 hectares pertaining to the conjugal partnership. Of the land of 40 hectares in
Cabatagan which was assessed at P3,750, only 5 hectares pertain to the conjugal partnership
and the 35 are private property of the husband, P469 corresponding to the 5 hectares. The lands
in Sagpon are assessed at P1,072; the one in San Antonio at P180, and the one in Joyon-Joyon
at P150. All of the other lands, those situated in Catalutoan and San Jose, are estimated at
P1,090. Taking, therefore, into account the assessed value of the property of the conjugal
partnership at the time of the liquidation, the total value thereof amounts to P10,853.40.

The appellant contends that the claim in connection with the debts contracted by Casimiro
Natividad for the expenses of the administration of the property of the conjugal partnership of the
family and the last sickness and funerals of Maria Prado, should have been filed with the
committee on claims in the intestate proceeding for the settlement of the estate of Maria Prado.
This contention is clearly untenable, because said debts having been contracted by Casimiro
Natividad as legal administrator of the conjugal partnership formed by virtue of his marriage with
Maria Prado, must, according to law (art. 1408 of the Civil Code), be charged to said partnership
at the making of the liquidation thereof and not to the estate of Maria Prado, inasmuch as she did
not personally intervene in obtaining said loans.

So that even if the assessed value of the estate of the conjugal partnership at the time of the
liquidation be taken into account, its total value of P10,853.40 would not be sufficient to cover all
the expenses incurred by the administration of said partnership which amount to the sum of
P17,423.98, and consequently after the sale of said estate and the payment of the debts with the
proceeds thereof there would be no residue that might be considered as conjugal property to be
distributed among the heirs of Maria Prado.

In conclusion, while the lower court erred in not taking into account the assessed value of the
estate of the conjugal partnership at the time of its liquidation, yet that does not affect the final
decision, and the judgment appearing to be in accordance with the evidence and the law, the
same is hereby affirmed in its entirety, with the costs against the appellant. So ordered.

Avancea, C.J., Johnson, Street, Malcolm, Villamor, and Johns, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-46079 March 24, 1944

MARIA LOPEZ, plaintiff-appellant,

vs.
MAGDALENA GONZAGA VDA. DE CUAYCONG, ET AL., defendants-appellees;
LOPEZ SUGAR CENTRAL MILL CO., INC., intervenor-appellant.

BOCOBO, J.:
The intervenor and appellant, the Lopez Sugar Central Mill Co., Inc., moves for a reconsideration
of the resolution of this Court promulgated on July 20, 1940, in so far as said resolution declared
the deed of sale, Exhibit D, void in its entirety and denied certain remedies prayed for.

In the decision of this Court under date of January 29, 1940, this Court held the sale in question
void and of no effect in so far as the three daughters, Maria Cristina, Josefina and Anita
Cuaycong, were concerned because they had not taken part therein, but valid as to the widow
and other children of Cuaycong who had consented to the transaction. In said decision, this
Court ordered intervenor to removed the buildings constructed on Lot 178-B. Then, in the
resolution dated July 20, 1940, this Court held that said contract was void in its entirety. The
portion of said resolution whose reconsideration is sought reads: "And with respect to the widow
of Cuaycong and his children of age, the sale was also void, because they alienated, without a
previous partition of the hacienda, a definite and concrete part thereof, although they had only an
abstract and undivided share of said property."

We shall discuss three questions raised in the motion for reconsideration: (1) Was the consent of
the three daughters, Maria Cristina, Josefina and Anita Cuaycong necessary to the sale in
question? (2) What rights did the intervenor acquire in this sale? (3) Whether the distillery
building and other improvements constructed on Lot 178-B should be removed by intervenor.

On the first question, we believe the consent of the three daughters above named was not
necessary to the validity of the sale in question. Each coowner may alienate his undivided or
ideal share in the community.

Articles 392 and 399 of the Civil Code provide:

Articles 392. There is co-ownership whenever the ownership of a thing or of a right

belong undivided to different persons.

Art. 399. Todo condueo tendra la plena propiedad de su parte y la de los frutos y
utilidades que le correspondan, pudiendo en su consecuencia enajenarla, cederla o
hipotecarla, y aun sustituir otro en su aprovechamiento, salvo si se tratare de derechos
personales. Pero el efecto de la enajenacion o hipoteca con relacion a los condueos
estara limitado a la porcion que se le adjudique en la division al cesar la comunidad.

Article 399. Each one of the co-owners shall have the absolute ownership of his part and
that of the fruits and profits pertaining thereto, and he may therefore sell, assign or
mortgage it, and even substitute another person in its enjoyment, unless personal rights
are involved. But the effect of the alienation or mortgage with respect to the coowners
shall be limited to the share which may be allotted to him in the division upon the
termination of the co-ownership.

Manresa has the following to say on this subject:

Cada condomino lo es del todo, y sobre el todo ejerce derechos dominicales, pero al
mismo tiempo es proprietario de una parte realmente abstracta, porque hasta que la
division se efectue no queda aquella determinada concretamente. Los derechos de los
comuneros son, por lo expuesto, todo lo absolutos que el dominio requiere, puesto que
aquellos pueden gozar y disponer de la cosa comun, sin otras limitaciones que las de no
perjudicar en el ejercicio de su derecho los intereses generales de la comunidad, y
poseen ademas la plena propiedad de su parte, que pueden enajenar, ceder o hipotecar:
parte que, repetimos, no sera cierta hasta el momento de cesar la comunidad. El
derecho de propiedad, por consiguiente, tal y como lo define el art. 348 del presente
Codigo civil, con sus notas de absoluto y con su caracter de individualizacion, aparece
 ejercido en el condominio, sin otra diferencia entre la propiedad singular y la comun que
la que acertadamente establece el codigo portugues (arts. 2175 y 2176), al decir 'que el
propietario singular ejerce de modo exclusivo sus derechos, y el proprietario en comun
los ejerce conjuntamente con los otros'; pero, aadiremos nosotros, estandole atribuidos
al condomino de modo individual sobre su parte indivisa todos los derechos de tal
propietario, a mas del uso y disfrute de la cosa, que es comun a todos los propietarios.
(Emphasis supplied.)

Each co-owner owns the whole, and over it he exercises rights of dominion, but at the
same time he is the owner of a share which is really abstract, because until the division is
effected, such share is not concretely determined. The rights of the co-owners are,
therefore, as absolute as dominion requires, because they may enjoy and dispose of the
common property, without any limitation other than that they should not, in the exercise of
their right, prejudice the general interest of the community, and possess, in addition, the
full ownership of their share, which they may alienate, convey or mortgage; which share,
we repeat, will not be certain until the community ceases. The right of ownership,
therefore, as defined in Art. 348 of the present Civil Code, with its absolute features and
its individualized character, in exercised in co-ownership, with no other differences
between sole and common ownership than that which is rightly established by the
Portuguese Code (Arts. 2175 and 2176), when it says "that the sole owner exercises his
rights exclusively, and the co-owner exercises them jointly with the other co-owners"; but
we shall add, to each co-owner pertains individually, over his undivided share, all the
rights of the owner, aside from the use and enjoyment of the thing, which is common to
all the co-owners. (Emphasis supplied.)

Manresa further says that in the alienation of his undivided or ideal share, a co-owner does not
meet the consent of the others. (Vol. 3 pp. 486-487, 3rd Ed.)

Sanchez Roman also says ("Estudios de Derecho Civil", vol. 3, pp. 174-175):

Muestra el 399 la integridad esencial del derecho de cada condueo en la

porcion mental que en el condominio o comunidad le corresponde.

xxx xxx xxx

. . . el ser condueo o coparticipe de una propiedad no significa quedar privado de todo

reconocimiento de disposicion de la cosa, del libre uso de su derecho dentro de las
condiciones circunstanciales de tal estado juridico, ni que para ejercer el uso y disfrute, o
el de libre disposicion, sea preciso el previo consentimiento de todos los interesados.

Article 399 shows the essential integrity of the right of each co-owner in the mental
portion which belongs to him in the co-ownership or community.

xxx xxx xxx

To be a co-owner of a property does not mean that one is deprived of every recognition
of the disposal of the thing, of the free use of his right within the circumstantial conditions
of such juridical status, nor is it necessary, for the use and enjoyment, or the right of free
disposal, that the previous consent of all the interested parties be obtained. . . .

According to Scaevola (Codigo Civil, vol. 7, pp. 154-155):

2.a Derecho absoluto de cada comunero respecto de su parte o cuota. Respecto de

esta se equipara al propietario individual. Es, en efecto, un propietario singular, con
todos los derechos inherentes a tal condicion. La cuota del comunero, o sea la parte que
idealmente le corresponde en la cosa o derecho comun y que se halla representada por
 una cantidad determinada, es suya y puede disponer de ella como le plazca, porque no
afecta al derecho de los demas. Dicha cantidad equivale a un credito contra la cosa o
derecho comun, propiedad particular de cada acreedor (comunero). Las diversas cuotas
suponen idealmente otras tantas unidades de cosa o derecho, pertenencientes de modo
singular a los various propietarios, o sea una unidad a cada dueo.

2nd. Absolute right of each co-owner with respect to his part or share. With respect to
the latter, each co-owner is the same as an individual owner. He is a singular owner, with
all the rights inherent in such condition. The share of the co-owner, that is, the part which
ideally belongs to him in the common thing or right and is represented by a certain
quantity, is his and he may dispose of the same as he pleases, because it does not affect
the right of the others. Such quantity is equivalent to a credit against the common thing or
right, and is the private property of each creditor (co-owner). The various shares ideally
signify as many units of thing or right, pertaining individually to the different owners; in
other words a unit for each owner."

It follows that the consent of the three daughters Maria Cristina, Josefina and Anita Cuaycong to
the sale in question was not necessary.

II

The second question is: What rights did the intervenor acquire in this sale? The answer is: the
same rights as the grantors had as co-owners in an ideal share equivalent in value to 10,832
square meters of the hacienda. No specific portion, physically identified, of the hacienda has
been sold, but only an abstract and undivided share equivalent in value to 10,832 square meters
of the common property. What portion of the hacienda has been sold will not be physically and
concretely ascertained until after the division. This sale is therefore subject to the result of such
partition, but this condition does not render the contract void, for an alienation by the co-owner of
his ideal share is permitted by law, as already indicated. If in the partition this lot 178-B should be
adjudicated to the intervenor, the problem would be simplified; otherwise, the sellers would have
to deliver to the intervenor another lot equivalent in value to Lot No. 178-B. Incidentally, it should
be stated that according to Rule 71, sec. 4, of the new Rules of Court, regarding partition of real
estate, the commissioners on partition shall set apart the real property "to the several parties in
such lots or parcels as will be most advantageous and equitable, having due regard to the
improvements, situation and quality of the different parts thereof." (Emphasis supplied.)
Consequently, without deciding that the commissioners on partition must assign Lot 5 178-B to
intervenor, we deem it proper to state that if in the partition proceedings, the commissioners
should set apart said lot to intervenor, they would be acting within the letter and spirit of the
provision, just quoted, of Rule 71, sec. 4; and that they will probably make such adjudication.

In the Sentence of December 29, 1905, the Supreme Tribunal of Spain declared that the
alienation, by a co-owner, of either an abstract or a concrete part of the property owned in
common does not mean the cessation of the ownership. Said sentence held:

No es de estimar el primer motivo, porque tal estado de derecho no desaparece, ni

siquiera se desvirtua, con respecto a los copropietarios entre si, por haber ambos, o
alguno de ellos, ejecutado actos que pudieran reputarse no comprendidos en las
facultades inherentes a la administracion, unicas que de mutuo acuerdo se habian
conferido en determinados bienes, porque si bien todo condueo puede enajenar, ceder
o hipotecar la propiedad de su parte, el efecto de tal enajenacion esta limitado, con
referencia a los condueos, a la porcion que se le adjudique ulteriormente, conforme al
articulo 399 del Codigo civil, y no implica la cesacion de la comunidad, ya se refiera la
venta a parte abstracta de los bienes, ya a parte concreta y determinada de los mismos,
porque esto ultimo, que podra afectar a la forma y condiciones con que en su dia haya
de practicarse la particion, no altera en manera alguna la situacion juridica de los que
 poseen colectivamente, mientras no se realice la division de la cosa comun, que se
declara no haber tenido efecto. (Italics supplied.)

The first assignment of error cannot be sustained, because such legal status does not
disappear, nor is it impaired, with respect to the co-owners between themselves simply
because both or either of them executed acts which may be considered as beyond the
powers inherent in administration, the only powers which by mutual agreement had been
conferred as to certain properties, inasmuch as although every co-owner may alienante,
grant, or mortgage the ownership of his share, the effect of such alienation is limited, with
reference to the co-owners, to the portion which may be adjudicated to him later,
according to Art. 399 of the Civil Code, and does not imply the cessation of the
community, whether the sale refers to an abstract part of the property, or to a concrete
and definite part thereof, because though in the latter case the form and conditions of the
subsequent partition may be effected, nevertheless, the juridical situation of the collective
owners is not in any way altered so long as the partition of the common property is not
carried out, which is declared not to have taken place. (Emphasis supplied.)

Applying the above doctrine to the instant case, it cannot be said that the sale of Lot 178-B to the
intervenor had the effect of partitioning the hacienda and adjudicating that lot to the intervenor. It
merely transferred to the intervenor an abstract share equivalent in value to 10,832 square
meters of said hacienda, subject to the result of the subsequent partition. The fact that the
agreement in question purported to sell a concrete portion of the hacienda does not render the
sale void, for it is a well-established principle that the binding force of a contract must be
recognized as far as it is legally possible to do so. "Quando res non valet ut ago, valeat quantum
valere potest." (when a thing is of no force as I do it, it shall have as much force as it can have.")
It is plain that Margarita G. Vda. de Cuaycong and her children of age intended to sell to
intervenor no more than what could convey only their ideal share, equivalent in value to 10,1832
square meters of the hacienda, that ideal share alone must be deemed to have been the subject-
matter of the sale in question. They are presume to know the law that before partition,
conventional or judicial, coowner may dispose of any physically identified portion of the common
property; and that any conveyance by a coowner is subject to the result of a subsequent
partition. This interpretation of the contract does no harm to the minor daughters, as the sale in
question is subject to the result of the partition which intervenor may demand.

As a successor in interest to an abstract or undivided share of the sellers, equivalent in value to

10,832 square meters of the property owned in common, the intervenor has the same right as its
predecessors in interest to demand partition at any time, according to article 400 of the Civil
Code which reads:

Art. 400. Ningun copropietario estara obligado a permanecer en la comunidad. Cada uno
de ellos podra pedir en cualquier tiempo que se divida la cosa comun.

Esto no obstante, sera valido el pacto de conservar la cosa indivisa por tiempo
determinado, que no exceda de diez aos. Este plazo podra prorrogarse por nueva
convencion.

III

The third and remaining question is whether the distillery building and other improvements
constructed on Lot 178-B should be removed by the intervenor. It is clear that the sale in
question being valid, subject to the result of the partition which the intervenor has a right to
demand as a coowner, the intervenor is a builder in good faith. Hence, if in the partition already
discussed, Lot 178-B should not be adjudicated to the intervenor as a coowner, then article 361
of the Civil Code would have to be applied. Said article provides:
 Art. 361. El dueo del terreno en que se edificare, sembrare o plantare de buena fe,
tendra derecho a hacer suya la obra, siembra o plantacion, previa la indemnizacion
establecida en los articulos 453 y 454, o a obligar al que fabrico o planto a pagarle el
precio del terreno, y al que sembro la renta correspondiente.

Therefore, upon reconsideration we hereby declare the deed of sale, Exh. D. valid, binding as it
is, not only upon the widow and her children who consented thereto but also upon her three
minor daughters Maria Cristina, Josefina and Anita Cuaycong. It is hereby further adjudicated
that the intervenor as a coowner has a right to demand partition; that if in the partition, Lot No.
178-B should not be adjudicated to the intervenor being a builder in good faith; and that
consequently, our order in the decision of January 29, 1940, requiring intervenor to remove the
buildings constructed on said lot should be and is hereby cancelled and withdrawn.

So ordered.

Yulo, C.J., Horrilleno, Ozaeta and Paras, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-28040 August 18, 1972

TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-appellee; JOSE

DE BORJA, as administrator, CAYETANO DE BORJA, MATILDE DE BORJA and
CRISANTO DE BORJA (deceased) as Children of Josefa Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special Administratrix of the Testate Estate of Francisco
de Borja,appellant. .

G.R. No L-28568 August 18, 1972

TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA O. VDA. DE DE

BORJA, special Administratrix appellee,
vs.
JOSE DE BORJA, oppositor-appellant.

G.R. No. L-28611 August 18, 1972

TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate Estate of the late Francisco
de Borja,plaintiff-appellee,
vs.
JOSE DE BORJA, as Administrator of the Testate Estate of the late Josefa
Tangco, defendant-appellant.

L-28040

Pelaez, Jalandoni & Jamir for administrator-appellee.

Quiogue & Quiogue for appellee Matilde de Borja.

Andres Matias for appellee Cayetano de Borja.

Sevilla & Aquino for appellant.

L-28568

Sevilla & Aquino for special administratrix-appellee.

Pelaez, Jalandoni & Jamir for oppositor-appellant.

L-28611

Sevilla & Aquino for plaintiff-appellee.

Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.

REYES, J.B.L., J.:p

Of these cases, the first, numbered L-28040 is an appeal by Tasiana Ongsingco Vda. de de
Borja, special administratrix of the testate estate of Francisco de Borja, 1 from the approval of a
compromise agreement by the Court of First Instance of Rizal, Branch I, in its Special Proceeding No.
R-7866, entitled, "Testate Estate of Josefa Tangco, Jose de Borja, Administrator".

Case No. L-28568 is an appeal by administrator Jose Borja from the disapproval of the same
compromise agreement by the Court of First Instance of Nueva Ecija, Branch II, in its Special
Proceeding No. 832, entitled, "Testate Estate of Francisco de Borja, Tasiana O. Vda. de de
Borja, Special Administratrix".

And Case No. L-28611 is an appeal by administrator Jose de Borja from the decision of the
Court of First Instance of Rizal, Branch X, in its Civil Case No. 7452, declaring the Hacienda
Jalajala Poblacion, which is the main object of the aforesaid compromise agreement, as the
separate and exclusive property of the late Francisco de Borja and not a conjugal asset of the
community with his first wife, Josefa Tangco, and that said hacienda pertains exclusively to his
testate estate, which is under administrator in Special Proceeding No. 832 of the Court of First
Instance of Nueva Ecija, Branch II.

It is uncontested that Francisco de Borja, upon the death of his wife Josefa Tangco on 6 October
1940, filed a petition for the probate of her will which was docketed as Special Proceeding No. R-
7866 of the Court of First Instance of Rizal, Branch I. The will was probated on 2 April 1941. In
1946, Francisco de Borja was appointed executor and administrator: in 1952, their son, Jose de
Borja, was appointed co-administrator. When Francisco died, on 14 April 1954, Jose became the
sole administrator of the testate estate of his mother, Josefa Tangco. While a widower Francisco
de Borja allegedly took unto himself a second wife, Tasiana Ongsingco. Upon Francisco's death,
Tasiana instituted testate proceedings in the Court of First Instance of Nueva Ecija, where, in
1955, she was appointed special administratrix. The validity of Tasiana's marriage to Francisco
was questioned in said proceeding.

The relationship between the children of the first marriage and Tasiana Ongsingco has been
plagued with several court suits and counter-suits; including the three cases at bar, some
eighteen (18) cases remain pending determination in the courts. The testate estate of Josefa
Tangco alone has been unsettled for more than a quarter of a century. In order to put an end to
all these litigations, a compromise agreement was entered into on 12 October 1963, 2 by and
between "[T]he heir and son of Francisco de Borja by his first marriage, namely, Jose de Borja
personally and as administrator of the Testate Estate of Josefa Tangco," and "[T]he heir and surviving
spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco Vda. de Borja, assisted by
her lawyer, Atty. Luis Panaguiton Jr." The terms and conditions of the compromise agreement are as
follows:

AGREEMENT

THIS AGREEMENT made and entered into by and between

The heir and son of Francisco de Borja by his first marriage, namely, Jose de
Borja personally and as administrator of the Testate Estate of Josefa Tangco,

AND

The heir and surviving spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de Borja, assisted by her lawyer, Atty. Luis Panaguiton
Jr.

WITNESSETH

THAT it is the mutual desire of all the parties herein terminate and settle, with
finality, the various court litigations, controversies, claims, counterclaims, etc.,
between them in connection with the administration, settlement, partition,
adjudication and distribution of the assets as well as liabilities of the estates of
Francisco de Borja and Josefa Tangco, first spouse of Francisco de Borja.

THAT with this end in view, the parties herein have agreed voluntarily and without
any reservations to enter into and execute this agreement under the following
terms and conditions:

1. That the parties agree to sell the Poblacion portion of the Jalajala properties
situated in Jalajala, Rizal, presently under administration in the Testate Estate of
Josefa Tangco (Sp. Proc. No. 7866, Rizal), more specifically described as
follows:

Linda al Norte con el Rio Puwang que la separa de la jurisdiccion

del Municipio de Pililla de la Provincia de Rizal, y con el pico del
Monte Zambrano; al Oeste con Laguna de Bay; por el Sur con los
herederos de Marcelo de Borja; y por el Este con los terrenos de
la Familia Maronilla

with a segregated area of approximately 1,313 hectares at the amount of P0.30

per square meter.

2. That Jose de Borja agrees and obligates himself to pay Tasiana Ongsingco
Vda. de de Borja the total amount of Eight Hundred Thousand Pesos (P800,000)
Philippine Currency, in cash, which represent P200,000 as his share in the
payment and P600,000 as pro-rata shares of the heirs Crisanto, Cayetano and
Matilde, all surnamed de Borja and this shall be considered as full and complete
payment and settlement of her hereditary share in the estate of the late Francisco
de Borja as well as the estate of Josefa Tangco, Sp. Proc. No. 832-Nueva Ecija
and Sp. Proc. No. 7866-Rizal, respectively, and to any properties bequeathed or
devised in her favor by the late Francisco de Borja by Last Will and Testament or
by Donation Inter Vivos or Mortis Causa or purportedly conveyed to her for
consideration or otherwise. The funds for this payment shall be taken from and
shall depend upon the receipt of full payment of the proceeds of the sale of
Jalajala, "Poblacion."

3. That Tasiana Ongsingco Vda. de de Borja hereby assumes payment of that

particular obligation incurred by the late Francisco de Borja in favor of the
Rehabilitation Finance Corporation, now Development Bank of the Philippines,
amounting to approximately P30,000.00 and also assumes payment of her 1/5
share of the Estate and Inheritance taxes on the Estate of the late Francisco de
Borja or the sum of P3,500.00, more or less, which shall be deducted by the
buyer of Jalajala, "Poblacion" from the payment to be made to Tasiana
Ongsingco Vda. de Borja under paragraph 2 of this Agreement and paid directly
to the Development Bank of the Philippines and the heirs-children of Francisco
de Borja.

4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to pay

directly to Tasiana Ongsingco Vda. de de Borja the balance of the payment due
her under paragraph 2 of this Agreement (approximately P766,500.00) and issue
in the name of Tasiana Ongsingco Vda. de de Borja, corresponding certified
checks/treasury warrants, who, in turn, will issue the corresponding receipt to
Jose de Borja.

5. In consideration of above payment to Tasiana Ongsingco Vda. de de Borja,

Jose de Borja personally and as administrator of the Testate Estate of Josefa
Tangco, and Tasiana Ongsingco Vda. de de Borja, for themselves and for their
heirs, successors, executors, administrators, and assigns, hereby forever
mutually renounce, withdraw, waive, remise, release and discharge any and all
manner of action or actions, cause or causes of action, suits, debts, sum or sums
of money, accounts, damages, claims and demands whatsoever, in law or in
equity, which they ever had, or now have or may have against each other, more
specifically Sp. Proceedings Nos. 7866 and 1955, CFI-Rizal, and Sp. Proc. No.
832-Nueva Ecija, Civil Case No. 3033, CFI Nueva Ecija and Civil Case No. 7452-
CFI, Rizal, as well as the case filed against Manuel Quijal for perjury with the
Provincial Fiscal of Rizal, the intention being to completely, absolutely and finally
release each other, their heirs, successors, and assigns, from any and all liability,
arising wholly or partially, directly or indirectly, from the administration,
settlement, and distribution of the assets as well as liabilities of the estates of
Francisco de Borja and Josefa Tangco, first spouse of Francisco de Borja, and
lastly, Tasiana Ongsingco Vda. de de Borja expressly and specifically renounce
absolutely her rights as heir over any hereditary share in the estate of Francisco
de Borja.

6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of the payment under
paragraph 4 hereof, shall deliver to the heir Jose de Borja all the papers, titles
and documents belonging to Francisco de Borja which are in her possession and
said heir Jose de Borja shall issue in turn the corresponding receive thereof.

7. That this agreement shall take effect only upon the fulfillment of the sale of the
properties mentioned under paragraph 1 of this agreement and upon receipt of
the total and full payment of the proceeds of the sale of the Jalajala property
"Poblacion", otherwise, the non-fulfillment of the said sale will render this
instrument NULL AND VOID AND WITHOUT EFFECT THEREAFTER.

IN WITNESS WHEREOF, the parties hereto have her unto set their hands in the
City of Manila, Philippines, the 12th of October, 1963.
On 16 May 1966, Jose de Borja submitted for Court approval the agreement of 12 October 1963
to the Court of First Instance of Rizal, in Special Proceeding No. R-7866; and again, on 8 August
1966, to the Court of First Instance of Nueva Ecija, in Special Proceeding No. 832. Tasiana
Ongsingco Vda. de de Borja opposed in both instances. The Rizal court approved the
compromise agreement, but the Nueva Ecija court declared it void and unenforceable. Special
administratrix Tasiana Ongsingco Vda. de de Borja appealed the Rizal Court's order of approval
(now Supreme Court G.R. case No. L-28040), while administrator Jose de Borja appealed the
order of disapproval (G.R. case No. L-28568) by the Court of First Instance of Nueva Ecija.

The genuineness and due execution of the compromised agreement of 12 October 1963 is not
disputed, but its validity is, nevertheless, attacked by Tasiana Ongsingco on the ground that: (1)
the heirs cannot enter into such kind of agreement without first probating the will of Francisco de
Borja; (2) that the same involves a compromise on the validity of the marriage between Francisco
de Borja and Tasiana Ongsingco; and (3) that even if it were valid, it has ceased to have force
and effect.

In assailing the validity of the agreement of 12 October 1963, Tasiana Ongsingco and the
Probate Court of Nueva Ecija rely on this Court's decision in Guevara vs. Guevara. 74 Phil. 479,
wherein the Court's majority held the view that the presentation of a will for probate is mandatory
and that the settlement and distribution of an estate on the basis of intestacy when the decedent
left a will, is against the law and public policy. It is likewise pointed out by appellant Tasiana
Ongsingco that Section 1 of Rule 74 of the Revised Rules explicitly conditions the validity of an
extrajudicial settlement of a decedent's estate by agreement between heirs, upon the facts that
"(if) the decedentleft no will and no debts, and the heirs are all of age, or the minors are
represented by their judicial and legal representatives ..." The will of Francisco de Borja having
been submitted to the Nueva Ecija Court and still pending probate when the 1963 agreement
was made, those circumstances, it is argued, bar the validity of the agreement.

Upon the other hand, in claiming the validity of the compromise agreement, Jose de Borja
stresses that at the time it was entered into, on 12 October 1963, the governing provision was
Section 1, Rule 74 of the original Rules of Court of 1940, which allowed the extrajudicial
settlement of the estate of a deceased person regardless of whether he left a will or not. He also
relies on the dissenting opinion of Justice Moran, in Guevara vs. Guevara, 74 Phil. 479, wherein
was expressed the view that if the parties have already divided the estate in accordance with a
decedent's will, the probate of the will is a useless ceremony; and if they have divided the estate
in a different manner, the probate of the will is worse than useless.

The doctrine of Guevara vs. Guevara, ante, is not applicable to the case at bar. This is apparent
from an examination of the terms of the agreement between Jose de Borja and Tasiana
Ongsingco. Paragraph 2 of said agreement specifically stipulates that the sum of P800,000
payable to Tasiana Ongsingco

shall be considered as full complete payment settlement of her hereditary

share in the estate of the late Francisco de Borja as well as the estate of Josefa
Tangco, ... and to any properties bequeathed or devised in her favor by the late
Francisco de Borja by Last Will and Testament or by Donation Inter Vivos or
Mortis Causa or purportedly conveyed to her for consideration or otherwise.

This provision evidences beyond doubt that the ruling in the Guevara case is not applicable to
the cases at bar. There was here no attempt to settle or distribute the estate of Francisco de
Borja among the heirs thereto before the probate of his will. The clear object of the contract was
merely the conveyance by Tasiana Ongsingco of any and all her individual share and interest,
actual or eventual in the estate of Francisco de Borja and Josefa Tangco. There is no stipulation
as to any other claimant, creditor or legatee. And as a hereditary share in a decedent's estate is
transmitted or vested immediately from the moment of the death of such causante or
predecessor in interest (Civil Code of the Philippines, Art. 777) 3 there is no legal bar to a
successor (with requisite contracting capacity) disposing of her or his hereditary share immediately
after such death, even if the actual extent of such share is not determined until the subsequent
liquidation of the estate. 4 Of course, the effect of such alienation is to be deemed limited to what is
ultimately adjudicated to the vendor heir. However, the aleatory character of the contract does not
affect the validity of the transaction; neither does the coetaneous agreement that the numerous
litigations between the parties (the approving order of the Rizal Court enumerates fourteen of them,
Rec. App. pp. 79-82) are to be considered settled and should be dismissed, although such stipulation,
as noted by the Rizal Court, gives the contract the character of a compromise that the law favors, for
obvious reasons, if only because it serves to avoid a multiplicity of suits.

It is likewise worthy of note in this connection that as the surviving spouse of Francisco de Borja,
Tasiana Ongsingco was his compulsory heir under article 995 et seq. of the present Civil Code.
Wherefore, barring unworthiness or valid disinheritance, her successional interest existed
independent of Francisco de Borja's last will and testament and would exist even if such will were
not probated at all. Thus, the prerequisite of a previous probate of the will, as established in the
Guevara and analogous cases, can not apply to the case of Tasiana Ongsingco Vda. de de
Borja.

Since the compromise contract Annex A was entered into by and between "Jose de Borja
personally and as administrator of the Testate Estate of Josefa Tangco" on the one hand, and on
the other, "the heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de de Borja", it is clear that the transaction was binding on both in their
individual capacities, upon the perfection of the contract, even without previous authority of the
Court to enter into the same. The only difference between an extrajudicial compromise and one
that is submitted and approved by the Court, is that the latter can be enforced by execution
proceedings. Art. 2037 of the Civil Code is explicit on the point:

8. Art. 2037. A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial
compromise.

It is argued by Tasiana Ongsingco that while the agreement Annex A expressed

no definite period for its performance, the same was intended to have a
resolutory period of 60 days for its effectiveness. In support of such contention, it
is averred that such a limit was expressly stipulated in an agreement in similar
terms entered into by said Ongsingco with the brothers and sister of Jose de
Borja, to wit, Crisanto, Matilde and Cayetano, all surnamed de Borja, except that
the consideration was fixed at P600,000 (Opposition, Annex/Rec. of Appeal, L-
28040, pp. 39- 46) and which contained the following clause:

III. That this agreement shall take effect only upon the consummation of the sale
of the property mentioned herein and upon receipt of the total and full payment of
the proceeds of the sale by the herein owner heirs-children of Francisco de Borja,
namely, Crisanto, Cayetano and Matilde, all surnamed de Borja; Provided that if
no sale of the said property mentioned herein is consummated, or the non-receipt
of the purchase price thereof by the said owners within the period of sixty (60)
days from the date hereof, this agreement will become null and void and of no
further effect.

Ongsingco's argument loses validity when it is considered that Jose de Borja was not a party to
this particular contract (Annex 1), and that the same appears not to have been finalized, since it
bears no date, the day being left blank "this day of October 1963"; and while signed by the
parties, it was not notarized, although plainly intended to be so done, since it carries a proposed
notarial ratification clause. Furthermore, the compromise contract with Jose de Borja (Annex A),
provides in its par. 2 heretofore transcribed that of the total consideration of P800, 000 to be paid
to Ongsingco, P600,000 represent the "prorata share of the heirs Crisanto, Cayetano and
Matilde all surnamed de Borja" which corresponds to the consideration of P600,000 recited in
Annex 1, and that circumstance is proof that the duly notarized contract entered into wit Jose de
Borja under date 12 October 1963 (Annex A), was designed to absorb and supersede the
separate unformalize agreement with the other three Borja heirs. Hence, the 60 days resolutory
term in the contract with the latter (Annex 1) not being repeated in Annex A, can not apply to the
formal compromise with Jose de Borja. It is moreover manifest that the stipulation that the sale of
the Hacienda de Jalajala was to be made within sixty days from the date of the agreement with
Jose de Borja's co-heirs (Annex 1) was plainly omitted in Annex A as improper and ineffective,
since the Hacienda de Jalajala (Poblacion) that was to be sold to raise the P800,000 to be paid
to Ongsingco for her share formed part of the estate of Francisco de Borja and could not be sold
until authorized by the Probate Court. The Court of First Instance of Rizal so understood it, and in
approving the compromise it fixed a term of 120 days counted from the finality of the order now
under appeal, for the carrying out by the parties for the terms of the contract.

This brings us to the plea that the Court of First Instance of Rizal had no jurisdiction to approve
the compromise with Jose de Borja (Annex A) because Tasiana Ongsingco was not an heir in
the estate of Josefa Tangco pending settlement in the Rizal Court, but she was an heir of
Francisco de Borja, whose estate was the object of Special Proceeding No. 832 of the Court of
First Instance of Nueva Ecija. This circumstance is irrelevant, since what was sold by Tasiana
Ongsingco was only her eventual share in the estate of her late husband, not the estate itself;
and as already shown, that eventual share she owned from the time of Francisco's death and the
Court of Nueva Ecija could not bar her selling it. As owner of her undivided hereditary share,
Tasiana could dispose of it in favor of whomsoever she chose. Such alienation is expressly
recognized and provided for by article 1088 of the present Civil Code:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before
the partition, any or all of the co-heirs may be subrogated to the rights of the
purchaser by reimbursing him for the price of the sale, provided they do so within
the period of one month from the time they were notified in writing of the sale of
the vendor.

If a sale of a hereditary right can be made to a stranger, then a fortiori sale thereof to a coheir
could not be forbidden.

Tasiana Ongsingco further argues that her contract with Jose de Borja (Annex "A") is void
because it amounts to a compromise as to her status and marriage with the late Francisco de
Borja. The point is without merit, for the very opening paragraph of the agreement with Jose de
Borja (Annex "A") describes her as "the heir and surviving spouse of Francisco de Borja by his
second marriage, Tasiana Ongsingco Vda. de de Borja", which is in itself definite admission of
her civil status. There is nothing in the text of the agreement that would show that this recognition
of Ongsingco's status as the surviving spouse of Francisco de Borja was only made in
consideration of the cession of her hereditary rights.

It is finally charged by appellant Ongsingco, as well as by the Court of First Instance of Nueva
Ecija in its order of 21 September 1964, in Special Proceedings No. 832 (Amended Record on
Appeal in L-28568, page 157), that the compromise agreement of 13 October 1963 (Annex "A")
had been abandoned, as shown by the fact that, after its execution, the Court of First Instance of
Nueva Ecija, in its order of 21 September 1964, had declared that "no amicable settlement had
been arrived at by the parties", and that Jose de Borja himself, in a motion of 17 June 1964, had
stated that the proposed amicable settlement "had failed to materialize".

It is difficult to believe, however, that the amicable settlement referred to in the order and motion
above-mentioned was the compromise agreement of 13 October 1963, which already had been
formally signed and executed by the parties and duly notarized. What the record discloses is that
some time after its formalization, Ongsingco had unilaterally attempted to back out from the
compromise agreement, pleading various reasons restated in the opposition to the Court's
approval of Annex "A" (Record on Appeal, L-20840, page 23): that the same was invalid because
of the lapse of the allegedly intended resolutory period of 60 days and because the contract was
not preceded by the probate of Francisco de Borja's will, as required by this Court's Guevarra vs.
Guevara ruling; that Annex "A" involved a compromise affecting Ongsingco's status as wife and
widow of Francisco de Borja, etc., all of which objections have been already discussed. It was
natural that in view of the widow's attitude, Jose de Borja should attempt to reach a new
settlement or novatory agreement before seeking judicial sanction and enforcement of Annex
"A", since the latter step might ultimately entail a longer delay in attaining final remedy. That the
attempt to reach another settlement failed is apparent from the letter of Ongsingco's counsel to
Jose de Borja quoted in pages 35-36 of the brief for appellant Ongsingco in G.R. No. 28040; and
it is more than probable that the order of 21 September 1964 and the motion of 17 June 1964
referred to the failure of the parties' quest for a more satisfactory compromise. But the inability to
reach a novatory accord can not invalidate the original compromise (Annex "A") and justifies the
act of Jose de Borja in finally seeking a court order for its approval and enforcement from the
Court of First Instance of Rizal, which, as heretofore described, decreed that the agreement be
ultimately performed within 120 days from the finality of the order, now under appeal.

We conclude that in so doing, the Rizal court acted in accordance with law, and, therefore, its
order should be upheld, while the contrary resolution of the Court of First Instance of Nueva Ecija
should be, and is, reversed.

In her brief, Tasiana Ongsingco also pleads that the time elapsed in the appeal has affected her
unfavorably, in that while the purchasing power of the agreed price of P800,000 has diminished,
the value of the Jalajala property has increased. But the fact is that her delay in receiving the
payment of the agreed price for her hereditary interest was primarily due to her attempts to nullify
the agreement (Annex "A") she had formally entered into with the advice of her counsel, Attorney
Panaguiton. And as to the devaluation de facto of our currency, what We said in Dizon Rivera vs.
Dizon, L-24561, 30 June 1970, 33 SCRA 554, that "estates would never be settled if there were
to be a revaluation with every subsequent fluctuation in the values of currency and properties of
the estate", is particularly opposite in the present case.

Coming now to Case G.R. No. L-28611, the issue is whether the Hacienda de Jalajala
(Poblacion), concededly acquired by Francisco de Borja during his marriage to his first wife,
Josefa Tangco, is the husband's private property (as contended by his second spouse, Tasiana
Ongsingco), or whether it forms part of the conjugal (ganancial) partnership with Josefa Tangco.
The Court of First Instance of Rizal (Judge Herminio Mariano, presiding) declared that there was
adequate evidence to overcome the presumption in favor of its conjugal character established by
Article 160 of the Civil Code.

We are of the opinion that this question as between Tasiana Ongsingco and Jose de Borja has
become moot and academic, in view of the conclusion reached by this Court in the two preceding
cases (G.R. No. L-28568), upholding as valid the cession of Tasiana Ongsingco's eventual share
in the estate of her late husband, Francisco de Borja, for the sum of P800,000 with the
accompanying reciprocal quit-claims between the parties. But as the question may affect the
rights of possible creditors and legatees, its resolution is still imperative.

It is undisputed that the Hacienda Jalajala, of around 4,363 hectares, had been originally
acquired jointly by Francisco de Borja, Bernardo de Borja and Marcelo de Borja and their title
thereto was duly registered in their names as co-owners in Land Registration Case No. 528 of
the province of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil. 465). Subsequently,
in 1931, the Hacienda was partitioned among the co-owners: the Punta section went to Marcelo
de Borja; the Bagombong section to Bernardo de Borja, and the part in Jalajala proper
(Poblacion) corresponded to Francisco de Borja (V. De Borja vs. De Borja 101 Phil. 911, 932).

The lot allotted to Francisco was described as

 Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E. Hermogena
Romero; S. Heirs of Marcelo de Borja O. Laguna de Bay; containing an area of
13,488,870 sq. m. more or less, assessed at P297,410. (Record on Appeal,
pages 7 and 105)

On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of the Testate Estate of

Francisco de Borja, instituted a complaint in the Court of First Instance of Rizal (Civil Case No.
7452) against Jose de Borja, in his capacity as Administrator of Josefa Tangco (Francisco de
Borja's first wife), seeking to have the Hacienda above described declared exclusive private
property of Francisco, while in his answer defendant (now appellant) Jose de Borja claimed that
it was conjugal property of his parents (Francisco de Borja and Josefa Tangco), conformably to
the presumption established by Article 160 of the Philippine Civil Code (reproducing Article 1407
of the Civil Code of 1889), to the effect that:

Art. 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.

Defendant Jose de Borja further counterclaimed for damages, compensatory, moral and
exemplary, as well as for attorney's fees.

After trial, the Court of First Instance of Rizal, per Judge Herminio Mariano, held that the plaintiff
had adduced sufficient evidence to rebut the presumption, and declared the Hacienda de Jalajala
(Poblacion) to be the exclusive private property of the late Francisco de Borja, and his
Administratrix, Tasiana Ongsingco Vda. de Borja, to be entitled to its possession. Defendant
Jose de Borja then appealed to this Court.

The evidence reveals, and the appealed order admits, that the character of the Hacienda in
question as owned by the conjugal partnership De Borja-Tangco was solemnly admitted by the
late Francisco de Borja no less than two times: first, in the Reamended Inventory that, as
executor of the estate of his deceased wife Josefa Tangco, he filed in the Special Proceedings
No. 7866 of the Court of First Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in the
Reamended Accounting of the same date, also filed in the proceedings aforesaid (Exhibit "7").
Similarly, the plaintiff Tasiana O. Vda. de Borja, herself, as oppositor in the Estate of Josefa
Tangco, submitted therein an inventory dated 7 September 1954 (Exhibit "3") listing the Jalajala
property among the "Conjugal Properties of the Spouses Francisco de Borja and Josefa
Tangco". And once more, Tasiana Ongsingco, as administratrix of the Estate of Francisco de
Borja, in Special Proceedings No. 832 of the Court of First Instance of Nueva Ecija, submitted
therein in December, 1955, an inventory wherein she listed the Jalajala Hacienda under the
heading "Conjugal Property of the Deceased Spouses Francisco de Borja and Josefa Tangco,
which are in the possession of the Administrator of the Testate Estate of the Deceased Josefa
Tangco in Special Proceedings No. 7866 of the Court of First Instance of Rizal" (Exhibit "4").

Notwithstanding the four statements aforesaid, and the fact that they are plain admissions
against interest made by both Francisco de Borja and the Administratrix of his estate, in the
course of judicial proceedings in the Rizal and Nueva Ecija Courts, supporting the legal
presumption in favor of the conjugal community, the Court below declared that the Hacienda de
Jalajala (Poblacion) was not conjugal property, but the private exclusive property of the late
Francisco de Borja. It did so on the strength of the following evidences: (a) the sworn statement
by Francis de Borja on 6 August 1951 (Exhibit "F") that

He tomado possession del pedazo de terreno ya delimitado (equivalente a 1/4

parte, 337 hectareas) adjunto a mi terreno personal y exclusivo (Poblacion de
Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja, that the entire Hacienda
had been bought at a foreclosure sale for P40,100.00, of which amount P25,100 was contributed
by Bernardo de Borja and P15,000. by Marcelo de Borja; that upon receipt of a subsequent
demand from the provincial treasurer for realty taxes the sum of P17,000, Marcelo told his
brother Bernardo that Francisco (son of Marcelo) wanted also to be a co-owner, and upon
Bernardo's assent to the proposal, Marcelo issue a check for P17,000.00 to pay the back taxes
and said that the amount would represent Francisco's contribution in the purchase of the
Hacienda. The witness further testified that

Marcelo de Borja said that that money was entrusted to him by Francisco de
Borja when he was still a bachelor and which he derived from his business
transactions. (Hearing, 2 February 1965, t.s.n., pages 13-15) (Emphasis
supplied)

The Court below, reasoning that not only Francisco's sworn statement overweighed the
admissions in the inventories relied upon by defendant-appellant Jose de Borja since probate
courts can not finally determine questions of ownership of inventoried property, but that the
testimony of Gregorio de Borja showed that Francisco de Borja acquired his share of the original
Hacienda with his private funds, for which reason that share can not be regarded as conjugal
partnership property, but as exclusive property of the buyer, pursuant to Article 1396(4) of Civil
Code of 1889 and Article 148(4) of the Civil Code of the Philippines.

The following shall be the exclusive property of each spouse:

xxx xxx xxx

(4) That which is purchased with exclusive money of the wife or of the husband.

We find the conclusions of the lower court to be untenable. In the first place, witness Gregorio de
Borja's testimony as to the source of the money paid by Francisco for his share was plain
hearsay, hence inadmissible and of no probative value, since he was merely repeating what
Marcelo de Borja had told him (Gregorio). There is no way of ascertaining the truth of the
statement, since both Marcelo and Francisco de Borja were already dead when Gregorio
testified. In addition, the statement itself is improbable, since there was no need or occasion for
Marcelo de Borja to explain to Gregorio how and when Francisco de Borja had earned the
P17,000.00 entrusted to Marcelo. A ring of artificiality is clearly discernible in this portion of
Gregorio's testimony.

As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion thereof (ante, page 14) does
not clearly demonstrate that the "mi terreno personal y exclusivo (Poblacion de Jalajala, Rizal) "
refers precisely to the Hacienda in question. The inventories (Exhibits 3 and 4) disclose that
there were two real properties in Jalajala owned by Francisco de Borja, one of 72.038 sq. m.,
assessed at P44,600, and a much bigger one of 1,357.260.70 sq. m., which is evidently the
Hacienda de Jalajala (Poblacion). To which of these lands did the affidavit of Francisco de Borja
(Exhibit "F") refer to? In addition, Francisco's characterization of the land as "mi terreno personal
y exclusivo" is plainly self-serving, and not admissible in the absence of cross examination.

It may be true that the inventories relied upon by defendant-appellant (Exhibits "2", "3", "4" and
"7") are not conclusive on the conjugal character of the property in question; but as already
noted, they are clear admissions against the pecuniary interest of the declarants, Francisco de
Borja and his executor-widow, Tasiana Ongsingco, and as such of much greater probative
weight than the self-serving statement of Francisco (Exhibit "F"). Plainly, the legal presumption in
favor of the conjugal character of the Hacienda de Jalajala (Poblacion) now in dispute has not
been rebutted but actually confirmed by proof. Hence, the appealed order should be reversed
and the Hacienda de Jalajala (Poblacion) declared property of the conjugal partnership of
Francisco de Borja and Josefa Tangco.
No error having been assigned against the ruling of the lower court that claims for damages
should be ventilated in the corresponding special proceedings for the settlement of the estates of
the deceased, the same requires no pro announcement from this Court.

IN VIEW OF THE FOREGOING, the appealed order of the Court of First Instance of Rizal in
Case No. L-28040 is hereby affirmed; while those involved in Cases Nos. L-28568 and L-28611
are reversed and set aside. Costs against the appellant Tasiana Ongsingco Vda. de Borja in all
three (3) cases.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.

Fernando, J., took no part.

FIRST DIVISION

[G.R. No. 63145. October 5, 1999]

SULPICIA VENTURA, petitioner, vs. HON. FRANCIS J. MILITANTE, in

His Capacity as Presiding Judge, Regional Trial Court, 7th Judicial
District, Branch XII, Cebu City; and JOHN UY, respondents.

DECISION
PUNO, J.:

This is a Petition for Certiorari assailing the Order[1] of public respondent directing her to
file an Answer to the Complaint for a Sum of Money with Damages filed by private
respondent after denying her Motion to Dismiss.[2]
There is no dispute as to the following relevant facts:
Private respondent filed a Complaint for a Sum of Money and Damages against
petitioner which reads:

REPUBLIC OF THE PHILIPPINES

COURT OF FIRST INSTANCE OF CEBU

14th Judicial District

BRANCH ____

MR. JOHN UY, Proprietor of Cebu

Textar Auto Supply,

Plaintiff,

- versus - CIVIL CASE NO. R-21968

For: SUM OF MONEY AND DAMAGES

ESTATE OF CARLOS NGO as

represented by surviving

spouse Ms. SULPICIA VENTURA,

Defendant.

Oo - - - - - - - - - - - - - - - - - - - - - - - -///

COMPLAINT

PLAINTIFF, thru counsel, unto this Honorable Court, most respectfully states that:

1. He is of legal age, Filipino and proprietor of Cebu Textar Auto Supply whose
postal address is at 177 Leon Kilat St., Cebu City, while the defendant is an estate
of Carlos Ngo as represented by surviving spouse Ms. Sulpicia Ventura with
residence and postal address at-Back [sic] of Chong Hua Hospital, Cebu City
where summons and other processes of the Court could be effected;

2. During the lifetime of Carlos Ngo he was indebted with the plaintiff in the
amount of P48,889.70 as evidenced by the hereto attached statement marked as
Annexes A and A-1 which account was obtained by him for the benefit of his
family;

3. Said obligation is already due and demandable and the defendant thru Ms.
Ventura who is ostensibly taking care of the properties/estate of deceased Carlos
Ngo, refused, failed and neglected and still continues to refuse, fail and neglect to
pay despite repeated demands;

4. As a consequence of the refusal to pay the plaintiff was compelled to retain the
services of counsel with whom he contracted to pay P10,000.00 as attorney's
fees. Upon institution of this complaint, he has further incurred initial litigation
expenditures in the sum of P4,000.00.

WHEREFORE, this Honorable Court is most respectfully prayed to render

judgment for the plaintiff by-
1. Ordering the defendant to pay the plaintiff the sum of P48,889.70 plus interest
until the obligation is fully paid;

2. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as

attorney's fees plus P4,000.00 as reimbursement of the initial litigation
expenditures.

FURTHER plaintiff prays for such other relief or remedy in accordance with law,
justice and equity.

Cebu City, Philippines, March 29, 1982.

x x x[3]

Petitioner moved to dismiss the foregoing complaint on the ground that the estate of
Carlos Ngo has no legal personality, the same being neither a natural nor legal person in
contemplation of law[4]
In his Opposition to Motion to Dismiss,[5] petitioner insisted that since the money claim
subject of this case actually represents the costs of automotive spare parts/replacements
contracted by deceased Carlos Ngo during his lifetime for the benefit/business of the family x
x x the conjugal partnership x x x shall be accountable for the payment
thereof.[6] Subsequently, private respondent's counsel manifested that he is poised to amend
the complaint in order to state the correct party defendant that he intends to sue in this
case[7]. The public respondent gave private respondent fifteen (15) days to make the
amendment.
Petitioner filed a Motion for Reconsideration[8] of the order of public respondent
permitting private respondent to amend his complaint. First, she argued that the action
instituted by the private respondent to recover P48,889.70, representing the unpaid price of
the automotive spare parts purchased by her deceased husband during his lifetime, is a money
claim which, under Section 21, Rule 3 of the Revised Rules of Court, does not survive, the
same having been filed after Carlos Ngo had already died. Second, she claimed that the
public respondent never acquired jurisdiction over the subject matter of the case which, being
an action to recover a sum of money from a deceased person, may only be heard by a probate
court.
Private respondent opposed the foregoing motion.[9] He insisted that petitioner, being the
wife of the deceased Carlos Ngo, is liable to pay the obligation which benefited their family.
Public respondent issued an Order giving private respondent twenty four (24) hours to
file his amended complaint so that the Court can determine for itself whether there is really a
cause of action against the defendant who would be substituted to the Estate of Carlos Ngo,
considering that it would seem from the arguments of counsel for plaintiff x x x that the debt
incurred by the deceased Carlong [sic] Ngo was in behalf of the conjugal partnership so that
the wife of Carlos Ngo might be liable to pay the obligation.[10]
Private respondent then filed his Amended Complaint[11] with the new allegations
underscored therein as follows:

REPUBLIC OF THE PHILIPPINES

 COURT OF FIRST INSTANCE OF CEBU

14th Judicial District

BRANCH XII

MR. JOHN UY, Proprietor of Cebu

Textar Auto Supply,

Plaintiff,

- versus - CIVIL CASE NO. R-21968

For: SUM OF MONEY AND

MS. SULPICIA VENTURA, DAMAGES

Defendant.

Oo - - - - - - - - - - - - - - - - - - - - - - -x

AMENDED COMPLAINT

PLAINTIFF thru counsel, unto this Honorable Court most respectfully states that:

1. x x x

2. During the lifetime of Carlos Ngo he and his wife, the defendant herein are
indebted with the plaintiff in the amount of P48,889.70 as evidenced by the hereto
attached statement marked as Annexes A and A-1 which account was obtained for
the benefit of their family and is being confirmed by their son Roy Ngo per his
signature marked as Annex A-2;

3. x x x

4. For several times, the defendant had concealed herself in her house when the
plaintiff's representative went to her residence to collect payment of the said
account;

5. x x x

x x x.[12]

Petitioner filed a Comment to Plaintiff's Amended Complaint.[13] She reiterated that

whether the unsecured debt was contracted by her husband alone or as a charge against the
conjugal partnership of gains, it cannot be denied that her husband was now deceased, the
said debt does not survive him, the conjugal partnership of gains is terminated upon the death
of one of the spouses, and the debts and charges against the conjugal partnership of gains
may only be paid after an inventory is made in the appropriate testate or intestate proceeding.
Private respondent filed a Rejoinder to Defendant's Comment.[14] He countered that the
defendant in his amended complaint was now petitioner and that she was not deceased, hence
the inapplicability of the legal rules on the abatement of money claims in case the defendant
dies pending their prosecution.
Public respondent issued the herein assailed order which reads as follows:

ORDER

This case is called today to deal on the motion for reconsideration of the order of
this Court dated November 16, 1982 denying the motion of the defendant to
dismiss the complaint.

In its order of November 16, 1982, the Court in the interest of justice advised the
plaintiff to make the proper amendment so that the proper party defendant may be
impleaded considering that the motion to dismiss then was anchored on the ground
that the estate of Carlos Ngo was not a natural nor juridical person, hence it could
not be sued. On December 23, 1982, the plaintiff amended its complaint and this
time the defendant is already Sulpicia Ventura. The defendant now argues that
even the amended complaint would show that this is really a collection of a debt of
the conjugal partnership of deceased Carlong [sic] Ngo and his wife.

Perusing the amended complaint, the Court finds that in Paragraph 2 the allegation
states: During the lifetime of Carlos Ngo, he and his wife, the defendant, are
indebted with the plaintiff in the amount of P48,689.70, (sic) etc., so that the
indebtedness was incurred by Carlos Ngo and defendant Sulpicia Ventura and
since Carlos Ngo is now dead that will not preclude the plaintiff from filing a case
against the living defendant, Sulpicia Ventura.

WHEREFORE, the motion for reconsideration is hereby DENIED and the

defendant may file her answer within fifteen (15) days from today.

IT IS SO ORDERED.[15]

Petitioner scurried to this Court praying that the foregoing order of the public respondent
be set aside and the amended complaint of private respondent, ordered dismissed.[16]
We grant the petition.
First. Sec. 1, Rule 3 of the Revised Rules of Court provided that only natural or judicial
persons, or entities authorized by law may be parties in a civil action. This was the rule in
1982 at the time that private respondent filed his complaint against petitioner. In 1997, the
rules on civil procedure were revised, but Sec. 1, Rule 3 remained largely unaltered, except
for the change of the word, judicial to juridical.
 Parties may be either plaintiffs or defendants. The plaintiff in an action is the party
complaining, and a proper party plaintiff is essential to confer jurisdiction on the court.[17] In
order to maintain an action in a court of justice, the plaintiff must have an actual legal
existence, that is, he, she or it must be a person in law and possessed of a legal entity as either
a natural or an artificial person, and no suit can be lawfully prosecuted save in the name of
such a person.[18]
The rule is no different as regards party defendants. It is incumbent upon a plaintiff,
when he institutes a judicial proceeding, to name the proper party defendant to his cause of
action.[19] In a suit or proceeding in personam of an adversary character, the court can acquire
no jurisdiction for the purpose of trial or judgment until a party defendant who actually or
legally exists and is legally capable of being sued, is brought before it.[20] It has even been
held that the question of the legal personality of a party defendant is a question of substance
going to the jurisdiction of the court and not one of procedure.[21]
The original complaint of petitioner named the estate of Carlos Ngo as represented by
surviving spouse Ms. Sulpicia Ventura as the defendant. Petitioner moved to dismiss the
same on the ground that the defendant as named in the complaint had no legal
personality. We agree.
Neither a dead person nor his estate may be a party plaintiff in a court action. A deceased
person does not have such legal entity as is necessary to bring action so much so that a
motion to substitute cannot lie and should be denied by the court.[22] An action begun by a
decedent's estate cannot be said to have been begun by a legal person, since an estate is not a
legal entity; such an action is a nullity and a motion to amend the party plaintiff will not
likewise lie, there being nothing before the court to amend.[23] Considering that capacity to be
sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the
capacity to be sued and may not be named a party defendant in a court action.[24]
Second. It is clear that the original complaint of private respondent against the estate of
Carlos Ngo was a suit against Carlos Ngo himself who was already dead at the time of the
filing of said complaint. At that time, and this, private respondent admitted, no special
proceeding to settle his estate had been filed in court. As such, the trial court did not acquire
jurisdiction over either the deceased Carlos Ngo or his estate.
To cure this fatal defect, private respondent amended his original complaint. In his
amended complaint, private respondent deleted the estate of Carlos Ngo and named petitioner
as the defendant. When petitioner, in her comment to the amended complaint, reasoned that
the conjugal partnership of gains between her and Carlos Ngo was terminated upon the
latter's death and that the debt which he contracted, assuming it was a charge against the
conjugal property, could only be paid after an inventory is made in the appropriate testate or
intestate proceeding, private respondent simply reiterated his demand that petitioner pay her
husband's debt which, he insisted, redounded to the benefit of everyone in her family.
It is true that amendments to pleadings are liberally allowed in furtherance of justice, in
order that every case may so far as possible be determined on its real facts, and in order to
speed the trial of causes or prevent the circuitry of action and unnecessary expense.[25] But
amendments cannot be allowed so as to confer jurisdiction upon a court that never acquired it
in the first place.[26] When it is evident that the court has no jurisdiction over the person and
the subject matter and that the pleading is so fatally defective as not to be susceptible of
amendment, or that to permit such amendment would radically alter the theory and the nature
of the action, then the court should refuse the amendment of the defective pleading and order
the dismissal of the case.[27]
 Moreover, as correctly argued by petitioner, the conjugal partnership terminates upon the
death of either spouse.[28] After the death of one of the spouses, in case it is necessary to sell
any portion of the conjugal property in order to pay outstanding obligations of the
partnership, such sale must be made in the manner and with the formalities established by the
Rules of Court for the sale of the property of deceased persons.[29] Where a complaint is
brought against the surviving spouse for the recovery of an indebtedness chargeable against
said conjugal property, any judgment obtained thereby is void.[30] The proper action should be
in the form of a claim to be filed in the testate or intestate proceedings of the deceased
spouse.[31]
In many cases as in the instant one, even after the death of one of the spouses, there is no
liquidation of the conjugal partnership. This does not mean, however, that the conjugal
partnership continues.[32] And private respondent cannot be said to have no remedy. Under
Sec. 6, Rule 78 of the Revised Rules of Court, he may apply in court for letters of
administration in his capacity as a principal creditor of the deceased Carlos Ngo if after thirty
(30) days from his death, petitioner failed to apply for administration or request that
administration be granted to some other person.
WHEREFORE, the instant petition for certiorari is GRANTED. The Amended
Complaint filed by private respondent is HEREBY DISMISSED.
SO ORDERED.
Pardo, and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., (Chairman), and Kapunan, J., on official leave.
SECOND DIVISION

[G.R. No. 155043. September 30, 2004]

ARTURO R. ABALOS, petitioner, vs. DR. GALICANO S.

MACATANGAY, JR., respondent.

DECISION
TINGA, J.:

The instant petition seeks a reversal of the Decision of the Court of Appeals in
CA-G.R. CV No. 48355 entitled Dr. Galicano S. Macatangay, Jr. v. Arturo R. Abalos
and Esther Palisoc-Abalos, promulgated on March 14, 2002. The appellate court
reversed the trial courts decision which dismissed the action for specific performance
filed by respondent, and ordered petitioner and his wife to execute in favor of herein
respondent a deed of sale over the subject property.
Spouses Arturo and Esther Abalos are the registered owners of a parcel of land
with improvements located at Azucena St., Makati City consisting of about three
hundred twenty-seven (327) square meters, covered by Transfer Certificate of Title
(TCT) No. 145316 of the Registry of Deeds of Makati.
 Armed with a Special Power of Attorney dated June 2, 1988, purportedly issued
by his wife, Arturo executed a Receipt and Memorandum of Agreement (RMOA)
dated October 17, 1989, in favor of respondent, binding himself to sell to respondent
the subject property and not to offer the same to any other party within thirty (30)
days from date. Arturo acknowledged receipt of a check from respondent in the
amount of Five Thousand Pesos (P5,000.00), representing earnest money for the
subject property, the amount of which would be deducted from the purchase price of
One Million Three Hundred Three Hundred Thousand Pesos
(P1,300,000.00). Further, the RMOA stated that full payment would be effected as
soon as possession of the property shall have been turned over to respondent.
Subsequently, Arturos wife, Esther, executed a Special Power of Attorney dated
October 25, 1989, appointing her sister, Bernadette Ramos, to act for and in her
behalf relative to the transfer of the property to respondent. Ostensibly, a marital
squabble was brewing between Arturo and Esther at the time and to protect his
interest, respondent caused the annotation of his adverse claim on the title of the
spouses to the property on November 14, 1989.
On November 16, 1989, respondent sent a letter to Arturo and Esther informing
them of his readiness and willingness to pay the full amount of the purchase price.
The letter contained a demand upon the spouses to comply with their obligation to
turn over possession of the property to him. On the same date, Esther, through her
attorney-in-fact, executed in favor of respondent, a Contract to Sell the property to
the extent of her conjugal interest therein for the sum of six hundred fifty thousand
pesos (P650,000.00) less the sum already received by her and Arturo. Esther
agreed to surrender possession of the property to respondent within twenty (20)
days from November 16, 1989, while the latter promised to pay the balance of the
purchase price in the amount of one million two hundred ninety thousand pesos
(P1,290,000.00) after being placed in possession of the property. Esther also
obligated herself to execute and deliver to respondent a deed of absolute sale upon
full payment.
In a letter dated December 7, 1989, respondent informed the spouses that he
had set aside the amount of One Million Two Hundred Ninety Thousand Pesos
(P1,290,000.00) as evidenced by Citibank Check No. 278107 as full payment of the
purchase price. He reiterated his demand upon them to comply with their obligation
to turn over possession of the property. Arturo and Esther failed to deliver the
property which prompted respondent to cause the annotation of another adverse
claim on TCT No. 145316. On January 12, 1990, respondent filed a complaint for
specific performance with damages against petitioners.Arturo filed his answer to the
complaint while his wife was declared in default.
The Regional Trial Court (RTC) dismissed the complaint for specific
performance. It ruled that the Special Power of Attorney (SPA) ostensibly issued by
Esther in favor of Arturo was void as it was falsified.Hence, the court concluded that
the SPA could not have authorized Arturo to sell the property to respondent. The trial
court also noted that the check issued by respondent to cover the earnest money
was dishonored due to insufficiency of funds and while it was replaced with another
check by respondent, there is no showing that the second check was issued as
payment for the earnest money on the property.
 On appeal taken by respondent, the Court of Appeals reversed the decision of
the trial court. It ruled that the SPA in favor of Arturo, assuming that it was void,
cannot affect the transaction between Esther and respondent. The appellate court
ratiocinated that it was by virtue of the SPA executed by Esther, in favor of her sister,
that the sale of the property to respondent was effected. On the other hand, the
appellate court considered the RMOA executed by Arturo in favor of respondent
valid to effect the sale of Arturos conjugal share in the property.
Dissatisfied with the appellate courts disposition of the case, petitioner seeks a
reversal of its decision alleging that:
I.

The Court of Appeals committed serious and manifest error when it decided on the
appeal without affording petitioner his right to due process.
II.

The Court of Appeals committed serious and manifest error in reversing and
setting aside the findings of fact by the trial court.
III.

The Court of Appeals erred in ruling that a contract to sell is a contract of sale, and
in ordering petitioner to execute a registrable form of deed of sale over the
property in favor of respondent. [1]

Petitioner contends that he was not personally served with copies of summons,
pleadings, and processes in the appeal proceedings nor was he given an opportunity
to submit an appellees brief. He alleges that his counsel was in the United
States from 1994 to June 2000, and he never received any news or communication
from him after the proceedings in the trial court were terminated. Petitioner submits
that he was denied due process because he was not informed of the appeal
proceedings, nor given the chance to have legal representation before the appellate
court.
We are not convinced. The essence of due process is an opportunity to be
heard. Petitioners failure to participate in the appeal proceedings is not due to a
cause imputable to the appellate court but because of petitioners own neglect in
ascertaining the status of his case. Petitioners counsel is equally negligent in failing
to inform his client about the recent developments in the appeal proceedings. Settled
is the rule that a party is bound by the conduct, negligence and mistakes of his
counsel.[2] Thus, petitioners plea of denial of due process is downright baseless.
Petitioner also blames the appellate court for setting aside the factual findings of
the trial court and argues that factual findings of the trial court are given much weight
and respect when supported by substantial evidence. He asserts that the sale
between him and respondent is void for lack of consent because the SPA
purportedly executed by his wife Esther is a forgery and therefore, he could not have
validly sold the subject property to respondent.
 Next, petitioner theorizes that the RMOA he executed in favor of respondent was
not perfected because the check representing the earnest money was dishonored.
He adds that there is no evidence on record that the second check issued by
respondent was intended to replace the first check representing payment of earnest
money.
Respondent admits that the subject property is co-owned by petitioner and his
wife, but he objects to the allegations in the petition bearing a relation to the
supposed date of the marriage of the vendors. He contends that the alleged date of
marriage between petitioner and his wife is a new factual issue which was not raised
nor established in the court a quo. Respondent claims that there is no basis to annul
the sale freely and voluntarily entered into by the husband and the wife.
The focal issue in the instant petition is whether petitioner may be compelled to
convey the property to respondent under the terms of the RMOA and the Contract to
Sell. At bottom, the resolution of the issue entails the ascertainment of the
contractual nature of the two documents and the status of the contracts contained
therein.
Contracts, in general, require the presence of three essential elements: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the
contract; and (3) cause of the obligation which is established.[3]
Until the contract is perfected, it cannot, as an independent source of obligation,
serve as a binding juridical relation.[4] In a contract of sale, the seller must consent to
transfer ownership in exchange for the price, the subject matter must be
determinate, and the price must be certain in money or its equivalent. [5] Being
essentially consensual, a contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract and upon the
price.[6] However, ownership of the thing sold shall not be transferred to the vendee
until actual or constructive delivery of the property.[7]
On the other hand, an accepted unilateral promise which specifies the thing to
be sold and the price to be paid, when coupled with a valuable consideration distinct
and separate from the price, is what may properly be termed a perfected contract of
option.[8] An option merely grants a privilege to buy or sell within an agreed time and
at a determined price. It is separate and distinct from that which the parties may
enter into upon the consummation of the option. [9] A perfected contract of option does
not result in the perfection or consummation of the sale; only when the option is
exercised may a sale be perfected.[10] The option must, however, be supported by a
consideration distinct from the price.[11]
Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the property to
respondent for a price certain within a period of thirty days. The RMOA does not
impose upon respondent an obligation to buy petitioners property, as in fact it does
not even bear his signature thereon. It is quite clear that after the lapse of the thirty-
day period, without respondent having exercised his option, Arturo is free to sell the
property to another. This shows that the intent of Arturo is merely to grant
respondent the privilege to buy the property within the period therein stated. There is
nothing in the RMOA which indicates that Arturo agreed therein to transfer
ownership of the land which is an essential element in a contract of
sale. Unfortunately, the option is not binding upon the promissory since it is not
supported by a consideration distinct from the price.[12]
 As a rule, the holder of the option, after accepting the promise and before he
exercises his option, is not bound to buy. He is free either to buy or not to buy
later. In Sanchez v. Rigos[13] we ruled that in an accepted unilateral promise to sell,
the promissor is not bound by his promise and may, accordingly, withdraw it, since
there may be no valid contract without a cause or consideration. Pending notice of its
withdrawal, his accepted promise partakes of the nature of an offer to sell which, if
acceded or consented to, results in a perfected contract of sale.
Even conceding for the nonce that respondent had accepted the offer within the
period stated and, as a consequence, a bilateral contract of purchase and sale was
perfected, the outcome would be the same. To benefit from such situation,
respondent would have to pay or at least make a valid tender of payment of the price
for only then could he exact compliance with the undertaking of the other
party.[14] This respondent failed to do. By his own admission, he merely informed
respondent spouses of his readiness and willingness to pay. The fact that he had set
aside a check in the amount of One Million Two Hundred Ninety Thousand Pesos
(P1,290,000.00) representing the balance of the purchase price could not help his
cause. Settled is the rule that tender of payment must be made in legal tender. A
check is not legal tender, and therefore cannot constitute a valid tender of
payment.[15] Not having made a valid tender of payment, respondents action for
specific performance must fail.
With regard to the payment of Five Thousand Pesos (P5,000.00), the Court is of
the view that the amount is not earnest money as the term is understood in Article
1482 which signifies proof of the perfection of the contract of sale, but merely a
guarantee that respondent is really interested to buy the property. It is not the giving
of earnest money, but the proof of the concurrence of all the essential elements of
the contract of sale which establishes the existence of a perfected sale. [16] No
reservation of ownership on the part of Arturo is necessary since, as previously
stated, he has never agreed to transfer ownership of the property to respondent.
Granting for the sake of argument that the RMOA is a contract of sale, the same
would still be void not only for want of consideration and absence of respondents
signature thereon, but also for lack of Esthers conformity thereto. Quite glaring is the
absence of the signature of Esther in the RMOA, which proves that she did not give
her consent to the transaction initiated by Arturo. The husband cannot alienate any
real property of the conjugal partnership without the wifes consent.[17]
However, it was the Contract to Sell executed by Esther through her attorney-in-
fact which the Court of Appeals made full use of. Holding that the contract is valid,
the appellate court explained that while Esther did not authorize Arturo to sell the
property, her execution of the SPA authorizing her sister to sell the land to
respondent clearly shows her intention to convey her interest in favor of respondent.
In effect, the court declared that the lack of Esthers consent to the sale made by
Arturo was cured by her subsequent conveyance of her interest in the property
through her attorney-in-fact.
We do not share the ruling.
The nullity of the RMOA as a contract of sale emanates not only from lack of
Esthers consent thereto but also from want of consideration and absence of
respondents signature thereon. Such nullity cannot be obliterated by Esthers
subsequent confirmation of the putative transaction as expressed in the Contract to
Sell. Under the law, a void contract cannot be ratified [18] and the action or defense for
the declaration of the inexistence of a contract does not prescribe.[19] A void contract
produces no effect either against or in favor of anyoneit cannot create, modify or
extinguish the juridical relation to which it refers.[20]
True, in the Contract to Sell, Esther made reference to the earlier RMOA
executed by Arturo in favor of respondent. However, the RMOA which Arturo signed
is different from the deed which Esther executed through her attorney-in-fact. For
one, the first is sought to be enforced as a contract of sale while the second is
purportedly a contract to sell only. For another, the terms and conditions as to the
issuance of title and delivery of possession are divergent.
The congruence of the wills of the spouses is essential for the valid disposition of
conjugal property. Where the conveyance is contained in the same document which
bears the conformity of both husband and wife, there could be no question on the
validity of the transaction. But when there are two documents on which the
signatures of the spouses separately appear, textual concordance of the documents
is indispensable. Hence, in this case where the wifes putative consent to the sale of
conjugal property appears in a separate document which does not, however, contain
the same terms and conditions as in the first document signed by the husband, a
valid transaction could not have arisen.
Quite a bit of elucidation on the conjugal partnership of gains is in order.
Arturo and Esther appear to have been married before the effectivity of the
Family Code. There being no indication that they have adopted a different property
regime, their property relations would automatically be governed by the regime of
conjugal partnership of gains.[21]
The subject land which had been admittedly acquired during the marriage of the
spouses forms part of their conjugal partnership.[22]
Under the Civil Code, the husband is the administrator of the conjugal
partnership. This right is clearly granted to him by law.[23] More, the husband is the
sole administrator. The wife is not entitled as of right to joint administration.[24]
The husband, even if he is statutorily designated as administrator of the conjugal
partnership, cannot validly alienate or encumber any real property of the conjugal
partnership without the wifes consent.[25]Similarly, the wife cannot dispose of any
property belonging to the conjugal partnership without the conformity of the husband.
The law is explicit that the wife cannot bind the conjugal partnership without the
husbands consent, except in cases provided by law.[26]
More significantly, it has been held that prior to the liquidation of the conjugal
partnership, the interest of each spouse in the conjugal assets is inchoate, a mere
expectancy, which constitutes neither a legal nor an equitable estate, and does not
ripen into title until it appears that there are assets in the community as a result of
the liquidation and settlement. The interest of each spouse is limited to the net
remainder or remanente liquido (haber ganancial) resulting from the liquidation of the
affairs of the partnership after its dissolution.[27] Thus, the right of the husband or wife
to one-half of the conjugal assets does not vest until the dissolution and liquidation of
the conjugal partnership, or after dissolution of the marriage, when it is finally
determined that, after settlement of conjugal obligations, there are net assets left
which can be divided between the spouses or their respective heirs. [28]
 In not a few cases, we ruled that the sale by the husband of property belonging
to the conjugal partnership without the consent of the wife when there is no showing
that the latter is incapacitated is void ab initio because it is in contravention of the
mandatory requirements of Article 166 of the Civil Code.[29] Since Article 166 of the
Civil Code requires the consent of the wife before the husband may alienate or
encumber any real property of the conjugal partnership, it follows that acts or
transactions executed against this mandatory provision are void except when the law
itself authorizes their validity.[30]
Quite recently, in San Juan Structural and Steel Fabricators, Inc. v. Court of
Appeals,[31] we ruled that neither spouse could alienate in favor of another, his or her
interest in the partnership or in any property belonging to it, or ask for partition of the
properties before the partnership itself had been legally dissolved. Nonetheless,
alienation of the share of each spouse in the conjugal partnership could be had after
separation of property of the spouses during the marriage had been judicially
decreed, upon their petition for any of the causes specified in Article 191[32] of the Civil
Code in relation to Article 214[33] thereof.
As an exception, the husband may dispose of conjugal property without the wifes
consent if such sale is necessary to answer for conjugal liabilities mentioned in
Articles 161 and 162 of the Civil Code.[34] InTinitigan v. Tinitigan, Sr.,[35] the Court ruled
that the husband may sell property belonging to the conjugal partnership even
without the consent of the wife if the sale is necessary to answer for a big conjugal
liability which might endanger the familys economic standing. This is one instance
where the wifes consent is not required and, impliedly, no judicial intervention is
necessary.
Significantly, the Family Code has introduced some changes particularly on the
aspect of the administration of the conjugal partnership. The new law provides that
the administration of the conjugal partnership is now a joint undertaking of the
husband and the wife. In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal partnership, the other
spouse may assume sole powers of administration. However, the power of
administration does not include the power to dispose or encumber property
belonging to the conjugal partnership.[36] In all instances, the present law specifically
requires the written consent of the other spouse, or authority of the court for the
disposition or encumbrance of conjugal partnership property without which, the
disposition or encumbrance shall be void.[37]
Inescapably, herein petitioners action for specific performance must fail. Even on
the supposition that the parties only disposed of their respective shares in the
property, the sale, assuming that it exists, is still void for as previously stated, the
right of the husband or the wife to one-half of the conjugal assets does not vest until
the liquidation of the conjugal partnership. Nemo dat qui non habet. No one can give
what he has not.
WHEREFORE, the appealed Decision is hereby REVERSED and SET
ASIDE. The complaint in Civil Case No. 90-106 of the Regional Trial Court of Makati
is ordered DISMISSED. No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, and Callejo, Sr., JJ., concur.
 Chico-Nazario, J., on leave.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-48137 October 4, 1943

In re testate estate of NARCISO A. PADILLA.

CONCEPCION PATERNO VDA. DE PADILLA, widow-appellee,
vs.
ISABEL BIBBY VDA. DE PADILLA, executrix-appellant.

BOCOBO, J.:

This case is an incident of the settlement of the testate estate of the late Narciso A. Padilla. In
order that his property may be divided according to his last will and testament, it is necessary first
to liquidate the conjugal partnership. It was in connection with such liquidation that the widow,
Concepcion Paterno Vda. de Padilla, commenced the instant proceedings by filing a petition
wherein she prayed, inter alia, that her paraphernal property be segregated from the inventoried
estate and delivered to her together with the corresponding reimbursements and indemnities;
that she be given one-half of the conjugal partnership property; and that her usufructuary right
over one-half of the portion pertaining to the heir instituted in the will be recognized. The Court of
First Instance of Manila rendered judgment declaring certain pieces of real estate and jewelry as
well as certain sums of money to be paraphernal, and ordering the same to be delivered to the
widow (appellee herein). The trial court's judgment, as amended, reads:

En vista de los hechos y consideraciones que preceden, el Juzgado dicta sentencia y

declara:

(a) Que todos los bienes que constan en el inventario, y sobre los cuales no se ha
suscitado controversia por las partes, son bienes gananciales;

(b) Que se nombran tres (3) Comisionados, uno a recomendacion de la heredera

instituida en el testamento, otro a recomendacion de Da. Concepcion Paterno Vda. de
Padilla, y el tercero por el Juzgado, para que se hagan cargo de avaluar las fincas o
partes de fincas que se deben justipreciar de conformidad con las conclusiones sentadas
en esta decision hagan las computaciones correspondientes a fin de determinar el
remanente liquido de la sociedad de gananciales, tomando por base los precios
calculados y avaluados sobre dichos bienes, y dividan por mitad el remanente liquido
entre Da. Concepcion Paterno Vda. de Padilla, y la heredera testamentaria Da. Isabel
Bibby Vda. de Padilla, especificando los bienes que a cada una debe corresponder;

(c) Que pagadas todas las deudas de la sociedad de gananciales, dichos comisionados
procederan a dividir en tres partes los bienes que deben corresponder al difunto, a fin de
que las dos terceras partes sean adjudicadas a la heredera testamentaria en pleno
dominio, y la otra tercera parte en nuda propiedad a la misma heredera testamentaria y
en usufructo a la viuda Concepcion Paterno mientras ella viva. law phil.net

(d) Que los gastos en que incurra esta Testamentaria por los servicios de los
Comisionados se paguen por ambas partes, por mitad.
From the foregoing judgment the testator's mother and instituted heir, Isabel Bibby Vda. de
Padilla, appeals.

The value in controversy being over P50,000, we have reviewed the evidence. After a careful
examination of the oral and documentary proof, we find no error in the findings of fact made by
the trial court. From the evidence it appears that Narciso A. Padilla and Concepcion Paterno
were married on December 12, 1912. The husband, who was a medical student, contributed a
small capital to the conjugal partnership at the time of the marriage. The wife, on the other hand,
brought to the marriage considerable property in real estate, jewelry and cash. Practically all of
the conjugal partnership property came from the fruits of the paraphernal property. The conjugal
partnership lasted twenty-one years, the husband having died on February 12, 1934. (The wife
also died recently, during the pendency of this appeal, but in this decision she is referred to as if
still living.) The common fortune, consisting of real and personal property, is fairly large. The
husband, who left no children, executed a will giving his whole estate to his mother, Isabel Bibby
Vda. de Padilla, appellant herein. The property included in the inventory is appraised at
P261,000. Seven pieces of real estate are in controversy in this case. The remaining ten real
properties left by the deceased husband admittedly pertain to the conjugal partnership.

A thorough study of the evidence convinces us that the trial court was right in finding that the
following properties in Manila are paraphernal: (1) the lot at 305 Arquiza Street and the
demolished improvements; (2) the lot at 1393-1409 Juan Luna Street and the improvements that
had been torn down; (3) the lot and improvements (except the building constructed during the
marriage for P4,000) at 401-407 Camba Street; (4) the lot at 613-631 and 634-636 Martin
Ocampo Street, with the original "accesorias" and a camarin which was destroyed in order that
new "accesorias" might be constructed, these new "accesorias" being of the conjugal
partnership; (5) the property at 620-A-H Callejon De la Fe; (6) one-half of the property at 631
Regidor Street; and (7) nine twenty-ninths (9/29) of the property at 302-306 R. Hidalgo Street.

We also agree with the finding of the lower court that certain jewels, namely: two pairs of ear-
rings, a bracelet, and a gold watch, belong to the widow.

In like manner, we see no error in the following findings of the trial court: (1) that the husband
borrowed P7,000 from the wife to meet his personal obligations; and (2) that the amount of
P21,046.52 (the remainder of P66,046.52) received by the wife during the marriage was
commingled with the conjugal partnership funds.

II

Several questions of law are raised in the present appeal. We shall discuss them one by one.

1. The first legal controversy is on a sort of no-man's land where many a legal battle has been
fought. The issue is, How far is a Torrens title conclusive and incontestable? Various
manifestations of this legal question have been decided by the courts, and while certain of its
aspects may still be doubtful, we are persuaded, however, that there can be no doubt, as will
presently be shown, that what appears in the Torrens certificate in this case is neither final nor
incontrovertible.

Appellant contends that because certain of these real estates (on Camba, Martin Ocampo and
Regidor Streets) have been registered in the names of both spouses, Narciso Padilla and
Concepcion Paterno de Padilla, and considering the presumption in Art. 1407 of the Civil Code,
these properties must be held to be of the conjugal partnership. The trial court, however, found
that the whole purchase price of the Camba and Martin Ocampo properties, and one-half of the
purchase price of the Regidor property, were from the wife's exclusive funds, and therefore the
whole of the original Camba and Ocampo estates and one-half of the Regidor realty must be
adjudged paraphernal, in spite of the fact that the certificates of title are in the names of both
spouses.

There is nothing sacrosanct and definitive in the certificate of title when the conjugal partnership
is liquidated. The true and real owner may be shown whether it be the husband, or the wife, or
both. Thus, in Flores vs. Flores, 48 Phil. 288, this Court held that property acquired during the
marriage but registered in the husband's name still belonged to the conjugal partnership. A
similar ruling was announced when the real estate was registered in the wife's name. Romero vs.
Sheriff, 53 Phil., 51. But the appellant maintains that the converse is not true; and that even if
evidence is admissible to alter the conjugal character of the property, such evidence must be
clear, strong and convincing (citing Art 1407, Civil Code, and Ahern vs. Julian, 39 Phil., 607).

We are of the opinion that an exception should in no wise be made when the property is
registered in the names of both spouses. In such instances, the property may be shown to be
really of either spouse, though recorded in the names of both. The underlying reason is the same
in all cases, which is the confidential relation between husband and wife. Because of the feelings
of trust existing between the spouses, certificates of title are often secured in the name of both,
or of either, regardless of the true ownership of the property, and 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.
(See Severino vs. Severino, 44 Phil., 343). It is because a certificate of title under the Torrens
system should not be turned into an instrument for deprivation of ownership. The Torrens plan,
created to protect dominion, is not a Frankenstein that destroys this very dominion. A trust,
deriving its strength from confidence, which runs though with the woof and warp of the social
fabric, does not lose that character on the plea that a Torrens certificate of title is conclusive. It is
meet and seemly that this should be so, for any rule that permits the violation of a fiduciary duty
would be a reproach to any legal system. These observations apply with peculiar force to the
relations between husband and wife. In a normal marriage, the spouses trust each other so
implicitly that they attach little or no importance to what appears in legal documents, fully and
unreservedly believing that no technicality would be availed of to claim what in very truth pertains
to one or the other. Things would indeed come to a sorry pass if the jurisprudence of this country
should harbor any theory which would impair this intimate reliance, this unquestioning loyalty,
this befitting faith between husband and wife.

There is another reason why evidence of the nature of any property as paraphernal should be
allowed, despite the Torrens certificate. It is this: the manager of the conjugal partnership is the
husband. He may, without let or hindrance, deal with and dispose of any property appearing in
the names of both spouses, even if the property should really be paraphernal. In the course of
years, any such property may have been sold, transformed or substituted. Upon liquidation of the
conjugal partnership, to forbid an investigation of the true source of the purchase price of the
original property, after many years of marriage, would make liquidation a mockery, for it would be
well nigh impossible to trace and identity the paraphernal property. The law positively ordains
that the wife's property (dowry and paraphernal) should be returned, even before the payment of
the debts of the conjugal partnership (Art. 1421 and 1422, Civil Code). But how can this mandate
of the law be complied with when the means to that end are withheld and forbidden?

As for the appellants proposition that the evidence to rebut the Torrens certificates and the legal
presumption in favor of the conjugal partnership (Art. 1407) should be clear, strong and
convincing, we find that the proof, both oral and documentary, in the record is more than
sufficient to offset and counteract the certificates of title and the presumption of law.

2. The second legal inquiry is the interpretation of Article 1404, par. 2, Civil Code: whether the
value of the paraphernal land to be reimbursed to the wife is that obtaining at the time of the
liquidation of the conjugal partnership. With conjugal funds the husband constructed buildings on
the wife's lots on Arquiza, Juan Luna, Camba and Martin Ocampo streets. The court a
quo ordered that the value of the lots occupied by these constructions, to be paid to the widow,
should be that prevailing at the time of the liquidation of the conjugal partnership.

Appellant claims such pronouncement of the trial court to be erroneous because from the time of
the construction of the buildings, the conjugal partnership became the owner of the whole
property (lot and building) in each instance, and therefore the subsequent increase in value
should accrue to the conjugal partnership, and any depreciation should be suffered by the
partnership.

Article 1404, Civil Code, provides:

Las expensas utiles hechas en los beines peculiares de cualquiera de los conyuges
mediante anticipaciones de la sociedad o por la industria del marido o de la mujer, son
ganaciales.

Los seran tambien los edificios construidos durante el matrimonio en suelo propio de uno
de los conyuges abonandose el valor del suelo al conyuge a quien pertenezca.

Appellant's theory is untenable. The ownership of the land is retained by the wife until she is paid
the value of the lot, as a result of the liquidation of the conjugal partnership. The mere
construction of a building from common funds does not automatically convey the ownership of
the wife's land to the conjugal partnership. Such a mode of using the land, namely, by erecting a
building thereon, is simply an exercise of the right of usufruct pertaining to the conjugal
partnership over the wife's land. As Manresa says, "la sociedad de gananciales es realmente la
usufructuaria de los bienes privativos de cada conyuge." (Comment on Art. 1408.) In
consequence of this usufructuary right, the conjugal partnership is not bound to pay any rent
during the occupation of the wife's land because if the lot were leased to a third person, instead
of being occupied by the new construction from partnership funds, the rent from the third person
would belong to the conjugal partnership. Therefore, before payment of the value of the land is
made from the common funds, inasmuch as the owner of the land is the wife, all the increase or
decrease in its value must be for her benefit or loss. And when may she demand payment? Not
until the liquidation of the conjugal partnership because up to that time, it is neither necessary nor
appropriate to transfer to the partnership the dominion over the land, which is lawfully held in
usufruct by the conjugal partnership during the marriage.

The foregoing finds support, by analogy, in Article 361, Civil Code, which reads:

Art. 361. El dueo del terreno en que se edificare, sembrare o plantare de buena fe,
tendra derecho a hacer suya la obra, siembra o plantacion, previa
la indemnizacion establecida en los arts. 453 y 454, o a obligar al que fabrico o planto a
pagarle el precio del terreno, y al que sembro, la renta correspondiente. (Emphasis
supplied.)

In the instant case, no reimbursement for the value of the lots was made from the common funds
during the marriage.

Moreover, Sanchez Roman declares:

Los derechos de la muyer en la sociedad legal de gananciales se remiten todos a la

epoca de su disolucion y liquidacion, cuando se trata de la existencia normal de la
sociedad legal de gananciales. (Emphasis supplied.)

And Manresa states:

 El valor fijado a los bienes debe ser el que realmente tengan el dia de la disolucion de la
sociedad, con las necesarias aclaraciones, para conocer lo que pueda tener caracter
propio o ganancial. (Emphasis supplied).

Furthermore, the wife should not be allowed to demand payment of the lot during the marriage
and before liquidation because this would unduly disturb the husband's management of the
conjugal partnership. The scheme of the Civil Code is that in the interest of successful
administration of the common property, the wife should not interfere with the husband's way of
directing the affairs of the partnership. Besides, such premature requirement of the value making
improvements, whereas article 1404, par. 2, has for its purpose the encouragement of
construction by the husband. (Manresa's comment on Art. 1404.) On the other hand, if the
payment for the lot is deferred till the liquidation of the conjugal partnership, the initial outlay for
the erection of the building would be less, and consequently the construction would be facilitated.

3. The next question of law is whether the value of the paraphernal buildings which were
demolished to make possible the construction of new ones, at the expense of the conjugal
partnership, should be reimbursed to the wife. Such tearing down of buildings was done with
regard to the Arquiza, Juan Luna and Martin Ocampo properties. Appellant maintains that it is
doubtful if these buildings had any value at the time they were destroyed, and that there is no
evidence that the conjugal partnership realized any benefit therefrom. However, we are certain
these old buildings had some value, though small, and it will be the duty of the commissioners
mentioned in the judgment appealed from, to assess that value. We entertain no manner of
doubt that the conjugal partnership derived a positive advantage from the demolition, which
made it possible to erect new constructions for the partnership. It is but just, therefore, that the
value of the old buildings at the time they were torn down should be paid to the wife. We dismiss,
as without any merit whatever, the appellant's contention that because article 1404, par. 2, of the
Civil Code does not provide for the reimbursement of the value of demolished improvements, the
wife should not be indemnified. Suffice it to mention the ancient maxim of the Roman law, "Jure
nature aequum est, meminem cum alterius detrimento et injuria fieri locupletiorem" which was
restated by the Partidas in these terms: "Ninguno non deue enriquecerse tortizeramente con
dano de otro." When the statutes are silent or ambiguous, this is one of those fundamental
principles which the courts invoke in order to arrive at a solution that would respond to the
vehement urge of conscience.

4. Then, there is the total amount of P7,000 borrowed by the husband from the wife, thus
itemized: (1) P3,000 lost in horse-races and in poker; (2) P3,000 spent for pastime ("diversion");
and (3) P1,000 to pay a personal debt of the husband. The trial court applied article 1386 of the
Civil Code, and ordered that said amount of P7,000 be deducted from the husband's share. But
appellant's theory is that articles 1408 (par. 1) and 441 should govern, so that the amount is
chargeable against the conjugal partnership. These provisions read thus:

Art. 1408. Seran de cargo de la sociedad de gananciales:

1.o. Todas las deudas y obligaciones contraidas durantes el matrimonio por el marido, y
tabien las que contrajere la mujer en los casos en que pueda legalmente obligar a la
sociedad. . . .

Art. 1411. Lo perdido y pagado durante el matrimonio por alguno de los conyuges en
cualquier clase de juego, no disminuira su parte respectiva de los ganaciales. . . .

It is true that article 1385 ordains that the fruits of the paraphernal property form part of the
conjugal partnership and are subject to the payment of the charges against the marriage. But as
Manresa says, article 1386 contains a limitation on the first part (just cited) of article 1385.

It is likewise true that under article 1408, par. 1, all debts and obligations contracted by the
husband during the marriage are chargeable against the conjugal partnership, but article 1386 is
an exception to the rule, and exempts the fruits of the paraphernal property from the payment of
the personal obligations of the husband, unless there is proof that they redounded to the benefit
of the family. It is self-evident that the amounts in question did not benefit the family. Hence, they
cannot be charged against the fruits of the paraphernal property. They should be paid from the
husband's funds. We quote from Manresa's comment on article 1386:

No hay, desde luego, contradiccion entre los preceptos de los articulos 1408 y 1386; hay
solo una regla general contenida en aquel, y una excepcion contenida en este. El articulo
1386, como especial, modifica la regla, y ha de aplicarse siempre que las obligaciones
personales contraidas por el marido quieren hacerse efectivas en frutos o rentas de los
bienes parafernales de la mujer.

La frase 'obligaciones personales', se reduce a deudas u obligaciones contraidas

privativamente por el marido, deudas y obligaciones que son desde luego propiamente
personales o no reales, pues si se reclamase contra bienes o derecho especial y
legalmente efectos al cumplimiento de la obligacion, no podria haber inconveniente para
que esta se hiciese efectiva. Por lo demas, el espiritu del precepto es que el marido no
puede aprovecharse en interes proprio o para atenciones privativas o personales suyas,
de los frutos de los bienes parafernales; que estos se destinen a las verdaderas
necesidades y cargas de la sociedad conyugal, y, por tanto, se emplean, como deben,
en beneficio de la familia.

Valverde in his "Tratado de Derecho Civil Espaol," Vol. 4, pp. 347-348, says:

Consecuencia natural de esta especie de separacion de responsabilidades y de

patrimonios, es que el Codigo ordene que 'las obligaciones personales del marido no
podran hacerse efectivas sobre los frutos de los bienes parafernales, a menos que se
pruebe que redundaron en provecho de la familia'. En efecto, el marido, como
administrador de la sociedad legal, obliga a esta con sus actos, y por eso los
gananciales responden de las deudad y obligaciones contraidas por el marido durante el
matrimonio, presumiendose hechos en interes de la sociedad, a no ser que se pruebe lo
contrario, pero como caso de excepcion, si los gananciales son frutos de bienes
parafernales, entonces, para que respondan tales frutos de las obligaciones del marido,
es preciso que prueba este que las dichas obligaciones redundaron en provecho de la
familia, pues por el precepto del codigo, si los frutos de los parafernales son
gananciales, cuando de las deudad del marido se trata, solo son responsables esos
frutos en el caso que se demuestre que redundaron en provecho de aquella. (Emphasis
supplied.)

Oyuelos, in his work, "Digesto: Principios, Doctrina y Jurisprudencia Referentes al Codigo Civil
Espaol" (Vol. 6, pp. 79-80), has this to say:

(c) Fundamento de la exencion de los frutos. El articulo 1386 es un complemento de

los articulos 1385, 1408, 1413, 1417, 1433 y 1434, y se inspira en los mismos principios
economicos de la familia, porque si los frutos de los parafernales forman parte de la
sociedad conyugal, que subsiste mientras no se disuelva el matrimonio o se decrete la
separacion de bienes, y si a cargo de la misma corre el sostenimiento de la familia, la
educacion de los hijos y las deudas que el marido contraiga como jefe de ella, es logico
concluir, sobre todo teniendo presente el articulo 1385, que aun prescindiendo del texto
claro y terminante del articulo 1386, las responsabilidades del marido en tanto puedan
hacerse efectivas con los productos de dichos bienes en cuanto se hubiesen contraido
en provecho de la familia; no existiendo contradiccion entre los articulos 1386 y 1408,
numero 1.0 (alegada en el concepto de que el articulo 1386 no puede aplicarse al caso
de subsistencia del matrimonio), por cuanto la esfera de actuacion del 1386 no se
contrae al estado de derecho consiguiente a la separacion de bienes de los respectivos
esposos.
Is the amount under consideration, P7,000, being enforced against the fruits of the paraphernal
property? Yes, because practically all of the conjugal partnership assets have been derived from
the fruits of the wife's exclusive property.

In the case of Fidelity and Surety Co. vs. Ansaldo, 37 Off. Gaz., 1164, (promulgated November
26, 1938), this Court held:

Article 1386 of the Civil Code provides that the personal obligations of the husband may not be
paid out of the fruits of the paraphernal property, unless it be proved that such obligations
redounded to the benefit of the family. It, as contended by the appellant, the properties levied
upon in Civil Case No. 33923 of the Court of First Instance of Manila, entitled "Fidelity & Surety
Company of the Philippines Islands vs. Romarico Agcaoili and Angel A. Ansaldo" were acquired
with the fruits of the paraphernal properties belonging to Margarita Quintos, said properties,
although conjugal (art. 1385, par. 1 and art. 1408, Civil Code; Mirasol vs. Lim, 59 Phil., 701, 709)
are not liable for the personal obligations of the husband, unless said obligations redounded to
the benefit of the family. Paragraph 1 of article 1408 of the Civil Code makes all debts and
obligations contracted during the marriage by the husband chargeable against the conjugal
partnership, as a general rule, that is to say, although the fruits of the paraphernal property of the
wife are conjugal, they do not respond for the personal obligations of the latter unless said
obligations have redounded to the benefit of the family."

In the sentence of January 15, 1917, of the Supreme Tribunal of Spain, the following doctrine is
enunciated:

Considerando a mayor abundamiento que si bien en orden al regimen familiar y

conforme a la doctina legal establecida por el Tribunal Supremo, interpretando el art.
1385 del expresado Codigo, al marido incumbe exclusivamente la administracion de los
frutos de los bienes parafernales como parte del haber de la sociedad conyugal, esta
potsted esta condicionada y regulada por el 1386, al prohibir al esposo el
aprovechamiento de tales rendimientos en benficio propio o sea de sus obligaciones
personales,imponiendole por modo expreso, el deber de aplicarlos al levantamiento de
las cargas matrimoniales, pues de otra forma se desnaturalizaria la reserva y privilegio
que constituye el concepto del patrimonia parafernal, con riesgo de infringir la
disposicion legal que precede invocada. (Emphasis supplied.)

In the instant case, it is quite plain that if the amount of P7,000.00 under review should be
charged against the conjugal partnership property which came almost exclusively from the fruits
of the paraphernal property, the reservation and privilege established by law on behalf of the
paraphernal patrimony would be encroached upon and tempered with.

There are just and sound reasons for article 1386. The wife contributes the fruits, interests, and
rents of her paraphernal property to help bear the expenses of the family. When the husband
contracts any debt in his own name, it is chargeable against the conjugal partnership as a
general rule (article 1408, par. 1) because it is presumed that the debt is beneficial to the family.
But when such a debt is enforced against the fruits of the paraphernal property, such a
presumption no longer applies, considering article 1386. On the contrary, it must be proved that
the purpose for which the wife contributes the fruits of her paraphernal property has been
accomplished through such personal debt of the husband.

Appellant relies on article 1411 which reads:

Lo perdido y pagado por alguno de los conyuges en juego licito, sera a cargo de la
sociedad de gananciales.

Lo perdido y no pagado por alguno de los conyuges en juego licito, sera a cargo de la
sociedad de ganaciales.
But this provision should be applied only when the debt is not being charged against the fruits of
the paraphernal property. If the conjugal partnership assets are derived almost entirely, if not
entirely, from the fruits of the paraphernal property, as in this case, it is neither lawful nor
equitable to apply article 1411 because by so doing, the fruits of the paraphernal property would
in reality be the only kind of property to bear the husband's gambling losses. In other words, what
the husband loses in gambling should be shouldered by him and not by the conjugal partnership
if the latter's assets come solely from the fruits of the paraphernal property. This is but just,
because gambling losses of the husband cannot by any process of reasoning be considered
beneficial to the family. By the same token, to charge the gambling losses against the conjugal
partnership in such a situation would fly in the case of the stern prohibition of article 1386, which
protects the fruits of the paraphernal property precisely against expenses of the husband that are
of no help to the family.

We are satisfied that the foregoing is by and large a fair and rational interpretation of articles
1408 and 1411, which must be read in the light of article 1386. If such a qualification of articles
1408 and 1411 is not made, article 1386 becomes nugatory.

5. The next question is whether interest should be paid by the widow on the amount of P9,229.48
withdrawn by her from the Monte de Piedad savings account No. 3317 of the conjugal
partnership. There is no question that the principal should be credited to the partnership as the
appellee's counsel does not dispute this point. The withdrawal of said amount was made on April
7, 1934, about two months after the husband's death, and while the widow was a special
administratrix. There being no evidence in the record as to the purpose for which this amount
was used, although counsel for appellee suggests the possibility that the same might have been
disbursed for funeral and similar expenses, we believe she should pay such interest, if any, as
the Monte de Piedad would have paid on the amount aforesaid, had not the same been
withdrawn by the widow.

Wherefore, with the modification that the appellee shall pay such interest, if any, on P9,229.48 as
the Monte de Piedad would have paid if the amount had not been withdrawn, the judgment
appealed from should be and is hereby affirmed, with costs against the appellant. So ordered.

Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.

THIRD DIVISION

[G.R. No. 111547. January 27, 1997]

SPS. TRINIDAD S. ESTONINA and PAULINO ESTONINA, petitioners,

vs. COURT OF APPEALS, SPS. CELSO ATAYAN and NILDA
HICBAN and CONSUELO VDA. DE GARCIA, REMEDIOS,
ELVIRA, OFELIA, VIRGILIO, MARILOU, and LOLITA all
surnamed GARCIA, and HEIRS OF CASTOR GARCIA and of
SANTIAGO GARCIA, JR.,respondents.
RESOLUTION
FRANCISCO, J.:
 The instant controversy involves Lot C of the amended plan Psu-22983 Amd.,
situated in Barrio Santisima Cruz, Sta. Cruz, Laguna with an area of 273 square
meters. The said parcel of land was covered by Transfer Certificate of Title No. T-
19175 issued in the name of Santiago Garcia who died on October 2, 1967. Some
six years after Santiago Garcia's death, or on March 10, 1973, the then Court of First
Instance of Manila issued an order granting Trinidad Estonina's application for a writ
of preliminary attachment in Civil Case No. 88430 entitled "Trinidad Estonina et
al., plaintiffs-versus-Consuelo Garcia et al., defendants". Consequently, a notice of
attachment was inscribed as a memorandum of encumbrance at the back of TCT
No. T-19175 in favor of Trinidad Estonina covering all the rights, title, interest, and
participation that Consuelo Garcia, the widow of Santiago Garcia, may have in and
to the parcel of land covered by the said title.
As a result of a prior sale made by Santiago Garcia to Anselmo Balasoto of a
sixty square meter portion of the said parcel of land, TCT. No. T-19175 was
cancelled and in lieu thereof, TCT No. 77215 was issued on July 25, 1975 in the
name of Santiago Garcia covering the remaining 213 square meters. TCT No. 77215
was in turn cancelled on June 27, 1977 because of another sale purportedly made
during his lifetime by Santiago Garcia to his wife's niece, Ofelia Garcia, and TCT No.
82229 was issued in the name of the latter.
On August 14, 1977, the children of Santiago Garcia with his first wife, Adela
Isoreta, namely Ofelia, Remedios, Elvira and Castor, all surnamed Garcia, executed
a deed selling, transferring and conveying unto the spouses Celso Atayan and Nilda
Hicban (hereinafter referred to as the spouses Atayan for brevity) their "title, rights,
interest and participation which is four tenths (4/10) pro indiviso share" in the said
parcel of land covered by TCT No. T-82229. About a year after, Santiago Garcia's
second wife and widow, Consuelo Garcia and their children, Virgilio, Marilou and
Lolita, all surnamed Garcia, followed suit and also sold to the spouses Atayan, their
four-tenths (4/10) pro indiviso share in the same parcel of land. On February 22,
1980, Estrella R. Garcia, the widow of Santiago Garcia, Jr. (Santiago Garcia's son
from his first marriage), and their children, Roderick, Elizabeth, Dorothy and Erlinda,
likewise sold to the spouses Atayan, their one-tenth (1/10) pro indiviso share in the
parcel of land covered by TCT No. T-82229.[1]
Subsequent to a favorable decision obtained by Trinidad Estonina in Civil Case
No. 88430 against Consuelo Garcia, execution pending appeal was made on the
parcel of land formerly covered by TCT No. T-19175 (now covered by TCT No. T-
82229) on July 20, 1979. The said parcel of land was sold at a public auction where
Trinidad Estonina was the highest bidder. Consuelo Garcia appealed the decision in
Civil Case No. 88430 before the then Intermediate Appellate Court which, however,
ruled in favor of Trinidad Estonina. Thus, on February 29, 1984, the Intermediate
Appellate Court rendered a decision declaring "owner's copy of Certificate of Title-
No. T-82229 a NULLITY and/or CANCELLED". Upon the finality of the said decision,
TCT No. T-82229 was cancelled by the Register of Deeds of Laguna and in lieu
thereof, TCT No. T-99961 was issued in favor of "Trinidad Estonina married to
Paulino Estonina". [2]
On July 25, 1985, the spouses Atayan filed a complaint for annulment of sheriff's
sale and transfer certificate of title with damages before Branch 28 of the Regional
Trial Court (RTC) of Santa Cruz, Laguna, impleading as defendants therein the
spouses Trinidad and Paulino Estonina (hereinafter referred to as the spouses
Estonina for brevity), Nicanor E. Silvano, Reynaldo G. Javier, Edmund R. Solidum,
the Register of Deeds of Laguna, and the heirs of Santiago Garcia who sold to the
spouses Atayan their, pro indiviso shares in the parcel of land covered by TCT No.
T-82229. The complaint prayed:

"that the sale at public auction of the parcel of land covered by TCT No 77215 x x
x and the Sheriff's final deed x x x be declared null and void; that the Register of
Deeds be ordered to cancel TCT No. T-99961 in the name of Trinidad S. Estonina
married to Paulino Estonina x x x; that the plaintiffs be declared owners of nine-
tenths (9/10) pro indiviso interests, shares and participation in the parcel of land
covered by TCT No. T-77215, x x x, and the Register of Deeds ordered to issue a
new certificate of title corresponding thereto, and that the defendants Nicanor E.
Silvano, Reynaldo G. Javier and Edmund R. Solidum be ordered to pay, jointly and
severally, the plaintiff's spouses and (sic) amount of P30,000 for attorney's
fees, P15,000 for litigation expenses incurred, P20,000 for moral damages
and P15,000 for exemplary damages x x x." [3]

In their amended answer to the plaintiff's complaint, the spouses Estonina

claimed that:

"the plaintiff's (spouses Atayan) had acted in bad faith in allegedly purchasing the
parcel of land, they being aware that it was the subject of a lawful and valid
attachment; that there was no valid extrajudicial settlement of agreement executed
by the heirs of Santiago Garcia by which their rights could have been adjusted and
settled before doing anything with his property; that the deeds of sale executed by
his heirs were anomalous, fictitious and simulated intended to defeat the adverse
judgment rendered by the Court against them and the writ of attachment issued
pursuant thereto as they were derived from a falsified deed of sale purportedly
executed by Santiago Garcia on June 23, 1967; that the property in question is
presumed to be conjugal answerable for obligations and liabilities of the conjugal
partnership incurred during the existence of the partnership; and that the plaintiffs
were guilty of laches (pp. 90-99, rec.)" [4]

After trial, the RTC rendered a decision dismissing the complaint for lack of
merit. It found, among others, that the property covered by TCT No. T-19175 and
now covered by TCT No. T-82229, was acquired during the marriage of Santiago
Garcia and Consuelo Garcia, and is presumed to be conjugal in nature. Upon the
death of Santiago Garcia on October 2, 1967, his conjugal share of one-half (1/2) of
the said parcel of land was transmitted to his heirs by intestate succession. By the
law on intestate succession, his nine children, five by his first wife and four out of the
subsequent marriage, and Consuelo Garcia, his second wife and widow, inherited
the same at one- tenth (1/10) each pro indiviso. The remaining one-half (1/2)
pertained to the conjugal share of Consuelo Garcia. Thus, inasmuch as Consuelo
Garcia inherited one-tenth (1/10) of her husband's conjugal share in the said
property and is the owner of one-half (1/2) thereof as her conjugal share, she owns a
total of 55% (or 1/10 plus 1/2) of the said parcel of land. [5]Finding as such, the RTC
held that what could be attached by the spouses Estonina and later levied on
execution and sold at public auction was only Consuelo Garcia's rights and interests
which is fifty five per cent (55%) of the property. Thus, the RTC ordered the Register
of Deeds of the Province of Laguna, to cancel Transfer Certificate of Title No. T-
99961 in the name of TRINIDAD S. ESTONINA, married to Paulino Estonina, and
issue another one, also in her name, married to the same person, stating therein that
said person is the owner of the property therein covered to the extent of 55% pro
indiviso, and the remaining 45% belongs to the heirs of Santiago Garcia pro
indiviso. [6]
Both the spouses Atayan and the heirs of Santiago Garcia appealed to the
herein public respondent Court of Appeals. After a thorough review of the evidence
on record, the Court of Appeals concluded that contrary to the finding of the RTC,
the parcel of land in question was not the conjugal property of Santiago and
Consuelo Garcia, but was the former's exclusive property. It was therefore the entire
property that formed part of Santiago Garcia's estate upon his death. When Santiago
Garcia died, his nine children and Consuelo Garcia inherited the said property each
to the extent of one-tenth (1/10) pro indiviso share. Hence, it was only Consuelo
Garcia's one-tenth (1/10) pro indiviso share in the parcel of land in question which
could be validly attached, levied and sold in execution to satisfy the judgment against
her and in favor of Trinidad Estonina in Civil Case No. 88430. On August 12, 1993,
the Court of Appeals rendered a decision, the dispositive portion of which reads as
follows:

"WHEREFORE, the judgment appealed from is REVERSED and SET ASIDE.

Accordingly, Transfer Certificate of Title No. T-99961, covering Lot 2-C (LRC)
Psd 223486, situated in Sta. Cruz, Laguna issued in the name of Trinidad S.
Estonina, married to Paulino Estonina x x x, is hereby ordered cancelled and
nullified and the Register of Deeds of Laguna ordered to issue another in lieu
thereof covering the same parcel of land in the name of Trinidad S. Estonina,
widow, one-tenth (1/10) pro indiviso share, and spouses Celso Atayan and Nilda
Hicban, nine-tenths (9/10) pro indiviso share. [7]

Aggrieved, the spouses Estonina filed this petition and raised the following issues:
I.

The Court of Appeals, in declaring the property in question as exclusive property

of Santiago Garcia, DISREGARDED the long established doctrine that the trial
court's findings especially as to the credibility of the witnesses should be respected.

II.

The Court of Appeals, in issuing the questioned decision, solely centered on the
nature of the property in question, and conveniently brushed aside the following
legal issues raised on appeal (thereby leading to an erroneous judgment), to wit:

(a) That the plaintiffs-appellants (Sps. Atayan and now private respondents) have
no cause of action and/or lack cause of action against Estoninas (now petitioners).
Assuming, arguendo that they have, the same is now barred by laches. The same is
true with the appellants Garcias (now also private respondents). Hence, the title of
Estonina should have been declared valid.

(b) That the plaintiffs-appellants (Sps. Atayan and now private respondents) are
not parties to Civil Case No. 88430 where the writ of attachment was issued and
which resulted in the execution pending appeal. Hence, they cannot attack the
validity of the execution in this proceedings especially so when judgment therein
had already attained finality.

III.

Consequently, by virtue of the foregoing errors, the Court of Appeals erred in not
granting herein petitioners' prayer that the trial court's findings be modified by
upholding Estonina's title to the property under TCT No. T-99961, and affirming in
all other respect the order of the trial court. [8]

The settled rule is that the factual findings, of the appellate court are deemed
conclusive.[9] Thus, the jurisdiction of this Court in cases brought to it from the Court
of Appeals is generally limited to the review and revision of errors of law allegedly
committed by the appellate court. As such, this Court is generally not duty-bound to
analyze and weigh all over again the evidence already considered in the
proceedings below. [10] This is, however, subject to several exceptions, one of which
is when there is a conflict between the factual findings of the Court of Appeals and
the trial court, as in this case, warranting a review by this Court of such factual
findings. [11]
In concluding that the parcel of land in question was the conjugal property of
Santiago and Consuelo Garcia, the trial court relied solely on the fact that when TCT
No. T-19175 covering the said land was issued, Santiago Garcia was already
married to Consuelo Garcia, thus giving rise to the presumption that the same was
indeed conjugal. It found the testimony of Consuelo Garcia that the said property
was inherited by Santiago Garcia from his deceased mother to be self-serving and
completely disregarded the said testimony. And as regards the inscription at the
back of the TCT No. T-19175 that:

"[t]he property described in this title is subject to the claims of the heirs of the
deceased Eugenia Clemente, within two (2) years from January 27, 1961, in
accordance with the provision of Section 4, Rule 74 of the Rules of Court", [12]

the trial court held that "there is no showing at all from said inscription that said
property came from the parents of Santiago Garcia". [13]
On the other hand, the Court of Appeals in taking the stance that the said land
was the exclusive property of Santiago Garcia, gave credence to the unrebutted
testimony of Consuelo Garcia that the said parcel of land was inherited by Santiago
Garcia from his deceased mother Eugenia Clemente and that it used to be part of a
big tract of land which was divided among Santiago and his sisters.
The evidence on record as well as established jurisprudence on the matter lead
us to concur with the finding of the Court of Appeals that the property involved in this
dispute is indeed the exclusive property of the deceased Santiago Garcia. It has
been repeatedly held by this Court that the presumption under Article 160 of the Civil
Code that all property of the marriage belong to the conjugal partnership applies only
when there is proof that the property was acquired during the marriage. Otherwise
stated, proof of acquisition during the marriage is a condition sine qua non for the
operation of the presumption in favor of the conjugal partnership. [14] In the case at
bench, the petitioners have been unable to present any proof that the property in
question was acquired during the marriage of Santiago and Consuelo. They anchor
their claim solely on the fact that when the title over the land in question was issued,
Santiago was already married to Consuelo as evidenced by the registration in the
name of "Santiago Garcia married to Consuelo Gaza". This, according to the
spouses Estonina, suffices to establish the conjugal nature of the property. The
foregoing contention has no merit. In the case of Jocson v. Court of Appeals [15] we
held that:

"The certificates of title, however, upon which petitioner rests his claim is
insufficient. The fact that the properties were registered in the name of 'Emilio
Jocson, married to Alejandra Poblete' is no proof that the properties were acquired
during the spouses' coverture. Acquisition of title and registration thereof are two
different acts. It is well settled that registration does not confer title but merely
confirms one already existing x x x. It may be that the properties under dispute
were acquired by Emilio Jocson when he was still a bachelor but were registered
only after his marriage to Alejandra Poblete, which explains why he was described
in the certificates of title as married to the latter.

"Contrary to petitioner's position, the certificates of title show, on their face, that
the properties were exclusively Emilio Jocson's, the registered owner. This is so
because the words 'married to' preceding 'Alejandra Poblete' are merely descriptive
of the civil status of Emilio Jocson x x x. In other words, the import from the
certificates of title is that Emilio Jocson is the owner of the properties, the same
having been registered in his name alone, and that he is married to Alejandra
Poblete." [16]

Being the exclusive property of Santiago Garcia, it was the entire parcel of land
in question that formed part of his estate and which passed to his ten heirs by
compulsory succession upon his death. And as correctly held by the Court of
Appeals, what could therefore be attached and sold at public auction in Civil Case
No. 88430 was only the one-tenth (1/10) pro indiviso share of Consuelo Garcia in the
said parcel of land. The sale at public auction of the disputed property in its entirety
by the Sheriff in favor of Trinidad Estonina over and above the one-tenth (1/10)
share of Consuelo Garcia is null and void, belonging as it does to the other heirs of
Santiago Garcia and later to the spouses Atayan. Worth reiterating is the basic
precept that the power of the court in the execution of judgments extends only over
properties unquestionably belonging to the judgment debtor. The levy by the sheriff
of a property by virtue of a writ of attachment may be considered as made under the
authority of the court only when the property levied upon belongs to the
defendant. [17] For, as the saying goes, one man's goods shall not be sold for another
man's debts. [18]
 The right of a third-party claimant to file an independent action to vindicate his
claim of ownership over the properties seized is reserved by Section 17, Rule 39 of
the Rules of Court:

"SEC. 17. Proceedings where property claimed by third person. -- If property

levied on be claimed by any other person than the judgment debtor or his agent,
and such person make an affidavit of his title thereto or his right to the possession
thereof, stating the grounds of his right or title, and serve the same upon the officer
making the' levy, and a copy thereof upon the judgment creditor, the officer shall
not be bound to keep the property, unless such judgment creditor or his agent, on
demand of the officer, indemnify the officer against such claim by a bond in a sum
not greater than the value of the property levied on. In case of disagreement as to
such value, the same shall be determined by the court issuing the writ of execution.

"The officer is not liable for damages, for the taking or the keeping of the property,
to any third-party claimant unless a claim is made by the latter and unless an action
for damages is brought by him against the officer within one hundred twenty (120)
days from the date of the filing of the bond. But nothing herein contained shall
prevent such claimant or any third person from vindicating his claim to the
property by any other proper action.

"x x x x x x x x x" (Underscoring supplied.)

As stated in the case of Sy v. Discaya,[19] this "proper action" would have for its
object the recovery of ownership or possession of the property seized by the sheriff,
as well as damages resulting from the allegedly wrongful seizure and detention
thereof despite the third party claim and it may be brought against the sheriff and
such other parties as may be alleged to have colluded with him in the supposedly
wrongful execution proceedings, such as the judgment creditor himself. Such "proper
action", as above pointed out, is and should be an entirely separate and distinct
action from that in which execution has issued, if instituted by a stranger to the latter
suit. [20]
In the case at bench, the filing by the spouses Atayan of an independent action
with the court other than the one which issued the writ of execution is proper as they
were strangers to Civil Case No. 88430. Such an independent action cannot be
considered as an encroachment upon the jurisdiction of a co-equal and coordinate
court. [21] While it is true that property in custody of the law may not be interfered with,
without the permission of the proper court, this rule is confined to cases where the
property belongs to the defendant or one in which the defendant has proprietary
interests. But when the Sheriff, acting beyond the bounds of his office seizes a
stranger's property, the rule does not apply and interference with his custody is not
interference with another court's custody. [22]
The foregoing puts to rest any and all questions raised regarding the propriety of
the course of action taken by the spouses Atayan in vindication of their claim over
the land in question. Anent the contention that the spouses Atayan are guilty of
laches, suffice it to state that this residual argument deserves scant consideration.
Being strangers to Civil Case No. 88430 where the writ of execution over the land in
question was issued, they cannot be faulted for filing the "proper action" only in 1985
or six (6) years after the levy on execution. Besides, it was only in 1984 that the
Court of Appeals rendered a decision finally cancelling the title of their predecessors-
in-interest and issuing another one in favor of Trinidad Estonina. The action filed by
the spouses Atayan seeking the annulment of the sheriff's sale and the transfer
certificate of title with damages immediately thereafter or on July 25, 1985 cannot be
considered as undue delay nor does it imply a lack of interest to enforce their claim
over the disputed property.
WHEREFORE, the petition is DENIED and the assailed decision of the Court of
Appeals is affirmed in toto.
SO ORDERED.
Narvasa, C.J., (Chairman), Davide, Jr., Melo, and Panganiban, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-68873 March 31, 1989

LUCILDA DAEL, EVERGISTO DAEL, DOMINGO DAEL, JR., CONRADO DAEL, FEDERICO
DURANA, JR., FREDISVINDA DURANA, FLEURDELIZADA DURANA, FABIAN DURANA and
FE PATRICIO DURANA,petitioners,
vs.
INTERMEDIATE APPELLATE COURT, CARMENCITA CABUTIHAN, NONILON CABUTIHAN,
ROMULO CABUTIHAN, LERMO CABUTIHAN, and BIENVENIDO CABUTIHAN, respondents.

Ismael T. Porles for petitioners.

Primo L. Marquez for respondents.

Bienvenido C. Vera Cruz collaborating counsel for respondents.

Roman R. Ulendioro for respondent Administratrix Carmencita Cabutihan.

REGALADO, J.:

The reversal of the decision of the then Intermediate Appellate Court promulgated on February
29, 1984 in AC-G.R. CV No. 69711, 1 which affirmed in toto the decision, dated December 3, 1980, of the quondam
Court of First Instance of Quezon, Branch II, in Special Proceeding No. 4374 thereof, 2 as well as the former's resolution of September
14, 1984 denying the motion for reconsideration of the oppositors-appellants therein, are the twin objectives of the present appeal
by certiorari.

The assailed decision of the court a quo sets out the revelant background facts and the dramatis
personae in this controversy, thus:

It is not disputed that Victorina Durana died intestate on August 1, 1977 in

Manila; she was the wife of the deceased Cesario Cabutihan who died earlier on
June 9, 1972; Cesario Cabutihan was first married to Bienvenida Durana in
February, 1942; the latter died on May 2, 1957; it was less than a year thereafter
 or particularly on April 6, 1958 that Cesario Cabutihan married Victorina Durana,
sister of his first wife, Bienvenida Durana.

The first marriage of Cesario Cabutihan produced the following legitimate

children: Nonilon Carmencita, Romulo, Lermo and Bienvenido all surnamed
Cabutihan and who are the intervenors in this case although Carmencita
Cabutihan instituted the case as petitioner; the second marriage of Cesario
Cabutihan with Victorina Durana did not produce any issue; however, the latter's
heirs are the children of her two sisters and a brother namely: Bienvenida
Durana, Soledad Durana and Federico Durana Sr.; the latter is the father of the
oppositors, Federico, Jr., Flordelizada (sic), Fredizvinda, Fabian and Fe Patricio,
all surnamed Durana; while Soledad Durana is the mother of the other oppsitors,
Evaristo, Domingo Jr., Lucilda and Conrado, all surnamed Dael; the other heirs of
Vitorina Durana are the petitioner herself and the intervenors who are all the
children of Bienvenida Durana.

It is claimed by all the oppositors that they are entitled to 213 portion of the estate
of Victorina Durana considering that their predecessors-in-interest are the brother
and sister of Victorina Durana; while the remaining 1/3 portion should devolve to
the petitioner and the intervenors who represent their mother Bienvenida Durana
and the other sister of Victorina Durana.

There is, therefore, no dispute concerning the relationship of the petitioner,

oppositors and the intervenors to the decedent Victorina Durana; there is neither
any question concerning the right of all the parties in this case to inherit from the
deceased Victorina Durana; 3

Likewise established is the fact that during the second marriage of Cesario and Victorina, they
were engaged in a copra business and a public transportation business, with Victorina managing
the former. After the demise of Cesario, Victorina and the private respondents entered into a
extra-judicial settlement of his estate on December 30, 1973. Part of the properties adjudicated
to Victorina include the copra business abovementioned, as well as some of the vehicles used in
the transportation business. 4 Subsequently, however, the vehicles were transferred to the private respondents by virtue of a
"deed of sale" dated July 24, 1978. 5

This case was commenced in the aforementioned Court of First Instance of Quezon by
Carmencita Cabutihan, one of the private respondents herein, who filed a petition for the
settlement of the intestate estate of Victorina Durana, wherein she also prayed for her
appointment as administratrix. 6 Petitioners herein filed an opposition, asking that the letters of administration be issued
instead to herein petitioner Lucilda Dael. 7 The other private respondents, on their motion, intervened in the case. 8

On December 22, 1977, Honesto Cabutihan, Democrito Cabutihan and David Cabutihan filed
their claim against the estate for the payment of the harvest of their property which had been
entrusted to Victorina Durana for purposes of her copra business but which obligation she failed
to pay due to her untimely death. 9 Said claim, in the amount of P70,350.82, was approved by the probate court on
December 2, 1980. 10

Meanwhile, the court below appointed Amado Zoleta as special administrator of the estate of the
late Victorina Durana on May 24, 1978. 11 Said special administrator, upon order of the probate court, submitted an
inventory of the properties of the estate on August 30, 1978, consisting of twenty (20) parcels of land valued at P69,340.00, cash in
bank amounting to P140,079.41, cattle and livestock valued at P7,200.00, furniture valued at P5,120.00, fixtures in the amount of
P1,300.00, equipment worth P11,863.00, and other miscellaneous items valued at P3,038.00. The total value of the properties included
in this inventory is P237,940.41. 12

On January 16, 1979, a "Supplementary Inventory" was filed by the special administrator
covering other real properties of the estate of Victorina, consisting of the undivided shares in the
inheritance of Cesario Cabutihan from his parents, Bartolome Cabutihan and Natividad Daelo.
The total value of the properties listed in the supplementary inventory is P4,700.82. 13 It may be
mentioned that the properties that were adjudicated to Victorina in the extrajudicial settlement of the estate of Cesario were included in
the inventory submitted by the special administrator. 14

Private respondents moved for the disapproval of said inventories claiming that the properties
listed therein were either acquired during the first marriage of Cesario Cabutihan or were merely
the products or fruits of the properties of said first union or otherwise acquired through the funds
thereof. 15

In due course, the trial court rendered a decision holding that Victorina Durana had no
paraphernal properties brought or contributed to her marriage with Cesario Cabutihan; that the
copra business was formed in 1949 during the first marriage; that Victorina used the same
facilities, credit and capital in managing the business; and that the main source of income not
only of Cesario Cabutihan and also of Victorina during their respective lifetimes was the copra
business. 16

On such factual findings, the lower court came up with the following conclusions:

Not having any personal property which she brought to her marriage with Cesario
Cabutihan and the copra business not being her own or of her conjugal
partnership with her husband, the conclusion is inescapable; that all the
properties listed in the inventories in her name or jointly with Cesario Cabutihan
do not belong to her exclusively; these properties in Exhibits 'A- SPA' and 'B-SPA'
are either the assets of Bienvenida Durana as her paraphernal property or as the
conjugal partnership assets of spouses Cesario Cabutihan (sic) or the latter's
capital inasmuch as the properties in the name of Victorina a Durana or those
jointly with her husband were acquired or purchased out of the fruits or produce
of the properties of Bienvenida Durana and/or Cesario Cabutihan or out of the
income of the copra business of the first marriage which was merely managed
and administered by Victorina Durana after the owners' deaths.

xxx xxx xxx

To determine, therefore, the extent of the estate of Victorina Durana from the list
of properties, real and personal, enumerated in the Inventories (Exhibits 'A-SPA'
and B-SPA') which erroneously include even the Estate of the First Marriage, the
conjugal estate of Cesario Cabutihan and Bienvenida Durana must be settled or
liquidated first; one-half of the conjugal estate shall be inherited by Cesario
Cabutihan and his five (5) children, namely: Nonilon Carmencita, Romulo, Lermo
and Bienvenido, all surnamed CABUTIHAN, share and share alike; the
inheritance of Cesario Cabutihan in the Estate of Bienvenida Durana in addition
to the other one (1/2) half which is his share in the conjugal partnership with his
wife Bienvenida shall constitute Cesario's estate which shall be inherited by his
heirs, namely: Victorina Durana, his second wife, and his legitimate children by
his first wife, namely: Nonilon Carmencita, Romulo, Lermo and Bienvenido, all
surnamed CABUTIHAN, share and share alike.

xxx xxx xxx

Hence, the extent of the Estate of Victorina Durana shall consist only of her share
in the inheritance of the Estate of Cesario Cabutihan.

Unless any of the properties listed in Exhibits 'A-SPA' and B-SPA' exclusively
belong to Bienvenida Durana, all of said properties shall be presumed to be the
conjugal (sic) and/or the fruits and income of said partnership or of the copra
business of said partnership; therefore, the properties in said inventories shall be
computed, divided and partitioned as follows: five (5/12) twelve over the one (1/2)
 half thereof to be adjudicated to Nonilon Carmencita, Romulo, Lermo and
Bienvenido, all surnamed CABUTIHAN as their shares in the inheritance of their
mother; the one (1/6) sixth portion out of the one (1/2) half of said properties shall
pertain to Cesario Cabutihan as his share in the inheritance of his first wife; this
share and the remaining one (1/2) half of the properties in the Inventories which
comprise his estate shall be inherited by his second wife Victorina Durana with
(whom he had no child) and his five children by his first marriage, Nonilon
Carmencita, Romulo, Lermo and Bienvenido, all surnamed CABUTIHAN, at the
proportion of one (1/6) sixth each of the said properties over the seven (7/12)
twelfth thereof; therefore, one (1/6) sixth out of the said seven (7/12) twelfth of the
said properties (Estate of Cesario) shall be the extent of the Estate of Victorina
Durana which she inherited from her husband; this (1/6 of 7/12) portion shall be
inherited by Durana's heirs; one (1/3) third thereof to be adjudicated to petitioner
and the Intervenors and the remaining two (2/3) thirds thereof to the
oppositors. 17

The probate court thereby disapproved both inventories and annulled the extrajudicial settlement
and deed of sale (Exhibit 1 Dael and Exhibit 3-Dael) mentioned earlier. The latter two were
annulled for being simulated or fictitious and for involving conjugal properties of the first
marriage, including properties of Bienvenida, to which Victorina is not an heir. 18

As a consequence, petitioners appealed to the former Intermediate Appellate Court on

December 8, 1980. 19 On the same day, respondent Carmencita Cabutihan filed a "motion for authority to withdraw funds" from
the estate, in the amount of P90,000.00 to be partitioned among the heirs in accordance with the proportion provided for in the aforesaid
decision of the probate court. 20 On December 11, 1980, this motion was granted, 21 despite opposition thereto. 22

Thereafter, on December 12, 1980, petitioners herein filed a motion asking the lower court to
order the return of the amount of P70,350.82 allegedly paid to the claimants Democrito Honesto
and David Cabutihan, submitting as proof a receipt allegedly signed on December 30, 1980 by
Democrito Cabutihan in behalf of all said claimants and assisted by their counsel, Euclides A.
Abcede.

On February 9, 1984, respondent court promulgated its decision which, as already stated,
affirmed the decision of the lower court, hence this petition assigning four errors which we will
resolve seriatim.

1. Petitioners submit that both the respondent and lower courts erred in concluding that the copra
business, as well as the properties listed in the inventories as acquired during the second
marriage, are assets of the conjugal partnership of the first marriage between Cesario and
Bienvenida. They argued that to so hold would, in effect, maintain the theory that the marital
community of proprietary interest continued to exist even after the Cesario-Bienvenida conjugal
partnership had been dissolved by the death of Bienvenida.

It may be conceded that the factual findings of the trial court were based on substantial
documentary and testimonial evidence and are entitled to the corresponding weight and respect.

Such established facts notwithstanding, We are not as equally disposed to yield assent to the
conclusions drawn by both the court a quo and the respondent court which Would so
simplistically adjudicate and consider the properties involved as belonging in their entirety to the
first marriage.

When Bienvenida Durana died on May 2, 1957, the first conjugal partnership was automatically
dissolved. 23 That conjugal partnership was then converted into an implied ordinary co-ownership. 24 It was also at this point in
time that the inheritance was transmitted to the heirs of Bienvenida. 25 Thus, her heirs, Cesario, Nonilon Carmencita Romulo, Lermo
and Bienvenido, acquired respective and definite rights over one-half (1/2) of the conjugal partnership property which pertained to
Bienvinida. Consequently, whatever fruits or income may thereafter be derived from the properties, including the copra business, would
no longer be conjugal but would belong in part to the heirs in proportion to their respective shares. The fruits and income of the other
half of the property of the conjugal partnership would exclusively belong to Cesario.
The marriage of Cesario and Victorina on April 6, 1952 also produced the corresponding legal
consequences. From that moment on, the fruits or income of the separate properties of the
spouses would be conjugal, including those acquired through their industry. 26 Hence, the fruits and
income of Cesario's share in the inheritance from Bienvenida and of his conjugal share in the property of the first conjugal partnership
would form part of the conjugal partnership properties of the second marriage. The fruits and income derived or acquired through these
last-mentioned properties would likewise be conjugal in nature.

It would have been ideal had there been a liquidation of the conjugal partnership properties of the
first marriage between Cesario and Bienvenida. Unfortunately, We cannot determine from the
records the amount of such properties at the time of Bienvenida's demise. There is a dearth of
proof on this matter. What appears evident, however, is that, considering the continuity in the
operation of the two businesses during the marital coverture between Cesario and Victorina
which spanned a period of fourteen (14) years, and the fact that after Cesario's death Victorina
still actively engaged in the same business until her own death five (5) years later, the properties
enumerated in the aforesaid inventories submitted to the probate court could not all have been
properties of the first marriage.

Inevitably, the problem is how to apportion the properties involved between the two conjugal
partnerships. On this score, guidance should be sought from the provisions of the Civil Code to
the effect that whenever the liquidation of the partnership of two or more marriages contracted by
the same person should be carried out at the same time and there is no evidence to show the
capital or the conjugal property belonging to each of the partnerships to be liquidated, the total
mass of the partnership property shall be divided between the different partnerships in proportion
to the duration of each and to the property belonging to the respective spouses. 27

The first marriage existed for approximately fifteen (15) years (1942 to 1957), while the second
marriage lasted for about fourteen (14) years (1958 to 1972). Applying the aforestated rule, the
first conjugal partnership will be prorated a share of fifteen twenty-ninths (15/29) of the properties
included in the inventory submitted on August 30, 1978, while the second conjugal partnership
will get fourteen twenty-ninths (14/29) thereof. Not to be included, however, are the real
properties listed in the supplementary inventory filed on January 16, 1979, because they
definitely belong to the estate of Cesario as the latter's inheritance from his parents, Bartolome
Cabutihan and Natividad Daelo.

One-half (1/2) of the properties that pertain to the first conjugal partnership belong to Cesario as
his conjugal share therein, while the other half shall be considered as inherited by him and his
five children as the heirs of Bienvenida.

The properties pertaining to the second partnership shall also be equally divided, one-half (1/2)
to belong to Cesario and the other to Victorina as their respective shares in their conjugal
partnership properties. The share of Cesario should then be divided among his heirs, namely,
Victorina and his five (5) children.

To recapitulate, the estate of Victorina for distribution to her heirs shall consist of her one-half
(1/2) share in the conjugal properties of the aforesaid second marriage and her one-sixth (1/6)
share in the estate of Cesario as an heir.

2. Petitioners also question the approval of the claims of Democrito Honesto and David
Cabutihan. Petitioners' effete opposition is anchored on their allegation that said claim "was
approved primarily on the basis of the testimony of claimant Democrito Cabutihan" which,
according to them, is inadmissible under the Dead Man's Statute or the survivorship
disqualification rule. 28 While petitioners' arguments may have a juris tantum plausibility if considered alone, We see no reason
to dwell on this issue. It would be pointless since, as correctly observed by the trial court, "even assuming the applicability of the dead
man's rule concerning the testimony of Democrito Cabutihan, the testimony of Urbano Prado and Tirso Linosa are more than sufficient
to establish the claim and to bolster the documentary evidence in support thereof as indicated on Exhibits 'B', 'B-1', to 'B-82-claim', 'C'
and 'C-1' inclusive." 29
3. Also challenged by petitioners is the order of the court below, dated December 11, 1980,
allowing the withdrawal of funds for distribution to the heirs as advance inheritance. Said order is,
however, within the contemplation and authority of Rule 109, Section 2 whereof provides that
"(n)otwithstanding a pending controversy or appeal in proceedings to settle the estate of a
decedent, the court may, in its discretion and upon such terms as it may deem proper and just,
permit that such part of the estate as may not be affected by the controversy or appeal be
distributed among the heirs or legatees, upon compliance with the conditions set forth in Rule 90
of these rules'. Said Rule 90, on the other hand, provides in part that "(n)o distribution shall be
allowed until the payment of the obligations above mentioned has been made or provided for,
unless the distributees or any of them, give a bond, in a sum to be fixed by the court, conditioned
for the payment of said obligations within such time as the court directs."

It is true that "partial distribution of the decedent's estate pending the final termination of the
testate or intestate proceedings should as much as possible be discouraged by the courts and,
unless in extreme cases, such form of advances of inheritance should not be countenanced. The
reason for this strict rule is obvious courts should guard with utmost zeal and jealousy the estate
of the decedent to the end that the creditors thereof be adequately protected and all the rightful
heirs assured of their shares in the inheritance." 30

Nevertheless, after duly considering the foregoing rules, We sustain the validity of the questioned
order. The respondent court correctly held than "(i)f oppositors would stand to share more in the
inheritance than what was fixed for them in the appealed judgment, We believe the estate has
sufficient assets to ensure an equitable distribution of the inheritance in accordance with law and
final judgment in the proceedings." 31 Also, it does not appear that there are unpaid obligations, as contemplated in Rule
90, for which provisions should have been made or a bond required. It is clear that the provisions of the Rules of Court, as well as the
jurisprudence thereon, were followed in this particular incident.

4. With respect to the propriety of the alleged payment of the claims of the Cabutihan brothers
before the decision is this case became final and executory, We are not in a position to rule on
such issue because this Court is not a trier of facts. Such issue requires the prior resolution of
basic factual questions, that is, whether or not such payment had actually been made to the
claimants and the circumstances under which the same was effected.

The probate court had not yet ruled on petitioners' "Motion to Order the Return of the Amount
Paid for Claim", when the instant petition was filed. Based on the records of this appeal, the last
action taken in the lower court was its order that the private respondents comment on said
motion, but no response thereto or any subsequent development on this matter is reflected or
reported. If the petitioners have sufficient basis to complain on this matter, the same should
consequently be pursued and threshed out in the court below.

WHEREFORE, the decision of respondent court, which affirmed and adopted in toto the decision
of the court a quo, is MODIFIED and judgment is hereby rendered as follows:

1. So much of the judgments of both lower courts as declare that all the properties listed in the
two inventories, marked as Exhibits "A-SPA"and "B-SPA" in Special Proceeding No. 4374 of the
court of origin, are conjugal partnership assets of the deceased spouses Cesario Cabutihan and
Bienvenida Durana are hereby SET ASIDE;

2. The properties therein enumerated shall be divided in the following manner: (a) Seven-twelfths
(7/12) of fifteen twenty-ninths (15/29), and one-half (1/2) of fourteen twenty-ninths (14/29), of the
properties listed in the inventory dated August 30, 1978, as well as all the properties listed in the
supplementary inventory dated January 16, 1979, shall constitute the estate of Cesario
Cabutihan. This estate shall be divided equally among his six (6) heirs, namely, his second wife,
Victorina, and his five (5) children, Nonilon Carmencita, Romulo, Lermo and Bienvenido, all
surnamed Cabutihan; and (b) The remaining five-twelfths (5/12) of fifteen twenty-ninths (15/29) of
the properties in said inventory of August 30, 1978 shall belong to the said five (5) children, share
and share alike, as their respective participations in their mother's inheritance;
3. The estate of Victorina Durana, which shall be the subject of settlement and distribution in said
Special Proceeding No. 4374, shall consist of one-half (1/2) of the other portion constituting
fourteen twenty-ninths (14/29) of the properties in the inventory of August 30, 1978, which
represents her share in the conjugal properties of the second marriage, and one-sixth (1/6) of the
estate of Cesario Cabutihan as fixed herein, and said properties shall be divided among her heirs
enumerated and in the proportion allotted by the probate court as qouted at the outset of this
decision;

4. The other pronouncements in the dispositive portion of the appealed judgment of the court
below and adopted by the respondent court, insofar as the are not inconsistent with the foregoing
dispositions; the order of the said lower court, dated December 2, 1980, approving the claims of
Honesto, Democrito and David Cabutihan; and its order of December 11, 1980 allowing the
withdrawal of funds for distribution among the heirs are AFFIRMED; and

5. All other incidents not otherwise disposed of herein shall be pursued by the parties in and shall
be resolved by the court a quo in accordance with the terms of this judgment.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-3605 April 21, 1952

TESTATE ESTATE OF THE LATE BALDOMERO J. LESACA. CONSUELO F. LESACA AND

JUANA F. LESACA,executrices-appellants,
vs.
JUANA FELIX VDA. DE LESACA, claimant-appellee.

Mariano H. de Joya and Jose V. Lesaca for executrices-appellants.

Marcelino Lontok for minors-appellants.

REYES, J.:

There are three appeals registered in this case all of which have been certified to this Court by
the Court of Appeals for the reason that, in its opinion and as admitted by the parties, they
involve only questions of law. Those questions are formulated in the certification of the Court of
Appeals as follows:

1. Whether money received after marriage, as purchase price of land sold a retrovendado before
such marriage to one of the consorts, constitutes conjugal property or not;

2. Whether allowances for support granted by the court to the minor heirs should or should not
be subject to collation and deducted from their respective hereditary portions; and

3. Whether a standing crop of palay planted during coverture, and harvested after the death of
the one of the consorts, constitutes fruits and income within the purview of Article 1401 of the
Civil Code, and one-half of such crop should be delivered to the surviving spouse.

Appeal No. 1
Baldomaro J. Lesaca died in the City of Manila on November 8, 1946. He was survived by his
second wife (Juana Felix), two minor children by the latter, two children by his marriage, and
three acknowledged natural children by a third woman. In his will he named Juana F. Lesaca and
Consuelo F. Lesaca, his children by his first marriage, co-executrices.

Proceedings for the probate of the will and for the administration of the estate of the deceased
having been instituted in the Court of First Instance of Manila, that court, at the instance of the
widow but over the opposition of the co-executrices and the three acknowledge natural children,
granted each of the two minor children a monthly allowance of P100 for the living expenses,
"plus an extra sum of P300 for their matriculation and uniforms," and later ordered the co-
executrices to deposit in court all the allowances in arrears. The co-executrices refused to make
the deposit, contending that if any amount were to be paid for the support and education of the
minors the same should be charged against their share of the inheritance. But the court took a
different view and issued an order, dated March 11, 1949, holding that the amounts it had
authorized to be paid to the minors should be considered allowances for support, to be deducted
from hereditary portion only insofar as they exceed what they are entitled to as fruits or income,
and requiring the co-executrices to deposit in court " all the amounts due the said minors, namely
P2,955.83, if and when the financial condition of this estate under administration so warrants."
This is the order involved in the first appeal and the question presented is whether the
allowances for support granted by the court to legitimate minor children of the deceased pending
liquidation of his estate are subject to collation and deductible from their share of the inheritance.

Obviously, the answer should be the affirmative in view of Article 1430 of the Civil Code of 1898
(re-enacted as Article 188 of the new Civil Code) which provides that "the surviving spouse and
his or her children shall be given an allowance for their support out of the general estate, pending
the liquidation of the inventoried estate, and until their share has been delivered to them, but it
shall be deducted from their portion insofar as it exceeds what they may have been entitled to as
fruits or income."

Counsel for the appellant minors, however, contends that Art. 1430 should be harmonized with
Art. 1041, which provides that "allowances for support, education, attendance and illness, even
though unusually expensive, apprenticeship, ordinary equipment, or customary presents are not
subject to collation," because the allowances mentioned in the later article refer to no other than
the allowances for support given to the children of a deceased person. This contention is without
merit. Article 1041 is found under the section on "Collation," which refers only to property or
rights received by donation or gratuitous title "during the lifetime of the decedent." (Civil Law by
Padilla, Vol. I, p. 1125), and is based on the philosophy that such donations in no way impoverish
the donor or in reach the donee since ordinarily they are not taken from the capital but rather
from the fruits thereof which would anyway have been consumed or spent during the life of the
donor and therefor would form no part of his inheritance. (7 Manresa, 5th ed., p. 625.) But
allowances given to the heirs pending the liquidation of the estate of the decedent stand on a
different footing. As Manresa observes:

Despues de la muerte del cuasante todo varia: los frutos del capital se agrarian a este,
formando parte del mismo, y por esto se deben a la herencia, ya provengan de las cosas
donadas sujetas a colacion, o de derechos de disfrute, ya constituyesen el objeto mismo
de la liberalidad, como en case de renta o pension, cesion de productos o frutos, perdon
de intereses, etc. (7 Manresa 5th ed. p. 576.)

Appeal No. 2

This appeal is taken by the co-executrices from another order of March 11, 1949, declaring that
the sum of P2,500 received by them as repurchase price of land bought by the deceased before
the marriage is conjugal property and directing that one-half of said sum be paid to the widow.
It appears that the deceased and his widow, Juana Felix, had lived together maritally since 1924
but were not married until December 18, 1945; that is, less than a year before his death; that in
1930 Ramon Garcia conveyed to the deceased three parcels of land for P2,500 under a pacto de
retro sale; and that on September 25, 1947 the co-executrices, with the approval of the court,
reconveyed the said parcels of land to Ramon Garcia for the same sum of P2,500. Claiming that
this sum was conjugal property the widow petitioned the court to order the co-executrices to give
her one-half thereof. The co-executrices opposed the petition, claiming that the money paid to
Ramon Garcia for the land in question came from the products of the property left by their
mother. But after hearing, the court granted the petition in an order dated March 11, 1949,
holding that the sum in dispute was conjugal property, "considering that the reconveyance was
affected after the marriage." This order is the subject of appeal No. 2, which presents the first of
the three questions stated in the beginning, to wit:

Whether money received after marriage, as purchase price of land sold a

retrovendendo before such marriage to one of the consorts, constitutes conjugal property
or not.

In our opinion the question calls for a negative answer. According to the briefs Garcia sold the
land for P2,500 to Lesaca before the latter's marriage to Juana Felix and repurchased it to for the
same amount after said marriage. If the money paid by Lesaca was his own exclusively, surely
the mere fact that it was returned or repaid after marriage cannot convert it to conjugal property.
It is true that under Art. 1401 of the Civil Code of 1889 property obtained by the industry, wages
or work of the spouses or of either of them belongs to the conjugal partnership. But the article
refers to the property obtained during the marriage, and while counsel for the widow cites the
case of Marata vs. Dionio (G.R. No. 24449, unreported) wherein this Court held that though there
is no technical marital partnership between person living maritally without being lawfully married,
nevertheless there is between them an informal civil partnership which would entitle the parties to
an equal interest in property acquired by their joint efforts, in the present case there is no
showing that the sum paid to Garcia was earned by the joint efforts of the deceased and his
widow. In the absence of such proof the sum must be deemed to have been the property of the
deceased to whom the land for which it was given in payment was sold by Garcia. It follows that
the order below adjudging one-half of the sum in question to the widow is erroneous.

But the claim that the sum in question belongs to the co-executrices as an inheritance from their
deceased mother has not been upheld by the trial court, and as a question of fact cannot be
urged in this appeal, which, with the conformity of the parties, has been submitted to this Court
as involving questions purely of law. Moreover, as stated in the resolution of the Court of
Appeals, dated October 28, 1949, the Clerk of Court of First Instance certifies that no evidence
has been submitted or taken in connection with the motions that gave rise to the present
appeals.

Appeal No. 3

This is an appeal from the order of April 29, 1949, which declares that the 1,040 cavans of palay
of the value of P20,800 received as rent on decedent's land for the agricultural year 1946-1947
should be considered conjugal property so that one-half thereof should go to the widow.

It is admitted that the deceased did not cultivate his land personally but had it cultivated by one
who gave him a certain percentage of the crop every year by way of rent, and the lower court
found that the 1,040 cavans of palay in dispute was the rent or the decedent's share of the
harvest from palay planted in June or July 1946 that is, after his marriage to Juana Felix
and which must have already matured or been near maturity at the time when the conjugal
partnership was dissolved by the death of the deceased in November, 1946. Under Article 1380
of the old Civil Code "after the marriage has been dissolved, the uncollected fruits or rents shall
be divided pro ratabetween the surviving spouse and the heirs of the deceased in accordance of
the rules which govern in case of termination of usufruct," the conjugal partnership being
considered usufructuary of the private property of each spouse. As rents are civil fruits (Art. 355,
old Civil Code) they must be deemed to accrue from day to day and belong to the usufructuary
(in this case the conjugal partnership) in proportion to the time the usufruct may last. (Art. 474,
old Civil Code.)

We gather from the findings of the trial court that the decedent's participation (as rent) in the
palay planted by the lessee in June or July and which must have been harvested on the following
November, if not before, accrued during coverture. Such being the case it should belong to the
conjugal partnership. It is immaterial that the rent was actually received after the dissolution of
the marriage through the death of one of the spouses. It is the date of accrual that is important.
As Manresa says:

Los frutos civiles se entiende devangados dia por dia; la regla en ellos no pueden ser
mas sencilla. Importa poco la epoca en que se realice el pago. Si se percibieron
adelantados, el conyuge propietario debe ala sociedad cuanto a esta correspanda, o
sea, los devengados desde el de la celebracion del matrimonio. Si las rentas, interes,
productos o utiladades se perciben o cobran despues, la sociedad debe al propietario la
perte proporcional correspondiente hasta el dia de la union. (9 Manresa, 5th ed., 508.)

. . . En lo relativo al usufracto, esa regla se contiene en el art. 474: los futos civiles se
entienden percibidos dia por dia y pertenecen al usufructuario en proporcion al tiempo
que dure el usufructo. (4 Manresa, 5th ed., 346-347.)

To the same effect is the following comment on the corresponding provision of the french civil
code:

3.. El modo de adquisicion de los frutos por la comunidad difiere segun de trato de
frutos naturales o civiles; los primeros se adquiren po su percepcion, los segundos dia a
lia. La distribucion de los frutos civelies por tanto debera hacerse sin tomar en
consideracion el momento en que hayan sido efectivamente percibidos ni aun, si se trata
de alqueleres de fincas rusticas o urbanas el momento enque han vencido: solo hay que
atenerse a la epoca a que corresponde.

xxx xxx xxx

Asi, frecuentemente ocurre que los alquileres solamente son pagaderos el ano siguinte
al de la cosecha y aveces en various plazos. Es indudable que, si la communidad queda
disuelta antes del vencimiento, tendra derecho a la totalidad o aparte del alquiler de la
finca, en proporcion al tiempo que acquella existio en el ano dela cosecha. Asimismo, si
los alquileres han sido percibidos por anticipado, antes del matrimonio, la communidad
tiene derecho a una compensacion si esos alquileres son correspondientes a una epoca
posterior al matrimonio: infra, titulo III, comunidad de gananciales. Contra Req., mayo 27,
1879, D. I. 297, s. 80, 1, 393." (Planiol and Ripert, Tratado Practico de Derecho Civil
Frances, vol. 8 p.306 [Spanish translation by Diaz Cruz]).

It follows from the foregoing that the order appealed from is in accordance with the law and
should therefore be affirmed.

Wherefore, it is the decision of this Court that

(1) The order of March 11, 1949, declaring that the allowances granted the minors pending
liquidation of the estate should be deducted form their hereditary shares in so far as they exceed
what they may be entitled to as fruits or income, is affirmed;

(2) The other order of March 11, 1949, declaring the sum of P2,500 received by the co-
executrices from Ramon Garcia as repurchase price of the three parcels of land resold to the
latters is conjugal property and that the widow is entitled to one-half thereof is reversed and the
said sum is declared to be part of the estate of the deceased;

(3) The order of April 28, 1949, declaring that the decedents share of standing crop of palay
planted during the coverture and harvested after the dissolution of the marriage are fruits and
income within the purview of Article 1401 of the Civil Code and, therefore, should be considered
conjugal property, of which one-half should be delivered to Juana F. Vda. de Lesaca, is affirmed.

Without pronouncement as to costs.

Paras, C.J., Feria, Bengzon, Tuason, Montemayor and Bautista Angelo, JJ., concur.

SECOND DIVISION

[G.R. No. 136803. June 16, 2000]

EUSTAQUIO MALLILIN, JR., petitioner, vs. MA. ELVIRA

CASTILLO, respondent.

DECISION

MENDOZA, J.: batas

This is a petition for review of the amended decision of the Court of[1]

Appeals dated May 7, 1998 in CA G.R. CV No. 48443 granting

respondents motion for reconsideration of its decision dated November 7,
1996, and of the resolution dated December 21, 1998 denying petitioners
motion for reconsideration.

The factual and procedural antecedents are as follows:

On February 24, 1993, petitioner Eustaquio Mallilin, Jr. filed a

complaint for "Partition and/or Payment of Co-Ownership Share,
[2]

Accounting and Damages" against respondent Ma. Elvira Castillo. The

complaint, docketed as Civil Case No. 93-656 at the Regional Trial Court in
Makati City, alleged that petitioner and respondent, both married and with
children, but separated from their respective spouses, cohabited after a
brief courtship sometime in 1979 while their respective marriages still
subsisted. During their union, they set up the Superfreight Customs
Brokerage Corporation, with petitioner as president and chairman of the
board of directors, and respondent as vice-president and treasurer. The
business flourished and petitioner and respondent acquired real and
personal properties which were registered solely in respondents name. In
1992, due to irreconcilable differences, the couple separated. Petitioner
demanded from respondent his share in the subject properties, but
respondent refused alleging that said properties had been registered solely
in her name.
In her Amended Answer, respondent admitted that she engaged in the
[3]

customs brokerage business with petitioner but alleged that the

Superfreight Customs Brokerage Corporation was organized with other
individuals and duly registered with the Securities and Exchange
Commission in 1987. She denied that she and petitioner lived as husband
and wife because the fact was that they were still legally married to their
respective spouses. She claimed to be the exclusive owner of all real and
personal properties involved in petitioners action for partition on the ground
that they were acquired entirely out of her own money and registered solely
in her name.

On November 25, 1994, respondent filed a Motion for Summary

Judgment, in accordance with Rule 34 of the Rules of Court. She
[4] [5]

contended that summary judgment was proper, because the issues raised
in the pleadings were sham and not genuine, to wit: CODES

A.

The main issue is -- Can plaintiff validly claim the partition

and/or payment of co-ownership share, accounting and
damages, considering that plaintiff and defendant are
admittedly both married to their respective spouses under
still valid and subsisting marriages, even assuming as
claimed by plaintiff, that they lived together as husband and
wife without benefit of marriage? In other words, can the
parties be considered as co-owners of the properties, under the
law, considering the present status of the parties as both
married and incapable of marrying each other, even assuming
that they lived together as husband and wife (?)

B.

As a collateral issue, can the plaintiff be considered as an

unregistered co-owner of the real properties under the
Transfer Certificates of Title duly registered solely in the
name of defendant Ma. Elvira Castillo? This issue is also
true as far as the motor vehicles in question are concerned
which are also registered in the name of defendant. [6]

On the first point, respondent contended that even if she and petitioner
actually cohabited, petitioner could not validly claim a part of the subject
real and personal properties because Art. 144 of the Civil Code, which
provides that the rules on co-ownership shall govern the properties
acquired by a man and a woman living together as husband and wife but
not married, or under a marriage which is void ab initio, applies only if the
parties are not in any way incapacitated to contract marriage. In the
[7]

parties case, their union suffered the legal impediment of a prior subsisting
marriage. Thus, the question of fact being raised by petitioner, i.e., whether
they lived together as husband and wife, was irrelevant as no co-ownership
could exist between them.

As to the second issue, respondent maintained that petitioner can not be

considered an unregistered co-owner of the subject properties on the
ground that, since titles to the land are solely in her name, to grant
petitioners prayer would be to allow a collateral attack on the validity of
such titles.

Petitioner opposed respondents Motion for Summary Judgment. He [8]

contended that the case presented genuine factual issues and that Art. 144
of the Civil Code had been repealed by the Family Code which now allows,
under Art. 148, a limited co-ownership even though a man and a woman
living together are not capacitated to marry each other. Petitioner also
asserted that an implied trust was constituted when he and respondent
agreed to register the properties solely in the latters name although the
same were acquired out of the profits made from their brokerage business.
Petitioner invoked the following provisions of the Civil Code: yacats

Art. 1452. If two or more persons agree to purchase property

and by common consent the legal title is taken in the name of
one of them for the benefit of all, a trust is created by force of
law in favor of the others in proportion to the interest of each.

Art. 1453. When the property is conveyed to a person in

reliance upon his declared intention to hold it for, or transfer it
to another grantor, there is an implied trust in favor of the
person whose benefit is contemplated.

On January 30, 1995, the trial court rendered its decision granting
[9]

respondents motion for summary judgment. It ruled that an examination of

the pleadings shows that the issues involved were purely legal. The trial
court also sustained respondents contention that petitioners action for
partition amounted to a collateral attack on the validity of the certificates of
title covering the subject properties. It held that even if the parties really
had cohabited, the action for partition could not be allowed because an
action for partition among co-owners ceases to be so and becomes one for
title if the defendant, as in the present case, alleges exclusive ownership of
the properties in question. For these reasons, the trial court dismissed Civil
Case No. 93-656.
On appeal, the Court of Appeals on November 7, 1996, ordered the case
remanded to the court of origin for trial on the merits. It cited the decision
in Roque v. Intermediate Appellate Court to the effect that an action for
[10]

partition is at once an action for declaration of co-ownership and for

segregation and conveyance of a determinate portion of the properties
involved. If the defendant asserts exclusive title over the property, the
action for partition should not be dismissed. Rather, the court should
resolve the case and if the plaintiff is unable to sustain his claimed status
as a co-owner, the court should dismiss the action, not because the wrong
remedy was availed of, but because no basis exists for requiring the
defendant to submit to partition. Resolving the issue whether petitioners
action for partition was a collateral attack on the validity of the certificates of
title, the Court of Appeals held that since petitioner sought to compel
respondent to execute documents necessary to effect transfer of what he
claimed was his share, petitioner was not actually attacking the validity of
the titles but in fact, recognized their validity. Finally, the appellate court
upheld petitioners position that Art. 144 of the Civil Code had been
repealed by Art. 148 of the Family Code. haideem

Respondent moved for reconsideration of the decision of the Court of

Appeals. On May 7, 1998, nearly two years after its first decision, the Court
of Appeals granted respondents motion and reconsidered its prior decision.
In its decision now challenged in the present petition, it held

Prefatorily, and to better clarify the controversy on whether this

suit is a collateral attack on the titles in issue, it must be
underscored that plaintiff-appellant alleged in his complaint that
all the nine (9) titles are registered in the name of defendant-
appellee, Ma. Elvira T. Castillo, except one which appears in
the name of Eloisa Castillo (see par. 9, Complaint). However, a
verification of the annexes of such initiatory pleading shows
some discrepancies, to wit:

1. TCT No. 149046 (Annex

A) =.Elvira T. Castillo, single

2. TCT No. 168208 ( Annex

B) =..........-do-

3. TCT No. 37046 (Annex

C) =..........-do-

4. TCT No. 37047 (Annex

D) = ..... ...-do-

5. TCT No. 37048 (Annex =..........-do-

E)

6. TCT No. 30368 (Annex

F) =.Steelhaus Realty & Dev. Corp.

7. TCT No. 30369 (Annex

G) =..........-do-

8. TCT No. 30371 (Annex

F) =..........-do-

9.TCT No. (92323) 67881

(Annex I) = Eloisa Castillo

hustisya

In this action, plaintiff-appellant seeks to be declared as 1/2 co-

owner of the real properties covered by the above listed titles
and eventually for their partition [par. (a), Prayer; p. 4 Records].
Notably, in order to achieve such prayer for a joint co-
ownership declaration, it is unavoidable that the individual titles
involved be altered, changed, canceled or modified to include
therein the name of the appellee as a registered 1/2 co-owner.
Yet, no cause of action or even a prayer is contained in the
complaint filed. Manifestly, absent any cause or prayer for the
alteration, cancellation, modification or changing of the titles
involved, the desired declaration of co-ownership and eventual
partition will utterly be an indirect or collateral attack on the
subject titles in this suit.

It is here that We fell into error, such that, if not rectified will
surely lead to a procedural lapse and a possible injustice. Well
settled is the rule that a certificate of title cannot be altered,
modified or canceled except in a direct proceeding in
accordance with law. Jksm

In this jurisdiction, the remedy of the landowner whose property

has been wrongfully or erroneously registered in another name
is, after one year from the date of the decree, not to set aside
the decree, but respecting it as incontrovertible and no longer
open to review, to bring an action for reconveyance or, if the
property had passed into the hands of an innocent purchaser
for value, for damages. Verily, plaintiff-appellant should have
first pursued such remedy or any other relief directly attacking
the subject titles before instituting the present partition suit.
Apropos, the case at bench appears to have been prematurely
filed.
 Lastly, to grant the partition prayed for by the appellant will in
effect rule and decide against the properties registered in the
names of Steelhouse Realty and Development Corporation and
Eloisa Castillo, who are not parties in the case. To allow this to
happen will surely result to injustice and denial of due process
of law. . . .
[11]

Petitioner moved for reconsideration but his motion was denied by the
Court of Appeals in its resolution dated December 21, 1998. Hence this
petition.

Petitioner contends that: (1) the Court of Appeals, in its first decision of
November 7, 1996, was correct in applying the Roque ruling and in
rejecting respondents claim that she was the sole owner of the subject
properties and that the partition suit was a collateral attack on the titles; (2)
the Court of Appeals correctly ruled in its first decision that Art. 148 of the
Family Code governs the co-ownership between the parties, hence, the
complaint for partition is proper; (3) with respect to the properties registered
in the name of Steelhouse Realty, respondent admitted ownership thereof
and, at the very least, these properties could simply be excluded and the
partition limited to the remaining real and personal properties; and (4) the
Court of Appeals erred in not holding that under the Civil Code, there is an
implied trust in his favor. [12]

The issue in this case is really whether summary judgment, in accordance

with Rule 35 of the Rules of Court, is proper. We rule in the negative.

First. Rule 35, 3 of the Rules of Court provides that summary judgment is
proper only when, based on the pleadings, depositions, and admissions on
file, and after summary hearing, it is shown that except as to the amount of
damages, there is no veritable issue regarding any material fact in the
action and the movant is entitled to judgment as a matter of
law. Conversely, where the pleadings tender a genuine issue,i.e., an
[13]

issue of fact the resolution of which calls for the presentation of evidence,
as distinguished from an issue which is sham, fictitious, contrived, set-up in
bad faith, or patently unsubstantial, summary judgment is not proper. Chiefx
[14]

In the present case, we are convinced that genuine issues exist. Petitioner
anchors his claim of co-ownership on two factual grounds: first, that said
properties were acquired by him and respondent during their union from
1979 to 1992 from profits derived from their brokerage business; and
second, that said properties were registered solely in respondents name
only because they agreed to that arrangement, thereby giving rise to an
implied trust in accordance with Art. 1452 and Art. 1453 of the Civil Code.
These allegations are denied by respondent. She denies that she and
petitioner lived together as husband and wife. She also claims that the
properties in question were acquired solely by her with her own money and
resources. With such conflicting positions, the only way to ascertain the
truth is obviously through the presentation of evidence by the parties.

The trial court ruled that it is immaterial whether the parties actually lived
together as husband and wife because Art. 144 of the Civil Code can not
be made to apply to them as they were both incapacitated to marry each
other. Hence, it was impossible for a co-ownership to exist between them.

We disagree.

Art. 144 of the Civil Code provides:

When a man and a woman live together as husband and wife,

but they are not married, or their marriage is void from the
beginning, the property acquired by either or both of them
through their work or industry or their wages and salaries shall
be governed by the rules on co-ownership.

This provision of the Civil Code, applies only to cases in which a man and a
woman live together as husband and wife without the benefit of marriage
provided they are not incapacitated or are without impediment to marry
each other, or in which the marriage is void ab initio, provided it is not
[15]

bigamous. Art. 144, therefore, does not cover parties living in an adulterous
relationship. However, Art. 148 of the Family Code now provides for a
limited co-ownership in cases where the parties in union are incapacitated
to marry each other. It states:

In cases of cohabitation not falling under the preceding

article, only the properties acquired by both of the parties
[16]

through their actual joint contribution of money, property or

industry shall be owned by them in common in proportion to
their respective contributions. In the absence of proof to the
contrary, their contributions and corresponding shares are
presumed to be equal. The same rule and presumption shall
apply to joint deposits of money and evidences of credits. HTML

If one of the parties is validly married to another, his or her

share in the co-ownership shall accrue to the absolute
community or conjugal partnership existing in such valid
marriage. If the party who acted in bad faith is not validly
married to another, his or her share shall be forfeited in the
manner provided in the last paragraph of the preceding article.
 The foregoing rules on forfeiture shall likewise apply even if
both parties are in bad faith.

It was error for the trial court to rule that, because the parties in this case
were not capacitated to marry each other at the time that they were alleged
to have been living together, they could not have owned properties in
common. The Family Code, in addition to providing that a co-ownership
exists between a man and a woman who live together as husband and wife
without the benefit of marriage, likewise provides that, if the parties are
incapacitated to marry each other, properties acquired by them through
their joint contribution of money, property or industry shall be owned by
them in common in proportion to their contributions which, in the absence
of proof to the contrary, is presumed to be equal. There is thus co-
ownership eventhough the couple are not capacitated to marry each other.

In this case, there may be a co-ownership between the parties herein.

Consequently, whether petitioner and respondent cohabited and whether
the properties involved in the case are part of the alleged co-ownership are
genuine and material. All but one of the properties involved were alleged to
have been acquired after the Family Code took effect on August 3, 1988.
With respect to the property acquired before the Family Code took effect if
it is shown that it was really acquired under the regime of the Civil Code,
then it should be excluded.

Petitioner also alleged in paragraph 7 of his complaint that:

Due to the effective management, hardwork and enterprise of

plaintiff assisted by defendant, their customs brokerage
business grew and out of the profits therefrom, the parties
acquired real and personal properties which were, upon
agreement of the parties, listed and registered in defendants
name with plaintiff as the unregistered co-owner of all said
properties. Esmsc
[17]

On the basis of this, he contends that an implied trust existed pursuant to

Art. 1452 of the Civil Code which provides that "(I)f two or more persons
agree to purchase property and by common consent the legal title is taken
in the name of one of them for the benefit of all, a trust is created by force
of law in favor of the others in proportion to the interest of each." We do not
think this is correct. The legal relation of the parties is already specifically
covered by Art. 148 of the Family Code under which all the properties
acquired by the parties out of their actual joint contributions of money,
property or industry shall constitute a co-ownership. Co-ownership is a form
of trust and every co-owner is a trustee for the other. The provisions of
[18]

Art. 1452 and Art. 1453 of the Civil Code, then are no longer material since
a trust relation already inheres in a co-ownership which is governed under
Title III, Book II of the Civil Code.

Second. The trial court likewise dismissed petitioners action on the ground
that the same amounted to a collateral attack on the certificates of title
involved. As already noted, at first, the Court of Appeals ruled that
petitioners action does not challenge the validity of respondents titles.
However, on reconsideration, it reversed itself and affirmed the trial court. It
noted that petitioners complaint failed to include a prayer for the alteration,
cancellation, modification, or changing of the titles involved. Absent such
prayer, the appellate court ruled that a declaration of co-ownership and
eventual partition would involve an indirect or collateral attack on the titles.
We disagree.

A torrens title, as a rule, is conclusive and indefeasible. Proceeding from

this, P.D. No. 1529, 48 provides that a certificate of title shall not be
[19]

subject to collateral attack and can not be altered, modified, or canceled

except in a direct proceeding. When is an action an attack on a title? It is
when the object of the action or proceeding is to nullify the title, and thus
challenge the judgment pursuant to which the title was decreed. The attack
is direct when the object of an action or proceeding is to annul or set aside
such judgment, or enjoin its enforcement. On the other hand, the attack is
indirect or collateral when, in an action to obtain a different relief, an attack
on the judgment is nevertheless made as an incident thereof. [20]

In his complaint for partition, consistent with our ruling in Roque regarding
the nature of an action for partition, petitioner seeks first, a declaration that
he is a co-owner of the subject properties; and second, the conveyance of
his lawful shares. He does not attack respondents titles. Petitioner alleges
no fraud, mistake, or any other irregularity that would justify a review of the
registration decree in respondents favor. His theory is that although the
subject properties were registered solely in respondents name, but since by
agreement between them as well as under the Family Code, he is co-
owner of these properties and as such is entitled to the conveyance of his
shares. On the premise that he is a co-owner, he can validly seek the
partition of the properties in co-ownership and the conveyance to him of his
share. Esmmis

Thus, in Guevara v. Guevara, in which a parcel of land bequeathed in a

[21]

last will and testament was registered in the name of only one of the heirs,
with the understanding that he would deliver to the others their shares after
the debts of the original owner had been paid, this Court ruled that
notwithstanding the registration of the land in the name of only one of the
heirs, the other heirs can claim their shares in "such action, judicial or
extrajudicial, as may be necessary to partition the estate of the testator." [22]
Third. The Court of Appeals also reversed its first decision on the ground
that to order partition will, in effect, rule and decide against Steelhouse
Realty Development Corporation and Eloisa Castillo, both strangers to the
present case, as to the properties registered in their names. This
reasoning, however, ignores the fact that the majority of the properties
involved in the present case are registered in respondents name, over
which petitioner claims rights as a co-owner. Besides, other than the real
properties, petitioner also seeks partition of a substantial amount of
personal properties consisting of motor vehicles and several pieces of
jewelry. By dismissing petitioners complaint for partition on grounds of due
process and equity, the appellate court unwittingly denied petitioner his
right to prove ownership over the claimed real and personal properties. The
dismissal of petitioners complaint is unjustified since both ends may be
amply served by simply excluding from the action for partition the
properties registered in the name of Steelhouse Realty and Eloisa Castillo.

WHEREFORE, the amended decision of the Court of Appeals, dated May

7, 1998, is REVERSED and the case is REMANDED to the Regional Trial
Court, Branch 59, Makati City for further proceedings on the merits.

SO ORDERED.

Bellosillo, (Chairman), Quisumbing, and De Leon, Jr., JJ., concur.

Buena, J., no part. Percuriam

FIRST DIVISION

[G.R. No. 122749. July 31, 1996]

ANTONIO A. S. VALDES, petitioner, vs. REGIONAL TRIAL COURT,

BRANCH 102, QUEZON CITY, and CONSUELO M. GOMEZ-
VALDES, respondents.

DECISION
VITUG, J.:

The petition for review bewails, purely on a question of law, an alleged

error committed by the Regional Trial Court in Civil Case No. Q-92-12539.
Petitioner avers that the court a quo has failed to apply the correct law that
should govern the disposition of a family dwelling in a situation where a
marriage is declared void ab initio because of psychological incapacity on
the part of either or both of the parties to the contract.
The pertinent facts giving rise to this incident are, by and large, not in
dispute.
Antonio Valdes and Consuelo Gomez were married on 05 January
1971. Begotten during the marriage were five children. In a petition, dated
22 June 1992, Valdes sought the declaration of nullity of the marriage
pursuant to Article 36 of the Family Code (docketed Civil Case No. Q-92-
12539, Regional Trial Court of Quezon City, Branch 102). After hearing the
parties following the joinder of issues, the trial court, in its decision of 29
[1]

July 1994, granted the petition; viz:

"WHEREFORE, judgment is hereby rendered as follows:

"(1) The marriage of petitioner Antonio Valdes and respondent Consuelo Gomez-
Valdes is hereby declared null and void under Article 36 of the Family Code on the
ground of their mutual psychological incapacity to comply with their essential
marital obligations;

"(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela
Rosario shall choose which parent they would want to stay with.

"Stella Eloisa and Joaquin Pedro shall be placed in the custody of their mother,
herein respondent Consuelo Gomez-Valdes.

"The petitioner and respondent shall have visitation rights over the children who
are in the custody of the other.

"(3) The petitioner and respondent are directed to start proceedings on the
liquidation of their common properties as defined by Article 147 of the Family
Code, and to comply with the provisions of Articles 50, 51 and 52 of the same
code, within thirty (30) days from notice of this decision.

"Let a copy of this decision be furnished the Local Civil Registrar of Mandaluyong, Metro
Manila, for proper recording in the registry of marriages."[2] (Italics ours)

Consuelo Gomez sought a clarification of that portion of the decision

directing compliance with Articles 50, 51 and 52 of the Family Code. She
asserted that the Family Code contained no provisions on the procedure for
the liquidation of common property in "unions without marriage."
Parenthetically, during the hearing on the motion, the children filed a joint
affidavit expressing their desire to remain with their father, Antonio Valdes,
herein petitioner.
 In an Order, dated 05 May 1995, the trial court made the following
clarification:

"Consequently, considering that Article 147 of the Family Code explicitly provides
that the property acquired by both parties during their union, in the absence of
proof to the contrary, are presumed to have been obtained through the joint efforts
of the parties and will be owned by them in equal shares, plaintiff and defendant
will own their 'family home' and all their other properties for that matter in equal
shares.

"In the liquidation and partition of the properties owned in common by the plaintiff and
defendant, the provisions on co-ownership found in the Civil Code shall apply."[3] (Italics
supplied)

In addressing specifically the issue regarding the disposition of the

family dwelling, the trial court said:

"Considering that this Court has already declared the marriage between petitioner
and respondent as null and void ab initio, pursuant to Art. 147, the property regime
of petitioner and respondent shall be governed by the rules on co-ownership.

"The provisions of Articles 102 and 129 of the Family Code finds no application since Article
102 refers to the procedure for the liquidation of the conjugal partnership property and
Article 129 refers to the procedure for the liquidation of the absolute community of
property."[4]

Petitioner moved for a reconsideration of the order. The motion was

denied on 30 October 1995.
In his recourse to this Court, petitioner submits that Articles 50, 51 and
52 of the Family Code should be held controlling; he argues that:
"I

"Article 147 of the Family Code does not apply to cases where the parties are
psychological incapacitated.
"II

"Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code
govern the disposition of the family dwelling in cases where a marriage is declared
void ab initio, including a marriage declared void by reason of the psychological
incapacity of the spouses.
"III
"Assuming arguendo that Article 147 applies to marriages declared void ab
initio on the ground of the psychological incapacity of a spouse, the same may be
read consistently with Article 129.
"IV

"It is necessary to determine the parent with whom majority of the children wish to stay."[5]

The trial court correctly applied the law. In a void marriage, regardless
of the cause thereof, the property relations of the parties during the period
of cohabitation is governed by the provisions of Article 147 or Article 148,
such as the case may be, of the Family Code. Article 147 is a remake of
Article 144 of the Civil Code as interpreted and so applied in previous
cases; it provides:
[6]

"ART. 147. When a man and a woman who are capacitated to marry each other,
live exclusively with each other as husband and wife without the benefit of
marriage or under a void marriage, their wages and salaries shall be owned by
them in equal shares and the property acquired by both of them through their work
or industry shall be governed by the rules on co-ownership.

"In the absence of proof to the contrary, properties acquired while they lived
together shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be owned by them in equal shares. For purposes of this Article,
a party who did not participate in the acquisition by the other party of any property
shall be deemed to have contributed jointly in the acquisition thereof if the former's
efforts consisted in the care and maintenance of the family and of the household.

"Neither party can encumber or dispose by acts inter vivos of his or her share in the
property acquired during cohabitation and owned in common, without the consent
of the other, until after the termination of their cohabitation.

"When only one of the parties to a void marriage is in good faith, the share of the
party in bad faith in the co-ownership shall be forfeited in favor of their common
children. In case of default of or waiver by any or all of the common children or
their descendants, each vacant share shall belong to the respective surviving
descendants. In the absence of descendants, such share shall belong to the innocent
party. In all cases, the forfeiture shall take place upon termination of the
cohabitation."

This peculiar kind of co-ownership applies when a man and a woman,

suffering no legal impediment to marry each other, so exclusively live
together as husband and wife under a void marriage or without the benefit
of marriage. The term "capacitated" in the provision (in the first paragraph
of the law) refers to the legal capacity of a party to contract marriage, i.e.,
any "male or female of the age of eighteen years or upwards not under any
of the impediments mentioned in Articles 37 and 38" of the Code.
[7]

Under this property regime, property acquired by both spouses through

their work and industry shall be governed by the rules on equal co-
ownership. Any property acquired during the union is prima faciepresumed
to have been obtained through their joint efforts. A party who did not
participate in the acquisition of the property shall still be considered as
having contributed thereto jointly if said party's "efforts consisted in the care
and maintenance of the family household." Unlike the conjugal partnership
[8]

of gains, the fruits of the couple's separate property are not included in the
co-ownership.
Article 147 of the Family Code, in substance and to the above extent,
has clarified Article 144 of the Civil Code; in addition, the law now expressly
provides that
(a) Neither party can dispose or encumber by act inter vivos his or her
share in co-ownership property, without the consent of the other, during the
period of cohabitation; and
(b) In the case of a void marriage, any party in bad faith shall forfeit his
or her share in the co-ownership in favor of their common children; in
default thereof or waiver by any or all of the common children, each vacant
share shall belong to the respective surviving descendants, or still in default
thereof, to the innocent party. The forfeiture shall take place upon the
termination of the cohabitation or declaration of nullity of the marriage.
[9] [10]

When the common-law spouses suffer from a legal impediment to

marry or when they do not live exclusively with each other (as husband and
wife ),only the property acquired by both of them through theiractual
joint contribution of money, property or industry shall be owned in common
and in proportion to their respective contributions. Such contributions and
corresponding shares, however, are prima faciepresumed to be equal. The
share of any party who is married to another shall accrue to the absolute
community or conjugal partnership, as the case may be, if so existing under
a valid marriage. If the party who has acted in bad faith is not validly
married to another, his or her share shall be forfeited in the manner already
heretofore expressed. [11]

In deciding to take further cognizance of the issue on the settlement of

the parties' common property, the trial court acted neither imprudently nor
precipitately; a court which has jurisdiction to declare the marriage a nullity
must be deemed likewise clothed with authority to resolve incidental and
consequential matters. Nor did it commit a reversible error in ruling that
petitioner and private respondent own the "family home" and all their
common property in equal shares, as well as in concluding that, in the
liquidation and partition of the property owned in common by them, the
provisions on co-ownership under the Civil Code, not Articles 50, 51 and
52, in relation to Articles 102 and 129, of the Family Code, should aptly
[12]

prevail. The rules set up to govern the liquidation of either the absolute
community or the conjugal partnership of gains, the property regimes
recognized for valid and voidable marriages (in the latter case until the
contract is annulled ),are irrelevant to the liquidation of the co-ownership
that exists between common-law spouses. The first paragraph of Article 50
of the Family Code, applying paragraphs (2 ),(3 ),(4) and (5) of Article
43, relates only, by its explicit terms, to voidable marriages and,
[13]

exceptionally, tovoid marriages under Article 40 of the Code, i.e., the

[14]

declaration of nullity of a subsequent marriage contracted by a spouse of a

prior void marriage before the latter is judicially declared void. The latter is
a special rule that somehow recognizes the philosophy and an old doctrine
that void marriages are inexistent from the very beginning and no judicial
decree is necessary to establish their nullity. In now requiring forpurposes
of remarriage, the declaration of nullity by final judgment of the previously
contracted void marriage, the present law aims to do away with any
continuing uncertainty on the status of the second marriage. It is not then
illogical for the provisions of Article 43, in relation to Articles 41 and
[15]

42, of the Family Code, on the effects of the termination of a subsequent

[16]

marriage contracted during the subsistence of a previous marriage to be

made applicable pro hac vice. In all other cases, it is not to be assumed
that the law has also meant to have coincident property relations, on the
one hand, between spouses in valid and voidable marriages (before
annulment) and, on the other, between common-law spouses or spouses of
void marriages, leaving to ordain, in the latter case, the ordinary rules on
co-ownership subject to the provision of Article 147 and Article 148 of the
Family Code. It must be stressed, nevertheless, even as it may merely
state the obvious, that the provisions of the Family Code on the "family
home," i.e., the provisions found in Title V, Chapter 2, of the Family Code,
remain in force and effect regardless of the property regime of the spouses.
WHEREFORE, the questioned orders, dated 05 May 1995 and 30
October 1995, of the trial court are AFFIRMED. No costs.
SO ORDERED.
Padilla, Kapunan, and Hermosisima, Jr., JJ., concur.
Bellosillo, J., on leave.

THIRD DIVISION

[G.R. No. 137650. April 12, 2000]

GUILLERMA TUMLOS, petitioner, vs. SPOUSES MARIO FERNANDEZ

and LOURDES FERNANDEZ, respondents.
 DECISION

PANGANIBAN, J.:

Under Article 148 of the Family Code, a man and a woman who are not legally
capacitated to marry each other, but who nonetheless live together conjugally, may
be deemed co-owners of a property acquired during the cohabitation only upon proof
that each made an actual contribution to its acquisition. Hence, mere cohabitation
without proof of contribution will not result in a co-ownership.

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the
November 19, 1998 Decision of the Court of Appeals[1] (CA), which reversed the
October 7, 1997 Order of the Regional Trial Court (RTC).[2] The dispositive part of the
CA Decision reads: Jur-is

"WHEREFORE, the instant petition is GRANTED, and the questioned

orders of the court a quo dated October 7, 1997 and November 11,
1997, are hereby REVERSED and SET ASIDE. The judgment of the
court a quo dated June 5, 1997 is hereby REINSTATED. Costs against
the private respondents."[3]

The assailed Order of the RTC disposed as follows: Supr-ema

"Wherefore, the decision of this Court rendered on June 5, 1997

affirming in toto the appealed judgment of the [MTC] is hereby
reconsidered and a new one is entered reversing said decision of the
[MTC] and dismissing the complaint in the above-entitled case."[4]

Petitioner also assails the February 14, 1999 CA Resolution denying the Motion for
Reconsideration.

The Facts

The Court of Appeals narrates the facts as follows:

"[Herein respondents] were the plaintiffs in Civil Case No. 6756, an

action for ejectment filed before Branch 82 of the MTC of Valenzuela,
Metro Manila against [herein Petitioner] Guillerma Tumlos, Toto
Tumlos, and Gina Tumlos. In their complaint dated July 5, 1996, the
said spouses alleged that they are the absolute owners of an
apartment building located at ARTE SUBDIVISION III, Lawang Bato,
Valenzuela, Metro Manila; that through tolerance they had allowed the
defendants-private respondents to occupy the apartment building for
the last seven (7) years, since 1989, without the payment of any rent;
that it was agreed upon that after a few months, defendant Guillerma
Tumlos will pay P1,600.00 a month while the other defendants
promised to pay P1,000.00 a month, both as rental, which agreement
was not complied with by the said defendants; that they have
demanded several times [that] the defendants x x x vacate the
premises, as they are in need of the property for the construction of a
new building; and that they have also demanded payment of
P84,000.00 from Toto and Gina Tumlos representing rentals for seven
(7) years and payment of P143,600.00 from Guillerma Tumlos as
unpaid rentals for seven (7) years, but the said demands went
unheeded. They then prayed that the defendants be ordered to vacate
the property in question and to pay the stated unpaid rentals, as well as
to jointly pay P30,000.00 in attorneys fees.

"[Petitioner] Guillerma Tumlos was the only one who filed an answer to
the complaint. She averred therein that the Fernandez spouses had no
cause of action against her, since she is a co-owner of the subject
premises as evidenced by a Contract to Sell wherein it was stated that
she is a co-vendee of the property in question together with
[Respondent] Mario Fernandez. She then asked for the dismissal of the
complaint.

"After an unfruitful preliminary conference on November 15, 1996, the

MTC required the parties to submit their affidavits and other evidence
on the factual issues defined in their pleadings within ten (10) days
from receipt of such order, pursuant to section 9 of the Revised Rule
on Summary Procedure. [Petitioner] Guillerma Tumlos submitted her
affidavit/position paper on November 29, 1996, while the [respondents]
filed their position paper on December 5, 1996, attaching thereto their
marriage contract, letters of demand to the defendants, and the
Contract to Sell over the disputed property. The MTC thereafter
promulgated its judgment on January 22, 1997[.]Scs-daad

xxxxxxxxx

"Upon appeal to the [RTC], [petitioner and the two other] defendants
alleged in their memorandum on appeal that [Respondent] Mario
Fernandez and [Petitioner] Guillerma had an amorous relationship, and
that they acquired the property in question as their love nest. It was
further alleged that they lived together in the said apartment building
with their two (2) children for around ten(10) years, and that Guillerma
administered the property by collecting rentals from the lessees of the
other apartments, until she discovered that [Respondent Mario]
deceived her as to the annulment of his marriage. It was also during
the early part of 1996 when [Respondent Mario] accused her of being
unfaithful and demonstrated his baseless [jealousy].

"In the same memorandum, [petitioner and the two other] defendants
further averred that it was only recently that Toto Tumlos was
temporarily accommodated in one of the rooms of the subject premises
while Gina Tumlos acted as a nanny for the children. In short, their
presence there [was] only transient and they [were] not tenants of the
Fernandez spouses.
 "On June 5, 1997, the [RTC] rendered a decision affirming in toto the
judgment of the MTC. S-daad

"The [petitioner and the two other defendants] seasonably filed a

motion for reconsideration on July 3, 1997, alleging that the decision of
affirmance by the RTC was constitutionally flawed for failing to point
out distinctly and clearly the findings of facts and law on which it was
based vis--vis the statements of issues they have raised in their
memorandum on appeal. They also averred that the Contract to Sell
presented by the plaintiffs which named the buyer as Mario P.
Fernandez, of legal age, married to Lourdes P. Fernandez, should not
be given credence as it was falsified to appear that way. According to
them, the Contract to Sell originally named Guillerma Fernandez as the
spouse of [Respondent Mario]. As found by the [RTC] in its judgment, a
new Contract to Sell was issued by the sellers naming the
[respondents] as the buyers after the latter presented their marriage
contract and requested a change in the name of the vendee-wife. Such
facts necessitate the conclusion that Guillerma was really a co-owner
thereof, and that the [respondents] manipulated the evidence in order
to deprive her of her rights to enjoy and use the property as recognized
by law.Sd-aamiso

xxxxxxxxx

"The [RTC], in determining the question of ownership in order to

resolve the issue of possession, ruled therein that the Contract to Sell
submitted by the Fernandez spouses appeared not to be authentic, as
there was an alteration in the name of the wife of [Respondent] Mario
Fernandez. Hence, the contract presented by the [respondents] cannot
be given any weight. The court further ruled that Guillerma and
[Respondent Mario] acquired the property during their cohabitation as
husband and wife, although without the benefit of marriage. From such
findings, the court concluded that [Petitioner] Guillerma Tumlos was a
co-owner of the subject property and could not be ejected therefrom.

"The [respondents] then filed a motion for reconsideration of the order

of reversal, but the same was denied by the [RTC]."[5]

As earlier stated, the CA reversed the RTC. Hence, this Petition filed by Guillerma
Tumlos only.[6]

Ruling of the Court of Appeals

The CA rejected petitioners claim that she and Respondent Mario Fernandez were
co-owners of the disputed property. The CA ruled: Scnc-m

"From the inception of the instant case, the only defense presented by
private respondent Guillerma is her right as a co-owner of the subject
property[.]
 xxxxxxxxx

This claim of co-ownership was not satisfactorily proven by Guillerma,

as correctly held by the trial court. No other evidence was presented to
validate such claim, except for the said affidavit/position paper. As
previously stated, it was only on appeal that Guillerma alleged that she
cohabited with the petitioner-husband without the benefit of marriage,
and that she bore him two (2) children. Attached to her memorandum
on appeal are the birth certificates of the said children. Such
contentions and documents should not have been considered by the x
x x (RTC), as they were not presented in her affidavit/position paper
before the trial court (MTC).

xxxxxxxxx

"However, even if the said allegations and documents could be

considered, the claim of co-ownership must still fail. As [herein
Respondent] Mario Fernandez is validly married to [Respondent]
Lourdes Fernandez (as per Marriage Contract dated April 27, 1968, p.
45, Original Record), Guillerma and Mario are not capacitated to marry
each other. Thus, the property relations governing their supposed
cohabitation is that found in Article 148 of Executive Order No. 209, as
amended, otherwise known as the Family Code of the Philippines[.]

xxxxxxxxx

"It is clear that actual contribution is required by this provision, in

contrast to Article 147 of the Family Code which states that efforts in
the care and maintenance of the family and household are regarded as
contributions to the acquisition of common property by one who has no
salary or income or work or industry (Agapay v. Palang, 276 SCRA
340). The care given by one party [to] the home, children, and
household, or spiritual or moral inspiration provided to the other, is not
included in Article 148 (Handbook on the Family Code of the
Philippines by Alicia V. Sempio-Diy, 1988 ed., p. 209). Hence, if actual
contribution of the party is not proved, there will be no co-ownership
and no presumption of equal shares (Agapay, supra at p. 348, citing
Commentaries and Jurisprudence on the Civil Code of the Philippines
Volume I by Arturo M. Tolentino, 1990 ed., p. 500).

"In the instant case, no proof of actual contribution by Guillerma

Tumlos in the purchase of the subject property was presented. Her
only evidence was her being named in the Contract to Sell as the wife
of [Respondent] Mario Fernandez. Since she failed to prove that she
contributed money to the purchase price of the subject apartment
building, We find no basis to justify her co-ownership with [Respondent
Mario]. The said property is thus presumed to belong to the conjugal
partnership property of Mario and Lourdes Fernandez, it being
acquired during the subsistence of their marriage and there being no
other proof to the contrary (please see Article 116 of the Family Code).
 "The court a quo (RTC) also found that [Respondent Mario] has two (2)
children with Guillerma who are in her custody, and that to eject them
from the apartment building would be to run counter with the obligation
of the former to give support to his minor illegitimate children, which
indispensably includes dwelling. As previously discussed, such finding
has no leg to stand on, it being based on evidence presented for the
first time on appeal. Nc-mmis

xxxxxxxxx

"Even assuming arguendo that the said evidence was validly

presented, the RTC failed to consider that the need for support cannot
be presumed. Article 203 of the Family Code expressly provides that
the obligation to give support shall be demandable from the time the
person who has a right to receive the same needs it for maintenance,
but it shall not be paid except from the date of judicial or extrajudicial
demand. x x x. Nc-m

"In contrast to the clear pronouncement of the Supreme Court, the RTC
instead presumed that Guillerma and her children needed support from
[Respondent Mario]. Worse, it relied on evidence not properly
presented before the trial court (MTC).

"With regard to the other [defendants], Gina and Toto Tumlos, a close
perusal of the records shows that they did not file any responsive
pleading. Hence, judgment may be rendered against them as may be
warranted by the facts alleged in the complaint and limited to what is
prayed for therein, as provided for in Section 6 of the Revised Rules on
Summary Procedure. There was no basis for the public respondent to
dismiss the complaint against them."[7] (emphasis in the original) Ol-
dmiso

The Issues

In her Memorandum, petitioner submits the following issues for the consideration of
the Court:

"I. The Court of Appeals gravely erred and abused its discretion in not
outrightly dismissing the petition for review filed by respondents.

"II. The Court of Appeals erred in finding that petitioner is not the co-
owner of the property in litis.

"III. Corollary thereto, the Court of Appeals erred in applying Art. 148 of
the Family Code in the case at bar. Man-ikan

"IV. The Court of Appeals erred in disregarding the substantive right of

support vis--vis the remedy of ejectment resorted to by respondents."[8]
In resolving this case, we shall answer two questions: (a) Is the petitioner a co-owner
of the property? (b) Can the claim for support bar this ejectment suit? We shall also
discuss these preliminary matters: (a) whether the CA was biased in favor of
respondents and (b) whether the MTC had jurisdiction over the ejectment suit. Manik-
s

The Courts Ruling

The Petition has no merit.

Preliminary Matters

Petitioner submits that the CA exhibited partiality in favor of herein respondents. This
bias, she argues, is manifest in the following: Man-ikx

1. The CA considered the respondents Petition for Review[9] despite their failure to
attach several pleadings as well as the explanation for the proof of service, despite
the clear mandate of Section 11[10] of Rule 13 of the Revised Rules of Court and
despite the ruling in Solar Team Entertainment, Inc. v. Ricafort.[11]

2. It allowed respondents to submit the pleadings that were not attached.

3. It considered respondents Reply dated May 20, 1998, which had allegedly been
filed out of time. Ne-xold

4. It declared that the case was submitted for decision without first determining
whether to give due course to the Petition, pursuant to Section 6, Rule 42 of the
Rules of Court.[12]

The CA, for its part, succinctly dismissed these arguments in this wise: Mi-so

"It is too late in the day now to question the alleged procedural error
after we have rendered the decision. More importantly, when the
private respondent filed their comment to the petition on April 26, 1998,
they failed to question such alleged procedural error. Neither have they
questioned all the resolutions issued by the Court after their filing of
such comment. They should, therefore, be now considered in estoppel
to question the same."[13]

We agree with the appellate court. Petitioner never raised these matters before the
CA. She cannot be allowed now to challenge its Decision on grounds of alleged
technicalities being belatedly raised as an afterthought. In this light, she cannot
invoke Solar[14] because she never raised this issue before the CA. Spp-edjo

More important, we find it quite sanctimonious indeed on petitioners part to rely, on

the one hand, on these procedural technicalities to overcome the appealed Decision
and, on the other hand, assert that the RTC may consider the new evidence she
presented for the first time on appeal. Such posturing only betrays the futility of
petitioners assertion, if not its absence of merit.
One other preliminary matter. Petitioner implies that the court of origin, the Municipal
Trial Court (MTC), did not have jurisdiction over the "nature of the case," alleging
that the real question involved is one of ownership. Since the issue of possession
cannot be settled without passing upon that of ownership, she maintains that the
MTC should have dismissed the case. Josp-ped

This contention is erroneous. The issue of ownership may be passed upon by the
MTC to settle the issue of possession.[15] Such disposition, however, is not final
insofar as the issue of ownership is concerned,[16]which may be the subject of another
proceeding brought specifically to settle that question.

Having resolved these preliminary matters, we now move on to petitioners

substantive contentions. Spped

First Issue: Petitioner as Co-owner

Petitioners central theory and main defense against respondents action for ejectment
is her claim of co-ownership over the property with Respondent Mario Fernandez. At
the first instance before the MTC, she presented a Contract to Sell indicating that
she was his spouse. The MTC found this document insufficient to support her claim.
The RTC, however, after considering her allegation that she had been cohabiting
with Mario Fernandez as shown by evidence presented before it,[17] ruled in her
favor. Misspped

On the other hand, the CA held that the pieces of evidence adduced before the RTC
could no longer be considered because they had not been submitted before the
MTC. Hence, the appellate court concluded that "[t]he claim of co-ownership was not
satisfactorily proven x x x."[18]

We agree with the petitioner that the RTC did not err in considering the evidence
presented before it. Nonetheless, we reject her claim that she was a co-owner of the
disputed property. Missc

Evidence Presented on Appeal Before the RTC

In ruling that the RTC erred in considering on appeal the evidence presented by
petitioner, the CA relied on the doctrine that issues not raised during trial could not
be considered for the first time during appeal.[19]

We disagree. In the first place, there were no new matters or issues belatedly raised
during the appeal before the RTC. The defense invoked by petitioner at the very start
was that she was a co-owner. To support her claim, she presented a Contract to Sell
dated November 14, 1986, which stated that Mario Fernandez was legally married to
her. The allegation that she was cohabiting with him was a mere elaboration of her
initial theory.

In the second place, procedural rules are generally premised on considerations of

fair play. Respondents never objected when the assailed evidence was presented
before the RTC. Thus, they cannot claim unfair surprise or prejudice. Scmis
Petitioner Not a Co-Owner Under Article 144 of the Civil Code

Even considering the evidence presented before the MTC and the RTC, we cannot
accept petitioners submission that she is a co-owner of the disputed property
pursuant to Article 144 of the Civil Code.[20] As correctly held by the CA, the
applicable law is not Article 144 of the Civil Code, but Article 148 of the Family Code
which provides:

"Art. 148. In cases of cohabitation not falling under the preceding

Article,[21] only the properties acquired by both of the parties through
their actual joint contribution of money, property, or industry shall be
owned by them in common in proportion to their respective
contributions. In the absence of proof to the contrary, their contributions
and corresponding shares are presumed to be equal. The same rule
and presumption shall apply to joint deposits of money and evidences
of credit.

"If one of the parties is validly married to another, his or her share in
the co-ownership shall accrue to the absolute community or conjugal
partnership existing in such valid marriage. If the party who acted in
bad faith is not validly married to another, his or her share shall be
forfeited in the manner provided in the last paragraph of the preceding
Article.

"The foregoing rules on forfeiture shall likewise apply even if both

parties are in bad faith." Sc

Article 144 of the Civil Code applies only to a relationship between a man and a
woman who are not incapacitated to marry each other,[22] or to one in which the
marriage of the parties is void[23] from the beginning.[24] It does not apply to a
cohabitation that amounts to adultery or concubinage, for it would be absurd to
create a co-ownership where there exists a prior conjugal partnership or absolute
community between the man and his lawful wife.[25]

Based on evidence presented by respondents, as well as those submitted by

petitioner herself before the RTC, it is clear that Mario Fernandez was incapacitated
to marry petitioner because he was legally married to Lourdes Fernandez. It is also
clear that, as readily admitted by petitioner, she cohabited with Mario in a state of
concubinage. Therefore, Article 144 of the Civil Code is inapplicable.

As stated above, the relationship between petitioner and Respondent Mario

Fernandez is governed by Article 148 of the Family Code. Justice Alicia V. Sempio-
Diy points out[26] that "[t]he Family Code has filled the hiatus in Article 144 of the Civil
Code by expressly regulating in its Article 148 the property relations of couples living
in a state of adultery or concubinage." x-sc

Hence, petitioners argument -- that the Family Code is inapplicable because the
cohabitation and the acquisition of the property occurred before its effectivity --
deserves scant consideration. Suffice it to say that the law itself states that it can be
applied retroactively if it does not prejudice vested or acquired rights.[27] In this case,
petitioner failed to show any vested right over the property in question. Moreover, to
resolve similar issues, we have applied Article 148 of the Family Code retroactively.[28]

No Evidence of Actual Joint Contribution

Another consideration militates against petitioners claim that she is a co-owner of the
property. In Agapay,[29] the Court ruled:

"Under Article 148, only the properties acquired by both of the parties
through their actual joint contribution of money, property or
industry shall be owned by them in common in proportion to their
respective contributions. It must be stressed that the actual contribution
is required by this provision, in contrast to Article 147 which states that
efforts in the care and maintenance of the family and household, are
regarded as contributions to the acquisition of common property by one
who has no salary or income or work or industry. If the actual
contribution of the party is not proved, there will be no co-
ownership and no presumption of equal shares." (emphasis ours) xl-aw

In this case, petitioner fails to present any evidence that she had made an actual
contribution to purchase the subject property. Indeed, she anchors her claim of co-
ownership merely on her cohabitation with Respondent Mario Fernandez.

Likewise, her claim of having administered the property during the cohabitation is
unsubstantiated. In any event, this fact by itself does not justify her claim, for nothing
in Article 148 of the Family Code provides that the administration of the property
amounts to a contribution in its acquisition.

Clearly, there is no basis for petitioners claim of co-ownership. The property in

question belongs to the conjugal partnership of respondents. Hence, the MTC and
the CA were correct in ordering the ejectment of petitioner from the premises. Sc-lex

Second Issue: Support versus Ejectment

Petitioner contends that since Respondent Mario Fernandez failed to repudiate her
claim regarding the filiation of his alleged sons, Mark Gil and Michael Fernandez, his
silence on the matter amounts to an admission. Arguing that Mario is liable for
support, she advances the theory that the childrens right to support, which
necessarily includes shelter, prevails over the right of respondents to eject her.

We disagree. It should be emphasized that this is an ejectment suit whereby

respondents seek to exercise their possessory right over their property. It is
summary in character and deals solely with the issue of possession of the property in
dispute. Here, it has been shown that they have a better right to possess it than does
the petitioner, whose right to possess is based merely on their tolerance. Scl-aw

Moreover, Respondent Mario Fernandez alleged failure to repudiate petitioners claim

of filiation is not relevant to the present case. Indeed, it would be highly improper for
us to rule on such issue. Besides, it was not properly taken up below. [30] In any event,
Article 298[31] of the Civil Code requires that there should be an extrajudicial
demand.[32] None was made here. The CA was correct when it said:

"Even assuming arguendo that the said evidence was validly

presented, the RTC failed to consider that the need for support cannot
be presumed. Article [298] of the [New Civil Code] expressly provides
that the obligation to give support shall be demandable from the time
the person who has a right to receive the same need it for
maintenance, but it shall not be paid except from the date of judicial
and extrajudicial demand."[33]

WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED.

Costs against petitioner. Rtc-spped

SO ORDERED.

Melo, (Chairman), Purisima, and Gonzaga-Reyes, JJ., concur.

Vitug, J., abroad-on official business.

FIRST DIVISION

CAMILO F. BORROMEO, G.R. No. 159310

Petitioner,

Present:

PUNO, C.J., Chairperson,

- versus - CARPIO,

CORONA,

LEONARDO-DE CASTRO, and

BRION, JJ.

ANTONIETTA O. DESCALLAR, Promulgated:

Respondent. February 24, 2009

x--------------------------------------------------x
 DECISION

PUNO, C.J.:

What are the rights of an alien (and his successor-in-interest) who acquired
real properties in the country as against his former Filipina girlfriend in whose
sole name the properties were registered under the Torrens system?

The facts are as follows:

Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after

he was assigned by his employer, Simmering-Graz Panker A.G., an Austrian
company, to work at a project in Mindoro.In 1984, he transferred
to Cebu and worked at the Naga II Project of the National Power
Corporation. There, he met respondent Antonietta Opalla-Descallar, a
separated mother of two boys who was working as a waitress at St. Moritz
Hotel. Jambrich befriended respondent and asked her to tutor him in
English. In dire need of additional income to support her children,
respondent agreed. The tutorials were held in Antoniettas residence at a
squatters area in Gorordo Avenue.

Jambrich and respondent fell in love and decided to live together in a

rented house in Hernan Cortes, Mandaue City. Later, they transferred to
their own house and lots at Agro-Macro Subdivision,
Cabancalan, Mandaue City. In the Contracts to Sell dated November 18,
1985[1] and March 10, 1986[2] covering the properties, Jambrich and
respondent were referred to as the buyers.A Deed of Absolute Sale dated
November 16, 1987[3] was likewise issued in their favor. However, when the
Deed of Absolute Sale was presented for registration before the Register of
Deeds, registration was refused on the ground that Jambrich was an alien
and could not acquire alienable lands of the public domain. Consequently,
Jambrichs name was erased from the document. But it could be noted that
his signature remained on the left hand margin of page 1, beside
respondents signature as buyer on page 3, and at the bottom of page 4
which is the last page. Transfer Certificate of Title
(TCT) Nos. 24790, 24791 and 24792 over the properties were issued in
respondents name alone.

Jambrich also formally adopted respondents two sons in Sp. Proc. No.
39-MAN,[4] and per Decision of
the Regional Trial Court of Mandaue City dated May 5, 1988.[5]

However, the idyll lasted only until April 1991. By then, respondent
found a new boyfriend while Jambrich began to live with another woman
in Danao City. Jambrich supported respondents sons for only two months
after the break up.

Jambrich met petitioner Camilo F. Borromeo sometime in

1986. Petitioner was engaged in the real estate business. He also built and
repaired speedboats as a hobby. In 1989, Jambrich purchased an engine and
some accessories for his boat from petitioner, for which he became
indebted to the latter for about P150,000.00. To pay for his debt, he sold his
rights and interests in the Agro-Macro properties to petitioner for P250,000,
as evidenced by a Deed of Absolute Sale/Assignment.[6] On July 26, 1991,
when petitioner sought to register the deed of assignment, he discovered
that titles to the three lots have been transferred in the name of
respondent, and that the subject property has already been mortgaged.

On August 2, 1991, petitioner filed a complaint against respondent for

recovery of real property before
the Regional Trial Court of Mandaue City. Petitioner alleged that the
Contracts to Sell dated November 18, 1985 and March 10, 1986 and the
Deed of Absolute Sale dated November 16, 1987 over the properties which
identified both Jambrich and respondent as buyers do not reflect the true
agreement of the parties since respondent did not pay a single centavo of
the purchase price and was not in fact a buyer; that it was Jambrich alone
who paid for the properties using his exclusive funds; that Jambrich was the
real and absolute owner of the properties; and, that petitioner acquired
absolute ownership by virtue of the Deed of Absolute Sale/Assignment
dated July 11, 1991 which Jambrich executed in his favor.

In her Answer, respondent belied the allegation that she did not pay a
single centavo of the purchase price. On the contrary, she claimed that she
solely and exclusively used her own personal funds to defray and pay for the
purchase price of the subject lots in question, and that Jambrich, being an
alien, was prohibited to acquire or own real property in the Philippines.

At the trial, respondent presented evidence showing her alleged

financial capacity to buy the disputed property with money from a supposed
copra business. Petitioner, in turn, presented Jambrich as his witness and
documentary evidence showing the substantial salaries which Jambrich
received while still employed by the Austrian company, Simmering-Graz
Panker A.G.

In its decision, the court a quo found

Evidence on hand clearly show that at the time of the purchase and
acquisition of [the] properties under litigation that Wilhelm Jambrich was still
working and earning much. This fact of Jambrich earning much is not only supported
by documentary evidence but also by the admission made by the defendant
Antoniet[t]a Opalla. So that, Jambrichs financial capacity to acquire and purchase
the properties . . . is not disputed.[7]

xxx

On the other hand, evidence . . . clearly show that before defendant met
Jambrich sometime in the latter part of 1984, she was only working as a waitress at
the St. Moritz Hotel with an income of P1,000.00 a month and was . . . renting and
living only in . . . [a] room at . . . [a] squatter area at Gorordo Ave., Cebu City; that
Jambrich took pity of her and the situation of her children that he offered her a
better life which she readily accepted. In fact, this miserable financial situation of
hers and her two children . . . are all stated and reflected in the Child Study Report
dated April 20, 1983 (Exhs. G and G-1) which facts she supplied to the Social Worker
who prepared the same when she was personally interviewed by her in connection
with the adoption of her two children by Wilhelm Jambrich. So that, if such facts
were not true because these are now denied by her . . . and if it was also true that
during this time she was already earning as much as P8,000.00 to P9,000.00 as profit
per month from her copra business, it would be highly unbelievable and impossible
for her to be living only in such a miserable condition since it is the observation of
this Court that she is not only an extravagant but also an expensive person and not
thrifty as she wanted to impress this Court in order to have a big saving as clearly
shown by her actuation when she was already cohabiting and living with Jambrich
that according to her . . . the allowance given . . . by him in the amount of $500.00 a
month is not enough to maintain the education and maintenance of her children.[8]

This being the case, it is highly improbable and impossible that she could
acquire the properties under litigation or could contribute any amount for their
acquisition which according to her is worth more than P700,000.00 when while she
was working as [a] waitress at St. Moritz Hotel earning P1,000.00 a month as
salary and tips of more or less P2,000.00 she could not even provide [for] the daily
needs of her family so much so that it is safe to conclude that she was really in
financial distress when she met and accepted the offer of Jambrich to come and
live with him because that was a big financial opportunity for her and her children
who were already abandoned by her husband.[9]

xxx
The only probable and possible reason why her name appeared and was
included in [the contracts to sell dated November 18, 1985 and March 10, 1986 and
finally, the deed of absolute sale dated November 16, 1987] as buyer is because as
observed by the Court, she being a scheming and exploitive woman, she has taken
advantage of the goodness of Jambrich who at that time was still bewitched by her
beauty, sweetness, and good attitude shown by her to him since he could still very
well provide for everything she needs, he being earning (sic) much yet at that
time. In fact, as observed by this Court, the acquisition of these properties under
litigation was at the time when their relationship was still going smoothly and
harmoniously.[10] [Emphasis supplied.]

The dispositive portion of the Decision states:

WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and

against the defendant Antoniet[t]a Opalla by:

1) Declaring plaintiff as the owner in fee simple over the residential house of
strong materials and three parcels of land designated as Lot Nos. 1, 3 and 5 which
 are covered by TCT Nos. 24790, 24791 and 24792 issued by the Register of Deeds of
Mandaue City;

2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the
name of defendant Antoniet[t]a Descallar by the Register of Deeds of Mandaue City;

3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790,
24791 and 24792 in the name of defendant Antoniet[t]a Descallar and to issue new
ones in the name of plaintiff Camilo F. Borromeo;

4) Declaring the contracts now marked as Exhibits I, K and L as avoided

insofar as they appear to convey rights and interests over the properties in question
to the defendant Antoniet[t]a Descallar;

5) Ordering the defendant to pay plaintiff attorneys fees in the amount

of P25,000.00 and litigation expenses in the amount of P10,000.00; and,

6) To pay the costs.[11]

Respondent appealed to the Court of Appeals. In a Decision dated

April 10, 2002,[12] the appellate court reversed the decision of the trial
court. In ruling for the respondent, the Court of Appeals held:
We disagree with the lower courts conclusion. The circumstances involved in
the case cited by the lower court and similar cases decided on by the Supreme Court
which upheld the validity of the title of the subsequent Filipino purchasers are
absent in the case at bar. It should be noted that in said cases, the title to the
subject property has been issued in the name of the alien transferee (Godinez et al.,
vs. Fong Pak Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of
Manila, 79 Phils. 461; United Church Board for World Ministries vs. Sebastian, 159
SCRA 446, citing the case of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547;
Tejido vs. Zamacoma, 138 SCRA 78). In the case at bar, the title of the subject
property is not in the name of Jambrich but in the name of defendant-
appellant. Thus, Jambrich could not have transferred a property he has no title
thereto.[13]

Petitioners motion for reconsideration was denied.

Hence, this petition for review.

Petitioner assigns the following errors:

 I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING
RESPONDENTS JUDICIAL ADMISSION AND OTHER OVERWHELMING
EVIDENCE ESTABLISHING JAMBRICHS PARTICIPATION, INTEREST AND
OWNERSHIP OF THE PROPERTIES IN QUESTION AS FOUND BY THE
HONORABLE TRIAL COURT.

II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT

JAMBRICH HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY NOT
THEREFORE TRANSFER AND ASSIGN ANY RIGHTS AND INTERESTS IN FAVOR
OF PETITIONER.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE

WELL-REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING DOUBLE
COSTS AGAINST HEREIN PETITIONER (THEN, PLAINTIFF-APPELLEE).[14]

First, who purchased the subject properties?

The evidence clearly shows, as pointed out by the trial court, who
between respondent and Jambrich possesses the financial capacity to
acquire the properties in dispute. At the time of the acquisition of the
properties in 1985 to 1986, Jambrich was gainfully employed at Simmering-
Graz Panker A.G., an Austrian company. He was earning an estimated
monthly salary of P50,000.00.Then, Jambrich was assigned to Syria for
almost one year where his monthly salary was approximately P90,000.00.

On the other hand, respondent was employed as a waitress from 1984

to 1985 with a monthly salary of not more than P1,000.00. In 1986, when
the parcels of land were acquired, she was unemployed, as admitted by her
during the pre-trial conference. Her allegations of income from a copra
business were unsubstantiated. The supposed copra business was actually
the business of her mother and their family, with ten siblings. She has no
license to sell copra, and had not filed any income tax return. All the
motorized bancas of her mother were lost to fire, and the last one left
standing was already scrap. Further, the Child Study Report[15] submitted by
the Department of Social Welfare and Development (DSWD) in the adoption
proceedings of respondents two sons by Jambrich disclosed that:
 Antonietta tried all types of job to support the children until she was
accepted as a waitress at St. Moritz Restaurant in 1984. At first she had no problem
with money because most of the customers of St. Moritzare (sic) foreigners and they
gave good tips but towards the end of 1984 there were no more foreigners coming
because of the situation in the Philippines at that time. Her financial problem started
then. She was even renting a small room in a squatters area in Gorordo
Ave., Cebu City. It was during her time of great financial distress that she met
Wilhelm Jambrich who later offered her a decent place for herself and her
children.[16]

The DSWD Home Study Report[17] further disclosed that:

[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta
Descallar, one of the waitresses of the said Restaurants. He made friends with the
girl and asked her to tutor him in [the] English language. Antonietta accepted the
offer because she was in need of additional income to support [her] 2 young
children who were abandoned by their father. Their session was agreed to be
scheduled every afternoon at the residence of Antonietta in the squatters area
in Gorordo Avenue, Cebu City. The Austrian was observing the situation of the family
particularly the children who were malnourished. After a few months sessions, Mr.
Jambrich offered to transfer the family into a decent place. He told Antonietta that
the place is not good for the children. Antonietta who was miserable and financially
distressed at that time accepted the offer for the sake of the children.[18]

Further, the following additional pieces of evidence point to Jambrich

as the source of fund used to purchase the three parcels of land, and to
construct the house thereon:
(1) Respondent Descallar herself affirmed under oath, during her re-
direct examination and during the proceedings for the adoption of her
minor children, that Jambrich was the owner of the properties in question,
but that his name was deleted in the Deed of Absolute Sale because of legal
constraints. Nonetheless, his signature remained in the deed of sale, where
he signed as buyer.
(2) The money used to pay the subject parcels of land in installments
was in postdated checks issued by Jambrich. Respondent has never opened
any account with any bank. Receipts of the installment payments were also
in the name of Jambrich and respondent.
 (3) In 1986-1987, respondent lived in Syria with Jambrich and her two
children for ten months, where she was completely under the support of
Jambrich.
(4) Jambrich executed a Last Will and Testament, where he, as owner,
bequeathed the subject properties to respondent.

Thus, Jambrich has all authority to transfer all his rights, interests and
participation over the subject properties to petitioner by virtue of the Deed
of Assignment he executed on July 11, 1991.

Well-settled is the rule that this Court is not a trier of facts. The
findings of fact of the trial court are accorded great weight and respect, if
not finality by this Court, subject to a number of exceptions. In the instant
case, we find no reason to disturb the factual findings of the trial court. Even
the appellate court did not controvert the factual findings of the trial
court. They differed only in their conclusions of law.

Further, the fact that the disputed properties were acquired during
the couples cohabitation also does not help respondent. The rule that co-
ownership applies to a man and a woman living exclusively with each other
as husband and wife without the benefit of marriage, but are otherwise
capacitated to marry each other, does not apply.[19] In the instant case,
respondent was still legally married to another when she and Jambrich lived
together. In such an adulterous relationship, no co-ownership exists
between the parties. It is necessary for each of the partners to prove his or
her actual contribution to the acquisition of property in order to be able to
lay claim to any portion of it. Presumptions of co-ownership and equal
contribution do not apply.[20]

Second, we dispose of the issue of registration of the properties in the

name of respondent alone. Having found that the true buyer of the disputed
house and lots was the Austrian Wilhelm Jambrich, what now is the effect of
registration of the properties in the name of respondent?

It is settled that registration is not a mode of acquiring

ownership.[21] It is only a means of confirming the fact of its existence with
notice to the world at large.[22] Certificates of title are not a source of
right. The mere possession of a title does not make one the true owner of
the property. Thus, the mere fact that respondent has the titles of the
disputed properties in her name does not necessarily, conclusively and
absolutely make her the owner. The rule on indefeasibility of title likewise
does not apply to respondent. A certificate of title implies that the title is
quiet,[23] and that it is perfect, absolute and indefeasible.[24] However, there
are well-defined exceptions to this rule, as when the transferee is not a
holder in good faith and did not acquire the subject properties for a valuable
consideration.[25] This is the situation in the instant case. Respondent did not
contribute a single centavo in the acquisition of the properties. She had no
income of her own at that time, nor did she have any savings. She and her
two sons were then fully supported by Jambrich.

Respondent argued that aliens are prohibited from acquiring private

land. This is embodied in Section 7, Article XII of the 1987
Constitution,[26] which is basically a reproduction of Section 5, Article XIII of
the 1935 Constitution,[27] and Section 14, Article XIV of the 1973
Constitution.[28] The capacity to acquire private land is dependent on the
capacity to acquire or hold lands of the public domain. Private land may be
transferred only to individuals or entities qualified to acquire or hold lands
of the public domain. Only Filipino citizens or corporations at least 60% of
the capital of which is owned by Filipinos are qualified to acquire or hold
lands of the public domain. Thus, as the rule now stands, the fundamental
law explicitly prohibits non-Filipinos from acquiring or holding title to private
lands, except only by way of legal succession or if the acquisition was made
by a former natural-born citizen.[29]
 Therefore, in the instant case, the transfer of land from Agro-Macro
Development Corporation to Jambrich, who is an Austrian, would have been
declared invalid if challenged, had not Jambrich conveyed the properties to
petitioner who is a Filipino citizen. In United Church Board for World
Ministries v. Sebastian,[30] the Court reiterated the consistent ruling in a
number of cases[31] that if land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw
in the original transaction is considered cured and the title of the transferee
is rendered valid. Applying United Church Board for World Ministries, the
trial court ruled in favor of petitioner, viz.:
[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the
properties under litigation [were] void ab initio since [they were] contrary to the
Constitution of the Philippines, he being a foreigner, yet, the acquisition of these
properties by plaintiff who is a Filipino citizen from him, has cured the flaw in the
original transaction and the title of the transferee is valid.

The trial court upheld the sale by Jambrich in favor of petitioner and ordered
the cancellation of the TCTs in the name of respondent. It declared
petitioner as owner in fee simple of the residential house of strong materials
and three parcels of land designated as Lot Nos. 1, 3 and 5, and ordered the
Register of Deeds of Mandaue City to issue new certificates of title in his
name. The trial court likewise ordered respondent to pay petitioner P25,000
as attorneys fees and P10,000 as litigation expenses, as well as the costs of
suit.

We affirm the Regional Trial Court.

The rationale behind the Courts ruling in United Church Board for
World Ministries, as reiterated in subsequent cases,[32] is this since the ban
on aliens is intended to preserve the nations land for future generations of
Filipinos, that aim is achieved by making lawful the acquisition of real estate
by aliens who became Filipino citizens by naturalization or those transfers
made by aliens to Filipino citizens. As the property in dispute is already in
the hands of a qualified person, a Filipino citizen, there would be no more
 public policy to be protected. The objective of the constitutional provision to
keep our lands in Filipino hands has been achieved.

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the

Court of Appeals in C.A. G.R. CV No. 42929 dated April 10, 2002 and its
Resolution dated July 8, 2003 are REVERSED and SET ASIDE. The Decision of
the Regional Trial Court of Mandaue City in Civil Case No. MAN-1148 is
REINSTATED.

SO ORDERED.

REYNATO S. PUNO
Chief Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice