G.R.
No 176556 July 4, 2012 WHEREFORE, viewed from the foregoing considerations, judgment is hereby rendered
BRIGIDO B. QUIAO, Petitioner,
vs.
RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by
their mother RITA QUIAO, Respondents.
DECISION
REYES, J.:
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 Certiorari1 under Rule 45 of the Rules
of Court. The petitioner seeks that we vacate and set aside the Order2 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 Decision4 dated October 10, 2005, the dispositive portion of which provides:
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
[₱]45,740.00.
[Petitioner’s] 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 [₱]19,000.00 as attorney's fees
and litigation expenses of [₱]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 execution7 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 Execution9 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 ₱46,870.00, representing the following payments:
(a) ₱22,870.00 – as petitioner's share of the payment of the conjugal share;
(b) ₱19,000.00 – as attorney's fees; and
(c) ₱5,000.00 – 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 Order13 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 Reconsideration17
on September 8, 2006. Consequently, the RTC issued another Order18 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
I Motion for Clarification was filed on July 7, 2006.
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?
II
WHAT IS THE MEANING OF THE NET PROFITS EARNED BY THE CONJUGAL PARTNERSHIP FOR
PURPOSES OF EFFECTING THE FORFEITURE AUTHORIZED UNDER ARTICLE 63 OF THE FAMILY
CODE?
III
WHAT LAW GOVERNS THE PROPERTY RELATIONS BETWEEN THE HUSBAND AND WIFE WHO
GOT MARRIED IN 1977? CAN THE FAMILY CODE OF THE PHILIPPINES BE GIVEN RETROACTIVE
EFFECT FOR PURPOSES OF DETERMINING THE NET PROFITS SUBJECT OF FORFEITURE AS A
RESULT OF THE DECREE OF LEGAL SEPARATION WITHOUT IMPAIRING VESTED RIGHTS
ALREADY ACQUIRED UNDER THE CIVIL CODE?
IV
WHAT PROPERTIES SHALL BE INCLUDED IN THE FORFEITURE OF THE SHARE OF THE GUILTY
SPOUSE IN THE NET CONJUGAL PARTNERSHIP AS A RESULT OF THE ISSUANCE OF THE
DECREE OF LEGAL SEPARATION?23
Our Ruling
While the petitioner has raised a number of issues on the applicability of certain laws, we
are well-aware that the respondents have called our attention to the fact that the Decision
dated October 10, 2005 has attained 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
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 RTC’s Decision dated October 10, 2005. For 270 days, the
petitioner never raised a single issue until the decision had already been partially executed.
Thus at the time the petitioner filed his motion for clarification, the trial court’s 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 Separation33 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
₱503,862.10 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 ₱19,000.00
as attorney's fees and litigation expenses of ₱5,000.00.54
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 title—legal or equitable—to the present or future
enjoyment of property.62 (Citations omitted)
In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List 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.
SO ORDERED.
G.R. No. 164201 December 10, 2012
EFREN PANA, Petitioner,
vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE, JR., Respondents.
DECISION
ABAD, J.:
This case is about the propriety of levy and execution on conjugal properties where one of
the spouses has been found guilty of a crime and ordered to pay civil indemnities to the
victims' heirs.
The Facts and the Case
The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and others of
murder before the. Regional Trial Court (RTC) of Surigao City in Criminal Cases 4232 and
4233.1
On July 9, 1997 the RTC rendered a consolidated decision2 acquitting Efren of the charge for
insufficiency of evidence but finding Melecia and another person guilty as charged and
sentenced them to the penalty of death. The RTC ordered those found guilty to pay each of
the heirs of the victims, jointly and severally, P50,000.00 as civil indemnity, P50,000.00 each
as moral damages, and P150,000.00 actual damages.
On appeal to this Court, it affirmed on May 24, 2001 the conviction of both accused but
modified the penalty to reclusion perpetua. With respect to the monetary awards, the Court
also affirmed the award of civil indemnity and moral damages but deleted the award for
actual damages for lack of evidentiary basis. In its place, however, the Court made an award
of P15,000.00 each by way of temperate damages. In addition, the Court awarded
P50,000.00 exemplary damages per victim to be paid solidarily by them.3 The decision
became final and executory on October 1, 2001.4
Upon motion for execution by the heirs of the deceased, on March 12, 2002 the RTC
ordered the issuance of the writ,5 resulting in the levy of real properties registered in the
names of Efren and Melecia.6 Subsequently, a notice of levy7 and a notice of sale on
execution8 were issued.
On April 3, 2002, petitioner Efren and his wife Melecia filed a motion to quash the writ of
execution, claiming that the levied properties were conjugal assets, not paraphernal assets
of Melecia.9 On September 16, 2002 the RTC denied the motion.10 The spouses moved for
reconsideration but the RTC denied the same on March 6, 2003.11
Claiming that the RTC gravely abused its discretion in issuing the challenged orders, Efren
filed a petition for certiorari before the Court of Appeals (CA). On January 29, 2004 the CA
dismissed the petition for failure to sufficiently show that the RTC gravely abused its
discretion in issuing its assailed orders.12 It also denied Efren’s motion for
reconsideration,13 prompting him to file the present petition for review on certiorari.
The Issue Presented
The sole issue presented in this case is whether or not the CA erred in holding that the
conjugal properties of spouses Efren and Melecia can be levied and executed upon for the
satisfaction of Melecia’s civil liability in the murder case.
Ruling of the Court
To determine whether the obligation of the wife arising from her criminal liability is
chargeable against the properties of the marriage, the Court has first to identify the
spouses’ property relations.
Efren claims that his marriage with Melecia falls under the regime of conjugal partnership of
gains, given that they were married prior to the enactment of the Family Code and that they
did not execute any prenuptial agreement.14 Although the heirs of the deceased victims do
not dispute that it was the Civil Code, not the Family Code, which governed the marriage,
they insist that it was the system of absolute community of property that applied to Efren
and Melecia. The reasoning goes:
Admittedly, the spouses were married before the effectivity of the Family Code. But that
fact does not prevent the application of [A]rt. 94, last paragraph, of the Family Code
because their property regime is precisely governed by the law on absolute community. This
finds support in Art. 256 of the Family Code which states:
"This code shall have retroactive effect in so far as it does not prejudice or impair vested or
acquired rights in accordance with the Civil Code or other laws."
None of the spouses is dead. Therefore, no vested rights have been acquired by each over
the properties of the community. Hence, the liabilities imposed on the accused-spouse may
properly be charged against the community as heretofore discussed.15
The RTC applied the same reasoning as above.16 Efren and Melecia’s property relation was
admittedly conjugal under the Civil Code but, since the transitory provision of the Family
Code gave its provisions retroactive effect if no vested or acquired rights are impaired, that
property relation between the couple was changed when the Family Code took effect in
1988. The latter code now prescribes in Article 75 absolute community of property for all
marriages unless the parties entered into a prenuptial agreement. As it happens, Efren and
Melecia had no prenuptial agreement. The CA agreed with this position.17
Both the RTC and the CA are in error on this point. While it is true that the personal stakes
of each spouse in their conjugal assets are inchoate or unclear prior to the liquidation of the
conjugal partnership of gains and, therefore, none of them can be said to have acquired
vested rights in specific assets, it is evident that Article 256 of the Family Code does not
intend to reach back and automatically convert into absolute community of property
relation all conjugal partnerships of gains that existed before 1988 excepting only those with
prenuptial agreements.
The Family Code itself provides in Article 76 that marriage settlements cannot be modified
except prior to marriage.
Art. 76. In order that any modification in the marriage settlements may be valid, it must be
made before the celebration of the marriage, subject to the provisions of Articles 66, 67,
128, 135 and 136.
Clearly, therefore, the conjugal partnership of gains that governed the marriage between
Efren and Melecia who were married prior to 1988 cannot be modified except before the
celebration of that marriage.
Post-marriage modification of such settlements can take place only where: (a) the absolute
community or conjugal partnership was dissolved and liquidated upon a decree of legal
separation;18 (b) the spouses who were legally separated reconciled and agreed to revive
their former property regime;19 (c) judicial separation of property had been had on the
ground that a spouse abandons the other without just cause or fails to comply with his
obligations to the family;20 (d) there was judicial separation of property under Article 135;
(e) the spouses jointly filed a petition for the voluntary dissolution of their absolute
community or conjugal partnership of gains.21 None of these circumstances exists in the
case of Efren and Melecia.
What is more, under the conjugal partnership of gains established by Article 142 of the Civil
Code, the husband and the wife place only the fruits of their separate property and incomes
from their work or industry in the common fund. Thus:
Art. 142. By means of the conjugal partnership of gains the husband and wife place in a
common fund the fruits of their separate property and the income from their work or
industry, and divide equally, upon the dissolution of the marriage or of the partnership, the
net gains or benefits obtained indiscriminately by either spouse during the marriage.
This means that they continue under such property regime to enjoy rights of ownership over
their separate properties. Consequently, to automatically change the marriage settlements
of couples who got married under the Civil Code into absolute community of property in
1988 when the Family Code took effect would be to impair their acquired or vested rights to
such separate properties.
The RTC cannot take advantage of the spouses’ loose admission that absolute community of
property governed their property relation since the record shows that they had been
insistent that their property regime is one of conjugal partnership of gains.22 No evidence
of a prenuptial agreement between them has been presented.
What is clear is that Efren and Melecia were married when the Civil Code was still the
operative law on marriages. The presumption, absent any evidence to the contrary, is that
they were married under the regime of the conjugal partnership of gains. Article 119 of the
Civil Code thus provides:
Art. 119. The future spouses may in the marriage settlements agree upon absolute or
relative community of property, or upon complete separation of property, or upon any
other regime. In the absence of marriage settlements, or when the same are void, the
system of relative community or conjugal partnership of gains as established in this Code,
shall govern the property relations between husband and wife.
Of course, the Family Code contains terms governing conjugal partnership of gains that
supersede the terms of the conjugal partnership of gains under the Civil Code. Article 105 of
the Family Code states:
"x x x x
The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to
conjugal partnerships of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance with the Civil
Code or other laws, as provided in Article 256."23
Consequently, the Court must refer to the Family Code provisions in deciding whether or
not the conjugal properties of Efren and Melecia may be held to answer for the civil
liabilities imposed on Melecia in the murder case. Its Article 122 provides:
Art. 122. The payment of personal debts contracted by the husband or the wife before or
during the marriage shall not be charged to the conjugal properties partnership except
insofar as they redounded to the benefit of the family.
Neither shall the fines and pecuniary indemnities imposed upon them be charged to the
partnership.
However, the payment of personal debts contracted by either spouse before the marriage,
that of fines and indemnities imposed upon them, as well as the support of illegitimate
children of either spouse, may be enforced against the partnership assets after the
responsibilities enumerated in the preceding Article have been covered, if the spouse who is
bound should have no exclusive property or if it should be insufficient; but at the time of the
liquidation of the partnership, such spouse shall be charged for what has been paid for the
purpose above-mentioned.
Since Efren does not dispute the RTC’s finding that Melecia has no exclusive property of her
own,24 the above applies. The civil indemnity that the decision in the murder case imposed
on her may be enforced against their conjugal assets after the responsibilities enumerated
in Article 121 of the Family Code have been covered.25 Those responsibilities are as follows:
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and the legitimate children of
either spouse; however, the support of illegitimate children shall be governed by
the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the designated
administrator-spouse for the benefit of the conjugal partnership of gains, or by both
spouses or by one of them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of the
other to the extent that the family may have benefited;
(4) All taxes, liens, charges, and expenses, including major or minor repairs upon the
conjugal partnership property;
(5) All taxes and expenses for mere preservation made during the marriage upon
the separate property of either spouse;
(6) Expenses to enable either spouse to commence or complete a professional,
vocational, or other activity for self-improvement;
(7) Antenuptial debts of either spouse insofar as they have redounded to the benefit
of the family;
(8) The value of what is donated or promised by both spouses in favor of their
common legitimate children for the exclusive purpose of commencing or completing
a professional or vocational course or other activity for self-improvement; and
(9) Expenses of litigation between the spouses unless the suit is found to be
groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall
be solidarily liable for the unpaid balance with their separate properties.1âwphi1
Contrary to Efren’s contention, Article 121 above allows payment of the criminal
indemnities imposed on his wife, Melecia, out of the partnership assets even before these
are liquidated. Indeed, it states that such indemnities "may be enforced against the
partnership assets after the responsibilities enumerated in the preceding article have been
covered."[26] No prior liquidation of those assets is required. This is not altogether unfair
since Article 122 states that "at the time of liquidation of the partnership, such [offending]
spouse shall be charged for what has been paid for the purposes above-mentioned."
WHEREFORE, the Court AFFIRMS with MODIFICATION the Resolutions of the Court of
Appeals in CA-G.R. SP 77198 dated January 29, 2004 and May 14, 2004. The Regional Trial
Court of Surigao City, Branch 30, shall first ascertain that, in enforcing the writ of execution
on the conjugal properties of spouses Efren and Melecia Pana for the satisfaction of the
indemnities imposed by final judgment on the latter accused in Criminal Cases 4232 and
4233, the responsibilities enumerated in Article 121 of the Family Code have been covered.
SO ORDERED.
G.R. No. 165803 September 1, 2010
SPOUSES REX AND CONCEPCION AGGABAO, Petitioners,
vs.
DIONISIO Z. PARULAN, JR. and MA. ELENA PARULAN, Respondents.
 DECISION
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 CA’s finding that the vendees
were not buyers in good faith, because they did not exercise the necessary prudence to
inquire into the wife’s 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, Parañaque City and registered
under Transfer Certificate of Title (TCT) No. 633762 and TCT No. 633773 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 Atanacio’s 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 owner’s
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 ₱20,000.00 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 ₱130,000.00 on February 4, 1991; (b) they would pay the balance of
the bank loan of the respondents amounting to ₱650,000.00 on or before February 15,
1991; and (c) they would make the final payment of ₱700,000.00 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
Assessor’s Office of Parañaque 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 Baños 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 ₱500,000.00.9
The petitioners and Atanacio next inquired about the mortgage and the court order
annotated on TCT No. 63377 at the Los Baños Rural Bank. There, they met with Atty. Noel
Zarate, the bank’s 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 ₱130,000.00 as additional down
payment on February 4, 1991; and ₱650,000.00 to the Los Baños Rural Bank on February 12,
1991, which then released the owner’s duplicate copy of TCT No. 63377 to them. 11
On March 18, 1991, the petitioners delivered the final amount of ₱700,000.00 to Ma. Elena,
who executed a deed of absolute sale in their favor. However, Ma. Elena did not turn over
the owner’s 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 owner’s 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 owner’s copy of TCT No. 63376 as promised. In
due time, the petitioners learned that the duplicate owner’s 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 Atanacio’s 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 ₱800,000.00" in exchange for the
duplicate owner’s copy of TCT No. 63376, because Atty. Parulan represented the current
value of the property to be ₱1.5 million. As a counter-offer, however, they tendered
₱250,000.00, 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, Parañaque, 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
₱50,000.00 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 Baños 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 Atanacio’s advice that
they first consult a lawyer before buying the property; that with ordinary prudence, they
should first have obtained the owner’s 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 RTC’s 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 man’s
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 Appeals26 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 conjugal
properties 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. Parulan’s counter-offer during the March 25,
1991 meeting.
We do not subscribe to the petitioners’ submissions.
To start with, Article 25427 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 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.
Thirdly, according to Article 25629 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 petitioner’s 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.31
Lastly, the petitioners’ insistence that Atty. Parulan’s 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 spouse’s 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 vendor’s title,
but also agent’s 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 man’s
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 Baños Rural Bank. They lament the holding
of the CA that they should have been put on their guard when they learned that the Los
Baños 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 seller’s 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 Baños 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:381avvphi1
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. Elena’s SPA without first taking
precautions to verify its authenticity was not a prudent buyer’s 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-à-
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 ₱700,000.00 even without the owner’s 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
owner’s 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 Baños
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 owner’s original copy of TCT
No. 63376 was in the possession of Atty. Parulan, contrary to Elena’s 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."
Costs of suit to be paid by the petitioners.
SO ORDERED.
G.R. No. 183984 April 13, 2011
ARTURO SARTE FLORES, Petitioner,
vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 30 May 2008 Decision2 and the 4
August 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No. 94003.
The Antecedent Facts
The facts, as gleaned from the Court of Appeals’ Decision, are as follows:
On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner)
amounting to ₱400,000 payable on 1 December 1995 with 3% compounded monthly
interest and 3% surcharge in case of late payment. To secure the loan, Edna executed a
Deed of Real Estate Mortgage4 (the Deed) covering a property in the name of Edna and her
husband Enrico (Enrico) Lindo, Jr. (collectively, respondents). Edna also signed a Promissory
Note5 and the Deed for herself and for Enrico as his attorney-in-fact.
Edna issued three checks as partial payments for the loan. All checks were dishonored for
insufficiency of funds, prompting petitioner to file a Complaint for Foreclosure of Mortgage
with Damages against respondents. The case was raffled to the Regional Trial Court of
Manila, Branch 33 (RTC, Branch 33) and docketed as Civil Case No. 00-97942.
In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner was not
entitled to judicial foreclosure of the mortgage. The RTC, Branch 33 found that the Deed
was executed by Edna without the consent and authority of Enrico. The RTC, Branch 33
noted that the Deed was executed on 31 October 1995 while the Special Power of Attorney
(SPA) executed by Enrico was only dated 4 November 1995.
The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the loan
from Edna as he could file a personal action against her. However, the RTC, Branch 33 ruled
that it had no jurisdiction over the personal action which should be filed in the place where
the plaintiff or the defendant resides in accordance with Section 2, Rule 4 of the Revised
Rules on Civil Procedure.
Petitioner filed a motion for reconsideration. In its Order7 dated 8 January 2004, the RTC,
Branch 33 denied the motion for lack of merit.
On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages against
respondents. It was raffled to Branch 42 (RTC, Branch 42) of the Regional Trial Court of
Manila, and docketed as Civil Case No. 04-110858.
Respondents filed their Answer with Affirmative Defenses and Counterclaims where they
admitted the loan but stated that it only amounted to ₱340,000. Respondents further
alleged that Enrico was not a party to the loan because it was contracted by Edna without
Enrico’s signature. Respondents prayed for the dismissal of the case on the grounds of
improper venue, res judicata and forum-shopping, invoking the Decision of the RTC, Branch
33. On 7 March 2005, respondents also filed a Motion to Dismiss on the grounds of res
judicata and lack of cause of action.
The Decision of the Trial Court
On 22 July 2005, the RTC, Branch 42 issued an Order8 denying the motion to dismiss. The
RTC, Branch 42 ruled that res judicata will not apply to rights, claims or demands which,
although growing out of the same subject matter, constitute separate or distinct causes of
action and were not put in issue in the former action. Respondents filed a motion for
reconsideration. In its Order9 dated 8 February 2006, the RTC, Branch 42 denied
respondents’ motion. The RTC, Branch 42 ruled that the RTC, Branch 33 expressly stated
that its decision did not mean that petitioner could no longer recover the loan petitioner
extended to Edna.
Respondents filed a Petition for Certiorari and Mandamus with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order before the Court of Appeals.
 The Decision of the Court of Appeals
In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 and 8 February
2006 Orders of the RTC, Branch 42 for having been issued with grave abuse of discretion.
The Court of Appeals ruled that while the general rule is that a motion to dismiss is
interlocutory and not appealable, the rule admits of exceptions. The Court of Appeals ruled
that the RTC, Branch 42 acted with grave abuse of discretion in denying respondents’
motion to dismiss.
The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of Civil Procedure,
a party may not institute more than one suit for a single cause of action. If two or more suits
are instituted on the basis of the same cause of action, the filing of one on a judgment upon
the merits in any one is available ground for the dismissal of the others. The Court of
Appeals ruled that on a nonpayment of a note secured by a mortgage, the creditor has a
single cause of action against the debtor, that is recovery of the credit with execution of the
suit. Thus, the creditor may institute two alternative remedies: either a personal action for
the collection of debt or a real action to foreclose the mortgage, but not both. The Court of
Appeals ruled that petitioner had only one cause of action against Edna for her failure to pay
her obligation and he could not split the single cause of action by filing separately a
foreclosure proceeding and a collection case. By filing a petition for foreclosure of the real
estate mortgage, the Court of Appeals held that petitioner had already waived his personal
action to recover the amount covered by the promissory note.
Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, the Court of
Appeals denied the motion.
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals committed a reversible error in
dismissing the complaint for collection of sum of money on the ground of multiplicity of
suits.
The Ruling of this Court
The petition has merit.
The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor,
that is, to recover the debt.10 The mortgage-creditor has the option of either filing a
personal action for collection of sum of money or instituting a real action to foreclose on the
mortgage security.11 An election of the first bars recourse to the second, otherwise there
would be multiplicity of suits in which the debtor would be tossed from one venue to
another depending on the location of the mortgaged properties and the residence of the
parties.12
The two remedies are alternative and each remedy is complete by itself.13 If the mortgagee
opts to foreclose the real estate mortgage, he waives the action for the collection of the
debt, and vice versa.14 The Court explained:
x x x in the absence of express statutory provisions, a mortgage creditor may institute
against the mortgage debtor either a personal action for debt or a real action to foreclose
the mortgage. In other words, he may pursue either of the two remedies, but not both. By
such election, his cause of action can by no means be impaired, for each of the two
remedies is complete in itself. Thus, an election to bring a personal action will leave open to
him all the properties of the debtor for attachment and execution, even including the
mortgaged property itself. And, if he waives such personal action and pursues his remedy
against the mortgaged property, an unsatisfied judgment thereon would still give him the
right to sue for deficiency judgment, in which case, all the properties of the defendant,
other than the mortgaged property, are again open to him for the satisfaction of the
deficiency. In either case, his remedy is complete, his cause of action undiminished, and any
advantages attendant to the pursuit of one or the other remedy are purely accidental and
are all under his right of election. On the other hand, a rule that would authorize the
plaintiff to bring a personal action against the debtor and simultaneously or successively
another action against the mortgaged property, would result not only in multiplicity of suits
so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity
(Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of
being sued in the place of his residence or of the residence of the plaintiff, and then again in
the place where the property lies.15
The Court has ruled that if a creditor is allowed to file his separate complaints
simultaneously or successively, one to recover his credit and another to foreclose his
mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so
much costs to the court and with so much vexation and oppressiveness to the debtor. 16
In this case, however, there are circumstances that the Court takes into consideration.
Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33 ruled that
petitioner was not entitled to judicial foreclosure because the Deed of Real Estate Mortgage
was executed without Enrico’s consent. The RTC, Branch 33 stated:
All these circumstances certainly conspired against the plaintiff who has the burden of
proving his cause of action. On the other hand, said circumstances tend to support the claim
of defendant Edna Lindo that her husband did not consent to the mortgage of their conjugal
property and that the loan application was her personal decision.
Accordingly, since the Deed of Real Estate Mortgage was executed by defendant Edna Lindo
lacks the consent or authority of her husband Enrico Lindo, the Deed of Real Estate
Mortgage is void pursuant to Article 96 of the Family Code.
This does not mean, however, that the plaintiff cannot recover the ₱400,000 loan plus
interest which he extended to defendant Edna Lindo. He can institute a personal action
against the defendant for the amount due which should be filed in the place where the
plaintiff resides, or where the defendant or any of the principal defendants resides at the
election of the plaintiff in accordance with Section 2, Rule 4 of the Revised Rules on Civil
Procedure. This Court has no jurisdiction to try such personal action.17
Edna did not deny before the RTC, Branch 33 that she obtained the loan. She claimed,
however, that her husband did not give his consent and that he was not aware of the
transaction.18 Hence, the RTC, Branch 33 held that petitioner could still recover the amount
due from Edna through a personal action over which it had no jurisdiction.
Edna also filed an action for declaratory relief before the RTC, Branch 93 of San Pedro
Laguna (RTC, Branch 93), which ruled:
At issue in this case is the validity of the promissory note and the Real Estate Mortgage
executed by Edna Lindo without the consent of her husband.
The real estate mortgage executed by petition Edna Lindo over their conjugal property is
undoubtedly an act of strict dominion and must be consented to by her husband to be
effective. In the instant case, the real estate mortgage, absent the authority or consent of
the husband, is necessarily void. Indeed, the real estate mortgage is this case was executed
on October 31, 1995 and the subsequent special power of attorney dated November 4, 1995
cannot be made to retroact to October 31, 1995 to validate the mortgage previously made
by petitioner.
The liability of Edna Lindo on the principal contract of the loan however subsists
notwithstanding the illegality of the mortgage. Indeed, where a mortgage is not valid, the
principal obligation which it guarantees is not thereby rendered null and void. That
obligation matures and becomes demandable in accordance with the stipulation pertaining
to it. Under the foregoing circumstances, what is lost is merely the right to foreclose the
mortgage as a special remedy for satisfying or settling the indebtedness which is the
principal obligation. In case of nullity, the mortgage deed remains as evidence or proof of a
personal obligation of the debtor and the amount due to the creditor may be enforced in an
ordinary action.
In view of the foregoing, judgment is hereby rendered declaring the deed of real estate
mortgage as void in the absence of the authority or consent of petitioner’s spouse therein.
The liability of petitioner on the principal contract of loan however subsists notwithstanding
the illegality of the real estate mortgage.19
The RTC, Branch 93 also ruled that Edna’s liability is not affected by the illegality of the real
estate mortgage.
Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail,
subject to recourse to the court by the wife for proper remedy, which must be availed of
within five years from the date of 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.
(Emphasis supplied)
Article 124 of the Family Code of which applies to conjugal partnership property, is a
reproduction of Article 96 of the Family Code which applies to community property.
Both Article 96 and Article 127 of the Family Code provide that the powers do not include
disposition or encumbrance without the written consent of the other spouse. Any
disposition or encumbrance without the written consent shall be void. However, both
provisions also state that "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 x x x before the offer is withdrawn by
either or both offerors."
In this case, the Promissory Note and the Deed of Real Estate Mortgage were executed on
31 October 1995. The Special Power of Attorney was executed on 4 November 1995. The
execution of the SPA is the acceptance by the other spouse that perfected the continuing
offer as a binding contract between the parties, making the Deed of Real Estate Mortgage
a valid contract.
However, as the Court of Appeals noted, petitioner allowed the decisions of the RTC, Branch
33 and the RTC, Branch 93 to become final and executory without asking the courts for an
alternative relief. The Court of Appeals stated that petitioner merely relied on the
declarations of these courts that he could file a separate personal action and thus failed to
observe the rules and settled jurisprudence on multiplicity of suits, closing petitioner’s
avenue for recovery of the loan.
Nevertheless, petitioner still has a remedy under the law.
In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute against the
mortgage-debtor either a personal action for debt or a real action to foreclose the
mortgage. The Court ruled that the remedies are alternative and not cumulative and held
that the filing of a criminal action for violation of Batas Pambansa Blg. 22 was in effect a
collection suit or a suit for the recovery of the mortgage-debt.21 In that case, however, this
Court pro hac vice, ruled that respondents could still be held liable for the balance of the
loan, applying the principle that no person may unjustly enrich himself at the expense of
another.22
The principle of unjust enrichment is provided under Article 22 of the Civil Code which
provides:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.
There is unjust enrichment "when a person unjustly retains a benefit to the loss of another,
or when a person retains money or property of another against the fundamental principles
of justice, equity and good conscience."23 The principle of unjust enrichment requires two
conditions: (1) that a person is benefited without a valid basis or justification, and (2) that
such benefit is derived at the expense of another.241avvphi1
The main objective of the principle against unjust enrichment is to prevent one from
enriching himself at the expense of another without just cause or consideration.25 The
principle is applicable in this case considering that Edna admitted obtaining a loan from
petitioners, and the same has not been fully paid without just cause. The Deed was declared
void erroneously at the instance of Edna, first when she raised it as a defense before the
RTC, Branch 33 and second, when she filed an action for declaratory relief before the RTC,
Branch 93. Petitioner could not be expected to ask the RTC, Branch 33 for an alternative
remedy, as what the Court of Appeals ruled that he should have done, because the RTC,
Branch 33 already stated that it had no jurisdiction over any personal action that petitioner
might have against Edna.
Considering the circumstances of this case, the principle against unjust enrichment, being a
substantive law, should prevail over the procedural rule on multiplicity of suits. The Court of
Appeals, in the assailed decision, found that Edna admitted the loan, except that she
claimed it only amounted to ₱340,000. Edna should not be allowed to unjustly enrich herself
because of the erroneous decisions of the two trial courts when she questioned the validity
of the Deed. Moreover, Edna still has an opportunity to submit her defenses before the RTC,
Branch 42 on her claim as to the amount of her indebtedness.
WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 94003 are SET ASIDE. The Regional Trial Court of Manila, Branch
42 is directed to proceed with the trial of Civil Case No. 04-110858.
SO ORDERED.
G.R. No. 193038, March 11, 2015
JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B. NUEGA, Respondent.
DECISION
VILLARAMA, JR., J.:
At bar is a petition for review on certiorari of the Decision1 dated May 14, 2010 and the
Resolution2 dated July 21, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 70235, which
affirmed with modification the assailed Decision3 dated February 14, 2001 of the Regional
Trial Court (RTC) of Marikina City, Branch 273, in Civil Case No. 96-274-MK.
The following facts are found by the trial court and affirmed by the appellate court:
Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on
September 1, 1990.4 Sometime in 1988 when the parties were still engaged, Shirley was
working as a domestic helper in Israel. Upon the request of Rogelio, Shirley sent him money5
for the purchase of a residential lot in Marikina where they had planned to eventually build
their home. Rogelio was then also working abroad as a seaman. The following year, or on
September 13, 1989, Rogelio purchased the subject house and lot for One Hundred Two
Thousand Pesos (P102,000.00)6 from Rodeanna Realty Corporation. The subject property
has an aggregate area of one hundred eleven square meters (111 sq. m.) covered by
Transfer Certificate of Title (TCT) No. N-133844.7 Shirley claims that upon her arrival in the
Philippines sometime in 1989, she settled the balance for the equity over the subject
property with the developer through SSS8 financing. She likewise paid for the succeeding
monthly amortizations. On October 19, 1989, TCT No. 171963 9 over the subject property
was issued by the Registry of Deeds of Marikina, Rizal solely under the name of Rogelio.
On September 1, 1990, Shirley and Rogelio got married and lived in the subject property.
The following year, Shirley returned to Israel for work. While overseas, she received
information that Rogelio had brought home another woman, Monica Escobar, into the
family home. She also learned, and was able to confirm upon her return to the Philippines in
May 1992, that Rogelio had been introducing Escobar as his wife.
In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the
Provincial Prosecution Office of Rizal, and another for Legal Separation and Liquidation of
Property before the RTC of Pasig City. Shirley later withdrew the complaint for legal
separation and liquidation of property, but re-filed10 the same on January 29, 1993. In
between the filing of these cases, Shirley learned that Rogelio had the intention of selling
the subject property. Shirley then advised the interested buyers - one of whom was their
neighbor and petitioner Josefina V. Nobleza (petitioner) - of the existence of the cases that
she had filed against Rogelio and cautioned them against buying the subject property until
the cases are closed and terminated. Nonetheless, under a Deed of Absolute Sale11 dated
December 29, 1992, Rogelio sold the subject property to petitioner without Shirley's
consent in the amount of Three Hundred Eighty Thousand Pesos (P380,000.00), including
petitioner's undertaking to assume the existing mortgage on the property with the National
Home Mortgage Finance Corporation and to pay the real property taxes due thereon.
Meanwhile, in a Decision12 dated May 16, 1994, the RTC of Pasig City, Branch 70, granted
the petition for legal separation and ordered the dissolution and liquidation of the regime of
absolute community of property between Shirley and Rogelio,
viz.:chanroblesvirtuallawlibrary
WHEREFORE, in view of the foregoing, the Court hereby grants the instant petition for legal
separation between the subject spouses with all its legal effects as provided for in Art. 63 of
the Family Code. Their community property is consequently dissolved and must be
liquidated in accordance with Art. 102 of the New Family Code. The respondent is thus
hereby enjoined from selling, encumbering or in any way disposing or alienating any of their
community property including the subject house and lot before the required liquidation.
Moreover, he, being the guilty spouse, must forfeit the net profits of the community
property in favor of the petitioner who is the innocent spouse pursuant to Art. 43 of the
aforesaid law. Finally, in the light of the claim of ownership by the present occupants who
have not been impleaded in the instant case, a separate action must be instituted by the
petitioner against the alleged buyer or buyers thereof to determine their respective rights
thereon.
Let a copy of this decision be furnished the Local Civil Registrar of Manila, the Register of
Deeds of Marikina, Metro Manila and the National Statistics Office (NSO), sta. Mesa, Manila.
SO ORDERED.13cralawlawlibrary
Rogelio appealed the above-quoted ruling before the CA which denied due course and
dismissed the petition. It became final and executory and a writ of execution was issued in
August 1995.14
On August 27, 1996, Shirley instituted a Complaint15 for Rescission of Sale and Recoveiy of
Property against petitioner and Rogelio before the RTC of Marikina City, Branch 273. After
trial on the merits, the trial court rendered its decision on February 14, 2001,
viz.:chanroblesvirtuallawlibrary
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of
plaintiff Shirley Nuega and against defendant Josefina Nobleza, as follows:
1) the Deed of Absolute Sale dated December 29, 1992 insofar as the 55.05 square meters
representing the one half (1/2) portion of plaintiff Shirley Nuega is concerned, is hereby
ordered rescinded, the same being null and void;
2) defendant Josefina Nobleza is ordered to reconvey said 55.05 square meters to plaintiff
Shirley Nuega, or in the alternative to pay plaintiff Shirley Nuega the present market
value of said 55.05 square meters; and
3) to pay plaintiff Shirley Nuega attorney's fees in the sum of Twenty Thousand Pesos
(P20,000.00).
For lack of merit, defendant's counterclaim is hereby DENIED.
SO ORDERED.16
Petitioner sought recourse with the CA, while Rogelio did not appeal the ruling of the trial
court. In its assailed Decision promulgated on May 14, 2010, the appellate court affirmed
with modification the trial court's ruling, viz.:chanroblesvirtuallawlibrary
WHEREFORE, subject to the foregoing disquisition, the appeal is DENIED. The Decision
dated 14 February 2001 of the Regional Trial Court of Marikina City, Branch 273 in Civil Case
No. 96-274-MK is AFFIRMED with MODIFICATION in that the Deed of Absolute Sale dated
29 December 1992 is hereby declared null and void in its entirety, and defendant-appellant
Josefina V. Nobleza is ordered to reconvey the entire subject property to plaintiff-appellee
Shirley B. Nuega and defendant Rogelio Nuega, without prejudice to said defendant-
appellant's right to recover from defendant Rogelio whatever amount she paid for the
subject property. Costs against defendant-appellant Nobleza.
SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration. In a Resolution dated July 21, 2010, the appellate
court denied the motion for lack of merit. Hence, this petition raising the following
assignment of errors:chanroblesvirtuallawlibrary
[I.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE DECISION OF THE
 REGIONAL TRIAL COURT BY SUSTAINING THE FINDING THAT PETITIONER WAS NOT A
PURCHASER IN GOOD FAITH.
[II.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT MODIFIED THE DECISION OF THE
REGIONAL TRIAL COURT BY DECLARING AS NULL AND VOID THE DEED OF ABSOLUTE
SALE DATED 29 DECEMBER 1992 IN ITS ENTIRETY.18
We deny the petition.
Petitioner is not a buyer in good faith.
An innocent purchaser for value is one who buys the property of another, without notice
that some other person has a right or interest in the property, for which a full and fair price
is paid by the buyer at the time of the purchase or before receipt of any notice of claims or
interest of some other person in the property.19 It is the party who claims to be an innocent
purchaser for value who has the burden of proving such assertion, and it is not enough to
invoke the ordinary presumption of good faith.20 To successfully invoke and be considered
as a buyer in good faith, the presumption is that first and foremost, the "buyer in good
faith" must have shown prudence and due diligence in the exercise of his/her rights. It
presupposes that the buyer did everything that an ordinary person would do for the
protection and defense of his/her rights and interests against prejudicial or injurious
concerns when placed in such a situation. The prudence required of a buyer in good faith is
"not that of a person with training in law, but rather that of an average man who 'weighs
facts and circumstances without resorting to the calibration of our technical rules of
evidence of which his knowledge is nil.'"21 A buyer in good faith does his homework and
verifies that the particulars are in order such as the title, the parties, the mode of transfer
and the provisions in the deed/contract of sale, to name a few. To be more specific, such
prudence can be shown by making an ocular inspection of the property, checking the
title/ownership with the proper Register of Deeds alongside the payment of taxes therefor,
or inquiring into the minutiae such as the parameters or lot area, the type of ownership, and
the capacity of the seller to dispose of the property, which capacity necessarily includes an
inquiry into the civil status of the seller to ensure that if married, marital consent is secured
when necessary. In fine, for a purchaser of a property in the possession of another to be in
good faith, he must exercise due diligence, conduct an investigation, and weigh the
surrounding facts and circumstances like what any prudent man in a similar situation would
do.22
In the case at bar, petitioner claims that she is a buyer in good faith of the subject property
which is titled under the name of the seller Rogelio A. Nuega alone as evidenced by TCT No.
171963 and Tax Declaration Nos. D-012-04723 and D-012-04724.23 Petitioner argues, among
others, that since she has examined the TCT over the subject property and found the
property to have been registered under the name of seller Rogelio alone, she is an innocent
purchaser for value and "she is not required to go beyond the face of the title in verifying
the status of the subject property at the time of the consummation of the sale and at the
date of the sale."24
We disagree with petitioner.
A buyer cannot claim to be an innocent purchaser for value by merely relying on the TCT of
the seller while ignoring all the other surrounding circumstances relevant to the sale.
In the case of Spouses Raymundo v. Spouses Bandong,25 petitioners therein - as does
petitioner herein - were also harping that due to the indefeasibility of a Torrens title, there
was nothing in the TCT of the property in litigation that should have aroused the buyer's
suspicion as to put her on guard that there was a defect in the title of therein seller. The
Court held in the Spouses Raymundo case that the buyer therein could not hide behind the
cloak of being an innocent purchaser for value by merely relying on the TCT which showed
that the registered owner of the land purchased is the seller. The Court ruled in this case
that the buyer was not an innocent purchaser for value due to the following attendant
circumstances, viz.:chanroblesvirtuallawlibrary
In the present case, we are not convinced by the petitioners' incessant assertion that
Jocelyn is an innocent purchaser for value. To begin with, she is a grandniece of Eulalia and
resides in the same locality where the latter lives and conducts her principal business. It is
therefore impossible for her not to acquire knowledge of her grand aunt's business practice
of requiring her biyaheros to surrender the titles to their properties and to sign the
corresponding deeds of sale over said properties in her favor, as security. This alone should
have put Jocelyn on guard for any possible abuses that Eulalia may commit with the titles
and the deeds of sale in her possession.26cralawlawlibrary
Similarly, in the case of Arrofo v. Quiño,27 the Court held that while "the law does not
require a person dealing with registered land to inquire further than what the Torrens Title
on its face indicates," the rule is not absolute.28 Thus, finding that the buyer therein failed to
take the necessary precaution required of a prudent man, the Court held that Arrofo was
not an innocent purchaser for value, viz.:chanroblesvirtuallawlibrary
In the present case, the records show that Arrofo failed to act as a prudent buyer. True, she
asked her daughter to verify from the Register of Deeds if the title to the Property is free
from encumbrances. However, Arrofo admitted that the Property is within the
neighborhood and that she conducted an ocular inspection of the Property. She saw the
house constructed on the Property. Yet, Arrofo did not even bother to inquire about the
occupants of the house. Arrofo also admitted that at the time of the sale, Myrna was
occupying a room in her house as her lessee. The fact that Myrna was renting a room from
Arrofo yet selling a land with a house should have put Arrofo on her guard. She knew that
Myrna was not occupying the house. Hence, someone else must have been occupying the
house.
Thus, Arrofo should have inquired who occupied the house, and if a lessee, who received
the rentals from such lessee. Such inquiry would have led Arrofo to discover that the lessee
was paying rentals to Quino, not to Renato and Myrna, who claimed to own the
Property.29cralawlawlibrary
An analogous situation obtains in the case at bar.
The TCT of the subject property states that its sole owner is the seller Rogelio himself who
was therein also described as "single". However, as in the cases of Spouses Raymundo and
Arrofo, there are circumstances critical to the case at bar which convince us to affirm the
ruling of both the appellate and lower courts that herein petitioner is not a buyer in good
faith.
First, petitioner's sister Hilda Bautista, at the time of the sale, was residing near Rogelio and
Shirley's house - the subject property - in Ladislao Diwa Village, Marikina City. Had petitioner
been more prudent as a buyer, she could have easily checked if Rogelio had the capacity to
dispose of the subject property. Had petitioner been more vigilant, she could have inquired
with such facility - considering that her sister lived in the same Ladislao Diwa Village where
the property is located - if there was any person other than Rogelio who had any right or
interest in the subject property.
To be sure, respondent even testified that she had warned their neighbors at Ladislao Diwa
Village - including petitioner's sister - not to engage in any deal with Rogelio relative to the
purchase of the subject property because of the cases she had filed against Rogelio.
Petitioner denies that respondent had given such warning to her neighbors, which includes
her sister, therefore arguing that such warning could not be construed as "notice" on her
part that there is a person other than the seller himself who has any right or interest in the
subject property. Nonetheless, despite petitioner's adamant denial, both courts a quo gave
probative value to the testimony of respondent, and the instant petition failed to present
any convincing evidence for this Court to reverse such factual finding. To be sure, it is not
within our province to second-guess the courts a quo, and the re-determination of this
factual issue is beyond the reach of a petition for review on certiorari where only questions
of law may be reviewed.30
Second, issues surrounding the execution of the Deed of Absolute Sale also pose question
on the claim of petitioner that she is a buyer in good faith. As correctly observed by both
courts a quo, the Deed of Absolute Sale was executed and dated on December 29, 1992.
However, the Community Tax Certificates of the witnesses therein were dated January 2
and 20, 1993.31 While this irregularity is not a direct proof of the intent of the parties to the
sale to make it appear that the Deed of Absolute Sale was executed on December 29, 1992 -
or before Shirley filed the petition for legal separation on January 29, 1993 - it is
circumstantial and relevant to the claim of herein petitioner as an innocent purchaser for
value.
That is not all.
In the Deed of Absolute Sale dated December 29, 1992, the civil status of Rogelio as seller
was not stated, while petitioner as buyer was indicated as "single,"
viz.:chanroblesvirtuallawlibrary
ROGELIO A. NUEGA, of legal age, Filipino citizen and with postal address at 2-A-2 Ladislao
Diwa St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the VENDOR
And
JOSEFINA V. NOBLEZA, of legal age, Filipino citizen, single and with postal address at No. L-2-
A-3 Ladislao Diwa St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the
VENDEE.32cralawlawlibrary
It puzzles the Court that while petitioner has repeatedly claimed that Rogelio is "single"
under TCT No. 171963 and Tax Declaration Nos. D-012-04723 and D-012-04724, his civil
status as seller was not stated in the Deed of Absolute Sale - further creating a cloud on the
claim of petitioner that she is an innocent purchaser for value.
As to the second issue, we rule that the appellate court did not err when it modified the
decision of the trial court and declared that the Deed of Absolute Sale dated December 29,
1992 is void in its entirety.
The trial court held that while the TCT shows that the owner of the subject property is
Rogelio alone, respondent was able to prove at the trial court that she contributed in the
payment of the purchase price of the subject property. This fact was also settled with
finality by the RTC of Pasig City, Branch 70, and affirmed by the CA, in the case for legal
separation and liquidation of property docketed as JDRC Case No. 2510. The pertinent
portion of the decision reads:chanroblesvirtuallawlibrary
xxx Clearly, the house and lot jointly acquired by the parties prior to their marriage forms
part of their community property regime, xxx
From the foregoing, Shirley sufficiently proved her financial contribution for the purchase of
the house and lot covered by TCT 171963. Thus, the present lot which forms part of their
community property should be divided equally between them upon the grant of the instant
petition for legal separation. Having established by preponderance of evidence the fact of
her husband's guilt in contracting a subsequent marriage xxx, Shirley alone should be
entitled to the net profits earned by the absolute community property.33cralawlawlibrary
However, the nullity of the sale made by Rogelio is not premised on proof of respondent's
financial contribution in the purchase of the subject property. Actual contribution is not
relevant in determining whether a piece of property is community property for the law itself
defines what constitutes community property.
Article 91 of the Family Code thus provides:chanroblesvirtuallawlibrary
Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the
community property shall consist of all the property owned by the spouses at the time of
the celebration of the marriage or acquired thereafter.
The only exceptions from the above rule are: (1) those excluded from the absolute
community by the Family Code; and (2) those excluded by the marriage settlement.
Under the first exception are properties enumerated in Article 92 of the Family Code, which
states:chanroblesvirtuallawlibrary
Art. 92. The following shall be excluded from the community property:
(1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits
as well as the income thereof, if any, unless it is expressly provided by the donor, testator or
grantor that they shall form part of the community property;
(2) Property for personal and exclusive use of either spouse; however, jewelry shall form
part of the community property;
(3) Property acquired before the marriage by either spouse who has legitimate descendants
by a former marriage, and the fruits as well as the income, if any, of such property.
As held in Quiao v. Quiao:34ChanRoblesVirtualawlibrary
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.
Since the subject property does not fall under any of the exclusions provided in Article 92, it
therefore forms part of the absolute community property of Shirley and Rogelio. Regardless
of their respective contribution to its acquisition before their marriage, and despite the fact
that only Rogelio's name appears in the TCT as owner, the property is owned jointly by the
spouses Shirley and Rogelio.
Respondent and Rogelio were married on September 1, 1990. Rogelio, on his own and
without the consent of herein respondent as his spouse, sold the subject property via a
Deed of Absolute Sale dated December 29, 1992 - or during the subsistence of a valid
contract of marriage. Under Article 96 of Executive Order No. 209, otherwise known as The
Family Code of the Philippines, the said disposition of a communal property is void,
viz.:chanroblesvirtuallawlibrary
Art. 96. The administration and enjoyment of the community property shall belong to both
spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to
recourse to the court by the wife for a proper remedy, which must be availed of within five
years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the common properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance
without the authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance shall be void.
However, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.35cralawlawlibrary
It is clear under the foregoing provision of the Family Code that Rogelio could not sell the
subject property without the written consent of respondent or the authority of the court.
Without such consent or authority, the entire sale is void. As correctly explained by the
appellate court:chanroblesvirtuallawlibrary
In the instant case, defendant Rogelio sold the entire subject property to defendant-
appellant Josefina on 29 December 1992 or during the existence of Rogelio's marriage to
plaintiff-appellee Shirley, without the consent of the latter. The subject property forms part
of Rogelio and Shirley's absolute community of property. Thus, the trial court erred in
declaring the deed of sale null and void only insofar as the 55.05 square meters representing
the one-half (1/2) portion of plaintiff-appellee Shirley. In absolute community of property, if
the husband, without knowledge and consent of the wife, sells (their) property, such sale is
void. The consent of both the husband Rogelio and the wife Shirley is required and the
absence of the consent of one renders the entire sale null and void including the portion of
the subject property pertaining to defendant Rogelio who contracted the sale with
defendant-appellant Josefina. Since the Deed of Absolute Sale x x x entered into by and
between defendant-appellant Josefina and defendant Rogelio dated 29 December 1992,
during the subsisting marriage between plaintiff-appellee Shirley and Rogelio, was without
the written consent of Shirley, the said Deed of Absolute Sale is void in its entirety. Hence,
the trial court erred in declaring the said Deed of Absolute Sale as void only insofar as the
1/2 portion pertaining to the share of Shirley is concerned.36cralawlawlibrary
Finally, consistent with our ruling that Rogelio solely entered into the contract of sale with
petitioner and acknowledged receiving the entire consideration of the contract under the
Deed of Absolute Sale, Shirley could not be held accountable to petitioner for the
reimbursement of her payment for the purchase of the subject property. Under Article 94 of
the Family Code, the absolute community of property shall only be "liable for x x x [d]ebts
and obligations contracted by either spouse without the consent of the other to the extent
that the family may have been benefited x x x." As correctly stated by the appellate court,
there being no evidence on record that the amount received by Rogelio redounded to the
benefit of the family, respondent cannot be made to reimburse any amount to petitioner.37
WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals dated May 14, 2010 and July 21, 2010, respectively, in
CA-G.R. CV No. 70235 are AFFIRMED.
Costs against petitioner.
SO ORDERED.chanroblesvirtuallawlibrary
THE HEIRS OF PROTACIO GO, SR. and G.R. No. 157537
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, Present:
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
CORONA, C.J., Chairperson,
-versus - LEONARDO-DE CASTRO, void if said portion has not yet been allocated by judicial or extrajudicial partition to another
BERSAMIN,
heir of the deceased spouse. At any rate, the requirement of prior liquidation does not
DEL CASTILLO, and
VILLARAMA, JR., JJ. prejudice vested rights.
ESTER L. SERVACIO and RITO B. GO,

Respondents.

Antecedents
Promulgated:

September 7, 2011 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
x-----------------------------------------------------------------------------------------x
three years later, or on March 29, 1999, Protacio, Jr. executed an Affidavit of Renunciation
and Waiver,1[1] whereby he affirmed under oath that it was his father, Protacio Go, Sr.

DECISION (Protacio, Sr.), not he, who had purchased the two parcels of land (the property).

BERSAMIN, J.:
 On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr. and
mother of the petitioners.2[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[3] On March 2, 2001, the
petitioners demanded the return of the property,4[4] but Servacio refused to heed their
demand. After barangay proceedings failed to resolve the dispute,5[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[6]
Servacio and Rito countered that Protacio, Sr. had exclusively owned the property
because he had purchased it with his own money.7[7]
On October 3, 2002,8[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[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[10] Quoting 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
Tolentinos commentary on the matter as authority,11[11] the RTC opined:
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
In his comment on Article 175 of the New Civil Code regarding the
be allotted, in the final partition, to the vendor. And rightly so, because why
dissolution of the conjugal partnership, Senator Arturo Tolentino, says [sic]
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?
Alienation by the survivor. After the death of one of the
Practically there is no reason for that view and it would be absurd.
spouses, in case it is necessary to sell any portion of the
community property in order to pay outstanding obligation of the
Now here, in the instant case, the 5,560 square meter portion of the
partnership, such sale must be made in the manner and with the
17,140 square-meter conjugal lot is certainly mush (sic) less than what
formalities established by the Rules of Court for the sale of the
vendors Protacio Go and his son Rito B. Go will eventually get as their share
property of the deceased persons. Any sale, transfer, alienation or
in the final partition of the property. So the sale is still valid.
disposition of said property affected without said formalities shall
be null and void, except as regards the portion that belongs to the
WHEREFORE, premises considered, complaint is hereby DISMISSED
vendor as determined in the liquidation and partition. Pending
without pronouncement as to cost and damages.
the liquidation, the disposition must be considered as limited only
to the contingent share or interest of the vendor in the particular
SO ORDERED.12[12]
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 RTCs denial of their motion for reconsideration13[13] prompted the petitioners
the required formality, is not however, null ab initio, for the law
to appeal directly to the Court on a pure question of 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]
 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[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 dissolved, pursuant to Article 175 (1) of the Civil Code,15[15] and an implied ordinary co-
settlements that the regime of conjugal partnership of gains shall govern
ownership ensued among Protacio, Sr. and the other heirs of Marta with respect to her
their property relations during marriage, the provisions in this Chapter shall
be of supplementary application. share in the assets of the conjugal partnership pending a liquidation following its
liquidation.16[16] The ensuing implied ordinary co-ownership was governed by Article 493
The provisions of this Chapter shall also apply to conjugal
partnerships of gains already established between spouses before the of the Civil Code,17[17] to wit:
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]
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
It is clear that conjugal partnership of gains established before and after the
alienation or the mortgage, with respect to the co-owners, shall be limited
effectivity of the Family Code are governed by the rules found in Chapter 4 (Conjugal to the portion which may be allotted to him in the division upon the
termination of the co-ownership. (399)
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
Protacio, Sr., although becoming a co-owner with his children in respect of Martas
void.
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
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
Martas share.18[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
In their separate comments,22[22] the respondents aver that each of the heirs had
interest of his co-owners.19[19] Consequently, the sale by Protacio, Sr. and Rito as co-
already received a certain allotted portion at the time of the sale, and that Protacio, Sr. and
owners without the consent of the other co-owners was not necessarily void, for the rights
Rito sold only the portions adjudicated to and owned by them. However, they did not
of the selling co-owners were thereby effectively transferred, making the buyer (Servacio) a
present any public document on the allocation among her heirs, including themselves, of
co-owner of Martas share.20[20] This result conforms to the well-established principle that
specific shares in Martas estate. Neither did they aver that the conjugal properties had
the binding force of a contract must be recognized as far as it is legally possible to do so
already been liquidated and partitioned. Accordingly, pending a partition among the heirs of
(quando res non valet ut ago, valeat quantum valere potest).21[21]
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
Article 105 of the Family Code, supra, expressly provides that the applicability of the
instructed in Bailon-Casilao v. Court of Appeals,23[23] to wit:
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 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
Servacio who had already acquired the shares of Protacio, Sr. and Rito in the property
subject of the sale.

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. xxx24[24]
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[25]
WHEREFORE, we DENY the petition for review on certiorari; and AFFIRM
the decision of the Regional Trial Court.

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:

The petitioners shall pay the costs of suit.

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 SO ORDERED.
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
G.R. No. 200274
MELECIO DOMINGO, Petitioner,
vs.
SPOUSES GENARO MOLINA and ELENA B. MOLINA, substituted by ESTER MOLINA,
Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by the petitioner Melecio Domingo
(Melecio) assailing the August 9, 2011 decision2 and January 10, 2012 resolution3 of the
Court of Appeals (CA) in CA-G.R. CV No. 94160.
THE FACTS
In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in Camiling,
Tarlac, consisting of a one-half undivided portion over an 18, 164 square meter parcel of
land. The sale was annotated on the Original Certificate of Title (OCT) No. 16354 covering
the subject property.
During his lifetime, Anastacio borrowed money from the respondent spouses Genaro and
Elena Molina (spouses Molina). On September 10, 1978 or 10 years after Flora’s death4,
Anastacio sold his interest over the land to the spouses Molina to answer for his debts. The
sale to the spouses Molina was annotated at the OCT of the subject property.5 In 1986,
Anastacio died.6
In May 19, 1995, the sale of Anastacio’s interest was registered under Transfer Certificate of
Title (TCT) No. 272967[[7 ]]and transferred the entire one-half undivided portion of the land
to the spouses Molina.
Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed a
Complaint for Annulment of Title and Recovery of Ownership (Complaint) against the
spouses Molina on May 17, 1999.8
Melecio claims that Anastacio gave the subject property to the spouses Molina to serve as
collateral for the money that Anastacio borrowed. Anastacio could not have validly sold the
interest over the subject property without Flora’s consent, as Flora was already dead at the
time of the sale.
Melecio also claims that Genaro Molina must have falsified the document transferring
Anastacio and Flora’s one-half undivided interest over the land. Finally, Melecio asserts that
he occupied the subject property from the time of Anastacio’s death up to the time he filed
the Complaint.9
Melecio presented the testimonies of the Records Officer of the Register of Deeds of Tarlac,
and of Melecio’s nephew, George Domingo (George).10
The Records Officer testified that he could not locate the instrument that documents the
transfer of the subject property ownership from Anastacio to the spouses Molina. The
Records Officer also testified that the alleged sale was annotated at the time when Genaro
Molina’s brother was the Register of Deeds for Camiling, Tarlac.11
George, on the other hand, testified that he has been living on the subject property owned
by Anastacio since 1986. George testified, however, that aside from himself, there were also
four other occupants on the subject property, namely Jaime Garlitos, Linda Sicangco, Serafio
Sicangco and Manuel Ramos.12
The spouses Molina asserted that Anastacio surrendered the title to the subject property to
answer for his debts and told the spouses Molina that they already own half of the land. The
spouses Molina have been in possession of the subject property before the title was
registered under their names and have religiously paid the property’s real estate taxes.
The spouses Molina also asserted that Melecio knew of the disputed sale since he
accompanied Anastacio several times to borrow money. The last loan was even used to pay
for Melecio’s wedding. Finally, the spouses Molina asserted that Melecio built his nipa hut
on the subject property only in 1999, without their knowledge and consent.13
The spouses Molina presented Jaime Garlitos (Jaime) as their sole witness and who is one of
the occupants of the subject lot.
Jaime testified that Elena Molina permitted him to build a house on the subject property in
1993. Jaime, together with the other tenants, planted fruit bearing trees on the subject
property and gave portions of their harvest to Elena Molina without any complaint from
Melecio. Jaime further testified that Melecio never lived on the subject property and that
only George Domingo, as the caretaker of the spouses Molina, has a hut on the property.
Meanwhile, the spouses Molina died during the pendency of the case and were substituted
by their adopted son, Cornelio Molina.14
THE RTC RULING
The Regional Trial Court (RTC) dismissed15 the case because Melecio failed to establish his
claim that Anastacio did not sell the property to the spouses Molina.
The RTC also held that Anastacio could dispose of conjugal property without Flora’s consent
since the sale was necessary to answer for conjugal liabilities.
The RTC denied Melecio’s motion for reconsideration of the RTC ruling. From this ruling,
Melecio proceeded with his appeal to the CA.
THE CA RULING
In a decision dated August 9, 2011, the CA affirmed the RTC ruling in toto.
The CA held that Melecio failed to prove by preponderant evidence that there was fraud in
the conveyance of the property to the spouses Molina. The CA gave credence to the OCT
annotation of the disputed property sale.
The CA also held that Flora’s death is immaterial because Anastacio only sold his rights,
excluding Flora’s interest, over the lot to the spouses Molina.1âwphi1 The CA explained that
"[t]here is no prohibition against the sale by the widower of real property formerly
belonging to the conjugal partnership of gains"16.
Finally, the CA held that Melecio’s action has prescribed. According to the CA, Melecio failed
to file the action within one year after entry of the decree of registration.
Melecio filed a motion for reconsideration of the CA Decision. The CA denied Melecio’s
motion for reconsideration for lack of merit.17
THE PETITION
Melecio filed the present petition for review on certiorari to challenge the CA ruling.
Melecio principally argues that the sale of land belonging to the conjugal partnership
without the wife’s consent is invalid.
Melecio also claims that fraud attended the conveyance of the subject property and the
absence of any document evidencing the alleged sale made the transfer null and void.
Finally, Melecio claims that the action has not yet prescribed.
The respondents, on the other hand, submitted and adopted their arguments in their
Appeal Brief18.
First, Melecio’s counsel admitted that Anastacio had given the lot title in payment of the
debt amounting to Php30,000.00. The delivery of the title is constructive delivery of the lot
itself based on Article 1498, paragraph 2 of
the Civil Code.
Second, the constructive delivery of the title coupled with the spouses Molina’s exercise of
attributes of ownership over the subject property, perfected the sale and completed the
transfer of ownership.
 THE ISSUES
The core issues of the petition are as follows: (1) whether the sale of a conjugal property to
the spouses Molina without Flora’s consent is valid and legal; and (2) whether fraud
attended the transfer of the subject property to the spouses Molina.
OUR RULING
We deny the petition.
It is well settled that when the trial court’s factual findings have been affirmed by the CA,
the findings are generally conclusive and binding upon the Court and may no longer be
reviewed on Rule 45 petitions.19 While there are exceptions20 to this rule, the Court finds
no applicable exception with respect to the lower courts’ finding that the subject property
was Anastacio and Flora’s conjugal property. Records before the Court show that the parties
did not dispute the conjugal nature of the property.
Melecio argues that the sale of the disputed property to the spouses Molina is void without
Flora’s consent.
We do not find Melecio’s argument meritorious.
Anastacio and Flora’s
conjugal partnership was
dissolved upon Flora’s death.
There is no dispute that Anastacio and Flora Domingo married before the Family Code’s
effectivity on August 3, 1988 and their property relation is a conjugal partnership.21
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. This is clear from Article
105 of the Family Code which states:
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.
The conjugal partnership of Anastacio and Flora was dissolved when Flora died in 1968,
pursuant to Article 175 (1) of the Civil Code22 (now Article 126 (1) of the Family Code).
Article 130 of the Family Code requires the liquidation of the conjugal partnership upon
death of a spouse and prohibits any disposition or encumbrance of the conjugal property
prior to the conjugal partnership liquidation, to quote:
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 extrajudicially 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. x x x (emphases supplied)
While Article 130 of the Family Code provides that any disposition involving the conjugal
property without prior liquidation of the partnership shall be void, this rule does not apply
since the provisions of the Family Code shall be "without prejudice to vested rights already
acquired in accordance with the Civil Code or other laws."23
An implied co-ownership
among Flora’s heirs governed
the conjugal properties
pending liquidation and
partition.
In the case of Taningco v. Register of Deeds of Laguna,24 we held that the properties of a
dissolved conjugal partnership fall under the regime of co-ownership among the surviving
spouse and the heirs of the deceased
spouse until final liquidation and partition. The surviving spouse, however, has an actual and
vested one-half undivided share of the properties, which does not consist of determinate
and segregated properties until liquidation
and partition of the conjugal partnership.
An implied ordinary co-ownership ensued among Flora’s surviving heirs, including Anastacio,
with respect to Flora’s share of the conjugal partnership until final liquidation and partition;
Anastacio, on the other hand, owns one-half of the original conjugal partnership properties
as his share, but this is an undivided interest.
Article 493 of the Civil Code on co-ownership provides:
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) (emphases supplied)
Thus, Anastacio, as co-owner, cannot claim title to any specific portion of the conjugal
properties without an actual partition being first done either by agreement or by judicial
decree. Nonetheless, Anastacio had the right to freely sell and dispose of his undivided
interest in the subject property.
The spouses Molina became
co-owners of the subject
property to the extent of
Anastacio’s interest.
The OCT annotation of the sale to the spouses Molina reads that "[o]nly the rights, interests
and participation of Anastacio Domingo, married to Flora Dela Cruz, is hereby sold,
transferred, and conveyed unto the said vendees for the sum of ONE THOUSAND PESOS
(P1,000.00) which pertains to an undivided one-half (1/2) portion and subject to all other
conditions specified in the document x x x"25 (emphases supplied). At the time of the sale,
Anastacio’s undivided interest in the conjugal properties consisted of: (1) one-half of the
entire conjugal properties; and (2) his share as Flora’s heir on the conjugal properties.
Anastacio, as a co-owner, had the right to freely sell and dispose of his undivided interest,
but not the interest of his co-owners. Consequently, Anastactio’s sale to the spouses Molina
without the consent of the other co-owners was not totally void, for Anastacio’s rights or a
portion thereof were thereby effectively transferred, making the spouses Molina a co-owner
of the subject property to the extent of Anastacio’s interest. This result conforms 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).26
The spouses Molina would be a trustee for the benefit of the co-heirs of Anastacio in
respect of any portion that might belong to the co-heirs after liquidation and partition. The
observations of Justice Paras cited in the case of Heirs of Protacio Go, Sr. V. Servacio27 are
instructive:
x x x [I]f it turns out that the property alienated or mortgaged really would pertain to the
share of the surviving spouse, then said transaction is valid. If it turns out that there really
would be, after liquidation, no more conjugal assets then the whole transaction is null and
void. But if it turns out that half of the property thus alienated or mortgaged belongs to the
husband as his share in the conjugal partnership, and half should go to the estate of the
wife, then that corresponding to the husband is valid, and that corresponding to the other is
not. Since all these can be determined only at the time the liquidation is over, it follows
logically that a disposal made by the surviving spouse is not void ab initio. Thus, it has been
held that the sale of conjugal properties cannot be made by the surviving spouse without
the legal requirements. The sale is void as to the share of the deceased spouse (except of
course as to that portion of the husband’s share inherited by her as the surviving spouse).
The buyers of the property that could not be validly sold become trustees of said portion for
the benefit of the husband’s other heirs, the cestui que trust ent. Said heirs shall not be
barred by prescription or by laches.
Melecio’s recourse as a co-owner of the conjugal properties, including the subject property,
is an action for partition under Rule 69 of the Revised Rules of Court. As held in the case of
Heirs of Protacio Go, Sr., "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."28
The sale of the subject
property to the spouses Molina
was not attended with fraud.
On the issue of fraud, the lower courts found that there was no fraud in the sale of the
disputed property to the spouses Molina.
The issue of fraud would require the Court to inquire into the weight of evidentiary matters
to determine the merits of the petition and is essentially factual in nature. It is basic that
factual questions cannot be cannot be entertained in a Rule 45 petition, unless it falls under
any of the recognized exceptions29 found in jurisprudence. The present petition does not
show that it falls under any of the exceptions allowing factual review.
The CA and RTC conclusion that there is no fraud in the sale is supported by the evidence on
record.
Melecio' s argument that no document was executed for the sale is negated by the CA
finding that there was a notarized deed of conveyance executed between Anastacio and the
spouses Molina, as annotated on the OCT of the disputed property.
Furthermore, Melecio's belief that Anastacio could not have sold the property without his
knowledge cannot be considered as proof of fraud to invalidate the spouses Molina's
registered title over the subject property.30
Prevailing jurisprudence uniformly holds that findings of facts of the trial court, particularly
when affirmed by the Court of Appeals, are binding upon t his court. 31
Considering these findings, we find no need to discuss the other issues raised by Melecio.
WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated
August 9, 2011 of the Court of Appeals in CA-G.R. CV No. 94160 is AFFIRMED.
SO ORDERED.
G.R. No. 182839 June 2, 2014
PHILIPPINE NATIONAL BANK, Petitioner,
vs.
JOSE GARCIA and CHILDREN NORA GARCIA, JOSE GARCIA, JR., BOBBY GARCIA and JIMMY
GARCIA and HEIRS OF ROGELIO GARCIA NAMELY: CELEDONIO GARCIA, DANILO GARCIA,
ELSA GARCIA, FERMIN GARCIA, HEHERSON GARCIA, GREGORIO GARCIA, IMELDA GARCIA
and JANE GARCIA, Respondents.
DECISION
BRION, J.:
We resolve this petition for review on certiorari1 assailing the decision2 dated September
26, 2007 and the resolution3 dated May 6, 2008 of the Court of Appeals (CA) in CA-G.R. CV
No. 71356.
These challenged CA rulings reversed and set aside the decision of the Regional Trial Court
(RTC), Branch 23, Roxas, Isabela, dismissing Civil Case No. Branch 23-500-96 for lack of cause
of action.
 The Factual Background
The facts of the case, gathered from the records, are briefly summarized below.
The subject of the present case is a parcel of residential land with all its improvements
(subject property) located in Barrio Olango, Mallig, Isabela. The land is covered by Transfer
Certificate of Title (TCT) No. T-44422 under the name of Jose Garcia Sr. (Jose Sr.) who
acquired the subject property during his marriage with Ligaya Garcia. Ligaya died on January
21, 1987.
The marriage of Jose Sr. and Ligaya produced the following children: Nora, Jose Jr., Bobby
and Jimmy, all surnamed Garcia, who are the respondents in the present case.
Sometime in 1989, the spouses Rogelio and Celedonia Garcia (Spouses Garcia) obtained a
loan facility from the petitioner, Philippine National Bank (petitioner bank), initially for
₱150,000.00. The loan was secured by a Real Estate Mortgage over their property covered
by TCT No. 177585. The spouses Garcia increased their loan to ₱220,000.00 and eventually
to ₱600,000.00. As security for the increased loan, they offered their property covered by
TCT No. 75324 and the subject property covered by TCT No. T-44422.
Jose Sr. agreed to accommodate the spouses Garcia by offering the subject property as
additional collateral security for the latter’s increased loan. For this purpose, Jose Sr.
executed Special Powers of Attorney (SPAs) dated April 14, 1992 and October 6, 1993,
respectively, expressly authorizing the Spouses Garcia to apply for, borrow, or secure any
loan from the petitioner bank, and to convey and transfer the subject property by way of
mortgage. Jose Sr. also executed an Amendment of Real Estate Mortgage in favor of the
petitioner bank. The SPAs and the Amendment of Real Estate Mortgage are both inscribed
on TCT No. T-44422. All of these transactions, however, were without the knowledge and
consent of Jose Sr.’s children.
On maturity of the loan on April 20,1994, the spouses Garcia failed to pay their loan to the
petitioner bank despite repeated demands.
On January 12, 1996, the respondents filed before the RTC a Complaint for Nullity of the
Amendment of Real Estate Mortgage, Damages with Preliminary Injunction against the
spouses Garcia and the petitioner bank. They claimed that the Amendment of Real Estate
Mortgage was null and void as to respondents Nora, Jose Jr., Bobby and Jimmy as they were
not parties to the contract.
The respondents alleged that the subject property was a conjugal property of Jose Sr. and
his deceased spouse, Ligaya, as they acquired the subject property during their marriage;
that upon Ligaya’s death, Jose Sr., together with his children Nora, Jose Jr., Bobby and
Jimmy, by law, became owners pro indiviso of the subject property; that the petitioner bank
was at fault for not including Jose Sr. as payee to the check representing the loan despite its
knowledge that Jose Sr. was a signatory to the real estate mortgage; that the real estate
mortgage executed by Jose Sr. could not bind his children as they did not give their consent
or approval to the encumbrance; and that the real estate mortgage was also void as to Jose
Sr. since he never benefitted from the loan.
In their answer, the Spouses Garcia alleged that Jose Sr. was indebted to them in the
amount of ₱133,800.00. To settle this indebtedness, Jose Sr. volunteered to give the subject
property as additional security for their (the Garcias’) loan to the petitioner bank.
The petitioner bank, on the other hand, claimed that the mortgage was made in good faith
and for value, and maintained that the respondents’ complaint stated no cause of action
against it. It alleged that the real estate mortgage over the properties was duly registered
and inscribed on their titles and was thus binding on the whole world.
In the course of the proceedings, Nora, Jose Jr., Bobby and Jimmy executed an SPA dated
May 31, 1996 authorizing Jose Sr. to act as their attorney-in-fact during the pretrial of the
case.
The Ruling of the RTC
The RTC dismissed the complaint for lack of cause of action. The court held that the subject
property was a conjugal property since it was acquired by Jose Sr. during his marriage with
his now deceased wife. As a conjugal property, it is presumed that upon the death of his
spouse, one-half of the property passed on to Jose Sr., while the other half went to Jose and
his children as co-owners and as forced heirs of his deceased spouse. Without the consent
of the children, the trial court ruled that the conjugal property could only be transferred or
encumbered to the extent of Jose Sr.’s share in the conjugal partnership, plus his share as an
heir in the other half pertaining to the estate of his deceased spouse.
The RTC nevertheless declared that by virtue of the SPA executed by Nora, Jose Jr., Bobby
and Jimmy in this suit, they are already estopped from questioning the mortgage and from
alleging lack of consent or knowledge in the transaction. It held Jose Sr. liable as an
accommodation party and upheld the petitioner bank’s right to collect the debt.
The respondents disagreed with the RTC ruling and elevated the case to the CA via an
ordinary appeal.
The Ruling of the CA
On September 26, 2007, the CA upheld the trial court’s finding that the subject property was
conjugal, but reversed and set aside its ruling in so far as it declared valid and binding the
Amendment of Real Estate Mortgage between the petitioner bank, on one hand, and the
spouses Garcia and Jose Sr., on the other hand, with respect to respondents Nora, Jose Jr.,
Bobby and Jimmy. Relying on the Court’s ruling in Nufable v. Nufable,4 the CA ruled that the
encumbrance Jose Sr. made over the entire conjugal property, without his children’s
conformity, was null and void because a mere part owner could not alienate the shares of
the other co-owners.
The CA also declared that the conjugal property could only be liable to the extent of Jose
Sr.’s shares; Jose Sr.’s acts could not affect his children’s pro-indiviso shares in the subject
property. It disagreed with the trial court’s estoppel theory and held that their execution of
the SPA should not be construed as acquiescence to the mortgage transaction. Lastly, it
ruled that Jose Sr. could not escape liability from the mortgage since he voluntarily bound
himself as the Spouses Garcia’s accommodation mortgagor.
The petition
The petitioner bank disputes the CA’s finding that the subject property was conjugal in
nature. It argues that, as can be gleaned from TCT No. T-44422, the subject property was
registered in the name of Jose Sr. alone, who was described in the title as "widower" and
not "married." The petitioner bank posits that as a mortgagee in good faith, it had the right
to rely on the mortgagor’s certificate of title; in the absence of any indication that could
arouse suspicion, it had no obligation to undertake further investigation and verify whether
the property was conjugal or was acquired during marriage or thereafter.
Since the subject property belonged to Jose Sr., insofar as petitioner bank as mortgagee was
concerned, Jose Sr. had the right under Article 428 of the Civil Code to mortgage it without
the consent of his children. Accordingly, the mortgage in its entirety should be declared
valid.
The Comment
The respondents state that the issues raised by petitioner bank are essentially factual;
hence, they are beyond the competence of this Court in a petition for review. They submit
that in a certiorari petition under Rule 45 of the Rules of Court, only questions of law may be
entertained because the Court is not a trier of facts.
The Court’s Ruling
We deny the petition for lack of merit.
The petition before us raises both questions of fact and of law. Whether petitioner bank is a
mortgagee in good faith and for value and whether the subject property was conjugal, are
factual issues that this Court cannot look into as our examination would entail going into
factual matters and records of the case. In Rule 45 petitions, only questions of law may be
put into issue. Questions of fact cannot be entertained.5
Although there are exceptions to the rule that only questions of law may be raised in a
petition for certiorari, the petitioner bank failed to show that this case falls under any of the
established exceptions. Too, since the CA partially affirmed the findings of the trial court and
absent any indication that these courts committed a serious error in its findings, this Court is
bound by these courts’ findings.6
Moreover, even if we were to review the factual issues raised by the petitioner bank, we still
find no reason to depart from the CA’s ruling.
The Subject Property is Conjugal
a. All property acquired during marriage is presumed conjugal
Since Jose Sr. and Ligaya were married prior to the effectivity of the Family Code, their
property relations were governed by the conjugal partnership of gains as provided under
Article 119 of the Civil Code. Under Article 160 of the Civil Code, "all property of the
marriage is presumed to belong to the conjugal partnership, unless it can be proven that it
pertains exclusively to the husband or to the wife."
In his testimony, Jose Sr. admitted that at the time he acquired the land through sale, he
was already married. The material portion of his testimony is as follows:
Q: Upon the death of your wife did you and your wife ever own a piece of land?
A: Yes, sir.
Q: Where is that land situated?
A: In Centro, District 2, Mallig[,] Isabela.
Q: Is that land titled in your names?
A:Yes, sir.
xxxx
Q: You and your wife acquired that piece of land?
A: Yes, sir.
xxxx
Q: May we know from you[,] Mr. Witness, how did you acquire this parcel of land presently
embraced and covered by TCT No. T-44422?
A: I purchased that piece of land from the Baniqued Family during my incumbency as
Municipal Mayor, sir.
Q: What was your civil status at the time you purchased that piece of land?
A: I was already married, sir.(Emphasis ours, TSN, July 24, 1997, Jose Garcia Sr.)7
Because of the petitioner bank’s failure to rebut the allegation that the subject property was
acquired during the former’s marriage to Ligaya, the legal presumption of the conjugal
nature of the property, in line with Article 160 of the Civil Code, applies to this property.
Proof of the subject property’s acquisition during the subsistence of marriage suffices to
render the statutory presumption operative.8
b. Registration of the subject property in the name of one spouse does not destroy the
presumption that the property is conjugal
The petitioner bank claims that the CA failed to consider that the subject property was
registered in the name of Jose Sr. alone.1a\^/phi1 Likewise, it raises the argument that Jose
Sr.’s change of status in the subject property’s title from "married" to "widower" prior to the
constitution of the real estate mortgage showed that the property was no longer conjugal.
We do not consider this argument persuasive.
Registration of a property alone in the name of one spouse does not destroy its conjugal
nature. What is material is the time when the property was acquired.9 The registration of
the property is not conclusive evidence of the exclusive ownership of the husband or the
wife. Although the property appears to be registered in the name of the husband, it has the
inherent character of conjugal property if it was acquired for valuable consideration during
marriage.10
It retains its conjugal nature.
In order to rebut the presumptive conjugal nature of the property, the petitioner must
present strong, clear and convincing evidence of exclusive ownership of one of the
spouses.11 The burden of proving that the property belongs exclusively to the wife or to the
husband rests upon the party asserting it.
In the present case, aside from its allegation that the subject property is no longer conjugal
and its assertion that it is a mortgagee in good faith, the petitioner bank offered no
evidence, convincing to this Court, that the subject property exclusively belonged to Jose Sr.
As stated earlier, the petitioner bank failed to overcome the legal presumption that the
disputed property was conjugal.1âwphi1 Thus, the conclusion of both lower courts that the
subject property was conjugal property holds. Factual findings of the CA affirming those of
the trial court are binding on this Court unless there is a clear showing that such findings are
tainted with arbitrariness, capriciousness or palpable error.12
The conjugal partnership was converted into an implied ordinary co-ownership upon the
death of Ligaya
Upon the death of Ligaya on January 21, 1987, the conjugal partnership was automatically
dissolved and terminated pursuant to Article 175(1) of the Civil Code,13 and the
successional rights of her heirs vest, as provided under Article 777 of the Civil Code, which
states that"[t]he rights to the succession are transmitted from the moment of the death of
the decedent."
Consequently, the conjugal partnership was converted into an implied ordinary co-
ownership between the surviving spouse, on the one hand, and the heirs of the deceased,
on the other.14 This resulting ordinary co-ownership among the heirs is governed by Article
493 of the Civil Code which reads:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when personal rights are involved. But
the effect of the alienation of 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)
Under this provision, each co-owner has the full ownership of his part or share in the co-
ownership and may, therefore, alienate, assign or mortgage it except when personal rights
are involved. Should a co-owner alienate or mortgage the co-owned property itself, the
alienation or mortgage shall remain valid but only to the extent of the portion which may be
allotted to him in the division upon the termination of the co-ownership.15 In Carvajal v.
Court of Appeals,16 the Court said:
While under Article 493 of the New Civil Code, each co-owner shall have the full ownership
of his part and of the fruits and benefits pertaining thereto and he may alienate, assign or
mortgage it, and even substitute another person in its enjoyment, the effect of the
alienation or the mortgage with respect to the co-owners, shall be limited, by mandate of
the same article, to the portion which may be allotted to him in the division upon the
termination of the co-ownership. He has no right to sell or alienate a concrete, specific, or
determinate part of the thing in common to the exclusion of the other co-owners because
his right over the thing is represented by an abstract or Ideal portion without any physical
adjudication.3 An individual co- owner cannot adjudicate to himself or claim title to any
definite portion of the land or thing owned in common until its actual partition by
agreement or judicial decree. Prior to that time all that the co-owner has is an Ideal or
abstract quota or proportionate share in the entire thing owned in common by all the co-
owners.4 What a co owner may dispose of is only his undivided aliquot share, which shall be
limited to the portion that may be allotted to him upon partition. [emphasis supplied].
In the present case, Jose Sr. constituted the mortgage over the entire subject property after
the death of Ligaya, but before the liquidation of the conjugal partnership. While under
Article 493 of the Civil Code, even if he had the right to freely mortgage or even sell his
undivided interest in the disputed property, he could not dispose of or mortgage the entire
property without his children’s consent. As correctly emphasized by the trial court, Jose Sr.’s
right in the subject property is limited only to his share in the conjugal partnership as well as
his share as an heir on the other half of the estate which is his deceased spouse’s share.
Accordingly, the mortgage contract is void insofar as it extends to the undivided shares of
his children (Nora, Jose Jr., Bobby and Jimmy) because they did not give their consent to the
transaction.17
Accordingly, the Amendment of Real Estate Mortgage constituted by Jose Sr. over the entire
property without his co-owners' consent is not necessarily void in its entirety. The right of
the petitioner bank as mortgagee is limited though only to the portion which may be
allotted to Jose Sr. in the event of a division and liquidation of the subject property.
WHEREFORE, in view of the foregoing, we hereby AFFIRM the Decision dated September 26,
2007of the Court of Appeals in CA-G.R. CV No. 71356. Costs against petitioner Philippine
National Bank.
SO ORDERED.
G.R. No. 183918 January 15, 2014
FRANCISCO LIM, Petitioner,
vs.
EQUITABLE PCI BANK, now known as the BANCO DE ORO UNIBANK, INC.,* Respondent.
DECISION
DEL CASTILLO, J.:
The basic rule is that he who alleges must prove his case.
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the July
30, 2008 Decision2 of the Court of Appeals CA) in CA-G.R. CV No. 85139.
Factual Antecedents
On November 17, 1988, petitioner Francisco Lim (petitioner) executed an Irrevocable Special
Power of Attorney3 in favor of his brother, Franco Lim (Franco), authorizing the latter to
mortgage his share in the property covered by by Transfer Certificate of Title (TCT) No.
57176,4 which they co-owned.5
On February 9, 1989, Banco De Oro Savings and Mortgage Bank released a loan in the
amount of ₱8.5 million by virtue of the said Irrevocable Special Power of Attorney, which
was entered in the Register of Deeds of San Juan, Metro Manila.6
On December 28, 1992, the loan was fully paid by Franco.7
On June 14, 1996, petitioner, Franco, and their mother Victoria Yao Lim (Victoria) obtained
from respondent Equitable PCI Bank (respondent; formerly Equitable Banking Corporation) a
loan in the amount of ₱30 million in favor of Sun Paper Products, Inc. To secure the loan,
petitioner and Franco executed in favor of respondent a Real Estate Mortgage8 over the
same property.9
However, when the loan was not paid, respondent foreclosed the mortgaged property.10
On September 29, 1999, TCT No. 947011 and Tax Declaration No. 96-3180712 were issued
in the name of respondent.13
Thereafter, a Writ of Possession14 in favor of respondent was issued by the Regional Trial
Court (RTC) of Pasig City, Branch 158, in LRC Case No. R-5818.
On January 11, 2001, petitioner filed before the RTC of Pasig a Motion for the Issuance of
Temporary Restraining Order (TRO)15 and a Complaint16 for Cancellation of Special Power
of Attorney, Mortgage Contract, Certificate of Sale, TCT No. 9470, and Tax Declaration No.
96-31807, with Damages and Issuance of Preliminary Mandatory Injunction, docketed as
Civil Case No. 68214 and raffled to Branch 267, against respondent, Franco, and Victoria.
Petitioner alleged that he did not authorize Franco to mortgage the subject property to
respondent and that his signatures in the Real Estate Mortgage and the Surety Agreement17
were forged.
On January 19, 2001, the RTC issued an Order18 granting petitioner’s Motion for the
issuance of a TRO to prevent respondent from enforcing the Writ of Possession. Thus:
WHEREFORE, considering that grave and irreparable injury will result on [petitioner] before
the application of injunctive relief can be heard on notice and pursuant to Section 4, Rule 58
of the 1997 Rules of Civil Procedure, as amended, let a Temporary Restraining Order (TRO)
be issued upon posting by [petitioner] of a bond executed to the party enjoined
([respondent] Equitable PCI Bank) in the amount of ONE HUNDRED THOUSAND PESOS
(₱100,000.00) bond to be approved by the Court, to the effect that [petitioner] will pay to
such party all damages which [respondent and] defendants may sustain by reason of the
TRO if the Court should finally decide that the [petitioner] is not really entitled thereto.
Consequently, [respondent and] defendants, their agents, officers, representatives and all
persons acting on their behalf, are restrained from further executing the Notice of
Compliance and/or Writ of Possession.
SO ORDERED.19
Respondent, for its part, filed an Answer Cum Motion to Dismiss20 contending that the trial
court has no jurisdiction to issue a TRO or a preliminary injunction enjoining the
implementation of the Writ of Possession issued by a co-equal court.21 Respondent also
argued that it is not privy to the execution of the Irrevocable Special Power of Attorney22
and that since there is no allegation that the foreclosure was defective or void, there is no
reason to cancel TCT No. 9470 and Tax Declaration No. 96-31807.23
On April 19, 2001, the RTC issued an Order24 granting petitioner’s application for injunctive
relief, to wit:
WHEREFORE, considering that based from testimonial and documentary evidence, there is
sufficient reason to believe that grave and irreparable injury will result on [petitioner]
before the main case can be heard on notice and pursuant to Section 4, Rule 58 of the 1997
Rules of Civil Procedure, as amended, let a writ of preliminary injunction be issued upon
posting by [petitioner] of a bond executed to the party enjoined ([respondent] Equitable PCI
Bank) in the amount of THREE MILLION PESOS (Php3,000,000.00) bond to be approved by
the Court, to the effect that [petitioner] will pay to such party all damages which
[respondent and] defendants may sustain by reason of the said writ if the Court should
finally decide that the [petitioner] is not really entitled thereto. Consequently, [respondent
and] defendants, their agents, officers, representatives and all persons acting on their
behalf, are restrained from further executing the Notice of Compliance and/or Writ of
Possession.
SO ORDERED.25
Franco and Victoria, however, did not participate in the proceedings.26
Ruling of the Regional Trial Court
On April 4, 2005, the RTC rendered a Decision27 in favor of petitioner. It ruled that
petitioner was able to prove by preponderance of evidence that he did not participate in the
execution of the mortgage contract giving rise to the presumption that his signature was
forged.28 The dispositive portion of the Decision reads:
WHEREFORE, IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered
in favor of [petitioner] Francisco Lim and against the [respondent] Equitable PCI Bank,
Franco Lim and Victoria Yao Lim.
Accordingly, the Real Estate Mortgage Contract dated 14 June 1996 covered by Transfer
Certificate of Title No. 57176; the Certificate of Sale dated 23 December 1997 covering the
same title; TCT No. 9470 in the name of [respondent] Bank; and Tax Declaration No. 96-
31807 issued in the name of the [respondent] Bank are hereby declared null and void and of
no force and effect.
The writ of preliminary injunction which was issued by the Court as per Order dated 19 April
2001 is hereby made permanent.
SO ORDERED.29
Ruling of the Court of Appeals
On appeal, the CA reversed the RTC Decision. It ruled that petitioner’s mere allegation that
his signature in the mortgage contract was forged is not sufficient to overcome the
presumption of regularity of the notarized document.30 Thus, the CA disposed of the case in
this wise:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The assailed
Decision of the Regional Trial Court is SET ASIDE. The complaint filed by [petitioner]
Francisco Lim against [respondent] Equitable PCI Banking Corporation is DISMISSED for lack
of merit.
SO ORDERED.31
Issues
Hence, this recourse by petitioner raising the following questions:
Did the [CA] err when it held that no evidence was presented to support Petitioner’s claim
that his signature was forged?
Corollary to the issue above, is the presentation of expert evidence indispensable in order
that forgery may be sufficiently proven in this case?
Did the [CA] err when it set aside the Decision rendered by the Trial Court on 04 April 2005
and forthwith dismissed the complaint filed by Francisco Lim against Equitable PCI Banking
Corporation for lack of merit?
Did Respondent Bank exercise the diligence required of it in the subject mortgage
transaction; if it did not, did Respondent Bank’s failure violate the rights of Petitioner?32
In a nutshell, the issues boil down to whether petitioner was able to prove that his signature
was forged.
Petitioner’s Arguments
Petitioner contends that his signature in the mortgage contract was forged as he was not in
the Philippines at the time of its execution.33 He posits that the presentation of expert
witnesses is not required to prove forgery as the court may make its own determination
based on the evidence presented.34 He claims that respondent was negligent in approving
the loan and in accepting the subject property as security for the loan.35 He also blames
respondent for not conducting a more in-depth inquiry before approving the loan since it
was a "take-out" from a mortgage36 constituted in favor of Planters Development Bank.37
Lastly, he insists that respondent should have been alerted by the fact that the mortgage
contract was executed without the consent of his wife.38
Respondent’s Arguments
Respondent, on the other hand, echoes the ruling of the CA that petitioner’s mere denial is
not enough to prove that his signature was forged.39 Respondent points out that there was,
in fact, no attempt on petitioner’s part to compare the alleged forged signature with any of
his genuine signatures.40 Also, no evidence was presented to show that respondent did not
exercise due diligence when it approved the loan and accepted the mortgage.41 More
important, petitioner cannot feign ignorance of the execution and existence of the
mortgage because he even communicated with respondent to settle the loan and, when the
property was foreclosed, to repurchase the same.42 Hence, petitioner is estopped from
assailing the validity of the mortgage contract.43
Our Ruling
The Petition is bereft of merit.
Petitioner failed to prove that his signature was forged.
Allegations of forgery, like all other allegations, must be proved by clear, positive, and
convincing evidence by the party alleging it.44 It should not be presumed45 but must be
established by comparing the alleged forged signature with the genuine signatures.46
Although handwriting experts are often offered as witnesses, they are not indispensable
because judges must exercise independent judgment in determining the authenticity or
genuineness of the signatures in question.47
In this case, the alleged forged signature was not compared with the genuine signatures of
petitioner as no sample signatures were submitted. What petitioner submitted was another
mortgage contract48 executed in favor of Planters Development Bank, which he claims was
also forged by his brother. But except for this, no other evidence was submitted by
petitioner to prove his allegation of forgery. His allegation that he was in the US at the time
of the execution of the mortgage contract is also not sufficient proof that his signature was
forged.
Petitioner failed to prove negligence on the part of respondent.
Likewise without merit is petitioner’s allegation of negligence on the part of respondent.
Before entering into a mortgage contract, banks are expected to exercise due diligence.49
However, in this case, no evidence was presented to show that respondent did not exercise
due diligence or that it was negligent in accepting the mortgage.50 That petitioner was
erroneously described as single and a Filipino citizen in the mortgage contract, when in fact
he is married and an American citizen, cannot be attributed to respondent considering that
the title of the mortgaged property was registered under "FRANCISCO LIM and FRANCO LIM,
both Filipino citizens, of legal age, single."
The nature of the property was never raised as an issue.
The absence of his wife’s signature on the mortgage contract also has no bearing in this
case.
We are not unaware that all property of the marriage is presumed to be conjugal, unless it is
shown that it is owned exclusively by the husband or the wife;51 that this presumption is
not overcome by the fact that the property is registered in the name of the husband or the
wife alone;52 and that the consent of both spouses is required before a conjugal property
may be mortgaged.53 However, we find it iniquitous to apply the foregoing presumption
especially since the nature of the mortgaged property was never raised as an issue before
the RTC, the CA, and even before this Court. In fact, petitioner never alleged in his
Complaint that the said property was conjugal in nature. Hence, respondent had no
opportunity to rebut the said presumption.
Worth mentioning, in passing, is the ruling in Philippine National Bank v. Court of Appeals54
to wit:
The 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 to make such inquiry.
A torrens title concludes all controversy over ownership of the land covered by a final
[decree] 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 as follows:
"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."
The presumption applies to property acquired during the lifetime of the husband and wife.
In this case, it appears on the face of the title that the properties were acquired by Donata
Montemayor when she was already a widow. 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.
The PNB had a reason to rely on what appears on the certificates of title of the properties
mortgaged. For all legal purposes, the PNB is a mortgagee in good faith for at the time the
mortgages covering said properties were constituted the PNB was not aware to any flaw of
the title of the mortgagor. (Emphasis supplied)
Petitioner’s allegation of forgery is belied by the evidence.
Moreover, petitioner’s subsequent actions belie his allegation of forgery.1âwphi1 Before
the expiration of the redemption period, petitioner sent respondent a letter55 signifying his
intention to reacquire the said property. He even visited the bank to discuss the matter.56
Clearly, his acts contradict his claim of forgery, which appears to be an afterthought and a
last-ditch effort to recover the said property.
All told, we find no error on the part of the CA in upholding the validity of the mortgage
contract.57
WHEREFORE, the Petition is hereby DENIED. The July 30 2008 Decision of the Court of
Appeals in CA-G.R. CV No. 85139 is hereby AFFIRMED.
SO ORDERED.
In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national,
met with Ms. Helen Soneja (Soneja) to inquire about a condominium unit and a parking slot
at Cityland Pioneer, Mandaluyong City, allegedly owned by Yung Sam Kang (Kang), a Korean
national and a Special Resident Retiree's Visa (SRRV) holder.
At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium
Certificate of Title (CCT) No. 18186]4 and Parking Slot No. 42 [covered by CCT No. 9118]5
were for sale for ₱3,000,000.00. Soneja likewise assured Suzuki that the titles to the unit
and the parking slot were clean. After a brief negotiation, the parties agreed to reduce the
price to ₱2,800,000.00. On August 5, 2003, Suzuki issued Kang a Bank of the Philippine
Island (BPI) Check No. 833496 for One Hundred Thousand Pesos (₱100,000.00) as
reservation fee.7 On August 21, 2003, Suzuki issued Kang another check, BPI Check No.
83350,8 this time for ₱2,700,000.00 representing the remaining balance of the purchase
price. Suzuki and Kang then executed a Deed of Absolute Sale dated August 26, 20039
covering Unit No. 536 and Parking Slot No. 42. Soon after, Suzuki took possession of the
condominium unit and parking lot, and commenced the renovation of the interior of the
condominium unit.

G.R. No. 205487 November 12, 2014 Kang thereafter made several representations with Suzuki to deliver the titles to the
properties, which were then allegedly in possession of Alexander Perez (Perez, Orion’s Loans
ORION SAVINGS BANK, Petitioner, Officer) for safekeeping. Despite several verbal demands, Kang failed to deliver the
vs. documents. Suzuki later on learned that Kang had left the country, prompting Suzuki to
SHIGEKANE SUZUKI, Respondent. verify the status of the properties with the Mandaluyong City Registry of Deeds.

DECISION Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No.
42 contained no annotations although it remained under the name of Cityland Pioneer. This
BRION, J.: notwithstanding, Cityland Pioneer, through Assistant Vice President Rosario D. Perez,
certified that Kang had fully paid the purchase price of Unit. No. 53610 and Parking Slot No.
42.11 CCT No. 18186 representing the title to the condominium unit had no existing
Before us is the Petition for Review on Certiorari1 filed by petitioner Orion Savings Bank
encumbrance, except for anannotation under Entry No. 73321/C-10186 which provided that
(Orion) under Rule 45 of the Rules of Court, assailing the decision2 dated August 23, 2012
any conveyance or encumbrance of CCT No. 18186 shall be subject to approval by the
and the resolution3 dated January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV No.
Philippine Retirement Authority (PRA). Although CCT No. 18186 contained Entry No.
94104.
66432/C-10186 dated February 2, 1999 representing a mortgage in favor of Orion for a
₱1,000,000.00 loan, that annotation was subsequently cancelled on June 16, 2000 by Entry
The Factual Antecedents
No. 73232/T. No. 10186. Despite the cancellation of the mortgage to Orion, the titles to the
properties remained in possession of Perez.
To protect his interests, Suzuki thenexecuted an Affidavit of Adverse Claim12 dated
September 8, 2003, withthe Registry of Deeds of Mandaluyong City, annotated as Entry No.
3292/C-No. 18186 in CCT No. 18186. Suzuki then demanded the delivery of the titles.13
Orion, (through Perez), however, refused to surrender the titles, and cited the need to
consult Orion’s legal counsel as its reason.
On October 14, 2003, Suzuki received a letter from Orion’s counsel dated October 9, 2003,
stating that Kang obtained another loan in the amount of ₱1,800,000.00. When Kang failed
to pay, he executed a Dacion en Pagodated February 2, 2003, in favorof Orion covering Unit
No. 536. Orion, however, did not register the Dacion en Pago, until October 15, 2003.
On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42
(covered by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in the
parking lot’s title.
On January 27, 2004, Suzuki filed a complaint for specific performance and damages against
Kang and Orion. At the pre-trial, the parties made the following admissions and stipulations:
1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and
Parking Slot No. 42;
2. That the mortgage in favor ofOrion supposedly executed by Kang, with Entry No.
66432/C-10186 dated February 2, 1999, was subsequently cancelled by Entry No.
73232/T No. 10186 dated June 16, 2000;
3. That the alleged Dacion en Pagowas never annotated in CCT Nos. 18186 and
9118;
4. That Orion only paid the appropriate capital gains tax and the documentary
stamp tax for the alleged Dacion en Pago on October 15, 2003;
5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to
Orion; and
6. That when Suzuki bought the properties, he went to Orion to obtain possession of
the titles.
The RTC Ruling
In its decision14 dated June 29, 2009, the Regional Trial Court (RTC), Branch 213,
Mandaluyong City ruled infavor of Suzuki and ordered Orion to deliver the CCT Nos. 18186
and 9118 to Suzuki.
The court found that Suzuki was an innocent purchaser for value whose rights over the
properties prevailed over Orion’s. The RTC further noted that Suzuki exerted efforts to verify
the status of the properties but he did not find any existing encumbrance inthe titles.
Although Orion claims to have purchased the property by way of a Dacion en Pago, Suzuki
only learned about it two (2) months after he bought the properties because Orion never
bothered to register or annotate the Dacion en Pagoin CCT Nos. 18186 and 9116.
The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages,
exemplary damages, attorney’s fees, appearance fees, expenses for litigation and cost
ofsuit. Orion timely appealed the RTC decision with the CA.
The CA Ruling
On August 23, 2012, the CA partially granted Orion’s appeal and sustained the RTC insofar as
it upheld Suzuki’s right over the properties. The CA further noted that Entry No. 73321/C-
10186 pertaining to the withdrawal of investment of an SRRV only serves as a warning to an
SRRV holder about the implications of a conveyance of a property investment. It deviated
from the RTC ruling, however, by deleting the award for moral damages, exemplary
damages, attorney’s fees, expenses for litigation and cost of suit.
Orion sought a reconsideration of the CA decision but the CA denied the motion in its
January 25, 2013 resolution. Orion then filed a petition for review on certiorariunder Rule 45
with this Court.
The Petition and Comment
Orion’s petition is based on the following grounds/arguments:15
1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under
Korean law, any conveyance of a conjugal property should be made with the
consent of both spouses;
2. Suzuki is not a buyer in good faith for he failed to check the owner’s duplicate
copies of the CCTs;
3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which
prohibits any conveyance or encumbrance of the property investment, defeats the
alleged claim of good faith by Suzuki; and
4. Orion should not be faulted for exercising due diligence.
In his Comment,16 Suzuki asserts that the issue on spousal consent was belatedly raised on
appeal. Moreover, proof of acquisition during the marital coverture is a condition sine qua
nonfor the operation of the presumption of conjugal ownership.17 Suzuki additionally
maintains that he is a purchaser in good faith, and is thus entitled to the protection of the
law.
The Court’s Ruling
We deny the petition for lack of merit.
The Court may inquire into conclusions of fact when the inference made is manifestly
mistaken
In a Rule 45 petition, the latitude of judicial review generally excludes a factual and
evidentiary re-evaluation, and the Court ordinarily abides by the uniform factual conclusions
of the trial court and the appellate court.18 In the present case, while the courts below both
arrived at the same conclusion, there appears tobe an incongruence in their factual findings
and the legal principle they applied to the attendant factual circumstances. Thus, we are
compelled to examine certain factual issues in the exercise of our sound discretion to
correct any mistaken inference that may have been made.19
Philippine Law governs the transfer of real property
Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot
uphold this position, however, because the issue of spousal consent was only raised on
appeal to the CA. It is a well-settled principle that points of law, theories, issues, and
arguments not brought to the attention of the trial court cannot be raised for the first time
on appeal and considered by a reviewing court.20 To consider these belated arguments
would violate basic principles of fairplay, justice, and due process.
Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only to
put an end to lingering doubts on the correctness of the denial of the present petition.
It is a universal principle thatreal or immovable property is exclusively subject to the laws of
the country or state where it is located.21 The reason is found in the very nature of
immovable property — its immobility. Immovables are part of the country and so closely
connected to it that all rights over them have their natural center of gravity there.22
Thus, all matters concerning the titleand disposition ofreal property are determined by what
is known as the lex loci rei sitae, which can alone prescribe the mode by which a title
canpass from one person to another, or by which an interest therein can be gained or
lost.23 This general principle includes all rules governing the descent, alienation and transfer
of immovable property and the validity, effect and construction of wills and other
conveyances.24
This principle even governs the capacity of the person making a deed relating to immovable
property, no matter what its nature may be. Thus, an instrument will be ineffective to
transfer title to land if the person making it is incapacitated by the lex loci rei sitae, even
though under the law of his domicile and by the law of the place where the instrument is
actually made, his capacity is undoubted.25
On the other hand, property relations between spouses are governed principally by the
national law of the spouses.26 However, the party invoking the application of a foreign law
has the burden of proving the foreign law. The foreign law is a question of fact to be
properly pleaded and proved as the judge cannot take judicial notice of a foreign law.27 He
is presumed to know only domestic or the law of the forum.28
To prove a foreign law, the party invoking it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads:
SEC. 24. Proof of official record. — The record of public documents referred to in paragraph
(a) of Section 19, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the legal custody of the
record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a
certificate that such officer has the custody. If the office in which the record is kept is in a
foreign country, the certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice consul, or consular agent or by any officer in the foreign service
of the Philippines stationed in the foreign country inwhich the record is kept, and
authenticated by the seal of his office. (Emphasis supplied)
SEC. 25. What attestation ofcopy must state. — Whenever a copy of a document or record is
attested for the purpose of the evidence, the attestation must state, in substance, that the
copy is a correct copy of the original, or a specific part thereof, as the case may be. The
attestation must be under the official seal of the attesting officer, if there be any, or if he be
the clerk of a court having a seal, under the seal of such court.
Accordingly, matters concerning the title and disposition of real property shall be governed
by Philippine law while issues pertaining to the conjugal natureof the property shall be
governed by South Korean law, provided it is proven as a fact.
In the present case, Orion, unfortunately failed to prove the South Korean law on the
conjugal ownership ofproperty. It merely attached a "Certification from the Embassy of the
Republic of Korea"29 to prove the existence of Korean Law. This certification, does not
qualify as sufficient proof of the conjugal nature of the property for there is no showing that
it was properly authenticated bythe seal of his office, as required under Section 24 of Rule
132.30
Accordingly, the International Law doctrine of presumed-identity approachor processual
presumption comes into play, i.e., where a foreign law is not pleaded or, evenif pleaded, is
not proven, the presumption is that foreign law is the same as Philippine Law.31
Under Philippine Law, the phrase "Yung Sam Kang ‘married to' Hyun Sook Jung" is merely
descriptive of the civil status of Kang.32 In other words, the import from the certificates of
title is that Kang is the owner of the properties as they are registered in his name alone, and
that he is married to Hyun Sook Jung.
We are not unmindful that in numerous cases we have held that registration of the property
in the name of only one spouse does not negate the possibility of it being conjugal or
community property.33 In those cases, however, there was proof that the properties,
though registered in the name of only one spouse, were indeed either conjugal or
community properties.34 Accordingly, we see no reason to declare as invalid Kang’s
conveyance in favor of Suzuki for the supposed lack of spousal consent.
The petitioner failed to adduce sufficient evidence to prove the due execution of the Dacion
en Pago
Article 1544 of the New Civil Codeof the Philippines provides that:
ART. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good faith,
if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who
in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith
was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith.
The application of Article 1544 of the New Civil Code presupposes the existence of two or
more duly executed contracts of sale. In the present case, the Deed of Sale dated August 26,
200335 between Suzuki and Kang was admitted by Orion36 and was properly identified by
Suzuki’s witness Ms. Mary Jane Samin (Samin).37
It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In a
contract of sale, the seller obligates himself to transfer the ownership of the determinate
thing sold, and to deliver the same to the buyer, who obligates himself to pay a price certain
to the seller.38 The execution of the notarized deed of saleand the actual transfer of
possession amounted to delivery that produced the legal effect of transferring ownership to
Suzuki.39
On the other hand, although Orion claims priority in right under the principle of prius
tempore, potior jure (i.e.,first in time, stronger in right), it failedto prove the existence and
due execution of the Dacion en Pagoin its favor.
At the outset, Orion offered the Dacion en Pagoas Exhibit "5"with submarkings "5-a" to "5-
c" to prove the existence of the February 6, 2003 transaction in its Formal Offer dated July
20, 2008. Orion likewise offered in evidence the supposed promissory note dated
September 4, 2002 as Exhibit "12"to prove the existence of the additional ₱800,000.00 loan.
The RTC, however, denied the admission of Exhibits "5" and "12,"among others, in its order
dated August 19, 2008 "since the same [were] not identified in court by any witness."40
Despite the exclusion of its most critical documentary evidence, Orion failed to make a
tender ofexcluded evidence, as provided under Section 40, Rule 132 of the Rules of Court.
For this reason alone, we are prevented from seriously considering Exhibit "5" and its
submarkings and Exhibit "12" in the present petition.
Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the
present petition, the copious inconsistencies and contradictions in the testimonial and
documentary evidence of Orion, militate against the conclusion that the Dacion en Pagowas
duly executed. First, there appears to be no due and demandable obligation when the
Dacion en Pago was executed, contrary to the allegations of Orion. Orion’s witness Perez
tried to impress upon the RTC that Kang was in default in his ₱1,800,000.00 loan. During his
direct examination, he stated:
ATTY. CRUZAT:
Q: Okay, so this loan of ₱1.8 million, what happened to this loan, Mr. Witness?
A: Well it became past due, there has been delayed interest payment by Mr.
Kangand...
Q: So what did you do after there were defaults[?]
A: We have to secure the money or the investment of the bank through loans and
we have executed a dacion en pagobecause Mr. Kang said he has no money. So we
just execute[d] the dacion en pago rather than going through the Foreclosure
proceedings.
xxxx
Q: Can you tell the court when was this executed?
A: February 6, 2003, your Honor.41
A reading of the supposed promissory note, however, shows that there was nodefault to
speak of when the supposed Dacion en Pagowas executed.
Based on the promissory note, Kang’s loan obligation wouldmature only on August 27, 2003.
Neither can Orion claim that Kang had been in default in his installment payments because
the wordings of the promissory note provide that "[t]he principal of this loanand its interest
and other charges shall be paid by me/us in accordance hereunder: SINGLE PAYMENT
LOANS.42 "There was thus no due and demandable loan obligation when the alleged Dacion
en Pago was executed.
Second, Perez, the supposed person who prepared the Dacion en Pago,appears to only have
a vague idea of the transaction he supposedly prepared. During his cross-examination, he
testified:
ATTY. DE CASTRO:
Q: And were you the one who prepared this [dacion en pago] Mr. witness?
A: Yes, sir. I personally prepared this.
xxxx
Q: So this 1.8 million pesos is already inclusive of all the penalties, interest and
surcharge due from Mr. Yung Sam Kang?
A: It’s just the principal, sir.
Q: So you did not state the interest [and] penalties?
A: In the [dacion en pago], we do not include interest, sir. We may actually
includethat but....
Q: Can you read the Second Whereas Clause, Mr. Witness?
A: Whereas the first party failed to pay the said loan to the second party and as of
February 10, 2003, the outstanding obligation which is due and demandable
principal and interest and other charges included amounts to ₱1,800,000.00 pesos,
sir.
xxxx
Q: You are now changing your answer[.] [I]t now includes interest and other
charges, based on this document?
A: Yes, based on that document, sir.43
Third, the Dacion en Pago,mentioned that the ₱1,800,000.00 loan was secured by a
real estate mortgage. However, no document was ever presented to prove this real
estate mortgage aside from it being mentioned in the Dacion en Pago itself.
ATTY. DE CASTRO:
Q: Would you know if there is any other document like a supplement to that Credit
Line Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which
says that there was a subsequent collateralization or security given by Mr. Yung
[Sam]
Kang for the loan?
xxxx
A: The [dacion en pago], sir.44
Fourth,the Dacion en Pago was first mentioned only two (2) months after Suzuki and Samin
demanded the delivery of the titles sometime in August 2003,and after Suzuki caused the
annotation of his affidavit of adverse claim. Records show that it was only on October 9,
2003, when Orion, through its counsel, Cristobal Balbin Mapile & Associates first spoke of
the Dacion en Pago.45 Not even Perez mentioned any Dacion en Pago on October 1, 2003,
when he personally received a letter demanding the delivery of the titles.Instead, Perez
refused to accept the letter and opted to first consult with his lawyer.46
Notably, even the October 9, 2003 letter contained material inconsistencies in its recital of
facts surrounding the execution of the Dacion en Pago. In particular, it mentioned that "on
[September 4, 2002], after paying the original loan, [Kang] applied and was granted a new
Credit Line Facility by [Orion] x x x for ONE MILLION EIGHT HUNDRED THOUSAND PESOS
(₱1,800,000.00)." Perez, however, testified that there was "no cash movement" in the Q: And yet despite no payment, the bank Orion Savings Bank still extended an
original ₱1,000,000.00 loan. In his testimony, he said: ₱800,000.00 additional right?

COURT: A: Yes, sir.47

xxxx Fifth, it is undisputed that notwithstanding the supposed execution of theDacion en Pago on
February 2, 2003, Kang remained in possession of the condominium unit. In fact, nothing in
Q: Would you remember what was the subject matter of that real estate mortgage the records shows that Orion even bothered to take possession of the property even six (6)
for that first ₱1,000,000.00 loan? months after the supposed date of execution of the Dacion en Pago. Kang was even able to
transfer possession of the condominium unit to Suzuki, who then made immediate
A: It’s a condominium Unit in Cityland, sir. improvements thereon. If Orion really purchased the condominium unit on February 2, 2003
and claimed to be its true owner, why did it not assert its ownership immediately after the
xxxx alleged sale took place? Why did it have to assert its ownership only after Suzuki demanded
the delivery of the titles? These gaps have remained unanswered and unfilled.
Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this
₱1,000,000.00 loan? In Suntay v. CA,48 we held that the most prominent index of simulation is the complete
absence of anattempt on the part of the vendee to assert his rights of ownership over the
A: None sir. property in question. After the sale, the vendee should have entered the land and occupied
the premises. The absence of any attempt on the part of Orion to assert its right of
Q: No payments? dominion over the property allegedly soldto it is a clear badge of fraud. That
notwithstanding the execution of the Dacion en Pago, Kang remained in possession of the
A: None sir. disputed condominium unit – from the time of the execution of the Dacion en Pagountil the
property’s subsequent transfer to Suzuki – unmistakably strengthens the fictitious nature of
Q: And from 1999 to 2002, there was no payment, either by way of payment to the the Dacion en Pago.
principal, by way ofpayment of interest, there was no payment by Mr. Yung Sam
Kang of this loan? These circumstances, aside from the glaring inconsistencies in the documents and testimony
of Orion’s witness, indubitably prove the spurious nature of the Dacion en Pago.
A: Literally, there was no actual cash movement, sir.
The fact that the Dacion en Pago
Q: There was no actual cash? is a notarized document does not
support the conclusion that the
A: Yes, sir. sale it embodies is a true
conveyance
Public instruments are evidence of the facts that gave rise to their execution and are to be
considered as containing all the terms of the agreement.49 While a notarized document
enjoys this presumption, "the fact that a deed is notarized is not a guarantee of the validity
of its contents."50 The presumption of regularity of notarized documents is not absolute
and may be rebutted by clear and convincing evidence to the contrary.51
In the present case, the presumption cannot apply because the regularity in the execution of
the Dacion en Pago and the loan documents was challenged in the proceedings below
where their prima facievalidity was overthrown by the highly questionable circumstances
surrounding their execution.52
Effect of the PRA restriction on
the validity of Suzuki’s title to the
property
Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki. In
particular, Orion assails the status of Suzuki as a purchaser in good faith in view of the
express PRA restriction contained in CCT No. 18186.53
We reject this suggested approachoutright because, to our mind, the PRA restriction cannot
affect the conveyance in favor of Suzuki. On this particular point, we concur withthe
following findings of the CA:
x x x the annotation merely servesas a warning to the owner who holds a Special Resident
Retiree’s Visa(SRRV) that he shall lose his visa if he disposes his property which serves as his
investment in order to qualify for such status. Section 14 of the Implementing Investment
Guidelines under Rule VIII-A of the Rules and Regulations Implementing Executive Order No.
1037, Creating the Philippine Retirement Park System Providing Funds Therefor and For
Other Purpose ( otherwise known as the Philippine Retirement Authority) states:
Section 14. Should the retiree-investor withdraw his investment from the Philippines, or
transfer the same to another domestic enterprise, orsell, convey or transfer his
condominium unit or units to another person, natural or juridical without the prior approval
of the Authority, the Special Resident Retiree’s Visa issued to him, and/or unmarried minor
child or children[,] may be cancelled or revoked by the Philippine Government, through the
appropriate government department or agency, upon recommendation of the Authority.54
Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on the
basis of the PRA restriction. Orion knew of the PRA restriction when it transacted with Kang.
Incidentally, Orion admitted accommodating Kang’s request to cancel the mortgage
annotation despite the lack of payment to circumvent the PRA restriction. Orion, thus, is
estopped from impugning the validity of the conveyance in favor of Suzuki on the basis of
the PRA restriction that Orion itself ignored and "attempted" to circumvent.
With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we
see no reason for the application of the rules on double sale under Article 1544 of the New
Civil Code. Suzuki, moreover, successfully adduced sufficient evidence to establish the
validity of conveyance in his favor.
WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against
petitioner Orion Savings Bank.
SO ORDERED.
G.R. No. 164584 June 22, 2009
PHILIP MATTHEWS, Petitioner,
vs.
BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.
DECISION
NACHURA, J.:
Assailed in this petition for review on certiorari are the Court of Appeals (CA) December 19,
2003 Decision1 and July 14, 2004 Resolution2 in CA-G.R. CV No. 59573. The assailed decision
affirmed and upheld the June 30, 1997 Decision3 of the Regional Trial Court (RTC), Branch 8,
Kalibo, Aklan in Civil Case No. 4632 for Declaration of Nullity of Agreement of Lease with
Damages.
On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British subject, married
Joselyn C. Taylor (Joselyn), a 17-year old Filipina.4 On June 9, 1989, while their marriage was
subsisting, Joselyn bought from Diosa M. Martin a 1,294 square-meter lot (Boracay
property) situated at Manoc-Manoc, Boracay Island, Malay, Aklan, for and in consideration
of ₱129,000.00.5 The sale was allegedly financed by Benjamin.6 Joselyn and Benjamin, also
using the latter’s funds, constructed improvements thereon and eventually converted the
property to a vacation and tourist resort known as the Admiral Ben Bow Inn.7 All required
permits and licenses for the operation of the resort were obtained in the name of Ginna
Celestino, Joselyn’s sister.8
However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim Philippsen.
On June 8, 1992, Joselyn executed a Special Power of Attorney (SPA) in favor of Benjamin,
authorizing the latter to maintain, sell, lease, and sub-lease and otherwise enter into
contract with third parties with respect to their Boracay property.9
On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee, entered into an
Agreement of Lease10 (Agreement) involving the Boracay property for a period of 25 years,
with an annual rental of ₱12,000.00. The agreement was signed by the parties and executed
before a Notary Public. Petitioner thereafter took possession of the property and renamed
the resort as Music Garden Resort.1avvphi1
Claiming that the Agreement was null and void since it was entered into by Joselyn without
his (Benjamin’s) consent, Benjamin instituted an action for Declaration of Nullity of
Agreement of Lease with Damages11 against Joselyn and the petitioner. Benjamin claimed
that his funds were used in the acquisition and improvement of the Boracay property, and
coupled with the fact that he was Joselyn’s husband, any transaction involving said property
required his consent.
No Answer was filed, hence, the RTC declared Joselyn and the petitioner in defeault. On
March 14, 1994, the RTC rendered judgment by default declaring the Agreement null and
void.12 The decision was, however, set aside by the CA in CA-G.R. SP No. 34054.13 The CA
also ordered the RTC to allow the petitioner to file his Answer, and to conduct further
proceedings.
In his Answer,14 petitioner claimed good faith in transacting with Joselyn. Since Joselyn
appeared to be the owner of the Boracay property, he found it unnecessary to obtain the
consent of Benjamin. Moreover, as appearing in the Agreement, Benjamin signed as a
witness to the contract, indicating his knowledge of the transaction and, impliedly, his
conformity to the agreement entered into by his wife. Benjamin was, therefore, estopped
from questioning the validity of the Agreement.
There being no amicable settlement during the pre-trial, trial on the merits ensued.
On June 30, 1997, the RTC disposed of the case in this manner:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendants as follows:
1. The Agreement of Lease dated July 20, 1992 consisting of eight (8) pages (Exhibits
"T", "T-1", "T-2", "T-3", "T-4", "T-5", "T-6" and "T-7") entered into by and between
Joselyn C. Taylor and Philip Matthews before Notary Public Lenito T. Serrano under
Doc. No. 390, Page 79, Book I, Series of 1992 is hereby declared NULL and VOID;
2. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of
SIXTEEN THOUSAND (₱16,000.00) PESOS as damages representing unrealized
income for the residential building and cottages computed monthly from July 1992
up to the time the property in question is restored to plaintiff; and
3. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of
TWENTY THOUSAND (₱20,000.00) PESOS, Philippine Currency, for attorney’s fees
and other incidental expenses.
SO ORDERED.15
The RTC considered the Boracay property as community property of Benjamin and Joselyn;
thus, the consent of the spouses was necessary to validate any contract involving the
property. Benjamin’s right over the Boracay property was bolstered by the court’s findings
that the property was purchased and improved through funds provided by Benjamin.
Although the Agreement was evidenced by a public document, the trial court refused to
consider the alleged participation of Benjamin in the questioned transaction primarily
because his signature appeared only on the last page of the document and not on every
page thereof.
On appeal to the CA, petitioner still failed to obtain a favorable decision. In its December 19,
2003 Decision,16 the CA affirmed the conclusions made by the RTC. The appellate court was
of the view that if, indeed, Benjamin was a willing participant in the questioned transaction,
the parties to the Agreement should have used the phrase "with my consent" instead of
"signed in the presence of." The CA noted that Joselyn already prepared an SPA in favor of
Benjamin involving the Boracay property; it was therefore unnecessary for Joselyn to
participate in the execution of the Agreement. Taken together, these circumstances yielded
the inevitable conclusion that the contract was null and void having been entered into by
Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in this petition for review on certiorari
based on the following grounds:
4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS NOT REQUIRED
IN THE AGREEMENT OF LEASE DATED 20 JULY 1992. GRANTING ARGUENDO THAT
HIS CONSENT IS REQUIRED, BENJAMIN TAYLOR IS DEEMED TO HAVE GIVEN HIS
CONSENT WHEN HE AFFIXED HIS SIGNATURE IN THE AGREEMENT OF LEASE AS
WITNESS IN THE LIGHT OF THE RULING OF THE SUPREME COURT IN THE CASE OF
SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO. 141323, JUNE 8, 2005.
4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT OF LEASE IS THE EXCLUSIVE
PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO CITIZEN, IN THE LIGHT OF CHEESMAN
VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.
4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE 96 OF THE FAMILY CODE
OF THE PHILIPPINES WHICH IS A PROVISION REFERRING TO THE ABSOLUTE
COMMUNITY OF PROPERTY. THE PROPERTY REGIME GOVERNING THE PROPERTY
RELATIONS OF BENJAMIN TAYLOR AND JOSELYN TAYLOR IS THE CONJUGAL
PARTNERSHIP OF GAINS BECAUSE THEY WERE MARRIED ON 30 JUNE 1988 WHICH IS
PRIOR TO THE EFFECTIVITY OF THE FAMILY CODE. ARTICLE 96 OF THE FAMILY CODE
OF THE PHILIPPINES FINDS NO APPLICATION IN THIS CASE.
4.4. THE HONORABLE COURT OF APPEALS IGNORED THE PRESUMPTION OF
REGULARITY IN THE EXECUTION OF NOTARIAL DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON THE
COUNTERCLAIM OF PETITIONER DESPITE THE FACT THAT IT WAS NOT CONTESTED
AND DESPITE THE PRESENTATION OF EVIDENCE ESTABLISHING SAID CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of an Agreement of Lease of a parcel of
land entered into by a Filipino wife without the consent of her British husband. In
addressing the matter before us, we are confronted not only with civil law or conflicts of law
issues, but more importantly, with a constitutional question.
It is undisputed that Joselyn acquired the Boracay property in 1989. Said acquisition was
evidenced by a Deed of Sale with Joselyn as the vendee. The property was also declared for
taxation purposes under her name. When Joselyn leased the property to petitioner,
Benjamin sought the nullification of the contract on two grounds: first, that he was the
actual owner of the property since he provided the funds used in purchasing the same; and
second, that Joselyn could not enter into a valid contract involving the subject property
without his consent.
The trial and appellate courts both focused on the property relations of petitioner and
respondent in light of the Civil Code and Family Code provisions. They, however, failed to
observe the applicable constitutional principles, which, in fact, are the more decisive.
Section 7, Article XII of the 1987 Constitution states:18
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain.1avvphi1
Aliens, whether individuals or corporations, have been disqualified from acquiring lands of
the public domain. Hence, by virtue of the aforecited constitutional provision, they are also
disqualified from acquiring private lands.19 The primary purpose of this constitutional
provision is the conservation of the national patrimony.20 Our fundamental law cannot be
any clearer. The right to acquire lands of the public domain is reserved only to Filipino
citizens or corporations at least sixty percent of the capital of which is owned by Filipinos.21
In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we had the occasion to explain
the constitutional prohibition:
Under Section 1 of Article XIII of the Constitution, "natural resources, with the exception of
public agricultural land, shall not be alienated," and with respect to public agricultural lands,
their alienation is limited to Filipino citizens. But this constitutional purpose conserving
agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino
citizens themselves who may alienate their agricultural lands in favor of aliens. It is partly to
prevent this result that Section 5 is included in Article XIII, and it reads as follows:
"Section 5. Save in cases of hereditary succession, no private agricultural land will be
transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines."
This constitutional provision closes the only remaining avenue through which agricultural
resources may leak into alien’s hands. It would certainly be futile to prohibit the alienation
of public agricultural lands to aliens if, after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of Filipino citizens. x x x
xxxx
If the term "private agricultural lands" is to be construed as not including residential lots or
lands not strictly agricultural, the result would be that "aliens may freely acquire and
possess not only residential lots and houses for themselves but entire subdivisions, and
whole towns and cities," and that "they may validly buy and hold in their names lands of any
area for building homes, factories, industrial plants, fisheries, hatcheries, schools, health and
vacation resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and
purposes that are not, in appellant’s words, strictly agricultural." (Solicitor General’s Brief, p.
6) That this is obnoxious to the conservative spirit of the Constitution is beyond question.24
The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or private
lands in the Philippines, save only in constitutionally recognized exceptions.25 There is no
rule more settled than this constitutional prohibition, as more and more aliens attempt to
circumvent the provision by trying to own lands through another. In a long line of cases, we
have settled issues that directly or indirectly involve the above constitutional provision. We
had cases where aliens wanted that a particular property be declared as part of their
father’s estate;26 that they be reimbursed the funds used in purchasing a property titled in
the name of another;27 that an implied trust be declared in their (aliens’) favor;28 and that a
contract of sale be nullified for their lack of consent.29
In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen, acquired a parcel of land,
together with the improvements thereon. Upon his death, his heirs (the petitioners therein)
claimed the properties as part of the estate of their deceased father, and sought the
partition of said properties among themselves. We, however, excluded the land and
improvements thereon from the estate of Felix Ting Ho, precisely because he never became
the owner thereof in light of the above-mentioned constitutional prohibition.
In Muller v. Muller,31 petitioner Elena Buenaventura Muller and respondent Helmut Muller
were married in Germany. During the subsistence of their marriage, respondent purchased a
parcel of land in Antipolo City and constructed a house thereon. The Antipolo property was
registered in the name of the petitioner. They eventually separated, prompting the
respondent to file a petition for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said property. In deciding the case
in favor of the petitioner, the Court held that respondent was aware that as an alien, he was
prohibited from owning a parcel of land situated in the Philippines. He had, in fact, declared
that when the spouses acquired the Antipolo property, he had it titled in the name of the
petitioner because of said prohibition. Hence, we denied his attempt at subsequently
asserting a right to the said property in the form of a claim for reimbursement. Neither did
the Court declare that an implied trust was created by operation of law in view of
petitioner’s marriage to respondent. We said that to rule otherwise would permit
circumvention of the constitutional prohibition.
In Frenzel v. Catito,32 petitioner, an Australian citizen, was married to Teresita Santos; while
respondent, a Filipina, was married to Klaus Muller. Petitioner and respondent met and later
cohabited in a common-law relationship, during which petitioner acquired real properties;
and since he was disqualified from owning lands in the Philippines, respondent’s name
appeared as the vendee in the deeds of sale. When their relationship turned sour, petitioner
filed an action for the recovery of the real properties registered in the name of respondent,
claiming that he was the real owner. Again, as in the other cases, the Court refused to
declare petitioner as the owner mainly because of the constitutional prohibition. The Court
added that being a party to an illegal contract, he could not come to court and ask to have
his illegal objective carried out. One who loses his money or property by knowingly engaging
in an illegal contract may not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner (an American citizen) and
Criselda Cheesman acquired a parcel of land that was later registered in the latter’s name.
Criselda subsequently sold the land to a third person without the knowledge of the
petitioner. The petitioner then sought the nullification of the sale as he did not give his
consent thereto. The Court held that assuming that it was his (petitioner’s) intention that
the lot in question be purchased by him and his wife, he acquired no right whatever over
the property by virtue of that purchase; and in attempting to acquire a right or interest in
land, vicariously and clandestinely, he knowingly violated the Constitution; thus, the sale as
to him was null and void.
In light of the foregoing jurisprudence, we find and so hold that Benjamin has no right to
nullify the Agreement of Lease between Joselyn and petitioner. Benjamin, being an alien, is
absolutely prohibited from acquiring private and public lands in the Philippines. Considering
that Joselyn appeared to be the designated "vendee" in the Deed of Sale of said property,
she acquired sole ownership thereto. This is true even if we sustain Benjamin’s claim that he
provided the funds for such acquisition. By entering into such contract knowing that it was
illegal, no implied trust was created in his favor; no reimbursement for his expenses can be
allowed; and no declaration can be made that the subject property was part of the
conjugal/community property of the spouses. In any event, he had and has no capacity or
personality to question the subsequent lease of the Boracay property by his wife on the
theory that in so doing, he was merely exercising the prerogative of a husband in respect of
conjugal property. To sustain such a theory would countenance indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this would accord
the alien husband a substantial interest and right over the land, as he would then have a
decisive vote as to its transfer or disposition. This is a right that the Constitution does not
permit him to have.34
In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be
nullified on the grounds advanced by Benjamin. Thus, we uphold its validity.
With the foregoing disquisition, we find it unnecessary to address the other issues raised by
the petitioner.
WHEREFORE, premises considered, the December 19, 2003 Decision and July 14, 2004
Resolution of the Court of Appeals in CA-G.R. CV No. 59573, are REVERSED and SET ASIDE
and a new one is entered DISMISSING the complaint against petitioner Philip Matthews.
SO ORDERED.
G.R. No. 145222 April 24, 2009
SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, Former Division, and ROMULO NICOL, Respondents.
DECISION
TINGA, J.:
Before this Court is a petition for certiorari assailing the Decision1 of the Court of Appeals in
CA-G.R. CV No. 47029 and its Resolution denying the motion for reconsideration thereof.
The case stemmed from the following factual backdrop:
On 30 April 1984, Spouses Roberto and Venus Buado (petitioners) filed a complaint for
damages against Erlinda Nicol (Erlinda) with Branch 19 of the Regional Trial Court (RTC) of
Bacoor, Cavite, docketed as Civil Case No. 84-33. Said action originated from Erlinda Nicol’s
civil liability arising from the criminal offense of slander filed against her by petitioners.
On 6 April 1987, the trial court rendered a decision ordering Erlinda to pay damages. The
dispositive portion reads:
Wherefore, judgment is hereby rendered in favor of the plaintiff[s] and against defendant
ordering the latter to pay the former the amount of thirty thousand (₱30,000.00) pesos as
moral damages, five thousand (₱5,000.00) pesos as attorney’s fees and litigation expenses,
another five thousand (₱5,000.00) pesos as exemplary damages and the cost of suit. 2
Said decision was affirmed, successively, by the Court of Appeals and this Court. It became
final and executory on 5 March 1992.
On 14 October 1992, the trial court issued a writ of execution, a portion of which provides:
Now, therefore, you are commanded that of the goods and chattels of the defendant
Erlinda Nicol, or from her estates or legal heirs, you cause the sum in the amount of forty
thousand pesos (₱40,000.00), Philippine Currency, representing the moral damages,
attorney’s fees and litigation expenses and exemplary damages and the cost of suit of the
plaintiff aside from your lawful fees on this execution and do likewise return this writ into
court within sixty (60) days from date, with your proceedings endorsed hereon.
But if sufficient personal property cannot be found whereof to satisfy this execution and
lawful fees thereon, then you are commanded that of the lands and buildings of said
defendant you make the said sum of money in the manner required by the Rules of Court,
and make return of your proceedings with this writ within sixty (60) days from date.3
Finding Erlinda Nicol’s personal properties insufficient to satisfy the judgment, the Deputy
Sheriff issued a notice of levy on real property on execution addressed to the Register of
Deeds of Cavite. The notice of levy was annotated on the Transfer Certificate of Title No. T-
125322.
On 20 November 1992, a notice of sheriff’s sale was issued.
Two (2) days before the public auction sale on 28 January 1993, an affidavit of third-party
claim from one Arnulfo F. Fulo was received by the deputy sheriff prompting petitioners to
put up a sheriff’s indemnity bond. The auction sale proceeded with petitioners as the
highest bidder.
On 4 February 1993, a certificate of sale was issued in favor of petitioners.
Almost a year later on 2 February 1994, Romulo Nicol (respondent), the husband of Erlinda
Nicol, filed a complaint for annulment of certificate of sale and damages with preliminary
injunction against petitioners and the deputy sheriff. Respondent, as plaintiff therein,
alleged that the defendants, now petitioners, connived and directly levied upon and execute
his real property without exhausting the personal properties of Erlinda Nicol. Respondent
averred that there was no proper publication and posting of the notice of sale. Furthermore,
respondent claimed that his property which was valued at ₱500,000.00 was only sold at a
"very low price" of ₱51,685.00, whereas the judgment obligation of Erlinda Nicol was only
₱40,000.00. The case was assigned to Branch 21 of the RTC of Imus, Cavite.
In response, petitioners filed a motion to dismiss on the grounds of lack of jurisdiction and
that they had acted on the basis of a valid writ of execution. Citing De Leon v. Salvador, 4
petitioners claimed that respondent should have filed the case with Branch 19 where the
judgment originated and which issued the order of execution, writ of execution, notice of
levy and notice of sheriff’s sale.
In an Order5 dated 18 April 1994, the RTC dismissed respondent’s complaint and ruled that
Branch 19 has jurisdiction over the case, thus:
As correctly pointed out by the defendants, any flaw in the implementation of the writ of
execution by the implementing sheriff must be brought before the court issuing the writ of
execution. Besides, there are two (2) remedies open to the plaintiff, if he feels that the
property being levied on belongs to him and not to the judgment debtor. The first remedy is
to file a third-party claim. If he fails to do this, a right is reserved to him to vindicate his
claim over the property by any proper action. But certainly, this is not the proper action
reserved to the plaintiff to vindicate his claim over the property in question to be ventilated
before this court. As earlier stated, this case should have been addressed to Branch 19, RTC
Bacoor as it was that court which issued the writ of execution.6
Respondent moved for reconsideration but it was denied on 26 July 1994.
On appeal, the Court of Appeals reversed the trial court and held that Branch 21 has
jurisdiction to act on the complaint filed by appellant. The dispositive portion reads:
WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. This case is
REMANDED to the Regional Trial Court of Imus, Cavite, Branch 21 for further proceedings.
SO ORDERED.7
Petitioners’ motion for reconsideration was denied on 23 August 2000. Hence, the instant
petition attributing grave abuse of discretion on the part of the Court of Appeals.
A petition for certiorari is an extraordinary remedy that is adopted to correct errors of
jurisdiction committed by the lower court or quasi-judicial agency, or when there is grave
abuse of discretion on the part of such court or agency amounting to lack or excess of
jurisdiction. Where the error is not one of jurisdiction, but of law or fact which is a mistake
of judgment, the proper remedy should be appeal. In addition, an independent action for
certiorari may be availed of only when there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law.8
Nowhere in the petition was it shown that the jurisdiction of the Court of Appeals was
questioned. The issue devolves on whether the husband of the judgment debtor may file an
independent action to protect the conjugal property subject to execution. The alleged error
therefore is an error of judgment which is a proper subject of an appeal.
Nevertheless, even if we were to treat this petition as one for review, the case should still be
dismissed on substantive grounds.
Petitioners maintain that Branch 19 retained jurisdiction over its judgment to the exclusion
of all other co-ordinate courts for its execution and all incidents thereof, in line with De Leon
v. Salvador. Petitioners insist that respondent, who is the husband of the judgment debtor,
is not the "third party" contemplated in Section 17 (now Section 16), Rule 39 of the Rules of
Court, hence a separate action need not be filed. Furthermore, petitioners assert that the
obligation of the wife redounded to the benefit of the conjugal partnership and cited
authorities to the effect that the husband is liable for the tort committed by his wife.
Respondent on the other hand merely avers that the decision of the Court of Appeals is
supported by substantial evidence and in accord with law and jurisprudence.9
Verily, the question of jurisdiction could be resolved through a proper interpretation of
Section 16, Rule 39 of the Rules of Court, which reads:
Sec. 16. Proceedings where property claimed by third person.
If the property levied on is claimed by any person other than the judgment obligor or his
agent, and such person makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves the same upon the officer
making the levy and a copy thereof upon the judgment obligee, the officer shall not be
bound to keep the property, unless such judgment obligee, on demand of the officer, files a
bond approved by the court to indemnify the third-party claimant in a sum not less than the
value of the property levied on. In case of disagreement as to such value, the same shall be
determined by the court issuing the writ of execution. No claim for damages for the taking
or keeping of the property may be enforced against the bond unless the action therefor is
filed within one hundred twenty (120) days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the property, to any
third-party claimant if such bond is filed. Nothing herein contained shall prevent such
claimant or any third person from vindicating his claim to the property in a separate action,
or prevent the judgment obligee from claiming damages in the same or a separate action
against a third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the Philippines, or any
officer duly representing it, the filing of such bond shall not be required, and in case the
sheriff or levying officer is sued for damages as a result of the levy, he shall be represented
by the Solicitor General and if held liable therefor, the actual damages adjudged by the
court shall be paid by the National Treasurer out of such funds as may be appropriated for
the purpose. (Emphasis Supplied)
Apart from the remedy of terceria available to a third-party claimant or to a stranger to the
foreclosure suit against the sheriff or officer effecting the writ by serving on him an affidavit
of his title and a copy thereof upon the judgment creditor, a third-party claimant may also
resort to an independent separate action, the object of which is the recovery of ownership
or possession of the property seized by the sheriff, as well as damages arising from wrongful
seizure and detention of the property. If a separate action is the recourse, the third-party
claimant must institute in a forum of competent jurisdiction an action, distinct and separate
from the action in which the judgment is being enforced, even before or without need of
filing a claim in the court that issued the writ.101awphi1.zw+
A third-party claim must be filed a person other than the judgment debtor or his agent. In
other words, only a stranger to the case may file a third-party claim.
This leads us to the question: Is the husband, who was not a party to the suit but whose
conjugal property is being executed on account of the other spouse being the judgment
obligor, considered a "stranger?"
In determining whether the husband is a stranger to the suit, the character of the property
must be taken into account. In Mariano v. Court of Appeals,11 which was later adopted in
Spouses Ching v. Court of Appeals,12 this Court held that the husband of the judgment
debtor cannot be deemed a "stranger" to the case prosecuted and adjudged against his wife
for an obligation that has redounded to the benefit of the conjugal partnership.13 On the
other hand, in Naguit v. Court of Appeals14 and Sy v. Discaya,15 the Court stated that a
spouse is deemed a stranger to the action wherein the writ of execution was issued and is
therefore justified in bringing an independent action to vindicate her right of ownership
over his exclusive or paraphernal property.lawphil.net
Pursuant to Mariano however, it must further be settled whether the obligation of the
judgment debtor redounded to the benefit of the conjugal partnership or not.
Petitioners argue that the obligation of the wife arising from her criminal liability is
chargeable to the conjugal partnership. We do not agree.
There is no dispute that contested property is conjugal in nature. Article 122 of the Family
Code16 explicitly provides that payment of personal debts contracted by the husband or the
wife before or during the marriage shall not be charged to the conjugal partnership except
insofar as they redounded to the benefit of the family.
Unlike in the system of absolute community where liabilities incurred by either spouse by
reason of a crime or quasi-delict is chargeable to the absolute community of property, in the
absence or insufficiency of the exclusive property of the debtor-spouse, the same advantage
is not accorded in the system of conjugal partnership of gains. The conjugal partnership of
gains has no duty to make advance payments for the liability of the debtor-spouse.
Parenthetically, by no stretch of imagination can it be concluded that the civil obligation
arising from the crime of slander committed by Erlinda redounded to the benefit of the
conjugal partnership.
To reiterate, conjugal property cannot be held liable for the personal obligation contracted
by one spouse, unless some advantage or benefit is shown to have accrued to the conjugal
partnership.17
In Guadalupe v. Tronco,18 this Court held that the car which was claimed by the third party
complainant to be conjugal property was being levied upon to enforce "a judgment for
support" filed by a third person, the third-party claim of the wife is proper since the
obligation which is personal to the husband is chargeable not on the conjugal property but
on his separate property.
SPOUSES RONNIE AND GINA LAMELA and STENILE Promulgated:
Hence, the filing of a separate action by respondent is proper and jurisdiction is thus vested ALVERO,
on Branch 21. Petitioners failed to show that the Court of Appeals committed grave abuse
of discretion in remanding the case to Branch 21 for further proceedings. Respondents.
April 11, 2011
WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals is AFFIRMED.
Costs against petitioners.

SO ORDERED.

ELENITA M. DEWARA, G.R. No. 179010

represented by her Attorney-in-Fact, FERDINAND

MAGALLANES,
Present: x------------------------------------------------------------------------------------x
Petitioner,

CARPIO, J., DECISION

Chairperson,

NACHURA,
- versus - NACHURA, J.:
PERALTA,

ABAD, and

MENDOZA, JJ.
 Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court, assailing the Decision26[1] dated November 6, 2006 and the Resolution27[2] dated July
10, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 64936, which reversed and set aside
the Decision28[3] dated September 2, 1999 of the Regional Trial Court (RTC), Branch 54,
Bacolod City, in Civil Case No. 93-7942.
The Facts
Eduardo Dewara (Eduardo) and petitioner Elenita Magallanes Dewara (Elenita) were
married before the enactment of the Family Code. Thus, the Civil Code governed their
marital relations. Husband and wife were separated-in-fact because Elenita went to work in
California, United States of America, while Eduardo stayed in Bacolod City.
On January 20, 1985, Eduardo, while driving a private jeep registered in the name of
Elenita,29[4] hit respondent Ronnie Lamela (Ronnie). Ronnie filed a criminal case for serious
physical injuries through reckless imprudence30[5] against Eduardo before the Municipal Trial
Court in Cities (MTCC), Branch IV, Bacolod City. The MTCC found Eduardo guilty of the
charge and sentenced him to suffer the penalty of imprisonment of two (2) months and one
(1) day to (3) months, and to pay civil indemnity of Sixty-Two Thousand Five Hundred
Ninety-Eight Pesos and Seventy Centavos (P62,598.70) as actual damages and Ten Thousand
Pesos (P10,000.00) as moral damages. On appeal, the RTC31[6] affirmed the decision of the
MTCC32[7] and it became final and executory.33[8]
The writ of execution on the civil liability was served on Eduardo, but it was
returned unsatisfied because he had no property in his name. Ronnie requested the City
Sheriff, respondent Stenile Alvero, to levy on Lot No. 234-C, Psd. 26667 of the Bacolod
Cadastre, with an area of One Thousand Four Hundred Forty (1,440) square meters (sq m),
under Transfer Certificate of Title (TCT) No. T-80054, in the name of ELENITA M. DEWARA, of
legal age, Filipino, married to Eduardo Dewara, and resident of Bacolod City, to satisfy the the execution sale. She sought the annulment of the sale and the annulment of the issuance
judgment on the civil liability of Eduardo. The City Sheriff served a notice of embargo on the of the new TCT in the name of respondent spouses.37[12]
title of the lot and subsequently sold the lot in a public auction. In the execution sale, there
were no interested buyers other than Ronnie. The City Sheriff issued a certificate of sale to
spouses Ronnie and Gina Lamela to satisfy the civil liability in the decision against
On the other hand, respondent spouses averred that the subject lot was the
Eduardo.34[9] Ronnie then caused the consolidation of title in a Cadastral Proceeding before
conjugal property of petitioner Elenita and Eduardo. They asserted that the property was
the RTC, which ordered the cancellation of TCT No. T-80054 in the name of Elenita and the
acquired by Elenita during her marriage to Eduardo; that the property was acquired with the
issuance of a new certificate of title in the name of respondent spouses. 35[10]
money of Eduardo because, at the time of the acquisition of the property, Elenita was a
plain housewife; that the jeep involved in the accident was registered in the name of
petitioner; and that Elenita did not interpose any objection pending the levy on execution of
The levy on execution, public auction, issuance of certificate of sale, and the property.38[13]
cancellation of title of the lot in the name of Elenita were done while Elenita was working in
California.36[11] Thus, Elenita, represented by her attorney-in-fact, Ferdinand Magallanes,
filed a case for annulment of sale and for damages against respondent spouses and ex-
On September 2, 1999, the RTC rendered a decision in favor of petitioner, the fallo
officio sheriff Stenile Alvero before the RTC of Bacolod City. Petitioner claimed that the levy
of which reads:
on execution of Lot No. 234-C was illegal because the said property was her paraphernal or
exclusive property and could not be made to answer for the personal liability of her
husband. Furthermore, as the registered owner of the property, she received no notice of
WHEREFORE, judgment is hereby rendered in favor of the
[petitioner] and against the [respondents]:
 her 1/3 share of the property in favor of her siblings, Jesus and Concepcion. The two siblings
1. The levy on execution on Lot No. 234-C of the Bacolod
then became the owners of the property, each owning one-half (1/2) of the property. Jesus
Cadastre covered by TCT No. 80054 in the name of [petitioner]
Elenita M. Dewara, the public auction of the property, and the subsequently sold his share to his daughter, Elenita, for the sum of Five Thousand Pesos
consolidation of the title and issuance of new TCT No. 167403
(P5,000.00), based on the deed of sale dated March 26, 1975. The deed of sale was duly
in the name of [respondent] Ronnie Lamela, are hereby
declared null and void; registered with the Register of Deeds under Entry No. 76393. Concepcion also sold her share
to her niece, Elenita, for the sum of Ten Thousand Pesos (P10,000.00), based on the deed of
2. The Register of Deeds of Bacolod City is ordered to cancel
TCT No. 167403 in the name of [respondent] Ronnie Lamela sale dated April 29, 1975, which was duly registered with the Register of Deeds under Entry
and TCT No. 80054 be reinstated or a new one issued in the
No. 76394. By virtue of the sale transactions, TCT No. T-17541 was cancelled and a new title,
name of [petitioner] Elenita M. Dewara;
TCT No. T-80054, was issued in the name of Elenita.40[15]
3. There is no pronouncement on damages with cost de officio.

SO ORDERED.39[14]

The RTC gave credence to the testimony of Elenita on the circumstances

surrounding the sale of the property. First, it was sold to her by her father and her aunt so
The RTC declared that said property was paraphernal in nature. It arrived at this
that the family would remain on the lot. Second, the minimal and inadequate consideration
conclusion by tracing how Elenita acquired the subject property. Based on the documentary
for the 1,440 sq m property was for the purpose of helping her expand her capital in her
evidence submitted, Elenitas grandfather, Exequiel Magallanes, originally owned Lot No.
business at the time. Thus, the sale was essentially a donation and was therefore gratuitous
234-C. Upon his demise, his children, Jesus (Elenitas father), Salud, and Concepcion,
in character.41[16]
inherited the property, each entitled to a share equal to one-third (1/3) of the total area of
the land. They were issued a new title (TCT No. T-17541) for the property. On July 6, 1966,
petitioners aunt, Salud, executed a waiver of rights duly registered with the Office of the
Register of Deeds under Entry No. 76392, thereby waiving her rights and participation over
 Having declared that the property was the paraphernal property of Elenita, the RTC
ruled that the civil liability of Eduardo, which was personal to him, could not be charged to
the exclusive property of his wife. 42[17]
On appeal, the CA reversed the decision of the RTC. The dispositive portion of the
Decision reads:
In reversing the decision of the RTC, the CA elucidated that the gross inadequacy of
the price alone does not affect a contract of sale, except that it may indicate a defect in the
consent, or that the parties really intended a donation or some other act or contract. Except
for the assertions of Elenita, there was nothing in the records that would indicate a defect in
Jesus and Concepcion Magallanes consent to the sale.44[19] The CA ruled that Elenita and
Eduardo acquired the property by onerous title during their marriage through their common
fund. Thus, it belonged to the conjugal partnership of gains and might be levied upon to
answer for civil liabilities adjudged against Eduardo.45[20]

WHEREFORE, in view of all the foregoing, the instant appeal is

GRANTED. The assailed decision of the Regional Trial Court of Bacolod City, Hence, this petition.
Branch 54, dated September 2, 1999, in Civil Case No. 93-7942 is hereby
REVERSED and SET ASIDE, and a new Decision is entered DISMISSING the
complaint for lack of merit. Let a copy of this Decision be furnished to the
Office of the Register of Deeds of Bacolod City, Negros Occidental [which] is
hereby ordered to cancel Transfer Certificate of Title No. T-80054 or any The Issue
transfer certificate of title covering Lot No. 234-C issued in the name of
Elenita M. Dewara, and reinstate Transfer Certificate of Title No. 167403 or
issue a new transfer certificate of title covering Lot No. 234-C in the name of
Ronnie Lamela. No pronouncement as to costs.
The sole issue for resolution is whether the subject property is the
SO ORDERED.43[18]
paraphernal/exclusive property of Elenita or the conjugal property of spouses Elenita and
Eduardo.

The answer to this question will define whether the property may be subject to levy
and execution sale to answer for the civil liability adjudged against Eduardo in the criminal
case for serious physical injuries, which judgment had already attained finality.
The Ruling of the Court
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. 46[21]
Registration in the name of the husband or the wife alone does not destroy this
presumption.47[22] The separation-in-fact between the husband and the wife without
judicial approval shall not affect the conjugal partnership. The lot retains its conjugal
nature.48[23] Moreover, the presumption of conjugal ownership applies even when the
manner in which the property was acquired does not appear. The use of the conjugal funds
is not an essential requirement for the presumption to arise.49[24]
There is no dispute that the subject property was acquired by spouses Elenita and
Eduardo during their marriage. It is also undisputed that their marital relations are governed
by the conjugal partnership of gains, since they were married before the enactment of the
Family Code and they did not execute any prenuptial agreement as to their property
relations. Thus, the legal presumption of the conjugal nature of the property applies to the
lot in question. The presumption that the property is conjugal property may be rebutted
only by strong, clear, categorical, and convincing evidencethere must be strict proof of the
exclusive ownership of one of the spouses, and the burden of proof rests upon the party
asserting it.50[25]
Aside from the assertions of Elenita that the sale of the property by her father and
her aunt was in the nature of a donation because of the alleged gross disparity between the
actual value of the property and the monetary consideration for the sale, there is no other
evidence that would convince this Court of the paraphernal character of the property.
Elenita proffered no evidence of the market value or assessed value of the subject property
in 1975. Thus, we agree with the CA that Elenita has not sufficiently proven that the prices
involved in the sales in question were so inadequate for the Court to reach a conclusion that
the transfers were in the nature of a donation rather than a sale.
Furthermore, gross inadequacy of the price does not affect a contract of sale, except
as it may indicate a defect in the consent, or that the parties really intended a donation or
some other act or contract.51[26] The records are bereft of proof that the consent of
petitioners father and her aunt were vitiated or that, in reality, they intended the sale to be
a donation or some other contract. Inadequacy of the price per se will not rule out the
transaction as one of sale; the price must be grossly inadequate or shocking to the
conscience, such that the mind would revolt at it and such that a reasonable man would
neither directly nor indirectly consent to it.52[27]
However, even after having declared that Lot No. 234-C is the conjugal property of
spouses Elenita and Eduardo, it does not necessarily follow that it may automatically be
levied upon in an execution to answer for debts, obligations, fines, or indemnities of one of
the spouses. Before debts and obligations may be charged against the conjugal partnership,
it must be shown that the same were contracted for, or the debts and obligations should
have redounded to, the benefit of the conjugal partnership. Fines and pecuniary indemnities
imposed upon the husband or the wife, as a rule, may not be charged to the partnership.
However, if the spouse who is bound should have no exclusive property or if the property
should be insufficient, the fines and indemnities may be enforced upon the partnership
assets only after the responsibilities enumerated in Article 161 of the Civil Code have been
covered.
In this case, it is just and proper that Ronnie be compensated for the serious
physical injuries he suffered. It should be remembered that even though the vehicle that hit
Ronnie was registered in the name of Elenita, she was not made a party in the said criminal
case. Thus, she may not be compelled to answer for Eduardos liability. Nevertheless, their
conjugal partnership property may be held accountable for it since Eduardo has no property
in his name. The payment of indemnity adjudged by the RTC of Bacolod City in Criminal Case
No. 7155 in favor of Ronnie may be enforced against the partnership assets of spouses
Elenita and Eduardo after the responsibilities enumerated under Article 161 of the Civil
Code have been covered. This remedy is provided for under Article 163 of the Civil Code,
viz.:
 Art. 163. The payment of debts contracted by the husband or the
wife before the marriage shall not be charged to the conjugal partnership.
Neither shall the fines and pecuniary indemnities imposed upon
them be charged to the partnership.
However, the payment of debts contracted by the husband or the
wife before the marriage, and that of fines and indemnities imposed upon
them, may be enforced against the partnership assets after the
responsibilities enumerated in Article 161 have been covered, if the
spouse who is bound should have no exclusive property or if it should be
insufficient; but at the time of the liquidation of the partnership such
spouse shall be charged for what has been paid for the purposes above-
mentioned.53[28]
Article 161 of the Civil Code enumerates the obligations which the conjugal
partnership may be held answerable, viz.:
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 the 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.
The enumeration above-listed should first be complied with before the conjugal partnership
may be held to answer for the liability adjudged against Eduardo.
Finally, the indemnity imposed against Eduardo shall earn an interest at the rate of
twelve percent per annum, in accordance with our ruling in Eastern Shipping Lines, Inc. v.
Court of Appeals.54[29]
 Chairperson,

WHEREFORE, in view of the foregoing, the Decision dated November 6, 2006 and CARPIO MORALES,

the Resolution dated July 10, 2007 of the Court of Appeals in CA-G.R. CV No. 64936 are MARY ANN P. VILLA ABRILLE, for herself and in BRION, and
hereby ANNULLED and SET ASIDE. The decision dated September 2, 1999 of the Regional behalf of INGRID DLYN P. VILLA ABRILLE,
INGREMARK DWIGHT VILLA ABRILLE, INGRESOLL BERSAMIN,
Trial Court of Bacolod City in Civil Case No. 93-7942 is hereby REINSTATED WITH
DIELS VILLA ABRILLE AND INGRELYN DYAN VILLA
MODIFICATION that the conjugal properties of spouses Elenita Dewara and Eduardo ABAD, JJ.
ABRILLE,
Dewara shall be held to answer for the judgment of Seventy-Two Thousand Five Hundred
Ninety-Eight Pesos and Seventy Centavos (P72,598.70), plus an interest rate of twelve (12) Respondents.

percent per annum from the date of finality of the decision of the Regional Trial Court of
Bacolod City in Criminal Case No. 7155, after complying with the provisions of Article 161 of
the Civil Code.

SO ORDERED.
Promulgated:

October 16, 2009

PATROCINIA RAVINA AND WILFREDO RAVINA, G.R. No. 160708

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Petitioners,
DECISION

Present:

QUISUMBING, Acting C.J.:

- versus - QUISUMBING, Acting C.J.,

 For review are the Decision55[1] dated February 21, 2002 and the Resolution56[2]
dated October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560. The appellate court
modified the Decision57[3] dated September 26, 1995 of the Regional Trial Court (RTC) of
Davao City, Branch 15.
Simply stated, the facts as found by the Court of Appeals58[4] are as follows:
Respondent Mary Ann Pasaol Villa Abrille and Pedro Villa Abrille are husband and
wife. They have four children, who are also parties to the instant case and are represented
by their mother, Mary Ann.
In 1982, the spouses acquired a 555-square meter parcel of land denominated as
Lot 7, located at Kamuning Street, Juna Subdivision, Matina, Davao City, and covered by
Transfer Certificate of Title (TCT) No. T-88674 in their names. Said lot is adjacent to a parcel
of land which Pedro acquired when he was still single and which is registered solely in his
name under TCT No. T-26471.
Through their joint efforts and the proceeds of a loan from the Development Bank
of the Philippines (DBP), the spouses built a house on Lot 7 and Pedros lot. The house was
finished in the early 1980s but the spouses continuously made improvements, including a
poultry house and an annex.
In 1991, Pedro got a mistress and began to neglect his family. Mary Ann was forced
to sell or mortgage their movables to support the family and the studies of her children. By
himself, Pedro offered to sell the house and the two lots to herein petitioners, Patrocinia
and Wilfredo Ravina. Mary Ann objected and notified the petitioners of her objections, but
Pedro nonetheless sold the house and the two lots without Mary Anns consent, as
evidenced by a Deed of Sale59[5] dated June 21, 1991. It appears on the said deed that
Mary Ann did not sign on top of her name.
On July 5, 1991 while Mary Ann was outside the house and the four children were in
school, Pedro together with armed members of the Civilian Armed Forces Geographical Unit
(CAFGU) and acting in connivance with petitioners60[6] began transferring all their
belongings from the house to an apartment.
When Mary Ann and her daughter Ingrid Villa Abrille came home, they were
stopped from entering it. They waited outside the gate until evening under the rain. They
sought help from the Talomo Police Station, but police authorities refused to intervene,
saying that it was a family matter. Mary Ann alleged that the incident caused stress, tension
and anxiety to her children, so much so that one flunked at school. Thus, respondents Mary
Ann and her children filed a complaint for Annulment of Sale, Specific Performance,
Damages and Attorneys Fees with Preliminary Mandatory Injunction61[7] against Pedro and
herein petitioners (the Ravinas) in the RTC of Davao City.
During the trial, Pedro declared that the house was built with his own money.
Petitioner Patrocinia Ravina testified that they bought the house and lot from Pedro, and
that her husband, petitioner Wilfredo Ravina, examined the titles when they bought the
property.
On September 26, 1995, the trial court ruled in favor of herein respondent Mary
Ann P. Villa Abrille as follows:
WHEREFORE, judgment is rendered as follows:
1. The sale of lot 8 covered by TCT No. 26471 by defendant
Pedro Abrille appearing in the Deed of Sale marked as Exh. E is void as to
one half or 277.5 square meters representing the share of plaintiff Mary
Villa Abrille.
2. That sale of Lot 7 covered by TCT No. [88674] by
defendant Pedro Villa Abrille in the Deed of Sale (Exh. A) is valid as to one
half or 277.5 square meters of the 555 square meters as one half belongs to
defendant Pedro Abrille but it is void as to the other half or 277.5 square
meters as it belongs to plaintiff Mary Abrille who did not sell her share nor
give her consent to the sale.
3. That sale of the house mentioned in the Deed of Sale
(Exh. A) is valid as far as the one half of the house representing the share of
defendant Pedro Abrille is concerned but void as to the other half which is
the share of plaintiff Mary Abrille because she did not give her consent/sign
the said sale.
4. The defendants shall jointly pay the plaintiffs.
4. A. Seventeen Thousand Pesos (P17,000.00) representing the
value of the movables and belonging[s] that were lost when unknown men
unceremoniously and without their knowledge and consent removed their
movables from their house and brought them to an apartment.
4. B. One Hundred Thousand Pesos (P 100,000.00) to plaintiff
Mary Abrille as moral damages.
4. C. Fifty Thousand Pesos (P50,000.00) to each of the four
children as moral damages, namely:
 a) Ingrid Villa Abrille Fifty Thousand Pesos (P50,000.00), b) 2. The sale of lot covered by TCT No. 88674 in favor of said
Ingremark Villa Abrille Fifty Thousand Pesos (P50,000.00), c) Ingresoll Villa defendants spouses Ravina, together with the house thereon, is declared
Abrille Fifty Thousand Pesos (P50,000.00) and d) Ingrelyn Villa Abrille Fifty null and void.
Thousand Pesos (P50,000.00).

3. Defendant Pedro Abrille is ordered to return the value of the

5. Ten Thousand Pesos (P10,000.00) as exemplary damages by consideration for the lot covered by TCT No. 88674 and the house thereon
way of example and correction for the public good. to co-defendants spouses Ravina.

6. The costs of suit.62[8] 4. Defendants spouses Ravina [a]re ordered to reconvey the lot and
house covered by TCT No. 88674 in favor of spouses Pedro and Mary Villa
Abrille and to deliver possession to them.
On appeal, the Court of Appeals modified the decision, thus:

WHEREFORE, the appealed judgment is hereby MODIFIED as

5. Plaintiffs are given the option to exercise their rights under
follows:
Article [450] of the New Civil Code with respect to the improvements
introduced by defendant spouses Ravina.

1. The sale of lot covered by TCT No. 26471 in favor of defendants

spouses Wilfredo and Patrocinia Ravina is declared valid.
6. Defendants Pedro Villa Abrille and spouses Ravina are ordered
to pay jointly and severally the plaintiffs as follows:

a) One Hundred Thousand Pesos (P100,000.00) to plaintiff

Mary Villa Abrille as moral damages.

b) Fifty Thousand Pesos (P50,000.00) as moral damages to
each of the four children, namely: Ingrid Villa Abrille, Ingremark Villa Abrille,
Ingresoll Villa Abrille and Ingrelyn Villa Abrille.
c) Ten Thousand (P10,000.00) as exemplary damages by
way of example and correction for the public good.
SO ORDERED.63[9]
Their Motion for Reconsideration having been denied, petitioners filed this petition.
Petitioners argue that:
I.
THE COURT OF APPEALS ERRED WHEN IT DECLARED x x x THE SALE OF LOT
COVERED BY TCT NO. 88674 IN FAVOR OF SPOUSES RAVINA, TOGETHER
WITH THE HOUSE THEREON, AS NULL AND VOID SINCE IT IS CLEARLY
CONTRARY TO LAW AND EVIDENCE.
II.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS
PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE NOT INNOCENT
PURCHASERS FOR VALUE, THE SAME BEING CONTRARY TO LAW AND
EVIDENCE.
III.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS
PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE LIABLE FOR DAMAGES,
THE SAME BEING CONTRARY TO LAW AND EVIDENCE.64[10]
In essence, petitioners assail the appellate courts declaration that the sale to them
by Pedro of the lot covered by TCT No. T-88674 is null and void. However, in addressing this
issue, it is imperative to determine: (1) whether the subject property covered by TCT No. T-
88674 is an exclusive property of Pedro or conjugal property, and (2) whether its sale by
Pedro was valid considering the absence of Mary Anns consent.
Petitioners assert that the subject lot covered by TCT No. T-88674 was the exclusive
property of Pedro having been acquired by him through barter or exchange.65[11] They
allege that the subject lot was acquired by Pedro with the proceeds of the sale of one of his
exclusive properties. Allegedly, Pedro and his sister Carmelita initially agreed to exchange
their exclusive lots covered by TCT No. T-26479 and TCT No. T-26472, respectively. Later,
however, Pedro sold the lot covered by TCT No. T-26472 to one Francisca Teh Ting and
purchased the property of Carmelita using the proceeds of the sale. A new title, TCT No. T-
88674, was issued thereafter. Thus, petitioners insist that the subject lot remains to be an
exclusive property of Pedro as it was acquired or purchased through the exclusive funds or
money of the latter.
We are not persuaded. Article 160 of the New Civil Code provides, All property of
the marriage is presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife.
There is no issue with regard to the lot covered by TCT No. T-26471, which was an
exclusive property of Pedro, having been acquired by him before his marriage to Mary Ann.
However, the lot covered by TCT No. T-88674 was acquired in 1982 during the marriage of
Pedro and Mary Ann. No evidence was adduced to show that the subject property was
acquired through exchange or barter. The presumption of the conjugal nature of the
property subsists in the absence of clear, satisfactory and convincing evidence to overcome
said presumption or to prove that the subject property is exclusively owned by Pedro.66[12]
Petitioners bare assertion would not suffice to overcome the presumption that TCT No. T-
88674, acquired during the marriage of Pedro and Mary Ann, is conjugal. Likewise, the
house built thereon is conjugal property, having been constructed through the joint efforts
of the spouses, who had even obtained a loan from DBP to construct the house.
Significantly, a sale or encumbrance of conjugal property concluded after the
effectivity of the Family Code on August 3, 1988, is governed by Article 124 of the same
Code that now treats such a disposition to be void if done (a) without the consent of both
the husband and the wife, or (b) in case of one spouses inability, the authority of the court.
Article 124 of the Family Code, the governing law at the time the assailed sale was
contracted, is explicit:
ART. 124. The administration and enjoyment of the conjugal
partnership property shall belong to both spouses jointly. In case of
disagreement, the 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 the powers of disposition or encumbrance which must have the
authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance
shall be void. However, the transaction shall be construed as a continuing
offer on the part of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both
offerors. (Emphasis supplied.)
The particular provision in the New Civil Code giving the wife ten (10) years to annul
the alienation or encumbrance was not carried over to the Family Code. It is thus clear that
alienation or encumbrance of the conjugal partnership property by the husband without the
consent of the wife is null and void.
Hence, just like the rule in absolute community of property, if the husband, without
knowledge and consent of the wife, sells conjugal property, such sale is void. If the sale was
with the knowledge but without the approval of the wife, thereby resulting in a
disagreement, such sale is annullable at the instance of the wife who is given five (5) years
from the date the contract implementing the decision of the husband to institute the
case.67[13]
Here, respondent Mary Ann timely filed the action for annulment of sale within five
(5) years from the date of sale and execution of the deed. However, her action to annul the
sale pertains only to the conjugal house and lot and does not include the lot covered by TCT
No. T-26471, a property exclusively belonging to Pedro and which he can dispose of freely
without Mary Anns consent.
On the second assignment of error, petitioners contend that they are buyers in good
faith.68[14] Accordingly, they need not inquire whether the lot was purchased by money
exclusively belonging to Pedro or of the common fund of the spouses and may rely on the
certificates of title.
The contention is bereft of merit. As correctly held by the Court of Appeals, a
purchaser in good faith is one who buys the property of another without notice that some
other person has a right to, or interest in, such property and pays a full and fair price for the
same at the time of such purchase, or before he has notice of the claim or interest of some
other person in the property.69[15] To establish his status as a buyer for value in good faith,
a person dealing with land registered in the name of and occupied by the seller need only
show that he relied on the face of the sellers certificate of title. But for a person dealing with
land registered in the name of and occupied by the seller whose capacity to sell is restricted,
such as by Articles 166 and 173 of the Civil Code or Article 124 of the Family Code, he must
show that he inquired into the latters capacity to sell in order to establish himself as a buyer
for value in good faith.70[16]
In the present case, the property is registered in the name of Pedro and his wife,
Mary Ann. Petitioners cannot deny knowledge that during the time of the sale in 1991,
Pedro was married to Mary Ann. However, Mary Anns conformity did not appear in the
deed. Even assuming that petitioners believed in good faith that the subject property is the
exclusive property of Pedro, they were apprised by Mary Anns lawyer of her objection to the
sale and yet they still proceeded to purchase the property without Mary Anns written
consent. Moreover, the respondents were the ones in actual, visible and public possession
of the property at the time the transaction was being made. Thus, at the time of sale,
petitioners knew that Mary Ann has a right to or interest in the subject properties and yet
they failed to obtain her conformity to the deed of sale. Hence, petitioners cannot now
invoke the protection accorded to purchasers in good faith.
Now, if a voidable contract is annulled, the restoration of what has been given is
proper. The relationship between the parties in any contract even if subsequently annulled
must always be characterized and punctuated by good faith and fair dealing.71[17] Hence,
in consonance with justice and equity and the salutary principle of non-enrichment at
anothers expense, we sustain the appellate courts order directing Pedro to return to
petitioner spouses the value of the consideration for the lot covered by TCT No. T-88674
and the house thereon.
However, this court rules that petitioners cannot claim reimbursements for
improvements they introduced after their good faith had ceased. As correctly found by the
Court of Appeals, petitioner Patrocinia Ravina made improvements and renovations on the
house and lot at the time when the complaint against them was filed. Ravina continued
introducing improvements during the pendency of the action.72[18]
Thus, Article 449 of the New Civil Code is applicable. It provides that, (h)e who
builds, plants or sows in bad faith on the land of another, loses what is built, planted or
sown without right to indemnity.73[19]
On the last issue, petitioners claim that the decision awarding damages to
respondents is not supported by the evidence on record.74[20]
The claim is erroneous to say the least. The manner by which respondent and her
children were removed from the family home deserves our condemnation. On July 5, 1991,
while respondent was out and her children were in school, Pedro Villa Abrille acting in
connivance with the petitioners75[21] surreptitiously transferred all their personal
belongings to another place. The respondents then were not allowed to enter their rightful
home or family abode despite their impassioned pleas.
Firmly established in our civil law is the doctrine that: Every person must, in the
exercise of his rights and in the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith.76[22] When a right is exercised in a manner that
does not conform with such norms and results in damages to another, a legal wrong is
thereby committed for which the wrong doer must be held responsible. Similarly, any
person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damages caused.77[23] It
is patent in this case that petitioners alleged acts fall short of these established civil law
standards.
WHEREFORE, we deny the instant petition for lack of merit. The Decision dated
February 21, 2002 and the Resolution dated October 7, 2003 of the Court of Appeals in CA-
G.R. CV No. 54560 are AFFIRMED.
G.R. No. 157434 September 19, 2006
SPOUSES CLARO and NIDA BAUTISTA, petitioners,
vs.
BERLINDA F. SILVA, Represented by HERMES J. DORADO, in his capacity as Attorney-In-
Fact, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
To establish his status as a buyer for value in good faith, a person dealing with land
registered in the name of and occupied by the seller need only show that he relied on the
face of the seller's certificate of title.1 But for a person dealing with land registered in the
name of and occupied by the seller whose capacity to sell is restricted, such as by Articles
1662 and 1733 of the Civil Code or Article 1244 of the Family Code, he must show that he
inquired into the latter's capacity to sell in order to establish himself as a buyer for value in
good faith.5 The extent of his inquiry depends on the proof of capacity of the seller. If the
proof of capacity consists of a special power of attorney duly notarized, mere inspection of
the face of such public document already constitutes sufficient inquiry. If no such special
power of attorney is provided or there is one but there appear flaws in its notarial
acknowledgment mere inspection of the document will not do; the buyer must show that
his investigation went beyond the document and into the circumstances of its execution.
Appealed by Petition for Review on Certiorari under Rule 45 of the Rules of Court are the
November 21, 2001 Decision6 of the Court of Appeals (CA) in CA-G.R. CV No. 487677 which
affirmed in toto the January 10, 1995 Decision of the Regional Trial Court (RTC) in Civil Case
No. 3091-V-89, and the February 27, 2003 CA Resolution which denied the motion for
reconsideration.
Civil Case No. 3091-V-89 is a Complaint for Annulment of Deed of Absolute Sale and Transfer
Certificate of Title (TCT) No. V-2765, Reconveyance and Damages filed with the RTC, Branch
171, Valenzuela, Metro Manila by Berlina F. Silva (Berlina), through Hermes Dorado
(Dorado) as Attorney-in-Fact, against Spouses Claro and Nida Bautista (Spouses Bautista).
Spouses Bautista filed their Answer8 and a Third-Party Complaint against Berlina's husband,
Pedro M. Silva (Pedro).9 In an Order dated August 6, 1991, the RTC declared third-party
defendant Pedro in default for failure to file an answer to the Third-Party Complaint.10
The undisputed facts of the case, as found by the RTC, are as follows:
1. That Transfer Certificate of Title No. B-37189 of the Registry of Deeds for xxx
Metro Manila District III over a parcel of land (Lot 42, Block 10, of the subdivision
plan (LRC) Psd-210217, Sheet 2, being a portion of Lot 903, Malinta Estate, LRC
Record No. 5941) situated in xxx Barrio of Parada, Valenzuela, Metro Manila,
containing an area of 216 square meters, more or less, was registered in the names
of Spouses Berlina F. Silva and Pedro M. Silva on August 14, 1980;
2. That on March 3, 1988, Pedro M. Silva, for himself and as attorney-in-fact of his
wife Berlina F. Silva, thru a Special Power of Attorney purportedly executed on
November 18, 1987 by Berlina F. Silva in his favor, signed and executed a Deed of
 Absolute Sale over the said parcel of land covered by Transfer Certificate of Title No.
B-37189 in favor of defendants-spouses Claro Bautista and Nida Bautista; and
3. That as a consequence, Transfer Certificate of Title No. 37189 was cancelled and
in lieu thereof, Transfer Certificate of Title No. V-2765 of the Registry of Deeds for
the Valenzuela Branch was issued in the names of Spouses Claro Bautista and Nida
Bautista on March 4, 1988.11
Based on the evidence presented, the RTC also found that the signature appearing on the
Special Power of Attorney (SPA) as that of Berlina Silva is a forgery, and that consequently
the Deed of Absolute Sale executed by Pedro in favor of Spouses Bautista is not authorized
by Berlina.12
The RTC rendered judgment on January 10, 1995, the decretal portion of which reads:
WHEREFORE, Judgment is hereby rendered:
1. Declaring the Deed of Absolute Sale dated March 3, 1988 executed by Pedro M.
Silva, for himself and as attorney-in-fact of Berlina F. Silva, in favor of defendants-
spouses Claro Bautista and Nida Bautista over the parcel of land, described and
covered by Transfer Certificate of Title No. B-37189 Metro Manila District III, null
and void and the resulting Transfer Certificate of Title No. V-2765 of Valenzuela
Registry in the name of Spouses Claro Bautista and Nida Bautista cancelled and that
Transfer Certificate of Title No. B-37189 reinstated.
2. Ordering defendants to reconvey the property covered by the said Transfer
Certificate of Title No. V-2765 together with the improvements thereon to the
plaintiff.
3. Condemning the defendants to pay the plaintiff the sum of P5,000.00 in the
concept of reasonable attorney's fees and the costs of suit.
Defendants' counterclaim is dismissed.
Judgment on default is hereby entered in favor of the third-party plaintiffs Spouses
Claro Bautista and Nida Bautista against third-party defendants Pedro M. Silva,
condemning the third-party defendant Pedro Silva to indemnify/pay third-party
plaintiffs Spouses Claro Bautista and Nida Bautista the amount of Seventy Thousand
Pesos (P70,000.00) the contract price of the sale of the property, with interest at
the legal rate from the date of the execution of the said document on March 3, 1988
until the amount is fully paid and for whatever amount that the third–party
plaintiffs were adjudged and paid to the plaintiff by reason of this decision and the
costs of suit.
SO ORDERED.13
Spouses Bautista filed an appeal with the CA which, in its November 21, 2001 Decision,
affirmed in toto the RTC decision;14 and, in a Resolution
dated February 27, 2003, denied the Motion for Reconsideration.15
Hence, the herein petition filed by Spouses Bautista praying that the CA Decision and
Resolution be annulled and set aside on the following grounds:
I. Respondent as represented by Hermes Dorado in his capacity as attorney-in-fact
has no legal authority to file action against spouses petitioners.
II. The petitioners are considered as purchasers in good faith and for value having
relied upon a Special Power of Attorney which appears legal, valid and genuine on
its face.
III. Gratia argumenti that the special power of attorney is a forgery and the deed of
sale executed by the husband is null and void, the nullity [thereof] does not include
the one half share of the husband.16
The petition fails for lack of merit.
As to the first ground, petitioners argue that for lack of authority of Dorado to represent
respondent, the latter's Complaint failed to state a cause of action and should have been
dismissed.17
The argument holds no water.
True, there was no written authority for Dorado to represent respondent in the filing of her
Complaint. However, no written authorization of Dorado was needed because the
Complaint was actually filed by respondent, and not merely through Dorado as her
attorney-in-fact. As correctly observed by the CA, respondent herself signed the verification
attached to the Complaint.18 She stated therein that she is the plaintiff in Civil Case No.
3091-V-89 and that she caused the preparation of the Complaint.19 Respondent also
personally testified on the facts alleged in her Complaint.20 In reality, respondent acted for
and by herself, and not through any representative, when she filed the Complaint.
Therefore, respondent being the real party in interest, by virtue of the then prevailing
Articles 16621 and 17322 of the Civil Code, the Complaint she filed sufficiently stated a cause
of action. The sufficiency of the Complaint was not affected by the inclusion of Dorado as
party representative for this was an obvious error which, under Section 11 of Rule 3,23 is not
a ground for dismissal, as it may be corrected by the court, on its own initiative and at any
stage of the action, by dropping such party from the complaint.24
Anent the second ground, there is no merit to petitioners' claim that they are purchasers in
good faith.
That the SPA is a forgery is a finding of the RTC and the CA on a question of fact.25 The same
is conclusive upon the Court, 26 especially as it is based on the expert opinion of the NBI
which constitutes more than clear, positive and convincing evidence that respondent did
not sign the SPA, and on the uncontroverted Certification of Dorado that respondent was in
Germany working as a nurse when the SPA was purportedly executed in 1987.
The SPA being a forgery, it did not vest in Pedro any authority to alienate the subject
property without the consent of respondent. Absent such marital consent, the deed of sale
was a nullity.27
But then petitioners disclaim any participation in the forgery of the SPA or in the
unauthorized sale of the subject property. They are adamant that even with their
knowledge that respondent was in Germany at the time of the sale, they acted in good faith
when they bought the subject property from Pedro alone because the latter was equipped
with a SPA which contains a notarial acknowledgment that the same is valid and authentic.28
They invoke the status of buyers in good faith whose registered title in the property is
already indefeasible and against which the remedy of reconveyance is no longer available. 29
In the alternative, petitioners offer that should respondent be declared entitled to
reconveyance, let it affect her portion only but not that of Pedro.30
Whether or not petitioners are buyers for value in good faith is a question of fact not
cognizable by us in a petition for review.31 We resolve only questions of law; we do not try
facts nor examine testimonial or documentary evidence on record. We leave these to the
trial and appellate courts to whose findings and conclusions we accord great weight and
respect, especially when their findings concur.32 We may have at times reversed their
findings and conclusions but we resort to this only under exceptional circumstances as when
it is shown that said courts failed to take into account certain relevant facts which, if
properly considered, would justify a different conclusion.33 No such exceptional
circumstance obtains in the present case for we find the conclusions of the RTC and CA
supported by the established facts and applicable law. However, we do not fully subscribe to
some of their views on why petitioners cannot be considered in good faith, as we will
discuss below.
A holder of registered title may invoke the status of a buyer for value in good faith as a
defense against any action questioning his title.34 Such status, however, is never presumed
but must be proven by the person invoking it.35
A buyer for value in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays full and fair price for
the same, at the time of such purchase, or before he has notice of the claim or interest of
some other persons in the property. He buys the property with the well-founded belief that
the person from whom he receives the thing had title to the property and capacity to
convey it.36
To prove good faith, a buyer of registered and titled land need only show that he relied on
the face of the title to the property. He need not prove that he made further inquiry for he
is not obliged to explore beyond the four corners of the title.37 Such degree of proof of good
faith, however, is sufficient only when the following conditions concur: first, the seller is the
registered owner of the land; 38 second, the latter is in possession thereof;39 and third, at the
time of the sale, the buyer was not aware of any claim or interest of some other person in
the property,40 or of any defect or restriction in the title of the seller or in his capacity to
convey title to the property.41
Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice
and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate
of title and examining all factual circumstances in order to determine the seller's title and
capacity to transfer any interest in the property.42 Under such circumstance, it is no longer
sufficient for said buyer to merely show that he relied on the face of the title; he must now
also show that he exercised reasonable precaution by inquiring beyond the title.43 Failure to
exercise such degree of precaution makes him a buyer in bad faith.44
In the present case, petitioners were dealing with a seller (Pedro) who had title to and
possession of the land but, as indicated on the face of his title, whose capacity to sell was
restricted, in that the marital consent of respondent is required before he could convey the
property. To prove good faith then, petitioners must show that they inquired not only into
the title of Pedro but also into his capacity to sell.
According to petitioners, to determine Pedro's capacity to sell, they conducted the following
forms of inquiry: first, they inspected the photocopy of the SPA presented to them by
Pedro;45 second, they brought said copy to Atty. Lorenzo Lucero (the notary public who
prepared the deed of sale) and asked whether it was genuine;46 and third, they inspected
the original copy of the SPA after they advanced payment of Php55,000.00 to Pedro. 47
Essentially, petitioners relied on the SPA, specifically on its notarial acknowledgment which
states that respondent appeared before the notary public and acknowledged having
executed the SPA in favor of Pedro.
The RTC and CA, however, found such inquiry superficial. They expected of petitioners an
investigation not only into the whereabouts of respondent at the time of the execution of
the SPA48 but also into the genuineness of the signature appearing on it.49
We find such requirements of the RTC and CA too stringent that to adopt them would be to
throw commerce into madness where buyers run around to probe the circumstances
surrounding each piece of sales document while sellers scramble to produce evidence of its
good order. Remember that it is not just any scrap of paper that is under scrutiny but a SPA,
the execution and attestation of which a notary public has intervened.
To what extent, therefore, should an inquiry into a notarized special power of attorney go in
order for one to qualify as a buyer for value in good faith?
We agree with one author who said:
x x x To speak of "notice", as applied to the grantee, is to follow the language of the
Statue of Elizabeth. Its proviso protects the man who purchases "upon good
consideration and bona fide * * * not having at the time * * * any manner of
notice or knowledge." The term "notice", however, is really but an approach to the
test of good faith, and all modern legislation tends toward that point.
Thus, some present day statutes (outside of the Uniform Law) may speak of notice,
actual and constructive, and define both terms, but they should be "liberally
construed, so as to protect bona fide purchaser for value." They may require the
grantee to have "knowledge" of the debtor's intent, but save for technical purposes
of pleading, the term is read in the light of the rules we are studying. It comes
always to a question of the grantee's good faith as distinct from mere negligence. 50
There must, indeed, be more than negligence. There must be a conscious turning
away from the subject x x x. As put by the Supreme Court, the grantee must take
the consequences if he "chooses to remain ignorant of what the necessities of the
case require him to know." The search, therefore, is described by the question, did
the grantee make a choice between not knowing and finding out the truth; or
 were the circumstances such that he was not faced with that choice? (Emphasis
ours)
This means that no automatic correlation exists between the state of forgery of a document
and the bad faith of the buyer who relies on it. A test has to be done whether the buyer had
a choice between knowing the forgery and finding it out, or he had no such choice at all.
When the document under scrutiny is a special power of attorney that is duly notarized, we
know it to be a public document where the notarial acknowledgment is prima facie evidence
of the fact of its due execution.51 A buyer presented with such a document would have no
choice between knowing and finding out whether a forger lurks beneath the signature on it.
The notarial acknowledgment has removed that choice from him and replaced it with a
presumption sanctioned by law that the affiant appeared before the notary public and
acknowledged that he executed the document, understood its import and signed it. In
reality, he is deprived of such choice not because he is incapable of knowing and finding out
but because, under our notarial system, he has been given the luxury of merely relying on
the presumption of regularity of a duly notarized SPA. And he cannot be faulted for that
because it is precisely that fiction of regularity which holds together commercial
transactions across borders and time.
In sum, all things being equal, a person dealing with a seller who has possession and title to
the property but whose capacity to sell is restricted, qualifies as a buyer in good faith if he
proves that he inquired into the title of the seller as well as into the latter's capacity to sell;
and that in his inquiry, he relied on the notarial acknowledgment found in the seller's duly
notarized special power of attorney. He need not prove anything more for it is already the
function of the notarial acknowledgment to establish the appearance of the parties to the
document, its due execution and authenticity.52
Note that we expressly made the foregoing rule applicable only under the operative words
"duly notarized" and "all things being equal." Thus, said rule should not apply when there is
an apparent flaw afflicting the notarial acknowledgment of the special power of attorney as
would cast doubt on the due execution and authenticity of the document; or when the
buyer has actual notice of circumstances outside the document that would render suspect
its genuineness.
In Domingo v. Reed,53 we found that the special power of attorney relied upon by the buyers
contained a defective notarial acknowledgment in that it stated there that only the agent-
wife signed the document before the notary public while the principal-husband did not.
Such flaw rendered the notarial acknowledgment of no effect and reduced the special
power of attorney into a private document. We declared the buyer who relied on the
private special power of attorney a buyer in bad faith.
In Lao v. Villones-Lao,54 and Estacio v. Jaranilla,55 we found that the buyers knew of
circumstances extrinsic to the special power of attorney which put in question the actual
execution of said document. In Domingo Lao, the buyer knew that the agent-wife was
estranged from the principal-husband but was living within the same city. In the Estacio
case, we found admissions by the buyers that they knew that at the time of the purported
execution of the special power of attorney, the alleged principal was not in the Philippines.
In both cases we held that the buyers were not in good faith, not because we found any
outward defect in the notarial acknowledgment of the special powers of attorney, but
because the latter had actual notice of facts that should have put them on deeper inquiry
into the capacity to sell of the seller.
In the present case, petitioners knew that Berlina was in Germany at the time they were
buying the property and the SPA relied upon by petitioners has a defective notarial
acknowledgment. The SPA was a mere photocopy56 and we are not convinced that there
ever was an original copy of said SPA as it was only this photocopy that was testified to by
petitioner Nida Bautista and offered into evidence by her counsel.57 We emphasize this fact
because it was actually this photocopy that was relied upon by petitioners before they
entered into the deed of sale with Pedro. As admitted to by petitioner Nida Bautista, upon
inspection of the photocopy of the SPA, they gave Pedro an advanced payment of
Php55,000.00; this signifies that, without further investigation on the SPA, petitioners had
agreed to buy the subject property from Pedro.
But then said photocopy of the SPA contains no notarial seal. A notarial seal is a mark, image
or impression on a document which would indicate that the notary public has officially
signed it.58 There being no notarial seal, the signature of the notary public on the notarial
certificate was therefore incomplete. The notarial certificate being deficient, it was as if the
notarial acknowledgment was unsigned. The photocopy of the SPA has no notarial
acknowledgment to speak of. It was a mere private document which petitioners cannot foist Puno, C.J.,
as a banner of good faith.
Carpio,
All told, it was not sufficient evidence of good faith that petitioners merely relied on the
photocopy of the SPA as this turned out to be a mere private document. They should have Corona,
adduced more evidence that they looked beyond it. They did not. Instead, they took no
precautions at all. They verified with Atty. Lucero whether the SPA was authentic but then
Carpio Morales,
the latter was not the notary public who prepared the document. Worse, they purposely
failed to inquire who was the notary public who prepared the SPA. Finally, petitioners
conducted the transaction in haste. It took them all but three days or from March 2 to 4, Velasco, Jr.,
1988 to enter into the deed of sale, notwithstanding the restriction on the capacity to sell of
Pedro.59 In no way then may petitioners qualify as buyers for value in good faith. Nachura,

That said, we come to the third issue on whether petitioners may retain the portion of - versus - Leonardo-De Castro,
Pedro Silva in the subject property. Certainly not. It is well-settled that the nullity of the sale
of conjugal property contracted by the husband without the marital consent of the wife Brion,
affects the entire property, not just the share of the wife.60 We see no reason to deviate
from this rule.
Peralta,
WHEREFORE, the petition is hereby DENIED. The Decision dated November 21, 2001 and
Bersamin,
Resolution dated February 27, 2003 of the Court of Appeal are AFFIRMED.

Costs against petitioners. Del Castillo,

SO ORDERED. Abad,

Villarama, Jr.,

MANUEL O. FUENTES and G.R. No. 178902 Perez, and

LETICIA L. FUENTES, Mendoza, JJ.

Petitioners, Present:
CONRADO G. ROCA, ANNABELLE R.
JOSON, ROSE MARIE R. CRISTOBAL 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
and PILAR MALCAMPO, Promulgated:
absolute sale.78[1] But Tarciano did not for the meantime have the registered title
Respondents. transferred to his name.

April 21, 2010

x ---------------------------------------------------------------------------------------- x
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
DECISION
D. Plagata whom they asked to prepare the documents of sale. They later signed an
agreement to sell that Atty. Plagata prepared79[2] dated April 29, 1988, which agreement
expressly stated that it was to take effect in six months.
ABAD, J.:

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
This case is about a husbands sale of conjugal real property, employing a challenged
clear the lot of structures and occupants and secure the consent of his estranged wife,
affidavit of consent from an estranged wife. The buyers claim valid consent, loss of right to
Rosario Gabriel Roca (Rosario), to the sale. Upon Tarcianos compliance with these
declare nullity of sale, and prescription.
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

The Facts and the Case

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.80[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 sale81[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 spouses82[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.83[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, 1989.84[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. be bound by his opinion since the opposing expert witness contradicted the same. Atty.
Comparing Rosarios standard signature on the affidavit with those on various documents Plagatas testimony remained technically unrebutted.88[11]
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.85[8]

Finally, the RTC noted that Atty. Plagatas defective notarization of the affidavit of
On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that
consent did not invalidate the sale. The law does not require spousal consent to be on the
the action had already prescribed since the ground cited by the Rocas for annulling the sale,
deed of sale to be valid. Neither does the irregularity vitiate Rosarios consent. She
forgery or fraud, already prescribed under Article 1391 of the Civil Code four years after its
personally signed the affidavit in the presence of Atty. Plagata.89[12]
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, 1989.86[9] 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
Moreover, the Rocas failed to present clear and convincing evidence of the fraud.
variance between them. That Tarciano and Rosario had been living separately for 30 years
Mere variance in the signatures of Rosario was not conclusive proof of forgery.87[10] The
since 1958 also reinforced the conclusion that her signature had been forged.
RTC ruled that, although the Rocas presented a handwriting expert, the trial court could not
 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
The Issues Presented
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.
The case presents the following issues:

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 1. Whether or not Rosarios signature on the document of consent to her
what they paid him plus legal interest computed from the filing of the complaint until actual husband Tarcianos sale of their conjugal land to the Fuentes spouses was forged;

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 2. Whether or not the Rocas action for the declaration of nullity of that sale to
the spouses already prescribed; and
award of attorneys fees to the Fuentes spouses.90[13]

3. Whether or not only Rosario, the wife whose consent was not had, could
Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition bring the action to annul that sale.

for review.91[14]

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 consent92[15] and her specimen
signatures.93[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 dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
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.
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.95[18] Further, the Family Code provisions
When Tarciano married Rosario, the Civil Code put in place the system of conjugal
were also made to apply to already existing conjugal partnerships without prejudice to
partnership of gains on their property relations. While its Article 165 made Tarciano the sole
vested rights.96[19] Thus:
administrator of the conjugal partnership, Article 16694[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
Art. 105. x x x The provisions of this Chapter shall also apply to
to have the sale annulled during the marriage within ten years from the date of the sale. conjugal partnerships of gains already established between spouses
Failing in that, she or her heirs may demand, after dissolution of the marriage, only the before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as
value of the property that Tarciano fraudulently sold. Thus:
provided in Article 256. (n)

Art. 173. The wife may, during the marriage, and within ten years Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11,
from the transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when such 1989, the law that governed the disposal of that lot was already the Family Code.
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
 and is absolutely wanting in civil effects. It cannot be validated either by ratification or
prescription.98[21]
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
But, although a void contract has no legal effects even if no action is taken to set it
court order allowing the sale, the same would be void. Article 124 thus provides:
aside, when any of its terms have been performed, an action to declare its inexistence is
Art. 124. x x x In the event that one spouse is incapacitated or necessary to allow restitution of what has been given under it.99[22] This action, according
otherwise unable to participate in the administration of the conjugal to Article 1410 of the Civil Code does not prescribe. Thus:
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 Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.

Under the provisions of the Civil Code governing contracts, a void or inexistent
Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment
contract has no force and effect from the very beginning. And this rule applies to contracts
of sale and reconveyance of the real property that Tarciano sold without their mothers (his
that are declared void by positive provision of law,97[20] as in the case of a sale of conjugal
wifes) written consent. The passage of time did not erode the right to bring such an action.
property without the other spouses written consent. A void contract is equivalent to nothing
 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.100[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.101[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,102[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.
Socorro Torres (Socorro) and Esteban Abletes (Esteban) were married on 9 June 1980.
Although Socorro and Esteban never had common children, both of them had children from
prior marriages: Esteban had a daughter named Evangeline Abuda (Evangeline), and Socorro
had a son, who was the father of Edilberto U. Ventura, Jr. (Edilberto), the petitioner in this
case.

Evidence shows that Socorro had a prior subsisting marriage to Crispin Roxas (Crispin) when
she married Esteban. Socorro married Crispin on 18 April 1952. This marriage was not
SO ORDERED. annulled, and Crispin was alive at the time of Socorro’s marriage to Esteban.

Esteban’s prior marriage, on the other hand, was dissolved by virtue of his wife’s death in
1960. According to Edilberto, sometime in 1968, Esteban purchased a portion of a lot
situated at 2492 State Alley, Bonifacio Street, Vitas, Tondo, Manila (Vitas property). The
G.R. No. 202932 October 23, 2013 remaining portion was thereafter purchased by Evangeline on her father’s behalf sometime
in 1970.4 The Vitas property was covered by Transfer Certificate of Title No. 141782, dated
EDILBERTO U. VENTURA JR., Petitioner, 11 December 1980, issued to "Esteban Abletes, of legal age, Filipino, married to Socorro
vs. Torres."5
SPOUSES PAULINO and EVANGELINE ABUDA, Respondents.
Edilberto also claimed that starting 1978, Evangeline and Esteban operated small business
DECISION establishments located at 903 and 905 Delpan Street, Tondo, Manila (Delpan property).6

CARPIO, J.:
The Case
1
This petition for review on certiorari seeks to annul the Decision dated 9 March 2012 of the
Court of Appeals (CA) in CA-G.R. CV No. 92330 and the Resolution2 dated 3 August 2012
denying the motion for reconsideration. The Decision and Resolution dismissed the Appeal
dated 23 October 2009 and affirmed with modification the Decision3 dated 24 November
2008 of the Regional Trial Court of Manila, Branch 32 (RTC-Manila).
The Facts
The RTC-Manila and the CA found the facts to be as follows:
On 6 September 1997, Esteban sold the Vitas and Delpan properties to Evangeline and her
husband, Paulino Abuda (Paulino).7 According to Edilberto:
when Esteban was diagnosed with colon cancer sometime in 1993, he decided to sell the
Delpan and Vitas properties to Evangeline. Evangeline continued paying the amortizations
on the two (2) properties situated in Delpan Street. The amortizations, together with the
amount of Two Hundred Thousand Pesos (Php 200,000.00), which Esteban requested as
advance payment, were considered part of the purchase price of the Delpan properties.
Evangeline likewise gave her father Fifty Thousand Pesos (Php 50,000.00) for the purchase
of the Vitas properties and she shouldered his medical expenses.8
Esteban passed away on 11 September 1997, while Socorro passed away on 31 July 1999.
Sometime in 2000, Leonora Urquila (Leonora), the mother of Edilberto, discovered the sale.
Thus, Edilberto, represented by Leonora, filed a Petition for Annulment of Deeds of Sale
before the RTC-Manila. Edilberto alleged that the sale of the properties was fraudulent
because Esteban’s signature on the deeds of sale was forged. Respondents, on the other
hand, argued that because of Socorro’s prior marriage to Crispin, her subsequent marriage
to Esteban was null and void. Thus, neither Socorro nor her heirs can claim any right or
interest over the properties purchased by Esteban and respondents.9
The Ruling of the RTC-Manila
The RTC-Manila dismissed the petition for lack of merit.
The RTC-Manila ruled that the marriage between Socorro and Esteban was void from the
beginning.10 Article 83 of the Civil Code, which was the governing law at the time Esteban
and Socorro were married, provides:
Art. 83. Any marriage subsequently contracted by any person during the lifetime of the first
spouse of such person shall be illegal and void from its performance unless:
1. The first marriage was annulled or dissolved; or
2. The first spouse had been absent for seven consecutive years at the time of the
second marriage without the spouse present having news of the absentee being
alive, or if the absentee, though he has been absent for less than seven years, is
generally considered as dead and believed to be so by the spouse present at the
time of contracting such subsequent marriage, or if the absentee is presumed dead
according to articles 390 and 391. The marriage so contracted shall be valid in any of
the three cases until declared null and void.
During trial, Edilberto offered the testimony of Socorro’s daughter-in-law Conchita Ventura
(Conchita). In her first affidavit, Conchita claimed that Crispin, who was a seaman, had been
missing and unheard from for 35 years. However, Conchita recanted her earlier testimony
and executed an Affidavit of Retraction.11
The RTC-Manila ruled that the lack of a judicial decree of nullity does not affect the status of
the union. It applied our ruling in Niñal v. Badayog:12
Jurisprudence under the Civil Code states that no judicial decree is necessary in order to
establish the nullity of a marriage. x x x
Under ordinary circumstances, the effect of a void marriage, so far as concerns the
conferring of legal rights upon the parties, is as though no marriage had ever taken place.
And therefore, being good for no legal purpose, its invalidity can be maintained in any
proceeding in which [the] fact of marriage may be material, either direct or collateral, in any
civil court between any parties at any time, whether before or after the death of either or
both the husband and the wife, and upon mere proof of the facts rendering such marriage
void, it will be disregarded or treated as non-existent by the courts.13
According to the RTC-Manila, the Vitas and Delpan properties are not conjugal, and are
governed by Articles 144 and 485 of the Civil Code, to wit:
Art. 144. 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.
Art. 485. The share of the co-owners, in the benefits as well as in the charges, shall be
proportional to their respective interests. Any stipulation in a contract to the contrary shall
be void.
The portions belonging to the co-owners in the co-ownership shall be presumed equal,
unless the contrary is proved.
The RTC-Manila then determined the respective shares of Socorro and Esteban in the
properties. It found that:
with respect to the property located at 2492 State Alley, Bonifacio St. Vitas, Tondo, Manila
covered by TCT No. 141782, formerly Marcos Road, Magsaysay Village, Tondo, Manila,
[Evangeline] declared that part of it was first acquired by her father Esteban Abletes
sometime in 1968 when he purchased the right of Ampiano Caballegan. Then, in 1970, she x
x x bought the right to one-half of the remaining property occupied by Ampiano Caballegan.
However, during the survey of the National Housing Authority, she allowed the whole lot to
be registered in her father’s name. As proof thereof, she presented Exhibits "8" to "11" x x x.
These documents prove that that she has been an occupant of the said property in Vitas,
Tondo even before her father and Socorro Torres got married in June, 1980. 14
Anent the parcels of land and improvements thereon 903 and 905 Del Pan Street, Tondo,
Manila, x x x Evangeline professed that in 1978, before her father met Socorro Torres and
before the construction of the BLISS Project thereat, her father [already had] a bodega of
canvas (lona) and a sewing machine to sew the canvas being sold at 903 Del Pan Street,
Tondo Manila. In 1978, she was also operating Vangie’s Canvas Store at 905 Del Pan Street,
Tondo, Manila, which was evidenced by Certificate of Registration of Business Name issued
in her favor on 09 November 1998 x x x. When the BLISS project was constructed in 1980,
the property became known as Units D-9 and D-10. At first, her father [paid] for the
amortizations for these two (2) parcels of land but when he got sick with colon cancer in
1993, he asked respondents to continue paying for the amortizations x x x. [Evangeline] paid
a total of ₱195,259.52 for Unit D-9 as shown by the 37 pieces of receipts x x x and the
aggregate amount of ₱188,596.09 for Unit D-10, as evidenced by 36 receipts x x x.15
The RTC-Manila concluded that Socorro did not contribute any funds for the acquisition of
the properties. Hence, she cannot be considered a co-owner, and her heirs cannot claim any
rights over the Vitas and Delpan properties.16
Aggrieved, Edilberto filed an appeal before the CA.
The Ruling of the CA
In its Decision17 dated 9 March 2012, the CA sustained the decision of the RTC-Manila. The
dispositive portion of the CA Decision reads:
WHEREFORE, the Appeal is hereby DENIED and the challenged Decision of the court a quo
STANDS.
SO ORDERED.18
The CA ruled, however, that the RTC-Manila should have applied Article 148 of the Family
Code, and not Articles 144 and 485 of the Civil Code. Article 148 of the Family Code states
that in unions between a man and a woman who are incapacitated to marry each other:
x x x 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.
The CA applied our ruling in Saguid v. Court of Appeals,19 and held that the foregoing
provision applies "even if the cohabitation or the acquisition of the property occurred
before the effectivity of the Family Code."20 The CA found that Edilberto failed to prove that
Socorro contributed to the purchase of the Vitas and Delpan properties. Edilberto was
unable to provide any documentation evidencing Socorro’s alleged contribution.21
On 2 April 2012, Edilberto filed a Motion for Reconsideration,22 which was denied by the CA
in its Resolution dated 3 August 2012.23
Hence, this petition.
The Ruling of this Court
We deny the petition.
Edilberto admitted that in unions between a man and a woman who are incapacitated to
marry each other, the ownership over the properties acquired during the subsistence of that
relationship shall be based on the actual contribution of the parties. He even quoted our
ruling in Borromeo v. Descallar24 in his petition:
It is necessary for each of the partners to prove his or her actual contribution to the
acquisition of property in order to be able to lay claim to any portion of it. Presumptions of
co-ownership and equal contribution do not apply.25
This is a reiteration of Article 148 of the Family Code, which the CA applied in the assailed
decision:
Art 148. In cases of cohabitation [wherein the parties are incapacitated to marry each
other], 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.
Applying the foregoing provision, the Vitas and Delpan properties can be considered
common property if: (1) these were acquired during the cohabitation of Esteban and
Socorro; and (2) there is evidence that the properties were acquired through the parties’
actual joint contribution of money, property, or industry.
Edilberto argues that the certificate of title covering the Vitas property shows that the
parcel of land is co-owned by Esteban and Socorro because: (1) the Transfer Certificate of
Title was issued on 11 December 1980, or several months after the parties were married;
and (2) title to the land was issued to "Esteban Abletes, of legal age, married to Socorro
Torres."26
We disagree. The title itself shows that the Vitas property is owned by Esteban
alone.1âwphi1 The phrase "married to Socorro Torres" is merely descriptive of his civil
status, and does not show that Socorro co-owned the property.27 The evidence on record
also shows that Esteban acquired ownership over the Vitas property prior to his marriage to
Socorro, even if the certificate of title was issued after the celebration of the marriage.
Registration under the Torrens title system merely confirms, and does not vest title. This
was admitted by Edilberto on page 9 of his petition wherein he quotes an excerpt of our
ruling in Borromeo:
Registration is not a mode of acquiring ownership. It is only a means of confirming the fact
of its existence with notice to the world at large. Certificates of title are not a source of
right. The mere possession of a title does not make one the true owner of the property.
Thus, the mere fact that respondent has the titles of the disputed properties in her name
does not necessarily, conclusively and absolutely make her the owner. The rule on
indefeasibility of title likewise does not apply to respondent. A certificate of title implies that
the title is quiet, and that it is perfect, absolute and indefeasible. However, there are well-
defined exceptions to this rule, as when the transferee is not a holder in good faith and did
not acquire the subject properties for a valuable consideration.
Edilberto claims that Esteban s actual contribution to the purchase of the Delpan property
was not sufficiently proven since Evangeline shouldered some of the amortizations.28 Thus,
the law presumes that Esteban and Socorro jointly contributed to the acquisition of the Del
pan property.
We cannot sustain Edilberto s claim. Both the RTC-Manila and the CA found that the Delpan
property was acquired prior to the marriage of Esteban and Socorro.29 Furthermore, even if
payment of the purchase price of the Delpan property was made by Evangeline, such
payment was made on behalf of her father. Article 1238 of the Civil Code provides:
Art. 1238. Payment made by a third person who does not intend to be reimbursed by the
debtor is deemed to be a donation, which requires the debtor s consent. But the payment is
in any case valid as to the creditor who has accepted it.

Thus, it is clear that Evangeline paid on behalf of her father, and the parties intended that
the Delpan property would be owned by and registered under the name of Esteban.

During trial, the Abuda spouses presented receipts evidencing payments of the
amortizations for the Delpan property.1âwphi1 On the other hand, Edilberto failed to show
any evidence showing Socorro s alleged monetary contributions. As correctly pointed out by
the CA:

settled is the rule that in civil cases x x x the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts the affirmative of an issue. x
x x. Here it is Appellant who is duty bound to prove the allegations in the complaint which
undoubtedly, he miserably failed to do so.30

WHEREFORE, the petition is DENIED. The Decision dated 9 March 2012 of the Court of
Appeals in CA-G.R. CV No. 92330 is AFFIRMED.

SO ORDERED.