MUÑOZ vs.

RAMIREZ AND CARLOS

629 SCRA 38 (2010)
BRION, J.:

FACTS:
The subject property in this case is a house and lot previously owned by Spouses Eliseo and Erlinda
Carlos, the TCT of which has already been transferred to petitioner Francisco Muñoz’s name.
Original petition in the RTC was Eliseo and Erlinda’s prayer for the nullification of the Deed of
Sale, for the reason that their transaction with petitioner was only an equitable mortgage and not a
sale. The lot was part of the parcel of land originally owned by Erlinda’s parents.

ISSUE:
Whether or not the property is paraphernal or conjugal and what are the effects on the sale

RULING:
The Court held that as a general rule, all property acquired by the spouses during the marriage are
conjugal. Article 92, paragraph 1, however, provides that properties acquired by gratuitous title
by either spouse shall be excluded from the community property and be the exclusive property of
the spouse. The lot was inherited by Erlinda from her parents, hence, it remains to be her exclusive
property.

According to Article 120, a property may become part of the community property, if the
improvements made to it has a value higher than the value of the property before the improvement.
When this happens the spouse-owner is entitled to a reimbursement of the value of the property
when it was still exclusively owned by him. In this case, the improvements made, valued at about
P60,755.76 paid by Eliseo as salary deductions was smaller in comparison to the amount paid to
the GSIS for the housing loan, the property remains to be the paraphernal property of Erlinda.

Also, since the property was paraphernal, Eliseo’s signatures were not needed in any of the transfer