Persons Week 5 Cases

Module 5:
I. Conjugal Partnership of Gains (Articles 116-133,Family Code)

Cases:
Articles 116-120
1. Villanueva v. Court of Appeals, G.R. No. 143286, April 14, 2004
G.R. No. 143286 April 14, 2004
PROCOPIO VILLANUEVA, NICOLAS RETUYA and PACITA VILLANUEVA, petitioners,

vs.
COURT OF APPEALS and THE HEIRS OF EUSEBIA NAPISA RETUYA, respondents.
DECISION
CARPIO, J.:
This petition for review on certiorari1 seeks the reversal of the Court of Appeals’ Decision dated 31
January 2000 as well as its Resolution dated 25 April 2000 in CA-G.R. No. CV-46716. The assailed
Decision dismissed petitioners’ appeal of the Decision of the Regional Trial Court, Branch 55, Mandaue
City ("trial court").
On 13 October 1988, Eusebia Napisa Retuya ("Eusebia") filed a complaint before the trial court against
her husband Nicolas Retuya ("Nicolas"), Pacita Villanueva ("Pacita"), and Nicolas’ son with Pacita,
Procopio Villanueva ("Procopio"). Eusebia sought the reconveyance from Nicolas and Pacita of several
properties listed in paragraph 2 of the complaint ("subject properties"), claiming the subject properties
are her conjugal properties with Nicolas. Eusebia also prayed for accounting, damages and the delivery
of rent and other income from the subject properties.
Antecedent Facts
The facts as found by the trial court are as follows:
Plaintiff Eusebia Napisa Retuya, is the legal wife of defendant Nicolas Retuya, having been
married to the latter on October 7, 1926. Out of the lawful wedlock, they begot five (5) children,
namely, Natividad, Angela, Napoleon, Salome, and Roberta. Spouses Retuya resided at Tipolo,
Mandaue City. During their marriage they acquired real properties and all improvements
situated in Mandaue City, and Consolacion, Cebu, more particularly described as follows:
‘1. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24951;
2. A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24952;
8. A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No. 01042;
12. A parcel of land located at Nawanao-Subangdaku, Mandaue City covered by tax dec.
No. 01488;
13. A parcel of land located at Baklid, Mandaue City, covered by tax dec. No. 00492;
14. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01044;
15. A residential house located at Tipolo, Mandaue City covered by tax dec. No. 01050;
19. A parcel of land located at Banilad, Mandaue City covered by tax dec. No. 02381;
22. A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01450 (in
the name of Pacita Villanueva).’
Also, defendant, Nicolas Retuya, is co-owner of a parcel of land situated in Mandaue City which
he inherited from his parents Esteban Retuya and Balbina Solon as well as the purchasers of
hereditary shares of approximately eight (8) parcels of land in Mandaue City.
Some of these properties above-mentioned earn income from coconuts and the other
lands/houses are leased to the following:
a) Mandaue Food Products Company – for Lot 121-F, Lot 121-G and Lot 121-H under TCT
No. 11300 at an annual rental of ₱10,800.00;
b) Barben Wood Industries, Inc. – for Lot 148 covered by TCT No. l731 for an annual
rental of ₱21,600.00;
c) Metaphil, Inc. – parcel of land consisting of 2,790.51 sq. meters at the rate of
₱2,700.00 annually for the first five (5) years, and ₱3,240.00 for the second years;
d) Benedicto Development Corp. – for a portion of Lot 148 covered by TCT No. 1731 for
a period of 20 years at an annual rate of ₱3,500.00 renewable for another 20 years after
April 1, 1995 at an annual rate of ₱4,000.00;
e) Benedicto Development Corporation – for a portion of Lot No. 148 covered by

Certificate of Title No. 1731 over an area of 6,000 sq. meters for an annual rental of
₱9,500.00 for a period of 2 years from June 1, 1982;
f) Visayan Timber and Machinery Corp. – over a parcel of land at Nawanaw, Mandaue
City, for a period of 2 years from June 1, 1987 and renewable for another 12 years at an
annual income of ₱4,000.00;
g) House lessees listed in Exhibit "13" with total monthly rentals of ₱1,975.00 a month
for the 24 lessees or ₱24,700.00 annually. (Exhs. "7" to "13")
In 1945, defendant Nicolas Retuya no longer lived with his legitimate family and cohabited with
defendant, Pacita Villanueva, wherein defendant, Procopio Villanueva, is their illegitimate son.
Nicolas, then, was the only person who received the income of the above-mentioned properties.
Defendant, Pacita Villanueva, from the time she started living in concubinage with Nicolas, has
no occupation, she had no properties of her own from which she could derive income.
In 1985, Nicolas suffered a stroke and cannot talk anymore, cannot walk anymore and they have
to raise him up in order to walk. Natividad Retuya knew of the physical condition of her father
because they visited him at the hospital. From the time defendant Nicolas Retuya suffered a
stroke on January 27, 1985 and until the present, it is defendant Procopio Villanueva, one of
Nicolas’ illegitimate children who has been receiving the income of these properties. Witness
Natividad Retuya went to Procopio to negotiate because at this time their father Nicolas was
already senile and has a childlike mind. She told defendant, Procopio that their father was
already incapacitated and they had to talk things over and the latter replied that it was not yet
the time to talk about the matter.
Plaintiff, then, complained to the Barangay Captain for reconciliation/mediation but no

settlement was reached, hence, the said official issued a certification to file action. Written
demands were made by plaintiff, through her counsel, to the defendants, including the
illegitimate family asking for settlement but no settlement was reached by the parties.
Further, plaintiff’s witness, Natividad Retuya, testified that the parcel of land covered by tax
declaration marked Exhibit "T" was the property bought by her father from Adriano Marababol
for at the time of purchase of the property, defendant Pacita Villanueva had no means of
livelihood (TSN, p. 6).
The trial court rendered its Decision on 16 February 1994 in favor of Eusebia. The dispositive portion of
the Decision states:
WHEREFORE, in view of the foregoing considerations, judgment is rendered in favor of the

plaintiff Eusebia Napisa Retuya and against defendants Procopio Villanueva, Nicolas Retuya and
Pacita Villanueva:
1. Declaring the properties listed in paragraph 2 of the amended complaint as conjugal

properties of the spouses plaintiff Eusebia Retuya and the defendant Nicolas Retuya;
2. Ordering the transfer of the sole administration of conjugal properties of the spouses
Eusebia Retuya and Nicolas Retuya in accordance with Art. 124 of the Family Code to
the plaintiff Eusebia Napisa Retuya;
3. Ordering defendant Procopio Villanueva to account and turnover all proceeds or

rentals or income of the conjugal properties from January 27, 1985 when he took over
as ‘administrator’ thereof and until he shall have ceased administering the same in
accordance with the judgment of this Court;
4. Ordering defendants jointly and severally to reconvey the parcel of land situated at
Tipolo, Mandaue City now in the name of defendant Pacita Villanueva under tax dec.
No. 01450 and transfer the same into the names of the conjugal partners Eusebia N.
Retuya and Nicolas Retuya;
5. Ordering the City Assessor’s Office of Mandaue City to cancel tax declaration No.
01450 in the name of Pacita Villanueva and direct the issuance of a new title and tax
declaration in the names of Eusebia Napisa Retuya and Nicolas Retuya;
6. Ordering defendants jointly and severally to reconvey that certain building of strong
materials located at Tipolo, Mandaue City under tax dec. No. 01450 into the names of
Eusebia Retuya and Nicolas Retuya;
7. Ordering defendants jointly and severally to pay plaintiff the sum of ₱50,000.00 by
way of attorney’s fees and expenses of litigation in the sum of ₱5,000.00 plus the costs.
SO ORDERED.
Petitioners appealed the trial court’s decision to the Court of Appeals. Eusebia died on 23 November
1996. Thereafter, Eusebia’s heirs substituted her pursuant to the resolution of the Court of Appeals
dated 7 April 1997. The Court of Appeals eventually upheld the Decision of the trial court but deleted
the award of attorney’s fees, ruling in this wise:
WHEREFORE, the decision dated February 16, 1994 is AFFIRMED with the modification that the
award of attorney’s fees of ₱50,000.00 is deleted.
SO ORDERED.
Petitioners filed a Motion for Reconsideration on 23 February 2000 which the Court of Appeals denied in
a Resolution dated 11 May 2000.
Hence, this petition.
The Trial Court’s Ruling
The trial court applied Article 116 of the Family Code, which reads:
Art. 116. All property acquired during the marriage, whether the acquisition appears to have
been made, contracted or registered in the name of one or both spouses, is presumed conjugal
unless the contrary is proved.
The trial court ruled that the documents and other evidence Eusebia presented constitute "solid
evidence" which proved that the subject properties were acquired during her marriage with Nicolas.
This made the presumption in Article 116 applicable to the subject properties. Thus, the trial court ruled
that Eusebia had proved that the subject properties are conjugal in nature. On the other hand, the trial
court found that petitioners failed to meet the standard of proof required to maintain their claim that
the subject properties are paraphernal properties of Nicolas. The trial court added that Pacita presented
no "factual solidity" to support her claim that she bought Lot No. 1522 exclusively with her own money.
The Court of Appeals’ Ruling
The Court of Appeals concurred with the findings of the trial court. The appellate court found that Pacita
failed to rebut the presumption under Article 116 of the Family Code that the subject properties are
conjugal. The appellate court dismissed Pacita’s defense of prescription and laches since she failed to
have the issue included in the pre-trial order after raising it in her answer with her co-petitioners.
The Issues
Petitioners Nicolas, Pacita and Procopio contend that both the trial and appellate courts erred in ruling
in favor of Eusebia. They seek a reversal and raise the following issues for resolution:
1. WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE DECLARATION OF THE TRIAL
COURT THAT THE PROPERTIES LISTED IN PARAGRAPH 2 OF THE COMPLAINT ARE CONJUGAL
PROPERTIES OF NICOLAS RETUYA AND EUSEBIA RETUYA ALTHOUGH THIS WAS NOT ONE OF THE
CAUSES OF ACTION IN EUSEBIA’S COMPLAINT.
2. WHETHER THE COURT OF APPEALS ERRED IN APPLYING THE PRESUMPTION THAT PROPERTIES
ACQUIRED DURING THE EXISTENCE OF THE MARRIAGE OF NICOLAS RETUYA AND EUSEBIA
RETUYA ARE CONJUGAL.
3. WHETHER THE COURT OF APPEALS ERRED IN NOT APPLYING INSTEAD THE PRESUMPTION
UNDER ARTICLE 148 OF THE FAMILY CODE IN FAVOR OF CO-OWNERSHIP BETWEEN NICOLAS
RETUYA AND PACITA VILLANUEVA.
4. WHETHER THE COURT OF APPEALS ERRED IN NOT DECLARING THAT THE ACTION FOR
RECONVEYANCE OVER LOT NO. 152 IS ALREADY BARRED BY PRESCRIPTION OR LACHES.3
The Ruling of the Court
The petition lacks merit.
First Issue: On the Alleged Failure

To Claim that the Properties are Conjugal
Petitioners’ contention that Eusebia’s complaint failed to state that the subject properties are conjugal
is absolutely without basis. A cursory reading of the complaint readily shows that the complaint
maintains that the subject properties are conjugal.4 The first sentence of the second paragraph of the
complaint states:
2. The plaintiff Eusebia Retuya and defendant Nicolas Retuya are husband and wife and conjugal
owners of real properties and all improvements thereon situated in Mandaue City and
Consolacion, Cebu more particularly described as follows: (Emphasis added)
The same claim is restated and repleaded throughout the complaint. Petitioners should know better
than to clutter their appeal with useless arguments such as this.
The other issues petitioners raise contest in essence the finding that the subject properties are conjugal
in nature. Apart from this, the only other issue raised is whether prescription or laches bars Eusebia’s
complaint. We shall resolve first the issue of prescription and laches.
Second Issue: Prescription and Laches
We agree with the Court of Appeals’ observation that while petitioners did raise the issue of
prescription and laches in their Answer,5 they failed to have the same included in the pre-trial order for
consideration during the trial. Now, petitioners wish to raise the issue on appeal by relying on Section 1,
Rule 9 of the Rules of Court, which provides:
Section 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in
a motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter,
that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the
claim.
Petitioners are mistaken.
The determination of issues during the pre-trial conference bars the consideration of other questions,
whether during trial or on appeal.6 Section 1 of Rule 9 covers situations where a defense or objection is
not raised in a motion to dismiss or an answer. What we have before us is the exact opposite. Here,
petitioners in fact raised in their answer the defense of prescription and laches. However, despite raising
the defense of prescription and laches in their answer, petitioners failed to include this defense among
the issues for consideration during the trial. The non-inclusion of this defense in the pre-trial order
barred its consideration during the trial. Clearly, Section 1 of Rule 9 does not apply to the present case.
Pre-trial is primarily intended to insure that the parties properly raise all issues necessary to dispose of a
case.7 The parties must disclose during pre-trial all issues they intend to raise during the trial, except
those involving privileged or impeaching matters.8 Although a pre-trial order is not meant to catalogue
each issue that the parties may take up during the trial, issues not included in the pre-trial order may be
considered only if they are impliedly included in the issues raised or inferable from the issues raised by
necessary implication.9 The basis of the rule is simple. Petitioners are bound by the delimitation of the
issues during the pre-trial because they themselves agreed to the same.10
Petitioners argue that in past instances we have reviewed matters raised for the first time during appeal.
True, but we have done so only by way of exception involving clearly meritorious situations.11 This case
does not fall under any of those exceptions. The fact that the case proceeded to trial, with the
petitioners actively participating without raising the necessary objection, all the more requires that they
be bound by the stipulations they made at the pre-trial.12 Petitioners were well aware that they raised
the defense of prescription and laches since they included it in their answer. However, for reasons of
their own, they did not include this defense in the pre-trial.
Able counsels represented both parties. We see no claim that either counsel erred or was negligent. This
could only mean that petitioners’ counsel chose to waive, or did not consider important, the defense of
prescription and laches. Petitioners are bound by their counsel’s choice. Other than arguing that it is
allowable to raise the issue for the first time on appeal, we have no explanation from petitioners why
they suddenly decided to change their mind. Parties are not allowed to flip-flop. Courts have neither the
time nor the resources to accommodate parties who choose to go to trial haphazardly. Moreover, it
would be grossly unfair to allow petitioners the luxury of changing their mind to the detriment of private
respondents at this late stage. To put it simply, since petitioners did not raise the defense of prescription
and laches during the trial, they cannot now raise this defense for the first time on appeal.13
Third Issue: Whether the Subject Properties Are Conjugal
We proceed to the crux of this petition.
We reiterate the basic rule that a petition for review should only cover questions of law.14 Questions of
fact are not reviewable. The exceptions apply only in the presence of extremely meritorious
circumstances.15 None exists in this case. We note with disfavor that most of the issues raised in this
petition are factual. We caution the petitioners that this practice of deluging the Court with factual
issues in defiance of well-settled rule, in the hope of having them reviewed, is unacceptable.
The only issue proper for resolution is the question of whether the subject properties are conjugal.
Petitioners claim that the subject properties16 are exclusive properties of Nicolas except for Lot No. 152,
which they claim is Pacita’s exclusive property. This issue is easily resolved. The Family Code provisions
on conjugal partnerships govern the property relations between Nicolas and Eusebia even if they were
married before the effectivity of Family Code.17 Article 10518 of the Family Code explicitly mandates that
the Family Code shall apply to conjugal partnerships established before the Family Code without
prejudice to vested rights already acquired under the Civil Code or other laws. Thus, under the Family
Code, if the properties are acquired during the marriage, the presumption is that they are
conjugal.19 The burden of proof is on the party claiming that they are not conjugal.20 This is counter-
balanced by the requirement that the properties must first be proven to have been acquired during the
marriage before they are presumed conjugal.21 Petitioners argue that Eusebia failed to prove this pre-
requisite. We disagree.
The question of whether the subject properties were acquired during the marriage of Nicolas and
Eusebia is a factual issue. Both the trial and appellate courts agreed that the subject properties were in
fact acquired during the marriage of Nicolas and Eusebia.22 The tax declarations23 covering the subject
properties, along with the unrebutted testimony of Eusebia’s witnesses, establish this fact. We give due
deference to factual findings of trial courts,24 especially when affirmed by the appellate court. A reversal
of this finding can only occur if petitioners show sufficient reason for us to doubt its correctness.
Petitioners in the present case have not.
Moreover, on whether Lot No. 152 is conjugal or not, the answer came from petitioners themselves.
Nicolas and Eusebia were married on 7 October 1926. Nicolas and Pacita started cohabiting in 1936.
Eusebia died on 23 November 1996. Pacita and Nicolas were married on 16 December 1996. Petitioners
themselves admit that Lot No. 152 was purchased on 4 October 1957.25 The date of acquisition of Lot
No. 152 is clearly during the marriage of Nicolas and Eusebia.
Since the subject properties, including Lot No. 152, were acquired during the marriage of Nicolas and
Eusebia, the presumption under Article 116 of the Family Code is that all these are conjugal properties
of Nicolas and Eusebia. The burden is on petitioners to prove that the subject properties are not
conjugal. The presumption in Article 116, which subsists "unless the contrary is proved," stands as an
obstacle to any claim the petitioners may have. The burden of proving that a property is exclusive
property of a spouse rests on the party asserting it and the evidence required must be clear and
convincing.26 Petitioners failed to meet this standard.
Petitioners point out that the deed of sale, the transfer certificate of title and the tax declaration of Lot
No. 152 are all in the name of Pacita. Petitioners maintain that this can only mean that Pacita is the real
owner of Lot No. 152. We disagree. The totality of the evidence reveals that this was merely just one of
the several schemes Nicolas employed to deprive Eusebia of their conjugal property. Ironically,
petitioners themselves submitted in evidence a decision rendered by the Regional Trial Court of Cebu,
Branch IV, in Civil Case No. R-960227 involving the acquisition of Lot No. 152.
The decision in Civil Case No. R-9602 stated that Tranquiliana Marababol Remulta testified that the one
who offered to buy the lot from her was none other than Nicolas Retuya.28 Tranquiliana narrated that at
first she refused to sign the deed of sale because the buyer placed in the deed was Pacita and not
Nicolas, her understanding being that the buyer was Nicolas. We find that the trial court in the present
case correctly took into consideration the decision in Civil Case No. R-9602.29 Considering that the
decision in Civil Case No. R-9602 has become final and executory, its findings of fact involving the sale of
Lot No. 152 to Nicolas and Pacita are conclusive and binding on petitioners who introduced in evidence
the decision.
Petitioners also point out that all the other tax declarations presented before the trial court are in the
name of Nicolas alone. Petitioners argue that this serves as proof of Nicolas’ exclusive ownership of
these properties. Petitioners are mistaken. The tax declarations are not sufficient proof to overcome the
presumption under Article 116 of the Family Code. All property acquired by the spouses during the
marriage, regardless in whose name the property is registered, is presumed conjugal unless proved
otherwise.30 The presumption is not rebutted by the mere fact that the certificate of title of the property
or the tax declaration is in the name of one of the spouses only.31 Article 116 of the Family Code
expressly provides that the presumption remains even if the property is "registered in the name of one
or both of the spouses."
In some of the documents that petitioners presented, Nicolas misrepresented his civil status by claiming
that he was single. Petitioners point to this as proof of Nicolas’ desire to exclude Eusebia from the
properties covered by the documents.32 Petitioners further claim that this supports their stand that the
subject properties are not conjugal. This argument is baseless. Whether a property is conjugal or not is
determined by law and not by the will of one of the spouses. No unilateral declaration by one spouse
can change the character of conjugal property. The clear intent of Nicolas in placing his status as single is
to exclude Eusebia from her lawful share in the conjugal property. The law does not allow this.
Petitioners point out that Pacita had the means to buy Lot No. 152. Even if Pacita had the financial
capacity, this does not prove that Pacita bought Lot No. 152 with her own money. To rebut the
presumption that Lot No. 152 is conjugal, petitioners must prove that Pacita used her own money to pay
for Lot No. 152. Petitioners failed to prove this.
Petitioners further argue that since Nicolas and Pacita were already cohabiting when Lot No. 152 was
acquired, the lot cannot be deemed conjugal property of Nicolas and Eusebia. Petitioners keep
belaboring this point in their petition and memorandum.
Petitioners’ argument is flawed.
The cohabitation of a spouse with another person, even for a long period, does not sever the tie of a
subsisting previous marriage.33 Otherwise, the law would be giving a stamp of approval to an act that is
both illegal and immoral. What petitioners fail to grasp is that Nicolas and Pacita’s cohabitation cannot
work to the detriment of Eusebia, the legal spouse. The marriage of Nicolas and Eusebia continued to
exist regardless of the fact that Nicolas was already living with Pacita. Hence, all property acquired from
7 October 1926, the date of Nicolas and Eusebia’s marriage, until 23 November 1996, the date of
Eusebia’s death, are still presumed conjugal. Petitioners have neither claimed nor proved that any of the
subject properties was acquired outside or beyond this period.
Finally, petitioners’ reliance on Article 148 of the Family Code34 is misplaced. A reading of Article 148
readily shows that there must be proof of "actual joint contribution" by both the live-in partners before
the property becomes co-owned by them in proportion to their contribution. The presumption of
equality of contribution arises only in the absence of proof of
their proportionate contributions, subject to the condition that actual joint contribution is proven first.
Simply put, proof of actual contribution by both parties is required, otherwise there is no co-ownership
and no presumption of equal sharing. Petitioners failed to show proof of actual contribution by Pacita in
the acquisition of Lot No. 152. In short, petitioners failed to prove that Pacita bought Lot No. 152 with
her own money, or that she actually contributed her own money to acquire it.
WHEREFORE, we DENY the petition. The Decision of the Court of Appeals dated 31 January 2000 in CA-
G.R. CV No. 46716 is AFFIRMED.
SO ORDERED.
2. Bank of the Philippine Islands v. Posadas, Jr., 56 Phil 215 (1931)
G.R. No. L-34583 October 22, 1931
THE BANK OF THE PHILIPPINE ISLANDS, administrator of the estate of the late Adolphe Oscar
Schuetze, plaintiff-appellant,
vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee.
Araneta, De Joya, Zaragoza and Araneta for appellant.

Attorney-General Jaranilla for appellee.
VILLA-REAL, J.:
The Bank of the Philippine Islands, as administrator of the estate of the deceased Adolphe Oscar
Schuetze, has appealed to this court from the judgment of the Court of First Instance of Manila
absolving the defendant Juan Posadas, Jr., Collector of Internal Revenue, from the complaint filed
against him by said plaintiff bank, and dismissing the complaint with costs.
The appellant has assigned the following alleged errors as committed by the trial court in its judgment,
to wit:
1. The lower court erred in holding that the testimony of Mrs. Schuetze was inefficient to
established the domicile of her husband.
2. The lower court erred in holding that under section 1536 of the Administrative Code the tax
imposed by the defendant is lawful and valid.
3. The lower court erred in not holding that one-half (½) of the proceeds of the policy in
question is community property and that therefore no inheritance tax can be levied, at least on
one-half (½) of the said proceeds.
4. The lower court erred in not declaring that it would be unconstitutional to impose an
inheritance tax upon the insurance policy here in question as it would be a taking of property
without due process of law.
The present complaint seeks to recover from the defendant Juan Posadas, Jr., Collector of Internal
Revenue, the amount of P1,209 paid by the plaintiff under protest, in its capacity of administrator of the
estate of the late Adolphe Oscar Schuetze, as inheritance tax upon the sum of P20,150, which is the
amount of an insurance policy on the deceased's life, wherein his own estate was named the
beneficiary.
At the hearing, in addition to documentary and parol evidence, both parties submitted the following
agreed statement of facts of the court for consideration:
It is hereby stipulated and agreed by and between the parties in the above-entitled action
through their respective undersigned attorneys:
1. That the plaintiff, Rosario Gelano Vda. de Schuetze, window of the late Adolphe Oscar
Schuetze, is of legal age, a native of Manila, Philippine Islands, and is and was at all times
hereinafter mentioned a resident of Germany, and at the time of the death of her husband, the
late Adolphe Oscar Schuetze, she was actually residing and living in Germany;
2. That the Bank of the Philippine Islands, is and was at all times hereinafter mentioned a
banking institution duly organized and existing under and by virtue of the laws of the Philippine
Islands;
3. That on or about August 23, 1928, the herein plaintiff before notary public Salvador Zaragoza,
drew a general power appointing the above-mentioned Bank of the Philippine Islands as her
attorney-in-fact, and among the powers conferred to said attorney-in-fact was the power to
represent her in all legal actions instituted by or against her;
4. That the defendant, of legal age, is and at all times hereinafter mentioned the duly appointed
Collector of Internal Revenue with offices at Manila, Philippine Islands;
5. That the deceased Adolphe Oscar Schuetze came to the Philippine Islands for the first time of
March 31, 1890, and worked in the several German firms as a mere employee and that from the
year 1903 until the year 1918 he was partner in the business of Alfredo Roensch;
6. That from 1903 to 1922 the said Adolphe Oscar Schuetze was in the habit of making various
trips to Europe;
7. That on December 3, 1927, the late Adolphe Oscar Schuetze coming from Java, and with the
intention of going to Bremen, landed in the Philippine Islands where he met his death on
February 2, 1928;
8. That on March 31, 1926, the said Adolphe Oscar Schuetze, while in Germany, executed a will,
in accordance with its law, wherein plaintiff was named his universal heir;
9. That the Bank of the Philippine Islands by order of the Court of First Instance of Manila under
date of May 24, 1928, was appointed administrator of the estate of the deceased Adolphe Oscar
Schuetze;
10. That, according to the testamentary proceedings instituted in the Court of First Instance of
Manila, civil case No. 33089, the deceased at the time of his death was possessed of not only
real property situated in the Philippine Islands, but also personal property consisting of shares of
stock in nineteen (19) domestic corporations;
11. That the fair market value of all the property in the Philippine Islands left by the deceased at
the time of his death in accordance with the inventory submitted to the Court of First Instance
of Manila, civil case No. 33089, was P217,560.38;
12. That the Bank of the Philippine Islands, as administrator of the estate of the deceased
rendered its final account on June 19, 1929, and that said estate was closed on July 16, 1929;
13. That among the personal property of the deceased was found life-insurance policy No.
194538 issued at Manila, Philippine Islands, on January 14, 1913, for the sum of $10,000 by the
Sun Life Assurance Company of Canada, Manila branch, a foreign corporation duly organized
and existing under and by virtue of the laws of Canada, and duly authorized to transact business
in the Philippine Islands;
14. That in the insurance policy the estate of the said Adolphe Oscar Schuetze was named the
beneficiary without any qualification whatsoever;
15. That for five consecutive years, the deceased Adolphe Oscar Schuetze paid the premiums of
said policy to the Sun Life Assurance Company of Canada, Manila branch;
16. That on or about the year 1918, the Sun Life Assurance Company of Canada, Manila branch,
transferred said policy to the Sun Life Assurance Company of Canada, London branch;
17. That due to said transfer the said Adolphe Oscar Schuetze from 1918 to the time of his death
paid the premiums of said policy to the Sun Life Assurance Company of Canada, London Branch;
18. That the sole and only heir of the deceased Adolphe Oscar Schuetze is his widow, the
plaintiff herein;
19. That at the time of the death of the deceased and at all times thereafter including the date
when the said insurance policy was paid, the insurance policy was not in the hands or
possession of the Manila office of the Sun Life Assurance Company of Canada, nor in the
possession of the herein plaintiff, nor in the possession of her attorney-in-fact the Bank of the
Philippine Islands, but the same was in the hands of the Head Office of the Sun Life Assurance
Company of Canada, at Montreal, Canada;
20. That on July 13, 1928, the Bank of the Philippine Islands as administrator of the decedent's
estate received from the Sun Life Assurance Company of Canada, Manila branch, the sum of
P20,150 representing the proceeds of the insurance policy, as shown in the statement of income
and expenses of the estate of the deceased submitted on June 18, 1929, by the administrator to
the Court of First Instance of Manila, civil case No. 33089;
21. That the Bank of the Philippine Islands delivered to the plaintiff herein the said sum of
P20,150;
22. That the herein defendant on or about July 5, 1929, imposed an inheritance tax upon the
transmission of the proceeds of the policy in question in the sum of P20,150 from the estate of
the late Adolphe Oscar Schuetze to the sole heir of the deceased, or the plaintiff herein, which
inheritance tax amounted to the sum of P1,209;
23. That the Bank of the Philippine Islands as administrator of the decedent's estate and as
attorney-in-fact of the herein plaintiff, having been demanded by the herein defendant to pay
inheritance tax amounting to the sum of P1,209, paid to the defendant under protest the above-
mentioned sum;
24. That notwithstanding the various demands made by plaintiff to the defendant, said
defendant has refused and refuses to refund to plaintiff the above mentioned sum of P1,209;
25. That plaintiff reserves the right to adduce evidence as regards the domicile of the deceased,
and so the defendant, the right to present rebuttal evidence;
26. That both plaintiff and defendant submit this stipulation of facts without prejudice to their
right to introduce such evidence, on points not covered by the agreement, which they may
deem proper and necessary to support their respective contentions.
In as much as one of the question raised in the appeal is whether an insurance policy on said Adolphe
Oscar Schuetze's life was, by reason of its ownership, subject to the inheritance tax, it would be well to
decide first whether the amount thereof is paraphernal or community property.
According to the foregoing agreed statement of facts, the estate of Adolphe Oscar Schuetze is the sole
beneficiary named in the life-insurance policy for $10,000, issued by the Sun Life Assurance Company of
Canada on January 14, 1913. During the following five years the insured paid the premiums at the
Manila branch of the company, and in 1918 the policy was transferred to the London branch.
The record shows that the deceased Adolphe Oscar Schuetze married the plaintiff-appellant Rosario
Gelano on January 16, 1914.
With the exception of the premium for the first year covering the period from January 14, 1913 to
January 14, 1914, all the money used for paying the premiums, i. e., from the second year, or January
16, 1914, or when the deceased Adolphe Oscar Schuetze married the plaintiff-appellant Rosario Gelano,
until his death on February 2, 1929, is conjugal property inasmuch as it does not appear to have
exclusively belonged to him or to his wife (art. 1407, Civil Code). As the sum of P20,150 here in
controversy is a product of such premium it must also be deemed community property, because it was
acquired for a valuable consideration, during said Adolphe Oscar Schuetze's marriage with Rosario
Gelano at the expense of the common fund (art. 1401, No. 1, Civil Code), except for the small part
corresponding to the first premium paid with the deceased's own money.
In his Commentaries on the Civil Code, volume 9, page 589, second edition, Manresa treats of life
insurance in the following terms, to wit:
The amount of the policy represents the premiums to be paid, and the right to it arises the
moment the contract is perfected, for at the moment the power of disposing of it may be
exercised, and if death occurs payment may be demanded. It is therefore something acquired
for a valuable consideration during the marriage, though the period of its fulfillment, depend
upon the death of one of the spouses, which terminates the partnership. So considered, the
question may be said to be decided by articles 1396 and 1401: if the premiums are paid with the
exclusive property of husband or wife, the policy belongs to the owner; if with conjugal
property, or if the money cannot be proved as coming from one or the other of the spouses, the
policy is community property.
The Supreme Court of Texas, United States, in the case of Martin vs. Moran (11 Tex. Civ. A., 509) laid
down the following doctrine:
COMMUNITY PROPERTY — LIFE INSURANCE POLICY. — A husband took out an endowment life
insurance policy on his life, payable "as directed by will." He paid the premiums thereon out of
community funds, and by his will made the proceeds of the policy payable to his own estate.
Held, that the proceeds were community estate, one-half of which belonged to the wife.
In In re Stan's Estate, Myr. Prob. (Cal.), 5, the Supreme Court of California laid down the following
doctrine:
A testator, after marriage, took out an insurance policy, on which he paid the premiums from his
salary. Held that the insurance money was community property, to one-half of which, the wife
was entitled as survivor.
In In re Webb's Estate, Myr. Prob. (Cal.), 93, the same court laid down the following doctrine:
A decedent paid the first third of the amount of the premiums on his life-insurance policy out of
his earnings before marriage, and the remainder from his earnings received after marriage.
Held, that one-third of the policy belonged to his separate estate, and the remainder to the
community property.
Thus both according to our Civil Code and to the ruling of those North American States where the
Spanish Civil Code once governed, the proceeds of a life-insurance policy whereon the premiums were
paid with conjugal money, belong to the conjugal partnership.
The appellee alleges that it is a fundamental principle that a life-insurance policy belongs exclusively to
the beneficiary upon the death of the person insured, and that in the present case, as the late Adolphe
Oscar Schuetze named his own estate as the sole beneficiary of the insurance on his life, upon his death
the latter became the sole owner of the proceeds, which therefore became subject to the inheritance
tax, citing Del Val vs. Del Val (29 Phil., 534), where the doctrine was laid down that an heir appointed
beneficiary to a life-insurance policy taken out by the deceased, becomes the absolute owner of the
proceeds of such policy upon the death of the insured.
The estate of a deceased person cannot be placed on the same footing as an individual heir. The
proceeds of a life-insurance policy payable to the estate of the insured passed to the executor or
administrator of such estate, and forms part of its assets (37 Corpus Juris, 565, sec. 322); whereas the
proceeds of a life-insurance policy payable to an heir of the insured as beneficiary belongs exclusively to
said heir and does not form part of the deceased's estate subject to administrator. (Del Val vs. Del
Val, supra; 37 Corpus Juris, 566, sec. 323, and articles 419 and 428 of the Code of Commerce.)
Just as an individual beneficiary of a life-insurance policy taken out by a married person becomes the
exclusive owner of the proceeds upon the death of the insured even if the premiums were paid by the
conjugal partnership, so, it is argued, where the beneficiary named is the estate of the deceased whose
life is insured, the proceeds of the policy become a part of said estate upon the death of the insured
even if the premiums have been paid with conjugal funds.
In a conjugal partnership the husband is the manager, empowered to alienate the partnership property
without the wife's consent (art. 1413, Civil Code), a third person, therefore, named beneficiary in a life-
insurance policy becomes the absolute owner of its proceeds upon the death of the insured even if the
premiums should have been paid with money belonging to the community property. When a married
man has his life insured and names his own estate after death, beneficiary, he makes no alienation of
the proceeds of conjugal funds to a third person, but appropriates them himself, adding them to the
assets of his estate, in contravention of the provisions of article 1401, paragraph 1, of the Civil Code
cited above, which provides that "To the conjugal partnership belongs" (1) Property acquired for a
valuable consideration during the marriage at the expense of the common fund, whether the acquisition
is made for the partnership or for one of the spouses only." Furthermore, such appropriation is a fraud
practised upon the wife, which cannot be allowed to prejudice her, according to article 1413, paragraph
2, of said Code. Although the husband is the manager of the conjugal partnership, he cannot of his own
free will convert the partnership property into his own exclusive property.
As all the premiums on the life-insurance policy taken out by the late Adolphe Oscar Schuetze, were paid
out of the conjugal funds, with the exceptions of the first, the proceeds of the policy, excluding the
proportional part corresponding to the first premium, constitute community property, notwithstanding
the fact that the policy was made payable to the deceased's estate, so that one-half of said proceeds
belongs to the estate, and the other half to the deceased's widow, the plaintiff-appellant Rosario Gelano
Vda. de Schuetze.
The second point to decide in this appeal is whether the Collector of Internal Revenue has authority,
under the law, to collect the inheritance tax upon one-half of the life-insurance policy taken out by the
late Adolphe Oscar Schuetze, which belongs to him and is made payable to his estate.
According to the agreed statement of facts mentioned above, the plaintiff-appellant, the Bank of the
Philippine Islands, was appointed administrator of the late Adolphe Oscar Schuetze's testamentary
estate by an order dated March 24, 1928, entered by the Court of First Instance of Manila. On July 13,
1928, the Sun Life Assurance Company of Canada, whose main office is in Montreal, Canada, paid
Rosario Gelano Vda. de Schuetze upon her arrival at Manila, the sum of P20,150, which was the amount
of the insurance policy on the life of said deceased, payable to the latter's estate. On the same date
Rosario Gelano Vda. de Schuetze delivered the money to said Bank of the Philippine Islands, as
administrator of the deceased's estate, which entered it in the inventory of the testamentary estate,
and then returned the money to said widow.
Section 1536 of the Administrative Code, as amended by section 10 of Act No. 2835 and section 1 of Act
No. 3031, contains the following relevant provision:
SEC. 1536. Conditions and rate of taxation. — Every transmission by virtue of inheritance,
devise, bequest, gift mortis causa or advance in anticipation of inheritance, devise, or bequest of
real property located in the Philippine Islands and real rights in such property; of any franchise
which must be exercised in the Philippine Islands; of any shares, obligations, or bonds issued by
any corporation or sociedad anonima organized or constituted in the Philippine Islands in
accordance with its laws; of any shares or rights in any partnership, business or industry
established in the Philippine Islands or of any personal property located in the Philippine Islands
shall be subject to the following tax:
xxx xxx xxx
In as much as the proceeds of the insurance policy on the life of the late Adolphe Oscar Schuetze were
paid to the Bank of the Philippine Islands, as administrator of the deceased's estate, for management
and partition, and as such proceeds were turned over to the sole and universal testamentary heiress
Rosario Gelano Vda. de Schuetze, the plaintiff-appellant, here in Manila, the situs of said proceeds is the
Philippine Islands.
In his work "The Law of Taxation," Cooley enunciates the general rule governing the levying of taxes
upon tangible personal property, in the following words:
GENERAL RULE. — The suits of tangible personal property, for purposes of taxation may be
where the owner is domiciled but is not necessarily so. Unlike intangible personal property, it
may acquire a taxation situs in a state other than the one where the owner is domiciled, merely
because it is located there. Its taxable situs is where it is more or less permanently located,
regardless of the domicile of the owner. It is well settled that the state where it is more or less
permanently located has the power to tax it although the owner resides out of the state,
regardless of whether it has been taxed for the same period at the domicile of the owner,
provided there is statutory authority for taxing such property. It is equally well settled that the
state where the owner is domiciled has no power to tax it where the property has acquired an
actual situs in another state by reason of its more or less permanent location in that state. ... (2
Cooley, The Law of Taxation, 4th ed., p. 975, par. 451.)
With reference to the meaning of the words "permanent" and "in transit," he has the following to say:
PERMANENCY OF LOCATION; PROPERTY IN TRANSIT. — In order to acquire a situs in a state or

taxing district so as to be taxable in the state or district regardless of the domicile of the owner
and not taxable in another state or district at the domicile of the owner, tangible personal
property must be more or less permanently located in the state or district. In other words, the
situs of tangible personal property is where it is more or less permanently located rather than
where it is merely in transit or temporarily and for no considerable length of time. If tangible
personal property is more or less permanently located in a state other than the one where the
owner is domiciled, it is not taxable in the latter state but is taxable in the state where it is
located. If tangible personal property belonging to one domiciled in one state is in another state
merely in transitu or for a short time, it is taxable in the former state, and is not taxable in the
state where it is for the time being. . . . .
Property merely in transit through a state ordinarily is not taxable there. Transit begins when an
article is committed to a carrier for transportation to the state of its destination, or started on
its ultimate passage. Transit ends when the goods arrive at their destination. But intermediate
these points questions may arise as to when a temporary stop in transit is such as to make the
property taxable at the place of stoppage. Whether the property is taxable in such a case usually
depends on the length of time and the purpose of the interruption of transit. . . . .
. . . It has been held that property of a construction company, used in construction of a railroad,
acquires a situs at the place where used for an indefinite period. So tangible personal property
in the state for the purpose of undergoing a partial finishing process is not to be regarded as in
the course of transit nor as in the state for a mere temporary purpose. (2 Cooley, The Law of
Taxation, 4th ed., pp. 982, 983 and 988, par. 452.)
If the proceeds of the life-insurance policy taken out by the late Adolphe Oscar Schuetze and made
payable to his estate, were delivered to the Bank of the Philippine Islands for administration and
distribution, they were not in transit but were more or less permanently located in the Philippine
Islands, according to the foregoing rules. If this be so, half of the proceeds which is community property,
belongs to the estate of the deceased and is subject to the inheritance tax, in accordance with the legal
provision quoted above, irrespective of whether or not the late Adolphe Oscar Schuetze was domiciled
in the Philippine Islands at the time of his death.
By virtue of the foregoing, we are of opinion and so hold: (1) That the proceeds of a life-insurance policy
payable to the insured's estate, on which the premiums were paid by the conjugal partnership,
constitute community property, and belong one-half to the husband and the other half to the wife,
exclusively; (2) that if the premiums were paid partly with paraphernal and partly conjugal funds, the
proceeds are likewise in like proportion paraphernal in part and conjugal in part; and (3) that the
proceeds of a life-insurance policy payable to the insured's estate as the beneficiary, if delivered to the
testamentary administrator of the former as part of the assets of said estate under probate
administration, are subject to the inheritance tax according to the law on the matter, if they belong to
the assured exclusively, and it is immaterial that the insured was domiciled in these Islands or
outside.1awphil.net
Wherefore, the judgment appealed from is reversed, and the defendant is ordered to return to the
plaintiff the one-half of the tax collected upon the amount of P20,150, being the proceeds of the
insurance policy on the life of the late Adolphe Oscar Schuetze, after deducting the proportional part
corresponding to the first premium, without special pronouncement of costs. So ordered.
3. Jocson v. Court of Appeals, G.R. No. L-55322, February 16, 1989
G.R. No. L-55322 February 16, 1989
MOISES JOCSON, petitioner,

vs.
HON. COURT OF APPEALS, AGUSTINA JOCSON-VASQUEZ, ERNESTO VASQUEZ, respondents.
Dolorfino and Dominguez Law Officers for petitioner.
Gabriel G. Mascardo for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court of the decision of the Court
of Appeals in CA- G.R. No. 63474, promulgated on April 30, 1980, entitled "MOISES JOCSON, plaintiff-
appellee, versus AGUSTINA JOCSON-VASQUEZ and ERNESTO VASQUEZ, defendant-appellants,"
upholding the validity of three (3) documents questioned by Moises Jocson, in total reversal of the
decision of the then Court of First Instance of Cavite, Branch I, which declared them as null and void; and
of its resolution, dated September 30, 1980, denying therein appellee's motion for reconsideration.
Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the only surviving offsprings of
the spouses Emilio Jocson and Alejandra Poblete, while respondent Ernesto Vasquez is the husband of
Agustina. Alejandra Poblete predeceased her husband without her intestate estate being settled.
Subsequently, Emilio Jocson also died intestate on April 1, 1972.
As adverted to above, the present controversy concerns the validity of three (3) documents executed by
Emilio Jocson during his lifetime. These documents purportedly conveyed, by sale, to Agustina Jocson-
Vasquez what apparently covers almost all of his properties, including his one-third (1/3) share in the
estate of his wife. Petitioner Moises Jocson assails these documents and prays that they be declared null
and void and the properties subject matter therein be partitioned between him and Agustina as the only
heirs of their deceased parents.
The documents, which were presented as evidence not by Moises Jocson, as the party assailing its
validity, but rather by herein respondents, are the following:
1) "Kasulatan ng Bilihan ng Lupa," marked as Exhibit 3 (pp. 12-13, Records) for the
defendant in the court a quo, dated July 27, 1968. By this document Emilio Jocson sold
to Agustina Jocson-Vasquez six (6) parcels of land, all located at Naic, Cavite, for the sum
of ten thousand P10,000.00 pesos. On the same document Emilio Jocson acknowledged
receipt of the purchase price, thus:
Na ngayon, alang-alang sa halagang SAMPUNG LIBONG PISO (P10,000) salaping Pilipino

na aking tinanggap ng buong kasiyahan loob at ang pagkakatanggap ay aking
hayagang inaamin sa pamamagitan ng kasulatang ito, sa aking anak na si Agustina
Jocson, na may sapat na gulang, mamamayang Pilipino, asawa ni Ernesto Vasquez, at
naninirahan sa Poblacion, Naic, Cavite, ay aking ipinagbile ng lubusan at kagyat at
walang ano mang pasubali ang nabanggit na anim na pirasong lupa na nasa unang
dahon ng dokumentong ito, sa nabanggit na Agustina Jocson, at sa kaniyang
tagapagmana o makakahalili at gayon din nais kong banggitin na kahit na may
kamurahan ang ginawa kong pagbibile ay dahilan sa ang nakabile ay aking anak na sa
akin at mapaglingkod, madamayin at ma-alalahanin, na tulad din ng isa ko pang anak
na lalaki. Ang kuartang tinanggap ko na P10,000.00, ay gagamitin ko sa aking katandaan
at mga huling araw at sa aking mga ibang mahahalagang pangangailangan. [Emphasis
supplied]
Na nais ko ring banggitin na ang ginawa kong ito ay hindi labag sa ano mang batas o
kautusan, sapagkat ang aking pinagbile ay akin at nasa aking pangalan. Ang mga lupang
nasa pangalan ng aking nasirang asawa ay hindi ko ginagalaw ni pinakikialaman at iyon
ay dapat na hatiin ng dalawa kong anak alinsunod sa umiiral na batas (p. 13, Records.)
2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968, marked as Exhibit 4 (p. 14,

Records). On the face of this document, Emilio Jocson purportedly sold to Agustina
Jocson-Vasquez, for the sum of FIVE THOUSAND (P5,000.00) PESOS, two rice mills and a
camarin (camalig) located at Naic, Cavite. As in the first document, Moises Jocson
acknowledged receipt of the purchase price:
'Na alang-alang sa halagang LIMANG LIBONG PISO (P5,000.00) salaping Pilipino na aking
tinanggap ng buong kasiyahan loob sa aking anak na Agustina Jocson .... Na ang
halagang ibinayad sa akin ay may kamurahan ng kaunti ngunit dahil sa malaking
pagtingin ko sa kaniya ... kaya at pinagbile ko sa kaniya ang mga nabanggit na pagaari
kahit na hindi malaking halaga ... (p. 14, Records).
3) Lastly, the "Deed of Extrajudicial Partition and Adjudication with Sale, "dated March
9, 1969, marked as Exhibit 2 (p. 10-11, Records), whereby Emilio Jocson and Agustina
Jocson-Vasquez, without the participation and intervention of Moises Jocson,
extrajudicially partitioned the unsettled estate of Alejandra Poblete, dividing the same
into three parts, one-third (1/3) each for the heirs of Alejandra Poblete, namely: Emilio
Jocson, Agustina Jocson-Vasquez and Moises Jocson. By the same instrument, Emilio
sold his one- third (1/3) share to Agustin for the sum of EIGHT THOUSAND (P8,000.00)
PESOS. As in the preceding documents, Emilio Jocson acknowledged receipt of the
purchase price:
Now for and in consideration of the sum of only eight thousand (P8,000.00) pesos,
which I, the herein Emilio Jocson had received from my daughter Agustina Jocson, do
hereby sell, cede, convey and transfer, unto the said Agustina Jocson, her heirs and
assigns, administrators and successors in interests, in the nature of absolute and
irrevocable sale, all my rights, interest, shares and participation, which is equivalent to
one third (1/3) share in the properties herein mentioned and described the one third
being adjudicated unto Agustina Jocson and the other third (1/3) portion being the
share of Moises Jocson. (p. 11, Records).
These documents were executed before a notary public. Exhibits 3 and 4 were registered with the Office
of the Register of Deeds of Cavite on July 29, 1968 and the transfer certificates of title covering the
properties therein in the name of Emilio Jocson, married to Alejandra Poblete," were cancelled and new
certificates of title were issued in the name of Agustina Jocson-Vasquez. Exhibit 2 was not registered
with the Office of the Register of Deeds.
Herein petitioner filed his original complaint (Record on Appeal, p. 27, Rollo) on June 20,1973 with the
then Court of First Instance of Naic, Cavite (docketed as Civil Case No. TM- 531), and which was twice
amended. In his Second Amended Complaint (pp. 47-58, Record on Appeal), herein petitioner assailed
the above documents, as aforementioned, for being null and void.
It is necessary to partly quote the allegation of petitioner in his complaint for the reason that the nature
of his causes of action is at issue, thus:
8. [With regard the first document, that] the defendants, through fraud, deceit, undue
pressure and influence and other illegal machinations, were able to induce, led, and
procured their father ... to sign [the] contract of sale ..., for the simulated price of
P10,000.00, which is a consideration that is shocking to the conscience of ordinary man
and despite the fact that said defendants have no work or livelihood of their own ...;
that the sale is null and void, also, because it is fictitious, simulated and fabricated
contract x x x (pp. 52-53, Record on Appeal). [Emphasis supplied]
xxx xxx xxx
12. [With regards the second and third document, that they] are null and void because
the consent of the father, Emilio Jocson, was obtained with fraud, deceit, undue
pressure, misrepresentation and unlawful machinations and trickeries committed by the
defendant on him; and that the said contracts are simulated, fabricated and
fictitious, having been made deliberately to exclude the plaintiff from participating and
with the dishonest and selfish motive on the part of the defendants to defraud him of
his legitimate share on said properties [subject matter thereof]; and that without any
other business or employment or any other source of income, defendants who were just
employed in the management and administration of the business of their parents, would
not have the sufficient and ample means to purchase the said properties except by
getting the earnings of the business or by simulated consideration ... (pp. 54-55, Record
on Appeal). [Emphasis supplied]
Petitioner explained that there could be no real sale between a father and daughter who are living
under the same roof, especially so when the father has no need of money as the properties supposedly
sold were all income-producing. Further, petitioner claimed that the properties mentioned in Exhibits 3
and 4 are the unliquidated conjugal properties of Emilio Jocson and Alejandra Poblete which the former,
therefore, cannot validly sell (pp. 53, 57, Record on Appeal). As far as Exhibit 2 is concerned, petitioner
questions not the extrajudicial partition but only the sale by his father to Agustina of the former's 1/3
share (p. 13, Rollo).
The trial court sustained the foregoing contentions of petitioner (pp. 59-81, Record on Appeal). It
declared that the considerations mentioned in the documents were merely simulated and fictitious
because: 1) there was no showing that Agustina Jocson-Vasquez paid for the properties; 2) the prices
were grossly inadequate which is tantamount to lack of consideration at all; and 3) the improbability of
the sale between Emilio Jocson and Agustina Jocson-Vasquez, taking into consideration the
circumstances obtaining between the parties; and that the real intention of the parties were donations
designed to exclude Moises Jocson from participating in the estate of his parents. It further declared the
properties mentioned in Exhibits 3 and 4 as conjugal properties of Emilio Jocson and Alejandra Poblete,
because they were registered in the name of "Emilio Jocson, married to Alejandra Poblete" and ordered
that the properties subject matter of all the documents be registered in the name of herein petitioners
and private respondents.
On appeal, the Court of Appeals in CA-G.R. No. 63474-R rendered a decision (pp. 29-42, Rollo) and
reversed that of the trial court's and ruled that:
1. That insofar as Exhibits 3 and 4 are concerned the appellee's complaint for
annulment, which is indisputably based on fraud, and undue influence, is now barred by
prescription, pursuant to the settled rule that an action for annulment of a contract
based on fraud must be filed within four (4) years, from the discovery of the fraud, ...
which in legal contemplation is deemed to be the date of the registration of said
document with the Register of Deeds ... and the records admittedly show that both
Exhibits 3 and 4, were all registered on July 29, 1968, while on the other hand, the
appellee's complaint was filed on June 20, 1973, clearly beyond the aforesaid four-year
prescriptive period provided by law;
2. That the aforesaid contracts, Exhibits 2, 3, and 4, are decisively not simulated or
fictitious contracts, since Emilio Jocson actually and really intended them to be effective
and binding against him, as to divest him of the full dominion and ownership over the
properties subject of said assailed contracts, as in fact all his titles over the same were
all cancelled and new ones issued to appellant Agustina Jocson-Vasquez ...;
3. That in regard to Exhibit 2, the same is valid and subsisting, and the partition with sale
therein made by and between Emilio Jocson and Agustina Jocson-Vasquez, affecting the
2/3 portion of the subject properties described therein have all been made in
accordance with Article 996 of the New Civil Code on intestate succession, and the
appellee's (herein petitioner) remaining 1/3 has not been prejudiced (pp. 41-42, Rollo).
In this petition for review, Moises Jocson raised the following assignments of errors:
1. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE SUIT
FOR THE ANNULMENT OF CONTRACTS FILED BY PETITIONERS WITH THE TRIAL COURT IS
"BASED ON FRAUD" AND NOT ON ITS INEXISTENCE AND NULLITY BECAUSE OF IT'S BEING
SIMULATED OR FICTITIOUS OR WHOSE CAUSE IS CONTRARY TO LAW, MORALS AND
GOOD CUSTOMS?
II. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE
COMPLAINT FILED BY PETITIONER IN THE TRIAL COURT IS BARRED BY PRESCRIPTION?
III. HAS THE RESPONDENT COURT OF APPEALS ERRED IN NOT DECLARING AS INEXISTENT
AND NULL AND VOID THE CONTRACTS IN QUESTION AND IN REVERSING THE
DECLARING DECISION OF THE TRIAL COURT? (p. 2, Rollo)
I.
The first and second assignments of errors are related and shall be jointly discussed.
According to the Court of Appeals, herein petitioner's causes of action were based on fraud. Under
Article 1330 of the Civil Code, a contract tainted by vitiated consent, as when consent was obtained
through fraud, is voidable; and the action for annulment must be brought within four years from the
time of the discovery of the fraud (Article 1391, par. 4, Civil Code), otherwise the contract may no longer
be contested. Under present jurisprudence, discovery of fraud is deemed to have taken place at the
time the convenant was registered with the Register of Deeds (Gerona vs. De Guzman, No. L-19060, May
29,1964, 11 SCRA 153). Since Exhibits 3 and 4 were registered on July 29, 1968 but Moises Jocson filed
his complaint only on June 20, 1973, the Court of Appeals ruled that insofar as these documents were
concerned, petitioner's "annulment suit" had prescribed.
If fraud were the only ground relied upon by Moises Jocson in assailing the questioned documents, We
would have sustained the above pronouncement. But it is not so. As pointed out by petitioner, he
further assailed the deeds of conveyance on the ground that they were without consideration since the
amounts appearing thereon as paid were in fact merely simulated.
According to Article 1352 of the Civil Code, contracts without cause produce no effect whatsoever. A
contract of sale with a simulated price is void (Article 1471; also Article 1409 [3]]), and an action for the
declaration of its nullity does not prescribe (Article 1410, Civil Code; See also, Castillo v. Galvan, No. L-
27841, October 20, l978, 85 SCRA 526). Moises Jocsons saction, therefore, being for the judicial
declaration of nullity of Exhibits 3 and 4 on the ground of simulated price, is imprescriptible.
II.
For petitioner, however, the above discussion may be purely academic. The burden of proof in showing
that contracts lack consideration rests on he who alleged it. The degree of proof becomes more
stringent where the documents themselves show that the vendor acknowledged receipt of the price,
and more so where the documents were notarized, as in the case at bar. Upon consideration of the
records of this case, We are of the opinion that petitioner has not sufficiently proven that the
questioned documents are without consideration.
Firstly, Moises Jocson's claim that Agustina Jocson-Vasquez had no other source of income other than
what she derives from helping in the management of the family business (ricefields and ricemills), and
which was insufficient to pay for the purchase price, was contradicted by his own witness, Isaac Bagnas,
who testified that Agustina and her husband were engaged in the buy and sell of palay and rice (p. 10,
t.s.n., January 14, 1975). Amazingly, petitioner himself and his wife testified that they did not know
whether or not Agustina was involved in some other business (p. 40, t.s.n., July 30, 1974; p. 36, t.s.n.,
May 24, 1974).
On the other hand, Agustina testified that she was engaged in the business of buying and selling palay
and rice even before her marriage to Ernesto Vasquez sometime in 1948 and continued doing so
thereafter (p. 4, t.s.n., March 15, 1976). Considering the foregoing and the presumption that a contract
is with a consideration (Article 1354, Civil Code), it is clear that petitioner miserably failed to prove his
allegation.
Secondly, neither may the contract be declared void because of alleged inadequacy of price. To begin
with, there was no showing that the prices were grossly inadequate. In fact, the total purchase price
paid by Agustina Jocson-Vasquez is above the total assessed value of the properties alleged by
petitioner. In his Second Amended Complaint, petitioner alleged that the total assessed value of the
properties mentioned in Exhibit 3 was P8,920; Exhibit 4, P3,500; and Exhibit 2, P 24,840, while the
purchase price paid was P10,000, P5,000, and P8,000, respectively, the latter for the 1/3 share of Emilio
Jocson from the paraphernal properties of his wife, Alejandra Poblete. And any difference between the
market value and the purchase price, which as admitted by Emilio Jocson was only slight, may not be so
shocking considering that the sales were effected by a father to her daughter in which case filial love
must be taken into consideration (Alsua-Betts vs. Court of Appeals, No. L-46430-31, April 30, 1979, 92
SCRA 332).
Further, gross inadequacy of 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
(Article 1470, Civil Code) and there is nothing in the records at all to indicate any defect in Emilio
Jocson's consent.
Thirdly, any discussion as to the improbability of a sale between a father and his daughter is purely
speculative which has no relevance to a contract where all the essential requisites of consent, object
and cause are clearly present.
There is another ground relied upon by petitioner in assailing Exhibits 3 and 4, that the properties
subject matter therein are conjugal properties of Emilio Jocson and Alejandra Poblete. It is the position
of petitioner that since the properties sold to Agustina Jocson-Vasquez under Exhibit 3 were registered
in the name of "Emilio Jocson, married to Alejandra Poblete," the certificates of title he presented as
evidence (Exhibits "E', to "J', pp. 4-9, Records) were enough proof to show that the properties covered
therein were acquired during the marriage of their parents, and, therefore, under Article 160 of the Civil
Code, presumed to be conjugal properties.
Article 160 of the Civil Code provides that:
All property of the marriage is presumed to belong to the conjugal partnership, unless it
be proved that it pertains exclusively to the husband or to the wife.
In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23 SCRA 637, 644, We held that:
Anent their claim that the shares in question are conjugal assets, the spouses Perez
adduced not a modicum of evidence, although they repeatedly invoked article 160 of
the New Civil Code which provides that ... . As interpreted by this Court, the party who
invokes this presumption must first prove that the property in controversy was acquired
during the marriage. In other words, proof of acquisition during the coverture is a
condition sine qua non for the operation of the presumption in favor of conjugal
ownership. Thus in Camia de Reyes vs. Reyes de Ilano [62 Phil. 629, 639], it was held that
"according to law and jurisprudence, it is sufficient to prove that the Property was
acquired during the marriage in order that the same may be deemed conjugal
property." In the recent case of Maramba vs. Lozano, et. al. [L-21533, June 29, 1967, 20
SCRA 474], this Court, thru Mr. Justice Makalintal, reiterated that "the presumption
under Article 160 of the Civil Code refers to property acquired during the marriage," and
then concluded that since "there is no showing as to when the property in question was
acquired...the fact that the title is in the wife's name alone is determinative." Similarly,
in the case at bar, since there is no evidence as to when the shares of stock were
acquired, the fact that they are registered in the name of the husband alone is an
indication that the shares belong exclusively to said spouse.'
This pronouncement was reiterated in the case of Ponce de Leon vs. Rehabilitation Finance Corporation,
No. L-24571, December 18, 1970, 36 SCRA 289, and later in Torela vs. Torela, No. 1,27843, October 11,
1979, 93 SCRA 391.
It is thus clear that before Moises Jocson may validly invoke the presumption under Article 160 he must
first present proof that the disputed properties were acquired during the marriage of Emilio Jocson and
Alejandra Poblete. The certificates of title, however, upon which petitioner rests his claim is insufficient.
The fact that the properties were registered in the name of "Emilio Jocson, married to Alejandra
Poblete" is no proof that the properties were acquired during the spouses' coverture. Acquisition of title
and registration thereof are two different acts. It is well settled that registration does not confer title but
merely confirms one already existing (See Torela vs. Torela, supra). It may be that the properties under
dispute were acquired by Emilio Jocson when he was still a bachelor but were registered only after his
marriage to Alejandra Poblete, which explains why he was described in the certificates of title as
married to the latter.
Contrary to petitioner's position, the certificates of title show, on their face, that the properties were
exclusively Emilio Jocson's, the registered owner. This is so because the words "married to' preceding
"Alejandra Poblete' are merely descriptive of the civil status of Emilio Jocson Litam v. Rivera, 100 Phil.
354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143; Magallon v. Montejo, G.R. No. L-73733,
December 16, 1986, 146 SCRA 282). In other words, the import from the certificates of title is that Emilio
Jocson is the owner of the properties, the same having been registered in his name alone, and that he is
married to Alejandra Poblete.
We are not unmindful that in numerous cases We consistently held that registration of the property in
the name of only one spouse does not negate the possibility of it being conjugal (See Bucoy vs. Paulino,
No. L-25775, April 26, 1968, 23 SCRA 248). But this ruling is not inconsistent with the above
pronouncement for in those cases there was proof that the properties, though registered in the name of
only one spouse, were indeed conjugal properties, or that they have been acquired during the marriage
of the spouses, and therefore, presumed conjugal, without the adverse party having presented proof to
rebut the presumption (See Mendoza vs- Reyes, No. L-31618, August 17, 1983, 124 SCRA 154).
In the instant case, had petitioner, Moises Jocson, presented sufficient proof to show that the disputed
properties were acquired during his parents' coverture. We would have ruled that the properties,
though registered in the name of Emilio Jocson alone, are conjugal properties in view of the
presumption under Article 160. There being no such proof, the condition sine qua non for the
application of the presumption does not exist. Necessarily, We rule that the properties under Exhibit 3
are the exclusive properties of Emilio Jocson.
There being no showing also that the camarin and the two ricemills, which are the subject of Exhibit 4,
were conjugal properties of the spouses Emilio Jocson and Alejandra Poblete, they should be
considered, likewise, as the exclusive properties of Emilio Jocson, the burden of proof being on
petitioner.
ACCORDINGLY, the petition is DISMISSED and the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
4. Jovellanos v. Court of Appeals, G.R. No. 100728, June 18, 1992
G.R. No. 100728 June 18, 1992
WILHELMINA JOVELLANOS, MERCY JOVELLANOS-MARTINEZ and JOSE HERMILO

JOVELLANOS, petitioners,
vs.
THE COURT OF APPEALS, and ANNETTE H. JOVELLANOS, for and in her behalf, and in representation of
her two minor daughters as natural guardian, ANA MARIA and MA. JENNETTE, both surnamed
JOVELLANOS, respondents.
REGALADO, J.:
This petition for review on certiorari seeks to reverse and set aside the decision 1 promulgated by
respondent court on June 26, 1991 in CA-G.R. CV No. 27556 affirming with some modifications the
earlier decision of the Regional Trial Court of Quezon City, Branch 85, which, inter alia, awarded one-half
(1/2) of the property subject of Civil Case No. Q-52058 therein to private respondent Annette H.
Jovellanos and one-sixth (1/6) each of the other half of said property to the three private respondents.
all as pro indiviso owners of their aforesaid respective portions.
As found by respondent court, 2 on September 2, 1955, Daniel Jovellanos and Philippine American Life
Insurance Company (Philamlife) entered into a contract denominated as a lease and conditional sale
agreement over Lot 8, Block 3 of the latter's Quezon City Community Development Project, including a
bungalow thereon, located at and known as No. 55 South Maya Drive, Philamlife Homes, Quezon City.
At that time, Daniel Jovellanos was married to Leonor Dizon, with whom he had three children, the
petitioners herein. Leonor Dizon died on January 2, 1959. On May 30, 1967, Daniel married private
respondent Annette H. Jovellanos with whom he begot two children, her herein co-respondents.
On December 18, 1971, petitioner Mercy Jovellanos married Gil Martinez and, at the behest of Daniel
Jovellanos, they built a house on the back portion of the premises. On January 8, 1975, with the lease
amounts having been paid, Philamlife executed to Daniel Jovellanos a deed of absolute sale and, on the
next day, the latter donated to herein petitioners all his rights, title and interests over the lot and
bungalow thereon. On September 8, 1985, Daniel Jovellanos died and his death spawned the present
controversy, resulting in the filing by private respondents of Civil Case No. Q-52058 in the court below.
Private respondent Annette H. Jovellanos claimed in the lower court that the aforestated property was
acquired by her deceased husband while their marriage was still subsisting, by virtue of the deed of
absolute sale dated January 8, 1975 executed by Philamlife in favor of her husband, Daniel Jovellanos.
who was issued Transfer Certificate of Title No. 212286 of the Register of Deeds of Quezon City and
which forms part of the conjugal partnership of the second marriage. Petitioners, on the other hand,
contend that the property, specifically the lot and the bungalow erected thereon, as well as the
beneficial and equitable title thereto, were acquired by their parents during the existence of the first
marriage under their lease and conditional sale agreement with Philamlife of September 2, 1955.
On December 28, 1989, the court a quo rendered judgment 3 with the following dispositions:
WHEREFORE, premises considered, judgment is hereby rendered as follows
1. Ordering the liquidation of the partnership of the second marriage and directing the
reimbursement of the amount advanced by the partnership of the first marriage as well
(as) by the late Daniel Jovellanos and the defendants spouses Gil and Mercia * J.
Martinez in the acquisition of the lot and bungalow described in the Lease and
Conditional Sale Agreement (Exhs. D and 1);
2. After such liquidation and reimbursement, declaring the plaintiff Annette Jovellanos
as pro-indiviso owner of 1/2 of the property described in TCT No. 212268 (sic) and the
bungalow erected therein;
3. Declaring the plaintiff Annette Jovellanos, as well as the minors Anna Marie and Ma.
Jeannette (sic) both surnamed Jovellanos and the herein defendants, as
owners pro indiviso of 1/6 each of the other half of said property;
4. Declaring the defendants spouses Gil and Mercia Martinez as exclusive owners of the
two-storey house erected on the property at the back of the said bungalow, with all the
rights vested in them as builders in good faith under Article 448 of the New Civil Code;
5. Ordering the parties to make a partition among themselves by proper instruments of

conveyances, subject to the confirmation of this Court, and if they are unable to agree
upon the partition, ordering that the partition should be made by not more than three
(3) competent and disinterested persons as commissioners who shall make the partition
in accordance with Sec. 5, Rule 69 of the Revised Rules of Court;
6. Ordering the defendant(s) to pay plaintiffs, jointly and severally, the sum of P5,000.00
as attorney's fees, plus costs.
SO ORDERED. 4
Respondent Court of Appeals, in its challenged decision, held that the lease and conditional sale
agreement executed by and between Daniel Jovellanos and Philamlife is a lease contract and, in support
of its conclusion, reproduced as its own the following findings of the trial court:
It is therefore incumbent upon the vendee to comply with all his obligations, i.e., the
payment of the stipulated rentals and adherence to the limitations set forth in the
contract before the legal title over the property is conveyed to the lessee-vendee. This,
in effect. is a pactum reservati dominii which is common in sales on installment plan of
real estate whereby ownership is retained by the vendor and payment of the agreed
price being a condition precedent before full ownership could be transferred (Wells vs.
Samonte, 38768-R, March 23, 1973; Perez vs. Erlanger and Galinger Inc., CA 54 OG
6088). The dominion or full ownership of the subject property was only transferred to
Daniel Jovellanos upon full payment of the stipulated price giving rise to the execution
of the Deed of Absolute Sale on January 8, 1975 (Exh. 2) when the marriage between
the plaintiff and Daniel Jovellanos was already in existence.
The contention of the defendants that the jus in re aliena or right in the property of
another person (Gabuya vs. Cruz, 38 SCRA 98) or beneficial use and enjoyment of the
property or the equitable title has long been vested in the vendee-lessee Daniel
Jovellanos upon execution of Exh. "1" is true, But the instant case should be
differentiated from the cited cases of Pugeda v. Trias, et al., 4 SCRA 849; and Alvarez vs.
Espiritu, G.R. L-18833, August 14, 1965, which cannot be applied herein even by
analogy. In Pugeda. the subject property refers solely to friar lands and is governed by
Act 1120 wherein the certificate of sale is considered a conveyance of ownership subject
only to the resolutory condition that the sale may be rescinded if the agreed price has
not been paid in full; in the case at bar, however, payment of the stipulated price is a
condition precedent before ownership could be transferred to the vendee. 5
With the modification that private respondents should also reimburse to petitioners their proportionate
shares on the proven hospitalization and burial expenses of the late Daniel Jovellanos, respondent Court
of Appeals affirmed the judgment of the trial court. applying Article 118 of the Family Code which
provides:
Art. 118. Property bought on installment paid partly from exclusive funds of either or
both spouses and partly from conjugal funds belongs to the buyer or buyers if full
ownership was vested before the marriage and to the conjugal partnership if such
ownership was vested during the marriage. In either case, any amount advanced by the
partnership or by either or both spouses shall be reimbursed by the owner or owners
upon liquidation of the partnership.
Petitioners now seek this review, invoking their assignment of errors raised before the respondent court
and which may be capsulized into two contentions, namely, that (1) the lower court erred in holding
that the lot and bungalow covered by the lease and conditional sale agreement (Exhibit 1) is conjugal
property of the second marriage of the late Daniel Jovellanos: and (2) the lower court erred in holding
that the provisions of the Family Code are applicable in resolving the rights of the parties herein. 6
It is petitioners' position that the Family Code should not be applied in determining the successional
rights of the party litigants to the estate of Daniel Jovellanos. for to do so would be to impair their
vested property rights over the property in litigation which they have acquired long before the Family
Code took effect. 7
To arrive at the applicable law, it would accordingly be best to look into the nature of the contract
entered into by the contracting parties. As appositely observed by respondent court, the so-called lease
agreement is, therefore, very much in issue. Preliminarily, we do not lose sight of the basic rule that a
contract which is not contrary to law, morals, good customs, public order or public policy has the force
of law between the contracting parties and should be complied with in good faith. 8 Its provisions are
binding not only upon them but also upon their heirs and assigns. 9
The contract entered into by the late Daniel Jovellanos and Philamlife is specifically denominated as a
"Lease and Conditional Sale Agreement" over the property involved with a lease period of twenty years
at a monthly rental of P288.87, by virtue of which the former, as lessee-vendee, had only the right of
possession over the property. 10 In a lease agreement, the lessor transfers merely the temporary use
and enjoyment of the thing leased. 11 In fact, Daniel Jovellanos bound himself therein, among other
things, to use the property solely as a residence, take care thereof like a good father of a family, permit
inspection thereof by representatives of Philamlife in regard to the use and preservation of the
property. 12
It is specifically provided, however, that "(i)f, at the expiration of the lease period herein agreed upon,
the LESSEE-VENDEE shall have fully faithfully complied with all his obligations herein stipulated, the
LESSOR-VENDOR shall immediately sell, transfer and convey to the LESSEE-VENDEE the property which is
the subject matter of this agreement; . . . 13
The conditional sale agreement in said contract is, therefore, also in the nature of a contract to sell, as
contrdistinguished from a contract of sale. In a contract to sell or a conditional sale, ownership is not
transferred upon delivery of the property but upon full payment of the purchase price. 14 Generally,
ownership is transferred upon delivery, but even if delivered, the ownership may still be with the seller
until full payment of the price is made, if there is stipulation to this effect. The stipulation is usually
known as a pactum reservati dominii, or contractual reservation of title, and is common in sales on the
installment plan. 15 Compliance with the stipulated payments is a suspensive condition. 16 the failure of
which prevents the obligation of the vendor to convey title from acquiring binding force. 17
Hornbook lore from civilists clearly lays down the distinctions between a contract of sale in which the
title passes to the buyer upon delivery of the thing sold, and a contract to sell where, by agreement, the
ownership is reserved in the seller and is not to pass until full payment of the purchase price: In the
former, non-payment of the price is a negative resolutory condition; in the latter, full payment is a
positive suspensive condition. In the former, the vendor loses and cannot recover the ownership of the
thing sold until and unless the contract of sale is rescinded or set aside; in the latter, the title remains in
the vendor if the vendee does not comply with the condition precedent of making full payment as
specified in the contract.
Accordingly, viewed either as a lease contract or a contract to sell, or as a contractual amalgam with
facets of both, what was vested by the aforestated contract in petitioners' predecessor in interest was
merely the beneficial title to the property in question. His monthly payments were made in the concept
of rentals, but with the agreement that if he faithfully complied with all the stipulations in the contract
the same would in effect be considered as amortization payments to be applied to the predetermined
price of the said property. He consequently acquired ownership thereof only upon full payment of the
said amount hence, although he had been in possession of the premises since September 2, 1955, it was
only on January 8, 1975 that Philamlife executed the deed of absolute sale thereof in his favor.
The conditions of the aforesaid agreement also bear notice, considering the stipulations therein that
Daniel Jovellanos, as lessee-vendee, shall not —
xxx xxx xxx
(b) Sublease said property to a third party;
(c) Engage in business or practice any profession within the property;
xxx xxx xxx
(f) Make any alteration or improvement on the property without the prior written
consent of the LESSOR-VENDOR;
(g) Cut down, damage, or remove any tree or shrub, or remove or quarry any stone, rock
or earth within the property, without the prior written consent of the LESSOR-VENDOR;
(h) Assign to another his right, title and interest under and by virtue of this Agreement,
without the prior written consent and approval of the LESSOR-VENDOR. 18
The above restrictions further bolster the conclusion that Daniel Jovellanos did not enjoy the full
attributes of ownership until the execution of the deed of sale in his favor. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other limitations than those established by
law, 19 and, under the contract, Daniel Jovellanos evidently did not possess or enjoy such rights of
ownership.
We find no legal impediment to the application in this case of the rule of retroactivity provided in the
Family Code to the effect that —
Art. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair
vested or acquired nights in accordance with the Civil Code or other laws.
The right of Daniel Jovellanos to the property under the contract with Philamlife was merely an inchoate
and expectant right which would ripen into a vested right only upon his acquisition of ownership which,
as aforestated, was contingent upon his full payment of the rentals and compliance with all his
contractual obligations thereunder. A vested right as an immediate fixed right of present and future
enjoyment. It is to be distinguished from a right that is expectant or contingent. 20 It is a right which is
fixed, unalterable, absolute, complete and unconditional to the exercise of which no obstacle
exists, 21 and which is perfect in itself and not dependent upon a contingency. 22 Thus, for a property
right to be vested, there must be a transition from the potential or contingent to the actual, and the
proprietary interest must have attached to a thing; it must have become fixed or established and is no
longer open to doubt or controversy. 23
The trial court which was upheld by respondent court, correctly ruled that the cases cited by petitioners
are inapplicable to the case at bar since said cases involved friar lands which are governed by a special
law, Act 1120, which was specifically enacted for the purpose. In the sale of friar lands, upon execution
of the contract to sell, a certificate of sale is delivered to the vendee and such act is considered as a
conveyance of ownership, subject only to the resolutory condition that the sale may be rescinded if the
agreed price shall not be paid in full. In the instant case, no certificate of sale was delivered and full
payment of the rentals was a condition precedent before ownership could be transferred to the
vendee. 24
We have earlier underscored that the deed of absolute sale was executed in 1975 by Philamlife,
pursuant to the basic contract between the parties, only after full payment of the rentals. Upon the
execution of said deed of absolute sale, full ownership was vested in Daniel Jovellanos. Since. as early as
1967, he was already married to Annette H. Jovellanos, this property necessarily belonged to his
conjugal partnership with his said second wife.
As found by the trial court, the parties stipulated during the pre-trial conference in the case below that
the rentals/installments under the lease and conditional sale agreement were paid as follows (a) from
September 2, 1955 to January 2, 1959, by conjugal funds of the first marriage; (b) from January 3, 1959
to May 29, 1967, by capital of Daniel Jovellanos; (c) from May 30, 1967 to 1971, by conjugal funds of the
second marriage; and (d) from 1972 to January 8, 1975, by conjugal funds of the spouses Gil and Mercy
Jovellanos
Martinez. 25 Both courts, therefore, ordered that reimbursements should be made in line with the
pertinent provision of Article 118 of the Family Code that "any amount advanced by the partnership or
by either or both spouses shall be reimbursed by the owner or owners upon liquidation of the
partnership."
ACCORDINGLY, finding no reversible error in the judgment of respondent court, the same is hereby
AFFIRMED.
SO ORDERED.
5. Castillo, Jr. v. Pasco, G.R. No. L-16857, May 29, 1964
G.R. No. L-16857 May 29, 1964
MARCELO CASTILLO, JR., FELICISIMO CASTILLO, ENCARNACION CASTILLO, AMELIA CASTILLO, JAIME
CASTILLO, RONALDO CASTILLO, VICTORIA CASTILLO, LETICIA CINCO, LEVI CINCO and DANIEL
CINCO, petitioners,
vs.
MACARIA PASCO, respondent.
Tomas Yumol for petitioners.

Mariano G. Bustos and Associates for respondent.
REYES, J.B.L., J.:
The legitimate children and descendants of the late Marcelo Castillo, Sr. pray for the review and reversal
of the decision of the Court of Appeals, in its Case CA G.R. No. 19377-R, that affirmed the decision of the
Court of First Instance of Bulacan, declaring that the fishpond in San Roque, Paombong, Bulacan
(covered by TCT No. 9928 of the Registry of Deeds of said province), was the exclusive paraphernal
property of respondent Macaria Pasco, surviving spouse of the deceased Marcelo Castillo, Sr., and
dismissing the complaint for partition and accounting filed by petitioners in said Court of First Instance.
The Court of Appeals found, and the petitioner-appellants do not dispute, that in October 1931 Marcelo
Castillo, Sr., being a widower, married Macaria Pasco, a widow who had survived two previous
husbands. Petitioners were children and grandchildren (representing their deceased parents) of Marcelo
Castillo, Sr. by his previous marriage. On April 3, 1933, Marcelo Castillo, Sr. died, and his widow married
her fourth husband, Luis San Juan, on June 8, 1934.
On December 22, 1932, Gabriel and Purificacion Gonzales, as co-owners of the litigated fishpond,
executed a deed of sale (Exh. 1) conveying said property to the spouses Marcelo Castillo and Macaria
Pasco for the sum of P6,000.00 (although the deed recited a higher amount), payable in three
installments: P1,000 upon execution of the deed (Exh. 1) ; P2,000 on January 25, 1933 without interest;
and P3,000 within one year thereafter, with 11% interest from February 1, 1933, but extendible for
another year.
Against the contention of petitioners-appellants that the fishpond thus bought should be considered
conjugal for its having been acquired during coverture, the Court of Appeals declared it to be
paraphernalia because it was purchased with exclusive funds of the wife, Macaria Pasco. She was
admittedly a woman of means even before she married Marcelo Castillo, Sr. and the latter's principal
source of income was only his P80 a month salary, as provincial treasurer (as found by the Court of First
Instance), besides two small residential lots and fishponds, which were encumbered and later
transferred to his five children by his first wife and whom he was then supporting in medical and high
school. Actually, Marcelo Castillo, Sr. died without enough assets to pay his debts. .
In point of fact, the Court of Appeals found that the initial payment of P1,000 for the fishpond now in
litigation was made up of P600, that one of the vendors (Gabriel Gonzales) owed to appellee Pasco, and
P400 in cash, which the latter paid out of the proceeds of the sale of one of her nipa lands. The second
installment of P2,000 appears to have been paid with the proceeds of the loan from Dr. Nicanor Jacinto,
to whom the fishpond was mortgaged by both spouses. Dr. Jacinto later assigned his interest to Dr.
Antonio Pasco. The last payment of P3,000 was derived from a loan secured by a mortgage (Exh. 2) on 2
parcels of land assessed in the name of Macaria Pasco, and one of which she had inherited from a
former husband, Justo S. Pascual, while the other lot encumbered was assessed in her exclusive name.
It was also found by the Court of Appeals that upon the death of Marcelo Castillo, Sr., the loan and
mortgage in favor of Dr. Jacinto (later assigned by him to Dr. Antonio Pasco) was still outstanding.
Unable to collect the loan, Dr. Pasco foreclosed the mortgaged, and the encumbered fishpond was sold
to him; but the sale was subsequently annulled. Later, on September 7, 1949, respondent Macaria Pasco
judicially consigned P12,300 on account of the mortgage debt and its interest, and completed payment
by a second consignation of P752.43 made on April 24, 1950. As the estate of Castillo had no assets
adequate to pay off the claims against it, the Court of Appeals concluded that the amounts consigned
belonged to the widow Macaria Pasco, respondent herein.1äwphï1.ñët
It is not gain said that under the Spanish Civil Code of 1889, that was the applicable law in 1932, the
property acquired for onerous consideration during the marriage was deemed conjugal or separate
property depending on the source of the funds employed for its acquisition. Thus, Article 1396 of said
Code provided:
ART. 1396. The following is separate property spouse:
1. ...
2. ...
3. ...
4. That bought with money belonging exclusively to the wife or to the husband.
On the other hand, Article 1401, prescribed that:
ART. 1401. To the conjugal property belong:
1. Property acquired for valuable consideration during the marriage at the expense of the
common fund, whether the acquisition is made for the partnership or for one of the spouses
only.
The last clause in Article 1401 (par. 1) indicates that the circumstance of the sale of the fishpond in
question being made by the original owners in favor of both spouses, Marcelo Castillo, Sr. and Macaria
Pasco, is indifferent for the determination of whether the property should be deemed paraphernal or
conjugal. As remarked by Manresa in his Commentaries to the Civil Code, Vol. IX (5th Ed), p. 549, "la ley
atiende no a la persona encuyo nombre o a favor del cual se realize la compra, sino a la procedenciadel
dinero."
As above-noted, the Court of Appeals determined that the initial payment of P1,000 for the fishpond
now disputed was made out of private funds of Macaria Pasco. Appellants, however, argue that since
there is no express finding that the P600 debt owed by Gabriel Gonzales came exclusively from private
funds of Pasco, they should be presumed conjugal funds, in accordance with Article 1407 of the Civil
Code of 1889. The argument is untenable. Since the wife, under Article 1418, can not bind the conjugal
partnership without the consent of the husband, her private transactions are presumed to be for her
own account, and not for the account of the partnership. The finding of the Court of Appeals is that
Gabriel Gonzales owed this particular indebtedness to Macaria Pasco alone, and in the absence of proof
that the husband authorized her to use community funds therefor, the appellate Court's finding can not
be disturbed by us. Whether the evidence adverted to should be credited is for the Court of Appeals to
decide.
Appellants next assail the conclusion of the Court of Appeals that the other two installments of the
purchase price should be, like the first one, deemed to have been paid with exclusive funds of the wife
because the money was raised by loans guaranteed by mortgage on paraphernalia property of the wife.
The position thus taken by appellants is meritorious, for the reason that the deeds show the loans to
have been made by Dr. Nicanor Jacinto, and by Gabriel and Purificacion Gonzales, to both spouses
Marcelo Castillo and Macaria Pasco, as joint borrowers. The loans thus became obligations of the
conjugal partnership of both debtor spouses, and the money loaned is logically conjugal property. While
the securing mortgage is on the wife's paraphernalia the mortgage is a purely accessory obligation that
the lenders could, waive if they so chose, without affecting the principal debt which was owned by the
conjugal partnership, and which the creditors could enforce exclusively against the latter it they so
desired.
In Palanca vs. Smith Bell & Co., 9 Phil. 131., this Court ruled as follows (cas cit. at p. 133,) .
This P14,000, borrowed by said Emiliano Boncan upon the credit of the property of his wife
became conjugal property (par. 3, Art. 1401, Civil Code) and when that same was reinvented in
the construction of a house, the house became e conjugal property and was liable for the
payment of the debts of the husband (Art 1408, Civ. Code).
If money borrowed by the husband alone on the security of his wife's property is conjugal in character,
a fortiori should it be conjugal when borrowed by both spouses. The reason obviously is that the loan
becomes an obligation of the conjugal partnership which is the one primarily bound for its repayment.
The case of Lim Queco vs. Cartagena, 71 Phil. 162, is clearly distinguishable from the Palanca case in that
in the Lim Queco case the wife alone borrowed the money from "El Ahorro Insular" although she
guaranteed repayment with a mortgage on her parapherna executed with her husband's consent. Since
the wife does not have the management or representation of the conjugal partnership where the
husband is qualified therefor, the loan to her constituted a transaction that did not involve the
community, and the creditor could seek repayment exclusively from her properties. Logically, as this
Court then held, the money loaned to the wife, as well as the property acquired thereby, should be
deemed to be the wife's exclusive property.
The analogy between the case now before us and the Palanca vs. Smith Bell case is undeniable, and the
Palanca ruling applies. We, therefore, find that the two installments, totalling P5,000, of the price of the
fishpond were paid with conjugal funds, unlike the first installment of P1,000 that was paid exclusively
with money belonging to the wife Macaria Pasco, appellee herein.
As the litigated fishpond was purchased partly with paraphernal funds and partly with money of the
conjugal partnership, justice requires that the property be held to belong to both patrimonies in
common, in proportion to the contributions of each to the total purchase price of P6,000. An undivided
one-sixth (1/6) should be deemed paraphernalia and the remaining five-sixths (5/6) held property of the
conjugal partnership of spouses Marcelo Castillo and Macaria Pasco (9 Manresa, Com. al Codigo Civil
[5th Ed.], p. 549).
Puesto que la ley atiende no a la persona en cuyo nombre o a favor del cualse realize la compra
sino a la procedencia del dinero, considerando el hecho como una verdadera substitution o
conversion del dinero en otros objetos, debemos deduce que cuando una finca por ejemplo, se
compra con dinero del marido y de la mujer, o de la mujer y de la Sociedad, pertenece a
aquellos de quienes precede el precio y en la proporcion entregada por cada cual. Si pues
marido y mujer compran una casa entregando el primero de su capital propio 10,000 pesetas, y
la segunda 5,000, la casa pertenecera a losdos conyuges pro indiviso, en la proportion de los
terceras partes al marido y una tercera a la mujer. (Manresa. op. cit)
The payment by the widow, after her husband's death, of the mortgage debt due to Dr. Pasco, the
assignee of the original mortgagee, Dr. Nicanor Jacinto, does not result in increasing her share in the
property in question but in creating a lien in her favor over the undivided share of the conjugal
partnership, for the repayment of the amount she has advanced, should it be ultimately shown that the
money thus delivered to the creditor was exclusively owned by her.
It follows from the foregoing that, as the fishpond was undivided property of the widow and the
conjugal partnership with her late husband, the heirs of the latter, appellants herein, were entitled to
ask for partition thereof and liquidation of its proceeds. The ultimate interest of each party must be
resolved after due hearing, taking into account (a) the widow's one-sixth direct share; (b) her half of the
community property; (e) her successional rights to a part of the husband's share pursuant to the
governing law of succession when the husband died; and (d) the widow's right to reimbursement for any
amounts advanced by her in paying the mortgage debt as aforesaid. All these details must be settled
after proper trial.
WHEREFORE, the dismissal of the original complaint is hereby revoked and set aside, and the records
are ordered remanded to the court of origin for further proceedings conformable to this opinion.
6. Magallon v. Montejo, G.R. No. 73733, December 16, 1986
G.R. No. 73733 December 16, 1986
EPIFANIA MAGALLON, petitioner,

vs.
HON. ROSALINA L. MONTEJO, in her Official Capacity as Presiding Judge of Regional Trial Court of
Davao del Sur, Branch XXI, CONCEPCION LACERNA, ELECERIA LACERNA and PURITA
LACERNA, respondents.
Latasa, Cagas and Aranune Law & Surveying Office for petitioner.
Alberto Lumakang for private respondents.
NARVASA, J.:
The petition before this Court sinks the annulment of a writ of execution issued by the respondent Judge
in Civil Case No. 727 of her court (RTC Davao del Sur). Said case was instituted by the plaintiffs (private
respondents herein) against Martin Lacerna to compel partition of parcel of land located in Barrio
Kasuga Municipality of Magsaysay, Davao del Sur, to which said defendant had perfected a claim by
homestead. The plaintiffs, claiming to be the common children of Martin Lacerna and his wife, Eustaquia
Pichan, who died in 1953, asserted a right to one-half of the land as their mother's share in her conjugal
partnership with Martin. While said defendant denied having contracted marriage with Eustaquia Pichan
— although he admitted living with her without benefit of marriage until she allegedly abandoned him
— as well as paternity of two of the plaintiffs who, he claimed, were fathered by other men, the Trial
Court gave his denials no credence. Said Court, on the basis of the evidence presented to it, found that
Martin had in fact been married to Eustaquia, and that the plaintiffs were his children with her. The Trial
Court further found that Martin had begun working the homestead, and his right to a patent to the land
accrued, during his coverture with Eustaquia. On the basis of these findings, the plaintiffs were declared
entitled to the half of the land claimed by them. 1
Martin Lacerna appealed to the Intermediate Appellate Court AC-G.R. No. 59900-R). That Court
affirmed, in a Decision promulgated on August 31, 1984 which has since become final.2
It appears that at the time the case was brought, and while it was being heard in the Trial Court, no
certificate of title to the land had yet been issued to Martin Lacerna, although he had already complied
with all the conditions necessary to a grant thereof. Original Certificate of Title No. P-11 568 (issued on
the basis of Homestead Patent No. 148869) was issued only on November 22, 1978, while Lacerna's
appeal was pending in the Intermediate Appellate Court. While it is not disputed that said certificate of
title refers to the same land homesteaded by Lacerna during his coverture with Eustaquia Pichan, for
reasons to which the record before the Court offers no clear clue, it states on its face that it is issued in
the name of " ... MARTIN LACERNA, Filipino, of legal age, married to Epifania Magallon ... ," the latter
being the present petitioner.3
It appears further that on November 26, 1985, after the confirmative Decision of the Intermediate
Appellate Court had become final and executory, the respondent Judge, on motion of the plaintiffs
issued an alias writ of execution commanding the Provincial Sheriff::
... to order the defendant Martin Lacerna to divide and partition the property located at
Casuga, Magsaysay, Davao del Sur, consisting of 10 hectares designated as Lot No. 5098
Cad. No. 275 covered by H.A. No. 20-13378 (E-20-12748), ½ of which is the share of
Eustaquia Pichan in the conjugal property, and plaintiffs being Pichan's children are also
entitled thereto; and deliver portion of 5 hectares of the aforedescribed lot to the
plaintiffs as their share to satisfy the said judgment and your fees thereon. 4
Apparently, said writ was served on both Martin Lacerna and petitioner herein, for on December 17,
1985, the latter filed with the Trial Court a "Motion for Intervention and to Stay Execution" alleging that
the land subject of the writ was conjugal property of herself and Martin Lacerna under a certificate of
title (OCT No. P-11568) ... issued way back 1978 (sic) without legal impediments, and ... now
incontestable," as well as ... valid, binding and legal unless declared otherwise in an independent
proceedings, ... and praying that ... the property of herein intervenor be excluded from the enforcement
of the writ of execution." 5 Said motion was denied, as also was a motion for reconsideration of the
order of denial. Hence, the present petition.
The facts found by the lower courts which, in view of the finality of the latter's decisions, are binding
upon this Court and can no longer be controverted, as wen as the pertinent allegations of the petition,
leave no doubt that the land in question, which rightfully pertained to the conjugal partnership of
Martin Lacerna and Eustaquia Pichan, the plaintiff's mother, and should have been titled in the names of
said spouses, was, through fraud or mistaken, registered in the names of Martin Lacerna and petitioner
herein, Epifania Magallon In such a situation, the property should be regarded as impressed with an
implied, or a constructive, trust for the party rightfully entitled thereto. The Civil Code provides that:
If property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom
the property comes. 6
The provision restates one of the principles upon which the general law of trust is founded, expressed in
equity jurisprudence thus:
A constructive trust is a creature of equity, defined supra (sec. 15) as a remedial device
by which the holder of legal title is held to be a trustee for the benefit of another who in
good conscience is entitled to the beneficial interest. So. the doctrine of constructive
trust is an instrument of equity for the maintenance of justice, good faith, and good
conscience, resting on a sound public policy requiring that the law should not become
the instrument of designing persons to be used for the purpose of fraud. In this respect
constructive trusts have been said to arise through the application of the doctrine of
equitable estoppel or under the broad doctrine that equity regards and treats as done
what in good conscience ought to be done.
Where, through a mistake of fact, title to, and apparent ownership of, property
rightfully belonging to one person is obtained by another, a constructive trust ordinarily
arises in favor of the rightful owner of such property
It is a general principle that one who acquires land or other property by fraud,
misrepresentation, imposition, or concealment, or under any such other circumstances
as to render it inequitable for him to retain the property, is in equity to be regarded as a
trustee ex maleficio thereof for a person who suffers by reason of the fraud or other
wrong, and is equitably entitled to the property, even though such beneficiary may
never have any legal estate therein. It is to be observed, however, that in the absence of
equitable considerations or a fiduciary relationship, fraud alone, either actual or
constructive, will not give rise to a trust, since, as has been pointed out, if it were
otherwise all persons claiming property under defective titles would be trustee for the
'true' owners.7
Under proper circumstances, mistake, although unconnected with fraud, will warrant
relief under the Code providing that one who gains a thing by fraud, accident, mistake,
undue influence, the violation of a trust, or other wrongful act is, unless he has come
better title thereto, an involuntary trustee of the thing gained for the benefit of the
person who would otherwise have had it. 8
As stated by Justice Cardozo, a constructive trust is the formula through which the
conscience of equity finds expression and when property has been acquired in such
circumstances that the holder of the legal title may not in good conscience retain the
beneficial interest; equity converts him into a trustee. 9
In an early case in this jurisdiction, land of the plaintiff had, by mistake, been included in the title of an
adjoining owner who was afterwards sued by his creditors, the latter obtaining writs of execution and
procuring their annotation on said title. In an action by the plaintiff to enjoin the sale of his property,
annul the levies thereon and secure a new title without those encumbrances, this Court affirmed
judgment of the lower court in the plaintiff's favor, despite the fact that he had done nothing to protect
his interests in the land during a period of almost six years following the issuance of the decree of
registration in favor of the adjoining owner. The Court, noting that the titular (ostensible) owner had
never laid claim to the property mistakenly registered in his name and that he had in fact acquiesced to
judgment in a separate action declaring the plaintiff the real owner of the property, refused to apply the
one-year limitation period for disputing the title and held that in the circumstances, the former merely
held title to the property in trust for the plaintiff. 10
In Bueno vs. Reyes, 11 where property belonging to an ancestor of whom plaintiffs' parents were the
intestate heirs was, though mistake or in bad faith, registered in cadastral proceedings in the name of
other parties who had no right thereto, this Court reaffirmed the principles already cited, holding that:
If any trust can be deduced at all from the foregoing facts it was an implied one, arising
by operation of law not from any presumed intention of the parties but to satisfy the
demands of justice and equity and as a protection against unfair dealing or downright
fraud. Indeed, in this kind of implied trust, commonly denominated constructive, as
distinguished from resulting, trust, there exists a certain antagonism between the cestui
que trust and the trustee. Thus, for instance, under Article 1456 of the Civil Code, 'if
property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the
property comes.' In a number of cases this Court has held that registration of property
by one person in his name, whether by mistake or fraud, the real owner being another
person, impresses upon the title so acquired the character of a constructive trust for
the real owner, which would justify an action for reconveyance. 12
Clearly, therefore, the petitioner herein, as the trustee of a constructive trust, has an obligation to
convey to the private respondents that part of the land in question to which she now claims an
ostensible title, said portion rightfully pertaining to the respondents' deceased mother as her share in
the conjugal partnership with Martin Lacerna.
The question is whether that obligation may be enforced by execution in the action at bar, which was
brought and prosecuted to judgment against Martin Lacerna only, without impleading the
petitioner. 13 Stated otherwise, is petitioner bound by final judgment rendered in an action to which she
was not made a party?
There are no clear precedents on the matter in our law. Reference to American law for any persuasive
ruling shows that even there the question seems to be an open one.
"The authorities are in conflict as to whether a wife, not a party to an action is bound by a judgment
therein for or against her husband with respect to community or homestead property or property held
as an estate in entirety.
Community property. It has been held that a judgment against the husband in an action involving
community property, is conclusive on the wife even if she is not a party, but it has also been held that a
judgment against either husband or wife with respect to community property in an action to which the
other spouse is not a party does not prevent the other spouse from subsequently having his or her day
in court, although, of course, a judgment against both husband and wife is binding on both.
Estate by entirety. It has been both affirmed and denied that a wife is in such privity with her husband in
respect of property held by them as an estate in entirety that a judgment for or against him respecting
such property in a suit to which she is not a party is binding on her.
Homestead. A judgment affecting a homestead is, according to some authorities, not binding on a
spouse who is not a party to the action in which it is rendered, unless the homestead is community
property or the homestead claim or interest would not defeat the action; but, according to other
authorities, where the husband sets up and litigates a claim for the homestead, an adjudication for or
against him is binding on the wife. 14
As to her community interest in real property, a wife is in privity with her husband and is
represented by him in an action as fully as though she had expressly been made a party
thereto. Cutting vs. Bryan, 274 P. 326, 206 Cal. 254, certiorari denied 50 S. Ct. 16, 280
U.S. 556,74 L.Ed 611. 15
In the particular circumstances obtaining here, the Court can as it does in good conscience and without
doing violence to doctrine, adopt the affirmative view and hold the petitioner bound by the judgment
against Martin Lacerna, despite her not having in fact been impleaded in the action against the latter.
This ruling presumes that petitioner is, as she claims, the legal wife of Lacerna though, as observed by
the Intermediate Appellate Court, no marriage contract was presented by Lacerna to prove his marriage
to the petitioner either before or after the death of Eustaquia Pichan. Indeed, it is clear that the
petitioner cannot assert any claim to the land other than by virtue of her supposed marriage to Lacerna.
As a mere mistress, she cannot pretend to any right thereto.
But whether the petitioner is a lawful wife or a mere "live-in" partner, the Court simply cannot believe
that she never became aware of the litigation concerning the land until presented with the writ of
execution. What is far more probable and credible is that she has known of the lawsuit since 1956 when
Martin Lacerna "married" her. 16 Her silence and inaction since then and until barely a year ago bespeak
more than anything else, a confession that she had and has no right to the land and no defense to offer
to the action, either on her part or on the part of Martin Lacerna. Had she even the semblance of a right,
there is no doubt she would have lost no time asserting it.
From the averments of the petition, it is evident that the petitioner relies mainly, if not solely, on the
fact that the certificate of title to the land carries her name as the "wife" of the owner named therein,
Martin Lacerna. As already observed, such entry on the certificate of title has been established by
evidence no longer disputable as resulting from a mistake if, indeed, it was not procured through fraud.
Moreover, on the authority of Litam vs. Rivera 17 and Stuart vs. Yatco, 18 the phrase "married to Epifania
Magallon written after the name of Martin Lacerna in said certificate of title is merely descriptive of the
civil status of Martin Lacerna, the registered owner, and does not necessarily prove that the land is
"conjugal" property of Lacerna and petitioner hereyn. Neither can petitioner invoke the presumption
established in Article 160 of the Civil Code that property acquired during the marriage belongs to the
conjugal partnership, there being no proof of her alleged marriage to Martin Lacerna except that which
arises by implication from the aforestated entry in the certificate of title and for the far more compelling
reason that the homestead claim on the land was shown to have been perfected during Martin
Lacerna's marriage to Eustaquia Pichan, mother of the private respondents. The ruling in Maramba vs.
Lozano 19 that the presumption does not operate where there is no showing as to when property alleged
to be conjugal was acquired applies with even greater force here.
The writ of execution, however, must be set aside, though not for the reasons urged in the petition. The
judgment of the respondent Trial Court which was affirmed by the Intermediate Appellate Court merely
declared the private respondents entitled to one-half of the land in question, without specifically
ordering partition and delivery to them of said half portion. A writ of execution cannot vary the terms of
the judgment it is issued to satisfy, or afford relief different from, or not clearly included in, what is
awarded by said judgment. Even if the judgment in question is construable as authorizing or directing a
partition of the land, the mechanics of an actual partition should follow the procedure laid down in Rule
69 of the Rules of Court which does not contemplate or provide for the intervention of the sheriff in the
manner prescribed in the writ complained of.
Both the Trial Court, in rendering the judgment in question, and the Intermediate Appellate Court, in
affirming the same, appear to have overlooked the fact that the surviving spouse is the legal and
compulsory heir of the deceased husband or wife; otherwise, consistent with the finding that the half
portion of the land sued for pertained to the late Eustaquia Pichan as her share in the conjugal
partnership with Martin Lacerna, they should have ruled that Martin Lacerna concurred with the three
private respondents in the succession to said portion, each of them taking an equal
share. 20 Unfortunately, said error is beyond review because Martin Lacerna allowed the judgment to
become final and executory without raising that point of law, even on appeal.
WHEREFORE, the writ of execution complained of is set aside and annulled. Instead of enforcing said
writ, the respondent Trial Court is ordered to effect the partition of the land in question in accordance
with the terms of its now final and executory decision and the provisions of Rule 69 of the Rules of
Court. No pronouncement as to costs in this instance.
SO ORDERED.
7. Vda. de Padilla v. Vda. De Padilla, 74 Phil 377 (1943)
G.R. No. L-48137 October 4, 1943
In re testate estate of NARCISO A. PADILLA.

CONCEPCION PATERNO VDA. DE PADILLA, widow-appellee,
vs.
ISABEL BIBBY VDA. DE PADILLA, executrix-appellant.
BOCOBO, J.:
This case is an incident of the settlement of the testate estate of the late Narciso A. Padilla. In order that
his property may be divided according to his last will and testament, it is necessary first to liquidate the
conjugal partnership. It was in connection with such liquidation that the widow, Concepcion Paterno
Vda. de Padilla, commenced the instant proceedings by filing a petition wherein she prayed, inter alia,
that her paraphernal property be segregated from the inventoried estate and delivered to her together
with the corresponding reimbursements and indemnities; that she be given one-half of the conjugal
partnership property; and that her usufructuary right over one-half of the portion pertaining to the heir
instituted in the will be recognized. The Court of First Instance of Manila rendered judgment declaring
certain pieces of real estate and jewelry as well as certain sums of money to be paraphernal, and
ordering the same to be delivered to the widow (appellee herein). The trial court's judgment, as
amended, reads:
En vista de los hechos y consideraciones que preceden, el Juzgado dicta sentencia y declara:
(a) Que todos los bienes que constan en el inventario, y sobre los cuales no se ha suscitado
controversia por las partes, son bienes gananciales;
(b) Que se nombran tres (3) Comisionados, uno a recomendacion de la heredera instituida en el
testamento, otro a recomendacion de Da. Concepcion Paterno Vda. de Padilla, y el tercero por
el Juzgado, para que se hagan cargo de avaluar las fincas o partes de fincas que se deben
justipreciar de conformidad con las conclusiones sentadas en esta decision hagan las
computaciones correspondientes a fin de determinar el remanente liquido de la sociedad de
gananciales, tomando por base los precios calculados y avaluados sobre dichos bienes, y dividan
por mitad el remanente liquido entre Da. Concepcion Paterno Vda. de Padilla, y la heredera
testamentaria Da. Isabel Bibby Vda. de Padilla, especificando los bienes que a cada una debe
corresponder;
(c) Que pagadas todas las deudas de la sociedad de gananciales, dichos comisionados
procederan a dividir en tres partes los bienes que deben corresponder al difunto, a fin de que
las dos terceras partes sean adjudicadas a la heredera testamentaria en pleno dominio, y la otra
tercera parte en nuda propiedad a la misma heredera testamentaria y en usufructo a la viuda
Concepcion Paterno mientras ella viva.lawphil.net
(d) Que los gastos en que incurra esta Testamentaria por los servicios de los Comisionados se
paguen por ambas partes, por mitad.
From the foregoing judgment the testator's mother and instituted heir, Isabel Bibby Vda. de Padilla,
appeals.
The value in controversy being over P50,000, we have reviewed the evidence. After a careful
examination of the oral and documentary proof, we find no error in the findings of fact made by the trial
court. From the evidence it appears that Narciso A. Padilla and Concepcion Paterno were married on
December 12, 1912. The husband, who was a medical student, contributed a small capital to the
conjugal partnership at the time of the marriage. The wife, on the other hand, brought to the marriage
considerable property in real estate, jewelry and cash. Practically all of the conjugal partnership
property came from the fruits of the paraphernal property. The conjugal partnership lasted twenty-one
years, the husband having died on February 12, 1934. (The wife also died recently, during the pendency
of this appeal, but in this decision she is referred to as if still living.) The common fortune, consisting of
real and personal property, is fairly large. The husband, who left no children, executed a will giving his
whole estate to his mother, Isabel Bibby Vda. de Padilla, appellant herein. The property included in the
inventory is appraised at P261,000. Seven pieces of real estate are in controversy in this case. The
remaining ten real properties left by the deceased husband admittedly pertain to the conjugal
partnership.
A thorough study of the evidence convinces us that the trial court was right in finding that the following
properties in Manila are paraphernal: (1) the lot at 305 Arquiza Street and the demolished
improvements; (2) the lot at 1393-1409 Juan Luna Street and the improvements that had been torn
down; (3) the lot and improvements (except the building constructed during the marriage for P4,000) at
401-407 Camba Street; (4) the lot at 613-631 and 634-636 Martin Ocampo Street, with the original
"accesorias" and a camarin which was destroyed in order that new "accesorias" might be constructed,
these new "accesorias" being of the conjugal partnership; (5) the property at 620-A-H Callejon De la Fe;
(6) one-half of the property at 631 Regidor Street; and (7) nine twenty-ninths (9/29) of the property at
302-306 R. Hidalgo Street.
We also agree with the finding of the lower court that certain jewels, namely: two pairs of ear-rings, a
bracelet, and a gold watch, belong to the widow.
In like manner, we see no error in the following findings of the trial court: (1) that the husband
borrowed P7,000 from the wife to meet his personal obligations; and (2) that the amount of P21,046.52
(the remainder of P66,046.52) received by the wife during the marriage was commingled with the
conjugal partnership funds.
II
Several questions of law are raised in the present appeal. We shall discuss them one by one.
1. The first legal controversy is on a sort of no-man's land where many a legal battle has been fought.
The issue is, How far is a Torrens title conclusive and incontestable? Various manifestations of this legal
question have been decided by the courts, and while certain of its aspects may still be doubtful, we are
persuaded, however, that there can be no doubt, as will presently be shown, that what appears in the
Torrens certificate in this case is neither final nor incontrovertible.
Appellant contends that because certain of these real estates (on Camba, Martin Ocampo and Regidor
Streets) have been registered in the names of both spouses, Narciso Padilla and Concepcion Paterno de
Padilla, and considering the presumption in Art. 1407 of the Civil Code, these properties must be held to
be of the conjugal partnership. The trial court, however, found that the whole purchase price of the
Camba and Martin Ocampo properties, and one-half of the purchase price of the Regidor property, were
from the wife's exclusive funds, and therefore the whole of the original Camba and Ocampo estates and
one-half of the Regidor realty must be adjudged paraphernal, in spite of the fact that the certificates of
title are in the names of both spouses.
There is nothing sacrosanct and definitive in the certificate of title when the conjugal partnership is
liquidated. The true and real owner may be shown — whether it be the husband, or the wife, or both.
Thus, in Flores vs. Flores, 48 Phil. 288, this Court held that property acquired during the marriage but
registered in the husband's name still belonged to the conjugal partnership. A similar ruling was
announced when the real estate was registered in the wife's name. Romero vs. Sheriff, 53 Phil., 51. But
the appellant maintains that the converse is not true; and that even if evidence is admissible to alter the
conjugal character of the property, such evidence must be clear, strong and convincing (citing Art 1407,
Civil Code, and Ahern vs. Julian, 39 Phil., 607).
We are of the opinion that an exception should in no wise be made when the property is registered in
the names of both spouses. In such instances, the property may be shown to be really of either spouse,
though recorded in the names of both. The underlying reason is the same in all cases, which is the
confidential relation between husband and wife. Because of the feelings of trust existing between the
spouses, certificates of title are often secured in the name of both, or of either, regardless of the true
ownership of the property, and regardless of the source of the purchase money. It is thus but fair that
on liquidation of the partnership, the trust should be recognized and enforced, so that the real
ownership of the property may be established. The principle that a trustee who takes a Torrens title in
his name cannot repudiate the trust by relying on the registration, is one of the well-known limitations
upon the finality of a decree of title. (See Severino vs. Severino, 44 Phil., 343). It is because a certificate
of title under the Torrens system should not be turned into an instrument for deprivation of ownership.
The Torrens plan, created to protect dominion, is not a Frankenstein that destroys this very dominion. A
trust, deriving its strength from confidence, which runs though with the woof and warp of the social
fabric, does not lose that character on the plea that a Torrens certificate of title is conclusive. It is meet
and seemly that this should be so, for any rule that permits the violation of a fiduciary duty would be a
reproach to any legal system. These observations apply with peculiar force to the relations between
husband and wife. In a normal marriage, the spouses trust each other so implicitly that they attach little
or no importance to what appears in legal documents, fully and unreservedly believing that no
technicality would be availed of to claim what in very truth pertains to one or the other. Things would
indeed come to a sorry pass if the jurisprudence of this country should harbor any theory which would
impair this intimate reliance, this unquestioning loyalty, this befitting faith between husband and wife.
There is another reason why evidence of the nature of any property as paraphernal should be allowed,
despite the Torrens certificate. It is this: the manager of the conjugal partnership is the husband. He
may, without let or hindrance, deal with and dispose of any property appearing in the names of both
spouses, even if the property should really be paraphernal. In the course of years, any such property
may have been sold, transformed or substituted. Upon liquidation of the conjugal partnership, to forbid
an investigation of the true source of the purchase price of the original property, after many years of
marriage, would make liquidation a mockery, for it would be well nigh impossible to trace and identity
the paraphernal property. The law positively ordains that the wife's property (dowry and paraphernal)
should be returned, even before the payment of the debts of the conjugal partnership (Art. 1421 and
1422, Civil Code). But how can this mandate of the law be complied with when the means to that end
are withheld and forbidden?
As for the appellants proposition that the evidence to rebut the Torrens certificates and the legal
presumption in favor of the conjugal partnership (Art. 1407) should be clear, strong and convincing, we
find that the proof, both oral and documentary, in the record is more than sufficient to offset and
counteract the certificates of title and the presumption of law.
2. The second legal inquiry is the interpretation of Article 1404, par. 2, Civil Code: whether the value of
the paraphernal land to be reimbursed to the wife is that obtaining at the time of the liquidation of the
conjugal partnership. With conjugal funds the husband constructed buildings on the wife's lots on
Arquiza, Juan Luna, Camba and Martin Ocampo streets. The court a quo ordered that the value of the
lots occupied by these constructions, to be paid to the widow, should be that prevailing at the time of
the liquidation of the conjugal partnership.
Appellant claims such pronouncement of the trial court to be erroneous because from the time of the
construction of the buildings, the conjugal partnership became the owner of the whole property (lot and
building) in each instance, and therefore the subsequent increase in value should accrue to the conjugal
partnership, and any depreciation should be suffered by the partnership.
Article 1404, Civil Code, provides:

Las expensas utiles hechas en los beines peculiares de cualquiera de los conyuges mediante
anticipaciones de la sociedad o por la industria del marido o de la mujer, son ganaciales.
Los seran tambien los edificios construidos durante el matrimonio en suelo propio de uno de los
conyuges abonandose el valor del suelo al conyuge a quien pertenezca.
Appellant's theory is untenable. The ownership of the land is retained by the wife until she is paid the
value of the lot, as a result of the liquidation of the conjugal partnership. The mere construction of a
building from common funds does not automatically convey the ownership of the wife's land to the
conjugal partnership. Such a mode of using the land, namely, by erecting a building thereon, is simply an
exercise of the right of usufruct pertaining to the conjugal partnership over the wife's land. As Manresa
says, "la sociedad de gananciales es realmente la usufructuaria de los bienes privativos de cada
conyuge." (Comment on Art. 1408.) In consequence of this usufructuary right, the conjugal partnership
is not bound to pay any rent during the occupation of the wife's land because if the lot were leased to a
third person, instead of being occupied by the new construction from partnership funds, the rent from
the third person would belong to the conjugal partnership. Therefore, before payment of the value of
the land is made from the common funds, inasmuch as the owner of the land is the wife, all the increase
or decrease in its value must be for her benefit or loss. And when may she demand payment? Not until
the liquidation of the conjugal partnership because up to that time, it is neither necessary nor
appropriate to transfer to the partnership the dominion over the land, which is lawfully held in usufruct
by the conjugal partnership during the marriage.
The foregoing finds support, by analogy, in Article 361, Civil Code, which reads:
Art. 361. El dueño del terreno en que se edificare, sembrare o plantare de buena fe, tendra
derecho a hacer suya la obra, siembra o plantacion, previa la indemnizacion establecida en los
arts. 453 y 454, o a obligar al que fabrico o planto a pagarle el precio del terreno, y al que
sembro, la renta correspondiente. (Emphasis supplied.)
In the instant case, no reimbursement for the value of the lots was made from the common funds
during the marriage.
Moreover, Sanchez Roman declares:
Los derechos de la muyer en la sociedad legal de gananciales se remiten todos a la epoca de su

disolucion y liquidacion, cuando se trata de la existencia normal de la sociedad legal de
gananciales. (Emphasis supplied.)
And Manresa states:
El valor fijado a los bienes debe ser el que realmente tengan el dia de la disolucion de la
sociedad, con las necesarias aclaraciones, para conocer lo que pueda tener caracter propio o
ganancial. (Emphasis supplied).
Furthermore, the wife should not be allowed to demand payment of the lot during the marriage and
before liquidation because this would unduly disturb the husband's management of the conjugal
partnership. The scheme of the Civil Code is that in the interest of successful administration of the
common property, the wife should not interfere with the husband's way of directing the affairs of the
partnership. Besides, such premature requirement of the value making improvements, whereas article
1404, par. 2, has for its purpose the encouragement of construction by the husband. (Manresa's
comment on Art. 1404.) On the other hand, if the payment for the lot is deferred till the liquidation of
the conjugal partnership, the initial outlay for the erection of the building would be less, and
consequently the construction would be facilitated.
3. The next question of law is whether the value of the paraphernal buildings which were demolished to
make possible the construction of new ones, at the expense of the conjugal partnership, should be
reimbursed to the wife. Such tearing down of buildings was done with regard to the Arquiza, Juan Luna
and Martin Ocampo properties. Appellant maintains that it is doubtful if these buildings had any value at
the time they were destroyed, and that there is no evidence that the conjugal partnership realized any
benefit therefrom. However, we are certain these old buildings had some value, though small, and it will
be the duty of the commissioners mentioned in the judgment appealed from, to assess that value. We
entertain no manner of doubt that the conjugal partnership derived a positive advantage from the
demolition, which made it possible to erect new constructions for the partnership. It is but just,
therefore, that the value of the old buildings at the time they were torn down should be paid to the
wife. We dismiss, as without any merit whatever, the appellant's contention that because article 1404,
par. 2, of the Civil Code does not provide for the reimbursement of the value of demolished
improvements, the wife should not be indemnified. Suffice it to mention the ancient maxim of the
Roman law, "Jure nature aequum est, meminem cum alterius detrimento et injuria fieri locupletiorem"
which was restated by the Partidas in these terms: "Ninguno non deue enriquecerse tortizeramente con
dano de otro." When the statutes are silent or ambiguous, this is one of those fundamental principles
which the courts invoke in order to arrive at a solution that would respond to the vehement urge of
conscience.
4. Then, there is the total amount of P7,000 borrowed by the husband from the wife, thus itemized: (1)
P3,000 lost in horse-races and in poker; (2) P3,000 spent for pastime ("diversion"); and (3) P1,000 to pay
a personal debt of the husband. The trial court applied article 1386 of the Civil Code, and ordered that
said amount of P7,000 be deducted from the husband's share. But appellant's theory is that articles
1408 (par. 1) and 441 should govern, so that the amount is chargeable against the conjugal partnership.
These provisions read thus:
Art. 1408. Seran de cargo de la sociedad de gananciales:
1.o. Todas las deudas y obligaciones contraidas durantes el matrimonio por el marido, y tabien
las que contrajere la mujer en los casos en que pueda legalmente obligar a la sociedad. . . .
Art. 1411. Lo perdido y pagado durante el matrimonio por alguno de los conyuges en cualquier
clase de juego, no disminuira su parte respectiva de los ganaciales. . . .
It is true that article 1385 ordains that the fruits of the paraphernal property form part of the conjugal
partnership and are subject to the payment of the charges against the marriage. But as Manresa says,
article 1386 contains a limitation on the first part (just cited) of article 1385.
It is likewise true that under article 1408, par. 1, all debts and obligations contracted by the husband
during the marriage are chargeable against the conjugal partnership, but article 1386 is an exception to
the rule, and exempts the fruits of the paraphernal property from the payment of the personal
obligations of the husband, unless there is proof that they redounded to the benefit of the family. It is
self-evident that the amounts in question did not benefit the family. Hence, they cannot be charged
against the fruits of the paraphernal property. They should be paid from the husband's funds. We quote
from Manresa's comment on article 1386:
No hay, desde luego, contradiccion entre los preceptos de los articulos 1408 y 1386; hay solo
una regla general contenida en aquel, y una excepcion contenida en este. El articulo 1386, como
especial, modifica la regla, y ha de aplicarse siempre que las obligaciones personales contraidas
por el marido quieren hacerse efectivas en frutos o rentas de los bienes parafernales de la
mujer.
La frase 'obligaciones personales', se reduce a deudas u obligaciones contraidas privativamente

por el marido, deudas y obligaciones que son desde luego propiamente personales o no reales,
pues si se reclamase contra bienes o derecho especial y legalmente efectos al cumplimiento de
la obligacion, no podria haber inconveniente para que esta se hiciese efectiva. Por lo demas, el
espiritu del precepto es que el marido no puede aprovecharse en interes proprio o para
atenciones privativas o personales suyas, de los frutos de los bienes parafernales; que estos se
destinen a las verdaderas necesidades y cargas de la sociedad conyugal, y, por tanto, se
emplean, como deben, en beneficio de la familia.
Valverde in his "Tratado de Derecho Civil Español," Vol. 4, pp. 347-348, says:
Consecuencia natural de esta especie de separacion de responsabilidades y de patrimonios, es

que el Codigo ordene que 'las obligaciones personales del marido no podran hacerse efectivas
sobre los frutos de los bienes parafernales, a menos que se pruebe que redundaron en provecho
de la familia'. En efecto, el marido, como administrador de la sociedad legal, obliga a esta con
sus actos, y por eso los gananciales responden de las deudad y obligaciones contraidas por el
marido durante el matrimonio, presumiendose hechos en interes de la sociedad, a no ser que se
pruebe lo contrario, pero como caso de excepcion, si los gananciales son frutos de bienes
parafernales, entonces, para que respondan tales frutos de las obligaciones del marido, es
preciso que prueba este que las dichas obligaciones redundaron en provecho de la familia, pues
por el precepto del codigo, si los frutos de los parafernales son gananciales, cuando de las
deudad del marido se trata, solo son responsables esos frutos en el caso que se demuestre que
redundaron en provecho de aquella. (Emphasis supplied.)
Oyuelos, in his work, "Digesto: Principios, Doctrina y Jurisprudencia Referentes al Codigo Civil Español"
(Vol. 6, pp. 79-80), has this to say:
(c) Fundamento de la exencion de los frutos. — El articulo 1386 es un complemento de los

articulos 1385, 1408, 1413, 1417, 1433 y 1434, y se inspira en los mismos principios economicos
de la familia, porque si los frutos de los parafernales forman parte de la sociedad conyugal, que
subsiste mientras no se disuelva el matrimonio o se decrete la separacion de bienes, y si a cargo
de la misma corre el sostenimiento de la familia, la educacion de los hijos y las deudas que el
marido contraiga como jefe de ella, es logico concluir, sobre todo teniendo presente el articulo
1385, que aun prescindiendo del texto claro y terminante del articulo 1386, las
responsabilidades del marido en tanto puedan hacerse efectivas con los productos de dichos
bienes en cuanto se hubiesen contraido en provecho de la familia; no existiendo contradiccion
entre los articulos 1386 y 1408, numero 1.0 (alegada en el concepto de que el articulo 1386 no
puede aplicarse al caso de subsistencia del matrimonio), por cuanto la esfera de actuacion del
1386 no se contrae al estado de derecho consiguiente a la separacion de bienes de los
respectivos esposos.
Is the amount under consideration, P7,000, being enforced against the fruits of the paraphernal
property? Yes, because practically all of the conjugal partnership assets have been derived from the
fruits of the wife's exclusive property.
In the case of Fidelity and Surety Co. vs. Ansaldo, 37 Off. Gaz., 1164, (promulgated November 26, 1938),
this Court held:
Article 1386 of the Civil Code provides that the personal obligations of the husband may not be paid out
of the fruits of the paraphernal property, unless it be proved that such obligations redounded to the
benefit of the family. It, as contended by the appellant, the properties levied upon in Civil Case No.
33923 of the Court of First Instance of Manila, entitled "Fidelity & Surety Company of the Philippines
Islands vs. Romarico Agcaoili and Angel A. Ansaldo" were acquired with the fruits of the paraphernal
properties belonging to Margarita Quintos, said properties, although conjugal (art. 1385, par. 1 and art.
1408, Civil Code; Mirasol vs. Lim, 59 Phil., 701, 709) are not liable for the personal obligations of the
husband, unless said obligations redounded to the benefit of the family. Paragraph 1 of article 1408 of
the Civil Code makes all debts and obligations contracted during the marriage by the husband
chargeable against the conjugal partnership, as a general rule, that is to say, although the fruits of the
paraphernal property of the wife are conjugal, they do not respond for the personal obligations of the
latter unless said obligations have redounded to the benefit of the family."
In the sentence of January 15, 1917, of the Supreme Tribunal of Spain, the following doctrine is
enunciated:
Considerando a mayor abundamiento que si bien en orden al regimen familiar y conforme a la

doctina legal establecida por el Tribunal Supremo, interpretando el art. 1385 del expresado
Codigo, al marido incumbe exclusivamente la administracion de los frutos de los bienes
parafernales como parte del haber de la sociedad conyugal, esta potsted esta condicionada y
regulada por el 1386, al prohibir al esposo el aprovechamiento de tales rendimientos en benficio
propio o sea de sus obligaciones personales, imponiendole por modo expreso, el deber de
aplicarlos al levantamiento de las cargas matrimoniales, pues de otra forma se desnaturalizaria
la reserva y privilegio que constituye el concepto del patrimonia parafernal, con riesgo de
infringir la disposicion legal que precede invocada. (Emphasis supplied.)
In the instant case, it is quite plain that if the amount of P7,000.00 under review should be charged
against the conjugal partnership property which came almost exclusively from the fruits of the
paraphernal property, the reservation and privilege established by law on behalf of the paraphernal
patrimony would be encroached upon and tempered with.
There are just and sound reasons for article 1386. The wife contributes the fruits, interests, and rents of
her paraphernal property to help bear the expenses of the family. When the husband contracts any debt
in his own name, it is chargeable against the conjugal partnership as a general rule (article 1408, par. 1)
because it is presumed that the debt is beneficial to the family. But when such a debt is enforced against
the fruits of the paraphernal property, such a presumption no longer applies, considering article 1386.
On the contrary, it must be proved that the purpose for which the wife contributes the fruits of her
paraphernal property has been accomplished through such personal debt of the husband.
Appellant relies on article 1411 which reads:
Lo perdido y pagado por alguno de los conyuges en juego licito, sera a cargo de la sociedad de
gananciales.
Lo perdido y no pagado por alguno de los conyuges en juego licito, sera a cargo de la sociedad
de ganaciales.
But this provision should be applied only when the debt is not being charged against the fruits of the
paraphernal property. If the conjugal partnership assets are derived almost entirely, if not entirely, from
the fruits of the paraphernal property, as in this case, it is neither lawful nor equitable to apply article
1411 because by so doing, the fruits of the paraphernal property would in reality be the only kind of
property to bear the husband's gambling losses. In other words, what the husband loses in gambling
should be shouldered by him and not by the conjugal partnership if the latter's assets come solely from
the fruits of the paraphernal property. This is but just, because gambling losses of the husband cannot
by any process of reasoning be considered beneficial to the family. By the same token, to charge the
gambling losses against the conjugal partnership in such a situation would fly in the case of the stern
prohibition of article 1386, which protects the fruits of the paraphernal property precisely against
expenses of the husband that are of no help to the family.
We are satisfied that the foregoing is by and large a fair and rational interpretation of articles 1408 and
1411, which must be read in the light of article 1386. If such a qualification of articles 1408 and 1411 is
not made, article 1386 becomes nugatory.
5. The next question is whether interest should be paid by the widow on the amount of P9,229.48
withdrawn by her from the Monte de Piedad savings account No. 3317 of the conjugal partnership.
There is no question that the principal should be credited to the partnership as the appellee's counsel
does not dispute this point. The withdrawal of said amount was made on April 7, 1934, about two
months after the husband's death, and while the widow was a special administratrix. There being no
evidence in the record as to the purpose for which this amount was used, although counsel for appellee
suggests the possibility that the same might have been disbursed for funeral and similar expenses, we
believe she should pay such interest, if any, as the Monte de Piedad would have paid on the amount
aforesaid, had not the same been withdrawn by the widow.
Wherefore, with the modification that the appellee shall pay such interest, if any, on P9,229.48 as the
Monte de Piedad would have paid if the amount had not been withdrawn, the judgment appealed from
should be and is hereby affirmed, with costs against the appellant. So ordered.
8. Lilius v. Manila Railroad Co., 62 Phil 56 (1935)
G.R. No. 42551 September 4, 1935
ALEKO E. LILIUS, for himself and as guardian ad litem of his minor child, Brita Marianne Lilius, and
SONJA MARIA LILIUS, plaintiffs-appellees,
vs.
MANILA RAILROAD COMPANY, defendant.
LAURA LINDLEY SHUMAN, MANILA WINE MERCHANTS, LTD., BANK OF THE PHILIPPINE ISLANDS AND
MANILA MOTOR CO., INC., intervenors-appellants, and
W.H. WATEROUS, M. MARFORI, JOHN R. MCFIE, JR., ERLANGER & GALINGER, INC., PHILIPPINE
EDUCATION CO., INC., HAMILTON BROWN SHOE CO., ESTRELLA DEL NORTE and EASTERN &
PHILIPPINE SHIPPING AGENCIES, LTD., intervenors-appellees.
J.W. Ferrier for intervenor-appellant Shuman.

Franco and Reinoso for intervenor-appellant Manila Wine Merchants, Ltd.
Feria and La O for intervenor-appellant Bank of the Philippine Islands.
Gibbs and McDonough for intervenor-appellant Manila Motor Co.
Harvey and O'Brien for plaintiffs-appellees.
John R. Mcfie, Jr., in his behalf and for the intervenors-appellees.
GODDARD, J.:
In this case Laura Lindley Shuman, the Manila Wine Merchants, Ltd., the Bank of the Philippine Islands
and the Manila Motor Co., Inc., have appealed from an order of the Court of First Instance of Manila
fixing the degree of preference of the claimants and distributing the proceeds of the judgment of this
court in the case of Lilius vs. Manila Railroad Co. (59 Phil., 758), the amount of which judgment in the
sum of P33,525.03, including interest and costs, was deposited by the railroad company with the clerk of
the lower court in that case. After deducting the attorneys' fees in the sum of P8,016.88, which is not
questioned, the net amount in the hands of the clerk of the lower court pertaining to each of the
plaintiffs in the original action is follows:
Aleko E. Lilius P13,181.33
Sonja Maria Lilius 8,218.54
Brita Marianne Lilius 4,109.28
There was a total of twenty-eight claimants to these funds, whose claims were presented and decided
without objection in the original case in the lower court.
The trial court in its order from which these appeals are taken, allowed:
(a) As against the sum of P8,218.54, separately awarded to the plaintiff Sonja Lilius, the following claims
or portions thereof in the order stated:
One-half of the claim of Dr. W.H. Waterous by virtue of a P1,500.00
written assignment of March 9, 1933, by the said Sonja
Maria Lilius to him
One-third of the claim of the appellant Laura Lindley 661.13

Shuman by virtue of a joint judgement obtained by her on
August 10, 1933, in the Case No. 44254 of the Court of
First Instance of Manila, against the said Sonja Maria
Lilius, Aleko E. Lilius and Brita Marianne Lilius
One-third of the claim of the St. Paul's Hospital by 518.19

virtue of a joint written assignment of September 21,
1933, by the said Sonja Maria Lilius, Aleko E. Lilius and
Brita Marianne Lilius to it
and the balance of the award was ordered paid to the said Brita Marianne Lilius, and
(b) As against the sum of P4,109.28, separately awarded to the plaintiff Brita Marriane Lilius, the
following claims or portions thereof in the order stated:
One-third of the claim of Laura Lindley Shuman by virtue P661.13

of a joint judgment obtained by her on August 10, 1933,
in Case No. 44254 of the Court of First Instance of Manila,
against the said Brita Marianne Lilius, Sonja Maria Lilius
and Aleko E. Lilius
One-third of the claim of St. Paul's Hospital by virtue 518.18

of a joint written assignment of September 21, 1933, by
the
said Brita Marianne Lilius, Sonia Maria Lilius and Aleko
E. Lilius
and the balance of the award was ordered paid to the said Brita Marianne Lilius, and
(c) As against the sum of P13,181.33, awarded to the plaintiff Aleko E. Lilius, the following claims or
portions thereof in the order stated:
The other half of the claim of Dr. W.H. Waterous by virtue

of the final judgement in the original case, G.R. No. 39587 P1,500.00
The claim of Dr. M. Marfori, by virtue of the final

judgment in the original case, G.R. No. 39587 250.00
The claim of John R. McFie, Jr., by virtue of a written
assignment to him by the said Aleko E. Lilius of November
13, 1931 500.00
The balance of P10, 931.33 of the judgment pertaining to

the said Aleko E. Lilius was allowed and distributed by the
lower court proportionately among the following
claimants by virtue of their written assignment of January
27, 1932:
Erlanger & Galinger, Inc. 3,374.50
Philippine Education Co., Inc., 3,394.94
Hamilton Brown Shoe Co. 1,878.98
Estrella del Norte 1,850.76
Eastern & Philippine Shipping Agencies, Ltd. 432.15
APPEAL OF LAURA LINDLEY SHUMAN
First assignments of error: "The lower court erred in holding that Dr. W.H. Waterous and Dr. M. Marfori
had a claim against the plaintiff, Aleko E. Lilius superior to the claim of the appellant, Laura Lindley
Shuman, against him."
One of the contentions of this appellant under this assignment of error is that her claim, having been
made the basis of the plaintiffs' action and of the award for damages, as shown in the original decision
herein, should constitute, and does constitute a superior lien against the funds awarded said plaintiffs,
to those of any other claimants, except the two doctors, the hospital and the other nurse, and that as to
the claims of the two doctors, the hospital and the other nurse the claim of this appellant has equal
preference with their claims.
The following items were made the basis of a part of the judgment for damages awarded to the
plaintiffs in the original action against the Manila Railroad Company:
Por honorarios del Dr. Waterous (Exhibit N-2) P3,000.00
Por la primera cura hecha en el Hospital de Calauang (Exhibit

N-5) 250.00
Por el alquiler de la ambulancia del Hospital General (Exhibit

N-4) 10.00
Por la estancia en el Hospital Saint Paul (Exhibit N-3) 3,355.00

Por los servicios prestados por la enfermera Laura Shuman
(Exhibit N-6) 2,156.00
Por los servisios prestados por la enfermera Alejandra

Alcayaga (Exhibit N-9) 1,450.00
Porlos servicios prestados por la enfermera Carmen

Villanueva (Exhibit N-11) 240.00
Por la perdida de la camara fotografica, pluma fuente y lapiz

(Exhibit N-1) 43.00
Por trajes dañados en el choque 131.00
Total 10,635.00
The trial court in that case directed the defendant Railroad Company to pay P3,000 to Dr. Waterous and
to pay to Dr. Marfori P250, but failed to direct the defendant to pay the corresponding sums to the
other persons and entities mentioned in the portion of the decision copied above.
It must be admitted that the amounts due Dr. Waterous and the others mentioned is the original
decision, including the appellant Shuman, were all used as a basis for a part of the judgment which
plaintiffs secured against the defendants Railroad Company.
From the foregoing it is clear that the claim of this appellant rests upon the same ground as those of
Doctors Waterous and Marfori. She was also among those who rendered services to plaintiffs in aid of
their recover from the injuries received by them in the accident for which damages were awarded them
in the case against the Railroad Company. The fact that the trial court did not direct the defendant
Railroad Company to pay directly to this appellant the amount of her claim does not modify or do away
with her equitable right to the same status as that given to the two doctors mentioned above. The
inevitable conclusion is that the claims of Waterous and Marfori have no preference over her claim for
her services as a nurse. This assignment of error should be and is hereby sustained.
This appellant in her second assignment of error contends that the trial court erred in failing to allow her
claim in the sum of P61.94 as costs in the case in which judgment was rendered in her favor against the
herein plaintiffs-appellees. The record shows that the reason for the disallowance of this item was
because no proof was offered as to the amount of such costs. The only thing appearing in the transcript
on this point is the statement of counsel that the amount of costs in case No. 44254, as shown by the bill
of costs, was P6l.94. Rule 38 of the Revised Rules of Courts of First Instance requires that ". . . costs shall
be taxed by the clerk on five days' written notice given by the prevailing party to the adverse party, with
which notice given by the prevailing party, verified by his oath or that of his attorney, shall be served. . .
." The proper evidence, therefore, of the costs in that case would have been the bill of costs and the
taxation of such costs by the clerk. In order to recover such costs in a separate proceeding, such as this,
evidence must be presented as to the amount of the same. As there was no evidence offered in this case
as to the amount of said costs, the lower court was correct in disallowing that item. This assignment of
error is overruled.
Under her third assignment of error this appellant contends (1) that the funds separately awarded the
wife, Sonja Maria Lilius, partake of the nature of conjugal property, at least to the extent of the sum of
P800 awarded to her as interest on the principal award of P10,000 made in her favor by the trial court,
and as such should respond for the support of the family, including medical expenses and (2) that even
assuming that the sums awarded separately to Sonja Maria Lilius are not conjugal property, but her own
paraphernal property, still under the provisions of the Civil Code payment may be required out of said
funds, her husband being insolvent, under her liability for the medical expenses incurred by her
husband, one of the obligations imposed by law upon the wife.
The second contention under this assignment of error can be disposed of by calling attention to the fact
that there is no proof in this case that her husband is insolvent. It has not been proved that Aleko E.
Lilius had no other property outside of the sum awarded to him in the case against the Railroad
Company.
APPEAL OF THE MANILA WINE MERCHANTS, LTD., AND THE BANK OF THE PHILIPPINE ISLANDS.
The appellants, the Manila Wine Merchants. Ltd., and the Bank of the Philippine islands also contend
that the sum separately awarded Sonja Maria Lilius is conjugal property and therefore liable for the
payment of the private debts of her husband, Aleko E. Lilius, contracted during her marriage.
it is contended that the damages awarded for personal injury are not classified as separate property of
each of the spouses in article 1396 of the Civil Code and they should therefore be resumed conjugal. In
answer to this, article 1401 of the same Code, in enumerating the property belonging to the conjugal
partnership, does not mention damages for personal injury.
The question raised by these appellants is one of first impression in this jurisdiction and apparently has
never been passed upon by the Supreme Court of Spain.
The following comment is found in Colin y Capitant, Vol. 6, pages 217 and 218:
"No esta resuelta expresamente en la legislacion espa_¤_ola la cuestion de si las indemnizaciones

debidas por accidentes del trabajo tienen la consideracion de gananciales o son bienes particulares de
los conyuges.
"Inclinan a la solucion de que estas indemnizaciones deben ser consideradas como gananciales, el hecho
de que la sociedad pierde la capacidad de trabajo con el accidente, que a ella le pertenece, puesto que
de la sociedad son los frutos de ese trabajo; en cambio, la consideracion de que de igual manera que los
bienes que sustituyen a los que cada conyuge lleva al matrimonio como propios tienen el caracter de
propios, hace pensar que las indemnizaciones que vengan a suplir la capacidad de trabajo aportada por
cada conyuge a la sociedad, deben ser juridicamente reputadas como bienes propios del conyuge que
haya sufrido el accidente. Asi se Ilega a la misma solucion aportada por la jurisprudencia francesa.".
From the above it appears that there are two distinct theories as to whether damages rising from an
injury suffered by one of the spouses should be considered conjugal or separate property of the injured
spouse. The theory holding that such damages should form part of the conjugal partnership property is
based wholly on the proposition, also advanced by the Manila Wine Merchants, Ltd., that by the injury
the earning capacity of the injured spouse is diminished to the consequent prejudice of the conjugal
partnership.
Assuming the correctness of this theory, a reading of the decision of this court in G. R. No. 39587 will
show that the sum of P10,000 was awarded to Sonja Maria Lilius "by way of indemnity for patrimonial
and moral damages." The pertinent part of that decision on this point reads:
"Taking into consideration the fact that the plaintiff Sonja Maria Lilius, wife of the plaintiff Aleko E. Lilius
is-in the language of the court, which saw her at the trial "young and beautiful and the big scar, which
she has on her forehead caused by the lacerated wound received by her from the accident, disfigures
her face and that the fracture of her left leg has caused a permanent deformity which renders it very
difficult for her to walk', and taking into further consideration her social standing, neither is the sum of
P10,000, adjudicated to her by the said trial court by way, of indemnity for patrimonial and moral
damages, excessive.".
It should be added that the interest on that sum is part of the damages "patrimonial and moral"
awarded to Sonja Maria Lilius.
Furthermore it appears in the decision of the trial court in G. R. No. 39587 that Aleko E. Lilius claimed
the sum of P10,000 as damages on account of the loss of the services of Sonja Maria Lilius as secretary
and translator, her particular work as a member of the conjugal partnership. The trial court disallowed
this claim and neither of the plaintiffs in that case appealed to this court.
In view of the foregoing it is held that the sum of P10,000 with interest thereon awarded to Sonja Maria
Lilius as damages is paraphernal property.
The third assignment of error of the appellant Shuman, the second assignment of error of the appellant
Bank of the Philippine Islands and the sole assignment of error of the appellant Manila Wine Merchants,
Ltd., are overruled.
In its first assignment of error it is contended by the Bank of the Philippines Islands that by virtue of its
writ of garnishment served on the Manila Railroad Company of February 8, 1933, it acquired a lilen
superior to the preference granted by article 1924 of the Civil Code to prior judgments. This error, if at
all, is however non-prejudicial as the record shows that all the creditors declared by the court as having
a right to participate in the proceeds of the judgment in favor of Aleko E. Lilius were so held by virtue of
deeds of assignment executed prior to the date of the service of notice of the bank's writ of garnishment
on the Manila Railroad Company. These creditors are John R. McFie, jr., whose claim is based on a deed
of assignment dated November 13, 1931, and Erlanger & Galinger, Philippine Education Co., Inc.,
Hamilton Brown Shoe Co., Estrella del Norte and Eastern & Philippine Shipping Agencies, Ltd., whose
claims are based on a deed of assignment dated November 17, 1931. As the record shows that whatever
was left of the judgment in favor of Aleko E. Lilius is not sufficient to pay in full the credits of the above
mentioned creditors and furthermore, in view of the fact that strictly speaking, there was no existing
credit in favor of Aleko E. Lilius to be garnished on February 3, 1933, as it had been assigned, before that
date, to his creditors, this assignment of error, therefore, must be overruled.
APPEAL OF THE THE MANILA MOTOR CO., INC.

The two error assigned by this appellant read as follows:
"I. The lower court erred in considering the date of the date judgment, Exhibit A, Manila Motor Co., Inc.,
instead of the date of the public document upon which it was based in determining the preference
among the several claims filed and litigated in this proceeding.
"ll. The lower court erred in not holding the claim of the claimant-appellant, Manila Motor Co., Inc.,
preferred over all other claims against Aleko E. Lilius evidenced by public instruments and final
judgments.".
The claimant has not proven that its credit is evidenced by a public document within the meaning of
article 1924 of the Civil Code. The only evidence offered by the Manila Motor Co., Inc., in support of its
claim of preference against the fund of Aleko E. Lilius was a certified copy of its judgment against him in
civil case No. 41159 of the Court of First Instance of Manila, together with a certified copy of the writ of
execution and the garnishment issued by virtue of said judgment. These documents appear in the record
as Exhibits A, B and C. The alleged public document evidencing its claim was not offered in evidence and
counsel of the Manila Motor Co., Inc., merely stated at the hearing in the lower court that its judgment
was based on a public document dated May 10, 1931. There is no explanation as to why it was not
presented as evidence along with Exhibits A, B, and C. In their brief in this court, counsel for the Motor
Co., Inc., merely assume that its credit is evidenced by a public document dated may 10, 1931, because
the court, in its judgment in said civil case No. 41159, refers to a mortgage appearing in the evidence as
Exhibit A, as the basis of its judgment, without mentioning the date of the execution of the exhibit. This
reference in said judgment to a mortgage is not competent or satisfactory evidence as against third
persons upon which to base a finding that the Manila Motor Company's credit evidenced by a public
document within the meaning of article 1924 of the Civil Code. This court is not authorized to make use
of that judgment as a basis for its findings of fact in this proceeding. This is shown by the decision of this
court in the case of Martinez vs. Diza 920 Phil., 498). In that syllabus of that decision it is stated:
"1. COURTS OF FIRST INSTANCE; JUDGMENT IN FORMER CIVIL ACTION AS BASIC FOR FINDINGS OF FACT;
ERROR.-A person who was not a party to a former civil action, or who did not acquire his rights from one
of the parties thereto after the entry of judgment therein, is not bound by such judgment; nor can it be
used against him as a basis for the findings of fact in a judgment rendered in a subsequent action.".
But even if the court is authorized to accept the statement in that judgment as a basis for its finding of
fact in relation to this claim, still it would not establish the claim of preference of the Manila Motor Co.,
Inc. Granting that a mortgage existed between the Manila Motor Co., Inc., and Aleko E. Lilius, this does
not warrant the conclusion that the instrument evidencing that mortgage is a public document entitled
to preference under article 1924 of the Civil Code. Under section 5 of Act No. 1507 as amended by Act
No. 2496, a chattel does not have to be acknowledge before a notary public. As against creditors and
subsequent encumbrances, the law does require an affidavit of good faith appended to the mortgage
and recorded with it. (See Giberson vs. A. N. Jureidini Bros., 44 Phil., 216, and Betita vs. Ganzon, 49 Phil.,
87.) A chattel mortgage may, however, be valid as between the parties without such an affidavit of good
faith. In 11 Corpus Juris, 482, the rule is expressly stated that as between the parties and as to third
persons who have no rights against the mortgagor, no affidavit of good faith is necessary. It will thus be
seen that under the law, a valid mortgage may exist between the parties without its being evidenced by
a public document. This court would not be justified, merely from the reference by the lower court in
that case to a mortgage, in assuming that its date appears in a public document. if the Manila motor Co.,
Inc., desired to rely upon a public document in the form of a mortgagor as establishing its preference in
this case, it should have offered that document in evidence, so that the court might satisfy itself as to its
nature and unquestionably fix the date of its execution. There is nothing either in the judgment relied
upon or in the evidence to show the date of said mortgage. The burden was upon the claimant to prove
that it actually had a public Code. It is essential that the nature and the date of the document be
established by competent evidence before the court can allow a preference as against the other parties
to this proceeding. Inasmuch as the claimant failed to establish its preference, based on a public
document, the lower court properly held that its claim against the said Aleko E. Lilius was based on the
final judgment in civil case No. 41159 of the Court of First Instance of Manila of May 3, 1932. The court,
therefore, committed no error in holding that the claim of the Manila Motor Co., Inc., was inferior in
preference to those of the appellees in this case.
This appellant's assignments of error are overulled.
In view of the foregoing the following portion of the dispositive part of the decision of the trial court is
affirmed.
"Por estas consideraciones, se ordena y se decreta (a) que del saldo de P8,219.54, que pertenece a Sonja
Maria LIllius y que se halla depositado en la Escribana del Juzgado, se pague po el Escribano al Dr. W. H.
Waterous la suma de mil quinientos pesos (P1,500), a Laura L. Shuman, seiscientos sesenta y un pesos
con trece centavos (P661.13, y al St. Paul's Hospital, quinientos diez y ocho pesos con diez y ocho
centavos (P518.18), y el remanente de cinco mil cuatrocientos setenta y siete pesos con veinticuatro
centavos (P5,477.24), a Sonja Maria Lililus, o su apoderado; (b) que del saldo de P4,109.28 que pretence
a Brita Marianne Lilius y que se halla deposito en la Escribania del Juzgado, se pague por el Escribano a
Laura Shuman, la suma de seicientos sesenta y un pesos con trece centavos (P661.13); y al St. Paul's
Hospital, quinientos diez y ocho pesos con diez y ocho centavos (P518.18)y, y el sado de dos mil
ochocientos sesenta y siete pesos con noventa y siete centavos (P2,867.97), a Brita Marianne Lilius, por
conducto de su tutor;".
The remaining portion of the dispositive part of the decision of the trial court is modified as follows:
"That from the sum of P13,181.33 pertaining to Aleko E. Lilius, which is deposited with the clerk of the
trial court, the following claims shall first be paid:
Dr. W.H. Waterous P1,500.00
Dr. M. Marfori 250.00
Laura Lindley Shuman 661.13
John R. McFie, Jr. 500.00
and the balance of the sum pertaining to Aleko E. Lilius shall be divided among the following entities in
proportion to their respective claims:
Amount of
claim
Erlanger & Galinger, Inc. P3,672.76
Philippine Education Co., Inc. 3,695.20
Hamilton-Brown Shoe Co. 2045.00
Estrella del Norte 2,014.45
Eastern and Philippine Shipping Agencies, Ltd. 470.38
So ordered without special pronouncement as to costs.
9. Villanueva v. Intermediate Appellate Court, G.R. No. 74577, December 4, 1990
[G.R. No. 74577. December 4, 1990.]
CONSOLACION VILLANUEVA, Petitioner, v. THE INTERMEDIATE APPELLATE COURT, JESUS BERNAS and
REMEDIOS Q. BERNAS, Respondents.
Geomer C. Delfin for Petitioner.
Roger B. Patricio for Private Respondents.
DECISION
NARVASA, J.:
The spouses Graciano Aranas and Nicolasa Bunsa were the owners in fee simple of a parcel of land
identified as Lot 13, their ownership being evidenced by Original Certificate of Title No. 0-3239 issued by
the Register of Deeds of Capiz on June 19, 1924. After they died, their surviving children, Modesto
Aranas and Federico Aranas, adjudicated the land to themselves under a deed of extrajudicial partition
executed on May 2, 1952. The southern portion, described as Lot 13-C, was thereby assigned to
Modesto; the northern, to Federico. 1
On March 21, 1953, Modesto Aranas obtained a Torrens title in his name from the Capiz Registry of
Property, numbered T-1346. He died on April 20, 1973, at the age of 81 years. His wife, Victoria
Comorro, predeceased him dying at age 70 on July 16, 1971. They had no children. 2
Now, it appears that Modesto was survived by two (2) illegitimate children named Dorothea Aranas Ado
and Teodoro C. Aranas. These two borrowed P18,000.00 from Jesus Bernas. As security therefor they
mortgaged to Bernas their father’s property, Lot 13-C. In the "Loan Agreement with Real Estate
Mortgage" executed between them and Bernas on October 30, 1975, they described themselves as the
absolute co-owners of Lot 13-C. A relative, Raymundo Aranas, signed the agreement as a witness. 3
Dorothea and Teodoro failed to pay their loan. As a result, Bernas caused the extrajudicial foreclosure of
the mortgage over Lot 13-C on June 29, 1977 and acquired the land at the auction sale as the highest
bidder. 4 After the foreclosure sale, Dorothea and Teodoro executed a deed of Extrajudicial Partition
dated June 21, 1978, in which they adjudicated the same Lot 13-C unto themselves in equal shares pro-
indiviso.chanroblesvirtualawlibrary
On October 25, 1978 Bernas consolidated his ownership over Lot 13-C, the mortgagors having failed to
redeem the same within the reglementary period, and had the latter’s title (No. T-1346 in the name of
Modesto Aranas) cancelled and another issued in his name, TCT No. T-15121. 5
About a month later, or on November 24, 1978, Consolacion Villanueva and Raymundo Aranas — who,
as aforestated, was an instrumental witness in the deed of mortgage executed by Dorothea and
Teodoro Aranas on October 30, 1975 — filed a complaint with the Regional Trial Court at Roxas City
against Jesus Bernas and his spouse, Remedios Bernas. The case was docketed as Civil Case No. V-4188,
and assigned to Branch 14. In their complaint, the plaintiffs prayed that the latter’s title over Lot 13-C,
TCT No. T-15121, be cancelled and they be declared co-owners of the land. They grounded their cause
of action upon their alleged discovery on or about November 20, 1978 of two (2) wills, one executed on
February 11, 1958 by Modesto Aranas, and the other, executed on October 29, 1957 by his wife, Victoria
Comorro. Victoria Comorro’s will allegedly bequeathed to Consolacion and Raymundo, and to Dorothea
and Teodoro Aranas, in equal shares pro indiviso, all of said Victoria Comorro’s "interests, rights and
properties, real and personal . . . as her net share from (the) conjugal partnership property with her
husband, Modesto Aranas . . ." Modesto Aranas’ will, on the other hand, bequeathed to Dorothea and
Teodoro Aranas (his illegitimate children) all his interests in his conjugal partnership with Victoria "as
well as his own capital property brought by him to (his) marriage with his said wife." 6
At the pre-trial, the parties stipulated on certain facts, including the following:chanrob1es virtual 1aw
library
1) that the property in question was registered before the mortgage in the name of the late Modesto
Aranas, married to Victoria Comorro, (covered by) TCT No. 1346, issued on March 21, 1953;
2) that the wills above described were probated only after the filing of the case (No. V-4188);
3) that Consolacion Villanueva and Raymundo Aranas are not children of either Modesto Aranas or
Victoria Comorro;
4) that the lot in question is not expressly mentioned in the will; and
5) that TCT No. 15121 exists, and was issued in favor of defendant spouses Jesus Bernas and Remedios
Bernas.chanrobles virtual lawlibrary
Trial ensued after which judgment was rendered adversely to the plaintiffs, Consolacion Villanueva and
Raymundo Aranas. 7 The dispositive part of the judgment reads as follows: 8
WHEREFORE, IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the defendants and
against the plaintiffs as follows:chanrob1es virtual 1aw library
The plaintiffs’ complaint is hereby dismissed and ordering the plaintiffs, jointly and severally, to pay the
defendants the following:chanrob1es virtual 1aw library
1) THREE THOUSAND FIVE HUNDRED PESOS (P3,500.00) as attorney’s fees;
2) FIVE HUNDRED PESOS (P500.00) as actual damages;
3) TEN THOUSAND PESOS (P10,000.00) as moral damages;
4) Declaring the defendants spouses Jesus Bernas and Remedios O. Bernas as legal owners of Lot No. 13-
C and including all the improvements thereon;
5) Declaring the loan agreement with real estate mortgage (Exh.’2’) entered into by Dorothea Aranas
Ado married to Reynaldo F. Ado and Teodoro C. Aranas and Jesus Bernas married to Remedios O.
Bernas, over the lot in question executed on October 30, 1975 before Notary Public Roland D. Abalajon
and the corresponding Certificate of Title No. T-15121 registered in the name of Jesus Bernas
(defendants spouses) as having been executed and issued in accordance with law, are declared legal and
valid;
6) For failure to prove all other counter-claim and damages, the same are hereby dismissed.
7) To pay costs of this suit.
SO ORDERED."cralaw virtua1aw library
The plaintiffs appealed to the Intermediate Appellate Court, where they succeeded only in having the
award of actual and moral damages deleted, the judgment of the Regional Trial Court having been
otherwise affirmed in toto.
From this judgment of the Appellate Court, 9 Consolacion Villanueva appealed to this Court. Her co-
plaintiff, Raymundo Aranas, did not.
The only question is, what right was acquired by Consolacion Villanueva over Lot 13-C and the
improvements thereon standing by virtue of Victoria Camorro’s last will and testament giving to her all
of said Victoria’s "interests, rights and properties, real and personal . . . as her net share from (the)
conjugal partnership property with her husband, Modesto Aranas . . ." She is admittedly, not named an
heiress in Modesto Aranas’ will.chanroblesvirtualawlibrary
Certain it is that the land itself, Lot 13-C, was not "conjugal partnership property" of Victoria Comorro
and her husband, Modesto Aranas. It was the latter’s exclusive, private property, which he had inherited
from his parents — Graciano Aranas and Nicolasa Bunsa, the original owners of the property —
registered solely in his name, under TCT T-1346. Whether Modesto succeeded to the property prior or
subsequent to his marriage to Victoria Comorro — the record being unfortunately none too clear on the
point — is inconsequential. The property should be regarded as his own exclusively, as a matter of law.
This is what Article 148 of the Civil Code clearly decrees: that to be considered as "the exclusive property
of each spouse" is inter alia, "that which is brought to the marriage as his or her own," or "that which
each acquires, during the marriage, by lucrative title." Thus, even if it be assumed that Modesto’s
acquisition by succession of Lot 13-C took place during his marriage to Victoria Comorro, the lot would
nonetheless be his "exclusive property" because acquired by him, "during the marriage, by lucrative
title."cralaw virtua1aw library
Moreover, Victoria Comorro died on July 16, 1971, about two (2) years ahead of her husband, Modesto
Aranas, exclusive owner of Lot 13-C, who passed away on April 20, 1973. Victoria never therefore
inherited any part of Lot 13-C and hence, had nothing of Lot 13-C to bequeath by will or otherwise to
Consolacion Villanueva or anybody else.
It would seem, however, that there are improvements standing on Lot 13-C, and it is to these
improvements that Consolacion Villanueva’s claims are directed. The question then is, whether or not
the improvements are conjugal property, so that Victoria Comorro may be said to have acquired a right
over them by succession, as voluntary heir of Victoria Comorro.
The Civil Code says that improvements, "whether for utility or adornment, made on the separate
property of the spouses through advancements from the partnership or through the industry of either
the husband or the wife, belong to the conjugal partnership," and buildings "constructed, at the expense
of the partnership, during the marriage on land belonging to one of the spouses, also pertain to the
partnership, but the value of the land shall be reimbursed to the spouse who owns the same." 10 Proof,
therefore, is needful of the time of the making or construction of the improvements and the source of
the funds used therefor, in order to determine the character of the improvements as belonging to the
conjugal partnership or to one spouse separately. No such proof was presented or proferred by
Consolacion Villanueva or any one else. What is certain is that the land on which the improvements
stand was the exclusive property of Modesto Aranas and that where, as here, property is registered in
the name of one spouse only and there is no showing of when precisely the property was acquired, the
presumption is that it belongs exclusively to said spouse. 11 It is not therefore possible to declare the
improvements to be conjugal in character.
Yet another consideration precludes relief to Consolacion Villanueva and that is, that when Lot 13-C was
mortgaged to Jesus Bernas, the title was free of any lien, encumbrance or adverse claim presented by or
for Consolacion Villanueva or anybody else, and that when Bernas subsequently consolidated his
ownership over Lot 13-C and obtained title in his name, the Registry of Deeds contained no record of
any lien, encumbrance or adverse claim affecting the property. Furthermore, Bernas’ mode of
acquisition of ownership over the property, i.e., by a mortgage sale, appears in all respects to be regular,
untainted by any defect whatsoever. Bernas must therefore be deemed to have acquired indefeasible
and clear title to Lot 13-C which cannot be defeated or negated by claims subsequently arising and of
which he had no knowledge or means of knowing prior to their assertion and ventilation.chanrobles
virtual lawlibrary
Finally, it bears stressing that the conclusion of the Intermediate Appellate Court that the evidence
establishes that the property in question was the exclusive property of one spouse, not conjugal, is a
factual one which, absent any satisfactory showing of palpable error or grave abuse of discretion on the
part of the Appellate Court in reaching it, is not reviewable by this Court.
WHEREFORE, the judgment of the Intermediate Appellate Court subject of this appeal, being in accord
with the evidence and applicable law and jurisprudence, is AFFIRMED, with costs against the
petitioner.chanrobles law library : red
SO ORDERED.
Articles 121-133
10. BA Finance Corporation v. Court of Appeals, G.R. No. L-61464, May 28, 1988
[G.R. No. L-61464. May 28, 1988.]
BA FINANCE CORPORATION, Petitioner, v. THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY
YULO (doing business under the name and style of A & L INDUSTRIES), Respondents.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review seeking to set aside the decision of the Court of Appeals which affirmed the
decision of the then Court of First Instance of Manila, dismissing the complaint instituted by the
petitioner and ordering it to pay damages on the basis of the private respondent’s counterclaim.
On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the amount of
P591,003.59 as evidenced by a promissory note he signed in his own behalf and as representative of the
A & L Industries. Respondent Yulo presented an alleged special power of attorney executed by his wife,
respondent Lily Yulo, who manages A & L Industries and under whose name the said business is
registered, purportedly authorizing Augusto Yulo to procure the loan and sign the promissory note.
About two months prior to the loan, however, Augusto Yulo had already left Lily Yulo and their children
and had abandoned their conjugal home. When the obligation became due and demandable, Augusto
Yulo failed to pay the same.
On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto and Lily
Yulo on the basis of the promissory note. It also prayed for the issuance of a writ of attachment alleging
that the said spouses were guilty of fraud in contracting the debt upon which the action was brought
and that the fraud consisted of the spouses’ inducing the petitioner to enter into a contract with them
by executing a Deed of Assignment in favor of the petitioner, assigning all their rights, titles and interests
over a construction contract executed by and between the spouses and A. Soriano Corporation on June
19, 1974 for a consideration of P615,732.50 when, in truth, the spouses did not have any intention of
remitting the proceeds of the said construction contract to the petitioner because despite the provisions
in the Deed of Assignment that the spouses shall, without compensation or costs, collect and receive in
trust for the petitioner all payments made upon the construction contract and shall remit to the
petitioner all collections therefrom, the said spouses failed and refused to remit the collections and
instead, misappropriated the proceeds for their own use and benefit, without the knowledge or consent
of the petitioner.
The trial court issued the writ of attachment prayed for thereby enabling the petitioner to attach the
properties of A & L Industries. Apparently not contented with the order, the petitioner filed another
motion for the examination of attachment debtor, alleging that the properties attached by the sheriff
were not sufficient to secure the satisfaction of any judgment that may be recovered by it in the case.
This was likewise granted by the court.
Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusto Yulo and
she are husband and wife, the former had abandoned her and their children five (5) months before the
filing of the complaint; that they were already separated when the promissory note was executed; that
her signature in the special power of attorney was forged because she had never authorized Augusto
Yulo in any capacity to transact any business for and in behalf of A & L Industries, which is owned by her
as a single proprietor, that she never got a single centavo from the proceeds of the loan mentioned in
the promissory note; and that as a result of the illegal attachment of her properties, which constituted
the assets of the A & L Industries, the latter closed its business and was taken over by the new owner.
After hearing, the trial court rendered judgment dismissing the petitioner’s complaint against the
private respondent Lily Yulo and A & L Industries and ordering the petitioner to pay the respondent Lily
Yulo P660,000.00 as actual damages; P500,000.00 as unrealized profits; P300,000.00 as exemplary
damages; P30,000.00 as and for attorney’s fees; and to pay the costs.
The petitioner appealed. The Court of Appeals affirmed the trial court’s decision except for the
exemplary damages which it reduced from P300,000.00 to P150,000.00 and the attorney’s fees which
were reduced from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in holding that the signature of
respondent Lily Yulo in the special power of attorney was forged, the Court of Appeals
said:jgc:chanrobles.com.ph
"The crucial issue to be determined is whether or not the signatures of the appellee Lily Yulo in Exhibits
B and B-1 are forged. Atty. Crispin Ordoña, the Notary Public, admitted in open court that the parties in
the subject documents did not sign their signatures in his presence. The same were already signed by
the supposed parties and their supposed witnesses at the time they were brought to him for ratification.
We quote from the records the pertinent testimony of Atty. Ordoña, thus:jgc:chanrobles.com.ph
"Q This document marked as Exhibit B-1, when this was presented to you by that common friend, June
Enriquez, it was already typewritten, it was already accomplished, all typewritten?
"A Yes, sir.
"Q And the parties had already affixed their signatures in this document?
"A Yes, sir.
"Q In this document marked as Exhibit B although it appears here that this is an acknowledgment, you
have not stated here that the principal actually acknowledged this document to be her voluntary act and
deed?
"A This is one of those things that escaped my attention. Actually I have not gone over the second page.
I believed it was in order I signed it. (TSN., pp. 13-14, Hearing of Nov. 26, 1976).
"The glaring admission by the Notary Public that he failed to state in the acknowledgment portion of
Exhibit B-1 that the appellee Lily Yulo acknowledged the said document to be her own voluntary act and
deed, is a very strong and commanding circumstance to show that she did not appear personally before
the said Notary Public and did not sign the document.
"Additionally, the Notary Public admitted that, while June Enriquez is admittedly a mutual friend of his
and the defendant Augusto Yulo, and who is also an instrumental witness in said Exhibit B-1, he could
not recognize or tell which of the two signatures appearing therein, was the signature of this June
Enriquez.
"Furthermore, as the issue is one of credibility of a witness, the findings and conclusions of the trial
court before whom said witness, Atty. Crispin Ordoña, the Notary Public before whom the questioned
document was supposedly ratified and acknowledged, deserve great respect and are seldom disturbed
on appeal by appellate tribunals, since it is in the best and peculiar advantage of determining and
observing the conduct, demeanor and deportment of a particular witness while he is testifying in court,
an opportunity not enjoyed by the appellate courts who merely have to rely on the recorded
proceedings which transpired in the court below, and the records are bare of any circumstance of
weight, which the trial court had overlooked and which, if duly considered, may radically affect the
outcome of the case.
"On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her signature in Exhibit B-1,
presented in court a handwriting expert witness in the person of Police Captain Yakal Giron of the
Integrated National Police Training Command, and who is also a Document Examiner of the same
Command’s Crime Laboratory at Fort Bonifacio, Metro Manila. His experience as an examiner of
questioned and disputed documents, in our mind, is quite impressive. To qualify him as a handwriting
expert, he declared that he underwent extensive and actual studies and examination of disputed or
questioned document, both at the National Bureau of Investigation Academy and National Bureau of
Investigation Questioned Document Laboratory, respectively, from July 1964, up to his appointment as
Document Examiner in June, 1975, and, to further his experience along this line, he attended the 297th
Annual Conference of the American Society of Questioned Document Examiners held at Seattle,
Washington, in August 1971, as a representative of the Philippines, and likewise conducted an
observation of the present and modern trends of crime laboratories in the West Coast, U.S.A., in 1971;
that the likewise had conducted actual tests and examination of about 100,000 documents, as
requested by the different courts, administrative, and governmental agencies of the Government,
substantial portions of which relate to actual court cases.
"In concluding that the signatures of the appellee Lily Yulo, in the disputed document in question (Exh.
B-1), were all forgeries, and no her genuine signatures, the expert witness categorically recited and
specified in open court what he observed to be about twelve (12) glaring and material significant
differences, in his comparison of the signatures appearing in the genuine specimen signatures of the
said appellee and with those appearing in the questioned document (Exhibit B-1). Indeed, we have
likewise seen the supposed notable differences, found in the standard or genuine signatures of the
appellee which were lifted and obtained in the official files of the government, such as the Bureau of
Internal Revenue on her income tax returns, as compared to the pretended signature of the appellee
appearing in Exhibits B, B-1. It is also noteworthy to mention that the appellant did not even bother to
conduct a cross-examination of the handwriting expert witness, Capt. Giron, neither did the appellant
present another handwriting expert, at least to counter-act or balance the appellee’s handwriting
expert.
"Prescinding from the foregoing facts, we subscribe fully to the lower court’s observations that the
signatures of the appellee Lily Yulo in the questioned document (Exh. B-1) were forged. Hence, we find
no factual basis to disagree." (pp. 28-30, Rollo)
As to the petitioner’s contention that even if the signature of Lily Yulo was forged or even if the attached
properties were her exclusive property, the same can be made answerable to the obligation because the
said properties form part of the conjugal partnership of the spouses Yulo, the appellate court held that
these contentions are without merit because there is strong preponderant evidence to show that A & L
Industries belongs exclusively to respondent Lily Yulo, namely: a) The Certificate of Registration of A & L
Industries, issued by the Bureau of Commerce, showing that said business is a single proprietorship, and
that the registered owner thereof is only Lily Yulo; b) The Mayor’s Permit issued in favor of A & L
Industries, by the Caloocan City Mayor’s Office showing compliance by said single proprietorship
company with the City Ordinance governing business establishments; and c) The Special Power of
Attorney itself, assuming but without admitting its due execution, is tangible proof that Augusto Yulo
has no interest whatsoever in the A & L Industries, otherwise, there would have been no necessity for
the Special Power of Attorney if he is a part owner of said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed the findings of the trial court that
there was bad faith on the part of the petitioner as to entitle the private respondent to damages as
shown not only by the fact that the petitioner did not present the Deed of Assignment or the
construction agreement or any evidence whatsoever to support its claim of fraud on the part of the
private respondent and to justify the issuance of a preliminary attachment, but also by the following
findings:jgc:chanrobles.com.ph
"Continuing and elaborating further on the appellant’s mala fide actuations in securing the writ of
attachment, the lower court stated as follows:jgc:chanrobles.com.ph
"‘Plaintiff not satisfied with the instant case where an order for attachment has already been issued and
enforced, on the strength of the same Promissory Note (Exhibit ‘A’), utilizing the Deed of Chattel
Mortgage (Exhibit ‘4’), filed a foreclosure proceedings before the Office of the Sheriff of Caloocan
(Exhibit ‘6’) foreclosing the remaining properties found inside the premises formerly occupied by the A
& L Industries. A minute examination of Exhibit ‘4’ will show that the contracting parties thereto, as
appearing in par. 1 thereof, are Augusto Yulo, doing business under the style of A & L Industries (should
be A & L Glass Industries Corporation), as mortgagor and BA Finance Corporation as mortgagee, thus the
enforcement of the Chattel Mortgage against the property of A & L Industries exclusively owned by Lily
T. Yulo appears to be without any factual or legal basis whatsoever. The chattel mortgage, Exhibit ‘4’ and
the Promissory Note, Exhibit ‘A,’ are based on one and the same obligation. Plaintiff tried to enforce as
it did enforce its claim into two different modes a single obligation.
"‘Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by virtue of a complaint she
filed with the Court of First Instance of Caloocan, seeking annulment of the Promissory Note, the very
basis of the plaintiff in filing this complaint, immediately after the day it filed a Motion for the Issuance
of an Alias Writ of Preliminary Attachment . . . Yet, inspite of the knowledge and the filing of this Motion
to Suspend Proceedings, the Plaintiff still filed a Motion for the Issuance of a Writ of Attachment dated
February 6, 1976 before this court. To add insult to injury, plaintiff even filed a Motion for Examination
of the Attachment Debtor, although aware that Lily Yulo had already denied participation in the
execution of Exhibits "A" and "B." These incidents and actions taken by plaintiff, to the thinking of the
court, are sufficient to prove and establish the element of bad faith and malice on the part of plaintiff
which may warrant the award of damages in favor of defendant of Lily Yulo. (Ibid., pp. 102-103).’
"Indeed, the existence of evident bad faith on the appellant’s part in proceeding against the appellee
Lily Yulo in the present case, may likewise be buttressed on the fact that its officer Mr. Abraham Co, did
not even bother to demand the production of at least the duplicate original of the Special Power of
Attorney (Exhibit B) and merely contended himself with a mere xerox copy thereof, neither did he
require a more specific authority from the A & L Industries to contract the loan in question, since from
the very content and recitals of the disputed document, no authority, express or implied, has been
delegated or granted to August Yulo to contract a loan, especially with the appellant." (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the petitioner should have presented
evidence to disprove or rebut the private respondent’s claim but it remained quiet and chose not to
disturb the testimony and the evidence presented by the private respondent to prove her
claim.chanrobles.com:cralaw:red
In this petition for certiorari, the petitioner raises three issues. The first issue deals with the appellate
court’s affirmance of the trial court’s findings that the signature of the private respondent on the Special
Power of Attorney was forged. According to the petitioner, the Court of Appeals disregarded the direct
mandate of Section 23, Rule 132 of the Rules of Court which states in part that evidence of handwriting
by comparison may be made "with writings admitted or treated as genuine by the party against whom
the evidence is offered, or proved to be genuine to the satisfaction of the judge," and that there is no
evidence on record which proves or tends to prove the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as "standards" for comparison with the alleged
signature of the private respondent in the Special Power of Attorney were those from the latter’s
residence certificates in the years 1973, 1974 and 1975, her income tax returns for the years 1973 and
1975 and from a document on long bond paper dated May 18, 1977. Not only were the signatures in the
foregoing documents admitted by the private respondent as hers but most of the said documents were
used by the private respondent in her transactions with the government. As was held in the case of
Plymouth Saving & Loan Ass’n. No. 2 v. Kassing (125 N.E. 488, 494):jgc:chanrobles.com.ph
"We believe the true rule deduced from the authorities to be that the genuineness of a ‘standard’
writing may be established (1) by the admission of the person sought to be charged with the disputed
writing made at or for the purposes of the trial or by his testimony; (2) by witnesses who saw the
standards written or to whom or in whose hearing the person sought to be charged acknowledged the
writing thereof; (3) by evidence showing that the reputed writer of the standard has acquiesced in or
recognized the same, or that it has been adopted and acted upon by him his business transactions or
other concerns . . ."cralaw virtua1aw library
Furthermore, the judge found such signatures to be sufficient as standards. In the case of Taylor-
Wharton Iron & Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:jgc:chanrobles.com.ph
"When a writing is offered as a standard of comparison it is for the presiding judge to decide whether it
is the handwriting of the party to be charged.’Unless his finding is founded upon error of law, or upon
evidence which is, as matter of law, insufficient to justify the finding, this court will not revise it upon
exceptions.’ (Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuñez v. Perry, 113 Mass, 274, 276.)"
We cannot find any error on the part of the trial judge in using the above documents as standards and
also in giving credence to the expert witness presented by the private respondent whose testimony the
petitioner failed to rebut and whose credibility it likewise failed to impeach. But more important is the
fact that the unrebutted handwriting expert’s testimony noted twelve (12) glaring and material
differences in the alleged signature of the private respondent in the Special Power of Attorney as
compared with the specimen signatures, something which the appellate court also took into account. In
Cesar v. Sandiganbayan (134 SCRA 105, 132), we ruled:jgc:chanrobles.com.ph
"Mr. Maniwang pointed to other significant divergences and distinctive characteristics between the
sample signatures and the signatures on the questioned checks in his report which the court’s Presiding
Justice kept mentioning during Maniwang’s testimony.
"In the course of his cross-examination, NBI expert Tabayoyong admitted that he saw the differences
between the exemplars used and the questioned signatures but he dismissed the differences because
he did not consider them fundamental. We role that significant differences are more fundamental than
a few similarities. A forger always strives to master some similarities."cralaw virtua1aw library
The second issue raised by the petitioner is that while it is true that A & L Industries is a single
proprietorship and the registered owner thereof is private respondent Lily Yulo, the said proprietorship
was established during the marriage and its assets were also acquired during the same. Therefore, it is
presumed that this property forms part of the conjugal partnership of the spouses Augusto and Lily Yulo
and thus, could be held liable for the obligations contracted by Augusto Yulo, as administrator of the
partnership.
There is no dispute that A & L Industries was established during the marriage of Augusto and Lily Yulo
and therefore the same is presumed conjugal and the fact that it was registered in the name of only one
of the spouses does not destroy its conjugal nature (See Mendoza v. Reyes, 124 SCRA 161, 165).
However, for the said property to be held liable, the obligation contracted by the husband must have
redounded to the benefit of the conjugal partnership under Article 161 of the Civil Code. In the present
case, the obligation which the petitioner is seeking to enforce against the conjugal property managed by
the private respondent Lily Yulo was undoubtedly contracted by Augusto Yulo for his own benefit
because at the time he incurred the obligation he had already abandoned his family and had left their
conjugal home. Worse, he made it appear that he was duly authorized by his wife in behalf of A & L
Industries, to procure such loan from the petitioner. Clearly, to make A & L Industries liable now for the
said loan would be unjust and contrary to the express provision of the Civil Code. As we have ruled in
Luzon Surety Co., Inc. v. De Garcia (30 SCRA 111, 115-117):jgc:chanrobles.com.ph
"As explained in the decision now under review: ‘It is true that the husband is the administrator of the
conjugal property pursuant to the provisions of Art. 163 of the new Civil Code. However, as such
administrator the only obligations incurred by the husband that are chargeable against the conjugal
property are those incurred in the legitimate pursuit of his career, profession or business with the
honest benefit that he is doing right for the benefit of the family. This is not true in the case at bar for
we believe that the husband in acting as guarantor or surety for another in am indemnity agreement as
that involved in this case did not act for the benefit of the conjugal partnership. Such inference is more
emphatic in this case, when no proof is presented that Vicente Garcia in acting as surety or guarantor
received consideration therefor, which may redound to the benefit of the conjugal partnership.’ (Ibid,
pp. 46-47).
x x x
". . . In the most categorical language, a conjugal partnership under that provision is liable only for such
‘debts and obligations contracted by the husband for the benefit of the conjugal partnership.’ There
must be the requisite showing then of some advantage which clearly accrued to the welfare of the
spouses. There is none in this case . . .
x x x
"Moreover, it would negate the plain object of the additional requirement in the present Civil Code that
a debt contracted by the husband to bind a conjugal partnership must redound to its benefit. That is still
another provision indicative of the solicitude and tender regard that the law manifests for the family as
a unit. Its interest is paramount; its welfare uppermost in the minds of the codifiers and
legislators."cralaw virtua1aw library
We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto Yulo against
his conjugal properties with respondent Lily Yulo. Thus, it follows that the writ of attachment cannot
issue against the said properties.chanrobles law library : red
Finally, the third issue assails the award of actual damages. According to the petitioner, both the lower
court and the appellate court overlooked the fact that the properties referred to are still subject to a
levy on attachment. They are, therefore, still under custodia legis and thus, the assailed decision should
have included a declaration as to who is entitled to the attached properties and that assuming arguendo
that the attachment was erroneous, the lower court should have ordered the sheriff to return to the
private respondent the attached properties instead of condemning the petitioner to pay the value
thereof by way of actual damages.
In the case of Lazatin v. Twaño (2 SCRA 842, 847), we ruled:chanrob1es virtual 1aw library
x x x
". . . It should be observed that Sec. 4 of Rule 59, does not prescribe the remedies available to the
attachment defendant in case of a wrongful attachment, but merely provides an action for recovery
upon the bond, based on the undertaking therein made and not upon the liability arising from a tortious
act, like the malicious suing out of an attachment. Under the first, where malice is not essential, the
attachment defendant, is entitled to recover only the actual damages sustained by him by reason of the
attachment. Under the second, where the attachment is maliciously sued out, the damages recoverable
may include a compensation for every injury to his credit, business or feelings (Tyler v. Mahoney, 168 NC
237, 84 SE 362; Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE 234) . . ."cralaw virtua1aw library
The question before us, therefore, is whether the attachment of the properties of A & L Industries was
wrongful so as to entitle the petitioner to actual damages only or whether the said attachment was
made in bad faith and with malice to warrant the award of other kinds of damages. Moreover, if the
private respondent is entitled only to actual damages, was the court justified in ordering the petitioner
to pay for the value of the attached properties instead of ordering the return of the said properties to
the private respondent Lily Yulo?
Both the trial and appellate courts found that there was bad faith on the part of the petitioner in
securing the writ of attachment. We do not think so. "An attachment may be said to be wrongful when,
for instance, the plaintiff has no cause of action, or that there is no true ground therefor, or that the
plaintiff has a sufficient security other than the property attached, which is tantamount to saying that
the plaintiff is not entitled to attachment because the requirements of entitling him to the writ are
wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco, Revised Rules of Court)
Although the petitioner failed to prove the ground relied upon for the issuance of the writ of
attachment, this failure cannot be equated with bad faith or malicious intent. The steps which were
taken by the petitioner to ensure the security of its claim were premised on the firm belief that the
properties involved could be made answerable for the unpaid obligation due it. There is no question
that a loan in the amount of P591,003.59 was borrowed from the bank.chanrobles.com.ph : virtual law
library
We, thus, find that the petitioner is liable only for actual damages and not for exemplary damages and
attorney’s fees. Respondent Lily Yulo has manifested before this Court that she no longer desires the
return of the attached properties since the said attachment caused her to close down the business.
From that time she has become a mere employee of the new owner of the premises. She has grave
doubts as to the running condition of the attached machineries and equipments considering that the
attachment was effected way back in 1975. She states as a matter of fact that the petitioner has already
caused the sale of the machineries for fear that they might be destroyed due to prolonged litigation.
We, therefore, deem it just and equitable to allow private respondent Lily Yulo to recover actual
damages based on the value of the attached properties as proven in the trial court, in the amount of
P660,000.00. In turn, if there are any remaining attached properties, they should be permanently
released to herein petitioner.
We cannot, however, sustain the award of P500,000.00 representing unrealized profits because this
amount was not proved or justified before the trial court. The basis of the alleged unearned profits is
too speculative and conjectural to show actual damages for a future period. The private respondent
failed to present reports on the average actual profits earned by her business and other evidence of
profitability which are necessary to prove her claim for the said amount (See G. A. Machineries, Inc. v.
Yaptinchay, 126 SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00 actual
damages representing unrealized profits, P150,000.00 for exemplary damages and P20,000.00 for
attorney’s fees. As stated earlier, the attached properties, should be released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner is ordered to
pay the private respondent Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS
(P660,000.00) as actual damages. The remaining properties subject of the attachment are ordered
released in favor of the petitioner.
SO ORDERED.
11. Security Bank v. Mar Tierra Corp., GR No. 143382, November 29, 2006
G.R. No. 143382 November 29, 2006
SECURITY BANK and TRUST COMPANY, Petitioner,

vs.
MAR TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL J. LACSON and RICARDO A.
LOPA, Respondents.
DECISION
CORONA, J.:
May the conjugal partnership be held liable for an indemnity agreement entered into by the husband to
accommodate a third party?
This issue confronts us in this petition for review on certiorari assailing the November 9, 1999
decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 48107.
On May 7, 1980, respondent Mar Tierra Corporation, through its president, Wilfrido C. Martinez, applied
for a ₱12,000,000 credit accommodation with petitioner Security Bank and Trust Company. Petitioner
approved the application and entered into a credit line agreement with respondent corporation. It was
secured by an indemnity agreement executed by individual respondents Wilfrido C. Martinez, Miguel J.
Lacson and Ricardo A. Lopa who bound themselves jointly and severally with respondent corporation for
the payment of the loan.
On July 2, 1980, the credit line agreement was amended and increased to ₱14,000,000. Individual
respondents correspondingly executed a new indemnity agreement in favor of the bank to secure the
increased credit line.
On September 25, 1981, respondent corporation availed of its credit line and received the sum of
₱9,952,000 which it undertook to pay on or before November 30, 1981. It was able to pay ₱4,648,000
for the principal loan and ₱2,729,195.56 for the interest and other charges. However, respondent
corporation was not able to pay the balance as it suffered business reversals, eventually ceasing
operations in 1984.
Unable to collect the balance of the loan, petitioner filed a complaint for a sum of money with a prayer
for preliminary attachment against respondent corporation and individual respondents in the Regional
Trial Court (RTC) of Makati, Branch 66. It was docketed as Civil Case No. 3947.
Subsequently, however, petitioner had the case dismissed with respect to individual respondents Lacson
and Lopa,2 leaving Martinez as the remaining individual respondent.
On August 10, 1982, the RTC issued a writ of attachment on all real and personal properties of
respondent corporation and individual respondent Martinez. As a consequence, the conjugal house and
lot of the spouses Wilfrido and Josefina Martinez in Barrio Calaanan, Caloocan City covered by Transfer
Certificate of Title (TCT) No. 49158 was levied on.
The RTC rendered its decision3 on June 20, 1994. It held respondent corporation and individual
respondent Martinez jointly and severally liable to petitioner for ₱5,304,000 plus 12% interest per
annum and 5% penalty commencing on June 21, 1982 until fully paid, plus ₱10,000 as attorney’s fees. It,
however, found that the obligation contracted by individual respondent Martinez did not redound to
the benefit of his family, hence, it ordered the lifting of the attachment on the conjugal house and lot of
the spouses Martinez.
Dissatisfied with the RTC decision, petitioner appealed to the CA but the appellate court affirmed the
trial court’s decision in toto. Petitioner sought reconsideration but it was denied. Hence, this petition.
Petitioner makes two basic assertions: (1) the RTC and CA erred in finding that respondent corporation
availed of ₱9,952,000 only from its credit line and not the entire ₱14,000,000 and (2) the RTC and CA
were wrong in ruling that the conjugal partnership of the Martinez spouses could not be held liable for
the obligation incurred by individual respondent Martinez.
We uphold the CA.
Factual findings of the CA, affirming those of the trial court, will not be disturbed on appeal but must be
accorded great weight.4 These findings are conclusive not only on the parties but on this Court as well.5
The CA affirmed the finding of the RTC that the amount availed of by respondent corporation from its
credit line with petitioner was only ₱9,952,000. Both courts correctly pointed out that petitioner itself
admitted this amount when it alleged in paragraph seven of its complaint that respondent corporation
"borrowed and received the principal sum of ₱9,952,000."6 Petitioner was therefore bound by the
factual finding of the appellate and trial courts, as well as by its own judicial admission, on this particular
point.
At any rate, the issue of the amount actually availed of by respondent corporation is factual. It is not
within the ambit of this Court’s discretionary power of judicial review under Rule 45 of the Rules of
Court which is concerned solely with questions of law.7
We now move on to the principal issue in this case.
Under Article 161(1) of the Civil Code,8 the conjugal partnership is liable for "all debts and obligations
contracted by the husband for the benefit of the conjugal partnership." But when are debts and
obligations contracted by the husband alone considered for the benefit of and therefore chargeable
against the conjugal partnership? Is a surety agreement or an accommodation contract entered into by
the husband in favor of his employer within the contemplation of the said provision?
We ruled as early as 1969 in Luzon Surety Co., Inc. v. de Garcia9 that, in acting as a guarantor or surety
for another, the husband does not act for the benefit of the conjugal partnership as the benefit is clearly
intended for a third party.
In Ayala Investment and Development Corporation v. Court of Appeals,10 we ruled that, if the husband
himself is the principal obligor in the contract, i.e., the direct recipient of the money and services to be
used in or for his own business or profession, the transaction falls within the term "obligations for the
benefit of the conjugal partnership." In other words, where the husband contracts an obligation on
behalf of the family business, there is a legal presumption that such obligation redounds to the benefit
of the conjugal partnership.11
On the other hand, if the money or services are given to another person or entity and the husband acted
only as a surety or guarantor, the transaction cannot by itself be deemed an obligation for the benefit of
the conjugal partnership.12 It is for the benefit of the principal debtor and not for the surety or his
family. No presumption is raised that, when a husband enters into a contract of surety or
accommodation agreement, it is for the benefit of the conjugal partnership. Proof must be presented to
establish the benefit redounding to the conjugal partnership.13 In the absence of any showing of benefit
received by it, the conjugal partnership cannot be held liable on an indemnity agreement executed by
the husband to accommodate a third party.14
In this case, the principal contract, the credit line agreement between petitioner and respondent
corporation, was solely for the benefit of the latter. The accessory contract (the indemnity agreement)
under which individual respondent Martinez assumed the obligation of a surety for respondent
corporation was similarly for the latter’s benefit. Petitioner had the burden of proving that the conjugal
partnership of the spouses Martinez benefited from the transaction. It failed to discharge that burden.
To hold the conjugal partnership liable for an obligation pertaining to the husband alone defeats the
objective of the Civil Code to protect the solidarity and well being of the family as a unit.15 The
underlying concern of the law is the conservation of the conjugal partnership.16 Hence, it limits the
liability of the conjugal partnership only to debts and obligations contracted by the husband for the
benefit of the conjugal partnership.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
12. Carandang v. Heirs of de Guzman, G.R. No. 160347, November 29, 2006
G.R. No. 160347 November 29, 2006
ARCADIO and MARIA LUISA CARANDANG, Petitioners,

vs.
HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO
DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari assailing the Court of Appeals Decision1 and Resolution
affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa
Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to
Quirino A. de Guzman.
The Court of Appeals summarized the facts as follows:
[Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of
Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six
percent (46%) respectively.
On November 26, 1983, the capital stock of MBS was increased, from ₱500,000 to P1.5 million and
₱345,000 of this increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989,
MBS again increased its capital stock, from ₱1.5 million to ₱3 million, [the spouses Carandang] yet again
subscribed to the increase. They subscribed to ₱93,750 worth of newly issued capital stock.
[De Guzman] claims that, part of the payment for these subscriptions were paid by him, ₱293,250 for
the November 26, 1983 capital stock increase and ₱43,125 for the March 3, 1989 Capital Stock increase
or a total of ₱336,375. Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses
Carandang] for the payment of said total amount.
[The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement
was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for
the stock subscriptions of the former without cost, in consideration for [Arcadio Carandang’s] technical
expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication
equipment therefore, there is no indebtedness on their part [sic].
On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the ₱336,375 together with
damages. After trial on the merits, the trial court disposed of the case in this wise:
"WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman]. Accordingly,
[the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit:
(1) ₱336,375.00 representing [the spouses Carandang’s] loan to de Guzman;
(2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June
5, 1992 when this complaint was filed until the principal amount shall have been fully paid;
(3) ₱20,000.00 as attorney’s fees;
(4) Costs of suit.
The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in
the 22 April 2003 assailed Decision:
WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs.2
The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of
Appeals in the 6 October 2003 assailed Resolution:
WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April
22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and
REITERATED.3
The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari,
bringing forth the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE
IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF
BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE
RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE
REVISED RULES ON EVIDENCE.
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT
FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.
V.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE
PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF
THE NEW CIVIL CODE.4
Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the Rules of
Court
The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of
Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which
provides:
SEC. 16. Death of party; duty of counsel. – Whenever a party to a pending action dies, and the claim is
not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days
after such death of the fact thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order the legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if the one so named shall
fail to appear within the specified period, the court may order the opposing party, within a specified
time, to procure the appointment of an executor or administrator for the estate of the deceased and the
latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such
appointment, if defrayed by the opposing party, may be recovered as costs.
The spouses Carandang posits that such failure to comply with the above rule renders void the decision
of the RTC, in adherence to the following pronouncements in Vda. de Haberer v. Court of Appeals5 and
Ferreria v. Vda. de Gonzales6 :
Thus, it has been held that when a party dies in an action that survives and no order is issued by the
court for the appearance of the legal representative or of the heirs of the deceased in substitution of the
deceased, and as a matter of fact no substitution has ever been effected, the trial held by the court
without such legal representatives or heirs and the judgment rendered after such trial are null and void
because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs
upon whom the trial and judgment would be binding.7
In the present case, there had been no court order for the legal representative of the deceased to
appear, nor had any such legal representative appeared in court to be substituted for the deceased;
neither had the complainant ever procured the appointment of such legal representative of the
deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid
substitution was effected, consequently, the court never acquired jurisdiction over appellant for the
purpose of making her a party to the case and making the decision binding upon her, either personally
or as a representative of the estate of her deceased mother.8
However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the
discretion of the parties,9 jurisdiction over the person of the parties to the case may be waived either
expressly or impliedly.10 Implied waiver comes in the form of either voluntary appearance or a failure to
object.11
In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the
heirs of the deceased party, and therefore the judgment cannot be made binding upon them. In the
case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction of the court
over their persons; they are actually claiming and embracing such jurisdiction. In doing so, their waiver is
not even merely implied (by their participation in the appeal of said Decision), but express (by their
explicit espousal of such view in both the Court of Appeals and in this Court). The heirs of de Guzman
had no objection to being bound by the Decision of the RTC.
Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only
be asserted by the party who can thereby waive it by silence.
It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The
underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement,
but because non-compliance therewith results in the undeniable violation of the right to due process of
those who, though not duly notified of the proceedings, are substantially affected by the decision
rendered therein.12 Such violation of due process can only be asserted by the persons whose rights are
claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be
enforced.
Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo,13 where we
likewise held that the proceedings that took place after the death of the party are void, we gave another
reason for such nullity: "the attorneys for the offended party ceased to be the attorneys for the
deceased upon the death of the latter, the principal x x x." Nevertheless, the case at bar had already
been submitted for decision before the RTC on 4 June 1998, several months before the passing away of
de Guzman on 19 February 1999. Hence, no further proceedings requiring the appearance of de
Guzman’s counsel were conducted before the promulgation of the RTC Decision. Consequently, de
Guzman’s counsel cannot be said to have no authority to appear in trial, as trial had already ceased
upon the death of de Guzman.
In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of
Court, because of the express waiver of the heirs to the jurisdiction over their persons, and because
there had been, before the promulgation of the RTC Decision, no further proceedings requiring the
appearance of de Guzman’s counsel.
Before proceeding with the substantive aspects of the case, however, there is still one more procedural
issue to tackle, the fourth issue presented by the spouses Carandang on the non-inclusion in the
complaint of an indispensable party.
Whether or not the RTC should have dismissed the case for failure to state a cause of action, considering
that Milagros de Guzman, allegedly an indispensable party, was not included as a party-plaintiff
The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions
were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party.
Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should
cause the dismissal of the action because "(i)f a suit is not brought in the name of or against the real
party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of
action."14
The Court of Appeals held:
We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which
the four (4) checks were drawn is part of their conjugal property and under both the Civil Code and the
Family Code the husband alone may institute an action for the recovery or protection of the spouses’
conjugal property.
Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that "x x x Under the New Civil
Code, the husband is the administrator of the conjugal partnership. In fact, he is the sole administrator,
and the wife is not entitled as a matter of right to join him in this endeavor. The husband may defend
the conjugal partnership in a suit or action without being joined by the wife. x x x Under the Family
Code, the administration of the conjugal property belongs to the husband and the wife jointly. However,
unlike an act of alienation or encumbrance where the consent of both spouses is required, joint
management or administration does not require that the husband and wife always act together. Each
spouse may validly exercise full power of management alone, subject to the intervention of the court in
proper cases as provided under Article 124 of the Family Code. x x x."
The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest"
and "indispensable party." A real party in interest is the party who stands to be benefited or injured by
the judgment of the suit, or the party entitled to the avails of the suit.15 On the other hand, an
indispensable party is a party in interest without whom no final determination can be had of an
action,16 in contrast to a necessary party, which is one who is not indispensable but who ought to be
joined as a party if complete relief is to be accorded as to those already parties, or for a complete
determination or settlement of the claim subject of the action.17
The spouses Carandang are indeed correct that "(i)f a suit is not brought in the name of or against the
real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause
of action."18 However, what dismissal on this ground entails is an examination of whether the parties
presently pleaded are interested in the outcome of the litigation, and not whether all persons interested
in such outcome are actually pleaded. The latter query is relevant in discussions
concerning indispensable and necessary parties, but not in discussions concerning real parties in
interest. Both indispensable and necessary parties are considered as real parties in interest, since both
classes of parties stand to be benefited or injured by the judgment of the suit.
Quirino and Milagros de Guzman were married before the effectivity of the Family Code on 3 August
1988. As they did not execute any marriage settlement, the regime of conjugal partnership of gains
govern their property relations.19
All property acquired during the marriage, whether the acquisition appears to have been made,
contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the
contrary is proved.20 Credits are personal properties,21 acquired during the time the loan or other credit
transaction was executed. Therefore, credits loaned during the time of the marriage are presumed to be
conjugal property.
Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable,
such credits are presumed to be conjugal property. There being no evidence to the contrary, such
presumption subsists. As such, Quirino de Guzman, being a co-owner of specific partnership
property,22 is certainly a real party in interest. Dismissal on the ground of failure to state a cause of
action, by reason that the suit was allegedly not brought by a real party in interest, is therefore
unwarranted.
So now we come to the discussion concerning indispensable and necessary parties. When an
indispensable party is not before the court, the action should likewise be dismissed.23 The absence of an
indispensable party renders all subsequent actuations of the court void, for want of authority to act, not
only as to the absent parties but even as to those present.24 On the other hand, the non-joinder of
necessary parties do not result in the dismissal of the case. Instead, Section 9, Rule 3 of the Rules of
Court provides for the consequences of such non-joinder:
Sec. 9. Non-joinder of necessary parties to be pleaded. – Whenever in any pleading in which a claim is
asserted a necessary party is not joined, the pleader shall set forth his name, if known, and shall state
why he is omitted. Should the court find the reason for the omission unmeritorious, it may order the
inclusion of the omitted necessary party if jurisdiction over his person may be obtained.
The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver
of the claim against such party.
The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and
the judgment rendered therein shall be without prejudice to the rights of such necessary party.
Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of
the complaint. This is an exception to Section 3, Rule 17 which allows the dismissal of the complaint for
failure to comply with an order of the court, as Section 9, Rule 3 specifically provides for the effect of
such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment
rendered therein shall be without prejudice to the rights of such necessary party. Section 11, Rule 3
likewise provides that the non-joinder of parties is not a ground for the dismissal of the action.
Other than the indispensable and necessary parties, there is a third set of parties: the pro-forma parties,
which are those who are required to be joined as co-parties in suits by or against another party as may
be provided by the applicable substantive law or procedural rule.25 An example is provided by Section 4,
Rule 3 of the Rules of Court:
Sec. 4. Spouses as parties. – Husband and wife shall sue or be sued jointly, except as provided by law.
Pro-forma parties can either be indispensable, necessary or neither indispensable nor necessary. The
third case occurs if, for example, a husband files an action to recover a property which he claims to be
part of his exclusive property. The wife may have no legal interest in such property, but the rules
nevertheless require that she be joined as a party.
In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under
Section 11, Rule 3 must be followed: such non-joinder is not a ground for dismissal. Hence, in a case
concerning an action to recover a sum of money, we held that the failure to join the spouse in that case
was not a jurisdictional defect.26 The non-joinder of a spouse does not warrant dismissal as it is merely a
formal requirement which may be cured by amendment.27
Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the
rules concerning indispensable or necessary parties, as the case may be, should be applied. Thus,
dismissal is warranted only if the pro-forma party not joined in the complaint is an indispensable party.
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses
Carandang, seems to be either an indispensable or a necessary party. If she is an indispensable party,
dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not
there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3.
Article 108 of the Family Code provides:

Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all
that is not in conflict with what is expressly determined in this Chapter or by the spouses in their
marriage settlements.
This provision is practically the same as the Civil Code provision it superceded:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all
that is not in conflict with what is expressly determined in this Chapter.
In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other
partners of specific partnership property." Taken with the presumption of the conjugal nature of the
funds used to finance the four checks used to pay for petitioners’ stock subscriptions, and with the
presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and
Milagros de Guzman co-owners of the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action
for the recovery thereof. In the fairly recent cases of Baloloy v. Hular28 and Adlawan v. Adlawan,29 we
held that, in a co-ownership, co-owners may bring actions for the recovery of co-owned property
without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to
have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of
Appeals,30 we also held that Article 487 of the Civil Code, which provides that any of the co-owners may
bring an action for ejectment, covers all kinds of action for the recovery of possession.31
In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to
Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind
of action, for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-
owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto.
The other co-owners are not indispensable parties. They are not even necessary parties, for a complete
relief can be accorded in the suit even without their participation, since the suit is presumed to have
been filed for the benefit of all co-owners.32
We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery
of the allegedly loaned money to the spouses Carandang. As such, she need not have been impleaded in
said suit, and dismissal of the suit is not warranted by her not being a party thereto.
Whether or not respondents were able to prove the loan sought to be collected from petitioners
In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans
failed to prove the alleged loan for which the spouses Carandang were held liable. As previously stated,
spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang,
amounting to ₱336,375.00. The de Guzmans claim that these payments were in the form of loans
and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses
Carandang that the latter would repay him. Petitioners, on the other hand, argue that there was an oral
pre-incorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his
46% equity participation in the corporation even if the capital structures were increased, and that
Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang
with no cost to the latter.
On this main issue, the Court of Appeals held:
[The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by
preponderance of evidence, either the existence of the purported loan or the non-payment thereof.
Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is
superior to that of the other. The concept of preponderance of evidence refers to evidence that is of
greater weight, or more convincing, than that which is offered in opposition to it; it means probability of
truth.
[The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock
subscriptions and their reason for not reimbursing the latter is the alleged pre-incorporation agreement,
to which they offer no clear proof as to its existence.
It is a basic rule in evidence that each party must prove his affirmative allegation. Thus, the plaintiff or
complainant has to prove his affirmative allegations in the complaints and the defendant or respondent
has to prove the affirmative allegations in his affirmative defenses and counterclaims.33
The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having
presented evidence only of the payment in favor of the Carandangs. They claim:
It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay
for Mr. "B’s" obligation, that payment by Mr. "A" cannot, by any stretch of imagination, possibly mean
that there is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payment by Mr. "A" is
purely out of generosity or that there is a mutual agreement between them. As applied to the instant
case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr. de
Guzman and the petitioners --- to the effect that the former shall be responsible for paying stock
subscriptions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions of the
petitioners, there was no loan to speak of, but only a compliance with the pre-incorporation
agreement.34
The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "B’s" obligation, the
presumption is that Mr. "B" is indebted to Mr. "A" for such amount that has been paid. This is pursuant
to Articles 1236 and 1237 of the Civil Code, which provide:
Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no
interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover only insofar as the payment has
been beneficial to the debtor.
Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter,
cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage,
guarantee, or penalty.
Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a
third person, and even in cases where the third person paid against the will of the debtor, such payment
would produce a debt in favor of the paying third person. In fact, the only consequences for the failure
to inform or get the consent of the debtor are the following: (1) the third person can recover only
insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated to
the rights of the creditor, such as those arising from a mortgage, guarantee or penalty.35
We say, however, that this is merely a presumption. By virtue of the parties’ freedom to contract, the
parties could stipulate otherwise and thus, as suggested by the spouses Carandang, there is indeed a
possibility that such payment by Mr. "A" was purely out of generosity or that there was a mutual
agreement between them. But such mutual agreement, being an exception to presumed course of
events as laid down by Articles 1236 and 1237, must be adequately proven.
The de Guzmans have successfully proven their payment of the spouses Carandang’s stock
subscriptions. These payments were, in fact, admitted by the spouses Carandang. Consequently, it is
now up to the spouses Carandang to prove the existence of the pre-incorporation agreement that was
their defense to the purported loan.
Unfortunately for the spouses Carandang, the only testimony which touched on the existence and
substance of the pre-incorporation agreement, that of petitioner Arcardio Carandang, was stricken off
the record because he did not submit himself to a cross-examination of the opposing party. On the
other hand, the testimonies of Romeo Saavedra,36 Roberto S. Carandang,37 Gertrudes Z.
Esteban,38 Ceferino Basilio,39 and Ma. Luisa Carandang40 touched on matters other than the existence
and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no
personal knowledge as to the alleged existence of the pre-incorporation agreement, the testimonies of
these witnesses did not even mention the existence of a pre-incorporation agreement.
Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted
the existence of a pre-incorporation agreement because when they were asked by their counsel
regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in their behalf,
they said that they had already paid for it thereby negating their own defense that there was a pre-
incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or
loaned to them. This basic and irrefutable fact can be gleaned from their testimonies which the private
respondents are quoting for easy reference:
a. With respect to the testimony of Ma. Luisa Carandang
Q: Now, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff
in this case charging you that you paid for this year and asking enough to paid (sic) your tax?
A: We have paid already, so, we are not liable for anything payment (sic).41
b. With respect to the testimony of Arcadio Carandang
"Q: How much?
A: ₱40,000.00 to ₱50,000.00 per month.

Q: The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment
of your shares; which receipts were marked as Exhibits "G" to "L" (Plaintiff).
I’m showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the
name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this
Official Receipt and state for the records, who made for the payment stated in these receipts in your
name?
A: I paid for those shares."42
There being no testimony or documentary evidence proving the existence of the pre-incorporation
agreement, the spouses Carandang are forced to rely upon an alleged admission by the original plaintiff
of the existence of the pre-incorporation agreement.
Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the pre-
incorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private
respondents’ Reply.
Paragraphs 13 and 14 of petitioners’ Answer dated 7 July 1992 state in full:
13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M.
Carandang to a joint venture by pooling together their technical expertise, equipments, financial
resources and franchise. Plaintiff proposed to defendant and mutually agreed on the following:
1. That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc.
2. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his
new equipments he bought, and his skill in repairing and modifying radio/communication
equipments into high proficiency, said defendant would have an equity participation in the
corporation of 46%, and plaintiff 54% because of his financial resources and franchise.
3. That defendant would always maintain his 46% equity participation in the corporation even if
the capital structures are increased, and that plaintiff would personally pay the equity
shares/stock subscriptions of defendant with no cost to the latter.
4. That because of defendant’s expertise in the trade including the marketing aspects, he would
be the President and General Manager, and plaintiff the Chairman of the Board.
5. That considering their past and trustworthy relations, they would maintain such relations in
the joint venture without any mental reservation for their common benefit and success of the
business.
14. Having mutually agreed on the above arrangements, the single proprietorship of plaintiff
was immediately spun-off into a corporation now known as Mabuhay Broadcasting System, Inc.
The incorporators are plaintiff and his family members/nominees controlling jointly 54% of the
stocks and defendant Arcadio M. Carandang controlling singly 46% as previously agreed.43
Meanwhile, paragraphs 3 and 4 of private respondents’ Reply dated 29 July 1992 state in full:
3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and
defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems,
Inc. Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being
devoid of any legal or factual bases. The truth of the matter is that defendant Arcadio M. Carandang was
not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to
terminate lease. Additionally, the records would show that it was the defendant Arcadio M. Carandang
who proposed a joint venture with the plaintiff.
It appears that plaintiff agreed to the formation of the corporation principally because of a directive of
then President Marcos indicating the need to broaden the ownership of radio broadcasting stations. The
plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the
radio transmitter and other equipment. Verily, he would be placed in a great disadvantage if he would
still have to personally pay for the shares of defendant Arcadio M. Carandang.
4. Plaintiff admits the allegations in paragraph 14 of the Answer.44
In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted
paragraph 14 of the Answer, which incidentally contained the opening clause "(h)aving mutually agreed
on the above arrangements, x x x."
Admissions, however, should be clear and unambiguous. This purported admission by Quirino de
Guzman reeks of ambiguity, as the clause "(h)aving mutually agreed on the above arrangements," seems
to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had
been converted into a corporation. If Quirino de Guzman had meant to admit paragraph 13.3, he could
have easily said so, as he did the other paragraphs he categorically admitted. Instead, Quirino de
Guzman expressly stated the opposite: that "(p)laintiff specifically denies the other allegations of
paragraph 13 of the Answer."45 The Reply furthermore states that the only portion of paragraph 13
which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said that Quirino de
Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc.46
All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged pre-
incorporation agreement. As there was no admission, and as the testimony of Arcardio Carandang was
stricken off the record, we are constrained to rule that there was no pre-incorporation agreement
rendering Quirino de Guzman liable for the spouses Carandang’s stock subscription. The payment by the
spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan
which the spouses Carandang are liable to pay.1âwphi1
Whether or not the liability of the spouses Carandang is joint and solidary
Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability.
According to the Court of Appeals:
With regards (sic) the tenth assigned error, [the spouses Carandang] contend that:
"There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of
[the spouses Carandang] is joint and solidary. x x x
"Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the
obligations required by law to be solidary x x x."
It is apparent from the facts of the case that [the spouses Carandang] were married way before the
effectivity of the Family Code hence; their property regime is conjugal partnership under the Civil Code.
It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation
entered into by the husband and wife is chargeable against their conjugal partnership and it is the
partnership, which is primarily bound for its repayment. Thus, when the spouses are sued for the
enforcement of the obligation entered into by them, they are being impleaded in their capacity as
representatives of the conjugal partnership and not as independent debtors, such that the concept of
joint and solidary liability, as between them, does not apply.47
The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of
the obligation entered into by them, they are being impleaded in their capacity as representatives of the
conjugal partnership and not as independent debtors. Hence, either of them may be sued for the whole
amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal
partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals,48 the
two sets of defendant-spouses therein were held liable for ₱25,300.00 each, chargeable to their
respective conjugal partnerships.
WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses
Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are
ORDERED to pay the following amounts from their conjugal partnership properties:
(1) ₱336,375.00 representing the spouses Carandang’s loan to Quirino de Guzman; and
(2) Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June
1992 when the complaint was filed until the principal amount can be fully paid; and
(3) ₱20,000.00 as attorney’s fees.
No costs.
SO ORDERED.
13. Spouses Go v. Yamane, G.R. No. 160762, May 3, 2006
G.R. No. 160762 May 3, 2006
Spouses JOSEPHINE MENDOZA GO & HENRY GO, Petitioners,

vs.
LEONARDO YAMANE, Respondent.
DECISION
PANGANIBAN, CJ:
Property purchased by spouses during the existence of their marriage is presumed to be conjugal in
nature. This presumption stands, absent any clear, categorical, and convincing evidence that the
property is paraphernal. Conjugal property cannot be held liable for the personal obligation contracted
by one spouse, unless some advantage or benefit is shown to have accrued to the conjugal partnership.
The Case
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the November
22, 2002 Decision2 and the September 17, 2003 Resolution3 of the Court of Appeals (CA) in CA-GR CV
No. 60939. The assailed Decision disposed as follows:
"WHEREFORE, premises considered, the Decision appealed from is hereby REVERSED and SET ASIDE. The
Sheriff's Certificate of Sale dated August 12, 1981 and the Final Sheriff's Certificate of Sale dated August
26, 1982 are declared NULL and VOID."4
The CA denied reconsideration in its September 17, 2003 Resolution.
The Facts
The undisputed factual findings of the CA are as follows:
"Involved in the suit is a 750 square meters (sic) parcel of lot located at Res. Sec. 'K', Baguio City,
registered in the name of Muriel Pucay Yamane, wife of Leonardo Yamane, [respondent] herein, under
Transfer Certificate of Title No. 12491.
"As a result of a motion for execution of a charging lien filed by Atty. Guillermo F. De Guzman in Civil
Case No. 1841, entitled 'Florence Pucay De Gomez, Elsie Pucay Kiwas and Muriel Pucay Yamane v.
Cypress Corporation,' which said counsel handled for the plaintiffs therein, hereinafter collectively
referred to as the Pucay sisters, the subject property was levied to satisfy the lien for attorney's fees in
the amount of P10,000. The said property was scheduled to be sold at public auction on August 11,
1981.
"Four days prior to the auction sale, [respondent] filed a Third-Party Claim with the Office of the
Provincial Sheriff to stop the public auction on the ground that the subject property is conjugal property
and, therefore, should not be held answerable for the personal obligation of the Pucay sisters. However,
the Sheriff proceeded with the auction sale despite [respondent's] protest. The subject property was
sold to spouses Josephine [and] Henry Go (or [petitioners]) as highest bidder. No redemption having
been made during the one-year period, a Final Sheriff's Certificate of Sale was eventually issued on
August 26, 1982 conveying and transferring the said property to [petitioners].
"On September 4, 1984, [respondent] filed a Complaint with the Regional Trial Court of Baguio City,
docketed as Civil Case No. 417-R, against [petitioners] and Sheriff Melgar for annulment and cancellation
of auction sale upon the same ground stated in the abovementioned third-party claim. Citing the Order
of the Regional Trial Court of Baguio City, Branch V in LRC Case No. 2288, which ordered the cancellation
of TCT No. 12491 and directed the Register of Deeds to issue new title in the name of Josephine Go x x x,
[petitioners] moved to dismiss the complaint on the ground of res judicata. In the Order dated
November 28, 1984, the motion was denied by the trial court.
"In their Answer filed on December 10, 1984, [petitioners] denied the material allegations of the
complaint and interposed the following special affirmative defenses: that the cause of action was barred
by prior judgment; that [respondent] has not pursued any lawful remedy to annul the execution
proceeding; that there is no flaw or irregularity in the auction sale; and that since the execution sale was
made in accordance with Section 21, Rule 39 of the Revised Rules of Court, it is deemed final and any
irregularity committed in the course thereof will not vitiate its validity.
"On December 28, 1984, Muriel likewise lodged a Complaint for Damages, docketed as Civil Case No.
505-R, against [petitioners] and Atty. Guillermo De Guzman alleging, in gist, fraud, misrepresentation,
manipulation and unlawful acts of the defendants in causing the levy of the subject property with an
estimated commercial value of P200,000 as against a charging lien in the amount of P10,000.
"In its May 27, 1985 Order, the trial court ordered the joint hearing of Civil Cases Nos. 417-R and 505-R.
On August 30, 1985, Muriel was declared non-suited for failure to appear in the hearing despite due
notice. As a consequence, Civil Case No. 505-R was dismissed on October 15, 1985."5
In its Decision6 dated March 25, 1998, the Regional Trial Court (RTC) of Baguio City, Branch 4, held that
the subject parcel of land was the paraphernal property of the late Muriel Pucay Yamane -- spouse of
respondent -- and was not their conjugal property. The appearance of his name on the Transfer
Certificate of Title (TCT) was deemed to be merely descriptive of the civil status of the registered owner,
his late wife. Hence, finding that he had no legal standing to question the auction sale or to pray for its
annulment or cancellation, the RTC dismissed the case for lack of merit.
Upon receipt of the RTC Decision on April 8, 1998, respondent filed a Motion,7 in which he prayed that
he be allowed to file his Motion for Reconsideration of the Decision, on or before May 30, 1998. The
trial court granted8 his Motion; received the Motion for Reconsideration,9 which was filed on May 28,
1998; and eventually denied it in its Order dated June 5, 1998.10 He then elevated the matter to the CA
on June 15, 1998.
Ruling of the Court of Appeals
The CA reversed the RTC's Decision. The Sheriff's Certificate of Sale dated August 12, 1981, and the Final
Sheriff's Certificate of Sale dated August 26, 1982, were declared null and void.
According to the appellate court, property acquired during marriage is presumed to be conjugal, unless
the exclusive funds of one spouse are shown to have been used for the purpose. That the land was
acquired during the spouses' coverture was sufficiently established by the TCT and the Deed of Absolute
Sale, both indicating that Muriel Pucay Yamane was "married to Leonardo Yamane"; and by the
undisputed testimony of the previous owner, Eugene Pucay. Because of petitioners' failure to establish
that the land in question had been acquired by Muriel using her exclusive funds, the CA concluded that
the contested land was conjugal property.
The appellate court further held thus:
"x x x [T]he disputed property being a conjugal property of [respondent] and his wife, and absent any
showing of some advantage or benefit that accrued to their conjugal partnership from the transaction
between the Pucay sisters and Atty. De Guzman, the public auction sale of the subject property in favor
of [petitioners] is null and void."11
Hence, this Petition.12
Issues
Petitioners submit the following issues for our consideration:
"I. The Court of Appeals gravely erred in taking cognizance of the appeal and in not dismissing
the same, despite the fact that the respondent failed to perfect his appeal within the 15-day
reglementary period set by the Rules of Court.
"II. The Court of Appeals gravely erred in declaring the subject property as conjugal property,
despite the existence of clear evidence showing that the subject property is the exclusive
paraphernal property of Muriel who, even during her lifetime, always claimed the said property
as her own exclusive paraphernal property and not as property co-owned with her husband, the
respondent herein.1avvphil.net
"III. The Court of Appeals, assuming, ex grati argumenti, that the subject property is conjugal
property between respondent and Muriel, gravely erred in ruling that the same cannot answer
for the charging lien of Atty. Guillermo de Guzman in Civil Case No. 1841."13
In the main, they posit two issues. They raise, first, the procedural question of whether the CA erred in
giving due course to respondent's lapsed appeal; and, second, the substantive issue of whether the
subject property is conjugal or paraphernal.
The Court's Ruling
The Petition has no merit.
Procedural Issue:
Whether Respondent's Appeal Should Be Given Due Course

Petitioners contend that the CA erred in giving due course to the appeal filed by respondent beyond the
15-day reglementary period.
Concededly, he received a copy of the RTC Decision on April 8, 1998. He had, therefore, until April 23,
1998, within which to file an appeal. Prior to the latter date, however, he moved that his new counsel be
allowed to file a motion for reconsideration on May 30, 1998. It was eventually filed on May 28, 1998,
but was denied. Respondent subsequently filed a Notice of Appeal on June 15, 1998. By this time, the
original period to appeal had expired. It should be clear that the Rules prohibit an extension to file a
motion for reconsideration.14
The perfection of an appeal in the manner and within the period prescribed by the Rules of Civil
Procedure is not only mandatory, but also jurisdictional; and the lapse of the appeal period of fifteen
days deprives a court of the jurisdiction to alter a final judgment.15
There have been exceptions, however, in which the Court dispensed with technical infirmities and gave
due course to tardy appeals. In some of those instances, the presence of any justifying circumstance
recognized by law -- such as fraud, accident, mistake or excusable negligence -- properly vested the
judge with discretion to approve or admit an appeal filed out of time.16 In other instances, lapsed
appeals were allowed in order to serve substantial justice, upon consideration of a) matters of life,
liberty, honor or property; b) the existence of special or compelling circumstances; c) the merits of the
case; d) causes not entirely attributable to the fault or negligence of the party that would be favored by
the suspension of the rules; e) the failure to show that the review being sought was merely frivolous and
dilatory; and f) the fact that the other party would not be unjustly prejudiced.17
Indeed, in some exceptional cases, the Court has allowed the relaxation of the rules regulating the
reglementary periods of appeal. These exceptions were cited in Manila Memorial Park Cemetery v.
CA,18 from which we quote:
"In Ramos vs. Bagasao, the Court excused the delay of four days in the filing of the notice of appeal
because the questioned decision of the trial court had been served upon appellant Ramos at a time
when her counsel of record was already dead. The new counsel could only file the appeal four days after
the prescribed reglementary period was over. In Republic vs. Court of Appeals, the Court allowed the
perfection of an appeal by the Republic despite the delay of six days to prevent a gross miscarriage of
justice since the Republic stood to lose hundreds of hectares of land already titled in its name and had
since then been devoted for public purposes. In Olacao vs. National Labor Relations Commission, a tardy
appeal was accepted considering that the subject matter in issue had theretofore been judicially settled
with finality in another case, and a dismissal of the appeal would have had the effect of the appellant
being ordered twice to make the same reparation to the appellee."19
We believe that a suspension of the Rules is similarly warranted in the present controversy. We have
carefully studied the merits of the case and noted that the review being sought has not been shown to
be merely frivolous and dilatory. The Court has come to the conclusion that the Decision of the RTC,
Branch 4 (in Civil Case No. 417-R), must be set aside. It would be far better and more prudent to attain
the ends of justice, rather than to dispose of the case on technicality and cause grave injustice in the
process. Thus, we would rather excuse a technical lapse and afford respondent a review of the case on
appeal.
Substantive Issue:
Paraphernal or Conjugal?
The purchase of the property had been concluded in 1967, before the Family Code took effect on August
3, 1988.20 Accordingly, the transaction was aptly covered by the then governing provisions of the New
Civil Code. On the latter basis, therefore, we shall resolve the issue of the nature of the contested
property.
Article 160 of the New Civil Code provides that "all property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the
wife."21 As a conditio sine qua non for the operation of this article in favor of the conjugal
partnership,22 the party who invokes the presumption must first prove that the property was acquired
during the marriage.23
In other words, the presumption in favor of conjugality does not operate if there is no showing
of when the property alleged to be conjugal was acquired.24 Moreover, the presumption may be
rebutted only with strong, clear, categorical and convincing evidence.25 There must be strict proof of the
exclusive ownership of one of the spouses,26 and the burden of proof rests upon the party asserting it.27
The CA committed no error in declaring that the parcel of land belonged to the conjugal partnership of
Spouses Muriel and Leonardo Yamane. They acquired it from Eugene Pucay on February 27, 1967,28 or
specifically during the marriage.29 We then follow the rule that proof of the acquisition of the subject
property during a marriage suffices to render the statutory presumption operative. It is clear enough
that the presently disputed piece of land pertains to the conjugal partnership.
Petitioners concede that the property was acquired during the subsistence of the marriage of Muriel to
respondent.30 Nonetheless, they insist that it belonged exclusively to her for the following reasons:
First. Respondent never denied nor opposed her claim in Civil Case No. 505-R, which she had
filed during her lifetime; or in AG-GR Sp. No. 01616 (entitled "Muriel Pucay Yamane v. Josephine
Go"), that the disputed parcel of land was her exclusive paraphernal property. They allege that
his failure to file a denial or opposition in those cases is tantamount to a judicial admission that
militates against his belated claim.
Second. The Deed of Absolute Sale of the property is in the sole name of Muriel. Petitioners
posit that, had the spouses jointly purchased this piece of land, the document should have
indicated this fact or carried the name of respondent as buyer.
Third. The failure of respondent to redeem the parcel of land within the redemption period after
the auction sale indicated that he was not its co-owner.
We will discuss the three arguments seriatim.
Unilateral Declaration
Respondent's interest cannot be prejudiced by the claim of Muriel in her Complaint in Civil Case No.
505-R that the subject parcel of land was her paraphernal property. Significantly, the nature of a
property -- whether conjugal or paraphernal -- is determined by law and not by the will of one of the
spouses.31 Thus, no unilateral declaration by one spouse can change the character of a conjugal
property.32
Besides, the issue presented in Civil Case No. 505-R was not the nature of the subject piece of land being
levied upon, but whether Atty. Guillermo de Guzman was entitled to a charging lien. In that case, Muriel
claimed that she had not officially retained him as counsel, and that no lawyer-client relationship had
been established between them.33
Deed and Title in the Name of One Spouse
Further, the mere registration of a property in the name of one spouse does not destroy its conjugal
nature.34 Hence, it cannot be contended in the present case that, simply because the title and the Deed
of Sale covering the parcel of land were in the name of Muriel alone, it was therefore her personal and
exclusive property. In concluding that it was paraphernal, the trial court's reliance on Stuart v.
Yatco35 was clearly erroneous.
As stated earlier, to rebut the presumption of the conjugal nature of the property, petitioners must
present clear and convincing evidence. We affirm and quote below, for easy reference, the relevant
dispositions of the CA:
"x x x. We are unable to go along with [petitioners'] contention that the subject property was acquired
by Muriel with her exclusive funds. Mere registration of the contested property in the name of the wife
is not sufficient to establish the paraphernal nature of the property. This reminds Us of the teaching in
the recent case of Diancin v. Court of Appeals, that all the property acquired by the spouses, regardless
of in whose name the same is registered, during the marriage is presumed to belong to the conjugal
partnership of gains, unless it is proved that it pertains exclusively to the husband or to the wife. To
quote:
"As a general rule, all property acquired by the spouses, regardless of in whose name the same is
registered, during the marriage is presumed to belong to the conjugal partnership of gains, unless it is
proved that it pertains exclusively to the husband or to the wife. In the case at bar, the fishpond lease
right is not paraphernal having been acquired during the coverture of the marriage between Matilde
and Tiburcio, which was on April 9, 1940. The fact that the grant was solely in the name of Matilde did
not make the property paraphernal property. What was material was the time the fishpond lease right
was acquired by the grantee, and that was during the lawful existence of Matilde's marriage to Tiburcio.
"x x x [T]his presumption is rebuttable, but only with strong, clear and convincing evidence. The burden
of proving that the property belongs exclusively to the wife rests upon the party asserting it. Mere
assertion of the property's paraphernal nature is not sufficient."
"The record as well as the foregoing established jurisprudence lead us to conclude that the contested
property was indeed acquired during the marriage of herein [respondent] and Muriel. To prove that it is
nonetheless paraphernal property, it is incumbent upon [petitioners] to adduce strong, clear and
convincing evidence that Muriel bought the same with her exclusive funds. [Petitioners] failed to
discharge the burden. Nowhere in the evidence presented by them do We find any indication that the
land in question was acquired by Muriel with her exclusive funds. The presumption not having been
overthrown, the conclusion is that the contested land is conjugal property."36
Non-Redemption After the Auction Sale
The non-redemption of the property by respondent within the period prescribed by law did not, in any
way, indicate the absence of his right or title to it. Contrary to petitioners' allegation, the fact is that he
filed a Third-Party Claim37 with the sheriff, upon learning of the levy and impending auction sale. This
fact was specifically admitted by petitioners.38 Respondent claimed that the parcel of land was conjugal,
and that he could not answer for the separate obligation of his wife and her sisters.39 Notwithstanding
his claim, the disputed piece of land was sold at a public auction on August 11, 1981. Consequently
issued were a Sheriff's Certificate of Sale dated August 12, 1981, and a Final Sheriff's Certificate of Sale
dated August 26, 1982.40
Likewise, in his Opposition (Answer) to the Petition in LRC File Adm. Case No. 2288,41 respondent raised
the issue of the conjugal nature of the property and reserved his right to file an independent action to
annul the auction sale. In its March 30, 1983 Order,42 however, Branch 5 of the RTC of Baguio City did
not rule on either the actual ownership or the nature of the parcel of land. Rather, it granted the
Petition to issue a new certificate of title in favor of Petitioner Josephine Mendoza Go. It found that,
under Section 75 of Presidential Decree 1529, respondent had no legal standing to question the auction
sale, because he was not the registered owner of the property. Instead, his right to prove his claim in a
separate and independent action was upheld.43 Thus, he instituted the present case for annulment and
cancellation of the auction sale.
The foregoing points clearly explain the failure of respondent to redeem the property. Misplaced is
petitioners' emphasis on his failure to do so within the period required by law, because redemption in
this case would have been inconsistent with his claim that the sale was invalid.44 Redemption would
have served as an implied admission of the regularity of the sale and estopped him from later impugning
its validity on that ground.45
Since petitioners have failed to present convincing evidence that the property is paraphernal, the
presumption that it is conjugal therefore stands. The next question before us is, whether the charging
lien of Atty. de Guzman may be properly enforced against the piece of land in question.
Charging Lien Not Chargeable Against Conjugal Property
It is indisputable that the services of Atty. de Guzman were acquired during the marriage of respondent
and Muriel. The lawyer's legal services were engaged to recover from Cypress Corporation (in Civil Case
No. 1841) the balance of the purchase price of the sale of the exclusive property of Muriel and her
sisters.46 The recovery was done during the marriage.47
The CA elucidated on this matter as follows:
"x x x. The contract or transaction between Atty. De Guzman and the Pucay sisters appears to have been
incurred for the exclusive interest of the latter. Muriel was acting privately for her exclusive interest
when she joined her two sisters in hiring the services of Atty. De Guzman to handle a case for them.
Accordingly, whatever expenses were incurred by Muriel in the litigation for her and her sisters' private
and exclusive interests, are her exclusive responsibility and certainly cannot be charged against the
contested conjugal property.
"Even on the remote assumption that the conjugal property could be held liable, levy on execution of
the same property should still be denied in accordance with the ruling in Luzon Surety Co., Inc. v. De
Garcia that before a conjugal property could be held liable for the obligation contracted by a spouse,
there must be a showing of some advantage or benefit that accrued to the conjugal partnership.
Concededly, the burden is on the [petitioners] to prove that the services rendered by Atty. De Guzman
in handling Civil Case No. 1841 for the Pucay sisters had, somehow, redounded to the benefit of the
conjugal partnership of herein [respondent] and Muriel. This onus, [petitioners], however, failed to
discharge."48
We find no reason to deviate from the CA's findings, which are amply supported by evidence. The
expenses incurred by Muriel for the recovery of the balance of the purchase price of her paraphernal
property are her exclusive responsibility.49 This piece of land may not be used to pay for her
indebtedness, because her obligation has not been shown to be one of the charges against the conjugal
partnership.50 Moreover, her rights to the property are merely inchoate prior to the liquidation of the
conjugal partnership.
Under the New Civil Code, a wife may bind the conjugal partnership only when she purchases things
necessary for the support of the family, or when she borrows money for that purpose upon her
husband's failure to deliver the needed sum;51 when administration of the conjugal partnership is
transferred to the wife by the courts52 or by the husband;53 or when the wife gives moderate donations
for charity.54 Failure to establish any of these circumstances in the present case means that the conjugal
asset may not be bound to answer for Muriel's personal obligation.
The power of the court in executing judgments extends only to properties unquestionably belonging to
the judgment debtor alone.55 In this case, therefore, the property -- being conjugal in nature -- cannot
be levied upon.56
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against
petitioners.
SO ORDERED.
14. Ching v. Court of Appeals, G.R. No. 124642, February 23, 2004
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION CHING, petitioners

vs.
THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision1 of the Court of
Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April 2,
1996 denying the petitioners’ motion for reconsideration. The impugned decision granted the private
respondent’s petition for certiorari and set aside the Orders of the trial court dated December 15,
19933 and February 17, 19944 nullifying the attachment of 100,000 shares of stocks of the Citycorp
Investment Philippines under the name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of
₱9,000,000.00 from the Allied Banking Corporation (ABC). By virtue of this loan, the PBMCI, through its
Executive Vice-President Alfredo Ching, executed a promissory note for the said amount promising to
pay on December 22, 1978 at an interest rate of 14% per annum.5 As added security for the said loan, on
September 28, 1978, Alfredo Ching, together with Emilio Tañedo and Chung Kiat Hua, executed a
continuing guaranty with the ABC binding themselves to jointly and severally guarantee the payment of
all the PBMCI obligations owing the ABC to the extent of ₱38,000,000.00.6 The loan was subsequently
renewed on various dates, the last renewal having been made on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount of
₱13,000,000.00 payable in eighteen months at 16% interest per annum. As in the previous loan, the
PBMCI, through Alfredo Ching, executed a promissory note to evidence the loan maturing on June 29,
1981.8 This was renewed once for a period of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC filed a
complaint for sum of money with prayer for a writ of preliminary attachment against the PBMCI to
collect the ₱12,612,972.88 exclusive of interests, penalties and other bank charges. Impleaded as co-
defendants in the complaint were Alfredo Ching, Emilio Tañedo and Chung Kiat Hua in their capacity as
sureties of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila, Branch XVIII.10 In
its application for a writ of preliminary attachment, the ABC averred that the "defendants are guilty of
fraud in incurring the obligations upon which the present action is brought11 in that they falsely
represented themselves to be in a financial position to pay their obligation upon maturity thereof."12 Its
supporting affidavit stated, inter alia, that the "[d]efendants have removed or disposed of their
properties, or [are] ABOUT to do so, with intent to defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the ABC’s
application for a writ of preliminary attachment. The trial court decreed that the grounds alleged in the
application and that of its supporting affidavit "are all conclusions of fact and of law" which do not
warrant the issuance of the writ prayed for.14 On motion for reconsideration, however, the trial court, in
an Order dated September 14, 1981, reconsidered its previous order and granted the ABC’s application
for a writ of preliminary attachment on a bond of ₱12,700,000. The order, in relevant part, stated:
With respect to the second ground relied upon for the grant of the writ of preliminary attachment ex-
parte, which is the alleged disposal of properties by the defendants with intent to defraud creditors as
provided in Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits can only barely justify the issuance of
said writ as against the defendant Alfredo Ching who has allegedly bound himself jointly and severally to
pay plaintiff the defendant corporation’s obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo Ching requiring
the sheriff of this Court to attach all the properties of said Alfredo Ching not exceeding ₱12,612,972.82
in value, which are within the jurisdiction of this Court and not exempt from execution upon, the filing
by plaintiff of a bond duly approved by this Court in the sum of Twelve Million Seven Hundred Thousand
Pesos (₱12,700,000.00) executed in favor of the defendant Alfredo Ching to secure the payment by
plaintiff to him of all the costs which may be adjudged in his favor and all damages he may sustain by
reason of the attachment if the court shall finally adjudge that the plaintiff was not entitled thereto.
SO ORDERED.15
Upon the ABC’s posting of the requisite bond, the trial court issued a writ of preliminary attachment.
Subsequently, summonses were served on the defendants,16 save Chung Kiat Hua who could not be
found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for suspension of
payments with the Securities and Exchange Commission (SEC), docketed as SEC Case No. 2250, at the
same time seeking the PBMCI’s rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, including its assets and liabilities,
under rehabilitation receivership, and ordered that "all actions for claims listed in Schedule "A" of the
petition pending before any court or tribunal are hereby suspended in whatever stage the same may be
until further orders from the Commission."18 The ABC was among the PBMCI’s creditors named in the
said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to Dismiss and/or
motion to suspend the proceedings in Civil Case No. 142729 invoking the PBMCI’s pending application
for suspension of payments (which Ching co-signed) and over which the SEC had already assumed
jurisdiction.19 On February 4, 1983, the ABC filed its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment the 100,000
common shares of Citycorp stocks in the name of Alfredo Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court partially granted the aforementioned
motion by suspending the proceedings only with respect to the PBMCI. It denied Ching’s motion to
dismiss the complaint/or suspend the proceedings and pointed out that P.D. No. 1758 only concerns the
activities of corporations, partnerships and associations and was never intended to regulate and/or
control activities of individuals. Thus, it directed the individual defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend Proceedings on the
same ground of the pendency of SEC Case No. 2250. This motion met the opposition from the ABC.23
On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-claim.24 Ching eventually filed
his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed an Omnibus Motion,26 again
praying for the dismissal of the complaint or suspension of the proceedings on the ground of the July 9,
1982 Injunctive Order issued in SEC Case No. 2250. He averred that as a surety of the PBMCI, he must
also necessarily benefit from the defenses of his principal. The ABC opposed Ching’s omnibus motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion27 praying for the dismissal of the complaint,
arguing that the ABC had "abandoned and waived" its right to proceed against the continuing guaranty
by its act of resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment
bond from ₱12,700,000 to ₱6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2, 1987, the
court issued an Order setting the incident for further hearing on May 28, 1987 at 8:30 a.m. for the
parties to adduce evidence on the actual value of the properties of Alfredo Ching levied on by the
sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the
attachment bond of ₱6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to
Set Aside the levy on attachment. She alleged inter alia that the 100,000 shares of stocks levied on by
the sheriff were acquired by her and her husband during their marriage out of conjugal funds after the
Citycorp Investment Philippines was established in 1974. Furthermore, the indebtedness covered by the
continuing guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the
account of PBMCI did not redound to the benefit of the conjugal partnership. She, likewise, alleged that
being the wife of Alfredo Ching, she was a third-party claimant entitled to file a motion for the release of
the properties.32 She attached therewith a copy of her marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge
records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has
no personality to file any motion before this Honorable Court;
2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule
12 of the Rules of Court;
2.3 Said Motion cannot even be construed to be in the nature of a Third-Party Claim
conformably with Sec. 14, Rule 57 of the Rules of Court.
3. Furthermore, assuming in gracia argumenti that the supposed movant has the required personality,
her Motion cannot be acted upon by this Honorable Court as the above-entitled case is still in the
archives and the proceedings thereon still remains suspended. And there is no previous Motion to revive
the same.34
The ABC also alleged that the motion was barred by prescription or by laches because the shares of
stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage contract to
Alfredo Ching to prove that they were married on January 8, 1960;35 the articles of incorporation of
Citycorp Investment Philippines dated May 14, 1979;36 and, the General Information Sheet of the
corporation showing that petitioner Alfredo Ching was a member of the Board of Directors of the said
corporation and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to expunge
records.
Acting on the aforementioned motion, the trial court issued on December 15, 1993 an Order37 lifting the
writ of preliminary attachment on the shares of stocks and ordering the sheriff to return the said stocks
to the petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9, 1993, is hereby
granted. Let the writ of preliminary attachment subject matter of said motion, be quashed and lifted
with respect to the attached 100,000 common shares of stock of Citycorp Investment Philippines in the
name of the defendant Alfredo Ching, the said shares of stock to be returned to him and his movant-
spouse by Deputy Sheriff Apolonio A. Golfo who effected the levy thereon on July 26, 1983, or by
whoever may be presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but denied
the same on February 17, 1994. The petitioner bank forthwith filed a petition for certiorari with the CA,
docketed as CA-G.R. SP No. 33585, for the nullification of the said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking
cognizance of, and granting a "Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave abuse of discretion in lifting the writ of preliminary
attachment without any basis in fact and in law, and contrary to established jurisprudence on
the matter.39
On November 27, 1995, the CA rendered judgment granting the petition and setting aside the assailed
orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the questioned orders
(dated December 15, 1993 and February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set aside the assailed orders. According
to the CA, the RTC deprived the private respondent of its right to file a bond under Section 14, Rule 57 of
the Rules of Court. The petitioner Encarnacion T. Ching was not a party in the trial court; hence, she had
no right of action to have the levy annulled with a motion for that purpose. Her remedy in such case was
to file a separate action against the private respondent to nullify the levy on the 100,000 Citycorp shares
of stocks. The court stated that even assuming that Encarnacion T. Ching had the right to file the said
motion, the same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the presumption in Article 160 of the
New Civil Code shall not apply where, as in this case, the petitioner-spouses failed to prove the source of
the money used to acquire the shares of stock. It held that the levied shares of stocks belonged to
Alfredo Ching, as evidenced by the fact that the said shares were registered in the corporate books of
Citycorp solely under his name. Thus, according to the appellate court, the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. The petitioners’
motion for reconsideration was denied by the CA in a Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC did not
commit any grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the assailed
orders in their favor; hence, the CA erred in reversing the same. They aver that the source of funds in
the acquisition of the levied shares of stocks is not the controlling factor when invoking the presumption
of the conjugal nature of stocks under Art. 160,42 and that such presumption subsists even if the
property is registered only in the name of one of the spouses, in this case, petitioner Alfredo
Ching.43 According to the petitioners, the suretyship obligation was not contracted in the pursuit of the
petitioner-husband’s profession or business.44 And, contrary to the ruling of the CA, where conjugal
assets are attached in a collection suit on an obligation contracted by the husband, the wife should
exhaust her motion to quash in the main case and not file a separate suit.45 Furthermore, the petitioners
contend that under Art. 125 of the Family Code, the petitioner-husband’s gratuitous suretyship is null
and void ab initio,46 and that the share of one of the spouses in the conjugal partnership remains
inchoate until the dissolution and liquidation of the partnership.47
In its comment on the petition, the private respondent asserts that the CA correctly granted its petition
for certiorari nullifying the assailed order. It contends that the CA correctly relied on the ruling of this
Court in Wong v. Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court
of Appeals, the private respondent alleges that the continuing guaranty and suretyship executed by
petitioner Alfredo Ching in pursuit of his profession or business. Furthermore, according to the private
respondent, the right of the petitioner-wife to a share in the conjugal partnership property is merely
inchoate before the dissolution of the partnership; as such, she had no right to file the said motion to
quash the levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the motion
to quash the levy on attachment on the 100,000 shares of stocks in the Citycorp Investment Philippines;
(b) whether or not the RTC committed a grave abuse of its discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the said
motion, although she was not a party in Civil Case No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those properties of the defendant against
whom a writ of attachment has been issued by the court. When the sheriff erroneously levies on
attachment and seizes the property of a third person in which the said defendant holds no right or
interest, the superior authority of the court which has authorized the execution may be invoked by the
aggrieved third person in the same case. Upon application of the third person, the court shall order a
summary hearing for the purpose of determining whether the sheriff has acted rightly or wrongly in the
performance of his duties in the execution of the writ of attachment, more specifically if he has indeed
levied on attachment and taken hold of property not belonging to the plaintiff. If so, the court may then
order the sheriff to release the property from the erroneous levy and to return the same to the third
person. In resolving the motion of the third party, the court does not and cannot pass upon the question
of the title to the property with any character of finality. It can treat the matter only insofar as may be
necessary to decide if the sheriff has acted correctly or not. If the claimant’s proof does not persuade
the court of the validity of the title, or right of possession thereto, the claim will be denied by the court.
The aggrieved third party may also avail himself of the remedy of "terceria" by executing an affidavit of
his title or right of possession over the property levied on attachment and serving the same to the office
making the levy and the adverse party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should be a totally separate and distinct
action from the former case. The above-mentioned remedies are cumulative and any one of them may
be resorted to by one third-party claimant without availing of the other remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the 100,000
shares of stocks in the name of petitioner-husband claiming that the said shares of stocks were conjugal
in nature; hence, not liable for the account of her husband under his continuing guaranty and suretyship
agreement with the PBMCI. The petitioner-wife had the right to file the motion for said relief.
On the second issue, we find and so hold that the CA erred in setting aside and reversing the orders of
the RTC. The private respondent, the petitioner in the CA, was burdened to prove that the RTC
committed a grave abuse of its discretion amounting to excess or lack of jurisdiction. The tribunal acts
without jurisdiction if it does not have the legal purpose to determine the case; there is excess of
jurisdiction where the tribunal, being clothed with the power to determine the case, oversteps its
authority as determined by law. There is grave abuse of discretion where the tribunal acts in a
capricious, whimsical, arbitrary or despotic manner in the exercise of its judgment and is equivalent to
lack of jurisdiction.51
It was incumbent upon the private respondent to adduce a sufficiently strong demonstration that the
RTC acted whimsically in total disregard of evidence material to, and even decide of, the controversy
before certiorari will lie. A special civil action for certiorari is a remedy designed for the correction of
errors of jurisdiction and not errors of judgment. When a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of its jurisdiction being exercised when the error is
committed.52
After a comprehensive review of the records of the RTC and of the CA, we find and so hold that the RTC
did not commit any grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
Article 160 of the New Civil Code provides that all the properties acquired during the marriage are
presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the
husband, or to the wife. In Tan v. Court of Appeals,53 we held that it is not even necessary to prove that
the properties were acquired with funds of the partnership. As long as the properties were acquired by
the parties during the marriage, they are presumed to be conjugal in nature. In fact, even when the
manner in which the properties were acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. The presumption of the conjugal nature of the properties
acquired during the marriage subsists in the absence of clear, satisfactory and convincing evidence to
overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in
the Citycorp Investment Philippines were issued to and registered in its corporate books in the name of
the petitioner-husband when the said corporation was incorporated on May 14, 1979. This was done
during the subsistence of the marriage of the petitioner-spouses. The shares of stocks are, thus,
presumed to be the conjugal partnership property of the petitioners. The private respondent failed to
adduce evidence that the petitioner-husband acquired the stocks with his exclusive money.55 The
barefaced fact that the shares of stocks were registered in the corporate books of Citycorp Investment
Philippines solely in the name of the petitioner-husband does not constitute proof that the petitioner-
husband, not the conjugal partnership, owned the same.56 The private respondent’s reliance on the
rulings of this Court in Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v. Banzon58 is
misplaced. In the Maramba case, we held that where there is no showing as to when the property was
acquired, the fact that the title is in the wife’s name alone is determinative of the ownership of the
property. The principle was reiterated in the Associated Insurance case where the uncontroverted
evidence showed that the shares of stocks were acquired during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v. Intermediate
Appellate Court59 buttresses the case for the petitioners. In that case, we ruled that he who claims that
property acquired by the spouses during their marriage is not conjugal partnership property but belongs
to one of them as his personal property is burdened to prove the source of the money utilized to
purchase the same. In this case, the private respondent claimed that the petitioner-husband acquired
the shares of stocks from the Citycorp Investment Philippines in his own name as the owner thereof. It
was, thus, the burden of the private respondent to prove that the source of the money utilized in the
acquisition of the shares of stocks was that of the petitioner-husband alone. As held by the trial court,
the private respondent failed to adduce evidence to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship agreement
with the private respondent for the payment of the PBMCI loans, the petitioner-husband was in the
exercise of his profession, pursuing a legitimate business. The appellate court erred in concluding that
the conjugal partnership is liable for the said account of PBMCI under Article 161(1) of the New Civil
Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family Code of the Philippines)
provides:
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.
The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the
payment of the loan obtained by the PBMCI from the private respondent in the amount of ₱38,000,000.
In Ayala Investment and Development Corp. v. Court of Appeals,61 this Court ruled "that the signing as
surety is certainly not an exercise of an industry or profession. It is not embarking in a business. No
matter how often an executive acted on or was persuaded to act as surety for his own employer, this
should not be taken to mean that he thereby embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there
must be a showing that some advantages accrued to the spouses. Certainly, to make a conjugal
partnership responsible for a liability that should appertain alone to one of the spouses is to frustrate
the objective of the New Civil Code to show the utmost concern for the solidarity and well being of the
family as a unit. The husband, therefore, is denied the power to assume unnecessary and unwarranted
risks to the financial stability of the conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was
benefited by the petitioner-husband’s act of executing a continuing guaranty and suretyship agreement
with the private respondent for and in behalf of PBMCI. The contract of loan was between the private
respondent and the PBMCI, solely for the benefit of the latter. No presumption can be inferred from the
fact that when the petitioner-husband entered into an accommodation agreement or a contract of
surety, the conjugal partnership would thereby be benefited. The private respondent was burdened to
establish that such benefit redounded to the conjugal partnership.63
It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and
was one of its top twenty stockholders, and that the shares of stocks of the petitioner-husband and his
family would appreciate if the PBMCI could be rehabilitated through the loans obtained; that the
petitioner-husband’s career would be enhanced should PBMCI survive because of the infusion of fresh
capital. However, these are not the benefits contemplated by Article 161 of the New Civil Code. The
benefits must be those directly resulting from the loan. They cannot merely be a by-product or a spin-off
of the loan itself.64
This is different from the situation where the husband borrows money or receives services to be used
for his own business or profession. In the Ayala case, we ruled that it is such a contract that is one within
the term "obligation for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and
services to be used in or for his own business or his own profession, that contract falls within the term
"… obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is
enough that the benefit to the family is apparent at the time of the signing of the contract. From the
very nature of the contract of loan or services, the family stands to benefit from the loan facility or
services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated, where the husband contracts obligations
on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to
the benefit of the conjugal partnership.65
The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not
controlling because the husband, in those cases, contracted the obligation for his own business. In this
case, the petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the
private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals are SET ASIDE AND REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.
15. Borlongan v. Banco de Oro, G.R. Nos. 217617 & 218540 (Resolution), April 5, 2017
G.R. No. 217617, April 05, 2017
CARMELITA T. BORLONGAN, Petitioner, v. BANCO DE ORO (FORMERLY EQUITABLE PCI

BANK), Respondent.
G.R. No. 218540
ELISEO C. BORLONGAN, JR., Petitioner, v. BDO UNIBANK, INC. (FORMERLY EQUITABLE PCI
BANK), Respondent.
RESOLUTION
VELASCO JR., J.:
Nature of the Case
Before the Court are two consolidated petitions invariably assailing the foreclosure sale of a property
without properly serving the summons upon its owners.
Factual Antecedents
Sometime in 1976, Eliseo Borlongan, Jr. (Eliseo) and his wife Carmelita, acquired a real property located
at No. 111, Sampaguita St., Valle Verde II, Pasig City covered by Transfer Certificate of Title (TCT) No.
0421 (the subject property). In 2012, they went to the Registry of Deeds of Pasig City to obtain a copy of
the TCT in preparation for a prospective sale of the subject property. To their surprise, the title
contained an annotation that the property covered thereby was the subject of an execution sale in Civil
Case (CC) No. 03-0713 pending before Branch 134 of the Regional Trial Court of Makati City (Makati
RTC).
Petitioner immediately procured a copy of the records of CC No. 03-0713 and found out that respondent
Banco de Oro (BDO), formerly Equitable PCI Bank, filed a complaint for sum of money against Tancho
Corporation, the principal debtor of loan obligations obtained from the bank. Likewise impleaded were
several persons, including Carmelita, who supposedly signed four (4) security agreements totaling
P13,500,000 to guarantee the obligations of Tancho Corporation.
It appears from the records of CC No. 03-0713 that on July 2, 2003, the Makati RTC issued an Order
directing the service of summons to all the defendants at the business address of Tancho Corporation
provided by BDO: Fumakilla Compound, Amang Rodriguez Avenue, Brgy. Dela Paz, Pasig City (Fumakilla
Compound).
Parenthetically, the records of CC No. 03-0713 show that respondent BDO already foreclosed the
Fumakilla Compound as early as August 21, 2000, following Tancho Corporation's failure to pay its
obligation, and BDO already consolidated its ownership of the property on November 16, 2001.
Understandably, on July 31, 2003, the process server filed an Officer's Return stating that summons
remained unserved as the "defendants are no longer holding office at [Fumakilla Compound]."
On October 27, 2003, after the single attempt at personal service on Carmelita and her co-defendants,
BDO moved for leave to serve the summons by publication. On October 28, 2003, the RTC granted the
motion.
On August 10, 2004, BDO filed an ex-parte Motion for the Issuance of a Writ of Attachment against the
defendants, including Carmelita. During the hearing on the motion, BDO submitted a copy of the title of
the subject property. The Makati RTC thereafter granted BDO's motion and a Writ of Attachment was
issued against the defendants in CC No. 03-0713, effectively attaching the subject property on behalf of
BDO.
On December 20, 2005, BDO filed an ex-parte motion praying, among others, that the summons and the
complaint be served against Carmelita at the subject property. The Makati RTC granted the motion. On
February 9, 2006, the Sheriff filed a return stating that no actual personal service was made as Carmelita
"is no longer residing at the given address and the said address is for 'rent,' as per information gathered
from the security guard on duty."
On May 30, 2006, however, BDO filed a manifestation stating that it had complied with the October 28,
2003 Order of the Makati RTC having caused the publication of the alias summons and the complaint in
People's Taliba on May 15, 2006.
Thereafter, upon BDO's motion, the Makati RTC declared the defendants in CC No. 03-0713, including
Carmelita, in default. BDO soon after proceeded to present its evidence ex-parte.
On November 29, 2007, the Makati RTC rendered a Decision holding the defendants in CC No. 03-0713
liable to pay BDO P32,543,856.33 plus 12% interest per annum from the time of the filing of the
complaint until fully paid and attorney's fees. The Makati RTC decision was published on June 9, 2008.
On August 20, 2008, the Makati RTC issued a Writ of Execution upon BDO's motion. The Order states
that in the event that the judgment obligors cannot pay all or part of the obligation, the sheriff shall levy
upon the properties of the defendants to satisfy the award.
On October 28, 2008, the Makati RTC's sheriff filed a Report stating that he tried to serve the Writ of
Execution upon the defendants at Fumakilla Compound but he was not able to do so since the
defendants were no longer holding office thereat. The Sheriff also reported that, on the same day, he
went to the subject property to serve the execution but likewise failed in his attempt since Carmelita
was no longer residing at the said address.
On November 11, 2008, BDO filed a Motion to Conduct Auction of the subject property. The motion was
granted by the Makati RTC on May 5, 2009 so that the subject property was sold to BDO, as the highest
bidder, on October 6, 2009.
Following the discovery of the sale of their property, Eliseo executed an affidavit of adverse claim and,
on January 21, 2013, filed a Complaint for Annulment of Surety Agreements, Notice of Levy on
Attachment, Auction Sale and Other Documents, docketed as CC No. 73761, with the Regional Trial
Court of Pasig City (Pasig RTC).1
He alleged in his Complaint that the subject property is a family home that belongs to the conjugal
partnership of gains he established with his wife. He further averred that the alleged surety agreements
upon which the attachment of the property was anchored were signed by his wife without his consent
and did not redound to benefit their family. Thus, he prayed that the surety agreements and all other
documents and processes, including the ensuing attachment, levy and execution sale, based thereon be
nullified.
BDO filed a Motion to Dismiss the Complaint, asserting that the Pasig RTC has no jurisdiction to hear
Eliseo's Complaint, the case was barred by res judicata given the Decision and orders of the Makati RTC,
and, finally, the Complaint failed to state a cause of action.
In an Order dated May 31, 2013, the Pasig RTC dismissed the case citing lack of jurisdiction. The RTC
held that it could not pass upon matters already brought before the RTC Makati and, citing Spouses
Ching v. Court of Appeals,2 the husband of a judgment debtor is not a stranger to a case who can file a
separate and independent action to determine the validity of the levy and sale of a property.
On a motion for reconsideration filed by Eliseo, the Pasig RTC reinstated the case with qualification.
Relying on Buado v. Court of Appeals,3 the Pasig RTC held that since majority of Eliseo's causes of action
were premised on a claim that the obligation contracted by his wife has not redounded to their family,
and, thus, the levy on their property was illegal, his filing of a separate action is not an encroachment on
the jurisdiction of the Makati RTC, which ordered the attachment and execution in the first place.
The Pasig RTC clarified, however, that it cannot annul the surety agreements supposedly signed by
Carmelita since Eliseo was not a party to those agreements and the validity and efficacy of these
contracts had already been decided by the Makati RTC.
Both Eliseo and BDO referred the Pasig RTC's Decision to the Court of Appeals (CA).
In its petition, docketed as CA-G.R. SP No. 133994, BDO contended that it was an error for the Pasig RTC
to apply Buado as it does not apply squarely to the circumstances of the case and has not
superseded Ching. BDO maintained that by reinstating the complaint, Pasig RTC has violated the rule
prohibiting non-interference by one court with the orders of a coequal court.
In its January 20, 2015 Decision,4 the appellate court granted BDO's petition and ordered the Pasig RTC
to cease from hearing CC No. 73761 commenced by Eliseo. In so ruling, the CA held that Eliseo is not a
stranger who can initiate an action independent from the case where the attachment and execution sale
were ordered. Thus, the CA concluded that in opting to review the validity of the levy and execution sale
of the subject property pursuant to the judgment of the Makati RTC, the Pasig RTC acted without
jurisdiction.
Eliseo moved for, but was denied, reconsideration by the appellate court. Hence, he came to this Court
via a Petition for Review on Certiorari under Rule 45 of the Rules of Court, docketed as G.R. No. 218540.
On August 19, 2015, the Court issued a Resolution denying Eliseo's petition. Eliseo begs to differ and
takes exception from the said holding in his motion for reconsideration dated October 5, 2015, which is
presently for Resolution by this Court.
Meanwhile, on an ex-parte omnibus motion filed by BDO, the Makati RTC ordered the issuance of a Writ
of Possession and the issuance of a new TCT covering the subject property in favor of the respondent
bank.
Arguing that the Makati RTC had not acquired jurisdiction over her person as the service of the
summons and the other processes of the court was defective, Carmelita filed a Petition for Annulment
of Judgment (With Urgent Prayer for Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction) with the CA, docketed as CA-G.R. SP No. 134664.
Before the CA can act on the Petition for Annulment, the Borlongans found posted on the subject
property a Writ of Possession dated August 1, 2014 and a Notice to Vacate dated August 29, 2014.
In its Resolution dated November 12, 2014,5 the appellate court denied Carmelita's prayer for the
issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction (WPI).
Aggrieved, Carmelita interposed a motion for the reconsideration of the CA's November 12, 2014
Resolution. On March 23, 2015, however, the appellate court denied her motion for reconsideration,
holding that "upon the expiration of the redemption period, the right of the purchaser to the possession
of the foreclosed property becomes absolute."
Thus, on April 27, 2015, Carmelita filed a Petition for Review, docketed as G.R. No. 217617, before this
Court, ascribing to the appellate court the commission of serious reversible errors. The Court denied the
petition on June 22, 2015. Hence, on September 1, 2015, Carmelita interposed a Motion for
Reconsideration urging the Court to take a second hard look at the facts of the case and reconsider its
stance.
Considering that both cases originated from the same facts and involved interrelated issues, on January
25, 2016, the Court resolved to consolidate G.R. No. 218540 with G.R. No. 217617.
Issues
The question posed in G.R. No. 217617 is whether or not the CA erred in refusing to issue a TRO and/or
WPI stopping the consolidation of BDO's ownership over the subject property. On the other hand, the
issue in G.R. No. 218540 revolves around whether the Pasig RTC has jurisdiction to hear and decide a
case filed by the non-debtor husband to annul the levy and execution sale of the subject property
ordered by the Makati RTC against his wife.
Our Ruling
A reexamination of the antecedents and arguments in G.R. Nos. 217617 and 218540 compels the
reversal of the appellate court's resolutions in both cases.
G.R. No. 217617
The Issuance of a TRO/WPI is not a prejudgment of the main case
On the propriety of CA's refusal to issue a TRO/WPI, it is worthy to note that Section 3, Rule 58 of the
Rules of Court provides the grounds for the issuance of a preliminary injunction,
viz:chanRoblesvirtualLawlibrary
Section 3. Grounds for issuance of preliminary injunction. — A preliminary injunction may be granted
when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the
performance of an act or acts either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done some act or acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment ineffectual.
From the foregoing provision, it is clear that a writ of preliminary injunction is warranted where there is
a showing that there exists a right to be protected and that the acts against which the writ is to be
directed violate an established right. Otherwise stated, for a court to decide on the propriety of issuing a
TRO and/or a WPI, it must only inquire into the existence of two things: (1) a clear and unmistakable
right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious
damage.
In Levi Strauss (Phils.) Inc. v. Vogue Traders Clothing Company,6 the Court already explained that the
issuance of a TRO is not conclusive of the outcome of the case as it requires but a sampling of the
evidence, viz:chanRoblesvirtualLawlibrary
Indeed, a writ of preliminary injunction is generally based solely on initial and incomplete evidence
adduced by the applicant (herein petitioner). The evidence submitted during the hearing of the
incident is not conclusive, for only a "sampling" is needed to give the trial court an idea of the
justification for its issuance pending the decision of the case on the merits. As such, the findings of fact
and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature.
Moreover, the sole object of a preliminary injunction is to preserve the status quo until the merits of
the case can be heard. Since Section 4 of Rule 58 of the Rules of Civil Procedure gives the trial courts
sufficient discretion to evaluate the conflicting claims in an application for a provisional writ which often
involves a factual determination, the appellate courts generally will not interfere in the absence of
manifest abuse of such discretion. A writ of preliminary injunction would become a prejudgment of a
case only when it grants the main prayer in the complaint or responsive pleading, so much so that
there is nothing left for the trial court to try except merely incidental matters, (emphasis supplied)
Notably, the primary prayer of the Petition for Annulment before the appellate court is the declaration
of the nullity of the proceedings in the RTC and its Decision dated November 29, 2007; it is not merely
confined to the prevention of the issuance of the writ of possession and the consolidation of the
ownership of the subject property in BDO's name—the concerns of the prayer for the TRO and/or WPI.
Indeed, the petitioner's prayer for the issuance of a TRO and/or WPI was intended to preserve the status
quo ante,7 and not to pre-empt the appellate court's decision on the merits of her petition for
annulment. Thus, it was a grievous error on the part of the CA to deny her of this provisional remedy.
The appellate court's error is readily apparent given the stark existence of the grounds for the issuance
of a writ of preliminary injunction.
On the first ground, petitioner has a clear and unmistakable right that must be protected. This right is
not just her proprietary rights over the subject property but her constitutionally protected right to due
process before she can be deprived of her property. No less than Section 1 of the Bill of Rights of the
1987 Constitution mandates that:chanRoblesvirtualLawlibrary
No person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws, (emphasis supplied)
In its classic formulation, due process means that any person with interest to the thing in litigation must
be notified and given an opportunity to defend that interest.8 Thus, as the essence of due process lies
in the reasonable opportunity to be heard and to submit any evidence the defendant may have in
support of her defense, she must be properly served the summons of the court. In other words, the
service of summons is a vital and indispensable ingredient of due process9 and compliance with the rules
regarding the service of the summons is as much an issue of due process as it is of
jurisdiction.10 Unfortunately, as will be discussed, it would seem that the Constitutional right of the
petitioner to be properly served the summons and be notified has been disregarded by the officers of
the trial court.
At this very juncture, the existence of the second ground for the issuance of a TRO and/or WPI is self-
evident. Without a TRO and/or WPI enjoining the respondent bank from continuing in the possession
and consolidating the ownership of the subject property, petitioner's right to be afforded due process
will unceasingly be violated.
It need not be stressed that a continuous violation of constitutional rights is by itself a grave and
irreparable injury that this or any court cannot plausibly tolerate.
Without a doubt, the appellate court should have acted intrepidly and issued the TRO and/or WPI
posthaste to protect the constitutional rights of petitioner, as it is duty-bound to do.
The performance of official duty was not regular
Regrettably, the appellate court fell short in the fulfillment of its mandate and instead relied on the
disputable presumption that "official duty has been regularly performed." The Court cannot subscribe to
the position taken by the appellate court.
As a rule, summons should be personally served on a defendant.
When summons cannot be served personally within a reasonable period of time, substituted service
may be resorted to. Service of summons by publication can be resorted to only if the defendant's
"whereabouts are unknown and cannot be ascertained by diligent inquiry." The relevant sections of Rule
14 of the Rules of Court provide, thus:chanRoblesvirtualLawlibrary
SEC. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by
handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
SEC. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of
the summons at the defendant's residence with some person of suitable age and discretion then
residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some
competent person in charge thereof.
xxxx
SEC. 14. Service upon defendant whose identity or whereabouts are unknown. - In any action where the
defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown
and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by
publication in a newspaper of general circulation and in such places and for such time as the court may
order.
It is, therefore, proper to state that the hierarchy and rules in the service of summons are as follows:
(1) Personal service;
(2) Substituted service, if for justifiable causes the defendant cannot be served within a
reasonable time; and
(3) Service by publication, whenever the defendant's whereabouts are unknown and cannot be
ascertained by diligent inquiry.
Simply put, personal service of summons is the preferred mode. And, the rules on the service of
summons other than by personal service may be used only as prescribed and only in the circumstances
authorized by statute. Thus, the impossibility of prompt personal service must be shown by stating
that efforts have been made to find the defendant personally and that such efforts have failed before
substituted service may be availed.11 Furthermore, their rules must be followed strictly, faithfully and
fully as they are extraordinary in character and considered in derogation of the usual method of service.
In Manotoc v. Court of Appeals,12 the Court enumerated and explained the requirements to effect a
valid service of summons other than by personal service, viz:chanRoblesvirtualLawlibrary
(1) Impossibility of Prompt Personal Service
xxxx
Sheriffs are asked to discharge their duties on the service of summons with due care, utmost diligence,
and reasonable promptness and speed so as not to prejudice the expeditious dispensation of justice.
Thus, they are enjoined to try their best efforts to accomplish personal service on defendant. On the
other hand, since the defendant is expected to try to avoid and evade service of summons, the sheriff
must be resourceful, persevering, canny, and diligent in serving the process on the defendant. For
substituted service of summons to be available, there must be several attempts by the sheriff to
personally serve the summons within a reasonable period [of one month] which eventually resulted in
failure to prove impossibility of prompt service. "Several attempts" means at least three (3) tries,
preferably on at least two different dates. In addition, the sheriff must cite why such efforts were
unsuccessful. It is only then that impossibility of service can be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and circumstances surrounding the
attempted personal service. The efforts made to find the defendant and the reasons behind the
failure must be clearly narrated in detail in the Return. The date and time of the attempts on personal
service, the inquiries made to locate the defendant, the name/s of the occupants of the alleged
residence or house of defendant and all other acts done, though futile, to serve the summons on
defendant must be specified in the Return to justify substituted service. The form on Sheriffs Return of
Summons on Substituted Service prescribed in the Handbook for Sheriffs published by the Philippine
Judicial Academy requires a narration of the efforts made to find the defendant personally and the fact
of failure. Supreme Court Administrative Circular No. 5 dated November 9, 1989 requires
that "impossibility of prompt service should be shown by stating the efforts made to find the
defendant personally and the failure of such efforts," which should be made in the proof of service.
In the case now before Us, the summons was served on the petitioner by publication. Yet, the
circumstances surrounding the case do not justify the resort.
Consider: in July 2003, the sheriff attempted to serve the summons on the defendants, including
petitioner Carmelita, at Fumakilla Compound, i.e., at the property already foreclosed, acquired, and
possessed by the respondent bank as early as August 2001. Immediately after this single attempt at
personal service in July 2003, the respondent bank moved in October 2003 for leave to serve the
summons by publication (and not even substituted service), which motion the RTC granted.
Clearly, there was no diligent effort made to find the petitioner and properly serve her the summons
before the service by publication was allowed. Neither was it impossible to locate the residence of
petitioner and her whereabouts.
It should be noted that the principal obligor in CC No. 03-0713 was Tancho Corporation and petitioner
Carmelita was impleaded only because she supposedly signed a surety agreement as a director. As a
juridical person, Tancho Corporation is required to file mandatory corporate papers with the Securities
and Exchange Commission (SEC), such as its General Information Sheet (GIS). In 1997 and 2000, the GIS
filed by Tancho Corporation with the SEC provided the names of its directors and their addresses. One of
these directors included petitioner Carmelita with her address listed at 41 Chicago St., Quezon City. The
GIS of Tancho Corporation was readily available to the public including the RTC's process server and
respondent bank.
Patently, it cannot be plausibly argued that it was impossible to find the petitioner and personally serve
her with summons. In like manner, it can hardly be stated that the process server regularly performed
his duty.
The subject property was not foreclosed by the respondent bank; right of BDO to the possession of
the subject property is questionable
Still unwilling to issue the TRO and/or WPI fervently prayed for by petitioner, the appellate court held
that "upon the expiration of the redemption period, the right of the purchaser to the possession of the
foreclosed property becomes absolute." This Court cannot affirm the appellate court's ruling.
At the outset, it must be pointed out that the subject property was never mortgaged to, much less
foreclosed by, the respondent bank. Thus, it was error for the CA to refer to the subject property as
"foreclosed property."
Rather, as disclosed by the records, the possession of the subject property was acquired by BDO through
attachment and later by execution sale. However, it is presumptive to state that the right of BDO over
the possession of the subject property is now absolute considering that there is an action that questions
the validity of the bank's acquisition over the same property.
In Cometa v. Intermediate Appellate Court,13 we explained that the expiration of the redemption period
does not automatically vest in the auction purchaser an absolutely possessory right over the property,
viz:chanRoblesvirtualLawlibrary
From the foregoing discussion, it can be seen that the writ of possession may issue in favor of a
purchaser in an execution sale when the deed of conveyance has been executed and delivered to him
after the period of redemption has expired and no redemption has been made by the judgment debtor.
A writ of possession is complementary to a writ of execution (see Vda. de Bogacki v. Inserto, 111 SCRA
356, 363), and in an execution sale, it is a consequence of a writ of execution, a public auction sale, and
the fulfillment of several other conditions for conveyance set by law. The issuance of a writ of
possession is dependent on the valid execution of the procedural stages preceding it. Any flaw afflicting
any of its stages, therefore, could affect the validity of its issuance.
In the case at bar, the validity of the levy and sale of the properties is directly put in issue in another
case by the petitioners. This Court finds it an issue which requires pre-emptive resolution. For if the
respondent acquired no interest in the property by virtue of the levy and sale, then, he is not entitled
to its possession.
The respondent appellate court's emphasis on the failure of The petitioner to redeem the properties
within the period required by law is misplaced because redemption, in this case, is inconsistent with the
petitioner's claim of invalidity of levy and sale. Redemption is an implied admission of the regularity
of the sale and would estop the petitioner from later impugning its validity on that ground. (emphasis
supplied)
Thus, even given the expiration of the redemption period, a TRO and/or WPI is still obtainable and
warranted where the validity of the acquisition of the possession is afflicted by Constitutional and
procedural infirmities.
G.R. No. 218540
Eliseo can file an independent action for the annulment of the attachment of their conjugal property
As to the question of the Pasig RTC's jurisdiction to hear Eliseo's complaint, we cannot subscribe to
BDO's contention that Eliseo cannot file a separate and independent action for the annulment of the
levy on their conjugal property.
Section 16, Rule 39 of the Rules of Court allows third-party claimants of properties under execution to
vindicate their claims to the property in a separate action with another court. It states,
thus:chanRoblesvirtualLawlibrary
SECTION 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, (emphasis supplied)
Clearly, the availability of the remedy provided under the foregoing provision requires only that that the
claim is a third-party or a "stranger" to the case. The poser then is this: is the husband, who was not a
party to the suit but whose conjugal property was executed on account of the other spouse's debt, a
"stranger" to the suit? In Buado v. Court of Appeals,14 this Court had the opportunity to clarify that, to
resolve the issue, it must first be determined whether the debt had redounded to the benefit of the
conjugal partnership or not. In the negative, the spouse is a stranger to the suit who can file an
independent separate action, distinct from the action in which the writ was issued. We held,
thus:chanRoblesvirtualLawlibrary
A third-party claim must be filed [by] 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?"
xxxx
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 Code
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.
xxxx
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.
xxxx
Hence, the filing of a separate action by respondent is proper and jurisdiction is thus vested on Branch
21. (emphasis supplied)
In the present case, it is not disputed that the conjugal property was attached on the basis of a surety
agreement allegedly signed by Carmelita for and in behalf of Tancho Corporation. In our 2004 Decision
in Spouses Ching v. Court of Appeals,15 we elucidated that there is no presumption that the conjugal
partnership is benefited when a spouse enters into a contract of surety, holding
thusly:chanRoblesvirtualLawlibrary
In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was
benefited by the petitioner-husband's act of executing a continuing guaranty and suretyship agreement
with the private respondent for and in behalf of PBMCI. The contract of loan was between the private
respondent and the PBMC1, solely for the benefit of the latter No presumption can be inferred from
the fact that when the petitioner-husband entered into an accommodation agreement or a contract of
surety, the conjugal partnership would thereby be benefited. The private respondent was burdened
to establish that such benefit redounded to the conjugal partnership.
It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and
was one of its top twenty stockholders, and that the shares of stocks of the petitioner-husband and his
family would appreciate if the PBMCI could be rehabilitated through the loans obtained; that the
petitioner-husband's career would be enhanced should PBMCI survive because of the infusion of fresh
capital. However, these are not the benefits contemplated by Article 161 of the New Civil Code. The
benefits must be those directly resulting from the loan. They cannot merely be a by-product or a spin-
off of the loan itself.
This is different from the situation where the husband borrows money or receives services to be used
for his own business or profession. In the Ayala case, we ruled that it is such a contract that is one within
the term "obligation for the benefit of the conjugal partnership." Thus;
xxxx
The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not
controlling because the husband, in those cases, contracted the obligation for his own business. In this
case, the petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the
private respondent, (emphasis supplied)
Furthermore, it is not apparent from the records of this case that BDO had established the benefit to the
conjugal partnership flowing from the surety agreement allegedly signed by Carmelita. Thus, Eliseo's
claim over the subject property lodged with the RTC Pasig is proper, with the latter correctly exercising
jurisdiction thereon.
Besides, BDO's reliance on Spouses Ching v. Court of Appeals16 (2003) is improper. In the present case,
Eliseo and his wife discovered the attachment of their conjugal property only after the finality of the
decision by the RTC Makati. There was, therefore, no opportunity for Eliseo to intervene in the case
before the RTC Makati which attached the conjugal property, as a motion to intervene can only be filed
"at any time before rendition of judgment by the trial court."17 This spells the whale of difference
between the case at bar and the earlier Spouses Ching. Unlike in the present case, the debtor in the case
cited by BDO was properly informed of the collection suit and his spouse had the opportunity to
question the attachment of their conjugal property before the court that issued the levy on attachment,
but simply refused to do so. Thus, to now deny Eliseo the opportunity to question the attachment made
by the RTC Makati in a separate and independent action will be to, again, refuse him the due process of
law before their property is taken. As this Court is duty-bound to protect and enforce Constitutional
rights, this we cannot allow.
WHEREFORE, the petitions are GRANTED.
(1) The January 20, 2015 Decision and May 26, 2015 Resolution of the Court of Appeals in CA-G.R. SP No.
133994 are hereby REVERSED and SET ASIDE. The Regional Trial Court of Pasig, Branch 155 is ordered to
continue with the proceedings and decide Civil Case No. 73761 with reasonable dispatch.
(2) The November 12, 2014 and March 23, 2015 Resolutions of the appellate court in CA-G.R. SP No.
134664 are REVERSED and SET ASIDE.
Accordingly, let a Temporary Restraining Order (TRO) be issued enjoining, prohibiting, and preventing
respondent Banco De Oro, its assigns, transferees, successors, or any and all other persons acting on its
behalf from possessing, selling, transferring, encumbering or otherwise exercising acts of ownership
over the property subject of the controversy. Said TRO shall remain valid and effective until such time as
the rights and interests of the parties in CA-G.R. SP No. 134664 shall have been determined and finally
resolved.
SO ORDERED.
16. Lacson v. Diaz, G.R. No. L-19346, May 31, 1965
[G.R. No. L-19346. May 31, 1965.]
SOLEDAD L. LACSON, ET AL., Plaintiffs-Appellees, v. ABELARDO G. DIAZ, Defendant-Appellant.
Agustin Locsin for Plaintiffs-Appellees.
Abelardo G. Diaz in his own behalf as defendant-appellant.

DECISION
BARRERA, J.:
The facts of this case are not disputed:chanrob1es virtual 1aw library
In connection with a final decision rendered by the Court of First Instance of Negros Occidental in Civil
Case No. 5790 (Soledad L. Lacson, Et. Al. v. Abelardo G. Diaz), sentencing therein defendant to pay the
plaintiffs the sum of P97,532.93 with legal interest thereon from July 1, 1960 until fully paid, plus a sum
equivalent to 25% of the total amount as attorney’s fees, the court issued a writ of execution on August
1, 1961. On August 7, 1961, the Provincial Sheriff of Negros Occidental sent to the manager of Talisay-
Silay Milling Company, wherein defendant Diaz was employed, a notice to garnish one- third of his
monthly salary and of any other personal properties belonging to said defendant, to cover the total
amount of P132,718.30.
Diaz filed with the court a motion to quash the writ of execution and to lift the notice of garnishment (of
his salary), on the ground that the same are not enforceable against his present family. It was claimed
that since the money-judgment arose out of a contract entered into by him during his first marriage,
said judgment cannot be enforced against his salaries which form part of the conjugal properties of the
second marriage. Plaintiffs opposed this motion, for the reason that re-marriage is not a cause for
extinction of obligations. As his aforesaid motion, after hearing, was denied by the court for lack of
merit, the defendant instituted the present appeal.
Appellant does not dispute the existence of the money judgment against him in the amount above-
stated, which decision was rendered in 1947 and affirmed by the appellate court in 1950. It appears,
however, that appellant, who became a widower in 1951, remarried in 1960. The writ of execution and
notice of garnishment in this case were issued and implemented in 1961. It is now contended that, as
the conjugal partnership resulting of the second marriage is different from that of the first marriage,
during which existence the obligation arose, such obligation, as far as the second conjugal partnership is
concerned, is personal to the husband and cannot be charged against the properties of the second
union. And, since his salaries form part of the conjugal assets, the same cannot be garnished to satisfy
his personal obligations. In support of this proposition, appellant cites Article 163 of the new Civil Code
and the ruling of this Court that the right of the husband to one-half of the assets of the conjugal
partnership does not vest until the dissolution of the marriage. 1
Article 163 of the new Civil Code relied upon by appellant provides:jgc:chanrobles.com.ph
"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."cralaw
virtua1aw library
As a general rule, therefore, debts contracted by the husband or wife before the marriage, 2 as well as
fines and pecuniary indemnities imposed thereon, are not chargeable to the conjugal partnership.
However, such obligations may be enforced against the conjugal assets if the responsibilities
enumerated in Article 161 3 of the new Civil Code have already been covered, and that the obligor has
no exclusive property or the same is insufficient. Considering that the enforceability of the personal
obligation of the husband or wife, against the conjugal assets, forms the exception to the general rule, it
is incumbent upon the one who invokes this provision or the creditor to show that the requisites for its
applicability are obtaining.
In the instant case, although it is not controverted that there is due and owing the plaintiffs-appellees a
certain sum of money from the appellant debtor — a personal obligation — yet, it has not been
established that the latter does not have properties of his own or that the same are not adequate to
satisfy appellees’ claim. Furthermore, there is no showing that the responsibilities named in Article 161
of the new Civil Code have already been covered in order that the personal obligation of the husband
may be made chargeable against the properties of the second marriage.
IN VIEW OF THE FOREGOING CONSIDERATIONS, this case is hereby remanded to the court of origin for
further proceedings, in accordance with the aforestated observation. No costs. So ordered.
17. Pana v. Heirs of Juanite, Sr., G.R. No. 164201, December 10, 2012
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.
18. Spouses Wong v. Intermediate Appellate Court, G.R. No. 70082, August 19, 1991
G.R. No. 70082 August 19, 1991
SPOUSES RICKY WONG and ANITA CHAN, LEONARDO JOSON, JUANITO SANTOS, EMERITO SICAT and
CONRADO LAGMAN, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT and ROMARICO HENSON, respondents.
Feliciano C. Tumale for petitioners.

Benjamin Dadios and Bausa, Ampil, Suarez, Paredes & Bausa for private respondent.
FERNAN, C.J.:
Submitted for adjudication in the instant petition for review on certiorari is the issue of whether or not
the execution of a decision in an action for collection of a sum of money may be nullified on the ground
that the real properties levied upon and sold at public auction are the alleged exclusive properties of a
husband who did not participate in his wife's business transaction from which said action stemmed.
Private respondent Romarico Henson married Katrina Pineda on January 6, 1964.1 They have three
children but even during the early years of their marriage, Romarico and Katrina had been most of the
time living separately. The former stayed in Angeles City while the latter lived in Manila. During the
marriage or on January 6, 1971, Romarico bought a 1,787 square-meter parcel of land in Angeles City for
P11,492 from his father, Dr. Celestino L. Henson2 with money borrowed from an officemate. His father
need the amount for investments in Angeles City and Palawan.3
Meanwhile, in Hongkong sometime in June 1972, Katrina entered into an agreement with Anita Chan
whereby the latter consigned to Katrina pieces of jewelry for sale valued at 199,895 Hongkong dollars or
P321,830.95.4 When Katrina failed to return the pieces of jewelry within the 20-day period agreed upon,
Anita Chan demanded payment of their value.
On September 18, 1972, Katrina issued in favor of Anita Chan a check for P55,000 which, however, was
dishonored for lack of funds. Hence, Katrina was charged with estafa before the then Court of First
Instance of Pampanga and Angeles City, Branch IV.5 After trial, the lower court rendered a decision
dismissing the case on the ground that Katrina's liability was not criminal but civil in nature as no estafa
was committed by the issuance of the check in payment of a pre-existing obligation.6
In view of said decision, Anita Chan and her husband Ricky Wong filed against Katrina and her husband
Romarico Henson, an action for collection of a sum of money also in the same branch of the aforesaid
court.7 The records of the case show that Atty. Gregorio Albino, Jr. filed an answer with counterclaim
but only in behalf of Katrina. When the case was called for pre-trial, Atty. Albino once again appeared as
counsel for Katrina only. While it is true that during subsequent hearings, Atty. Expedite Yumul, who
collaborated with Atty. Albino, appeared for the defendants, it is not shown on record that said counsel
also represented Romarico. In fact, a power of attorney which Atty. Albino produced during the trial,
showed that the same was executed solely by Katrina.8
After trial, the court promulgated a decisions9 in favor of the Wongs. It ordered Katrina and Romarico
Henson to pay the Wongs HK$199,895.00 or P321,830.95 with legal interest from May 27, 1975, the
date of filing of the complaint, until fully paid; P20,000 as expenses for litigation; P15,000 as attorney's
fees, and the costs of the suit.
A writ of execution was thereafter issued. Levied upon were four lots in Angeles City covered by Transfer
Certificates of Title Nos. 30950, 30951, 30952 and 30953 all in the name of Romarico Henson ... married
to Katrina Henson.10
The public auction sale was first set for October 30, 1977 but since said date was declared a public
holiday, Deputy Sheriff Emerito Sicat reset the sale to November 11, 1977. On said date, the following
properties registered in the name of Romarico Henson "married to Katrina Henson" were sold at public
auction: (a) two parcels of land covered by Transfer Certificates of Title Nos. 30950 and 30951 with
respective areas of 293 and 289 square meters at P145,000 each to Juanito L. Santos,11 and (b) two
parcels of land covered by Transfer Certificates of Title Nos. 30952 and 30953 with respective areas of
289 and 916 square meters in the amount of P119,000.00 to Leonardo B. Joson.12
After the inscription on Transfer Certificate of Title No. 30951 of the levy on execution of the judgment
in Civil Case No. 2224, the property covered by said title was extrajudicially foreclosed by the Rural Bank
of Porac, Pampanga on account of the mortgage loan of P8,000 which Romarico and Katrina had
obtained from said bank. The property was sold by the sheriff to the highest bidder for P57,000 on
September 9, 1977. On September 14, 1978, Juanito Santos, who had earlier bought the same property
at public auction on November 11, 1977, redeemed it by paying the sum of P57,000 plus the legal
interest of P6,840.00 or a total amount of P63,840.00.13
About a month before such redemption or on August 8, 1 978, Romarico filed an action for the
annulment of the decision in Civil Case No. 2224 as well as the writ of execution, levy on execution and
the auction sale therein in the same Court of First Instance.14 Romarico alleged that he was "not given
his day in court" because he was not represented by counsel as Attys. Albino and Yumul appeared solely
for Katrina; that although he did not file an answer to the complaint, he was not declared in default in
the case; that while Atty. Albino received a copy of the decision, he and his wife were never personally
served a copy thereof; that he had nothing to do with the business transactions of Katrina as he did not
authorize her to enter into such transactions; and that the properties levied on execution and sold at
public auction by the sheriff were his capital properties and therefore, as to him, all the proceedings had
in the case were null and void.
On November 10, 1978, the lower court issued an order restraining the Register of Deeds of Angeles City
from issuing the final bill of sale of Transfer Certificates of Title Nos. 30950 and 30951 in favor of Juanito
Santos and Transfer Certificates of Title Nos. 30952 and 30953 in favor of Leonardo Joson until further
orders of the court.15 On January 22, 1979, upon motion of Romarico, the court issued a writ of
preliminary injunction enjoining the sheriff from approving the final bill of sale of the land covered by
the aforementioned certificates of title and the Register of Deeds of Angeles City from registering said
certificates of title in the names of Santos and Joson until the final outcome of the case subject to
Romarico's posting of a bond in the amount of P321,831.00.16
After trial on the merits, the lower court17 rendered a decision holding that Romarico was indeed not
given his day in court as he was not represented by counsel nor was he notified of the hearings therein
although he was never declared in default. Noting that the complaint in Civil Case No. 2224 as well as
the testimonial and documentary evidence adduced at the trial in said case do not show that Romarico
had anything to do with the transactions between Katrina and Anita Chan, the court ruled that the
judgment in Civil Case No. 2224 "is devoid of legal or factual basis which is not even supported by a
finding of fact or ratio decidendi in the body of the decision, and may be declared null and void ...
pursuant to a doctrine laid down by the Supreme Court to the effect that the Court of First Instance or a
branch thereof, has authority and jurisdiction to try and decide an action for annulment of a final and
executory judgment or order rendered by another court of first instance or of a branch thereof (Gianan
vs. Imperial, 55 SCRA 755)."18
On whether or not the properties lenied upon and sold at public auction may be reconveyed to
Romarico, the court, finding that there was no basis for holding the conjugal partnership liable for the
personal indebtedness of Katrina, ruled in favor of reconveyance in view of the jurisprudence that the
interest of the wife in the conjugal partnership property being inchoate and therefore merely an
expectancy, the same may not be sold or disposed of for value until after the liquidation and settlement
of the community assets. The dispositive portion of the decision reads:
WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff
and against all the defendants, as follows:
(a) The Decision of the Court of First Instance of Pampanga and Angeles City, Branch IV,
rendered in Civil Case No. 2224, entitled "RICKY WONG, ET AL. vs. KATRINA PINEDA HENSON and
ROMARICO HENSON", is hereby declared null and void, only as far as it affects plaintiff herein
Romarico Henson;
(b) The Writ of Execution, levy in execution and auction sale of the conjugal property of the
spouses Romarico Henson and Katrina Pineda Henson which were sold at public auction on
November 11, 1977, without notice to plaintiff herein, by Deputy Sheriff Emerito Sicat, are
likewise declared null and void and of no force and effect;
(c) Defendants Emerito Sicat and Conrado Lagman, in their official capacity as Sheriff and
Register of Deeds, respectively, are enjoined permanently from issuing and/or registering the
corresponding deeds of sale affecting the property;
(d) The aforementioned buyers are directed to reconvey the property they have thus purchased
at public auction to plaintiff Romarico Henson;
(e) As far as the claim for reimbursement filed by Juanito Santos concerning the redemption of
the property covered by Transfer Certificate of Title No. 30951 from the Rural Bank of Porac,
which foreclosed the same extrajudicially, is concerned, plaintiff Romarico Henson may redeem
the same within the period and in the manner prescribed by law, after the corresponding deed
of redemption shall have been registered in the Office of the Registry of Deeds for Angeles City;
(f) Defendants Spouses Ricky Wong and Anita Chan are, with the exception of the defendants
Juanito Santos, Leonardo Joson, Sheriff and Register of Deeds, are ordered jointly and severally,
to pay the plaintiff Romarico Henson the sum of P10,000.00, corresponding to the expenses of
litigation, with legal interest thereon from the time this suit was filed up to the time the same
shall have been paid, plus P5,000.00 for and as attorney's fees, and the costs of suit; and
(g) The counterclaims respectively filed on behalf of all the defendants in the above-entitled
case are hereby DISMISSED.
SO ORDERED.
The defendants appealed to the then Intermediate Appellate Court. In its decision of January 22,
198519 the said court affirmed in toto the decision of the lower court. It added that as to Romarico, the
judgment in Civil Case No. 2224 had not attained finality as the decision therein was not served on him
and that he was not represented by counsel. Therefore, estoppel may not be applied against him as, not
having been served with the decision, Romarico did not know anything about it. Corollarily, there can be
no valid writ of execution inasmuch as the decision had not become final as far as Romarico is
concerned.
On whether the properties may be levied upon as conjugal properties, the appellate court ruled in the
negative. It noted that the properties are Romarico' s exclusive capital having been bought by him with
his own funds. But granting that the properties are conjugal, they cannot answer for Katrina's
obligations as the latter were exclusively hers because they were incurred without the consent of her
husband, they were not for the daily expenses of the family and they did not redound to the benefit of
the family. The court underscored the fact that no evidence has been submitted that the administration
of the conjugal partnership had been transferred to Katrina either by Romarico or by the court before
said obligations were incurred.
The appellants filed a motion for reconsideration of the decision of the appellate court but the same
was denied for lack of merit on February 6, 1985.20
Hence, the instant petition for review on certiorari. Petitioners contend that, inasmuch as the Henson
spouses were duly represented by Atty. Albino as shown by their affidavit of August 25, 1977 wherein
they admitted that they were represented by said counsel until Atty. Yumul took over the actual
management and conduct of the case and that Atty. Albino had not withdrawn as their counsel, the
lower court "did not commit an error" in serving a copy of the decision in Civil Case No. 2224 only on
Atty. Albino. Moreover, during the 2-year period between the filing of the complaint in Civil Case No.
2224 and the public auction sale on November 11, 1977, Romarico remained silent thereby making him
in estoppel and guilty of laches.
Petitioners further aver that there being sufficient evidence that the auction sale was conducted in
accordance with law, the acts of the sheriffs concerned are presumed to be regular and valid. But
granting that an irregularity consisting of the non-notification of Romarico attended the conduct of the
auction sale, the rights of Santos and Joson who were "mere strangers who participated as the highest
bidders" therein, may not be prejudiced. Santos and Joson bought the properties sincerely believing that
the sheriff was regularly performing his duties and no evidence was presented to the effect that they
acted with fraud or that they connived with the sheriff. However, should the auction sale be nullified,
petitioners assert that Romarico should not be unduly enriched at the expense of Santos and Joson.
The petitioners' theory is that Romarico Henson was guilty of laches and may not now belatedly assert
his rights over the properties because he and Katrina were represented by counsel in Civil Case No.
2224. Said theory is allegedly founded on the perception that the Hensons were like any other ordinary
couple wherein a spouse knows or should know the transactions of the other spouse which necessarily
must be in interest of the family. The factual background of this case, however, takes it out of said ideal
situation.
Romarico and Katrina had in fact been separated when Katrina entered into a business deal with Anita
Wong. Thus, when that business transaction eventually resulted in the filing of Civil Case No. 2224,
Romarico acted, or, as charged by petitioners, failed to act, in the belief that he was not involved in the
personal dealings of his estranged wife. That belief was buttressed by the fact that the complaint itself
did not mention or implicate him other than as the husband of Katrina. On whether Romarico was also
represented by Atty. Albino, Katrina's counsel, the courts below found that:
... Atty. Albino filed an Answer with Counterclaims dated July 25, 1975 solely on behalf of
defendant Katrina Henson. The salutary statement in that Answer categorically reads: ... COMES
NOW THE DEFENDANT KATRINA HENSON by and through undersigned counsel, in answer to
plaintiffs' complaint respectfully alleges: ... .
That Answer was signed by GREGORIO ALBINO, JR., over the phrase COUNSEL FOR DEFENDANT
KATRINA HENSON.
Again, when Civil Case No. 2224 was called for pre-trial on November 27, 1975, before then
Presiding Judge Bienvenido Ejercito, it is clearly stated on page 2 of the day's stenographic
notes, under "APPEARANCES that Atty. Albino, Jr. appeared as COUNSEL FOR DEFENDANT
KATRINA HENSON". And when the case was called, Atty. Jose Baltazar, Sr. appeared for the
plaintiffs while Atty. Albino categorically appeared "FOR DEFENDANT KATRINA HENSON".
It might be true that in subsequent hearings, Atty. Expedito Yumul 'appeared as counsel for the
defendants,' but the whole trouble is that he never expressly manifested to the Court that he
was likewise actually representing defendant "ROMARICO HENSON", for it cannot be disputed
that Atty. Yumul only entered his appearance in collaboration with Atty. Albino (see p. 2 tsn,
January 26, 1976, Espinosa), who in turn entered his initial appearance during the pre- trial, and
through the filing of an Answer, for defendant KATRINA HENSON. As a matter of fact, the Power
of Attorney which Atty. Albino produced during the pre-trial was executed solely by defendant
KATRINA HENSON. Accordingly, as collaborating counsel, Atty. Yumul cannot, by any stretch of
the imagination, be considered as duly authorized to formally appear likewise on behalf of
defendant ROMARICO HENSON for whom principal counsel of record Atty. Gregorio Albino, Jr.
never made any formal appearance. On this score, it is not amiss to state that "A spring cannot
rise higher than its source:.
Now, what about that statement in the aforementioned joint affidavit of the spouses KATRINA
HENSON and ROMARICO HENSON, to the effect that our first lawyer in said case was Atty.
Gregorio Albino, Jr., and sometime later Atty. Expedito B. Yumul took over ...
That statement which plaintiff ROMARICO HENSON was made to sign by Atty. Yumul on August
25,1977, after the filing of this case, allegedly for the purpose of dissolving the writ of execution,
as claimed in paragraph XIV of the complaint herein, and is satisfactorily explained by both
plaintiff herein and his wife, while on cross-examination by Atty. Baltazar, Sr., and We quote:
Q So, the summons directed your filing of your Answer for both of you, your wife and
your good self?
A Yes, sir but may I add, I received the summons but I did not file an answer because my
wife took a lawyer and that lawyer I think will protect her interest and my interest being
so I did not have nothing to do in the transaction which is attached to the complaint.'
(TSN, Jan. 14, 1980, pp. 52-53).
That plaintiff never appeared in Civil Case No. 2224, nor was he therein represented by
counsel was impliedly admitted by defendants' counsel of records thru a question he
propounded on cross, and the answer given by Katrina Pineda, to wit:
Q How about your husband, do you remember if he physically appeared in that Civil
Case No. 2224, will you tell us if he was represented by counsel as a party defendant?
A No, sir, he did not appear.
Q You are husband and wife, please tell us the reason why you have your own counsel
in that case whereas Romarico Henson did not appear nor a counsel did not appear in
that proceedings (TSN, Feb. 25,1980, pp. 6-7).
xxx xxx xxx
A Because that case is my exclusive and personal case, he has nothing to do with that,
sir. (TSN, Feb. 25, 1980, p. 9). (Rollo, pp. 17-20)
Hence, laches may not be charged against Romarico because, aside from the fact that he had no
knowledge of the transactions of his estranged wife, he was also not afforded an opportunity to defend
himself in Civil Case No. 2224.21 There is no laches or even finality of decision to speak of with respect to
Romarico since the decision in Civil Case No. 2224 is null and void for having been rendered without
jurisdiction for failure to observe the notice requirements prescribed by law.22 Failure to notify Romarico
may not be attributed to the fact that the plaintiffs in Civil Case No. 2224 acted on the presumption that
the Hensons were still happily married because the complaint itself shows that they did not consider
Romarico as a party to the transaction which Katrina undertook with Anita Wong. In all likelihood, the
plaintiffs merely impleaded Romarico as a nominal party in the case pursuant to the provisions of Rule 3,
Section 4 of the Rules of Court.
Consequently, the writ of execution cannot be issued against Romarico as he has not yet had his day in
court23 and, necessarily, the public auction sale is null and void.24 Moreover, the power of the court in
the execution of judgments extends only over properties unquestionably belonging to the judgment
debtor.25
On the matter of ownership of the properties involved, however, the Court disagrees with the appellate
court that the said properties are exclusively owned by Romarico.1âwphi1 Having been acquired during
the marriage, they are still presumed to belong to the conjugal partnership26 even though Romarico and
Katrina had been living separately.27
The presumption of the conjugal nature of the properties subsists in the absence of clear, satisfactory
and convincing evidence to overcome said presumption or to prove that the properties are exclusively
owned by Romarico.28 While there is proof that Romarico acquired the properties with money he had
borrowed from an officemate, it is unclear where he obtained the money to repay the loan. If he paid it
out of his salaries, then the money is part of the conjugal assets29 and not exclusively his. Proof on this
matter is of paramount importance considering that in the determination of the nature of a property
acquired by a person during covertrue, the controlling factor is the source of the money utilized in the
purchase.
The conjugal nature of the properties notwithstanding, Katrina's indebtedness may not be paid for with
them her obligation not having been shown by the petitioners to be one of the charges against the
conjugal partnership.30 In addition to the fact that her rights over the properties are merely inchoate
prior to the liquidation of the conjugal partnership, the consent of her husband and her authority to
incur such indebtedness had not been alleged in the complaint and proven at the trial.31
Furthermore, under the Civil Code (before the effectivity of the Family Code on August 3, 1988), a wife
may bind the conjugal partnership only when she purchases things necessary for the support of the
family or when she borrows money for the purpose of purchasing things necessary for the support of
the family if the husband fails to deliver the proper sum;32 when the administration of the conjugal
partnership is transferred to the wife by the courts33 or by the husband34 and when the wife gives
moderate donations for charity.35 Having failed to establish that any of these circumstances occurred,
the Wongs may not bind the conjugal assets to answer for Katrina's personal obligation to them.
Petitioners' contention that the rights of Santos and Joson as innocent buyers at the public auction sale
may not be prejudiced, is, to a certain extent, valid. After all, in the absence of proof that irregularities
attended the sale, the same must be presumed to have been conducted in accordance with law. There
is, however, a peculiar factual circumstance that goes against the grain of that general presumption the
properties levied upon and sold at the public auction do not exclusively belong to the judgment debtor.
Thus, the guiding jurisprudence is as follows:
The rule in execution sales is that an execution creditor acquires no higher or better right than
what the execution debtor has in the property levied upon. The purchaser of property on sale
under execution and levy takes as assignee, only as the judicial seller possesses no title other
than that which would pass by an assignment by the owner. "An execution purchaser generally
acquires such estate or interest as was vested in the execution debtor at the time of the seizure
on execution, and only such interest, taking merely a quit-claim of the execution debtor's title,
without warranty on the part of either the execution officer or of the parties, whether the
property is realty or personalty. This rule prevails even if a larger interest in the property was
intended to be sold. Accordingly, if the judgment debtor had no interest in the property, the
execution purchaser acquires no interest therein." (Pacheco vs. Court of Appeals, L-48689,
August 31, 1987, 153 SCRA 382, 388-389 quoting Laureano vs. Stevenson, 45 Phil. 252; Cabuhat
vs. Ansery, 42 Phil. 170; Fore v. Manove, 18 Cal. 436 and 21 Am. Jur., 140-141. Emphasis
supplied.)
Applying this jurisprudence, execution purchasers Santos and Joson possess no rights which may rise
above judgment debtor Katrina's inchoate proprietary rights over the properties sold at public auction.
After all, a person can sell only what he owns or is authorized to sell and the buyer can, as a
consequence, acquire no more that what the seller can legally transfer.36 But, inasmuch as the decision
in Civil Case No. 2224 is void only as far as Romarico and the conjugal properties are concerned, the
same may still be executed by the Spouses Wong against Katrina Henson personally and exclusively. The
Spouses Wong must return to Juanito Santos and Leonardo Joson the purchase prices of P145,000 and
P119,000 respectively, received by said spouse from the public auction sale.
The redemption made by Santos in the foreclosure proceeding against Romarico and Katrina Henson
filed by the Rural Bank of Porac, should, however, be respected unless Romarico exercises his right of
redemption over the property covered by Transfer Certificate of Title No. 30951 in accordance with law.
WHEREFORE, the decisions of the appellate court and the lower court in Civil Case No. 28-09 are hereby
AFFIRMED subject to the modifications above stated. No costs.
SO ORDERED.
19. Pelayo v. Perez, G.R. No. 141323, June 8, 2005
G.R. No. 141323 June 8, 2005
DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners,

vs.
MELKI E. PEREZ, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the reversal of the Decision1 of the Court of
Appeals (CA) promulgated on April 20, 1999 which reversed the Decision of the Regional Trial Court
(RTC) of Panabo, Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution dated December 17,
1999 denying petitioners’ motion for reconsideration.
The antecedent facts as aptly narrated by the CA are as follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11, 1988, conveyed to Melki
Perez (Perez) two parcels of agricultural land (the lots) situated in Panabo, Davao which are portions of
Lot 4192, Cad. 276 covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible witnessed the
execution of the deed.
Loreza, however, signed only on the third page in the space provided for witnesses on account of which
Perez’ application for registration of the deed with the Office of the Register of Deeds in Tagum, Davao
was denied.
Perez thereupon asked Loreza to sign on the first and second pages of the deed but she refused, hence,
he instituted on August 8, 1991 the instant complaint for specific performance against her and her
husband Pelayo (defendants).
The defendants moved to dismiss the complaint on the ground that it stated no cause of action, citing
Section 6 of RA 6656 otherwise known as the Comprehensive Agrarian Reform Law which took effect on
June 10, 1988 and which provides that contracts executed prior thereto shall "be valid only when
registered with the Register of Deeds within a period of three (3) months after the effectivity of this
Act."
The questioned deed having been executed on January 10, 1988, the defendants claimed that Perez had
at least up to September 10, 1988 within which to register the same, but as they failed to, it is not valid
and, therefore, unenforceable.
The trial court thus dismissed the complaint. On appeal to this Court, the dismissal was set aside and the
case was remanded to the lower court for further proceedings.
In their Answer, the defendants claimed that as the lots were occupied illegally by some persons against
whom they filed an ejectment case, they and Perez who is their friend and known at the time as an
activist/leftist, hence feared by many, just made it appear in the deed that the lots were sold to him in
order to frighten said illegal occupants, with the intentional omission of Loreza’s signature so that the
deed could not be registered; and that the deed being simulated and bereft of consideration is
void/inexistent.
Perez countered that the lots were given to him by defendant Pelayo in consideration of his services as
his attorney-in-fact to make the necessary representation and negotiation with the illegal occupants-
defendants in the ejectment suit; and that after his relationship with defendant Pelayo became sour, the
latter sent a letter to the Register of Deeds of Tagum requesting him not to entertain any transaction
concerning the lots title to which was entrusted to Perez who misplaced and could [not] locate it.
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19, 1996, that the deed was
without his wife Loreza’s consent, hence, in light of Art. 166 of the Civil Code which provides:
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property
of the conjugal partnership without the wife’s consent . . .
it is null and void.
The trial court, finding, among others, that Perez did not possess, nor pay the taxes on the lots, that
defendant Pelayo was indebted to Perez for services rendered and, therefore, the deed could only be
considered as evidence of debt, and that in any event, there was no marital consent to nor actual
consideration for the deed, held that the deed was null and void and accordingly rendered judgment the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering and directing the defendants to pay plaintiff Melki
Perez the sum of TEN THOUSAND (₱10,000.00) Pesos as principal with 12% interest per annum starting
from the date of filing of the complaint on August 1, 1991 until plaintiff is fully paid.
The defendants shall likewise pay to plaintiff the sum of THREE THOUSAND (₱3,000.00) as attorney’s
fees.
The court further orders that the Deed of Absolute Sale, (Annex ‘A’) of the complaint and (Annex ‘C’) of
the plaintiff’s Motion for Summary Judgment is declared null and void and without force and it is
likewise removed as a cloud over defendants’ title and property in suit. . . ."2
The RTC Decision was appealed by herein respondent Perez to the CA. Petitioners failed to file their
appellees’ brief. The CA then promulgated its Decision on April 20, 1999 whereby it ruled that by
Lorenza’s signing as witness to the execution of the deed, she had knowledge of the transaction and is
deemed to have given her consent to the same; that herein petitioners failed to adduce sufficient proof
to overthrow the presumption that there was consideration for the deed, and that petitioner David
Pelayo, being a lawyer, is presumed to have acted with due care and to have signed the deed with full
knowledge of its contents and import. The CA reversed and set aside the RTC Decision, declaring as valid
and enforceable the questioned deed of sale and ordering herein petitioner Lorenza Pelayo to affix her
signature on all pages of said document.
Petitioners moved for reconsideration of the decision but the same was denied per Resolution dated
December 17, 1999. The CA found said motion to have been filed out of time and ruled that even
putting aside technicality, petitioners failed to present any ground bearing on the merits of the case to
justify a reversal or setting aside of the decision.
Hence, this petition for review on certiorari on the following grounds:
1. The CA erred in ignoring the specific provision of Section 6, in relation to Section 4 of R.A. No.
6657 otherwise known as the Comprehensive Agrarian Reform Law of 1988 which took effect on
June 15, 1988 and which provides that contracts executed prior thereto shall "be valid only
when registered with the Register of Deeds within a period of three (3) months after the
effectivity of this Act."
2. The CA erred in holding that the deed of sale was valid and considering the ₱10,000.00
adjudged by the trial court as Perez’s remuneration as the consideration for the deed of sale,
instead of declaring the same as null and void for being fictitious or simulated and on the basis
of Art. 491, Par. 2 of the New Civil Code which prohibits agents from acquiring by purchase
properties from his principal under his charge.
3. The CA made a novel ruling that there was implied marital consent of the wife of petitioner
David Pelayo.
4. Petitioners should have been allowed to file their appellees’ brief to ventilate their side,
considering the existence of peculiar circumstances which prevented petitioners from filing said
brief.
On the other hand, respondent points out that the CA, in resolving the first appeal docketed as CA-G.R.
SP No. 387003 brought by respondent assailing the RTC Order granting herein petitioners’ motion to
dismiss, already ruled that under R.A. No. 6657, the sale or transfer of private agricultural land is
allowed only when the area of the land being conveyed constitutes or is a part of, the landowner-seller
retained area and when the total landholding of the purchaser-transferee, including the property sold,
does not exceed five (5) hectares; that in this case, the land in dispute is only 1.3 hectares and there is
no proof that the transferee’s (herein respondent) total landholding inclusive of the subject land will
exceed 5 hectares, the landholding ceiling prescribed by R.A. No. 6657; that the failure of respondent to
register the instrument was not due to his fault or negligence but can be attributed to Lorenza’s
unjustified refusal to sign two pages of the deed despite several requests of respondent; and that
therefore, the CA ruled that the deed of sale subject of this case is valid under R.A. No. 6657.
Respondent further maintains that the CA correctly held in its assailed Decision that there was
consideration for the contract and that Lorenza is deemed to have given her consent to the deed of sale.
Respondent likewise opines that the CA was right in denying petitioners’ motion for reconsideration
where they prayed that they be allowed to file their appellees’ brief as their counsel failed to file the
same on account of said counsel’s failing health due to cancer of the liver. Respondent emphasized that
in petitioners’ motion for reconsideration, they did not even cite any errors made by the CA in its
Decision.
The issues boil down to the question of whether or not the deed of sale was null and void on the
following grounds: (a) for not complying with the provision in R.A. No. 6657 that such document must be
registered with the Register of Deeds within three months after the effectivity of said law; (b) for lack of
marital consent; (c) for being prohibited under Article 1491 (2) of the Civil Code; and (d) for lack of
consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and void under R.A. No. 6657, for respondent’s
failure to register said document with the Register of Deeds within three months after the effectivity of
R.A. No. 6657, had been resolved with finality by the CA in its Decision dated November 24, 1994 in CA-
G.R. SP No. 38700.4 Herein petitioners no longer elevated said CA Decision to this Court and the same
became final and executory on January 7, 1995.5
In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A. No. 6657, to mean thus:
. . . the proper interpretation of both sections is that under R.A. No. 6657, the sale or transfer of a
private agricultural land is allowed only when said land area constitutes or is a part of the landowner-
seller retained area and only when the total landholdings of the purchaser-transferee, including the
property sold does not exceed five (5) hectares.
Aside from declaring that the failure of respondent to register the deed was not of his own fault or
negligence, the CA ruled that respondent’s failure to register the deed of sale within three months after
effectivity of The Comprehensive Agrarian Reform Law did not invalidate the deed of sale as "the
transaction over said property is not proscribed by R.A. No. 6657."
Thus, under the principle of law of the case, said ruling of the CA is now binding on
petitioners.1avvph!1 Such principle was elucidated in Cucueco vs. Court of Appeals,6 to wit:
Law of the case has been defined as the opinion delivered on a former appeal. It is a term applied to an
established rule that when an appellate court passes on a question and remands the case to the lower
court for further proceedings, the question there settled becomes the law of the case upon subsequent
appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision
between the same parties in the same case continues to be the law of the case, whether correct on
general principles or not, so long as the facts on which such decision was predicated continue to be the
facts of the case before the court.
Petitioners not having questioned the Decision of the CA dated November 24, 1994 which then attained
finality, the ruling that the deed of sale subject of this case is not among the transactions deemed as
invalid under R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the Deed of Sale on the
space provided for witnesses, is deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent, which may either be express or
implied.7 A wife’s consent to the husband’s disposition of conjugal property does not always have to be
explicit or set forth in any particular document, so long as it is shown by acts of the wife that such
consent or approval was indeed given.8 In the present case, although it appears on the face of the deed
of sale that Lorenza signed only as an instrumental witness, circumstances leading to the execution of
said document point to the fact that Lorenza was fully aware of the sale of their conjugal property and
consented to the sale.
In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they have been having serious
problems, including threats to the life of petitioner David Pelayo, due to conflicts with the illegal
occupants of the property in question, so that respondent, whom many feared for being a
leftist/activist, offered his help in driving out said illegal occupants.
Human experience tells us that a wife would surely be aware of serious problems such as threats to her
husband’s life and the reasons for such threats. As they themselves stated, petitioners’ problems over
the subject property had been going on for quite some time, so it is highly improbable for Lorenza not to
be aware of what her husband was doing to remedy such problems. Petitioners do not deny that
Lorenza Pelayo was present during the execution of the deed of sale as her signature appears thereon.
Neither do they claim that Lorenza Pelayo had no knowledge whatsoever about the contents of the
subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between her husband and respondent.
Under the rules of evidence, it is presumed that a person takes ordinary care of his
concerns.10 Petitioners did not even attempt to overcome the aforementioned presumption as no
evidence was ever presented to show that Lorenza was in any way lacking in her mental faculties and,
hence, could not have fully understood the ramifications of signing the deed of sale. Neither did
petitioners present any evidence that Lorenza had been defrauded, forced, intimidated or threatened
either by her own husband or by respondent into affixing her signature on the subject document. If
Lorenza had any objections over the conveyance of the disputed property, she could have totally
refrained from having any part in the execution of the deed of sale. Instead, Lorenza even affixed her
signature thereto.
Moreover, under Article 173, in relation to Article 166, both of the New Civil Code, which was still in
effect on January 11, 1988 when the deed in question was executed, the lack of marital consent to the
disposition of conjugal property does not make the contract void ab initio but merely voidable. Said
provisions of law provide:
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property
of the conjugal property without the wife’s consent. If she refuses unreasonably to give her consent, the
court may compel her to grant the same.
...
Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask
the courts for the annulment of any contract of the husband entered into without her consent, when
such consent is required, or any act or contract of the husband which tends to defraud her or impair her
interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs,
after the dissolution of the marriage, may demand the value of property fraudulently alienated by the
husband.
Hence, it has been held that the contract is valid until the court annuls the same and only upon an action
brought by the wife whose consent was not obtained.11 In the present case, despite respondent’s
repeated demands for Lorenza to affix her signature on all the pages of the deed of sale, showing
respondent’s insistence on enforcing said contract, Lorenza still did not file a case for annulment of the
deed of sale. It was only when respondent filed a complaint for specific performance on August 8, 1991
when petitioners brought up Lorenza’s alleged lack of consent as an affirmative defense. Thus, if the
transaction was indeed entered into without Lorenza’s consent, we find it quite puzzling why for more
than three and a half years, Lorenza did absolutely nothing to seek the nullification of the assailed
contract.
The foregoing circumstances lead the Court to believe that Lorenza knew of the full import of the
transaction between respondent and her
husband; and, by affixing her signature on the deed of sale, she, in effect, signified her consent to the
disposition of their conjugal property.
With regard to petitioners’ asseveration that the deed of sale is invalid under Article 1491, paragraph 2
of the New Civil Code, we find such argument unmeritorious. Article 1491 (2) provides:
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either
in person or through the mediation of another:
...
(2) Agents, the property whose administration or sale may have been entrusted to them, unless the
consent of the principal has been given;
...
In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas, designated one of her sons as the
administrator of several parcels of her land. The landowner subsequently executed a Deed of
Certification of Sale of Unregistered Land, conveying some of said land to her son/administrator.
Therein, we held that:
Under paragraph (2) of the above article, the prohibition against agents purchasing property in their
hands for sale or management is not absolute. It does not apply if the principal consents to the sale of
the property in the hands of the agent or administrator. In this case, the deeds of sale signed by
Iluminada Abiertas shows that she gave consent to the sale of the properties in favor of her son, Rufo,
who was the administrator of the properties. Thus, the consent of the principal Iluminada Abiertas
removes the transaction out of the prohibition contained in Article 1491(2).13
The above-quoted ruling is exactly in point with this case before us. Petitioners, by signing the Deed of
Sale in favor of respondent, are also deemed to have given their consent to the sale of the subject
property in favor of respondent, thereby making the transaction an exception to the general rule that
agents are prohibited from purchasing the property of their principals.
Petitioners also argue that the CA erred in ruling that there was consideration for the sale. We find no
error in said appellate court’s ruling. The element of consideration for the sale is indeed present.
Petitioners, in adopting the trial court’s narration of antecedent facts in their petition,14 thereby
admitted that they authorized respondent to represent them in negotiations with the "squatters"
occupying the disputed property and, in consideration of respondent’s services, they executed the
subject deed of sale. Aside from such services rendered by respondent, petitioners also acknowledged in
the deed of sale that they received in full the amount of Ten Thousand Pesos. Evidently, the
consideration for the sale is respondent’s services plus the aforementioned cash money.
Petitioners contend that the consideration stated in the deed of sale is excessively inadequate,
indicating that the deed of sale was merely simulated. We are not persuaded. Our ruling
in Buenaventura vs. Court of Appeals15 is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal to the exact value of the subject matter of
sale. . . . As we stated in Vales vs. Villa:
Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from
unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts
cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate not
because one person has been defeated or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and
lose money by them – indeed, all they have in the world; but not for that alone can the law intervene
and restore. There must be, in addition, a violation of the law, the commission of what the law knows as
an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it.16
Verily, in the present case, petitioners have not presented proof that there has been fraud, mistake or
undue influence exercised upon them by respondent. It is highly unlikely and contrary to human
experience that a layman like respondent would be able to defraud, exert undue influence, or in any
way vitiate the consent of a lawyer like petitioner David Pelayo who is expected to be more
knowledgeable in the ways of drafting contracts and other legal transactions.
Furthermore, in their Reply to Respondent’s Memorandum,17 petitioners adopted the CA’s narration of
fact that petitioners stated in a letter they sent to the Register of Deeds of Tagum that they have
entrusted the titles over subject lots to herein respondent. Such act is a clear indication that they
intended to convey the subject property to herein respondent and the deed of sale was not merely
simulated or fictitious.
Lastly, petitioners claim that they were not able to fully ventilate their defense before the CA as their
lawyer, who was then suffering from cancer of the liver, failed to file their appellees’ brief. Thus, in their
motion for reconsideration of the CA Decision, they prayed that they be allowed to submit such
appellees’ brief. The CA, in its Resolution dated December 17, 1999, stated thus:
By movant-defendant-appellee’s own information, his counsel received a copy of the decision on May 5,
1999. He, therefore, had fifteen (15) days from said date or up to May 20, 1999 to file the motion. The
motion, however, was sent through a private courier and, therefore, considered to have been filed on
the date of actual receipt on June 17, 1999 by the addressee – Court of Appeals, was filed beyond the
reglementary period.
Technicality aside, movant has not proffered any ground bearing on the merits of the case why the
decision should be set aside.1awphi1
Petitioners never denied the CA finding that their motion for reconsideration was filed beyond the
fifteen-day reglementary period. On that point alone, the CA is correct in denying due course to said
motion. The motion having been belatedly filed, the CA Decision had then attained finality. Thus,
in Abalos vs. Philex Mining Corporation,18 we held that:
. . . Nothing is more settled in law than that once a judgment attains finality it thereby becomes
immutable and unalterable. It may no longer be modified in any respect, even if the modification is
meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of
whether the modification is attempted to be made by the court rendering it or by the highest court of
the land.
Moreover, it is pointed out by the CA that said motion did not present any defense or argument on the
merits of the case that could have convinced the CA to reverse or modify its Decision.
We have consistently held that a petitioner’s right to due process is not violated where he was able to
move for reconsideration of the order or decision in question.19 In this case, petitioners had the
opportunity to fully expound on their defenses through a motion for reconsideration. Petitioners did file
such motion but they wasted such opportunity by failing to present therein whatever errors they
believed the CA had committed in its Decision. Definitely, therefore, the denial of petitioners’ motion for
reconsideration, praying that they be allowed to file appellees’ brief, did not infringe petitioners’ right to
due process as any issue that petitioners wanted to raise could and should have been contained in said
motion for reconsideration.
IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the Court of Appeals dated
April 20, 1999 and its Resolution dated December 17, 1999 are hereby AFFIRMED.
SO ORDERED.
20. Homeowners and Savings Loan Bank vs. Dailo, GR No 153802, March 11, 2005
G.R. No. 153802. March 11, 2005
HOMEOWNERS SAVINGS & LOAN BANK, Petitioner,

vs.
MIGUELA C. DAILO, Respondents.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, assailing
the Decision1 of the Court of Appeals in CA-G.R. CV No. 59986 rendered on June 3, 2002, which affirmed
with modification the October 18, 1997 Decision2 of the Regional Trial Court, Branch 29, San Pablo City,
Laguna in Civil Case No. SP-4748 (97).
The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8, 1967. During their
marriage, the spouses purchased a house and lot situated at Barangay San Francisco, San Pablo City
from a certain Sandra Dalida. The subject property was declared for tax assessment purposes under
Assessment of Real Property No. 94-051-2802. The Deed of Absolute Sale, however, was executed only
in favor of the late Marcelino Dailo, Jr. as vendee thereof to the exclusion of his wife.3
On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in favor of one
Lilibeth Gesmundo, authorizing the latter to obtain a loan from petitioner Homeowners Savings and
Loan Bank to be secured by the spouses Dailo’s house and lot in San Pablo City. Pursuant to the SPA,
Gesmundo obtained a loan in the amount of ₱300,000.00 from petitioner. As security therefor,
Gesmundo executed on the same day a Real Estate Mortgage constituted on the subject property in
favor of petitioner. The abovementioned transactions, including the execution of the SPA in favor of
Gesmundo, took place without the knowledge and consent of respondent.4
Upon maturity, the loan remained outstanding. As a result, petitioner instituted extrajudicial foreclosure
proceedings on the mortgaged property. After the extrajudicial sale thereof, a Certificate of Sale was
issued in favor of petitioner as the highest bidder. After the lapse of one year without the property
being redeemed, petitioner, through its vice-president, consolidated the ownership thereof by executing
on June 6, 1996 an Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.5
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her visits to the subject
property, respondent learned that petitioner had already employed a certain Roldan Brion to clean its
premises and that her car, a Ford sedan, was razed because Brion allowed a boy to play with fire within
the premises.
Claiming that she had no knowledge of the mortgage constituted on the subject property, which was
conjugal in nature, respondent instituted with the Regional Trial Court, Branch 29, San Pablo City, Civil
Case No. SP-2222 (97) for Nullity of Real Estate Mortgage and Certificate of Sale, Affidavit of
Consolidation of Ownership, Deed of Sale, Reconveyance with Prayer for Preliminary Injunction and
Damages against petitioner. In the latter’s Answer with Counterclaim, petitioner prayed for the dismissal
of the complaint on the ground that the property in question was the exclusive property of the late
Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision on October 18, 1997. The dispositive portion
thereof reads as follows:
WHEREFORE, the plaintiff having proved by the preponderance of evidence the allegations of the
Complaint, the Court finds for the plaintiff and hereby orders:
ON THE FIRST CAUSE OF ACTION:
1. The declaration of the following documents as null and void:
(a) The Deed of Real Estate Mortgage dated December 1, 1993 executed before Notary Public Romulo
Urrea and his notarial register entered as Doc. No. 212; Page No. 44, Book No. XXI, Series of 1993.
(b) The Certificate of Sale executed by Notary Public Reynaldo Alcantara on April 20, 1995.
(c) The Affidavit of Consolidation of Ownership executed by the defendant
(c) The Affidavit of Consolidation of Ownership executed by the defendant over the residential lot
located at Brgy. San Francisco, San Pablo City, covered by ARP No. 95-091-1236 entered as Doc. No. 406;
Page No. 83, Book No. III, Series of 1996 of Notary Public Octavio M. Zayas.
(d) The assessment of real property No. 95-051-1236.
2. The defendant is ordered to reconvey the property subject of this complaint to the plaintiff.
ON THE SECOND CAUSE OF ACTION
1. The defendant to pay the plaintiff the sum of ₱40,000.00 representing the value of the car which was
burned.
ON BOTH CAUSES OF ACTION

1. The defendant to pay the plaintiff the sum of ₱25,000.00 as attorney’s fees;
2. The defendant to pay plaintiff ₱25,000.00 as moral damages;
3. The defendant to pay the plaintiff the sum of ₱10,000.00 as exemplary damages;
4. To pay the cost of the suit.
The counterclaim is dismissed.
SO ORDERED.6
Upon elevation of the case to the Court of Appeals, the appellate court affirmed the trial court’s finding
that the subject property was conjugal in nature, in the absence of clear and convincing evidence to
rebut the presumption that the subject property acquired during the marriage of spouses Dailo belongs
to their conjugal partnership.7 The appellate court declared as void the mortgage on the subject
property because it was constituted without the knowledge and consent of respondent, in accordance
with Article 124 of the Family Code. Thus, it upheld the trial court’s order to reconvey the subject
property to respondent.8 With respect to the damage to respondent’s car, the appellate court found
petitioner to be liable therefor because it is responsible for the consequences of the acts or omissions of
the person it hired to accomplish the assigned task.9 All told, the appellate court affirmed the trial
court’s Decision, but deleted the award for damages and attorney’s fees for lack of basis.10
Hence, this petition, raising the following issues for this Court’s consideration:
1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO DAILO, JR. ON THE
SUBJECT PROPERTY AS CO-OWNER THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.
2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE PAYMENT OF THE LOAN
OBTAINED BY THE LATE MARCELINO DAILO, JR. THE SAME HAVING REDOUNDED TO THE BENEFIT OF
THE FAMILY.11
First, petitioner takes issue with the legal provision applicable to the factual milieu of this case. It
contends that Article 124 of the Family Code should be construed in relation to Article 493 of the Civil
Code, which states:
ART. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in
the division upon the termination of the co-ownership.
Article 124 of the Family Code provides in part:
ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both
spouses jointly. . . .
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do
not include the powers of disposition or encumbrance which must have the authority of the court or the
written consent of the other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. . . .
Petitioner argues that although Article 124 of the Family Code requires the consent of the other spouse
to the mortgage of conjugal properties, the framers of the law could not have intended to curtail the
right of a spouse from exercising full ownership over the portion of the conjugal property pertaining to
him under the concept of co-ownership.12 Thus, petitioner would have this Court uphold the validity of
the mortgage to the extent of the late Marcelino Dailo, Jr.’s share in the conjugal partnership.
In Guiang v. Court of Appeals,13 it was held that the sale of a conjugal property requires the consent of
both the husband and wife.14 In applying Article 124 of the Family Code, this Court declared that the
absence of the consent of one renders the entire sale null and void, including the portion of the conjugal
property pertaining to the husband who contracted the sale. The same principle in Guiang squarely
applies to the instant case. As shall be discussed next, there is no legal basis to construe Article 493 of
the Civil Code as an exception to Article 124 of the Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In the absence of a
marriage settlement, the system of relative community or conjugal partnership of gains governed the
property relations between respondent and her late husband.15 With the effectivity of the Family Code
on August 3, 1988, Chapter 4 on Conjugal Partnership of Gains in the Family Code was made applicable
to conjugal partnership of gains already established before its effectivity unless vested rights have
already been acquired under the Civil Code or other laws.16
The rules on co-ownership do not even apply to the property relations of respondent and the late
Marcelino Dailo, Jr. even in a suppletory manner. The regime of conjugal partnership of gains is a special
type of partnership, where the husband and wife place in a common fund the proceeds, products, fruits
and income from their separate properties and those acquired by either or both spouses through their
efforts or by chance.17 Unlike the absolute community of property wherein the rules on co-ownership
apply in a suppletory manner,18 the conjugal partnership shall be governed by the rules on contract of
partnership in all that is not in conflict with what is expressly determined in the chapter (on conjugal
partnership of gains) or by the spouses in their marriage settlements.19 Thus, the property relations of
respondent and her late husband shall be governed, foremost, by Chapter 4 on Conjugal Partnership of
Gains of the Family Code and, suppletorily, by the rules on partnership under the Civil Code. In case of
conflict, the former prevails because the Civil Code provisions on partnership apply only when the
Family Code is silent on the matter.
The basic and established fact is that during his lifetime, without the knowledge and consent of his wife,
Marcelino Dailo, Jr. constituted a real estate mortgage on the subject property, which formed part of
their conjugal partnership. By express provision of Article 124 of the Family Code, in the absence of
(court) authority or written consent of the other spouse, any disposition or encumbrance of the conjugal
property shall be void.
The aforequoted provision does not qualify with respect to the share of the spouse who makes the
disposition or encumbrance in the same manner that the rule on co-ownership under Article 493 of the
Civil Code does. Where the law does not distinguish, courts should not distinguish.20 Thus, both the trial
court and the appellate court are correct in declaring the nullity of the real estate mortgage on the
subject property for lack of respondent’s consent.
Second, petitioner imposes the liability for the payment of the principal obligation obtained by the late
Marcelino Dailo, Jr. on the conjugal partnership to the extent that it redounded to the benefit of the
family.21
Under Article 121 of the Family Code, "[T]he conjugal partnership shall be liable for: . . . (3) Debts and
obligations contracted by either spouse without the consent of the other to the extent that the family
may have been benefited; . . . ." For the subject property to be held liable, the obligation contracted by
the late Marcelino Dailo, Jr. must have redounded to the benefit of the conjugal partnership. There must
be the requisite showing then of some advantage which clearly accrued to the welfare of the spouses.
Certainly, to make a conjugal partnership respond for a liability that should appertain to the husband
alone is to defeat and frustrate the avowed objective of the new Civil Code to show the utmost concern
for the solidarity and well-being of the family as a unit.22
The burden of proof that the debt was contracted for the benefit of the conjugal partnership of gains
lies with the creditor-party litigant claiming as such.23 Ei incumbit probatio qui dicit, non qui negat (he
who asserts, not he who denies, must prove).24 Petitioner’s sweeping conclusion that the loan obtained
by the late Marcelino Dailo, Jr. to finance the construction of housing units without a doubt redounded
to the benefit of his family, without adducing adequate proof, does not persuade this Court. Other than
petitioner’s bare allegation, there is nothing from the records of the case to compel a finding that,
indeed, the loan obtained by the late Marcelino Dailo, Jr. redounded to the benefit of the family.
Consequently, the conjugal partnership cannot be held liable for the payment of the principal obligation.
In addition, a perusal of the records of the case reveals that during the trial, petitioner vigorously
asserted that the subject property was the exclusive property of the late Marcelino Dailo, Jr. Nowhere in
the answer filed with the trial court was it alleged that the proceeds of the loan redounded to the
benefit of the family. Even on appeal, petitioner never claimed that the family benefited from the
proceeds of the loan. When a party adopts a certain theory in the court below, he will not be permitted
to change his theory on appeal, for to permit him to do so would not only be unfair to the other party
but it would also be offensive to the basic rules of fair play, justice and due process.25 A party may
change his legal theory on appeal only when the factual bases thereof would not require presentation of
any further evidence by the adverse party in order to enable it to properly meet the issue raised in the
new theory.26
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
21. Jose Uy vs. CA, G.R. No. 109557, November 2, 2000
G.R. No. 109557 November 29, 2000
JOSE UY and his Spouse GLENDA J. UY and GILDA L. JARDELEZA, petitioners,

vs.
COURT OF APPEALS and TEODORO L. JARDELEZA, respondents.
DECISION
PARDO, J.:
The case is an appeal via certiorari from the decision1 of the Court of Appeals and its resolution denying
reconsideration2 reversing that of the Regional Trial Court, Iloilo, Branch 323 and declaring void the
special proceedings instituted therein by petitioners to authorize petitioner Gilda L. Jardeleza, in view of
the comatose condition of her husband, Ernesto Jardeleza, Sr., with the approval of the court, to dispose
of their conjugal property in favor of co-petitioners, their daughter and son in law, for the ostensible
purpose of "financial need in the personal, business and medical expenses of her ‘incapacitated’
husband."
The facts, as found by the Court of Appeals, are as follows:
"This case is a dispute between Teodoro L. Jardeleza (herein respondent) on the one hand, against his
mother Gilda L. Jardeleza, and sister and brother-in-law, the spouses Jose Uy and Glenda Jardeleza
(herein petitioners) on the other hand. The controversy came about as a result of Dr. Ernesto Jardeleza,
Sr.’s suffering of a stroke on March 25, 1991, which left him comatose and bereft of any motor or
mental faculties. Said Ernesto Jardeleza, Sr. is the father of herein respondent Teodoro Jardeleza and
husband of herein private respondent Gilda Jardeleza.
"Upon learning that one piece of real property belonging to the senior Jardeleza spouses was about to
be sold, petitioner Teodoro Jardeleza, on June 6, 1991, filed a petition (Annex "A") before the R.T.C. of
Iloilo City, Branch 25, where it was docketed as Special Proceeding No. 4689, in the matter of the
guardianship of Dr. Ernesto Jardeleza, Sr. The petitioner averred therein that the present physical and
mental incapacity of Dr. Ernesto Jardeleza, Sr. prevent him from competently administering his
properties, and in order to prevent the loss and dissipation of the Jardelezas’ real and personal assets,
there was a need for a court-appointed guardian to administer said properties. It was prayed therein
that Letters of Guardianship be issued in favor of herein private respondent Gilda Ledesma Jardeleza,
wife of Dr. Ernesto Jardeleza, Sr. It was further prayed that in the meantime, no property of Dr. Ernesto
Jardeleza, Sr. be negotiated, mortgaged or otherwise alienated to third persons, particularly Lot No.
4291 and all the improvements thereon, located along Bonifacio Drive, Iloilo City, and covered by T.C.T.
No. 47337.
"A few days later, or on June 13, 1991, respondent Gilda L. Jardeleza herself filed a petition docketed as
Special Proceeding NO. 4691, before Branch 32 of the R.T.C. of Iloilo City, regarding the declaration of
incapacity of Ernesto Jardeleza, Sr., assumption of sole powers of administration of conjugal properties,
and authorization to sell the same (Annex "B"). Therein, the petitioner Gilda L. Jardeleza averred the
physical and mental incapacity of her husband, who was then confined for intensive medical care and
treatment at the Iloilo Doctor’s Hospital. She signified to the court her desire to assume sole powers of
administration of their conjugal properties. She also alleged that her husband’s medical treatment and
hospitalization expenses were piling up, accumulating to several hundred thousands of pesos already.
For this, she urgently needed to sell one piece of real property, specifically Lot No. 4291 and its
improvements. Thus, she prayed for authorization from the court to sell said property.
"The following day, June 14, 1991, Branch 32 of the R.T.C. of Iloilo City issued an Order (Annex "C")
finding the petition in Spec. Proc. No. 4691 to be sufficient in form and substance, and setting the
hearing thereof for June 20, 1991. The scheduled hearing of the petition proceeded, attended by therein
petitioner Gilda Jardeleza, her counsel, her two children, namely Ernesto Jardeleza, Jr., and Glenda
Jardeleza Uy, and Dr. Rolando Padilla, one of Ernesto Jardeleza, Sr.’s attending physicians.
"On that same day, June 20, 1991, Branch 32 of the RTC of Iloilo City rendered its Decision (Annex "D"),
finding that it was convinced that Ernesto Jardeleza, Sr. was truly incapacitated to participate in the
administration of the conjugal properties, and that the sale of Lot No. 4291 and the improvements
thereon was necessary to defray the mounting expenses for treatment and Hospitalization. The said
court also made the pronouncement that the petition filed by Gilda L. Jardeleza was "pursuant to Article
124 of the Family Code, and that the proceedings thereon are governed by the rules on summary
proceedings sanctioned under Article 253 of the same Code x x x.
"The said court then disposed as follows:
"WHEREFORE, there being factual and legal bases to the petition dated June 13, 1991, the Court hereby
renders judgment as follows:
"1) declaring Ernesto Jardeleza, Sr., petitioner’s husband, to be incapacitated and unable to participate
in the administration of conjugal properties;
"2) authorizing petitioner Gilda L. Jardeleza to assume sole powers of administration of their conjugal
properties; and
"3) authorizing aforesaid petitioner to sell Lot No. 4291 of the Cadastral Survey of Iloilo, situated in Iloilo
City and covered by TCT No. 47337 issued in the names of Ernesto Jardeleza, Sr. and Gilda L. Jardeleza
and the buildings standing thereof.
"SO ORDERED.
"On June 24, 1991, herein petitioner Teodoro Jardeleza filed his Opposition to the proceedings before
Branch 32 in Spec. Proc. Case No. 4691, said petitioner being unaware and not knowing that a decision
has already been rendered on the case by public respondent.
"On July 3, 1991, herein petitioner Teodoro Jardeleza filed a motion for reconsideration of the judgment
in Spec. Proc. No. 4691 and a motion for consolidation of the two cases (Annex "F"). He propounded the
argument that the petition for declaration of incapacity, assumption of sole powers of administration,
and authority to sell the conjugal properties was essentially a petition for guardianship of the person
and properties of Ernesto Jardeleza, Sr. As such, it cannot be prosecuted in accordance with the
provisions on summary proceedings set out in Article 253 of the Family Code. It should follow the rules
governing special proceedings in the Revised Rules of Court which require procedural due process,
particularly the need for notice and a hearing on the merits. On the other hand, even if Gilda Jardeleza’s
petition can be prosecuted by summary proceedings, there was still a failure to comply with the basic
requirements thereof, making the decision in Spec. Proc. No. 4691 a defective one. He further alleged
that under the New Civil Code, Ernesto Jardeleza, Sr. had acquired vested rights as a conjugal partner,
and that these rights cannot be impaired or prejudiced without his consent. Neither can he be deprived
of his share in the conjugal properties through mere summary proceedings. He then restated his
position that Spec. Proc. No. 4691 should be consolidated with Spec. Proc. No. 4689 which was filed
earlier and pending before Branch 25.
"Teodoro Jardeleza also questioned the propriety of the sale of Lot No. 4291 and the improvements
thereon supposedly to pay the accumulated financial obligations arising from Ernesto Jardeleza, Sr.’s
hospitalization. He alleged that the market value of the property would be around Twelve to Fifteen
Million Pesos, but that he had been informed that it would be sold for much less. He also pointed out
that the building thereon which houses the Jardeleza Clinic is a monument to Ernesto Jardeleza Sr.’s
industry, labor and service to his fellowmen. Hence, the said property has a lot of sentimental value to
his family. Besides, argued Teodoro Jardeleza, then conjugal partnership had other liquid assets to pay
off all financial obligations. He mentioned that apart from sufficient cash, Jardeleza, Sr. owned stocks of
Iloilo Doctors’ Hospital which can be off-set against the cost of medical and hospital bills. Furthermore,
Ernesto Jardeleza, Sr. enjoys certain privileges at the said hospital which allows him to pay on
installment basis. Moreover, two of Ernesto Jardeleza Sr.’s attending physicians are his own sons who do
not charge anything for their professional services.
"On July 4, 1991, Teodoro Jardeleza filed in Spec. Proc. No. 4691 a supplement to his motion for
reconsideration (Annex "G"). He reiterated his contention that summary proceedings was irregularly
applied. He also noted that the provisions on summary proceedings found in Chapter 2 of the Family
Code comes under the heading on "Separation in Fact Between Husband and Wife" which contemplates
of a situation where both spouses are of disposing mind. Thus, he argued that were one spouse is
"comatose without motor and mental faculties," the said provisions cannot be made to apply.
"While the motion for reconsideration was pending, Gilda Jardeleza disposed by absolute sale Lot No.
4291 and all its improvements to her daughter, Ma. Glenda Jardeleza Uy, for Eight Million Pesos
(P8,000,000.00), as evidenced by a Deed Absolute Sale dated July 8, 1991 executed between them (p.
111, Rollo). Under date of July 23, 1991, Gilda Jardeleza filed an urgent ex-parte motion for approval of
the deed of absolute sale.
"On August 12, 1991 Teodoro Jardeleza filed his Opposition to the motion for approval of the deed of
sale on the grounds that: (1) the motion was prematurely filed and should be held in abeyance until the
final resolution of the petition; (2) the motion does not allege nor prove the justifications for the sale;
and (3) the motion does not allege that had Ernesto Jardeleza, Sr. been competent, he would have given
his consent to the sale.
"Judge Amelita K. del Rosario-Benedicto of Branch 32 of the respondent Court, who had penned the
decision in Spec. Proc. No. 4691 had in the meantime formally inhibited herself from further acting in
this case (Annex "I"). The case was then reraffled to Branch 28 of the said court.
"On December 19, 1991, the said court issued an Order (Annex "M") denying herein petitioner’s motion
for reconsideration and approving respondent Jardeleza’s motion for approval of the deed of absolute
sale. The said court ruled that:
"After a careful and thorough perusal of the decision, dated June 20, 1991, the Motion for
Reconsideration, as well as its supplements filed by "oppositor", Teodoro L. Jardeleza, through counsel,
and the opposition to the Motion for Reconsideration, including its supplements, filed by petitioner,
through counsel, this Court is of the opinion and so holds, that her Honor, Amelita K. del Rosario-
Benedicto, Presiding Judge of Branch 32, of this Court, has properly observed the procedure embodied
under Article 253, in relation to Article 124, of the Family Code, in rendering her decision dated June 20,
1991.
"Also, as correctly stated by petitioner, through counsel, that "oppositor" Teodor L. Jardeleza does not
have the personality to oppose the instant petition considering that the property or properties, subject
of the petition, belongs to the conjugal partnership of the spouses Ernesto and Gilda Jardeleza, who are
both still alive.
"In view thereof, the Motion for Reconsideration of "oppositor" Teodoro L. Jardeleza, is hereby denied
for lack of merit.
"Considering the validity of the decision dated June 20, 1991, which among others, authorized Gilda L.
Jardeleza to sell Lot No. 4291 of the Cadastral Survey of Iloilo, covered by Transfer Certificate of Title No.
47337 issued in the names of Ernesto Jardeleza, Sr., and Gilda L. Jardeleza and the building standing
thereon, the Urgent Ex-Parte Motion for Approval of Deed of Absolute Sale dated July 23, 1991, filed by
petitioner, through counsel, is hereby granted and the deed of absolute sale, executed and notarized on
July 8, 1991, by and between Gilda L. Jardeleza, as vendor, and Ma. Glenda Jardeleza, as vendee, is
hereby approved, and the Register of Deeds of Iloilo City, is directed to register the sale and issue the
corresponding transfer certificate of title to the vendee.
"SO ORDERED."4
On December 9, 1992, the Court of Appeals promulgated its decision reversing the appealed decision
and ordering the trial court to dismiss the special proceedings to approve the deed of sale, which was
also declared void.5
On December 29, 1992, petitioners filed a motion for reconsideration,6 however, on March 29, 1993, the
Court of Appeals denied the motion, finding no cogent and compelling reason to disturb the decision.7
Hence, this appeal.8
The issue raised is whether petitioner Gilda L. Jardeleza as the wife of Ernesto Jardeleza, Sr. who
suffered a stroke, a cerebrovascular accident, rendering him comatose, without motor and mental
faculties, and could not manage their conjugal partnership property may assume sole powers of
administration of the conjugal property under Article 124 of the Family Code and dispose of a parcel of
land with its improvements, worth more than twelve million pesos, with the approval of the court in a
summary proceedings, to her co-petitioners, her own daughter and son-in-law, for the amount of eight
million pesos.
The Court of Appeals ruled that in the condition of Dr. Ernesto Jardeleza, Sr., the procedural rules on
summary proceedings in relation to Article 124 of the Family Code are not applicable. Because Dr.
Jardeleza, Sr. was unable to take care of himself and manage the conjugal property due to illness that
had rendered him comatose, the proper remedy was the appointment of a judicial guardian of the
person or estate or both of such incompetent, under Rule 93, Section 1, 1964 Revised Rules of Court.
Indeed, petitioner earlier had filed such a petition for judicial guardianship.
Article 124 of the Family Code provides as follows:
"ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the
court by the wife for a proper remedy which must be availed of within five years from the date of the
contract implementing such decision.
"In the event that one spouse is incapacitated or otherwise unable to participate in the administration
of the conjugal properties, the other spouse may assume sole powers of administration. These powers
do not include the powers of disposition or encumbrance which must have the authority of the court or
the written consent of the other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the
part of the consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either
or both offerors. (165a)."
In regular manner, the rules on summary judicial proceedings under the Family Code govern the
proceedings under Article 124 of the Family Code. The situation contemplated is one where the spouse
is absent, or separated in fact or has abandoned the other or consent is withheld or cannot be obtained.
Such rules do not apply to cases where the non-consenting spouse is incapacitated or incompetent to
give consent. In this case, the trial court found that the subject spouse "is an incompetent" who was in
comatose or semi-comatose condition, a victim of stroke, cerebrovascular accident, without motor and
mental faculties, and with a diagnosis of brain stem infarct.9 In such case, the proper remedy is a judicial
guardianship proceedings under Rule 93 of the 1964 Revised Rules of Court.
Even assuming that the rules of summary judicial proceedings under the Family Code may apply to the
wife's administration of the conjugal property, the law provides that the wife who assumes sole powers
of administration has the same powers and duties as a guardian under the Rules of Court.10
Consequently, a spouse who desires to sell real property as such administrator of the conjugal property
must observe the procedure for the sale of the ward’s estate required of judicial guardians under Rule
95, 1964 Revised Rules of Court, not the summary judicial proceedings under the Family Code.
In the case at bar, the trial court did not comply with the procedure under the Revised Rules of
Court.1âwphi1 Indeed, the trial court did not even observe the requirements of the summary judicial
proceedings under the Family Code. Thus, the trial court did not serve notice of the petition to the
incapacitated spouse; it did not require him to show cause why the petition should not be granted.
Hence, we agree with the Court of Appeals that absent an opportunity to be heard, the decision
rendered by the trial court is void for lack of due process. The doctrine consistently adhered to by this
Court is that a denial of due process suffices to cast on the official act taken by whatever branch of the
government the impress of nullity.11 A decision rendered without due process is void ab initio and may
be attacked directly or collaterally.12 "A decision is void for lack of due process if, as a result, a party is
deprived of the opportunity of being heard."13 "A void decision may be assailed or impugned at any time
either directly or collaterally, by means of a separate action, or by resisting such decision in any action or
proceeding where it is invoked."14
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals in CA-G. R. SP No. 26936, in toto.
Costs against petitioners.
SO ORDERED.
22. Jader-Manalo v. Spouses Camaisa, G.R. No. 147978, January 23, 2002
[G.R. No. 147978. January 23, 2002.]
THELMA A. JADER-MANALO, Petitioner, v. NORMA FERNANDEZ C. CAMAISA and EDILBERTO

CAMAISA, Respondents.
DECISION
KAPUNAN, J.:
The issue raised in this case is whether or not the husband may validly dispose of a conjugal property
without the wife’s written consent.
The present controversy had its beginning when petitioner Thelma A. Jader-Manalo allegedly came
across an advertisement placed by respondents, the Spouses Norma Fernandez C. Camaisa and
Edilberto Camaisa, in the Classified Ads Section of the newspaper BULLETIN TODAY in its April, 1992
issue, for the newspaper BULLETIN TODAY in its April, 1992 issue, for the sale of their ten-door
apartment in Makati, as well as that in Taytay, Rizal.chanrob1es virtua1 1aw 1ibrary
As narrated by petitioner in her complaint filed with the Regional Trial Court of Makati, Metro Manila,
she was interested in buying the two properties so she negotiated for the purchase through a real estate
broker, Mr. Proceso Ereno, authorized by respondent spouses. 1 Petitioner made a visual inspection of
the said lots with the real estate broker and was shown the tax declarations, real property tax payment
receipts, location plans, and vicinity maps relating to the properties. 2 Thereafter, petitioner met with
the vendors who turned out to be respondent spouses. She made a definite offer to buy the properties
to respondent Edilberto Camaisa with the knowledge and conformity of his wife, respondent Norma
Camaisa in the presence of the real estate broker. 3 After some bargaining, petitioner and Edilberto
agreed upon the purchase price of P1,500,000.00 for the Taytay property and P2,100,000.00 for the
Makati property 4 to be paid on installment basis with downpayments of P100,000.00 and P200,000.00,
respectively, on April 15, 1992. The balance thereof was to be paid as follows 5 :chanrob1es virtual 1aw
library
Taytay Property Makati Property
6th month P200,000.00 P300,000.00
12th month 700,000.00 1,600,000.00
18th month 500,000.00
This agreement was handwritten by petitioner and signed by Edilberto. 6 When petitioner pointed out
the conjugal nature of the properties, Edilberto assured her of his wife’s conformity and consent to the
sale. 7 The formal typewritten Contracts to Sell were thereafter prepared by petitioner. The following
day, Petitioner, the real estate broker and Edilberto met in the latter’s office for the formal signing of the
typewritten Contracts to Sell. 8 After Edilberto signed the contracts, petitioner delivered to him two
checks, namely, UCPB Check No. 62807 dated April 15, 1992 for P200,000.00 and UCPB Check No. 62808
also dated April 15, 1992 for P100,000.00 in the presence of the real estate broker and an employee in
Edilberto’s office. 9 The contracts were given to Edilberto for the formal affixing of his wife’s
signature.chanrob1es virtua1 1aw 1ibrary
The following day, petitioner received a call from respondent Norma; requesting a meeting to clarify
some provisions of the contracts. 10 To accommodate her queries, Petitioner, accompanied by her
lawyer, met with Edilberto and Norma and the real estate broker at Cafe Rizal in Makati. 11 During the
meeting, handwritten notations were made on the contracts to sell, so they arranged to incorporate the
notations and to meet again for the formal signing of the contracts. 12
When petitioner met again with respondent spouses and the real estate broker at Edilberto’s office for
the formal affixing of Norma’s signature, she was surprised when respondent spouses informed her that
they were backing out of the agreement because they needed "spot cash" for the full amount of the
consideration. 13 Petitioner reminded respondent spouses that the contracts to sell had already been
duly perfected and Norma’s refusal to sign the same would unduly prejudice petitioner. Still, Norma
refused to sign the contracts prompting petitioner to file a complaint for specific performance and
damages against respondent spouses before the Regional Trial Court of Makati, Branch 136 on April 29,
1992, to compel respondent Norma Camaisa to sign the contracts to sell.
A Motion to Dismiss 14 was filed by respondents which was denied by the trial court in its Resolution of
July 21, 1992. 15
Respondents then filed their Answer with Compulsory Counterclaim, alleging that it was an agreement
between herein petitioner and respondent Edilberto Camaisa that the sale of the subject properties was
still subject to the approval and conformity of his wife Norma Camaisa. 16 Thereafter, when Norma
refused to give her consent to the sale, her refusal was duly communicated by Edilberto to petitioner. 17
The check issued by petitioner were returned to her by Edilberto and she accepted the same without
any objection. 18 Respondent further claimed that the acceptance of the checks returned to petitioner
signified her assent to the cancellation of the sale of the subject properties. 19 Respondent Norma
denied that she ever participated in the negotiations for the sale of the subject properties and that she
gave her consent and conformity to the same. 20
On October 20, 1992, respondent Norma F. Camaisa filed a Motion for Summary Judgment 21 asserting
that there is no genuine issue as to any material fact on the basis of the pleadings and admission of the
parties considering that the wife’s written consent was not obtained in the contract to sell, the subject
conjugal properties belonging to respondents; hence, the contract was null and void.
On April 14, 1993, the trial court rendered a summary judgment dismissing the complaint on the ground
that under Art. 124 of the Family Code, the court cannot intervene to authorize the transaction in the
absence of the consent of the wife since said wife who refused to give consent had not been shown to
be incapacitated. The dispositive portion of the trial court’s decision reads:chanrob1es virtua1 1aw
1ibrary
WHEREFORE, considering these premises, judgment is hereby rendered:chanrob1es virtual 1aw library
1. Dismissing the complaint and ordering the cancellation of the Notice of Lis Pendens by reason of its
filing on TCT Nos. (464860) S-8724 and (464861) S-8725 of the Registry of Deeds at Makati and on TCT
Nos. 295976 and 295971 of the Registry of Rizal.
2. Ordering plaintiff Thelma A. Jader to pay defendant spouses Norma and Edilberto Camaisa, FIFTY
THOUSAND (P50,000.00) as Moral Damages and FIFTY THOUSAND (P50,000.00) as Attorney’s Fees.
Costs against plaintiff. 22
Petitioner, thus, elevated the case to the Court of Appeals. On November 29, 2000, the Court of Appeals
affirmed the dismissal by the trial court but deleted the award of P50,000.00 as damages and
P50,000.00 as attorney’s fees.
The Court of Appeals explained that the properties subject of the contracts were conjugal properties
and as such, the consent of both spouses is necessary to give effect to the sale. Since private respondent
Norma Camaisa refused to sign the contracts, the sale was never perfected. In fact, the downpayment
was returned by respondent spouses and was accepted by petitioner. The Court of Appeals also stressed
that the authority of the court to allow sale or encumbrance of a conjugal property without the consent
of the other spouse is applicable only in cases where the said spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal property.
Hence, the present recourse assigning the following errors:chanrob1es virtual 1aw library
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RENDERING SUMMARY JUDGMENT IN

DISMISSING THE COMPLAINT ENTIRELY AND ORDERING THE CANCELLATION OF NOTICE OF LIS PENDENS
ON THE TITLES OF THE SUBJECT REAL PROPERTIES;
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN FAILING TO CONSIDER THAT THE SALE OF
REAL PROPERTIES BY RESPONDENTS TO PETITIONER HAVE ALREADY BEEN PERFECTED, FOR AFTER THE
LATTER PAID P300,000.00 DOWNPAYMENT, RESPONDENT MRS. CAMAISA NEVER OBJECTED TO
STIPULATIONS WITH RESPECT TO PRICE, OBJECT AND TERMS OF PAYMENT IN THE CONTRACT TO SELL
ALREADY SIGNED BY THE PETITIONER MR. CAMAISA AND WITNESSES MARKED AS ANNEX "G" IN THE
COMPLAINT EXCEPT, FOR MINOR PROVISIONS ALREADY IMPLIED BY LAW, LIKE EJECTMENT OF TENANTS,
SUBDIVISION OF TITLE AND RESCISSION IN CASE OF NONPAYMENT, WHICH PETITIONER READILY
AGREED AND ACCEDED TO THEIR INCLUSION;
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT
CONTRACT OF SALE IS CONSENSUAL AND IT IS PERFECTED BY THE MERE CONSENT OF THE PARTIES AND
THE APPLICABLE PROVISIONS ARE ARTICLES 1157, 1356, 1357, 1358, 1403, 1405 AND 1475 OF THE CIVIL
CODE OF THE PHILIPPINES AND GOVERNED BY THE STATUTE OF FRAUD. 23
The Court does not find error in the decisions of both the trial court and the Court of Appeals.
Petitioner alleges that the trial court erred when it entered a summary judgment in favor of respondent
spouses there being a genuine issue of fact. Petitioner maintains that the issue of whether the contracts
to sell between petitioner and respondent spouses was perfected is a question of fact necessitating a
trial on the merits.
The Court does not agree. A summary judgment is one granted by the court upon motion by a party for
an expeditious settlement of a case, there appearing from the pleadings, depositions, admissions and
affidavits that there are no important questions or issues of fact involved, and that therefore the moving
party is entitled to judgment as a matter of law. 24 A perusal of the pleadings submitted by both parties
should that there is no genuine controversy as to the facts involved therein.
Both parties admit that there were negotiations for the sale of four parcels of land between petitioner
and respondent spouses; that petitioner and respondent Edilberto Camaisa came to an agreement as to
the price and the terms of payment, and a downpayment was paid by petitioner to the latter; and that
respondent Norma refused to sign the contracts to sell. The issue thus posed for resolution in the trial
court was whether or not the contracts to sell between petitioner and respondent spouses were already
perfected such that the latter could no longer back out of the agreement.chanrobles.com.ph : red
The law requires that the disposition of a conjugal property by the husband as administrator in
appropriate cases requires the written consent of the wife, otherwise, the disposition is void. Thus,
Article 124 of the Family Code provides:chanrob1es virtual 1aw library
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the
court by the wife for a proper remedy, which must be availed of within five years from the date of the
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do
not include the powers of disposition or encumbrance which must have the authority of the court or the
written consent of the other spouse. In the absence of such authority or consent the disposition or
encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the
part of the consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either
or both offerors. (Emphasis supplied.)
The properties subject of the contracts in this case were conjugal; hence, for the contracts to sell to be
effective, the consent of both husband and wife must concur.
Respondent Norma Camaisa admittedly did not give her written consent to the sale. Even granting that
respondent Norma actively participated in negotiating for the sale of the subject properties, which she
denied, her written consent to the sale is required by law for its validity. Significantly, petitioner herself
admits that Norma refused to sign the contracts to sell. Respondent Norma may have been aware of the
negotiations for the sale of their conjugal properties. However, being merely aware of a transaction is
not consent.25cralaw:red
Finally, petitioner argues that since respondent Norma unjustly refuses to affix her signatures to the
contracts to sell, court authorization under Article 124 of the Family Code is warranted.
The argument is bereft of merit. Petitioner is correct insofar as she alleges that if the written consent of
the other spouse cannot be obtained or is being withheld, the matter may be brought to court which
will give such authority if the same is warranted by the circumstances. However it should be stressed
that court authorization under Art. 124 is only resorted to in cases where the spouse who does not give
consent is incapacitated. 26
In this case, petitioner failed to allege and prove that respondent Norma was incapacitated to give her
consent to the contracts. In the absence of such showing of the wife’s incapacity, court authorization
cannot be sought.
Under the foregoing facts, the motion for summary judgment was proper considering that there was no
genuine issue as to any material fact. The only issue to be resolved by the trial court was whether the
contract to sell involving conjugal properties was valid without the written consent of the wife.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated November
29, 2000 in CA-G.R. CV No 43421 AFFIRMED.chanrob1es virtua1 1aw 1ibrary
SO ORDERED.
23. Spouses Guiang v. Court of Appeals, G.R. No. 125172, June 26, 1998
G.R. No. 125172 June 26, 1998
Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,

vs.
COURT OF APPEALS and GILDA COPUZ, respondents.
PANGANIBAN, J.:
The sale of a conjugal property requires the consent of both the husband and the wife. The absence of
the consent of one renders the sale null and void, while the vitiation thereof makes it merely voidable.
Only in the latter case can ratification cure the defect.
The Case
These were the principles that guided the Court in deciding this petition for review of the
Decision 1 dated January 30, 1996 and the Resolution 2 dated May 28, 1996, promulgated by the Court
of Appeals in CA-GR CV No. 41758, affirming the Decision of the lower court and denying
reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complainant 3 against her
husband Judie Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said Complaint
sought the declaration of a certain deed of sale, which involved the conjugal property of private
respondent and her husband, null and void. The case was raffled to the Regional Trial Court of
Koronadal, South Cotabato, Branch 25. In due course, the trial court rendered a Decision 4 dated
September 9, 1992, disposing as follow: 5
ACCORDINGLY, judgment is rendered for the plaintiff and against the defendants,
1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. "A") and
the "amicable settlement" dated March 16, 1990 (Exh. "B") as null void and of no
effect;
2. Recognizing as lawful and valid the ownership and possession of plaintiff Gilda
Corpuz over the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409 which
has been the subject of the Deed of Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda Guiang the

amount of NINE THOUSAND (P9,000.00) PESOS corresponding to the payment made
by defendants Guiangs to Manuel Callejo for the unpaid balance of the account of
plaintiff in favor of Manuel Callejo, and another sum of P379.62 representing one-half
of the amount of realty taxes paid by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-
165409, both with legal interests thereon computed from the finality of the decision.
No pronouncement as to costs in view of the factual circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent Court, in its
challenged Decision, ruled as follow: 6
WHEREFORE, the appealed of the lower court in Civil Case No. 204 is hereby
AFFIRMED by this Court. No costs considering plaintiff-appellee's failure to file her
brief despite notice.
Reconsideration was similarly denied by the same court in its assailed Resolution: 7
Finding that the issues raised in defendants-appellants motion for reconsideration of

Our decision in this case of January 30, 1996, to be a mere rehash of the same issues
which we have already passed upon in the said decision, and there [being] no cogent
reason to disturb the same, this Court RESOLVED to DENY the instant motion for
reconsideration for lack of merit.
The Facts
The facts of this case are simple. Over the objection of private respondent and while she was in
Manila seeking employment, her husband sold to the petitioners-spouses one half of their conjugal
peoperty, consisting of their residence and the lot on which it stood. The circumstances of this sale are
set forth in the Decision of Respondent Court, which quoted from the Decision of the trial court as
follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses. They
were married on December 24, 1968 in Bacolod City, before a judge. This is admitted
by defendants-spouses Antonio and Luzviminda Guiang in their answer, and also
admitted by defendant Judie Corpuz when he testified in court (tsn. p. 3, June 9,
1992), although the latter says that they were married in 1967. The couple have three
children, namely: Junie — 18 years old, Harriet — 17 years of age, and Jodie or Joji, the
youngest, who was 15 years of age in August, 1990 when her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with plaintiff-wife
Gilda Corpuz as vendee, bought a 421 sq. meter lot located in Barangay Gen. Paulino
Santos (Bo. 1), Koronadal, South Cotabato, and particularly known as Lot 9, Block 8,
(LRC) Psd-165409 from Manuel Callejo who signed as vendor through a conditional
deed of sale for a total consideration of P14,735.00. The consideration was payable in
installment, with right of cancellation in favor of vendor should vendee fail to pay
three successive installments (Exh. "2", tsn p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half
portion of their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-spouses
Antonio and Luzviminda Guiang. The latter have since then occupied the one-half
portion [and] built their house thereon (tsn. p. 4, May 22, 1992). They are thus
adjoining neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was trying to look
for work abroad, in [the] Middle East. Unfortunately, she became a victim of an
unscrupulous illegal recruiter. She was not able to go abroad. She stayed for sometime
in Manila however, coming back to Koronadal, South Cotabato, . . . on March 11, 1990.
Plaintiff's departure for Manila to look for work in the Middle East was with the
consent of her husband Judie Corpuz (tsn. p. 16, Aug. 12, 1990; p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant Judie Corpuz seldom went home to
the conjugal dwelling. He stayed most of the time at his place of work at Samahang
Nayon Building, a hotel, restaurant, and a cooperative. Daughter Herriet Corpuz went
to school at King's College, Bo. 1, Koronadal, South Cotabato, but she was at the same
time working as household help of, and staying at, the house of Mr. Panes. Her
brother Junie was not working. Her younger sister Jodie (Jojie) was going to school.
Her mother sometimes sent them money (tsn. p. 14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned that her father intended to sell the
remaining one-half portion including their house, of their homelot to defendants
Guiangs. She wrote a letter to her mother informing her. She [Gilda Corpuz] replied
that she was objecting to the sale. Harriet, however, did not inform her father about
this; but instead gave the letter to Mrs. Luzviminda Guiang so that she [Guiang] would
advise her father (tsn. pp. 16-17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz pushed
through the sale of the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409.
On March 1, 1990, he sold to defendant Luzviminda Guiang thru a document known as
"Deed of Transfer of Rights" (Exh. "A") the remaining one-half portion of their lot and
the house standing thereon for a total consideration of P30,000.00 of which P5,000.00
was to be paid in June, 1990. Transferor Judie Corpuz's children Junie and Harriet
signed the document as witness.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever
defect in defendant Judie Corpuz's title over the lot transferred, defendant Luzviminda
Guiang as vendee executed another agreement over Lot 9, Block 8, (LRC) Psd-165408
(Exh. "3"), this time with Manuela Jimenez Callejo, a widow of the original registered
owner from whom the couple Judie and Gilda Corpuz originally bought the lot (Exh.
"2"), who signed as vendor for a consideration of P9,000.00. Defendant Judie Corpuz
signed as a witness to the sale (Exh. "3-A"). The new sale (Exh. "3") describes the lot
sold as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from the mass of evidence
that the correct lot is Lot 8, Block 9, (LRC) Psd-165409, the very lot earlier sold to the
couple Gilda and Judie Corpuz.
5. Sometimes on March 11, 1990, plaintiff returned home. She found her children
staying with other households. Only Junie was staying in their house. Harriet and Joji
were with Mr. Panes. Gilda gathered her children together and stayed at their house.
Her husband was nowhere to be found. She was informed by her children that their
father had a wife already.
6. For staying in their house sold by her husband, plaintiff was complained against by
defendant Luzviminda Guiang and her husband Antonio Guiang before the Barangay
authorities of Barangay General Paulino Santos (Bo. 1), Koronadal, South Cotabato, for
trespassing (tsn. p. 34, Aug. 17, 1990). The case was docketed by the barangay
authorities as Barangay Case No. 38 for "trespassing". On March 16, 1990, the parties
thereat signed a document known as "amicable settlement". In full, the settlement
provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children, namely:
Junie, Hariet and Judie to leave voluntarily the house of Mr. and Mrs.
Antonio Guiang, where they are presently boarding without any
charge, on or before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the bargain, plaintiff to the
Barangay Captain of Barangay Paulino Santos to question her signature on the
amicable settlement. She was referred however to the Office-In-Charge at the time, a
certain Mr. de la Cruz. The latter in turn told her that he could not do anything on the
matter (tsn. p. 31, Aug. 17, 1990).
This particular point not rebutted. The Barangay Captain who testified did not deny
that Mrs. Gilda Corpuz approached him for the annulment of the settlement. He
merely said he forgot whether Mrs. Corpuz had approached him (tsn. p. 13, Sept. 26,
1990). We thus conclude that Mrs. Corpuz really approached the Barangay Captain for
the annulment of the settlement. Annulment not having been made, plaintiff stayed
put in her house and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement with a motion for
the execution of the amicable settlement, filing the same with the Municipal Trial
Court of Koronadal, South Cotabato. The proceedings [are] still pending before the
said court, with the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00 for the preparation
of the Deed of Transfer of Rights, Exh. "A", P9,000.00 as the amount they paid to Mrs.
Manuela Callejo, having assumed the remaining obligation of the Corpuzes to Mrs.
Callejo (Exh. "3"); P100.00 for the preparation of Exhibit "3"; a total of P759.62 basic
tax and special education fund on the lot; P127.50 as the total documentary stamp tax
on the various documents; P535.72 for the capital gains tax; P22.50 as transfer tax; a
standard fee of P17.00; certification fee of P5.00. These expenses particularly the
taxes and other expenses towards the transfer of the title to the spouses Guiangs
were incurred for the whole Lot 9, Block 8, (LRC) Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial court's ruling that any alienation or
encumbrance by the husband of the conjugal propety without the consent of his wife is null and void
as provided under Article 124 of the Family Code. It also rejected petitioners' contention that the
"amicable sttlement" ratified said sale, citing Article 1409 of the Code which expressly bars
ratification of the contracts specified therein, particularly those "prohibited or declared void by law."
Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public respondent the following errors: 10
Whether or not the assailed Deed of Transfer of Rights was validly executed.
II
Whether or not the Cour of Appeals erred in not declairing as voidable contract under
Art. 1390 of the Civil Code the impugned Deed of Transfer of Rights which was validly
ratified thru the execution of the "amicable settlement" by the contending parties.
III
Whether or not the Court of Appeals erred in not setting aside the findings of the
Court a quo which recognized as lawful and valid the ownership and possession of
private respondent over the remaining one half (1/2) portion of the properly.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of Transfer of Rights) was
merely voidable, and (2) such contract was ratified by private respondent when she entered into an
amicable sttlement with them.
This Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by the parties-
litigants in good faith and for valuable consideration. The absence of private respondent's consent
merely rendered the Deed voidable under Article 1390 of the Civil Code, which provides:
Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They
are susceptible of ratification.(n)
The error in petitioners' contention is evident. Article 1390, par. 2, refers to contracts visited by vices
of consent, i.e., contracts which were entered into by a person whose consent was obtained and
vitiated through mistake, violence, intimidation, undue influence or fraud. In this instance, private
respondent's consent to the contract of sale of their conjugal property was totally inexistent or
absent. Gilda Corpuz, on direct examination, testified thus: 11
Q Now, on March 1, 1990, could you still recall where you were?
A I was still in Manila during that time.
xxx xxx xxx

ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was there any problem which
arose concerning the ownership of your residential house at Callejo
Subdivision?
A When I arrived here in Koronadal, there was a problem which arose

regarding my residential house and lot because it was sold by my
husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124 of the Family Code,
which was correctly applied by the teo lower court:
Art. 124. The administration and enjoyment of the conjugal partnerhip properly shall
belong to both spouses jointly. In case of disgreement, the husband's decision shall
prevail, subject recourse to the court by the wife for proper remedy, which must be
availed of within five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers
of administration. These powers do not include the powers of disposition or
encumbrance which must have the authority of the court or the written consent of the
other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may
be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors.
(165a) (Emphasis supplied)
Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly explained
the amendatory effect of the above provision in this wise: 12
The legal provision is clear. The disposition or encumbrance is void. It becomes still
clearer if we compare the same with the equivalent provision of the Civil Code of the
Philippines. Under Article 166 of the Civil Code, the husband cannot generally alienate
or encumber any real property of the conjugal partnershit without the wife's consent.
The alienation or encumbrance if so made however is not null and void. It is merely
voidable. The offended wife may bring an action to annul the said alienation or
encumbrance. Thus the provision of Article 173 of the Civil Code of the Philippines, to
wit:
Art. 173. The wife may, during the marriage and within ten years from
the transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when such
consent is required, or any act or contract of the husband which tends
to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs
after the dissolution of the marriage, may demand the value of
property fraudulently alienated by the husband.(n)
This particular provision giving the wife ten (10) years . . . during [the] marriage to
annul the alienation or encumbrance was not carried over to the Family Code. It is
thus clear that any alienation or encumbrance made after August 3, 1988 when the
Family Code took effect by the husband of the conjugal partnership property without
the consent of the wife is null and void.
Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners were
perpetrated in the execution of the document embodying the amicable settlement. Gilda Corpuz
alleged during trial that barangay authorities made her sign said document through misrepresentation
and
coercion. 13 In any event, its execution does not alter the void character of the deed of sale between
the husband and the petitioners-spouses, as will be discussed later. The fact remains that such
contract was entered into without the wife's consent.
In sum, the nullity of the contract of sale is premised on the absence of private respondent's consent.
To constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1)
cause, (2) object, and (3) consent, 14 the last element being indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners aver that it was duly ratified by the
contending parties through the "amicable settlement" they executed on March 16, 1990 in Barangay
Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved this issue in favor of
the private respondent. The trial court correctly held: 15
By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to
Transfer of Rights (Exh. "A") cannot be ratified, even by an "amicable settlement". The
participation by some barangay authorities in the "amicable settlement" cannot
otherwise validate an invalid act. Moreover, it cannot be denied that the "amicable
settlement (Exh. "B") entered into by plaintiff Gilda Corpuz and defendent spouses
Guiang is a contract. It is a direct offshoot of the Deed of Transfer of Rights (Exh. "A").
By express provision of law, such a contract is also void. Thus, the legal provision, to
wit:
Art. 1422. Acontract which is the direct result of a previous illegal

contract, is also void and inexistent. (Civil Code of the Philippines).
In summation therefore, both the Deed of transfer of Rights (Exh. "A") and the
"amicable settlement" (Exh. "3") are null and void.
Doctrinally and clearly, a void contract cannot be ratified. 16
Neither can the "amicable settlement" be considered a continuing offer that was accepted and
perfected by the parties, following the last sentence of Article 124. The order of the pertinent events
is clear: after the sale, petitioners filed a complaint for trespassing against private respondent, after
which the barangay authorities secured an "amicable settlement" and petitioners filed before the
MTC a motion for its execution. The settlement, however, does not mention a continuing offer to sell
the property or an acceptance of such a continuing offer. Its tenor was to the effect that private
respondent would vacate the property. By no stretch of the imagination, can the Court interpret this
document as the acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged Decision and
Resolution. Costs against petitioners.
SO ORDERED.
24. Quiao v. Quiao, G.R. No. 176556, July 4, 2012
G.R. No 176556 July 4, 2012
BRIGIDO B. QUIAO, Petitioner,

vs.
RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their mother
RITA QUIAO, Respondents.
DECISION
REYES, J.:
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:
WHEREFORE, viewed from the foregoing considerations, judgment is hereby rendered declaring the
legal separation of plaintiff Rita C. Quiao and defendant-respondent Brigido B. Quiao pursuant to Article
55.
As such, the herein parties shall be entitled to live separately from each other, but the marriage bond
shall not be severed.
Except for Letecia C. Quiao who is of legal age, the three minor children, namely, Kitchie, Lotis and
Petchie, all surnamed Quiao shall remain under the custody of the plaintiff who is the innocent spouse.
Further, except for the personal and real properties already foreclosed by the RCBC, all the remaining
properties, namely:
1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;
2. coffee mill in Durian, Las Nieves, Agusan del Norte;
3. corn mill in Casiklan, Las Nieves, Agusan del Norte;
4. coffee mill in Esperanza, Agusan del Sur;
5. a parcel of land with an area of 1,200 square meters located in Tungao, Butuan City;
6. a parcel of agricultural land with an area of 5 hectares located in Manila de Bugabos, Butuan
City;
7. a parcel of land with an area of 84 square meters located in Tungao, Butuan City;
8. Bashier Bon Factory located in Tungao, Butuan City;
shall be divided equally between herein [respondents] and [petitioner] subject to the respective
legitimes of the children and the payment of the unpaid conjugal liabilities of [₱]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
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 Motion for
Clarification was filed on July 7, 2006.
Section 3, Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15) days from notice of
the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file
a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final
order.
The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion
for extension of time to file a motion for new trial or reconsideration shall be allowed.
In Neypes v. Court of Appeals,25 we clarified that to standardize the appeal periods provided in the Rules
and to afford litigants fair opportunity to appeal their cases, we held that "it would be practical to allow
a fresh period of 15 days within which to file the notice of appeal in the RTC, counted from receipt of the
order dismissing a motion for a new trial or motion for reconsideration."26
In Neypes, we explained that the "fresh period rule" shall also apply to Rule 40 governing appeals from
the Municipal Trial Courts to the RTCs; Rule 42 on petitions for review from the RTCs to the Court of
Appeals (CA); Rule 43 on appeals from quasi-judicial agencies to the CA and Rule 45 governing appeals
by certiorari to the Supreme Court. We also said, "The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion for new trial, motion for
reconsideration (whether full or partial) or any final order or resolution."27 In other words, a party
litigant may file his notice of appeal within a fresh 15-day period from his receipt of the trial court's
decision or final order denying his motion for new trial or motion for reconsideration. Failure to avail of
the fresh 15-day period from the denial of the motion for reconsideration makes the decision or final
order in question final and executory.
In the case at bar, the trial court rendered its Decision on October 10, 2005. The petitioner neither filed
a motion for reconsideration nor a notice of appeal. On December 16, 2005, or after 67 days had lapsed,
the trial court issued an order granting the respondent's motion for execution; and on February 10,
2006, or after 123 days had lapsed, the trial court issued a writ of execution. Finally, when the writ had
already been partially executed, the petitioner, on July 7, 2006 or after 270 days had lapsed, filed his
Motion for Clarification on the definition of the "net profits earned." From the foregoing, the petitioner
had clearly slept on his right to question the 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.
25. Domingo v. Spouses Molina, G.R. No. 200274, April 20, 2016
G.R. No. 200274, April 20, 2016
MELECIO DOMINGO, Petitioner, v. 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. 2729677 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. 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 mere 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:
chanRoblesvirtualLawlibrary
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 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. 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 this Court.31
Considering these findings, we find no need to discuss the other issues raised by Melecio.chanrobleslaw
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.cralawlawlibrary

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Module 5:

I. Conjugal Partnership of Gains (Articles 116-133,Family Code)

G.R. No. 143286 April 14, 2004

PROCOPIO VILLANUEVA, NICOLAS RETUYA and PACITA VILLANUEVA, petitioners,

The facts as found by the trial court are as follows:

e) Benedicto Development Corporation – for a portion of Lot No. 148 covered by

Plaintiff, then, complained to the Barangay Captain for reconciliation/mediation but no

WHEREFORE, in view of the foregoing considerations, judgment is rendered in favor of the

1. Declaring the properties listed in paragraph 2 of the amended complaint as conjugal

3. Ordering defendant Procopio Villanueva to account and turnover all proceeds or

Hence, this petition.

The Trial Court’s Ruling

The Court of Appeals’ Ruling

The Ruling of the Court

The petition lacks merit.

First Issue: On the Alleged Failure

Second Issue: Prescription and Laches

Petitioners are mistaken.

Third Issue: Whether the Subject Properties Are Conjugal

We proceed to the crux of this petition.

Petitioners’ argument is flawed.

2. Bank of the Philippine Islands v. Posadas, Jr., 56 Phil 215 (1931)

G.R. No. L-34583 October 22, 1931

Araneta, De Joya, Zaragoza and Araneta for appellant.

xxx xxx xxx

PERMANENCY OF LOCATION; PROPERTY IN TRANSIT. — In order to acquire a situs in a state or

G.R. No. L-55322 February 16, 1989

MOISES JOCSON, petitioner,

Dolorfino and Dominguez Law Officers for petitioner.

Gabriel G. Mascardo for private respondents.

Na ngayon, alang-alang sa halagang SAMPUNG LIBONG PISO (P10,000) salaping Pilipino

2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968, marked as Exhibit 4 (p. 14,

xxx xxx xxx

Article 160 of the Civil Code provides that:

4. Jovellanos v. Court of Appeals, G.R. No. 100728, June 18, 1992

G.R. No. 100728 June 18, 1992

WILHELMINA JOVELLANOS, MERCY JOVELLANOS-MARTINEZ and JOSE HERMILO

WHEREFORE, premises considered, judgment is hereby rendered as follows

5. Ordering the parties to make a partition among themselves by proper instruments of

xxx xxx xxx

(b) Sublease said property to a third party;

(c) Engage in business or practice any profession within the property;

xxx xxx xxx

5. Castillo, Jr. v. Pasco, G.R. No. L-16857, May 29, 1964

G.R. No. L-16857 May 29, 1964

Tomas Yumol for petitioners.

REYES, J.B.L., J.:

On the other hand, Article 1401, prescribed that:

ART. 1401. To the conjugal property belong:

6. Magallon v. Montejo, G.R. No. 73733, December 16, 1986

G.R. No. 73733 December 16, 1986

EPIFANIA MAGALLON, petitioner,

Alberto Lumakang for private respondents.

7. Vda. de Padilla v. Vda. De Padilla, 74 Phil 377 (1943)

G.R. No. L-48137 October 4, 1943

In re testate estate of NARCISO A. PADILLA.

Article 1404, Civil Code, provides:

Moreover, Sanchez Roman declares:

Los derechos de la muyer en la sociedad legal de gananciales se remiten todos a la epoca de su

And Manresa states:

Art. 1408. Seran de cargo de la sociedad de gananciales:

La frase 'obligaciones personales', se reduce a deudas u obligaciones contraidas privativamente

Consecuencia natural de esta especie de separacion de responsabilidades y de patrimonios, es