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LIST

OF CASES IN PERSONS AND FAMILY RELATIONS


(PROPERTY RELATIONS BETWEEN SPOUSES)
SY 2016-2017



1. Ty vs Court of Appeals, GR No. 127406, 27 November 2000
2. Arcaba vs Tabancura Vda De Batocael, GR No. 146683, 22 November 2001, 370 SCRA
414
3. Ayala Investment vs Court of Appeals, GR No. 1183305, 12 February 1998
4. Go vs Court of Appeals, GR No. 114791, 29 May 1997
5. Zulueta vs Pan American World Airways, Inc., GR No. 28589, 08 January 1973
6. Wong vs. IAC, GR No. 70082, 19 August 1991
7. Go vs Servacio, GR No. 157537, 07 September 2011
8. Carino vs Carino, GR No. 132529, 02 February 2001, 351 SCRA 127
9. Lilius vs Manila Railroad, GR No. L-39587, 24 March 1934
10. Go vs. Yamane, GR No. 160762, 3 May 2006
11. Pana vs Heirs of Juanete, GR NO. 164201, 10 December 2012
12. Carlos vs. Abelardo, GR No. 146504, 9 April 2002
13. Guiang vs. CA, GR No. 125172, 26 June 1998
14. Jader-Manalo vs. Camaisa, GR No. 147978, 28 January 2002
15. Homeowners Savings vs. Dailo, GR No. 153802, 11 March 2005
16. Sps. Lita De Leon & Felic Rio Tarrosa vs. Anita de Leon, et al., G.R. No. 185063, 23 July
2009
17. Dino vs Dino, GR No. 178044, 19 January 2011
18. Valdez vs. RTC of Quezon City, GR No. 122749, 31 July 1996, 260 SCRA 221
19. Francisco vs. Master Iron Works, GR No. 151967, 16 February 16, 2005
20. Abrenica vs Abrenica, GR No. 180572, 18 June 2012
21. Quiao vs Quiao, GR No. 176556, 04 July 2012
22. Beumer vs Amores, GR No. 195670, 03 December 2012
23. Fuentes vs Roca, GR No. 178902, 21 April 2010
24. Ravina vs Abrille, GR No. 160708, 16 October 2009
25. Borromeo vs Descaller, GR No. 159310, 24 February 2009
26. Villanueva vs Court of Appeals, GR No. 143286, 14 April 2004
27. Boado vs Court of Appeals, GR No. 145222, 24 April 2009
28. Veloso vs Martinez, GR No. L-8715, 24 October 1914
29. G-Tractors Inc. vs Court of Appeals, GR No. L-57402, 28 February 1985

Page 1
SECOND DIVISION

[G.R. No. 127406. November 27, 2000.]

OFELIA P. TY , petitioner, vs . THE COURT OF APPEALS, and EDGARDO


M. REYES , respondents.

Caguioa Law Office for petitioner.


Ceballos & Associates Law Office for private respondent.

SYNOPSIS

Edgardo Reyes (private respondent herein) married Anna Maria Regina Villanueva in a civil
ceremony and in a church wedding, both in 1977. In 1980, the then Juvenile and Domestic
Relations Court declared their marriage null and void for lack of valid marriage license. The
church wedding was likewise declared null and void. But even before the decree nullifying
his marriage to Anna Maria was issued, Edgardo married Ofelia (herein petitioner) in civil
ceremonies in 1979 and in a church wedding in 1982. In 1991, Edgardo filed a civil case
with the Pasig RTC praying for the declaration of his marriage to Ofelia as null and void. He
averred that at the time of his marriage to petitioner the decree of nullity of his first
marriage had not been issued yet. The Pasig RTC sustained respondent's civil suit and
declared his marriage to herein petitioner null and void ab initio. Both parties appealed to
the Court of Appeals. The appellate court affirmed the decision of the trial court. It ruled
that a judicial declaration of nullity of the first marriage must first be secured before a
subsequent marriage could be validly contracted. Petitioner's motion for reconsideration
was denied, hence, this petition before the Supreme Court. The principal issue is whether
the decree of nullity of the first marriage is required before a subsequent marriage can be
entered into validly.
According to the Supreme Court, the provisions of the Civil Code should govern the first
and second marriages herein having been contracted in 1977 and 1979 respectively. As to
whether a judicial declaration of nullity of a void marriage is necessary, the Civil Code had
no express provision to that effect. Jurisprudence also appeared to be conflicting. But the
confusion under the Civil Code was put to rest under the Family Code. At the time the
second marriage in this case was entered into, the prevailing rule was found in Odayat,
Mendoza and Aragon cases. The rule therein was that the first marriage of private
respondent being void for lack of license and consent, there was no need for judicial
declaration of its nullity before he could contract a second marriage. The Court concluded
that private respondent's second marriage to petitioner was valid. The assailed decision
was partially reversed, and, hence, the marriage of Edgardo to Ofelia was declared valid,
and the award of P15,000.00 was ratified and maintained as monthly support to their two
children for as long as they were of minor age or otherwise legally entitled thereto.

SYLLABUS

1. CIVIL LAW; CIVIL CODE; MARRIAGE; JUDICIAL DECLARATION OF NULLITY OF A


VOID MARRIAGE; ABSENCE OF EXPRESS PROVISION THEREON RESULTED IN
CONFLICTING JURISPRUDENCE. At the outset, we must note that private respondent's
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first and second marriages contracted in 1977 and 1979, respectively, are governed by the
provisions of the Civil Code. The present case differs significantly from the recent cases of
Bobis v. Bobis and Mercado v. Tan, both involving a criminal case for bigamy where the
bigamous marriage was contracted during the effectivity of the Family Code, under which
a judicial declaration of nullity of marriage is clearly required. As to whether a judicial
declaration of nullity of a void marriage is necessary, the Civil Code contains no express
provision to that effect. Jurisprudence on the matter, however, appears to be conflicting.
Originally, in People v. Mendoza, and People v. Aragon, this Court held that no judicial
decree is necessary to establish the nullity of a void marriage. Both cases involved the
same factual milieu. Accused contracted a second marriage during the subsistence of his
first marriage. After the death of his first wife, accused contracted a third marriage during
the subsistence of the second marriage. The second wife initiated a complaint for bigamy.
The Court acquitted accused on the ground that the second marriage is void, having been
contracted during the existence of the first marriage. There is no need for a judicial
declaration that said second marriage is void. Since the second marriage is void, and the
first one terminated by the death of his wife, there are no two subsisting valid marriages.
Hence, there can be no bigamy. Justice Alex Reyes dissented in both cases, saying that it is
not for the spouses but the court to judge whether a marriage is void or not. In Gomez v.
Lipana, and Consuegra v. Consuegra, however, we recognized the right of the second wife
who entered into the marriage in good faith, to share in their acquired estate and in
proceeds of the retirement insurance of the husband. The 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 was a need for judicial declaration of such
nullity (of the second marriage). And since the death of the husband supervened before
such declaration, we upheld the right of the second wife to share in the estate they
acquired, on grounds of justice and equity. But in Odayat v. Amante (1977), the Court
adverted to Aragon and Mendoza as precedents. We exonerated a clerk of court of the
charge of immorality on the ground that his marriage to Filomena Abella in October of
1948 was void, since she was already previously married to one Eliseo Portales in February
of the same year. The Court held that no judicial decree is necessary to establish the
invalidity of void marriages. This ruling was affirmed in Tolentino v. Paras. Yet again in
Wiegel v. Sempio-Diy (1986), the Court held that there is a need for a judicial declaration of
nullity of a void marriage. In Wiegel, Lilia married Maxion in 1972. In 1978, she married
another man, Wiegel. Wiegel filed a petition with the Juvenile Domestic Relations Court to
declare his marriage to Lilia as void on the ground of her previous valid marriage. The
Court, expressly relying on Consuegra, concluded that: There is likewise no need of
introducing evidence about the existing prior marriage of her first husband at the time they
married each other, for then such a marriage though void still needs according to this
Court a judicial declaration (citing Consuegra) of such fact and for all legal intents and
purposes she would still be regarded as a married woman at the time she contracted her
marriage with respondent Karl Heinz Wiegel; accordingly, the marriage of petitioner and
respondent would be regarded VOID under the law. In Yap v. Court of Appeals, however,
the Court found the second marriage void without need of judicial declaration, thus
reverting to the Odayat, Mendoza and Aragon rulings. DTcACa

2. ID.; FAMILY CODE; MARRIAGE; JUDICIAL DECLARATION OF NULLITY OF MARRIAGE,


EXPRESSLY REQUIRED; APPLICATION THEREOF. At any rate, the confusion under the
Civil Code was put to rest under the Family Code. Our rulings in, Gomez, Consuegra, and
Wiegel were eventually embodied in Article 40 of the Family Code. Article 40 of said Code
expressly required a judicial declaration of nullity of marriage. See Art. 40: The absolute
nullity of a previous marriage may be invoked for purposes of remarriage on the basis
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solely of a final judgment declaring such previous marriage void. In Terre v. Terre (1992)
the Court, applying Gomez, Consuegra and Wiegel, categorically stated that a judicial
declaration of nullity of a void marriage is necessary. Thus, we disbarred a lawyer for
contracting a bigamous marriage during the subsistence of his first marriage. He claimed
that his first marriage in 1977 was void since his first wife was already married in 1968.
We held that Atty. Terre should have known that the prevailing case law is that "for
purposes of determining whether a person is legally free to contract a second marriage, a
judicial declaration that the first marriage was null and void ab initio is essential." The Court
applied this ruling in subsequent cases. In Domingo v. Court of Appeals (1993), the Court
held: Came the Family Code which settled once and for all the conflicting jurisprudence on
the matter. A declaration of absolute nullity of marriage is now explicitly required either as
a cause of action or a ground for defense. (Art. 39 of the Family Code). 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.
3. ID.; ID.; ID.; ID.; WHEN NOT APPLICABLE; CASE AT BAR. However, a recent case
applied the old rule because of the peculiar circumstances of the case. In Apiag v. Cantero,
(1997) the first wife charged a municipal trial judge of immorality for entering into a
second marriage. The judge claimed that his first marriage was void since he was merely
forced into marrying his first wife whom he got pregnant. On the issue of nullity of the first
marriage, we applied Odayat, Mendoza and Aragon. We held that since the second
marriage took place and all the children thereunder were born before the promulgation of
Wiegel and the effectivity of the Family Code, there is no need for a judicial declaration of
nullity of the first marriage pursuant to prevailing jurisprudence at that time. Similarly, in
the present case, the second marriage of private respondent was entered into in 1979,
before Wiegel. At that time, the prevailing rule was found in Odayat, Mendoza and Aragon.
The first marriage of private respondent being void for lack of license and consent, there
was no need for judicial declaration of its nullity before he could contract a second
marriage. In this case, therefore, we conclude that private respondent's second marriage
to petitioner is valid. TAacCE

4. ID.; ID.; ID.; PROVISIONS THEREOF HAS RETROACTIVE EFFECT; EXCEPTION;


APPLICATION IN CASE AT BAR. Moreover, we find that the provisions of the Family
Code cannot be retroactively applied to the present case, for to do so would prejudice the
vested rights of petitioner and of her children. As held in Jison v. Court of Appeals, the
Family Code has retroactive effect unless there be impairment of vested rights. In the
present case, that impairment of vested rights of petitioner and the children is patent.
Additionally, we are not quite prepared to give assent to the appellate court's finding that
despite private respondent's "deceit and perfidy" in contracting marriage with petitioner, he
could benefit from her silence on the issue.
5. ID.; ID.; ID.; MARRIAGE LICENSE; WHEN USED LEGALLY IN THE CIVIL CEREMONY
DOES NOT DETRACT FROM THE CEREMONIAL USE THEREOF IN THE CHURCH WEDDING
OF THE SAME PARTIES TO THE MARRIAGE; CASE AT BAR Thus, coming now to the civil
effects of the church ceremony wherein petitioner married private respondent using the
marriage license used three years earlier in the civil ceremony, we find that petitioner now
has raised this matter properly. Earlier petitioner claimed as untruthful private
respondent's allegation that he wed petitioner but they lacked a marriage license. Indeed
we find there was a marriage license, though it was the same license issued on April 3,
1979 and used in both the civil and the church rites. Obviously, the church ceremony was
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confirmatory of their civil marriage. As petitioner contends, the appellate court erred when
it refused to recognize the validity and salutary effects of said canonical marriage on a
technicality, i.e. that petitioner had failed to raise this matter as affirmative defense during
trial. She argues that such failure does not prevent the appellate court from giving her
defense due consideration and weight. She adds that the interest of the State in protecting
the inviolability of marriage, as a legal and social institution, outweighs such technicality. In
our view, petitioner and private respondent had complied with all the essential and formal
requisites for a valid marriage, including the requirement of a valid license in the first of the
two ceremonies. That this license was used legally in the celebration of the civil ceremony
does not detract from the ceremonial use thereof in the church wedding of the same
parties to the marriage, for we hold that the latter rites served not only to ratify but also to
fortify the first. The appellate court might have its reasons for brushing aside this possible
defense of the defendant below which undoubtedly could have tendered a valid issue, but
which was not timely interposed by her before the trial court. But we are now persuaded
we cannot play blind to the absurdity, if not inequity, of letting the wrongdoer profit from
what the CA calls "his own deceit and perfidy."
6. ID.; DAMAGES; MAY NOT BE AWARDED TO THE HUSBAND OR WIFE FOR BREACH
OF A MARITAL OBLIGATION; CASE AT BAR. Like the lower courts, we are also of the
view that no damages should be awarded in the present case, but for another reason.
Petitioner wants her marriage to private respondent held valid and subsisting. She is suing
to maintain her status as legitimate wife. In the same breath, she asks for damages from
her husband for filing a baseless complaint for annulment of their marriage which caused
her mental anguish, anxiety, besmirched reputation, social humiliation and alienation from
her parents. Should we grant her prayer, we would have a situation where the husband pays
the wife damages from conjugal or common funds. To do so, would make the application
of the law absurd. Logic, if not common sense, militates against such incongruity.
Moreover, our laws do not comprehend an action for damages between husband and wife
merely because of breach of a marital obligation. There are other remedies.

DECISION

QUISUMBING , J : p

This appeal seeks the reversal of the decision dated July 24, 1996, of the Court of Appeals
in C.A. G.R. CV 37897, which affirmed the decision of the Regional Trial Court of Pasig,
Branch 160, declaring the marriage contract between private respondent Edgardo M.
Reyes and petitioner Ofelia P. Ty null and void ab initio. It also ordered private respondent
to pay P15,000.00 as monthly support for their children Faye Eloise Reyes and Rachel Anne
Reyes.
As shown in the records of the case, private respondent married Anna Maria Regina
Villanueva in a civil ceremony on March 29, 1977, in Manila. Then they had a church
wedding on August 27, 1977. However, on August 4, 1980, the Juvenile and Domestic
Relations Court of Quezon City declared their marriage null and void ab initio for lack of a
valid marriage license. The church wedding on August 27, 1977, was also declared null and
void ab initio for lack of consent of the parties.
Even before the decree was issued nullifying his marriage to Anna Maria, private
respondent wed Ofelia P. Ty, herein petitioner, on April 4, 1979, in ceremonies officiated by
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the judge of the City Court of Pasay. On April 4, 1982, they also had a church wedding in
Makati, Metro Manila.
On January 3, 1991, private respondent filed a Civil Case 1853-J with the RTC of Pasig,
Branch 160, praying that his marriage to petitioner be declared null and void. He alleged
that they had no marriage license when they got married. He also averred that at the time
he married petitioner, he was still married to Anna Maria. He stated that at the time he
married petitioner the decree of nullity of his marriage to Anna Maria had not been issued.
The decree of nullity of his marriage to Anna Maria was rendered only on August 4, 1980,
while his civil marriage to petitioner took place on April 4, 1979.
Petitioner, in defending her marriage to private respondent, pointed out that his claim that
their marriage was contracted without a valid license is untrue. She submitted their
Marriage License No. 5739990 issued at Rosario, Cavite on April 3, 1979, as Exh. 11, 12
and 12-A. He did not question this document when it was submitted in evidence. Petitioner
also submitted the decision of the Juvenile and Domestic Relations Court of Quezon City
dated August 4, 1980, which declared null and void his civil marriage to Anna Maria Regina
Villanueva celebrated on March 29, 1977, and his church marriage to said Anna Maria on
August 27, 1977. These documents were submitted as evidence during trial and,
according to petitioner, are therefore deemed sufficient proof of the facts therein. The fact
that the civil marriage of private respondent and petitioner took place on April 4, 1979,
before the judgment declaring his prior marriage as null and void is undisputed. It also
appears indisputable that private respondent and petitioner had a church wedding
ceremony on April 4, 1982. 1
The Pasig RTC sustained private respondent's civil suit and declared his marriage to herein
petitioner null and void ab initio in its decision dated November 4, 1991. Both parties
appealed to respondent Court of Appeals. On July 24, 1996, the appellate court affirmed
the trial court's decision. It ruled that a judicial declaration of nullity of the first marriage (to
Anna Maria) must first be secured before a subsequent marriage could be validly
contracted. Said the appellate court:
We can accept, without difficulty, the doctrine cited by defendant's counsel that
'no judicial decree is necessary to establish the invalidity of void marriages.' It
does not say, however, that a second marriage may proceed even without a
judicial decree. While it is true that if a marriage is null and void ab initio, there is
in fact no subsisting marriage, we are unwilling to rule that the matter of whether
a marriage is valid or not is for each married spouse to determine for himself
for this would be the consequence of allowing a spouse to proceed to a second
marriage even before a competent court issues a judicial decree of nullity of his
first marriage. The results would be disquieting, to say the least, and could not
have been the intendment of even the now-repealed provisions of the Civil Code
on marriage.

xxx xxx xxx


WHEREFORE, upon the foregoing ratiocination, We modify the appealed Decision
in this wise:
1. The marriage contracted by plaintiff-appellant [herein private
respondent] Eduardo M. Reyes and defendant-appellant [herein
petitioner] Ofelia P. Ty is declared null and void ab initio;
2. Plaintiff-appellant Eduardo M. Reyes is ordered to give monthly
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support in the amount of P15,000.00 to his children Faye Eloise
Reyes and Rachel Anne Reyes from November 4, 1991; and
3. Cost against plaintiff-appellant Eduardo M. Reyes.
SO ORDERED. 2

Petitioner's motion for reconsideration was denied. Hence, this instant petition asserting
that the Court of Appeals erred:
I.
BOTH IN THE DECISION AND THE RESOLUTION, IN REQUIRING FOR THE
VALIDITY OF PETITIONER'S MARRIAGE TO RESPONDENT, A JUDICIAL DECREE
NOT REQUIRED BY LAW.
II
IN THE RESOLUTION, IN APPLYING THE RULING IN DOMINGO VS. COURT OF
APPEALS.
III
IN BOTH THE DECISION AND RESOLUTION IN NOT CONSIDERING THE CIVIL
EFFECTS OF THE RELIGIOUS RATIFICATION WHICH USED THE SAME MARRIAGE
LICENSE.
IV
IN THE DECISION NOT GRANTING MORAL AND EXEMPLARY DAMAGES TO THE
DEFENDANT-APPELLANT.

The principal issue in this case is whether the decree of nullity of the first marriage is
required before a subsequent marriage can be entered into validly? To resolve this
question, we shall go over applicable laws and pertinent cases to shed light on the
assigned errors, particularly the first and the second which we shall discuss jointly.
In sustaining the trial court, the Court of Appeals declared the marriage of petitioner to
private respondent null and void for lack of a prior judicial decree of nullity of the marriage
between private respondent and Villanueva. The appellate court rejected petitioner's claim
that People v. Mendoza 3 and People v. Aragon 4 are applicable in this case. For these
cases held that where a marriage is void from its performance, no judicial decree is
necessary to establish its invalidity. But the appellate court said these cases, decided
before the enactment of the Family Code (E.O. No. 209 as amended by E.O No. 227), no
longer control. A binding decree is now needed and must be read into the provisions of law
previously obtaining. 5

In refusing to consider petitioner's appeal favorably, the appellate court also said:
Terre v. Attorney Terre, Adm. Case No. 2349, 3 July 1992 is mandatory precedent
for this case. Although decided by the High Court in 1992, the facts situate it
within the regime of the now-repealed provisions of the Civil Code, as in the
instant case.
xxx xxx xxx

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For purposes of determining whether a person is legally free to contract a second
marriage, a judicial declaration that the first marriage was null and void ab initio
is essential . . . . 6

At the outset, we must note that private respondent's first and second marriages
contracted in 1977 and 1979, respectively, are governed by the provisions of the Civil
Code. The present case differs significantly from the recent cases of Bobis v. Bobis 7 and
Mercado v. Tan, 8 both involving a criminal case for bigamy where the bigamous marriage
was contracted during the effectivity of the Family Code 9 under which a judicial
declaration of nullity of marriage is clearly required. ISCHET

Pertinent to the present controversy, Article 83 of the Civil Code provides that:
ARTICLE 83. Any marriage subsequently contracted by any person during the
lifetime of the first spouse of such person with any person other than such first
spouse shall be illegal and void from its performance, unless:
(1) The first marriage was annulled or dissolved; or
(2) The first spouse had been absent for seven consecutive years at
the time of the second marriage without the spouse present having news
of the absentee being alive, or if the absentee, though he has been absent
for less than seven years, is generally considered as dead and before any
person believed to be so by the spouse present at the time of contracting
such subsequent marriage, or if the absentee is presumed dead according
to articles 390 and 391. The marriage so contracted shall be valid in any of
the three cases until declared null and void by a competent court.

As to whether a judicial declaration of nullity of a void marriage is necessary, the Civil Code
contains no express provision to that effect. Jurisprudence on the matter, however,
appears to be conflicting.
Originally, in People v. Mendoza, 1 0 and People v. Aragon, 1 1 this Court held that no judicial
decree is necessary to establish the nullity of a void marriage. Both cases involved the
same factual milieu. Accused contracted a second marriage during the subsistence of his
first marriage. After the death of his first wife, accused contracted a third marriage during
the subsistence of the second marriage. The second wife initiated a complaint for bigamy.
The Court acquitted accused on the ground that the second marriage is void, having been
contracted during the existence of the first marriage. There is no need for a judicial
declaration that said second marriage is void. Since the second marriage is void, and the
first one terminated by the death of his wife, there are no two subsisting valid marriages.
Hence, there can be no bigamy. Justice Alex Reyes dissented in both cases, saying that it is
not for the spouses but the court to judge whether a marriage is void or not.
In Gomez v. Lipana, 1 2 and Consuegra v. Consuegra, 1 3 however, we recognized the right of
the second wife who entered into the marriage in good faith, to share in their acquired
estate and in proceeds of the retirement insurance of the husband. The 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 was a need for judicial
declaration of such nullity (of the second marriage). And since the death of the husband
supervened before such declaration, we upheld the right of the second wife to share in the
estate they acquired, on grounds of justice and equity. 1 4
But in Odayat v. Amante (1977), 1 5 the Court adverted to Aragon and Mendoza as
precedents. We exonerated a clerk of court of the charge of immorality on the ground that
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his marriage to Filomena Abella in October of 1948 was void, since she was already
previously married to one Eliseo Portales in February of the same year. The Court held that
no judicial decree is necessary to establish the invalidity of void marriages. This ruling was
affirmed in Tolentino v. Paras. 1 6
Yet again in Wiegel v. Sempio-Diy (1986), 1 7 the Court held that there is a need for a judicial
declaration of nullity of a void marriage. In Wiegel, Lilia married Maxion in 1972. In 1978,
she married another man, Wiegel. Wiegel filed a petition with the Juvenile Domestic
Relations Court to declare his marriage to Lilia as void on the ground of her previous valid
marriage. The Court, expressly relying on Consuegra, concluded that: 1 8
There is likewise no need of introducing evidence about the existing prior
marriage of her first husband at the time they married each other, for then such a
marriage though void still needs according to this Court a judicial declaration
(citing Consuegra) of such fact and for all legal intents and purposes she would
still be regarded as a married woman at the time she contracted her marriage with
respondent Karl Heinz Wiegel; accordingly, the marriage of petitioner and
respondent would be regarded VOID under the law. (Italics supplied).

In Yap v. Court of Appeals, 1 9 however, the Court found the second marriage void without
need of judicial declaration, thus reverting to the Odayat, Mendoza and Aragon rulings.
At any rate, the confusion under the Civil Code was put to rest under the Family Code. Our
rulings in Gomez, Consuegra, and Wiegel were eventually embodied in Article 40 of the
Family Code. 2 0 Article 40 of said Code expressly required a judicial declaration of nullity of
marriage
ARTICLE 40. 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.

In Terre v. Terre (1992) 2 1 the Court, applying Gomez, Consuegra and Wiegel, categorically
stated that a judicial declaration of nullity of a void marriage is necessary. Thus, we
disbarred a lawyer for contracting a bigamous marriage during the subsistence of his first
marriage. He claimed that his first marriage in 1977 was void since his first wife was
already married in 1968. We held that Atty. Terre should have known that the prevailing
case law is that "for purposes of determining whether a person is legally free to contract a
second marriage, a judicial declaration that the first marriage was null and void ab initio is
essential."
The Court applied this ruling in subsequent cases. In Domingo v. Court of Appeals (1993),
2 2 the Court held:

Came the Family Code which settled once and for all the conflicting jurisprudence
on the matter. A declaration of absolute nullity of marriage is now explicitly
required either as a cause of action or a ground for defense. (Art. 39 of the Family
Code). 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. (Family Code, Art. 40; See also Arts. 11, 13,
42, 44, 48, 50, 52, 54, 86, 99, 147, 148). 2 3

However, a recent case applied the old rule because of the peculiar circumstances of the
case. In Apiag v. Cantero, (1997) 2 4 the first wife charged a municipal trial judge of
immorality for entering into a second marriage. The judge claimed that his first marriage
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was void since he was merely forced into marrying his first wife whom he got pregnant. On
the issue of nullity of the first marriage, we applied Odayat, Mendoza and Aragon. We held
that since the second marriage took place and all the children thereunder were born before
the promulgation of Wiegel and the effectivity of the Family Code, there is no need for a
judicial declaration of nullity of the first marriage pursuant to prevailing jurisprudence at
that time.
Similarly, in the present case, the second marriage of private respondent was entered into
in 1979, before Wiegel. At that time, the prevailing rule was found in Odayat, Mendoza and
Aragon. The first marriage of private respondent being void for lack of license and
consent, there was no need for judicial declaration of its nullity before he could contract a
second marriage. In this case, therefore, we conclude that private respondent's second
marriage to petitioner is valid.
Moreover, we find that the provisions of the Family Code cannot be retroactively applied to
the present case, for to do so would prejudice the vested rights of petitioner and of her
children. As held in Jison v. Court of Appeals, 2 5 the Family Code has retroactive effect
unless there be impairment of vested rights. In the present case, that impairment of vested
rights of petitioner and the children is patent. Additionally, we are not quite prepared to
give assent to the appellate court's finding that despite private respondent's "deceit and
perfidy" in contracting marriage with petitioner, he could benefit from her silence on the
issue. Thus, coming now to the civil effects of the church ceremony wherein petitioner
married private respondent using the marriage license used three years earlier in the civil
ceremony, we find that petitioner now has raised this matter properly. Earlier petitioner
claimed as untruthful private respondent's allegation that he wed petitioner but they lacked
a marriage license. Indeed we find there was a marriage license, though it was the same
license issued on April 3, 1979 and used in both the civil and the church rites. Obviously,
the church ceremony was confirmatory of their civil marriage. As petitioner contends, the
appellate court erred when it refused to recognize the validity and salutary effects of said
canonical marriage on a technicality, i.e. that petitioner had failed to raise this matter as
affirmative defense during trial. She argues that such failure does not prevent the appellate
court from giving her defense due consideration and weight. She adds that the interest of
the State in protecting the inviolability of marriage, as a legal and social institution,
outweighs such technicality. In our view, petitioner and private respondent had complied
with all the essential and formal requisites for a valid marriage, including the requirement
of a valid license in the first of the two ceremonies. That this license was used legally in the
celebration of the civil ceremony does not detract from the ceremonial use thereof in the
church wedding of the same parties to the marriage, for we hold that the latter rites served
not only to ratify but also to fortify the first. The appellate court might have its reasons for
brushing aside this possible defense of the defendant below which undoubtedly could
have tendered a valid issue, but which was not timely interposed by her before the trial
court. But we are now persuaded we cannot play blind to the absurdity, if not inequity, of
letting the wrongdoer profit from what the CA calls "his own deceit and perfidy."

On the matter of petitioner's counterclaim for damages and attorney's fees. Although the
appellate court admitted that they found private respondent acted "duplicitously and
craftily" in marrying petitioner, it did not award moral damages because the latter did not
adduce evidence to support her claim. 2 6 Like the lower courts, we are also of the view that
no damages should be awarded in the present case, but for another reason. Petitioner
wants her marriage to private respondent held valid and subsisting. She is suing to
maintain her status as legitimate wife. In the same breath, she asks for damages from her
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husband for filing a baseless complaint for annulment of their marriage which caused her
mental anguish, anxiety, besmirched reputation, social humiliation and alienation from her
parents. Should we grant her prayer, we would have a situation where the husband pays the
wife damages from conjugal or common funds. To do so, would make the application of
the law absurd. Logic, if not common sense, militates against such incongruity. Moreover,
our laws do not comprehend an action for damages between husband and wife merely
because of breach of a marital obligation. 2 7 There are other remedies. 2 8
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals
dated July 24, 1996 and its Resolution dated November 7, 1996, are reversed partially, so
that the marriage of petitioner Ofelia P. Ty and private respondent Edgardo M. Reyes is
hereby DECLARED VALID AND SUBSISTING; and the award of the amount of P15,000.00 is
RATIFIED and MAINTAINED as monthly support to their two children, Faye Eloise Reyes
and Rachel Anne Reyes, for as long as they are of minor age or otherwise legally entitled
thereto. Costs against private respondent.
SO ORDERED.
Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.
Footnotes

1. See also Tison vs. CA, 276 SCRA 582, 593 (1997); Quebral vs. CA, 252 SCRA 353, 365
(1996); Son vs. Son, 251 SCRA 556, 564 (1995); re proof of facts cited.
2. Rollo, pp. 48-52.
3. 45 Phil. 739(1954).
4. 100 SCRA 1033(1957).

5. Rollo, p. 47.
6. Rollo, p. 49.
7. G.R. No. 138509, July 31, 2000.
8. G.R. No. 137110, August 1, 2000. In his dissenting and concurring opinion, Justice Vitug
opined that the necessity of a judicial declaration of nullity of a void marriage for the
purpose of remarriage should be held to refer merely to cases where it can be said that a
marriage, at least ostensibly, had taken place. No such judicial declaration of nullity, in
his view, should still be deemed essential when the "marriage," for instance, is between
persons of the same sex or when either or both parties had not at all given consent to the
marriage. Indeed, it is likely that Article 40 of the Family Code has been meant and
intended to refer only to marriages declared void under the provisions of Articles 35, 36,
37, 38 and 53 thereof.
9. E.O. No. 209, which took effect on August 3, 1988.
10. 45 Phil. 739 (1954).

11. 100 SCRA 1033 (1957).


12. 33 SCRA 614 (1970).
13. 37 SCRA 315 (1971).
14. See also Lao v. Dee, 45 Phil. 739 (1924) and Pisalbon v. Bejec, 74 Phil. 88 (1943).
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15. 77 SCRA 338 (1977).
16. 22 SCRA 525 (1983).
17. 143 SCRA 499 (1986).
18. Id. at 501.
19. 145 SCRA 229 (1986).

20. The Family Code took effect on August 3, 1988.


21. 211 SCRA 7 (1992).
22. 226 SCRA 572 (1993).
23. Id. at 579.
24. 268 SCRA 47 (1997).

25. 286 SCRA 495, 530 (1998).


26. Rollo, p. 51.
27. Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the
Philippines, Vol. 1, Manila: 1990, p. 223.
28. Among them legal separation, or prosecution for adultery and concubinage.

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SECOND DIVISION

[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.

Pacatang Barbaso and Pacatang Law Offices for petitioner.


Feliciano M. Maraon for respondents.

SYNOPSIS

Having no children to take care of him after his retirement, Francisco Comille, then a
widower, asked his niece Leticia Bellosillo, the latter's cousin, Luzviminda Paghacian, and
petitioner Cirila Arcaba to take care of his house, as well as the store inside. A few months
before his death, Francisco executed an instrument denominated "Deed of Donation Inter
Vivos," in which he ceded a portion of his lot consisting of 150 square meters, together
with his house, to Cirila, who accepted the donation in the same instrument. 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 Francisco'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. 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. The trial court rendered judgment in favor of
respondents, holding the donation void under the provision of the Family Code. On appeal,
the Court of Appeals affirmed the decision of the trial court. Hence, the present petition.
The main issue is whether Cirila is an employee or the common-law wife of Francisco.
The Supreme Court affirmed the decision of the Court of Appeals. According to the Court,
human reason would lead to the conclusion that Cirila was Francisco's common-law
spouse. Cirila admitted that she and Francisco resided under one roof for a long time and
the possibility that the two consummated their relationship could be established from
Leticia Bellosillo's testimony that Cirila and Francisco slept in the same bedroom. The
Court also considered the fact that Cirila signed some documents using Francisco's
surname clearly indicating that she saw herself as Francisco's common-law wife,
otherwise, she would not have used his last name. Also, 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 and it is difficult to believe that she stayed with Francisco and
served him out of pure beneficence. Their public conduct, therefore, indicated that theirs
was not just a relationship of caregiver and patient, but that of exclusive partners akin to
husband and wife.
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SYLLABUS

1. CIVIL LAW; FAMILY CODE; PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE;
VOID DONATIONS; COHABITATION IS THE PUBLIC ASSUMPTION BY A MAN A WOMAN
OF THE MARITAL RELATION, AND DWELLING TOGETHER AS MAN AND WIFE, THEREBY
HOLDING THEMSELVES OUT TO THE PUBLIC AS SUCH. We previously 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.
2. ID.; ID.; ID.; DONATION MADE IN FAVOR OF A COMMON-LAW SPOUSE IS VOID
UNDER THE FAMILY CODE; CASE AT BAR. 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.
IEaATD

DECISION

MENDOZA , J : p

Petitioner Cirila Arcaba seeks review on certiorari of the decision 1 of the Court of Appeals,
which affirmed with modification the decision 2 of the Regional Trial Court, Branch 10,
Dipolog City, Zamboanga del Norte in Civil Case No. 4593, declaring as void a deed of
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donation inter vivos executed by the late Francisco T. Comille in her favor and its
subsequent resolution 3 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. 4 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. 5 On June 27, 1916, Francisco
registered the lot in his name with the Registry of Deeds. 6
Having no children to take care of him after his retirement, Francisco asked his niece
Leticia Bellosillo, 7 the latter's cousin, Luzviminda Paghacian, 8 and petitioner Cirila Arcaba,
then a widow, to take care of his house, as well as the store inside. 9
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, 1 0 while Erlinda Tabancura, 1 1 another niece of Francisco, claimed that the
latter had told her that Cirila was his mistress. 1 2 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. 1 3
It appears that when Leticia and Luzviminda were married, only Cirila was left to take care
of Francisco. 1 4 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; 1 5 and that his health eventually deteriorated and he became
bedridden. 1 6 Erlinda Tabancura testified that Francisco's sole source of income consisted
of rentals from his lot near the public streets. 1 7 He did not pay Cirila a regular cash wage
as a househelper, though he provided her family with food and lodging. 1 8
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. 1 9 and later registered by Cirila as its absolute owner.
20

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. 2 1

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,
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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 2 (2) a sanitary permit to operate as real estate lessor with a
health certificate showing the signature "Cirila Comille" in black ink; 2 3 and (3) the death
certificate of the decedent with the signature "Cirila A. Comille" written in black ink. 2 4 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. 2 5

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
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908, and Liguez v. CA, 102 Phil. 577, 584. 2 6

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. 2 7 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, 2 8 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. 2 9 In this jurisdiction,
this Court has considered as sufficient proof of common-law relationship the stipulations
between the parties, 3 0 a conviction of concubinage, 3 1 or the existence of illegitimate
children. 3 2
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, 3 3 a sanitary permit to operate as real estate lessor with a health
certificate, 3 4 and the death certificate of Francisco. 3 5 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
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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. 3 6 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.
Bellosillo, Quisumbing, Buena and De Leon, Jr., JJ., concur.
Footnotes

1. Per Associate Justice Bernardo Salas and concurred in by Associate Justices Presbiterio
Velasco, Jr. and Edgardo Cruz.
2. Per Judge Wilfredo C. Martinez.

3. Per Associate Justice Edgardo Cruz, with the concurrence of Associate Justices Teodoro
Regino and Presbitero Velasco, Jr.

4. Exh. A; Records, p. 66.


5. Exh. D; id., p. 71.
6. Exhs. E & 3; id., pp. 73, 102.
7. Also called "Letitia," "Letecia," and "Leticia Bellosillo.
8. Also known as "Luzminda."

9. TSN (Leticia Bellosillo), pp. 12-15, Sept. 27, 1994; TSN (Cirila Arcaba), p. 8, Aug. 14,
1994.

10. TSN (Leticia Bellosillo), p. 14, Sept. 27, 1994.


11. Also known as "Erlinda Tabangcura Vda. de Batocael."
12. TSN (Erlinda Tabancura), p. 17, April 28, 1994.
13. TSN (Cirila Arcaba), p. 11, Aug. 14, 1996.
14. TSN (Leticia Bellosillo), pp. 14-16, Sept. 27, 1994.

15. TSN (Cirila Arcaba), p. 8, Aug. 14, 1996.


16. Id., p. 10; Rollo, p. 33.
17. TSN (Erlinda Tabancura), p. 12, April 28, 1994; TSN (Cirila Arcaba), p. 8, Aug. 14, 1994.
18. TSN (Erlinda Tabancura), p. 9, Aug. 14, 1996.
19. Exh. C; Records, p. 69.

20. TSN (Atty. Vic T. Lacaya, Sr.), pp. 3-4, Feb. 13, 1995; Exh. 3-B; Records, p. 102.

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21. Exh. B; Records, p. 68.

22. Exh. H-1; id., p. 154.


23. Exh. J-2; id., p. 155.
24. Exh. O-1; id., p. 159.
25. Decision, pp. 1-13; Rollo, pp. 36-48.
26. Petition, p. 7; Rollo, p. 9.

27. Martinez v. Court of Appeals , G.R. No. 123547, May 21, 2001; Floro v. Llenado , 244
SCRA 715 (1995).

28. 112 SCRA 113 (1982); See also A. Sempio-Diy, HANDBOOK ON THE FAMILY CODE OF
THE PHILIPPINES , 115-117 (1995).

29. 52 Am Jur 2d 50.


30. The Insular Life Company, Ltd. v. Ebrado , 80 SCRA 181 (1977); Matabuena v.
Cervantes, 38 SCRA 284 (1971).
31. Calimlim-Canullas v. Fortun, 129 SCRA 675 (1984).
32. People v. Villagonzalo , 238 SCRA 215 (1994); Bienvenido v. Court of Appeals , 237
SCRA 676 (1994).
33. Exh. H-1; Records, p. 154.
34. Exh. J-2; id., p. 155.
35. Exh. O-1; id., p. 159.

36. LABOR CODE, ARTS. 99-101.

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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.

Acosta and Corvera Law Offices for petitioner.


Quianson Makalintal Baro Torres and Ibarra for private respondent.

SYLLABUS

1. CIVIL LAW; FAMILY CODE; CONJUGAL PARTNERSHIP PROPERTIES; WHEN MAY BE


LIABLE FOR CONTRACTED OBLIGATIONS. This court does not agree that 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. From
jurisprudential rulings of this Court, the following conclusions can be derived: (A) If the
husband himself is the principal obligor in the contract, i.e., he directly received the money
and services to be used in or for his own business or his own profession, that contract
falls within the term ". . . obligations for the benefit of the conjugal partnership." Here, no
actual benefit may be proved. It is enough that the benefit to the family is apparent at the
time of the signing of the contract. From the very nature of the contract of loan or services,
the family stands to benefit from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if in the end, his business or
profession fails or does not succeed. Simply stated, where the husband contracts
obligations on behalf of the family business, the law presumes, and rightly so, that such
obligation will redound to the benefit of the conjugal partnership. (B) On the other hand, if
the money or services are given to another person or entity, and the husband acted only as
a surety or guarantor, that contract cannot, by itself, alone be categorized as falling within
the context of "obligations for the benefit of the conjugal partnership." The contract of loan
or services is clearly for the benefit of the principal debtor and not for the surety or his
family. No presumption can be inferred that, when a husband enters into a contract of
surety or accommodation agreement, it is "for the benefit of the conjugal partnership."
Proof must be presented to establish benefit redounding to the conjugal partnership. In all
our decisions involving accommodation contracts of the husband, we underscored the
requirement that: "there must be the requisite showing . . . of some advantage which
clearly accrued to the welfare of the spouses" or "benefits to his family" or "that such
obligations are productive of some benefit to the family."
2. ID.; ID.; ID.; RATIONALE FOR THE RESTRICTIONS ON LIABILITY. The provisions of
the Family Code highlight the underlying concern of the law for the conservation of the
conjugal partnership; for the husband's duty to protect and safeguard, if not augment, not
to dissipate it. This is the underlying reason why the Family Code clarifies that the
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obligations entered into by one of the spouses must be those that redounded to the
benefit of the family and that the measure of the partnership's liability is to "the extent that
the family is benefited." (Article 121, Nos. 2 & 3, Family Code.) 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. (Article 174,
Civil Code.)
3. ID.; ID.; CHARGES UPON AND OBLIGATIONS OF THE CONJUGAL PARTNERSHIP;
SIGNING AS A SURETY, WHEN NOT AN EXERCISE OF AN INDUSTRY OR PROFESSION;
CASE AT BAR. 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," We are likewise of the
view that no matter how often an executive acted or was persuaded to act, as a surety for
his own employer, this should not be taken to mean that he had thereby embarked in the
business of suretyship or guaranty. This is not to say, however, that we are unaware that
executives are often asked to stand as surety for their company's loan obligations. This is
especially true if the corporate officials have sufficient property of their own; otherwise,
their spouses' signatures are required in order to bind the conjugal partnerships. The fact
that on several occasions the lending institutions did not require the signature of the wife
and the husband signed alone does not mean that being a surety became part of his
profession. Neither could he be presumed to have acted for the conjugal partnership.
Article 121, paragraph 3, of the Family Code is emphatic that the payment of personal
debts contracted by the husband or the wife before or during the marriage shall not be
charged to the conjugal partnership except to the extent that they redounded to the benefit
of the family. Here, the property in dispute also involves the family home. The loan is a
corporate loan not a personal one. Signing as a surety is certainly not an exercise of an
industry or profession nor an act of administration for the benefit of the family.

DECISION

MARTINEZ , J : p

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. cdtai

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Philippine Blooming Mills (hereinafter referred to as PBM) obtained a P50,300,000.00 loan
from petitioner Ayala Investment and Development Corporation (hereinafter referred to as
AIDC). As added security for the credit line extended to PBM, respondent Alfredo Ching,
Executive Vice President of PBM, executed security agreements on December 10, 1980
and on March 20, 1981 making himself jointly and severally answerable with PBM's
indebtedness to AIDC.
PBM failed to pay the loan. Thus, on July 30, 1981, AIDC filed a case for sum of money
against PBM and respondent-husband Alfredo Ching with the then Court of First Instance
of Rizal (Pasig), Branch VIII, entitled "Ayala Investment and Development Corporation vs.
Philippine Blooming Mills and Alfredo Ching," docketed as Civil Case No. 42228.
After trial, the court rendered judgment ordering PBM and respondent-husband Alfredo
Ching to jointly and severally pay AIDC the principal amount of P50,300,000.00 with
interests.
Pending appeal of the judgment in Civil Case No. 42228, upon motion of AIDC, the lower
court issued a writ of execution pending appeal. Upon AIDC's putting up of an
P8,000,000.00 bond, a writ of execution dated May 12, 1982 was issued. Thereafter,
petitioner Abelardo Magsajo, Sr., Deputy Sheriff of Rizal and appointed sheriff in Civil Case
No. 42228, caused the issuance and service upon respondents-spouses of a notice of
sheriff sale dated May 20, 1982 on three (3) of their conjugal properties. Petitioner
Magsajo then scheduled the auction sale of the properties levied.
On June 9, 1982, private respondents filed a case of injunction against petitioners with the
then Court of First Instance of Rizal (Pasig), Branch XIII, to enjoin the auction sale alleging
that petitioners cannot enforce the judgment against the conjugal partnership levied on the
ground that, among others, the subject loan did not redound to the benefit of the said
conjugal partnership. 2 Upon application of private respondents, the lower court issued a
temporary restraining order to prevent petitioner Magsajo from proceeding with the
enforcement of the writ of execution and with the sale of the said properties at public
auction.
AIDC filed a petition for certiorari before the Court of Appeals, 3 questioning the order of
the lower court enjoining the sale. Respondent Court of Appeals issued a Temporary
Restraining Order on June 25, 1982, enjoining the lower 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. . . ." 5

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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. LibLex

The lower court denied the motion to dismiss. Hence, trial on the merits proceeded.
Private respondents presented several witnesses. On the other hand, petitioners did not
present any evidence.
On September 18, 1991, the trial court promulgated its decision declaring the sale on
execution null and void. Petitioners appealed to the respondent court, which was docketed
as CA-G.R. CV No. 29632.
On April 14, 1994, the respondent court promulgated the assailed decision, affirming the
decision of the regional trial court. It held that:
"The loan procured from respondent-appellant AIDC was for the advancement
and benefit of Philippine Blooming Mills and not for the benefit of the conjugal
partnership of petitioners-appellees.
xxx xxx xxx
As to the applicable law, whether it is Article 161 of the New Civil Code or Article
1211 of the Family Code-suffice it to say that the two provisions are substantially
the same. Nevertheless, We agree with the trial court that the Family Code is the
applicable law on the matter . . .
Article 121 of the Family Code provides that 'The conjugal partnership shall be
liable for: . . . (2) All debts and obligations contracted during the marriage by the
designated Administrator-Spouse for the benefit of the conjugal partnership of
gains . . .' The burden of proof that the debt was contracted for the benefit of the
conjugal partnership of gains, lies with the creditor-party litigant claiming as such.
In the case at bar, respondent-appellant AIDC failed to prove that the debt was
contracted by appellee-husband, for the benefit of the conjugal partnership of
gains."

The dispositive portion of the decision reads:


"WHEREFORE, in view of all the foregoing, judgment is hereby rendered
DISMISSING the appeal. The decision of the Regional Trial Court is AFFIRMED in
toto." 6
Petitioner filed a Motion for Reconsideration which was denied by the respondent court in
a Resolution dated November 28, 1994. 7
Hence, this petition for review. Petitioner contends that the "respondent court erred in
ruling that the conjugal partnership of private respondents is not liable for the obligation
by the respondent-husband."
Specifically, the errors allegedly committed by the respondent court are as follows:
"I. RESPONDENT COURT ERRED IN RULING THAT THE OBLIGATION
INCURRED BY RESPONDENT HUSBAND DID NOT REDOUND TO THE
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BENEFIT OF THE CONJUGAL PARTNERSHIP OF THE PRIVATE
RESPONDENT.
II. RESPONDENT COURT ERRED IN RULING THAT THE ACT OF
RESPONDENT HUSBAND IN SECURING THE SUBJECT LOAN IS NOT PART
OF HIS INDUSTRY, BUSINESS OR CAREER FROM WHICH HE SUPPORTS
HIS FAMILY."

Petitioners in their appeal point out that there is no need to prove that actual benefit
redounded to the benefit of the partnership; all that is necessary, they say, is that the
transaction was entered into for the benefit of the conjugal partnership. Thus, petitioners
aver that:
"The wordings of Article 161 of the Civil Code is very clear: for the partnership to
be held liable, the husband must have contracted the debt 'for the benefit of' the
partnership, thus:

'Art. 161. The conjugal partnership shall be liable for:


1) all debts and obligations contracted by the husband for the benefit
of the conjugal partnership . . .'

There is a difference between the phrases: 'redounded to the benefit of' or


'benefited from' (on the one hand) and 'for the benefit of' (on the other). The
former require that actual benefit must have been realized; the latter requires only
that the transaction should be one which normally would produce benefit to the
partnership, regardless of whether or not actual benefit accrued." 8

We do not agree with petitioners that there is a difference between the terms "redounded
to the benefit of" or "benefited from" on the one hand; and "for the benefit of" on the other.
They mean one and the same thing. Article 161 (1) of the Civil Code and Article 121 (2) of
the Family Code are similarly worded, i.e., both use the term "for the benefit of." On the
other hand, Article 122 of the Family Code provides that "The payment of personal debts
by the husband or the wife before or during the marriage shall not be charged to the
conjugal partnership except insofar as they 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. cdrep

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, 1 0 Abella de Diaz vs. Erlanger & Galinger, Inc., 1 1 Cobb-
Perez vs. Lantin 1 2 and G-Tractors, Inc. vs. Court of Appeals, 1 3 cited by the petitioners, we
held that:
"The debts contracted by the husband during the marriage relation, for and in the
exercise of the industry or profession by which he contributes toward the support
of his family, are not his personal and private debts, and the products or income
from the wife's own property, which, like those of her husband's, are liable for the
payment of the marriage expenses, cannot be excepted from the payment of such
debts." (Javier)
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"The husband, as the manager of the partnership (Article 1412, Civil Code), has a
right to embark the partnership in an ordinary commercial enterprise for gain, and
the fact that the wife may not approve of a venture does not make it a private and
personal one of the husband." (Abella de Diaz)

"Debts contracted by the husband for and in the exercise of the industry or
profession by which he contributes to the support of the family, cannot be
deemed to be his exclusive and private debts." (Cobb-Perez)
". . . if he incurs an indebtedness in the legitimate pursuit of his career or
profession or suffers losses in a legitimate business, the conjugal partnership
must equally bear the indebtedness and the losses, unless he deliberately acted to
the prejudice of his family." (G-Tractors)

However, in the cases of Ansaldo vs. Sheriff of Manila, Fidelity Insurance & Luzon Insurance
Co., 1 4 Liberty Insurance Corporation vs. Banuelos, 1 5 and Luzon Surety Inc. vs. De Garcia, 1 6
cited by the respondents, we ruled that:
"The fruits of the paraphernal property which form part of the assets of the
conjugal partnership, are subject to the payment of the debts and expenses of the
spouses, but not to the payment of the personal obligations (guaranty
agreements) of the husband, unless it be proved that such obligations were
productive of some benefit to the family." (Ansaldo; parenthetical phrase ours.)
"When there is no showing that the execution of an indemnity agreement by the
husband redounded to the benefit of his family, the undertaking is not a conjugal
debt but an obligation personal to him." (Liberty Insurance)

"In the most categorical language, a conjugal partnership under Article 161 of the
new Civil Code is liable only for such 'debts and obligations contracted by the
husband for the benefit of the conjugal partnership.' There must be the requisite
showing then of some advantage which clearly accrued to the welfare of the
spouses. Certainly, to make a conjugal partnership respond for a liability that
should appertain to the husband alone is to defeat and frustrate the avowed
objective of the new Civil Code to show the utmost concern for the solidarity and
well-being of the family as a unit. The husband, therefore, is denied the power to
assume unnecessary and unwarranted risks to the financial stability of the
conjugal partnership." (Luzon Surety, Inc.)

From the foregoing jurisprudential rulings of this Court, we can derive the following
conclusions:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly
received the money and services to be used in or for his own business or his own
profession, that contract falls within the term ". . . obligations for the benefit of the
conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit
to the family is apparent at the time of the signing of the contract. From the very nature of
the contract of loan or services, the family stands to benefit from the loan facility or
services to be rendered to the business or profession of the husband. It is immaterial, if in
the end, his business or profession fails or does not succeed. Simply stated, where the
husband contracts obligations on behalf of the family business, the law presumes, and
rightly so, that such obligation will redound to the benefit of the conjugal partnership.
(B) On the other hand, if the money or services are given to another person or entity,
and the husband acted only as a surety or guarantor, that contract cannot, by itself, alone
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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. LLphil

Thus, the distinction between the Cobb-Perez case, and we add, that of the three other
companion cases, on the one hand, and that of Ansaldo, Liberty Insurance and Luzon
Surety, is that in the former, the husband contracted the obligation for his own business;
while in the latter, the husband merely acted as a surety for the loan contracted by another
for the latter's business.
The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed as
surety for the P50M loan contracted on behalf of PBM. Petitioner should have adduced
evidence to prove that Alfredo Ching's acting as surety redounded to the benefit of the
conjugal partnership. The reason for this is as lucidly explained by the respondent court:
"The loan procured from respondent-appellant AIDC was for the advancement
and benefit of Philippine Blooming Mills and not for the benefit of the conjugal
partnership of petitioners-appellees. Philippine Blooming Mills has a personality
distinct and separate from the family of petitioners-appellees this despite the
fact that the members of the said family happened to be stockholders of said
corporate entity."
xxx xxx xxx
. . . The burden of proof that the debt was contracted for the benefit of the
conjugal partnership of gains, lies with the creditor-party litigant claiming as such.
In the case at bar, respondent-appellant AIDC failed to prove that the debt was
contracted by appellee-husband, for the benefit of the conjugal partnership of
gains. What is apparent from the facts of the case is that the judgment debt was
contracted by or in the name of the Corporation Philippine Blooming Mills and
appellee-husband only signed as surety thereof. The debt is clearly a corporate
debt and respondent-appellant's right of recourse against appellee-husband as
surety is only to the extent of his corporate stockholdings. It does not extend to
the conjugal partnership of gains of the family of petitioners-appellees. . . ." 1 7

Petitioners contend that no actual benefit need accrue to the conjugal partnership. To
support this contention, they cite Justice J.B.L. Reyes' authoritative opinion in the Luzon
Surety Company case:
"I concur in the result, but would like to make of record that, in my opinion, the
words 'all debts and obligations contracted by the husband for the benefit of the
conjugal partnership' used in Article 161 of the Civil Code of the Philippines in
describing the charges and obligations for which the conjugal partnership is liable
do not require that actual profit or benefit must accrue to the conjugal partnership
from the husband's transaction; but it suffices that the transaction should be one
that normally would produce such benefit for the partnership. This is the ratio
behind our ruling in Javier vs. 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
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partnership should not be made liable for the surety agreement which was clearly for the
benefit of a third party. Such opinion merely registered an exception to what may be
construed as a sweeping statement that in all cases actual profit or benefit must accrue to
the conjugal partnership. The opinion merely made it clear that no actual benefits to the
family need be proved in some cases such as in the Javier case. There, the husband was
the principal obligor himself. Thus, said transaction was found to be "one that would
normally produce . . . benefit for the partnership." In the later case of G-Tractors, Inc., the
husband was also the principal obligor not merely the surety. This latter case, therefore,
did not create any precedent. It did not also supersede the Luzon Surety Company case,
nor any of the previous accommodation contract cases, where this Court ruled that they
were for the benefit of third parties. LLjur

But it could be argued, as the petitioner suggests, that even in such kind of contract of
accommodation, a benefit for the family may also result, when the guarantee is in favor of
the husband's employer.
In the case at bar, petitioner claims that the benefits the respondent family would
reasonably anticipate were the following:
(a) The employment of co-respondent Alfredo Ching would be
prolonged and he would be entitled to his monthly salary of
P20,000.00 for an extended length of time because of the loan he
guaranteed;
(b) The shares of stock of the members of his family would appreciate if
the PBM could be rehabilitated through the loan obtained;
(c) His prestige in the corporation would be enhanced and his career
would be boosted should PBM survive because of the loan.
However, these are not the benefits contemplated by Article 161 of the Civil Code. The
benefits must be one directly resulting from the loan. It cannot merely be a by-product or a
spin-off of the loan itself.
In all our decisions involving accommodation contracts of the husband, 1 8 we underscored
the requirement that: "there must be the requisite showing . . . of some advantage which
clearly accrued to the welfare of the spouses" or "benefits to his family" or "that such
obligations are productive of some benefit to the family." Unfortunately, the petition did
not present any proof to show: (a) Whether or not the corporate existence of PBM was
prolonged and for how many months or years; and/or (b) Whether or not the PBM was
saved by the loan and its shares of stock appreciated, if so, how much and how substantial
was the holdings of the Ching family.
Such benefits (prospects of longer employment and probable increase in the value of
stocks) might have been already apparent or could be anticipated at the time the
accommodation agreement was entered into. But would those "benefits" qualify the
transaction as one of the "obligations . . . for the benefit of the conjugal partnership"? Are
indirect and remote probable benefits, the ones referred to in Article 161 of the Civil Code?
The Court of Appeals in denying the motion for reconsideration, disposed of these
questions in the following manner:
"No matter how one looks at it, the debt/credit 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
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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.

. . . appellee-husband derives salaries, dividends benefits from Philippine


Blooming Mills (the debtor corporation), only because said husband is an
employee of said PBM. These salaries and benefits, are not the 'benefits'
contemplated by Articles 121 and 122 of the Family Code. The 'benefits'
contemplated by the exception in Article 122 (Family Code) is that benefit derived
directly from the use of the loan. In the case at bar, the loan is a corporate loan
extended to PBM and used by PBM itself, not by petitioner-appellee-husband or
his family. The alleged benefit, if any, continuously harped by respondents-
appellants, are not only incidental but also speculative." 19

We agree with the respondent court. Indeed, considering the odds involved in guaranteeing
a large amount (P50,000,000.00) of loan, the probable prolongation of employment in
PBM and increase in value of its stocks, would be too small to qualify the transaction as
one "for the benefit" of the surety's family. Verily, no one could say, with a degree of
certainty, that the said contract is even "productive of some benefits" to the conjugal
partnership.
We likewise agree with the respondent court (and this view is not contested by the
petitioners) that the provisions of the Family Code is applicable in this case. These
provisions highlight the underlying concern of the law for the conservation of the conjugal
partnership; for the husband's duty to protect and safeguard, if not augment, not to
dissipate it.
This is the underlying reason why the Family Code clarifies that the obligations entered into
by one of the spouses must be those that redounded to the benefit of the family and that
the measure of the partnership's liability is to "the extent that the family is benefited." 2 0
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. 2 1 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. cdphil

The respondent court correctly observed that:

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"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." 2 2

We are likewise of the view that no matter how often an executive acted or was persuaded
to act, as a surety for his own employer, this should not be taken to mean that he had
thereby embarked in the business of suretyship or guaranty.
This is not to say, however, that we are unaware that executives are often asked to stand
as surety for their company's loan obligations. This is especially true if the corporate
officials have sufficient property of their own; otherwise, their spouses' signatures are
required in order to bind the conjugal partnerships.
The fact that on several occasions the lending institutions did not require the signature of
the wife and the husband signed alone does not mean that being a surety became part of
his profession. Neither could he be presumed to have acted for the conjugal partnership.
Article 121, paragraph 3, of the Family Code is emphatic that the payment of personal
debts contracted by the husband or the wife before or during the marriage shall not be
charged to the conjugal partnership except to the extent that they redounded to the benefit
of the family.
Here, the property in dispute also involves the family home. The loan is a corporate loan
not a personal one. Signing as a surety is certainly not an exercise of an industry or
profession nor an act of administration for the benefit of the family.
On the basis of the facts, the rules, the law and equity, the assailed decision should be
upheld as we now uphold it. This is, of course, without prejudice to petitioner's right to
enforce the obligation in its favor against the PBM receiver in accordance with the
rehabilitation program and payment schedule approved or to be approved by the
Securities & Exchange Commission.
WHEREFORE, the petition for review should be, as it is hereby, DENIED for lack of merit. dctai

SO ORDERED.
Regalado, Melo, Puno and Mendoza, JJ ., concur.
Footnotes

1. Penned by Hon. Associate Justice Asaali S. Isnani and concurred in by Associate


Justices Nathanael P. de Pano, Jr. and Corona Ibay-Somera, Former Fourth Division,
Decision, pp. 34-39, rollo.
2. Annex "C," petition; pp. 43-52, rollo.

3. CA-G.R. No. SP-14404.


4. Branch VIII, CFI of Rizal.
5. Par. 4, 5, dispositive portion of the Decision in CA-G.R. No. SP-14404; p. 36, rollo.
6. Decision in CA-G.R. CV No. 29632; p. 39, rollo.

7. See p. 41, rollo.


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8. See p. 18, par. 3-6, rollo.
9. No. L-22320, May 22, 1968, 23 SCRA 637; 645.
10. No. 9984, March 23, 1916, 34 Phil. 336.
11. No. 38052, December 23, 1933, 59 Phil. 326.
12. No. L-22320, May 23, 1968, supra.

13. No. L-57402, February 28, 1995, 135 SCRA 193.


14. No. 43257, February 19, 1937, 64 Phil. 115.
15. 59 OG No. 29, 4526.
16. No. L-25659, October 31, 1969, 30 SCRA 111.
17. See pp. 38-39, rollo.

18. Ansaldo, et. al., vs. Liberty Insurance Company Inc. & Luzon Surety Company, supra.
19. Court of Appeals Resolution of Nov. 28, 1994 denying the motion for reconsideration,
pp. 1-2; Annex "B"; p. 41, rollo.
20. Article 121, Nos. 2 & 3, Family Code.

21. Article 174, Civil Code.


22. Denial of motion for reconsideration, supra.

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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.

Veronico P. Sardoncillo for petitioners.


Saleto J. Erames for private respondents.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; PRESUMPTIONS THAT EVIDENCE WILLFULLY


SUPPRESSED WOULD BE ADVERSE IF PRODUCED APPLIED IN CASE AT BAR. 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. AaCEDS

2. CIVIL LAW; DAMAGES; ACTIONABLE DELAY; FAILURE TO PROCESS VIDEO TAPE OF


WEDDING MANIFEST BY FILING CASE FOR SPECIFIC PERFORMANCE. 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 in 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 latter's 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.
3. ID.; ID.; ACTUAL OR COMPENSATORY DAMAGES; REIMBURSEMENT OF
DOWNPAYMENT PAID. 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.
4. ID.; ID.; MORAL DAMAGES; RECOVERABLE FOR MALICIOUS BREACH OF
CONTRACT. 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, that act which violates the
contract may also constitute a quasi-delict. Consequently, moral damages are recoverable
for the breach of contract which was palpably wanton, reckless, malicious or in bad faith,
oppressive or abusive. SAEHaC

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5. ID.; ID.; ID:; ID.; MANIFEST IN RECKLESSLY ERASING A VIDEO COVERAGE OF
PRIVATE RESPONDENTS' WEDDING. 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. 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
business to observe due diligence in the conduct of their affairs. The award of attorney's
fees and litigation expenses are likewise proper, consistent with Article 2208 of the Civil
Code.
6. ID.; ID.; SOLE LIABILITY OF WIFE EXERCISING PROFESSION, OCCUPATION OR
ENGAGING IN BUSINESS WITHOUT CONSENT OF HUSBAND. 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. 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. TSEcAD

DECISION

ROMERO , J : p

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


institution and the foundation of the family. 1 In our society, 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. LibLex

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, 7th Judicial District,
Branch 33, Dumaguete City. After a protracted trial, the court a quo rendered a decision, to
wit:
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"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 attorney's 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 court's 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.
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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 latter's 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. 7 Consequently, moral damages are recoverable for the breach of
contract which was palpably wanton, reckless, malicious or in bad faith, oppressive 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
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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 1 0 to serve as a warning to
all entities engaged in the same business to observe due diligence in the conduct of their
affairs.
The award of attorney's fees and litigation expenses are likewise proper, consistent with
Article 2208 1 1 of the Civil Code.
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. 1 2
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. 1 3
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. cdtai

SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ ., concur.
Footnotes

1. Section 2, Article XV, 1987 Constitution.

2. Rollo, pp. 15-23.


3. Ibid., p. 7.
4. Section 3(e), Rule 131 of the Rules of Court states, "(t)hat evidence willfully suppressed
would be adverse if produced."

5. Rollo, p. 19.
6. Article 2200, Civil Code of the Philippines.
7. PARAS, Civil Code of the Philippines, V, 1990, pp. 995-996, Singson v. Bank of the
Philippine Islands, 23 SCRA 1117 (1968).
8. TOLENTINO, COMMENTARIES & JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES, V, 1995, p. 656.
9. Rollo, p. 37.
10. Article 2232, Civil Code of the Philippines.

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11. "ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
xxx xxx xxx

12. Rollo, p. 23.


13. Article 1311, Civil Code of the Philippines.

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SECOND DIVISION

[G.R. No. L-28589. January 8, 1973.]

RAFAEL ZULUETA, ET AL. , plaintiffs-appellee, vs . PAN AMERICAN


WORLD AIRWAYS INC. , defendant-appellant.

Jose W. Diokno & Associates for plaintiffs-appellees.


Ross, Salcedo, Del Rosario, Bito & Misa for defendants appellants.

SYLLABUS

1. REMEDIAL LAW; COURTS OF FIRST INSTANCE; JURISDICTION; ACTIONS SUBJECT OF


WHICH IS NOT CAPABLE OF PECUNIARY ESTIMATION IS WITHIN THE JURISDICTION OF
COURTS OF FIRST INSTANCE. Where the complaint for damages, among others,
includes a claim for moral damages, the court of rst instance has jurisdiction over the
complaint. A claim for moral damages is one not susceptible of pecuniary estimation.
2. ID., ID.; ID.; ACTION WHERE COUNTERCLAIM IS P12,000. Where defendants had set
up a counterclaim in the aggregate sum of P12,000, the action is within the original
jurisdiction of the court of rst instance, thereby curing the alleged lack of jurisdiction over
the complaint itself.
3. ID.; ID.; ID.; DEFENDANT ESTOPPED FROM IMPUGNING JURISDICTION OF COURT IN
INSTANT CASE. 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 ling the present 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.
4. CIVIL LAW; DAMAGES; EXEMPLARY DAMAGES, AWARD THEREOF IN QUASI-DELICTS
JUSTIFIED WHERE ACT WAS PERFORMED DELIBERATELY AND IN BAD FAITH. It is
urged by the defendant that exemplary damages are not recoverable in quasi-delicts,
pursuant to Art. 2231 of our Civil Code, except when the defendant has acted with "gross
negligence," and that there is no speci c nding that it had so acted. It is obvious, however,
that in off-loading plaintiff at Wake Island, for having dared to retort to defendant's agent
in a tone and manner matching, if not be tting his intemperate language and arrogant
attitude, 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 justi ed when the act performed is deliberate, malicious and tainted with bad
faith.
5. ID.; ID.; ID.; SUBSIDIARY LIABILITY THEREFOR OF PRINCIPAL FOR ACTS OF AGENTS;
CASES OF ROTEA v. HALILI and PALISOC v. BRILLANTES, NOT IN POINT. Defendant
cites Rotea vs. Halili, (109 Phil. 495) 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 rati ed 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." The Rotea case is not in point, for the case at bar involves a
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breach of contract, as well as a quasi-delict. Neither may the case of Palisoc vs. Brillantes
(L-29025, Oct., 4, 1971), invoked by the defendant, be equated with the case at bar. There,
in an action for damages, the school of cials were held jointly and severally liable with the
student who caused the death of another 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." Obviously, the
amount of damages awarded 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, where as the student who killed the
young Palisoc was in no wise an agent of the school.
6. ID; ID; AWARD OF ATTORNEY'S FEES AND OF EXEMPLARY DAMAGES, EQUITABLE IN
INSTANT CASE. 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 the plaintiff-
appellee 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 "extraordinary" 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.
7. ID.; ID.; AWARD THEREOF IN INSTANT CASE, PART OF CONJUGAL PARTNERSHIP
PROPERTY. Where the damages in question have arisen from, inter alia, a breach of
plaintiffs' (husband's and wife's) contract of carriage with the defendant, for which
plaintiffs paid their fare with funds presumably belonging to the conjugal partnership, said
damages form part of the conjugal partnership property under paragraph (1) of Art. 153,
the right thereto having been "acquired by onerous title during the marriage . . . ."
8. ID.; ID.; ID.; EFFECT OF COMPROMISE AGREEMENT ENTERED BY WIFE WITH
DEFENDANT ON CONJUGAL PARTNERSHIP. The payment to Mrs. Zulueta by defendant
PANAM after her having settled her differences with the latter 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. Art. 113 of the Civil Code relied upon by the defense, 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 . . . 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.
BARREDO, J.; concurring and dissenting opinion.
1. REMEDIAL LAW; COURTS; JURISDICTION; COURT OF FIRST INSTANCE HAS
JURISDICTION OVER PRESENT CASE. In the present case, it is indisputable that the
damages claimed by appellees are susceptible of pecuniary estimation within the
contemplation of Sec. 44(a) of the Judiciary Act, and since they amount to more than
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P10,000.00, the trial court had jurisdiction over the same.
2. ID.; ID.; ID.; RULE WHERE THERE IS COMPULSORY COUNTER-CLAIM. It is the nature or
amount of the subject of the plaintiff's action that is decisive as to which court is to
exercise jurisdiction over his case, and if the defendant has any counterclaim, the latter, to
be available within the same action, must be within the jurisdiction of the court in which
plaintiff has properly led his case, unless such counterclaim is compulsory, in which case,
the same being essentially auxiliary or ancillary to the main controversy, considering that it
arises out of or is necessarily connected with the transaction or occurrence that is the
subject matter of the complaint, it is considered as absorbed, for jurisdictional purposes,
by the latter, albeit this exception does not obtain in inferior courts in view of the express
provision of Section 5 of Rule 5 to the effect that "a counterclaim beyond the court's
jurisdiction may only be pleaded by way of defense."
3. ID.; ID.; ID.; RULE WHERE THERE IS PERMISSIVE COUNTERCLAIM. As to permissive
counterclaims, which are considered as separate actions in themselves, it is obvious that
they must necessarily fall within the jurisdiction of the court in which the complaint has
been filed under the express provision of Section 8 of Rule 6 of the Rules of Court.
4. ID.; ID.; ID.; LACHES OR ESTOPPEL NOT APPLICABLE TO JURISDICTION OVER THE
SUBJECT MATTER. Laches or estoppel is not juridically possible or proper in regard to
the jurisdiction over the subject matter, notwithstanding the long list of cases cited by the
majority upholding the erroneously various shades of alleged estoppel and laches that
supposedly had the effect of validating, very often for reasons of convenience and
practicality, actuations and actions of courts which otherwise, by clear mandate of the
statute which this Court has held to be informed in public policy, do not come within the
jurisdiction conferred upon them thereby.
5. CIVIL LAW; CONTRACT OF CARRIAGE; BREACH OF SUCH CONTRACT; AWARD OF
DAMAGES THEREFOR; AWARD IN INSTANT CASE DID NOT PROCEED FROM BAD FAITH
OR MALICE. If it were true that the PANAM agents were motivated by pure
vindictiveness rather than by the desire to comply with the demands of the public interest
involved in the safety of the plane and of all on board thereof, they would not have offered
to-allow him to reboard under any circumstance. The fact that they implied they would
consider the incident about the "bomb scare" terminated if Mr. Zulueta would only permit
examination of his bags, just so there would be no reason for anyone to say that the
captain was so imprudent as to desist from taking safety measure only because Mr.
Zulueta was tenaciously standing his ground, simply goes to show that the PANAM agents
had no malice or any retaliatory intent in their minds. Accordingly I hold that appellant has
to answer for the damages for breach of its contract of carriage with Mr. Zulueta, albeit I
cannot condemn the captain's decision as proceeding from bad faith, vindictiveness,
malice aforethought and deliberate ill-will, contrary to the finds of the majority.

6. ID.; ID.; ID.; ID.; ID.; REQUEST TO OPEN BAGS WAS NOT UNJUSTIFIED OR IN BAD FAITH
It is the inherent duty of the captain of an airplane to screen every piece of baggage or
cargo with a view to avoiding the carrying of any which might endanger the safety of the
plane and its passengers. Correspondingly, it must follow that it is clearly within the ambit
of his unquestionable lawful authority to refuse to load any baggage or cargo not proven
to his satisfaction to be harmless. The net result of the foregoing consideration is that the
whole heated altercation about the opening of the bags and the mutually unyielding
attitude of both parties resulted from nothing more than their precipitate misconception
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of each other's motivation. Verily, I cannot see any bad faith that can be attributed to any of
those involved in such an unfortunate turn of events.
7. ID.; ID.; ID.; ID.; ID.; ID.; NO CONSTITUTIONAL RIGHT WAS VIOLATED. I am not
prepared to hold that the requirement to open his bags could be resisted by an invocation
of constitutional rights, because I am more disposed to consider that it is a matter of
public policy, more paramount than an individual's right to privacy, that the safety of air
travel is maintained free from concessions and compromises in consideration of the
variant personal status of the persons concerned. My considered view is that reliance
should rather be exclusively on the sound judgment of the captain who after all is the one
most responsible for such safety.
8. ID.; ID.; ID.; ID.; INSTANT CASE. For the error of judgment of Captain Zentner resulting
in the off-loading of Mr. Zulueta, appellant is liable to him for breach of the contract of
carriage, it being indisputable that it failed in its obligation to take him to his destination
stipulated in said contract.
9. ID., ID.; ID.; ID.; AWARD THEREFOR SHOULD BE LIMITED TO ACTUAL DAMAGES. There
being no clear showing that appellant's agents acted in bad faith in off-loading Mr. Zulueta,
the damages for which appellant should answer must be limited to actual ones, and
cannot include moral damages.
10. ID.; ID.; ID.; ID.; LIABILITY FOR INSULTING LANGUAGE PREDICATED ON QUASI-DELICT.
Although it has been established that appellant's agents employed insulting language in
dealing with the appellees, the liability therefor cannot be predicated on contractual breach
but on quasi-delict under Article 2176, read together with Articles 2180 and 2219(7) of the
Civil Code of the Philippines.
11. ID.; ID.; ID.; ID.; TORT RESULTING FROM VERBAL OFFENSE IN INSTANT CASE IS
SEPARATE FROM BREACH OF CARRIAGE CONTRACT. In the case at bar, the off-loading
of Mr. Zulueta is in every sense separable from the abusive or insulting language attributed
to appellant's employees while they were demanding that Mr. Zulueta open his bags, and
consequently, the tort resulting from such verbal offense is juridically independent of the
contractual breach of not taking him to his destination and it may, therefore, be considered
as a distinct cause of action and ground for relief from the ones for contractual breach.
12. ID.; ID.; ID.; ID.; ID.; EXPRESSIONS UTTERED BY PANAM AGENTS AGAINST PLAINTIFFS
ARE NOT ACTIONABLE. The choice of expressions by appellant' s agents was not
excellent, but viewed objectively in the context of the environmental circumstances
prevailing, I refuse to believe they are actionable. "What in (the) hell do you think you are?"
is not an uncommon expression of molestation and annoyance. It is hardly, if ever, meant
or considered as an offensive remark. As movant pointedly posits, it was once held by this
Court that the utterance of the words "Agustin, putang ina mo" ("Your mother is a whore"),
considered in the light of the circumstances under which it was made, is not defamatory.
And to make capital of them for the purpose of recovering supposed damages to feeling
and reputation is, in my considered view, to expand the concept of damages in law beyond
the natural bounds of human nature and experience, which I cannot conceive could ever be
juridically assumed.
13. ID.; ID.; ID.; ID.; AWARD IS NOT CONJUGAL IN INSTANT CASE. I also disagree with
the majority's pose that all the damages due appellees are conjugal property of the Zulueta
spouses for two basic juristic reasons: (a) said damages are merely reparative and cannot
in any sense be gains, hence inapposite to the essentially characteristic concept of the
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conjugal partnership of gains, and (b) the legal effects of the tort in this case are purely
personal to each of appellees and consequently belong to their respective patrimonies,
exclusive of the patrimony of the conjugal partnership; and also (c) because, in effect, the
majority's position disregards the separate and individual interest of Miss Zulueta involved
herein, which cannot in any sense be deemed absorbed in or merged with the interest of
her parents. While the three appellees do belong to a single family, it is undeniable that the
honor and prestige of each of them do not belong to all of them in common. Besides, it is
only consistent with fundamental principles that the damages to be awarded to each of
the appellees should be individualized in accordance not only with their respective
personal circumstances but also with the varying factors that affect the measure of the
damages to which each of them is entitled.
14. ID.; ID.; ID.; ID.; AWARD FOR DAMAGES ARE NOT EARNINGS OF THE CONJUGAL
PARTNERSHIP. Since the actual and moral damages which may be awarded to the
plaintiffs merely replace whatever material or sentimental losses or injuries they have
suffered, the same cannot be wholly considered as either the earnings or pro ts which are
categorized in the law on conjugal partnership as gains or "ganancias." The only portions of
the said damages which may be deemed as pertaining to the category of earnings or
pro ts of the spouses are those that correspond to their unearned income and hospital
expenses (Civil Code of the Philippines by Senator Tolentino, Vol. I, pp. 361-362, Bismorte
vs. Aldecoa, 17 Phil. 480; Lilius vs. Manila Railroad, 62 Phil 56).
15. ID.; ID.; ID.; ID.; AWARD FOR DAMAGES TO BODY AND HONOR OF THE SPOUSE IS
SEPARATE PROPERTY. In this jurisdiction, it is settled that the body of each spouse is
his or her own patrimony, and necessarily, compensation for any injury suffered by it in
private properly of the injured spouse; their honor cannot be treated differently. From
another point of view, since under Article 163, "the nes and pecuniary indemnities
imposed upon" the spouses "shall not be charged to the conjugal partnership," it stands to
reason that conversely and upon the principle that these matters are purely personal, the
indemnities to them for personal injury do not accrue to the partnership.
16. ID.; ID.; ID.; ID.; ARTICLE 153(1) OF THE CIVIL CODE IS NOT APPLICABLE IN INSTANT
CASE. Neither the letter of Article 153(1) nor the spirit behind it can be properly invoked
in this case. The theory of the majority seems to be that inasmuch ac conjugal fund was
used in purchasing his ticket, all rights accruing from the ensuing contract of carriage are
necessarily conjugal. I do not see it that way. It must be considered that even under the
position taken by the majority to the effect that the liability of appellant arises from both
contract and tort at the same time, the inescapable implication is that there is a tort
aspect therein, On the other hand, the effects of that tort are purely personal to each of the
appellees.
17. ID.; ID.; ID.; ID.; SAID AWARD SHOULD NOT BE FOR FAMILY. The view being sustained
is that appellant is liable for damages to the three Zuluetas collectively, that is, as a family
and not to each of them individually. As far as I know, nowhere in the Civil Code is a family,
to which it devotes special attention as an institution, ever treated as a unit having rights or
obligations as such.
18. ID.; ID.; ID.; ID.; COMPROMISE AGREEMENT ENTERED INTO BY WIFE WITH
APPELLANT MUST BE GIVEN EFFECT. The majority would base their refusal to give
effect to Mrs. Zulueta's compromise agreement with appellant precisely on the predicate
that the damage being awarded to appellees constitute part of the properties of the
conjugal partnership of the Zulueta spouses. Frankly, and with due respect to the lengthy
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exposition of such theory in the majority opinion, I believe this is its weakest point. And the
rst obvious obstacle to this conceptualization is the fact that by their very terms, the
judgments herein, both of this Court and of the trial court, are not in favor of the so-called
conjugal partnership, represented by its manager, the husband, but of all "the (three)
plaintiffs" namely, Mr. Zulueta, Mrs. Zulueta and Miss Zulueta. In the second place, I am
convinced after mature deliberation that the damages herein involved cannot be juridically
treated as conjugal property, having in mind the true concept and the basic elements of the
conjugal partnership of gains as it is known and contemplated in our Civil Code.
19. ID.; CONJUGAL PARTNERSHIP; RELEVANT NEW AND OLD CIVIL CODE PROVISIONS
EXPLAINED . Substantially, Article 142 of the Civil Code of the Philippines is the same as
Article 1392 of the Civil Code of Spain which was in force here before the present Code,
but it will be noted that the change in phraseology served to accentuate not only the nature
of the component elements of the so-called conjugal partnership of properties but also
how they come into being. Whereas the old provision refers broadly or vaguely to
"ganancias o bene cio" or "earnings or pro ts," for which reason the system itself is aptly
dominated as "sociedad de gananciales," the new one makes it abundantly clear that what
are contemplated are ''fruits of their separate property and the income from their work or
industry." There is thus a discernible emphasis on the thought that the effort or labor on
the part of any or both of the spouses, whether this be actual or presumed, must be the
creative factor of the "earnings or pro t" in order for any of these to form part of the
conjugal partnership properties. This is even made clearer by the enumeration in Article
153 of what are "conjugal partnership properly." Even the new provision regarding "things
acquired by occupation, such as shing and hunting" conveys the same underlying idea.
While the new provision, Article 154, which provides that "the share of the hidden treasure
which the law awards to the nder or proprietor belongs to the conjugal partnership"
seems to refer to something acquired without labor on the part of the spouses, the truth is
that such hidden treasure is viewed by the Code as fruit of the property of the spouse in
which it is found, under Article 153(3). In contrast under Article 148, what either of the
spouses "acquires during the marriage by lucrative title" is exclusive property of the
spouse making the acquisition. And the obvious reason for all these distinctions and
clari cations is the human and realistic consideration that any earning or pro t of the
spouses, not derived from their respective private properties and without any effort on
their part is the product of their common and never ceasing effort to help each other
directly or indirectly in the promotion of their common interest and welfare. Such is the
concern of the law for their common industry that even in the absence of a marriage,
properties acquired by a man and a woman living together as husband and wife through
their work and industry are made governable by the rules on co-ownership (Art. 144).

20. ID.; ID.; SEPARATE PROPERTY OF SPOUSE CANNOT BY AGREEMENT BE MADE


CONJUGAL. It is a cardinal principle that the spouses cannot modify their respective
patrimonies vis-a-vis each other's and that of the conjugal partnership. In other words,
separate property of one spouse cannot by agreement be made conjugal nor vice-versa.
21. ID.; ID.; PRIMARY OBJECTIVE OF PARTNERSHIP'S FORMATION. The primary
objective of the formation of the conjugal partnership of gains is to have a common fund
to answer for the obligations of the spouses contracted in the common interest of the
family, thereby solving the problems of who of the two spouses should primarily answer
for them and from whose resources they should be satis ed. But there are also
obligations for which the spouses are individually liable, and for these, they answer with
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their own patrimonies.

RESOLUTION

CONCEPCION , J : p

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 af rmed 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 ling of its motion for reconsideration, the defendant led 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 unspeci ed sums representing items of alleged damages, may not be
considered, under the settled doctrines of this Honorable Court," and "the jurisdiction of
courts of rst instance when the complaint in the present case was led 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 unspeci ed moral damages and attorney's fees, does not
bring the action within the jurisdiction of the lower court."
We nd no merit in this contention. To begin with, it is not true that "the unspeci ed 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 claim 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 rst 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 complaints, 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.
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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 ling 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. Paci c 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 ling 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 speci c 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 ndings 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 con rming 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 ight from Wake Island. His failure to do so merely makes the
arti cious 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
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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 nd 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 speci c 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 rst class or tourist class in
which he is. Then, too, it takes several minutes for the passengers of big aircrafts, like
those ying 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 thereby. 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, rst, 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 at. What is more, he must have had
to take off 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 remonstrating 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
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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
ndings 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
ve (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.
In 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 rst 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 be tting 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
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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 consideration paid 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
b e dispensed with" or even "lessened by stipulation, by the posting of notices, by
statements on tickets, or otherwise." 1 0 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 speci c nding 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 justi ed when the act performed is deliberate, malicious and tainted with bad
faith. Thus, in Lopez v. PANAM, 1 1 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 1 2 this Court declared that an award for exemplary damages
was justi ed 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 rst 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 rst class fare and was issued in Manila a rst
class ticket.
Defendant cites Rotea v. Halili, 1 3 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." 1 4
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, 1 5 invoked by the defendant, be equated with
the case at bar. The Palisoc case dealt with the liability of school of cials for damages
arising from the death of a student (Palisoc) due to st 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
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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 awarded 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 nd
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 speci c
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 justi cation 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
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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 "extraordinary" 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, suf ce 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 1 6 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, led 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 incident of the humiliation to which her husband had been subjected. The Court
ordered that said sum of P50,000 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
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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. 1 7 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 1 9
seeks to protect by creating an additional cause for the misunderstanding that had
arisen between such spouses during the litigation, and thus rendering more dif cult 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 speci c 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 bene t 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." 2 0 In fact Manresa maintains 2 1 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. 2 2 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 by onerous 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:
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"(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," 2 4
belong 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 2 5 and Perez v. Lantin, 2 6 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 circumstances 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., 2 7 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 dis gured 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 cuestin de si las
indemnizaciones debidas por accidentes del trabajo 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 trabajo
con el accidente, que a ella le pertenece, puesto que de la sociedad son los frutos
de ese trabajo; en cambio, la consideracion de que de igual manera que los
bienes que sustituyen a los que cada conyuge lleva al matrimonio como propios
tienen el caracter de propios, hace pensar que las indemnizaciones que vengan a
suplir la capacidad de trabajo aportada por cada conyuge a la sociedad, deben
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ser juridicamente reputadas como bienes propios del conyuge que haya sufrido el
accidente. As! se llega a la misma solicion 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 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. 2 9
Besides, the French law and jurisprudence to which the comments of Planiol and Ripert,
likewise, refer are inapposite to the question under consideration, because they differ
basically from the Spanish law in the treatment of the property relations between husband
and wife. Indeed, our Civil Code, lie 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. 3 0
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 Codigos 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 3 3 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 nd, 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.
Barredo, J., voted to modify the judgment by reducing the amount of the awarded
damages and individualizing the same, and now reserves the ling of a separate
concurring and dissenting opinion in support of his vote.
Castro and Teehankee, JJ., took no part.

Footnotes

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1. Layda v. Court of Appeals, L-4487, Jan. 29, 1952; Yutuk v. Manila Electric Co., L-13016, May
31, 1961.

2. Sec. 44(a), Rep. Act No. 296.


3. See 38 Harvard Law Review, 744-751; 45 Yale Law Journal, 416.

4. Ginsburg v. Pacific Mutual Life Ins. Co., 69 F. (2d) 97, 98.


5. Home Life Ins. Co. v. Sipp., 11 F. (2d) 474, 476.

6. L-19631, Jan. 31, 1964. Italics ours.

7. People v. Casiano, L-15309, Feb. 16, 1961; People v. Roberts, L-15632, Feb. 28, 1961; People
v. Fajardo, L-18257, June 30, 1966; Tijam v. Manila Surety & Fidelity Co., L-21450, April
15, 1968; Carillo v. Allied Workers' Association of the Philippines, L-23689, July 31, 1968;
Rizal Light & Ice Co. v. Municipality of Morong, L-20993 and L-21221, Sept. 28, 1968;
Tolentino v. Escalona, et al., L-26556, Jan. 24, 1969; Surigao Consolidated Mining Co.,
Inc. v. Philippine Land-Air-Sea Labor Union (PLASLU), L-22970, June 9, 1969; Rodriguez
v. Court of Appeals, et al., L-29264, Aug. 29, 1969; Calderon, Jr. v. Public Service
Commission and Milo, L-29228, April 30, 1971.
8. Northwest Airlines, Inc. v. Cuenca, et al., L-22425, Aug. 31, 1965; Lopez, et al. v. Pan American
World Airways, L-22415, March 30, 1966, Air France v. Carrascoso, et al., L-21438, Sept.
28, 1966.

9. Articles 1733 and 1755, Civil Code of the Philippines.


10. Article 1757, Civil Code of the Philippines.

11. Supra.
12. Supra.

13. 109 Phil. 495.

14. Article 2230, New Civil Code.


15. L-29025; October 4, 1971.

16. Supra.

17. Civil Code of the Philippines, Article 179.


18. Ibid., Article 114.

19. Id., Article 220.


20. Paragraph (z) of Sec. 5, Rule 131 of the Rules of Court.

21. Codigo Civil Espaol, by Manresa (1950 ed.), Vol. 9, pp. 548-549.

22. In support of this view, Manresa cites the resolutions of the Supreme Court of Spain of
March 30 and May 6, 1904 as well as those of September 2, 1896, March 6, 1897, April
23, 1898, November 30, 1903 and September 20, 1907.

23. Flores v. Flores, 48 Phil. 288; Guinguing v. Abuton, 48 Phil. 144; Bucoy v. Paulino, G.R. No. L-
25775, April 26, 1968.
24. Pursuant to Article 148.
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25. L-21533, June 29, 1967.
26. L-22320, May 22, 1968.

27. 62 Phil, 56, 64-65.


28. Italics ours.

29. Although Colin y Capitant actually said that the question has not been "expressly" settled
under the Spanish law, they did not say that it has been "impliedly" settled and in what
way.
30. Art. Art. 119, Civil Code of the Philippines.

31. Art. 160, Civil Code of the Philippines, and Art. 1407 of the Civil Code of Spain.

32. 9 Manresa, p. 552. Italics ours.


33. Strebel v, Figueras, 96 Phil. 321; Araneta v. Arreglado, 104 Phil. 529; Soberano v. Manila
Railroad Co., L-19407, Nov. 23, 1966.

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THIRD DIVISION

[G.R. No. 70082. August 19, 1991.]

SPOUSES RICKY WONG and ANITA CHAN, LEONARDO JOSON,


JUANITO SANTOS, EMERITO SICAT and CONRADO LAGMAN ,
petitioners, vs. HON. INTERMEDIATE APPELLATE COURT and
ROMARICO HENSON , respondents.

Feliciano C. Tumale for petitioners.


Benjamin Dadios and Bausa, Ampil, Suarez, Paredes & Bausa for private respondent.

SYLLABUS

1. CIVIL LAW; LACHES; NOT AVAILABLE WHEN A PARTY WAS NOT GIVEN
OPPORTUNITY TO DEFEND HIMSELF; CASE AT BAR. Laches may not be charged
against Romarico because, aside from the fact that he had no knowledge of the
transactions of his estranged wife, he was also not afforded an opportunity to defend
himself in Civil Case No. 2224. There is no laches or even finality of decision to speak of
with respect to Romarico since the decision in Civil Case No. 2224 is null and void for
having been rendered without jurisdiction for failure to observe the notice requirements
prescribed by law. Failure to notify Romarico may not be attributed to the fact that the
plaintiffs in Civil Case No. 2224 acted on the presumption that the Hensons were still
happily married because the complaint itself shows that they did not consider Romarico
as a party to the transaction which Katrina undertook with Anita Wong. In all likelihood, the
plaintiffs merely impleaded Romarico as a nominal party in the case pursuant to the
provisions of Rule 3, Section 4 of the Rules of Court.
2. ID.; PERSONS AND FAMILY RELATIONS; CONJUGAL PROPERTIES; PRESUMED
WHEN PROPERTIES ARE ACQUIRED DURING THE MARRIAGE. Having been acquired
during the marriage, the properties are still presumed to belong to the conjugal
partnership even though Romarico and Katrina had been living separately. The
presumption of the conjugal nature of the properties subsists in the absence of clear,
satisfactory and convincing evidence to overcome said presumption or to prove that the
properties are exclusively owned by Romarico. While there is proof that Romarico acquired
the properties with money he had borrowed from an officemate, it is unclear where he
obtained the money to repay the loan. If he had paid it out of his salaries, then the money is
part of the conjugal assets and not exclusively his. Proof on this matter is of paramount
importance considering that in the determination of the nature of a property acquired by a
person during coverture, the controlling factor is the source of the money utilized in the
purchase.
3. ID.; ID.; ID.; NOT BOUND TO ANSWER FOR PERSONAL OBLIGATIONS OF A SPOUSE;
CASE AT BAR. The conjugal nature of the properties notwithstanding, Katrina's
indebtedness may not be paid for with them her obligation not having been shown by the
petitioners to be one of the charges against the conjugal partnership. In addition to the
fact that her rights over the properties are merely inchoate prior to the liquidation of the
conjugal partnership, the consent of her husband and her authority to incur such
indebtedness had not been alleged in the complaint and proven at the trial. Furthermore,
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under the Civil Code (before the effectivity of the Family Code on August 3, 1988), a wife
may bind the conjugal partnership only when she purchases things necessary for the
support of the family or when she borrows money for the purpose of purchasing things
necessary for the support of the family if the husband fails to deliver the proper sum; when
the administration of the conjugal partnership is transferred to the wife by the courts or by
the husband, and when the wife gives moderate donations for charity. Having failed to
establish that any of these circumstances occurred, the Wongs may not bind the conjugal
assets to answer for Katrina's personal obligation to them.
4. REMEDIAL LAW; CIVIL PROCEDURE; EXECUTION OF JUDGMENT; EXTENDS ONLY
OVER PROPERTIES UNQUESTIONABLY BELONGING TO JUDGMENT DEBTOR. The
power of the court in the execution of judgments extends only over properties
unquestionably belonging to the judgment debtor. Petitioners' contention that the rights of
Santos and Joson as innocent buyers at the public auction sale may not be prejudiced, is,
to a certain extent, valid. After all, in the absence of proof that irregularities attended the
sale, the same must be presumed to have been conducted in accordance with law. There
is, however, a peculiar factual circumstance that goes against the grain of that general
presumption the properties levied upon and sold at the public auction do not exclusively
belong to the judgment debtor. Thus, the guiding jurisprudence is as follows: "The rule in
execution sales is that an execution creditor acquires no higher or better right than what
the execution debtor has in the property levied upon. The purchaser of property on sale
under execution and levy takes as assignee only, as the judicial seller possesses no title
other than that which would pass by an assignment by the owner. 'An execution purchaser
generally acquires such estate or interest as was vested in the execution debtor at the
time of the seizure on execution, and only such interest, taking merely a quit-claim of the
execution debtor's title, without warranty on the part of either the execution officer or of
the parties, whether the property is realty or personalty. This rule prevails even if a larger
interest in the property was intended to be sold. Accordingly, if the judgment debtor had
no interest in the property, the execution purchaser acquires no interest therein.'" (Pacheco
vs. Court of Appeals, L-48689, August 31, 1987, 153 SCRA 382, 388-389 quoting Laureano
vs. Stevenson, 45 Phil 252)

DECISION

FERNAN , C.J : p

Submitted for adjudication in the instant petition for review on certiorari is the issue of
whether or not the execution of a decision in an action for collection of a sum of money
may be nullified on the ground that the real properties levied upon and sold at public
auction are the alleged exclusive properties of a husband who did not participate in his
wife's business transaction from which said action stemmed.
Private respondent Romarico Henson married Katrina Pineda on January 6, 1964. 1 They
have three children but even during the early years of their marriage, Romarico and Katrina
had been most of the time living separately. The former stayed in Angeles City while the
latter lived in Manila. During the marriage or on January 6, 1971, Romarico bought a 1,787
square-meter parcel of land in Angeles City for P11,492 from his father, Dr. Celestino L.
Henson 2 with money borrowed from an officemate. His father needed the amount for
investments in Angeles City and Palawan. 3
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Meanwhile, in Hongkong sometime in June 1972, Katrina entered into an agreement with
Anita Chan whereby the latter consigned to Katrina pieces of jewelry for sale valued at
199,895 Hongkong dollars or P321,830.95. 4 When Katrina failed to return the pieces of
jewelry within the 20-day period agreed upon, Anita Chan demanded payment of their
value.
On September 18, 1972, Katrina issued in favor of Anita Chan a check for P55,000 which,
however, was dishonored for lack of funds. Hence, Katrina was charged with estafa before
the then Court of First Instance of Pampanga and Angeles City, Branch IV. 5 After trial, the
lower court rendered a decision dismissing the case on the ground that Katrina's liability
was not criminal but civil in nature as no estafa was committed by the issuance of the
check in payment of a pre-existing obligation. 6
In view of said decision, Anita Chan and her husband Ricky Wong filed against Katrina and
her husband Romarico Henson, an action for collection of a sum of money also in the same
branch of the aforesaid court. 7 The records of the case show that Atty. Gregorio Albino,
Jr. filed an answer with counterclaim but only in behalf of Katrina. When the case was
called for pretrial, Atty. Albino once again appeared as counsel for Katrina only. While it is
true that during subsequent hearings, Atty. Expedito Yumul, who collaborated with Atty.
Albino, appeared for the defendants, it is not shown on record that said counsel also
represented Romarico. In fact, a power of attorney which Atty. Albino produced during the
trial, showed that the same was executed solely by Katrina. 8
After trial, the court promulgated a decision 9 in favor of the Wongs. It ordered Katrina and
Romarico Henson to pay the Wongs HK$199,895.00 or P321,830.95 with legal interest
from May 27, 1975, the date of filing of the complaint, until fully paid; P20,000 as expenses
for litigation; P15,000 as attorney's fees, and the costs of the suit.
A writ of execution was thereafter issued. Levied upon were four lots in Angeles City
covered by Transfer Certificates of Title Nos. 30950, 30951, 30952 and 30953 all in the
name of "Romarico Henson . . . married to Katrina Henson." 1 0
The public auction sale was first set for October 30, 1977 but since said date was
declared a public holiday, Deputy Sheriff Emerito Sicat reset the sale to November 11,
1977. On said date, the following properties registered in the name of Romarico Henson
"married to Katrina Henson" were sold at public auction: (a) two parcels of land covered by
Transfer Certificates of Title Nos. 30950 and 30951 with respective areas of 293 and 289
square meters at P145,000 each to Juanito L. Santos, 1 1 and (b) two parcels of land
covered by Transfer Certificates of Title Nos. 30952 and 30953 with respective areas of
289 and 916 square meters in the amount of P119,000.00 to Leonardo B. Joson. 1 2
After the inscription on Transfer Certificate of Title No. 30951 of the levy on execution of
the judgment in Civil Case No. 2224, the property covered by said title was extrajudicially
foreclosed by the Rural Bank of Porac, Pampanga on account of the mortgage loan of
P8,000 which Romarico and Katrina had obtained from said bank. The property was sold
by the sheriff to the highest bidder for P57,000 on September 9, 1977. On September 14,
1978, Juanito Santos, who had earlier bought the same property at public auction on
November 11, 1977, redeemed it by paying the sum of P57,000 plus the legal interest of
P6,840.00 or a total amount of P63,840.00. 1 3

About a month before such redemption or on August 8, 1978, Romarico filed an action for
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the annulment of the decision in Civil Case No. 2224 as well as the writ of execution, levy
on execution and the auction sale therein in the same Court of First Instance. 14 Romarico
alleged that he was "not given his day in court" because he was not represented by counsel
as Attys. Albino and Yumul appeared solely for Katrina; that although he did not file an
answer to the complaint he was not declared in default in the case, that while Atty. Albino
received a copy of the decision, he and his wife were never personally served a copy
thereof; that he had nothing to do with the business transactions of Katrina as he did not
authorize her to enter into such transactions; and that the properties levied on execution
and sold at public auction by the sheriff were his capital properties and therefore, as to
him, all the proceedings had in the case were null and void. prLL

On November 10, 1978, the lower court issued an order restraining the Register of Deeds
of Angeles City from issuing the final bill of sale of Transfer Certificates of Title Nos.
30950 and 30951 in favor of Juanito Santos and Transfer Certificates of Title Nos. 30952
and 30953 in favor of Leonardo Joson until further orders of the court. 1 5 On January 22,
1979, upon motion of Romarico, the court issued a writ of preliminary injunction enjoining
the sheriff from approving the final bill of sale of the land covered by the aforementioned
certificates of title and the Register of Deeds of Angeles City from registering said
certificates of title in the names of Santos and Joson until the final outcome of the case
subject to Romarico's posting of a bond in the amount of P321,831.00. 1 6
After trial on the merits, the lower court 1 7 rendered a decision holding that Romarico was
indeed not given his day in court as he was not represented by counsel nor was he notified
of the hearings therein although he was never declared in default. Noting that the
complaint in Civil Case No. 2224 as well as the testimonial and documentary evidence
adduced at the trial in said case do not show that Romarico had anything to do with the
transactions between Katrina and Anita Chan, the court ruled that the judgment in Civil
Case No. 2224 "is devoid of legal or factual basis which is not even supported by a finding
of fact or ratio decidendi in the body of the decision, and may be declared null and void . . .
pursuant to a doctrine laid down by the Supreme Court to the effect that 'the Court of First
Instance or a branch thereof has authority and jurisdiction to try and decide an action for
annulment of a final and executory judgment or order rendered by another court of first
instance or of a branch thereof' (Gianan vs. Imperial, 55 SCRA 755)." 1 8
On whether or not the properties levied upon and sold at public auction may be reconveyed
to Romarico, the court, finding that there was no basis for holding the conjugal partnership
liable for the personal indebtedness of Katrina, ruled in favor of reconveyance in view of
the jurisprudence that the interest of the wife in the conjugal partnership property being
inchoate and therefore merely an expectancy, the same may not be sold or disposed of for
value until after the liquidation and settlement of the community assets. The dispositive
portion of the decision reads:
"WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor
of the plaintiff and against all the defendants, as follows:
"(a) The Decision of the Court of First Instance of Pampanga and Angeles
City, Branch IV, rendered in Civil Case No. 2224, entitled "RICKY WONG, ET AL. vs.
KATRINA PINEDA HENSON and ROMARICO HENSON", is hereby declared null and
void, only as far as it affects plaintiff herein Romarico Henson;
"(b) The Writ of Execution, levy in execution and auction sale of the conjugal
property of the spouses Romarico Henson and Katrina Pineda Henson which were
sold at public auction on November 11, 1977, without notice to plaintiff herein, by
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Deputy Sheriff Emerito Sicat, are likewise declared null and void and of no force
and effect;
"(c) Defendants Emerito Sicat and Conrado Lagman, in their official capacity
as Sheriff and Register of Deeds, respectively, are enjoined permanently from
issuing and or registering the corresponding deeds of sale affecting the property; llcd

"(d) The aforementioned buyers are directed to reconvey the property they
have thus purchased at public auction to plaintiff Romarico Henson;

"(e) As far as the claim for reimbursement filed by Juanito Santos concerning
the redemption of the property covered by Transfer Certificate of Title No. 30951
from the Rural Bank of Porac, which foreclosed the same extrajudicially, is
concerned, plaintiff Romarico Henson may redeem the same within the period
and in the manner prescribed by law, after the corresponding deed of redemption
shall have been registered in the Office of the Registry of Deeds for Angeles City;
"(f) Defendants Spouses Ricky Wong and Anita Chan are, with the exception
of the defendants Juanito Santos, Leonardo Joson, Sheriff and Register of Deeds,
are ordered jointly and severally, to pay the plaintiff Romarico Henson the sum of
P10,000.00, corresponding to the expenses of litigation, with legal interest thereon
from the time this suit was filed up to the time the same shall have been paid,
plus P5,000.00 for and as attorney's fees, and the costs of suit; and

"(g) The counterclaims respectively filed on behalf of all the defendants in the
above-entitled case are hereby DISMISSED.

"SO ORDERED."

The defendants appealed to the then Intermediate Appellate Court. In its decision of
January 22, 1985 1 9 the said court affirmed in toto the decision of the lower court. It
added that as to Romarico, the judgment in Civil Case No. 2224 had not attained finality as
the decision therein was not served on him and that he was not represented by counsel.
Therefore, estoppel may not be applied against him as, not having been served with the
decision, Romarico did not know anything about it. Corollarily, there can be no valid writ of
execution inasmuch as the decision had not become final as far as Romarico is concerned.
On whether the properties may be levied upon as conjugal properties, the appellate court
ruled in the negative. It noted that the properties are Romarico's exclusive capital having
been bought by him with his own funds. But granting that the properties are conjugal, they
cannot answer for Katrina's obligations as the latter were exclusively hers because they
were incurred without the consent of her husband, they were not for the daily expenses of
the family and they did not redound to the benefit of the family. The court underscored the
fact that no evidence has been submitted that the administration of the conjugal
partnership had been transferred to Katrina either by Romarico or by the court before said
obligations were incurred.
The appellants filed a motion for reconsideration of the decision of the appellate court but
the same was denied for lack of merit on February 6, 1985. 2 0
Hence, the instant petition for review on certiorari. Petitioners contend that, inasmuch as
the Henson spouses were duly represented by Atty. Albino as shown by their affidavit of
August 25, 1977 wherein they admitted that they were represented by said counsel until
Atty. Yumul took over the actual management and conduct of the case and that Atty.
Albino had not withdrawn as their counsel, the lower court "did not commit an error" in
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serving a copy of the decision in Civil Case No. 2224 only on Atty. Albino. Moreover, during
the 2-year period between the filing of the complaint in Civil Case No. 2224 and the public
auction sale on November 11, 1977, Romarico remained silent thereby making him in
estoppel and guilty of laches. Cdpr

Petitioners further aver that there being sufficient evidence that the auction sale was
conducted in accordance with law, the acts of the sheriffs concerned are presumed to be
regular and valid. But granting that an irregularity consisting of the non-notification of
Romarico attended the conduct of the auction sale, the rights of Santos and Joson who
were "mere strangers who participated as the highest bidders" therein, may not be
prejudiced. Santos and Joson bought the properties sincerely believing that the sheriff
was regularly performing his duties and no evidence was presented to the effect that they
acted with fraud or that they connived with the sheriff. However, should the auction sale be
nullified, petitioners assert that Romarico should not be unduly enriched at the expense of
Santos and Joson.
The petitioners' theory is that Romarico Henson was guilty of laches and may not now
belatedly assert his rights over the properties because he and Katrina were represented by
counsel in Civil Case No. 2224. Said theory is allegedly founded on the perception that the
Henson's were like any other ordinary couple wherein a spouse knows or should know the
transactions of the other spouse which necessarily must be in interest of the family. The
factual background of this case, however, takes it out of said ideal situation.
Romarico and Katrina had in fact been separated when Katrina entered into a business
deal with Anita Wong. Thus, when that business transaction eventually resulted in the filing
of Civil Case No. 2224, Romarico acted, or, as charged by petitioners, failed to act, in the
belief that he was not involved in the personal dealings of his estranged wife. That belief
was buttressed by the fact that the complaint itself did not mention or implicate him other
than as the husband of Katrina. On whether Romarico was also represented by Atty. Albino,
Katrina's counsel, the courts below found that:
". . . Atty. Albino filed an Answer with Counterclaims dated July 25, 1975 solely on
behalf of defendant Katrina Henson. The salutary statement in that Answer
categorically reads: '. . . COMES NOW THE DEFENDANT KATRINA HENSON by
and through undersigned counsel, in answer to plaintiffs' complaint respectfully
alleges: . . .'

"That Answer was signed by GREGORIO ALBINO, JR., over the phrase 'COUNSEL
FOR DEFENDANT KATRINA HENSON.'
"Again, when Civil Case No. 2224 was called for pre-trial on November 27, 1975,
before then Presiding Judge Bienvenido Ejercito, it is clearly stated on page 2 of
the days stenographic notes, under 'APPEARANCES' that Atty. Albino, Jr.
appeared as 'COUNSEL FOR DEFENDANT KATRINA HENSON.' And when the case
was called, Atty. Jose Baltazar, Sr. appeared for the plaintiffs while Atty. Albino
categorically appeared 'FOR DEFENDANT KATRINA HENSON.'
"It might be true that in subsequent hearings, Atty. Expedito Yumul 'appeared as
counsel for the defendants', but the whole trouble is that he never expressly
manifested to the Court that he was likewise actually representing defendant
'ROMARICO HENSON', for it cannot be disputed that Atty. Yumul only entered his
appearance in collaboration with Atty. Albino (see p. 2 tsn, January 26, 1976,
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Espinosa), who in turn entered his initial appearance during the pre-trial, and
through the filing of an Answer, for defendant KATRINA HENSON. As a matter of
fact the Power of Attorney which Atty. Albino produced during the pre-trial was
executed solely by defendant KATRINA HENSON. Accordingly, as collaborating
counsel, Atty. Yumul cannot, by any stretch of the imagination, be considered as
duly authorized to formally appear likewise on behalf of defendant ROMARICO
HENSON for whom principal counsel of record Atty. Gregorio Albino, Jr. never
made any formal appearance. On this score, it is not amiss to state that 'A spring
cannot rise higher than its source.'
"Now, what about that statement in the aforementioned joint affidavit of the
spouses KATRINA HENSON and ROMARICO HENSON, to the effect that 'our first
lawyer in said case was Atty. Gregorio Albino, Jr., and sometime later Atty.
Expedito B. Yumul took over . . .
"That statement which plaintiff ROMARICO HENSON was made to sign by Atty.
Yumul on August 25, 1977, after the filing of this case, allegedly for the purpose
of dissolving the writ of execution, as claimed in paragraph XIV of the complaint
herein, and is satisfactorily explained by both plaintiff herein and his wife, while
on cross-examination by Atty. Baltazar, Sr., and We quote:
'Q So, the summons directed your filing of your Answer for both of you, your
wife and your good self?
'A Yes, sir but may I add, I received the summons but I did not file an answer
because my wife took a lawyer and that lawyer I think will protect her
interest and my interest being so I did not have nothing to do in the
transaction which is attached to the complaint.' (TSN, Jan. 14, 1980, pp.
52-53).
"That plaintiff never appeared in Civil Case No. 2224, nor was he therein
represented by counsel was impliedly admitted by defendants' counsel of
records thru a question he propounded on cross, and the answer given by
Katrina Pineda, to wit:
'Q How about your husband, do you remember if he physically appeared in
that Civil Case No. 2224, will you tell us if he was represented by counsel
as a party defendant?
'A No, sir, he did not appear.
'Q You are husband and wife, please tell us the reason why you have your
own counsel in that case whereas Romarico Henson did not appear nor a
counsel did not appear in that proceedings?' (TSN, Feb. 25, 1980, pp. 6-7).
xxx xxx xxx
'A Because that case is my exclusive and personal case, he has nothing to do
with that, sir.' (TSN, Feb. 25, 1980, p. 9)." (Rollo, pp. 17-20)

Hence, laches may not be charged against Romarico because, aside from the fact that he
had no knowledge of the transactions of his estranged wife, he was also not afforded an
opportunity to defend himself in Civil Case No. 2224. 2 1 There is no laches or even finality
of decision to speak of with respect to Romarico since the decision in Civil Case No. 2224
is null and void for having been rendered without jurisdiction for failure to observe the
notice requirements prescribed by law. 2 2 Failure to notify Romarico may not be attributed
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to the fact that the plaintiffs in Civil Case No. 2224 acted on the presumption that the
Hensons were still happily married because the complaint itself shows that they did not
consider Romarico as a party to the transaction which Katrina undertook with Anita Wong.
In all likelihood, the plaintiffs merely impleaded Romarico as a nominal party in the case
pursuant to the provisions of Rule 3, Section 4 of the Rules of Court. llcd

Consequently, the writ of execution cannot be issued against Romarico as he has not yet
had his day in court 2 3 and, necessarily, the public auction sale is null and void. 2 4
Moreover, the power of the court in the execution of judgments extends only over
properties unquestionably belonging to the judgment debtor. 2 5
On the matter of ownership of the properties involved, however, the Court disagrees with
the appellate court that the said properties are exclusively owned by Romarico. Having
been acquired during the marriage, they are still presumed to belong to the conjugal
partnership 2 6 even though Romarico and Katrina had been living separately. 2 7
The presumption of the conjugal nature of the properties subsists in the absence of clear,
satisfactory and convincing evidence to overcome said presumption or to prove that the
properties are exclusively owned by Romarico. 2 8 While there is proof that Romarico
acquired the properties with money he had borrowed from an officemate, it is unclear
where he obtained the money to repay the loan. If he paid it out of his salaries, then the
money is part of the conjugal assets 2 9 and not exclusively his. Proof on this matter is of
paramount importance considering that in the determination of the nature of a property
acquired by a person during coverture, the controlling factor is the source of the money
utilized in the purchase.
The conjugal nature of the properties notwithstanding, Katrina's indebtedness may not be
paid for with them her obligation not having been shown by the petitioners to be one of the
charges against the conjugal partnership. 3 0 In addition to the fact that her rights over the
properties are merely inchoate prior to the liquidation of the conjugal partnership, the
consent of her husband and her authority to incur such indebtedness had not been alleged
in the complaint and proven at the trial. 3 1 Furthermore, under the Civil Code (before the
effectivity of the Family Code on August 3, 1988), a wife may bind the conjugal partnership
only when she purchases things necessary for the support of the family or when she
borrows money for the purpose of purchasing things necessary for the support of the
family if the husband fails to deliver the proper sum; 3 2 when the administration of the
conjugal partnership is transferred to the wife by the courts 3 3 or by the husband, 3 4 and
when the wife gives moderate donations for charity. 3 5 Having failed to establish that any
of these circumstances occurred, the Wongs may not bind the conjugal assets to answer
for Katrina's personal obligation to them.
Petitioners' contention that the rights of Santos and Joson as innocent buyers at the public
auction sale may not be prejudiced, is, to a certain extent, valid. After all, in the absence of
proof that irregularities attended the sale, the same must be presumed to have been
conducted in accordance with law. There is, however, a peculiar factual circumstance that
goes against the grain of that general presumption the properties levied upon and sold
at the public auction do not exclusively belong to the judgment debtor. Thus, the guiding
jurisprudence is as follows:
"The rule in execution sales is that an execution creditor acquires no higher or
better right than what the execution debtor has in the property levied upon. The
purchaser of property on sale under execution and levy takes as assignee only, as
the judicial seller possesses no title other than that which would pass by an
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assignment by the owner. 'An execution purchaser generally acquires such estate
or interest as was vested in the execution debtor at the time of the seizure on
execution and only such interest, taking merely a quit-claim of the execution
debtor's title, without warranty on the part of either the execution officer or of the
parties, whether the property is realty or personalty. This rule prevails even if a
larger interest in the property was intended to be sold. Accordingly, if the
judgment debtor had no interest in the property, the execution purchaser acquires
no interest therein.'" (Pacheco vs. Court of Appeals, L-48689, August 31, 1987, 153
SCRA 382, 388-389 quoting Laureano vs. Stevenson, 45 Phil. 252; Cabuhat vs.
Ansery, 42 Phil 170; Fore v. Manove, 18 Cal. 436 and 21 Am. Jur., 140-141. ) prLL

Applying this jurisprudence, execution purchasers Santos and Joson possess no rights
which may rise above judgment debtor Katrina's inchoate proprietary rights over the
properties sold at public auction. After all, a person can sell only what he owns or is
authorized to sell and the buyer can, as a consequence, acquire no more than what the
seller can legally transfer. 3 6 But, inasmuch as the decision in Civil Case No. 2224 is void
only as far as Romarico and the conjugal properties are concerned, the same may still be
executed by the Spouses Wong against Katrina Henson personally and exclusively. The
Spouses Wong must return to Juanito Santos and Leonardo Joson the purchase prices of
P145,000 and P119,000 respectively, received by said spouses from the public auction
sale.
The redemption made by Santos in the foreclosure proceeding against Romarico and
Katrina Henson filed by the Rural Bank of Porac should, however, be respected unless
Romarico exercises his right of redemption over the property covered by Transfer
Certificate of Title No. 30951 in accordance with law.

WHEREFORE, the decisions of the appellate court and the lower court in Civil Case No.
2859 are hereby AFFIRMED subject to the modifications above-stated. No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ ., concur.
Footnotes

1. TSN, January 14, 1980, p. 54.


2. Exh. I.

3. TSN, January 14, 1980, p. 14.


4. Decision in Civil Case No. 2224, Exh. K, pp. 1-2.
5. Presided by Judge Bienvenido Ejercito.
6. Decision in Criminal Case No. 3205, Exh. J, p. 11.
7. Civil Case No. 2224.

8. Decision in Civil Case No. 2859, pp. 12-15.


9. Penned by Judge Felisa de la Fuente-Samson.
10. Exhs. Nos. A to D.

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11. Exh. 5 - Juanito Santos.
12. Exh. 6 - Joson.
13. Exh. 4 - Santos.
14. Civil Case No 2859.

15. Record on Appeal, p. 25.


16. Ibid, p. 54.
17. Presided by Judge Ignacio M. Capulong. The presiding judge of Branch IV had earlier
inhibited himself from taking cognizance of the case. Hence, Civil Case No. 2859 was
transferred to Branch V of the same court.

18. Pursuant to Section 9 (2) of Batas Pambansa Blg. 129, the Court of Appeals now
exercises exclusive original jurisdiction over actions for annulment of judgments of the
Regional Trial Courts (Islamic Da'Wah Council of the Philippines vs. Court of Appeals,
G.R. No. 80892, September 29, 1989, 178 SCRA 178; Liwag vs. Court of Appeals, G.R. No.
86094, December 20, 1989, 180 SCRA 420).
19. Penned by Justice Eduardo P. Caguioa and concurred in by Justices Ramon G. Gaviola,
Jr., Ma. Rosario Quetulio-Losa and Leonor Ines Luciano.
20. Rollo, p. 56.
21. Bailon-Casilao v. Court of Appeals, G.R. No. 78178, April 15, 1988, 160 SCRA 738, 747.
22. Portugal v. Reantasa, L-46078, November 24, 1988, 167 SCRA 712.
23. New Owners/Management of TML Garments, Inc. v. Zaragoza, G.R. No. 75866,
February 23, 1989, 170 SCRA 563; Vda. de Medina v. Cruz, L-39272, May 4, 1988, 161
SCRA 36.
24. Ver v. Quetulio, G.R. No. 77526, June 29, 1988, 163 SCRA 80.
25. Escovilla, Jr. v. Court of Appeals, G.R. No. 84497, November 6, 1989, 179 SCRA 109;
Ong v. Tating, G.R. No. 61042, April 15, 1987, 149 SCRA 265.
26. Art. 160, Civil Code; Cuenca v. Cuenca, G.R. No. 72321, December 8, 1988, 168 SCRA
335.
27. Art. 178, Ibid., Flores v. Escudero, 92 Phil. 786.
28. Ahern v. Julian, 39 Phil. 607.

29. Art. 153 (2), Civil Code.


30. Art. 161, Ibid.; Lacson v. Diaz, L-19346, May 31, 1965, 14 SCRA 183.
31. Art. 172, Ibid.; Manaois-Salonga v. Natividad, 107 Phil. 268.
32. Art. 115.
33. Arts. 196, 167 & 178.

34. Art. 168.


35. Art. 174.

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36. See: Segura v. Segura, L-29320, September 19, 1988, 165 SCRA 368, 374.

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FIRST DIVISION

[G.R. No. 157537. September 7, 2011.]

THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely:


LEONOR, SIMPLICIO, PROTACIO, JR., ANTONIO, BEVERLY ANN
LORRAINE, TITA, CONSOLACION, LEONORA and ASUNCION, all
surnamed GO, represented by LEONORA B. GO , petitioners, vs . ESTER
L. SERVACIO and RITO B. GO , respondents.

DECISION

BERSAMIN , J : p

The disposition by sale of a portion of the conjugal property by the surviving


spouse without the prior liquidation mandated by Article 130 of the Family Code is not
necessarily void if said portion has not yet been allocated by judicial or extrajudicial
partition to another heir of the deceased spouse. At any rate, the requirement of prior
liquidation does not prejudice vested rights.
Antecedents
On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a total area
of 17,140 square meters situated in Southern Leyte to Protacio B. Go, Jr. (Protacio, Jr.).
Twenty three years later, or on March 29, 1999, Protacio, Jr. executed an Af davit of
Renunciation and Waiver, 1 whereby he af rmed under oath that it was his father,
Protacio Go, Sr. (Protacio, Sr.), not he, who had purchased the two parcels of land (the
property).
On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr.
and mother of the petitioners. 2 On December 28, 1999, Protacio, Sr. and his son Rito B.
Go (joined by Rito's wife Dina B. Go) sold a portion of the property with an area of 5,560
square meters to Ester L. Servacio (Servacio) for P5,686,768.00. 3 On March 2, 2001,
the petitioners demanded the return of the property, 4 but Servacio refused to heed
their demand. After barangay proceedings failed to resolve the dispute, 5 they sued
Servacio and Rito in the Regional Trial Court in Maasin City, Southern Leyte (RTC) for the
annulment of the sale of the property.
The petitioners averred that following Protacio, Jr.'s renunciation, the property
became conjugal property; and that the sale of the property to Servacio without the
prior liquidation of the community property between Protacio, Sr. and Marta was null
and void. 6
Servacio and Rito countered that Protacio, Sr. had exclusively owned the property
because he had purchased it with his own money. 7 TaCDcE

On October 3, 2002, 8 the RTC declared that the property was the conjugal
property of Protacio, Sr. and Marta, not the exclusive property of Protacio, Sr., because
there were three vendors in the sale to Servacio (namely: Protacio, Sr., Rito, and Dina);
that the participation of Rito and Dina as vendors had been by virtue of their being heirs
of the late Marta; that under Article 160 of the Civil Code, the law in effect when the
property was acquired, all property acquired by either spouse during the marriage was
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conjugal unless there was proof that the property thus acquired pertained exclusively to
the husband or to the wife; and that Protacio, Jr.'s renunciation was grossly insuf cient
to rebut the legal presumption. 9
Nonetheless, the RTC af rmed the validity of the sale of the property, holding
that: ". . . As long as the portion sold, alienated or encumbered will not be allotted to the
other heirs in the nal partition of the property, or to state it plainly, as long as the
portion sold does not encroach upon the legitimate (sic) of other heirs, it is valid." 1 0
Quoting Tolentino's commentary on the matter as authority, 1 1 the RTC opined:
In his comment on Article 175 of the New Civil Code regarding the dissolution of
the conjugal partnership, Senator Arturo Tolentino, says" [sic]
"Alienation by the survivor. After the death of one of the spouses, in case
it is necessary to sell any portion of the community property in order to pay
outstanding obligation 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 the deceased persons. Any sale, transfer, alienation
or disposition of said property affected without said formalities shall be
null and void, except as regards the portion that belongs to the vendor as
determined in the liquidation and partition. Pending the liquidation, the
disposition must be considered as limited only to the contingent share or
interest of the vendor in the particular property involved, but not to the
corpus of the property.
This rule applies not only to sale but also to mortgages. The alienation,
mortgage or disposal of the conjugal property without the required
formality, is not however, null ab initio, for the law recognizes their validity
so long as they do not exceed the portion which, after liquidation and
partition, should pertain to the surviving spouse who made the contract."
[Underlining supplied]

It seems clear from these comments of Senator Arturo Tolentino on the


provisions of the New Civil Code and the Family Code on the alienation by the
surviving spouse of the community property that jurisprudence remains the same
that the alienation made by the surviving spouse of a portion of the community
property is not wholly void ab initio despite Article 103 of the Family Code, and
shall be valid to the extent of what will be allotted, in the nal partition, to the
vendor. And rightly so, because why invalidate the sale by the surviving spouse of
a portion of the community property that will eventually be his/her share in the
nal partition? Practically there is no reason for that view and it would be absurd.
EHaCTA

Now here, in the instant case, the 5,560 square meter portion of the 17,140
square-meter conjugal lot is certainly mush (sic) less than what vendors Protacio
Go and his son Rito B. Go will eventually get as their share in the nal partition of
the property. So the sale is still valid.

WHEREFORE, premises considered, complaint is hereby DISMISSED without


pronouncement as to cost and damages.

SO ORDERED. 1 2

The RTC's denial of their motion for reconsideration 13 prompted the petitioners
to appeal directly to the Court on a pure question of law.
Issue
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The petitioners claim that Article 130 of the Family Code is the applicable law;
and that the sale by Protacio, Sr., et al. to Servacio was void for being made without
prior liquidation.
In contrast, although they have led separate comments, Servacio and Rito both
argue that Article 130 of the Family Code was inapplicable; that the want of the
liquidation prior to the sale did not render the sale invalid, because the sale was valid to
the extent of the portion that was nally allotted to the vendors as his share; and that
the sale did not also prejudice any rights of the petitioners as heirs, considering that
what the sale disposed of was within the aliquot portion of the property that the
vendors were entitled to as heirs. 1 4
Ruling
The appeal lacks merit.
Article 130 of the Family Code reads:
Article 130. Upon the termination of the marriage by death, the conjugal
partnership property shall be liquidated in the same proceeding for the settlement
of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall


liquidate the conjugal partnership property either judicially or extra-judicially
within one year from the death of the deceased spouse. If upon the lapse of the
six month period no liquidation is made, any disposition or encumbrance
involving the conjugal partnership property of the terminated marriage shall be
void.
Should the surviving spouse contract a subsequent marriage without compliance
with the foregoing requirements, a mandatory regime of complete separation of
property shall govern the property relations of the subsequent marriage.

Article 130 is to be read in consonance with Article 105 of the Family Code, viz.:
Article 105. In case the future spouses agree in the marriage settlements that
the regime of conjugal partnership of gains shall govern their property relations
during marriage, the provisions in this Chapter shall be of supplementary
application.

The provisions of this Chapter shall also apply to conjugal partnerships


of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in
accordance with the Civil Code or other laws, as provided in Article 256.
(n) [emphasis supplied] DCcHIS

It is clear that conjugal partnership of gains established before and after the
effectivity of the Family Code are governed by the rules found in Chapter 4 (Conjugal
Partnership of Gains) of Title IV (Property Relations Between Husband and Wife) of the
Family Code. Hence, any disposition of the conjugal property after the dissolution of the
conjugal partnership must be made only after the liquidation; otherwise, the disposition
is void.
Before applying such rules, however, the conjugal partnership of gains must be
subsisting at the time of the effectivity of the Family Code. There being no dispute that
Protacio, Sr. and Marta were married prior to the effectivity of the Family Code on
August 3, 1988, their property relation was properly characterized as one of conjugal
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partnership governed by the Civil Code. Upon Marta's death in 1987, the conjugal
partnership was dissolved, pursuant to Article 175 (1) of the Civil Code, 1 5 and an
implied ordinary co-ownership ensued among Protacio, Sr. and the other heirs of Marta
with respect to her share in the assets of the conjugal partnership pending a liquidation
following its liquidation. 1 6 The ensuing implied ordinary co-ownership was governed by
Article 493 of the Civil Code, 1 7 to wit:
Article 493.Each co-owner shall have the full ownership of his part and of the
fruits and bene ts pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to
him in the division upon the termination of the co-ownership. (399)

Protacio, Sr., although becoming a co-owner with his children in respect of


Marta's share in the conjugal partnership, could not yet assert or claim title to any
speci c portion of Marta's share without an actual partition of the property being rst
done either by agreement or by judicial decree. Until then, all that he had was an ideal or
abstract quota in Marta's share. 1 8 Nonetheless, a co-owner could sell his undivided
share; hence, Protacio, Sr. had the right to freely sell and dispose of his undivided
interest, but not the interest of his co-owners. 1 9 Consequently, the sale by Protacio, Sr.
and Rito as co-owners without the consent of the other co-owners was not necessarily
void, for the rights of the selling co-owners were thereby effectively transferred, making
the buyer (Servacio) a co-owner of Marta's share. 2 0 This result conforms to the 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). 2 1
Article 105 of the Family Code, supra, expressly provides that the applicability of
the rules on dissolution of the conjugal partnership is "without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws." This provision
gives another reason not to declare the sale as entirely void. Indeed, such a declaration
prejudices the rights of Servacio who had already acquired the shares of Protacio, Sr.
and Rito in the property subject of the sale. cEAHSC

In their separate comments, 2 2 the respondents aver that each of the heirs had
already received "a certain allotted portion" at the time of the sale, and that Protacio, Sr.
and Rito sold only the portions adjudicated to and owned by them. However, they did
not present any public document on the allocation among her heirs, including
themselves, of speci c shares in Marta's estate. Neither did they aver that the conjugal
properties has already been liquidated and partitioned. Accordingly, pending a partition
among the heirs of Marta, the ef cacy of the sale, and whether the extent of the
property sold adversely affected the interests of the petitioners might not yet be
properly decided with nality. The appropriate recourse to bring that about is to
commence an action for judicial partition, as instructed in Bailon-Casilao v. Court of
Appeals, 2 3 to wit:
From the foregoing, it may be deduced that since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the
consent of the other co-owners is not null and void. However, only the
rights of the co-owner-seller are transferred, thereby making the buyer a co-owner
of the property.

The proper action in cases like this is not for the nulli cation of the sale or for the
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recovery of possession of the thing owned in common from the third person who
substituted the co-owner or co-owners who alienated their shares, but the
DIVISION of the common property as if it continued to remain in the possession
of the co-owners who possessed and administered it [Mainit v. Bandoy, supra].
Thus, it is now settled that the appropriate recourse of co-owners in
cases where their consent were not secured in a sale of the entire
property as well as in a sale merely of the undivided shares of some of
the co-owners is an action for PARTITION under Rule 69 of the Revised
Rules of Court . . . . 2 4

In the meanwhile, Servacio would be a trustee for the bene t of the co-heirs of
her vendors in respect of any portion that might not be validly sold to her. The following
observations of Justice Paras are explanatory of this result, viz.:
. . . [I]f it turns out that the property alienated or mortgaged really would pertain to
the share of the surviving spouse, then said transaction is valid. If it turns out that
there really would be, after liquidation, no more conjugal assets then the whole
transaction is null and void. But if it turns out that half of the property thus
alienated or mortgaged belongs to the husband as his share in the conjugal
partnership, and half should go to the estate of the wife, then that corresponding
to the husband is valid, and that corresponding to the other is not. Since all these
can be determined only at the time the liquidation is over, it follows logically that
a disposal made by the surviving spouse is not void ab initio. Thus, it has been
held that the sale of conjugal properties cannot be made by the surviving spouse
without the legal requirements. The sale is void as to the share of the deceased
spouse (except of course as to that portion of the husband's share inherited by
her as the surviving spouse). The buyers of the property that could not be validly
sold become trustees of said portion for the bene t of the husband's other heirs,
the cestui que trust ent. Said heirs shall not be barred by prescription or by laches
(See Cuison, et al. v. Fernandez, et al., L-11764, Jan. 31, 1959.) 2 5

WHEREFORE , we DENY the petition for review on certiorari; and AFFIRM the decision of
the Regional Trial Court.
The petitioners shall pay the costs of suit. EcASIC

SO ORDERED.
Corona, C.J., Leonardo-de Castro, Del Castillo and Villarama, Jr., JJ., concur.

Footnotes

1.Original records, p. 20.


2.Id., p. 173.

3.Id., pp. 22-24 (the contract was denominated as "Deed of Absolute Sale of a Portion of Real
Property").

4.Id., p. 26.
5.Id., p. 27.

6.Id., pp. 1-7.


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7.Id., pp. 31-43.

8.Rollo, pp. 22-25.


9.Id.
10.Id.

11.Id.
12.Id., pp. 24-25.

13.Id., pp. 26-27.


14.Id., p. 65.
15.Article 175. The conjugal partnership of gains terminates:
1. Upon the death of either spouse.

xxx xxx xxx


16.Dael v. Intermediate Appellate Court, G.R. No. 68873, March 31, 1989, 171 SCRA 524, 532-
533.
17.Metropolitan Bank and Trust Co. v. Pascual, G.R. No. 163744, February 29, 2008, 547 SCRA
246.
18.Acabal v. Acabal, G.R. No. 148376, March 31, 2005, 454 SCRA 555, 581.
19.Id., p. 582.
20.Aguirre v. Court of Appeals, G.R. No. 122249, January 29, 2004, 421 SCRA 310, 324, citing
Fernandez v. Fernandez, G.R. No. 143256, August 28, 2001, 363 SCRA 811, 829.
21.Metrobank v. Pascual, supra, note 17, at p. 260, quoting from Aromin v. Floresca, G.R. No.
160994, July 27, 2006, 496 SCRA 785, 815.
22.Rollo, pp. 62-67, 79-83.
23.No. L-78178, April 15, 1988, 160 SCRA 738.

24.Id., p. 745.
25.I Paras, Civil Code of the Philippines Annotated, Sixteenth Ed., p. 592.

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FIRST DIVISION

[G.R. No. 132529. February 2, 2001.]

SUSAN NICDAO CARIO , petitioner, vs . SUSAN YEE CARIO ,


respondent.

Gancayco Balasbas & Associates for petitioner.


Atty. Agapito P. Oquindo, Jr. for respondent.
SYNOPSIS
SPO4 Santiago S. Carino contracted two marriages. The rst was with petitioner with
whom he begot two (2) children, while the second, during the subsistence of the rst, was
with respondent with whom he had no issue. When he died in 1988 petitioner and
respondent led claims for monetary bene ts and nancial assistance from various
government agencies. Petitioner collected P146,000 from MBAI, PCCUI, commutation,
NAPOLCOM and Pag-Ibig, while respondent collected P21,000 from GSIS and SSS.
Respondent, in an action for collection, sought to recover half the amount collected by
petitioner. She claimed that she had no knowledge of the previous marriage with petitioner
and presented evidence that the same was contracted without the necessary marriage
license. Judgment was rendered by the trial court in favor of respondent which was
affirmed on appeal by the Court of Appeals. Hence, this recourse.
The absence of a marriage license, as a general rule, renders the marriage void ab initio.
However, for purposes of remarriage, a prior judicial declaration of nullity of the previous
marriage must be obtained. For other purposes no such judicial action is required.
Otherwise, the second marriage would also be void.
Article 148 of the Civil Code governs the property regime of bigamous marriages. Only the
properties acquired by 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. While union of parties who are legally capacitated and not barred by any
impediment to contract marriage is governed by co-ownership under Article 147 of the
Civil Code. Thus, the P146,000 from MBAI, PCCUI, commutation, NAPOLCOM and Pag-Ibig
earned by the deceased, in the absence of evidence that respondent contributed money,
property or industry in the acquisition of these monetary bene ts, is owned by the
deceased alone and respondent has no right whatsoever to claim the same. However,
petitioner is entitled to one-half of the subject "death bene ts" as her share in the property
regime and the other half shall pass by to petitioner's children as the decedent's legal
heirs.

SYLLABUS

1. CIVIL LAW; FAMILY CODE; MARRIAGE; FINAL JUDGMENT DECLARING PREVIOUS


MARRIAGE VOID, NECESSARY FOR PURPOSES OF SECOND MARRIAGE. Under Article 40
of the Family Code, the absolute nullity of a previous marriage may be invoked for
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purposes of remarriage on the basis solely of a nal 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 in rmity, is a nal judgment declaring the
previous marriage void. 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. 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 nal judgment of a court
declaring such previous marriage void.
2. ID.; PERSONS AND FAMILY RELATIONS; MARRIAGE; LICENSE, REQUIRED; CASE AT BAR.
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, and the absence thereof, subject to certain exceptions, renders the marriage
void ab initio. 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 certi ed by the Local Civil Registrar of
San Juan, Metro Manila, their of ce has no record of such marriage license. 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.
3. ID.; FAMILY CODE; FINAL JUDGMENT DECLARING PREVIOUS MARRIAGE VOID,
NECESSARY FOR PURPOSES OF SECOND MARRIAGE; WITHOUT SUCH DECLARATION,
SECOND MARRIAGE IS ALSO 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 rst 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. SCaITA

4. ID.; ID.; BIGAMOUS MARRIAGE; WAGES AND SALARIES EARNED BY EACH PARTY
BELONG TO HIM OR HER EXCLUSIVELY. 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, 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.
5. ID.; ID.; ID.; ID.; CASE AT BAR. 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
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[AFP Mutual Bene t Association, Inc.], NAPOLCOM, Commutation, Pag-ibig, and PCCUI, are
clearly remunerations, incentives and bene ts from governmental agencies earned by the
deceased as a police of cer. 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 bene ts. 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 bene ts" of the deceased shall
pass to his legal heirs. And, respondent, not being the legal wife of the deceased is not one
of them.
6. ID.; ID.; VOID MARRIAGES OF PARTIES LEGALLY CAPACITATED AND NOT BARRED BY
ANY IMPEDIMENT; PROPERTY RELATIONSHIP GOVERNED BY CO-OWNERSHIP; CASE AT
BAR. 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. 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. Conformably, even if the disputed "death bene ts" 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 rst marriage are presumed to be in good faith. Thus,
one-half of the subject "death bene ts" 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.

DECISION

YNARES-SANTIAGO , J : p

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 bene ts" is now the
subject of the controversy between the two Susans whom he married.
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 af rmed 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
rst 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
led claims for monetary bene ts and nancial assistance pertaining to the deceased
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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 led 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 bene ts" 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 rst 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
certi cate of the deceased and the petitioner which bears no marriage license number; 5
and 2) a certi cation dated March 9, 1994, from the Local Civil Registrar of San Juan,
Metro Manila, which reads
This is to certify that this Of ce 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 certi cation 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
bene ts arising from the death of SPO4 Santiago S. Cario, plus attorney 's 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 af rmed 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
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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 nal 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 in rmity, is a nal
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. 1 0 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 nal judgment of a court declaring such previous marriage void.
11 aDCIHE

It is clear therefore that the Court is clothed with suf cient 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, 1 2 and the absence thereof, subject to certain exceptions, 1 3 renders the
marriage void ab initio. 1 4
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 certi ed by the Local Civil Registrar of San Juan, Metro
Manila, their of ce has no record of such marriage license. In Republic v. Court of Appeals ,
1 5 the Court held that such a certi cation is adequate to prove the non-issuance of a
marriage license. Absent any circumstance of suspicion, as in the present case, the
certi cation issued by the local civil registrar enjoys probative value, he being the of cer
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 suf ciently 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
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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 bene ts" 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 rst 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 rst 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. 1 6 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, 1 7
". . . [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. 1 8
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 Bene t Association, Inc.], NAPOLCOM,
Commutation, Pag-ibig, and PCCUI, are clearly renumerations, incentives and bene ts from
governmental agencies earned by the deceased as a police of cer. 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 bene ts. Hence, they are not
owned in common by respondent and the deceased, but belong to the deceased alone and
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respondent has no right whatsoever to claim the same. By intestate succession, the said
"death bene ts" 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
ARTICLE 147. When a man and a woman who are capacitated to marry each
other, live exclusively with each other as husband and wife without the bene t 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.
xxx xxx 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. 1 9 Conformably, even if the disputed "death bene ts" 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 rst marriage are presumed to be in
good faith. Thus, one-half of the subject "death bene ts" 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 af rming the decision of the trial court, the Court of Appeals relied on the case of Vda.
de Consuegra v. Government Service Insurance System, 2 0 where the Court awarded one-
half of the retirement bene ts of the deceased to the rst wife and the other half, to the
second wife, holding that:
". . . [S]ince the defendant's rst marriage has not been dissolved or declared void
the conjugal partnership established by that marriage has not ceased. Nor has the
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rst 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 husband's 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 rst 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." 2 1
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, 2 2 however, the Court, construing Article 40 of the Family
Code, clari ed 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 rst a
judicial decree declaring the rst 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 rst 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 ling 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 ow 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 , 2 3 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 nal judgment of declaration of nullity is necessary even if
the purpose is other than to remarry. The clause "on the basis of a nal 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 af rmed the decision of the Regional Trial Court of Quezon City
ordering petitioner to pay respondent the sum of P73,000.00 plus attorney's 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.
SO ORDERED.
Davide, Jr., C .J ., Kapunan and Pardo, JJ., concur.
Puno, J., is on official leave.
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Footnotes

1. Rollo, pp. 43-47.


2. Rollo, pp. 49-55.

3. Exhibit "F", Records, p. 38.


4. Ibid.
5. Exhibit "D-1", Records, p. 36.
6. Exhibit "E", Records, p. 37.
7. Rollo, p. 55.

8. Rollo, p. 18.
9. Domingo v. Court of Appeals, 226 SCRA 572, 579 [1993].
10. Nial, et al., v. Bayadog, G.R. No. 133778, March 14, 2000.
11. Domingo v. Court of Appeals, supra.
12. ART. 53. No marriage shall be solemnized unless all these requisites are complied with:

(1) Legal capacity of the contracting parties;


(2) Their consent, freely given;
(3) Authority of the person performing the marriage; and
(4) A marriage license, except in a marriage of exceptional character.

13. ART. 58. Save marriages of an exceptional character authorized in Chapter 2 of this Title,
but not those under article 75, no marriage shall be solemnized without a license rst
being issued by the local civil registrar of the municipality where either contracting party
habitually resides.
14. ART. 80. The following marriages shall be void from the beginning:
xxx xxx xxx
(3) Those solemnized without a marriage license, save marriages of exceptional character;

xxx xxx xxx


15. 236 SCRA 257, 261-262; citing the Rules of Court, Rule 132, Section 29.
16. Art. 50. The effects provided for in paragraphs (2), (3), (4) and (5) of Article 43 and in Article
44 shall also apply in proper cases to marriages which are declared void ab initio or
annulled by final judgment under Articles 40 and 45.

The nal judgment in such cases shall provide for the liquidation, partition, and distribution of
the properties of the spouses, the custody and support of the common children, and the
delivery of their presumptive legitimes, unless such matters had been adjudicated in
previous judicial proceedings.
xxx xxx xxx
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Art. 43. The termination of the subsequent marriage referred to in the preceding Article shall
produce the following effects:

xxx xxx xxx


(2) The absolute community of property or the conjugal partnership, as the case may be, shall
be dissolved and liquidated, but if either spouse contracted said marriage in bad faith,
his or her share of the net pro ts of the community property or conjugal partnership
property shall be forfeited in favor of the common children or, if there are none, the
children of the guilty spouse by a previous marriage or, in default of children, the
innocent spouse;
xxx xxx xxx
Art. 44. If both spouses of the subsequent marriage acted in bad faith, said marriage shall be
void ab initio and all donations by reason of marriage and testamentary dispositions
made by one in favor of the other are revoked by operation of law.

17. Sempio-Diy, Handbook on the Family Code of the Philippines, p. 233-234 (1995).
18. Id., p. 234.
19. Id., p. 230.
20. 37 SCRA 316 [1971].
21. Id., p. 326.

22. Supra.
23. Supra.

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ALEKO E. LILIUS, ET AL. vs . MANILA RAILROAD CO.

SECOND DIVISION

[G.R. No. 39587. March 24, 1934.]

ALEKO E. LILIUS, ET AL. , plaintiffs-appellants, vs . THE MANILA


RAILROAD COMPANY , defendant-appellant.

Harvey & O'Brien for plaintiffs-appellants.


Jose C. Abreu for defendant-appellant.

SYLLABUS

1. NEGLIGENCE; RAILROAD COMPANY; DAMAGES. A railroad company


which does not install a semaphore at a crossing and 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. ID.; ID.; ID.; AMOUNT OF DAMAGES. An indemnity of P10,000 for a
permanent deformity on the face and left leg, suffered by a young and beautiful society
woman, is not excessive.
3. ID.; ID.; ID.; ID. 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.
4. ID.; ID.; ID.; PROOF OF DAMAGES. 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 the same had she not been prevented from so doing
by her illness.

DECISION

VILLA-REAL , J : p

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
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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 as 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 led 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 ling 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 co-plaintiff, 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 Stude-
baker 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 rst 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 ing 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
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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 dif culty 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 bula 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 dif culty 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 dis gure her face, and because of the fractures of both legs, although
now completely cured, she will be forced to walk with some dif culty 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 agman
or switchman arrived after the collision, coming from the station with a red ag in one
hand and a green one in the other, both of which were wound on their respective sticks.
The said agman 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
agman 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 agman 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 agman
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-
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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 agman 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 con ned 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 ways, 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 rst 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 xed 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
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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, dis gures her face and that the
fracture of her left leg has caused a permanent deformity which renders it very dif cult
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 oral 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
fracture 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 indemnity 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 be suffered any facial deformity,
nor did he have the social standing that the herein plaintiff-appellant Sonja Maria Lilius
enjoys.
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 dis gure her face and that the fractures of both her legs permanently
render it dif cult 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 rst question to be decided is that
raised by the plaintiff Aleko E. Lilius relative to the insuf ciency 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
suf cient 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
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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 dif cult 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 and
does not see to it that its agman 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 per cent per annum on the
amount of the indemnities adjudicated to them, from the date of the appealed,
judgment until this judgment becomes nal, in accordance with the provisions of
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section 510 of Act No. 190.
Wherefore, not nding any error in the judgment appealed from, it is hereby
af rmed in toto, with the sole modi cation that interest of 6 per cent per annum from
the date of the appealed judgment until this judgment becomes nal will be added to
the indemnities granted, with the costs of both instances against the appellant. So
ordered.
Malcolm, Hull, Imperial, and Gaddard, JJ., concur.

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FIRST DIVISION

[G.R. No. 160762. May 3, 2006.]

Spouses JOSEPHINE MENDOZA GO & HENRY GO , petitioners, vs .


LEONARDO YAMANE , respondent.

DECISION

PANGANIBAN , C.J : p

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 Review 1 under Rule 45 of the Rules of Court, challenging
the November 22, 2002 Decision 2 and the September 17, 2003 Resolution 3 of the Court
of Appeals (CA) in CA-G.R. 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. aHTcDA

"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
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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 . . ., [petitioners] moved to dismiss the
complaint on the ground of res judicata. In the Order dated November 28, 1984,
the motion was denied by the trial court.

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

"On December 28, 1984, Muriel likewise lodged a Complaint for Damages,
docketed as Civil Case No. 505-R, against [petitioners] and Atty. Guillermo De
Guzman alleging, in gist, fraud, misrepresentation, manipulation and unlawful
acts of the defendants in causing the levy of the subject property with an
estimated commercial value of P200,000 as against a charging lien in the
amount of P10,000.
"In its May 27, 1985 Order, the trial court ordered the joint hearing of Civil Cases
Nos. 417-R and 505-R. On August 30, 1985, Muriel was declared non-suited for
failure to appear in the hearing despite due notice. As a consequence, Civil Case
No. 505-R was dismissed on October 15, 1985." 5

In its Decision 6 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. TCcIaA

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 granted 8 his Motion; received the Motion for
Reconsideration, 9 which was filed on May 28, 1998; and eventually denied it in its Order
dated June 5, 1998. 1 0 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.

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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:
". . . [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." 1 1

Hence, this Petition. 1 2


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.

"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." 1 3

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. DcIHSa

Concededly, he received a copy of the RTC Decision on April 8, 1998. He had, therefore,
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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. 1 4
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. 1 5
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. 1 6 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. 1 7

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, 1 8 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." 1 9

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?
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The purchase of the property had been concluded in 1967, before the Family Code took
effect on August 3, 1988. 2 0 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." 2 1 As a conditio sine qua non for the operation of this article in
favor of the conjugal partnership, 2 2 the party who invokes the presumption must first
prove that the property was acquired during the marriage. 2 3
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. 2 4 Moreover, the
presumption may be rebutted only with strong, clear, categorical and convincing evidence.
2 5 There must be strict proof of the exclusive ownership of one of the spouses, 2 6 and the
burden of proof rests upon the party asserting it. 2 7
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, 2 8 or specifically during the marriage. 2 9 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. EHaDIC

Petitioners concede that the property was acquired during the subsistence of the marriage
of Muriel to respondent. 3 0 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. 3 1 Thus, no unilateral declaration by one spouse can
change the character of a conjugal property. 3 2
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
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counsel, and that no lawyer-client relationship had been established between them. 3 3
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. 3 4 Hence, 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. Yatco 3 5 was clearly erroneous. cDIHES

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:
". . . . 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.
". . . [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." 3 6

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'
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allegation, the fact is that he filed a Third-Party Claim 3 7 with the sheriff, upon learning of
the levy and impending auction sale. This fact was specifically admitted by petitioners. 3 8
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. 3 9 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. 4 0
Likewise, in his Opposition (Answer) to the Petition in LRC File Adm. Case No. 2288, 4 1
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, 4 2
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. 4 3 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. 4 4 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. 4 5
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. 4 6 The recovery was done during the
marriage. 4 7
The CA elucidated on this matter as follows:
". . . . 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. HAICET

"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
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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." 4 8

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. 4 9 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. 5 0 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; 5 1 when administration
of the conjugal partnership is transferred to the wife by the courts 5 2 or by the husband; 5 3
or when the wife gives moderate donations for charity. 5 4 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. 5 5 In this case, therefore, the property being
conjugal in nature cannot be levied upon. 5 6
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
Footnotes

1. Rollo, pp. 8-22.


2. Annex "L" of Petition; id. at 62-72. Penned by Justice Rebecca de Guia-Salvador and
concurred in by Justices Rodrigo V. Cosico (Division chairperson) and Regalado E.
Maambong (member).
3. Annex "N" of Petition; id. at 82.

4. Assailed CA Decision, p. 10; id. at 71.


5. Id. at 1-3; id. at 62-64.
6. Annex "A" of petitioners' Memorandum; rollo, unnumbered. Penned by acting Presiding
Judge Robert T. Cawed.
7. Rollo, p. 53.
8. Id. at 54.
9. Id. at 55-57.
10. Id. at 58.
11. Assailed CA Decision, p. 10; rollo, p. 71.
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12. This case was deemed submitted for decision on January 5, 2005, upon this Court's
receipt of petitioners' Memorandum, signed by Atty. Emiliano L. Gayo. Respondent's
Memorandum, signed by Atty. Albert A. Umaming, was received by the Court on
December 22, 2004.
13. Petitioners' Memorandum, p. 11; rollo, unnumbered.

14. RULES OF COURT, Rule 41, Sec. 3.


15. J. FERIA AND M.C. NOCHE, CIVIL PROCEDURE ANNOTATED, Vol. 2, 163 (2001); Neypes
v. CA, G.R. No. 141524, September 14, 2005.
16. Catubay v. NLRC, 330 SCRA 440, April 12, 2000.
17. Dela Cruz v. Sison, G.R. No. 142464, September 26, 2005; Barnes v. Hon. Padilla, 461
SCRA 533, June 28, 2005 (citing Sanchez v. Court of Appeals, 404 SCRA 540, June 20,
2003 and Aguam v. CA, 332 SCRA 784, May 31, 2000).

18. 344 SCRA 769, November 15, 2000.


19. Id. at 777, per Vitug, J .
20. M. STA. MARIA, JR., PERSONS AND FAMILY RELATIONS LAW, 94 (3rd ed., 1999).
21. The provision is reproduced in Article 116 of the Family Code, which states: "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."

22. Flora v. Prado, 420 SCRA 396, January 20, 2004.


23. Acabal v. Acabal, 454 SCRA 555, March 31, 2005; Jocson v. CA, 170 SCRA 333,
February 16, 1989.
24. Phil. National Bank v. CA, 153 SCRA 435, August 31, 1987.
25. Wong v. IAC, 200 SCRA 792, August 19, 1991.
26. Ching v. CA, 423 SCRA 356, February 23, 2004; Francisco v. CA, 359 Phil. 519,
November 25, 1998.
27. Tan v. CA, 339 Phil. 423, June 10, 1997.
28. Annex "P" of the Petition; rollo, p. 87.

29. See Annex "2-A" of respondent's Comment, p. 2; rollo, p. 148.


30. See petitioners' Memorandum, p. 22; rollo, unnumbered.
31. Villanueva v. CA, 427 SCRA 439, April 14, 2004.
32. Id.
33. See Annex "C" of Petition; rollo, pp. 34-38.
34. Acabal v. Acabal, supra note 20 (citing Mendoza v. Reyes, 124 SCRA 154, August 17,
1983 and Bucoy v. Paulino, 23 SCRA 248, April 26, 1968).

35. 4 SCRA 1143, April 27, 1962.


36. Assailed CA Decision, pp. 7-8; rollo, pp. 68-69.
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37. Third Party Claim dated August 3, 1981; rollo, pp. 135-136.
38. See Answer dated December 7, 1984, p. 2; rollo, p. 29.
39. See Complaint dated August 31, 1984, p. 3; rollo, p. 25.
40. Annex "1-F" of Respondent's Comment; rollo, pp. 141-142. The third "Whereas" clause
states that the sale was made in accordance with Rule 39, Section 17 of the Rules of
Court; Article 161 of the Civil Code; and Fulgencio v. Gatchalian, 21 Phil. 252, January 23,
1912.
41. In re: Petition for the Issuance of New Title, filed by Josephine Mendoza Go against
Muriel Pucay Yamane and Leonardo Yamane before the Regional Trial Court, First
Judicial Region of Baguio City, Branch V.
42. Annex "2-A" of respondent's Comment; rollo, pp. 147-150.

43. Id. at 2-3; rollo, pp. 148-149.


44. Cometa v. Intermediate Appellate Court, 151 SCRA 563, June 30, 1987.
45. Perez v. CA, 464 SCRA 89, July 22, 2005; Aclon v. CA, 387 SCRA 415, August 20, 2002;
Cometa v. Intermediate Appellate Court, 151 SCRA 563, June 30, 1987.
46. See Reply dated June 9, 2004, p. 1; rollo, p. 241.
47. Id.
48. Assailed CA Decision, p. 9; rollo, p. 70.

49. A. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE


PHILS., Vol. I, 456 (1990).

50. CIVIL CODE, Art. 161. The conjugal partnership shall be liable for the following:
(1) All debts and obligations contracted by the husband for the benefit of the
conjugal partnership, and those contracted by the wife, also for the same purpose, in the
cases where she may legally bind the partnership;
(2) Arrears or income due, during the marriage, from obligations which constitute
a charge upon property of either spouse or of the partnership;
(3) Minor repairs or for mere preservation made during the marriage upon the
separate property of either the husband or the wife; major repairs shall not be charged to
the partnership;
(4) Major or minor repairs upon the conjugal partnership property;
(5) The maintenance of the family and the education of the children of both
husband and wife, and of legitimate children of one of the spouses;
(6) Expenses to permit the spouses to complete a professional, vocational or
other course.
51. Id., Art. 115.
52. Id., Arts. 167, 178 and 196.
53. Id., Art. 168.
54. Id., Art. 174.
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55. Republic v. Enriquez, 166 SCRA 608, October 21, 1988; Wong v. IAC, 200 SCRA 792,
August 19, 1991.
56. Johnson and Johnson (Phils.) v. CA, 330 Phil. 856, September 23, 1996.

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THIRD DIVISION

[G.R. No. 164201. December 10, 2012.]

EFREN PANA , petitioner, vs . HEIRS OF JOSE JUANITE, SR. and JOSE


JUANITE, JR. , respondents.

DECISION

ABAD , J : p

This case is about the propriety of levy and execution on conjugal properties where one of
the spouses has been found guilty of a crime and ordered to pay civil indemnities to the
victims' heirs.
The Facts and the Case
The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and others of
murder before the Regional Trial Court (RTC) of Surigao City in Criminal Cases 4232 and
4233. 1
On July 9, 1997 the RTC rendered a consolidated decision 2 acquitting Efren of the charge
for insuf ciency of evidence but nding Melecia and another person guilty as charged and
sentenced them to the penalty of death. The RTC ordered those found guilty to pay each of
the heirs of the victims, jointly and severally, P50,000.00 as civil indemnity, P50,000.00
each as moral damages, and P150,000.00 actual damages.
On appeal to this Court, it af rmed on May 24, 2001 the conviction of both accused but
modi ed the penalty to reclusion perpetua. With respect to the monetary awards, the
Court also af rmed the award of civil indemnity and moral damages but deleted the award
for actual damages for lack of evidentiary basis. In its place, however, the Court made an
award of P15,000.00 each by way of temperate damages. In addition, the Court awarded
P50,000.00 exemplary damages per victim to be paid solidarily by them. 3 The decision
became final and executory on October 1, 2001. 4 TSacAE

Upon motion for execution by the heirs of the deceased, on March 12, 2002 the RTC
ordered the issuance of the writ, 5 resulting in the levy of real properties registered in the
names of Efren and Melecia. 6 Subsequently, a notice of levy 7 and a notice of sale on
execution 8 were issued.
On April 3, 2002, petitioner Efren and his wife Melecia led a motion to quash the writ of
execution, claiming that the levied properties were conjugal assets, not paraphernal assets
of Melecia. 9 On September 16, 2002 the RTC denied the motion. 1 0 The spouses moved
for reconsideration but the RTC denied the same on March 6, 2003. 1 1
Claiming that the RTC gravely abused its discretion in issuing the challenged orders, Efren
led a petition for certiorari before the Court of Appeals (CA). On January 29, 2004 the CA
dismissed the petition for failure to suf ciently show that the RTC gravely abused its
discretion in issuing its assailed orders. 1 2 It also denied Efren's motion for
reconsideration, 1 3 prompting him to file the present petition for review on certiorari.
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The Issue Presented
The sole issue presented in this case is whether or not the CA erred in holding that the
conjugal properties of spouses Efren and Melecia can be levied and executed upon for the
satisfaction of Melecia's civil liability in the murder case.
Ruling of the Court
To determine whether the obligation of the wife arising from her criminal liability is
chargeable against the properties of the marriage, the Court has rst to identify the
spouses' property relations.
Efren claims that his marriage with Melecia falls under the regime of conjugal partnership
of gains, given that they were married prior to the enactment of the Family Code and that
they did not execute any prenuptial agreement. 1 4 Although the heirs of the deceased
victims do not dispute that it was the Civil Code, not the Family Code, which governed the
marriage, they insist that it was the system of absolute community of property that
applied to Efren and Melecia. The reasoning goes: TADCSE

Admittedly, the spouses were married before the effectivity of the Family Code.
But that fact does not prevent the application of [A]rt. 94, last paragraph, of the
Family Code because their property regime is precisely governed by the law on
absolute community. This nds support in Art. 256 of the Family Code which
states:

"This code shall have retroactive effect in so far as it does not prejudice or
impair vested or acquired rights in accordance with the Civil Code or other
laws."

None of the spouses is dead. Therefore, no vested rights have been acquired by
each over the properties of the community. Hence, the liabilities imposed on the
accused-spouse may properly be charged against the community as heretofore
discussed. 1 5

The RTC applied the same reasoning as above. 1 6 Efren and Melecia's property relation
was admittedly conjugal under the Civil Code but, since the transitory provision of the
Family Code gave its provisions retroactive effect if no vested or acquired rights are
impaired, that property relation between the couple was changed when the Family Code
took effect in 1988. The latter code now prescribes in Article 75 absolute community of
property for all marriages unless the parties entered into a prenuptial agreement. As it
happens, Efren and Melecia had no prenuptial agreement. The CA agreed with this
position. 1 7
Both the RTC and the CA are in error on this point. While it is true that the personal stakes
of each spouse in their conjugal assets are inchoate or unclear prior to the liquidation of
the conjugal partnership of gains and, therefore, none of them can be said to have acquired
vested rights in speci c assets, it is evident that Article 256 of the Family Code does not
intend to reach back and automatically convert into absolute community of property
relation all conjugal partnerships of gains that existed before 1988 excepting only those
with prenuptial agreements. CETIDH

The Family Code itself provides in Article 76 that marriage settlements cannot be modi ed
except prior to marriage.
Art. 76. In order that any modi cation in the marriage settlements may be
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valid, it must be made before the celebration of the marriage, subject to the
provisions of Articles 66, 67, 128, 135 and 136.

Clearly, therefore, the conjugal partnership of gains that governed the marriage between
Efren and Melecia who were married prior to 1988 cannot be modi ed except before the
celebration of that marriage.
Post-marriage modi cation of such settlements can take place only where: (a) the
absolute community or conjugal partnership was dissolved and liquidated upon a decree
of legal separation; 1 8 (b) the spouses who were legally separated reconciled and agreed
to revive their former property regime; 1 9 (c) judicial separation of property had been had
on the ground that a spouse abandons the other without just cause or fails to comply with
his obligations to the family; 2 0 (d) there was judicial separation of property under Article
135; (e) the spouses jointly led a petition for the voluntary dissolution of their absolute
community or conjugal partnership of gains. 2 1 None of these circumstances exists in the
case of Efren and Melecia.
What is more, under the conjugal partnership of gains established by Article 142 of the
Civil Code, the husband and the wife place only the fruits of their separate property and
incomes from their work or industry in the common fund. Thus:
Art. 142. By means of the conjugal partnership of gains the husband and wife
place in a common fund the fruits of their separate property and the income from
their work or industry, and divide equally, upon the dissolution of the marriage or
of the partnership, the net gains or bene ts obtained indiscriminately by either
spouse during the marriage.

This means that they continue under such property regime to enjoy rights of ownership
over their separate properties. Consequently, to automatically change the marriage
settlements of couples who got married under the Civil Code into absolute community of
property in 1988 when the Family Code took effect would be to impair their acquired or
vested rights to such separate properties. ICHAaT

The RTC cannot take advantage of the spouses' loose admission that absolute community
of property governed their property relation since the record shows that they had been
insistent that their property regime is one of conjugal partnership of gains. 2 2 No evidence
of a prenuptial agreement between them has been presented.
What is clear is that Efren and Melecia were married when the Civil Code was still the
operative law on marriages. The presumption, absent any evidence to the contrary, is that
they were married under the regime of the conjugal partnership of gains. Article 119 of the
Civil Code thus provides:
Art. 119. The future spouses may in the marriage settlements agree upon
absolute or relative community of property, or upon complete separation of
property, or upon any other regime. In the absence of marriage settlements, or
when the same are void, the system of relative community or conjugal partnership
of gains as established in this Code, shall govern the property relations between
husband and wife.

Of course, the Family Code contains terms governing conjugal partnership of gains that
supersede the terms of the conjugal partnership of gains under the Civil Code. Article 105
of the Family Code states:
"xxx xxx xxx
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The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also
apply to conjugal partnerships of gains already established between spouses
before the effectivity of this Code, without prejudice to vested rights already
acquired in accordance with the Civil Code or other laws, as provided in Article
256." 2 3

Consequently, the Court must refer to the Family Code provisions in deciding whether or
not the conjugal properties of Efren and Melecia may be held to answer for the civil
liabilities imposed on Melecia in the murder case. Its Article 122 provides:
Art. 122. The payment of personal debts contracted by the husband or the
wife before or during the marriage shall not be charged to the conjugal properties
partnership except insofar as they redounded to the benefit of the family.
Neither shall the nes and pecuniary indemnities imposed upon them be charged
to the partnership. IDASHa

However, the payment of personal debts contracted by either spouse before the
marriage, that of nes and indemnities imposed upon them, as well as the
support of illegitimate children of either spouse, may be enforced against the
partnership assets after the responsibilities enumerated in the preceding Article
have been covered, if the spouse who is bound should have no exclusive property
or if it should be insuf cient; but at the time of the liquidation of the partnership,
such spouse shall be charged for what has been paid for the purpose above-
mentioned.

Since Efren does not dispute the RTC's nding that Melecia has no exclusive property of
her own, 2 4 the above applies. The civil indemnity that the decision in the murder case
imposed on her may be enforced against their conjugal assets after the responsibilities
enumerated in Article 121 of the Family Code have been covered. 2 5 Those responsibilities
are as follows:
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and the legitimate
children of either spouse; however, the support of illegitimate children shall be
governed by the provisions of this Code on Support;

(2) All debts and obligations contracted during the marriage by the
designated administrator-spouse for the benefit of the conjugal partnership of
gains, or by both spouses or by one of them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of
the other to the extent that the family may have benefited;

(4) All taxes, liens, charges, and expenses, including major or minor repairs
upon the conjugal partnership property;

(5) All taxes and expenses for mere preservation made during the marriage
upon the separate property of either spouse; SHTcDE

(6) Expenses to enable either spouse to commence or complete a


professional, vocational, or other activity for self-improvement;

(7) Antenuptial debts of either spouse insofar as they have redounded to the
benefit of the family;

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(8) The value of what is donated or promised by both spouses in favor of
their common legitimate children for the exclusive purpose of commencing or
completing a professional or vocational course or other activity for self-
improvement; and
(9) Expenses of litigation between the spouses unless the suit is found to be
groundless.
If the conjugal partnership is insuf cient to cover the foregoing liabilities, the
spouses shall be solidarily liable for the unpaid balance with their separate
properties.

Contrary to Efren's contention, Article 121 above allows payment of the criminal
indemnities imposed on his wife, Melecia, out of the partnership assets even before these
are liquidated. Indeed, it states that such indemnities "may be enforced against the
partnership assets after the responsibilities enumerated in the preceding article have been
covered." 2 6 No prior liquidation of those assets is required. This is not altogether unfair
since Article 122 states that "at the time of liquidation of the partnership, such [offending]
spouse shall be charged for what has been paid for the purposes above-mentioned."
WHEREFORE , the Court AFFIRMS with MODIFICATION the Resolutions of the Court of
Appeals in CA-G.R. SP 77198 dated January 29, 2004 and May 14, 2004. The Regional Trial
Court of Surigao City, Branch 30, shall rst ascertain that, in enforcing the writ of execution
on the conjugal properties of spouses Efren and Melecia Pana for the satisfaction of the
indemnities imposed by nal judgment on the latter accused in Criminal Cases 4232 and
4233, the responsibilities enumerated in Article 121 of the Family Code have been covered.
SO ORDERED .
Peralta, * Bersamin, ** Mendoza and Leonen, JJ., concur.

Footnotes

* Per Special Order 1394 dated December 6, 2012.


** Designated Acting Member, in lieu of Associate Justice Presbitero J. Velasco, Jr., per
Special Order 1395-A dated December 6, 2012.

1. Records, pp. 20-21; 24-25.


2. CA rollo, pp. 45-70.

3. Records, pages not indicated; Paa v. Judge Buyser, 410 Phil. 433, 450 (2001).
4. CA rollo, p. 74.

5. Id. at 74-75.
6. Original Certificates of Title 9138, 512 and 511.
7. CA rollo, pp. 76-77.

8. Id. at 78-79.
9. Id. at 87-93.
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10. Rollo, p. 54.
11. Id. at 55-59.
12. Penned by Associate Justice Amelita G. Tolentino, and concurred in by Associate
Justices Eloy R. Bello, Jr. and Arturo D. Brion (now a member of this Court), rollo, pp.
120-123.
13. Rollo, p. 127.
14. Id. at 170.
15. CA rollo, p. 95.
16. Rollo, pp. 56-57.
17. Id. at 121.
18. FAMILY CODE, Art. 66.
19. Id., Art. 67.
20. Id., Art. 128.
21. Id., Art. 136.
22. CA rollo, pp. 88, 91.
23. Muoz, Jr. v. Ramirez, G.R. No. 156125, August 25, 2010, 629 SCRA 38, 49-50.
24. Rollo, p. 58.
25. See Muoz, Jr. v. Ramirez, supra note 23, at 49; Dewara v. Lamela, G.R. No. 179010,
April 11, 2011, 647 SCRA 483, 491-492.
26. See People v. Lagrimas, 139 Phil. 612, 617 (1969).

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FIRST DIVISION

[G.R. No. 146504. April 9, 2002.]

HONORIO L. CARLOS , petitioner, vs . MANUEL T. ABELARDO ,


respondent.

Oscar L. Karaan for petitioner.


Hildawa & Gomez for respondent.

SYNOPSIS

For failure to pay the amount of US$25,000.00, which the petitioner advanced to
the respondent and his wife for the purchase of a house and lot, petitioner led a
complaint for collection of a sum of money and damages against respondent and his
wife. Since the respondent and his wife were separated in fact for more than a year
prior to the ling of the complaint, they led separate answers. The wife admitted
securing a loan with her husband from the petitioner. Respondent claimed that the
amount he received from the petitioner was part of the pro t sharing which was
promise to him by the petitioner for reviving an erstwhile losing company of the latter.
He also denied the claim that he made threats to petitioner. The Regional Trial Court
rendered a decision in favor of petitioner. Respondent appealed the decision to the
Court of Appeals. The Court of Appeals reversed and set aside the trial court's decision
and dismissed the complaint for insuf ciency of evidence to show that the subject
amount was indeed loaned by petitioner to respondent and his wife. A motion for
reconsideration of the above decision having been denied, petitioner brought this
appeal before the Supreme Court.
The petition was granted. According to the Supreme Court, respondent failed to
substantiate his claim that he was entitled to the pro ts and income of the corporation.
Moreover, there was no showing that respondent was a stockholder of the corporation.
Not being a stockholder, he could not be entitled to salaries or commission from the
corporation. The Court of Appeals, thus, erred in nding that respondent's liability was
not proved by preponderance of evidence. On the contrary, the evidence adduced by
petitioner suf ciently established his claim that the amount he advanced to respondent
and his wife was a loan. The Court also found sufficient basis for the award of damages
to petitioner. His claim of verbal and written threats by the respondent was duly
supported by the evidence on record.

SYLLABUS

1. CIVIL LAW; FAMILY CODE; PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE;
LOAN REDOUNDED TO THE BENEFIT OF THE FAMILY; HUSBAND SHALL BE SOLIDARILY
LIABLE WITH THE WIFE NOTWITHSTANDING HIS LACK OF CONSENT FOR SUCH LOAN.
The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family
Code. While respondent did not and refused to sign the acknowledgment executed and
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signed by his wife, undoubtedly, the loan redounded to the bene t of the family because it
was used to purchase the house and lot which became the conjugal home of respondent
and his family. Hence, notwithstanding the alleged lack of consent of respondent, under
Art. 121 of the Family Code, he shall be solidarily liable for such loan together with his wife.
CHATEa

2. ID.; DAMAGES; MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES;


AWARDED IN VARYING AMOUNTS IN CASE AT BAR. Petitioner's allegations of verbal
and written threats directed against him by respondent is duly supported by evidence on
record. He presented two witnesses, Irineo Pajarin and Randy Rosal, who testi ed on
separate incidents where threats were made by respondent against petitioner. The
testimonies of these witnesses on the two separate incidents of threat are positive, direct
and straightforward. Petitioner also declared on the witness stand that on several
occasions, he received telephone calls from respondent cursing and threatening him.
These incidents of threat were also evidenced by a letter written by respondent's wife and
addressed to her father-in-law (father of respondent). The letter recounted the instances
when threats were made by her husband against petitioner, particularly, the incident
reported by Pajarin and the threats made by respondent through the telephone. All these
circumstances suf ciently establish that threats were directed by respondent against
petitioner justifying the award of moral damages in favor of petitioner. However, the Court
nds the amount of P500,000.00 as moral damages too exorbitant under the
circumstances and the same is reduced to P50,000.00. The exemplary damages and
attorney's fees are likewise reduced to P20,000.00 and P50,000.00, respectively.

DECISION

KAPUNAN , J : p

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is the
decision of the Court of Appeals dated November 10, 2000 in CA-G.R. CV No. 54464 which
reversed and set aside the decision of the Regional Trial Court of Valenzuela, Branch 172,
and dismissed for insuf ciency of evidence the complaint for a sum of money and
damages led by herein petitioner Honorio Carlos against respondent Manuel Abelardo,
his son-in-law, and the latter's wife, Maria Theresa Carlos-Abelardo.
Petitioner averred in his complaint led on October 13, 1994 that in October 1989,
respondent and his wife Maria Theresa Carlos-Abelardo approached him and requested
him to advance the amount of US$25,000.00 for the purchase of a house and lot located at
#19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila. To enable
and assist the spouses conduct their married life independently and on their own,
petitioner, in October 31, 1989, issued a check in the name of a certain Pura Vallejo, seller
of the property, who acknowledged receipt thereof. 1 The amount was in full payment of
the property.
When petitioner inquired from the spouses in July 1991 as to the status of the amount he
loaned to them, the latter acknowledged their obligation but pleaded that they were not yet
in a position to make a de nite settlement of the same. 2 Thereafter, respondent
expressed violent resistance to petitioner's inquiries on the amount to the extent of
making various death threats against petitioner. 3
On August 24, 1994, petitioner made a formal demand for the payment of the amount of
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US$25,000.00 but the spouses failed to comply with their obligation. 4 Thus, on October
13, 1994, petitioner led a complaint for collection of a sum of money and damages
against respondent and his wife before the Regional Trial Court of Valenzuela, Branch 172,
docketed as Civil Case No. 4490-V-94. In the complaint, petitioner asked for the payment
of the US$25,000.00 or P625,000.00, its equivalent in Philippine currency plus legal
interest from date of extra-judicial demand. 5 Petitioner likewise claimed moral and
exemplary damages, attorney's fees and costs of suit from respondent. 6
As they were separated in fact for more than a year prior to the ling of the complaint,
respondent and his wife led separate answers. Maria Theresa Carlos-Abelardo admitted
securing a loan together with her husband, from petitioner. 7 She claimed, however, that
said loan was payable on a staggered basis so she was surprised when petitioner
demanded immediate payment of the full amount. 8
In his separate Answer, respondent admitted receiving the amount of US$25,000.00 but
claimed that:
xxx xxx xxx
a. Defendant (respondent) . . . revived that otherwise dormant construction
rm H.L. CARLOS CONSTRUCTION of herein plaintiff which suffered
tremendous setback after the assassination of Senator Benigno Aquino;

b. Working day and night and almost beyond human endurance, defendant
devoted all his efforts and skill, used all his business and personal
connection to be able to revive the construction business of plaintiff;
c. Little-by-little, starting with small construction business, defendant was
able to obtain various construction jobs using the name H.L. CARLOS
CONSTRUCTION and the income derived therefrom were deposited in the
name of such firm of plaintiff;

d. Defendant . . . was made to believe that the earnings derived from such
construction will be for him and his family since he was the one working to
secure the contract and its completion, he was allowed to use the facilities
of the plaintiff;
e. The plaintiff seeing the progress brought about by defendant . . . to his
company proposed a pro t sharing scheme to the effect that all projects
amounting to more than P10 million shall be for the account of plaintiff;
lower amount shall be for defendant's account but still using H.L. CARLOS
CONSTRUCTION.
f. But, to clear account on previous construction contracts that brought
income to H. L. CARLOS CONSTRUCTION, out of which defendant derived
his income, plaintiff gave the amount of US$25,000.00 to defendant to
square off account and to start the arrangement in paragraph (e) supra;
g. That, the said US$25,000.00 was never intended as loan of defendant. It
was his share of income on contracts obtained by defendant;

xxx xxx xxx 9


Respondent denied having made death threats to petitioner and by way of compulsory
counterclaim, he asked for moral damages from petitioner for causing the alienation of his
wife's love and affection, attorney's fees and costs of suit. 1 0
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On June 26, 1996, the Regional Trial Court rendered a decision in favor of petitioner, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. Ordering the defendants to pay plaintiff the amount of US$25,000.00 or its
equivalent in Philippine Currency at the time of its payment, plus legal
interest thereon from August 24, 1994 until fully paid;

2. Ordering the defendant Manuel T. Abelardo to pay the plaintiff the amount
of P500,000.00 representing moral damages and the further amount of
P50,000.00 as exemplary damages; and
3. Ordering the defendants to pay the plaintiff the amount of P100,000.00 as
attorney's fees, plus the costs of suit.

SO ORDERED . 1 1
Respondent appealed the decision of the trial court to the Court of Appeals. On November
10, 2000, the Court of Appeals reversed and set aside the trial court's decision and
dismissed the complaint for insuf ciency of evidence to show that the subject amount
was indeed loaned by petitioner to respondent and his wife. The Court of Appeals found
that the amount of US$25,000.00 was respondent's share in the pro ts of H.L. Carlos
Construction. The dispositive portion of the Court of Appeals' decision states:

WHEREFORE, premises considered, the Decision of the Regional Trial Court of


Valenzuela, Branch 172 in Civil Case No. 4490-V-94 is hereby REVERSED and SET
ASIDE and a new one entered DISMISSING the Complaint for insuf ciency of
evidence.

The claim for damages by defendant-appellant is likewise DISMISSED, also for


insufficiency of evidence, because of his failure to present substantial evidence to
prove that plaintiff-appellee caused the defendant-spouses' separation.
Costs against the plaintiff-appellee.
SO ORDERED . 1 2
A motion for reconsideration of the above decision having been denied on, petitioner
brought this appeal assigning the following errors:
THE COURT OF APPEALS ERRED IN FINDING INSUFFICIENT EVIDENCE TO
PROVE THAT THE AMOUNT OF US$25,000.00 WAS A LOAN OBTAINED BY
PRIVATE RESPONDENT AND HIS WIFE FROM PETITIONER.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE US$25,000.00 WAS
GIVEN AS PRIVATE RESPONDENT'S SHARE IN THE PROFITS OF H.L. CARLOS
CONSTRUCTION, INC. AND THAT THE FILING OF THE COMPLAINT IS A HOAX.

THE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF DAMAGES FOR


LACK OF PROOF THEREOF.

We find merit in the petition.


As gleaned from the records, the following facts are undisputed: (1) there was a check in
the amount of US$25,000.00 issued by petitioner; (2) this amount was received by
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respondent and his wife and given to a certain Pura Vallejo for the full payment of a house
and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro
Manila; (3) this house and lot became the conjugal dwelling of respondent and his wife;
and (4) respondent's wife executed an instrument acknowledging the loan but which
respondent did not sign.
To prove his claim that the amount was in the nature of a loan or an advance he extended
to respondent and his wife, petitioner presented Banker's Trust Check No. 337 in the
amount of US$25,000.00 he issued on October 31, 1989 to Pura Vallejo. 1 3 He also
introduced in evidence an instrument executed by respondent's wife on July 31, 1991
acknowledging her and her husband's accountability to petitioner for the said amount
which was advanced in payment of a house and lot located at #19952 Chestnut Street,
Executive Heights Subdivision, Paranaque. 1 4 A formal demand letter by counsel for
petitioner dated August 24, 1994 sent to and received by respondent was also on record.
15

All these pieces of evidence, taken together with respondent's admission that he and his
wife received the subject amount and used the same to purchase their house and lot,
suf ciently prove by a preponderance of evidence petitioner's claim that the amount of
US$25,000.00 was really in the nature of a loan.
Respondent tried to rebut petitioner's evidence by claiming that the US$25,000.00 was not
a loan but his share in the pro ts of H.L. Carlos Construction. He alleged that he received
money from petitioner amounting to almost P3 million as his share in the pro ts of the
corporation. To prove this, he presented ten (10) Bank of the Philippine Islands (BPI)
checks allegedly given to him by petitioner. 1 6 He argued that if indeed, he and his wife
were indebted to petitioner, the latter could have easily deducted the amount of the said
loan from his share of the profits.
Respondent fails to convince this Court.
All the checks presented by respondent, which he claims to be his share in the pro ts of
petitioner's company, were all in the account of H.L. Carlos Construction. 1 7 On the other
hand, the Banker's Trust Check in the amount of US$25,000.00 was drawn from the
personal account of petitioner. 1 8 Assuming to be true that the checks presented by
respondent were his pro ts from the corporation, then all the more does this prove that
the amount of US$25,000.00 was not part of such pro ts because it was issued by
petitioner from his own account. Indeed, if such amount was respondent's share of the
pro ts, then the same should have been issued under the account of H.L. Carlos
Construction.
Moreover, respondent failed to substantiate his claim that he is entitled to the pro ts and
income of the corporation. There was no showing that respondent was a stockholder of
H.L. Carlos Construction. His name does not appear in the Articles of Incorporation as well
as the Organizational Profile of said company either as stockholder or officer. 1 9 Not being
a stockholder, he cannot be entitled to the pro ts or income of said corporation. Neither
did respondent prove that he was an employee or an agent so as to be entitled to salaries
or commissions from the corporation.
We quote with favor the disquisition of the trial court on this point:
Early in time, it must be noted 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 bene t of the
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family. The defendants never denied that the check of US$25,000.00 was used to
purchase the subject house and lot. They do not deny that the same served as
their conjugal home, thus bene ting the family. On the same principle,
acknowledgment of the loan made by the defendant-wife binds the conjugal
partnership since its proceeds redounded to the bene t of the family. Hence,
defendant-husband and defendant-wife are jointly and severally liable in the
payment of the loan.
Defendant-husband cannot allege as a defense that the amount of US$25,000.00
was received as his share in the income or pro ts of the corporation and not as a
loan. Firstly, defendant-husband does not appear to be a stockholder nor an
employee nor an agent of the corporation, H. L. Carlos Construction, Inc. Since he
is not a stockholder, he has no right to participate in the income or pro ts thereof.
In the same manner that as he is not an employee nor an agent of H. L. Carlos
Construction, Inc., he has no right to receive any salary or commission therefrom.
Secondly, the amount advanced for the purchase of the house and lot came from
the personal account of the plaintiff. If, indeed, it was to be construed as
defendant-husband's share in the pro ts of the corporation, the checks should
come from the corporation's account and not from the plaintiff's personal
account, considering that the corporation has a personality separate and distinct
from that of its stockholders and officers.
Even granting that the checks amount to US$3,000.000.00 given by the plaintiff
to the defendant-spouses was their share in the pro ts of the corporation, still
there is no suf cient evidence to establish that the US$25,000.00 is to be treated
similarly. Defendant-husband in invoking the defense of compensation argued
that if indeed they were indebted to the plaintiff, the latter could have applied their
share in the proceeds or income of the corporation to the concurrent amount of
the alleged loan, instead of giving the amount of P3,000,000.00 to them. This
argument is untenable. Article 1278 of the Civil Code provides that compensation
shall take place when two persons, in their own right, are debtors and creditors of
each other. As its indicates, compensation is a sort of balancing between two
obligations. In the instant case, the plaintiff and the defendant-husband are not
debtors and creditors of each other. Even granting that the defendant-husband's
claim to the pro ts of the corporation is justi ed, still compensation cannot
extinguish his loan obligation to the plaintiff because under such assumption, the
defendant is dealing with the corporation and not with the plaintiff in his personal
capacity. Hence, compensation cannot take place.

The Court of Appeals, thus, erred in nding that respondent's liability was not proved by
preponderance of evidence. On the contrary, the evidence adduced by petitioner
suf ciently established his claim that the US$25,000.00 he advanced to respondent and
his wife was a loan.
The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family
Code:
Article 121. The conjugal partnership shall be liable for:

xxx xxx xxx


(2) All debts and obligations contracted during the marriage by the
designated administrator-spouse for the bene t of the conjugal
partnership of gains, or by both spouses or by one of them with the
consent of the other;
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(3) Debts and obligations contracted by either spouse without the consent of
the other to the extent that the family may have been benefited;
If the conjugal partnership is insuf cient to cover the foregoing
liabilities, the spouses shall be solidarily liable for the unpaid balance with
their separate properties.

xxx xxx xxx


While respondent did not and refused to sign the acknowledgment executed and signed by
his wife, undoubtedly, the loan redounded to the bene t of the family because it was used
to purchase the house and lot which became the conjugal home of respondent and his
family. Hence, notwithstanding the alleged lack of consent of respondent, under Art. 21 of
the Family Code, he shall be solidarily liable for such loan together with his wife.
We also nd suf cient basis for the award of damages to petitioner, contrary to the
findings of the Court of Appeals that petitioner is not entitled thereto.
Petitioner's allegations of verbal and written threats directed against him by respondent is
duly supported by evidence on record. He presented two witnesses, Irineo Pajarin and
Randy Rosal, who testi ed on separate incidents where threats were made by respondent
against petitioner.
Randy Rosal, driver of petitioner, declared that around three o'clock in the afternoon of
September 15, 1991, he was sent by respondent's wife on an errand to deliver the
acknowledgment letter to respondent for him to sign. Respondent did not sign the
acknowledgment and instead, wrote a letter addressed to petitioner threatening him. He
narrated what took place thereafter:

xxx xxx xxx


Q When you were requested by Ma. Theresa C. Abelardo to bring a letter to
herein defendant Manuel Abelardo for him to sign the same, do you know
whether that letter was actually signed by Manuel Abelardo?
A No, sir.

xxx xxx xxx


Q And what happened when Manuel Abelardo refused to sign that letter
coming from the other defendant?
A He made me wait and he prepared a letter to Mr. Honorio Carlos, sir.

xxx xxx xxx


Q Where were you at the time when this defendant Manuel Abelardo prepared
this letter?
A In his house, sir.

Q And where did he actually prepare that letter?


A At the dining table, sir.
Q How far were you from Manuel Abelardo from the dining table at the time
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when he was preparing a letter.
A Around 1 meter, sir.

Q And do you know where in, what particular paper did Mr. Abelardo prepare
or write this letter?

A He wrote it in a Manila envelope, sir.

xxx xxx xxx


Q What happened after Manuel Abelardo prepared this letter in a Manila
envelope?
A He got a small envelope and placed there the name of Mr. Carlos as the
addressee, sir.

xxx xxx xxx


Q After preparing this letter on a Manila envelope and then getting another
envelope and writing on it the address of herein plaintiff, what did the
defendant Manuel Abelardo do, if any?
A He instructed me to mail the letter which he prepared, sir.
xxx xxx xxx
Q And did you actually accede to the request of herein defendant Manuel
Abelardo for you to mail that letter to Engr. Carlos?
A I got the envelope but I did not mail it, sir.

xxx xxx xxx


Q May we know from you the reason why you did not mail said letter?
A Because Engr. Carlos might become frightened, sir.
Q What did you do with that letter, although you did not mail it?
A I kept it, sir.
xxx xxx xxx

Q And what did you do next after keeping the letter for several days?
A I gave the letter personally to Engr. Carlos, sir.
Q What prompted you to give that letter to Engr. Carlos instead of mailing it?
A So that Engr. Carlos can prepare, sir.

xxx xxx xxx 2 0


This incident was duly entered and recorded in the Police Blotter on October 7, 1991 by a
certain Sgt. Casile of the Valenzuela Police Station. 2 1 A photocopy of this written threat
was also attached to the Police Report and presented in evidence. 2 2
Another witness, Irineo Pajarin, recounted an incident which occurred in the afternoon of
May 25, 1994, to wit:

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xxx xxx xxx
Q Now Mr. Witness, on May 25, 1994 at around 2:30 in the afternoon do you
recall where you were on that particular date and time?
A I was at B.F. Homes, Paranaque, sir.
Q What were you doing at that time?

A I was waiting for Sargie Cornista, sir.


xxx xxx xxx
Q Will you please narrate to this Honorable Court that unusual incident?
A Manuel Abelardo passed by and when he saw me he called me. I
approached him while he was then on board his car and asked me who
was my companion, sir.
Q And what was your answer to him?
A I told him it was Sargie, sir.
Q And what was his reply if any?

A He again asked me if I have in my company one of his children, sir.


Q What was your reply?
A I answered none, sir.
Q Incidentally Mr. Witness, where or in what particular place did this
conversation between you and Manuel T. Abelardo take place?
A Parking Area of Academy I, Gov. Santos corner Aguirre St., sir.
Q Now, what else happened after you talk[ed] with this Manuel T. Abelardo?

A He said I may be fooling him because he said I once fooled him when I ran
away with his children which he is going to take back, sir.
Q And what was your reply to that?

A I answered I did not do that and he said that once he discovered that I did it
he would box me, sir.

Q What else if any did he tell you at that time?


A He asked me who instructed me, sir.
Q Instructed you about what?
A To run away with the children, sir.
Q And what was your reply?

A None, he was the one who said "was it your Ate Puppet?" But I did not
answer, sir.

Q What happened next when you failed to answer?


A "Or my father in law?"
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Q And when he said his father in law to whom was he referring at that time?
A Mr. Honorio Carlos, sir.
Q After mentioning the name of his father-in-law Mr. Honorio Carlos what
happened next?
A He told me "Sabihin mo sa biyenan ko babarilin ko siya pag nakita ko siya."
Q Where was Manuel Abelardo at that particular time when he told this
threatening remark against Honorio Carlos?
A He was inside his car in Aguirre St., sir.
Q How about you where were you approximately at that particular time when
he narrated that message to you threatening the herein plaintiff?
A I was outside looking in his vehicle at Aguirre St., sir.

xxx xxx xxx


Q And what was your reply or reaction when he made this threatening
remarks?
A None, because he left. I was left behind, sir. 2 3

This testimony was in part corroborated by an entry dated May 28, 1994 in the Police
Blotter of the Paranaque Police Station narrating the aforementioned incident. 2 4
The testimonies of these witnesses on the two separate incidents of threat are positive,
direct and straightforward. Petitioner also declared on the witness stand that on several
occasions, he received telephone calls from respondent cursing and threatening him. 2 5
These incidents of threat were also evidenced by a letter written by respondent's wife and
addressed to her father-in-law (father of respondent). 2 6 The letter recounted the
instances when threats were made by her husband against petitioner, particularly, the
incident reported by Pajarin and the threats made by respondent through the telephone. 2 7
All these circumstances suf ciently establish that threats were directed by respondent
against petitioner justifying the award of moral damages in favor of petitioner. However,
the Court nds the amount of P500,000.00 as moral damages too exorbitant under the
circumstances and the same is reduced to P50,000.00. The exemplary damages and
attorney's fees are likewise reduced to P20,000.00 and P50,000.00, respectively.
WHEREFORE, the petition is hereby GRANTED and the decision of the Court of Appeals in
CA-G.R. CV No. 54464 is MODIFIED in that respondent is ordered to pay petitioner the
amounts of (1) US$25,000 or its equivalent in Philippine currency at the time of payment,
plus legal interest from August 4, 1994, until fully paid; (2) P50,000.00 as moral damages;
(3) P20,000.00 as exemplary damages; and (4) P50,000.00 as attorney's fees.
SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago JJ., concur.

Footnotes

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1. Paragraph 3 of Complaint, Records, p. 2.
2. Paragraph 4, id.
3. Paragraph 5, id.
4. Paragraph 6, id., at 2-3.
5. Id.
6. Paragraphs 7-9, id., at 3-4.
7. Paragraph 4 of Answer, id., at 25.
8. Paragraphs 5-6, id., at 25-26.
9. Defendant Manuel Abelardo's Answer, id., at 17-19.
10. Id., at 19-20.
11. Rollo, p. 59.
12. Id., at 80-81.
13. Exhibits, p. 1.
14. Id., at 11.
15. Id., at 10.
16. Id., at 30-32.
17. Id.
18. supra, Note 15.
19. Id., at 19-26.
20. TSN of April 18, 1995, pp. 6-15.

21. Exhibits, p. 8.

22. Id., at 7.
23. TSN of March 16, 1995, pp. 7-12.

24. Exhibits, p. 9.
25. TSN of January 17, 1995, pp. 22-23, 32.

26. Exhibits, pp. 12-15.

27. Id.

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FIRST DIVISION

[G.R. No. 125172. June 26, 1998.]

Spouses ANTONIO and LUZVIMINDA GUIANG , petitioners, vs . COURT


OF APPEALS and GILDA CORPUZ , respondents.

Public Attorney's Office for petitioners.


Arnold D. Cruz for private respondent.

SYNOPSIS

Private respondent Gilda Corpuz and husband Judie Corpuz sold one-half of their lot to
petitioner-spouses Antonio and Luzviminda Guiang. When Gilda was in Manila looking for
work abroad Judie sold the remaining one-half portion of the lot including the house
standing thereon to the Guiang spouses. When Gilda returned home, she gathered her
children together and stayed at their house. She then filed a complaint before the RTC for
the nullification of the deed of sale executed by her husband in favor of the petitioner
spouses. The RTC rendered judgment in her favor and against petitioners. The Court of
Appeals, affirmed the trial court's ruling. Hence, this appeal.
Petitioners contend that the contract of sale was merely voidable and was ratified by
private respondent when she entered into an amicable settlement with them. Petitioners
based their arguments under Article 1390 of the Civil Code providing that contracts
entered into where consent of one party is vitiated by mistake, violence, intimidation, undue
influence or fraud are voidable and are binding, unless annulled but they are susceptible of
ratification. STcADa

The Supreme Court held that the error in petitioners' contention is evident. Article 1390,
par. 2, refers to contracts visited by vices of consent, i.e., contracts which were entered
into by a person whose consent was obtained and vitiated through mistake, violence,
intimidation, undue influence or fraud. In this instance, private respondent's consent to the
contract of sale of their conjugal property was totally inexistent or absent. 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. 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. In any event, its execution does not alter the void character of the deed of sale
between the husband and the petitioners-spouses. The fact remains that such contract
was entered into without the wife's consent.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SALES; ELEMENTS. In sum, the


nullity of the contract of sale is premised on the absence of private respondent's consent.
To constitute a valid contract, the Civil Code requires the concurrence of the following
elements: (1) cause, (2) object, and (3) consent, the last element being indubitably absent
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in the case at bar.
2. ID.; ID.; VOID CONTRACTS CANNOT BE RATIFIED. 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: 'Article 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."
3. ID.; FAMILY CODE; ADMINISTRATION OF THE CONJUGAL PARTNERSHIP
PROPERTY; SETTLEMENT DOES NOT MENTION A CONTINUING OFFER TO SELL
PROPERTY OR ACCEPTANCE THEREOF; CASE AT BAR. Neither can the "amicable
settlement" be considered a continuing offer that was accepted and perfected by the
parties, following the last sentence of Article 124. The order of the pertinent events is
clear: after the sale, petitioners filed a complaint for trespassing against private
respondent, after which the barangay authorities secured an "amicable settlement" and
petitioners filed before the MTC a motion for its execution. The settlement, however, does
not mention a continuing offer. 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. ScTCIE

DECISION

PANGANIBAN , J : p

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. LibLex

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,

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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-appellee's 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
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vendor should vendee fail to pay three successive installments (Exh. '2', tsn. p. 6,
February 14, 1990).

2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-
half portion of their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-
spouses Antonio and Luzviminda Guiang. The latter have since then occupied the
one-half portion [and] built their house thereon (tsn. p. 4, May 22, 1992). They are
thus adjoining neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was
trying to look for work abroad, in [the] Middle East. Unfortunately, she became a
victim of an unscrupulous illegal recruiter. She was not able to go abroad. She
stayed for sometime in Manila however, coming back to Koronadal, South
Cotabato, . . . on March 11, 1990. Plaintiff's departure for Manila to look for work
in the Middle East was with the consent of her husband Judie Corpuz (tsn. p. 16,
Aug. 12, 1990; p. 10, Sept. 6, 1991).

After his wife's departure for Manila, defendant Judie Corpuz seldom went home
to the conjugal dwelling. He stayed most of the time at his place of work at
Samahang Nayon Building, a hotel, restaurant, and a cooperative. Daughter
Harriet Corpuz went to school at King's College, Bo. 1, Koronadal, South Cotabato,
but she was at the same time working as household help of, and staying at, the
house of Mr. Panes. Her brother Junie was not working. Her younger sister Jodie
(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 of
P30,000.00 of which P5,000.00 was to be paid in June, 1990. Transferor Judie
Corpuz's children Junie and Harriet signed the document as witnesses.

Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever
defect in defendant Judie Corpuz's title over the lot transferred, defendant
Luzviminda Guiang as vendee executed another agreement over Lot 9, Block 8,
(LRC) Psd-165408 (Exh. '3'), this time with Manuela Jimenez Callejo, a widow of
the original registered owner from whom the couple Judie and Gilda Corpuz
originally bought the lot (Exh. '2'), who signed as vendor for a consideration of
P9,000.00. Defendant Judie Corpuz signed as a witness to the sale (Exh. '3-A').
The new sale (Exh. '3') describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408
but it is obvious from the mass of evidence that the correct lot is Lot 8, Block 9,
(LRC) Psd-165409, the very lot earlier sold to the couple Gilda and Judie Corpuz.
5. Sometime on March 11, 1990, plaintiff returned home. She found her
children staying with other households. Only Junie was staying in their house.
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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." LexLib

Ruling of Respondent Court


Respondent Court found no reversible error in the trial court's ruling that any alienation or
encumbrance by the husband of the conjugal 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."
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Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public respondent the following errors: 1 0
"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 () 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 Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by
the parties-litigants in good faith and for valuable consideration. The absence of private
respondent's consent merely rendered the Deed voidable under Article 1390 of the Civil
Code, which provides:
"ART. 1390. The following contracts are voidable or annullable, even though
there may have been no damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court.
They are susceptible of ratification.(n)"

The error in petitioners' contention is evident. Article 1390, par. 2, refers to contracts
visited by vices of consent, i.e., contracts which were entered into by a person whose
consent was obtained and vitiated through mistake, violence, intimidation, undue influence
or fraud. In this instance, private respondent's consent to the contract of sale of their
conjugal property was totally inexistent or absent. Gilda Corpuz, on direct examination,
testified thus: 1 1
"Q Now, on March 1, 1990, could you still recall where you were?
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A I was still in Manila during that time.

xxx xxx xxx


ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was there any problem which arose
concerning the ownership of your residential house at Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem which arose
regarding my 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
husband's decision shall prevail, subject to recourse to the court by the wife for
proper remedy, which must be availed of within five years from the date of the
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in
the administration of the conjugal properties, the other spouse may assume sole
powers of administration. These powers do not include the powers of disposition
or encumbrance which must have the authority of the court or the written consent
of the other spouse. In the absence of such authority or consent, the disposition
or encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other spouse
or authorization by the court before the offer is withdrawn by either or both
offerors. (165a)" (emphasis supplied)

Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly
explained the amendatory effect of the above provision in this wise: 1 2
"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 wife's consent. The alienation or encumbrance if so made however is
not null and void. It is merely voidable. The offended wife may bring an action to
annul the said alienation or encumbrance. Thus, the provision of Article 173 of
the Civil Code of the Philippines, to wit:
'Art. 173. The wife may, during the marriage and within ten years from
the transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when such
consent is required, or any act or contract of the husband which tends to
defraud her or impair her interest in the conjugal partnership property.
Should the wife fail to exercise this right, she or her heirs after the
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dissolution of the marriage, may demand the value of property fraudulently
alienated by the husband.(n)'
This particular provision giving the wife ten (10) years . . . during [the] marriage to
annul the alienation or encumbrance was not carried over to the Family Code. It is
thus clear that any alienation or encumbrance made after August 3, 1988 when
the Family Code took effect by the husband of the conjugal partnership property
without the consent of the wife is null and void."

Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners
were perpetrated in the execution of the document embodying the amicable settlement.
Gilda Corpuz alleged during trial that barangay authorities made her sign said document
through misrepresentation and coercion. 1 3 In any event, its execution does not alter the
void character of the deed of sale between the husband and the petitioners-spouses, as
will be discussed later. The fact remains that such contract was entered into without the
wife's consent.
In sum, the nullity of the contract of sale is premised on the absence of private
respondent's consent. To constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2) object, and (3) consent, 1 4 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: 1 5
"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: after the sale, petitioners filed a complaint for trespassing
against private respondent, after which the barangay authorities secured an "amicable
settlement" and petitioners filed before the MTC a motion for its execution. The
settlement, however, does not mention a continuing offer to sell the property or an
acceptance of such a continuing offer. Its tenor was to the effect that private respondent
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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. cdll

Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ ., concur.


Footnotes

1. Penned by J. Lourdes K. Tayao-Jaguros and concurred in by JJ. Jorge S. Imperial,


division chairman, and B.A. Adefuin-De la Cruz; Rollo, pp. 47-57.
2. Justice Oswaldo D. Agcaoili replaced Justice Imperial in the special former Ninth
Division; Rollo, p. 58.
3. Docketed as Civil Case No. 284; Rollo, pp. 22-27.

4. Penned by Judge Francisco S. Ampig, Jr.


5. RTC Decision, p. 12; Rollo, p. 42.
6. CA Decision, p. 10; Rollo, p. 56.
7. Rollo, p. 58.
8. CA Decision, pp. 2-6; Rollo, pp. 48-52.
9. This case was submitted for decision upon receipt by the Court of private respondent's
Memorandum on November 17, 1997.

10. Rollo, pp. 91-92.


11. TSN, August 17, 1990, pp. 16-17.
12. Rollo, p. 37.
13. TSN, August 17, 1990, pp. 13-14.

14. Art. 1318, Civil Code.


15. Rollo, p. 38.
16. Art. 1409; Civil Code; and Tongoy vs. Court of Appeals, 123 SCRA 99, 119-121, June 28,
1983, per Makasiar, J .

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FIRST DIVISION

[G.R. No. 147978. January 23, 2002.]

THELMA A. JADER-MANALO , petitioner, vs . NORMA FERNANDEZ C.


CAMAISA and EDILBERTO CAMAISA , respondents.

Thelma A. Jader-Manalo for petitioner.


Jose R. Ebro, Jr. for private respondents.

SYNOPSIS

Petitioner herein responded to an advertisement in the newspaper for the sale of


a ten-door apartment owned by herein respondents spouses. After the purchase price
and the term of payments were agreed upon by the petitioner and the respondent
husband, a contract to sell was prepared. The husband signed the contract, but
unfortunately the wife changed her mind as she did not agree with the term of
payments by the petitioner. Hence, petitioner herein led a complaint for speci c
performance against the spouses to compel the wife to sign the contract to sell. The
respondent wife led a motion for summary judgment. The trial court rendered a
summary judgment dismissing the complaint. Petitioner elevated the case to the Court
of Appeals. The Court of Appeals af rmed the dismissal of the case by the trial court.
Hence, this appeal. The issue raised in this case is whether or not the husband may
validly dispose a conjugal property without the wife's written consent. aHECST

The Supreme Court af rmed the decision of the Court of Appeals. The Court
agreed with the trial court that summary judgment was applicable to this case as there
was no genuine controversy as to the facts involved herein. According to the Court, the
properties subject of the contract in this case were conjugal; hence, for the contract to
sell to be effective, the consent of both the husband and wife must concur. In the
absence of proof that the wife was incapacitated to give her consent to the contract, a
court authorization cannot be sought in this case.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; SUMMARY JUDGMENT; DEFINED. A summary


judgment is one granted by the court upon motion by a party for an expeditious settlement
of a case, there appearing from the pleadings, depositions, admissions and affidavits that
there are no important questions or issues of fact involved, and that therefore the moving
party is entitled to judgment as a matter of law.
2. CIVIL LAW; FAMILY CODE; CONJUGAL PROPERTY; DISPOSITION BY THE HUSBAND
REQUIRES WRITTEN CONSENT OF THE WIFE; APPLICATION IN CASE AT BAR. The law
requires that the disposition of a conjugal property by the husband as administrator in
appropriate cases requires the written consent of the wife, otherwise, the disposition is
void. The properties subject of the contracts in this case were conjugal; hence, for the
contracts to sell to be effective, the consent of both husband and wife must concur.
3. ID.; ID.; ID.; ID.; EXCEPTION; NOT PRESENT IN CASE AT BAR. Petitioner is correct
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insofar as she alleges that if the written consent of the other spouse cannot be obtained or
is being withheld, the matter may be brought to court which will give such authority if the
same is warranted by the circumstances. However, it should be stressed that court
authorization under Art. 124 is only resorted to in cases where the spouse who does not
give consent is incapacitated. In this case, petitioner failed to allege and prove that
respondent Norma was incapacitated to give her consent to the contracts. In the absence
of such showing of the wife's incapacity, court authorization cannot be sought.

DECISION

KAPUNAN , J : p

The issue raised in this case is whether or not the husband may validly dispose of a
conjugal property without the wife's written consent.
The present controversy had its beginning when petitioner Thelma A. Jader-Manalo
allegedly came across an advertisement placed by respondents, the Spouses Norma
Fernandez C. Camaisa and Edilberto Camaisa, in the Classified Ads Section of the
newspaper BULLETIN TODAY in its April, 1992 issue, for the sale of their ten-door
apartment in Makati, as well as that in Taytay, Rizal.
As narrated by petitioner in her complaint filed with the Regional Trial Court of Makati,
Metro Manila, she was interested in buying the two properties so she negotiated for the
purchase through a real estate broker, Mr. Proceso Ereno, authorized by respondent
spouses. 1 Petitioner made a visual inspection of the said lots with the real estate broker
and was shown the tax declarations, real property tax payment receipts, location plans,
and vicinity maps relating to the properties. 2 Thereafter, petitioner met with the vendors
who turned out to be respondent spouses. She made a definite offer to buy the properties
to respondent Edilberto Camaisa with the knowledge and conformity of his wife,
respondent Norma Camaisa in the presence of the real estate broker. 3 After some
bargaining, petitioner and Edilberto agreed upon the purchase price of P1,500,000.00 for
the Taytay property and P2,100,000.00 for the Makati property 4 to be paid on installment
basis with downpayments of P100,000.00 and P200,000.00, respectively, on April 15,
1992. The balance thereof was to be paid as follows: 5
Taytay Property Makati Property

6th month P200,000.00 P300,000.00


12th month 700,000.00 1,600,000.00

18th month 500,000.00

This agreement was handwritten by petitioner and signed by Edilberto. 6 When petitioner
pointed out the conjugal nature of the properties, Edilberto assured her of his wife's
conformity and consent to the sale. 7 The formal typewritten Contracts to Sell were
thereafter prepared by petitioner. The following day, petitioner, the real estate broker and
Edilberto met in the latter's office for the formal signing of the typewritten Contracts to
Sell. 8 After Edilberto signed the contracts, petitioner delivered to him two checks, namely,
UCPB Check No. 62807 dated April 15, 1992 for P200,000.00 and UCPB Check No. 62808
also dated April 15, 1992 for P100,000.00 in the presence of the real estate broker and an
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employee in Edilberto's office. 9 The contracts were given to Edilberto for the formal
affixing of his wife's signature. aATHIE

The following day, petitioner received a call from respondent Norma, requesting a meeting
to clarify some provisions of the contracts. 10 To accommodate her queries, petitioner,
accompanied by her lawyer, met with Edilberto and Norma and the real estate broker at
Cafe Rizal in Makati. 11 During the meeting, handwritten notations were made on the
contracts to sell, so they arranged to incorporate the notations and to meet again for the
formal signing of the contracts. 12
When petitioner met again with respondent spouses and the real estate broker at
Edilberto's office for the formal affixing of Norma's signature, she was surprised when
respondent spouses informed her that they were backing out of the agreement because
they needed "spot cash" for the full amount of the consideration. 13 Petitioner reminded
respondent spouses that the contracts to sell had already been duly perfected and
Norma's refusal to sign the same would unduly prejudice petitioner. Still, Norma refused to
sign the contracts prompting petitioner to file a complaint for specific performance and
damages against respondent spouses before the Regional Trial Court of Makati, Branch
136 on April 29, 1992, to compel respondent Norma Camaisa to sign the contracts to sell.
A Motion to Dismiss 14 was filed by respondents which was denied by the trial court in its
Resolution of July 21, 1992. 15
Respondents then filed their Answer with Compulsory Counterclaim, alleging that it was an
agreement between herein petitioner and respondent Edilberto Camaisa that the sale of
the subject properties was still subject to the approval and conformity of his wife Norma
Camaisa. 1 6 Thereafter, when Norma refused to give her consent to the sale, her refusal
was duly communicated by Edilberto to petitioner. 1 7 The check issued by petitioner were
returned to her by Edilberto and she accepted the same without any objection. 1 8
Respondent further claimed that the acceptance of the checks returned to petitioner
signified her assent to the cancellation of the sale of the subject properties. 1 9 Respondent
Norma denied that she ever participated in the negotiations for the sale of the subject
properties and that she gave her consent and conformity to the same. 2 0
On October 20, 1992, respondent Norma F. Camaisa filed a Motion for Summary
Judgment 21 asserting that there is no genuine issue as to any material fact on the basis of
the pleadings and admission of the parties considering that the wife's written consent was
not obtained in the contract to sell, the subject conjugal properties belonging to
respondents; hence, the contract was null and void.
On April 14, 1993, the trial court rendered a summary judgment dismissing the complaint
on the ground that under Art. 124 of the Family Code, the court cannot intervene to
authorize the transaction in the absence of the consent of the wife since said wife who
refused to give consent had not been shown to be incapacitated. The dispositive portion
of the trial court's decision reads: HTIEaS

WHEREFORE, considering these premises, judgment is hereby rendered:

1. Dismissing the complaint and ordering the cancellation of the Notice of Lis
Pendens by reason of its filing on TCT Nos. (464860) S-8724 and (464861) S-
8725 of the Registry of Deeds at Makati and on TCT Nos. 295976 and 295971 of
the Registry of Rizal.

2. Ordering plaintiff Thelma A. Jader to pay defendant spouses Norma and


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Edilberto Camaisa, FIFTY THOUSAND (P50,000.00) as Moral Damages and FIFTY
THOUSAND (P50,000.00) as Attorney's Fees.

Costs against plaintiff. 22

Petitioner, thus, elevated the case to the Court of Appeals. On November 29, 2000, the
Court of Appeals affirmed the dismissal by the trial court but deleted the award of
P50,000.00 as damages and P50,000.00 as attorney's fees.
The Court of Appeals explained that the properties subject of the contracts were conjugal
properties and as such, the consent of both spouses is necessary to give effect to the
sale. Since private respondent Norma Camaisa refused to sign the contracts, the sale was
never perfected. In fact, the downpayment was returned by respondent spouses and was
accepted by petitioner. The Court of Appeals also stressed that the authority of the court
to allow sale or encumbrance of a conjugal property without the consent of the other
spouse is applicable only in cases where the said spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal property.

Hence, the present recourse assigning the following errors:


THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN RENDERING
SUMMARY JUDGMENT IN DISMISSING THE COMPLAINT ENTIRELY AND
ORDERING THE CANCELLATION OF NOTICE OF LIS PENDENS ON THE TITLES
OF THE SUBJECT REAL PROPERTIES;

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN FAILING TO


CONSIDER THAT THE SALE OF REAL PROPERTIES BY RESPONDENTS TO
PETITIONER HAVE ALREADY BEEN PERFECTED, FOR AFTER THE LATTER PAID
P300,000.00 DOWNPAYMENT, RESPONDENT MRS. CAMAISA NEVER OBJECTED
TO STIPULATIONS WITH RESPECT TO PRICE, OBJECT AND TERMS OF
PAYMENT IN THE CONTRACT TO SELL ALREADY SIGNED BY THE PETITIONER,
RESPONDENT MR. CAMAISA AND WITNESSES MARKED AS ANNEX "G" IN THE
COMPLAINT EXCEPT, FOR MINOR PROVISIONS ALREADY IMPLIED BY LAW, LIKE
EJECTMENT OF TENANTS, SUBDIVISION OF TITLE AND RESCISSION IN CASE
OF NONPAYMENT, WHICH PETITIONER READILY AGREED AND ACCEDED TO
THEIR INCLUSION;

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT FAILED TO


CONSIDER THAT CONTRACT OF SALE IS CONSENSUAL AND IT IS PERFECTED
BY THE MERE CONSENT OF THE PARTIES AND THE APPLICABLE PROVISIONS
ARE ARTICLES 1157, 1356, 1357, 1358, 1403, 1405 AND 1475 OF THE CIVIL
CODE OF THE PHILIPPINES AND GOVERNED BY THE STATUTE OF FRAUD. 2 3

The Court does not find error in the decisions of both the trial court and the Court of
Appeals.
Petitioner alleges that the trial court erred when it entered a summary judgment in favor of
respondent spouses there being a genuine issue of fact. Petitioner maintains that the
issue of whether the contracts to sell between petitioner and respondent spouses was
perfected is a question of fact necessitating a trial on the merits.
The Court does not agree. A summary judgment is one granted by the court upon motion
by a party for an expeditious settlement of a case, there appearing from the pleadings,
depositions, admissions and affidavits that there are no important questions or issues of
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fact involved, and that therefore the moving party is entitled to judgment as a matter of
law. 24 A perusal of the pleadings submitted by both parties should that there is no
genuine controversy as to the facts involved therein.
Both parties admit that there were negotiations for the sale of four parcels of land
between petitioner and respondent spouses; that petitioner and respondent Edilberto
Camaisa came to an agreement as to the price and the terms of payment, and a
downpayment was paid by petitioner to the latter; and that respondent Norma refused to
sign the contracts to sell. The issue thus posed for resolution in the trial court was whether
or not the contracts to sell between petitioner and respondent spouses were already
perfected such that the latter could no longer back out of the agreement. ATcEDS

The law requires that the disposition of a conjugal property by the husband as
administrator in appropriate cases requires the written consent of the wife, otherwise, the
disposition is void. Thus, Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husband's decision shall prevail, subject to recourse to the court by the wife for a
proper remedy, which must be availed of within five years from the date of the
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in
the administration of the conjugal properties, the other spouse may assume sole
powers of administration. These powers do not include the powers of disposition
or encumbrance which must have the authority of the court or the written consent
of the other spouse. In the absence of such authority or consent the disposition or
encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other spouse
or authorization by the court before the offer is withdrawn by either or both
offerors. (Italics ours.)

The properties subject of the contracts in this case were conjugal; hence, for the contracts
to sell to be effective, the consent of both husband and wife must concur.
Respondent Norma Camaisa admittedly did not give her written consent to the sale. Even
granting that respondent Norma actively participated in negotiating for the sale of the
subject properties, which she denied, her written consent to the sale is required by law for
its validity. Significantly, petitioner herself admits that Norma refused to sign the contracts
to sell. Respondent Norma may have been aware of the negotiations for the sale of their
conjugal properties. However, being merely aware of a transaction is not consent. 25
Finally, petitioner argues that since respondent Norma unjustly refuses to affix her
signatures to the contracts to sell, court authorization under Article 124 of the Family Code
is warranted.
The argument is bereft of merit. Petitioner is correct insofar as she alleges that if the
written consent of the other spouse cannot be obtained or is being withheld, the matter
may be brought to court which will give such authority if the same is warranted by the
circumstances. However it should be stressed that court authorization under Art. 124 is
only resorted to in cases where the spouse who does not give consent is incapacitated. 2 6
In this case, petitioner failed to allege and prove that respondent Norma was incapacitated
to give her consent to the contracts. In the absence of such showing of the wife's
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incapacity, court authorization cannot be sought.
Under the foregoing facts, the motion for summary judgment was proper considering that
there was no genuine issue as to any material fact. The only issue to be resolved by the
trial court was whether the contract to sell involving conjugal properties was valid without
the written consent of the wife.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated
November 29, 2000 in CA-G.R. CV No. 43421 AFFIRMED. aTcESI

SO ORDERED.
Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.
Footnotes

1. Paragraph IV of Complaint; Rollo, p. 61.


2. Paragraph V of Complaint; id.
3. Paragraph VI of Complaint; id.

4. Paragraph VII of Complaint; id., at 62.


5. Id.
6. The handwritten agreement was attached as Annex "E" to the Complaint; Rollo, pp. 80-
83.
7. Supra, Note 4.
8. Paragraph IX of Complaint; Rollo, p. 63.
9. Photocopies of these checks were attached as Annex "H" to the Complaint; Rollo, pp. 90-
92.
10. Paragraph XI of Complaint; Rollo, pp. 63-64.

11. Paragraph XII of Complaint; id.


12. Paragraph XIII of Complaint; id.
13. Paragraph XIX; id., pp. 64-65.
14. Rollo, pp. 107-110.
15. Id., at 143.
16. Paragraph XI of Answer with Compulsory Counterclaim, id., p. 95.
17. Paragraph XIII, id.
18. id.
19. id.
20. Paragraphs 2 and 3 of the Answer with Compulsory Counterclaim; id. at 93-94.

21. Rollo, p. 186.


22. Annex "Q", p. 3; Rollo, pp. 224-225.
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23. Rollo, p. 23.
24. 271 SCRA 36 (1997).
25. Tinitigan vs. Tinitigan, 100 SCRA 619 (1980).
26. Commentaries and Jurisprudence on the Civil Code of the Philippines, Arturo Tolentino,
Vol. I, p. 461 citing the case of Nicolas vs. Court of Appeals, 154 SCRA 635 [1987] which
held that:

". . . the very conspicuous absence of the wife's conforme to such disposition of
the ganancial property, there being no showing that Lourdes Manuel, whom
respondent Madlangsakay married in 1927, is legally incapacitated renders the
alleged sale void ab initio because it is in contravention of the mandatory requirement
in Article 166 of the Civil Code. This doctrine is too well-settled in our jurisprudence to
require further elucidation."
See also p. 392 of Tolentino's Commentaries relating to an identical provision,
Art. 96 of the Civil Code, on community property. Tolentino writes:
"As a result of this joint ownership, neither spouse may alienate or encumber
any common property without the written consent of the other, or, if the other spouse is
incapacitated, authorization of the court."

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SECOND DIVISION

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

HOMEOWNERS SAVINGS & LOAN BANK , petitioner, vs . MIGUELA C.


DAILO , respondent.

DECISION

TINGA , J : p

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 Dailo's 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. HTIEaS

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
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with Prayer for Preliminary Injunction and Damages against petitioner. In the latter's
Answer with Counterclaim, petitioner prayed for the dismissal of the complaint on the
ground that the property in question was the exclusive property of the late Marcelino Dailo,
Jr.
After trial on the merits, the trial court rendered a Decision on October 18, 1997. The
dispositive portion thereof reads as follows:
WHEREFORE, the plaintiff having proved by the preponderance of evidence the
allegations of the Complaint, the Court finds for the plaintiff and hereby orders:

ON THE FIRST CAUSE OF ACTION:


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

(a) The Deed of Real Estate Mortgage dated December 1, 1993


executed before Notary Public Romulo Urrea and his notarial
register entered as Doc. No. 212; Page No. 44, Book No. XXI, Series
of 1993.

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


Alcantara on April 20, 1995.
(c) The Affidavit of Consolidation of Ownership executed by the
defendant

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


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

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


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

ON THE SECOND CAUSE OF ACTION

1. The defendant to pay the plaintiff the sum of 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 attorney's


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. jur2005cda

SO ORDERED. 6

Upon elevation of the case to the Court of Appeals, the appellate court affirmed the trial
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court's finding that the subject property was conjugal in nature, in the absence of clear and
convincing evidence to rebut the presumption that the subject property acquired during
the marriage of spouses Dailo belongs to their conjugal partnership. 7 The appellate court
declared as void the mortgage on the subject property because it was constituted without
the knowledge and consent of respondent, in accordance with Article 124 of the Family
Code. Thus, it upheld the trial court's order to reconvey the subject property to respondent.
8 With respect to the damage to respondent's car, the appellate court found petitioner to
be liable therefor because it is responsible for the consequences of the acts or omissions
of the person it hired to accomplish the assigned task. 9 All told, the appellate court
affirmed the trial court's Decision, but deleted the award for damages and attorney's fees
for lack of basis. 1 0
Hence, this petition, raising the following issues for this Court's consideration:
1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE
MARCELINO DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER THEREOF
IS VALID AS TO HIS UNDIVIDED SHARE. ESHcTD

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. 1 1

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. 1 2
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, 1 3 it was held that the sale of a conjugal property requires
the consent of both the husband and wife. 1 4 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
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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. 1 5 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. 1 6
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. 1 7 Unlike
the absolute community of property wherein the rules on co-ownership apply in a
suppletory manner, 1 8 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. 1 9 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. THCASc

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. 2 0 Thus, both the trial court and the appellate court are correct in declaring
the nullity of the real estate mortgage on the subject property for lack of respondent's
consent.
Second, petitioner imposes the liability for the payment of the principal obligation obtained
by the late Marcelino Dailo, Jr. on the conjugal partnership to the extent that it redounded
to the benefit of the family. 2 1
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
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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. 2 2
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. 2 3 Ei incumbit
probatio qui dicit, non qui negat (he who asserts, not he who denies, must prove). 2 4
Petitioner's sweeping conclusion that the loan obtained by the late Marcelino Dailo, Jr. to
finance the construction of housing units without a doubt redounded to the benefit of his
family, without adducing adequate proof, does not persuade this Court. Other than
petitioner's bare allegation, there is nothing from the records of the case to compel a
finding that, indeed, the loan obtained by the late Marcelino Dailo, Jr. redounded to the
benefit of the family. Consequently, the conjugal partnership cannot be held liable for the
payment of the principal obligation.
In addition, a perusal of the records of the case reveals that during the trial, petitioner
vigorously asserted that the subject property was the exclusive property of the late
Marcelino Dailo, Jr. Nowhere in the answer filed with the trial court was it alleged that the
proceeds of the loan redounded to the benefit of the family. Even on appeal, petitioner
never claimed that the family benefited from the proceeds of the loan. When a party
adopts a certain theory in the court below, he will not be permitted to change his theory on
appeal, for to permit him to do so would not only be unfair to the other party but it would
also be offensive to the basic rules of fair play, justice and due process. 2 5 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. 2 6
WHEREFORE, the petition is DENIED. Costs against petitioner. TICDSc

SO ORDERED.
Puno, Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
Footnotes

1. Penned by J. Juan Q. Enriquez and concurred in by JJ. Eugenio S. Labitoria, Chairman,


and Teodoro P. Regino; Rollo, p. 34.
2. Penned by Judge Bienvenido Reyes.
3. Decision of the Court of Appeals dated June 3, 2002, p. 3; Rollo, p. 36.

4. Ibid.
5. Ibid.
6. As quoted in the Decision of the Court of Appeals, pp. 1-2; Rollo, pp. 34-35.
7. Decision of the Court of Appeals, p. 5; Rollo, p. 38.

8. Id. at 6; Rollo, p. 39.


9. Ibid.
10. Id. at 7; Rollo, p. 40.
11. Rollo, p. 24.
12. Rollo, p. 26.
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13. 353 Phil. 578 (1998).

14. Id. at 374.


15. Article 119, The New Civil Code.
16. Article 105, Family Code.

17. Article 106, Family Code.


18. Article 90, Family Code.

19. Article 108, Family Code.


20. Recaa, Jr. v. Court of Appeals, G.R. No. 123850, January 5, 2001, 349 SCRA 24, 33.
21. Rollo, p. 27.
22. Ayala Investment & Development Corp. v. Court of Appeals, 349 Phil. 942, 952 (1998),
citing Luzon Surety Co., Inc. v. De Garcia, 30 SCRA 111 (1969).
23. Id. at 954, 286 SCRA 272, 283 (1998).
24. Castilex Industrial Corporation v. Vasquez, Jr., 378 Phi. 1009 (1999).
25. Drilon v. Court of Appeals, 336 Phil. 949 (1997).
26. Heirs of Enrique Zambales v. Court of Appeals, 205 Phil. 789 (1983).

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THIRD DIVISION

[G.R. No. 185063. July 23, 2009.]

SPS. LITA DE LEON and FELIX RIO TARROSA , petitioners, vs . ANITA B.


DE LEON, DANILO B. DE LEON, and VILMA B. DE LEON , respondents.

DECISION

VELASCO , JR. , J : p

The Case
Before us is a Petition for Review on Certiorari under Rule 45 assailing and
seeking to set aside the Decision 1 and Resolution 2 dated August 27, 2008 and
October 20, 2008, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 88571.
The CA affirmed with modification the October 4, 2006 Decision 3 in Civil Case No. Q04-
51595 of the Regional Trial Court (RTC), Branch 22 in Quezon City.
The Facts
On July 20, 1965, Bonifacio O. de Leon, then single, and the People's Homesite
and Housing Corporation (PHHC) entered into a Conditional Contract to Sell for the
purchase on installment of a 191.30 square-meter lot situated in Fairview, Quezon City.
Subsequently, on April 24, 1968, Bonifacio married Anita de Leon in a civil rite of ciated
by the Municipal Mayor of Zaragosa, Nueva Ecija. To this union were born Danilo and
Vilma.
Following the full payment of the cost price for the lot thus purchased, PHHC
executed, on June 22, 1970, a Final Deed of Sale in favor of Bonifacio. Accordingly,
Transfer Certi cate of Title (TCT) No. 173677 was issued on February 24, 1972 in the
name of Bonifacio, "single".
Subsequently, Bonifacio, for PhP19,000, sold the subject lot to her sister, Lita,
and husband Felix Rio Tarrosa (Tarrosas), petitioners herein. The conveying Deed of
Sale dated January 12, 1974 (Deed of Sale) did not bear the written consent and
signature of Anita.
Thereafter, or on May 23, 1977, Bonifacio and Anita renewed their vows in a
church wedding at St. John the Baptist Parish in San Juan, Manila.
On February 29, 1996, Bonifacio died.
Three months later, the Tarrosas registered the Deed of Sale and had TCT No.
173677 canceled. They secured the issuance in their names of TCT No. N-173911 from
the Quezon City Register of Deeds.
Getting wind of the cancellation of their father's title and the issuance of TCT No.
N-173911, Danilo and Vilma led on May 19, 2003 a Notice of Adverse Claim before the
Register of Deeds of Quezon City to protect their rights over the subject property. Very
much later, Anita, Danilo, and Vilma led a reconveyance suit before the RTC in Quezon
City. In their complaint, Anita and her children alleged, among other things, that fraud
attended the execution of the Deed of Sale and that subsequent acts of Bonifacio
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would show that he was still the owner of the parcel of land. In support of their case,
they presented, inter alia, the following documents:
a. A Real Estate Mortgage execution by Bonifacio in favor of spouses Cesar
Diankinay and Filomena Almero on July 22, 1977.

b. A Civil Complaint led by Bonifacio against spouses Cesar Diankinay and


Filomena Almero on November 27, 1979 for nulli cation of the Real Estate
Mortgage.

c. The Decision issued by the Court of First Instance of Rizal, Quezon City,
promulgated on July 30, 1982, nullifying the Real Estate Mortgage. 4

The Tarrosas, in their Answer with Compulsory Counterclaim, averred that the lot
Bonifacio sold to them was his exclusive property inasmuch as he was still single when
he acquired it from PHHC. As further alleged, they were not aware of the supposed
marriage between Bonifacio and Anita at the time of the execution of the Deed of Sale.
TESICD

After several scheduled hearings, both parties, assisted by their respective


counsels, submitted a Joint Stipulation of Facts with Motion, to wit:
1. The parties have agreed to admit the following facts:

a. Bonifacio O. de Leon, while still single . . ., purchased from the [PHHC] through
a Conditional Contract to Sell on July 20, 1965 a parcel of land with an area of
191.30 square meters situated in Fairview, Quezon City for P841.72;
b. On April 24, 1968, Bonifacio O. De Leon married plaintiff Anita B. de Leon
before the Municipal Mayor of Zaragosa, Nueva Ecija. Both parties stipulate that
said marriage is valid and binding under the laws of the Philippines;

c. On June 22, 1970, Bonifacio O. De Leon paid [PHHC] the total amount of
P1,023.74 . . . . The right of ownership over the subject parcel of land was
transferred to the late Bonifacio O. De Leon on June 22, 1970, upon the full
payment of the total [price] of P1,023.74 and upon execution of the Final Deed of
Sale;
d. After full payment, Bonifacio O. De Leon was issued [TCT] No. 173677 on
February 24, 1972;

e. On January 12, 1974, Bonifacio O. de Leon executed a Deed of Sale in favor of


defendants-spouses Felix Rio Tarrosa and Lita O. de Leon disposing the parcel of
land under TCT No. 173677 for valuable consideration amount of P19,000.00 and
subscribed before Atty. Salvador R. Aguinaldo who was commissioned to
[notarize] documents on said date. The parties stipulate that the Deed of Sale is
valid and genuine. However, plaintiff Anita de Leon was not a signatory to the
Deed of Sale executed on January 12, 1974;
f. That plaintiff Anita B. de Leon and the late Bonifacio O. De Leon were married
in church rites on May 23, 1977 . . .;

g. The late Bonifacio O. de Leon died on February 29, 1996 at the UST Hospital,
Espaa, Manila;

h. The said "Deed of Sale" executed on January 12, 1974 was registered on May
8, 1996 before the Of ce of the Register of Deeds of Quezon City and [TCT] No. N-
173911 was issued to Lita O. De Leon and Felix Rio Tarrosa. 5
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The Ruling of the Trial Court
On October 4, 2006, the RTC, on the nding that the lot in question was the
conjugal property of Bonifacio and Anita, rendered judgment in favor of Anita and her
children. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
plaintiffs and against defendants in the following manner:

(1) Declaring the Deed of Sale dated January 12, 1974 executed by the late
Bonifacio O. De Leon in favor of defendants-spouses Lita De Leon and Felix Rio
Tarrosa void ab initio;
(2) Directing the Register of Deed of Quezon City to cancel Transfer Certi cate of
Title No. N-173911 in the name of "Lita O. De Leon, married to Felix Rio Tarrosa"
and restore Transfer Certi cate of Title No. 173667 in the name of "Bonifacio O.
De Leon";

(3) Ordering the defendants-spouses to pay plaintiffs the following sums:

(a) P25,000.00 as moral damages;

(b) P20,000.00 as exemplary damages;


(c) P50,000.00 as attorney's fees plus appearance fee of P2,500.00 per
court appearance;

(d) Costs of this suit.

SO ORDERED.

Aggrieved, the Tarrosas appealed to the CA. As they would submit, the RTC
erred:
(1) in nding for the plaintiffs-appellees by declaring that the land subject matter
of the case is conjugal property;

(2) in not declaring the land as the exclusive property of Bonifacio O. De Leon
when sold to defendant-appellants;

(3) in ruling that defendant-appellants did not adduce any proof that the property
was acquired solely by the efforts of Bonifacio O. De Leon;

(4) in declaring that one-half of the conjugal assets does not vest to Bonifacio O.
De Leon because of the absence of liquidation;
(5) in cancelling TCT No. N-173911 and restored TCT No. [173677] in the name of
Bonifacio O. De Leon;
(6) in awarding moral and exemplary damages and attorney's fees to the
plaintiffs-appellees. 6

The Ruling of the Appellate Court


On August 27, 2008, the CA rendered a decision af rmatory of that of the RTC,
save for the award of damages, attorney's fees, and costs of suit which the appellate
court ordered deleted. The fallo of the CA decision reads:
WHEREFORE, in view of the foregoing, the assailed decision dated October 4,
2006, of the Regional Trial Court, Branch 22, Quezon City in Civil Case No. Q-04-
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51595 is hereby AFFIRMED with MODIFICATION, in that the award of moral and
exemplary damages as well as attorney's fees, appearance fee and costs of suit
are hereby DELETED.
SO ORDERED.

Just like the RTC, the CA held that the Tarrosas failed to overthrow the legal
presumption that the parcel of land in dispute was conjugal. The appellate court held
further that the cases they cited were inapplicable.
As to the deletion of the grant of moral and exemplary damages, the CA, in gist,
held that no evidence was adduced to justify the award. Based on the same reason, it
also deleted the award of attorney's fees and costs of suit.
The Tarrosas moved but was denied reconsideration by the CA in its equally
assailed resolution of October 20, 2008.
Hence, they filed this petition.
The Issues
I

Whether the [CA] gravely erred in concluding that the land purchased on
installment by Bonifacio O. De Leon before marriage although some installments
were paid during the marriage is conjugal and not his exclusive property.
II
Whether the [CA] gravely erred in ruling that the Lorenzo, et al. vs. Nicolas, et al.,
and Alvarez vs. Espiritu cases do not apply in the case at bar because in the latter
the land involved is not a friar land unlike in the former.
DHcEAa

III
Whether the [CA] gravely erred in af rming the decision of the trial court a quo
which ruled that petitioners did not adduce any proof that the land was acquired
solely by the efforts of Bonifacio O. De Leon.

IV
Whether the court of appeals gravely erred in af rming the decision of the trial
court which ruled that one-half (1/2) of the conjugal assets do not vest to
Bonifacio O. De Leon because of the absence of liquidation.

Our Ruling
The petition lacks merit.
The Subject Property is the
Conjugal Property of Bonifacio and Anita
The rst three issues thus raised can be summed up to the question of whether
or not the subject property is conjugal.
Petitioners assert that, since Bonifacio purchased the lot from PHHC on
installment before he married Anita, the land was Bonifacio's exclusive property and not
conjugal, even though some installments were paid and the title was issued to
Bonifacio during the marriage. In support of their position, petitioners cite Lorenzo v.
Nicolas 7 and Alvarez v. Espiritu. 8
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We disagree.
Article 160 of the 1950 Civil Code, the governing provision in effect at the time
Bonifacio and Anita contracted marriage, provides that all property of the marriage is
presumed to belong to the conjugal partnership unless it is proved that it pertains
exclusively to the husband or the wife. For the presumption to arise, it is not, as Tan v.
Court of Appeals 9 teaches, even necessary to prove that the property was acquired
with funds of the partnership. Only proof of acquisition during the marriage is needed
to raise the presumption that the property is conjugal. In fact, even when the manner in
which the properties were acquired does not appear, the presumption will still apply,
and the properties will still be considered conjugal. 1 0
In the case at bar, ownership over what was once a PHHC lot and covered by the
PHHC-Bonifacio Conditional Contract to Sell was only transferred during the marriage
of Bonifacio and Anita. It is well settled that a conditional sale is akin, if not equivalent,
to a contract to sell. In both types of contract, the ef cacy or obligatory force of the
vendor's obligation to transfer title is subordinated to the happening of a future and
uncertain event, usually the full payment of the purchase price, so that if the suspensive
condition does not take place, the parties would stand as if the conditional obligation
had never existed. 1 1 In other words, in a contract to sell ownership is retained by the
seller and is not passed to the buyer until full payment of the price, unlike in a contract
of sale where title passes upon delivery of the thing sold. 1 2
Such is the situation obtaining in the instant case. The conditional contract to sell
executed by and between Bonifacio and PHHC on July 20, 1965 provided that
ownership over and title to the property will vest on Bonifacio only upon execution of
the nal deed of sale which, in turn, will be effected upon payment of the full purchase
price, to wit:
14. Titles to the property subject of this contract remains with the CORPORATION
and shall pass to, and be transferred in the name of the APPLICANT only upon
the execution of the nal Deed of Sale provided for in the next succeeding
paragraph.
15. Upon the full payment by the APPLICANT of the price of the lot above referred
to together with all the interest due thereon, taxes and other charges, and upon his
faithful compliance with all the conditions of this contract the CORPORATION
agrees to execute in favor of the APPLICANT a nal deed of sale of the aforesaid
land, and the APPLICANT agrees to accept said deed, as full performance by the
CORPORATION of its covenants and undertakings hereunder. 1 3 . . .

Evidently, title to the property in question only passed to Bonifacio after he had
fully paid the purchase price on June 22, 1970. This full payment, to stress, was made
more than two (2) years after his marriage to Anita on April 24, 1968. In net effect, the
property was acquired during the existence of the marriage; as such, ownership to the
property is, by law, presumed to belong to the conjugal partnership.
Such presumption is rebuttable only with strong, clear, categorical, and
convincing evidence. 1 4 There must be clear evidence of the exclusive ownership of one
of the spouses, 1 5 and the burden of proof rests upon the party asserting it. 1 6
Petitioners' argument that the disputed lot was Bonifacio's exclusive property,
since it was registered solely in his name, is untenable. The mere registration of a
property in the name of one spouse does not destroy its conjugal nature. 1 7 What is
material is the time when the property was acquired.
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Thus, the question of whether petitioners were able to adduce proof to
overthrow the presumption is a factual issue best addressed by the trial court. As a
matter of long and sound practice, factual determinations of the trial courts, 1 8
especially when con rmed by the appellate court, are accorded great weight by the
Court and, as rule, will not be disturbed on appeal, except for the most compelling
reasons. 1 9 Petitioners have not, as they really cannot, rebut the presumptive conjugal
nature of the lot in question. In this regard, the Court notes and quotes with approval
the following excerpts from the trial court's disposition:
The defendants, however, did not adduce any proof that the property in question
was acquired solely by the efforts of [Bonifacio]. The established jurisprudence
on the matter leads this Court to the conclusion that the property involved in this
dispute is indeed the conjugal property of the deceased [Bonifacio] De Leon.

In fact, defendant even admitted that [Bonifacio] brought into his marriage with
plaintiff Anita the said land, albeit in the concept of a possessor only as it was
not yet registered in his name. The property was registered only in 1972 during the
existence of the marriage. However, the absence of evidence on the source of
funding has called for the application of the presumption under Article 160 in
favor of the plaintiffs. 2 0

The cases petitioners cited are without governing applicability to this case
simply because they involved a law speci cally enacted to govern the disposition of
and ownership of friar lands. In Lorenzo, the Court held that the pervading legislative
intent of Act No. 1120 is "to sell the friar lands acquired by the Government to actual
settlers and occupants of the same". 2 1 The Court went on further to say in Alvarez that
"under the Friar Lands Act of 1120, the equitable and bene cial title to the land passes
to the purchaser the moment the rst installment is paid and a certi cate of sale is
issued". 2 2 Plainly, the said cases are not applicable here considering that the disputed
property is not friar land.
There can be no quibbling that Anita's conformity to the sale of the disputed lot
to petitioners was never obtained or at least not formally expressed in the conveying
deed. The parties admitted as much in their Joint Stipulation of Facts with Motion
earlier reproduced. Not lost on the Court of course is the fact that petitioners went to
the process of registering the deed after Bonifacio's death in 1996, some 22 years
after its execution. In the interim, petitioners could have had work but did not
towards securing Anita's marital consent to the sale.
It cannot be over-emphasized that the 1950 Civil Code is very explicit on the
consequence of the husband alienating or encumbering any real property of the
conjugal partnership without the wife's consent. 2 3 To a speci c point, the sale of a
conjugal piece of land by the husband, as administrator, must, as a rule, be with the
wife's consent. Else, the sale is not valid. So it is that in several cases we ruled that the
sale by the husband of property belonging to the conjugal partnership without the
consent of the wife is void ab initio, absent any showing that the latter is incapacitated,
under civil interdiction, or like causes. The nullity, as we have explained, proceeds from
the fact that sale is in contravention of the mandatory requirements of Art. 166 of the
Code. 2 4 Since Art. 166 of the Code requires the consent of the wife before the husband
may alienate or encumber any real property of the conjugal partnership, it follows that
the acts or transactions executed against this mandatory provision are void except
when the law itself authorized their validity. 2 5
Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio
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and the Tarrosas covering the PHHC lot is void.
Interest in the Conjugal Partnership is
Merely Inchoate until Liquidation
As a nal consideration, the Court agrees with the CA that the sale of one-half of
the conjugal property without liquidation of the partnership is void. Prior to the
liquidation of the conjugal partnership, the interest of each spouse in the conjugal
assets is inc ho at e, a mere expectancy, which constitutes neither a legal nor an
equitable estate, and does not ripen into a title until it appears that there are assets in
the community as a result of the liquidation and settlement. 2 6 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. 2 7
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 nally determined that, after settlement of conjugal obligations,
there are net assets left which can be divided between the spouses or their respective
heirs. 2 8
Therefore, even on the supposition that Bonifacio only sold his portion of the
conjugal partnership, the sale is still theoretically 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.
Nevertheless, this Court is mindful of the fact that the Tarrosas paid a valuable
consideration in the amount of PhP19,000 for the property in question. Thus, as a
matter of fairness and equity, the share of Bonifacio after the liquidation of the
partnership should be liable to reimburse the amount paid by the Tarrosas. It is a well-
settled principle that no person should unjustly enrich himself at the expense of
another. 2 9
WHEREFORE, the petition is DENIED. The CA Decision in CA-G.R. CV No. 88571
is AFFIRMED. Costs against petitioners.
SO ORDERED. acHTIC

Ynares-Santiago, Chico-Nazario, Nachura and Peralta, JJ., concur.

Footnotes

1. Rollo, pp. 191-209. Penned by Associate Justice Remedios A. Salazar-Fernando and


concurred in by Associate Justices Rosalinda Asuncion-Vicente and Ramon M. Bato, Jr.
2. Id. at 216-217.
3. Id. at 99-103.
4. Id. at 28-29.
5. Id. at 63-65.

6. Id. at 115-116.
7. 91 Phil. 686 (1952).
8. No. L-18833, August 14, 1965, 14 SCRA 892.
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9. G.R. No. 120594, June 10, 1997, 273 SCRA 229, 236.
10. Ching v. Court of Appeals, G.R. No. 124642, February 23, 2004, 423 SCRA 356, 370; Tan,
supra note 9; Viloria v. Aquino, 28 Phil. 258 (1914).
11. Serrano v. Caguiat, G.R. No. 139173, February 28, 2007, 517 SCRA 57, 64; Philippine
National Bank v. Court of Appeals, G.R. No. 119580, September 26, 1996, 262 SCRA 464,
citing Rose Packing Co., Inc. v. Court of Appeals, No. L-33084, November 14, 1988, 167
SCRA 309, 318 and Lim v. Court of Appeals, G.R. No. 85733, February 23, 1990, 182
SCRA 564, 670.
12. Serrano, supra at 65.

13. Rollo, p. 45.


14. Go v. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107, 117; citing Wong v.
Intermediate Appellate Court, G.R. No. 70082, August 19, 1991, 200 SCRA 792.
15. Ching, supra note 10; Francisco v. Court of Appeals, November 25, 1988, 229 SCRA 188.
16. Tan, supra note 9.
17. Go, supra note 14, at 119; Acabal v. Acabal, G.R. No. 148376, March 31, 2005, 454 SCRA
555, 580, citing Mendoza v. Reyes, No. L-31618, August 17, 1983, 124 SCRA 154 and
Bucoy v. Paulino, No. L-25775, April 26, 1968, 23 SCRA 248.
18. Villanueva v. Court of Appeals, G.R. No. 143286, April 14, 2004, 427 SCRA 439, 451; citing
People v. Cordero, G.R. Nos. 136894-96, February 7, 2001, 351 SCRA 383.
19. Republic v. Court of Appeals, G.R. No. 116372, January 18, 2001, 349 SCRA 451, 460.
20. Rollo, p. 101.
21. Supra note 7.
22. Supra note 8, at 897; citing Director of Lands v. Rizal, 87 Phil. 806 (1950).

23. Art. 166.


24. Nicolas v. Court of Appeals, No. L-37631, October 12, 1987, 154 SCRA 635, 643; Garcia v.
Court of Appeals, 215 Phil. 380 (1984); Tolentino v. Cardenas, 123 Phil. 517 (1966).
25. Civil Code, Art. 5.
26. Abalos v. Macatangay, Jr., G.R. No. 155043, September 30, 2004, 439 SCRA 649, 663;
Wong, supra note 14, at 803.
27. Manuel v. Losano, 41 Phil. 855 (1918); Nable Jose v. Nable Jose, 41 Phil. 713 (1916).
28. Abalos, supra note 26; citing Quintos de Ansaldo v. Sheriff of Manila, 64 Phil. 115 (1937).
29. Civil Code, Art. 22; Hulst v. PR Builders, Inc., G.R. No. 156364, September 3, 2007, 532 SCRA
74, 96; Advanced Foundation Construction Systems Corporation v. New World Properties
and Ventures, Inc., G.R. No. 143154, June 21, 2006, 491 SCRA 557, 578; Reyes v. Lim, et
al., G.R. No. 134241, August 11, 2003.

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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.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.


Roco, Buag, Kapunan & Migallos for private respondent.

SYLLABUS

1. CIVIL LAW; FAMILY CODE; VOID MARRIAGES; PROPERTY RELATIONS GOVERNED


BY PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE. 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, as the case may be, of the
Family Code.
2. ID.; ID.; ID.; ID.; ARTICLE 147, ELABORATED. Article 147 is a remake of Article 144
of the Civil Code as interpreted and so applied in previous cases. 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 first paragraph of Art. 147 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. Under this property regime, property acquired by both spouses through
their work and industry shall be governed by the rules on equal co-ownership. Any property
acquired during the union is prima facie presumed to have been obtained through their
joint efforts. A party who did not participate in the acquisition of the property shall 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 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.
3. ID.; ID.; ID.; ID.; ARTICLE 148, ELABORATED. When the common-law spouses
suffer from a legal impediment to marry or when they do not live exclusively with each
other (as husband and wife), only the property acquired by both of them through their
actual joint contribution of money, property or industry shall be owned in common and in
proportion to their respective contributions. Such contributions and corresponding shares,
however, are prima facie presumed to be equal. The share of any party who is married to
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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.
4. ID.; ID.; VOID AND VOIDABLE MARRIAGES; ARTICLE 50, APPLICABILITY. 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, exceptionally, to
void marriages under Article 40 of the Code, i.e., the declaration of nullity of a subsequent
marriage contracted by a spouse of a prior void marriage before the latter is judicially
declared void. The latter is a special rule that somehow recognizes the philosophy and an
old doctrine that void marriages are inexistent from the very beginning and no judicial
decree is necessary to establish their nullity. In now requiring for purposes of remarriage,
the declaration of nullity by final judgment of the previously contracted void marriage, the
present law aims to do away with any continuing uncertainty on the status of the second
marriage. It is not then illogical for the provisions of Article 43, in relation to Articles 41
and 42, of the Family Code, on the effects of the termination of a subsequent marriage
contracted during the subsistence of a previous marriage to be made applicable pro hac
vice. In all other cases, it is not to be assumed that the law has also meant to have
coincident property relations, on the one hand, between spouses in valid and voidable
marriages (before annulment) and, on the other, between common-law spouses or
spouses of void marriages, leaving to ordain, 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.
5. REMEDIAL LAW; JURISDICTION; COURT IN NULLITY OF MARRIAGE CAN ALSO
SETTLE PARTIES' COMMON PROPERTY. On the settlement of the parties' common
property, a court which has jurisdiction to declare the marriage a nullity must be deemed
likewise clothed with authority to resolve incidental and consequential matters. Here,
petitioner and private respondent own the "family home" and all their common property in
equal shares. In the liquidation and partition of the property owned in common by them,
the provisions on co-ownership under the Civil Code should aptly prevail.

DECISION

VITUG , J : p

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
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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, 1 in its decision of 29 July 1994,
granted the petition; viz:
"WHEREFORE, judgment is hereby rendered as follows:

"(1) The marriage of petitioner Antonio 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 Register of Mandaluyong,
Metro Manila, for proper recording in the registry of marriages." 2 (Emphasis
ours.)

Consuelo Gomez sought a clarification of that portion of the decision directing compliance
with Articles 50, 51 and 52 of the Family Code. She asserted that the Family Code
contained no provisions on the procedure for the liquidation of common property in
"unions without marriage." Parenthetically, during the hearing 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 (Emphasis supplied.)

In addressing specifically the issue regarding the disposition of the family dwelling, the
trial court said:
"Considering that this Court has already declared the marriage between petitioner
and respondent as null and void ab initio, pursuant to Art. 147, the property
regime of petitioner and respondent shall be governed by the rules on co-
ownership.
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"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 declares void ab initio
on the ground of the psychological incapacity of a spouse, the same may be read
consistently with Article 129.
"IV

"It is necessary to determine the parent with whom majority of the children wish to
stay." 5

The trial court correctly applied the law. In a void marriage, regardless of the cause thereof,
the property relations of the parties during the period of cohabitation is governed by the
provisions of Article 147 or Article 148, such as the case may be, of the Family Code.
Article 147 is a remake of Article 144 of the Civil Code as interpreted and so applied in
previous cases; 6 it provides:
"ART. 147. When a man and a woman who are capacitated to marry each
other, live exclusively with each other as husband and wife without the benefit of
marriage or under a void marriage, their wages and salaries shall be owned by
them in equal shares and the property acquired by both of them through their
work or industry shall be governed by the rules on co-ownership.
"In the absence of proof to the contrary, properties acquired while they lived
together shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be owned by them in equal shares. For purposes of this Article,
a party who did not participate in the acquisition by the other party of any
property shall be deemed to have contributed jointly in the acquisition thereof 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
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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 bene t of marriage. The term "capacitated" in the
provision (in the rst paragraph of the law) refers to the legal capacity of a party to
contract marriage, i.e., any "male or female of the age of eighteen years or upwards not
under any of the impediments mentioned in Articles 37 and 38" 7 of the Code.
Under this property regime, property acquired by both spouses through their work and
industry shall be governed by the rules on equal co-ownership. Any property acquired
during the union is prima facie presumed to have been obtained through their joint efforts.
A party who did not participate in the acquisition of the property shall still be considered
as having contributed thereto jointly if said party's "efforts consisted in the care and
maintenance of the family household." 8 Unlike the conjugal partnership of gains, the fruits
of the couple's separate property are not included in the co-ownership.
Article 147 of the Family Code, in 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 9 or declaration of
nullity of the marriage. 10
When the common-law spouses suffer from a legal impediment to marry or when they do
not live exclusively with each other (as husband and wife), only the property acquired by
both of them through their actual joint contribution of money, property or industry shall be
owned in common and in proportion to their respective contributions. Such contributions
and corresponding shares, however, are prima facie presumed to be equal. The share of
any party who is married to another shall accrue to the absolute community or conjugal
partnership, as the case may be, if so existing under a valid marriage. If the party who has
acted in bad faith is not validly married to another, his or her share shall be forfeited in the
manner already heretofore expressed. 1 1
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
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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, 1 2 12a of the
Family Code, should aptly prevail. The rules set up to govern the liquidation of either the
absolute community or the conjugal partnership of gains, the property regimes recognized
for valid and voidable marriages (in the latter case until the contract is annulled), are
irrelevant to the liquidation of the co-ownership that exists between common-law spouses.
The first paragraph of Article 50 of the Family Code, applying paragraphs (2), (3), (4) and
(5) of Article 43, 1 3 relates only, by its explicit terms, to voidable marriages and,
exceptionally, to void marriages under Article 40 1 4 of the Code, i.e., the declaration of
nullity of a subsequent marriage contracted by a spouse of a prior void marriage before
the latter is judicially declared void. The latter is a special rule that somehow recognizes
the philosophy and an old doctrine that void marriages are inexistent from the very
beginning and no judicial decree is necessary to establish their nullity. In now requiring for
purposes of remarriage, the declaration of nullity by final judgment of the previously
contracted void marriage, the present law aims to do away with any continuing uncertainty
on the status of the second marriage. It is not then illogical for the provisions of Article 43,
in relation to Articles 41 1 5 and 42, 1 6 of the Family Code, on the effects of the termination
of a subsequent marriage contracted during the subsistence of a previous marriage to be
made applicable pro hac vice. In all other case, 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 ., is on leave.
Footnotes

1. Hon. Perlita Tria Tirona, presiding.


2. Rollo, p. 22.
3. Rollo, p. 42.
4. Rollo, pp. 38-39.
5. Rollo, pp. 24-25.
6. See Margaret Maxey vs. Court of Appeals, 129 SCRA 187; Aznar, et al. vs. Garcia, et al.,
102 Phil. 1055.
7. Art. 5. Any male or female of the age of eighteen years or upwards not under any of
the impediments mentioned in Articles 37 and 38, may contract marriage.
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Art. 37. Marriages between the following are incestuous and void from the
beginning, whether the relationship between the parties be legitimate or illegitimate:
(1) Between ascendants and descendants of any degree; and

(2) Between brothers and sisters, whether of the full or half-blood.


Art. 38. The following marriages shall be void from the beginning for reasons of
public policy:

(1) Between collateral blood relatives; whether legitimate or illegitimate, up to the


fourth civil degree;

(2) Between step-parents and stepchildren;


(3) Between parents-in-law and children-in-law;
(4) Between the adopting parent and the adopted child;
(5) Between the surviving spouse of the adopting parent and the adopted child;
(6) Between the surviving spouse of the adopted child and the adopter;

(7) Between an adopted child and a legitimate child of the adopter;


(8) Between adopted children of the same adopter; and

(9) Between parties where one, with the intention to marry the other, killed that
other person's spouse or his or her own spouse.
8 Article 147, Family Code.
9. Article 147, Family Code.

10. Articles 43, 50 and 51, Family Code.


11. Article 148, Family Code.
12. Art. 50. The effects provided for in paragraphs (2), (3), (4) and (5) of Article 43 and
in Article 44 shall also apply in proper cases to marriages which are declared void ab
initio or annulled by final judgment under Articles 40 and 45.
The final judgment in such case shall provide for the liquidation, partition and
distribution of the properties of the spouses, the custody and support of the common
children and the delivery of their presumptive legitimates, unless such matters had been
adjudicated in previous judicial proceedings.
All creditors of the spouses as well as of the absolute community or the conjugal
partnership shall be notified of the proceedings for liquidation.
In the partition, the conjugal dwelling and the lot on which it is situated, shall be
adjudicated in accordance with the provisions of Articles 102 and 129.
Art. 51. In said partition, the value of the presumptive legitimates of all common
children, computed as of the date of the final judgment of the trial court, shall be
delivered in cash, property or sound securities, unless the parties, by mutual agreement
judicially approved, had already for such matters.
The children or their guardian, or the trustee of their property, may ask for the
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enforcement of the judgment.
The delivery of the presumptive legitimes herein prescribed shall in no way prejudice
the ultimate successional rights of the children accruing upon the death of either or both
of the parents; but the value of the properties already received under the decree of
annulment or absolute nullity shall be considered as advances on their legitime.
Art. 52. The judgment of annulment or of absolute nullity of the marriage, the
partition and distribution of the properties of the spouses, and the delivery of the
children's presumptive legitimes shall be recorded in the appropriate civil registry and
registries of property; otherwise, the same shall not affect third persons.
Art. 102. Upon dissolution of the absolute community regime, the following
procedure shall apply:
(1) An inventory shall be prepared, listing separately all the properties of the
absolute community and the exclusive properties of each spouse.
(2) The debts and obligations of the absolute community shall be paid out of its
assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for
the unpaid balance with their separate properties in accordance with the provisions of
the second paragraph of Article 94.
(3) Whatever remains of the exclusive properties of the spouses shall thereafter
be delivered to each of them.
(4) The net remainder of the properties of the absolute community shall
constitute its net assets, which shall be divided equally between husband and wife,
unless a different proportion or division was agreed upon in the marriage settlements, or
unless there has been a voluntary waiver of such share as provided in this Code. For
purposes of computing the net profits subject to forfeiture in accordance with Articles
43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the
market value of the community property at the time of the celebration of the marriage
and the market value at the time of its dissolution.

(5) The presumptive legitimes of the common children shall be delivered upon
partition, in accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties,
the conjugal dwelling and the lot on which it is situated shall be adjudicated to the
spouse with whom the majority of the common children choose to remain. Children
below the age of seven years are deemed to have chosen the mother, unless the court
has decided otherwise. In case there is no such majority, the court shall decide, taking
into consideration the best interests of said children.
Art. 129. Upon the dissolution of the conjugal partnership regime, the following
procedure shall apply;
(1) An inventory shall be prepared, listing separately all the properties of the
conjugal partnership and the exclusive properties of each spouse.
(2) Amounts advanced by the conjugal partnership in payment of personal debts
and obligations of either spouse shall be credited to the conjugal partnership as an asset
thereof.
(3) Each spouse shall be reimbursed for the use of his or her exclusive funds in
the acquisition of property or for the value of his or her exclusive property, the ownership
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of which has been vested by law in the conjugal partnership.
(4) The debts and obligations of the conjugal partnership shall be paid out of the
conjugal assets. In case of insufficiency of said assets, the spouses shall be solidarily
liable for the unpaid balance with their separate properties, in accordance with the
provisions of paragraph (2) of Article 121.

(5) Whatever remains of the exclusive properties of the spouses shall thereafter
be delivered to each of them.
(6) Unless the owner has been indemnified from whatever source, the loss or
deterioration of movables used for the benefit of the family, belonging to either spouse,
even due to fortuitous event, shall be paid to said spouse from the conjugal funds, if
any.
(7) The net remainder of the conjugal partnership properties shall constitute the
profits, which shall be divided equally between husband and wife, unless a different
proportion or division was agreed upon in the marriage settlements or unless there has
been a voluntary waiver or forfeiture of such share as provided in this Code.
(8) The presumptive legitimates of the common children shall be delivered upon
partition in accordance with Article 51.
(9) In the partition of the properties, the conjugal dwelling and the lot on which it
is situated shall, unless otherwise agreed upon by the parties, be adjudicated to the
spouse with whom the majority of the common children choose to remain. Children
below the age of seven years are deemed to have chosen the mother, unless the court
has decided otherwise. In case there is no such majority, the court shall decide, taking
into consideration the best interests of said children.
13. Art. 43. The termination of the subsequent marriage referred to in the preceding
Article shall produce the following effects:
(1) The children of the subsequent marriage conceived prior to its termination
shall be considered legitimate, and their custody and support in case of dispute shall be
decided by the court in a proper proceeding;

(2) The absolute community of property or the conjugal partnership, as the case
may be, shall be dissolved and liquidated, but if either spouse contracted said marriage
in bad faith, his or her share of the net profits of the community property or conjugal
partnership property shall be forfeited in favor of the common children or, if there are
none, the children of the guilty spouse by a previous marriage or, in default of children,
the innocent spouse;
(3) Donations by reason or marriage shall remain valid, except that if the donee
contracted the marriage in bad faith, such donations made to said donee are revoked by
operation of law;
(4) The innocent spouse may revoke the designation of the other spouse who
acted in bad faith as a beneficiary in any insurance policy, even if such designation be
stipulated as irrevocable; and
(5) The spouse who contracted the subsequent marriage in bad faith shall be
disqualified to inherit from the innocent spouse by testate and intestate succession.

14. Art. 40. 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
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void.
15. Art. 41. A marriage contracted by any person during the subsistence of a previous
marriage shall be null and void, unless before the celebration of the subsequent
marriage, the prior spouse had been absent for four consecutive years and the spouse
present had a well-founded belief that the absent spouse was already dead. In case of
disappearance where there is danger under the circumstances set forth in the provisions
of Article 391 of the Civil Code, an absence of only two years shall be sufficient.
For the purpose of contracting the subsequent marriage under the preceding
paragraph, the spouse present must institute a summary proceeding as provided in this
Code for the declaration of presumptive death of the absentee, without prejudice to the
effect of reappearance of the absent spouse.
16. Art. 42. The subsequent marriage referred to in the preceding Article 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.

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SECOND DIVISION

[G.R. No. 151967. February 16, 2005.]

JOSEFINA C. FRANCISCO , petitioner, vs . MASTER IRON WORKS &


CONSTRUCTION CORPORATION and ROBERTO V. ALEJO, Sheriff IV,
Regional Trial Court of Makati City, Branch 142 , respondents.

DECISION

CALLEJO, SR ., J : p

Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals
(CA) in CA-G.R. No. CV No. 59045, which reversed and set aside the Decision 2 of the
Regional Trial Court (RTC) of Paraaque, Metro Manila, Branch 260, in Civil Case No. 94-
2260 and the Resolution of the CA denying the petitioner's motion for reconsideration of
the said decision.
Josefina Castillo was only 24 years old when she and Eduardo G. Francisco were married
on January 15, 1983. 3 Eduardo was then employed as the vice president in a private
corporation. A little more than a year and seven months thereafter, or on August 31, 1984,
the Imus Rural Bank, Inc. (Imus Bank) executed a deed of absolute sale for P320,000.00 in
favor of Josefina Castillo Francisco, married to Eduardo Francisco, covering two parcels of
residential land with a house thereon located at St. Martin de Porres Street, San Antonio
Valley I, Sucat, Paraaque, Metro Manila. One of the lots was covered by Transfer
Certificate of Title (TCT) No. 36519, with an area of 342 square meters, while the other lot,
with an area of 360 square meters, was covered by TCT No. 36518. 4 The purchase price
of the property was paid to the Bank via Check No. 002334 in the amount of P320,000.00
drawn and issued by the Commercial Bank of Manila, for which the Imus Bank issued
Official Receipt No. 121408 on August 31, 1984. 5 On the basis of the said deed of sale,
TCT Nos. 36518 and 36519 were cancelled and, on September 4, 1984, the Register of
Deeds issued TCT Nos. 87976 (60550) and 87977 (60551) in the name of "Josefina
Castillo Francisco married to Eduardo G. Francisco." 6
On February 15, 1985, the Register of Deeds made of record Entry No. 85-18003 at the
dorsal portion of the said titles. This referred to an Affidavit of Waiver executed by
Eduardo where he declared that before his marriage to Josefina, the latter purchased two
parcels of land, including the house constructed thereon, with her own savings, and that he
was waiving whatever claims he had over the property. 7 On January 13, 1986, Josefina
mortgaged the said property to Leonila Cando for a loan of P157,000.00. 8 It appears that
Eduardo affixed his marital conformity to the deed. 9
On June 11, 1990, Eduardo, who was then the General Manager and President of Reach
Out Trading International, bought 7,500 bags of cement worth P768,750.00 from Master
Iron Works & Construction Corporation (MIWCC) but failed to pay for the same. On
November 27, 1990, MIWCC filed a complaint against him in the RTC of Makati City for the
return of the said commodities, or the value thereof in the amount of P768,750.00. The
case was docketed as Civil Case No. 90-3251. On January 8, 1992, the trial court rendered
judgment in favor of MIWCC and against Eduardo. The fallo of the decision reads:
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Accordingly, the Court renders judgment in favor of the plaintiff Master Iron Works
And Construction Corporation against the defendant [Eduardo] Francisco ordering
the latter as follows:

1. To replace to plaintiff 7,500 bags at 50 kilos/bag of Portland cement or, in


the alternative, to pay the plaintiff the amount of P768,750.00;HCDAcE

2. In either case, to pay liquidated damages by way of interest at 12% per


annum from June 21, 1990 until fully paid;

3. To pay P50,000.00 as actual damages; and

4. To pay attorney's fees of P153,750.00 and litigation expenses of


P20,000.00.
SO ORDERED. 1 0

The decision in Civil Case No. 90-3251 became final and executory and, on June 7, 1994,
the court issued a writ of execution. 1 1 On June 14, 1994, Sheriff Roberto Alejo sold at a
public auction one stainless, owner-type jeep for P10,000.00 to MIWCC. 1 2 Sheriff Alejo
issued a Notice of Levy on Execution/Attachment over the lots covered by TCT No. 87976
(60550) and 87977 (60551) for the recovery of the balance of the amount due under the
decision of the trial court in Civil Case No. 90-3251. 1 3 On June 24, 1994, the sale of the
property at a public auction was set to August 5, 1994. 1 4
On July 3, 1994, Josefina executed an Affidavit of Third Party Claim 1 5 over the two parcels
of land in which she claimed that they were her paraphernal property, and that her husband
Eduardo had no proprietary right or interest over them as evidenced by his affidavit of
waiver, a copy of which she attached to her affidavit. She, likewise, requested Sheriff Alejo
to cause the cancellation of the notice of levy on execution/attachment earlier issued by
him.
On July 7, 1994, Josefina filed the said Affidavit of Third Party Claim in the trial court and
served a copy thereof to the sheriff. MIWCC then submitted an indemnity bond 1 6 in the
amount of P1,361,500.00 issued by the Prudential Guarantee and Assurance, Inc. The sale
at public auction proceeded. MIWCC made a bid for the property for the price of
P1,350,000.00. 1 7
On July 28, 1994, Josefina filed a Complaint against MIWCC and Sheriff Alejo in the RTC of
Paraaque for damages with a prayer for a writ of preliminary injunction or temporary
restraining order, docketed as Civil Case No. 94-2260. She alleged then that she was the
sole owner of the property levied on execution by Sheriff Alejo in Civil Case No. 90-3251;
hence, the levy on execution of the property was null and void. She reiterated that her
husband, the defendant in Civil Case No. 90-3251, had no right or proprietary interest over
the said property as evidenced by his affidavit of waiver annotated at the dorsal portion of
the said title. Josefina prayed that the court issue a temporary restraining order/writ of
preliminary injunction to enjoin MIWCC from causing the sale of the said property at public
auction. Considering that no temporary restraining order had as yet been issued by the trial
court, the sheriff sold the subject property at public auction to MIWCC for P1,350,000.00
on August 5, 1994. 1 8 However, upon the failure of MIWCC to remit the sheriff's
commission on the sale, the latter did not execute a sheriff's certificate of sale over the
property. The RTC of Paraaque, thereafter, issued a temporary restraining order 1 9 on
August 16, 1994. cEITCA

When Josefina learned of the said sale at public auction, she filed an amended complaint
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impleading MIWCC, with the following prayer:
WHEREFORE, premises considered, it is most respectfully prayed to this
Honorable Court that, after hearing, judgment be rendered in favor of the plaintiff
and against the defendants and the same be in the following tenor:

1. Ordering the defendants, jointly and severally, to pay the plaintiff the
following amounts:

A. The sum of P50,000.00 representing as actual damages;

B. The sum of P200,000.00 representing as moral damages;

C. The sum of P50,000.00 or such amount which this Honorable Court


deems just as exemplary damages;

D. The sum of P60,000.00 as and for attorney's fees.


2. Declaring the levying and sale at public auction of the plaintiff's properties
null and void;

3. To issue writ of preliminary injunction and makes it permanent;

4. Order the cancellation of whatever entries appearing at the titles as a result


of the enforcement of the writ of execution issued in Civil Case No. 90-3251.

Plaintiff further prays for such other reliefs as may be just under the premises. 2 0

In its answer to the complaint, MIWCC cited Article 116 of the Family Code of the
Philippines and averred that the property was the conjugal property of Josefina and her
husband Eduardo, who purchased the same on August 31, 1984 after their marriage on
January 14, 1983. MIWCC asserted that Eduardo executed the affidavit of waiver to evade
the satisfaction of the decision in Civil Case No. 90-3251 and to place the property beyond
the reach of creditors; hence, the said affidavit was null and void. ESTcIA

Before she could commence presenting her evidence, Josefina filed a petition to annul her
marriage to Eduardo in the RTC of Paraaque, Metro Manila, on the ground that when they
were married on January 15, 1983, Eduardo was already married to one Carmelita Carpio.
The case was docketed as Civil Case No. 95-0169.
Josefina and Carmelita testified in Civil Case No. 95-0169. Josefina declared that during
her marriage to Eduardo, she acquired the property covered by TCT Nos. 87976 (60550)
and 87977 (60551), through the help of her sisters and brother, and that Eduardo had no
participation whatsoever in the said acquisition. She added that Eduardo had five children,
namely, Mary Jane, Dianne, Mary Grace Jo, Mark Joseph and Mary Cecille, all surnamed
Francisco. jur2005cd

On September 9, 1996, the RTC of Paraaque rendered judgment 2 1 in Civil Case No. 95-
0169, declaring the marriage between Josefina and Eduardo as null and void for being
bigamous.
In the meantime, Josefina testified in Civil Case No. 94-2260, declaring, inter alia, that she
was able to purchase the property from the Bank when she was still single with her
mother's financial assistance; she was then engaged in recruitment when Eduardo
executed an affidavit of waiver; she learned that he was previously married when they
already had two children; nevertheless, she continued cohabiting with him and had three
more children by him; and because of Eduardo's first marriage, she decided to have him
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execute the affidavit of waiver.
Eduardo testified that when his wife bought the property in 1984, he was in Davao City and
had no knowledge of the said purchases; he came to know of the purchase only when
Josefina informed him a week after his arrival from Davao; 2 2 Josefina's sister, Lolita
Castillo, told him that she would collect from him the money his wife borrowed from her
and their mother to buy the property; 2 3 when he told Lolita that he had no money, she said
that she would no longer collect from him, on the condition that he would have no
participation over the property, 2 4 which angered Eduardo; 2 5 when Josefina purchased the
property, he had a gross monthly income of P10,000.00 and gave P5,000.00 to Josefina
for the support of his family; 2 6 Josefina decided that he execute the affidavit of waiver
because her mother and sister gave the property to her. 2 7

On December 20, 1997, the trial court rendered judgment finding the levy on the subject
property and the sale thereof at public auction to be null and void. The fallo of the decision
reads:
WHEREFORE, PREMISES CONSIDERED, THIS COURT finds the Levying and sale
at public auction of the plaintiff's properties null and void. ETHCDS

The court orders the defendants to, jointly and severally, pay plaintiff the
following amounts:

a. The sum of P50,000.00 as actual damages;

b. The sum of P50,000.00 representing as moral damages;

c. The sum of P50,000.00 as exemplary damages;

d. The sum of P60,000.00 as and for attorney's fees.


The court orders the cancellation of whatever entries appearing at the Titles as a
result of the enforcement of the writ of execution issued in Civil Case No. 90-
3251.
SO ORDERED. 2 8

The trial court held that the property levied by Sheriff Alejo was the sole and exclusive
property of Josefina, applying Articles 144, 160, 175 and 485 of the New Civil Code. The
trial court also held that MIWCC failed to prove that Eduardo Francisco contributed to the
acquisition of the property.
MIWCC appealed the decision to the CA in which it alleged that:
I. THE TRIAL COURT ERRED IN RULING THAT THE REAL ESTATE
PROPERTIES SUBJECT OF THE AUCTION SALE ARE PARAPHERNAL
PROPERTIES OWNED BY PLAINTIFF-APPELLEE JOSEFINA FRANCISCO;

II. THE TRIAL COURT ERRED IN ALLOWING THE RECEPTION OF REBUTTAL


EVIDENCE WITH REGARD TO THE ANNULMENT OF PLAINTIFF-
APPELLEE'S MARRIAGE WITH EDUARDO FRANCISCO;
III. THE TRIAL COURT ERRED IN RULING THAT THE LEVY ON EXECUTION OF
PLAINTIFF-APPELLEE'S PROPERTIES SUBJECT OF THE PRESENT
CONTROVERSY IS NULL AND VOID; TEAcCD

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IV. THE TRIAL COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO
PAY DAMAGES TO PLAINTIFF-APPELLEE FOR ALLEGED IMPROPER LEVY
ON EXECUTION. 2 9

The CA rendered judgment setting aside and reversing the decision of the RTC on
September 20, 2001. The fallo of the decision reads:
WHEREFORE, premises considered, the Decision, dated 20 December 1997, of the
Regional Trial Court of Paraaque, Branch 260, is hereby REVERSED and SET
ASIDE and a new one entered dismissing Civil Case No. 94-0126.
SO ORDERED. 3 0

The CA ruled that the property was presumed to be the conjugal property of Eduardo and
Josefina, and that the latter failed to rebut such presumption. It also held that the affidavit
of waiver executed by Eduardo was contrary to Article 146 of the New Civil Code and, as
such, had no force and effect. Josefina filed a motion for reconsideration of the decision,
which was, likewise, denied by the CA.
Josefina, now the petitioner, filed the present petition for review, alleging that:
A. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THERE
EXISTS A CONJUGAL PARTNERSHIP BETWEEN PETITIONER AND
EDUARDO FRANCISCO;
B. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE
SUBJECT PROPERTIES WERE NOT PARAPHERNAL PROPERTIES OF
PETITIONER;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISTURBING THE
FINDINGS OF FACTS AND CONCLUSION BY THE TRIAL COURT IN ITS
DECISION OF DECEMBER 20, 1997, THE SAME BEING IN ACCORDANCE
WITH LAW AND JURISPRUDENCE. 3 1

The threshold issues for resolution are as follows: (a) whether or not the subject property
is the conjugal property of Josefina Castillo and Eduardo Francisco; and (b) whether or not
the subject properties may be held to answer for the personal obligations of Eduardo. acADIT

We shall deal with the issues simultaneously as they are closely related.
The petitioner asserts that inasmuch as her marriage to Eduardo is void ab initio, there is
no occasion that would give rise to a regime of conjugal partnership of gains. The
petitioner adds that to rule otherwise would render moot and irrelevant the provisions on
the regime of special co-ownership under Articles 147 and 148 of the Family Code of the
Philippines, in relation to Article 144 of the New Civil Code.
The petitioner avers that since Article 148 of the Family Code governs their property
relationship, the respondents must adduce evidence to show that Eduardo actually
contributed to the acquisition of the subject properties. The petitioner asserts that she
purchased the property before her marriage to Eduardo with her own money without any
contribution from him; hence, the subject property is her paraphernal property.
Consequently, such property is not liable for the debts of Eduardo to private respondent
MIWCC.
The respondents, on the other hand, contend that the appellate court was correct in ruling
that the properties are conjugal in nature because there is nothing in the records to
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support the petitioner's uncorroborated claim that the funds she used to purchase the
subject properties were her personal funds or came from her mother and sister. The
respondents point out that if, as claimed by the petitioner, the subject properties were,
indeed, not conjugal in nature, then, there was no need for her to obtain marital (Eduardo's)
consent when she mortgaged the properties to two different parties sometime in the first
quarter of 1986, or after Eduardo executed the affidavit of waiver.
We note that the only questions raised in this case are questions of facts. Under Rule 45 of
the Rules of Court, only questions of law may be raised in and resolved by the Court. The
Court may, however, determine and resolve questions of facts in cases where the findings
of facts of the trial court and those of the CA are inconsistent, where highly meritorious
circumstances are present, and where it is necessary to give substantial justice to the
parties. In the present action, the findings of facts and the conclusions of the trial court
and those of the CA are opposite. There is thus an imperative need for the Court to delve
into and resolve the factual issues, in tandem with the questions of law raised by the
parties. HEISca

The petition has no merit.


The petitioner failed to prove that she acquired the property with her personal funds
before her cohabitation with Eduardo and that she is the sole owner of the property. The
evidence on record shows that the Imus Bank executed a deed of absolute sale over the
property to the petitioner on August 31, 1984 and titles over the property were, thereafter,
issued to the latter as vendee on September 4, 1984 after her marriage to Eduardo on
January 15, 1983.
We agree with the petitioner that Article 144 of the New Civil Code does not apply in the
present case. This Court in Tumlos v. Fernandez 3 2 held that Article 144 of the New Civil
Code applies only to a relationship between a man and a woman who are not incapacitated
to marry each other, or to one in which the marriage of the parties is void from the very
beginning. It does not apply to a cohabitation that is adulterous or amounts to
concubinage, for it would be absurd to create a co-ownership where there exists a prior
conjugal partnership or absolute community between the man and his lawful wife. In this
case, the petitioner admitted that when she and Eduardo cohabited, the latter was
incapacitated to marry her.
Article 148 of the Family Code of the Philippines, on which the petitioner anchors her
claims, provides as follows:
Art. 148. In cases of cohabitation not falling under the preceding Article, only
the properties acquired by both of the parties through their actual joint
contribution of money, property, or industry shall be owned by them in common in
proportion to their respective contributions. In the absence of proof to the
contrary, their contributions and corresponding shares are presumed to be equal.
The same rule and presumption shall apply to joint deposits of money and
evidences of credit.
If one of the parties is validly married to another, his or her share in the co-
ownership shall accrue to the absolute community or conjugal partnership
existing in such valid marriage. If the party who acted in bad faith is not validly
married to another, his or her share shall be forfeited in the manner provided in
the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall, likewise, apply even if both parties are in
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bad faith. ADaSEH

Indeed, the Family Code has filled the hiatus in Article 144 of the New Civil Code by
expressly regulating in Article 148 the property relations of couples living in a state of
adultery or concubinage. Under Article 256 of the Family Code, the law can be applied
retroactively if it does not prejudice vested or acquired rights. The petitioner failed to
prove that she had any vested right over the property in question. 3 3
Since the subject property was acquired during the subsistence of the marriage of
Eduardo and Carmelita, under normal circumstances, the same should be presumed to be
conjugal property. 3 4 Article 105 of the Family Code of the Philippines provides that the
Code shall apply to conjugal partnership established before the code took effect, without
prejudice to vested rights already acquired under the New Civil Code or other laws. 3 5
Thus, even if Eduardo and Carmelita were married before the effectivity of the Family Code
of the Philippines, the property still cannot be considered conjugal property because there
can only be but one valid existing marriage at any given time. 3 6 Article 148 of the Family
Code also debilitates against the petitioner's claim since, according to the said article, a
co-ownership may ensue in case of cohabitation where, for instance, one party has a pre-
existing valid marriage provided that the parents prove their actual joint contribution of
money, property or industry and only to the extent of their proportionate interest thereon.
37

We agree with the findings of the appellate court that the petitioner failed to adduce
preponderance of evidence that she contributed money, property or industry in the
acquisition of the subject property and, hence, is not a co-owner of the property:
First of all, other than plaintiff-appellee's bare testimony, there is nothing in the
record to support her claim that the funds she used to purchase the subject
properties came from her mother and sister. She did not, for instance, present the
testimonies of her mother and sister who could have corroborated her claim.
Furthermore, in her Affidavit of Third-Party Claim (Exh. "C"), she stated that the
subject properties "are my own paraphernal properties, including the
improvements thereon, as such are the fruits of my own exclusive efforts . . .,"
clearly implying that she used her own money and contradicting her later claim
that the funds were provided by her mother and sister. She also stated in her
affidavit that she acquired the subject properties before her marriage to Eduardo
Francisco on 15 January 1983, a claim later belied by the presentation of the
Deed of Absolute Sale clearly indicating that she bought the properties from Imus
Rural Bank on 31 August 1984, or one year and seven months after her marriage
(Exh. "D"). In the face of all these contradictions, plaintiff-appellee's
uncorroborated testimony that she acquired the subject properties with funds
provided by her mother and sister should not have been given any weight by the
lower court.

It is to be noted that plaintiff-appellee got married at the age of 23. At that age, it
is doubtful if she had enough funds of her own to purchase the subject properties
as she claimed in her Affidavit of Third Party Claim. Confronted with this reality,
she later claimed that the funds were provided by her mother and sister, clearly an
afterthought in a desperate effort to shield the subject properties from appellant
Master Iron as judgment creditor. 3 8

Aside from her bare claims, the petitioner offered nothing to prove her allegation that she
borrowed the amount of P320,000.00 from her mother and her sister, which she paid to
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the Imus Bank on August 31, 1984 to purchase the subject property. The petitioner even
failed to divulge the name of her mother and the sources of her income, if any, and that of
her sister. When she testified in Civil Case No. 95-0169, the petitioner declared that she
borrowed part of the purchase price of the property from her brother, 3 9 but failed to
divulge the latter's name, let alone reveal how much money she borrowed and when. The
petitioner even failed to adduce any evidence to prove that her mother and sister had
P320,000.00 in 1984, which, considering the times, was then quite a substantial amount.
Moreover, the petitioner's third-party-claim affidavit stating that the properties "are the
fruits of my own exclusive effort before I married Eduardo Francisco" belies her testimony
in the trial court and in Civil Case No. 95-0169. cECTaD

We note that, as gleaned from the receipt issued by the Imus Bank, the payment for the
subject property was drawn via Check No. 002334 and issued by the Commercial Bank of
Manila in the amount of P320,000.00. 4 0 The petitioner failed to testify against whose
account the check was drawn and issued, and whether the said account was owned by her
and/or Eduardo Francisco or her mother, sister or brother. She even failed to testify
whether the check was a manager's check and, if so, whose money was used to purchase
the same.
We also agree with the findings of the CA that the affidavit of waiver executed by Eduardo
on February 15, 1985, stating that the property is owned by the petitioner, is barren of
probative weight. We are convinced that he executed the said affidavit in anticipation of
claims by third parties against him and hold the property liable for the said claims. First,
the petitioner failed to prove that she had any savings before her cohabitation with
Eduardo. Second, despite Eduardo's affidavit of waiver, he nevertheless affixed his marital
conformity to the real estate mortgage executed by the petitioner over the property in
favor of Leonila on January 13, 1986. 4 1 Third, the petitioner testified that she borrowed
the funds for the purchase of the property from her mother and sister. 4 2 Fourth, the
petitioner testified that Eduardo executed the affidavit of waiver because she discovered
that he had a first marriage. 4 3 Lastly, Eduardo belied the petitioner's testimony when he
testified that he executed the affidavit of waiver because his mother-in-law and sister-in-
law had given the property to the petitioner. 4 4
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of
the Court of Appeals reversing the decision of the Regional Trial Court is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Puno, Austria-Martinez, Tinga and Chico-Nazario, JJ., concur.
Footnotes

1. Penned by Associate Justice Wenceslao I. Agnir, Jr. (retired), with Associate Justices
Salvador J. Valdez, Jr. and Mariano C. Del Castillo, concurring.

2. Penned by Judge Helen Bautista-Ricafort.


3. TSN, 24 January 1995, pp. 13-14. (Exhibit "H")
4. Exhibit "D."
5. Exhibit "E."

6. Records, pp. 149, 151. (Exhibits "A" and "B")


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7. Dorsal portion of TCT Nos. 87976 and 87977.
8. Records, pp. 236-239. (Exhibits "13" to "13-D")
9. Id. at 238. (Exhibit "13-D")
10. Id. at 221.
11. Id. at 222. (Exhibit "2")
12. Id. at 45.
13. Id. at 223. (Exhibit "3")
14. Id. at 224. (Exhibit "4")
15. Id. at 153.
16. Id. at 227. (Exhibit "6")
17. Id. at 229. (Exhibit "8")
18. Id. at 56.
19. Id. at 19.
20. Id. at 32.
21. Id. at 287-289.
22. TSN, 11 July 1995, p. 15.
23. Id. at 10-12.
24. TSN, 14 July 1995, p. 14.
25. TSN, 11 July 1995, pp. 19-20.
26. Id. at 31.
27. Id. at 29-32.
28. CA Rollo, pp. 41-42.

29. Id. at 21.


30. Rollo, pp. 39-40.
31. Id. at 13.
32. 330 SCRA 718 (2000).

33. Id. at 733.


34. Art. 116. 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.
35. Villanueva v. Court of Appeals, G.R. No. 143286, April 14, 2004.
36. Tumlos v. Fernandez, supra.
37. Ibid; Malang v. Moson, 338 SCRA 393 (2000).
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38. Rollo, pp. 34-35.
39. Exhibit "G-1."
40. Exhibit "E."
41. Exhibit "13-D."

42. TSN, 11 July 1995, pp. 11-12.


43. TSN, 30 May 1995, pp. 8-9.
44. TSN, 11 July 1995, pp. 29-30.

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SECOND DIVISION

[G.R. No. 180572. June 18, 2012.]

SPOUSES ATTY. ERLANDO A. ABRENICA and JOENA B. ABRENICA ,


petitioners, vs . LAW FIRM OF ABRENICA, TUNGOL and TIBAYAN,
ATTYS. ABELARDO M. TIBAYAN and DANILO N. TUNGOL ,
respondents.

DECISION

SERENO , J : p

The present case is a continuation of G.R. No. 169420 1 decided by this Court on 22
September 2006. For brevity, we quote the relevant facts narrated in that case:
Petitioner Atty. Erlando A. Abrenica was a partner of individual respondents, Attys.
Danilo N. Tungol and Abelardo M. Tibayan, in the Law Firm of Abrenica, Tungol
and Tibayan ("the firm").

In 1998, respondents led with the Securities and Exchange Commission (SEC)
two cases against petitioner. The rst was SEC Case No. 05-98-5959, for
Accounting and Return and Transfer of Partnership Funds with Damages and
Application for Issuance of Preliminary Attachment, where they alleged that
petitioner refused to return partnership funds representing pro ts from the sale of
a parcel of land in Lemery, Batangas. The second was SEC Case No. 10-98-6123,
also for Accounting and Return and Transfer of Partnership Funds where
respondents sought to recover from petitioner retainer fees that he received from
two clients of the rm and the balance of the cash advance that he obtained in
1997.
The SEC initially heard the cases but they were later transferred to the Regional
Trial Court of Quezon City pursuant to Republic Act No. 8799, which transferred
jurisdiction over intra-corporate controversies from the SEC to the courts. In a
Consolidated Decision dated November 23, 2004, the Regional Trial Court of
Quezon City, Branch 226, held that: HcSaTI

WHEREFORE, in view of all the foregoing, judgment is hereby rendered as


follows:
CIVIL CASE NO. Q01-42948

1. Ordering the respondent Atty. Erlando Abrenica to render full


accounting of the amounts he received as profits from the sale and resale
of the Lemery property in the amount of P4,524,000.00;
2. Ordering the respondent Atty. Erlando Abrenica to remit to the law
firm the said amount of P4,524,000.00 plus interest of 12% per annum
from the time he received the same and converted the same to his own
personal use or from September 1997 until fully paid; and
3. To pay the costs of suit.
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CIVIL CASE NO. Q01-42959

1. Ordering Atty. Erlando Abrenica to render a full accounting of the


amounts he received under the retainer agreement between the law firm
and Atlanta Industries, Inc. and Atlanta Land Corporation in the amount of
P320,000.00.

2. Ordering Atty. Erlando Abrenica to remit to the law firm the amount
received by him under the Retainer Agreement with Atlanta Industries, Inc.
and Atlanta Land Corporation in the amount of P320,000.00 plus interests
of 12% per annum from June 1998 until fully paid;

3. Ordering Atty. Erlando Abrenica to pay the law firm his balance on
his cash advance in the amount of P25,000.00 with interest of 12% per
annum from the date this decision becomes final; and

4. To pay the costs of suit. aDHCEA

SO ORDERED.

Petitioner received a copy of the decision on December 17, 2004. On December


21, 2004, he led a notice of appeal under Rule 41 and paid the required appeal
fees.

Two days later, respondents led a Motion for Issuance of Writ of Execution
pursuant to A.M. 01-2-04-SC, which provides that decisions in intra-corporate
disputes are immediately executory and not subject to appeal unless stayed by an
appellate court.

On January 7, 2005, respondents led an Opposition (To Defendant's Notice of


Appeal) on the ground that it violated A.M. No. 04-9-07-SC 2 prescribing appeal by
certiorari under Rule 43 as the correct mode of appeal from the trial court's
decisions on intra-corporate disputes.
Petitioner thereafter led a Reply with Manifestation (To the Opposition to
Defendant's Notice of Appeal) and an Opposition to respondents' motion for
execution.

On May 11, 2005, the trial court issued an Order requiring petitioner to show cause
why it should take cognizance of the notice of appeal in view of A.M. No. 04-9-07-
SC. Petitioner did not comply with the said Order. Instead, on June 10, 2005, he
led with the Court of Appeals a Motion for Leave of Court to Admit Attached
Petition for Review under Rule 43 of the Revised Rules of Court. Respondents
opposed the motion.

The Court of Appeals denied petitioner's motion in its assailed Resolution dated
June 29, 2005 . . . .

xxx xxx xxx

The Court of Appeals also denied petitioner's motion for reconsideration in its
August 23, 2005 Resolution.

Given the foregoing facts, we dismissed the Petition in G.R. No. 169420 on the ground that
the appeal led by petitioner was the wrong remedy. For that reason, we held as follows: 3
cDTHIE

Time and again, this Court has upheld dismissals of incorrect appeals, even if
these were timely led. In Lanzaderas v. Amethyst Security and General Services,
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Inc., this Court af rmed the dismissal by the Court of Appeals of a petition for
review under Rule 43 to question a decision because the proper mode of appeal
should have been a petition for certiorari under Rule 65. . . . .

xxx xxx xxx

Indeed, litigations should, and do, come to an end. "Public interest demands an
end to every litigation and a belated effort to reopen a case that has already
attained nality will serve no purpose other than to delay the administration of
justice." In the instant case, the trial court's decision became nal and executory
on January 3, 2005. Respondents had already acquired a vested right in the
effects of the finality of the decision, which should not be disturbed any longer.
WHEREFORE , the petition is DENIED . The Court of Appeals Resolutions dated
June 29, 2005 and August 23, 2005 in CA-G.R. SP No. 90076 denying admission
of petitioner's Petition for Review are AFFIRMED .

Thus, respondents sought the execution of the judgment. On 11 April 2007, G.R. No.
169420 became final and executory. 4
Apparently not wanting to be bound by this Court's Decision in G.R. No. 169420,
petitioners Erlando and Joena subsequently led with the Court of Appeals (CA) a Petition
for Annulment of Judgment with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order, docketed as CA-G.R. SP No. 98679. The Petition for
Annulment of Judgment assailed the merits of the RTC's Decision in Civil Case Nos. Q-01-
42948 and Q-01-42959, subject of G.R. No. 169420. In that Petition for Annulment,
Petitioners raised the following grounds:
I. The lower court erred in concluding that both petitioners and respondents
did not present direct documentary evidence to substantiate [their]
respective claims.

II. The lower court erred in concluding that both petitioners and respondents
relied mainly on testimonial evidence to prove their respective position[s].
TAIaHE

III. The lower court erred in not ruling that the real estate transaction entered
into by said petitioners and spouses Roman and Amalia Aguzar was a
personal transaction and not a law partnership transaction.

IV. The lower court erred in ruling that the testimonies of the respondents are
credible.

V. The lower court erred in ruling that the purchase price for the lot involved
was ?3 million and not ?8 million.
VI. The lower court erred in ruling that petitioner's retainer agreement with
Atlanta Industries, Inc. was a law partnership transaction.
VII. The lower court erred when it failed to rule on said petitioners' permissive
counterclaim relative to the various personal loans secured by
respondents.

VIII. The lower court not only erred in the exercise of its jurisdiction but more
importantly it acted without jurisdiction or with lack of jurisdiction. 5

We note that petitioners were married on 28 May 1998. The cases led with the Securities
and Exchange Commission (SEC) on 6 May 1998 and 15 October 1998 were led against
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petitioner Erlando only. It was with the ling of CA-G.R. SP No. 98679 on 24 April 2007 that
Joena joined Erlando as a co-petitioner.
On 26 April 2007, the CA issued a Resolution 6 dismissing the Petition. First, it reasoned
that the remedy of annulment of judgment under Rule 47 of the Rules of Court is available
only when the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of petitioners. 7 Considering that the
dismissal of the appeal was directly attributable to them, the remedy under Rule 47 was no
longer available. aIcSED

Second, the CA stated that the grounds alleged in the Petition delved on the merits of the
case and the appreciation by the trial court of the evidence presented to the latter. Under
Rule 47, the grounds for annulment are limited only to extrinsic fraud and lack of
jurisdiction.
Lastly, the CA held that the fact that the trial court was not designated as a special
commercial court did not mean that the latter had no jurisdiction over the case. The
appellate court stated that, in any event, petitioners could have raised this matter on
appeal or through a petition for certiorari under Rule 65, but they did not do so.
Petitioners led an Amended Petition for Annulment of Judgment dated 2 May 2007, but
the CA had by then already issued the 26 April 2007 Resolution dismissing the Petition.
On 24 May 2007, the 26 April 2007 Resolution in CA-G.R. SP No. 98679 became nal and
executory. 8
Petitioners did not give up. They once again led a 105-page Petition for Annulment of
Judgment with the CA dated 25 May 2007 9 docketed as CA-G.R. SP No. 99719. This time,
they injected the ground of extrinsic fraud into what appeared to be substantially the same
issues raised in CA-G.R. SP No. 98679. The following were the grounds raised in CA-G.R.
SP No. 99719:
A. Extrinsic fraud and/or collusion attended the rendition of the Consolidated
Decision . . . based on the following badges of fraud and/or glaring errors
deliberately committed, to wit:
I. The lower court deliberately erred in concluding that both petitioners
and respondents did not present direct documentary evidence to
substantiate their respective claims, as it relied purely on the gist of
what its personnel did asregards the transcript of stenographic
notes the latter [sic] in collusion with the respondents.THADEI

II. The lower court deliberately erred in concluding that both petitioners
and respondents relied mainly on testimonial evidence to prove their
respective positions by relying totally on what was presented to it by
its personnel who drafted the Consolidated Decision in collusion
with the respondents.

III. The lower court deliberately erred in not ruling that the real estate
transaction entered into by said petitioners and spouses Roman and
Amalia Aguzar was a personal transaction and not a law
partnership transaction for the same reasons as stated in Nos. I and
II above.

IV. The lower court deliberately erred in ruling that the testimonies of
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the respondents are credible as against the petitioner Erlando
Abrenica and his witnesses for the same reasons as stated in Nos. I
and II above. EaCDAT

V. The lower court deliberately erred in ruling that the purchase price
for the lot involved was P3 million and not P8 million for the same
reasons as stated in Nos. I and II above.
VI. The lower court deliberately erred in ruling that petitioner's retainer
agreement with Atlanta Industries, Inc. was a law partnership
transaction for the same reasons as stated in Nos. I and II above.
VII. The lower court deliberately erred when it failed to rule on said
petitioners' permissive counterclaim relative to the various personal
loans secured by respondents also for the same reasons as the
above.
B. As an incident of the extrinsic fraud[,] the lower court[,] despite full
knowledge of its incapacity[,] rendered/promulgated the assailed
Consolidated Decision . . . without jurisdiction or with lack of jurisdiction.
10 (Underscoring in the original.)

On 2 August 2007, the CA issued the rst assailed Resolution 11 dismissing the Petition in
CA-G.R. SP No. 99719, which held the Petition to be insuf cient in form and substance. It
noted the following:
. . . . Readily noticeable is that CA-G.R. SP No. 90076 practically contained
the prayer for the annulment of the subject consolidated Decision
premised on the very same allegations, grounds or issues as the
present annulment of judgment case .
xxx xxx xxx

Annulment of judgment is a recourse equitable in character, allowed only in


exceptional cases as where there is no available or other adequate remedy
(Espinosa vs. Court of Appeals, 430 SCRA 96[2004]). Under Section 2 of Rule 47
of the Revised Rules of Court, the only grounds for an annulment of judgment are
extrinsic fraud and lack of jurisdiction (Cerezo vs. Tuazon, 426 SCRA 167 [2004]) .
Extrinsic fraud shall not be a valid ground if it was availed of, or could have been
availed of, in a motion for new trial or petition for relief. IaDTES

xxx xxx xxx


. . . . In the case at bar, not only has the court a quo jurisdiction over the subject
matter and over the persons of the parties, what petitioner is truly complaining [of]
here is only a possible error in the exercise of jurisdiction, not on the issue of
jurisdiction itself. Where there is jurisdiction over the person and the subject
matter (as in this case), the decision on all other questions arising in the case is
but an exercise of the jurisdiction. And the errors which the court may commit in
the exercise of jurisdiction are merely errors of judgment which are the proper
subject of an appeal (Republic vs. "G" Holdings, supra, citing Tolentino vs. Leviste,
supra). (Emphasis supplied.)
Subsequently, petitioners led a Humble Motion for Reconsideration 12 on 28 August
2007.
While the 28 August 2007 motion was pending, on 13 September 2007, petitioner Erlando
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led an Urgent Omnibus Motion 13 with Branch 226, alleging that the sheriff had levied on
properties belonging to his children and petitioner Joena. In addition, Erlando alleged that
the trial court still had to determine the manner of distribution of the rm's assets and the
value of the levied properties. Lastly, he insisted that the RTC still had to determine the
issue of whether the Rule 41 appeal was the correct remedy.
On the same day, Joena led an Af davit of Third Party Claim 14 also with Branch 226 of
the RTC of Quezon City, alleging that she 15 and her stepchildren 1 6 owned a number of the
personal properties sought to be levied. She also insisted that she owned half of the two
(2) motor vehicles as well as the house and lot covered by Transfer Certi cate of Title
(TCT) No. 216818, which formed part of the absolute community of property. She likewise
alleged that the real property, being a family home, and the furniture and the utensils
necessary for housekeeping having a depreciated combined value of one hundred
thousand pesos (P100,000) were exempt from execution pursuant to Rule 39, Section 13
of the Rules of Court. Thus, she sought their discharge and release and likewise the
immediate remittance to her of half of the proceeds, if any. TCDcSE

Accordingly, the RTC scheduled 17 a hearing on the motion. On 17 October 2007, however,
petitioner Erlando moved to withdraw his motion on account of ongoing negotiations with
respondents. 18
Thereafter, petitioner Erlando and respondent Abelardo Tibayan, witnessed by Sheriff
Nardo de Guzman, Jr. of Branch 226 of the RTC of Quezon City, executed an agreement to
postpone the auction sale of the property covered by TCT No. 216818 in anticipation of an
amicable settlement of the money judgment. 19
Finally, on 30 October 2007, the CA in CA-G.R. SP No. 99719 issued the second assailed
Resolution 20 denying petitioners' Motion for Reconsideration for having been led out of
time, as the last day for ling was on 27 August 2007. Moreover, the CA found that the
grounds stated in the motion were merely recycled and rehashed propositions, which had
already been dispensed with. cEAHSC

Petitioners are now assailing the CA Resolutions dated 2 August 2007 and 30 October
2007, respectively, in CA-G.R. SP No. 99719. They insist that there is still a pending issue
that has not been resolved by the RTC. That issue arose from the Order 2 1 given by the trial
court to petitioner Erlando to explain why it should take cognizance of the Notice of
Appeal when the proper remedy was a petition for review under Rule 43 of the Rules of
Court.
Further, petitioners blame the trial and the appellate courts for the dismissal of their
appeal despite this Court's explanation in G.R. No. 169420 that the appeal was the wrong
remedy and was thus correctly dismissed by the CA. Instead of complying with the show-
cause Order issued by the RTC, petitioners went directly to the CA and insisted that the
remedy they had undertaken was correct.
Petitioners also contend that there was extrinsic fraud in the appreciation of the merits of
the case. They raise in the present Petition the grounds they cited in the three (3) Petitions
for Annulment of Judgment (including the Amended Petition) quoted above.
Next, they assert that petitioner Joena's right to due process was also violated when she
was not made a party-in-interest to the proceedings in the lower courts, even if her half of
the absolute community of property was included in the execution of the judgment
rendered by Branch 226 of the RTC of Quezon City.
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Finally, they insist that their Humble Motion for Reconsideration was led on time, since 27
August 2007 was a holiday. Therefore, they had until 28 August 2007 to file their motion.
Since then, it appears that a Sheriff's Certi cate of Sale was issued on 3 January 2008 in
favor of the law rm for the sum of P5 million for the property covered by TCT No.
216818. TacADE

On 18 March 2009, while the case was pending with this Court, petitioners led a
Complaint 22 with a prayer for the issuance of a writ of preliminary injunction before the
RTC of Marikina City against herein respondents and Sheriff Nardo I. de Guzman, Jr. of
Branch 226 of the RTC of Quezon City. The case was docketed as Civil Case No. 09-1323-
MK and was raf ed to Branch 273 of the RTC of Marikina City. 23 Petitioners sought the
nulli cation of the sheriff's sale on execution of the Decision in the consolidated cases
rendered by Branch 226, as well as the payment of damages. They alleged that the
process of the execution sale was conducted irregularly, unlawfully, and in violation of their
right to due process.
On 2 July 2009, Branch 273 of the RTC of Marikina City issued a Writ of Preliminary
Injunction enjoining respondents and/or their agents, and the Register of Deeds of
Marikina City from consolidating TCT No. 216818. 24
The ling of the Complaint with the RTC of Marikina City prompted respondents to le a
Motion 25 before us to cite for contempt petitioner spouses and their counsel, Atty.
Antonio R. Bautista. This Motion was on the ground that petitioners committed forum
shopping when they led the Complaint pending with Branch 273 of the RTC of Marikina
City, while the present case was also still pending.
Meanwhile, on 22 September 2009, respondents led before Branch 226 an Ex Parte
Motion for Issuance of Writ of Possession. 26 That Motion was granted by Branch 226
through a Resolution 27 issued on 10 November 2011. This Resolution then became the
subject of a Petition for Certiorari 28 under Rule 65 led by petitioners before the CA
docketed as CA-G.R. SP No. 123164.
Soon after, on 6 March 2012, petitioners filed with the CA an Urgent Motion for Issuance of
Temporary Restraining Order (T.R.O.) 29 after Sheriff De Guzman, Jr. served on them a
Notice to Vacate within ve days from receipt or until 11 March 2012. As of the writing of
this Decision, the CA has not resolved the issue raised in the Petition in CA-G.R. SP No.
123164.
Our Ruling
Petitioners elevated this case to this Court, because they were allegedly denied due
process when the CA rejected their second attempt at the annulment of the Decision of the
RTC and their Humble Motion for Reconsideration. SDEITC

We DENY petitioners' claims.


The rules of procedure were formulated to achieve the ends of justice, not to thwart them.
Petitioners may not defy the pronouncement of this Court in G.R. No. 169420 by pursuing
remedies that are no longer available to them. Twice, the CA correctly ruled that the
remedy of annulment of judgment was no longer available to them, because they had
already filed an appeal under Rule 41. Due to their own actions, that appeal was dismissed.
It must be emphasized that the RTC Decision became nal and executory through the fault
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of petitioners themselves when petitioner Erlando (1) led an appeal under Rule 41 instead
of Rule 43; and (2) led a Petition for Review directly with the CA, without waiting for the
resolution by the RTC of the issues still pending before the trial court.
In Enriquez v. Court of Appeals, 30 we said:
It is true that the Rules should be interpreted so as to give litigants ample
opportunity to prove their respective claims and that a possible denial of
substantial justice due to legal technicalities should be avoided. But it is
equally true that an appeal being a purely statutory right, an appealing
party must strictly comply with the requisites laid down in the Rules of
Court. In other words, he who seeks to avail of the right to appeal must
play by the rules. . . . . (Emphasis supplied.)

With regard to the allegation of petitioner Joena that her right to due process was violated,
it must be recalled that after she led her Af davit of Third Party Claim on 13 September
2007 and petitioner Erlando led his Urgent Omnibus Motion raising the same issues
contained in that third-party claim, he subsequently led two Motions withdrawing his
Urgent Omnibus Motion. Petitioner Joena, meanwhile, no longer pursued her third-party
claim or any other remedy available to her. Her failure to act gives this Court the
impression that she was no longer interested in her case. Thus, it was through her own
fault that she was not able to ventilate her claim. DcSEHT

Furthermore, it appears from the records that petitioner Erlando was rst married to a
certain Ma. Aline Lovejoy Padua on 13 October 1983. They had three children: Patrik
Erlando (born on 14 April 1985), Maria Monica Erline (born on 9 September 1986), and
Patrik Randel (born on 12 April 1990).
After the dissolution of the rst marriage of Erlando, he and Joena got married on 28 May
1998. 31 In her Af davit, Joena alleged that she represented her stepchildren; that the
levied personal properties in particular, a piano with a chair, computer equipment and a
computer table were owned by the latter. We note that two of these stepchildren were
already of legal age when Joena led her Af davit. As to Patrik Randel, parental authority
over him belongs to his parents. Absent any special power of attorney authorizing Joena
to represent Erlando's children, her claim cannot be sustained.
Petitioner Joena also asserted that the two (2) motor vehicles purchased in 1992 and
1997, as well as the house and lot covered by TCT No. 216818 formed part of the absolute
community regime. However, Art. 92, par. (3) of the Family Code excludes from the
community property the property acquired before the marriage of a spouse who has
legitimate descendants by a former marriage; and the fruits and the income, if any, of that
property. Neither these two vehicles nor the house and lot belong to the second marriage.
We now proceed to discuss the Motion for contempt filed by respondents.
Respondents claim that petitioners and their present counsel, Atty. Antonio R. Bautista,
were guilty of forum shopping when the latter led Civil Case No. 09-1323-MK with the
RTC of Marikina City while the case was still pending before us. In Executive Secretary v.
Gordon, 3 2 we explained forum shopping in this wise:
Forum-shopping consists of filing multiple suits involving the same parties for the
same cause of action, either simultaneously or successively, for the purpose of
obtaining a favorable judgment. Thus, it has been held that there is forum-
shopping
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(1) whenever as a result of an adverse decision in one forum, a party seeks a
favorable decision (other than by appeal or certiorari) in another, or
(2) if, after he has led a petition before the Supreme Court, a party les
another before the Court of Appeals since in such case he deliberately splits
appeals "in the hope that even as one case in which a particular remedy is sought
is dismissed, another case (offering a similar remedy) would still be open," or
(3) where a party attempts to obtain a preliminary injunction in another court
after failing to obtain the same from the original court.

Civil Case No. 09-1323-MK was filed to question the proceedings undertaken by the sheriff
in executing the judgment in Civil Case Nos. Q01-42948 and Q01-42959. On the other
hand, the present case questions the merits of the Decision itself in Civil Case Nos. Q01-
42948 and Q01-42959. These cases have different causes of action. Thus, it cannot be
said that petitioners were clearly guilty of forum shopping when they led the Complaint
before the RTC of Marikina City.
WHEREFORE , in view of the foregoing, the Petition is hereby DENIED . The Resolutions
dated 2 August 2007 and 30 October 2007 issued by the Court of Appeals in CA-G.R. SP
No. 99719 are AFFIRMED .
SO ORDERED.
Carpio, Brion, Perez and Reyes, JJ., concur.

Footnotes

1.Abrenica v. Law Firm of Abrenica, Tungol & Tibayan, 534 Phil. 34, 37-41 (2006).
2.Entitled "RE: MODE OF APPEAL IN CASES FORMERLY COGNIZABLE BY THE SECURITIES
AND EXCHANGE COMMISSION," which was issued on September 14, 2004 and became
effective on October 15, 2004. Pertinent portions thereof read:

xxx xxx xxx


1. All decisions and final orders in cases falling under the Interim Rules of Corporate
Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate
Controversies under Republic Act No. 8799 shall be appealable to the Court of Appeals
through a petition for review under Rule 43 of the Rules of Court.
2. The petition for review shall be taken within fifteen (15) days from notice of the decision or
final order of the Regional Trial Court. Upon proper motion and the payment of the full
amount of the legal fee prescribed in Rule 141 as amended before the expiration of the
reglementary period, the Court of Appeals may grant an additional period of fifteen (15)
days within which to file the petition for review. No further extension shall be granted
except for the most compelling reasons and in no case to exceed fifteen (15) days.
3.Supra note 1, at 44-47.
4.Rollo, p. 614.
5.Id. at 618-620.

6.Penned by Associate Justice Lucas P. Bersamin (now a member of this Court), with Associate
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Justices Marina L. Buzon and Estela M. Perlas-Bernabe (now a member of this Court)
concurring; rollo, pp. 460-463.

7.Rule 47, Sec. 1.


8.Rollo, p. 601.
9.Id. at 82-186.
10.Id. at 118-122.

11.Penned by Associate Justice Conrado M. Vasquez, Jr., with Associate Justices Edgardo F.
Sundiam and Monina Arevalo-Zenarosa concurring; rollo, pp. 74-78.
12.Rollo, pp. 379-398.

13.Records, Vol. 15, pp. 248-253.


14.Id. at 257-259.
15.One (1) king size wooden bed with two (2) night tables and two (2) sets of lamp shades; one
(1) wooden chest; and one (1) wooden kitchen cabinet with glass.
16.One (1) Trebel piano with chair; one (1) set of computer equipment consisting of one (1)
Samsung monitor, Sync master 793S; one (1) Viper keyboard with mouse; one (1) HP
printer PSC-1315; one (1) Asus hard disk and DVD Rom; one (1) set of speakers; and one
(1) computer table.
17.Records, Vol. 15, p. 287.

18.Petitioner filed two motions on the same day: an Urgent Motion to Withdraw (Records, Vol.
15, pp. 289-290) and an Extremely Urgent but Humble Manifestation and Motion
(Records, Vol. 15, pp. 291-292).
19.Rollo, p. 781.

20.Id. at 80-81.
21.Id. at 332.
22.Id. at 678-686.
23.The real property subject of the sale on execution was located at No. 17 President Roxas St.,
Industrial Valley, Marikina City.
24.Records, Vol. 19, pp. 71-73.
25.Rollo, pp. 656-677.

26.Records, Vol. 19, pp. 74-83.


27.Id. at 39-44.
28.Id. at 22-38.
29.Id. at 121-124.
30.444 Phil. 419, 429 (2003).

31.Records, Vol. 15, p. 274.


32.359 Phil. 266, 271-272 (1998).
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SECOND DIVISION

[G.R. No. 176556. July 4, 2012.]

BRIGIDO B. QUIAO , petitioner, vs . RITA C. QUIAO, KITCHIE C. QUIAO,


LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their mother
RITA QUIAO , respondents.

DECISION

REYES , J : p

The family is the basic and the most important institution of society. It is in the family
where children are born and molded either to become useful citizens of the country or
troublemakers in the community. Thus, we are saddened when parents have to separate
and ght over properties, without regard to the message they send to their children.
Notwithstanding this, we must not shirk from our obligation to rule on this case involving
legal separation escalating to questions on dissolution and partition of properties.
The Case
This case comes before us via Petition for Review on Certiorari 1 under Rule 45 of the
Rules of Court. The petitioner seeks that we vacate and set aside the Order 2 dated
January 8, 2007 of the Regional Trial Court (RTC), Branch 1, Butuan City. In lieu of the said
order, we are asked to issue a Resolution de ning the net pro ts subject of the forfeiture
as a result of the decree of legal separation in accordance with the provision of Article 102
(4) of the Family Code, or alternatively, in accordance with the provisions of Article 176 of
the Civil Code.
Antecedent Facts
On October 26, 2000, herein respondent Rita C. Quiao (Rita) filed a complaint for legal
separation against herein petitioner Brigido B. Quiao (Brigido). 3 Subsequently, the RTC
rendered a Decision 4 dated October 10, 2005, the dispositive portion of which provides:
WHEREFORE, viewed from the foregoing considerations, judgment is hereby
rendered declaring the legal separation of plaintiff Rita C. Quiao and defendant-
respondent Brigido B. Quiao pursuant to Article 55. HcSaTI

As such, the herein parties shall be entitled to live separately from each other, but
the marriage bond shall not be severed.

Except for Letecia C. Quiao who is of legal age, the three minor children, namely,
Kitchie, Lotis and Petchie, all surnamed Quiao shall remain under the custody of
the plaintiff who is the innocent spouse.

Further, except for the personal and real properties already foreclosed by the
RCBC, all the remaining properties, namely:

1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;


2. coffee mill in Durian, Las Nieves, Agusan del Norte;
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3. corn mill in Casiklan, Las Nieves, Agusan del Norte;

4. coffee mill in Esperanza, Agusan del Sur;


5. a parcel of land with an area of 1,200 square meters located in Tungao,
Butuan City;

6. a parcel of agricultural land with an area of 5 hectares located in Manila


de Bugabos, Butuan City;
7. a parcel of land with an area of 84 square meters located in Tungao,
Butuan City;

8. Bashier Bon Factory located in Tungao, Butuan City;

shall be divided equally between herein [respondents] and [petitioner] subject to


the respective legitimes of the children and the payment of the unpaid conjugal
liabilities of [P]45,740.00.

[Petitioner's] share, however, of the net pro ts earned by the conjugal partnership
is forfeited in favor of the common children.

He is further ordered to reimburse [respondents] the sum of [P]19,000.00 as


attorney's fees and litigation expenses of [P]5,000.00[.]
SO ORDERED. 5 ESCTIA

Neither party led a motion for reconsideration and appeal within the period provided for
under Section 17 (a) and (b) of the Rule on Legal Separation. 6
On December 12, 2005, the respondents led a motion for execution 7 which the trial court
granted in its Order dated December 16, 2005, the dispositive portion of which reads:
"Wherefore, nding the motion to be well taken, the same is hereby granted. Let a
writ of execution be issued for the immediate enforcement of the Judgment.

SO ORDERED." 8

Subsequently, on February 10, 2006, the RTC issued a Writ of Execution 9 which reads as
follows:
NOW THEREFORE, that of the goods and chattels of the [petitioner] BRIGIDO B.
QUIAO you cause to be made the sums stated in the afore-quoted DECISION [sic],
together with your lawful fees in the service of this Writ, all in the Philippine
Currency.

But if suf cient personal property cannot be found whereof to satisfy this
execution and your lawful fees, then we command you that of the lands and
buildings of the said [petitioner], you make the said sums in the manner required
by law. You are enjoined to strictly observed Section 9, Rule 39, Rule [sic] of the
1997 Rules of Civil Procedure.

You are hereby ordered to make a return of the said proceedings immediately
after the judgment has been satis ed in part or in full in consonance with Section
14, Rule 39 of the 1997 Rules of Civil Procedure, as amended. 10

On July 6, 2006, the writ was partially executed with the petitioner paying the respondents
the amount of P46,870.00, representing the following payments:
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(a) P22,870.00 as petitioner's share of the payment of the conjugal
share;
(b) P19,000.00 as attorney's fees; and
(c) P5,000.00 as litigation expenses. 11
On July 7, 2006, or after more than nine months from the promulgation of the Decision, the
petitioner filed before the RTC a Motion for Clarification, 12 asking the RTC to define the
term "Net Profits Earned."
To resolve the petitioner's Motion for Clari cation, the RTC issued an Order 13 dated
August 31, 2006, which held that the phrase "NET PROFIT EARNED" denotes "the
remainder of the properties of the parties after deducting the separate properties of each
[of the] spouse and the debts." 14 The Order further held that after determining the
remainder of the properties, it shall be forfeited in favor of the common children because
the offending spouse does not have any right to any share of the net pro ts earned,
pursuant to Articles 63, No. (2) and 43, No. (2) of the Family Code. 15 The dispositive
portion of the Order states:
WHEREFORE, there is no blatant disparity when the sheriff intends to forfeit all
the remaining properties after deducting the payments of the debts for only
separate properties of the defendant-respondent shall be delivered to him which
he has none. caAICE

The Sheriff is herein directed to proceed with the execution of the Decision.
IT IS SO ORDERED. 16

Not satis ed with the trial court's Order, the petitioner led a Motion for Reconsideration
17 on September 8, 2006. Consequently, the RTC issued another Order 18 dated November
8, 2006, holding that although the Decision dated October 10, 2005 has become nal and
executory, it may still consider the Motion for Clari cation because the petitioner simply
wanted to clarify the meaning of "net profit earned." 19 Furthermore, the same Order held:
ALL TOLD , the Court Order dated August 31, 2006 is hereby ordered set aside.
NET PROFIT EARNED, which is subject of forfeiture in favor of [the] parties'
common children, is ordered to be computed in accordance [with] par. 4 of Article
102 of the Family Code. 20

On November 21, 2006, the respondents led a Motion for Reconsideration, 21 praying for
the correction and reversal of the Order dated November 8, 2006. Thereafter, on January 8,
2007, 22 the trial court had changed its ruling again and granted the respondents' Motion
for Reconsideration whereby the Order dated November 8, 2006 was set aside to reinstate
the Order dated August 31, 2006.
Not satis ed with the trial court's Order, the petitioner led on February 27, 2007 this
instant Petition for Review under Rule 45 of the Rules of Court, raising the following:
Issues
I

IS THE DISSOLUTION AND THE CONSEQUENT LIQUIDATION OF THE COMMON


PROPERTIES OF THE HUSBAND AND WIFE BY VIRTUE OF THE DECREE OF
LEGAL SEPARATION GOVERNED BY ARTICLE 125 (SIC) OF THE FAMILY CODE?
aTCADc

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II
WHAT IS THE MEANING OF THE NET PROFITS EARNED BY THE CONJUGAL
PARTNERSHIP FOR PURPOSES OF EFFECTING THE FORFEITURE AUTHORIZED
UNDER ARTICLE 63 OF THE FAMILY CODE?

III
WHAT LAW GOVERNS THE PROPERTY RELATIONS BETWEEN THE HUSBAND
AND WIFE WHO GOT MARRIED IN 1977? CAN THE FAMILY CODE OF THE
PHILIPPINES BE GIVEN RETROACTIVE EFFECT FOR PURPOSES OF
DETERMINING THE NET PROFITS SUBJECT OF FORFEITURE AS A RESULT OF
THE DECREE OF LEGAL SEPARATION WITHOUT IMPAIRING VESTED RIGHTS
ALREADY ACQUIRED UNDER THE CIVIL CODE?

IV
WHAT PROPERTIES SHALL BE INCLUDED IN THE FORFEITURE OF THE SHARE
OF THE GUILTY SPOUSE IN THE NET CONJUGAL PARTNERSHIP AS A RESULT
OF THE ISSUANCE OF THE DECREE OF LEGAL SEPARATION? 23

Our Ruling
While the petitioner has raised a number of issues on the applicability of certain laws, we
are well-aware that the respondents have called our attention to the fact that the Decision
dated October 10, 2005 has attained nality when the Motion for Clari cation was led. 24
Thus, we are constrained to resolve rst the issue of the nality of the Decision dated
October 10, 2005 and subsequently discuss the matters that we can clarify.
The Decision dated October 10, 2005 has
become final and executory at the time
the Motion for Clarification was filed
on July 7, 2006.
Section 3, Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. The appeal shall be taken within
fteen (15) days from notice of the judgment or nal order appealed from. Where
a record on appeal is required, the appellant shall le a notice of appeal and a
record on appeal within thirty (30) days from notice of the judgment or final order.

The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to le a motion for new trial or
reconsideration shall be allowed.

In Neypes v. Court of Appeals , 25 we clari ed that to standardize the appeal periods


provided in the Rules and to afford litigants fair opportunity to appeal their cases, we held
that "it would be practical to allow a fresh period of 15 days within which to le the notice
of appeal in the RTC, counted from receipt of the order dismissing a motion for a new trial
or motion for reconsideration." 26 SHCaDA

In Neypes, we explained that the "fresh period rule" shall also apply to Rule 40 governing
appeals from the Municipal Trial Courts to the RTCs; Rule 42 on petitions for review from
the RTCs to the Court of Appeals (CA); Rule 43 on appeals from quasi-judicial agencies to
the CA and Rule 45 governing appeals by certiorari to the Supreme Court. We also said,
"The new rule aims to regiment or make the appeal period uniform, to be counted from
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receipt of the order denying the motion for new trial, motion for reconsideration (whether
full or partial) or any nal order or resolution." 27 In other words, a party litigant may le his
notice of appeal within a fresh 15-day period from his receipt of the trial court's decision
or nal order denying his motion for new trial or motion for reconsideration. Failure to avail
of the fresh 15-day period from the denial of the motion for reconsideration makes the
decision or final order in question final and executory.
In the case at bar, the trial court rendered its Decision on October 10, 2005. The petitioner
neither led a motion for reconsideration nor a notice of appeal. On December 16, 2005, or
after 67 days had lapsed, the trial court issued an order granting the respondent's motion
for execution; and on February 10, 2006, or after 123 days had lapsed, the trial court
issued a writ of execution. Finally, when the writ had already been partially executed, the
petitioner, on July 7, 2006 or after 270 days had lapsed, led his Motion for Clari cation on
the de nition of the "net pro ts earned." From the foregoing, the petitioner had clearly
slept on his right to question the RTC's Decision dated October 10, 2005. For 270 days, the
petitioner never raised a single issue until the decision had already been partially executed.
Thus at the time the petitioner led his motion for clari cation, the trial court's decision
has become nal and executory. A judgment becomes nal and executory when the
reglementary period to appeal lapses and no appeal is perfected within such period.
Consequently, no court, not even this Court, can arrogate unto itself appellate jurisdiction
to review a case or modify a judgment that became final. 28
The petitioner argues that the decision he is questioning is a void judgment. Being such,
the petitioner's thesis is that it can still be disturbed even after 270 days had lapsed from
the issuance of the decision to the ling of the motion for clari cation. He said that "a void
judgment is no judgment at all. It never attains nality and cannot be a source of any right
nor any obligation." 29 But what precisely is a void judgment in our jurisdiction? When does
a judgment becomes n void?
"A judgment is null and void when the court which rendered it had no power to grant the
relief or no jurisdiction over the subject matter or over the parties or both." 30 In other
words, a court, which does not have the power to decide a case or that has no jurisdiction
over the subject matter or the parties, will issue a void judgment or a coram non judice. 31
STIEHc

The questioned judgment does not fall within the purview of a void judgment. For sure, the
trial court has jurisdiction over a case involving legal separation. Republic Act (R.A.) No.
8369 confers upon an RTC, designated as the Family Court of a city, the exclusive original
jurisdiction to hear and decide, among others, complaints or petitions relating to marital
status and property relations of the husband and wife or those living together. 32 The Rule
on Legal Separation 33 provides that "the petition [for legal separation] shall be led in the
Family Court of the province or city where the petitioner or the respondent has been
residing for at least six months prior to the date of ling or in the case of a non-resident
respondent, where he may be found in the Philippines, at the election of the petitioner." 34
In the instant case, herein respondent Rita is found to reside in Tungao, Butuan City for
more than six months prior to the date of ling of the petition; thus, the RTC, clearly has
jurisdiction over the respondent's petition below. Furthermore, the RTC also acquired
jurisdiction over the persons of both parties, considering that summons and a copy of the
complaint with its annexes were served upon the herein petitioner on December 14, 2000
and that the herein petitioner led his Answer to the Complaint on January 9, 2001. 35
Thus, without doubt, the RTC, which has rendered the questioned judgment, has
jurisdiction over the complaint and the persons of the parties.

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From the aforecited facts, the questioned October 10, 2005 judgment of the trial court is
clearly not void ab initio, since it was rendered within the ambit of the court's jurisdiction.
Being such, the same cannot anymore be disturbed, even if the modi cation is meant to
correct what may be considered an erroneous conclusion of fact or law. 36 In fact, we have
ruled that for "[as] long as the public respondent acted with jurisdiction, any error
committed by him or it in the exercise thereof will amount to nothing more than an error of
judgment which may be reviewed or corrected only by appeal." 37 Granting without
admitting that the RTC's judgment dated October 10, 2005 was erroneous, the petitioner's
remedy should be an appeal led within the reglementary period. Unfortunately, the
petitioner failed to do this. He has already lost the chance to question the trial court's
decision, which has become immutable and unalterable. What we can only do is to clarify
the very question raised below and nothing more.
For our convenience, the following matters cannot anymore be disturbed since the
October 10, 2005 judgment has already become immutable and unalterable, to wit:
(a) The nding that the petitioner is the offending spouse since he cohabited with a
woman who is not his wife; 38
(b) The trial court's grant of the petition for legal separation of respondent Rita; 39
(c) The dissolution and liquidation of the conjugal partnership; 40
(d) The forfeiture of the petitioner's right to any share of the net pro ts earned by the
conjugal partnership; 41 THaDEA

(e) The award to the innocent spouse of the minor children's custody; 42
(f) The disquali cation of the offending spouse from inheriting from the innocent
spouse by intestate succession; 4 3
(g) The revocation of provisions in favor of the offending spouse made in the will of
the innocent spouse; 44
(h) The holding that the property relation of the parties is conjugal partnership of
gains and pursuant to Article 116 of the Family Code, all properties acquired during the
marriage, whether acquired by one or both spouses, is presumed to be conjugal unless the
contrary is proved; 45
(i) The nding that the spouses acquired their real and personal properties while they
were living together; 46
(j) The list of properties which Rizal Commercial Banking Corporation (RCBC)
foreclosed; 47
(k) The list of the remaining properties of the couple which must be dissolved and
liquidated and the fact that respondent Rita was the one who took charge of the
administration of these properties; 48
(l) The holding that the conjugal partnership shall be liable to matters included under
Article 121 of the Family Code and the conjugal liabilities totaling P503,862.10 shall be
charged to the income generated by these properties; 49
(m) The fact that the trial court had no way of knowing whether the petitioner had
separate properties which can satisfy his share for the support of the family; 50
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(n) The holding that the applicable law in this case is Article 129 (7); 51
(o) The ruling that the remaining properties not subject to any encumbrance shall
therefore be divided equally between the petitioner and the respondent without prejudice
to the children's legitime; 52 HITAEC

(p) The holding that the petitioner's share of the net pro ts earned by the conjugal
partnership is forfeited in favor of the common children; 53 and
(q) The order to the petitioner to reimburse the respondents the sum of P19,000.00
as attorney's fees and litigation expenses of P5,000.00. 54
After discussing lengthily the immutability of the Decision dated October 10, 2005, we will
discuss the following issues for the enlightenment of the parties and the public at large.
Article 129 of the Family Code applies
to the present case since the parties'
property relation is governed by the
system of relative community or
conjugal partnership of gains.
The petitioner claims that the court a quo is wrong when it applied Article 129 of the
Family Code, instead of Article 102. He confusingly argues that Article 102 applies
because there is no other provision under the Family Code which defines net profits earned
subject of forfeiture as a result of legal separation.
Offhand, the trial court's Decision dated October 10, 2005 held that Article 129 (7) of the
Family Code applies in this case. We agree with the trial court's holding.
First, let us determine what governs the couple's property relation. From the record, we can
deduce that the petitioner and the respondent tied the marital knot on January 6, 1977.
Since at the time of the exchange of marital vows, the operative law was the Civil Code of
the Philippines (R.A. No. 386) and since they did not agree on a marriage settlement, the
property relations between the petitioner and the respondent is the system of relative
community or conjugal partnership of gains. 55 Article 119 of the Civil Code provides:
Art. 119. The future spouses may in the marriage settlements agree upon
absolute or relative community of property, or upon complete separation of
property, or upon any other regime. In the absence of marriage settlements, or
when the same are void, the system of relative community or conjugal partnership
of gains as established in this Code, shall govern the property relations between
husband and wife. cEATSI

Thus, from the foregoing facts and law, it is clear that what governs the property relations
of the petitioner and of the respondent is conjugal partnership of gains. And under this
property relation, "the husband and the wife place in a common fund the fruits of their
separate property and the income from their work or industry." 56 The husband and wife
also own in common all the property of the conjugal partnership of gains. 57
Second, since at the time of the dissolution of the petitioner and the respondent's
marriage the operative law is already the Family Code, the same applies in the instant case
and the applicable law in so far as the liquidation of the conjugal partnership assets and
liabilities is concerned is Article 129 of the Family Code in relation to Article 63 (2) of the
Family Code. The latter provision is applicable because according to Article 256 of the
Family Code "[t]his Code shall have retroactive effect insofar as it does not prejudice or
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impair vested or acquired rights in accordance with the Civil Code or other law." 58
Now, the petitioner asks: Was his vested right over half of the common properties of the
conjugal partnership violated when the trial court forfeited them in favor of his children
pursuant to Articles 63 (2) and 129 of the Family Code?
We respond in the negative.
Indeed, the petitioner claims that his vested rights have been impaired, arguing: "As earlier
adverted to, the petitioner acquired vested rights over half of the conjugal properties, the
same being owned in common by the spouses. If the provisions of the Family Code are to
be given retroactive application to the point of authorizing the forfeiture of the petitioner's
share in the net remainder of the conjugal partnership properties, the same impairs his
rights acquired prior to the effectivity of the Family Code." 59 In other words, the petitioner
is saying that since the property relations between the spouses is governed by the regime
of Conjugal Partnership of Gains under the Civil Code, the petitioner acquired vested rights
over half of the properties of the Conjugal Partnership of Gains, pursuant to Article 143 of
the Civil Code, which provides: "All property of the conjugal partnership of gains is owned
in common by the husband and wife." 60 Thus, since he is one of the owners of the
properties covered by the conjugal partnership of gains, he has a vested right over half of
the said properties, even after the promulgation of the Family Code; and he insisted that no
provision under the Family Code may deprive him of this vested right by virtue of Article
256 of the Family Code which prohibits retroactive application of the Family Code when it
will prejudice a person's vested right.
However, the petitioner's claim of vested right is not one which is written on stone. In Go,
Jr. v. Court of Appeals , 61 we de ne and explained "vested right" in the following manner:
aSTcCE

A vested right is one whose existence, effectivity and extent do not depend upon
events foreign to the will of the holder, or to the exercise of which no obstacle
exists, and which is immediate and perfect in itself and not dependent upon a
contingency. The term "vested right" expresses the concept of present xed
interest which, in right reason and natural justice, should be protected against
arbitrary State action, or an innately just and imperative right which enlightened
free society, sensitive to inherent and irrefragable individual rights, cannot deny.
To be vested, a right must have become a title legal or equitable to the
present or future enjoyment of property. 62 (Citations omitted)

In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List Of cer
Samson S. Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. Ermita , 6 3 we also
explained:
The concept of "vested right" is a consequence of the constitutional guaranty
of due process that expresses a present xed interest which in right reason and
natural justice is protected against arbitrary state action; it includes not only legal
or equitable title to the enforcement of a demand but also exemptions from new
obligations created after the right has become vested. Rights are considered
vested when the right to enjoyment is a present interest, absolute, unconditional,
and perfect or fixed and irrefutable. 64 (Emphasis and underscoring supplied)

From the foregoing, it is clear that while one may not be deprived of his "vested right," he
may lose the same if there is due process and such deprivation is founded in law and
jurisprudence.
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In the present case, the petitioner was accorded his right to due process. First, he was
well-aware that the respondent prayed in her complaint that all of the conjugal properties
be awarded to her. 65 In fact, in his Answer, the petitioner prayed that the trial court divide
the community assets between the petitioner and the respondent as circumstances and
evidence warrant after the accounting and inventory of all the community properties of the
parties. 66 Second, when the Decision dated October 10, 2005 was promulgated, the
petitioner never questioned the trial court's ruling forfeiting what the trial court termed as
"net pro ts," pursuant to Article 129 (7) of the Family Code. 67 Thus, the petitioner cannot
claim being deprived of his right to due process.
Furthermore, we take note that the alleged deprivation of the petitioner's "vested right" is
one founded, not only in the provisions of the Family Code, but in Article 176 of the Civil
Code. This provision is like Articles 63 and 129 of the Family Code on the forfeiture of the
guilty spouse's share in the conjugal partnership profits. The said provision says: AcEIHC

Art. 176. In case of legal separation, the guilty spouse shall forfeit his or her
share of the conjugal partnership pro ts, which shall be awarded to the children
of both, and the children of the guilty spouse had by a prior marriage. However, if
the conjugal partnership property came mostly or entirely from the work or
industry, or from the wages and salaries, or from the fruits of the separate
property of the guilty spouse, this forfeiture shall not apply.

In case there are no children, the innocent spouse shall be entitled to all the net
profits.

From the foregoing, the petitioner's claim of a vested right has no basis considering that
even under Article 176 of the Civil Code, his share of the conjugal partnership pro ts may
be forfeited if he is the guilty party in a legal separation case. Thus, after trial and after the
petitioner was given the chance to present his evidence, the petitioner's vested right claim
may in fact be set aside under the Civil Code since the trial court found him the guilty party.
More, in Abalos v. Dr. Macatangay, Jr., 68 we reiterated our long-standing ruling that:
[P]rior to the liquidation of the conjugal partnership, the interest of each spouse in
the conjugal assets is inchoate, a mere expectancy, which constitutes neither a
legal nor an equitable estate, and does not ripen into title until it appears that
there are assets in the community as a result of the liquidation and settlement.
The interest of each spouse is limited to the net remainder or "remanente liquido"
(haber ganancial) resulting from the liquidation of the affairs of the partnership
after its dissolution. Thus, the right of the husband or wife to one-half of the
conjugal assets does not vest until the dissolution and liquidation of the conjugal
partnership, or after dissolution of the marriage, when it is nally determined that,
after settlement of conjugal obligations, there are net assets left which can be
divided between the spouses or their respective heirs. 69 (Citations omitted)

Finally, as earlier discussed, the trial court has already decided in its Decision dated
October 10, 2005 that the applicable law in this case is Article 129 (7) of the Family Code.
70 The petitioner did not le a motion for reconsideration nor a notice of appeal. Thus, the
petitioner is now precluded from questioning the trial court's decision since it has become
nal and executory. The doctrine of immutability and unalterability of a nal judgment
prevents us from disturbing the Decision dated October 10, 2005 because nal and
executory decisions can no longer be reviewed nor reversed by this Court. 71 ESIcaC

From the above discussions, Article 129 of the Family Code clearly applies to the present
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case since the parties' property relation is governed by the system of relative community
or conjugal partnership of gains and since the trial court's Decision has attained nality
and immutability.
The net profits of the conjugal partnership
of gains are all the fruits of the separate
properties of the spouses and the products
of their labor and industry.
The petitioner inquires from us the meaning of "net pro ts" earned by the conjugal
partnership for purposes of effecting the forfeiture authorized under Article 63 of the
Family Code. He insists that since there is no other provision under the Family Code, which
de nes "net pro ts" earned subject of forfeiture as a result of legal separation, then Article
102 of the Family Code applies.
What does Article 102 of the Family Code say? Is the computation of "net profits" earned in
the conjugal partnership of gains the same with the computation of "net pro ts" earned in
the absolute community?
Now, we clarify.
First and foremost, we must distinguish between the applicable law as to the property
relations between the parties and the applicable law as to the de nition of "net pro ts." As
earlier discussed, Article 129 of the Family Code applies as to the property relations of the
parties. In other words, the computation and the succession of events will follow the
provisions under Article 129 of the said Code. Moreover, as to the de nition of "net
pro ts," we cannot but refer to Article 102 (4) of the Family Code, since it expressly
provides that for purposes of computing the net pro ts subject to forfeiture under Article
43, No. (2) and Article 63, No. (2), Article 102 (4) applies. In this provision, net pro ts "shall
be the increase in value between the market value of the community property at the time of
the celebration of the marriage and the market value at the time of its dissolution." 72 Thus,
without any iota of doubt, Article 102 (4) applies to both the dissolution of the absolute
community regime under Article 102 of the Family Code, and to the dissolution of the
conjugal partnership regime under Article 129 of the Family Code. Where lies the
difference? As earlier shown, the difference lies in the processes used under the
dissolution of the absolute community regime under Article 102 of the Family Code, and in
the processes used under the dissolution of the conjugal partnership regime under Article
129 of the Family Code.
Let us now discuss the difference in the processes between the absolute community
regime and the conjugal partnership regime.
On Absolute Community Regime:
When a couple enters into a regime of absolute community , the husband and the wife
becomes joint owners of all the properties of the marriage. Whatever property each
spouse brings into the marriage, and those acquired during the marriage (except those
excluded under Article 92 of the Family Code) form the common mass of the couple's
properties. And when the couple's marriage or community is dissolved, that common
mass is divided between the spouses, or their respective heirs, equally or in the proportion
the parties have established, irrespective of the value each one may have originally owned.
73

Under Article 102 of the Family Code, upon dissolution of marriage, an inventory is
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prepared, listing separately all the properties of the absolute community and the exclusive
properties of each; then the debts and obligations of the absolute community are paid out
of the absolute community's assets and if the community's properties are insuf cient, the
separate properties of each of the couple will be solidarily liable for the unpaid balance.
Whatever is left of the separate properties will be delivered to each of them. The net
remainder of the absolute community is its net assets, which shall be divided between the
husband and the wife; and for purposes of computing the net pro ts subject to forfeiture,
said pro ts shall be the increase in value between the market value of the community
property at the time of the celebration of the marriage and the market value at the time of
its dissolution. 74 TSIDaH

Applying Article 102 of the Family Code, the "net pro ts" requires that we rst nd the
market value of the properties at the time of the community's dissolution. From the totality
of the market value of all the properties, we subtract the debts and obligations of the
absolute community and this result to the net assets or net remainder of the properties of
the absolute community, from which we deduct the market value of the properties at the
time of marriage, which then results to the net profits. 75
Granting without admitting that Article 102 applies to the instant case, let us see what will
happen if we apply Article 102:
(a) According to the trial court's nding of facts, both husband and wife have no
separate properties, thus, the remaining properties in the list above are all part of the
absolute community. And its market value at the time of the dissolution of the absolute
community constitutes the "market value at dissolution."
(b) Thus, when the petitioner and the respondent nally were legally separated, all the
properties which remained will be liable for the debts and obligations of the community.
Such debts and obligations will be subtracted from the "market value at dissolution."
(c) What remains after the debts and obligations have been paid from the total
assets of the absolute community constitutes the net remainder or net asset. And from
such net asset/remainder of the petitioner and respondent's remaining properties, the
market value at the time of marriage will be subtracted and the resulting totality
constitutes the "net profits."
(d) Since both husband and wife have no separate properties , and nothing
would be returned to each of them, what will be divided equally between them is simply the
"net pro ts." However, in the Decision dated October 10, 2005, the trial court forfeited the
half-share of the petitioner in favor of his children. Thus, if we use Article 102 in the instant
case (which should not be the case), nothing is left to the petitioner since both parties
entered into their marriage without bringing with them any property.
On Conjugal Partnership Regime:
Before we go into our disquisition on the Conjugal Partnership Regime, we make it clear
that Article 102 (4) of the Family Code applies in the instant case for purposes only of
de ning "net pro t ." As earlier explained, the de nition of "net pro ts" in Article 102 (4)
of the Family Code applies to both the absolute community regime and conjugal
partnership regime as provided for under Article 63, No. (2) of the Family Code, relative to
the provisions on Legal Separation.
Now, when a couple enters into a regime of conjugal partnership of gains under
Article 142 of the Civil Code, "the husband and the wife place in common fund the fruits of
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their separate property and income from their work or industry, and divide equally, upon
the dissolution of the marriage or of the partnership, the net gains or bene ts obtained
indiscriminately by either spouse during the marriage." 76 From the foregoing provision,
each of the couple has his and her own property and debts. The law does not intend to
effect a mixture or merger of those debts or properties between the spouses. Rather, it
establishes a complete separation of capitals. 77 EAICTS

Considering that the couple's marriage has been dissolved under the Family Code, Article
129 of the same Code applies in the liquidation of the couple's properties in the event that
the conjugal partnership of gains is dissolved, to wit:
Art. 129. Upon the dissolution of the conjugal partnership regime, the
following procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the
conjugal partnership and the exclusive properties of each spouse.

(2) Amounts advanced by the conjugal partnership in payment of personal


debts and obligations of either spouse shall be credited to the conjugal
partnership as an asset thereof.
(3) Each spouse shall be reimbursed for the use of his or her exclusive
funds in the acquisition of property or for the value of his or her exclusive
property, the ownership of which has been vested by law in the conjugal
partnership.

(4) The debts and obligations of the conjugal partnership shall be paid out
of the conjugal assets. In case of insuf ciency of said assets, the spouses shall
be solidarily liable for the unpaid balance with their separate properties, in
accordance with the provisions of paragraph (2) of Article 121.

(5) Whatever remains of the exclusive properties of the spouses shall


thereafter be delivered to each of them.
(6) Unless the owner had been indemni ed from whatever source, the loss
or deterioration of movables used for the bene t of the family, belonging to either
spouse, even due to fortuitous event, shall be paid to said spouse from the
conjugal funds, if any.
(7) The net remainder of the conjugal partnership properties shall constitute
the pro ts, which shall be divided equally between husband and wife, unless a
different proportion or division was agreed upon in the marriage settlements or
unless there has been a voluntary waiver or forfeiture of such share as provided in
this Code. aHESCT

(8) The presumptive legitimes of the common children shall be delivered


upon the partition in accordance with Article 51.

(9) In the partition of the properties, the conjugal dwelling and the lot on
which it is situated shall, unless otherwise agreed upon by the parties, be
adjudicated to the spouse with whom the majority of the common children
choose to remain. Children below the age of seven years are deemed to have
chosen the mother, unless the court has decided otherwise. In case there is no
such majority, the court shall decide, taking into consideration the best interests
of said children.

In the normal course of events, the following are the steps in the liquidation of the
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properties of the spouses:
(a) An inventory of all the actual properties shall be made, separately listing the
couple's conjugal properties and their separate properties. 7 8 In the instant case, the trial
court found that the couple has no separate properties when they married . 79
Rather, the trial court identified the following conjugal properties, to wit:
1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;

2. coffee mill in Durian, Las Nieves, Agusan del Norte;


3. corn mill in Casiklan, Las Nieves, Agusan del Norte;

4. coffee mill in Esperanza, Agusan del Sur;


5. a parcel of land with an area of 1,200 square meters located in Tungao,
Butuan City;

6. a parcel of agricultural land with an area of 5 hectares located in Manila


de Bugabos, Butuan City;
7. a parcel of land with an area of 84 square meters located in Tungao,
Butuan City;

8. Bashier Bon Factory located in Tungao, Butuan City. 80

(b) Ordinarily, the bene t received by a spouse from the conjugal partnership during
the marriage is returned in equal amount to the assets of the conjugal partnership; 81 and
if the community is enriched at the expense of the separate properties of either spouse, a
restitution of the value of such properties to their respective owners shall be made. 82
(c) Subsequently, the couple's conjugal partnership shall pay the debts of the
conjugal partnership; while the debts and obligation of each of the spouses shall be paid
from their respective separate properties. But if the conjugal partnership is not suf cient
to pay all its debts and obligations, the spouses with their separate properties shall be
solidarily liable. 83
(d) Now, what remains of the separate or exclusive properties of the husband and of
the wife shall be returned to each of them. 84 In the instant case, since it was already
established by the trial court that the spouses have no separate properties, 85
there is nothing to return to any of them . The listed properties above are considered
part of the conjugal partnership. Thus, ordinarily, what remains in the above-listed
properties should be divided equally between the spouses and/or their respective heirs. 8 6
However, since the trial court found the petitioner the guilty party, his share from the net
pro ts of the conjugal partnership is forfeited in favor of the common children, pursuant to
Article 63 (2) of the Family Code. Again, lest we be confused, like in the absolute
community regime, nothing will be returned to the guilty party in the conjugal partnership
regime, because there is no separate property which may be accounted for in the
guilty party's favor .
In the discussions above, we have seen that in both instances, the petitioner is not entitled
to any property at all. Thus, we cannot but uphold the Decision dated October 10, 2005 of
the trial court. However, we must clarify, as we already did above, the Order dated January
8, 2007.
WHEREFORE , the Decision dated October 10, 2005 of the Regional Trial Court, Branch 1
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of Butuan City is AFFIRMED . Acting on the Motion for Clari cation dated July 7, 2006 in
the Regional Trial Court, the Order dated January 8, 2007 of the Regional Trial Court is
hereby CLARIFIED in accordance with the above discussions.
SO ORDERED.
Carpio, Brion, Perez and Sereno, JJ., concur.

Footnotes

1.Rollo, pp. 7-35.

2.Penned by Judge Eduardo S. Casals; id. at 115-122.


3.Id. at 36.

4.Id. at 36-57.

5.Id. at 56-57.
6.A.M. No. 02-11-11-SC.

7.Rollo, p. 185.
8.Id. at 59.

9.Id. at 58-59.

10.Id. at 59.
11.Id. at 60.

12.Id. at 61-69.
13.Id. at 70-76.

14.Id. at 75.

15.Id. at 74-75.
16.Id. at 75-76.

17.Id. at 77-86.

18.Id. at 87-91.
19.Id. at 90.

20.Id. at 91.
21.Id. at 92-97.

22.Id. at 115-122.

23.Id. at 18.
24.Id. at 143-146.

25.506 Phil. 613, 629 (2005).


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26.Id. at 626.

27.Id. at 627.

28.PCI Leasing and Finance, Inc. v. Milan, G.R. No. 151215, April 5, 2010, 617 SCRA 258.
29.Rollo, p. 166.

30.See Moreno, Federico B., Philippine Law Dictionary , 3rd ed., 1988, p. 998.
31.People v. Judge Navarro, 159 Phil. 863, 874 (1975).

32.R.A. No. 8369, Section 5 (d).

33.A.M. No. 02-11-11-SC.


34.Id. at Section 2 (c).

35.Rollo, p. 38.
36.Sps. Edillo v. Sps. Dulpina, G.R. No. 188360, January 21, 2010, 610 SCRA 590, 601-602.

37.Lim v. Judge Vianzon, 529 Phil. 472, 483-484 (2006); See also Herrera v. Barretto and
Joaquin, 25 Phil. 245, 256 (1913), citing Miller v. Rowan, 251 Ill., 344.
38.Rollo, pp. 50-51.
39.Id. at 51.

40.Id.
41.Id. at 51-52.

42.Id. at 52 and 56.

43.Id. at 52.
44.Id.

45.Id.
46.Id.

47.Id. at 52-53.

48.Id. at 53.
49.Id. at 53-54.

50.Id. at 55.
51.Id.

52.Id. at 56.

53.Id. at 57.
54.Id.

55.CIVIL CODE OF THE PHILIPPINES, Art. 119.


56.Id. at Art. 142.

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57.Id. at Art. 143.
58.FAMILY CODE OF THE PHILIPPINES, Art. 256.

59.Rollo, p. 29.

60.CIVIL CODE OF THE PHILIPPINES, Art. 143.


61.G.R. No. 172027, July 29, 2010, 626 SCRA 180, 201.

62.Id. at 199.
63.The Court consolidated the following cases: ABAKADA Guro Party List Officer Samson S.
Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. Ermita, G.R. No. 168056;
Aquilino Q. Pimentel, Jr., et al. v. Executive Secretary Eduardo R. Ermita, et al., G.R. No.
168207; Association of Pilipinas Shell Dealers, Inc., et al. v. Cesar V. Purisima, et al., G.R.
No. 168461; Francis Joseph G. Escudero v. Cesar V. Purisima, et al., G.R. No. 168463;
and Bataan Governor Enrique T. Garcia, Jr. v. Hon. Eduardo R. Ermita, et al., G.R. No.
168730.
64.Id.

65.Rollo, p. 37.
66.Id. at 39.

67.Id. at 55-57.

68.482 Phil. 877-894 (2004).


69.Id. at 890-891.

70.Rollo, p. 55.
71.Malayan Employees Association-FFW v. Malayan Insurance Co., Inc., G.R. No. 181357,
February 2, 2010, 611 SCRA 392, 399; Catmon Sales Int'l. Corp. v. Atty. Yngson, Jr., G.R.
No. 179761, January 15, 2010, 610 SCRA 236, 245.

72.FAMILY CODE OF THE PHILIPPINES, Art. 102 (4).


73.Id. at Art. 91; See also Tolentino, Arturo, M., COMMENTARIES AND JURISPRUDENCE ON THE
CIVIL CODE OF THE PHILIPPINES: VOLUME ONE WITH THE FAMILY CODE OF THE
PHILIPPINES, 379 (1990).

74.FAMILY CODE OF THE PHILIPPINES, Art. 102.


75.Tolentino, Arturo, M., COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES: VOLUME ONE WITH THE FAMILY CODE OF THE PHILIPPINES, 401-402
(1990).

76.CIVIL CODE OF THE PHILIPPINES, Art. 142.


77.Tolentino, Arturo, M., COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES: VOLUME ONE, 365 (1974).

78.Tolentino, Arturo, M., COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES: VOLUME ONE WITH THE FAMILY CODE OF THE PHILIPPINES, 472 (1990).
79.Rollo, p. 55.

80.Id. at 56-57.
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81.FAMILY CODE OF THE PHILIPPINES, Art. 129 (2).

82.Id. at Art. 129 (3).


83.Id. at Art. 129 (4).

84.Id. at Art. 129 (5).

85.Rollo, p. 55.
86.FAMILY CODE OF THE PHILIPPINES, Art. 129 (7).

n Note from the Publisher: Copied verbatim from the official copy.

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SECOND DIVISION

[G.R. No. 195670. December 3, 2012.]

WILLEM BEUMER , petitioner, vs . AVELINA AMORES , respondent.

DECISION

PERLAS-BERNABE , J : p

Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court
assailing the October 8, 2009 Decision 2 and January 24, 2011 Resolution 3 of the Court of
Appeals (CA) in CA-G.R. CV No. 01940, which af rmed the February 28, 2007 Decision 4 of
the Regional Trial Court (RTC) of Negros Oriental, Branch 34 in Civil Case No. 12884. The
foregoing rulings dissolved the conjugal partnership of gains of Willem Beumer
(petitioner) and Avelina Amores (respondent) and distributed the properties forming part
of the said property regime. TSaEcH

The Factual Antecedents


Petitioner, a Dutch National, and respondent, a Filipina, married in March 29, 1980. After
several years, the RTC of Negros Oriental, Branch 32, declared the nullity of their marriage
in the Decision 5 dated November 10, 2000 on the basis of the former's psychological
incapacity as contemplated in Article 36 of the Family Code.
Consequently, petitioner led a Petition for Dissolution of Conjugal Partnership 6 dated
December 14, 2000 praying for the distribution of the following described properties
claimed to have been acquired during the subsistence of their marriage, to wit:
By Purchase:
a. Lot 1, Block 3 of the consolidated survey of Lots 2144 & 2147 of the
Dumaguete Cadastre, covered by Transfer Certi cate of Title (TCT) No.
22846, containing an area of 252 square meters (sq.m.), including a
residential house constructed thereon.
b. Lot 2142 of the Dumaguete Cadastre, covered by TCT No. 21974,
containing an area of 806 sq.m., including a residential house constructed
thereon.

c. Lot 5845 of the Dumaguete Cadastre, covered by TCT No. 21306,


containing an area of 756 sq.m.

d. Lot 4, Block 4 of the consolidated survey of Lots 2144 & 2147 of the
Dumaguete Cadastre, covered by TCT No. 21307, containing an area of 45
sq.m.
By way of inheritance:

e. 1/7 of Lot 2055-A of the Dumaguete Cadastre, covered by TCT No. 23567,
containing an area of 2,635 sq.m. (the area that appertains to the conjugal
partnership is 376.45 sq.m.).
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f. 1/15 of Lot 2055-I of the Dumaguete Cadastre, covered by TCT No. 23575,
containing an area of 360 sq.m. (the area that appertains to the conjugal
partnership is 24 sq.m.). 7

In defense, 8 respondent averred that, with the exception of their two (2) residential houses
on Lots 1 and 2142, she and petitioner did not acquire any conjugal properties during their
marriage, the truth being that she used her own personal money to purchase Lots 1, 2142,
5845 and 4 out of her personal funds and Lots 2055-A and 2055-I by way of inheritance. 9
She submitted a joint af davit executed by her and petitioner attesting to the fact that she
purchased Lot 2142 and the improvements thereon using her own money. 1 0 Accordingly,
respondent sought the dismissal of the petition for dissolution as well as payment for
attorney's fees and litigation expenses. 1 1
During trial, petitioner testi ed that while Lots 1, 2142, 5845 and 4 were registered in the
name of respondent, these properties were acquired with the money he received from the
Dutch government as his disability bene t 1 2 since respondent did not have suf cient
income to pay for their acquisition. He also claimed that the joint af davit they submitted
before the Register of Deeds of Dumaguete City was contrary to Article 89 of the Family
Code, hence, invalid. 1 3
For her part, respondent maintained that the money used for the purchase of the lots came
exclusively from her personal funds, in particular, her earnings from selling jewelry as well
as products from Avon, Triumph and Tupperware. 1 4 She further asserted that after she
led for annulment of their marriage in 1996, petitioner transferred to their second house
and brought along with him certain personal properties, consisting of drills, a welding
machine, grinders, clamps, etc. She alleged that these tools and equipment have a total
cost of P500,000.00. 1 5 TIcAaH

The RTC Ruling


On February 28, 2007, the RTC of Negros Oriental, Branch 34 rendered its Decision,
dissolving the parties' conjugal partnership, awarding all the parcels of land to respondent
as her paraphernal properties; the tools and equipment in favor of petitioner as his
exclusive properties; the two (2) houses standing on Lots 1 and 2142 as co-owned by the
parties, the dispositive of which reads:
WHEREFORE, judgment is hereby rendered granting the dissolution of the
conjugal partnership of gains between petitioner Willem Beumer and [respondent]
Avelina Amores considering the fact that their marriage was previously annulled
by Branch 32 of this Court. The parcels of land covered by Transfer Certi cate of
Titles Nos. 22846, 21974, 21306, 21307, 23567 and 23575 are hereby declared
paraphernal properties of respondent Avelina Amores due to the fact that while
these real properties were acquired by onerous title during their marital union,
Willem Beumer, being a foreigner, is not allowed by law to acquire any private
land in the Philippines, except through inheritance.

The personal properties, i.e., tools and equipment mentioned in the complaint
which were brought out by Willem from the conjugal dwelling are hereby declared
to be exclusively owned by the petitioner. HAEDCT

The two houses standing on the lots covered by Transfer Certi cate of Title Nos.
21974 and 22846 are hereby declared to be co-owned by the petitioner and the
respondent since these were acquired during their marital union and since there is
no prohibition on foreigners from owning buildings and residential units.
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Petitioner and respondent are, thereby, directed to subject this court for approval
their project of partition on the two house[s] aforementioned.
The Court nds no suf cient justi cation to award the counterclaim of
respondent for attorney's fees considering the well settled doctrine that there
should be no premium on the right to litigate. The prayer for moral damages are
likewise denied for lack of merit.

No pronouncement as to costs.

SO ORDERED. 1 6

It ruled that, regardless of the source of funds for the acquisition of Lots 1, 2142, 5845
and 4, petitioner could not have acquired any right whatsoever over these properties as
petitioner still attempted to acquire them notwithstanding his knowledge of the
constitutional prohibition against foreign ownership of private lands. 1 7 This was made
evident by the sworn statements petitioner executed purporting to show that the subject
parcels of land were purchased from the exclusive funds of his wife, the herein respondent.
1 8 Petitioner's plea for reimbursement for the amount he had paid to purchase the
foregoing properties on the basis of equity was likewise denied for not having come to
court with clean hands.
The CA Ruling
Petitioner elevated the matter to the CA, contesting only the RTC's award of Lots 1, 2142,
5845 and 4 in favor of respondent. He insisted that the money used to purchase the
foregoing properties came from his own capital funds and that they were registered in the
name of his former wife only because of the constitutional prohibition against foreign
ownership. Thus, he prayed for reimbursement of one-half (1/2) of the value of what he
had paid in the purchase of the said properties, waiving the other half in favor of his
estranged ex-wife. 1 9
On October 8, 2009, the CA promulgated a Decision 2 0 af rming in toto the judgment
rendered by the RTC of Negros Oriental, Branch 34. The CA stressed the fact that
petitioner was "well-aware of the constitutional prohibition for aliens to acquire lands in the
Philippines." 2 1 Hence, he cannot invoke equity to support his claim for reimbursement.
Consequently, petitioner led the instant Petition for Review on Certiorari assailing the CA
Decision due to the following error: cHTCaI

UNDER THE FACTS ESTABLISHED, THE COURT ERRED IN NOT


SUSTAINING THE PETITIONER'S ATTEMPT AT SUBSEQUENTLY
ASSERTING OR CLAIMING A RIGHT OF HALF OR WHOLE OF THE
PURCHASE PRICE USED IN THE PURCHASE OF THE REAL PROPERTIES
SUBJECT OF THIS CASE. 2 2 (Emphasis supplied)

The Ruling of the Court


The petition lacks merit.
The issue to be resolved is not of rst impression. In In Re: Petition for Separation of
Property-Elena Buenaventura Muller v. Helmut Muller 2 3 the Court had already denied a
claim for reimbursement of the value of purchased parcels of Philippine land instituted by
a foreigner Helmut Muller, against his former Filipina spouse, Elena Buenaventura Muller. It
held that Helmut Muller cannot seek reimbursement on the ground of equity where it is
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clear that he willingly and knowingly bought the property despite the prohibition against
foreign ownership of Philippine land 2 4 enshrined under Section 7, Article XII of the 1987
Philippine Constitution which reads:
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.

Undeniably, petitioner openly admitted that he "is well aware of the [above-cited]
constitutional prohibition" 2 5 and even asseverated that, because of such prohibition, he
and respondent registered the subject properties in the latter's name. 2 6 Clearly,
petitioner's actuations showed his palpable intent to skirt the constitutional prohibition. On
the basis of such admission, the Court nds no reason why it should not apply the Muller
ruling and accordingly, deny petitioner's claim for reimbursement.
As also explained in Muller, the time-honored principle is that he who seeks equity must do
equity, and he who comes into equity must come with clean hands. Conversely stated, he
who has done inequity shall not be accorded equity. Thus, a litigant may be denied relief by
a court of equity on the ground that his conduct has been inequitable, unfair and dishonest,
or fraudulent, or deceitful. 2 7
In this case, petitioner's statements regarding the real source of the funds used to
purchase the subject parcels of land dilute the veracity of his claims: While admitting to
have previously executed a joint af davit that respondent's personal funds were used to
purchase Lot 1, 2 8 he likewise claimed that his personal disability funds were used to
acquire the same. Evidently, these inconsistencies show his untruthfulness. Thus, as
petitioner has come before the Court with unclean hands, he is now precluded from
seeking any equitable refuge. HADTEC

In any event, the Court cannot, even on the grounds of equity, grant reimbursement to
petitioner given that he acquired no right whatsoever over the subject properties by virtue
of its unconstitutional purchase. It is well-established that equity as a rule will follow the
law and will not permit that to be done indirectly which, because of public policy, cannot be
done directly. 2 9 Surely, a contract that violates the Constitution and the law is null and
void, vests no rights, creates no obligations and produces no legal effect at all. 3 0 Corollary
thereto, under Article 1412 of the Civil Code, 3 1 petitioner cannot have the subject
properties deeded to him or allow him to recover the money he had spent for the purchase
thereof. The law will not aid either party to an illegal contract or agreement; it leaves the
parties where it nds them. 3 2 Indeed, one cannot salvage any rights from an
unconstitutional transaction knowingly entered into.
Neither can the Court grant petitioner's claim for reimbursement on the basis of unjust
enrichment. 3 3 As held in Frenzel v. Catito, a case also involving a foreigner seeking
monetary reimbursement for money spent on purchase of Philippine land, the provision on
unjust enrichment does not apply if the action is proscribed by the Constitution, to wit:
Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which reads:
Art. 22. Every person who through an act of performance by another, or
any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him.
The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER
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DETREMENTO PROTEST" (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been paid without just
cause has been designated as an accion in rem verso. This provision does not
apply if, as in this case, the action is proscribed by the Constitution or by the
application of the pari delicto doctrine. It may be unfair and unjust to bar the
petitioner from ling an accion in rem verso over the subject properties, or from
recovering the money he paid for the said properties, but, as Lord Mans eld
stated in the early case of Holman v. Johnson : "The objection that a contract is
immoral or illegal as between the plaintiff and the defendant, sounds at all times
very ill in the mouth of the defendant. It is not for his sake, however, that the
objection is ever allowed; but it is founded in general principles of policy, which
the defendant has the advantage of, contrary to the real justice, as between him
and the plaintiff." 3 4 (Citations omitted)

Nor would the denial of his claim amount to an injustice based on his foreign citizenship. 3 5
Precisely, it is the Constitution itself which demarcates the rights of citizens and non-
citizens in owning Philippine land. To be sure, the constitutional ban against foreigners
applies only to ownership of Philippine land and not to the improvements built thereon,
such as the two (2) houses standing on Lots 1 and 2142 which were properly declared to
be co-owned by the parties subject to partition. Needless to state, the purpose of the
prohibition is to conserve the national patrimony 3 6 and it is this policy which the Court is
duty-bound to protect.
WHEREFORE , the petition is DENIED . Accordingly, the assailed October 8, 2009 Decision
and January 24, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 01940 are
AFFIRMED .
SO ORDERED.
Carpio, Brion, Del Castillo and Perez, JJ., concur.

Footnotes

1.Rollo, pp. 11-25.

2.Penned by Acting Executive Justice Franchito N. Diamante, with Associate Justices Edgardo
L. Delos Santos and Samuel H. Gaerlan, concurring. Id. at 26-38.

3.Penned by Associate Justice Edgardo L. Delos Santos, with Associate Justices Agnes Reyes-
Carpio and Eduardo B. Peralta, Jr., concurring. Id. at 45-46.
4.Penned by Judge Rosendo B. Bandal, Jr. Id. at 80-86.

5.See Annex "E" of the Petition. Penned by Judge Eleuterio E. Chiu (Civil Case No. 11754). Id. at
53-62.

6.Annex "E" of the Petition. Id. at 47-52.


7.Id. at 48-49a.

8.See attached as Annex "E" of the Petitioner. Respondent's Answer. Id. at 76-79.
9.Id. at 76.
10.Id. at 79.
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11.Id. at 77.

12.Id. at 81.
13.Id. at 82.
14.Id.

15.Id.
16.Id. at 85-86.

17.Id. at 84, citing Cheesman v. Intermediate Appellate Court, G.R. No. 74833, January 21, 1991,
193 SCRA 93, 103.
18.Id.
19.Id. at 91.
20.Id. at 26-38.
21.Id. at 33.

22.Id. at 17.
23.G.R. No. 149615, August 29, 2006, 500 SCRA 65.
24.Id. at 72.
25.Rollo, p. 17.

26.Id. at 18.
27.Supra note 23 at 73, citing University of the Philippines v. Catungal, Jr. , 338 Phil. 728, 734-
744 (1997).

28.Id. at 82.
29.Frenzel v. Catito, G.R. No. 143958, July 11, 2003, 406 SCRA 55, 70.
30.Id. at 69-70, citing Chavez v. Presidential Commission on Good Government, 307 SCRA 394
(1998).
31.Re: Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he has
given by virtue of the contract, or demand the performance of the other's undertaking
xxx xxx xxx
32.Id., citing Rellosa v. Hun, 93 Phil. 827 (1953).
33.Rollo, p. 20.

34.Supra note 29 at 74, citing I. Tolentino, Civil Code of the Philippines (1990), p. 85 and
Marissey v. Bologna, 123 So. 2d 537 (1960).
35.Rollo, pp. 19-21.

36.See Krivenko v. Register of Deeds, 79 Phil. 461 (1947).

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EN BANC

[G.R. No. 178902. April 21, 2010.]

MANUEL O. FUENTES and LETICIA L. FUENTES , petitioners, vs .


CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R.
CRISTOBAL and PILAR MALCAMPO , respondents.

DECISION

ABAD , J : p

This case is about a husband's sale of conjugal real property, employing a


challenged af davit of consent from an estranged wife. The buyers claim valid consent,
loss of right to declare nullity of sale, and prescription.
The Facts and the Case
Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City.
On October 11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of
absolute sale. 1 But Tarciano did not for the meantime have the registered title
transferred to his name.
Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and
Leticia Fuentes (the Fuentes spouses). They arranged to meet at the of ce of Atty.
Romulo D. Plagata whom they asked to prepare the documents of sale. They later
signed an agreement to sell that Atty. Plagata prepared 2 dated April 29, 1988, which
agreement expressly stated that it was to take effect in six months.
The agreement required the Fuentes spouses to pay Tarciano a down payment of
P60,000.00 for the transfer of the lot's title to him. And, within six months, Tarciano was
to clear the lot of structures and occupants and secure the consent of his estranged
wife, Rosario Gabriel Roca (Rosario), to the sale. Upon Tarciano's compliance with
these conditions, the Fuentes spouses were to take possession of the lot and pay him
an additional P140,000.00 or P160,000.00, depending on whether or not he succeeded
in demolishing the house standing on it. If Tarciano was unable to comply with these
conditions, the Fuentes spouses would become owners of the lot without any further
formality and payment.
The parties left their signed agreement with Atty. Plagata who then worked on
the other requirements of the sale. According to the lawyer, he went to see Rosario in
one of his trips to Manila and had her sign an af davit of consent. 3 As soon as
Tarciano met the other conditions, Atty. Plagata notarized Rosario's af davit in
Zamboanga City. On January 11, 1989 Tarciano executed a deed of absolute sale 4 in
favor of the Fuentes spouses. They then paid him the additional P140,000.00
mentioned in their agreement. A new title was issued in the name of the spouses 5 who
immediately constructed a building on the lot. On January 28, 1990 Tarciano passed
away, followed by his wife Rosario who died nine months afterwards. SacTCA

Eight years later in 1997, the children of Tarciano and Rosario, namely,
respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal,
together with Tarciano's sister, Pilar R. Malcampo, represented by her son, John Paul M.
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Trinidad (collectively, the Rocas), led an action for annulment of sale and
reconveyance of the land against the Fuentes spouses before the Regional Trial Court
(RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale to the
spouses was void since Tarciano's wife, Rosario, did not give her consent to it. Her
signature on the af davit of consent had been forged. They thus prayed that the
property be reconveyed to them upon reimbursement of the price that the Fuentes
spouses paid Tarciano. 6
The spouses denied the Rocas' allegations. They presented Atty. Plagata who
testi ed that he personally saw Rosario sign the af davit at her residence in Paco,
Manila, on September 15, 1988. He admitted, however, that he notarized the document
in Zamboanga City four months later on January 11, 1989. 7 All the same, the Fuentes
spouses pointed out that the claim of forgery was personal to Rosario and she alone
could invoke it. Besides, the four-year prescriptive period for nullifying the sale on
ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting experts at the
trial. Comparing Rosario's standard signature on the af davit with those on various
documents she signed, the Rocas' expert testi ed that the signatures were not written
by the same person. Making the same comparison, the spouses' expert concluded that
they were. 8
On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled
that the action had already prescribed since the ground cited by the Rocas for annulling
the sale, forgery or fraud, already prescribed under Article 1391 of the Civil Code four
years after its discovery. In this case, the Rocas may be deemed to have notice of the
fraud from the date the deed of sale was registered with the Registry of Deeds and the
new title was issued. Here, the Rocas led their action in 1997, almost nine years after
the title was issued to the Fuentes spouses on January 18, 1989. 9
Moreover, the Rocas failed to present clear and convincing evidence of the fraud.
Mere variance in the signatures of Rosario was not conclusive proof of forgery. 1 0 The
RTC ruled that, although the Rocas presented a handwriting expert, the trial court could
not be bound by his opinion since the opposing expert witness contradicted the same.
Atty. Plagata's testimony remained technically unrebutted. 1 1
Finally, the RTC noted that Atty. Plagata's defective notarization of the af davit of
consent did not invalidate the sale. The law does not require spousal consent to be on
the deed of sale to be valid. Neither does the irregularity vitiate Rosario's consent. She
personally signed the affidavit in the presence of Atty. Plagata. 1 2
On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found
suf cient evidence of forgery and did not give credence to Atty. Plagata's testimony
that he saw Rosario sign the document in Quezon City. Its jurat said differently. Also,
upon comparing the questioned signature with the specimen signatures, the CA noted
signi cant variance between them. That Tarciano and Rosario had been living
separately for 30 years since 1958 also reinforced the conclusion that her signature
had been forged.
Since Tarciano and Rosario were married in 1950, the CA concluded that their
property relations were governed by the Civil Code under which an action for annulment
of sale on the ground of lack of spousal consent may be brought by the wife during the
marriage within 10 years from the transaction. Consequently, the action that the Rocas,
her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale.

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Considering, however, that the sale between the Fuentes spouses and Tarciano
was merely voidable, the CA held that its annulment entitled the spouses to
reimbursement of what they paid him plus legal interest computed from the filing of the
complaint until actual payment. Since the Fuentes spouses were also builders in good
faith, they were entitled under Article 448 of the Civil Code to payment of the value of
the improvements they introduced on the lot. The CA did not award damages in favor of
the Rocas and deleted the award of attorney's fees to the Fuentes spouses. 1 3
Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for
review. 1 4
The Issues Presented
The case presents the following issues:
1. Whether or not Rosario's signature on the document of consent to her
husband Tarciano's sale of their conjugal land to the Fuentes spouses
was forged;
2. Whether or not the Rocas' action for the declaration of nullity of that
sale to the spouses already prescribed; and
3. Whether or not only Rosario, the wife whose consent was not had,
could bring the action to annul that sale.
HCTAEc

The Court's Rulings


First. The key issue in this case is whether or not Rosario's signature on the
document of consent had been forged. For, if the signature were genuine, the fact that
she gave her consent to her husband's sale of the conjugal land would render the other
issues merely academic.
The CA found that Rosario's signature had been forged. The CA observed a
marked difference between her signature on the af davit of consent 1 5 and her
specimen signatures. 1 6 The CA gave no weight to Atty. Plagata's testimony that he
saw Rosario sign the document in Manila on September 15, 1988 since this clashed
with his declaration in the jurat that Rosario signed the af davit in Zamboanga City on
January 11, 1989.
The Court agrees with the CA's observation that Rosario's signature strokes on
the af davit appears heavy, deliberate, and forced. Her specimen signatures, on the
other hand, are consistently of a lighter stroke and more uid. The way the letters "R"
and "s" were written is also remarkably different. The variance is obvious even to the
untrained eye.
Signi cantly, Rosario's specimen signatures were made at about the time that
she signed the supposed af davit of consent. They were, therefore, reliable standards
for comparison. The Fuentes spouses presented no evidence that Rosario suffered
from any illness or disease that accounted for the variance in her signature when she
signed the af davit of consent. Notably, Rosario had been living separately from
Tarciano for 30 years since 1958. And she resided so far away in Manila. It would have
been quite tempting for Tarciano to just forge her signature and avoid the risk that she
would not give her consent to the sale or demand a stiff price for it.
What is more, Atty. Plagata admittedly falsi ed the jurat of the af davit of
consent. That jurat declared that Rosario swore to the document and signed it in
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Zamboanga City on January 11, 1989 when, as Atty. Plagata testi ed, she supposedly
signed it about four months earlier at her residence in Paco, Manila on September 15,
1988. While a defective notarization will merely strip the document of its public
character and reduce it to a private instrument, that falsi ed jurat, taken together with
the marks of forgery in the signature, dooms such document as proof of Rosario's
consent to the sale of the land. That the Fuentes spouses honestly relied on the
notarized af davit as proof of Rosario's consent does not matter. The sale is still void
without an authentic consent.
Second. Contrary to the ruling of the Court of Appeals, the law that applies to
this case is the Family Code, not the Civil Code. Although Tarciano and Rosario got
married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on
January 11, 1989, a few months after the Family Code took effect on August 3, 1988.
When Tarciano married Rosario, the Civil Code put in place the system of
conjugal partnership of gains on their property relations. While its Article 165 made
Tarciano the sole administrator of the conjugal partnership, Article 166 1 7 prohibited
him from selling commonly owned real property without his wife's consent. Still, if he
sold the same without his wife's consent, the sale is not void but merely voidable.
Article 173 gave Rosario the right to have the sale annulled during the marriage within
ten years from the date of the sale. Failing in that, she or her heirs may demand, after
dissolution of the marriage, only the value of the property that Tarciano fraudulently
sold. Thus:
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.

But, as already stated, the Family Code took effect on August 3, 1988. Its
Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the
Civil Code on Property Relations Between Husband and Wife. 1 8 Further, the Family
Code provisions were also made to apply to already existing conjugal partnerships
without prejudice to vested rights. 1 9 Thus:
Art. 105. . . . The provisions of this Chapter shall also apply to
conjugal partnerships of gains already established between spouses
before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as
provided in Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January
11, 1989, the law that governed the disposal of that lot was already the Family Code.
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does
not provide a period within which the wife who gave no consent may assail her
husband's sale of the real property. It simply provides that without the other spouse's
written consent or a court order allowing the sale, the same would be void. Article 124
thus provides:
Art. 124. . . . In the event that one spouse is incapacitated or
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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. . . .

Under the provisions of the Civil Code governing contracts, a void or inexistent
contract has no force and effect from the very beginning. And this rule applies to
contracts that are declared void by positive provision of law, 2 0 as in the case of a sale
of conjugal property without the other spouse's written consent. A void contract is
equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated
either by ratification or prescription. 2 1
But, although a void contract has no legal effects even if no action is taken to set
it aside, when any of its terms have been performed, an action to declare its inexistence
is necessary to allow restitution of what has been given under it. 2 2 This action,
according to Article 1410 of the Civil Code does not prescribe. Thus:
Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.

Here, the Rocas led an action against the Fuentes spouses in 1997 for
annulment of sale and reconveyance of the real property that Tarciano sold without
their mother's (his wife's) written consent. The passage of time did not erode the right
to bring such an action.
Besides, even assuming that it is the Civil Code that applies to the transaction as
the CA held, Article 173 provides that the wife may bring an action for annulment of sale
on the ground of lack of spousal consent during the marriage within 10 years from the
transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell
within 10 years of the January 11, 1989 sale. It did not yet prescribe.
The Fuentes spouses of course argue that the RTC nulli ed the sale to them
based on fraud and that, therefore, the applicable prescriptive period should be that
which applies to fraudulent transactions, namely, four years from its discovery. Since
notice of the sale may be deemed given to the Rocas when it was registered with the
Registry of Deeds in 1989, their right of action already prescribed in 1993.
But, if there had been a victim of fraud in this case, it would be the Fuentes
spouses in that they appeared to have agreed to buy the property upon an honest belief
that Rosario's written consent to the sale was genuine. They had four years then from
the time they learned that her signature had been forged within which to file an action to
annul the sale and get back their money plus damages. They never exercised the right.
If, on the other hand, Rosario had agreed to sign the document of consent upon a
false representation that the property would go to their children, not to strangers, and it
turned out that this was not the case, then she would have four years from the time she
discovered the fraud within which to le an action to declare the sale void. But that is
not the case here. Rosario was not a victim of fraud or misrepresentation. Her consent
was simply not obtained at all. She lost nothing since the sale without her written
consent was void. Ultimately, the Rocas ground for annulment is not forgery but the
lack of written consent of their mother to the sale. The forgery is merely evidence of
lack of consent.
Third. The Fuentes spouses point out that it was to Rosario, whose consent was
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not obtained, that the law gave the right to bring an action to declare void her husband's
sale of conjugal land. But here, Rosario died in 1990, the year after the sale. Does this
mean that the right to have the sale declared void is forever lost?
The answer is no. As stated above, that sale was void from the beginning.
Consequently, the land remained the property of Tarciano and Rosario despite that sale.
When the two died, they passed on the ownership of the property to their heirs, namely,
the Rocas. 2 3 As lawful owners, the Rocas had the right, under Article 429 of the Civil
Code, to exclude any person from its enjoyment and disposal.
In fairness to the Fuentes spouses, however, they should be entitled, among
other things, to recover from Tarciano's heirs, the Rocas, the P200,000.00 that they
paid him, with legal interest until fully paid, chargeable against his estate.
Further, the Fuentes spouses appear to have acted in good faith in entering the
land and building improvements on it. Atty. Plagata, whom the parties mutually
entrusted with closing and documenting the transaction, represented that he got
Rosario's signature on the af davit of consent. The Fuentes spouses had no reason to
believe that the lawyer had violated his commission and his oath. They had no way of
knowing that Rosario did not come to Zamboanga to give her consent. There is no
evidence that they had a premonition that the requirement of consent presented some
dif culty. Indeed, they willingly made a 30 percent down payment on the selling price
months earlier on the assurance that it was forthcoming. DHAcET

Further, the notarized document appears to have comforted the Fuentes spouses
that everything was already in order when Tarciano executed a deed of absolute sale in
their favor on January 11, 1989. In fact, they paid the balance due him. And, acting on
the documents submitted to it, the Register of Deeds of Zamboanga City issued a new
title in the names of the Fuentes spouses. It was only after all these had passed that the
spouses entered the property and built on it. He is deemed a possessor in good faith,
said Article 526 of the Civil Code, who is not aware that there exists in his title or mode
of acquisition any flaw which invalidates it.
As possessor in good faith, the Fuentes spouses were under no obligation to pay
for their stay on the property prior to its legal interruption by a nal judgment against
t hem. 2 4 What is more, they are entitled under Article 448 to indemnity for the
improvements they introduced into the property with a right of retention until the
reimbursement is made. Thus:
Art. 448. The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate as his
own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to buy the land if
its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the Civil
Code, 2 5 of indemnifying the Fuentes spouses for the costs of the improvements or
paying the increase in value which the property may have acquired by reason of such
improvements.
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WHEREFORE , the Court DENIES the petition and AFFIRMS WITH
MODIFICATION the decision of the Court of Appeals in CA-G.R. CV 00531 dated
February 27, 2007 as follows:
1. The deed of sale dated January 11, 1989 that Tarciano T. Roca
executed in favor of Manuel O. Fuentes, married to Leticia L. Fuentes,
as well as the Transfer Certi cate of Title T-90,981 that the Register
of Deeds of Zamboanga City issued in the names of the latter
spouses pursuant to that deed of sale are DECLARED void;
2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate
Transfer Certi cate of Title 3533 in the name of Tarciano T. Roca,
married to Rosario Gabriel;
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are ORDERED to pay petitioner
spouses Manuel and Leticia Fuentes the P200,000.00 that the latter
paid Tarciano T. Roca, with legal interest from January 11, 1989 until
fully paid, chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are further ORDERED , at their option,
to indemnify petitioner spouses Manuel and Leticia Fuentes with their
expenses for introducing useful improvements on the subject land or
pay the increase in value which it may have acquired by reason of
those improvements, with the spouses entitled to the right of
retention of the land until the indemnity is made; and
5. The RTC of Zamboanga City from which this case originated is
DIRECTED to receive evidence and determine the amount of
indemnity to which petitioner spouses Manuel and Leticia Fuentes are
entitled.
SO ORDERED.
Puno, C.J., Carpio, Corona, Carpio Morales, Velasco, Jr., Nachura, Leonardo-de Castro,
Brion, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez and Mendoza, JJ., concur.

Footnotes

1. Records, p. 8.
2. Id. at 149.
3. Id. at 10.
4. Id. at 9.
5. Id. at 171.
6. Id. at 1-5.
7. TSN, April 12, 2000, pp. 16-18.

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8. Rollo, p. 42.
9. Id. at 72.
10. Id. at 73.
11. Id. at 92.
12. Id. at 95-96.
13. Id. at 45-50.
14. A Division of the Court already denied the petition for having been filed late and on
other technical grounds. (Rollo, pp. 7 and 110-111). But it was reinstated on second
motion for reconsideration and referred to the En Banc on a consulta. (Rollo, pp. 199-
200).
15. Records, p. 10.
16. Exhibits E to E-21 consisting of personal letters and legal documents signed by Rosario
relative to a special proceedings case tried by another court.
17. 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 partnership without the wife's consent. If she
refuses unreasonably to give her consent, the court may compel her to grant the same.
18. Family Code of the Philippines, Art. 254.

19. Id., Art. 105; see also Homeowners Savings and Loan Bank v. Miguela C. Dailo, G.R. No.
153802, March 11, 2005, 453 SCRA 283, 290.

20. Civil Code of the Philippines, Art. 1409.


21. Id., Vol. IV (1990-1991 Edition) Arturo M. Tolentino, pp. 629 & 631.
22. Id. at 632.
23. Id., Art. 979. "Legitimate children and their descendants succeed the parents and other
ascendants, without distinction as to sex or age, and even if they should come from
different marriages. . . .
24. Id., Art. 544.
25. Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the increase in value which the
thing may have acquired by reason thereof. (453a)

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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 : p

For review are the Decision 1 dated February 21, 2002 and the Resolution 2 dated
October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560. The appellate court
modi ed the Decision 3 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 Appeals 4 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 Certi cate of Title (TCT) No. T-88674 in their names. Said lot is adjacent to
a parcel of land which Pedro acquired when he was still single and which is registered
solely in his name under TCT No. T-26471.
Through their joint efforts and the proceeds of a loan from the Development
Bank of the Philippines (DBP), the spouses built a house on Lot 7 and Pedro's lot. The
house was nished in the early 1980's but the spouses continuously made
improvements, including a poultry house and an annex.
In 1991, Pedro got a mistress and began to neglect his family. Mary Ann was
forced to sell or mortgage their movables to support the family and the studies of her
children. By himself, Pedro offered to sell the house and the two lots to herein
petitioners, Patrocinia and Wilfredo Ravina. Mary Ann objected and noti ed the
petitioners of her objections, but Pedro nonetheless sold the house and the two lots
without Mary Ann's consent, as evidenced by a Deed of Sale 5 dated June 21, 1991. It
appears on the said deed that Mary Ann did not sign on top of her name. DcCEHI

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 petitioners 6 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,
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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 unked at school. Thus,
respondents Mary Ann and her children filed a complaint for Annulment of Sale, Specific
Performance, Damages and Attorney's Fees with Preliminary Mandatory Injunction 7
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 testi ed 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 (P100,000.00) 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). cCTAIE

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:

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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 led this
petition. Petitioners argue that:
I.

THE COURT OF APPEALS ERRED WHEN IT DECLARED . . . 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. ASICDH

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. 1 0

In essence, petitioners assail the appellate court's declaration that the sale to
them by Pedro of the lot covered by TCT No. T-88674 is null and void. However, in
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addressing this issue, it is imperative to determine: (1) whether the subject property
covered by TCT No. T-88674 is an exclusive property of Pedro or conjugal property, and
(2) whether its sale by Pedro was valid considering the absence of Mary Ann's consent.
Petitioners assert that the subject lot covered by TCT No. T-88674 was the
exclusive property of Pedro having been acquired by him through barter or exchange. 1 1
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. 1 2 Petitioners' bare assertion would not suf ce
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.
Signi cantly, 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 spouse's inability, the authority of
the court. Article 124 of the Family Code, the governing law at the time the assailed sale
was contracted, is explicit:
ART. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husband's decision shall prevail, subject to recourse to the court by the wife for
proper remedy which must be availed of within ve years from the date of the
contract implementing such decision. aITDAE

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
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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 ve
(5) years from the date the contract implementing the decision of the husband to
institute the case. 1 3
Here, respondent Mary Ann timely led the action for annulment of sale within
ve (5) years from the date of sale and execution of the deed. However, her action to
annul the sale pertains only to the conjugal house and lot and does not include the lot
covered by TCT No. T-26471, a property exclusively belonging to Pedro and which he
can dispose of freely without Mary Ann's consent.
On the second assignment of error, petitioners contend that they are buyers in
good faith. 1 4 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. 1 5 To establish his status as a buyer for
value in good faith, a person dealing with land registered in the name of and occupied
by the seller need only show that he relied on the face of the seller's certi cate of title.
But for a person dealing with land registered in the name of and occupied by the seller
whose capacity to sell is restricted, such as by Articles 166 and 173 of the Civil Code or
Article 124 of the Family Code, he must show that he inquired into the latter's capacity
to sell in order to establish himself as a buyer for value in good faith. 1 6
In the present case, the property is registered in the name of Pedro and his wife,
Mary Ann. Petitioners cannot deny knowledge that during the time of the sale in 1991,
Pedro was married to Mary Ann. However, Mary Ann's conformity did not appear in the
deed. Even assuming that petitioners believed in good faith that the subject property is
the exclusive property of Pedro, they were apprised by Mary Ann's lawyer of her
objection to the sale and yet they still proceeded to purchase the property without Mary
Ann's written consent. Moreover, the respondents were the ones in actual, visible and
public possession of the property at the time the transaction was being made. Thus, at
the time of sale, petitioners knew that Mary Ann has a right to or interest in the subject
properties and yet they failed to obtain her conformity to the deed of sale. Hence,
petitioners cannot now invoke the protection accorded to purchasers in good faith. ACcaET

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.
1 7 Hence, in consonance with justice and equity and the salutary principle of non-
enrichment at another's expense, we sustain the appellate court's order directing Pedro
to return to petitioner spouses the value of the consideration for the lot covered by TCT
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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 led. Ravina
continued introducing improvements during the pendency of the action. 1 8
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". 1 9
On the last issue, petitioners claim that the decision awarding damages to
respondents is not supported by the evidence on record. 2 0
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 petitioners 2 1 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". 2 2 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. 2 3 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 .
Carpio Morales, Brion, Bersamin * and Abad, JJ., concur.

Footnotes

* Additional member per Special Order No. 761.


1. Rollo, pp. 44-70. Penned by Associate Justice Ruben T. Reyes (now a retired member of
this Court), with Associate Justices Renato C. Dacudao and Mariano C. Del Castillo (now
a member of this Court) concurring.

2. Id. at 71.
3. CA rollo, pp. 47-54. Penned by Judge Jesus V. Quitain.
4. With editorial changes for brevity.
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5. Records, pp. 144-145. Exh. "T".

6. CA rollo, p. 53.
7. Records, pp. 1-7.
8. CA rollo, pp. 53-54.
9. Rollo, pp. 68-69.
10. Id. at 24.
11. Id.
12. See Castro v. Miat, G.R. No. 143297, February 11, 2003, 397 SCRA 271, 280.
13. M. STA. MARIA, PERSONS AND FAMILY RELATIONS LAW, p. 511 (4th ed., 2004).
14. Rollo, p. 32.
15. San Lorenzo Development Corporation v. Court of Appeals, G.R. No. 124242, January
21, 2005, 449 SCRA 99, 117.
16. Bautista v. Silva, G.R. No. 157434, September 19, 2006, 502 SCRA 334, 338-339.
17. Heirs of Ignacia Aguilar-Reyes v. Mijares, G.R. No. 143826, August 28, 2003, 410 SCRA
97, 109.

18. Rollo, p. 63.


19. Lumungo v. Usman, No. L-25359, September 28, 1968, 25 SCRA 255, 262.
20. Rollo, p. 36.
21. CA rollo, p. 53.
22. CIVIL CODE, Art. 19.

23. CIVIL CODE, Art. 21.

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FIRST DIVISION

[G.R. No. 159310. February 24, 2009.]

CAMILO F. BORROMEO , petitioner, vs . ANTONIETTA O. DESCALLAR ,


respondent.

DECISION

PUNO , C.J : p

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? CaAIES

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 Antonietta's
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, Jambrich's name was erased from the document. But it could be noted that
his signature remained on the left hand margin of page 1, beside respondent's 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 respondent's
name alone.
Jambrich also formally adopted respondent's 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
respondent's 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
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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. IcSEAH

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, Jambrich's financial capacity to acquire and
purchase the properties . . . is not disputed . 7

xxx xxx 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
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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 IDAESH

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 xxx 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. 1 0 [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;ATSIED

5)Ordering the defendant to pay plaintiff attorney's fees in the amount of


P25,000.00 and litigation expenses in the amount of P10,000.00; and,
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6)To pay the costs. 1 1

Respondent appealed to the Court of Appeals. In a Decision dated April 10, 2002, 1 2 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 court's 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. 1 3

Petitioner's 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
RESPONDENT'S JUDICIAL ADMISSION AND OTHER OVERWHELMING
EVIDENCE ESTABLISHING JAMBRICH'S 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). 1 4 HTScEI

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
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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 1 5 submitted by the Department of Social Welfare and
Development (DSWD) in the adoption proceedings of respondent's 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. Moritz are (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. 1 6

The DSWD Home Study Report 1 7 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. 1 8aSTECA

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
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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 couple's
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. 1 9 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. 2 0 DcaCSE

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. 2 1 It is only a means of
confirming the fact of its existence with notice to the world at large. 2 2 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, 2 3 and that it is perfect, absolute and
indefeasible. 2 4 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. 2 5 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, 2 6 which is basically a
reproduction of Section 5, Article XIII of the 1935 Constitution, 2 7 and Section 14, Article
XIV of the 1973 Constitution. 2 8 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. 2 9
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 , 3 0 the Court
reiterated the consistent ruling in a number of cases 3 1 that if land is invalidly transferred
to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw
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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 attorney's fees and P10,000 as litigation expenses, as well
as the costs of suit. DScTaC

We affirm the Regional Trial Court.


The rationale behind the Court's ruling in United Church Board for World Ministries , as
reiterated in subsequent cases, 3 2 is this since the ban on aliens is intended to preserve
the nation's 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.
Carpio, Corona, Leonardo-de Castro and Brion, JJ., concur.
Footnotes

1.Exhibit "I", Original Records, p. 104.

2.Exhibit "K", id. at 105.


3.Exhibit "L", id. at 106-109.
4.Exhibit "C", id. at 87-89.
5.Exhibit "H", id. at 101-103.
6.Exhibit "O", id. at 155.

7.Decision, id. at 294.


8.Id. at 295-296.
9.Id. at 296.
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10.Id. at 297. DSHcTC

11.Id. at 297-298.

12.Id. at 71-83.
13.CA rollo, pp. 225-226.
14.Rollo, p. 15.
15.Exhibit "G", Original Records, pp. 97-100.
16.Id. at 100.

17.Exhibit "F", id. at 92-96.


18.Id. at 93.
19.Art. 144, Civil Code; Art. 147, Family Code.
20.Art. 148, Family Code; Rivera v. Heirs of Romualdo Villanueva, G.R. No. 141501, July 21,
2006, 496 SCRA 135.
21.Bollozos v. Yu Tieng Su, No. L-29442, November 11, 1987, 155 SCRA 506.
22.Id. at 517, citing Bautista v. Dy Bun Chin, CA-L-6983-R, 49 O.G. 179.

23.Legarda and Prieto v. Saleeby , 31 Phil. 590 (1915).


24.Government v. Avila, 38 Phil. 38 (1918).
25.Ignacio v. Chua Beng, 52 Phil. 940 (1929); Acosta v. Gomez, 52 Phil. 744 (1929); Cruz v.
Fabie, 35 Phil. 144 (1916).
26.SEC. 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. cASIED

27.SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be


transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines.
28.SEC. 14. Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain.
29.1987 Constitution, Art. XII, Sec. 8. Notwithstanding the provisions of Section 7 of this Article,
a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a
transferee of private lands, subject to limitations provided by law.

30.G.R. No. L-34672, March 30, 1988, 159 SCRA 446.


31.Sarsosa Vda. de Barsobia v. Cuenco, G.R. No. L-33048, April 16, 1982, 113 SCRA 547;
Godinez v. Pak Luen, G.R. No. L-36731, January 27, 1983, 120 SCRA 223, Vasquez v. Li
Seng Giap & Sons, 96 Phil. 447 (1955); Herrera v. Luy King Guan, G.R. No. L-17043,
January 31, 1961, 1 SCRA 406; Yap v. Maravillas, G.R. No. L-31606, March 28, 1983, 121
SCRA 244; and De Castro v. Tan, G.R. No. L-31956, April 30, 1984, 129 SCRA 85.
32.Hko Ah Pao v. Ting, G.R. No. 153476, September 27, 2006, 503 SCRA 551; Muller v. Muller,
G.R. No. 149615, August 29, 2006, 500 SCRA 65; Lee v. Republic, G.R. No. 128195,
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October 3, 2001, 366 SCRA 524.

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FIRST DIVISION

[G.R. No. 143286. April 14, 2004.]

PROCOPIO VILLANUEVA, NICOLAS RETUYA and PACITA


VILLANUEVA , petitioners, vs . COURT OF APPEALS and THE HEIRS OF
EUSEBIA NAPISA RETUYA , respondents.

DECISION

CARPIO , J : p

This petition for review on certiorari 1 seeks the reversal of the Court of Appeals' Decision
dated 31 January 2000 as well as its Resolution dated 25 April 2000 in CA-G.R. No. CV-
46716. The assailed Decision dismissed petitioners' appeal of the Decision of the Regional
Trial Court, Branch 55, Mandaue City ("trial court").
On 13 October 1988, Eusebia Napisa Retuya (Eusebia) filed a complaint before the trial
court against her husband Nicolas Retuya ("Nicolas"), Pacita Villanueva ("Pacita"), and
Nicolas' son with Pacita, Procopio Villanueva ("Procopio"). Eusebia sought the
reconveyance from Nicolas and Pacita of several properties listed in paragraph 2 of the
complaint ("subject properties"), claiming the subject properties are her conjugal
properties with Nicolas. Eusebia also prayed for accounting, damages and the delivery of
rent and other income from the subject properties.
Antecedent Facts
The facts as found by the trial court are as follows:
Plaintiff Eusebia Napisa Retuya, is the legal wife of defendant Nicolas Retuya,
having been married to the latter on October 7, 1926. Out of the lawful wedlock,
they begot five (5) children, namely, Natividad, Angela, Napoleon, Salome, and
Roberta. Spouses Retuya resided at Tipolo, Mandaue City. During their marriage
they acquired real properties and all improvements situated in Mandaue City, and
Consolacion, Cebu, more particularly described as follows:
'1. A parcel of land located at Pulpugan, Consolacion, Cebu under tax
dec. No. 24951;

2. A parcel of land located at Pulpugan, Consolacion, Cebu under tax


dec. No. 24952;
3. A parcel of land located at Pulpugan, Consolacion, Cebu under tax
dec. No. 24953;

4. A parcel of land located at Pulpugan, Consolacion, Cebu under tax


dec. No. 24954;
5. A parcel of land located at Pulpugan, Consolacion, Cebu under tax
dec. No. 24956;

6. A parcel of land located at Pulpugan, Consolacion, Cebu under tax


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dec. No. 24957;

7. A parcel of land located at Pulpugan, Consolacion, Cebu under tax


dec. No. 24958;

8. A parcel of land located at Tipolo, Mandaue City, covered by tax dec.


No. 01042;

9. A parcel of land located at Tipolo, Mandaue City, covered by tax dec.


No. 01043;

10. A parcel of land located at Tipolo, Mandaue City, covered by tax


dec. No. 01046;

11. A parcel of land located at Tipolo, Mandaue City, covered by tax


dec. No. 01041;

12. A parcel of land located at Nawanao-Subangdaku, Mandaue City


covered by tax dec. No. 01488;

13. A parcel of land located at Baklid, Mandaue City, covered by tax


dec. No. 00492;

14. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01044;

15. A residential house located at Tipolo, Mandaue City covered by tax


dec. No. 01050;

16. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01048;

17. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01051;

18. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01047;

19. A parcel of land located at Banilad, Mandaue City covered by tax


dec. No. 02381;

20. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01049;

21. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01045;

22. A parcel of land located at Tipolo, Mandaue City covered by tax


dec. No. 01450 (in the name of Pacita Villanueva).'

Also, defendant, Nicolas Retuya, is co-owner of a parcel of land situated in


Mandaue City which he inherited from his parents Esteban Retuya and Balbina
Solon as well as the purchaser of hereditary shares of approximately eight (8)
parcels of land in Mandaue City.

Some of these properties above-mentioned earn income from coconuts and the
other lands/houses are leased to the following:

a) Mandaue Food Products Company for Lot 121-F, Lot 121-G and
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Lot 121-H under TCT No. 11300 at an annual rental of P10,800.00;

b) Barben Wood Industries, Inc. for Lot 148 covered by TCT No.
1731 for an annual rental of P21,600.00;

c) Metaphil, Inc. parcel of land consisting of 2,790.51 sq. meters at


the rate of P2,700.00 annually for the first five (5) years, and P3,240.00 for
the second years;

d) Benedicto Development Corp. for a portion of Lot 148 covered by


TCT No. 1731 for a period of 20 years at an annual rate of P3,500.00
renewable for another 20 years after April 1, 1995 at an annual rate of
P4,000.00;
e) Benedicto Development Corporation for a portion of Lot No. 148
covered by Certificate of Title No. 1731 over an area of 6,000 sq. meters for
an annual rental of P9,500.00 for a period of 2 years from June 1, 1982;

f) Visayan Timber and Machinery Corp. over a parcel of land at


Nawanaw, Mandaue City, for a period of 2 years from June 1, 1987 and
renewable for another 12 years at an annual income of P4,000.00;

g) House lessees listed in Exhibit "13" with total monthly rentals of


P1,975.00 a month for the 24 lessees or P24,700.00 annually. (Exhs. "7" to
"13")

In 1945, defendant Nicolas Retuya no longer lived with his legitimate family and
cohabited with defendant, Pacita Villanueva, wherein defendant, Procopio
Villanueva, is their illegitimate son. Nicolas, then, was the only person who
received the income of the above-mentioned properties.

Defendant, Pacita Villanueva, from the time she started living in concubinage with
Nicolas, has no occupation, she had no properties of her own from which she
could derive income.

In 1985, Nicolas suffered a stroke and cannot talk anymore, cannot walk anymore
and they have to raise him up in order to walk. Natividad Retuya knew of the
physical condition of her father because they visited him at the hospital. From the
time defendant Nicolas Retuya suffered a stroke on January 27, 1985 and until
the present, it is defendant Procopio Villanueva, one of Nicolas' illegitimate
children who has been receiving the income of these properties. Witness
Natividad Retuya went to Procopio to negotiate because at this time their father
Nicolas was already senile and has a childlike mind. She told defendant, Procopio
that their father was already incapacitated and they had to talk things over and
the latter replied that it was not yet the time to talk about the matter.
Plaintiff, then, complained to the Barangay Captain for reconciliation/mediation
but no settlement was reached, hence, the said official issued a certification to
file action. Written demands were made by plaintiff, through her counsel, to the
defendants, including the illegitimate family asking for settlement but no
settlement was reached by the parties.
Further, plaintiff's witness, Natividad Retuya, testified that the parcel of land
covered by tax declaration marked Exhibit "T" was the property bought by her
father from Adriano Marababol for at the time of purchase of the property,
defendant Pacita Villanueva had no means of livelihood (TSN, p. 6).

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The trial court rendered its Decision on 16 February 1994 in favor of Eusebia. The
dispositive portion of the Decision states:
WHEREFORE, in view of the foregoing considerations, judgment is rendered in
favor of the plaintiff Eusebia Napisa Retuya and against defendants Procopio
Villanueva, Nicolas Retuya and Pacita Villanueva:
1. Declaring the properties listed in paragraph 2 of the amended complaint as
conjugal properties of the spouses plaintiff Eusebia Retuya and the defendant
Nicolas Retuya;

2. Ordering the transfer of the sole administration of conjugal properties of


the spouses Eusebia Retuya and Nicolas Retuya in accordance with Art. 124 of
the Family Code to the plaintiff Eusebia Napisa Retuya;

3. Ordering defendant Procopio Villanueva to account and turnover all


proceeds or rentals or income of the conjugal properties from January 27, 1985
when he took over as 'administrator' thereof and until he shall have ceased
administering the same in accordance with the judgment of this Court;

4. Ordering defendants jointly and severally to reconvey the parcel of land


situated at Tipolo, Mandaue City now in the name of defendant Pacita Villanueva
under tax dec. No. 01450 and transfer the same into the names of the conjugal
partners Eusebia N. Retuya and Nicolas Retuya;
5. Ordering the City Assessor's Office of Mandaue City to cancel tax
declaration No. 01450 in the name of Pacita Villanueva and direct the issuance of
a new title and tax declaration in the names of Eusebia Napisa Retuya and
Nicolas Retuya;
6. Ordering defendants jointly and severally to reconvey that certain building
of strong materials located at Tipolo, Mandaue City under tax dec. No. 01450 into
the names of Eusebia Retuya and Nicolas Retuya;
7. Ordering defendants jointly and severally to pay plaintiff the sum of
P50,000.00 by way of attorney's fees and expenses of litigation in the sum of
P5,000.00 plus the costs.

SO ORDERED.

Petitioners appealed the trial court's decision to the Court of Appeals. Eusebia died on 23
November 1996. Thereafter, Eusebia's heirs substituted her pursuant to the resolution of
the Court of Appeals dated 7 April 1997. The Court of Appeals eventually upheld the
Decision of the trial court but deleted the award of attorney's fees, ruling in this wise:
WHEREFORE, the decision dated February 16, 1994 is AFFIRMED with the
modification that the award of attorney's fees of P50,000.00 is deleted.
SO ORDERED. HAEIac

Petitioners filed a Motion for Reconsideration on 23 February 2000 which the Court of
Appeals denied in a Resolution dated 11 May 2000.
Hence, this petition.
The Trial Court's Ruling
The trial court applied Article 116 of the Family Code, which reads:
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Art. 116. 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 conjugal unless the contrary is proved.

The trial court ruled that the documents and other evidence Eusebia presented constitute
"solid evidence" which proved that the subject properties were acquired during her
marriage with Nicolas. This made the presumption in Article 116 applicable to the subject
properties. Thus, the trial court ruled that Eusebia had proved that the subject properties
are conjugal in nature. On the other hand, the trial court found that petitioners failed to
meet the standard of proof required to maintain their claim that the subject properties are
paraphernal properties of Nicolas. The trial court added that Pacita presented no "factual
solidity" to support her claim that she bought Lot No. 152 2 exclusively with her own
money.

The Court of Appeals' Ruling


The Court of Appeals concurred with the findings of the trial court. The appellate court
found that Pacita failed to rebut the presumption under Article 116 of the Family Code that
the subject properties are conjugal. The appellate court dismissed Pacita's defense of
prescription and laches since she failed to have the issue included in the pre-trial order
after raising it in her answer with her co-petitioners.
The Issues
Petitioners Nicolas, Pacita and Procopio contend that both the trial and appellate courts
erred in ruling in favor of Eusebia. They seek a reversal and raise the following issues for
resolution:
1. WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE
DECLARATION OF THE TRIAL COURT THAT THE PROPERTIES LISTED IN
PARAGRAPH 2 OF THE COMPLAINT ARE CONJUGAL PROPERTIES OF
NICOLAS RETUYA AND EUSEBIA RETUYA ALTHOUGH THIS WAS NOT ONE
OF THE CAUSES OF ACTION IN EUSEBIA'S COMPLAINT.
2. WHETHER THE COURT OF APPEALS ERRED IN APPLYING THE
PRESUMPTION THAT PROPERTIES ACQUIRED DURING THE EXISTENCE
OF THE MARRIAGE OF NICOLAS RETUYA AND EUSEBIA RETUYA ARE
CONJUGAL.
3. WHETHER THE COURT OF APPEALS ERRED IN NOT APPLYING INSTEAD
THE PRESUMPTION UNDER ARTICLE 148 OF THE FAMILY CODE IN
FAVOR OF CO-OWNERSHIP BETWEEN NICOLAS RETUYA AND PACITA
VILLANUEVA.

4. WHETHER THE COURT OF APPEALS ERRED IN NOT DECLARING THAT


THE ACTION FOR RECONVEYANCE OVER LOT NO. 152 IS ALREADY
BARRED BY PRESCRIPTION OR LACHES. 3

The Ruling of the Court


The petition lacks merit.
First Issue: On the Alleged Failure To
Claim that the Properties are Conjugal
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Petitioners' contention that Eusebia's complaint failed to state that the subject properties
are conjugal is absolutely without basis. A cursory reading of the complaint readily shows
that the complaint maintains that the subject properties are conjugal. 4 The first sentence
of the second paragraph of the complaint states:
2. The plaintiff Eusebia Retuya and defendant Nicolas Retuya are husband
and wife and conjugal owners of real properties and all improvements thereon
situated in Mandaue City and Consolacion, Cebu more particularly described as
follows: (Emphasis added)

The same claim is restated and repleaded throughout the complaint. Petitioners should
know better than to clutter their appeal with useless arguments such as this.
The other issues petitioners raise contest in essence the finding that the subject
properties are conjugal in nature. Apart from this, the only other issue raised is whether
prescription or laches bars Eusebia's complaint. We shall resolve first the issue of
prescription and laches.
Second Issue: Prescription and Laches
We agree with the Court of Appeals' observation that while petitioners did raise the issue
of prescription and laches in their Answer, 5 they failed to have the same included in the
pre-trial order for consideration during the trial. Now, petitioners wish to raise the issue on
appeal by relying on Section 1, Rule 9 of the Rules of Court, which provides:
Section 1. Defenses and objections not pleaded. Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the evidence on record that the
court has no jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the action is barred
by a prior judgment or by statute of limitations, the court shall dismiss the claim.

Petitioners are mistaken.


The determination of issues during the pre-trial conference bars the consideration of other
questions, whether during trial or on appeal. 6 Section 1 of Rule 9 covers situations where a
defense or objection is not raised in a motion to dismiss or an answer. What we have
before us is the exact opposite. Here, petitioners in fact raised in their answer the defense
of prescription and laches. However, despite raising the defense of prescription and
laches in their answer, petitioners failed to include this defense among the issues for
consideration during the trial. The non-inclusion of this defense in the pre-trial order barred
its consideration during the trial. Clearly, Section 1 of Rule 9 does not apply to the present
case.
Pre-trial is primarily intended to insure that the parties properly raise all issues necessary
to dispose of a case. 7 The parties must disclose during pre-trial all issues they intend to
raise during the trial, except those involving privileged or impeaching matters. 8 Although a
pre-trial order is not meant to catalogue each issue that the parties may take up during the
trial, issues not included in the pre-trial order may be considered only if they are impliedly
included in the issues raised or inferable from the issues raised by necessary implication. 9
The basis of the rule is simple. Petitioners are bound by the delimitation of the issues
during the pre-trial because they themselves agreed to the same. 1 0
Petitioners argue that in past instances we have reviewed matters raised for the first time
during appeal. True, but we have done so only by way of exception involving clearly
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meritorious situations. 1 1 This case does not fall under any of those exceptions. The fact
that the case proceeded to trial, with the petitioners actively participating without raising
the necessary objection, all the more requires that they be bound by the stipulations they
made at the pre-trial. 1 2 Petitioners were well aware that they raised the defense of
prescription and laches since they included it in their answer. However, for reasons of their
own, they did not include this defense in the pre-trial.
Able counsels represented both parties. We see no claim that either counsel erred or was
negligent. This could only mean that petitioners' counsel chose to waive, or did not
consider important, the defense of prescription and laches. Petitioners are bound by their
counsel's choice. Other than arguing that it is allowable to raise the issue for the first time
on appeal, we have no explanation from petitioners why they suddenly decided to change
their mind. Parties are not allowed to flip-flop. Courts have neither the time nor the
resources to accommodate parties who choose to go to trial haphazardly. Moreover, it
would be grossly unfair to allow petitioners the luxury of changing their mind to the
detriment of private respondents at this late stage. To put it simply, since petitioners did
not raise the defense of prescription and laches during the trial, they cannot now raise this
defense for the first time on appeal. 1 3
Third Issue: Whether the Subject Properties Are Conjugal
We proceed to the crux of this petition.
We reiterate the basic rule that a petition for review should only cover questions of law. 1 4
Questions of fact are not reviewable. The exceptions apply only in the presence of
extremely meritorious circumstances. 1 5 None exists in this case. We note with disfavor
that most of the issues raised in this petition are factual. We caution the petitioners that
this practice of deluging the Court with factual issues in defiance of well-settled rule, in the
hope of having them reviewed, is unacceptable.
The only issue proper for resolution is the question of whether the subject properties are
conjugal. Petitioners claim that the subject properties 1 6 are exclusive properties of
Nicolas except for Lot No. 152, which they claim is Pacita's exclusive property. This issue
is easily resolved. The Family Code provisions on conjugal partnerships govern the
property relations between Nicolas and Eusebia even if they were married before the
effectivity of Family Code. 1 7 Article 105 1 8 of the Family Code explicitly mandates that the
Family Code shall apply to conjugal partnerships established before the Family Code
without prejudice to vested rights already acquired under the Civil Code or other laws.
Thus, under the Family Code, if the properties are acquired during the marriage, the
presumption is that they are conjugal. 1 9 The burden of proof is on the party claiming that
they are not conjugal. 2 0 This is counter-balanced by the requirement that the properties
must first be proven to have been acquired during the marriage before they are presumed
conjugal. 2 1 Petitioners argue that Eusebia failed to prove this pre-requisite. We disagree.
The question of whether the subject properties were acquired during the marriage of
Nicolas and Eusebia is a factual issue. Both the trial and appellate courts agreed that the
subject properties were in fact acquired during the marriage of Nicolas and Eusebia. 2 2 The
tax declarations 2 3 covering the subject properties, along with the unrebutted testimony of
Eusebia's witnesses, establish this fact. We give due deference to factual findings of trial
courts, 2 4 especially when affirmed by the appellate court. A reversal of this finding can
only occur if petitioners show sufficient reason for us to doubt its correctness. Petitioners
in the present case have not.

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Moreover, on whether Lot No. 152 is conjugal or not, the answer came from petitioners
themselves. Nicolas and Eusebia were married on 7 October 1926. Nicolas and Pacita
started cohabiting in 1936. Eusebia died on 23 November 1996. Pacita and Nicolas were
married on 16 December 1996. Petitioners themselves admit that Lot No. 152 was
purchased on 4 October 1957. 2 5 The date of acquisition of Lot No. 152 is clearly during
the marriage of Nicolas and Eusebia.
Since the subject properties, including Lot No. 152, were acquired during the marriage of
Nicolas and Eusebia, the presumption under Article 116 of the Family Code is that all these
are conjugal properties of Nicolas and Eusebia. The burden is on petitioners to prove that
the subject properties are not conjugal. The presumption in Article 116, which subsists
"unless the contrary is proved," stands as an obstacle to any claim the petitioners may
have. The burden of proving that a property is exclusive property of a spouse rests on the
party asserting it and the evidence required must be clear and convincing. 2 6 Petitioners
failed to meet this standard.

Petitioners point out that the deed of sale, the transfer certificate of title and the tax
declaration of Lot No. 152 are all in the name of Pacita. Petitioners maintain that this can
only mean that Pacita is the real owner of Lot No. 152. We disagree. The totality of the
evidence reveals that this was merely just one of the several schemes Nicolas employed to
deprive Eusebia of their conjugal property. Ironically, petitioners themselves submitted in
evidence a decision rendered by the Regional Trial Court of Cebu, Branch IV, in Civil Case
No. R-9602 2 7 involving the acquisition of Lot No. 152.
The decision in Civil Case No. R-9602 stated that Tranquiliana Marababol Remulta testified
that the one who offered to buy the lot from her was none other than Nicolas Retuya. 2 8
Tranquiliana narrated that at first she refused to sign the deed of sale because the buyer
placed in the deed was Pacita and not Nicolas, her understanding being that the buyer was
Nicolas. We find that the trial court in the present case correctly took into consideration
the decision in Civil Case No. R-9602. 2 9 Considering that the decision in Civil Case No. R-
9602 has become final and executory, its findings of fact involving the sale of Lot No. 152
to Nicolas and Pacita are conclusive and binding on petitioners who introduced in evidence
the decision.
Petitioners also point out that all the other tax declarations presented before the trial court
are in the name of Nicolas alone. Petitioners argue that this serves as proof of Nicolas'
exclusive ownership of these properties. Petitioners are mistaken. The tax declarations are
not sufficient proof to overcome the presumption under Article 116 of the Family Code. All
property acquired by the spouses during the marriage, regardless in whose name the
property is registered, is presumed conjugal unless proved otherwise. 3 0 The presumption
is not rebutted by the mere fact that the certificate of title of the property or the tax
declaration is in the name of one of the spouses only. 3 1 Article 116 of the Family Code
expressly provides that the presumption remains even if the property is "registered in the
name of one or both of the spouses."
In some of the documents that petitioners presented, Nicolas misrepresented his civil
status by claiming that he was single. Petitioners point to this as proof of Nicolas' desire
to exclude Eusebia from the properties covered by the documents. 3 2 Petitioners further
claim that this supports their stand that the subject properties are not conjugal. This
argument is baseless. Whether a property is conjugal or not is determined by law and not
by the will of one of the spouses. No unilateral declaration by one spouse can change the
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character of conjugal property. The clear intent of Nicolas in placing his status as single is
to exclude Eusebia from her lawful share in the conjugal property. The law does not allow
this.
Petitioners point out that Pacita had the means to buy Lot No. 152. Even if Pacita had the
financial capacity, this does not prove that Pacita bought Lot No. 152 with her own money.
To rebut the presumption that Lot No. 152 is conjugal, petitioners must prove that Pacita
used her own money to pay for Lot No. 152. Petitioners failed to prove this.
Petitioners further argue that since Nicolas and Pacita were already cohabiting when Lot
No. 152 was acquired, the lot cannot be deemed conjugal property of Nicolas and Eusebia.
Petitioners keep belaboring this point in their petition and memorandum.
Petitioners' argument is flawed.
The cohabitation of a spouse with another person, even for a long period, does not sever
the tie of a subsisting previous marriage. 3 3 Otherwise, the law would be giving a stamp of
approval to an act that is both illegal and immoral. What petitioners fail to grasp is that
Nicolas and Pacita's cohabitation cannot work to the detriment of Eusebia, the legal
spouse. The marriage of Nicolas and Eusebia continued to exist regardless of the fact that
Nicolas was already living with Pacita. Hence, all property acquired from 7 October 1926,
the date of Nicolas and Eusebia's marriage, until 23 November 1996, the date of Eusebia's
death, are still presumed conjugal. Petitioners have neither claimed nor proved that any of
the subject properties was acquired outside or beyond this period.
Finally, petitioners' reliance on Article 148 of the Family Code 3 4 is misplaced. A reading of
Article 148 readily shows that there must be proof of "actual joint contribution" by both the
live-in partners before the property becomes co-owned by them in proportion to their
contribution. The presumption of equality of contribution arises only in the absence of
proof of their proportionate contributions, subject to the condition that actual joint
contribution is proven first. Simply put, proof of actual contribution by both parties is
required, otherwise there is no co-ownership and no presumption of equal sharing.
Petitioners failed to show proof of actual contribution by Pacita in the acquisition of Lot
No. 152. In short, petitioners failed to prove that Pacita bought Lot No. 152 with her own
money, or that she actually contributed her own money to acquire it. IEcaHS

WHEREFORE, we DENY the petition. The Decision of the Court of Appeals dated 31 January
2000 in CA-G.R. CV No. 46716 is AFFIRMED.
SO ORDERED.
Davide, Jr., C .J ., Panganiban, Ynares-Santiago and Azcuna, JJ ., concur.
Footnotes

1. Under Rule 45 of the Rules of Court.


2. This is the parcel of land situated at Tipolo, Mandaue City in the name of Pacita
Villanueva under Tax Declaration No. 01450.
3. Rollo, p. 120.
4. RTC Records, p. 1.
5. Ibid., p. 19.

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6. Macaraeg v. Court of Appeals, G.R. No. 48008, 20 January 1989, 169 SCRA 259.
7. Permanent Concrete Products, Inc. v. Teodoro, 135 Phil. 364 (1968).
8. Caltex, Inc. v. Court of Appeals, G.R. No. 97753, 10 August 1992, 212 SCRA 448.
9. Velasco v. Apostol, G.R. No. 44588, 9 May 1989, 173 SCRA 228.
10. Munasque v. Court of Appeals, G.R. No. L-39780, 11 November 1985, 139 SCRA 533.
11. Some instances where we reviewed matters raised for the first time on appeal involved
the presence of at least one of the following circumstances:
1. that the issues are closely related to one properly assigned (PCIB v. CA et al., L-
34931, 18 March 1988, 159 SCRA 24);

2. that the determination of an issue properly assigned is dependent upon the one
being raised for the first time (Ortigas, Jr. v. Lufthansa German Airlines, L-28773, 30
June 1975, 64 SCRA 610);
3. if in avoiding the issue, the Court would be sacrificing substance for
technicality (Dilag v. Heirs of Resurreccion, 76 Phil. 649 [1946]).
12. Supra note 6.
13. Sanchez v. Court of Appeals, 345 Phil. 155 (1997).
14. Section 1, Rule 45, Rules of Court.
15. As laid out in Ramos, et al. v. Pepsi-Cola Bottling Co., 125 Phil. 701 (1967):
(a) when the conclusion is a finding grounded entirely on speculations, surmises
and 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 of the trial court and the appellate court are
conflicting;

(f) where the appellate court manifestly overlooked relevant facts which would
have justified a different conclusion;

(g) where the findings of fact are contradicted by the evidence of record.
16. Which consist of the following:
1. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24951;
2. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24952;
3. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24953;
4. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24954;
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5. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24956;
6. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24957;
7. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No.
24958;
8. A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No.
01042;
9. A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No.
01043;
10. A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No.
01046;
11. A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No.
01041;
12. A parcel of land located at Nawanao-Subangdaku, Mandaue City covered by
tax dec. No. 01488;
13. A parcel of land located at Baklid, Mandaue City, covered by tax dec. No.
00492;
14. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01044;
15. A residential house located at Tipolo, Mandaue City covered by tax dec. No.
01050;

16. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01048;
17. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01051;

18. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01047;
19. A parcel of land located at Banilad, Mandaue City covered by tax dec. No.
02381;

20. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01049;
21. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01045;

22. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.
01450 (in the name of Pacita Villanueva).
17. The Family Code took effect on 3 August 1988.

18. The second paragraph of which reads:


The provisions of this Chapter shall also apply to conjugal partnerships already
established between spouses before the effectivity of this Code, without prejudice to
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vested rights already acquired in accordance with the Civil Code or other laws, as
provided in Article 255.

19. Article 116, E.O. 209, The Family Code of the Philippines.
20. Lim v. Garcia, 7 Phil. 320 (1907).
21. Perez v. Lantin, 132 Phil. 219 (1968).

22. Rollo, p. 60.


23. RTC Records, pp. 52 to 75.
24. People v. Cordero, G.R. No. 136894-96, 7 February 2001, 351 SCRA 383.
25. Rollo, p. 135.
26. Ahern v. Julian, 39 Phil. 607 (1919).
27. Exhibit 6-A, Civil Case No. R-9602 of Branch IV, Regional Trial Court of Cebu.

28. "Third-party defendant Tranquiliana declared: (sic) that when Nicolas Retuya offered to
buy the lot, she told him that she already owned a portion thereof and that even after the
deed of sale was prepared, she refused to sign it at the very beginning because the sale
was in favor of Pacita Villanueva and not in Nicolas as she was made to believe. When
she signed the deed of sale because of the insistence of her uncle Nicolas Retuya, she
reminded him that she was selling her share, but Nicolas Retuya told her that he will take
care of his brothers and sisters." (Emphasis added)
29. RTC Decision, p. 6.

30. Diancin v. Court of Appeals, G.R. No. 119991, 20 November 2000, 345 SCRA 117.
31. Mendoza v. Reyes, 209 Phil. 120 (1983).
32. Rollo, p. 129.
33. Borja-Manzano v. Sanchez, A.M. No. MTJ-00-1329, 8 March 2001, 354 SCRA 1.
34. The pertinent portion of which provides:
"Art. 148. In cases of cohabitation not falling under the preceding Article, only the
properties acquired by both of the parties through their actual joint contribution of
money, property, or industry shall be owned by them in common in proportion to their
respective contributions. In the absence of proof to the contrary, their contributions and
corresponding shares are presumed to be equal. The same rule and presumption shall
apply to joint deposits of money and evidences of credit. . . ." (Emphasis supplied)

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MARIANO VELOSO vs . LUCIA MARTINEZ

EN BANC

[G.R. No. 8715. October 24, 1914.]

MARIANO VELOSO , plaintiff-appellant, vs . LUCIA MARTINEZ,


personally and as administratrix of the estate of Domingo Franco,
deceased , defendant-appellee.

Martin M. Levering, for appellant.


Pantaleon E. del Rosario, for appellee.

SYLLABUS

1. HUSBAND AND WIFE; PARAPHERNAL PROPERTY; RIGHT OF WIFE TO


RECOVER WHEN SOLD BY HUSBAND WITHOUT HER CONSENT. V claimed that he
had purchased certain jewels from F. M, the wife of F, claimed that such jewels were her
sole and separate property, acquired from her mother; that as such paraphernal
property she exercised dominion over them; that she had the exclusive control and
management of the same; that they had not been delivered to her husband to be
administered or controlled by him; that, inasmuch as they had not been delivered to her
husband to be administered by him, she could not be deprived of them by any act of his,
without her consent, and without a compliance with the provisions of the Civil Code.
(Arts. 1382, 1384.) Held: That M was entitled to recover from V the possession of said
jewels.

DECISION

JOHNSON , J : p

On the 1st day of July, 1911, the plaintiff commenced an action in the Court of
First Instance of the Province of Cebu to recover of the defendant, personally and as
administratrix of the estate of Domingo Franco, deceased, the possession of a certain
parcel of land particularly described in the second paragraph of the complaint, together
with the sum of p125 per month, from the 1st day of June, 1911.
The defendant presented a demurrer to said complaint, which was overruled. No
exception was taken to the ruling of the court upon the demurrer. Later the defendant
answered, setting up a general denial and a special defense. The special defense
consisted
First. Of a counterclaim in the sum of P18,500 as attorney's fees for services
rendered by the deceased, Domingo Franco, to the plaintiff; and, second, for the
recovery of certain jewelry, of the value of P6,000, particularly described in the answer
of the defendant, alleged to be in the possession of the plaintiff.
The rst special defense, relating to attorney's fees, was later withdrawn by the
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defendant. The only questions left for litigation were:
First. Whether the plaintiff was entitled to the recovery of the parcel of land in
question; and, second, whether the defendant was entitled to recover from the plaintiff
the jewelry described in her answer.
After hearing the evidence, the Honorable Adolph Wislizenus, judge, in a carefully
prepared opinion, found that the plaintiff was entitled to recover the possession of the
land in question, together with the sum of P100 for each month from the month of
June, 1911, until the possession of the land was returned to him.
The lower court further found that the defendant was entitled to the possession
of said jewelry, and ordered the plaintiff to return the same to her and in case of the
plaintiff's failure to return said jewelry to the defendant, then and in that case, he shall
pay to the defendant, for such failure, the sum of P6,000.
From the judgment of the lower court, each of the parties, plaintiff and defendant,
appealed to this court. Later the defendant withdrew her appeal, thereby allowing that
part of the judgment relating to the plaintiff's right to the possession of the land in
question, together with damages, to become nal. The only question remaining,
therefore, for this court to decide is as to the ownership and right of possession of said
jewels. It is admitted that the jewels in question, before the possession of the same
was given to the plaintiff, belonged to the defendant personally and that she had
inherited the same from her mother. The defendant, Lucia Martinez, is the widow of
Domingo Franco, and after the death of her husband she was appointed administratrix
of his estate. The record further shows (Exhibit C) that a short time before the death of
Domingo Franco he borrowed from the plaintiff the sum of P4,500 and gave as security
for the payment of said sum the jewelry described in the complaint. The money was
borrowed on the 7th day of April, 1911, under promise to repay the same, with 12 per
cent interest, on the 7th day of May, 1911. It is not clear whether or not the jewelry, at
the time of the execution of said document (Exhibit C), was in fact delivered to the
plaintiff. Said exhibit states that the jewelry was contained "dentro de una caja que
queda cerrada despues de demostradas las alhajas a D. Mariano Veloso" (in a box
which remains closed after the jewels were shown to Mariano Veloso). The document
further admits that "la llave quedara en poder de D. Domingo Franco" (the key shall
remain in possession of Domingo Franco). After the death of Domingo Franco it
appears that said jewelry was found in the same "caja" and that the key was in the
possession of the defendant. It is very doubtful, indeed, under the facts, whether the
plaintiff ever obtained the actual possession of the jewelry. His possession, however,
seems to be admitted by the defendant in the present action. So far as the record
shows the jewelry was in the same box where it was found at the time of the execution
and delivery of said Exhibit C and that the defendant still has the key to said box.
During the trial of the cause the plaintiff attempted to show that the jewels in
question were pawned to him by Domingo Franco, with the full knowledge and consent
of the defendant. And not only that, the plaintiff further attempts to show that after the
death of Domingo Franco, the defendant promised to pay the amount for which the said
jewels were pawned. The defendant positively denies that she knew that her husband
had pawned her jewels or that she promised to redeem the same by paying the amount
due. No explanation is contained in the record why the jewels were placed in said box
(presumably a money safe). In view of the fact, however, that the record shows that the
jewels were the sole and separate property of the wife, acquired from her mother, and
in the absence of further proof, we must presume that they constituted a part of her
paraphernal property. As such paraphernal property she exercised dominion over the
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same. (Article 1382, Civil Code.) She had the exclusive control and management of the
same, until and unless she had delivered it to her husband, before a notary public, with
the intent that her husband might administer it properly. (Article 1384, Civil Code.)
There is no proof in the record that she had ever delivered the same to her husband, in
any manner, or for any purpose. That being true, she could not be deprived of the same
by any act of her husband, without her consent, and without compliance with the
provisions of the Civil Code above cited.
For the foregoing reasons, we nd that the defendant is entitled to the
possession of said jewels, or to their value, amounting to P6,000.
The judgment of the lower court is therefore hereby affirmed, with costs.
Arellano, C.J., Torres, Carson, Moreland, Trent and Araullo, JJ., concur.

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SECOND DIVISION

[G.R. No. 57402. February 28, 1985.]

G-TRACTORS, INC. , petitioner, vs. HONORABLE COURT OF APPEALS


and LUIS R. NARCISO AND JOSEFINA SALAK NARCISO , respondents.

Francisco, De Castro, Zulueta & Reyes Law Office for petitioner.


Fernando F. Villoria for private respondents.

SYLLABUS

1. CIVIL LAW; PERSONS; JUDGMENT DEBT OF HUSBAND CONSTITUTES CHARGES


UPON AND OBLIGATIONS OF THE CONJUGAL PARTNERSHIP; CASE AT BAR. It is well
settled that the 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." (Emphasis supplied) The husband is the administrator of
the conjugal partnership and as long as he believes he is doing right to his family, he
should not be made to suffer and answer alone. So that, 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. Such is the nature of the judgment debt of
private respondent Luis R. Narciso to petitioner. Consequently, the conjugal partnership of
gains of private respondents Narcisos, must answer for the same. Necessarily the sale at
public auction by the Sheriff of Quezon City of TCT No. 120923 belonging to the conjugal
partnership of gains of the private respondents Narcisos in order to satisfy the judgment
debt of the private respondent Luis R. Narciso with petitioner, was validly and legally made
in accordance with law and not legally assailable as held in the analogous case of Vda. de
Sta. Romana vs. Philippine Commercial and Industrial Bank which held the non-inclusion of
the herein petitioner as a party-defendant in Civil Case No. 7678 is immaterial. There is no
rule or law requiring that in a suit against the husband to enforce an obligation, either
pertaining to him alone or one chargeable against the conjugal partnership, the defendant
husband must be joined by his wife.

DECISION

CUEVAS , J : p

Assailed and challenged in this Petition for Review is the Decision dated April 29, 1977 of
the then Court of Appeals in its CA-G.R. No. SP-05920, the dispositive portion of which
reads as follows
"WHEREFORE, the petition is hereby granted. The levy on execution dated
February 11, 1976, the sheriff's certificate of sale dated March 25, 1975 and final
deed of sale, and the orders of the respondent judge dated April 26, 1976, July 12,
1976 and August 26, 1976, are set aside and declared null and void. The writ of
preliminary injunction heretofore in force is made permanent. Costs against
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private respondent.

SO ORDERED."

Private respondent Luis R. Narciso is a businessman. He is engaged in business as a


producer and exporter of Philippine mahogany logs and operates a logging concession at
del Gallego, Camarines Sur. He is legally married to the other private respondent Josefina
Salak Narciso.
Petitioner G-Tractors, Inc. upon the other hand, is a domestic corporation engaged
primarily in the business of leasing heavy equipments such as tractors, bulldozers, and the
like.
Sometime in February 26, 1973, private respondent Luis R. Narciso entered into a Contract
of Hire of Heavy Equipment with petitioner G-Tractors under the terms of which the latter
leased to the former tractors for the purpose of constructing switchroads and hauling
felled trees at the jobsite of Narciso's logging concession at del Gallego, Camarines Sur.
The contract provided for payment of rental for the use of said tractors.
Luis R. Narciso defaulted in his rental payments. Hence, on August 15, 1974, G-Tractors
instituted an action against him to collect the total amount of P155,410.25 with legal
interest thereon, representing unpaid rentals for the leased tractors, 25% thereof as
liquidated damages, P30,000.00 as and for attorney's fees, and the costs of suit, before
the then Court of First Instance of Rizal, Quezon City, Branch IX. The case was docketed
thereat as Civil Case No. Q-19173.
Luis R. Narciso was declared in default. On his representations, however, G-Tractors
accepted his offer for a compromise agreement. A compromise agreement was
thereupon signed by G-Tractors and Luis R. Narciso and on the basis thereof, judgment
thereon was rendered on October 10, 1974.
The compromise agreement stipulated for payment by Luis R. Narciso of the total claim of
G-Tractors on an installment plan. Luis R. Narciso failed to comply and so on November
29, 1974, G-Tractors filed a motion for execution. This was opposed by Luis R. Narciso
who asked for the suspension of the issuance of a writ of execution on the ground that he
allegedly has a pending loan with a banking institution. The lower court, finding the
allegation without legal basis, denied the request for suspension and ordered the issuance
of a writ of execution to enforce the judgment based on the compromise agreement. The
writ of execution was issued on February 7, 1975. 1 Levy was accordingly made on
February 19, 1975 by the City Sheriff of Quezon City on certain personal properties of
private respondents at their residence at 208 Retiro Street, Quezon City. Auction sale
was held on March 1, 1975, and G-Tractors, being the highest bidder, was awarded the
sale by the City Sheriff of Quezon City of all the personal properties listed under the levy,
for the total amount of P4,090.00. cdrep

On March 5, 1976, Luis R. Narciso offered to redeem and/or buy back all the personal
properties sold to G-Tractors for the same amount of P4,090.00 which the latter agreed
and for which a Deed of Reconveyance was executed by G-Tractors.
Likewise, on February 12, 1975, the Sheriff of Quezon City made a levy on "all rights,
interest, title, participation which the defendant Luis R. Narciso" may have over a parcel of
residential land covered by TCT No. 120923 of the Registry of Deeds of Quezon City 2
which parcel of land is allegedly the conjugal property of the spouses Luis R. Narciso and
Josefina Salak Narciso.
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On February 22, 1975, the Sheriff notified the general public, in his Notice of Sheriff's sale,
that on March 25, 1975 he would sell at public auction to the highest bidder for cash "the
rights, interest and participation of the aforementioned defendant Luis R. Narciso in the
aforesaid real estate property covered by Transfer Certificate of Title No. 120923,
together with all the improvements existing thereon" to satisfy the aforementioned writ of
execution. 3
On March 25, 1975, a "Certificate of Sale" was issued to the effect that "on said date
(March 25, 1975) by virtue of the writ of execution issued by the Honorable Ulpiano
Sarmiento in Civil Case No. Q-19173, the ex-oficio Sheriff of Quezon City sold at public
auction to the highest bidder (plaintiff G-Tractors, Inc.) for P180,000.00 the real estate
property covered by TCT No. 120923, Quezon City, and levied upon on February 12, 1975,
together with all the improvements thereon." 4 At that time, however, TCT No. 120923 was
mortgaged to Mercantile Financing Corporation to guarantee an outstanding un-paid
account of Luis R. Narciso and his wife in the amount of P74,327.52.
Soon after the issuance of the aforesaid Certificate of Sale, Luis R. Narciso and G-Tractors,
Inc. executed a contract of lease over the aforesaid property whereby the former obligated
himself to pay a monthly rental of P1,000.00 and by virtue of the said contract of lease,
Luis R. Narciso actually paid to G-Tractors, Inc. the amount of P12,000.00 as rental for one
year.
On March 31, 1976, Josefina Salak Narciso and her husband Luis R. Narciso filed a
complaint in the same Court of First Instance of Quezon City for "declaration of nullity of
levy on execution and auction sale of plaintiff's conjugal property with damages and
injunction," docketed as Civil Case No. Q-21267. Among other things, the complaint
alleged that whatever transpired in Civil Case No. Q-19173 could be binding only on the
husband Luis R. Narciso and could not affect or bind the plaintiff-wife Josefina Salak
Narciso who was not a party to that case; that the nature of the Sheriff's sale clearly stated
that only the property of the husband may be sold to satisfy the money judgment against
him; that the conjugal property of the plaintiffs-spouses could not be made liable for the
satisfaction of the judgment in Civil Case No. Q-19173 considering that the subject matter
of said case was never used for the benefit of the conjugal partnership or of the family;
and that the levy of the wife's share in the conjugal property to satisfy the money judgment
against her husband is null and void. 5
On April 5, 1976, the President of G-Tractors, Inc. executed an affidavit of consolidation of
ownership and on the next day, April 6, 1976, the sheriff issued a Sheriff's Final Deed of
Sale. 6
On April 12, 1976, G-Tractors, Inc. filed in Civil Case No. Q-19173, a "Motion for Entry and
Issuance of New Torrens Certificate of Title" asking the Court to direct the Register of
Deeds of Quezon City to cancel TCT No. 120923 and to allow the entry and issuance of a
new torrens title in the name of G-Tractors, Inc.cdphil

On April 22, 1976, Luis R. Narciso filed an opposition to the aforesaid motion calling
attention to the fact that he and his wife had filed a complaint which was docketed as Civil
Case No. Q-21267 and pointing out that the Sheriff's final deed of sale and affidavit of
consolidation of ownership would have no effect should the levy on execution and the
subsequent auction sale of the conjugal property be nullified. 7
Civil Case No. Q-21267 was subsequently transferred to Branch IX of the same Court of
First Instance which tried Civil Case No. Q-19173.
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On April 26, 1976, Judge Sarmiento issued an Order cancelled TCT No. 120923 and
directing the Register of Deeds of Quezon City to issue in lieu thereof a new title in the
name of G-Tractors, Inc. 8

Luis R. Narciso moved to reconsider the aforesaid order of April 26, 1976. This was
followed by a motion filed by the Narciso spouses for a preliminary injunction in Civil Case
No. Q-21267. Meanwhile, immediately after receiving a copy of the order of April 26, 1976,
G-Tractors, Inc. caused the cancellation of TCT No. 120923 and the issuance of TCT No.
218552 in its name.
On May 21, 1976, the lower court enjoined G-Tractors, Inc. from transferring, conveying or
in any manner alienating the property covered by TCT No. 218552 until the motion for
reconsideration of the order of April 26, 1976 has been resolved.
On July 12, 1976, two (2) orders were issued by the lower court, one denying the motion
for reconsideration and the other denying the motion for preliminary injunction. A motion
to reconsider the order denying the preliminary injunction was likewise denied.
Hence, on October 2, 1976, the spouses Luis R. Narciso and Josefina Salak Narciso filed
before the then Court of Appeals, a petition for certiorari with Preliminary Injunction,
docketed in the said court as CA-G.R. No. SP-05920, seeking
A To annul, set aside and declare null and void the following:

(1) Levy on execution dated February 11, 1975;


(2) Sheriff's Certificate of Sale dated March 25, 1975;
(3) Sheriff's Final Deed of Sale dated April 6, 1976;

(4) Order of respondent Judge dated April 26, 1976;


(5) Orders of the respondent Judge both dated July 12, 1976;
and
(6) Order of the respondent Judge dated August 26, 1976.

B To restrain and enjoin the respondent from further giving force and effect to
the levy and sale on execution and to the disputed orders; the private respondent
G-Tractors, Inc. from alienating the Lot covered by TCT No. 218552 and from
dispossessing the petitioners of said Lot and the house standing thereon; the
respondent Judge from further proceeding in Civil Case Nos. Q-19173 and Q-
21267; and
C To direct the Register of Deeds of Quezon City to cancel TCT No. 218552 in
the name of G-Tractors, Inc. and to issue a new one in the name of petitioners-
spouses.

On April 29, 1977, the then Court of Appeals rendered its now assailed Decision, annulling
the levy on execution dated February 11, 1975, the sheriff's certificate of sale dated March
25, 1975, as well as the sheriff's final deed of sale; and the Orders dated April 26, July 12
and August 26, 1976. LLjur

G-Tractors, Inc.'s motion for reconsideration having been denied, the instant petition for
Review on Certiorari was filed before this Court, petitioner contending that respondent
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Court of Appeals erred
"1. In holding that a levy on a residential land does not include the residential
house or any improvement erected and existing thereon;

2. In holding that the judgment debt of private respondent Luis R. Narciso,


subject of Civil Case No. Q-19173, entitled G-Tractors, Inc. vs. Luis R. Narciso,"
Court of First Instance of Rizal, Quezon City, Branch IX was not the conjugal debt
of private respondents -spouses Luis R. Narciso and Josefina Salak Narciso;

3. In not holding that there was laches and delay in the filing by private
respondents-spouses of CA-G.R. No. 05920-SP with the respondent Court of
Appeals.
4. In granting the writs applied for by private respondents-spouses in CA-G.R.
No. 05920, the petition itself not being the proper remedy."

The crucial issue that poses itself for our resolution in the instant petition is whether or
not the judgment debt of private respondent Luis R. Narciso is a conjugal debt for which
the conjugal partnership property can be held answerable.
Article 161 of the New Civil Code provides that the conjugal partnership shall be liable for:
"(1) All the debts and obligations contracted by the husband for the benefit of
the conjugal partnership, and those contracted by the wife, also for the same
purpose, in the cases where she may legally bind the partnership."

There is no question that private respondent Luis R. Narciso is engaged in business as a


producer and exporter of Philippine mahogany logs. He operates a logging concession at
del Gallego, Camarines Sur and holds office right in the conjugal dwelling at 208 Retiro
Street, Talayan Village, Quezon City, Metro Manila, where he and his family reside. His
account with petitioner G-Tractors, Inc. represents rentals for the use of petitioner's
tractors which he leased for the purpose of constructing switchroads and hauling felled
trees at the jobsite of the logging concession at del Gallego, Camarines Sur which is not
his exclusive property but that of his family. There is no doubt then that his account with
the petitioner was brought about in order to enhance the productivity of said logging
business, a commercial enterprise for gain which he had the right to embark the conjugal
partnership.
This is the finding of the trial court and we find no cogent reason to deviate therefrom. It
held:
"Lastly, the contention that the conjugal partnership is not liable because the
obligation contracted by the husband is personal in nature is not applicable in
this case. The record shows that Luis R. Narciso is a producer and exporter of
Philippine mahogany logs and that the bulldozers leased to him was used for the
construction of switchroads for logging. It is very clear, therefore, that the
obligations were contracted in connection with his legitimate business as a
producer and exporter in mahogany logs and certainly benefited the conjugal
partnership. Justice J.B.L. Reyes is very liberal in interpreting Art. 161 of the Civil
Code when he declared in Luzon Surety Co., Inc. versus de Garcia (30 SCRA 118)
that the words in said article "all debts and obligations contracted by the husband
for the benefit of the conjugal partnership "do not require that actual profit or
benefit must accrue to the conjugal partnership from the husband's transaction",
but it suffices that the transaction should be one that normally would produce
such benefit for the partnership." 9
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In the case of Cobb-Perez vs. Lantin, 1 0 citing the case of Abella de Diaz vs. Erlanger and
Galinger, 1 1 and Javier vs. Osmea, 1 2 this court ruled
"The aforesaid obligation was contracted in the purchase of leather used in the
shoe manufacturing business of the petitioner husband. Said business is an
ordinary commercial enterprise for gain, in the pursuit of which Damaso Perez
had the right to embark the partnership. It is well settled that the 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." (Emphasis supplied)
The husband is the administrator of the conjugal partnership and as long as he believes he
is doing right to his family, he should not be made to suffer and answer alone. 1 3 So that, 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.
Such is the nature of the judgment debt of private respondent Luis R. Narciso to petitioner.
Consequently, the conjugal partnership of gains of private respondents Narcisos, must
answer for the same. 1 4 Necessarily the sale at public auction by the Sheriff of Quezon City
of TCT No. 120923 belonging to the conjugal partnership of gains of the private
respondents Narcisos in order to satisfy the judgment debt of the private respondent Luis
R. Narciso with petitioner, was validly and legally made in accordance with law and not
legally assailable as held in the analogous case of Vda. de Sta. Romana vs. Philippine
Commercial and Industrial Bank 1 5 where We laid down the following dictum:
"Petitioner assails the pronouncement by the respondent court that Civil Case No.
13553 is barred by res judicata on the principal ground that, not being a party in
Civil Case No. 7678, she could not be bound by the judgment rendered in said
case and, consequently, the writ of attachment and the consequent writ of
execution which levied on Lot No. 1258-F, together with its existing improvements,
are null and void insofar as her ONE-HALF (1/2) interest in said properties is
concerned.
We find no merit in this contention of the petitioner.
The action filed by private respondent against the petitioner Ramon Sta. Romana
was clearly a suit to enforce an obligation of the conjugal partnership. Civil Case
No. 7678 arose out of the failure of Ramon Sta. Romana to pay the purchase
price of a lot he bought from C.N. Hodges presumably in behalf of the conjugal
partnership. Petitioner does not deny the conjugal nature of both Lots Nos. 1258-
G and 1258-F. Indeed, she bases her contention on the claim that at least Lot No.
1258-F, together with its improvements existing thereon, constitutes property of
the conjugal partnership. It may not be denied, therefore, that the liability incurred
by Ramon Sta. Romana is chargeable against the conjugal partnership assets, it
being undisputed that the said obligation was contracted by the husband for the
benefit of the conjugal partnership. (Art. 161(1), Civil Code)

The non-inclusion of the herein petitioner as a party-defendant in Civil Case No.


7678 is immaterial. There is no rule or law requiring that in a suit against the
husband to enforce an obligation, either pertaining to him alone or one
chargeable against the conjugal partnership, the defendant husband must be
joined by his wife. The contrary rule is prescribed in Sec. 4, Rule 3, of the Rules of
Court and Article 113 of the Civil Code, but not the other way around, obviously in
recognition of the legal status of the husband as the administrator of the
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conjugal partnership. (Art. 112, Civil Code) There was, therefore, no need of
including the petitioner as a party in Civil Case No. 7678 for the purpose of
binding the conjugal partnership properties for the satisfaction of the judgment
that could be rendered thereon." (Emphasis supplied)

WHEREFORE, the Decision of the then Court of Appeals sought to be reviewed is hereby
REVERSED and SET ASIDE. No pronouncement as to costs. cdrep

SO ORDERED.
Makasiar, Aquino, Concepcion, Jr., Abad Santos and Escolin, JJ., concur.
Footnotes

1. Annex "A", page 28, Records.


2. Annex "B", page 29, Records.
3. Annex "C", pages 30-31, Records.
4. Annex "D", page 32, Records.
5. Annex "E", pages 34-38, Records.

6. Annex "F", page 39, Records.


7. Annex "G", pages 41-42, Records.
8. Annex "I", page 52, Records.
9. Order of Aug. 21, 1976, p. 181, Records.
10. 23 SCRA 637.

11. 56 Phil. 336.


12. 34 Phil. 336.
13. Tintigan vs. Tintigan, Sr., 100 SCRA 619.
14. Gelano vs. Ho. CA, 103 SCRA 90.

15. 118 SCRA 330-339.

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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 : p

Before this Court is a petition for certiorari assailing the Decision 1 of the Court of Appeals
in CA-G.R. CV No. 47029 and its Resolution denying the motion for reconsideration thereof.
cAIDEa

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
Nicol's 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
attorney's 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, attorney's 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 Nicol's personal properties insufficient to satisfy the judgment, the Deputy
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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 sheriff's 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 sheriff's indemnity bond. The auction sale proceeded with petitioners as the
highest bidder. cDCEHa

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 sheriff's sale.
In an Order 5 dated 18 April 1994, the RTC dismissed respondent's 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: SHEIDC

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
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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: CDAHaE

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