OCAMPO VS POTENCIANO

[PAZ Y. OCAMPO, JOSEFA Y. OCAMPO, ISIDRO Y. OCAMPO, GIL Y. OCAMPO, MAURO Y. OCAMPO, and VICENTE Y. OCAMPO, plainti!"
app#ll##!,
$!.
CONRADO POTENCIANO, VICTOR POTENCIANO and LOURDES POTENCIANO, d##ndant!.
VICTOR POTENCIANO and LOURDES POTENCIANO, d##ndant!"app#llant!.%
Topic: Settlement of Estate Venue and Process Dissolution of Marriage
Ponente: REYES, J
DOCTRINE: When the marriage is dissolved b the death of either husband or !ife, the
"artnershi" affairs must be li#uidated in the testate or intestate "roceedings of the deceased
s"ouse$
FACTS: %om"lainant Pa& Yatco !as the !ido! of Edilberto 'cam"o !hose estate is under
consideration in the case at bar$ Edilberto 'cam"o entered into a sale (house and lot) !ith
"acto de retro !ith his relative %onrado Potenciano and the latter*s !ife, Rufina Rees$ 'n
that same da, 'cam"o signed another document, ma+ing it a""ear that, for an annual
rental of P,--, !hich, as ma be noted, is e#uivalent to ./ "er cent of the "urchase "rice,
the vendees !ere leasing to him the house and lot for the duration of the redem"tion "eriod$
0he "ro"ert !as registered in the name of 'cam"o alone but in realit belonged to him and
his !ife as con1ugal "ro"ert
0he "eriod originall fi2ed for the re"urchase !as one ear, 3e2tendible to another ear,3 but
several e2tensions !ere granted, !ith the vendor "aing "art of the "rinci"al in addition to
interests$ 0he last e2tension granted !as for ear from 4ebruar ,, .5,6, and the "eriod
having ela"sed !ithout the re"urchase having been made, Potenciano, filed !ith the register
of deeds of 7aguna an affidavit for the consolidation of title, on the strength of !hich the
register of deeds issued a 0%0$
0his, ho!ever, did not close the avenue for settlement as Potenciano, his !ife Rufina Rees
alread deceased, gave Pa& Yatco an option to repurchase the "ro"ert for P/,8-- !ithin
8 ears, and a lease thereon for the same "eriod of time at annual rental of P,--$ Pa& Yatco
sought to e2ercise the o"tion b tendering to Potenciano at his clinic in Manila the sum of
P9,--- an amount sufficient to cover both "rinci"al and interest, and u"on the tender being
re1ected, de"osited the mone in court and brought an action in her o!n name and as
1udicial administratri2 of the estate of her deceased husband to com"el Potenciano to acce"t
it and to have the title to the "ro"ert reinstated in her name and that of her husband$
:ntervening in the case, Potenciano*s children, Victor and 7ourdes, filed a cross;com"laint,
alleging that the o"tion to "urchase granted b their father to "laintiff !as null and void as to
the share of their deceased mother Rufina Rees in the "ro"ert in litigation, !hich share
"assed to them b right of inheritance, and that as to their father*s share in the same
"ro"ert the, the intervenors, !ere e2ercising the right of redem"tion accorded b la! to co;
o!ners of "ro"ert held in common, for !hich "ur"ose the had alread tendered him the
sum of P.,/8- on the fifth da after the learned of said o"tion through "laintiff*s com"laint$
0o meet these allegations, "laintiff Pa& Yatco amended her com"laint b including the
intervenors as defendants and alleging, in effect, that the "acto de retro sale in #uestion !as
in realit a mortgage to secure a "re;e2isting debt, !ith the rental contract thro!n in to cover
the sti"ulated interest of ./ "er cent< that the o"tion agreement for the re"urchase of the
"ro"ert !ithin five ears from 4ebruar /=, .5,5, and for the "ament of rental for that
"eriod in an amount e#ual to an annual interest of ./ "er cent on the loan, !as also meant
to be in realit an e2tension of the life of the mortgage< and that the tender of "ament !as
valid, the same having been made !ithin the e2tended "eriod$
0% ; 4or "laintiff$ >"held Pa& Yatco?s allegations$
@% ; 4or "laintiff but !ith different vie! as it held that the option to purchase
!as validl e2ecuted b defendant %onrado Potenciano and binding u"on the "ro"ert in
litigation$
ISSUE:
Whether or not the surviving s"ouse have the authorit as de facto administrator of the
con1ugal estate and hence ma validl enter into the option to repurchase contract solel
DECISION: A'
E!D:
4irst thing to be noted is that the %ourt of @""eals found and it is not dis"uted that the "acto
de retro sale made b Edilberto 'cam"o in favor of %onrado Potenciano and his !ife !as in
realit a loan !ith securit or an e#uitable mortgage, !ith simulated rental for interest$ Such
being the case, the lenders had no right, through the unilateral declaration of one or both
them, to consolidate title in themselves over the "ro"ert given as securit$ 0he consolidation
of title effected b Potenciano in this case !as, therefore, null and void$
0he %ourt of @""eals, ho!ever, held that the mortgage contract !as su"erseded, through
novation, b the option a"ree#ent $or the repurchase of the "ro"ert mortgaged, and the
a""ellants no! contend that this !as an error because Potenciano had no authorit to enter
into that agreement after the death of his !ife$ 0o this contention !e have to agree$ 0he
%ourt of @""eals erred in su""osing that the surviving s"ouse had such authorit as de
facto administrator of the con1ugal estate$ @s "ointed out b a""ellants, the decisions relied
on b that court in su""ort of its vie! are no! obsolete$ 0hose decisions laid do!n the rule
that, u"on the dissolution of the marriage b the death of the !ife, the husband must
li#uidate the "artnershi" affairs$ But the "rocedure has been changed b @ct Ao$ ,.6C
(a""roved on Aovember /9, .5/9), no! section /, Rule 68, of the Rules of %ourt, !hich
"rovides that !hen the marriage is dissolved b the death of either husband or !ife, the
"artnershi" affairs must be li#uidated in the testate or intestate "roceedings of the deceased
s"ouse$
S% ; Modified %@$