G.R. No.

L-12707 August 10, 1918

MRS. HENRY E. HARDING, and her husband, plaintiffs-appellees,

vs.
COMMERCIAL UNION ASSURANCE COMPANY, defendant-appellant.

FISHER, J.:

This was an action by plaintiffs to recover from defendant the sum of P3,000 and interest, alleged
to be due under the terms of a policy of insurance. The trial court gave plaintiffs judgment for the
amount demanded, with interest and costs, and from that decision the defendant appeals.

The court below stated the issues made by the pleadings in this case, and its finding of fact, as
follows:

It is alleged by plaintiffs and admitted by defendant that plaintiffs are husband and wife
and residents of the city of Manila; that the defendant is a foreign corporation organized
and existing under and by virtue of the laws of Great Britain and duly registered in the
Philippine Islands, and Smith, Bell & Co. (limited), a corporation organized and existing
under the laws of the Philippine Islands, with its principal domicile in the city of Manila, is
the agent in the Philippine Islands of said defendant.

The plaintiffs alleged that on February 16, 1916, the plaintiff Mrs. Henry E. Harding was
the owner of a Studebaker automobile, registered number 2063, in the city of Manila; that
on said date; in consideration of the payment to the defendant of the premium of P150,
by said plaintiff, Mrs. Henry E. Harding, with the consent of her husband, the defendant
by its duly authorized agent, Smith, Bell & Company (limited), made its policy of
insurance in writing upon said automobile was set forth in said policy to be P3,000 that
the value of said automobile was set forth in said policy (Exhibit A) to be P3,000; that on
March 24, 1916, said automobile was totally destroyed by fire; that the loss thereby to
plaintiffs was the sum of P3,000; that thereafter, within the period mentioned in the said
policy of insurance, the plaintiff, Mrs. Henry E. Harding, furnished the defendant the
proofs of her said loss and interest, and otherwise performed all the conditions of said
policy on her part, and that the defendant has not paid said loss nor any part thereof,
although due demand was made upon defendant therefor.

The defendant, by its answer, admitted the allegations of the residence and status of the
parties and denied all the other allegation of the said complaint, and for a separate and
affirmative defense alleged (1) that on February 17, 1916, at the city of Manila, P.I. the
defendant upon request of plaintiff, Mrs. Henry E. Harding, issued to the said plaintiff the
policy of insurance on an automobile alleged by the said plaintiff to be her property; that
the said request for the issuance of said policy of insurance was made by means of a
proposal in writing signed and delivered by said plaintiff to the defendant, guaranteeing
the truth of the statements contained therein which said proposal is referred to in the said
policy of insurance made a part thereof; (2) that certain of the statements and
representations contained in said proposal and warranted by said plaintiff to be true, to
wit: (a) the price paid by the proposer for the said automobile; (b) the value of said
automobile at the time of the execution and delivery of the said proposal and (c) the
ownership of said automobile, were false and known to be false by the said plaintiff at the
time of signing and delivering the said proposal and were made for the purpose of
misleading and deceiving the defendant, and inducing the defendant, relying upon the
warranties, statements, and representations contained in the said proposal and believing
the same to be true, issued the said policy of insurance.
The defendant prays that judgment be entered declaring the said policy of insurance to
be null and void, and that plaintiffs take nothing by this action; and for such further relief
as to the court may seem just and equitable.

The evidence in this case shows that some time in the year 1913 Levy Hermanos, the
Manila agents for the Studebaker automobile, sold the automobile No. 2063 to John
Canson for P3,200 (testimony of Mr. Diehl); that under date of October 14, 1914, John
Canson sold the said automobile to Henry Harding for the sum of P1,500 (Exhibit 2); that
under date of November 19, 1914, the said Henry Harding sold the said automobile No.
2063 to J. Brannigan, of Los Baños, Province of Laguna, P.I., for the sum of P2,000
(Exhibit 3); that under date of December 20, 1915, J. C. Graham of Los Baños, Province
of Laguna, P.I., sold the said automobile No. 2063 to Henry Harding of the city of Manila
for the sum of P2,800 (Exhibit 4 and testimony of J. C. Graham); that on or about January
1, 1916, the said Henry Harding gave the said automobile to his wife; Mrs. Henry E.
Harding, one of the plaintiffs, as a present; that said automobile was repaired and
repainted at the Luneta Garage at a cost of some P900 (testimony of Mr. Server); that
while the said automobile was at the Luneta Garage; the said Luneta Garage, acting as
agent for Smith, Bell & Company, (limited), solicited of the plaintiff Mrs. Harding the
insurance of said automobile by the defendant Company (testimony of Mrs. Henry
Harding and Mr. Server); that a proposal was filled out by the said agent and signed by
the plaintiff Mrs. Henry E. Harding, and in said proposal under the heading "Price paid by
proposer," is the amount of "3,500" and under another heading "Present value" is the
amount of "3,000" (Exhibit 1).

The evidence tends to show that after the said proposal was made a representative of
the Manila agent of defendant went to the Luneta Garage and examined said automobile
No. 2063 and Mr. Server, the General Manager of the Luneta Garage, an experienced
automobile mechanic, testified that at the time this automobile was insured it was worth
about P3,000, and the defendant, by and through its said agent Smith, Bell & Company
(limited), thereafter issued a policy of insurance upon proposal in which policy the said
automobile was described as of the "present value" of P3,000 and the said defendant
charged the said plaintiff Mrs. Henry E. Harding as premium on said policy the sum of
P150, or 5 per cent of the then estimated value of P3,000. (Exhibit A.)

The "Schedule" in said policy of insurance describes the automobile here in question,
and provides in part of follows:

"Now it is hereby agreed as follows:

"That during the period above set forth and during any period for which the
company may agree to renew this policy the company will subject to the
exception and conditions contained herein or endorsed hereon indemnify the
insured against loss of or damage to any motor car described in the schedule
hereto (including accessories) by whatever cause such loss or damage may be
occasioned and will further indemnify the insured up to the value of the car or
P3,000 whichever is the greater against any claim at common law made by any
person (not being a person in the said motor car nor in the insured's service) for
loss of life or for accidental bodily injury or damage to property caused by the
said motor car including law costs payable in connection with such claim when
incurred with the consent of the company."

The evidence further shows that on March 24, 1916, the said automobile was totally
destroyed by fire, and that the iron and steel portions of said automobile which did not
burn were taken into the possession of the defendant by and through its agent Smith, Bell
& Company (limited), and sold by it for a small sum, which had never been tendered to
 the plaintiff prior to the trial of this case, but in open court during the trial the sum of P10
as the proceeds of such sale was tendered to plaintiff and refused.

Upon the facts so found, which we hold are supported by the evidence, the trial judge decided
that there was no proof of fraud on the part of plaintiff in her statement of the value of the
automobile, or with respect to its ownership; that she had an insurable interest therein; and that
defendant, having agreed to the estimated value, P3,000, and having insured the automobile for
that amount, upon the basis of which the premium was paid, is bound by it and must pay the loss
in accordance with the stipulated insured value. The assignments of error made on behalf of
appellant put in issue the correctness of those conclusions of law, and some others of minor
importance relating to the exclusion of evidence. Disposing of the minor objections first, as we
have reached the conclusion that the trial court was right in holding that the defendant is bound
by the estimated value of the automobile upon which policy was issued, and that the plaintiff was
not guilty of fraud in regard thereto, the exclusion of the testimony of the witness Diehl is without
importance. It merely tended to show the alleged actual value of the automobile, and in the view
we take of the case such evidence was irrelevant.

Appellant contends that Mrs. Harding was not the owner of the automobile at the time of the
issuance of the policy, and, therefore, had no insurable interest in it. The court below found that
the automobile was given to plaintiff by her husband shortly after the issuance of the policy here
in question. Appellant does not dispute the correctness of this finding, but contends that the gift
was void, citing article 1334 of the Civil Code which provides that "All gifts between spouses
during the marriage shall be void. Moderate gifts which the spouses bestow on each other on
festive days of the family are not included in this rule."

We are of the opinion that this contention is without merit. In the case of Cook vs. McMicking 27
Phil. Rep., 10), this court said:

It is claimed by the appellants that the so-called transfer from plaintiff's husband to her
was completely void under article 1458 of the Civil Code and that, therefore, the property
still remains the property of Edward Cook and subject to levy under execution against
him.

In our opinion the position taken by appellants is untenable. They are not in a position to
challenge the validity of the transfer, if it may be called such. They bore absolutely no
relation to the parties to the transfer at the time it occurred and had no rights or interests
inchoate, present, remote, or otherwise, in the property in question at the time the
transfer occurred. Although certain transfers from husband to wife or from wife to
husband are prohibited in the article referred to, such prohibition can be taken advantage
of only by persons who bear such a relation to the parties making the transfer or to the
property itself that such transfer interferes with their rights or interests. Unless such a
relationship appears the transfer cannot be attacked.

Even assuming that defendant might have invoked article 1334 as a defense, the burden would
be upon it to show that the gift in question does not fall within the exception therein established.
We cannot say, as a matter of law, that the gift of an automobile by a husband to his wife is not a
moderate one. Whether it is or is not would depend upon the circumstances of the parties, as to
which nothing is disclosed by the record.

Defendant contends that the statement regarding the cost of the automobile was a warranty, that
the statement was false, and that, therefore, the policy never attached to the risk. We are of the
opinion that it has not been shown by the evidence that the statement was false — on the
contrary we believe that it shows that the automobile had in fact cost more than the amount
mentioned. The court below found, and the evidence shows, that the automobile was bought by
plaintiff's husband a few weeks before the issuance of the policy in question for the sum of
P2,800, and that between that time and the issuance of the policy some P900 was spent upon it
in repairs and repainting. The witness Server, an expert automobile mechanic, testified that the
automobile was practically as good as new at the time the insurance was effected. The form of
proposal upon which the policy was issued does not call for a statement regarding the value of
the automobile at the time of its acquisition by the applicant for the insurance, but merely a
statement of its cost. The amount stated was less than the actual outlay which the automobile
represented to Mr. Harding, including repairs, when the insurance policy was issued. It is true that
the printed form calls for a statement of the "price paid by the proposer," but we are of the opinion
that it would be unfair to hold the policy void simply because the outlay represented by the
automobile was made by the plaintiff's husband and not by his wife, to whom he had given the
automobile. It cannot be assumed that defendant should not have issued the policy unless it were
strictly true that the price representing the cost of the machine had been paid by the insured and
by no other person — that it would no event insure an automobile acquired by gift, inheritance,
exchange, or any other title not requiring the owner to make a specific cash outlay for its
acquisition.

Furthermore, the court below found and the evidence shows, without dispute, that the proposal
upon which the policy in question was issued was made out by defendant's agent by whom the
insurance was solicited, and that appellee simply signed the same. It also appears that an
examiner employed by the defendant made an inspection of the automobile before the
acceptance of the risk, and that the sum after this examination. The trial court found that Mrs.
Harding, in fixing the value of the automobile at P3,000, acted upon information given her by her
husband and by Mr. Server, the manager of the Luneta Garage. The Luneta Garage, it will be
remembered, was the agent of the defendant corporation in the solicitation of the insurance. Mrs.
Harding did not state of her own knowledge that the automobile originally cost P3,000, or that its
value at the time of the insurance was P3,000. She merely repeated the information which had
been given her by her husband, and at the same time disclosed to defendant's agent the source
of her information. There is no evidence to sustain the contention that this communication was
made in bad faith. It appears that the statements in the proposal as to the price paid for the
automobile and as to its value were written by Mr. Quimby who solicited the insurance on behalf
of defendant, in his capacity as an employee of the Luneta Garage, and wrote out the proposal
for Mrs. Harding to sign. Under these circumstances, we do not think that the facts stated in the
proposal can be held as a warranty of the insured, even if it should have been shown that they
were incorrect in the absence of proof of willful misstatement. Under such circumstance, the
proposal is to be regarded as the act of the insurer and not of the insured. This question was
considered in the case of the Union Insurance Company vs. Wilkinson (13 Wall., 222; 20 L. ed.,
617), in which the Supreme Court of the United States said:

This question has been decided differently by courts of the highest respectability in cases
precisely analogous to the present. It is not to be denied that the application logically
considered, is the work of the assured, and if left to himself or to such assistance as he
might select, the person so selected would be his agent, and he alone would be
responsible. On the other hand, it is well-known, so well that no court would be justified in
shutting its eyes to it, that insurance companies organized under the laws of one State,
and having in that State their principal business office, send these agents all over the
land, with directions to solicit and procure applications for policies furnishing them with
printed arguments in favor of the value and necessity of life insurance, and of the special
advantages of the corporation which the agent represents. They pay these agents large
commissions on the premiums thus obtained, and the policies are delivered at their
hands to the assured. The agents are stimulated by letters and instructions to activity in
procuring contracts, and the party who is in this manner induced to take out a policy,
rarely sees or knows anything about the company or its officers by whom it is issued, but
looks to and relies upon the agent who has persuaded him to effect insurance as the full
and complete representative of the company, in all that is said or done in making the
 contract. Has he not a right to so regard him? It is quite true that the reports of judicial
decisions are filled with the efforts of these companies, by their counsel, to establish the
doctrine for the acts of these agents to the simple receipt of the premium and delivery of
the policy, the argument being that, as to all other acts of the agent, he is the agent of the
assured. This proposition is not without support in some of the earlier decision on the
subject; and, at a time when insurance companies waited for parties to come to them to
seek assurance, or to forward applications on their own motion, the doctrine had a
reasonable foundation to rest upon. But to apply such a doctrine, in its full force, to the
system of selling policies through agents, which we have described, would be a snare
and a delusion, leading, as it has done in numerous instances, to the grossest frauds, of
which the insurance corporations receive the benefits, and the parties supposing
themselves insured are the victims. The tendency of the modern decisions in this country
is steadily in the opposite direction. The powers of the agent are, prima facie, co-
extensive with the business intrusted to his care, and will not be narrowed by limitations
not communicated to the person with whom he deals. (Bebee vs. Ins. Co., 25 Conn., 51;
Lycoming Ins. Co. vs. Schoolenberger, 44 Pa., 259; Beal vs. Ins. Co., 16 Wis., 241;
Davenport vs. Ins. Co., 17 Iowa, 276.) An insurance company, establishing a local
agency, must be held responsible to the parties with whom they transact business, for the
acts and declarations of the agent, within the scope of his employment, as if they
proceeded from the principal. (Sav. Bk. vs. Ins. Co., 31 Conn., 517; Hortwitz vs. Ins. Co.,
40 Mo., 557; Ayres vs. Ins. Co., 17 Iowa, 176; Howard Ins. Co. vs. Bruner, 23 Pa., 50.)

In the fifth edition of American Leading Cases, 917, after a full consideration of the
authorities, it is said:

"By the interested or officious zeal of the agents employed by the insurance
companies in the wish to outbid each other and procure customers, they not
unfrequently mislead the insured, by a false or erroneous statement of what the
application should contain; or, taking the preparation of it into their own hands,
procure his signature by an assurance that it is properly drawn, and will meet the
requirements of the policy. The better opinion seems to be that, when this course
is pursued, the description of the risk should, though nominally proceeding from
the insured, be regarded as the act of the insurers." (Rowley vs. Empire Ins. Co.,
36 N.Y., 550.)

The modern decisions fully sustain this proposition, and they seem to us founded on
reason and justice, and meet our entire approval. This principle does not admit oral
testimony to vary or contradict that which is in writing, but it goes upon the idea that the
writing offered in evidence was not the instrument of the party whose name is signed to it;
that it was procured under such circumstances by the other side as estops that side from
using it or relying on its contents; not that it may be contradicted by oral testimony, but
that it may be shown by such testimony that it cannot be lawfully used against the party
whose name is signed to it. (See also Am. Life Ins. Co. vs. Mahone, 21 Wallace, 152.)

The defendant, upon the information given by plaintiff, and after an inspection of the automobile
by its examiner, having agreed that it was worth P3,000, is bound by this valuation in the absence
of fraud on the part of the insured. All statements of value are, of necessity, to a large extent
matters of opinion, and it would be outrageous to hold that the validity of all valued policies must
depend upon the absolute correctness of such estimated value. As was said by the Supreme
Court of the United States in the case of the First National Bank vs. Hartford Fire Insurance Co.
(5 Otto, 673; 24 L. ed., 563), at. p. 565 of the Lawyers Edition:

The ordinary test of the value of property is the price it will commend in the market if
offered for sale. But that test cannot, in the very nature of the case, be applied at the time
application is made for insurance. Men may honestly differ about the value of property, or
 as to what it will bring in the market; and such differences are often very marked among
those whose special business it is to buy and sell property of all kinds. The assured could
do no more than estimate such value; and that, it seems, was all that he was required to
do in this case. His duty was to deal fairly with the Company in making such estimate.
The special finding shows that he discharged that duty and observed good faith. We shall
not presume that the Company, after requiring the assured in his application to give the
"estimated value," and then to covenant that he had stated all material facts in regard to
such value, so far as known to him, and after carrying that covenant, by express words,
into the written contract, intended to abandon the theory upon which it sought the
contract, and make the absolute correctness of such estimated value a condition
precedent to any insurance whatever. The application, with its covenant and stipulations,
having been made a part of the policy, that presumption cannot be indulged without
imputing to the Company a purpose, by studied intricacy or an ingenious framing of the
policy, to entrap the assured into incurring obligations which, perhaps, he had no thought
of assuming.

Section 163 of the Insurance Law (Act No. 2427) provides that "the effect of a valuation in a
policy of fire insurance is the same as in a policy of marine insurance."

By the terms of section 149 of the Act cited, the valuation in a policy of marine insurance is
conclusive if the insured had an insurable interest and was not guilty of fraud.

We are, therefore, of the opinion and hold that plaintiff was the owner of the automobile in
question and had an insurable interest therein; that there was no fraud on her part in procuring
the insurance; that the valuation of the automobile, for the purposes of the insurance, is binding
upon the defendant corporation, and that the judgment of the court below is, therefore, correct
and must be affirmed, with interest, the costs of this appeal to be paid by the appellant.

So ordered.

[G.R. No. 146683. November 22, 2001]

CIRILA ARCABA, petitioner, vs. ERLINDA TABANCURA VDA. DE BATOCAEL, SEIGFREDO C.

TABANCURA, DORIS C. TABANCURA, LUZELLI C. TABANCURA, BELEN C. TABANCURA,
RAUL A. COMILLE, BERNADETTE A. COMILLE, and ABNER A. COMILLE, respondents.

DECISION

MENDOZA, J.:

Petitioner Cirila Arcaba seeks review on certiorari of the decision of the Court of Appeals, which
affirmed with modification the decision of the Regional Trial Court, Branch 10, Dipolog City,
Zamboanga del Norte in Civil Case No. 4593, declaring as void a deed of donation inter vivos
executed by the late Francisco T. Comille in her favor and its subsequent resolution denying
reconsideration.

The facts are as follows:

On January 16, 1956, Francisco Comille and his wife Zosima Montallana became the registered
owners of Lot No. 437-A located at the corner of Calle Santa Rosa (now Balintawak Street) and
Calle Rosario (now Rizal Avenue) in Dipolog City, Zamboanga del Norte. The total area of the lot
was 418 square meters. After the death of Zosima on October 3, 1980, Francisco and his mother-
in-law, Juliana Bustalino Montallana, executed a deed of extrajudicial partition with waiver of
rights, in which the latter waived her share consisting of one-fourth (1/4) of the property to
Francisco. On June 27, 1916, Francisco registered the lot in his name with the Registry of Deeds.

Having no children to take care of him after his retirement, Francisco asked his niece Leticia
Bellosillo, the latter’s cousin, Luzviminda Paghacian, and petitioner Cirila Arcaba, then a widow,
to take care of his house, as well as the store inside.

Conflicting testimonies were offered as to the nature of the relationship between Cirila and
Francisco. Leticia Bellosillo said Francisco and Cirila were lovers since they slept in the same
room, while Erlinda Tabancura, another niece of Francisco, claimed that the latter had told her
that Cirila was his mistress. On the other hand, Cirila said she was a mere helper who could enter
the master’s bedroom only when the old man asked her to and that Francisco in any case was
too old for her. She denied they ever had sexual intercourse.

It appears that when Leticia and Luzviminda were married, only Cirila was left to take care of
Francisco. Cirila testified that she was a 34-year old widow while Francisco was a 75-year old
widower when she began working for the latter; that he could still walk with her assistance at that
time; and that his health eventually deteriorated and he became bedridden. Erlinda Tabancura
testified that Francisco’s sole source of income consisted of rentals from his lot near the public
streets. He did not pay Cirila a regular cash wage as a househelper, though he provided her
family with food and lodging.

On January 24, 1991, a few months before his death, Francisco executed an instrument
denominated “Deed of Donation Inter Vivos,” in which he ceded a portion of Lot 437-A, consisting
of 150 square meters, together with his house, to Cirila, who accepted the donation in the same
instrument. Francisco left the larger portion of 268 square meters in his name. The deed stated
that the donation was being made in consideration of “the faithful services [Cirila Arcaba] had
rendered over the past ten (10) years.” The deed was notarized by Atty. Vic T. Lacaya, Sr. and
later registered by Cirila as its absolute owner.

On October 4, 1991, Francisco died without any children. In 1993, the lot which Cirila received
from Francisco had a market value of P57,105.00 and an assessed value of P28,550.00.

On February 18, 1993, respondents filed a complaint against petitioner for declaration of nullity of
a deed of donation inter vivos, recovery of possession, and damages. Respondents, who are the
decedent’s nephews and nieces and his heirs by intestate succession, alleged that Cirila was the
common-law wife of Francisco and the donation inter vivos made by Francisco in her favor is void
under Article 87 of the Family Code, which provides:

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.

On February 25, 1999, the trial court rendered judgment in favor of respondents, holding the
donation void under this provision of the Family Code. The trial court reached this conclusion
based on the testimony of Erlinda Tabancura and certain documents bearing the signature of one
“Cirila Comille.” The documents were (1) an application for a business permit to operate as real
estate lessor, dated January 8, 1991, with a carbon copy of the signature “Cirila Comille”; (2) a
sanitary permit to operate as real estate lessor with a health certificate showing the signature
“Cirila Comille” in black ink; and (3) the death certificate of the decedent with the signature “Cirila
A. Comille” written in black ink. The dispositive portion of the trial court’s decision states:
WHEREFORE, in view of the foregoing, judgment is rendered:

1. Declaring the Deed of Donation Inter Vivos executed by the late Francisco Comille recorded as
Doc. No. 7; Page No. 3; Book No. V; Series of 1991 in the Notarial Register of Notary Public Vic
T. Lacaya (Annex “A” to the Complaint) null and void;

2. Ordering the defendant to deliver possession of the house and lot subject of the deed unto the
plaintiffs within thirty (30) days after finality of this decision; and finally

3. Ordering the defendant to pay attorney’s fees in the sum of P10,000.00.

SO ORDERED.

Petitioner appealed to the Court of Appeals, which rendered on June 19, 2000 the decision
subject of this appeal. As already stated, the appeals court denied reconsideration. Its
conclusion was based on (1) the testimonies of Leticia, Erlinda, and Cirila; (2) the copies of
documents purportedly showing Cirila’s use of Francisco’s surname; (3) a pleading in another
civil case mentioning payment of rentals to Cirila as Francisco’s common-law wife; and (4) the
fact that Cirila did not receive a regular cash wage.

Petitioner assigns the following errors as having been committed by the Court of Appeals:

(a) The judgment of the Court of Appeals that petitioner was the common-law wife of the late
Francisco Comille is not correct and is a reversible error because it is based on a
misapprehension of facts, and unduly breaks the chain of circumstances detailed by the totality of
the evidence, its findings being predicated on totally incompetent or hearsay evidence, and
grounded on mere speculation, conjecture or possibility. (Salazar v. Gutierrez, 33 SCRA 243 and
other cases; cited in Quiason, Philippine Courts and their Jurisdictions, 1993 ed., p. 604)

(b) The Court of Appeals erred in shifting the burden of evidence from the plaintiff to defendant.
(Bunyi v. Reyes, 39 SCRA 504; Quiason, id.)

(c) The Court of Appeals decided the case in a way probably not in accord with law or with the
applicable jurisprudence in Rodriguez v. Rodriguez, 20 SCRA 908, and Liguez v. CA, 102 Phil.
577, 584.

The issue in this case is whether the Court of Appeals correctly applied Art. 87 of the Family
Code to the circumstances of this case. After a review of the records, we rule in the affirmative.

The general rule is that only questions of law may be raised in a petition for review under Rule 45
of the Rules of Court, subject only to certain exceptions: (a) when the conclusion is a finding
grounded entirely on speculations, surmises, or conjectures; (b) when the inference made is
manifestly mistaken, absurd, or impossible; (c) where there is grave abuse of discretion; (d) when
the judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting;
(f) when the Court of Appeals, in making its findings, went beyond the issues of the case and the
same are contrary to the admissions of both appellant and appellee; (g) when the findings of the
Court of Appeals are contrary to those of the trial court; (h) when the findings of fact are
conclusions without citation of specific evidence on which they are based; (i) when the finding of
fact of the Court of Appeals is premised on the supposed absence of evidence but is contradicted
by the evidence on record; and (j) when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly considered, would justify a
different conclusion. It appearing that the Court of Appeals based its findings on evidence
presented by both parties, the general rule should apply.
In Bitangcor v. Tan, we held that the term “cohabitation” or “living together as husband and wife”
means not only residing under one roof, but also having repeated sexual intercourse.
Cohabitation, of course, means more than sexual intercourse, especially when one of the parties
is already old and may no longer be interested in sex. At the very least, cohabitation is the public
assumption by a man and a woman of the marital relation, and dwelling together as man and
wife, thereby holding themselves out to the public as such. Secret meetings or nights
clandestinely spent together, even if often repeated, do not constitute such kind of cohabitation;
they are merely meretricious. In this jurisdiction, this Court has considered as sufficient proof of
common-law relationship the stipulations between the parties, a conviction of concubinage, or the
existence of illegitimate children.

Was Cirila Francisco’s employee or his common-law wife? Cirila admitted that she and Francisco
resided under one roof for a long time. It is very possible that the two consummated their
relationship, since Cirila gave Francisco therapeutic massage and Leticia said they slept in the
same bedroom. At the very least, their public conduct indicated that theirs was not just a
relationship of caregiver and patient, but that of exclusive partners akin to husband and wife.

Aside from Erlinda Tabancura’s testimony that her uncle told her that Cirila was his mistress,
there are other indications that Cirila and Francisco were common-law spouses. Seigfredo
Tabancura presented documents apparently signed by Cirila using the surname “Comille.” As
previously stated, these are an application for a business permit to operate as a real estate
lessor, a sanitary permit to operate as real estate lessor with a health certificate, and the death
certificate of Francisco. These documents show that Cirila saw herself as Francisco’s common-
law wife, otherwise, she would not have used his last name. Similarly, in the answer filed by
Francisco’s lessees in “Erlinda Tabancura, et al. vs. Gracia Adriatico Sy and Antonio Sy,” RTC
Civil Case No. 4719 (for collection of rentals), these lessees referred to Cirila as “the common-law
spouse of Francisco.” Finally, the fact that Cirila did not demand from Francisco a regular cash
wage is an indication that she was not simply a caregiver-employee, but Francisco’s common law
spouse. She was, after all, entitled to a regular cash wage under the law. It is difficult to believe
that she stayed with Francisco and served him out of pure beneficence. Human reason would
thus lead to the conclusion that she was Francisco’s common-law spouse.

Respondents having proven by a preponderance of evidence that Cirila and Francisco lived
together as husband and wife without a valid marriage, the inescapable conclusion is that the
donation made by Francisco in favor of Cirila is void under Art. 87 of the Family Code.

WHEREFORE, the decision of the Court of Appeals affirming the decision of the trial court is
hereby AFFIRMED.

SO ORDERED.

[G.R. No. 122134. October 3, 2003

ROMANA LOCQUIAO VALENCIA and CONSTANCIA L. VALENCIA, petitioners, vs. BENITO

A. LOCQUIAO, now deceased and substituted by JIMMY LOCQUIAO, TOMASA MARA and
the REGISTRAR OF DEEDS OF PANGASINAN, respondents.

CONSTANCIA L. VALENCIA, petitioner, vs. BENITO A. LOCQUIAO, now deceased and

substituted by JIMMY LOCQUIAO, respondent.

DECISION

TINGA, J.:
The Old Civil Code and the Old Code of Civil Procedure, repealed laws that they both are
notwithstanding, have not abruptly become mere quiescent items of legal history since their
relevance do not wear off for a long time. Verily, the old statutes proved to be decisive in the
adjudication of the case at bar.

Before us is a petition for review seeking to annul and set aside the joint Decision dated
November 24, 1994, as well as the Resolution dated September 8, 1995, of the former Tenth
Division of the Court of Appeals in two consolidated cases involving an action for annulment of
title and an action for ejectment.

Both cases involve a parcel of land consisting of 4,876 square meters situated in Urdaneta,
Pangasinan. This land was originally owned by the spouses Herminigildo and Raymunda
Locquiao, as evidenced by Original Certificate of Title No. 18383 issued on October 3, 1917 by
the Register of Deeds of Pangasinan.

On May 22, 1944, Herminigildo and Raymunda Locquiao executed a deed of donation propter
nuptias which was written in the Ilocano dialect, denominated as Inventario Ti Sagut in favor of
their son, respondent Benito Locquiao (hereafter, respondent Benito) and his prospective bride,
respondent Tomasa Mara (hereafter, respondent Tomasa). By the terms of the deed, the donees
were gifted with four (4) parcels of land, including the land in question, as well as a male cow and
one-third (1/3) portion of the conjugal house of the donor parents, in consideration of the
impending marriage of the donees.

The donees took their marriage vows on June 4, 1944 and the fact of their marriage was
inscribed at the back of O.C.T. No. 18383.

Herminigildo and Raymunda died on December 15, 1962 and January 9, 1968, respectively,
leaving as heirs their six (6) children, namely: respondent Benito, Marciano, Lucio, Emeteria,
Anastacia, and petitioner Romana, all surnamed Locquiao. With the permission of respondents
Benito and Tomasa, petitioner Romana Valencia (hereinafter, Romana) took possession and
cultivated the subject land. When respondent Romana’s husband got sick sometime in 1977, her
daughter petitioner Constancia Valencia (hereafter, petitioner Constancia) took over, and since
then, has been in possession of the land.

Meanwhile, respondents Benito and Tomasa registered the Inventario Ti Sagut with the Office of
the Register of Deeds of Pangasinan on May 15, 1970. In due course, the original title was
cancelled and in lieu thereof Transfer Certificate of Title No. 84897 was issued in the name of the
respondents Benito and Tomasa.

On March 18, 1973, the heirs of the Locquiao spouses, including respondent Benito and
petitioner Romana, executed a Deed of Partition with Recognition of Rights, wherein they
distributed among only three (3) of them, the twelve (12) parcels of land left by their common
progenitors, excluding the land in question and other lots disposed of by the Locquiao spouses
earlier. Contained in the deed is a statement that respondent Benito and Marciano Locquiao,
along with the heirs of Lucio Locquiao, “have already received our shares in the estates of our
parents, by virtue of previous donations and conveyances,” and that for that reason the heirs of
Lucio Locquaio were not made parties to the deed. All the living children of the Locquaio
spouses at the time, including petitioner Romana, confirmed the previous dispositions and waived
their rights to whomsoever the properties covered by the deed of partition were adjudicated.

Later on, disagreements among five (5) heirs or groups of heirs, including petitioner Romana,
concerning the distribution of two (2) of the lots covered by the deed of partition which are Lots
No. 2467 and 5567 of the Urdaneta Cadastral Survey surfaced. As their differences were settled,
the heirs concerned executed a Deed of Compromise Agreement on June 12, 1976, which
provided for the re-distribution of the two (2) lots. Although not directly involved in the discord,
Benito signed the compromise agreement together with his feuding siblings, nephews and
nieces. Significantly, all the signatories to the compromise agreement, including petitioner
Romana, confirmed all the other stipulations and provisions of the deed of partition.

Sometime in 1983, the apparent calm pervading among the heirs was disturbed when petitioner
Constancia filed an action for annulment of title against the respondents before the Regional Trial
Court of Pangasinan. The record shows that the case was dismissed by the trial court but it does
not indicate the reason for the dismissal.

On December 13, 1983, respondent Benito filed with the Municipal Trial Court of Urdaneta,
Pangasinan a Complaint seeking the ejectment of petitioner Constancia from the subject
property.

On November 25, 1985, the Municipal Trial Court rendered a Decision, ordering the defendant in
the case, petitioner Constancia, to vacate the land in question.

Petitioners Romana and Constancia countered with a Complaint for the annulment of Transfer
Certificate of Title No. 84897 against respondents Benito and Tomasa which they filed with the
Regional Trial Court of Pangasinan on December 23, 1985. Petitioners alleged that the issuance
of the transfer certificate of title was fraudulent; that the Inventario Ti Sagut is spurious; that the
notary public who notarized the document had no authority to do so, and; that the donation did
not observe the form required by law as there was no written acceptance on the document itself
or in a separate public instrument.

Meanwhile, the decision in the ejectment case was appealed to the same RTC where the case for
annulment of title was also pending. Finding that the question of ownership was the central issue
in both cases, the court issued an Order suspending the proceedings in the ejectment case until it
shall have decided the ownership issue in the title annulment case.

After trial, the RTC rendered a Decision dated January 30, 1989 dismissing the complaint for
annulment of title on the grounds of prescription and laches. It likewise ruled that the Inventario
Ti Sagut is a valid public document which transmitted ownership over the subject land to the
respondents. With the dismissal of the complaint and the confirmation of the respondents’ title
over the subject property, the RTC affirmed in toto the decision of the MTC in the ejectment case.

Dissatisfied, petitioners elevated the two (2) decisions to the respondent Court of Appeals. Since
they involve the same parties and the same property, the appealed cases were consolidated by
the appellate court.

On November 24, 1994, the Court of Appeals rendered the assailed Decision affirming the
appealed RTC decisions. The appellate court upheld the RTC’s conclusion that the petitioners’
cause of action had already prescribed, considering that the complaint for annulment of title was
filed more than fifteen (15) years after the issuance of the title, or beyond the ten (10) - year
prescriptive period for actions for reconveyance. It likewise rejected the petitioners’ assertion that
the donation propter nuptias is null and void for want of acceptance by the donee, positing that
the implied acceptance flowing from the very fact of marriage between the respondents, coupled
with the registration of the fact of marriage at the back of OCT No. 18383, constitutes substantial
compliance with the requirements of the law.

The petitioners filed a Motion for Reconsideration but it was denied by the appellate court in its
Resolution dated September 8, 1995. Hence, this petition.

We find the petition entirely devoid of merit.

Concerning the annulment case, the issues to be threshed out are: (1) whether the donation
propter nuptias is authentic; (2) whether acceptance of the donation by the donees is required; (3)
if so, in what form should the acceptance appear, and; (4) whether the action is barred by
prescription and laches.

The Inventario Ti Sagut which contains the donation propter nuptias was executed and notarized
on May 22, 1944. It was presented to the Register of Deeds of Pangasinan for registration on
May 15, 1970. The photocopy of the document presented in evidence as Exhibit “8” was
reproduced from the original kept in the Registry of Deeds of Pangasinan.

The petitioners have launched a two-pronged attack against the validity of the donation propter
nuptias, to wit: first, the Inventario Ti Sagut is not authentic; and second, even assuming that it is
authentic, it is void for the donee’s failure to accept the donation in a public instrument.

To buttress their claim that the document was falsified, the petitioners rely mainly on the
Certification dated July 9, 1984 of the Records Management and Archives Office that there was
no notarial record for the year 1944 of Cipriano V. Abenojar who notarized the document on May
22, 1944 and that therefore a copy of the document was not available.

The certification is not sufficient to prove the alleged inexistence or spuriousness of the
challenged document. The appellate court is correct in pointing out that the mere absence of the
notarial record does not prove that the notary public does not have a valid notarial commission
and neither does the absence of a file copy of the document with the archives effect evidence of
the falsification of the document. This Court ruled that the failure of the notary public to
furnish a copy of the deed to the appropriate office is a ground for disciplining him, but
certainly not for invalidating the document or for setting aside the transaction therein
involved.

Moreover, the heirs of the Locquaio spouses, including petitioner Romana, made reference in the
deed of partition and the compromise agreement to the previous donations made by the spouses
in favor of some of the heirs. As pointed out by the RTC, respondent Benito was not allotted any
share in the deed of partition precisely because he received his share by virtue of previous
donations. His name was mentioned in the deed of partition only with respect to the middle
portion of Lot No. 2638 which is the eleventh (11th) parcel in the deed but that is the same one-
third (1/3) portion of Lot No. 2638 covered by O.C.T. No. 18259 included in the donation propter
nuptias. Similarly, Marciano Locquiao and the heirs of Lucio Locquiao were not allocated any
more share in the deed of partition since they received theirs by virtue of prior donations or
conveyances.

The pertinent provisions of the deed of partition read:

That the heirs of Lucio Locquiao are not included in this Partition by reason of the fact
that in the same manner as we, BENITO and MARCIANO LOCQUIAO are
concerned, we have already received our shares in the estate of our parents by virtue
of previous donations and conveyances, and that we hereby confirm said dispositions,
waiving our rights to whomsoever will these properties will now be adjudicated;

That we, the Parties herein, do hereby waive and renounce as against each other any claim or
claims that we may have against one or some of us, and that we recognize the rights of
ownership of our co-heirs with respect to those parcels already distributed and
adjudicated and that in the event that one of us is cultivating or in possession of any one of the
parcels of land already adjudicated in favor of another heir or has been conveyed, donated or
disposed of previously, in favor of another heir, we do hereby renounce and waive our right
of possession in favor of the heir in whose favor the donation or conveyance was made
previously. (Emphasis supplied)

The exclusion of the subject property in the deed of partition dispels any doubt as to the
authenticity of the earlier Inventario Ti Sagut.

This brings us to the admissibility of the Deed of Partition with Recognition of Rights, marked as
Exhibit “2”, and the Deed of Compromise Agreement, marked as Exhibit “3”.

The petitioners fault the RTC for admitting in evidence the deed of partition and the compromise
agreement on the pretext that the documents “were not properly submitted in evidence”, pointing
out that “when presented to respondent Tomasa Mara for identification, she simply stated that
she knew about the documents but she did not actually identify them.”

The argument is not tenable. Firstly, objection to the documentary evidence must be made at the
time it is formally offered. Since the petitioners did not even bother to object to the documents at
the time they were offered in evidence, it is now too late in the day for them to question their
admissibility. Secondly, the documents were identified during the Pre-Trial, marked as Exhibits
“2” and “3” and testified on by respondent Tomasa. Thirdly, the questioned deeds, being public
documents as they were duly notarized, are admissible in evidence without further proof of their
due execution and are conclusive as to the truthfulness of their contents, in the absence of clear
and convincing evidence to the contrary. A public document executed and attested through the
intervention of the notary public is evidence of the facts therein expressed in clear, unequivocal
manner.

Concerning the issue of form, petitioners insist that based on a provision of the Civil Code of
Spain (Old Civil Code), the acceptance by the donees should be made in a public instrument.
This argument was rejected by the RTC and the appellate court on the theory that the implied
acceptance of the donation had flowed from the celebration of the marriage between the
respondents, followed by the registration of the fact of marriage at the back of OCT No. 18383.

The petitioners, the appellate court and the trial court all erred in applying the requirements on
ordinary donations to the present case instead of the rules on donation propter nuptias.
Underlying the blunder is their failure to take into account the fundamental dichotomy between
the two kinds of donations.

Unlike ordinary donations, donations propter nuptias or donations by reason of marriage are
those “made before its celebration, in consideration of the same and in favor of one or both of the
future spouses.” The distinction is crucial because the two classes of donations are not governed
by exactly the same rules, especially as regards the formal essential requisites.

Under the Old Civil Code, donations propter nuptias must be made in a public instrument in
which the property donated must be specifically described. However, Article 1330 of the same
Code provides that “acceptance is not necessary to the validity of such gifts”. In other
words, the celebration of the marriage between the beneficiary couple, in tandem with compliance
with the prescribed form, was enough to effectuate the donation propter nuptias under the Old
Civil Code.

Under the New Civil Code, the rules are different. Article 127 thereof provides that the form of
donations propter nuptias are regulated by the Statute of Frauds. Article 1403, paragraph 2,
which contains the Statute of Frauds requires that the contracts mentioned thereunder need be in
writing only to be enforceable. However, as provided in Article 129, express acceptance “is not
necessary for the validity of these donations.” Thus, implied acceptance is sufficient.
The pivotal question, therefore, is which formal requirements should be applied with respect to
the donation propter nuptias at hand. Those under the Old Civil Code or the New Civil Code?

It is settled that only laws existing at the time of the execution of a contract are applicable thereto
and not later statutes, unless the latter are specifically intended to have retroactive effect.
Consequently, it is the Old Civil Code which applies in this case since the donation propter
nuptias was executed in 1944 and the New Civil Code took effect only on August 30, 1950. The
fact that in 1944 the Philippines was still under Japanese occupation is of no consequence. It is a
well-known rule of the Law of Nations that municipal laws, as contra-distinguished from laws of
political nature, are not abrogated by a change of sovereignty. This Court specifically held that
during the Japanese occupation period, the Old Civil Code was in force. As a consequence,
applying Article 1330 of the Old Civil Code in the determination of the validity of the questioned
donation, it does not matter whether or not the donees had accepted the donation. The validity of
the donation is unaffected in either case.

Even the petitioners agree that the Old Civil Code should be applied. However, they invoked the
wrong provisions thereof.

Even if the provisions of the New Civil Code were to be applied, the case of the petitioners would
collapse just the same. As earlier shown, even implied acceptance of a donation propter nuptias
suffices under the New Civil Code.

With the genuineness of the donation propter nuptias and compliance with the applicable
mandatory form requirements fully established, petitioners’ hypothesis that their action is
imprescriptible cannot take off.

Viewing petitioners’ action for reconveyance from whatever feasible legal angle, it is definitely
barred by prescription. Petitioners’ right to file an action for the reconveyance of the land accrued
in 1944, when the Inventario Ti Sagut was executed. It must be remembered that before the
effectivity of the New Civil Code in 1950, the Old Code of Civil Procedure (Act No. 190) governed
prescription. Under the Old Code of Civil Procedure, an action for recovery of the title to, or
possession of, real property, or an interest therein, can only be brought within ten years after the
cause of such action accrues. Thus, petitioners’ action, which was filed on December 23, 1985, or
more than forty (40) years from the execution of the deed of donation on May 22, 1944, was
clearly time-barred.

Even following petitioners’ theory that the prescriptive period should commence from the time of
discovery of the alleged fraud, the conclusion would still be the same. As early as May 15, 1970,
when the deed of donation was registered and the transfer certificate of title was issued,
petitioners were considered to have constructive knowledge of the alleged fraud, following the
jurisprudential rule that registration of a deed in the public real estate registry is constructive
notice to the whole world of its contents, as well as all interests, legal and equitable, included
therein. As it is now settled that the prescriptive period for the reconveyance of property allegedly
registered through fraud is ten (10) years, reckoned from the date of the issuance of the
certificate of title, the action filed on December 23, 1985 has clearly prescribed.

In any event, independent of prescription, petitioners’ action is dismissible on the ground of

laches. The elements of laches are present in this case, viz:

(1) conduct on the part of the defendant, or one under whom he claims, giving rise to the situation
that led to the complaint and for which the complainant seeks a remedy;

(2) delay in asserting the complainant’s rights, having had knowledge or notice of defendant’s
conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the
right on which he bases his suit, and

(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the
suit is not held barred.

Of the facts which support the finding of laches, stress should be made of the following: (a) the
petitioners Romana unquestionably gained actual knowledge of the donation propter nuptias
when the deed of partition was executed in 1973 and the information must have surfaced again
when the compromise agreement was forged in 1976, and; (b) as petitioner Romana was a party-
signatory to the two documents, she definitely had the opportunity to question the donation
propter nuptias on both occasions, and she should have done so if she were of the mindset,
given the fact that she was still in possession of the land in dispute at the time. But she did not
make any move. She tarried for eleven (11) more years from the execution of the deed of
partition until she, together with petitioner Constancia, filed the annulment case in 1985.

Anent the ejectment case, we find the issues raised by the petitioners to be factual and, therefore,
beyond this Court’s power of review. Not being a trier of facts, the Court is not tasked to go over
the proofs presented by the parties and analyze, assess, and weigh them to ascertain if the trial
court and the appellate court were correct in according them superior credit in this or that piece of
evidence of one party or the other. In any event, implicit in the affirmance of the Court of Appeals
is the existence of substantial evidence supporting the decisions of the courts below.

WHEREFORE, finding no reversible error in the assailed decision, the same is hereby
AFFIRMED.

Costs against petitioners.

SO ORDERED.

CHING vs. GOYANKO, JR.

GR No. 165879
November 10, 2006
FACTS:

• The respondents are the seven children out of the legal union of Joseph
Goyanko, Sr. and Epifania dela Cruz.
• Respondents claim that in 1961, their parents acquired a real property in
Cebu which was first registered in the name of their aunt as their parents
was still Chinese citizens this time.
• In May, 1993, their aunt executed a Deed of Absolute Sale over the
subject property in favor of their father. In turn, on October 1993,
respondent’s father executed a Deed of Absolute Sale in favor of the
petitioner, Maria Ching, his common-law wife.
• After Goyanko Sr.’s death, the respondents discovered that the property
had been transferred to the name of the petitioner.
• Thus, the respondents filed a Complaint for the recovery of the property
and damages against petitioner and they prayed for the nullification of the
deed of sale and the issuance of a new one in favor of their father.
 ISSUES:

• Whether or not the subject property was part of the conjugal property of
Spouses Joseph Goyanko and Epifania dela Cruz.
• Whether or not the Deed of Absolute Sale in favor of herein petitioner was
void and inexistent.

HELD:

1) YES. The subject property was part of the conjugal property of the Spouses. As
it was acquired during the existence of a valid marriage between Joseph Sr. and
Epifania. Moreover, there was no decree of dissolution of marriage, nor of their
conjugal partnership.

2) YES.
• Supreme Court held that the contract of sale was null and void for being
contrary to morals and public policy. The sale was made by a husband in
favor of his concubine.
• According to Article 1409: Contracts whose cause, object or purpose is
contrary to law, morals, good customs, public order or public policy are
void and inexistent from the very beginning.
• Article 1352, NCC, also provides that: Contracts without cause or with
unlawful cause produce no effect whatsoever. The cause is unlawful if it is
contrary to law, morals, good customs, public order or pubic policy.
• Moreover, the sale of the property in favor of herein petitioner also fell
under the prohibition of sale of property between the spouses provided for
by Art. 1490, NCC. This provision also applies to common law
relationship.
• To rule otherwise would mean that “the condition of those who incurred
guilt would be better than those in legal union”
• This is so because if transfers and conveyances are allowed between
spouses during marriage would destroy the system of conjugal
partnership.
• This is also designed to prevent the exercise of undue influence of one
spouse over the other and to protect the institution of marriage, which is
the cornerstone of family law.
• Therefore, sale of the property made by Joseph Goyanko, Sr. in favor of
his common-law wife is null and void.

G.R. No. 165879 November 10, 2006

MARIA B. CHING, Petitioner,

vs.
 JOSEPH C. GOYANKO, JR., EVELYN GOYANKO, JERRY GOYANKO, IMELDA GOYANKO,
JULIUS GOYANKO, MARY ELLEN GOYANKO AND JESS GOYANKO, Respondents.

DECISION

CARPIO MORALES, J.:

On December 30, 1947, Joseph Goyanko (Goyanko) and Epifania dela Cruz (Epifania) were
married. [1] Out of the union were born respondents Joseph, Jr., Evelyn, Jerry, Imelda, Julius,
Mary Ellen and Jess, all surnamed Goyanko.

Respondents claim that in 1961, their parents acquired a 661 square meter property located at 29
F. Cabahug St., Cebu City but that as they (the parents) were Chinese citizens at the time, the
property was registered in the name of their aunt, Sulpicia Ventura (Sulpicia).

On May 1, 1993, Sulpicia executed a deed of sale [2] over the property in favor of respondents’
father Goyanko. In turn, Goyanko executed on October 12, 1993 a deed of sale [3] over the
property in favor of his common-law-wife-herein petitioner Maria B. Ching. Transfer Certificate of
Title (TCT) No. 138405 was thus issued in petitioner’s name.

After Goyanko’s death on March 11, 1996, respondents discovered that ownership of the property
had already been transferred in the name of petitioner. Respondents thereupon had the
purported signature of their father in the deed of sale verified by the Philippine National Police
Crime Laboratory which found the same to be a forgery. [4]

Respondents thus filed with the Regional Trial Court of Cebu City a complaint for recovery of
property and damages against petitioner, praying for the nullification of the deed of sale and of
TCT No. 138405 and the issuance of a new one in favor of their father Goyanko.

In defense, petitioner claimed that she is the actual owner of the property as it was she who
provided its purchase price. To disprove that Goyanko’s signature in the questioned deed of sale
is a forgery, she presented as witness the notary public who testified that Goyanko appeared and
signed the document in his presence.

By Decision of October 16, 1998, [5] the trial court dismissed the complaint against petitioner, the
pertinent portions of which decision read:

There is no valid and sufficient ground to declare the sale as null and void, fictitious and
simulated. The signature on the questioned Deed of Sale is genuine. The testimony of Atty.
Salvador Barrameda who declared in court that Joseph Goyanko, Sr. and Maria Ching together
with their witnesses appeared before him for notarization of Deed of Sale in question is more
reliable than the conflicting testimonies of the two document examiners. Defendant Maria Ching
asserted that the Deed of Sale executed by Joseph Goyanko, Sr. in her favor is valid and
genuine. The signature of Joseph Goyanko, Sr. in the questioned Deed of Absolute Sale is
genuine as it was duly executed and signed by Joseph Goyanko, Sr. himself.

The parcel of lands known as Lot No. 6 which is sought to be recovered in this case could never
be considered as the conjugal property of the original Spouses Joseph C. Goyanko and Epifania
dela Cruz or the exclusive capital property of the husband. The acquisition of the said property by
defendant Maria Ching is well-elicited from the aforementioned testimonial and documentary
evidence presented by the defendant. Although for a time being the property passed through
Joseph Goyanko, Sr. as a buyer yet his ownership was only temporary and transitory for the
reason that it was subsequently sold to herein defendant Maria Ching. Maria Ching claimed that it
was even her money which was used by Joseph Goyanko, Sr. in the purchase of the land and so
it was eventually sold to her. In her testimony, defendant Ching justified her financial capability to
buy the land for herself. The transaction undertaken was from the original owner Sulpicia Ventura
to Joseph Goyanko, Sr. and then from Joesph Goyanko, Sr. to herein defendant Maria Ching.

The land subject of the litigation is already registered in the name of defendant Maria Ching under
TCT No. 138405. By virtue of the Deed of Sale executed in favor of Maria Ching, Transfer
Certificate of Title No. 138405 was issued in her favor. In recognition of the proverbial virtuality of
a Torrens title, it has been repeatedly held that, unless bad faith can be established on the part of
the person appearing as owner on the certificate of title, there is no other owner than that in
whose favor it has been issued. A Torrens title is not subject to collateral attack. It is a well-known
doctrine that a Torrens title, as a rule, is irrevocable and indefeasible, and the duty of the court is
to see to it that this title is maintained and respected unless challenged in a direct proceedings
[sic]. [6] (Citations omitted; underscoring supplied)

Before the Court of Appeals where respondents appealed, they argued that the trial court erred:

1. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the subject
property between Joseph, Sr. and the defendant-appellee, despite the proliferation in the records
and admissions by both parties that defendant-appellee was the "mistress" or "common-law wife"
of Joseph, Sr..

2. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the subject
property between Joseph, Sr. and the defendant-appellee, despite the fact that the marriage of
Joseph, Sr. and Epifania was then still subsisting thereby rendering the subject property as
conjugal property of Joseph, Sr. and Epifania.

3. . . . in dismissing the complaint a quo . . . , in effect, sustaining the validity of the sale of the
subject property between Joseph, Sr. and the defendant-appellee, despite the clear findings of
forgery and the non-credible testimony of notary public. [7]

By Decision dated October 21, 2003, [8] the appellate court reversed that of the trial court and
declared null and void the questioned deed of sale and TCT No. 138405. Held the appellate
court:

. . . The subject property having been acquired during the existence of a valid marriage between
Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to belong to the conjugal partnership.
Moreover, while this presumption in favor of conjugality is rebuttable with clear and convincing
proof to the contrary, we find no evidence on record to conclude otherwise. The record shows
that while Joseph Sr. and his wife Epifania have been estranged for years and that he and
defendant-appellant Maria Ching, have in fact been living together as common-law husband and
wife, there has never been a judicial decree declaring the dissolution of his marriage to Epifania
nor their conjugal partnership. It is therefore undeniable that the 661-square meter property
located at No. 29 F. Cabahug Street, Cebu City belongs to the conjugal partnership.

Even if we were to assume that the subject property was not conjugal, still we cannot sustain the
validity of the sale of the property by Joseph, Sr. to defendant-appellant Maria Ching, there being
overwhelming evidence on records that they have been living together as common-law husband
and wife. On this score, Art. 1352 of the Civil Code provides:

"Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatsoever. The
cause is unlawful if it is contrary to law, morals, good customs, public order or public policy."
We therefore find that the contract of sale in favor of the defendant-appellant Maria Ching was
null and void for being contrary to morals and public policy. The purported sale, having been
made by Joseph Sr. in favor of his concubine, undermines the stability of the family, a basic
social institution which public policy vigilantly protects. Furthermore, the law emphatically
prohibits spouses from selling property to each other, subject to certain exceptions. And this is so
because transfers or conveyances between spouses, if allowed during the marriage
would destroy the system of conjugal partnership, a basic policy in civil law. The prohibition was
designed to prevent the exercise of undue influence by one spouse over the other and is likewise
applicable even to common-law relationships otherwise, "the condition of those who incurred guilt
would turn out to be better than those in legal union. [9] (Underscoring supplied)

Hence, the present petition, petitioners arguing that the appellate court gravely erred in:

I.

APPLYING THE STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND TRANSFERS OF

PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES ON THE SUBJECT PROPERTY,
THE SAME BEING FOUND BY THE COURT A QUO, AS THE EXCLUSIVE PROPERTY OF PETITIONER,
AND THAT THE SAME WAS NEVER PART OF THE CONJUGAL PROPERTY OF THE MARRIAGE
BETWEEN RESPONDENTS’ MOTHER EPIFANIA GOYANKO AND PETITIONER’S COMMON LAW
HUSBAND, JOSEPH GOYANKO, SR., NOR THE EXCLUSIVE OR CAPITAL PROPERTY OF THE
LATTER AT ANYTIME BEFORE THE SAME WAS VALIDLY ACQUIRED BY PETITIONER.

II.

NOT FINDING THAT A JURIDICAL RELATION OF TRUST AS PROVIDED FOR UNDER ARTICLES 1448
AND 1450 OF THE NEW CIVIL CODE CAN VALIDLY EXIST BETWEEN COMMON LAW SPOUSES.

III.

NOT FINDING THAT A CONVEYANCE OVER A PROPERTY MADE BY A TRUSTEE, WHO BECAME AS
SUCH IN CONTEMPLATION OF LAW, AND WHO HAPPENS TO BE A COMMON LAW HUSBAND OF
THE BENEFICIARY, IS NOT A VIOLATION OF A STATE POLICY ON PROHIBITION AGAINST
CONVEYANCES AND TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW
SPOUSES.

IV.

ALLOWING RESPONDENTS TO ABANDON THEIR ORIGINAL THEORY OF THEIR CASE DURING

APPEAL. [10]

The pertinent provisions of the Civil Code which apply to the present case read:

ART. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The
cause is unlawful if it is contrary to law, morals, good customs, public order or public policy.

ART. 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order
or public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;

(5) Those which contemplate an impossible service;

(6) Those where the intention of the parties relative to the principal object of the contract cannot
be ascertained;

(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.

ARTICLE 1490. The husband and wife cannot sell property to each other, except:

(1) When a separation of property was agreed upon in the marriage settlements; or

(2) When there has been a judicial separation of property under Article 191. (Underscoring
supplied)

The proscription against sale of property between spouses applies even to common law
relationships. So this Court ruled in Calimlim-Canullas v. Hon. Fortun, etc., et al.: [11]

Anent the second issue, we find that the contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor of a concubine after he
had abandoned his family and left the conjugal home where his wife and children lived and
from whence they derived their support. The sale was subversive of the stability of the
family, a basic social institution which public policy cherishes and protects.

Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purposes is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from
the very beginning.

Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no
effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public
order, or public policy."

Additionally, the law emphatically prohibits the spouses from selling property to each
other subject to certain exceptions. Similarly,

donations between spouses during marriage are prohibited. And this is so because if
transfers or conveyances between spouses were allowed during marriage, that would destroy the
system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the
exercise of undue influence by one spouse over the other, as well as to protect the institution of
marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as
husband and wife without benefit of marriage, otherwise, "the condition of those who
incurred guilt would turn out to be better than those in legal union." Those provisions are
dictated by public interest and their criterion must be imposed upon the will of the parties. . . . [12]
(Italics in the original; emphasis and underscoring supplied)

As the conveyance in question was made by Goyangko in favor of his common- law-wife-herein
petitioner, it was null and void.
Petitioner’s argument that a trust relationship was created between Goyanko as trustee and her
as beneficiary as provided in Articles 1448 and 1450 of the Civil Code which read:

ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the beneficiary. However, if the person to
whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the
child.

ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for the benefit of
another and the conveyance is made to the lender or payor to secure the payment of the debt, a
trust arises by operation of law in favor of the person to whom the money is loaned or for whom it
is paid. The latter may redeem the property and compel a conveyance thereof to him.

does not persuade.

For petitioner’s testimony that it was she who provided the purchase price is uncorroborated. That
she may have been considered the breadwinner of the family and that there was proof that she
earned a living do not conclusively clinch her claim.

As to the change of theory by respondents from forgery of their father’s signature in the deed of
sale to sale contrary to public policy, it too does not persuade. Generally, a party in a litigation is
not permitted to freely and substantially change the theory of his case so as not to put the other
party to undue disadvantage by not accurately and timely apprising him of what he is up against,
[13] and to ensure that the latter is given the opportunity during trial to refute all allegations
against him by presenting evidence to the contrary. In the present case, petitioner cannot be said
to have been put to undue disadvantage and to have been denied the chance to refute all the
allegations against her. For the nullification of the sale is anchored on its illegality per se, it being
violative of the above-cited Articles 1352, 1409 and 1490 of the Civil Code.

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioner.

SO ORDERED