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Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 187490 February 8, 2012

ANTONIA R. DELA PEÑA and ALVIN JOHN B. DELA PEÑA, Petitioners,


vs.
GEMMA REMILYN C. AVILA and FAR EAST BANK & TRUST CO., Respondents.

DECISION

PEREZ, J.:

Filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, this petition for review on certiorari seeks the reversal and setting aside of the Decision1
dated 31 March 2009 rendered by the then Second Division of the Court of Appeals in CA-G.R. CV No. 90485,2 the dispositive portion of which states:

WHEREFORE, premises considered, the appeal is GRANTED and the assailed Decision, dated December 18, 2007, of the Regional Trial Court of
Marikina City, Branch 272, is hereby REVERSED and SET ASIDE. The Deed of Absolute Sale in favor of Gemma Avila dated November 4, 1997 and
the subsequent sale on auction of the subject property to FEBTC (now Bank of the Philippine Islands) on March 15, 1999 are upheld as valid and
binding.

SO ORDERED.3

The Facts

The suit concerns a 277 square meter parcel of residential land, together with the improvements thereon, situated in Marikina City and previously
registered in the name of petitioner Antonia R. Dela Peña (Antonia), "married to Antegono A. Dela Peña" (Antegono) under Transfer Certificate of Title
(TCT) No. N-32315 of the Registry of Deeds of Rizal.4 On 7 May 1996, Antonia obtained from A.C. Aguila & Sons, Co. (Aguila) a loan in the sum of
₱250,000.00 which, pursuant to the Promissory Note the former executed in favor of the latter, was payable on or before 7 July 1996, with interest
pegged at 5% per month.5 On the very same day, Antonia also executed in favor of Aguila a notarized Deed of Real Estate Mortgage over the property,
for the purpose of securing the payment of said loan obligation. The deed provided, in part, that "(t)his contract is for a period of Three (3) months from
the date of this instrument".6

On 4 November 1997, Antonia executed a notarized Deed of Absolute Sale over the property in favor of respondent Gemma Remilyn C. Avila (Gemma),
for the stated consideration of ₱600,000.00.7 Utilizing the document, Gemma caused the cancellation of TCT No. N-32315 as well as the issuance of
TCT No. 337834 of the Marikina City Registry of Deeds, naming her as the owner of the subject realty.8 On 26 November 1997, Gemma also
constituted a real estate mortgage over said parcel in favor of respondent Far East Bank and Trust Company [now Bank of the Philippine Islands]
(FEBTC-BPI), to secure a loan facility with a credit limit of ₱1,200,000.00.9 As evidenced by the Promissory Notes she executed from 12 December
1997 to 10 March 1998,10 Gemma obtained the following loans from Visayas Avenue Branch of the FEBTC-BPI, in the aggregate sum of
₱1,200,000.00, to wit:

Promissory Note Date Amount Maturity


BDS#970779 12/02/97 ₱300,000.00 04/30/98
BDS#970790 12/15/97 ₱100,000.00 04/14/98
BDS#980800 01/16/98 ₱100,000.00 04/30/98
BDS#980805 02/06/98 ₱100,000.00 04/30/98
BDS#980817 02/27/98 ₱150,000.00 04/30/98
BDS#980821 03/10/98 ₱450,000.00 04/30/98
On 3 March 1998, in the meantime, Antonia filed with the Register of Deeds of Marikina an Affidavit of Adverse Claim to the effect, among others, that
she was the true and lawful owner of the property which had been titled in the name of Gemma under TCT No. 32315; and, that the Deed of Absolute
Sale Gemma utilized in procuring her title was simulated.11 As a consequence, Antonia’s Affidavit of Adverse Claim was inscribed on TCT No. 337834
as Entry No. 501099 on 10 March 1998.12 In view of Gemma’s failure to pay the principal as well as the accumulated interest and penalties on the loans
she obtained, on the other hand, FEBTC-BPI caused the extrajudicial foreclosure of the real estate mortgage constituted over the property. As the
highest bidder at the public auction conducted in the premises,13 FEBTC-BPI later consolidated its ownership over the realty and caused the same to be
titled in its name under TCT No. 415392 of the Marikina registry.14

On 18 May 1998, Antonia and her son, petitioner Alvin John B. Dela Peña (Alvin), filed against Gemma the complaint for annulment of deed of sale
docketed before Branch 272 of the Regional Trial Court (RTC) of Marikina City as Civil Case No. 98-445-MK. Claiming that the subject realty was
conjugal property, the Dela Peñas alleged, among other matters, that the 7 May 1996 Deed of Real Estate Mortgage Antonia executed in favor of Aguila
was not consented to by Antegono who had, by then, already died; that despite its intended 1998 maturity date, the due date of the loan secured by the
mortgage was shortened by Gemma who, taking advantage of her "proximate relationship" with Aguila, altered the same to 1997; and, that the 4
November 1997 Deed of Absolute Sale in favor of Gemma was executed by Antonia who was misled into believing that the transfer was necessary for
the loan the former promised to procure on her behalf from FEBTC-BPI. In addition to the annulment of said Deed of Absolute Sale for being simulated
and derogatory of Alvin’s successional rights, the Dela Peñas sought the reconveyance of the property as well as the grant of their claims for moral and
exemplary damages, attorney’s fees and the costs.15

Served with summons, Gemma specifically denied the material allegations of the foregoing complaint in her 1 July 1998 answer. Maintaining that the
realty was the exclusive property of Antonia who misrepresented that her husband was still alive, Gemma averred that the former failed to pay the
₱250,000.00 loan she obtained from Aguila on its stipulated 7 July 1996 maturity; that approached to help prevent the extrajudicial foreclosure of the
mortgage constituted on the property, she agreed to settle the outstanding obligation to Aguila and to extend Antonia a ₱50,000.00 loan, with interest
pegged at 10% per month; that to pay back the foregoing accommodations, Antonia agreed to the use of the property as collateral for a loan to be
obtained by her from FEBTC-BPI, hence, the execution of the impugned Deed of Absolute Sale; and, that conformably with the foregoing agreement,
she obtained loans in the total sum of ₱1,200,000.00 from FEBTC-BPI and applied the proceeds thereof to the sums owed by Antonia. Together with the
dismissal of the complaint, Gemma also prayed for the grant of her counterclaims for moral and exemplary damages, attorney’s fees, litigation expenses
and the costs.16

On 25 September 1999, the Dela Peñas filed a supplemental complaint, impleading FEBTC-BPI as additional defendant. Calling attention to Antonia’s 3
March 1998 Affidavit of Adverse Claim and the Notice of Lis Pendens they purportedly caused to be annotated on TCT No. 337834 on 10 December
1999, the Dela Peñas alleged that FEBTC-BPI was in bad faith when it purchased the property at public auction on 15 March 1999.17 In their 12
November 1999 answer, FEBTC-BPI, in turn, asserted that the property was already titled in Gemma’s name when she executed the 26 November 1997
real estate mortgage thereon, to secure the payment of the loans she obtained in the sum of ₱1,200,000.00; and, that not being privy to Antonia’s
transaction with Gemma and unaware of any adverse claim on the property, it was a mortgagee in good faith, entitled to foreclose the mortgage upon
Gemma’s failure to pay the loans she obtained. Seeking the dismissal of the complaint and the grant of its counterclaims for damages against the Dela
Peñas, FEBTC-BPI alternatively interposed cross-claims against Gemma for the payment of the subject loans, the accumulated interests and penalties
thereon as well as such sums for which it may be held liable in the premises.18

On 14 April 2000, the RTC issued the order terminating the pre-trial stage and declaring Gemma in default for failure to attend the pre-trial settings and
to engage the services of a new lawyer despite due notice and the withdrawal of her counsel of record.19 In support of their complaint, Antonia20 and
Alvin21 both took the witness stand and, by way of corroborative evidence, presented the testimony of one Alessandro Almoden22 who claimed to have
referred Antonia to Gemma for the purpose of obtaining a loan. By way of defense evidence, on the other hand, FEBTC-BPI adduced the oral evidence
elicited from Eleanor Abellare, its Account Officer who handled Gemma’s loans,23 and Zenaida Torres, the National Bureau of Investigation (NBI)
Document Examiner who, after analyzing Antonia’s specimen signatures on the 7 May 1996 Deed of Real Estate Mortgage and 4 November 1997 Deed
of Absolute Sale,24 issued NBI Questioned Documents Report No. 482-802 to the effect, among others, that said signatures were written by one and
the same person.25

On 18 December 2007, the RTC went on to render a Decision finding that the subject property was conjugal in nature and that the 4 November 1997
Deed of Absolute Sale Antonia executed in favor of Gemma was void as a disposition without the liquidation required under Article 130 of the Family
Code. Brushing aside FEBTC-BPI’s claim of good faith,26 the RTC disposed of the case in the following wise:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the defendants, as follows:

1). Declaring the Deed of Absolute dated November 04, 1997 in favor of defendant, [Gemma] as null and void;

2). Ordering defendant [FEBTC-BPI] to execute a deed of reconveyance in favor of the [Dela Peñas] involving the subject property now covered by
Transfer Certificate of Title No. 415392 in the name of [FEBTC-BPI];

3). Ordering [Gemma] to pay the [Dela Peñas] the following:

a). the amount of ₱200,000.00 as moral damages; and

b). the amount of ₱20,000.00 as and for attorney’s fees; and

c). costs of the suit

On the cross-claim, [Gemma] is hereby ordered to pay [FEBTC-BPI] the amount of ₱2,029,317.17 as of November 10, 1999, with twelve (12%) percent
interest per annum until fully paid.

SO ORDERED.27

Aggrieved, FEBTC-BPI perfected the appeal which was docketed before the CA as CA-G.R. CV No. 90485. On 31 March 2009 the CA’s Second
Division rendered the herein assailed decision, reversing the RTC’s appealed decision, upon the following findings and conclusions: (a) the property was
paraphernal in nature for failure of the Dela Peñas to prove that the same was acquired during Antonia’s marriage to Antegono; (b) having misled
Gemma into believing that the property was exclusively hers, Antonia is barred from seeking the annulment of the 4 November 1997 Deed of Absolute
Sale; (c) Antonia’s claim that her signature was forged is belied by her admission in the pleadings that she was misled by Gemma into executing said
Deed of Absolute Sale and by NBI Questioned Document Report No. 482-802; and, (d) FEBTC-BPI is a mortgagee in good faith and for value since
Gemma’s 26 November 1997 execution of the real estate mortgage in its favor predated Antonia’s 3 March 1998 Affidavit of Adverse Claim and the 10
December 1999 annotation of a Notice of Lis Pendens on TCT No. 337834.28

The Issues

The Dela Peñas seek the reversal of the assailed 31 March 2009 CA decision upon the affirmative of following issues, to wit:

1) Whether or not the CA erred in reversing the RTC holding the house and lot covered by TCT No. N-32315 conjugal property of the spouses Antegono
and Antonia Dela Peña;

2) Whether or not the CA erred in reversing the RTC declaring null and void the Deed of Absolute Sale executed by Antonia to (Gemma); and

3) Whether or not the CA erred in reversing the RTC holding (FEBTC-BPI) a mortgagee/purchaser in bad faith.29

The Court’s Ruling

The petition is bereft of merit.

Pursuant to Article 160 of the Civil Code of the Philippines, 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. Although it is not necessary to prove that the property was acquired with funds of the
partnership,30 proof of acquisition during the marriage is an essential condition for the operation of the presumption in favor of the conjugal
partnership.31 In the case of Francisco vs. Court of Appeals,32 this Court categorically ruled as follows:

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." However, the party who invokes this presumption must first prove that the property in controversy was
acquired during the marriage. Proof of acquisition during the coverture is a condition sine qua non for the operation of the presumption in favor of the
conjugal partnership. The party who asserts this presumption must first prove said time element. Needless to say, the presumption refers only to the
property acquired during the marriage and does not operate when there is no showing as to when property alleged to be conjugal was acquired.
Moreover, this presumption in favor of conjugality is rebuttable, but only with strong, clear and convincing evidence; there must be a strict proof of
exclusive ownership of one of the spouses.33

As the parties invoking the presumption of conjugality under Article 160 of the Civil Code, the Dela Peñas did not even come close to proving that the
subject property was acquired during the marriage between Antonia and Antegono. Beyond Antonia’s bare and uncorroborated assertion that the
property was purchased when she was already married,34 the record is bereft of any evidence from which the actual date of acquisition of the realty can
be ascertained. When queried about the matter during his cross-examination, even Alvin admitted that his sole basis for saying that the property was
owned by his parents was Antonia’s unilateral pronouncement to the effect.35 Considering that the presumption of conjugality does not operate if there
is no showing of when the property alleged to be conjugal was acquired,36 we find that the CA cannot be faulted for ruling that the realty in litigation was
Antonia’s exclusive property.

Not having established the time of acquisition of the property, the Dela Peñas insist that the registration thereof in the name of "Antonia R. Dela Peña, of
legal age, Filipino, married to Antegono A. Dela Peña" should have already sufficiently established its conjugal nature. Confronted with the same issue in
the case Ruiz vs. Court of Appeals,37 this Court ruled, however, that the phrase "married to" is merely descriptive of the civil status of the wife and
cannot be interpreted to mean that the husband is also a registered owner. Because it is likewise possible that the property was acquired by the wife
while she was still single and registered only after her marriage, neither would registration thereof in said manner constitute proof that the same was
acquired during the marriage and, for said reason, to be presumed conjugal in nature. "Since there is no showing as to when the property in question
was acquired, the fact that the title is in the name of the wife alone is determinative of its nature as paraphernal, i.e., belonging exclusively to said
spouse."38

Viewed in light of the paraphernal nature of the property, the CA correctly ruled that the RTC reversibly erred in nullifying Antonia’s 4 November 1997
sale thereof in favor of Gemma, for lack of the liquidation required under Article 130 of the Family Code.39 That Antonia treated the realty as her own
exclusive property may, in fact, be readily gleaned from her utilization thereof as security for the payment of the ₱250,000.00 loan she borrowed from
Aguila.40 Despite Gemma’s forfeiture of the right to present evidence on her behalf, her alleged alteration of the 7 May 1996 Deed of Real Estate
Mortgage to shorten the maturity of the loan secured thereby was also properly brushed aside by the CA. The double lie inherent in Antonia’s assertion
that the same deed was altered by Gemma to shorten the maturity of the loan to "1997 instead of 1998" is instantly evident from paragraph 1 of the
document which, consistent with 7 July 1996 maturity date provided in the Promissory Note she executed,41 specifically stated that "(t)his contract is for
a period of Three (3) months from the date of this instrument."42

Antonia’s evident lack of credibility also impels us to uphold the CA’s rejection of her version of the circumstances surrounding the execution of the 4
November 1997 Deed of Absolute Sale in favor of Gemma. In disavowing authorship of the signature appearing on said deed,43 Antonia contradicted
the allegation in the Dela Peñas’ complaint that she was misled by Gemma into signing the same document.44 The rule is well-settled that judicial
admissions like those made in the pleadings are binding and cannot be contradicted, absent any showing that the same was made thru palpable
mistake.45 Alongside that appearing on the Deed of Real Estate Mortgage she admitted executing in favor of Aguila, Antonia’s signature on the Deed of
Absolute Sale was, moreover, found to have been written by one and the same person in Questioned Document Report No. 482-802 prepared by
Zenaida Torres, the NBI Document Examiner to whom said specimen signatures were submitted for analysis.46 Parenthetically, this conclusion is borne
out by our comparison of the same signatures.

For all of Antonia’s denial of her receipt of any consideration for the sale of the property in favor of Gemma,47 the evidence on record also lend
credence to Gemma’s version of the circumstances surrounding the execution of the assailed 4 November 1997 Deed of Absolute Sale. Consistent with
Gemma’s claim that said deed was executed to facilitate the loans she obtained from FEBTC-BPI which were agreed to be used as payment of the
sums she expended to settle the outstanding obligation to Aguila and the ₱50,000.00 she loaned Antonia,48 the latter admitted during her direct
examination that she did not pay the loan she obtained from Aguila.49 Presented as witness of the Dela Peñas, Alessandro Almoden also admitted that
Gemma had extended a loan in the sum of ₱50,000.00 in favor of Antonia. Notably, Alessandro Almoden’s claim that the title to the property had been
delivered to Gemma as a consequence of the transaction50 is at odds with Antonia’s claim that she presented said document to the Registry of Deeds
when she verified the status of the property prior to the filing of the complaint from which the instant suit originated.51

With the material contradictions in the Dela Peña’s evidence, the CA cannot be faulted for upholding the validity of the impugned 4 November 1997
Deed of Absolute Sale. Having been duly notarized, said deed is a public document which carries the evidentiary weight conferred upon it with respect to
its due execution.52 Regarded as evidence of the facts therein expressed in a clear, unequivocal manner,53 public documents enjoy a presumption of
regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all controversy as to falsity.54 The burden of proof to
overcome said presumptions lies with the party contesting the notarial document55 like the Dela Peñas who, unfortunately, failed to discharge said onus.
Absent clear and convincing evidence to contradict the same, we find that the CA correctly pronounced the Deed of Absolute Sale was valid and binding
between Antonia and Gemma.

Since foreclosure of the mortgage is but the necessary consequence of non-payment of the mortgage debt,56 FEBTC-BPI was, likewise, acting well
within its rights as mortgagee when it foreclosed the real estate mortgage on the property upon Gemma’s failure to pay the loans secured thereby.
Executed on 26 November 1997, the mortgage predated Antonia’s filing of an Affidavit of Adverse Claim with the Register of Deeds of Marikina on 3
March 1998 and the annotation of a Notice of Lis Pendens on TCT No. 337834 on 10 December 1999. "The mortgage directly and immediately subjects
the property upon which it is imposed, whoever the possessor may be, to the fulfilment of the obligation for whose security it was constituted."57 When
the principal obligation is not paid when due, the mortgagee consequently has the right to foreclose the mortgage, sell the property, and apply the
proceeds of the sale to the satisfaction of the unpaid loan.58

Finally, the resolution of this case cannot be affected by the principles that banks like FEBTC-BPI are expected to exercise more care and prudence
than private individuals in that their dealings because their business is impressed with public interest59 and their standard practice is to conduct an
ocular inspection of the property offered to be mortgaged and verify the genuineness of the title to determine the real owner or owners thereof, hence,
the inapplicability of the general rule that a mortgagee need not look beyond the title does not apply to them.60 The validity of the Deed of Absolute Sale
executed by Antonia in favor of Gemma having been upheld, FEBTC-BPI’s supposed failure to ascertain the ownership of the property has been
rendered immaterial for the purpose of determining the validity of the mortgage executed in its favor as well as the subsequent extrajudicial foreclosure
thereof.

WHEREFORE, premises considered, the petition is DENIED for lack of merit and the assailed CA Decision dated 31 March 2009 is, accordingly,
AFFIRMED in toto.
SECOND DIVISION GR No. 169548
TITAN CONSTRUCTIONCORPORATION,Petitioner,
- versus -
MANUEL A. DAVID, SR. and MARTHA S. DAVID,

March 15, 2010

x-------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:

The review of factual matters is not the province of this Court.[1] The Supreme Court is not a trier of facts, and is not the proper forum for the ventilation
and substantiation of factual issues.[2]

This Petition for Review assails the July 20, 2004 Decision[3] of the Court of Appeals (CA) in CA-G.R. CV No. 67090 which affirmed with modification
the March 7, 2000 Decision[4] of the Regional Trial Court (RTC) of Quezon City, Branch 80. Also assailed is the August 31, 2005 Resolution[5] of the CA
denying the motion for reconsideration.

Factual Antecedents

Manuel A. David, Sr. (Manuel) and Martha S. David (Martha) were married on March 25, 1957. In 1970, the spouses acquired a 602 square meter lot
located at White Plains, Quezon City, which was registered in the name of MARTHA S. DAVID, of legal age, Filipino, married to Manuel A. David and
covered by Transfer Certificate of Title (TCT) No. 156043 issued by the Register of Deeds of Quezon City.[6] In 1976, the spouses separated de facto,
and no longer communicated with each other.[7]

Sometime in March 1995, Manuel discovered that Martha had previously sold the property to Titan Construction Corporation (Titan) for P1,500,000.00
through a Deed of Sale[8] dated April 24, 1995, and that TCT No. 156043 had been cancelled and replaced by TCT No. 130129 in the name of Titan.

Thus, on March 13, 1996, Manuel filed a Complaint[9] for Annulment of Contract and Recovenyance against Titan before the RTC of Quezon City.
Manuel alleged that the sale executed by Martha in favor of Titan was without his knowledge and consent, and therefore void. He prayed that the Deed
of Sale and TCT No. 130129 be invalidated, that the property be reconveyed to the spouses, and that a new title be issued in their names.

In its Answer with Counterclaim,[10] Titan claimed that it was a buyer in good faith and for value because it relied on a Special Power of Attorney (SPA)
[11] dated January 4, 1995 signed by Manuel which authorized Martha to dispose of the property on behalf of the spouses. Titan thus prayed for the
dismissal of the complaint.

In his unverified Reply,[12] Manuel claimed that the SPA was spurious, and that the signature purporting to be his was a forgery; hence, Martha was
wholly without authority to sell the property.

Subsequently, Manuel filed a Motion for Leave to File Amended Complaint[13] which was granted by the trial court. Thus, on October 15, 1996, Manuel
filed an Amended Complaint[14] impleading Martha as a co-defendant in the proceedings. However, despite personal service of summons[15] upon
Martha, she failed to file an Answer. Thus, she was declared in default.[16] Trial then ensued.

Ruling of the Regional Trial Court

On March 7, 2000, the RTC issued a Decision which (i) invalidated both the Deed of Sale and TCT No. 130129; (ii) ordered Titan to reconvey the
property to Martha and Manuel; (iii) directed the Register of Deeds of Quezon City to issue a new title in the names of Manuel and Martha; and (iv)
ordered Titan to pay P200,000.00 plus P1,000.00 per appearance as attorneys fees, and P50,000.00 as costs of suit.

The RTC found that:

1) The property was conjugal in character since it was purchased by Manuel

and Martha with conjugal funds during their marriage. The fact that TCT No. 156043 was registered in the name of MARTHA S. DAVID x x x married to
Manuel A. David did not negate the propertys conjugal nature.

2) The SPA professing to authorize Martha to sell the property on behalf of the spouses was spurious, and did not bear Manuels genuine signature. This
was the subject of expert testimony, which Titan failed to rebut. In addition, despite the fact that the SPA was notarized, the genuineness and due
execution of the SPA was placed in doubt since it did not contain Manuels residence certificate, and was not presented for registration with the Quezon
City Register of Deeds, in violation of Section 64 of Presidential Decree No. 1529.[17]

3) The circumstances surrounding the transaction with Martha should have put Titan on notice of the SPAs dubious veracity. The RTC noted that aside
from Marthas failure to register the SPA with the Register of Deeds, it was doubtful that an SPA would have even been necessary, since the SPA itself
indicated that Martha and Manuel lived on the same street in Navotas.

The dispositive portion of the trial courts Decision reads:

Wherefore, judgment is hereby rendered:


1.) Declaring the Deed of Sale dated April 24, 1995 as void ab initio and without force and effect.
2.) Declaring null and void TCT No. 130129 issued by the Register of Deeds of Quezon City in the name of defendant Titan Construction Corporation.
3.) Ordering defendant Titan Construction Corporation to reconvey the subject property to plaintiff and his spouse.
4.) Ordering the Register of Deeds of Quezon City to make and issue a new title in the name of plaintiff Manuel David and his Spouse, Martha David.
5.) Ordering defendant to pay P200,000.00 plus P1,000.00 per appearance as attorneys fees and P50,000.00 as costs of suit.

SO ORDERED.[18]

Ruling of the Court of Appeals

In its Decision dated July 20, 2004, the CA affirmed the Decision of the trial court but deleted the award of attorneys fees and the amount of P50,000.00
as costs.

The dispositive portion of the Decision reads:

WHEREFORE, with the MODIFICATION by deleting the award of attorneys fees in favor of plaintiff-appellee Manuel A. David, Sr. and the amount of
P50,000.00 as costs, the Decision appealed from is AFFIRMED in all other respects, with costs against defendant-appellant Titan Construction
Corporation.[19]

Titan moved for reconsideration but the motion was denied on August 31, 2005.

Hence, this petition.

Issues
Titan raises the following assignment of errors:
A. THE COURT OF APPEALS PATENTLY ERRED IN DECLARING THE SUBJECT DEED OF SALE NULL AND VOID AND FAILED
TO APPLY TO THIS CASE THE PERTINENT LAW AND JURISPRUDENCE ON THE TORRENS SYSTEM OF LAND REGISTRATION.

B. THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT TITAN WAS NOT A BUYER IN GOOD FAITH CONTRARY TO
THE STANDARDS APPLIED BY THIS HONORABLE COURT IN CASES INVOLVING SIMILAR FACTS.

C. THE COURT OF APPEALS PATENTLY ERRED BY DISCARDING THE NATURE OF A NOTARIZED SPECIAL POWER OF
ATTORNEY CONTRARY TO JURISPRUDENCE AND BY GIVING UNDUE WEIGHT TO THE ALLEGED EXPERT TESTIMONY VIS--VIS THE
CONTESTED SIGNATURES AS THEY APPEAR TO THE NAKED EYE CONTRARY TO JURISPRUDENCE.

D. THE COURT OF APPEALS PATENTLY ERRED BY FAILING TO DETECT BADGES OF CONNIVANCE BETWEEN
RESPONDENTS.

E. THE COURT OF APPEALS PATENTLY ERRED BY NOT RULING THAT ASSUMING THE SPA WAS NULL AND VOID, THE
SAME IS IMMATERIAL SINCE THE RESPONDENTS SHOULD BE CONSIDERED ESTOPPED FROM DENYING THAT THE SUBJECT PROPERTY
WAS SOLELY THAT OF RESPONDENT MARTHA S. DAVID.

F. THE COURT OF APPEALS PATENTLY ERRED BY NOT RULING THAT ASSUMING THE SALE WAS VOID, ON GROUNDS OF
EQUITY MARTHA S. DAVID SHOULD REIMBURSE PETITIONER OF HIS PAYMENT WITH LEGAL INTEREST.[20]

Petitioners Arguments

Titan is claiming that it was a buyer in good faith and for value, that the property was Marthas paraphernal property, that it properly relied on the SPA
presented by Martha, and that the RTC erred in giving weight to the alleged expert testimony to the effect that Manuels signature on the SPA was
spurious. Titan also argues, for the first time, that the CA should have ordered Martha to reimburse the purchase price paid by Titan.

Our Ruling

The petition is without merit.

The property is part of the spouses conjugal partnership.

The Civil Code of the Philippines,[21] the law in force at the time of the celebration of the marriage between Martha and Manuel in 1957, provides:

Article 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband
or to the wife.

Article 153 of the Civil Code also provides:

Article 153. The following are conjugal partnership property:

(1) That which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for
only one of the spouses;
xxxx
These provisions were carried over to the Family Code. In particular, Article 117 thereof provides:

Art. 117. The following are conjugal partnership properties:

(1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the
partnership, or for only one of the spouses;

xxxx

Article 116 of the Family Code is even more unequivocal in that [a]ll property acquired during the marriage, whether the acquisition appears to have
been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.

We are not persuaded by Titans arguments that the property was Marthas exclusive property because Manuel failed to present before the RTC any
proof of his income in 1970, hence he could not have had the financial capacity to contribute to the purchase of the property in 1970; and that Manuel
admitted that it was Martha who concluded the original purchase of the property. In consonance with our ruling in Spouses Castro v. Miat,[22] Manuel
was not required to prove that the property was acquired with funds of the partnership. Rather, the presumption applies even when the manner in which
the property was acquired does not appear.[23] Here, we find that Titan failed to overturn the presumption that the property, purchased during the
spouses marriage, was part of the conjugal partnership.

In the absence of Manuels consent, the Deed of Sale is void.

Since the property was undoubtedly part of the conjugal partnership, the sale to Titan required the consent of both spouses. Article 165 of the Civil Code
expressly provides that the husband is the administrator of the conjugal partnership. Likewise, Article 172 of the Civil Code ordains that (t)he wife cannot
bind the conjugal partnership without the husbands consent, except in cases provided by law.

Similarly, Article 124 of the Family Code requires that any disposition or encumbrance of conjugal property must have the written consent of the other
spouse, otherwise, such disposition is void. Thus:

Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both spouses jointly. In case of disagreement, the husband's
decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the
contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may
assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of
the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed
as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

The Special Power of Attorney purportedly signed by Manuel is spurious and void.

The RTC found that the signature of Manuel appearing on the SPA was not his genuine signature.

As to the issue of the validity or invalidity of the subject Special Power of Attorney x x x the Court rules that the same is invalid. As aptly demonstrated by
plaintiffs evidence particularly the testimony of expert witness Atty. Desiderio Pagui, which the defense failed to rebut and impeach, the subject Special
Power of Attorney does not bear the genuine signature of plaintiff Manuel David thus rendering the same as without legal effect.
Moreover, the genuineness and the due execution of the Special Power of Attorney was placed in more serious doubt as the same does not contain the
Residence Certificate of the plaintiff and most importantly, was not presented for registration with the Quezon City Register of Deeds which is a clear
violation of Sec. 64 of P.D. No. 1529.

As regards defendant Titan Construction Corporations assertion that plaintiffs failure to verify his Reply (wherein the validity of the Special Power of
Attorney is put into question) is an implied admission of its genuineness and due execution, [this] appears at first blush a logical conclusion. However,
the Court could not yield to such an argument considering that a rigid application of the pertinent provisions of the Rules of Court will not be given
premium when it would obstruct rather than serve the broader interest of justice.[24]

Titan claims that the RTC gave undue weight to the testimony of Manuels witness, and that expert testimony on handwriting is not conclusive.

The contention lacks merit. The RTCs ruling was based not only on the testimony of Manuels expert witness finding that there were significant
differences between the standard handwriting of Manuel and the signature found on the SPA, but also on Manuels categorical denial that he ever signed
any document authorizing or ratifying the Deed of Sale to Titan.[25]

We also note that on October 12, 2004, Titan filed before the CA a Manifestation with Motion for Re-Examination of Another Document/ Handwriting
Expert[26] alleging that there is an extreme necessity[27] for a conduct of another examination of the SPA by a handwriting expert as it will materially
affect and alter the final outcome[28] of the case. Interestingly, however, Titan filed on January 6, 2005 a Manifestation/Motion to Withdraw Earlier
Motion for Re-Examination of PNP Laboratory Expert[29] this time praying that its motion for re-examination be withdrawn. Titan claimed that after a
circumspect evaluation, deemed it wise not to pursue anymore said request (re-examination) as there is a great possibility that the x x x [PNP and the
NBI] might come out with two conflicting opinions and conclusions x x x that might cause some confusion to the minds of the Honorable Justices in
resolving the issues x x x as well as the waste of material time and resources said motion may result.[30]

In any event, we reiterate the well-entrenched rule that the factual findings of trial courts, when adopted and confirmed by the CA, are binding and
conclusive and will generally not be reviewed on appeal.[31] We are mandated to accord great weight to the findings of the RTC, particularly as regards
its assessment of the credibility of witnesses[32] since it is the trial court judge who is in a position to observe and examine the witnesses first hand.[33]
Even after a careful and independent scrutiny of the records, we find no cogent reason to depart from the rulings of the courts below.[34]

Furthermore, settled is the rule that only errors of law and not of fact are reviewable by this Court in a petition for review on certiorari under Rule 45 of
the Rules of Court. This applies with even greater force here, since the factual findings by the CA are in full agreement with those of the trial court.[35]

Indeed, we cannot help but wonder why Martha was never subpoenaed by Titan as a witness to testify on the character of the property, or the
circumstances surrounding the transaction with Titan. Petitioners claim that she could not be found is belied by the RTC records, which show that she
personally received and signed for the summons at her address in Greenhills, San Juan. Titan neither filed a cross claim nor made any adverse
allegation against Martha.

On the Failure to Deny the Genuineness and Due Execution of the SPA

Titan claimed that because Manuel failed to specifically deny the genuineness and due execution of the SPA in his Reply, he is deemed to have
admitted the veracity of said document, in accordance with Rule 8, Sections 7 and 8,[36] of the Rules of Court.

On this point, we fully concur with the findings of the CA that:

It is true that the reply filed by Manuel alleging that the special power of attorney is a forgery was not made under oath. However, the complaint, which
was verified by Manuel under oath, alleged that the sale of the subject property executed by his wife, Martha, in favor of Titan was without his
knowledge, consent, and approval, express or implied; and that there is nothing on the face of the deed of sale that would show that he gave his consent
thereto. In Toribio v. Bidin, it was held that where the verified complaint alleged that the plaintiff never sold, transferred or disposed their share in the
inheritance left by their mother to others, the defendants were placed on adequate notice that they would be called upon during trial to prove the
genuineness or due execution of the disputed deed of sale. While Section 8, Rule 8 is mandatory, it is a discovery procedure and must be reasonably
construed to attain its purpose, and in a way as not to effect a denial of substantial justice. The interpretation should be one which assists the parties in
obtaining a speedy, inexpensive, and most important, a just determination of the disputed issues.

Moreover, during the pre-trial, Titan requested for stipulation that the special power of attorney was signed by Manuel authorizing his wife to sell the
subject property, but Manuel refused to admit the genuineness of said special power of attorney and stated that he is presenting an expert witness to
prove that his signature in the special power of attorney is a forgery. However, Titan did not register any objection x x x. Furthermore, Titan did not object
to the presentation of Atty. Desiderio Pagui, who testified as an expert witness, on his Report finding that the signature on the special power of attorney
was not affixed by Manuel based on his analysis of the questioned and standard signatures of the latter, and even cross-examined said witness. Neither
did Titan object to the admission of said Report when it was offered in evidence by Manuel on the ground that he is barred from denying his signature on
the special power of attorney. In fact, Titan admitted the existence of said Report and objected only to the purpose for which it was offered. In Central
Surety & Insurance Company v. C.N. Hodges, it was held that where a party acted in complete disregard of or wholly overlooked Section 8, Rule 8 and
did not object to the introduction and admission of evidence questioning the genuineness and due execution of a document, he must be deemed to have
waived the benefits of said Rule. Consequently, Titan is deemed to have waived the mantle of protection given [it] by Section 8, Rule 8.[37]

It is true that a notarial document is considered evidence of the facts expressed therein.[38] A notarized document enjoys a prima facie presumption of
authenticity and due execution[39] and only clear and convincing evidence will overcome such legal presumption.[40] However, such clear and
convincing evidence is present here. While it is true that the SPA was notarized, it is no less true that there were defects in the notarization which
mitigate against a finding that the SPA was either genuine or duly executed. Curiously, the details of Manuels Community Tax Certificate are
conspicuously absent, yet Marthas are complete. The absence of Manuels data supports his claim that he did not execute the same and that his
signature thereon is a forgery. Moreover, we have Manuels positive testimony that he never signed the SPA, in addition to the expert testimony that the
signature appearing on the SPA was not Manuels true signature.

Moreover, there were circumstances which mitigate against a finding that Titan was a buyer in good faith.

First, TCT No. 156043 was registered in the name of MARTHA S. DAVID, of legal age, Filipino, married to Manuel A. David but the Deed of Sale failed
to include Marthas civil status, and only described the vendor as MARTHA S. DAVID, of legal age, Filipino citizen, with postal address at 247 Governor
Pascual, Navotas, Rizal. And it is quite peculiar that an SPA would have even been necessary, considering that the SPA itself indicated that Martha and
Manuel lived on the same street (379 and 247 Governor Pascual Street, respectively).

Second, Titans witness Valeriano Hernandez, the real estate agent who brokered the sale between Martha and Titan, testified that Jerry Yao (Yao),
Titans Vice President for Operations (and Titans signatory to the Deed of Sale), specifically inquired why the name of Manuel did not appear on the
Deed of Sale.[41] This indicates that Titan was aware that Manuels consent may be necessary. In addition, Titan purportedly sent their representative to
the Register of Deeds of Quezon City to verify TCT No. 156043, so Titan would have been aware that the SPA was never registered before the Register
of Deeds.

Third, Valeriano Hernandez also testified that during the first meeting between Martha and Yao, Martha informed Yao that the property was mortgaged
to a casino for P500,000.00. Without even seeing the property, the original title, or the SPA, and without securing an acknowledgment receipt from
Martha, Titan (through Yao) gave Martha P500,000.00 so she could redeem the property from the casino.[42] These are certainly not actions typical of a
prudent buyer.

Titan cannot belatedly claim that the RTC should have ordered Martha to reimburse the purchase price.

Titan argues that the CA erred in not ruling that, even assuming the sale was void, on grounds of equity, Martha should reimburse petitioner its payment
with legal interest. We note that this equity argument was raised for the first time before the CA, which disposed of it in this manner:
Anent defendant-appellants claim that the court a quo and this Court never considered the substantial amount of money paid by it to Martha David as
consideration for the sale of the subject property, suffice it to say that said matter is being raised for the first time in the instant motion for
reconsideration. If well-recognized jurisprudence precludes raising an issue only for the first time on appeal proper, with more reason should such issue
be disallowed or disregarded when initially raised only in a motion for reconsideration of the decision of the appellate court.

Nonetheless, record shows that only defendant-appellant was initially sued by plaintiff-appellee in his complaint for annulment of contract and
reconveyance upon the allegation that the sale executed by his wife, Martha David, of their conjugal property in favor of defendant-appellant was without
his knowledge and consent and, therefore, null and void. In its answer, defendant-appellant claimed that it bought the property in good faith and for value
from Martha David and prayed for the dismissal of the complaint and the payment of his counterclaim for attorneys fees, moral and exemplary damages.
Subsequently, plaintiff-appellee filed a motion for leave to file amended complaint by impleading Martha David as a defendant, attaching the amended
complaint thereto, copies of which were furnished defendant-appellant, through counsel. The amended complaint was admitted by the court a quo in an
Order dated October 23, 1996. Martha David was declared in default for failure to file an answer. The record does not show [that] a cross-claim was filed
by defendant-appellant against Martha David for the return of the amount of PhP1,500,000.00 it paid to the latter as consideration for the sale of the
subject property. x x x Thus, to hold Martha David liable to defendant-appellant for the return of the consideration for the sale of the subject property,
without any claim therefore being filed against her by the latter, would violate her right to due process. The essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence one may have in support of his defense. It is elementary that before a person can be
deprived of his property, he should be first informed of the claim against him and the theory on which such claim is premised.[43] (Emphasis supplied)

While it is true that litigation is not a game of technicalities,[44] it is equally true that elementary considerations of due process require that a party be
duly apprised of a claim against him before judgment may be rendered. Thus, we cannot, in these proceedings, order the return of the amounts paid by
Titan to Martha. However, Titan is not precluded by this Decision from instituting the appropriate action against Martha before the proper court.

WHEREFORE, the petition is DENIED. The July 20, 2004 Decision of the Court of Appeals in CA-G.R. CV No. 67090 which affirmed with modifications
the March 7, 2000 Decision of the Regional Trial Court of Quezon City, Branch 80, and its August 31, 2005 Resolution denying the motion for
reconsideration, are AFFIRMED, without prejudice to the recovery by petitioner Titan Construction Corporation of the amounts it paid to Martha S. David
in the appropriate action before the proper court.
SECOND DIVISION

[G.R. No. 118305. February 12, 1998]

AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO, petitioners, vs. COURT OF APPEALS and SPOUSES ALFREDO &
ENCARNACION CHING, respondents.

DECISION

MARTINEZ, J.:

Under Article 161 of the Civil Code, what debts and obligations contracted by the husband alone are considered for the benefit of the conjugal
partnership which are chargeable against the conjugal partnership? Is a surety agreement or an accommodation contract entered into by the husband in
favor of his employer within the contemplation of the said provision?

These are the issues which we will resolve in this petition for review.

The petitioner assails the decision dated April 14, 1994 of the respondent Court of Appeals in Spouses Alfredo and Encarnacion Ching vs. Ayala
Investment and Development Corporation, et. al., docketed as CA-G.R. CV No. 29632,[1] upholding the decision of the Regional Trial Court of Pasig,
Branch 168, which ruled that the conjugal partnership of gains of respondents-spouses Alfredo and Encarnacion Ching is not liable for the payment of
the debts secured by respondent-husband Alfredo Ching.

A chronology of the essential antecedent facts is necessary for a clear understanding of the case at bar.

Philippine Blooming Mills (hereinafter referred to as PBM) obtained a P50,300,000.00 loan from petitioner Ayala Investment and Development
Corporation (hereinafter referred to as AIDC). As added security for the credit line extended to PBM, respondent Alfredo Ching, Executive Vice President
of PBM, executed security agreements on December 10, 1980 and on March 20, 1981 making himself jointly and severally answerable with PBMs
indebtedness to AIDC.

PBM failed to pay the loan. Thus, on July 30, 1981, AIDC filed a case for sum of money against PBM and respondent-husband Alfredo Ching with the
then Court of First Instance of Rizal (Pasig), Branch VIII, entitled Ayala Investment and Development Corporation vs. Philippine Blooming Mills and
Alfredo Ching, docketed as Civil Case No. 42228.

After trial, the court rendered judgment ordering PBM and respondent-husband Alfredo Ching to jointly and severally pay AIDC the principal amount of
P50,300,000.00 with interests.

Pending appeal of the judgment in Civil Case No. 42228, upon motion of AIDC, the lower court issued a writ of execution pending appeal. Upon AIDCs
putting up of an P8,000,000.00 bond, a writ of execution dated May 12, 1982 was issued. Thereafter, petitioner Abelardo Magsajo, Sr., Deputy Sheriff of
Rizal and appointed sheriff in Civil Case No. 42228, caused the issuance and service upon respondents-spouses of a notice of sheriff sale dated May
20, 1982 on three (3) of their conjugal properties. Petitioner Magsajo then scheduled the auction sale of the properties levied.

On June 9, 1982, private respondents filed a case of injunction against petitioners with the then Court of First Instance of Rizal (Pasig), Branch XIII, to
enjoin the auction sale alleging that petitioners cannot enforce the judgment against the conjugal partnership levied on the ground that, among others,
the subject loan did not redound to the benefit of the said conjugal partnership.[2] Upon application of private respondents, the lower court issued a
temporary restraining order to prevent petitioner Magsajo from proceeding with the enforcement of the writ of execution and with the sale of the said
properties at public auction.

AIDC filed a petition for certiorari before the Court of Appeals,[3] questioning the order of the lower court enjoining the sale. Respondent Court of
Appeals issued a Temporary Restraining Order on June 25, 1982, enjoining the lower court[4] from enforcing its Order of June 14, 1982, thus paving the
way for the scheduled auction sale of respondents-spouses conjugal properties.

On June 25, 1982, the auction sale took place. AIDC being the only bidder, was issued a Certificate of Sale by petitioner Magsajo, which was registered
on July 2, 1982. Upon expiration of the redemption period, petitioner sheriff issued the final deed of sale on August 4, 1982 which was registered on
August 9, 1983.

In the meantime, the respondent court, on August 4, 1982, decided CA-G.R. SP No. 14404, in this manner:

WHEREFORE, the petition for certiorari in this case is granted and the challenged order of the respondent Judge dated June 14, 1982 in Civil Case No.
46309 is hereby set aside and nullified. The same petition insofar as it seeks to enjoin the respondent Judge from proceeding with Civil Case No. 46309
is, however, denied. No pronouncement is here made as to costs. x x x x.[5]

On September 3, 1983, AIDC filed a motion to dismiss the petition for injunction filed before Branch XIII of the CFI of Rizal (Pasig) on the ground that the
same had become moot and academic with the consummation of the sale. Respondents filed their opposition to the motion arguing, among others, that
where a third party who claims ownership of the property attached or levied upon, a different legal situation is presented; and that in this case, two (2) of
the real properties are actually in the name of Encarnacion Ching, a non-party to Civil Case No. 42228.

The lower court denied the motion to dismiss. Hence, trial on the merits proceeded. Private respondents presented several witnesses. On the other
hand, petitioners did not present any evidence.

On September 18, 1991, the trial court promulgated its decision declaring the sale on execution null and void. Petitioners appealed to the respondent
court, which was docketed as CA-G.R. CV No. 29632.

On April 14, 1994, the respondent court promulgated the assailed decision, affirming the decision of the regional trial court. It held that:

The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming Mills and not for the benefit of the
conjugal partnership of petitioners-appellees.

xxxxxxxxx

As to the applicable law, whether it is Article 161 of the New Civil Code or Article 1211 of the Family Code-suffice it to say that the two provisions are
substantially the same. Nevertheless, We agree with the trial court that the Family Code is the applicable law on the matter x x x x x x.

Article 121 of the Family Code provides that The conjugal partnership shall be liable for: x x x (2) All debts and obligations contracted during the
marriage by the designated Administrator-Spouse for the benefit of the conjugal partnership of gains x x x. The burden of proof that the debt was
contracted for the benefit of the conjugal partnership of gains, lies with the creditor-party litigant claiming as such. In the case at bar, respondent-
appellant AIDC failed to prove that the debt was contracted by appellee-husband, for the benefit of the conjugal partnership of gains.

The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered DISMISSING the appeal. The decision of the Regional Trial Court is
AFFIRMED in toto.[6]

Petitioner filed a Motion for Reconsideration which was denied by the respondent court in a Resolution dated November 28, 1994.[7]
Hence, this petition for review. Petitioner contends that the respondent court erred in ruling that the conjugal partnership of private respondents is not
liable for the obligation by the respondent-husband.

Specifically, the errors allegedly committed by the respondent court are as follows:

I. RESPONDENT COURT ERRED IN RULING THAT THE OBLIGATION INCURRED BY RESPONDENT HUSBAND DID NOT REDOUND TO THE
BENEFIT OF THE CONJUGAL PARTNERSHIP OF THE PRIVATE RESPONDENT.

II RESPONDENT COURT ERRED IN RULING THAT THE ACT OF RESPONDENT HUSBAND IN SECURING THE SUBJECT LOAN IS NOT PART OF
HIS INDUSTRY, BUSINESS OR CAREER FROM WHICH HE SUPPORTS HIS FAMILY.

Petitioners in their appeal point out that there is no need to prove that actual benefit redounded to the benefit of the partnership; all that is necessary,
they say, is that the transaction was entered into for the benefit of the conjugal partnership. Thus, petitioners aver that:

The wordings of Article 161 of the Civil Code is very clear: for the partnership to be held liable, the husband must have contracted the debt for the benefit
of the partnership, thus:

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

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

There is a difference between the phrases: redounded to the benefit of or benefited from (on the one hand) and for the benefit of (on the other). The
former require that actual benefit must have been realized; the latter requires only that the transaction should be one which normally would produce
benefit to the partnership, regardless of whether or not actual benefit accrued.[8]

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

Petitioners further contend that the ruling of the respondent court runs counter to the pronouncement of this Court in the case of Cobb-Perez vs.
Lantin,[9] that the husband as head of the family and as administrator of the conjugal partnership is presumed to have contracted obligations for the
benefit of the family or the conjugal partnership.

Contrary to the contention of the petitioners, the case of Cobb-Perez is not applicable in the case at bar. This Court has, on several instances,
interpreted the term for the benefit of the conjugal partnership.

In the cases of Javier vs. Osmea,[10] Abella de Diaz vs. Erlanger & Galinger, Inc.,[11] Cobb-Perez vs. Lantin[12] and G-Tractors, Inc. vs. Court of
Appeals,[13] cited by the petitioners, we held that:

The debts contracted by the husband during the marriage relation, for and in the exercise of the industry or profession by which he contributes toward
the support of his family, are not his personal and private debts, and the products or income from the wifes own property, which, like those of her
husbands, are liable for the payment of the marriage expenses, cannot be excepted from the payment of such debts. (Javier)

The husband, as the manager of the partnership (Article 1412, Civil Code), has a right to embark the partnership in an ordinary commercial enterprise
for gain, and the fact that the wife may not approve of a venture does not make it a private and personal one of the husband. (Abella de Diaz)

Debts contracted by the husband for and in the exercise of the industry or profession by which he contributes to the support of the family, cannot be
deemed to be his exclusive and private debts. (Cobb-Perez)

x x x if he incurs an indebtedness in the legitimate pursuit of his career or profession or suffers losses in a legitimate business, the conjugal partnership
must equally bear the indebtedness and the losses, unless he deliberately acted to the prejudice of his family. (G-Tractors)

However, in the cases of Ansaldo vs. Sheriff of Manila, Fidelity Insurance & Luzon Insurance Co.,[14] Liberty Insurance Corporation vs. Banuelos,[15]
and Luzon Surety Inc. vs. De Garcia,[16] cited by the respondents, we ruled that:

The fruits of the paraphernal property which form part of the assets of the conjugal partnership, are subject to the payment of the debts and expenses of
the spouses, but not to the payment of the personal obligations (guaranty agreements) of the husband, unless it be proved that such obligations were
productive of some benefit to the family. (Ansaldo; parenthetical phrase ours.)

When there is no showing that the execution of an indemnity agreement by the husband redounded to the benefit of his family, the undertaking is not a
conjugal debt but an obligation personal to him. (Liberty Insurance)

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

From the foregoing jurisprudential rulings of this Court, we can derive the following conclusions:

(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or
his own profession, that contract falls within the term x x x x obligations for the benefit of the conjugal partnership. Here, no actual benefit may be
proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or
services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in
the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business,
the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.

(B) On the other hand, if the money or services are given to another person or entity, and the husband acted only as a surety or guarantor, that contract
cannot, by itself, alone be categorized as falling within the context of obligations for the benefit of the conjugal partnership. The contract of loan or
services is clearly for the benefit of the principal debtor and not for the surety or his family. No presumption can be inferred that, when a husband enters
into a contract of surety or accommodation agreement, it is for the benefit of the conjugal partnership. Proof must be presented to establish benefit
redounding to the conjugal partnership.

Thus, the distinction between the Cobb-Perez case, and we add, that of the three other companion cases, on the one hand, and that of Ansaldo, Liberty
Insurance and Luzon Surety, is that in the former, the husband contracted the obligation for his own business; while in the latter, the husband merely
acted as a surety for the loan contracted by another for the latters business.

The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed as surety for the P50M loan contracted on behalf of PBM.
Petitioner should have adduced evidence to prove that Alfredo Chings acting as surety redounded to the benefit of the conjugal partnership. The reason
for this is as lucidly explained by the respondent court:
The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming Mills and not for the benefit of the
conjugal partnership of petitioners-appellees. Philippine Blooming Mills has a personality distinct and separate from the family of petitioners-appellees -
this despite the fact that the members of the said family happened to be stockholders of said corporate entity.

xxxxxxxxx

x x x. The burden of proof that the debt was contracted for the benefit of the conjugal partnership of gains, lies with the creditor-party litigant claiming as
such. In the case at bar, respondent-appellant AIDC failed to prove that the debt was contracted by appellee-husband, for the benefit of the conjugal
partnership of gains. What is apparent from the facts of the case is that the judgment debt was contracted by or in the name of the Corporation
Philippine Blooming Mills and appellee-husband only signed as surety thereof. The debt is clearly a corporate debt and respondent-appellants right of
recourse against appellee-husband as surety is only to the extent of his corporate stockholdings. It does not extend to the conjugal partnership of gains
of the family of petitioners-appellees. x x x x x x. [17]

Petitioners contend that no actual benefit need accrue to the conjugal partnership. To support this contention, they cite Justice J.B.L. Reyes authoritative
opinion in the Luzon Surety Company case:

I concur in the result, but would like to make of record that, in my opinion, the words all debts and obligations contracted by the husband for the benefit
of the conjugal partnership used in Article 161 of the Civil Code of the Philippines in describing the charges and obligations for which the conjugal
partnership is liable do not require that actual profit or benefit must accrue to the conjugal partnership from the husbands transaction; but it suffices that
the transaction should be one that normally would produce such benefit for the partnership. This is the ratio behind our ruling in Javier vs. Osmea, 34
Phil. 336, that obligations incurred by the husband in the practice of his profession are collectible from the conjugal partnership.

The aforequoted concurring opinion agreed with the majority decision that the conjugal partnership should not be made liable for the surety agreement
which was clearly for the benefit of a third party. Such opinion merely registered an exception to what may be construed as a sweeping statement that in
all cases actual profit or benefit must accrue to the conjugal partnership. The opinion merely made it clear that no actual benefits to the family need be
proved in some cases such as in the Javier case. There, the husband was the principal obligor himself. Thus, said transaction was found to be one that
would normally produce x x x benefit for the partnership. In the later case of G-Tractors, Inc., the husband was also the principal obligor - not merely the
surety. This latter case, therefore, did not create any precedent. It did not also supersede the Luzon Surety Company case, nor any of the previous
accommodation contract cases, where this Court ruled that they were for the benefit of third parties.

But it could be argued, as the petitioner suggests, that even in such kind of contract of accommodation, a benefit for the family may also result, when the
guarantee is in favor of the husbands employer.

In the case at bar, petitioner claims that the benefits the respondent family would reasonably anticipate were the following:

(a) The employment of co-respondent Alfredo Ching would be prolonged and he would be entitled to his monthly salary of P20,000.00 for an extended
length of time because of the loan he guaranteed;

(b) The shares of stock of the members of his family would appreciate if the PBM could be rehabilitated through the loan obtained;

(c) His prestige in the corporation would be enhanced and his career would be boosted should PBM survive because of the loan.

However, these are not the benefits contemplated by Article 161 of the Civil Code. The benefits must be one directly resulting from the loan. It cannot
merely be a by-product or a spin-off of the loan itself.

In all our decisions involving accommodation contracts of the husband,[18] we underscored the requirement that: there must be the requisite showing x x
x of some advantage which clearly accrued to the welfare of the spouses or benefits to his family or that such obligations are productive of some benefit
to the family. Unfortunately, the petition did not present any proof to show: (a) Whether or not the corporate existence of PBM was prolonged and for
how many months or years; and/or (b) Whether or not the PBM was saved by the loan and its shares of stock appreciated, if so, how much and how
substantial was the holdings of the Ching family.

Such benefits (prospects of longer employment and probable increase in the value of stocks) might have been already apparent or could be anticipated
at the time the accommodation agreement was entered into. But would those benefits qualify the transaction as one of the obligations x x x for the
benefit of the conjugal partnership? Are indirect and remote probable benefits, the ones referred to in Article 161 of the Civil Code? The Court of Appeals
in denying the motion for reconsideration, disposed of these questions in the following manner:

No matter how one looks at it, the debt/credit extended by respondents-appellants is purely a corporate debt granted to PBM, with petitioner-appellee-
husband merely signing as surety. While such petitioner-appellee-husband, as such surety, is solidarily liable with the principal debtor AIDC, such
liability under the Civil Code provisions is specifically restricted by Article 122 (par. 1) of the Family Code, so that debts for which the husband is liable
may not be charged against conjugal partnership properties. Article 122 of the Family Code is explicit The payment of personal debts contracted by the
husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the
family.

Respondents-appellants insist that the corporate debt in question falls under the exception laid down in said Article 122 (par. one). We do not agree. The
loan procured from respondent-appellant AIDC was for the sole advancement and benefit of Philippine Blooming Mills and not for the benefit of the
conjugal partnership of petitioners-appellees.

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

We agree with the respondent court. Indeed, considering the odds involved in guaranteeing a large amount (P50,000,000.00) of loan, the probable
prolongation of employment in PBM and increase in value of its stocks, would be too small to qualify the transaction as one for the benefit of the suretys
family. Verily, no one could say, with a degree of certainty, that the said contract is even productive of some benefits to the conjugal partnership.

We likewise agree with the respondent court (and this view is not contested by the petitioners) that the provisions of the Family Code is applicable in this
case. These provisions highlight the underlying concern of the law for the conservation of the conjugal partnership; for the husbands duty to protect and
safeguard, if not augment, not to dissipate it.

This is the underlying reason why the Family Code clarifies that the obligations entered into by one of the spouses must be those that redounded to the
benefit of the family and that the measure of the partnerships liability is to the extent that the family is benefited.[20]

These are all in keeping with the spirit and intent of the other provisions of the Civil Code which prohibits any of the spouses to donate or convey
gratuitously any part of the conjugal property.[21] Thus, when co-respondent Alfredo Ching entered into a surety agreement he, from then on, definitely
put in peril the conjugal property (in this case, including the family home) and placed it in danger of being taken gratuitously as in cases of donation.

In the second assignment of error, the petitioner advances the view that acting as surety is part of the business or profession of the respondent-
husband.

This theory is new as it is novel.


The respondent court correctly observed that:

Signing as a surety is certainly not an exercise of an industry or profession, hence the cited cases of Cobb-Perez vs. Lantin; Abella de Diaz vs. Erlanger
& Galinger; G-Tractors, Inc. vs. CA do not apply in the instant case. Signing as a surety is not embarking in a business.[22]

We are likewise of the view that no matter how often an executive acted or was persuaded to act, as a surety for his own employer, this should not be
taken to mean that he had thereby embarked in the business of suretyship or guaranty.

This is not to say, however, that we are unaware that executives are often asked to stand as surety for their companys loan obligations. This is
especially true if the corporate officials have sufficient property of their own; otherwise, their spouses signatures are required in order to bind the
conjugal partnerships.

The fact that on several occasions the lending institutions did not require the signature of the wife and the husband signed alone does not mean that
being a surety became part of his profession. Neither could he be presumed to have acted for the conjugal partnership.

Article 121, paragraph 3, of the Family Code is emphatic that the payment of personal debts contracted by the husband or the wife before or during the
marriage shall not be charged to the conjugal partnership except to the extent that they redounded to the benefit of the family.

Here, the property in dispute also involves the family home. The loan is a corporate loan not a personal one. Signing as a surety is certainly not an
exercise of an industry or profession nor an act of administration for the benefit of the family.

On the basis of the facts, the rules, the law and equity, the assailed decision should be upheld as we now uphold it. This is, of course, without prejudice
to petitioners right to enforce the obligation in its favor against the PBM receiver in accordance with the rehabilitation program and payment schedule
approved or to be approved by the Securities & Exchange Commission.

WHEREFORE, the petition for review should be, as it is hereby, DENIED for lack of merit.

SO ORDERED.
Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION

THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely: LEONOR, SIMPLICIO, PROTACIO, JR., ANTONIO, BEVERLY ANN
LORRAINNE, TITA, CONSOLACION, LEONORA and ASUNCION, all surnamed GO, represented by LEONORA B. GO, Petitioners,
-versus -
ESTER L. SERVACIO and RITO B. GO,Respondents. G.R. No. 157537
x-----------------------------------------------------------------------------------------x
DECISION
BERSAMIN, J.:

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 Affidavit of Renunciation and Waiver,[1] whereby he affirmed
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 Ritos wife Dina B. Go) sold a portion of the property with an area of 5,560 square meters to Ester L. Servacio
(Servacio) for ₱5,686,768.00.[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]

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 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 insufficient to rebut the legal presumption.[9]

Nonetheless, the RTC affirmed the validity of the sale of the property, holding that: xxx As long as the portion sold, alienated or encumbered will not be
allotted to the other heirs in the final 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.[10] Quoting Tolentinos commentary on the matter as authority,[11] 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 final
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 final partition? Practically there is no reason for that view and it would be absurd.

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 final 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.[12]

The RTCs denial of their motion for reconsideration[13] prompted the petitioners to appeal directly to the Court on a pure question of law.

Issue

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 filed 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 finally 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.[14]

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]

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 partnership governed by the Civil Code. Upon Martas death in 1987, the conjugal partnership was dissolved, pursuant
to Article 175 (1) of the Civil Code,[15] 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.[16] The ensuing implied ordinary co-ownership was
governed by Article 493 of the Civil Code,[17] to wit:

Article 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. (399)

Protacio, Sr., although becoming a co-owner with his children in respect of Martas share in the conjugal partnership, could not yet assert or claim title to
any specific portion of Martas share without an actual partition of the property being first done either by agreement or by judicial decree. Until then, all
that he had was an ideal or abstract quota in Martas share.[18] 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.[19] 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 Martas share.[20] 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).[21]

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.

In their separate comments,[22] 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 specific shares in Martas estate. Neither did they aver that the conjugal properties had already been
liquidated and partitioned. Accordingly, pending a partition among the heirs of Marta, the efficacy 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 finality. The appropriate recourse to bring that about is to
commence an action for judicial partition, as instructed in Bailon-Casilao v. Court of Appeals,[23] 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 nullification of the sale or for the 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. xxx[24]

In the meanwhile, Servacio would be a trustee for the benefit 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:

xxx [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 husbands 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 benefit of the husbands 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.)[25]

WHEREFORE, we DENY the petition for review on certiorari; and AFFIRM the decision of the Regional Trial Court.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 170166 April 6, 2011

JOE A. ROS and ESTRELLA AGUETE, Petitioners,


vs.
PHILIPPINE NATIONAL BANK - LAOAG BRANCH, Respondent.

CARPIO, J.:

The Case

G.R. No. 170166 is a petition for review1 assailing the Decision2 promulgated on 17 October 2005 by the Court of Appeals (appellate court) in CA-G.R.
CV No. 76845. The appellate court granted the appeal filed by the Philippine National Bank – Laoag Branch (PNB). The appellate court reversed the 29
June 2001 Decision of Branch 15 of the Regional Trial Court of Laoag City (trial court) in Civil Case No. 7803.

The trial court declared the Deed of Real Estate Mortgage executed by spouses Jose A. Ros3 (Ros) and Estrella Aguete (Aguete) (collectively,
petitioners), as well as the subsequent foreclosure proceedings, void. Aside from payment of attorney’s fees, the trial court also ordered PNB to vacate
the subject property to give way to petitioners’ possession.

The Facts

The appellate court narrated the facts as follows:

On January 13, 1983, spouses Jose A. Ros and Estrella Aguete filed a complaint for the annulment of the Real Estate Mortgage and all legal
proceedings taken thereunder against PNB, Laoag Branch before the Court of First Instance, Ilocos Norte docketed as Civil Case No. 7803.

The complaint was later amended and was raffled to the Regional Trial Court, Branch 15, Laoag City.

The averments in the complaint disclosed that plaintiff-appellee Joe A. Ros obtained a loan of ₱115,000.00 from PNB Laoag Branch on October 14,
1974 and as security for the loan, plaintiff-appellee Ros executed a real estate mortgage involving a parcel of land – Lot No. 9161 of the Cadastral
Survey of Laoag, with all the improvements thereon described under Transfer Certificate of Title No. T-9646.

Upon maturity, the loan remained outstanding. As a result, PNB instituted extrajudicial foreclosure proceedings on the mortgaged property. After the
extrajudicial sale thereof, a Certificate of Sale was issued in favor of PNB, Laoag as the highest bidder. After the lapse of one (1) year without the
property being redeemed, the property was consolidated and registered in the name of PNB, Laoag Branch on August 10, 1978.

Claiming that she (plaintiff-appellee Estrella Aguete) has no knowledge of the loan obtained by her husband nor she consented to the mortgage
instituted on the conjugal property – a complaint was filed to annul the proceedings pertaining to the mortgage, sale and consolidation of the property –
interposing the defense that her signatures affixed on the documents were forged and that the loan did not redound to the benefit of the family.1avvphi1

In its answer, PNB prays for the dismissal of the complaint for lack of cause of action, and insists that it was plaintiffs-appellees’ own acts [of]

omission/connivance that bar them from recovering the subject property on the ground of estoppel, laches, abandonment and prescription.4]

The Trial Court’s Ruling

On 29 June 2001, the trial court rendered its Decision5 in favor of petitioners. The trial court declared that Aguete did not sign the loan documents, did
not appear before the Notary Public to acknowledge the execution of the loan documents, did not receive the loan proceeds from PNB, and was not
aware of the loan until PNB notified her in 14 August 1978 that she and her family should vacate the mortgaged property because of the expiration of the
redemption period. Under the Civil Code, the effective law at the time of the transaction, Ros could not encumber any real property of the conjugal
partnership without Aguete’s consent. Aguete may, during their marriage and within ten years from the transaction questioned, ask the courts for the
annulment of the contract her husband entered into without her consent, especially in the present case where her consent is required. The trial court,
however, ruled that its decision is without prejudice to the right of action of PNB to recover the amount of the loan and its interests from Ros.

The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. DECLARING the Deed of Real Estate Mortgage (Exhibit "C") and the subsequent foreclosure proceedings conducted thereon NULL and VOID;

2. ORDERING the Register of Deeds of the City of Laoag to cancel TCT No. T-15276 in the name of defendant PNB and revert the same in the name of
plaintiffs spouses Joe Ros and Estrella Aguete;

3. ORDERING defendant to vacate and turnover the possession of the premises of the property in suit to the plaintiffs; and

4. ORDERING defendant to pay plaintiffs attorney’s fee and litigation expenses in the sum of TEN THOUSAND (₱10,000.00) PESOS.

No pronouncement as to costs.

SO ORDERED.6]

PNB filed its Notice of Appeal7 of the trial court’s decision on 13 September 2001 and paid the corresponding fees. Petitioners filed on the same date a
motion for execution pending appeal,8 which PNB opposed.9 In their comment to the opposition10 filed on 10 October 2001, petitioners stated that at
the hearing of the motion on 3 October 2001, PNB’s lay representative had no objection to the execution of judgment pending appeal. Petitioners
claimed that the house on the subject lot is dilapidated, a danger to life and limb, and should be demolished. Petitioners added that they obliged
themselves to make the house habitable at a cost of not less ₱50,000.00. The repair cost would accrue to PNB’s benefit should the appellate court
reverse the trial court. PNB continued to oppose petitioners’ motion.11

In an Order12 dated 8 May 2002, the trial court found petitioners’ motion for execution pending appeal improper because petitioners have made it clear
that they were willing to wait for the appellate court’s decision. However, as a court of justice and equity, the trial court allowed petitioners to occupy the
subject property with the condition that petitioners would voluntarily vacate the premises and waive recovery of improvements introduced should PNB
prevail on appeal.

The Appellate Court’s Ruling

On 17 October 2005, the appellate court rendered its Decision13 and granted PNB’s appeal. The appellate court reversed the trial court’s decision, and
dismissed petitioners’ complaint.
The appellate court stated that the trial court concluded forgery without adequate proof; thus it was improper for the trial court to rely solely on Aguete’s
testimony that her signatures on the loan documents were forged. The appellate court declared that Aguete affixed her signatures on the documents
knowingly and with her full consent.

Assuming arguendo that Aguete did not give her consent to Ros’ loan, the appellate court ruled that the conjugal partnership is still liable because the
loan proceeds redounded to the benefit of the family. The records of the case reveal that the loan was used for the expansion of the family’s business.
Therefore, the debt obtained is chargeable against the conjugal partnership.

Petitioners filed the present petition for review before this Court on 9 December 2005.

The Issues

Petitioners assigned the following errors:

I. The Honorable Court of Appeals erred in not giving weight to the findings and conclusions of the trial court, and in reversing and setting aside such
findings and conclusions without stating specific contrary evidence;

II. The Honorable Court of Appeals erred in declaring the real estate mortgage valid;

III. The Honorable Court of Appeals erred in declaring, without basis, that the loan contracted by husband Joe A. Ros with respondent Philippine
National Bank – Laoag redounded to the benefit of his family, aside from the fact that such had not been raised by respondent in its appeal.14]

The Court’s Ruling

The petition has no merit. We affirm the ruling of the appellate court.

The Civil Code was the applicable law at the time of the mortgage. The subject property is thus considered part of the conjugal partnership of gains. The
pertinent articles of the Civil Code provide:

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 interest received or due during the marriage, coming from the common property or from the exclusive property of each spouse.

Art. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or
to the wife.

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, 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.

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.

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 the property fraudulently alienated by the husband.

There is no doubt that the subject property was acquired during Ros and Aguete’s marriage. Ros and Aguete were married on 16 January 1954, while
the subject property was acquired in 1968.15 There is also no doubt that Ros encumbered the subject property when he mortgaged it for P115,000.00
on 23 October 1974.16 PNB Laoag does not doubt that Aguete, as evidenced by her signature, consented to Ros’ mortgage to PNB of the subject
property. On the other hand, Aguete denies ever having consented to the loan and also denies affixing her signature to the mortgage and loan
documents.

The husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife. Should the husband do so,
then the contract is voidable.17 Article 173 of the Civil Code allows Aguete to question Ros’ encumbrance of the subject property. However, the same
article does not guarantee that the courts will declare the annulment of the contract. Annulment will be declared only upon a finding that the wife did not
give her consent. In the present case, we follow the conclusion of the appellate court and rule that Aguete gave her consent to Ros’ encumbrance of the
subject property.

The documents disavowed by Aguete are acknowledged before a notary public, hence they are public documents. Every instrument duly acknowledged
and certified as provided by law may be presented in evidence without further proof, the certificate of acknowledgment being prima facie evidence of the
execution of the instrument or document involved.18 The execution of a document that has been ratified before a notary public cannot be disproved by
the mere denial of the alleged signer.19 PNB was correct when it stated that petitioners’ omission to present other positive evidence to substantiate their
claim of forgery was fatal to petitioners’ cause.20 Petitioners did not present any corroborating witness, such as a handwriting expert, who could
authoritatively declare that Aguete’s signatures were really forged.

A notarized document carries the evidentiary weight conferred upon it with respect to its due execution, and it has in its favor the presumption of
regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all controversy as to the falsity of the certificate. Absent
such, the presumption must be upheld. The burden of proof to overcome the presumption of due execution of a notarial document lies on the one
contesting the same. Furthermore, an allegation of forgery must be proved by clear and convincing evidence, and whoever alleges it has the burden of
proving the same.21]

Ros himself cannot bring action against PNB, for no one can come before the courts with unclean hands.1avvphi1 In their memorandum before the trial
court, petitioners themselves admitted that Ros forged Aguete’s signatures.
Joe A. Ros in legal effect admitted in the complaint that the signatures of his wife in the questioned documents are forged, incriminating himself to
criminal prosecution. If he were alive today, he would be prosecuted for forgery. This strengthens the testimony of his wife that her signatures on the
questioned documents are not hers.

In filing the complaint, it must have been a remorse of conscience for having wronged his family; in forging the signature of his wife on the questioned
documents; in squandering the P115,000.00 loan from the bank for himself, resulting in the foreclosure of the conjugal property; eviction of his family
therefrom; and, exposure to public contempt, embarassment and ridicule.22]

The application for loan shows that the loan would be used exclusively "for additional working [capital] of buy & sell of garlic & virginia tobacco."23 In her
testimony, Aguete confirmed that Ros engaged in such business, but claimed to be unaware whether it prospered. Aguete was also aware of loans
contracted by Ros, but did not know where he "wasted the money."24 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.25

If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his
own profession, that contract falls within the term "x x x x obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved.
It is enough that the benefit to the family is apparent at the 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.26]

For this reason, we rule that Ros’ loan from PNB redounded to the benefit of the conjugal partnership. Hence, the debt is chargeable to the conjugal
partnership.

WHEREFORE, we DENY the petition. The Decision of the Court of Appeals in CA-G.R. CV No. 76845 promulgated on 17 October 2005 is AFFIRMED.
Costs against petitioners.

SO ORDERED.
Republic of the Philippines
Supreme Court
Manila
THIRD DIVISION

SPOUSES REX AND CONCEPCION AGGABAO, Petitioners,


-versus-

DIONISIO Z. PARULAN, JR. and MA. ELENA PARULAN,Respondents.


G.R. No. 165803
x-----------------------------------------------------------------------------------------x
BERSAMIN, J:
On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati City annulled the deed of absolute sale executed in favor of the petitioners
covering two parcels of registered land the respondents owned for want of the written consent of respondent husband Dionisio Parulan, Jr. On July 2,
2004, in C.A.-G.R. CV No. 69044,[1] the Court of Appeals (CA) affirmed the RTC decision.

Hence, the petitioners appeal by petition for review on certiorari, seeking to reverse the decision of the CA. They present as the main issue whether the
sale of conjugal property made by respondent wife by presenting a special power of attorney to sell (SPA) purportedly executed by respondent husband
in her favor was validly made to the vendees, who allegedly acted in good faith and paid the full purchase price, despite the showing by the husband that
his signature on the SPA had been forged and that the SPA had been executed during his absence from the country.

We resolve the main issue against the vendees and sustain the CAs finding that the vendees were not buyers in good faith, because they did not
exercise the necessary prudence to inquire into the wifes authority to sell. We hold that the sale of conjugal property without the consent of the husband
was not merely voidable but void; hence, it could not be ratified.

Antecedents

Involved in this action are two parcels of land and their improvements (property) located at No. 49 Miguel Cuaderno Street, Executive Village, BF
Homes, Paraaque City and registered under Transfer Certificate of Title (TCT) No. 63376[2] and TCT No. 63377[3] in the name of respondents Spouses
Maria Elena A. Parulan (Ma. Elena) and Dionisio Z. Parulan, Jr. (Dionisio), who have been estranged from one another.

In January 1991, real estate broker Marta K. Atanacio (Atanacio) offered the property to the petitioners, who initially did not show interest due to the
rundown condition of the improvements. But Atanacios persistence prevailed upon them, so that on February 2, 1991, they and Atanacio met with Ma.
Elena at the site of the property. During their meeting, Ma. Elena showed to them the following documents, namely: (a) the owners original copy of TCT
No. 63376; (b) a certified true copy of TCT No. 63377; (c) three tax declarations; and (d) a copy of the special power of attorney (SPA) dated January 7,
1991 executed by Dionisio authorizing Ma. Elena to sell the property.[4] Before the meeting ended, they paid P20,000.00 as earnest money, for which
Ma. Elena executed a handwritten Receipt of Earnest Money, whereby the parties stipulated that: (a) they would pay an additional payment of
P130,000.00 on February 4, 1991; (b) they would pay the balance of the bank loan of the respondents amounting to P650,000.00 on or before February
15, 1991; and (c) they would make the final payment of P700,000.00 once Ma. Elena turned over the property on March 31, 1991.[5]

On February 4, 1991, the petitioners went to the Office of the Register of Deeds and the Assessors Office of Paraaque City to verify the TCTs shown by
Ma. Elena in the company of Atanacio and her husband (also a licensed broker).[6] There, they discovered that the lot under TCT No. 63376 had been
encumbered to Banco Filipino in 1983 or 1984, but that the encumbrance had already been cancelled due to the full payment of the obligation.[7] They
noticed that the Banco Filipino loan had been effected through an SPA executed by Dionisio in favor of Ma. Elena.[8] They found on TCT No. 63377 the
annotation of an existing mortgage in favor of the Los Baos Rural Bank, also effected through an SPA executed by Dionisio in favor of Ma. Elena,
coupled with a copy of a court order authorizing Ma. Elena to mortgage the lot to secure a loan of P500,000.00.[9]

The petitioners and Atanacio next inquired about the mortgage and the court order annotated on TCT No. 63377 at the Los Baos Rural Bank. There,
they met with Atty. Noel Zarate, the banks legal counsel, who related that the bank had asked for the court order because the lot involved was conjugal
property.[10]

Following their verification, the petitioners delivered P130,000.00 as additional down payment on February 4, 1991; and P650,000.00 to the Los Baos
Rural Bank on February 12, 1991, which then released the owners duplicate copy of TCT No. 63377 to them.[11]

On March 18, 1991, the petitioners delivered the final amount of P700,000.00 to Ma. Elena, who executed a deed of absolute sale in their favor.
However, Ma. Elena did not turn over the owners duplicate copy of TCT No. 63376, claiming that said copy was in the possession of a relative who was
then in Hongkong.[12] She assured them that the owners duplicate copy of TCT No. 63376 would be turned over after a week.

On March 19, 1991, TCT No. 63377 was cancelled and a new one was issued in the name of the petitioners.

Ma. Elena did not turn over the duplicate owners copy of TCT No. 63376 as promised. In due time, the petitioners learned that the duplicate owners
copy of TCT No. 63376 had been all along in the custody of Atty. Jeremy Z. Parulan, who appeared to hold an SPA executed by his brother Dionisio
authorizing him to sell both lots.[13]

At Atanacios instance, the petitioners met on March 25, 1991 with Atty. Parulan at the Manila Peninsula.[14] For that meeting, they were accompanied
by one Atty. Olandesca.[15] They recalled that Atty. Parulan smugly demanded P800,000.00 in exchange for the duplicate owners copy of TCT No.
63376, because Atty. Parulan represented the current value of the property to be P1.5 million. As a counter-offer, however, they tendered P250,000.00,
which Atty. Parulan declined,[16] giving them only until April 5, 1991 to decide.

Hearing nothing more from the petitioners, Atty. Parulan decided to call them on April 5, 1991, but they informed him that they had already fully paid to
Ma. Elena.[17]

Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an action (Civil Case No. 91-1005 entitled Dionisio Z. Parulan, Jr., represented by
Jeremy Z. Parulan, as attorney in fact, v. Ma. Elena Parulan, Sps. Rex and Coney Aggabao), praying for the declaration of the nullity of the deed of
absolute sale executed by Ma. Elena, and the cancellation of the title issued to the petitioners by virtue thereof.

In turn, the petitioners filed on July 12, 1991 their own action for specific performance with damages against the respondents.

Both cases were consolidated for trial and judgment in the RTC.[18]

Ruling of the RTC

After trial, the RTC rendered judgment, as follows:

WHEREFORE, and in consideration of the foregoing, judgment is hereby rendered in favor of plaintiff Dionisio A. Parulan, Jr. and against defendants
Ma. Elena Parulan and the Sps. Rex and Concepcion Aggabao, without prejudice to any action that may be filed by the Sps. Aggabao against co-
defendant Ma. Elena Parulan for the amounts they paid her for the purchase of the subject lots, as follows:
1. The Deed of Absolute Sale dated March 18, 1991 covering the sale of the lot located at No. 49 M. Cuaderno St., Executive Village, BF Homes,
Paraaque, Metro Manila, and covered by TCT Nos. 63376 and 63377 is declared null and void.

2. Defendant Mrs. Elena Parulan is directed to pay litigation expenses amounting to P50,000.00 and the costs of the suit.

SO ORDERED.[19]

The RTC declared that the SPA in the hands of Ma. Elena was a forgery, based on its finding that Dionisio had been out of the country at the time of the
execution of the SPA;[20] that NBI Sr. Document Examiner Rhoda B. Flores had certified that the signature appearing on the SPA purporting to be that
of Dionisio and the set of standard sample signatures of Dionisio had not been written by one and the same person;[21] and that Record Officer III Eliseo
O. Terenco and Clerk of Court Jesus P. Maningas of the Manila RTC had issued a certification to the effect that Atty. Alfred Datingaling, the Notary
Public who had notarized the SPA, had not been included in the list of Notaries Public in Manila for the year 1990-1991.[22]

The RTC rejected the petitioners defense of being buyers in good faith because of their failure to exercise ordinary prudence, including demanding from
Ma. Elena a court order authorizing her to sell the properties similar to the order that the Los Baos Rural Bank had required before accepting the
mortgage of the property.[23] It observed that they had appeared to be in a hurry to consummate the transaction despite Atanacios advice that they first
consult a lawyer before buying the property; that with ordinary prudence, they should first have obtained the owners duplicate copies of the TCTs before
paying the full amount of the consideration; and that the sale was void pursuant to Article 124 of the Family Code.[24]

Ruling of the CA

As stated, the CA affirmed the RTC, opining that Article 124 of the Family Code applied because Dionisio had not consented to the sale of the conjugal
property by Ma. Elena; and that the RTC correctly found the SPA to be a forgery.

The CA denied the petitioners motion for reconsideration.[25]

Issues

The petitioners now make two arguments: (1) they were buyers in good faith; and (2) the CA erred in affirming the RTCs finding that the sale between
Mrs. Elena and the petitioners had been a nullity under Article 124 of the Family Code.

The petitioners impute error to the CA for not applying the ordinary prudent mans standard in determining their status as buyers in good faith. They
contend that the more appropriate law to apply was Article 173 of the Civil Code, not Article 124 of the Family Code; and that even if the SPA held by
Ma. Elena was a forgery, the ruling in Veloso v. Court of Appeals[26] warranted a judgment in their favor.

Restated, the issues for consideration and resolution are as follows:

1) Which between Article 173 of the Civil Code and Article 124 of the Family Code should apply to the sale of the conjugal property executed without the
consent of Dionisio?

2) Might the petitioners be considered in good faith at the time of their purchase of the property?

3) Might the ruling in Veloso v. Court of Appeals be applied in favor of the petitioners despite the finding of forgery of the SPA?

Ruling

The petition has no merit. We sustain the CA.

1.Article 124, Family Code, applies to sale of conjugalproperties made after the effectivity of the Family Code.

The petitioners submit that Article 173 of the Civil Code, not Article 124 of the Family Code, governed the property relations of the respondents because
they had been married prior to the effectivity of the Family Code; and that the second paragraph of Article 124 of the Family Code should not apply
because the other spouse held the administration over the conjugal property. They argue that notwithstanding his absence from the country Dionisio still
held the administration of the conjugal property by virtue of his execution of the SPA in favor of his brother; and that even assuming that Article 124 of
the Family Code properly applied, Dionisio ratified the sale through Atty. Parulans counter-offer during the March 25, 1991 meeting.

We do not subscribe to the petitioners submissions.

To start with, Article 254[27] the Family Code has expressly repealed several titles under the Civil Code, among them the entire Title VI in which the
provisions on the property relations between husband and wife, Article 173 included, are found.

Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the effectivity of the Family Code. The proper law to apply is, therefore, Article
124 of the Family Code, for it is settled that any alienation or encumbrance of conjugal property made during the effectivity of the Family Code is
governed by Article 124 of the Family Code.[28]

Article 124 of the Family Code provides:

Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the
husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date
of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may
assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of
the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed
as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

Thirdly, according to Article 256[29] of the Family Code, the provisions of the Family Code may apply retroactively provided no vested rights are
impaired. In Tumlos v. Fernandez,[30] the Court rejected the petitioners argument that the Family Code did not apply because the acquisition of the
contested property had occurred prior to the effectivity of the Family Code, and pointed out that Article 256 provided that the Family Code could apply
retroactively if the application would not prejudice vested or acquired rights existing before the effectivity of the Family Code. Herein, however, the
petitioners did not show any vested right in the property acquired prior to August 3, 1988 that exempted their situation from the retroactive application of
the Family Code.

Fourthly, the petitioners failed to substantiate their contention that Dionisio, while holding the administration over the property, had delegated to his
brother, Atty. Parulan, the administration of the property, considering that they did not present in court the SPA granting to Atty. Parulan the authority for
the administration.

Nonetheless, we stress that the power of administration does not include acts of disposition or encumbrance, which are acts of strict ownership. As
such, an authority to dispose cannot proceed from an authority to administer, and vice versa, for the two powers may only be exercised by an agent by
following the provisions on agency of the Civil Code (from Article 1876 to Article 1878). Specifically, the apparent authority of Atty. Parulan, being a
special agency, was limited to the sale of the property in question, and did not include or extend to the power to administer the property.
Lastly, the petitioners insistence that Atty. Parulans making of a counter-offer during the March 25, 1991 meeting ratified the sale merits no
consideration. Under Article 124 of the Family Code, the transaction executed sans the written consent of Dionisio or the proper court order was void;
hence, ratification did not occur, for a void contract could not be ratified.[32]

On the other hand, we agree with Dionisio that the void sale was a continuing offer from the petitioners and Ma. Elena that Dionisio had the option of
accepting or rejecting before the offer was withdrawn by either or both Ma. Elena and the petitioners. The last sentence of the second paragraph of
Article 124 of the Family Code makes this clear, stating that in the absence of the other spouses consent, the transaction should 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 upon authorization by the court before the offer is withdrawn by either or both offerors.

2.Due diligence required in verifying not only vendors title,but also agents authority to sell the property

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 the full and fair price for it at the time of such purchase or before he has notice of the claim or interest of some other persons in the property. He
buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. He cannot close
his eyes to facts that should put a reasonable man on his guard and still claim he acted in good faith.[33] The status of a buyer in good faith is never
presumed but must be proven by the person invoking it.[34]

Here, the petitioners disagree with the CA for not applying the ordinary prudent mans standard in determining their status as buyers in good faith. They
insist that they exercised due diligence by verifying the status of the TCTs, as well as by inquiring about the details surrounding the mortgage extended
by the Los Baos Rural Bank. They lament the holding of the CA that they should have been put on their guard when they learned that the Los Baos
Rural Bank had first required a court order before granting the loan to the respondents secured by their mortgage of the property.

The petitioners miss the whole point.

Article 124 of the Family Code categorically requires the consent of both spouses before the conjugal property may be disposed of by sale, mortgage, or
other modes of disposition. In Bautista v. Silva,[35] the Court erected a standard to determine the good faith of the buyers dealing with

a seller who had title to and possession of the land but whose capacity to sell was restricted, in that the consent of the other spouse was required before
the conveyance, declaring that in order to prove good faith in such a situation, the buyers must show that they inquired not only into the title of the seller
but also into the sellers capacity to sell.[36] Thus, the buyers of conjugal property must observe two kinds of requisite diligence, namely: (a) the diligence
in verifying the validity of the title covering the property; and (b) the diligence in inquiring into the authority of the transacting spouse to sell conjugal
property in behalf of the other spouse.

It is true that a buyer of registered land needs only to show that he has relied on the face of the certificate of title to the property, for he is not required to
explore beyond what the certificate indicates on its face.[37] In this respect, the petitioners sufficiently proved that they had checked on the authenticity
of TCT No. 63376 and TCT No. 63377 with the Office of the Register of Deeds in Pasay City as the custodian of the land records; and that they had also
gone to the Los Baos Rural Bank to inquire about the mortgage annotated on TCT No. 63377. Thereby, the petitioners observed the requisite diligence
in examining the validity of the TCTs concerned.

Yet, it ought to be plain enough to the petitioners that the issue was whether or not they had diligently inquired into the authority of Ma. Elena to convey
the property, not whether or not the TCT had been valid and authentic, as to which there was no doubt. Thus, we cannot side with them.

Firstly, the petitioners knew fully well that the law demanded the written consent of Dionisio to the sale, but yet they did not present evidence to show
that they had made inquiries into the circumstances behind the execution of the SPA purportedly executed by Dionisio in favor of Ma. Elena. Had they
made the appropriate inquiries, and not simply accepted the SPA for what it represented on its face, they would have uncovered soon enough that the
respondents had been estranged from each other and were under de facto separation, and that they probably held conflicting interests that would
negate the existence of an agency between them. To lift this doubt, they must, of necessity, further inquire into the SPA of Ma. Elena. The omission to
inquire indicated their not being buyers in good faith, for, as fittingly observed in Domingo v. Reed:[38]

What was required of them by the appellate court, which we affirm, was merely to investigate as any prudent vendee should the authority of Lolita to sell
the property and to bind the partnership. They had knowledge of facts that should have led them to inquire and to investigate, in order to acquaint
themselves with possible defects in her title. The law requires them to act with the diligence of a prudent person; in this case, their only prudent course of
action was to investigate whether respondent had indeed given his consent to the sale and authorized his wife to sell the property.[39]

Indeed, an unquestioning reliance by the petitioners on Ma. Elenas SPA without first taking precautions to verify its authenticity was not a prudent buyers
move.[40] They should have done everything within their means and power to ascertain whether the SPA had been genuine and authentic. If they did
not investigate on the relations of the respondents vis--vis each other, they could have done other things towards the same end, like attempting to locate
the notary public who had notarized the SPA, or checked with the RTC in Manila to confirm the authority of Notary Public Atty. Datingaling. It turned out
that Atty. Datingaling was not authorized to act as a Notary Public for Manila during the period 1990-1991, which was a fact that they could easily
discover with a modicum of zeal.

Secondly, the final payment of P700,000.00 even without the owners duplicate copy of the TCT No. 63376 being handed to them by Ma. Elena indicated
a revealing lack of precaution on the part of the petitioners. It is true that she promised to produce and deliver the owners copy within a week because
her relative having custody of it had gone to Hongkong, but their passivity in such an essential matter was puzzling light of their earlier alacrity in
immediately and diligently validating the TCTs to the extent of inquiring at the Los Baos Rural Bank about the annotated mortgage. Yet, they could have
rightly withheld the final payment of the balance. That they did not do so reflected their lack of due care in dealing with Ma. Elena.

Lastly, another reason rendered the petitioners good faith incredible. They did not take immediate action against Ma. Elena upon discovering that the
owners original copy of TCT No. 63376 was in the possession of Atty. Parulan, contrary to Elenas representation. Human experience would have
impelled them to exert every effort to proceed against Ma. Elena, including demanding the return of the substantial amounts paid to her. But they
seemed not to mind her inability to produce the TCT, and, instead, they contented themselves with meeting with Atty. Parulan to negotiate for the
possible turnover of the TCT to them.

3.Veloso v. Court of Appeals cannot help petitioners

The petitioners contend that the forgery of the SPA notwithstanding, the CA could still have decided in their favor conformably with Veloso v. Court of
Appeals,[41] a case where the petitioner husband claimed that his signature and that of the notary public who had notarized the SPA the petitioner
supposedly executed to authorize his wife to sell the property had been forged. In denying relief, the Court upheld the right of the vendee as an innocent
purchaser for value.

Veloso is inapplicable, however, because the contested property therein was exclusively owned by the petitioner and did not belong to the conjugal
regime. Veloso being upon conjugal property, Article 124 of the Family Code did not apply.

In contrast, the property involved herein pertained to the conjugal regime, and, consequently, the lack of the written consent of the husband rendered the
sale void pursuant to Article 124 of the Family Code. Moreover, even assuming that the property involved in Veloso was conjugal, its sale was made on
November 2, 1987, or prior to the effectivity of the Family Code; hence, the sale was still properly covered by Article 173 of the Civil Code, which
provides that a sale effected without the consent of one of the spouses is only voidable, not void. However, the sale herein was made already during the
effectivity of the Family Code, rendering the application of Article 124 of the Family Code clear and indubitable.

The fault of the petitioner in Veloso was that he did not adduce sufficient evidence to prove that his signature and that of the notary public on the SPA
had been forged. The Court pointed out that his mere allegation that the signatures had been forged could not be sustained without clear and convincing
proof to substantiate the allegation. Herein, however, both the RTC and the CA found from the testimonies and evidence presented by Dionisio that his
signature had been definitely forged, as borne out by the entries in his passport showing that he was out of the country at the time of the execution of the
questioned SPA; and that the alleged notary public, Atty. Datingaling, had no authority to act as a Notary Public for Manila during the period of 1990-
1991.

WHEREFORE, we deny the petition for review on certiorari, and affirm the decision dated July 2, 2004 rendered by the Court of Appeals in C.A.-G.R.
CV No. 69044 entitled Dionisio Z. Parulan, Jr. vs. Ma. Elena Parulan and Sps. Rex and Concepcion Aggabao and Sps. Rex and Concepcion Aggabao
vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan.
EN BANC
G.R. No. 178902

MANUEL O. FUENTES and LETICIA L. FUENTES,Petitioners,


- versus
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR MALCAMPO, Respondents.

ABAD, J.:

This case is about a husbands sale of conjugal real property, employing a challenged affidavit 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
office 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 lots 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 Tarcianos 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 affidavit of consent.[3] As soon as Tarciano met the other conditions, Atty. Plagata
notarized Rosarios affidavit 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.

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 Tarcianos sister, Pilar R. Malcampo, represented by her son, John Paul M. Trinidad (collectively, the Rocas), filed 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 Tarcianos wife, Rosario, did not give her consent to it. Her signature on the
affidavit 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 testified that he personally saw Rosario sign the affidavit 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 Rosarios standard signature on the affidavit with those
on various documents she signed, the Rocas expert testified 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 filed 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.[10] 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. Plagatas testimony remained technically unrebutted.[11]

Finally, the RTC noted that Atty. Plagatas defective notarization of the affidavit 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 Rosarios consent. She personally signed the affidavit in the presence of
Atty. Plagata.[12]

On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient evidence of forgery and did not give credence to Atty.
Plagatas 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 significant 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.

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 attorneys fees to the Fuentes spouses.[13]

Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for review.[14]

The Issues Presented

The case presents the following issues:

1. Whether or not Rosarios signature on the document of consent to her husband Tarcianos 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.

The Courts Rulings


First. The key issue in this case is whether or not Rosarios signature on the document of consent had been forged. For, if the signature were genuine,
the fact that she gave her consent to her husbands sale of the conjugal land would render the other issues merely academic.

The CA found that Rosarios signature had been forged. The CA observed a marked difference between her signature on the affidavit of consent[15] and
her specimen signatures.[16] The CA gave no weight to Atty. Plagatas 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 affidavit in Zamboanga City on January 11, 1989.

The Court agrees with the CAs observation that Rosarios signature strokes on the affidavit appears heavy, deliberate, and forced. Her specimen
signatures, on the other hand, are consistently of a lighter stroke and more fluid. The way the letters R and s were written is also remarkably different.
The variance is obvious even to the untrained eye.

Significantly, Rosarios specimen signatures were made at about the time that she signed the supposed affidavit 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 affidavit 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 falsified the jurat of the affidavit of consent. That jurat declared that Rosario swore to the document and signed it
in Zamboanga City on January 11, 1989 when, as Atty. Plagata testified, 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 falsified jurat, taken together with the marks of forgery in the signature, dooms such document as proof of Rosarios consent to the sale of the land.
That the Fuentes spouses honestly relied on the notarized affidavit as proof of Rosarios 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[17] prohibited him from selling commonly owned real property without his
wifes consent. Still, if he sold the same without his wifes 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.[18] Further, the Family Code provisions were also made to apply to already
existing conjugal partnerships without prejudice to vested rights.[19] Thus:

Art. 105. x x x 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 husbands sale of the real property. It simply provides that without the other spouses written consent or a court order allowing the sale, the
same would be void. Article 124 thus provides:

Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the
authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be
void. x x x

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,[20] as in the case of a sale of conjugal property without the other spouses 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.[21]

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.[22] 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 filed an action against the Fuentes spouses in 1997 for annulment of sale and reconveyance of the real property that Tarciano sold
without their mothers (his wifes) 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 nullified 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 Rosarios 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 file 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 not obtained, that the law gave the right to bring an action to declare
void her husbands 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.[23] 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 Tarcianos 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 Rosarios signature on the affidavit 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 difficulty. Indeed,
they willingly made a 30 percent down payment on the selling price months earlier on the assurance that it was forthcoming.

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 final
judgment against them.[24] 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,[25] 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.

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 Certificate 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 Certificate 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.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 163744 February 29, 2008


METROPOLITAN BANK AND TRUST CO., petitioner,
vs.
NICHOLSON PASCUAL a.k.a. NELSON PASCUAL, respondent.

VELASCO, JR., J.:

Respondent Nicholson Pascual and Florencia Nevalga were married on January 19, 1985. During the union, Florencia bought from spouses Clarito and
Belen Sering a 250-square meter lot with a three-door apartment standing thereon located in Makati City. Subsequently, Transfer Certificate of Title
(TCT) No. S-101473/T-510 covering the purchased lot was canceled and, in lieu thereof, TCT No. 1562831 of the Registry of Deeds of Makati City was
issued in the name of Florencia, "married to Nelson Pascual" a.k.a. Nicholson Pascual.

In 1994, Florencia filed a suit for the declaration of nullity of marriage under Article 36 of the Family Code, docketed as Civil Case No. Q-95-23533. After
trial, the Regional Trial Court (RTC), Branch 94 in Quezon City rendered, on July 31, 1995, a Decision,2 declaring the marriage of Nicholson and
Florencia null and void on the ground of psychological incapacity on the part of Nicholson. In the same decision, the RTC, inter alia, ordered the
dissolution and liquidation of the ex-spouses’ conjugal partnership of gains. Subsequent events saw the couple going their separate ways without
liquidating their conjugal partnership.

On April 30, 1997, Florencia, together with spouses Norberto and Elvira Oliveros, obtained a PhP 58 million loan from petitioner Metropolitan Bank and
Trust Co. (Metrobank). To secure the obligation, Florencia and the spouses Oliveros executed several real estate mortgages (REMs) on their properties,
including one involving the lot covered by TCT No. 156283. Among the documents Florencia submitted to procure the loan were a copy of TCT No.
156283, a photocopy of the marriage-nullifying RTC decision, and a document denominated as "Waiver" that Nicholson purportedly executed on April 9,
1995. The waiver, made in favor of Florencia, covered the conjugal properties of the ex-spouses listed therein, but did not incidentally include the lot in
question.

Due to the failure of Florencia and the spouses Oliveros to pay their loan obligation when it fell due, Metrobank, on November 29, 1999, initiated
foreclosure proceedings under Act No. 3135, as amended, before the Office of the Notary Public of Makati City. Subsequently, Metrobank caused the
publication of the notice of sale on three issues of Remate.3 At the auction sale on January 21, 2000, Metrobank emerged as the highest bidder.

Getting wind of the foreclosure proceedings, Nicholson filed on June 28, 2000, before the RTC in Makati City, a Complaint to declare the nullity of the
mortgage of the disputed property, docketed as Civil Case No. 00-789 and eventually raffled to Branch 65 of the court. In it, Nicholson alleged that the
property, which is still conjugal property, was mortgaged without his consent.

Metrobank, in its Answer with Counterclaim and Cross-Claim,4 alleged that the disputed lot, being registered in Florencia’s name, was paraphernal.
Metrobank also asserted having approved the mortgage in good faith.

Florencia did not file an answer within the reglementary period and, hence, was subsequently declared in default.

The RTC Declared the REM Invalid

After trial on the merits, the RTC rendered, on September 24, 2001, judgment finding for Nicholson. The fallo reads:

PREMISES CONSIDERED, the Court renders judgment declaring the real estate mortgage on the property covered by [TCT] No. 156283 of the Registry
of Deeds for the City of Makati as well as all proceedings thereon null and void.

The Court further orders defendants [Metrobank and Florencia] jointly and severally to pay plaintiff [Nicholson]:

1. PhP100,000.00 by way of moral damages;

2. PhP75,000.00 by way of attorney’s fees; and

3. The costs.

SO ORDERED.5

Even as it declared the invalidity of the mortgage, the trial court found the said lot to be conjugal, the same having been acquired during the existence of
the marriage of Nicholson and Florencia. In so ruling, the RTC invoked Art. 116 of the Family Code, providing that "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." To the trial court, Metrobank had not overcome the presumptive conjugal nature of the lot. And being conjugal, the RTC
concluded that the disputed property may not be validly encumbered by Florencia without Nicholson’s consent.

The RTC also found the deed of waiver Florencia submitted to Metrobank to be fatally defective. For let alone the fact that Nicholson denied executing
the same and that the signature of the notarizing officer was a forgery, the waiver document was allegedly executed on April 9, 1995 or a little over three
months before the issuance of the RTC decision declaring the nullity of marriage between Nicholson and Florencia.

The trial court also declared Metrobank as a mortgagee in bad faith on account of negligence, stating the observation that certain data appeared in the
supporting contract documents, which, if properly scrutinized, would have put the bank on guard against approving the mortgage. Among the data
referred to was the date of execution of the deed of waiver.

The RTC dismissed Metrobank’s counterclaim and cross-claim against the ex-spouses.

Metrobank’s motion for reconsideration was denied. Undeterred, Metrobank appealed to the Court of Appeals (CA), the appeal docketed as CA-G.R. CV
No. 74874.

The CA Affirmed with Modification the RTC’s Decision

On January 28, 2004, the CA rendered a Decision affirmatory of that of the RTC, except for the award therein of moral damages and attorney’s fees
which the CA ordered deleted. The dispositive portion of the CA’s Decision reads:

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED WITH MODIFICATION with respect to the award of moral damages
and attorney’s fees which is hereby DELETED.

SO ORDERED.6

Like the RTC earlier held, the CA ruled that Metrobank failed to overthrow the presumption established in Art. 116 of the Family Code. And also decreed
as going against Metrobank was Florencia’s failure to comply with the prescriptions of the succeeding Art. 124 of the Code on the disposition of conjugal
partnership property. Art. 124 states:
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 x x x.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may
assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or 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.

As to the deletion of the award of moral damages and attorney’s fees, the CA, in gist, held that Metrobank did not enter into the mortgage contract out of
ill-will or for some fraudulent purpose, moral obliquity, or like dishonest considerations as to justify damages.

Metrobank moved but was denied reconsideration by the CA.

Thus, Metrobank filed this Petition for Review on Certiorari under Rule 45, raising the following issues for consideration:

a. Whether or not the [CA] erred in declaring subject property as conjugal by applying Article 116 of the Family Code.

b. Whether or not the [CA] erred in not holding that the declaration of nullity of marriage between the respondent Nicholson Pascual and Florencia
Nevalga ipso facto dissolved the regime of community of property of the spouses.

c. Whether or not the [CA] erred in ruling that the petitioner is an innocent purchaser for value.7

Our Ruling

A modification of the CA’s Decision is in order.

The Disputed Property is Conjugal

It is Metrobank’s threshold posture that Art. 160 of the Civil Code providing that "[a]ll property of the marriage is presumed to belong to the conjugal
partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife," applies. To Metrobank, Art. 116 of the Family Code could not
be of governing application inasmuch as Nicholson and Florencia contracted marriage before the effectivity of the Family Code on August 3, 1988. Citing
Manongsong v. Estimo,8 Metrobank asserts that the presumption of conjugal ownership under Art. 160 of the Civil Code applies when there is proof that
the property was acquired during the marriage. Metrobank adds, however, that for the presumption of conjugal ownership to operate, evidence must be
adduced to prove that not only was the property acquired during the marriage but that conjugal funds were used for the acquisition, a burden Nicholson
allegedly failed to discharge.

To bolster its thesis on the paraphernal nature of the disputed property, Metrobank cites Francisco v. Court of Appeals9 and Jocson v. Court of
Appeals,10 among other cases, where this Court held that a property registered in the name of a certain person with a description of being married is no
proof that the property was acquired during the spouses’ marriage.

On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance Corporation11 and Wong v. IAC,12 contends that Metrobank failed to
overcome the legal presumption that the disputed property is conjugal. He asserts that Metrobank’s arguments on the matter of presumption are
misleading as only one postulate needs to be shown for the presumption in favor of conjugal ownership to arise, that is, the fact of acquisition during
marriage. Nicholson dismisses, as inapplicable, Francisco and Jocson, noting that they are relevant only when there is no indication as to the exact date
of acquisition of the property alleged to be conjugal.

As a final point, Nicholson invites attention to the fact that Metrobank had virtually recognized the conjugal nature of the property in at least three
instances. The first was when the bank lumped him with Florencia in Civil Case No. 00-789 as co-mortgagors and when they were referred to as
"spouses" in the petition for extrajudicial foreclosure of mortgage. Then came the published notice of foreclosure sale where Nicholson was again
designated as co-mortgagor. And third, in its demand-letter13 to vacate the disputed lot, Metrobank addressed Nicholson and Florencia as "spouses,"
albeit the finality of the decree of nullity of marriage between them had long set in.

We find for Nicholson.

First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not Art. 116 of the Family Code, is the applicable legal provision since the
property was acquired prior to the enactment of the Family Code, it errs in its theory that, before conjugal ownership could be legally presumed, there
must be a showing that the property was acquired during marriage using conjugal funds. Contrary to Metrobank’s submission, the Court did not, in
Manongsong,14 add the matter of the use of conjugal funds as an essential requirement for the presumption of conjugal ownership to arise. Nicholson is
correct in pointing out that only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. Indeed, if proof
on the use of conjugal is still required as a necessary condition before the presumption can arise, then the legal presumption set forth in the law would
veritably be a superfluity. As we stressed in Castro v. Miat:

Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the marriage is presumed to be conjugal partnership, unless it
be prove[n] that it pertains exclusively to the husband or to the wife." This article does not require proof that the property was acquired with funds of the
partnership. The presumption applies even when the manner in which the property was acquired does not appear.15 (Emphasis supplied.)

Second, Francisco and Jocson do not reinforce Metrobank’s theory. Metrobank would thrust on the Court, invoking the two cases, the argument that the
registration of the property in the name of "Florencia Nevalga, married to Nelson Pascual" operates to describe only the marital status of the title holder,
but not as proof that the property was acquired during the existence of the marriage.

Metrobank is wrong. As Nicholson aptly points out, if proof obtains on the acquisition of the property during the existence of the marriage, then the
presumption of conjugal ownership applies. The correct lesson of Francisco and Jocson is that proof of acquisition during the marital coverture is a
condition sine qua non for the operation of the presumption in favor of conjugal ownership. When there is no showing as to when the property was
acquired by the spouse, the fact that a title is in the name of the spouse is an indication that the property belongs exclusively to said spouse.16

The Court, to be sure, has taken stock of Nicholson’s arguments regarding Metrobank having implicitly acknowledged, thus being in virtual estoppel to
question, the conjugal ownership of the disputed lot, the bank having named the former in the foreclosure proceedings below as either the spouse of
Florencia or her co-mortgagor. It is felt, however, that there is no compelling reason to delve into the matter of estoppel, the same having been raised
only for the first time in this petition. Besides, however Nicholson was designated below does not really change, one way or another, the classification of
the lot in question.

Termination of Conjugal Property Regime does


not ipso facto End the Nature of Conjugal Ownership

Metrobank next maintains that, contrary to the CA’s holding, Art. 129 of the Family Code is inapplicable. Art. 129 in part reads:

Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply:

xxxx
(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.

Apropos the aforequoted provision, Metrobank asserts that the waiver executed by Nicholson, effected as it were before the dissolution of the conjugal
property regime, vested on Florencia full ownership of all the properties acquired during the marriage.

Nicholson counters that the mere declaration of nullity of marriage, without more, does not automatically result in a regime of complete separation when
it is shown that there was no liquidation of the conjugal assets.

We again find for Nicholson.

While the declared nullity of marriage of Nicholson and Florencia severed their marital bond and dissolved the conjugal partnership, the character of the
properties acquired before such declaration continues to subsist as conjugal properties until and after the liquidation and partition of the partnership. This
conclusion holds true whether we apply Art. 129 of the Family Code on liquidation of the conjugal partnership’s assets and liabilities which is generally
prospective in application, or Section 7, Chapter 4, Title IV, Book I (Arts. 179 to 185) of the Civil Code on the subject, Conjugal Partnership of Gains. For,
the relevant provisions of both Codes first require the liquidation of the conjugal properties before a regime of separation of property reigns.

In Dael v. Intermediate Appellate Court, we ruled that pending its liquidation following its dissolution, the conjugal partnership of gains is converted into
an implied ordinary co-ownership among the surviving spouse and the other heirs of the deceased.17

In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the property relationship between the former spouses, where:

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. (Emphasis supplied.)

In the case at bar, Florencia constituted the mortgage on the disputed lot on April 30, 1997, or a little less than two years after the dissolution of the
conjugal partnership on July 31, 1995, but before the liquidation of the partnership. Be that as it may, what governed the property relations of the former
spouses when the mortgage was given is the aforequoted Art. 493. Under it, Florencia has the right to mortgage or even sell her one-half (1/2) undivided
interest in the disputed property even without the consent of Nicholson. However, the rights of Metrobank, as mortgagee, are limited only to the 1/2
undivided portion that Florencia owned. Accordingly, the mortgage contract insofar as it covered the remaining 1/2 undivided portion of the lot is null and
void, Nicholson not having consented to the mortgage of his undivided half.

The conclusion would have, however, been different if Nicholson indeed duly waived his share in the conjugal partnership. But, as found by the courts a
quo, the April 9, 1995 deed of waiver allegedly executed by Nicholson three months prior to the dissolution of the marriage and the conjugal partnership
of gains on July 31, 1995 bore his forged signature, not to mention that of the notarizing officer. A spurious deed of waiver does not transfer any right at
all, albeit it may become the root of a valid title in the hands of an innocent buyer for value.

Upon the foregoing perspective, Metrobank’s right, as mortgagee and as the successful bidder at the auction of the lot, is confined only to the 1/2
undivided portion thereof heretofore pertaining in ownership to Florencia. The other undivided half belongs to Nicholson. As owner pro indiviso of a
portion of the lot in question, Metrobank may ask for the partition of the lot and its property rights "shall be limited to the portion which may be allotted to
[the bank] in the division upon the termination of the co-ownership."18 This disposition is in line with 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.19

In view of our resolution on the validity of the auction of the lot in favor of Metrobank, there is hardly a need to discuss at length whether or not
Metrobank was a mortgagee in good faith. Suffice it to state for the nonce that where the mortgagee is a banking institution, the general rule that a
purchaser or mortgagee of the land need not look beyond the four corners of the title is inapplicable.20 Unlike private individuals, it behooves banks to
exercise greater care and due diligence before entering into a mortgage contract. The ascertainment of the status or condition of the property offered as
security and the validity of the mortgagor’s title must be standard and indispensable part of the bank’s operation.21 A bank that failed to observe due
diligence cannot be accorded the status of a bona fide mortgagee,22 as here.

But as found by the CA, however, Metrobank’s failure to comply with the due diligence requirement was not the result of a dishonest purpose, some
moral obliquity or breach of a known duty for some interest or ill-will that partakes of fraud that would justify damages.

WHEREFORE, the petition is PARTLY GRANTED. The appealed Decision of the CA dated January 28, 2004, upholding with modification the Decision
of the RTC, Branch 65 in Makati City, in Civil Case No. 00-789, is AFFIRMED with the MODIFICATION that the REM over the lot covered by TCT No.
156283 of the Registry of Deeds of Makati City is hereby declared valid only insofar as the pro indiviso share of Florencia thereon is concerned.

As modified, the Decision of the RTC shall read:

PREMISES CONSIDERED, the real estate mortgage on the property covered by TCT No. 156283 of the Registry of Deeds of Makati City and all
proceedings thereon are NULL and VOID with respect to the undivided 1/2 portion of the disputed property owned by Nicholson, but VALID with respect
to the other undivided 1/2 portion belonging to Florencia.

The claims of Nicholson for moral damages and attorney’s fees are DENIED for lack of merit.

No pronouncement as to costs.
Republic of the Philippines
Supreme Court
Manila
SECOND DIVISION

BRIGIDO B. QUIAO,Petitioner,
- versus -

RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their mother RITA QUIAO,Respondents.
G.R. No 176556

DECISION
REYES, J.:

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 fight 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 defining the net profits 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.

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;

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.

[Petitioners] share, however, of the net profits 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]

Neither party filed 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 filed a motion for execution[7] which the trial court granted in its Order dated December 16, 2005, the
dispositive portion of which reads:

Wherefore, finding 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 sufficient 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 satisfied 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:
(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 Clarification, 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 profits 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.

The Sheriff is herein directed to proceed with the execution of the Decision.

IT IS SO ORDERED.[16]

Not satisfied with the trial court's Order, the petitioner filed 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 final and executory, it may still
consider the Motion for Clarification 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 filed 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 satisfied with the trial court's Order, the petitioner filed on February 27, 2007 this instant Petition for Review under Rule 45 of the Rules of Court,
raising the following:

Issues

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?

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?

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?

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 finality when the Motion for Clarification was filed.[24] Thus, we are constrained to
resolve first the issue of the finality 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 fifteen (15) days from notice of the judgment or final order appealed from. Where
a record on appeal is required, the appellant shall file 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 file a motion for new trial
or reconsideration shall be allowed.

In Neypes v. Court of Appeals,[25] we clarified 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 file 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]

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 receipt
of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution.[27] In other words, a party
litigant may file his notice of appeal within a fresh 15-day period from his receipt of the trial court's decision or final 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 filed 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, filed his Motion for Clarification on the definition of the net profits earned. From the foregoing,
the petitioner had clearly slept on his right to question the RTCs 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 filed his motion for clarification, the trial courts decision has
become final and executory. A judgment becomes final 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 filing of the motion for clarification. He said that a void judgment is no judgment at all. It
never attains finality 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 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]

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 filed 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 filing 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 filing 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 filed 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.

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 modification 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 filed 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 finding 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 profits earned by the conjugal partnership;[41]
(e) The award to the innocent spouse of the minor children's custody;[42]
(f) The disqualification of the offending spouse from inheriting from the innocent spouse by intestate succession;[43]
(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 finding 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]
(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]
(p) The holding that the petitioner's share of the net profits 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.

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 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 define and explained vested
right in the following manner:

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 fixed 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 titlelegal or equitableto the present or future enjoyment of property.[62] (Citations omitted)

In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List Officer Samson S. Alcantara, et al. v. The Hon. Executive Secretary
Eduardo R. Ermita,[63] we also explained:

The concept of vested right is a consequence of the constitutional guaranty of due process that expresses a present fixed 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.

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 profits, 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:

Art. 176. In case of legal separation, the guilty spouse shall forfeit his or her share of the conjugal partnership profits, 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 profits 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 finally 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 file 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 final and executory. The doctrine of immutability and unalterability of a final judgment prevents
us from disturbing the Decision dated October 10, 2005 because final and executory decisions can no longer be reviewed nor reversed by this Court.[71]

From the above discussions, Article 129 of the Family Code clearly applies to the present 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 finality 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 profits 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 defines net profits 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 profits 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
definition of net profits. 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 definition of net profits, we
cannot but refer to Article 102(4) of the Family Code, since it expressly provides that for purposes of computing the net profits subject to forfeiture under
Article 43, No. (2) and Article 63, No. (2), Article 102(4) applies. In this provision, net 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.[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 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 insufficient, 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 profits subject to forfeiture, 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.[74]

Applying Article 102 of the Family Code, the net profits requires that we first find 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 finding 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 finally 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 profits. 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 defining net profit. As earlier explained, the definition of net profits 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 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 benefits 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]

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 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 had 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 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 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.[78] 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 benefit 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 sufficient 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.[86] However, since the trial court found the petitioner the guilty party, his share from the net profits 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 of Butuan City is AFFIRMED. Acting on the Motion for
Clarification 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.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-45870 May 11, 1984

MARGARET MAXEY assisted by Santiago Magbanua; FLORENCE MAXEY assisted by Ofrecinio Santos; and LUCILLE MAXEY, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and THE SPOUSES BEATO C. MACAYRA and ALACOPUE MONDAY, respondents.

GUTIERREZ, JR., J.:

This petition for review involves the rights of a woman over properties acquired in 1912 principally through the efforts of the man she was living with and
at a time when the two were not yet legally married.

The facts of the case are briefly stated in the decision of the Court of Appeals as follows:

The record reveals that Melbourne Maxey and Regina Morales (both deceased) lived together as husband and wife in Banganga, Davao; that out of said
union were born six (6) children, among them are the herein plaintiffs, namely: John or Carlos, Lucille, Margaret, Florence, Fred and George, all
surnamed Maxey; that during the period of their (Melbourne and Regina) cohabitation, or in 1911 and 1912, respectively, the late Melbourne Maxey
acquired the parcels of land described under Par. 4 of the com;plaint as evidenced by the documents of sale marked as Exhibits 4-a and 5-1 (same as
Exhibits Facts), Melbourne Maxey, through his attorney-in-fact Julia Pamatluan Maxey, sold in favor of the defendants-spouses in 1953 the parcels of
land under litigation which fact of sale was not controverted by the perties (Par. 1, /stipulation of Facts); that since thereof, the defendants-spouses have
taken immediate possession thereof continuously up to the present.

Plaintiffs instituted the present case on January 26, 1962, before the Court of First Instance of Davao, praying for the annulment of the documents of
sale covering the subject parcels of land and to recover possession thereof with damages from the herein defendants-spouses, alleging, among others,
that the aforesaid realties were common properties of their parents, having been acquired during their lifetime and through their joint effort and capital;
and that the sales of the of the said lands in favor of the defendants-spouses in 1953, after the death of their mother, Regina Morales, was executed by
their father, Melbourne Maxey, without their knowledge and consent; and that they came to know of the above mentioned sales only in 1961.

On the other hand, defendants-spouses deny the material allegations of the complaint and assert by way of affirmative defenses that they are the true
and lawful owners and possessors of the properties 'm question having purchased the same in good faith and for value from Melbourne Maxey during
his lifetime in 1953, based upon the reasonable belief that the latter is the me and exclusive owner of the said parcels of land and that since then, they
have been in possession thereof openly, exclusively and continuously in concept of owners. Defendants - spouses further counter for damages and
attorney's fees and in the alternative, for the value of the improvements they have introduced in the premises.

Melbourne Maxey and Regina Morales started living together in 1903. Their children claim that their parents were united in 1903 in a marriage
performed "in the military fashion". Both the trial court and the appellate court rejected this claim of a "military fashion" marriage.

The couple had several children. John Carlos was born in 1903, followed by Lucille, Margaret, Florence, Fred, and George. Except for the youngest son,
all the children were born before the disputed properties were acquired. The father, Melbourne Maxey, was a member of the 1899 American occupation
forces who afterwards held high positions in the provincial government and in the Philippine public schools system.

As earlier mentioned in the cited statement of facts, the disputed properties were acquired in 1911 and 1912 before the 1919 church marriage. Regina
Morales Maxey died in 1919 sometime after the church wedding. The husband remarried and in 1953, his second wife Julia Pamatluan Maxey, using a
power of attorney, sold the properties to the respondent spouses, Mr. and Mrs. Beato C. Macayra.

The trial court applied Article 144 of the Civil Code which provides:

When a man and a woman live together as husband and wife, but they are not married, or their marriage is void from the beginning, the property
acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership.

The court stated that "when a man and a woman lived together as husband and wife, justice demands that the woman should be entitled to the share of
the property. Certainly she cannot be considered mere adornment or only for man's comfort and passion." The dispositive portion of the decision reads:

Evidence, testimonial and document considered the Court hereby rendered judgment in favor of the plaintiffs and against defendant declaring that:

1. Declaring the abovementioned sales as null and void;

2. Ordering defendant-spouses to return the said lands, and to pay for the value of the use of the same at the rate of P1,000.00 a year from 1953
until delivered, together with interests corresponding thereto at the legal rate;

3. Ordering defendant-spouses to pay to plaintiff actual damages in the sum of P500.00 and attorney fees in the sum of P3,000.00.

Defendants counterclaim is hereby ordered dismissed.

The Court of Appeals, however, found the parcels of, land to be exclusive properties of the late Melbourne Maxey. It set aside the decision of the trial
court, decease valid the deeds of sale, and ruled that the appellants are the absolute owners of the properties in question.

The appellate decision sustained the following arguments of the respondent spouses:

Plaintiffs' evidence is completely devoid of any showing that these properties in question were acquired through the joint efforts of Melbourne Maxey and
Regina Morales. Indeed, if at all, plaintiffs' evidence tend to establish the fact that Melbourne Maxey by virtue of his positions as Deputy Governor of
Zamboanga (p. 36, t.s.n. de la Victoria) School Supervisor in the East Coast of Davao (p. 36, t.s.n., Id.) was more than in a position to purchase these
properties by his own efforts, his own earnings and without the help of Regina Morales. On the other hand, we have the declaration of Juana A. Morales,
a widow of 68 years of age when she testified, the sister-in-law of Regina Morales — Juana A. Morales confirmed the fact that Melbourne Maxey held
the positions of teacher, provincial treasurer, deputy governor, district supervisor and lastly superintendent of schools, respectively (p. 203, t.s.n., de la
Victoria). But more important is her declaration that her sister-in-law Regina Morales had no property of her own whence she could have derived any
income nor was Regina gainfully employed. (pp. 203-204, t.s.n., Id.) It must be remembered that the showing must be CLEAR that Regina Morales
contributed to the acquisition of these properties. Here the evidence is not only NOT CLEAR, indeed, there is no evidence at all that Regina Morales
contributed to the acquisition of the properties in question. In the case of Aznar, et al vs. Garcia, et al, supra, the Supreme Court had before it the
common-law wife's own testimony — claiming that the properties in controversy were the product of their joint industry. Her assertions however, were
completely brushed aside because aside from her claim that she took a hand in the management and/or acquisition of the same, "there appears no
evidence to prove her alleged contribution or participation in the, acquisition of the properties involved therein." (Id. p. 1069). In the case at bar, besides
the absence of any evidence showing that Regina Morales contributed by her efforts to the acquisition of these properties in controversy, both plaintiffs
and defendants' evidence show that it was through Melbourne Maxey's efforts alone that these properties were acquired. Indeed, that Regina Morales
had no means at all to have contributed in any manner to all its acquisition.

The petitioners raise the following issues in this petition:


1. THE COURT OF APPEALS ERRED IN DECLARING THAT THE LATE SPOUSES MELBOURNE MAXEY AND REGINA MORALES WERE
MARRIED ONLY IN 1919, BECAUSE THE TRUTH IS THAT THEY MARRIED AS EARLY AS 1903.

2. THE COURT OF APPEALS, LIKEWISE, ERRED IN DECLARING THE PROPERTIES IN QUESTION AS THE EXCLUSIVE PROPERTIES
OF THE LATE MELBOURNE MAXEY, TO THE EXCLUSION OF HIS WIFE REGINA MORALES, BECAUSE THE MENTIONED PROPERTIES WERE
ACTUALLY ACQUIRED BY THE JOINT EFFORTS AND INDUSTRY OF BOTH OF THEM AND THEREFORE, THESE PROPERTIES ARE COMMON
PROPERTIES.

3. THE COURT OF APPEALS FINALLY ERRED IN UNREASONABLY GIVING THE TERM "JOINT EFFORTS" NOT ONLY A VERY, VERY
LIMITED MEANING BUT A CONCEPT WHICH IS ENTIRELY ABSURD AND UNREALISTIC BECAUSE IN CONSTRUING THE TERM, THE COURT
OF APPEALS HAS REFUSED TO ACCEPT AN INTERPRETATION WHICH IS MOST CONSISTENT WITH COMMON PRACTICE AND CUSTOMS AS
WELL AS IN ACCORD WITH THE BEST TRADITION OF THE FILIPINO WAY OF LIFE.

The Court of First Instance and the Court of Appeals correctly rejected the argument that Act No. 3613, the Revised Marriage Law, recognized "military
fashion" marriages as legal. Maxey and Morales were legally married at a church wedding solemnized on February 16, 1919. Since Act No. 3613 was
approved on December 4, 1929 and took effect six months thereafter, it could not have applied to a relationship commenced in 1903 and legitimized in
1919 through a marriage performed according to law. The marriage law in 1903 was General Order No. 70. There is no provision in General Order No.
68 as amended nor in Act No. 3613 which would recognize as an exception to the general rule on valid marriages, a so called "Military fashion"
ceremony or arrangement.

The Court of First Instance and the Court of Appeals both ruled that Melbourne Maxey and Regina Morales were married only in 1919. This is a finding
of fact which we do not disturb at this stage of the case. There is no showing that this factual finding is totally devoid of or unsupported by evidentiary
basis or that it is inconsistent with the evidence of record.

The other issue raised in this Petition questions the Court of Appeals' finding that the parcels of land in question were exclusive properties of the late
Melbourne Maxey.

The petitioners argue that even assuming that the marriage of Melbourne Maxey and Regina Morales took place only in February 17, 1919, still the
properties legally and rightfully belonged in equal share to the two because the acquisition of the said properties was through their joint efforts and
industry. The second and third errors mentioned by the petitioners are grounded on the alleged wrong interpretation given by the Court of Appeals to the
phrase "joint efforts". The petitioners suggest that their mother's efforts in performing her role as mother to them and as wife to their father were more
than sufficient contribution to constitute the parcels of land in question as common properties acquired through the joint efforts to their parents.

The Court of Appeals, however, was of the opinion that Article 144 of the Civil Code is not applicable to the properties in question citing the case of
Aznar et al. v. Garcia (102 Phil. 1055) on non-retroactivity of codal provisions where vested rights may be prejudiced or impaired. And, assuming that
Article 144 of the Civil Code is applicable, the Court of Appeals held that the disputed properties were exclusively those of the petitioner's father because
these were not acquired through the joint efforts of their parents. This conclusion stems from the interpretation given by the Court of Appeals to the
phrase "joint efforts" to mean "monetary contribution". According to the Court

... This view with which this ponente personally wholeheartedly agrees for some time now has been advocated by sympathizers of equal rights for
women, notably in the Commission on the Status of Women of the United Nations. In our very own country there is strong advocacy for the passage of a
presidential decree providing that "the labors of a spouse in managing the affairs of the household shall be credited with compensation." Unfortunately,
until the happy day when such a proposal shall have materialized into law, Courts are bound by existing statutes and jurisprudence, which rigidly
interpret the phrase "joint efforts" as monetary contributions of the man and woman living together without benefit of marriage, and to date, the drudgery
of a woman's lifetime dedication to the management of the household goes unremunerated, and has no monetary value. Thus, in the case of Aznar vs.
Garcia (supra) the Supreme Court held that the man and the woman have an equal interest in the properties acquired during the union and each would
be entitled to participate therein if said properties were the product of their joint effort. In the same case it was stated that aside` from the observation of
the trial court that the appellee was an illiterate woman, there appears no evidence to prove appellee's contribution (in terms of pesos and centavos) or
participation in the acquisition of the properties involved; therefore, following the aforecited ruling of the Court, appellee's claim for one-half (1/2) of the
properties cannot be granted.

In so concluding, the respondent Court of Appeals accepted the private respondents' argument that it was unlikely for the petitioners' mother to have
materially contributed in the acquisition of the questioned properties since she had no property of her own nor was she gainfully engaged in any
business or profession from which she could derive income unlike their father who held the positions of teacher deputy governor, district supervisor, and
superintendent of schools.

We are constrained to adopt a contrary view. Considerations of justice dictate the retroactive application of Article 144 of the Civil Code to the case at
bar. Commenting on Article 2252 of the Civil Code which provides that changes made and new provisions and rules laid down by the Code which may
prejudice or impair vested or acquired rights in accordance with the old legislation shall have no retroactive effect, the Code Commission stated:

Laws shall have no retroactive effect, unless the contrary is provided. The question of how far the new Civil Code should be made applicable to past acts
and events is attended with the utmost difficulty. It is easy enough to understand the abstract principle that laws have no retroactive effect because
vested or acquired rights should be respected. But what are vested or acquired rights? The Commission did not venture to formulate a definition of a
vested or acquired right seeing that the problem is extremely committed.

What constitutes a vested or acquired right well be determined by the courts as each particular issue is submitted to them, by applying the transitional
provisions set forth, and in case of doubt, by observing Art. 9 governing the silence or obscurity of the law. In this manner, the Commission is confident
that the judiciary with its and high sense of justice will be able to decide in what cases the old Civil Code would apply and in what cases the new one
should be binding This course has been preferred by the Commission, which did not presume to be able to foresee and adequately provide for each and
every question that may arise. (Report of the Code Commission, pp. 165-166).

Similarly, with respect to Article 2253 which provides inter alia that if a right should be declared for the first tune in the Code, it shall be effective at once,
even though the act or event which gives rise thereto may have been done or may have occurred under the prior legislation, provided said new right
does not prejudice or impair any vested or acquired right, of the same origin, the Code Commission commented:

... But the second sentence gives a retroactive effect to newly created rights provided they do not prejudice or impair any vested or acquired right. The
retroactive character of the new right is the result of the exercise of the sovereign power of legislation, when the lawmaking body is persuaded that the
new right is called for by considerations of justice and public policy. But such new right most not encroach upon a vested right. (Report of the Code
Commission, p. 167).

The requirement of non-impairment of vested rights is clear. It is the opinion of the Court of Appeals that vested rights were prejudiced. We do not think
so.

Prior to the effectivity of the present Civil Code on August 30, 1950, the formation of an informal civil partnership between a man and wife not legally
married and their corresponding right to an equal share in properties acquired through their joint efforts and industry during cohabitation was recognized
through decisions of this Court. (Aznar et al. vs. Garcia, 102 Phil. 1055; Flores vs. Rehabilitation Finance Corporation, 94 Phil. 451; Marata vs. Dionio, L-
24449, December 31, 1925; Lesaca v. Lesaca, 91 Phil. 135.)

With the enactment of the new Civil Code, Article 144 codified the law established through judicial precedents but with the modification that the property
governed by the rules on co-ownership may be acquired by either or both of them through their work or industry. Even if it is only the man who works,
the property acquired during the man and wife relationship belongs through a fifty-fifty sharing to the two of them.
This new article in the Civil Code recognizes that it would be unjust and abnormal if a woman who is a wife in all aspects of the relationship except for
the requirement of a valid marriage must abandon her home and children, neglect her traditional household duties, and go out to earn a living or engage
in business before the rules on co-ownership would apply. This article is particularly relevant in this case where the "common-law" relationship was
legitimated through a valid marriage 34 years before the properties were sold.

The provisions of the Civil Code are premised on the traditional and existing, the normal and customary gender roles of Filipino men and women. No
matter how large the income of a working wife compared to that of her husband, the major, if not the full responsibility of running the household remains
with the woman. She is the administrator of the household. The fact that the two involved in this case were not legally married at the time does not
change the nature of their respective roles. It is the woman who traditionally holds the family purse even if she does not contribute to filling that purse
with funds. As pointed out by Dean Irene R. Cortes of the University of the Philippines, "in the Filipino family, the wife holds the purse, husbands hand
over their pay checks and get an allowance in return and the wife manages the affairs of the household. . . . And the famous statement attributed to
Governor General Leonard Wood is repeated: In the Philippines, the best man is the woman." (Cortes, "Womens Rights Under the New Constitution".
WOMAN AND THE LAW, U.P. Law Center, p. 10.)

The "real contribution" to the acquisition of property mentioned in Yaptinchay vs. Torres (28 SCRA 489) must include not only the earnings of a woman
from a profession, occupation, or business but also her contribution to the family's material and spiritual goods through caring for the children,
administering the household, husbanding scarce resources, freeing her husband from household tasks, and otherwise performing the traditional duties
of a housewife.

Should Article 144 of the Civil Code be applied in this case? Our answer is "Yes" because there is no showing that vested rights would be impaired or
prejudiced through its application.

A vested right is defined by this Court as property which has become fixed and established, and is no longer open to doubt or controversy; an
immediately fixed right of present or future enjoyment as distinguished from an expectant or contingent right (Benguet Consolidated Mining Co. vs.
Pineda, 98 Phil. 711; Balbao vs. Farrales, 51 Phil. 498). This cannot be said of the "exclusive" right of Melbourne Maxey over the properties in question
when the present Civil Code became effective for standing against it was the concurrent right of Regina Morales or her heirs to a share thereof. The
properties were sold in 1953 when the new Civil Code was already in full force and effect. Neither can this be said of the rights of the private
respondents as vendees insofar as one half of the questioned properties are concerned as this was still open to controversy on account of the legitimate
claim of Regina Morales to a share under the applicable law.

The disputed properties were owned in common by Melbourne Maxey and the estate of his late wife, Regina Morales, when they were sold. Technically
speaking, the petitioners should return one-half of the P1,300.00 purchase price of the land while the private respondents should pay some form of
rentals for their use of one-half of the properties. Equitable considerations, however, lead us to rule out rentals on one hand and return of P650.00 on the
other.

WHEREFORE, the petition for review on certiorari is hereby granted. The judgment of the Court of Appeals is reversed and set aside insofar as one-half
of the disputed properties are concerned. The private respondents are ordered to return one-half of said properties to the heirs of Regina Morales. No
costs.

SO ORDERED.
FIRST DIVISION

[G.R. No. 122749. July 31, 1996]

ANTONIO A. S. VALDES, petitioner, vs. REGIONAL TRIAL COURT, BRANCH 102, QUEZON CITY, and CONSUELO M. GOMEZ-VALDES,
respondents.

DECISION
VITUG, J.:

The petition for review bewails, purely on a question of law, an alleged error committed by the Regional Trial Court in Civil Case No. Q-92-12539.
Petitioner avers that the court a quo has failed to apply the correct law that should govern the disposition of a family dwelling in a situation where a
marriage is declared void ab initio because of psychological incapacity on the part of either or both of the parties to the contract.

The pertinent facts giving rise to this incident are, by and large, not in dispute.

Antonio Valdes and Consuelo Gomez were married on 05 January 1971. Begotten during the marriage were five children. In a petition, dated 22 June
1992, Valdes sought the declaration of nullity of the marriage pursuant to Article 36 of the Family Code (docketed Civil Case No. Q-92-12539, Regional
Trial Court of Quezon City, Branch 102). After hearing the parties following the joinder of issues, the trial court,[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 Registrar of Mandaluyong, Metro Manila, for proper recording in the registry of marriages."[2]
(Italics ours)

Consuelo Gomez sought a clarification of that portion of the decision directing compliance with Articles 50, 51 and 52 of the Family Code. She asserted
that the Family Code contained no provisions on the procedure for the liquidation of common property in "unions without marriage." Parenthetically,
during the hearing on the motion, the children filed a joint affidavit expressing their desire to remain with their father, Antonio Valdes, herein petitioner.

In an Order, dated 05 May 1995, the trial court made the following clarification:

"Consequently, considering that Article 147 of the Family Code explicitly provides that the property acquired by both parties during their union, in the
absence of proof to the contrary, are presumed to have been obtained through the joint efforts of the parties and will be owned by them in equal shares,
plaintiff and defendant will own their 'family home' and all their other properties for that matter in equal shares.

"In the liquidation and partition of the properties owned in common by the plaintiff and defendant, the provisions on co-ownership found in the Civil Code
shall apply."[3] (Italics supplied)

In addressing specifically the issue regarding the disposition of the family dwelling, the trial court said:

"Considering that this Court has already declared the marriage between petitioner and respondent as null and void ab initio, pursuant to Art. 147, the
property regime of petitioner and respondent shall be governed by the rules on co-ownership.

"The provisions of Articles 102 and 129 of the Family Code finds no application since Article 102 refers to the procedure for the liquidation of the
conjugal partnership property and Article 129 refers to the procedure for the liquidation of the absolute community of property."[4]

Petitioner moved for a reconsideration of the order. The motion was denied on 30 October 1995.

In his recourse to this Court, petitioner submits that Articles 50, 51 and 52 of the Family Code should be held controlling; he argues that:

"I

"Article 147 of the Family Code does not apply to cases where the parties are psychological incapacitated.

"II

"Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code govern the disposition of the family dwelling in cases where a marriage is
declared void ab initio, including a marriage declared void by reason of the psychological incapacity of the spouses.

"III

"Assuming arguendo that Article 147 applies to marriages declared void ab initio on the ground of the psychological incapacity of a spouse, the same
may be read consistently with Article 129.

"IV

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

The trial court correctly applied the law. In a void marriage, regardless of the cause thereof, the property relations of the parties during the period of
cohabitation is governed by the provisions of Article 147 or Article 148, such as the case may be, of the Family Code. Article 147 is a remake of Article
144 of the Civil Code as interpreted and so applied in previous cases;[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 consent of the other, until after the termination of their cohabitation.

"When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their
common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the
respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take
place upon termination of the cohabitation."

This peculiar kind of co-ownership applies when a man and a woman, suffering no legal impediment to marry each other, so exclusively live together as
husband and wife under a void marriage or without the benefit of marriage. The term "capacitated" in the provision (in the first paragraph of the law)
refers to the legal capacity of a party to contract marriage, i.e., any "male or female of the age of eighteen years or upwards not under any of the
impediments mentioned in Articles 37 and 38"[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.[11]

In deciding to take further cognizance of the issue on the settlement of the parties' common property, the trial court acted neither imprudently nor
precipitately; a court which has jurisdiction to declare the marriage a nullity must be deemed likewise clothed with authority to resolve incidental and
consequential matters. Nor did it commit a reversible error in ruling that petitioner and private respondent own the "family home" and all their common
property in equal shares, as well as in concluding that, in the liquidation and partition of the property owned in common by them, the provisions on co-
ownership under the Civil Code, not Articles 50, 51 and 52, in relation to Articles 102 and 129,[12] 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,[13] relates only, by its explicit terms, to
voidable marriages and, exceptionally, to void marriages under Article 40[14] 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[15] and 42,[16] 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.

WHEREFORE, the questioned orders, dated 05 May 1995 and 30 October 1995, of the trial court are AFFIRMED. No costs.

SO ORDERED.
THIRD DIVISION
FRANCISCO L. GONZALES,Petitioner,
versus
ERMINDA F. GONZALES,Respondents.
G.R. No. 159521
SANDOVAL-GUTIERREZ, J.:

This petition for review on certiorari seeks the reversal of the Decision dated April 2, 2003 and Resolution dated August 8, 2003, both issued by the
Court of Appeals in CA-G.R. CV No. 66041, entitled, Erminda F. Gonzales, plaintiff-appellee versus Francisco L. Gonzales, defendant-appellant.

In March 1977, Francisco Gonzales, petitioner, and Erminda Gonzales, respondent, started living as husband and wife. After two (2) years, or on
February 4, 1979, they got married. From this union, four (4) children were born, namely: Carlo Manuel, Maria Andres, Maria Angelica and Marco
Manuel.

On October 29, 1992, respondent filed a complaint with the Regional Trial Court, Branch 143, Makati City, for annulment of marriage with prayer for
support pendente lite, docketed as Civil Case No. 32-31111. The complaint alleges that petitioner is psychologically incapacitated to comply with the
obligations of marriage. He beats her for no justifiable reason, humiliates and embarrasses her, and denies her love, sexual comfort and loyalty. During
the time they lived together, they acquired properties. She managed their pizza business and worked hard for its development. She prays for the
declaration of the nullity of their marriage and for the dissolution of the conjugal partnership of gains.

In his answer to the complaint, petitioner averred that it is respondent who is psychologically incapacitated. He denied that she was the one who
managed the pizza business and claimed that he exclusively owns the properties existing during their marriage.

In her reply, respondent alleged that she controlled the entire generation of Fiesta Pizza representing 80% of the total management of the same and that
all income from said business are conjugal in nature.

The public prosecutor, in compliance with the directive of the trial court, and pursuant Section 48 of the Family Code,[1] certified that no collusion exists
between the parties in asking for the declaration of the nullity of their marriage and that he would appear for the state to see to it that the evidence is not
fabricated or suppressed.

Each party submitted a list of the properties with their valuation, acquired during their union, thus:

Valuation of respondent

(Record, p. 110)

Valuation of petitioner (Record, p. 111)

1. Acropolis property

2. Baguio City property

3. Nasugbu, Batangas property

4. Corinthian house and lot

5. Sagitarius condominium

6. Office

7. Greenmeadows lot

8. White Plains

9. Corinthian lot
None

P 10,000,000

5,000,000

18,000,000

2,500,000

30,000,000

10,000,000

7,000,000

12,000,000

P 6,000,000

10,000,000

5,000,000

23,000,000

2,000,000

24,000,000

15,000,000

10,000,000

None
Personal Property (Vehicles)

1. Galant 83 model

2. Toyota Corona 79 model

3. Coaster 77 model

4. Pajero 89 model

5. Corolla 92 model

6. L-300 90 model

7. Mercedes Sedan 79 model

8. Pick-up 89 model

9. Mercedes wagon 80 model

10. Nissan Sentra 89 model

11. 8Tamaraws

None
P 120,000

80,000

150,000

500,000

180,000

350,000

220,000

100,000

300,000

200,000

Evidence adduced during the trial show that petitioner used to beat respondent without justifiable reasons, humiliating and embarrassing her in the
presence of people and even in front of their children. He has been afflicted with satyriasis, a personality disorder characterized by excessive and
promiscuous sex hunger manifested by his indiscriminate womanizing. The trial court found that:

The evidence adduced by plaintiff was overwhelming to prove that the defendant by his infliction of injuries on the plaintiff, his wife, and excessive and
promiscuous hunger for sex, a personality disorder called satyriasis, was, at the time of the celebration of marriage, psychologically incapacitated to
comply with the essential obligations of marriage although such incapacity became manifest only after its solemnization. The defendants evidence, on
the other hand, on the psychological incapacity of plaintiff did not have any evidentiary weight, the same being doubtful, unreliable, unclear and
unconvincing.

On February 12, 1997, the trial court rendered its Decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, judgment is rendered:

1) Declaring the marriage contracted by and between FRANCISCO L. GONZALEZ and ERMINDA F. FLORENTINO solemnized by Rev. Fr. Alberto
Ampil, S.J. on February 4, 1979, at the Manila Hilton Chapel, Nuestra de Guia Parish, Ermita, Manila, NULL and VOID ab initio with all legal effects as
provided for under applicable laws;

2) Awarding the custody of minors Maria Andrea and Marco Manuel to the plaintiff, and Carlo Manuel and Maria Angela with rights of visitation given to
both parties under an arrangement mutually acceptable to both of them;

3) Ordering the parties to deliver the childrens legitimes pursuant to Article 50, in relation to Article 51 of the Family Code;

4) Ordering the defendant to give monthly support to Maria Andrea and Marco Manuel in the amount of Forty Thousand (P40,000.00) Pesos within five
(5) days of each corresponding month delivered at the residence of the plaintiff staring January 1997 and thereafter;

5) Ordering the dissolution of the conjugal partnership of gains and dividing the conjugal properties between the plaintiff and the defendant as follows:

A. 1) Plaintiffs share of real properties:

1. Corinthian lot -------------------- P 12,000,000

2. Acropolis property ------------- 6,000,000

3. Baguio property ----------------- 10,000,000

4. Nasugbu property -------------- 5,000,000

5. Greenmeadows property ----- 12,500,000

6. Sagitarius condominium ------ 2,250,000

P 47,750,000

2) Personal:
1. Pajero 89 model --------------- P 500,000

2. L-300 90 model ---------------- 350,000

3. Nissan Sentra 89 model ----- 200,000

P 1,050,000

B. 1) Defendants share of real properties:

1. Corinthian house and lot ---- P 20,500,000

2. Office ----------------------------- 27,000,000

P 47,500,000

2) Personal:

1. Galant 83 model --------------- P 120,000

2. Toyota Corona 79 model ---- 80,000

3. Coaster 77 model -------------- 150,000

4. Corolla 92 model -------------- 180,000

5. Mercedes Sedan 79 model --- 220,000

6. Pick-up 89 model -------------- 100,000

7. Mercedes wagon 80 model 300,000

P 1,150,000

8. Four (4) Tamaraws -------------

6) Ordering the plaintiff to pay the defendant in cash the amount of P2,196,125.

7) Ordering the defendant who has actual possession of the conjugal properties to deliver to plaintiff her share of the real and personal properties,
including four (4) Tamaraws, above-described, and execute the necessary documents valid in law conveying the title and ownership of said properties in
favor of the plaintiff.

Not satisfied with the manner their properties were divided, petitioner appealed to the Court of Appeals. He did not contest that part of the decision which
declared his marriage to respondent void ab initio.

In its Decision dated April 2, 2003, the Appellate Court affirmed the assailed Decision of the trial court.

Petitioner filed a motion for reconsideration but it was denied in an Order dated July 23, 1997.

Hence, the instant petition for review on certiorari.

The sole issue for our resolution is whether the court of Appeals erred in ruling that the properties should be divided equally between the parties.

Let it be stressed that petitioner does not challenge the Appellate Courts Decision declaring his marriage with respondent void. Consequently, their
property relation shall be governed by the provisions of Article 147 of the Family Code quoted as follows:

"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."

These provisions enumerate the two instances when the property relations between spouses shall be governed by the rules on co-ownership. These
are: (1) when a man and woman capacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage;
and (2) when a man and woman live together under a void marriage. Under this property regime of co-ownership, properties 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.

Article 147 creates a presumption that properties acquired during the cohabitation of the parties have been acquired through their joint efforts, work or
industry and shall be owned by them in equal shares. It further provides that a party who did not participate in the acquisition by the other party of any
property shall be deemed to have contributed jointly in the acquisition thereof if the formers efforts consisted in the care and maintenance of the family
and of the household.

While it is true that all the properties were bought from the proceeds of the pizza business, petitioner himself testified that respondent was not a plain
housewife and that she helped him in managing the business. In his handwritten letter to her dated September 6, 1989, he admitted that Youve helped
me for what we are now and I wont let it be destroyed.

It appeared that before they started living together, petitioner offered respondent to be his partner in his pizza business and to take over its operations.
Respondent started managing the business in 1976. Her job was to: (1) take care of the daily operations of the business; (2) manage the personnel; and
(3) meet people during inspection and supervision of outlets. She reported for work everyday, even on Saturdays and Sundays, without receiving any
salary or allowance.

In petitions for review on certiorari under Rule 45 of the Rules of Court, the general rule is that only questions of law may be raised by the parties and
passed upon by this Court.[2] Factual findings of the Appellate Court are generally binding on, especially this Court, when in complete accord with the
findings of the trial court,[3] as in this case. This is because it is not our function to analyze or weigh the evidence all over again.[4]
WHEREFOR, the instant petition is hereby DENIED. The assailed Decision and Resolution of the Court of Appeals, in CA-G.R. CV No. 66041, are
AFFIRMED. Costs against petitioner.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. Nos. 78583-4 March 26, 1990

BENIGNO TODA, JR., petitioner,


vs.
COURT OF APPEALS and ROSE MARIE TUASON-TODA, respondents.

REGALADO, J.:

These consolidated cases seek a review of the decision of the Court of Appeals promulgated on January 29,1987 1 in CA-G.R. CV Nos. 06675 and
07936, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Ordering the payment of the cash dividends declared on July 1, 1981 amounting to P2,191.62 and those declared on July 25, 1981 amounting
to P40,196.12 to Rose Marie Toda as her separate property. The cash dividends declared on April 25, 1981 amounting to P37,196.30 (sic) are hereby
adjudicated to Benigno Toda, Jr. as his share in the conjugal partnership assets; the portion of the order dated November 2, 1981 with respect to the
payment of the amount of P360,095.12 to Rose Marie T. Toda is set aside;

2. Ordering the payment of the amount of P4,1623,982.24 to Rose Marie Toda representing the balance of P15, 749,135.32 obligated to be paid
as estate taxes by Benigno Toda, Jr.;

3. Setting aside the order of the lower court dated June 2, 1982 directing Benigno Toda, Jr. to pay interest and non-payment penalty of 18% and
5%, respectively; and

4. Setting aside the order of the lower court directing the annotation of lien on the property of Benigno Toda, Jr.

SO ORDERED.

Benigno Toda, Jr. (Benigno for brevity) and Rose Marie Tuason-Toda (Rose Marie for brevity) were married on June 9, 1951 and were blessed with two
children. Individual differences and the alleged infidelity of Benigno, however, marred the conjugal union thereby prompting Rose Marie to file on
December 18, 1979 in the former Court of First Instance of Rizal, 2 as Civil Case No. 35566, a petition for termination of conjugal partnership for alleged
mismanagement and dissipation of conjugal funds against Benigno.

After hearings were held, the parties in order to avoid further "disagreeable proceedings," filed on April 1, 1981 a joint petition forjudicial approval of
dissolution of conjugal partnership under Article 191 of the Civil Code, docketed as Special Proceeding No. 9478, 3 which was consolidated with the
aforesaid civil case. This petition which was signed by the parties on March 30, 1981, embodied a compromise agreement allocating to the spouses their
respective shares in the conjugal partnership assets and dismissing with prejudice the said Civil Case No. 35566, CA-G.R. No. 11123-SP of the Court of
Appeals and G.R. No. 56121 of this Court. The said petition and the compromise agreement therein were approved by the trial court in its order of June
9, 1981. 4

Thereafter, several orders were issued by the lower court pertaining to the interpretation and implementation of the compromise agreement, as follows:

1. Order, dated November 20, 1981, ordering Benigno, inter alia, to pay Rose Marie the cash dividends on the shares declared on April 25, 1981
amounting to P37,126.30; that declared on July 25, 1981 amounting to P40,196.12; that declared on July 1, 1981, given on September 25, 1981
amounting to P2,191.62; and the payment of P360,095.12 to Rose Marie which is the balance of P2 million paid on April 4, 1981; 5

2. Order, dated June 2, 1982, ordering Benigno to pay Rose Marie interest at 18% per annum on the amounts required to be paid in the order of
November 20,1981, as well as 5% non-payment penalty should the said order of November 20,1981 be sustained on appeal; 6

3. Order, dated December 9, 1982, denying Benigno's motion to inhibit Judge Rizalina Bonifacio Vera from hearing the case; 7

4. Order, dated March 1, 1983, ordering the annotation of a lien on certain properties of Benigno as security for any and all amounts that he may
finally be ordered to pay to Rose Marie under the compromise agreement; 8 and

5. Order, dated March 14, 1983, ordering Benigno to pay Rose Marie the amount of P4,623,929.24, with interest and penalties thereon

at the rates stipulated in the compromise agreement from date of at the rates stipulated in the compromise agreement from date of demand by Rose
Marie. 9

The compromise agreement which, as earlier stated, was incorporated in the petition for dissolution of the conjugal partnership and was approved by the
court below, contains the following stipulaitons:

xxx xxx xxx

4. For the best interest of each of them, petitioners have agreed to dissolve their conjugal partnership and to partition the assets thereof, under
the following terms and conditions — this document, a pleading, being intended by them to embody and evidence their agreement;

(a) Petitioners as the parties hereto agree upon the dissolution of their conjugal partnership during the marriage and further agree to obtain
judicial approval of their said agreement as provided by Article 191 of the Civil Code.

(b) The following shall be adjudicated to petitioner Rose Marie Tuason-Toda:

(1) Forty Million Peson (P40,000,000.00) to be paid as follows:

(a) Petitioner Benigno Toda, Jr. shall assume the payment of the estate taxes, interest and penalties thereon, pertaining to the estate of petitioner
Rose Marie Tuason Toda's late brother Manuel Tuason, Jr. in the sum of P15,749,135.32 as of March 31, 1981 — all interest and penalty charges after
March 31, 1981 to be the responsibility of petitioner Benigno Toda, Jr.

(b) P2,000,000.00 to be paid within 30 days after signing of this agreement.

(c) The balance shall be paid within six (6) months after date of signing of this agreement. If not paid when due, the balance shall bear interest at
18% per annum until paid and there shall be a 5% non-payment penalty. The proceeds from any sale of or loss with respect to, Rubicon's shares in
Philippine Air Lines, Inc., shares of Cibeles Insurance Corporation or Hermana Mayor shall be applied when received against the aforesaid balance,
except to the extent such proceeds are used to satisfy any other obligation under this agreement.

(2) All shares of stock in San Nguel Corporation registered solely in the name of petitioner Rose Marie Tuason Toda whether stock dividends or
stocks acquired on pre-emptive rights including those acquired in the names of both petitioners Benigno Toda, Jr. and Rose Marie Tuason Toda
(whetherjointly or alternately 'and/or'), free from all liens and encumbrances.
(3) All shares of stock in San Miguel Corporation acquired whether as stock dividends of or on pre-emptive zighta pertaining to the shares of stock
in said corporation of petitioner Rose Marie Tuason Toda's brother the late Manuel Tuason, Jr. (of course, the original shares of the latter pertain to
petitioner Rose Marie Tuason Toda also), free from all liens and encumbrances except for the estate tax lien. Petitioner Rose Marie Tuason Toda
hereby grants petitioner Benigno Toda, Jr. an irrevocable proxy, for three years through the 1983 stockholders' meeting whether annual or special to
elect directors for all shares of stock she owns directly or indirectly including those from the late Manuel Tuason, Jr. in San Miguel Corporation.

(4) The Banaba Forbes Park conjugal dwelling and its contents free from all liens and encumbrances except that petitioner Benigno Toda, Jr.
shall remove therefrom his personal effects including furniture and appliances in his study room and T.V. room and, from the family rooin, all antiques,
rugs, paintings of Old Fort Manila, books and mementos. Petitioner Benigno Toda, Jr. commits that no servant now living in the Tolentino street
apartments shall be evicted.

(5) The San Francisco apartment at Apartment 905, No. 1750 Taylor Street, San Francisco, California, U.SA., and its contents, free from all liens
and encumbrances, except that petitioner Benigno Toda, Jr. shall remove therefrom his personal effects.

(6) The artifacts already removed by petitioner Rose Marie Tuason Toda from the Madrid Apartment at No. 4 San Pedro de Valdivia. She shall
return to it its silver ware, china ware, paintings and etchings. She may retain the three fans encased in glass and may remove her clothes, perfumes
and toiletries, the Sansa painting ofa shell dedicated to her, the painting of the Madonna and tapestry hanging in her bedroom, 5 Persian rugs, 1 writing
desk and chair and the 2 lamps thereon and 1 lamp on the night table, and the statuette given her by Hagedorn.

(7) Jewelry.

(8) Motor vehicles registered in her name.

(9) Within forty-five (45) days from signing of this agreement, One Million Pesos (Pl,000,000.00) as attorneys' fees — petitioner Rose Marie
Tuason Toda agreeing to hold petitioner Benigno Toda, Jr. harmless from any claim fo attorneys' fees and expenses that may be filed against the
conjugal partnership or herself for services rendered to her in the prosecution of her claims against said conjugal partnership or against petitioner
Benigno Toda, Jr. or to secure her paraphernal estate.

(10) Two shares with two lots in Valley Golf & Country Club.

(11) One share in Club Puerta de Hierro in Madrid, Spain if there is one registered in petitioner Rose Marie Tuason Toda's name.

(12) Share in Montemar Beach Club in Bagac, Bataan — petitioner Rose Marie Tuason Toda agreeing to assume the balance of the acquisition
cost thereof.

(c) All other properties of the conjugal partnership of whatever and wherever located shall be adjudicated to petitioner Benigno Toda, Jr. even
though acquired in the name of petitioner Rose Marie Tuason Toda or both of them — she undertaking to execute the corresponding deeds of
conveyances.

(d) Petitioner Benigno Toda, Jr. shall assume the payment of all conjugal obligations, petitioner Rose Marie Tuason Toda representing and
warranting that she has no pending obligation or incurred no obligation chargeable to the conjugal partnership except those listed in Annex 'A' hereof.

If the Rosaria Apartment is subject to a mortgage loan and such loan is a conjugal debt, petitioner Benigno Toda, Jr. shall assume such loan and shall
obtain the discharge of the mortgage.

(e) After the signing of this document:

(1) Each of them shall own, dispose of, possess, administer and enjoy his or her separate estate, present and future, without the consent of the
other;

(2) All earnings from any profession business or industry shall likewise belong to each of them respectively;

(3) All expenses and obligations incurred by each of them shall be their respective and separate responsibilities.

(f) With the signing of this document, Civil Case No. 35566 of this same Court, CA-G.R. No. 11123-SP and SC-G.R. No. L-56121 shall be
deemed dismissed with prejudice as between the parties hereto. 10

The parties then prayed that judgment be rendered:

(a) Approving the agreement for voluntary dissolution and partition of the conjugal partnership;

(b) declaring the conjugal partnership of petitioners dissolved and adjudicating to each of them his or her share in the properties and assets of
said conjugal partnership in accordance with the agreement embodied in paragraph 4 hereof; and

(c) enjoining the parties to comply with the terms and conditions of the aforesaid agreement. 11

Ironically, the said agreement failed to fully subserve the intended amicable settlement of all the disputes of the spouses. Instead, as lamented by the
counsel of one of them, the compromise agreement which was designed to terminate a litigation spawned two new petitions, with each party initiating
one against the other. Thus, illustrative of the saying that a solution which creates another problem is no solution, the contradictory interpretations placed
by the parties on some provisions of the agreement resulted in appeals to respondent court and, eventually, the present recourse to us.

Benigno appealed from the aforestated orders of the trial court of November 20, 1981, June 2, 1982, December 9, 1982, March 1, 1983 and March 14,
1983 containing the directives hereinbefore respectively set out. The same were disposed of by the Court of Appeals as explained at the start of this
decision.

Rose Marie now submits that the Court of Appeals erred:

1. In holding that the compromise agreement of the parties herein became effective only after its judicial approval on June 9, 1981 and not upon
its execution on March 30,1981;

2. In setting aside the order of the lower court dated June 2, 1981 directing Benigno to pay interest of eighteen percent and non-payment penalty
of five percent; and

3. In setting aside the order of the lower court directing the annotation of Rose Marie's lien on Benigno's property. 12

On the other hand, Benigno contends in his present petition before us that:

1. The Court of Appeals erred on a question of law when it affirmed the lower court's award of P4,623,929.24 without trial and evidence-taking
and overruled petitioner's claim of violation of his due process right;

2. The Court of Appeals erred on a question of law and due process when it upheld the lower court's denial of petitioner's motion for her
inhibition/disqualification;
3. Since the document (the parties' compromise agreement) explicitly provided for assumption of liability rather than agency to pay and since
there was no evidence-taking, the Court of Appeals finding of an agency to pay is reviewable as a question of law; and

4. The Court of Appeals on a question of law involving the parol evidence rule. 13

The award of cash dividends basically depends on the date of effectivity of the compromise agreement as this will determine whether the same is
conjugal property or separate property of the spouses.

We are in agreement with the holding of the Court of Appeals that the compromise agreement became effective only on June 9, 1981, the date when it
was approved by the trial court, and not on March 30,1981 when it was signed by the parties. Under Article 190 of the Civil Code, 14 "(i)n the absence of
an express declaration in the marriage settlements, the separation of property between spouses during the marriage shall not take place save in virtue of
a judicial order." Hence, the separation of property is not effected by the mere execution of the contract or agreement of the parties, but by the decree of
the court approving the same. It, therefore, becomes effective on y upon judicial approval, without which it is void.15 Furthermore, Article 192 of said
Code explicitly provides that the conjugal partnership is dissolved only upon the issuance of a decree of separation of property.

Consequently, the conjugal partnership of Benigno and Rose Marie should be considered dissolved only on June 9, 1981 when the trial court approved
their joint petition for voluntary dissolution of their conjugal partnership. Conformably thereto, the cash dividends declared on July 1, 1981 and July
25,1981 in the amount of P2,191.62 and P40,196.12, respectively, should pertain to Rose Marie; and that declared on April 2,5, 1981 in the amount of
P37,126.30 ought to be paid to Benigno, pursuant to Paragraph 4 (c) of the compromise agreement which awards to Benigno the conjugal assets not
otherwise specifically assigned to Rose Marie.

With respect to the amount of P360,095.12 which Benigrio deducted from the P2 million supposed to be paid to Rose Marie, it is not clear from the
records where said amount came from. The Court of Appeals, in holding that it is conjugal and therefore belongs to Benigno, presumed it to be in the
nature of cash dividends declared prior to the approval of the compromise agreement by reason of the fact that the amount was deducted by Benigno
from the P2 million which he paid on April 14,1981. While no sufficient proof was adduced to conclusively explain such deduction, there exists the legal
presumption that all property of the marriage belongs to the conjugal partnership absent any proof that it is the exclusive property of either spouse. 16
Since Rose Marie failed to prove that the amount forms part of her paraphernal property, it is presumed to be conjugal property. Consequently, Benigno
is entitled to the said amount of P360,095.12, hence he rightfully deducted the same from the amount due to Rose Marie.

The issue regarding the annotation of the lien on Benigno's properties has been mooted by our resolution dated Aprjl 3, 1989 wherein, at his instance,
we ordered the cancellation thereof upon his posting of the corresponding bond. In our resolution of February 26, 1990, we noted Benigno's comphance,
approved the bond he filed, and ordered the cancellation of the hens annotated on the certificates of title of the propertiesinvolved.

Likewise, the order denying the motion to inhibit Judge Rizalina Bonifacio Vera has become academic considering that she no longer presides over the
court where the case was filed. Besides, as correctly explained by respondent court, the groundfor inhibition raised by Benigno is not valid it being
merely on the basis of the judge having acquired knowledge of the facts surrounding the agreement of the parties, hence she would be a material
witness to the issue of the true agreement which is contested by the parties. However, those facts came to the knowledge of the judge in the course of
her efforts to effect a compromise between parties and are also known to the parties.This is not a ground for disqualification; on the contrary, said, acts
of the judge were in accord with the rule encouraging compromises in litigations, especially between members of the same family.

Anent the tax savings of P4,623,982.24 obtained by Benigno, we hold that this forms part of the P40 million allocated to Rose Marie under paragraph 4
(b) (1) of the compromise agreement.We give credit to the ratiocination thereon of the trial court as quoted with approval by respondent court:

The records show that petitioner Benigno Toda, Jr. paid only Pl,125,152.48 in estate taxes, although the amount stated in the m Compromise
Agreement was P15,749,135.32. The balance of P4,623,929.24 is now being claimed by both parties as aforestated. In the opinion of this court, the
pertinent terms of the Agreement as quoted, are clear and do not require any interpretation. In brief, under, the Agreement, petitioner Rose Marie T.
Toda is adjudicated the fixed sum of P40 million, to be paid as follows: (a) Payment by petitioner Benigno Toda, Jr. of the estate taxes, interests and
penalties thereon, pertaining to the estate of the late Manuel Tuason, Jr. in the amount of Pl5,749,135.32 as of March 31, 1982; (b) P2 million within 30
days after signing of the Agreement; (c) the balance within six months after date of signing of the Agreement. This Court notes that the amount of taxes,
interests and penalties is fixed at P15,749,135.32 and this figure was provided by Benigno Toda, Jr. There is no provision as contended by petitioner
Benigno Toda, Jr. that the amount was only an assumed liability and that he could attempt to reduce it by suit or compromise. It is clear that if the
amount of P4,623,929.24 is to be credited to Benigno Toda, Jr. then the P40 million which petitioner Rose Marie T. Toda is to receive would be short by
that amount. This Court is also of the opinion that under the Agreement, petitioner Benigno Toda, Jr. was constituted as agent to pay to the government
the liability of the estate of the late Manuel Tuason, Jr. in the fixed amount of P15,749,135.32 and if he was able to secure a reduction thereof, then he
should deliver to his principal such reduction... 17

We do not believe that Benigno was denied due process when the trial court resolved the motion of Rose Marie for the payment of P4,623,982.24
without the benefit of a hearing. The records disclose that the hearing thereon was postponed twice at the instance of Benigno, which prompted the
court to thereafter consider the motion submitted for resolution on the basis of the allegations therein and the answer filed by counsel for both parties.
Benigno cannot now be heard to claim that he was deprived of his day in court. Furthermore, respondent court correctly held that the issue involved was
more of a question of interpretation of a contract rather than a determination of facts. Benigno failed to make a plausible showing that the supposed
evidence he had intended to present, if any, would not be merely collateral matters.

Considering that the amount of P4,623,982.24 actually forms an integral part of the P40 million (minus the lawful and authorized deductions that may be
made therefrom) which Benigno categorically undertook to pay to Rose Marie, the same must earn interest at the rate of 18% per annum and 5% non-
payment penalty, the same being included in and within the contemplation of Paragraph 4 (b) (1) (c) of the compromise agreement. Said provision of the
agrdement provides for the payment of the interest and penalty upon non-payment of the balance of the P40 million after the specific authorized
deductions therefrom. Since the amount of P4,623,982.24 was not to be lawfully deducted by Benigno, as hereinbefore explained, it constitutes part of
the contemplated contingent balance which might tum out to be due to Rose Marie and, therefore, subject to the imposition of said increments on
Benigno's liability.

WHEREFORE, the judgment appealed from is hereby AFFIRMED, with the modification that Benigno Toda, Jr. is hereby ordered to pay Rose Marie
Tuason Toda interest at the rate of a 18% per annum and 5% non-payment penalty on the tax savings of P4,623,982.24 from date of formal demand
until the same is fully paid.

SO ORDERED.

Melencio-Herrrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.


SECOND DIVISION

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

ROMANA LOCQUIAO VALENCIA and CONSTANCIA L. VALENCIA, petitioners, vs. BENITO A. LOCQUIAO, now deceased and substituted by
JIMMY LOCQUIAO, TOMASA MARA and the REGISTRAR OF DEEDS OF PANGASINAN, respondents.
DECISION

TINGA, J.:

The Old Civil Code[1] and the Old Code of Civil Procedure,[2] repealed laws that they both are notwithstanding, have not abruptly become mere
quiescent items of legal history since their relevance do not wear off for a long time. Verily, the old statutes proved to be decisive in the adjudication of
the case at bar.

Before us is a petition for review seeking to annul and set aside the joint Decision[3] dated November 24, 1994, as well as the Resolution[4] dated
September 8, 1995, of the former Tenth Division[5] of the Court of Appeals in two consolidated cases involving an action for annulment of title[6] and an
action for ejectment.[7]

Both cases involve a parcel of land consisting of 4,876 square meters situated in Urdaneta, Pangasinan. This land was originally owned by the spouses
Herminigildo and Raymunda Locquiao, as evidenced by Original Certificate of Title No. 18383[8] issued on October 3, 1917 by the Register of Deeds of
Pangasinan.

On May 22, 1944, Herminigildo and Raymunda Locquiao executed a deed of donation propter nuptias which was written in the Ilocano dialect,
denominated as Inventario Ti Sagut[9] in favor of their son, respondent Benito Locquiao (hereafter, respondent Benito) and his prospective bride,
respondent Tomasa Mara (hereafter, respondent Tomasa). By the terms of the deed, the donees were gifted with four (4) parcels of land, including the
land in question, as well as a male cow and one-third (1/3) portion of the conjugal house of the donor parents, in consideration of the impending
marriage of the donees.

The donees took their marriage vows on June 4, 1944 and the fact of their marriage was inscribed at the back of O.C.T. No. 18383.[10]

Herminigildo and Raymunda died on December 15, 1962 and January 9, 1968, respectively, leaving as heirs their six (6) children, namely: respondent
Benito, Marciano, Lucio, Emeteria, Anastacia, and petitioner Romana, all surnamed Locquiao[11]. With the permission of respondents Benito and
Tomasa, petitioner Romana Valencia (hereinafter, Romana) took possession and cultivated the subject land.[12] When respondent Romanas husband
got sick sometime in 1977, her daughter petitioner Constancia Valencia (hereafter, petitioner Constancia) took over, and since then, has been in
possession of the land.[13]

Meanwhile, respondents Benito and Tomasa registered the Inventario Ti Sagut with the Office of the Register of Deeds of Pangasinan on May 15,
1970.[14] In due course, the original title was cancelled and in lieu thereof Transfer Certificate of Title No. 84897[15] was issued in the name of the
respondents Benito and Tomasa.

On March 18, 1973, the heirs of the Locquiao spouses, including respondent Benito and petitioner Romana, executed a Deed of Partition with
Recognition of Rights,[16] wherein they distributed among only three (3) of them, the twelve (12) parcels of land left by their common progenitors,
excluding the land in question and other lots disposed of by the Locquiao spouses earlier. Contained in the deed is a statement that respondent Benito
and Marciano Locquiao, along with the heirs of Lucio Locquiao, have already received our shares in the estates of our parents, by virtue of previous
donations and conveyances, and that for that reason the heirs of Lucio Locquaio were not made parties to the deed. All the living children of the
Locquaio spouses at the time, including petitioner Romana, confirmed the previous dispositions and waived their rights to whomsoever the properties
covered by the deed of partition were adjudicated.[17]

Later on, disagreements among five (5) heirs or groups of heirs, including petitioner Romana, concerning the distribution of two (2) of the lots covered by
the deed of partition which are Lots No. 2467 and 5567 of the Urdaneta Cadastral Survey surfaced. As their differences were settled, the heirs
concerned executed a Deed of Compromise Agreement[18] on June 12, 1976, which provided for the re-distribution of the two (2) lots. Although not
directly involved in the discord, Benito signed the compromise agreement together with his feuding siblings, nephews and nieces. Significantly, all the
signatories to the compromise agreement, including petitioner Romana, confirmed all the other stipulations and provisions of the deed of partition.[19]

Sometime in 1983, the apparent calm pervading among the heirs was disturbed when petitioner Constancia filed an action for annulment of title against
the respondents before the Regional Trial Court of Pangasinan.[20] The record shows that the case was dismissed by the trial court but it does not
indicate the reason for the dismissal.[21]

On December 13, 1983, respondent Benito filed with the Municipal Trial Court of Urdaneta, Pangasinan a Complaint[22] seeking the ejectment of
petitioner Constancia from the subject property.

On November 25, 1985, the Municipal Trial Court rendered a Decision,[23] ordering the defendant in the case, petitioner Constancia, to vacate the land
in question.

Petitioners Romana and Constancia countered with a Complaint[24] for the annulment of Transfer Certificate of Title No. 84897 against respondents
Benito and Tomasa [25] which they filed with the Regional Trial Court of Pangasinan on December 23, 1985. Petitioners alleged that the issuance of the
transfer certificate of title was fraudulent; that the Inventario Ti Sagut is spurious; that the notary public who notarized the document had no authority to
do so, and; that the donation did not observe the form required by law as there was no written acceptance on the document itself or in a separate public
instrument.

Meanwhile, the decision in the ejectment case was appealed to the same RTC where the case for annulment of title was also pending. Finding that the
question of ownership was the central issue in both cases, the court issued an Order[26] suspending the proceedings in the ejectment case until it shall
have decided the ownership issue in the title annulment case.

After trial, the RTC rendered a Decision[27] dated January 30, 1989 dismissing the complaint for annulment of title on the grounds of prescription and
laches. It likewise ruled that the Inventario Ti Sagut is a valid public document which transmitted ownership over the subject land to the respondents.
With the dismissal of the complaint and the confirmation of the respondents title over the subject property, the RTC affirmed in toto the decision of the
MTC in the ejectment case[28].

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

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

The petitioners filed a Motion for Reconsideration[29] but it was denied by the appellate court in its Resolution[30] dated September 8, 1995. Hence, this
petition.

We find the petition entirely devoid of merit.


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

The Inventario Ti Sagut which contains the donation propter nuptias was executed and notarized on May 22, 1944. It was presented to the Register of
Deeds of Pangasinan for registration on May 15, 1970. The photocopy of the document presented in evidence as Exhibit 8 was reproduced from the
original kept in the Registry of Deeds of Pangasinan.[31]

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

To buttress their claim that the document was falsified, the petitioners rely mainly on the Certification[32] dated July 9, 1984 of the Records Management
and Archives Office that there was no notarial record for the year 1944 of Cipriano V. Abenojar who notarized the document on May 22, 1944 and that
therefore a copy of the document was not available.

The certification is not sufficient to prove the alleged inexistence or spuriousness of the challenged document. The appellate court is correct in pointing
out that the mere absence of the notarial record does not prove that the notary public does not have a valid notarial commission and neither does the
absence of a file copy of the document with the archives effect evidence of the falsification of the document.[33] This Court ruled that the failure of the
notary public to furnish a copy of the deed to the appropriate office is a ground for disciplining him, but certainly not for invalidating the document or for
setting aside the transaction therein involved.[34]

Moreover, the heirs of the Locquaio spouses, including petitioner Romana, made reference in the deed of partition and the compromise agreement to
the previous donations made by the spouses in favor of some of the heirs. As pointed out by the RTC,[35] respondent Benito was not allotted any share
in the deed of partition precisely because he received his share by virtue of previous donations. His name was mentioned in the deed of partition only
with respect to the middle portion of Lot No. 2638 which is the eleventh (11th) parcel in the deed but that is the same one-third (1/3) portion of Lot No.
2638 covered by O.C.T. No. 18259 included in the donation propter nuptias. Similarly, Marciano Locquiao and the heirs of Lucio Locquiao were not
allocated any more share in the deed of partition since they received theirs by virtue of prior donations or conveyances.

The pertinent provisions of the deed of partition read:

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

That we, the Parties herein, do hereby waive and renounce as against each other any claim or claims that we may have against one or some of us, and
that we recognize the rights of ownership of our co-heirs with respect to those parcels already distributed and adjudicated and that in the event that one
of us is cultivating or in possession of any one of the parcels of land already adjudicated in favor of another heir or has been conveyed, donated or
disposed of previously, in favor of another heir, we do hereby renounce and waive our right of possession in favor of the heir in whose favor the donation
or conveyance was made previously.[36] (Emphasis supplied)

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

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

The petitioners fault the RTC for admitting in evidence the deed of partition and the compromise agreement on the pretext that the documents were not
properly submitted in evidence, pointing out that when presented to respondent Tomasa Mara for identification, she simply stated that she knew about
the documents but she did not actually identify them.[37]

The argument is not tenable. Firstly, objection to the documentary evidence must be made at the time it is formally offered.[38] Since the petitioners did
not even bother to object to the documents at the time they were offered in evidence,[39] it is now too late in the day for them to question their
admissibility. Secondly, the documents were identified during the Pre-Trial, marked as Exhibits 2 and 3 and testified on by respondent Tomasa.[40]
Thirdly, the questioned deeds, being public documents as they were duly notarized, are admissible in evidence without further proof of their due
execution and are conclusive as to the truthfulness of their contents, in the absence of clear and convincing evidence to the contrary.[41] A public
document executed and attested through the intervention of the notary public is evidence of the facts therein expressed in clear, unequivocal
manner.[42]

Concerning the issue of form, petitioners insist that based on a provision[43] of the Civil Code of Spain (Old Civil Code), the acceptance by the donees
should be made in a public instrument. This argument was rejected by the RTC and the appellate court on the theory that the implied acceptance of the
donation had flowed from the celebration of the marriage between the respondents, followed by the registration of the fact of marriage at the back of
OCT No. 18383.

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

Unlike ordinary donations, donations propter nuptias or donations by reason of marriage are those made before its celebration, in consideration of the
same and in favor of one or both of the future spouses.[44] The distinction is crucial because the two classes of donations are not governed by exactly
the same rules, especially as regards the formal essential requisites.

Under the Old Civil Code, donations propter nuptias must be made in a public instrument in which the property donated must be specifically
described.[45] However, Article 1330 of the same Code provides that acceptance is not necessary to the validity of such gifts. In other words, the
celebration of the marriage between the beneficiary couple, in tandem with compliance with the prescribed form, was enough to effectuate the donation
propter nuptias under the Old Civil Code.

Under the New Civil Code, the rules are different. Article 127 thereof provides that the form of donations propter nuptias are regulated by the Statute of
Frauds. Article 1403, paragraph 2, which contains the Statute of Frauds requires that the contracts mentioned thereunder need be in writing only to be
enforceable. However, as provided in Article 129, express acceptance is not necessary for the validity of these donations. Thus, implied acceptance is
sufficient.

The pivotal question, therefore, is which formal requirements should be applied with respect to the donation propter nuptias at hand. Those under the
Old Civil Code or the New Civil Code?

It is settled that only laws existing at the time of the execution of a contract are applicable thereto and not later statutes, unless the latter are specifically
intended to have retroactive effect.[46] Consequently, it is the Old Civil Code which applies in this case since the donation propter nuptias was executed
in 1944 and the New Civil Code took effect only on August 30, 1950.[47] The fact that in 1944 the Philippines was still under Japanese occupation is of
no consequence. It is a well-known rule of the Law of Nations that municipal laws, as contra-distinguished from laws of political nature, are not
abrogated by a change of sovereignty.[48] This Court specifically held that during the Japanese occupation period, the Old Civil Code was in force.[49]
As a consequence, applying Article 1330 of the Old Civil Code in the determination of the validity of the questioned donation, it does not matter whether
or not the donees had accepted the donation. The validity of the donation is unaffected in either case.

Even the petitioners agree that the Old Civil Code should be applied. However, they invoked the wrong provisions[50] thereof.
Even if the provisions of the New Civil Code were to be applied, the case of the petitioners would collapse just the same. As earlier shown, even implied
acceptance of a donation propter nuptias suffices under the New Civil Code.[51]

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

Viewing petitioners action for reconveyance from whatever feasible legal angle, it is definitely barred by prescription. Petitioners right to file an action for
the reconveyance of the land accrued in 1944, when the Inventario Ti Sagut was executed. It must be remembered that before the effectivity of the New
Civil Code in 1950, the Old Code of Civil Procedure (Act No. 190) governed prescription.[52] Under the Old Code of Civil Procedure, an action for
recovery of the title to, or possession of, real property, or an interest therein, can only be brought within ten years after the cause of such action
accrues.[53] Thus, petitioners action, which was filed on December 23, 1985, or more than forty (40) years from the execution of the deed of donation on
May 22, 1944, was clearly time-barred.

Even following petitioners theory that the prescriptive period should commence from the time of discovery of the alleged fraud, the conclusion would still
be the same. As early as May 15, 1970, when the deed of donation was registered and the transfer certificate of title was issued, petitioners were
considered to have constructive knowledge of the alleged fraud, following the jurisprudential rule that registration of a deed in the public real estate
registry is constructive notice to the whole world of its contents, as well as all interests, legal and equitable, included therein.[54] As it is now settled that
the prescriptive period for the reconveyance of property allegedly registered through fraud is ten (10) years, reckoned from the date of the issuance of
the certificate of title,[55] the action filed on December 23, 1985 has clearly prescribed.

In any event, independent of prescription, petitioners action is dismissible on the ground of laches. The elements of laches are present in this case, viz:

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

(2) delay in asserting the complainants rights, having had knowledge or notice of defendants conduct and having been afforded an opportunity to
institute a suit;

(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit, and

(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.[56]

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

Anent the ejectment case, we find the issues raised by the petitioners to be factual and, therefore, beyond this Courts power of review. Not being a trier
of facts, the Court is not tasked to go over the proofs presented by the parties and analyze, assess, and weigh them to ascertain if the trial court and the
appellate court were correct in according them superior credit in this or that piece of evidence of one party or the other.[57] In any event, implicit in the
affirmance of the Court of Appeals is the existence of substantial evidence supporting the decisions of the courts below.

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

Costs against petitioners.

SO ORDERED.
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.:

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 petitioners 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:

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;

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 attorneys fees of P153,750.00 and litigation expenses of P20,000.00.

SO ORDERED.[10]

The decision in Civil Case No. 90-3251 became final and executory and, on June 7, 1994, the court issued a writ of execution.[11] On June 14, 1994,
Sheriff Roberto Alejo sold at a public auction one stainless, owner-type jeep for P10,000.00 to MIWCC.[12] 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.[13] On June 24, 1994, the sale of the property at a public auction was set to August 5, 1994.[14]

On July 3, 1994, Josefina executed an Affidavit of Third Party Claim[15] 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[16] 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.[17]

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.[18] However, upon the failure of MIWCC to remit the
sheriffs commission on the sale, the latter did not execute a sheriffs certificate of sale over the property. The RTC of Paraaque, thereafter, issued a
temporary restraining order[19] on August 16, 1994.

When Josefina learned of the said sale at public auction, she filed an amended complaint 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 attorneys fees.

2. Declaring the levying and sale at public auction of the plaintiffs 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.[20]

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.

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.

On September 9, 1996, the RTC of Paraaque rendered judgment[21] 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 mothers 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 Eduardos first marriage, she decided to have him 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;[22] Josefinas 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;[23] 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,[24] which angered Eduardo;[25] 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;[26] Josefina
decided that he execute the affidavit of waiver because her mother and sister gave the property to her.[27]

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 plaintiffs properties null and void.

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 attorneys 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.[28]

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-
APPELLEES MARRIAGE WITH EDUARDO FRANCISCO;

III. THE TRIAL COURT ERRED IN RULING THAT THE LEVY ON EXECUTION OF PLAINTIFF-APPELLEES PROPERTIES SUBJECT OF THE
PRESENT CONTROVERSY IS NULL AND VOID;

IV. THE TRIAL COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO PAY DAMAGES TO PLAINTIFF-APPELLEE FOR ALLEGED
IMPROPER LEVY ON EXECUTION.[29]

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.[30]

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.[31]
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.

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 support the petitioners 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 (Eduardos) 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.

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[32] 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 bad faith.

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.[33]

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.[34] 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.[35]
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.[36] Article 148 of the Family Code also debilitates against
the petitioners 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-appellees 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-appellees 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.[38]

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 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,[39] but failed to divulge the latters 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 petitioners 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.

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.[40] 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 managers 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 Eduardos 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.[41] Third, the petitioner testified that she borrowed the funds for the purchase of the property from her
mother and sister.[42] Fourth, the petitioner testified that Eduardo executed the affidavit of waiver because she discovered that he had a first
marriage.[43] Lastly, Eduardo belied the petitioners 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.[44]

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, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.


THIRD DIVISION

[G.R. No. 153828. October 24, 2003]

LINCOLN L. YAO, petitioner, vs. HONORABLE NORMA C. PERELLO, in her capacity as Presiding Judge of the Regional Trial Court, Branch
276, Muntinlupa City, THE EX-OFICIO SHERIFF, REGIONAL TRIAL COURT, MUNTINLUPA CITY and BERNADINE D. VILLARIN, respondents.

DECISION

CORONA, J.:

Before us is a petition for certiorari filed by Lincoln L. Yao, assailing the resolution dated March 22, 2002 and Order dated May 10, 2002, of the Regional
Trial Court of Paraaque City, Branch 274,[1]which respectively granted private respondent Bernadine D. Villarins petition for prohibition and denied
petitioners motion for intervention.

The present controversy stemmed from a complaint filed by petitioner before the Housing and Land Use Regulatory Board (HLURB) against a certain
corporation, PR Builders, Inc. and its managers, Enrico Baluyot and Pablito Villarin, private respondents husband.

On September 17, 1999, the HLURB rendered a decision rescinding the contract to sell between petitioner and PR Builders, and ordering PR Builders to
refund petitioner the amount of P2,116,103.31, as well as to pay damages in the amount of P250,000.

Thereafter, the HLURB issued a writ of execution against PR Builders and its managers, and referred the writ to the office of the Clerk of Court of
Muntinlupa for enforcement.

Pursuant to the writ, the deputy sheriff levied on a parcel of land in Canlubang, Calamba, Laguna, registered in the names of spouses Pablito Villarin
and private respondent, Bernadine Villarin. The property was scheduled for public auction on March 20, 2002.

On March 19, 2002, private respondent filed before the RTC of Paraaque City, a petition for prohibition with prayer for temporary restraining order and/or
writ of preliminary injunction, seeking to enjoin Sheriff Melvin T. Bagabaldo from proceeding with the public auction. Private respondent alleged that she
co-owned the property subject of the execution sale; that the property regime between private respondent and her husband was complete separation of
property, and that she was not a party in the HLURB case, hence, the subject property could not be levied on to answer for the separate liability of her
husband.

On even date, public respondent Judge Norma C. Perrello issued a 72-hour temporary restraining order and set the case for raffle and conference on
March 22, 2002.

The case was eventually raffled to RTC, Branch 276, presided by public respondent judge. A conference was then conducted, after which public
respondent judge issued the assailed resolution of March 22, 2002 granting private respondents petition for prohibition and declaring the subject
property exempt from execution. Hence, the scheduled auction sale did not materialize.

On April 25, 2002, or more than a month after public respondent judge issued the resolution of March 22, 2002, petitioner filed a motion for intervention.
However, public respondent judge denied the motion in her assailed order of May 10, 2002:

ORDER

The MOTION FOR INTERVENTION is denied, considering that this case has long been decided, hence the intervention is too late. There is no case for
them to intervene.

Let the decision be executed to satisfy the judgment debt.

SO ORDERED in open Court.[2]

Aggrieved, petitioner filed the instant petition for certiorari imputing grave abuse of discretion to public respondent judge in: (a) declaring the subject
property exempt from execution and therefore could not be sold to satisfy the obligation of private respondents husband, and (b) denying petitioners
motion for intervention on the ground that the same was filed late.

It is a basic precept that the power of the court in the execution of judgments extends only to properties unquestionably belonging to the judgment
debtor. The levy by the sheriff on property by virtue of a writ of attachment may be considered as made under the authority of the court only vis-a-vis
property belonging to the defendant. For indeed, one man's goods shall not be sold for another man's debts.[3]In the case at bar, the property levied on
by the sheriff was clearly not exclusively owned by Pablito Villarin. It was co-owned by herein private respondent who was a stranger in the HLURB
case. The property relation of spouses Villarin was governed by the regime of complete separation of property as decreed in the order[4] dated
November 10, 1998 of the Regional Trial Court, Branch 27, Paraaque City.

Articles 145 and 146 of the Family Code governing the regime of complete separation of property provide:

Art. 145. Each spouse shall own, dispose of, possess, administer and enjoy his or her own separate estate, without need of the consent of the other. To
each spouse shall belong all earnings from his or her profession, business or industry and all fruits, natural, industrial or civil, due or received during his
marriage from his or her separate property. (214a)

Art. 146. Both spouses shall bear the family expenses in proportion to their income, or, in case of insufficiency or default thereof, to the current market
value of their separate properties.

The liability of the spouses to creditors for family expenses shall, however, be solidary. (215a)

It is clear from the foregoing that the only time the separate properties of the spouses can be made to answer for liabilities to creditors is when those
liabilities are incurred for family expenses. This has not been shown in the case at bar.

Accordingly, private respondent acted well within her rights in filing a petition for prohibition against the deputy sheriff because the latter went beyond his
authority in attaching the subject property. This right is specifically reserved by Section 17, Rule 39 of the Rules of Court.

Petitioner insists that, in a petition for prohibition, it is essential that the party who is interested in sustaining the act or acts sought to be prohibited or
enjoined be impleaded as private respondent. Thus, as the judgment creditor in the HLURB case, petitioner claims that he was an indispensable party in
the petition for prohibition and should have been allowed to intervene in the said case. He was not allowed to do so.

Section 2, Rule 65 of the Rules of Court provides:

SEC. 2 Petition for prohibition. - When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or
ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further
proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.
The petition shall likewise be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the last paragraph of Section 3, Rule 46. (2a)

Consequently, petitioners claim that he had the right to intervene is without basis. Nothing in the said provision requires the inclusion of a private party
as respondent in petitions for prohibition. On the other hand, to allow intervention, it must be shown that (a) the movant has a legal interest in the matter
in litigation or otherwise qualified, and (b) consideration must be given as to whether the adjudication of the rights of the original parties may be delayed
or prejudiced, or whether the intervenors rights may be protected in a separate proceeding or not. Both requirements must concur as the first is not more
important than the second.[5]

In the case at bar, it cannot be said that petitioners right as a judgment creditor was adversely affected by the lifting of the levy on the subject real
property. Records reveal that there are other pieces of property exclusively owned by the defendants in the HLURB case that can be levied upon.

Moreover, even granting for the sake of argument that petitioner indeed had the right to intervene, he must exercise said right in accordance with the
rules and within the period prescribed therefor.

As provided in the Rules of Court, the motion for intervention may be filed at any time before rendition of judgment by the trial court.[6] Petitioner filed his
motion only on April 25, 2002, way beyond the period set forth in the rules. The court resolution granting private respondents petition for prohibition and
lifting the levy on the subject property was issued on March 22, 2002. By April 6, 2002, after the lapse of 15 days, the said resolution had already
become final and executory.

Besides, the mere fact that petitioner failed to move for the reconsideration of the trial courts resolution is sufficient cause for the outright dismissal of the
instant petition. Certiorari as a special civil action will not lie unless a motion for reconsideration is first filed before the respondent court to allow it an
opportunity to correct its errors, if any.

Finally, grave abuse of discretion is committed when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility.
The Court fails to find grave abuse of discretion committed by public respondent judge in rendering the assailed resolution and order.

WHEREFORE, the petition is hereby dismissed for lack of merit.

SO ORDERED.

Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.