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QUIAO vs.

QUIAO
G.R. NO. 176556
July 4, 2012

I. FACTS
 On October 26, 2000, respondent Rita C. Quiao (Rita) filed a complaint for legal
separation against petitioner Brigido B. Quiao (Brigido)
 RTC rendered a decision, declaring the legal separation pursuant to Art. 55
- Three minor children to stay to with the plaintiff,
- the properties which are not foreclosed shall be divided equally between
respondent and petitioner, subject to the respective legitimes of the children
and the payment of the unpaid conjugal liabilities of [P]45,740.00.
- Petitioner’s share is forfeited in favor of common children
 Neither party filed a motion for reconsideration and appeal within period provided under
Sec 17 (a) and (b) of rule on legal separation
 On December 12, 2005, the respondents filed a motion for execution which the RTC
granted on Dec. 16, 2005
 On February 10, 2006, the RTC issued a Writ of Execution
 On July 6, 2006, the writ was partially executed with the petitioner paying the
respondents the amount of P46,870.00
 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, asking the RTC to define
the term Net Profits Earned.
 RTC issued an Order 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. It 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
 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.
 The respondents filed a Motion for Reconsideration, praying for the correction and
reversal of the RTC Order. Motion was granted and RTC changed its rulings
 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
II. ISSUE
 Whether Art 102 on dissolution of absolute community or Art 129 on dissolution of
conjugal partnership of gains is applicable in this case.
 Whether or not the offending spouse acquired vested rights over ½ of the properties in
the conjugal partnership
 Whether or not 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?
III. RULING
 ART 129 IS APPLICABLE
 NO
 NO
 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.
IV. RATIONALE
FIRST ISSUE
 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.
 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
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.
 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. The husband and wife
also own in common all the property of the conjugal partnership of gains.
 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

SECOND ISSUE
 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
 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
 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.
 he was well-aware that the respondent prayed in her complaint that all of the
conjugal properties be awarded to her. 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
 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 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.

THIRD ISSUE
 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
 Granting without admitting that Article 102 applies to the instant case,
SINCE both husband and wife have no separate properties, remaining
properties are all part of the absolute community its market value at the
time of the dissolution of the absolute community constitutes the market
value at dissolution. all the properties which remained will be liable for the
debts and obligations of the community. 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. 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.
 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, 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.

 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
 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
VALDEZ vs. RTC BRANCH 102
G.R. NO. 122749
July 31, 1996

I. FACTS
 Antonio Valdes and Consuelo Gomez were married and had 5 children
 On June 22, 1992, Valdes filed a petition for declaration of nullity of marriage
 RTC granted the petition and declared their marriage null and void on the ground of their
mutual psychological incapacity to comply with the essential requisites of marriage. The
3 older children can choose who to stay and the minors will stay with their mother.
Petitioner and respondent shall have visitation rights over the children who are in the
custody of the other. 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.
 Consuelo Gomez sought a clarification regarding the 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."
 In an order RTC clarified 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.
 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
 Petitioner moved for reconsideration but was denied

II. ISSUE
 Whether or not Article 147 of the Family Code with the provisions of Articles 50, 51 and
52 of the same code does not apply to the proceedings on the liquidation of the common
properties on unions without marriage

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

IV. RATIONALE
 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;
 Article 147 of the Family Code, in substance and to the above extent, has
clarified Article 144 of the Civil Code
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.
 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."
 However, 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
 RTC did not commit reversible error in ruling that petitioner and private
respondent’s liquidation and partition of the property owned in common by
them, the provisions on co-ownership under the Civil Code should aptly prevail
and not Articles 50, 51 and 52, in relation to Articles 102 and 129,[12] of the
Family Code because 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
PNB vs. COURT OF APPEALS
158 SCRA 435
August 31, 1987

I. FACTS
 On November 28, 1952, Donata Montemayor, through her son, Salvador M. Vitug,
mortgaged to the Philippine National Bank (PNB) several parcels of land covered by TCT
no. 2289 to guarantee the loan granted by the PNB to Salvador Jaramilla and Pedro
Bacani in the amount of P40,900.00 which was duly registered in the Office of the
Register of Deeds of Pampanga.
 On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB certain
properties covered by TCT no. 2887 and 2888 to guarantee the payment of the loan
account of her son Salvador Vitug in the amount of P35,200.00, which mortgage was
duly registered in the Register of Deeds of Pampanga.
 The above-mentioned Transfer Certificates of Titles covering said properties were all in
the name of Donata Montemayor at the time they were mortgaged to PNB 3 and were
free from all hens and encumbrances.
 Vitug, Jaramilla, and Bacani failed to settle their accounts with PNB so the latter
foreclosed the properties and were sold at public auction and likewise, PNB was the
buyer
 On September 2, 1969, the PNB sold the properties covered by TCT Nos. 2887 and
2888 to Jesus M. Vitug, Anunciacion V. de Guzman, Prudencia V. Fajardo, Salvador
Vitug and Aurora V. Gutierrez in those names the corresponding titles were issued.
 Durinng the lifetime of Clodualdo Vitug, he married 2 times. His first wife was Gervacia
Flores with whom he had 3 children and the second wife named Donata Montemayor
with whom he had 8 children
 Clodualdo died intestate so his estate was settled and distributed in Special proceeding
no. 422
 On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for partition and
reconveyance with damages
 The subject of the action is 30 parcels of land which they claim to be the conjugal property
of the spouses Donata Montemayor and Clodualdo Vitug of which they claim a share of
2/11 of 1/2 thereof. They assailed the mortgage to the PNB and the public auction of the
properties as null and void.
 RTC dismissed the complaint with costs against the plaintiff.
 Plaintiff interposed an appeal to the Court of Appeals. CA reversed and set aside the
RTC decision.

II. ISSUE
 Whether or not presumption of conjugality of properties acquired provided in Article 160
of the Civil Code, can be applied to property covered by a Torrens TCT in the name og
the widow?

III. RULING
 NO
 WHEREFORE, the subject decision of the respondent Court of Appeals is hereby
REVERSED and set aside and another decision is hereby rendered DISMISSING the
complaint and ordering private respondents to pay attomey's fees and expenses of
litigation to petitioner PNB in the amount of P20,000.00 and the costs of the suit.
IV. RATIONALE
 When the subject properties were mortgaged to the PNB they were registered in the
name of Donata Montemayor, widow. PNB relied on the torrens of TCT covering the
said properties and granted the mortgage application
 In processing the loan applications of Donata Montemayor, the PNB had the right to
rely on what appears in the certificates of title and no more. On its face the properties
are owned by Donata Montemayor, a widow. The PNB had no reason to doubt nor
question the status of said registered owner and her ownership thereof. Indeed, there
are no liens and encumbrances covering the same.
 Well-known rule in this jurisdiction is that a person dealing with a registered land has
a right to rely upon the face of the torrens certificate of title and to dispense with the
need of inquiring further, except when the party concerned has actual knowledge of
facts and circumstances that would impel a reasonably cautious man make such
inquiry.
 A torrens title concludes all controversy over ownership of the land covered by a final
degree of registration. Once the title is registered the owner may rest assured without
the necessity of stepping into the portals of the court or sitting in the mirador de su
casa to avoid the possibility of losing his land.
 Article 160 of the Civil Code provides: All property of the marriage is presumed to
belong to the conjugal partnership, unless it be proved that it pertains exclusively to
the husband or to the wife.
 The presumption applies to property acquired during the lifetime of the husband and
wife. When the property is registered in the name of a spouse only and there is no
showing as to when the property was acquired by said spouse, this is an indication that
the property belongs exclusively to said spouse.
 And this presumption under Article 160 of the Civil Code cannot prevail when the title
is in the name of only one spouse and the rights of innocent third parties are
involved.
 Pragmacio and Maximo Vitug are now estopped from questioning the title of Donata
Montemayor to the said properties. They never raised the conjugal nature of the
property nor took issue as to the ownership of their mother, over the same.
 Private respondents were among the defendants in said two cases wherein in their
answers to the complaint they asserted that the properties in question are paraphernal
properties belonging exclusively to Donata Montemayor and are not conjugal in nature.
 Thus they leased the properties from their mother Donata Montemayor for many years
knowing her to be the owner. They were in possession of the property for a long time
and they knew that the same were mortgaged by their mother to the PNB and
thereafter were sold at public auction, but they did not do anything. It is only after 17
years that they remembered to assert their rights. Certainly, they are guilty of laches.
 Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug as
occupants and lessees of the property in question cannot now dispute the ownership
of their mother over the same who was their lessor.
MENDOZA vs. REYES
124 SCRA 335
August 17,1983

I. FACTS
 This case originated with the filing of a complaint by Ponciano S. Reyes with the Court
of First Instance for the annulment of a deed of sale of two parcels of land with their
improvements, executed by his wife, Julia R. De Reyes as vendor and the spouses Efren
V. Mendoza and Inocencia R. De Mendoza, as vendees.
 Ponciano S. Reyes averred that said properties were conjugal properties of himself and
his wife and that she had sold them to petitioners "all by herself" and without his
knowledge or consent.
 Petitioners Efren V. Mendoza and Inocencia R. De Mendoza alleged in their answer that
the properties were paraphernal properties of Julia R. de Reyes and that they had
purchased the same in good faith and for adequate consideration.
 Court of First Instance dismissed the complaint and declared the properties in question
exclusive and paraphernal properties of petitioner Julia R. De Reyes.
 CA reversed the decision, declaring the deed of sale null and void with respect to ½
share of appellant, Register of deeds is hereby directed to cancel TCT, Mendozas hereby
ordered to pay unto appellant the accrued rentals of style properties in litigation
 Petitioners filed separate petitions for review on certiorari.
 Ponciano and Julia were married in 1915. Properties in question were bought from J.M.
Tuason & Co., represented by Gregorio Araneta
 spouses were always in arrears in the payment of the installments to Araneta due to lack
of money so they had to borrow money from the Rehabilitation Finance Corporation-
herein after referred to as RFC for short. The loan they obtained was for the following
exclusive purposes only; 'to complete the construction of one-storey residential building
on 9th Street, La Loma Quezon City; and to pay the balance of the price of the lot offered
as security' which is Lot 5,
 On October 2, 1952, the spouses secured an additional loan of P8,000.00 from the RFC
'to pay the balance of the lot herein offered (Lot No. 6) as additional security, and to
defray the expenses incurred in the repairs of the building' as the deed of mortgage so
recites
 From the loan, Lot no. 6 was paid and the deed of absolute sale was executed by
Araneta. In the deed of sale, the vendee named is 'Julia de Reyes'. Her signatures
appear over the caption vendee and those of Ponciano under the phrase: 'with my marital
consent.
 As promised to the RFC, the spouses built a house and later a camarin on the two lots.
The camarin was leased as a school building for the period of two years
 Camarin was then leased to Mr and Mrs. Mendoza, appellees for ten years
 In spite of the good rentals they had been receiving for the building, the spouses failed
to pay seasonably their obligations to the RFC. they had to ask for an extension of 5
years from the Development Bank of the Philippines or DBP, as successor of the RFC,
for the payment of their outstanding balance
 On March 3, 1961, while Ponciano was absent attending his farm in Arayat, Pampanga,
Julia sold absolutely the lots in question, together with their improvements to appellees
Mendozas for the sum of P80,000.00 without the knowledge and consent of Ponciano.
At the same time the spouses were living separately and were not in speaking terms.
II. ISSUE
 Whether or not the disputed properties are conjugal properties and not exclusive and
paraphernal of Julia
III. RULING
 YES
 WHEREFORE, the petitions for review on certiorari are hereby DENIED for lack of merit.
The judgment of the Court of Appeals is affirmed.
IV. RATIONALE

 applicable provision of law is Article 153 of the Civil Code which provides: 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;
 The presumption found in Article 160 of the Civil Code must also be overcome by one who
contends that the disputed property is paraphernal Article 160 provides:
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.
 Presumption is a strong one. As stated in Camia de Reyes v. Reyes de Ilano, "it is
sufficient to prove that the property was acquired during the marriage in order that
the same may be deemed conjugal property." And in in Laluan v. Malpaya, "proof
of acquisition of the property in dispute during the marriage suffices to render the
statutory presumption operative."
 There is no question that the disputed property was acquired by onerous title
during the marriage. But were the funds used to buy the lot and build the
improvements at the expense of the common fund?
 The records show that the funds came from loans obtained by the spouses from
the Rehabilitation Finance Corporation. Under Article 161 of the Civil Code, all
debts and obligations contracted by the husband and the wife for the benefit of the
conjugal partnership are liabilities of the partnership.
 To rebut the presumption and the evidence of the conjugal character of the
property, the petitioners have only the testimony of Julia de Reyes to offer.
 Mrs. Reyes testified that she bought the two parcels of land on installment basis
and that the first payment of a little less than P2,000.00 came from her personal
funds: The receipt issued by Araneta, however, shows that the first installment on
one lot was only P69.96 and on the other lot, P102.00. Mrs. Reyes also testified
that she paid the entire purchase price and the construction of the buildings from
her personal funds and money borrowed from the Philippine National Bank. The
mortgage contracts, however, show that the properties were paid out of the loan
from RFC.
 Julia’s claim of exclusive ownership is belied by the Income Tax Returns which
she herself prepared and filed in behalf of the conjugal partnership wherein she
made the statement that the rentals paid to her were income of the conjugal
partnership, and she made to appear the properties in question as capital assets
of the conjugal partnership.
 Property acquired during a marriage is presumed to be conjugal and the fact that
the land is later registered in the name of only one of the spouses does not destroy
its conjugal nature. (Bucoy v. Paulino, 23 SCRA 249). Section 46 of P.D. 1529, the
Property Registration Decree, reiterates the proviso in Section 70 of the former
Land Registration Act that registration cannot be construed to relieve registered
land or the owners thereof from any rights incident to the relation of husband and
wife.
 If the fact that property acquired during marriage was registered in the name of the
husband alone does not affect its conjugal nature, neither does registration in the
name of the wife. Any person who buys land registered in the married name of the
wife is put on notice about its conjugal nature.
CALIMLIM vs. FORTUN
129 SCRA 675
JUNE 22, 1984

I. FACTS
 Petitioner MERCEDES Calimlim-Canullas and FERNANDO Canullas were married on
December 19, 1962. They begot five children. They lived in a small house on the
residential land in question with an area of approximately 891 square meters
 After FERNANDO's father died in 1965, FERNANDO inherited the land.
 In 1978, FERNANDO abandoned his family and was living with private respondent
Corazon DAGUINES. During the pendency of this appeal, they were convicted of
concubinage
 On April 15, 1980, FERNANDO sold the subject property with the house thereon to
DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO described
the house as "also inherited by me from my deceased parents."
 Unable to take possession of the lot and house, DAGUINES initiated a complaint on
June 19, 1980 for quieting of title and damages against MERCEDES. The latter
resisted and claimed that the house in dispute where she and her children were
residing, including the coconut trees on the land, were built and planted with conjugal
funds and through her industry; that the sale of the land together with the house and
improvements to DAGUINES was null and void because they are conjugal properties
and she had not given her consent to the sale
 Respondent court promulgated a decision declaring Daguines the true and lawful
owner of the land in question and 10 coconut trees; Declaring null and void the sale of
the conjugal house including the 3 coconut trees and other crops planted during the
conjugal relation between Fernando Canullas (vendor) and his legitimate wife, herein
defendant Mercedes Calimlim- Canullas;

II. ISSUE
 Whether or not the construction of a conjugal house on the exclusive property of the
husband ipso facto gave the land the character of conjugal property
 Whether or not the sale of the lot together with the house and improvements thereon
was valid under the circumstances surrounding the transaction.

III. RULING

 WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his
Resolution of November 27, 1980 on petitioner's Motion for Reconsideration, are
hereby set aside and the sale of the lot, house and improvements in question, is
hereby declared null and void. No costs.

IV. RATIONALE
 determination of the first issue revolves around the interpretation to be given to the
second paragraph of Article 158 of the Civil Code
Buildings constructed at the expense of the partnership during
the marriage on land belonging to one of the spouses also
pertain to the partnership, but the value of the land shall be
reimbursed to the spouse who owns the same.
 both the land and the building belong to the conjugal partnership but the conjugal
partnership is indebted to the husband for the value of the land. The spouse owning
the lot becomes a creditor of the conjugal partnership for the value of the lot, 1 which
value would be reimbursed at the liquidation of the conjugal partnership.