Title II. LEGAL SEPARATION (Articles 55-67)

De facto Separation vs. Legal Separation/Article 63;See also Arts 86 (4), 99 & 126, 100 & 127, 135 (6), 204; Title XI, Chapter 2, Arts 239-248;Rule of Procedure on Legal Separation (A.M. No. 02-11-11 SC);Rule on Provisional Orders (AM 02-11-12 SC);See RA 9262 – compare Section 19 with Article 58;Rules on Revocation of Donations; Incapacity to Succeed by Will or Intestate Succession

CASES:

Manzano vs. Sanchez A.M. No. MTJ-00-1329. MAR. 08, 2001(Formerly A.M. No. OCA IPI No. IPI No. 99-706-MTJ) 354 SCRA 1

HERMINIA BORJA-MANZANO, petitioner, vs. JUDGE ROQUE R. SANCHEZ, MTC, Infanta, Pangasinan, respondent.

R E S O L U T I O NDAVIDE, JR., C.J.:The solemnization of a marriage between two contracting parties who were both bound by a prior existing marriage is the bone of contention of the instant complaint against respondent Judge Roque R. Sanchez, Municipal Trial Court, Infanta, Pangasinan. For this act, complainant Herminia Borja-Manzano charges respondent Judge with gross ignorance of the law in a sworn Complaint-Affidavit filed with the Office of the Court Administrator on 12 May 1999.Complainant avers that she was the lawful wife of the late David Manzano, having been married to him on 21 May 1966 in San Gabriel Archangel Parish, Araneta Avenue, Caloocan City.[1] Four children were born out of that marriage.[2] On 22 March 1993, however, her husband contracted another marriage with one Luzviminda Payao before respondent Judge.[3] When respondent Judge solemnized said marriage, he knew or ought to know that the same was void and bigamous, as the marriage contract clearly stated that both contracting parties were “separated.”Respondent Judge, on the other hand, claims in his Comment that when he officiated the marriage between Manzano and Payao he did not know that Manzano was legally married. What he knew was that the two had been living together as husband and wife for seven years already without the benefit of marriage, as manifested in their joint affidavit.[4] According to him, had he known that the late Manzano was married, he would have advised the latter not to marry again; otherwise, he (Manzano) could be charged with bigamy. He then prayed that the complaint be dismissed for lack of merit and for being designed merely to harass him.

After an evaluation of the Complaint and the Comment, the Court Administrator recommended that respondent Judge be found guilty of gross ignorance of the law and be ordered to pay a fine of P2,000, with a warning that a repetition of the same or similar act would be dealt with more severely.On 25 October 2000, this Court required the parties to manifest whether they were willing to submit the case for resolution on the basis of the pleadings thus filed. Complainant answered in the affirmative.For his part, respondent Judge filed a Manifestation reiterating his plea for the dismissal of the complaint and setting aside his earlier Comment. He therein invites the attention of the Court to two separate affidavits[5] of the late Manzano and of Payao, which were allegedly unearthed by a member of his staff upon his instruction. In those affidavits, both David Manzano and Luzviminda Payao expressly stated that they were married to Herminia Borja and Domingo Relos, respectively; and that since their respective marriages had been marked by constant quarrels, they had both left their families and had never cohabited or communicated with their spouses anymore. Respondent Judge alleges that on the basis of those affidavits, he agreed to solemnize the marriage in question in accordance with Article 34 of the Family Code.We find merit in the complaint.Article 34 of the Family Code provides:No license shall be necessary for the marriage of a man and a woman who have lived together as husband and wife for at least five years and without any legal impediment to marry each other. The contracting parties shall state the foregoing facts in an affidavit before any person authorized by law to administer oaths. The solemnizing officer shall also state under oath that he ascertained the qualifications of the contracting parties and found no legal impediment to the marriage.For this provision on legal ratification of marital cohabitation to apply, the following requisites must concur:1. The man and woman must have been living together as husband and wife for at least five years before the marriage;2. The parties must have no legal impediment to marry each other;3. The fact of absence of legal impediment between the parties must be present at the time of marriage;4. The parties must execute an affidavit stating that they have lived together for at least five years [and are without legal impediment to marry each other]; and5. The solemnizing officer must execute a sworn statement that he had ascertained the qualifications of the parties and that he had found no legal impediment to their marriage.[6]Not all of these requirements are present in the case at bar. It is significant to note that in their separate affidavits executed on 22 March 1993 and sworn to before respondent Judge himself, David Manzano and Luzviminda Payao expressly stated the fact of their prior existing marriage. Also, in their marriage contract, it was indicated that both were “separated.”

1YUMI- CIVIL LAW 1

Respondent Judge knew or ought to know that a subsisting previous marriage is a diriment impediment, which would make the subsequent marriage null and void.[7] In fact, in his Comment, he stated that had he known that the late Manzano was married he would have discouraged him from contracting another marriage. And respondent Judge cannot deny knowledge of Manzano’s and Payao’s subsisting previous marriage, as the same was clearly stated in their separate affidavits which were subscribed and sworn to before him.The fact that Manzano and Payao had been living apart from their respective spouses for a long time already is immaterial. Article 63(1) of the Family Code allows spouses who have obtained a decree of legal separation to live separately from each other, but in such a case the marriage bonds are not severed. Elsewise stated, legal separation does not dissolve the marriage tie, much less authorize the parties to remarry. This holds true all the more when the separation is merely de facto, as in the case at bar.Neither can respondent Judge take refuge on the Joint Affidavit of David Manzano and Luzviminda Payao stating that they had been cohabiting as husband and wife for seven years. Just like separation, free and voluntary cohabitation with another person for at least five years does not severe the tie of a subsisting previous marriage. Marital cohabitation for a long period of time between two individuals who are legally capacitated to marry each other is merely a ground for exemption from marriage license. It could not serve as a justification for respondent Judge to solemnize a subsequent marriage vitiated by the impediment of a prior existing marriage.Clearly, respondent Judge demonstrated gross ignorance of the law when he solemnized a void and bigamous marriage. The maxim “ignorance of the law excuses no one” has special application to judges,[8] who, under Rule 1.01 of the Code of Judicial Conduct, should be the embodiment of competence, integrity, and independence. It is highly imperative that judges be conversant with the law and basic legal principles.[9] And when the law transgressed is simple and elementary, the failure to know it constitutes gross ignorance of the law.[10]ACCORDINGLY, the recommendation of the Court Administrator is hereby ADOPTED, with the MODIFICATION that the amount of fine to be imposed upon respondent Judge Roque Sanchez is increased to P20,000.SO ORDERED.

Bañez vs. Bañez GR# 132592 / JAN. 23, 2002374 SCRA 340

Are multiple appeals allowed?

AIDA P. BAÑEZ, petitioner, vs. GABRIEL B. BAÑEZ, respondent.

QUISUMBING, J.:These two petitions stem from the decision[1] dated September 23, 1996 of the Regional Trial Court of Cebu, Branch 20, in Civil Case No. CEB-16765. The first[2] seeks the reversal of the Court of Appeals’ decision dated March 21, 1997, setting aside the orders dated October 1 and November 22, 1996 of the Regional Trial Court. The second[3] prays for the reversal of the resolution dated February 10, 1998, of the Court of Appeals in CA-G.R. No. CV-56265, denying the motion to dismiss.The antecedent facts, as gathered from the parties’ pleadings, are as follows:On September 23, 1996, the Regional Trial Court of Cebu, Branch 20, decided Civil Case No. CEB-16765, decreeing among others the legal separation between petitioner Aida Bañez and respondent Gabriel Bañez on the ground of the latter’s sexual infidelity; the dissolution of their conjugal property relations and the division of the net conjugal assets; the forfeiture of respondent’s one-half share in the net conjugal assets in favor of the common children; the payment to petitioner’s counsel of the sum of P100,000 as attorney’s fees to be taken from petitioner’s share in the net assets; and the surrender by respondent of the use and possession of a Mazda motor vehicle and the smaller residential house located at Maria Luisa Estate Park Subdivision to petitioner and the common children within 15 days from receipt of the decision.Thereafter, petitioner filed an urgent ex-parte motion to modify said decision, while respondent filed a Notice of Appeal.The trial court granted petitioner Aida Banez’ urgent ex-parte motion to modify the decision on October 1, 1996 by approving the Commitment of Fees dated December 22, 1994; obliging petitioner to pay as attorney’s fees the equivalent of 5% of the total value of respondent’s ideal share in the net conjugal assets; and ordering the administrator to pay petitioner’s counsel, Atty. Adelino B. Sitoy, the sum ofP100,000 as advance attorney’s fees chargeable against the aforecited 5%.[4]In another motion to modify the decision, petitioner Aida Bañez sought moral and exemplary damages, as well as litigation expenses. On October 9, 1996, she filed a motion for execution pending appeal. Respondent Gabriel Bañez filed a consolidated written opposition to the two motions, and also prayed for the reconsideration of the October 1, 1996 order.On November 22, 1996, the trial court denied Aida’s motion for moral and exemplary damages and litigation expenses but gave due course to the execution pending appeal. Thus:

2YUMI- CIVIL LAW 1

WHEREFORE, in view of all the foregoing premises, the petitioner’s motion to modify decision is hereby ordered denied. But, petitioner’s motion for execution of decision pending appeal is hereby granted. Consequently, let a writ of execution be issued in this case to enforce the decision for (1) respondent to vacate the premises of the small residential house situated in Maria Luisa Estate Park Subdivision, Lahug, Cebu City and for (2) respondent to surrender the use and possession of said Mazda motor vehicle together with its keys and accessories thereof to petitioner.Atty. Edgar Gica, the Special Administrator, appointed in this case, is hereby ordered to make the necessary computation of the value of the one-half (1/2) share of petitioner in the net remaining conjugal assets of the spouses within 10 days from receipt of this order.The petitioner is hereby ordered to post a bond in the amount of P1,500,000.00 to answer for all the damages that respondent may suffer arising from the issuance of said writ of execution pending appeal and to further answer for all the advances that petitioner may have received from the Special Administrator in this case pending final termination of this present case.[5]In turn, in a petition for certiorari, Gabriel Bañez elevated the case to the Court of Appeals. On March 21, 1997, the appellate court rendered its decision, thus:WHEREFORE, the Order dated October 1, 1996 and the Omnibus Order dated November 22, 1996, insofar as (1) it authorized the release of the sum of P100,000.00 to private respondent’s counsel as the advanced share of private respondent [Aida Bañez] in the net remaining conjugal assets, and (2) granted the motion for execution pending appeal by ordering petitioner [Gabriel Bañez] to vacate the premises of the small residential house situated in Maria Luisa Estate Park Subdivision, Lahug, Cebu City, and to surrender the use and possession of the Mazda Motor vehicle to private respondent are hereby SET ASIDE. The writ of execution dated December 2, 1996 and the Order dated December 10, 1996 granting the motion filed by the sheriff to make symbolic delivery of the subject house and motor vehicle to the administrator of the partnership are also SET ASIDE.As prayed for by petitioner, the Administrator of the conjugal partnership is hereby ordered to cause the reimbursement by counsel for the private respondent [Aida Bañez] of the amount of P100,000.00 released to him as advance payment of attorney’s fees.SO ORDERED.[6]On February 10, 1998, the Court of Appeals denied Aida’s motion for reconsideration. Hence, the petition in G.R. No. 132592, filed by herein petitioner.In the meantime, the trial court gave due course to Gabriel’s Notice of Appeal and elevated on April 15, 1997 the entire case records to the Court of Appeals. Aida filed with the Court of Appeals a motion to dismiss the appeal on the ground that Gabriel had failed to file with the appellate court a Record on Appeal. On February 10, 1998, the Court of Appeals decided the motion, thus:

WHEREFORE, premises considered, the petitioner–appellant’s motion to dismiss filed on November 3, 1997 is hereby DENIED. The appointment of the petitioner-appellee as administratix of the conjugal properties is hereby AFFIRMED.In view of petitioner’s Motion to Withdraw her own appeal filed on November 27, 1997, and for failing to pay the required docket fee within the prescribed period under Rule 41, Section 4 of the 1997 Rules of Civil Procedure, the appeal instituted by the petitioner Aida P. Bañez is hereby DISMISSED.In continuance of the appeal of respondent-appellant [Gabriel Bañez], he is hereby ordered to file his brief with the court within 45 days from receipt of this resolution. The petitioner-appellee [Aida Bañez] shall file her own brief with the court within 45 days from receipt of the petitioner-appellant’s [Gabriel Bañez] brief.SO ORDERED.[7]The appellate court also denied herein petitioner’s motion for reconsideration, hence, the petition in G.R. No. 133628.On January 19, 2000, we consolidated the two petitions. Petitioner Aida Bañez now avers that the Court of Appeals erred:I. G.R. No. 132592

... IN SETTING ASIDE THE GRANT OF EXECUTION PENDING APPEAL BY THE TRIAL COURT OF THE PORTIONS OF ITS DECISION ORDERING RESPONDENT TO VACATE THE SMALLER RESIDENTIAL HOUSE LOCATED AT THE MARIA LUISA ESTATE PARK SUBDIVISION, CEBU CITY, AND TO PAY P100,000.00 TO PETITIONER’S COUNSEL AS ATTORNEY’S FEES TO BE TAKEN FROM HER SHARE IN THE NET CONJUGAL ASSETS.[8]

II. G.R. No. 133628:... IN NOT GRANTING PETITIONER’S MOTION TO DISMISS RESPONDENT’S ORDINARY APPEAL AND/OR NOT RETURNING THE RECORDS OF CIVIL CASE NO. CEB-16765 TO THE REGIONAL TRIAL COURT OF CEBU.[9]

In G.R. No. 132592, petitioner manifested that she no longer questions the Court of Appeals’ decision on the Mazda vehicle because respondent repossessed it. As to the residential house, she claimed that being conjugal in nature, justice requires that she and her children be allowed to occupy and enjoy the house considering that during the entire proceedings before the trial court, she did not have the chance to occupy it. Further, she posted a bond of P1,500,000 for the damages which respondent may suffer.[10] For these reasons, she asked for execution pending appeal. The amount of P100,000 as advance payment to her counsel was a “drop in the bucket” compared to the bond she posted, according to her. She also suggested as an alternative that she simply be required to put up an additional bond. She also agreed to submit to an accounting as regular administratrix and the advance attorney’s fees be charged to her share in the net conjugal assets.In his comment, respondent denied petitioner’s allegation that she did not have the chance to occupy the residential house. He averred that she could have, had she

3YUMI- CIVIL LAW 1

chosen to. According to him, as the inventory of the couple’s properties showed, petitioner owned two houses and lots and two motor vehicles in the United States, where she is a permanent resident. Respondent contended that there was no compelling reason for petitioner to have the judgment executed pending appeal.Essentially, the core issue in G.R. No. 132592 is whether execution of judgment pending appeal was justified.As held in Echaus vs. Court of Appeals, 199 SCRA 381, 386 (1991), execution pending appeal is allowed when superior circumstances demanding urgency outweigh the damages that may result from the issuance of the writ. Otherwise, instead of being an instrument of solicitude and justice, the writ may well become a tool of oppression and inequity.[11]In this case, considering the reasons cited by petitioner, we are of the view that there is no superior or urgent circumstance that outweighs the damage which respondent would suffer if he were ordered to vacate the house. We note that petitioner did not refute respondent’s allegations that she did not intend to use said house, and that she has two (2) other houses in the United States where she is a permanent resident, while he had none at all. Merely putting up a bond is not sufficient reason to justify her plea for execution pending appeal. To do so would make execution routinary, the rule rather than the exception.[12]Similarly, we are not persuaded that the P100,000 advance payment to petitioner’s counsel was properly granted. We see no justification to pre-empt the judgment by the Court of Appeals concerning said amount of P100,000 at the time that the trial court’s judgment was already on appeal.In G.R. No. 133628, petitioner Aida Bañez contends that an action for legal separation is among the cases where multiple appeals may be taken. According to her, the filing of a record on appeal, pursuant to Section 2(a), Rule 41 of the Rules of Court,[13] is required in this case. She concludes that respondent’s appeal should have been dismissed for his failure to file the record on appeal within the reglementary period, as provided under Section 1-b, Rule 50 of the Rules of Court.[14]Petitioner likewise prays that, in the event that we do not dismiss Gabriel Bañez’ appeal, we should direct the appellate court to return the records of the case to the RTC of Cebu. Thereafter, according to her, respondent should file his record on appeal for approval and transmittal to the Court of Appeals. In the alternative, she prays that the appellate court retain only the pleadings and evidence necessary to resolve respondent’s appeal pursuant to Section 6, Rule 44[15] and Section 6, Rule 135[16] of the Rules of Court, and return the rest of the case records to the RTC.In turn, respondent argues that Section 39 of B.P. 129[17] expressly abolished the requirement of a record on appeal, except in appeals in special proceedings in accordance with Rule 109,[18] and other cases wherein multiple appeals are allowed. An action for legal separation, he avers, is neither a special proceeding nor one where multiple appeals are allowed.

Now, is an action for legal separation one where multiple appeals are allowed? We do not think so. In Roman Catholic Archbishop of Manila v. Court of Appeals, 258 SCRA 186, 194 (1996), this Court held:xxx Multiple appeals are allowed in special proceedings, in actions for recovery of property with accounting, in actions for partition of property with accounting, in the special civil actions of eminent domain and foreclosure of mortgage. The rationale behind allowing more than one appeal in the same case is to enable the rest of the case to proceed in the event that a separate and distinct issue is resolved by the court and held to be final.In said case, the two issues raised by therein petitioner that may allegedly be the subject of multiple appeals arose from the same cause of action, and the subject matter pertains to the same lessor-lessee relationship between the parties. Hence, splitting the appeals in that case would only be violative of the rule against multiplicity of appeals.The same holds true in an action for legal separation. The issues involved in the case will necessarily relate to the same marital relationship between the parties. The effects of legal separation, such as entitlement to live separately, dissolution and liquidation of the absolute community or conjugal partnership, and custody of the minor children, follow from the decree of legal separation.[19] They are not separate or distinct matters that may be resolved by the court and become final prior to or apart from the decree of legal separation. Rather, they are mere incidents of legal separation.[20] Thus, they may not be subject to multiple appeals.Petitioner’s alternative prayers that in case we do not dismiss the appeal, we return the records to the trial court and require respondent to file a record on appeal, or we return the records to the trial court and retain only the pleadings and orders relevant to the appeal, are untenable. If we grant the first, we are effectively saying that the instant case is one involving multiple appeals, which it is not. If we allow the second, we are effectively applying by analogy, Section 6, Rule 44 and Section 6, Rule 135 of the Rules of Court, without petitioner showing support therefor in law or jurisprudence.[21]WHEREFORE, the instant petitions are DENIED for lack of merit. The decision and resolution of the Court of Appeals in CA-G.R. SP No. 42663 and CA-G.R. No. CV-56265, respectively, are hereby AFFIRMED, so that the Order dated October 1, 1996, of the Regional Trial Court authorizing the release of P100,000 to petitioner’s counsel; the Omnibus Order dated November 22, 1996 granting the motion pending appeal; the writ of execution dated December 2, 1996; and the Order dated December 10, 1996 granting the motion by the sheriff to make symbolic delivery of the house and vehicle are SET ASIDE. Further, the Administrator of the conjugal partnership is ORDERED to cause the reimbursement by petitioner’s counsel of the released amount of P100,000. The Court of Appeals is hereby DIRECTED to give due course to respondent’s appeal, and the Division Clerk of Court of this Court is

4YUMI- CIVIL LAW 1

likewise DIRECTED to promptly remand the record of these cases to the Court of Appeals.Costs against petitioner.SO ORDERED.

Pacete vs. Carriaga GR# 53880 / MAR. 17, 1994 231 SCRA 321

ENRICO L. PACETE, CLARITA DE LA CONCEPCION, EMELDA C. PACETE, EVELINA C. PACETE and EDUARDO C. PACETE, petitioners, vs.HON. GLICERIO V. CARRIAGA, JR. and CONCEPCION (CONCHITA) ALANIS PACETE, respondents.

VITUG, J.:The issue in this petition for certiorari is whether or not the Court of First Instance (now Regional Trial Court) of Cotabato, Branch I, in Cotabato City, gravely abused its discretion in denying petitioners' motion for extension of time to file their answer in Civil Case No. 2518, in declaring petitioners in default and in rendering its decision of 17 March 1980 which, among other things, decreed the legal separation of petitioner Enrico L. Pacete and private respondent Concepcion Alanis and held to be null and void ab initio the marriage of Enrico L. Pacete to Clarita de la Concepcion.On 29 October 1979, Concepcion Alanis filed with the court below a complaint for the declaration of nullity of the marriage between her erstwhile husband Enrico L. Pacete and one Clarita de la Concepcion, as well as for legal separation (between Alanis and Pacete), accounting and separation of property. In her complaint, she averred that she was married to Pacete on 30 April 1938 before the Justice of the Peace of Cotabato, Cotabato; that they had a child named Consuelo who was born on 11 March 1943; that Pacete subsequently contracted (in 1948) a second marriage with Clarita de la Concepcion in Kidapawan, North Cotabato; that she learned of such marriage only on 01 August 1979; that during her marriage to Pacete, the latter acquired vast property consisting of large tracts of land, fishponds and several motor vehicles; that he fraudulently placed the several pieces of property either in his name and Clarita or in the names of his children with Clarita and other "dummies;" that Pacete ignored overtures for an amicable settlement; and that reconciliation between her and Pacete was impossible since he evidently preferred to continue living with Clarita.The defendants were each served with summons on 15 November 1979. They filed a motion for an extension of twenty (20) days from 30 November 1979 within which to file an answer. The court granted the motion. On 18 December 1979, appearing through a new counsel, the defendants filed a second motion for an extension of another thirty (30) days from 20 December 1979. On 07 January 1980, the lower

court granted the motion but only for twenty (20) days to be counted from 20 December 1979 or until 09 January 1980. The Order of the court was mailed to defendants' counsel on 11 January 1980. Likely still unaware of the court order, the defendants, on 05 February 1980, again filed another motion (dated 18 January 1980) for an extension of "fifteen (15) days counted from the expiration of the 30-day period previously sought" within which to file an answer. The following day, or on 06 February 1980, the court denied this last motion on the ground that it was "filed after the original period given . . . as first extension had expired."1The plaintiff thereupon filed a motion to declare the defendants in default, which the court forthwith granted. The plaintiff was then directed to present her evidence. 2 The court received plaintiff's evidence during the hearings held on 15, 20, 21 and 22 February 1980.On 17 March 1980, the court 3 promulgated the herein questioned decision, disposing of the case, thus —WHEREFORE, order is hereby issued ordering:1. The issuance of a Decree of Legal Separation of the marriage between, the plaintiff, Concepcion (Conchita) Alanis Pacete and the herein defendants, Enrico L. Pacete, in accordance with the Philippine laws and with consequences, as provided for by our laws;2. That the following properties are hereby declared as the conjugal properties of the partnership of the plaintiff, Concepcion (Conchita) Alanis Pacete and the defendant, Enrico L. Pacete, half and half, to wit:1. The parcel of land covered by TCT No. V-815 which is a parcel of land situated in the barrio of Langcong, Municipality of Matanog (previously of Parang), province of Maguindanao (previously of Cotabato province) with an area of 45,265 square meters registered in the name of Enrico Pacete, Filipino, of legal age, married to Conchita Alanis as shown in Exhibits "B" and "B-1" for the plaintiff.2. A parcel of land covered by Transfer Certificate of Title No. T-20442, with an area of 538 square meters and covered by Tax Declaration No. 2650 (74) in the name of Enrico Pacete, situated in the Poblacion of Kidapawan, North Cotabato, together with all its improvements, which parcel of land, as shown by Exhibits "K-1" was acquired by way of absolute deed of sale executed by Amrosio Mondog on January 14, 1965.3. A parcel of land covered by Transfer Certificate of Title No. T-20424 and covered by Tax Declaration No. 803 (74), with an area of 5.1670 hectares, more or less, as shown by Exhibit "R", the same was registered in the name of Enrico Pacete and the same was acquired by Enrico Pacete last February 17, 1967 from Ambag Ampoy, as shown by Exhibit "R-1", situated at Musan, Kidapawan, North Cotabato.4. A parcel of land situated at Lanao, Kidapawan, North Cotabato, with an area of 5.0567 hectares, covered by Tax Declaration No. 4332 (74), as shown by Exhibit "S", and registered in the name of Enrico Pacete.5. A parcel of land covered by Transfer Certificate of Title No. T-9750, situated at Lika, Mlang, North Cotabato, with an area of 4.9841 hectares and the same is

5YUMI- CIVIL LAW 1

covered by Tax Declaration No. 803 (74) and registered in the name of Enrico Pacete and which land was acquired by Enrico Pacete from Salvador Pacete on September 24, 1962, as shown by Exhibit "Q-1".6. A parcel of land covered by Transfer Certificate of Title No. T-9944, with an area of 9.9566 and also covered by Tax Declaration No. 8608 (74) and registered in the name of the defendant Enrico L. Pacete which Enrico L. Pacete acquired from Sancho Balingcos last October 22, 1962, as shown by Exhibit "L-1" and which parcel of land is situated at (Kialab), Kiab, Matalam, North Cotabato.7. A parcel of land covered by Transfer Certificate of Title No. T-9227, situated at Kiab, Matalam, North Cotabato, with an area of 12.04339 hectares, more or less, and also covered by Tax Declaration No. 8607 (74) both in the name of the defendant Enrico L. Pacete which he acquired last October 15, 1962 from Minda Bernardino, as shown by Exhibit "M-1".8. A parcel of land covered by Transfer Certificate of Title No. T-9228, situated at Kiab, Matalam, North Cotabato, with an area of 10.8908 hectares, registered in the name of Enrico Pacete and also covered by Tax Declaration No. 5781 (74) in the name of Enrico Pacete and which parcel of land he acquired last September 25, 1962 from Conchita dela Torre, as shown by Exhibit "P-1".9. A parcel of land covered by Transfer Certificate of Title No. T-10301, situated at Linao, Matalam, North Cotabato, with an area of 7.2547 hectares, registered in the name of Enrico Pacete and also covered by Tax Declaration No. 8716 (74) also in the name of Enrico Pacete which Enrico Pacete acquired from Agustin Bijo last July 16, 1963, as shown by Exhibit "N-1".10. A parcel of land covered by Transfer Certificate of Title No. 12728 in the name of the defendant, Enrico L. Pacete, with an area of 10.9006 hectares, situated at Linao, Matalam, North Cotabato and is also covered by Tax Declaration No. 5745 (74) in the name of Enrico Pacete, as shown on Exhibit "O" and which Enrico Pacete acquired last December 31, 1963 from Eliseo Pugni, as shown on Exhibit "0-1".3. Ordering the Cancellation of Original Certificate of Title No. P-34243 covering Lot No. 1066, issued in the name of Evelina Pacete, situated at Kiab, Matalam, North Cotabato, and ordering the registration of the same in the joint name of Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete as their conjugal property, with address on the part of Concepcion (Conchita) Alanis Pacete at Parang, Maguindanao and on the part of Enrico L. Pacete at Kidapawan, North Cotabato.4. Ordering likewise the cancellation of Original Certificate of Title No. V-20101, covering Lot No. 77, in the name of Eduardo C. Pacete, situated at New Lawaan, Mlang, North Cotabato, and the issuance of a new Transfer Certificate of Title in the joint name of (half and half) Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete.5. Ordering likewise the cancellation of Original Certificate of Title No. P-29890, covering Lot 1068, situated at Kiab, Matalam, North Cotabato, with an area of 12.1031 hectares, in the name of Emelda C. Pacete and the issuance of a new Transfer Certificate of Title in the joint name (half and half) of Concepcion (Conchita)

Alanis Pacete and Enrico L. Pacete; and declaring that the fishpond situated at Barrio Tumanan, Bislig, Surigao Del Sur, with an area of 48 hectares and covered by Fishpond Lease Agreement of Emelda C. Pacete, dated July 29, 1977 be cancelled and in lieu thereof, the joint name of Concepcion (Conchita) Alanis Pacete and her husband, Enrico L. Pacete, be registered as their joint property, including the 50 hectares fishpond situated in the same place, Barrio Timanan, Bislig, Surigao del Sur.6. Ordering the following motor vehicles to be the joint properties of the conjugal partnership of Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete, viz:a. Motor vehicle with Plate No. T-RG-783; Make, Dodge; Motor No. T137-20561; Chassis No. 83920393, and Type, Mcarrier;b. Motor vehicle with Plate No. T-RG-784; Make, Dodge; Motor No. T214-229547; Chassis No. 10D-1302-C; and Type, Mcarrier;c. Motor vehicle with Plate No. J-PR-818; Make, Ford; Motor No. GRW-116188; Chassis No. HOCC-GPW-1161-88-C; Type, Jeep;d. Motor vehicle with Plate No. TH-5J-583; Make, Ford: Motor No. F70MU5-11111; Chassis No. HOCC-GPW-1161188-G; Type, Stake;e. Motor vehicle with Plate No. TH-5J-584; Make, Hino; Motor No. ED300-45758; Chassis No. KB222-22044; Type, Stake; andf. Motor vehicle with Plate No. TH-5J-585; Make, Ford: Motor No. LTC-780-Dv; Chassis No. 10F-13582-K; Type, Stake.7. Ordering the defendant Enrico L. Pacete to pay the plaintiff the sum of P46,950.00 which is the share of the plaintiff in the unaccounted income of the ricemill and corn sheller for three years from 1971 to 1973.8. Ordering the defendant, Enrico L. Pacete, to reimburse the plaintiff the monetary equipment of 30% of whether the plaintiff has recovered as attorney's fees;9. Declaring the subsequent marriage between defendant Enrico L. Pacete and Clarita de la Concepcion to be void ab initio; and10. Ordering the defendants to pay the costs of this suit. 4Hence, the instant special civil action of certiorari.Under ordinary circumstances, the petition would have outrightly been dismissed, for, as also pointed out by private respondents, the proper remedy of petitioners should have instead been either to appeal from the judgment by default or to file a petition for relief from judgment. 5 This rule, however, is not inflexible; a petition for certiorari is allowed when the default order is improperly declared, or even when it is properly declared, where grave abuse of discretion attended such declaration. 6 In these exceptional instances, the special civil action of certiorari to declare the nullity of a judgment by default is available. 7 In the case at bench, the default order unquestionably is not legally sanctioned. The Civil Code provides:Art. 101. No decree of legal separation shall be promulgated upon a stipulation of facts or by confession of judgment.

6YUMI- CIVIL LAW 1

In case of non-appearance of the defendant, the court shall order the prosecuting attorney to inquire whether or not a collusion between the parties exists. If there is no collusion, the prosecuting attorney shall intervene for the State in order to take care that the evidence for the plaintiff is not fabricated.The provision has been taken from Article 30 of the California Civil Code, 8 and it is, in substance, reproduced in Article 60 of the Family Code. 9Article 101 reflects the public policy on marriages, and it should easily explain the mandatory tenor of the law. InBrown v. Yambao, 10 the Court has observed:The policy of Article 101 of the new Civil Code, calling for the intervention of the state attorneys in case of uncontested proceedings for legal separation (and of annulment of marriages, under Article 88), is to emphasize that marriage is more than a mere contract; that it is a social institution in which the state is vitally interested, so that its continuation or interruption can not be made to depend upon the parties themselves (Civil Code, Article 52; Adong vs. Cheong Gee, 43 Phil. 43; Ramirez v. Gmur, 42 Phil. 855; Goitia v. Campos, 35 Phil. 252). It is consonant with this policy that the inquiry by the Fiscal should be allowed to focus upon any relevant matter that may indicate whether the proceedings for separation or annulment are fully justified or not.Article 103 of the Civil Code, now Article 58 of the Family Code, further mandates that an action for legal separation must "in no case be tried before six months shall have elapsed since the filing of the petition," obviously in order to provide the parties a "cooling-off" period. In this interim, the court should take steps toward getting the parties to reconcile.The significance of the above substantive provisions of the law is further underscored by the inclusion of the following provision in Rule 18 of the Rules of Court:Sec. 6. No defaults in actions for annulments of marriage or for legal separation. — If the defendant in an action for annulment of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or not a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated.The special prescriptions on actions that can put the integrity of marriage to possible jeopardy are impelled by no less than the State's interest in the marriage relation and its avowed intention not to leave the matter within the exclusive domain and the vagaries of the parties to alone dictate.It is clear that the petitioner did, in fact, specifically pray for legal separation. 11 That other remedies, whether principal or incidental, have likewise been sought in the same action cannot dispense, nor excuse compliance, with any of the statutory requirements aforequoted.WHEREFORE, the petition for certiorari is hereby GRANTED and the proceedings below, including the Decision of 17 March 1980 appealed from, are NULLIFIED and SET ASIDE. No costs.SO ORDERED.Feliciano, Bidin, Romero and Melo, JJ., concur.

Articles 58, 60; See also Articles 101 & 103 NCCNo defaults in annulment/legal separation; AM 02-11-11

Sabalones vs. CA GR# 106169 / FEB. 14, 1994 230 SCRA 79

SAMSON T. SABALONES, petitioner, vs.THE COURT OF APPEALS and REMEDIOS GAVIOLA-SABALONES, respondents.

CRUZ, J.:The subject of this petition is the preliminary injunction issued by the respondent court pending resolution of a case on appeal. We deal only with this matter and not the merits of the case.As a member of our diplomatic service assigned to different countries during his successive tours of duties, petitioner Samson T. Sabalones left to his wife, herein respondent Remedios Gaviola-Sabalones, the administration of some of their conjugal, properties for fifteen years.Sabalones retired as ambassador in 1985 and came back to the Philippines but not to his wife and their children. Four years later, he filed an action for judicial authorization to sell a building and lot located at #17 Eisenhower St., Greenhills, San Juan, Metro Manila, belonging to the conjugal partnership. He claimed that he was sixty-eight years old, very sick and living alone without any income, and that his share of the proceeds of the sale to defray the prohibitive cost of his hospitalization and medical treatment.In her answer, the private respondent opposed the authorization and filed a counterclaim for legal separation. She alleged that the house in Greenhills was being occupied by her and their six children and that they were depending for their support on the rentals from another conjugal property, a building and lot in Forbes Park which was on lease to Nobumichi Izumi. She also informed the court that despite her husband's retirement, he had not returned to his legitimate family and was instead maintaining a separate residence in Don Antonio Heights, Fairview, Quezon City, with Thelma Cumareng and their three children.In her prayer, she asked the court to grant the decree of legal separation and order the liquidation of their conjugal properties, with forfeiture of her husband's share therein because of his adultery. She also prayed that it enjoin the petitioner and his agents from a) disturbing the occupants of the Forbes Park property and b) disposing of or encumbering any of the conjugal properties.After trial, Judge Mariano M. Umali, found that the petitioner had indeed contracted a bigamous marriage on October 5, 1981, with Thelma Cumareng, to whom he had returned upon his retirement in 1985 at a separate residence. The court thus decreed the legal separation of the spouses and the forfeiture of the petitioner's share in the

7YUMI- CIVIL LAW 1

conjugal properties, declaring as well that he was not entitled to support from his respondent wife. 1This decision was appealed to the respondent court. Pendente lite, the respondent wife filed a motion for the issuance of a writ of preliminary injunction to enjoin the petitioner from interfering with the administration of their properties in Greenhills and Forbes Park. She alleged inter alia that he had harassed the tenant of the Forbes Park property by informing him that his lease would not be renewed. She also complained that the petitioner had disposed of one of their valuable conjugal properties in the United States in favor of his paramour, to the prejudice of his legitimate wife and children.The petitioner opposed this motion and filed his own motion to prevent his wife from entering into a new contract of lease over the Forbes Park property with its present tenant, or with future tenants, without his consent.After hearing, the Court of Appeals, in an order dated April 7, 1992, granted the preliminary injunction prayed for by his wife. 2The petitioner now assails this order, arguing that since the law provides for a joint administration of the conjugal properties by the husband and wife, no injunctive relief can be issued against one or the other because no right will be violated. In support of this contention, he cites Art. 124 of the Family Code, reading 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 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 the administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or the authorization by the court before the offer is withdrawn by either or both offerors.He further notes that the respondent court failed to appoint an administrator of the conjugal assets as mandated by Art. 61 of the Code, thus:Art. 61 After the filing of the petition for legal separation, the spouses shall be entitled to live separately from each other.The court, in the absence of a written agreement between the spouses, shall designate either of them or a third person to administer the absolute community or conjugal partnership property. The administrator appointed by the court shall have the same powers and duties as those of a guardian under the Rules of Court.The Court has carefully considered the issues and the arguments of the parties and finds that the petition has no merit.We agree with the respondent court that pending the appointment of an administrator over the whole mass of conjugal assets, the respondent court was justified in

allowing the wife to continue with her administration. It was also correct, taking into account the evidence adduced at the hearing, in enjoining the petitioner from interfering with his wife's administration pending resolution of the appeal.The law does indeed grant to the spouses joint administration over the conjugal properties as clearly provided in the above-cited Article 124 of the Family Code. However, Article 61, also above quoted, states that after a petition for legal separation has been filed, the trial court shall, in the absence of a written agreement between the couple, appoint either one of the spouses or a third person to act as the administrator.While it is true that no formal designation of the administrator has been made, such designation was implicit in the decision of the trial court denying the petitioner any share in the conjugal properties (and thus also disqualifying him as administrator thereof). That designation was in effect approved by the Court of Appeals when it issued in favor of the respondent wife the preliminary injunction now under challenge.The primary purpose of the provisional remedy of injunction is to preserve the status quo of the things subject of the action or the relations between the parties and thus protect the rights of the plaintiff respecting these matters during the pendency of the suit. Otherwise, the defendant may, before final judgment, do or continue doing the act which the plaintiff asks the court to restrain and thus make ineffectual the final judgment that may be rendered afterwards in favor of the plaintiff. 3As observed by Francisco, "Injunction is primarily a preventive remedy. Its province is to afford relief against future acts which are against equity and good conscience and to keep and preserve the thing in the status quo, rather than to remedy what is past or to punish for wrongful acts already committed. It may issue to prevent future wrongs although no right has yet been violated." 4The Court notes that the wife has been administering the subject properties for almost nineteen years now, apparently without complaint on the part of the petitioner. He has not alleged, much less shown, that her administration has caused prejudice to the conjugal partnership. What he merely suggests is that the lease of the Forbes Park property could be renewed on better terms, or he should at least be given his share of the rentals.In her motion for the issuance of a preliminary injunction, the respondent wife alleged that the petitioner's harassment of their tenant at Forbes Park would jeopardize the lease and deprive her and her children of the income therefrom on which they depend for their subsistence. She also testified the numerous . . . including various dollar accounts, two houses in Quezon City and Cebu City, and a Mercedes Benz. The private respondent also complained that on June 10, 1991, the petitioner executed a quitclaim over their conjugal property in Apple Valley, San Bernardino, California, U.S.A., in favor of Thelma Cumareng, to improve his paramour's luxurious lifestyle to the prejudice of his legitimate family.These allegations, none of which was refuted by the husband, show that the injunction is necessary to protect the interests of the private respondent and her children and prevent the dissipation of the conjugal assets.

8YUMI- CIVIL LAW 1

The twin requirements of a valid injunction are the existence of a right and its actual or threatened violation. 5Regardless of the outcome of the appeal, it cannot be denied that as the petitioner's legitimate wife (and the complainant and injured spouse in the action for legal separation), the private respondent has a right to a share (if not the whole) of the conjugal estate. There is also, in our view, enough evidence to raise the apprehension that entrusting said estate to the petitioner may result in its improvident disposition to the detriment of his wife and children. We agree that inasmuch as the trial court had earlier declared the forfeiture of the petitioner's share in the conjugal properties, it would be prudent not to allow him in the meantime to participate in its management.Let it be stressed that the injunction has not permanently installed the respondent wife as the administrator of the whole mass of conjugal assets. It has merely allowed her to continue administering the properties in the meantime without interference from the petitioner, pending the express designation of the administrator in accordance with Article 61 of the Family Code.WHEREFORE, the petition is DENIED for lack of merit. It is so ordered.Davide, Jr., Bellosillo, Quiason and Kapunan, JJ, concur.

Article 61 (Administration issues pendente lite) See also, and compare with, Article 124

Ong v. Ong GR# 153206 / OCT. 23, 2006

ONG ENG KIAM a.k.a. WILLIAM ONG, petitioner, vs. LUCITA G. ONG, respondent.

Before this Court is a Petition for Review seeking the reversal of the Decision[1] of the Court of Appeals (CA) in CA G.R. CV No. 59400 which affirmed in toto the Decision of the Regional Trial Court (RTC) Branch 41, Dagupan City granting the petition for legal separation filed by herein respondent, as well as the Resolution[2] of the CA dated April 26, 2002 which denied petitioner’s motion for reconsideration. Ong Eng Kiam, also known as William Ong (William) and Lucita G. Ong (Lucita) were married on July 13, 1975 at the San Agustin Church in Manila. They have three children: Kingston, Charleston, and Princeton who are now all of the age of majority.[3] On March 21, 1996, Lucita filed a Complaint for Legal Separation under Article 55 par. (1) of the Family Code[4] before the Regional Trial Court (RTC) of Dagupan City, Branch 41 alleging that her life with William was marked by physical violence, threats, intimidation and grossly abusive conduct.[5]

Lucita claimed that: soon after three years of marriage, she and William quarreled almost every day, with physical violence being inflicted upon her; William would shout invectives at her like “putang ina mo”, “gago”, “tanga”, and he would slap her, kick her, pull her hair, bang her head against concrete wall and throw at her whatever he could reach with his hand; the causes of these fights were petty things regarding their children or their business; William would also scold and beat the children at different parts of their bodies using the buckle of his belt; whenever she tried to stop William from hitting the children, he would turn his ire on her and box her; on December 9, 1995, after she protested with William’s decision to allow their eldest son Kingston to go to Bacolod, William slapped her and said, “it is none of your business”; on December 14, 1995, she asked William to bring Kingston back fromBacolod; a violent quarrel ensued and William hit her on her head, left cheek, eye, stomach, and arms; when William hit her on the stomach and she bent down because of the pain, he hit her on the head then pointed a gun at her and asked her to leave the house; she then went to her sister’s house in Binondo where she was fetched by her other siblings and brought to their parents house inDagupan; the following day, she went to her parent’s doctor, Dr. Vicente Elinzano for treatment of her injuries.[6] William for his part denied that he ever inflicted physical harm on his wife, used insulting language against her, or whipped the children with the buckle of his belt. While he admits that he and Lucita quarreled on December 9, 1995, at their house in Jose AbadSantos Avenue, Tondo, Manila, he claimed that he left the same, stayed in their Greenhills condominium and only went back to theirTondo house to work in their office below. In the afternoon of December 14, 1995, their laundrywoman told him that Lucita left the house.[7]

On January 5, 1998, the RTC rendered its Decision decreeing legal separation, thus: WHEREFORE, premises considered, judgment is hereby rendered decreeing the legal separation of plaintiff and defendant, with all the legal effects attendant thereto, particularly the dissolution and liquidation of the conjugal partnership properties, for which purpose the parties are hereby ordered to submit a complete inventory of said properties so that the Court can make a just and proper division, such division to be embodied in a supplemental decision.SO ORDERED.[8] The RTC found that: It is indubitable that plaintiff (Lucita) and defendant (William) had their frequent quarrels and misunderstanding which made both of their lives miserable and hellish. This is even admitted by the defendant when he said that there was no day that he did not quarrel with his wife. Defendant had regarded the plaintiff negligent in the performance of her wifely duties and had blamed her for not reporting to him about the wrongdoings of their children. (citations omitted)

9YUMI- CIVIL LAW 1

These quarrels were always punctuated by acts of physical violence, threats and intimidation by the defendant against the plaintiff and on the children. In the process, insulting words and language were heaped upon her. The plaintiff suffered and endured the mental and physical anguish of these marital fights until December 14, 1995 when she had reached the limits of her endurance. The more than twenty years of her marriage could not have been put to waste by the plaintiff if the same had been lived in an atmosphere of love, harmony and peace. Worst, their children are also suffering. As very well stated in plaintiff’s memorandum, “it would be unthinkable for her to throw away this twenty years of relationship, abandon the comforts of her home and be separated from her children, whom she loves, if there exists no cause, which is already beyond her endurance.[9] William appealed to the CA which affirmed in toto the RTC decision. In its Decision dated October 8, 2001, the CA found that the testimonies for Lucita were straightforward and credible and the ground for legal separation under Art. 55, par. 1 of the Family Code, i.e., physical violence and grossly abusive conduct directed against Lucita, were adequately proven.[10] As the CA explained: The straightforward and candid testimonies of the witnesses were uncontroverted and credible. Dr. Elinzano’s testimony was able to show that the [Lucita] suffered several injuries inflicted by [William]. It is clear that on December 14, 1995, she sustained redness in her cheek, black eye on her left eye, fist blow on the stomach, blood clot and a blackish discoloration on both shoulders and a “bump” or “bukol” on her head. The presence of these injuries was established by the testimonies of [Lucita] herself and her sister, Linda Lim. The Memorandum/Medical Certificate also confirmed the evidence presented and does not deviate from the doctor’s main testimony --- that [Lucita] suffered physical violence on [sic] the hands of her husband, caused by physical trauma, slapping of the cheek, boxing and fist blows. The effect of the so-called alterations in the Memorandum/Medical Certificate questioned by [William] does not depart from the main thrust of the testimony of the said doctor. Also, the testimony of [Lucita] herself consistently and constantly established that [William] inflicted repeated physical violence upon her during their marriage and that she had been subjected to grossly abusive conduct when he constantly hurled invectives at her even in front of their customers and employees, shouting words like, “gaga”, “putang ina mo,” tanga,” and “you don’t know anything.” These were further corroborated by several incidents narrated by Linda Lim who lived in their conjugal home from 1989 to 1991. She saw her sister after the

December 14, 1995 incident when she (Lucita) was fetched by the latter on the same date. She was a witness to the kind of relationship her sister and [William] had during the three years she lived with them. She observed that [William] has an “explosive temper, easily gets angry and becomes very violent.” She cited several instances which proved that William Ong indeed treated her wife shabbily and despicably, in words and deeds.

That the physical violence and grossly abusive conduct were brought to bear upon [Lucita] by [William] have been duly established by [Lucita] and her witnesses. These incidents were not explained nor controverted by [William], except by making a general denial thereof. Consequently, as between an affirmative assertion and a general denial, weight must be accorded to the affirmative assertion. The grossly abusive conduct is also apparent in the instances testified to by [Lucita] and her sister. The injurious invectives hurled at [Lucita] and his treatment of her, in its entirety, in front of their employees and friends, are enough to constitute grossly abusive conduct. The aggregate behavior of [William] warrants legal separation under grossly abusive conduct. x x x[11] William filed a motion for reconsideration which was denied by the CA on April 26, 2002.[12] Hence the present petition where William claims that:I THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DISREGARDING CLEAR EVIDENCE THAT THE PETITION FOR LEGAL SEPARATION WAS INSTITUTED BY THE PRIVATE RESPONDENT FOR THE SOLE PURPOSE OF REMOVING FROM PETITIONER THE CONTROL AND OWNERSHIP OF THEIR CONJUGAL PROPERTIES AND TO TRANSFER THE SAME TO PRIVATE RESPONDENT’S FAMILY.

II

THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DISREGARDING CLEAR EVIDENCE REPUDIATING PRIVATE RESPONDENT’S CLAIM OF REPEATED PHYSICAL VIOLENCE AND GROSSLY ABUSIVE CONDUCT ON THE PART OF PETITIONER.[13] William argues that: the real motive of Lucita and her family in filing the case is to wrest control and ownership of properties belonging to the conjugal partnership; these properties, which include real properties in Hong Kong, Metro Manila, Baguio

10YUMI- CIVIL LAW 1

andDagupan, were acquired during the marriage through his (William’s) sole efforts; the only parties who will benefit from a decree of legal separation are Lucita’s parents and siblings while such decree would condemn him as a violent and cruel person, a wife-beater and child abuser, and will taint his reputation, especially among the Filipino-Chinese community; substantial facts and circumstances have been overlooked which warrant an exception to the general rule that factual findings of the trial court will not be disturbed on appeal; the findings of the trial court that he committed acts of repeated physical violence against Lucita and their children were not sufficiently established; what took place were disagreements regarding the manner of raising and disciplining the children particularly Charleston, Lucita’s favorite son; marriage being a social contract cannot be impaired by mere verbal disagreements and the complaining party must adduce clear and convincing evidence to justify legal separation; the CA erred in relying on the testimonies of Lucita and her witnesses, her sister Linda Lim, and their parent’s doctor, Dr. Vicente Elinzanzo, whose testimonies are tainted with relationship and fraud; in the 20 years of their marriage, Lucita has not complained of any cruel behavior on the part of William in relation to their marital and family life; William expressed his willingness to receive respondent unconditionally however, it is Lucitawho abandoned the conjugal dwelling on December 14, 1995 and instituted the complaint below in order to appropriate for herself and her relatives the conjugal properties; the Constitution provides that marriage is an inviolable social institution and shall be protected by the State, thus the rule is the preservation of the marital union and not its infringement; only for grounds enumerated in Art. 55 of the Family Code, which grounds should be clearly and convincingly proven, can the courts decree a legal separation among the spouses.[14] Respondent Lucita in her Comment, meanwhile, asserts that: the issues raised in the present petition are factual; the findings of both lower courts rest on strong and clear evidence borne by the records; this Court is not a trier of facts and factual findings of the RTC when confirmed by the CA are final and conclusive and may not be reviewed on appeal; the contention of William that Lucitafiled the case for legal separation in order to remove from William the control and ownership of their conjugal properties and to transfer the same to Lucita’s family is absurd; Lucita will not just throw her marriage of 20 years and forego the companionship of William and her children just to serve the interest of her family; Lucita left the conjugal home because of the repeated physical violence and grossly abusive conduct of petitioner.[15] Petitioner filed a Reply, reasserting his claims in his petition,[16] as well as a Memorandum where he averred for the first time that since respondent is guilty of abandonment, the petition for legal separation should be denied following Art. 56, par. (4) of the Family Code.[17] Petitioner argues that since respondent herself has given ground for legal separation by abandoning the family simply because of a

quarrel and refusing to return thereto unless the conjugal properties were placed in the administration of petitioner’s in-laws, no decree of legal separation should be issued in her favor.[18] Respondent likewise filed a Memorandum reiterating her earlier assertions.[19] We resolve to deny the petition. It is settled that questions of fact cannot be the subject of a petition for review under Rule 45 of the Rules of Court. The rule finds more stringent application where the CA upholds the findings of fact of the trial court. In such instance, this Court is generally bound to adopt the facts as determined by the lower courts.[20] The only instances when this Court reviews findings of fact are: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to that of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.[21] As petitioner failed to show that the instant case falls under any of the exceptional circumstances, the general rule applies. Indeed, this Court cannot review factual findings on appeal, especially when they are borne out by the records or are based on substantial evidence.[22] In this case, the findings of the RTC were affirmed by the CA and are adequately supported by the records. As correctly observed by the trial court, William himself admitted that there was no day that he did not quarrel with his wife, which made his life miserable, and he blames her for being negligent of her wifely duties and for not reporting to him the wrongdoings of their children.[23]

11YUMI- CIVIL LAW 1

Lucita and her sister, Linda Lim, also gave numerous accounts of the instances when William displayed violent temper againstLucita and their children; such as: when William threw a steel chair at Lucita;[24] threw chairs at their children;[25] slapped Lucitaand utter insulting words at her;[26] use the buckle of the belt in whipping the children;[27] pinned Lucita against the wall with his strong arms almost strangling her, and smashed the flower vase and brick rocks and moldings leaving the bedroom in disarray;[28]shouted at Lucita and threw a directory at her, in front of Linda and the employees of their business, because he could not find a draft letter on his table;[29] got mad at Charleston for cooking steak with vetchin prompting William to smash the plate with steak and hit Charleston, then slapped Lucita and shouted at her “putang ina mo, gago, wala kang pakialam, tarantado” when she sided with Charleston;[30] and the December 9 and December 14, 1995 incidents which forced Lucita to leave the conjugal dwelling.[31] Lucita also explained that the injuries she received on December 14, 1995, were not the first. As she related before the trial court: q. You stated on cross examination that the injuries you sustained on December 14, 1995 were the most serious? a. Unlike before I considered December 14, 1995 the very serious because before it is only on the arm and black eye, but on this December 14, I suffered bruises in all parts of my body, sir.[32] To these, all William and his witnesses, could offer are denials and attempts to downplay the said incidents.[33] As between the detailed accounts given for Lucita and the general denial for William, the Court gives more weight to those of the former. The Court also gives a great amount of consideration to the assessment of the trial court regarding the credibility of witnesses as trial court judges enjoy the unique opportunity of observing the deportment of witnesses on the stand, a vantage point denied appellate tribunals.[34] Indeed, it is settled that the assessment of the trial court of the credibility of witnesses is entitled to great respect and weight having had the opportunity to observe the conduct and demeanor of the witnesses while testifying.[35] In this case, the RTC noted that: [William]’s denial and that of his witnesses of the imputation of physical violence committed by him could not be given much credence by the Court. Since the office secretary Ofelia Rosal and the family laundrywoman Rosalino Morco are dependent upon defendant for their livelihood, their testimonies may be tainted with

bias and they could not be considered as impartial and credible witnesses. So with Kingston Ong who lives with defendant and depends upon him for support.[36] Parenthetically, William claims that that the witnesses of Lucita are not credible because of their relationship with her. We do not agree. Relationship alone is not reason enough to discredit and label a witness’s testimony as biased and unworthy of credence[37] and a witness’ relationship to one of the parties does not automatically affect the veracity of his or her testimony.[38] Considering the detailed and straightforward testimonies given by Linda Lim and Dr. Vicente Elinzano, bolstered by the credence accorded them by the trial court, the Court finds that their testimonies are not tainted with bias. William also posits that the real motive of Lucita in filing the case for legal separation is in order for her side of the family to gain control of the conjugal properties; that Lucita was willing to destroy his reputation by filing the legal separation case just so her parents and her siblings could control the properties he worked hard for. The Court finds such reasoning hard to believe. What benefit would Lucita personally gain by pushing for her parents’ and siblings’ financial interests at the expense of her marriage? What is more probable is that there truly exists a ground for legal separation, a cause so strong, that Lucita had to seek redress from the courts. As aptly stated by the RTC, ...it would be unthinkable for her to throw away this twenty years of relationship, abandon the comforts of her home and be separated from her children whom she loves, if there exists no cause, which is already beyond her endurance.[39] The claim of William that a decree of legal separation would taint his reputation and label him as a wife-beater and child-abuser also does not elicit sympathy from this Court. If there would be such a smear on his reputation then it would not be because ofLucita’s decision to seek relief from the courts, but because he gave Lucita reason to go to court in the first place. Also without merit is the argument of William that since Lucita has abandoned the family, a decree of legal separation should not be granted, following Art. 56, par. (4) of the Family Code which provides that legal separation shall be denied when both parties have given ground for legal separation. The abandonment referred to by the Family Code is abandonment without justifiable cause for more than one year. [40] As it was established that Lucita left William due to his abusive conduct, such does not constitute abandonment contemplated by the said provision. As a final note, we reiterate that our Constitution is committed to the policy of strengthening the family as a basic social institution.[41] The Constitution itself

12YUMI- CIVIL LAW 1

however does not establish the parameters of state protection to marriage and the family, as it remains the province of the legislature to define all legal aspects of marriage and prescribe the strategy and the modalities to protect it and put into operation the constitutional provisions that protect the same.[42] With the enactment of the Family Code, this has been accomplished as it defines marriage and the family, spells out the corresponding legal effects, imposes the limitations that affect married and family life, as well as prescribes the grounds for declaration of nullity and those for legal separation.[43] As Lucita has adequately proven the presence of a ground for legal separation, the Court has no reason but to affirm the findings of the RTC and the CA, and grant her the relief she is entitled to under the law.WHEREFORE, the petition is DENIED for lack of merit.Costs against petitioner.

SSS v. Aguas GR# 165546 / FEB. 27, 2006

SOCIAL SECURITY SYSTEM, Petitioner, vs.ROSANNA H. AGUAS, JANET H. AGUAS, and minor JEYLNN H. AGUAS, represented by her Legal Guardian, ROSANNA H. AGUAS, Respondents.

Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 66531 and its Resolution denying the motion for reconsideration thereof.

The antecedents are as follows:

Pablo Aguas, a member of the Social Security System (SSS) and a pensioner, died on December 8, 1996. Pablo’s surviving spouse, Rosanna H. Aguas, filed a claim with the SSS for death benefits on December 13, 1996. Rosanna indicated in her claim that Pablo was likewise survived by his minor child, Jeylnn, who was born on October 29, 1991.[2] Her claim for monthly pension was settled on February 13, 1997.[3] Sometime in April 1997, the SSS received a sworn letter[4] dated April 2, 1997 from Leticia Aguas-Macapinlac, Pablo’s sister, contesting Rosanna’s claim for death benefits. She alleged that Rosanna abandoned the family abode approximately more than six years before, and lived with another man on whom she has been dependent for support. She further averred that Pablo had no legal children with Rosanna, but that the latter had several children with a certain Romeo dela Peña. In support of her allegation, Leticia enclosed a notarized copy of the original birth certificate[5] of one Jefren H. dela Peña, showing that the latter was born onNovember 15, 1996 to Rosanna Y. Hernandez and Romeo C. dela Peña, and that the two were married on November 1, 1990.

As a result, the SSS suspended the payment of Rosanna and Jeylnn’s monthly pension in September 1997. It also conducted an investigation to verify Leticia’s allegations. In a Memorandum[6] dated November 18, 1997, the Social Security Officer who conducted the investigation reported that, based on an interview with Mariquita D. Dizon, Pablo’s first cousin and neighbor, and Jessie Gonzales (also a neighbor). She learned that the deceased had no legal children with Rosanna; Jenelyn[7] and Jefren were Rosanna’s children with one Romeo C. dela Peña; and Rosanna left the deceased six years before his death and lived with Romeo while she was still pregnant with Jenelyn, who was born on October 29, 1991. Mariquita also confirmed that Pablo was not capable of having a child as he was under treatment. On the basis of the report and an alleged confirmation by a certain Dr. Manuel Macapinlac that Pablo was infertile, the SSS denied Rosanna’s request to resume the payment of their pensions. She was advised to refund to the SSS within 30 days the amount of P10,350.00 representing the total death benefits released to her and Jenelyn from December 1996 to August 1997 atP1,150.00 per month.[8] Rosanna and Jeylnn, through counsel, requested for a reconsideration of the said decision.[9] However, in its Letter datedFebruary 6, 1998, the SSS denied the claim.[10] This prompted Rosanna and Jeylnn to file a claim/petition for the Restoration/Payment of Pensions with the Social Security Commission (SSC) on February 20, 1998.[11] Janet H. Aguas, who also claimed to be the child of the deceased and Rosanna, now joined them as claimant. The case was docketed as SSC Case No. 3-14769-98. The claimants appended to their petition, among others, photocopies of the following: (1) Pablo and Rosanna’s marriage certificate; (2) Janet’s certificate of live birth; (3) Jeylnn’s certificate of live birth; and (4) Pablo’s certificate of death. In its Answer, the SSS averred that, based on the sworn testimonies and documentary evidence showing the disqualification of the petitioners as primary beneficiaries, the claims were barren of factual and legal basis; as such, it was justified in denying their claims.[12] In their Position Paper, the claimants averred that Jeylnn was a legitimate child of Pablo as evidenced by her birth certificate bearing Pablo’s signature as Jeylnn’s father. They asserted that Rosanna never left Pablo and that they lived together as husband and wife under one roof. In support thereof, they attached a Joint Affidavit[13] executed by their neighbors, Vivencia Turla and Carmelita Yangu, where they declared that Rosanna and Pablo lived together as husband and wife until the

13YUMI- CIVIL LAW 1

latter’s death. In Janet’s birth certificate, which was registered in the Civil Registry of San Fernando, it appears that her father was Pablo and her mother was Rosanna. As to the alleged infertility of Pablo, the claimants averred that Dr. Macapinlac denied giving the opinion precisely because he was not an expert on such matters, and that he treated the deceased only for tuberculosis. The claimant likewise claimed that the information the SSS gathered from the doctor was privileged communication.[14] In compliance with the SSC’s order, the SSS secured Confirmation Reports[15] signed by clerks from the corresponding civil registers confirming (1) the fact of marriage between Pablo and Rosanna on December 4, 1977; (2) the fact of Jefren dela Peña’s birth on November 15, 1996; (3) the fact of Jeylnn’s birth on October 29, 1991; and (4) the fact of Pablo’s death on December 8, 1996. The SSC decided to set the case for hearing. It also directed the SSS to verify the authenticity of Pablo’s signature as appearing on Jeylnn’s birth certificate from his claim records, particularly his SSS Form E-1 and retirement benefit application.[16] The SSS complied with said directive and manifested to the SSC that, based on the laboratory analysis conducted, Pablo’s signature in the birth certificate was made by the same person who signed the member’s record and other similar documents submitted by Pablo.[17] The SSC then summoned Vivencia Turla, Carmelita Yangu and Leticia Aguas-Macapinlac for clarificatory questions with regard to their respective sworn affidavits.[18] Vivencia testified that she had known Pablo and Rosanna for more than 30 years already; the couple were married and lived in Macabacle, Dolores, San Fernando, Pampanga; she was a former neighbor of the spouses, but four years after their marriage, she (Vivencia) and her family moved to Sto. Niño Triangulo, San Fernando, Pampanga; she would often visit the two, especially during Christmas or fiestas; the spouses’ real child was Jeylnn; Janet was only an adopted child; the spouse later transferred residence, not far from their old house, and Janet, together with her husband and son, remained in the old house.[19] On the other hand, Carmelita testified that she had been a neighbor of Pablo and Rosanna for 15 years and that, up to the present, Rosanna and her children, Janet, Jeylnn and Jefren, were still her neighbors; Janet and Jeylnn were the children of Pablo and Rosanna but she did not know whose child Jefren is.[20] According to Leticia, Janet was not the real child of Pablo and Rosanna; she was just taken in by the spouses because for a long time they could not have children;[21] however, there were no legal papers on Janet’s adoption.[22] Later on, Rosanna got pregnant with Jeylnn; after the latter’s baptism, there was a commotion at the house because Romeo dela Peña was claiming that he was the father of the child and he got mad because the child was named after Pablo; the latter also got mad and even

attempted to shoot Rosanna; he drove them away from the house; since then, Pablo and Rosanna separated;[23] she knew about this because at that time their mother was sick, and she would often visit her at their ancestral home, where Pablo and Rosanna were also staying; Rosanna was no longer living in their ancestral home but Janet resided therein; she did not know where Rosanna was staying now but she knew that the latter and Romeo dela Peña were still living together.[24] Subsequently, Mariquita Dizon and Jessie Gonzales were also summoned for clarificatory questions.[25] During the hearing, Mariquita brought with her photocopies of two baptismal certificates: that of Jeylnn Aguas,[26] child of Pablo Aguas and Rosanna Hernandez born on October 29, 1991, and that of Jenelyn H. dela Peña,[27] child of Romeo dela Peña and Rosanna Hernandez, born on January 29, 1992. On March 14, 2001, the SSC rendered a decision denying the claims for lack of merit and ordering Rosanna to immediately refund to the SSS the amount of P10,350.00 erroneously paid to her and Jeylnn as primary beneficiaries of the deceased. The SSC likewise directed the SSS to pay the death benefit to qualified secondary beneficiaries of the deceased, and in their absence, to his legal heirs.[28] The SSC ruled that Rosanna was no longer qualified as primary beneficiary, it appearing that she had contracted marriage with Romeo dela Peña during the subsistence of her marriage to Pablo. The SSC based its conclusion on the birth certificate of Jefren dela Peña stating that his mother, Rosanna, and father, Romeo dela Peña, were married on November 1, 1990. The SSC declared that Rosanna had a child with Romeo dela Peña while she was still married to Pablo (as evidenced by the baptismal certificate ofJenelyn H. dela Peña showing that she was the child of Rosanna Hernandez and Romeo dela Peña and that she was born on January 29, 1992). The SSC concluded that Rosanna was no longer entitled to support from Pablo prior to his death because of her act of adultery. As for Jeylnn, the SSC ruled that, even if her birth certificate was signed by Pablo as her father, there was more compelling evidence that Jeylnn was not his legitimate child. The SSC deduced from the records that Jeylnn and Jenelyn was one and the same person and concluded, based on the latter’s baptismal certificate, that she was the daughter of Rosanna and Romeo dela Peña. It also gave credence to the testimonies of Leticia and Mariquita that Jeylnn was the child of Rosanna and Romeo dela Peña. As for Janet, the SSC relied on Leticia’s declaration that she was only adopted by Pablo and Rosanna.[29] The claimants filed a motion for reconsideration of the said decision but their motion was denied by the SSC for lack of merit and for having been filed out of time. [30] The claimants then elevated the case to the CA via a petition for review under Rule 43 of the Rules of Court.

14YUMI- CIVIL LAW 1

On September 9, 2003, the CA rendered a decision in favor of petitioners. The fallo of the decision reads: WHEREFORE, the resolution and order appealed from are hereby REVERSED and SET ASIDE, and a new one is enteredDECLARING petitioners as ENTITLED to the SSS benefits accruing from the death of Pablo Aguas. The case is hereby REMANDED to public respondent for purposes of computing the benefits that may have accrued in favor of petitioners after the same was cut and suspended in September 1997.SO ORDERED.[31] In so ruling, the CA relied on the birth certificates of Janet and Jeylnn showing that they were the children of the deceased. According to the appellate court, for judicial purposes, these records were binding upon the parties, including the SSS. These entries made in public documents may only be challenged through adversarial proceedings in courts of law, and may not be altered by mere testimonies of witnesses to the contrary. As for Rosanna, the CA found no evidence to show that she ceased to receive support from Pablo before he died. Rosanna’s alleged affair with Romeo dela Peña was not properly proven. In any case, even if Rosanna married Romeo dela Peña during her marriage to Pablo, the same would have been a void marriage; it would not have ipso facto made her not dependent for support upon Pablo and negate the presumption that, as the surviving spouse, she is entitled to support from her husband.[32] The SSS filed a motion for reconsideration of the decision, which the CA denied for lack of merit.[33] Hence, this petition. Petitioner seeks a reversal of the decision of the appellate court, contending that it

IGRAVELY ERRED IN HOLDING THAT ROSANNA AGUAS IS ACTUALLY DEPENDENT FOR SUPPORT UPON THE MEMBER DURING HIS LIFETIME TO QUALIFY AS PRIMARY BENEFICIARY WITHIN THE INTENDMENT OF SECTION 8(e), IN RELATION TO SECTION (k) OF THE SSS LAW, AS AMENDED.

IIERRED IN HOLDING THAT JANET AGUAS AND JEYLNN AGUAS ARE ENTITLED TO THE PENSION BENEFIT ACCRUING FROM THE DEATH OF PABLO AGUAS.[34] Petitioner invokes Section 8 of Republic Act No. 1161, as amended by Presidential Decree No. 735, which defines adependent spouse as “the legitimate spouse dependent for support upon the employee.” According to petitioner, Rosanna

forfeited her right to be supported by Pablo when she engaged in an intimate and illicit relationship with Romeo dela Peña and married the latter during her marriage to Pablo. Such act constitutes abandonment, which divested her of the right to receive support from her husband. It asserts that her act of adultery is evident from the birth certificate of Jefren H. dela Peña showing that he was born onNovember 15, 1996 to Rosanna and Romeo dela Peña. Petitioner submits that Rosanna cannot be considered as a dependent spouse of Pablo; consequently, she is not a primary beneficiary.[35] As for Janet and Jeylnn, petitioner maintains that they are not entitled to the pension because, based on the evidence on record, particularly the testimonies of the witnesses, they are not the legitimate children of Pablo. It argues that, in the exercise of its quasi-judicial authority under Section 5(a) of the Social Security Act, the SSC can pass upon the legitimacy of respondents’ relationship with the member to determine whether they are entitled to the benefits, even without correcting their birth certificates.[36] Respondents, for their part, assert that petitioner failed to prove that Rosanna committed acts of adultery or that she married another man after the death of her husband. They contend that Janet and Jeylnn’s legitimacy may be impugned only on the grounds stated in Article 166 of the Family Code, none of which were proven in this case.[37] The issue to be resolved in this case is whether Rosanna, Jeylnn and Janet are entitled to the SSS death benefits accruing from the death of Pablo. The petition is partly meritorious. The general rule is that only questions of law may be raised by the parties and passed upon by the Court in petitions for review under Rule 45 of the Rules of Court.[38] In an appeal via certiorari, the Court may not review the factual findings of the CA.[39] It is not the Court’s function under Rule 45 to review, examine, and evaluate or weigh the probative value of the evidence presented.[40] However, the Court may review findings of facts in some instances, such as, when the judgment is based on a misapprehension of facts, when the findings of the CA are contrary to those of the trial court or quasi-judicial agency, or when the findings of facts of the CA are premised on the absence of evidence and are contradicted by the evidence on record.[41] The Court finds these instances present in this case. At the time of Pablo’s death, the prevailing law was Republic Act No. 1161, as amended by Presidential Decree No. 735. Section 13 of the law enumerates those who are entitled to death benefits:

15YUMI- CIVIL LAW 1

Sec.13. Death benefits. – Effective July 1, 1975, upon the covered employee’s death, (a) his primary beneficiaries shall be entitled to the basic monthly pension, and his dependents to the dependent’s pension: Provided, That he has paid at least thirty-six monthly contributions prior to the semester of death: Provided, further, That if the foregoing condition is not satisfied, or if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to thirty times the basic monthly pension: Provided, however, That the death benefit shall not be less than the total contributions paid by him and his employer on his behalf nor less than five hundred pesos: Provided, finally, That the covered employee who dies in the month of coverage shall be entitled to the minimum benefit. Section 8(k) and (e), in turn, defines dependents and primary beneficiaries of an SSS member as follows: SECTION 8. Terms defined. – For the purposes of this Act the following terms shall, unless the context indicates otherwise, have the following meanings: x x x x (e) Dependent. – The legitimate, legitimated, or legally adopted child who is unmarried, not gainfully employed, and not over twenty-one years of age provided that he is congenitally incapacitated and incapable of self-support physically or mentally; the legitimate spouse dependent for support upon the employee; and the legitimate parents wholly dependent upon the covered employee for regular support. x x x x

(k) Beneficiaries. – The dependent spouse until he remarries and dependent children, who shall be the primary beneficiaries. In their absence, the dependent parents and, subject to the restrictions imposed on dependent children, the legitimate descendants and illegitimate children who shall be the secondary beneficiaries. In the absence of any of the foregoing, any other person designated by the covered employee as secondary beneficiary. Whoever claims entitlement to such benefits should establish his or her right thereto by substantial evidence. Substantial evidence, the quantum of evidence required to establish a fact in cases before administrative or quasi-judicial bodies, is that level of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[42]

The Court has reviewed the records of the case and finds that only Jeylnn has sufficiently established her right to a monthly pension. Jeylnn’s claim is justified by the photocopy of her birth certificate which bears the signature of Pablo. Petitioner was able to authenticate the certification from the Civil Registry showing that she was born on October 29, 1991. The records also show that Rosanna and Pablo were married on December 4, 1977 and the marriage subsisted until the latter’s death on December 8, 1996. It is therefore evident that Jeylnn was born during Rosanna and Pablo’s marriage. It bears stressing that under Article 164 of the Family Code, children conceived or born during the marriage of the parents are legitimate. This Court, in De Jesus v. Estate of Decedent Juan Gamboa Dizon,[43] extensively discussed this presumption – There is perhaps no presumption of the law more firmly established and founded on sounder morality and more convincing reason than the presumption that children born in wedlock are legitimate. This presumption indeed becomes conclusive in the absence of proof that there is physical impossibility of access between the spouses during the first 120 days of the 300 days which immediately precedes the birth of the child due to (a) the physical incapacity of the husband to have sexual intercourse with his wife; (b) the fact that the husband and wife are living separately in such way that sexual intercourse is not possible; or (c) serious illness of the husband, which absolutely prevents sexual intercourse. Quite remarkably, upon the expiration of the periods set forth in Article 170,[44] and in proper cases Article 171,[45] of the Family Code (which took effect on 03 August 1988), the action to impugn the legitimacy of the child would no longer be legally feasible and the status conferred by the presumption becomes fixed and unassailable.[46] Indeed, impugning the legitimacy of a child is a strictly personal right of the husband or, in exceptional cases, his heirs.[47] In this case, there is no showing that Pablo challenged the legitimacy of Jeylnn during his lifetime. Hence, Jeylnn’s status as a legitimate child of Pablo can no longer be contested. The presumption that Jeylnn is a legitimate child is buttressed by her birth certificate bearing Pablo’s signature, which was verified from his specimen signature on file with petitioner. A birth certificate signed by the father is a competent evidence of paternity.[48] The presumption of legitimacy under Article 164, however, can not extend to Janet because her date of birth was not substantially proven. Such presumption may be availed only upon convincing proof of the factual basis therefor, i.e., that the child’s parents were legally married and that his/her conception or birth occurred during the

16YUMI- CIVIL LAW 1

subsistence of that marriage.[49] It should be noted that respondents likewise submitted a photocopy of Janet’s alleged birth certificate. However, the Court cannot give said birth certificate the same probative weight as Jeylnn’s because it was not verified in any way by the civil register. It stands as a mere photocopy, without probative weight. Unlike Jeylnn, there was no confirmation by the civil register of the fact of Janet’s birth on the date stated in the certificate. In any case, a record of birth is merely prima facie evidence of the facts contained therein.[50] Here, the witnesses were unanimous in saying that Janet was not the real child but merely adopted by Rosanna and Pablo. Leticia also testified that Janet’s adoption did not undergo any legal proceedings; hence, there were no papers to prove it. Under Section 8(e) of Republic Act No. 1161, as amended, only “legally adopted” children are considered dependent children. Absent any proof that the family has legally adopted Janet, the Court cannot consider her a dependent child of Pablo, hence, not a primary beneficiary. On the claims of Rosanna, it bears stressing that for her to qualify as a primary beneficiary, she must prove that she was “the legitimate spouse dependent for support from the employee.” The claimant-spouse must therefore establish two qualifying factors: (1) that she is the legitimate spouse, and (2) that she is dependent upon the member for support. In this case, Rosanna presented proof to show that she is the legitimate spouse of Pablo, that is, a copy of their marriage certificate which was verified with the civil register by petitioner. But whether or not Rosanna has sufficiently established that she was still dependent on Pablo at the time of his death remains to be resolved. Indeed, a husband and wife are obliged to support each other,[51] but whether one is actually dependent for support upon the other is something that has to be shown; it cannot be presumed from the fact of marriage alone. In a parallel case[52] involving a claim for benefits under the GSIS law, the Court defined a dependent as “one who derives his or her main support from another. Meaning, relying on, or subject to, someone else for support; not able to exist or sustain oneself, or to perform anything without the will, power, or aid of someone else.” It should be noted that the GSIS law likewise defines a dependent spouse as “the legitimate spouse dependent forsupport upon the member or pensioner.” In that case, the Court found it obvious that a wife who abandoned the family for more than 17 years until her husband died, and lived with other men, was not dependent on her husband for support, financial or otherwise, during that entire period. Hence, the Court denied her claim for death benefits. The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be said to be “dependent for support” upon the husband, absent any

showing to the contrary. Conversely, if it is proved that the husband and wife were still living together at the time of his death, it would be safe to presume that she was dependent on the husband for support, unless it is shown that she is capable of providing for herself. Rosanna had the burden to prove that all the statutory requirements have been complied with, particularly her dependency on her husband for support at the time of his death. Aside from her own testimony, the only evidence adduced by Rosanna to prove that she and Pablo lived together as husband and wife until his death were the affidavits of Vivencia Turla and Carmelita Yangu where they made such declaration. Still, the affidavits of Vivencia and Carmelita and their testimonies before the SSC will not prevail over the categorical and straightforward testimonies of the other witnesses who testified that Rosanna and Pablo had already separated for almost six years before the latter died. Except for the bare assertion of Carmelita that the couple never separated, there was no further statement regarding the witnesses’ assertion in their affidavits that the couple lived together until Pablo’s death. On the contrary, Leticia narrated that the two separated after Jeylnn’s baptism as a result of an argument regarding Romeo dela Peña. According to Leticia, there was a commotion at their ancestral house because Romeo dela Peña was grumbling why Jeylnn was named after Pablo when he was the father, and as a result, Pablo drove them away. The SSC’s observation and conclusion on the two baptismal certificates of Jeylnn and Jenelyn convinces this Court to further believe Leticia’s testimony on why Pablo and Rosanna separated. As noted by the SSC: It appears from the records that Jeylnn Aguas and Jenelyn H. dela Peña are one and the same person. Jeylnn Aguas, born on October 29, 1991 was baptized at the Metropolitan Cathedral of San Fernando, Pampanga, on November 24, 1991 as the child of Pablo Aguas and Rosanna Hernandez. Jenelyn H dela Peña, on the other hand, was born on January 29, 1992 to spouses Rosanna Hernandez and Romeo dela Peña and baptized on February 9, 1992. It will be noted that Jenelyn dela Peña was born approximately three months after the birth of Jeylnn Aguas. It is physically impossible for Rosanna to have given birth successively to two children in so short a time. x x x The testimony of Leticia Aguas-Macapinlac that Rosanna was driven away by Pablo after the baptism of Jeylnn because of the commotion that was created by Romeo dela Peña who wanted Jeylnn to be baptized using his name explains why Jeylnn was again baptized in the Parish of Sto. Niño in San Fernando using the name Jenelyn dela Peña. They changed her date of birth also to make it appear in the record of the parish that she is another child of Rosanna.[53] On the other hand, Mariquita categorically affirmed that Rosanna was no longer living at Pablo’s house even before he died, and that she is still living with Romeo dela Peña up to the present. Mariquita testified as follows:

17YUMI- CIVIL LAW 1

Hearing Officer: Nagsama ba si Rosanna at Romeo?Mrs. Dizon:Ngayon at kahit na noon. Hearing Officer: Kailan namatay si Pablo?Mrs. Dizon: 1996.Hearing Officer: Noong bago mamatay si Pablo?Mrs. Dizon:Nagsasama na sila Romeo at Rosanna noon. Hearing Officer:So, buhay pa si Pablo ……Mrs. Dizon …. nagsasama na sila ni Romeo. Hearing Officer: Kailan nagkahiwalay si Romeo at Rosanna?Mrs. Dizon: Hindi na sila nagkahiwalay. Hearing Officer: Hindi, ibig ko sabihin si Pablo at Rosana?Mrs. Dizon: Hindi ko alam kasi hindi ako madalas pumunta sa kanila eh, dahil namatay na yung nanay ni Kuya Pabling, yung tiyahin ko, kapatid ng nanay ko.Noon madalas ako noong buhay pa yung nanay ni Kuya Pabling dahil kami ang nag aalaga sa kanya. Hearing Officer: Bago namatay si Pablo, nagsasama ba sina Romeo at Rosanna?Mrs. Dizon: Oo. Hearing Officer: Sa ngayon, may alam ka pa ba kung nagsasama pa sila Romeo at Rosanna?Mrs. Dizon: Oo, nagsasama sila, may bahay sila. Hearing Officer: Saan naman?Mrs. Dizon: Doon sa malapit sa amin sa may riles ng tren.[54] In conclusion, the Court finds that, among respondents, only Jeylnn is entitled to the SSS death benefits accruing from the death of Pablo, as it was established that she is his legitimate child. On the other hand, the records show that Janet was merely “adopted” by the spouses, but there are no legal papers to prove it; hence, she

cannot qualify as a primary beneficiary. Finally, while Rosanna was the legitimate wife of Pablo, she is likewise not qualified as a primary beneficiary since she failed to present any proof to show that at the time of his death, she was still dependent on him for support even if they were already living separately. IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals are AFFIRMED WITH MODIFICATION. Only Jeylnn H. Aguas is declared entitled to the SSS death benefits accruing from the death of Pablo Aguas. SO ORDERED.

Title III. RIGHTS AND OBLIGATIONS BETWEEN HUSBAND & WIFE(Articles 68-73)

See also Articles 220, 221 and 225; RA 9262 & IRR; Article 50 NCC;Different kinds of domicile; Article 69; See also Article 110 NCC; Habeas Corpus;Rule 102, Rules of Court; Article 73 FC v Article 117 NCC

Van Dorn vs. Romillo, Jr., No. L-68470 / OCT. 08, 1985 139 SCRA 13

ALICE REYES VAN DORN, petitioner, vs.HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of the National Capital Region Pasay City and RICHARD UPTON respondents.

 

MELENCIO-HERRERA, J.:\

In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which denied her Motion to Dismiss said case, and her Motion for Reconsideration of the Dismissal Order, respectively.

The basic background facts are that petitioner is a citizen of the Philippines while private respondent is a citizen of the United States; that they were married in Hongkong in 1972; that, after the marriage, they established their residence in the Philippines; that they begot two children born on April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada, United States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn.

Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be ordered to render an accounting of that business, and that private respondent be declared with right to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause

18YUMI- CIVIL LAW 1

of action is barred by previous judgment in the divorce proceedings before the Nevada Court wherein respondent had acknowledged that he and petitioner had "no community property" as of June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the ground that the property involved is located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is now the subject of this certiorari proceeding.

Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to appeal. certiorari and Prohibition are neither the remedies to question the propriety of an interlocutory order of the trial Court. However, when a grave abuse of discretion was patently committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in a certiorari proceeding to exercise its supervisory authority and to correct the error committed which, in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it would be useless and a waste of time to go ahead with the proceedings. 2 Weconsider the petition filed in this case within the exception, and we have given it due course.

For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in the Philippines.

Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property because of the representation he made in the divorce proceedings before the American Court that they had no community of property; that the Galleon Shop was not established through conjugal funds, and that respondent's claim is barred by prior judgment.

For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail over the prohibitive laws of the Philippines and its declared national policy; that the acts and declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest Philippine Courts of jurisdiction to entertain matters within its jurisdiction.

For the resolution of this case, it is not necessary to determine whether the property relations between petitioner and private respondent, after their marriage, were upon absolute or relative community property, upon complete separation of property, or upon any other regime. The pivotal fact in this case is the Nevada divorce of the parties.

The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who appeared in person before the Court during the trial of the case. It also obtained jurisdiction over private respondent who, giving his address as No. 381 Bush Street, San Francisco, California, authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the ground of incompatibility in the understanding that there were neither community property nor community obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce proceedings:

xxx xxx xxx

You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and do an things necessary and

proper to represent me, without further contesting, subject to the following:

1. That my spouse seeks a divorce on the ground of incompatibility.

2. That there is no community of property to be adjudicated by the Court.

3. 'I'hat there are no community obligations to be adjudicated by the court.

xxx xxx xxx 4

There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. What he is contending in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to local law and public policy.

It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public police and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. 6 In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton vs. Atherton , 45 L. Ed. 794, 799:

The purpose and effect of a decree of divorce from the bond of matrimony by a court of competent jurisdiction are to change the existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a penalty. that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former marriage.

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country's Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property.

To maintain, as private respondent does, that, under our laws, petitioner has to be considered still married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her heirs with possible

19YUMI- CIVIL LAW 1

rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served.

WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the Complaint filed in Civil Case No. 1075-P of his Court.

Without costs.

SO ORDERED.

Pilapil v. Ibay-Somera GR# 80116 / JUNE 30, 1989

G.R. No. 80116 June 30, 1989

IMELDA MANALAYSAY PILAPIL, petitioner, vs.HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila; and ERICH EKKEHARD GEILING, respondents.

 

REGALADO, J.:

An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to be followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to lay down a decisional rule on what hitherto appears to be an unresolved jurisdictional question.

On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of Births, Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started auspiciously enough, and the couple lived together for some time in Malate, Manila where their only child, Isabella Pilapil Geiling, was born on April 20, 1980. 1

Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a separation de facto between them.

After about three and a half years of marriage, such connubial disharmony eventuated in private respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg Local Court in January, 1983. He claimed that there was failure of their marriage and that they had been living apart since April, 1982. 2

Petitioner, on the other hand, filed an action for legal separation, support and separation of property before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still pending as Civil Case No. 83-15866. 3

On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany, promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of the child was granted to petitioner. The records show

that under German law said court was locally and internationally competent for the divorce proceeding and that the dissolution of said marriage was legally founded on and authorized by the applicable law of that foreign jurisdiction. 4

On June 27, 1986, or more than five months after the issuance of the divorce decree, private respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while still married to said respondent, petitioner "had an affair with a certain William Chia as early as 1982 and with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal approved a resolution, dated January 8, 1986, directing the filing of two complaints for adultery against the petitioner. 6 The complaints were accordingly filed and were eventually raffled to two branches of the Regional Trial Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil and William Chia",  docketed as Criminal Case No. 87-52435, was assigned to Branch XXVI presided by the respondent judge; while the other case, "People of the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the same court. 7

On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the respondent city fiscal to inform the Department of Justice "if the accused have already been arraigned and if not yet arraigned, to move to defer further proceedings" and to elevate the entire records of both cases to his office for review. 9

Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in Criminal Case No. 87-52434. On the other hand, respondent judge merely reset the date of the arraignment in Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date, petitioner moved for the cancellation of the arraignment and for the suspension of proceedings in said Criminal Case No. 87-52435 until after the resolution of the petition for review then pending before the Secretary of Justice. 11 A motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which motion was denied by the respondent judge in an order dated September 8, 1987. The same order also directed the arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a plea of not guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being considered by respondent judge as direct contempt, she and her counsel were fined and the former was ordered detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of not guilty. 14

On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a prayer for a temporary restraining order, seeking the annulment of the order of the lower court denying her motion to quash. The petition is anchored on the main ground that the court is without jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be prosecuted de officio (sic), since

20YUMI- CIVIL LAW 1

the purported complainant, a foreigner, does not qualify as an offended spouse having obtained a final divorce decree under his national law prior to his filing the criminal complaint." 15

On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoñez acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a resolution directing the respondent city fiscal to move for the dismissal of the complaints against the petitioner. 16

We find this petition meritorious. The writs prayed for shall accordingly issue.

Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has long since been established, with unwavering consistency, that compliance with this rule is a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written complaint is just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and without which the court cannot exercise its jurisdiction to try the case.

Now, the law specifically provides that in prosecutions for adultery and concubinage the person who can legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of the crimes of adultery and concubinage by the parents, grandparents or guardian of the offended party. The so-called exclusive and successive rule in the prosecution of the first four offenses above mentioned do not apply to adultery and concubinage. It is significant that while the State, as parens patriae, was added and vested by the 1985 Rules of Criminal Procedure with the power to initiate the criminal action for a deceased or incapacitated victim in the aforesaid offenses of seduction, abduction, rape and acts of lasciviousness, in default of her parents, grandparents or guardian, such amendment did not include the crimes of adultery and concubinage. In other words, only the offended spouse, and no other, is authorized by law to initiate the action therefor.

Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily follows that such initiator must have the status, capacity or legal representation to do so at the time of the filing of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of the complaint or petition.

The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that the same requirement and rationale would not apply. Understandably, it may not have been found necessary since criminal actions are generally and fundamentally commenced by the State, through the People of the Philippines, the offended party being merely the complaining witness therein. However, in the so-called "private crimes" or those which cannot be prosecuted de oficio, and the

present prosecution for adultery is of such genre, the offended spouse assumes a more predominant role since the right to commence the action, or to refrain therefrom, is a matter exclusively within his power and option.

This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence since the raison d'etre of said provision of law would be absent where the supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21

In these cases, therefore, it is indispensable that the status and capacity of the complainant to commence the action be definitely established and, as already demonstrated, such status or capacity must indubitably exist as of the time he initiates the action. It would be absurd if his capacity to bring the action would be determined by his status before or subsequent to the commencement thereof, where such capacity or status existed prior to but ceased before, or was acquired subsequent to but did not exist at the time of, the institution of the case. We would thereby have the anomalous spectacle of a party bringing suit at the very time when he is without the legal capacity to do so.

To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as to when precisely the status of a complainant as an offended spouse must exist where a criminal prosecution can be commenced only by one who in law can be categorized as possessed of such status. Stated differently and with reference to the present case, the inquiry ;would be whether it is necessary in the commencement of a criminal action for adultery that the marital bonds between the complainant and the accused be unsevered and existing at the time of the institution of the action by the former against the latter.

American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with ours, yields the rule that after a divorce has been decreed, the innocent spouse no longer has the right to institute proceedings against the offenders where the statute provides that the innocent spouse shall have the exclusive right to institute a prosecution for adultery. Where, however, proceedings have been properly commenced, a divorce subsequently granted can have no legal effect on the prosecution of the criminal proceedings to a conclusion. 22

In the cited Loftus case, the Supreme Court of Iowa held that —

'No prosecution for adultery can be commenced except on the complaint of the husband or wife.' Section 4932, Code. Though Loftus was husband of defendant when the offense is said to have been committed, he had ceased to be such when the prosecution was begun; and appellant insists that his status was not such as to entitle him to make the complaint. We have repeatedly said that the offense is against the unoffending spouse, as well as the state, in explaining the reason for this provision in the statute; and we are of the opinion that the unoffending spouse must be such when the prosecution is commenced. (Emphasis supplied.)

21YUMI- CIVIL LAW 1

We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction, considering our statutory law and jural policy on the matter. We are convinced that in cases of such nature, the status of the complainant vis-a-vis the accused must be determined as of the time the complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse, and by this is meant that he is still married to the accused spouse, at the time of the filing of the complaint.

In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines insofar as private respondent is concerned 23 in view of the nationality principle in our civil law on the matter of status of persons.

Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a trial court here alleging that her business concern was conjugal property and praying that she be ordered to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his pretensions, this Court perspicuously demonstrated the error of such stance, thus:

There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. ...

It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. ...

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. ...25

Under the same considerations and rationale, private respondent, being no longer the husband of petitioner, had no legal standing to commence the adultery case under the imposture that he was the offended spouse at the time he filed suit.

The allegation of private respondent that he could not have brought this case before the decree of divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case. When said respondent initiated the divorce proceeding, he obviously knew that there would no longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed. Neither would there be a danger of introducing spurious heirs into the family, which is said to be one of the reasons for the particular formulation of our law on adultery, 26 since there would thenceforth be no spousal relationship to speak of. The severance of the marital bond had the effect

of dissociating the former spouses from each other, hence the actuations of one would not affect or cast obloquy on the other.

The aforecited case of United States vs. Mata cannot be successfully relied upon by private respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal Code, which punished adultery "although the marriage be afterwards declared void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her marital vows, even though it should be made to appear that she is entitled to have her marriage contract declared null and void, until and unless she actually secures a formal judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the complaint can still be filed after the declaration of nullity because such declaration that the marriage is void ab initio is equivalent to stating that it never existed. There being no marriage from the beginning, any complaint for adultery filed after said declaration of nullity would no longer have a leg to stand on. Moreover, what was consequently contemplated and within the purview of the decision in said case is the situation where the criminal action for adultery was filed before the termination of the marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would necessarily apply where the termination of the marriage was effected, as in this case, by a valid foreign divorce.

Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer the same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein had duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency but which was resolved in favor of the complainant. Said case did not involve a factual situation akin to the one at bar or any issue determinative of the controversy herein.

WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and another one enteredDISMISSING the complaint in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby made permanent.

SO ORDERED.

Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

Limbona v. Comelec GR# 181097 / JUNE 25, 2008 555 SCRA 391

NORLAINIE MITMUG LIMBONA, PETITIONER, VS. COMMISSION ON ELECTIONS AND MALIK "BOBBY" T. ALINGAN, RESPONDENTS.

 YNARES-SANTIAGO, J.:            This petition for certiorari with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction seeks to reverse and nullify the September 4, 2007 Resolution[1] of the Commission on Elections (Comelec) in SPA Case No. 07-611 disqualifying petitioner to run as mayor of the municipality of Pantar, Lanao

22YUMI- CIVIL LAW 1

del Norte, as well as the January 9, 2008 Resolution[2]denying the motion for reconsideration.           Petitioner Norlainie Mitmug Limbona (Norlainie), her husband, Mohammad G. Limbona (Mohammad), and respondent Malik “Bobby” T. Alingan (Malik) were mayoralty candidates in Pantar, Lanao del Norte during the 2007 Synchronized National and Local Elections.  Mohammad and Norlainie filed their certificates of candidacy with Acting Election Officer, Alauya S. Tago, on January 22, 2007 and March 29, 2007, respectively; while Malik filed his certificate of candidacy with the Office of the Election Officer onMarch 26, 2007.           On April 2, 2007, Malik filed a petition to disqualify Mohammad for failure to comply with the residency requirement.  The petition was docketed as SPA No. 07-188.  Subsequently, or on April 12, 2007, Malik filed another petition to disqualify Norlainie also on the ground of lack of the one-year residency requirement.  The petition was docketed as SPA No. 07-611.[3]           On April 21, 2007, Norlainie filed an Affidavit of Withdrawal of Certificate of Candidacy.[4]  Thereafter, or on May 2, 2007, she filed before the Office of the Provincial Election Supervisor a Motion to Dismiss[5] the petition for disqualification in SPA No. 07-611 on the ground that the petition had become moot in view of the withdrawal of her certificate of candidacy.  

The Comelec en banc granted the withdrawal of Norlainie’s certificate of candidacy in Resolution No. 7949[6] dated May 13, 2007, the dispositive portion of which provides:

 The Commission RESOLVED, as it hereby RESOLVES,

to approve the foregoing recommendations of the Law Department, as concurred in by Commissioner Florentino A. Tuason, Jr., as follows:

 1.         To GIVE due course to the Affidavits of Withdrawal of

Certificates of Candidacy of the following candidates: 

x x x x 

Norlaine M. Limbona        Mayor         Pantar, Lanao del Norte

 x x x x 

2.         To direct the Election Officers concerned to DELETE the aforementioned names of candidates from the Certified List of Candidates.

 Let the Law Department implement this resolution with dispatch. 

SO ORDERED. 

          Meanwhile, the First Division of Comelec issued on May 24, 2007 a Resolution[7] in SPA No. 07-188 granting the petition filed by Malik and disqualifying Mohammad from running as municipal mayor of Pantar, Lanao del Norte for failing to satisfy the one year residency requirement and for not being a registered voter of the said place, thus: 

WHEREFORE, premises considered, the instant petition is GRANTED.  Respondent Mohammad “Exchan” G. Limbona is hereby disqualified.  Accordingly, his name is ordered deleted from the official list of candidates for the position of mayor of the municipality of Pantar, Lanao del Norte.

 SO ORDERED.

         The May 24, 2007 Resolution became final and executory on June 2, 2007.

[8]           Consequently, Norlainie filed a new certificate of candidacy as substitute candidate for Mohammad which was given due course by the Comelec en banc in its Resolution No. 8255[9] dated July 23, 2007, the dispositive portion of which states: 

The Commission RESOLVED, as it hereby RESOLVES, to approve the foregoing recommendations of the Law Department, as follows:

 1.         To GIVE due course to the Certificate of Candidacy and

Certificate of Nomination and Acceptance of Norlainie “Lai-Exchan” Mitmug Limbona as substitute candidate for Mohammad “Exchan” G. Limbona for Mayor, Pantar, Lanao del Norte; and

 2.         To direct the Election Officer of Pantar, Lanao del Norte

to DELETE the name of Mohammad “Exchan” G. Limbona from the Certified List of Candidates for Mayor, Pantar, Lanao del Norte and to INCLUDE therein the name of Norlainie “Lai-Exchan” Mitmug Limbona.

 Let the Law Department implement this resolution with

dispatch. 

SO ORDERED. 

          Thus, Malik filed a second petition for disqualification against Norlainie docketed as SPA No. 07-621.           After the elections, Norlainie emerged as the winning candidate and accordingly took her oath and assumed office.           However, on September 4, 2007, the Second Division of Comelec in SPA No. 07-611 disqualified Norlainie on three grounds: lack of the one-year residency

23YUMI- CIVIL LAW 1

requirement; not being a registered voter of the municipality; and, nullity of her certificate of candidacy for having been filed at a place other than the Office of the Election Officer. 

Norlainie filed an Omnibus Motion to declare the petition in SPA No. 07-611 moot and/or for reconsideration, arguing that the Comelec en banc had approved the withdrawal of her first certificate of candidacy and had given due course to her new certificate of candidacy as a substitute candidate for Mohammad.  Malik opposed the omnibus motion.           Meanwhile, the Second Division of Comelec in SPA No. 07-621, promulgated on November 23, 2007 a Resolution[10]disqualifying Norlainie from running as mayor of Pantar, Lanao del Norte.  It held thus: 

          As regards the residency requirement, We rule for petitioner.             As borne out from the record, respondent’s domicile of origin was in Maguing, Lanao del Norte, which is her place of birth.  When she got married, she became a resident of Marawi City, specifically, in Barangay Rapasun where her husband served as Barangay Chairman until November 2006.  This is her domicile by operation of law pursuant to the Family Code as applied in the case of Larrazabal v. Comelec (G.R. No. 100739, September 3, 1991). 

What respondent now is trying to impress upon Us is that she has changed her aforesaid domicile and resided in Pantar, Lanao del Norte.    x x x

 In the present case, the evidence adduced by respondent,

which consists merely of self-serving affidavits cannot persuade Us that she has abandoned her domicile of origin or her domicile in Marawi City.  It is alleged that respondent “has been staying, sleeping and doing business in her house for more than 20 months” in Lower Kalanganan and yet, there is no independent and competent evidence that would corroborate such statement.

 Further, We find no other act that would indicate

respondent’s intention to stay in Pantar for an indefinite period of time.  The filing of her Certificate of Candidacy in Pantar, standing alone, is not sufficient to hold that she has chosen Pantar as her new residence.  We also take notice of the fact that in SPA No. 07-611, this Commission has even found that she is not a registered voter in the said municipality warranting her disqualification as a candidate.[11]

           On January 9, 2008, the Comelec en banc in SPA No. 07-611 denied Norlainie’s motion for reconsideration.   

          Hence, the instant petition alleging that the Comelec gravely abused its discretion in proceeding to resolve the petition in SPA No. 07-611 despite the approval of petitioner’s withdrawal of certificate of candidacy.[12]           On January 29, 2008, the Court resolved to issue a temporary restraining order effective immediately enjoining respondents from enforcing and implementing the Comelec Resolutions disqualifying petitioner as a candidate for mayor in Pantar, Lanao del Norte.[13]         

 The petition lacks merit. The withdrawal of a certificate of candidacy does not necessarily render the

certificate void ab initio.  Once filed, the permanent legal effects produced thereby remain even if the certificate itself be subsequently withdrawn.[14]  Section 73 of the Omnibus Election Code of the Philippines (B.P. Blg. 881, as amended) provides:

 Sec. 73.  Certificate of candidacy. – No person shall be

eligible for any elective public office unless he files a sworn certificate of candidacy within the period fixed herein.  A person who has filed a certificate of candidacy may, prior to the election, withdraw the same by submitting to the office concerned a written declaration under oath.  No person shall be eligible for more than one office to be filled in the same election, and if he files his certificate of candidacy for more than one office, he shall not be eligible for any of them.  However, before the expiration of the period for the filing of certificate of candidacy, the person who has filed more than one certificate of candidacy may declare under oath the office for which he desires to be eligible and cancel the certificate of candidacy for the other office or offices.  The filing or withdrawal of a certificate of candidacy shall not affect whatever civil, criminal or administrative liabilities which a candidate may have incurred. (Emphasis supplied) 

          Thus, when petitioner filed her certificate of candidacy on March 29, 2007, such act produced legal effects, and the withdrawal of the same, despite the approval of the Comelec, did not bar or render nugatory the legal proceedings it had set in motion.  As such, the Comelec did not commit grave abuse of discretion when it ruled on the merits of the petition despite the withdrawal of petitioner’s certificate of candidacy.  The Comelec correctly held that a case only becomes moot when “there is no more actual controversy between the parties or no useful purpose can be served in passing upon the merits.”[15]  In the instant case, although petitioner withdrew her first certificate of candidacy, the subsequent disqualification of her husband required that she file a new certificate of candidacy as a substitute candidate.  The second filing of a certificate of candidacy thus once again put her qualifications in issue.  Hence, a ruling upon the same is necessary.           The fact that petitioner’s certificate of candidacy as a substitute candidate was given due course by the Comelec did not bar the Comelec from deciding on her qualifications to run as municipal mayor.  As correctly found by the Comelec:

24YUMI- CIVIL LAW 1

 Said resolution (Comelec Resolution No. 8255) discloses

only the following: a) movant is given the green lights to be the substitute candidate for her husband who was disqualified; b) her certificate of candidacy was duly accomplished in form and substance and c) the certificate of candidacy will not cause confusion among the voters.  Clearly, no issue of disqualification was passed upon by the Commission in the said resolution.

 Movant may have been given the impression that the

Commission’s act of giving due course to her substitute certificate of candidacy constitutes a pronouncement that she is not disqualified.  It must be pointed out, however, that the bases for giving due course to a certificate of candidacy are totally different from those for enunciating that the candidate is not disqualified. x x x[16]

 Moreover, the Electoral Reforms Law of 1987 (R.A. No. 6646) “authorizes

the Commission (Comelec) to try and decide petitions for disqualifications even after the elections,”[17] thus:

 SEC. 6. Effect of Disqualification Case. – Any candidate

who has been declared by final judgment to be disqualified shall not be voted for, and the votes cast for him shall not be counted.   If for any reason a candidate is not declared by final judgment before an election to be disqualified and he is voted for and receives the winning number of votes in such election, the Court or Commission shall continue with the trial and hearing of the action, inquiry or protest and, upon motion of the complainant or any intervenor, may during the pendency thereof order the suspension of the proclamation of such candidate whenever the evidence of his guilt is strong.  (Emphasis ours)

           As such, the Comelec did not err when it continued with the trial and hearing of the petition for disqualification. 

The Comelec correctly found that petitioner failed to satisfy the one-year residency requirement.  The term “residence” as used in the election law is synonymous with “domicile,” which imports not only intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention.[18]  The manifest intent of the law in fixing a residence qualification is to exclude a stranger or newcomer, unacquainted with the conditions and needs of a community and not identified with the latter, from an elective office to serve that community.[19]           For purposes of election law, the question of residence is mainly one of intention.  There is no hard and fast rule by which to determine where a person actually resides.[20]  Three rules are, however, well established: first, that a man must have a residence or domicile somewhere; second, that where once established

it remains until a new one is acquired; and third, a man can have but one domicile at a time.[21] 

In order to acquire a domicile by choice, there must concur (1) residence or bodily presence in the new locality, (2) an intention to remain there, and (3) an intention to abandon the old domicile.[22]  A person’s “domicile” once established is considered to continue and will not be deemed lost until a new one is established.[23] 

 To successfully effect a change of domicile one must demonstrate an actual

removal or an actual change of domicile; a bona fide intention of abandoning the former place of residence and establishing a new one, and definite acts which correspond with the purpose.  In other words, there must basically be animus manendi coupled with animus non revertendi.  The purpose to remain in or at the domicile of choice must be for an indefinite period of time; the change of residence must be voluntary; and the residence at the place chosen for the new domicile must be actual.[24]            Petitioner’s claim that she has been physically present and actually residing in Pantar for almost 20 months prior to the elections,[25] is self-serving and unsubstantiated.  As correctly observed by the Comelec:

 In the present case, the evidence adduced by respondent,

which consists merely of self-serving affidavits cannot persuade Us that she has abandoned her domicile of origin or her domicile in Marawi City.  It is alleged that respondent “has been staying, sleeping and doing business in her house for more than 20 months” in Lower Kalanganan and yet, there is no independent and competent evidence that would corroborate such statement.

 Further, We find no other act that would indicate

respondent’s intention to stay in Pantar for an indefinite period of time.  The filing of her Certificate of Candidacy in Pantar, standing alone, is not sufficient to hold that she has chosen Pantar as her new residence.  We also take notice of the fact that in SPA No. 07-611, this Commission has even found that she is not a registered voter in the said municipality warranting her disqualification as a candidate.[26]

 We note the findings of the Comelec that petitioner’s domicile of origin is

Maguing, Lanao del Norte,[27] which is also her place of birth; and that her domicile by operation of law (by virtue of marriage) is Rapasun, Marawi City.  The Comelec found that Mohammad, petitioner’s husband, effected the change of his domicile in favor of Pantar, Lanao del Norte only on November 11, 2006.  Since it is presumed that the husband and wife live together in one legal residence,[28] then it follows that petitioner effected the change of her domicile also on November 11, 2006.  Articles 68 and 69 of the Family Code provide:

 

25YUMI- CIVIL LAW 1

Art. 68.  The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support.

 Art. 69.  The husband and wife shall fix the family

domicile.  In case of disagreement, the court shall decide.  The court may exempt one spouse from living with the other if the latter should live abroad or there are other valid and compelling reasons for the exemption. However, such exemption shall not apply if the same is not compatible with the solidarity of the family. (Emphasis ours)

 Considering that petitioner failed to show that she maintained a separate

residence from her husband, and as there is no evidence to prove otherwise, reliance on these provisions of the Family Code is proper and is in consonance with human experience.[29]                             

Thus, for failure to comply with the residency requirement, petitioner is disqualified to run for the office of mayor of Pantar, Lanao del Norte.  However, petitioner’s disqualification would not result in Malik’s proclamation who came in second during the special election.

           The rules on succession under the Local Government Code shall apply, to wit: 

            SECTION 44. Permanent Vacancies in the Offices of the Governor, Vice-Governor, Mayor, and Vice-Mayor. – If a permanent vacancy occurs in the office of the xxx mayor, the xxx vice-mayor concerned shall become the xxx mayor.             x x x x

 For purposes of this Chapter, a permanent vacancy arises

when an elective local official fills a higher vacant office, refuses to assume office,fails to qualify or is removed from office, voluntarily resigns, or is otherwise permanently incapacitated to discharge the functions of his office.           

x x x x (Emphasis ours) 

Considering the disqualification of petitioner to run as mayor of Pantar, Lanao del Norte, the proclaimed Vice-Mayor shall then succeed as mayor.  

WHEREFORE, the petition for certiorari is DISMISSED.  The September 4, 2007 Resolution of the Commission on Elections in SPA Case No. 07-611 disqualifying petitioner Norlainie Mitmug Limbona from running for office of the Mayor of Pantar, Lanao del Norte, and the January 9, 2008 Resolution denying the motion for reconsideration, are AFFIRMED.  In view of the permanent vacancy in the Office of the Mayor, the proclaimed Vice-Mayor shall SUCCEED as Mayor.  The temporary restraining order issued on January 29, 2008 is ordered LIFTED.

 

SO ORDERED.

 

Ilusorio v. Bildner GR# 139789 / 139808 / MAY 12, 200

[G.R. No. 139789. May 12, 2000]

ERLINDA K. ILUSORIO, petitioner, vs. ERLINDA I. BILDNER and SYLVIA K. ILUSORIO, JOHN DOE and JANE DOE,respondents.

[G.R. No. 139808. May 12, 2000]

POTENCIANO ILUSORIO, MA. ERLINDA I. BILDNER, and SYLVIA ILUSORIO, petitioners, vs. COURT OF APPEALS and ERLINDA K. ILUSORIO, respondents.

D E C I S I O N

PARDO, J.:

May a wife secure a writ of habeas corpus to compel her husband to live with her in conjugal bliss? The answer is no. Marital rights including coverture and living in conjugal dwelling may not be enforced by the extra-ordinary writ of habeas corpus.

A writ of habeas corpus extends to all cases of illegal confinement or detention,[1] or by which the rightful custody of a person is withheld from the one entitled thereto.[2] Slx

"Habeas corpus is a writ directed to the person detaining another, commanding him to produce the body of the prisoner at a designated time and place, with the day and cause of his capture and detention, to do, submit to, and receive whatsoever the court or judge awarding the writ shall consider in that behalf."[3]

It is a high prerogative, common-law writ, of ancient origin, the great object of which is the liberation of those who may be imprisoned without sufficient cause.[4] It is issued when one is deprived of liberty or is wrongfully prevented from exercising legal custody over another person.[5]

The petition of Erlinda K. Ilusorio[6] is to reverse the decision[7] of the Court of Appeals and its resolution[8] dismissing the application for habeas corpus to have the custody of her husband, lawyer Potenciano Ilusorio and enforce consortium as the wife.

26YUMI- CIVIL LAW 1

On the other hand, the petition of Potenciano Ilusorio[9] is to annul that portion of the decision of the Court of Appeals giving Erlinda K. Ilusorio visitation rights to her husband and to enjoin Erlinda and the Court of Appeals from enforcing the visitation rights.

The undisputed facts are as follows: Scslx

Erlinda Kalaw Ilusorio is the wife of lawyer Potenciano Ilusorio.

Potenciano Ilusorio is about 86 years of age possessed of extensive property valued at millions of pesos. For many years, lawyer Potenciano Ilusorio was Chairman of the Board and President of Baguio Country Club.

On July 11, 1942, Erlinda Kalaw and Potenciano Ilusorio contracted matrimony and lived together for a period of thirty (30) years. In 1972, they separated from bed and board for undisclosed reasons. Potenciano lived at Urdaneta Condominium, Ayala Ave., Makati City when he was in Manila and at Ilusorio Penthouse, Baguio Country Club when he was in Baguio City. On the other hand, Erlinda lived in Antipolo City.

Out of their marriage, the spouses had six (6) children, namely: Ramon Ilusorio (age 55); Erlinda Ilusorio Bildner (age 52); Maximo (age 50); Sylvia (age 49); Marietta (age 48); and Shereen (age 39).

On December 30, 1997, upon Potenciano’s arrival from the United States, he stayed with Erlinda for about five (5) months in Antipolo City. The children, Sylvia and Erlinda (Lin), alleged that during this time, their mother gave Potenciano an overdose of 200 mg instead of 100 mg Zoloft, an antidepressant drug prescribed by his doctor in New York, U.S.A. As a consequence, Potenciano’s health deteriorated.

On February 25, 1998, Erlinda filed with the Regional Trial Court, Antipolo City a petition[10] for guardianship over the person and property of Potenciano Ilusorio due to the latter’s advanced age, frail health, poor eyesight and impaired judgment.

On May 31, 1998, after attending a corporate meeting in Baguio City, Potenciano Ilusorio did not return to Antipolo City and instead lived at Cleveland Condominium, Makati. Slxsc

On March 11, 1999, Erlinda filed with the Court of Appeals a petition for habeas corpus to have the custody of lawyer Potenciano Ilusorio. She alleged that respondents[11] refused petitioner’s demands to see and visit her husband and prohibited Potenciano from returning to Antipolo City.

After due hearing, on April 5, 1999, the Court of Appeals rendered decision the dispositive portion of which reads:

"WHEREFORE, in the light of the foregoing disquisitions, judgment is hereby rendered:

"(1) Ordering, for humanitarian consideration and upon petitioner’s manifestation, respondents Erlinda K. Ilusorio Bildner and Sylvia Ilusorio-Yap, the administrator of Cleveland Condominium or anywhere in its place, his guards and Potenciano Ilusorio’s staff especially Ms. Aurora Montemayor to allow visitation rights to Potenciano Ilusorio’s wife, Erlinda Ilusorio and all her children,

notwithstanding any list limiting visitors thereof, under penalty of contempt in case of violation of refusal thereof; xxx

"(2) ORDERING that the writ of habeas corpus previously issued be recalled and the herein petition for habeas corpus be DENIED DUE COURSE, as it is hereby DISMISSED for lack of unlawful restraint or detention of the subject of the petition.

"SO ORDERED."[12]

Hence, the two petitions, which were consolidated and are herein jointly decided.

As heretofore stated, a writ of habeas corpus extends to all cases of illegal confinement or detention,[13] or by which the rightful custody of a person is withheld from the one entitled thereto. It is available where a person continues to be unlawfully denied of one or more of his constitutional freedoms, where there is denial of due process, where the restraints are not merely involuntary but are unnecessary, and where a deprivation of freedom originally valid has later become arbitrary.[14] It is devised as a speedy and effectual remedy to relieve persons from unlawful restraint, as the best and only sufficient defense of personal freedom.[15] Jksmä â Ó

The essential object and purpose of the writ of habeas corpus is to inquire into all manner of involuntary restraint, and to relieve a person therefrom if such restraint is illegal.[16]

To justify the grant of the petition, the restraint of liberty must be an illegal and involuntary deprivation of freedom of action.[17] The illegal restraint of liberty must be actual and effective, not merely nominal or moral.[18]

The evidence shows that there was no actual and effective detention or deprivation of lawyer Potenciano Ilusorio’s liberty that would justify the issuance of the writ. The fact that lawyer Potenciano Ilusorio is about 86 years of age, or under medication does not necessarily render him mentally incapacitated. Soundness of mind does not hinge on age or medical condition but on the capacity of the individual to discern his actions.

After due hearing, the Court of Appeals concluded that there was no unlawful restraint on his liberty.

The Court of Appeals also observed that lawyer Potenciano Ilusorio did not request the administrator of the Cleveland Condominium not to allow his wife and other children from seeing or visiting him. He made it clear that he did not object to seeing them.

As to lawyer Potenciano Ilusorio’s mental state, the Court of Appeals observed that he was of sound and alert mind, having answered all the relevant questions to the satisfaction of the court.

Being of sound mind, he is thus possessed with the capacity to make choices. In this case, the crucial choices revolve on his residence and the people he opts to see or live with. The choices he made may not appeal to some of his family members but these are choices which exclusively belong to Potenciano. He made it clear before the Court of Appeals that he was not prevented from leaving his house or seeing

27YUMI- CIVIL LAW 1

people. With that declaration, and absent any true restraint on his liberty, we have no reason to reverse the findings of the Court of Appeals.

With his full mental capacity coupled with the right of choice, Potenciano Ilusorio may not be the subject of visitation rights against his free choice. Otherwise, we will deprive him of his right to privacy. Needless to say, this will run against his fundamental constitutional right. Esä m

The Court of Appeals exceeded its authority when it awarded visitation rights in a petition for habeas corpus where Erlinda never even prayed for such right. The ruling is not consistent with the finding of subject’s sanity.

When the court ordered the grant of visitation rights, it also emphasized that the same shall be enforced under penalty of contempt in case of violation or refusal to comply. Such assertion of raw, naked power is unnecessary.

The Court of Appeals missed the fact that the case did not involve the right of a parent to visit a minor child but the right of a wife to visit a husband. In case the husband refuses to see his wife for private reasons, he is at liberty to do so without threat of any penalty attached to the exercise of his right.

No court is empowered as a judicial authority to compel a husband to live with his wife. Coverture cannot be enforced by compulsion of a writ ofhabeas corpus carried out by sheriffs or by any other mesne process. That is a matter beyond judicial authority and is best left to the man and woman’s free choice.

WHEREFORE, in G. R. No. 139789, the Court DISMISSES the petition for lack of merit. No costs.

In G. R. No. 139808, the Court GRANTS the petition and nullifies the decision of the Court of Appeals insofar as it gives visitation rights to respondent Erlinda K. Ilusorio. No costs.

SO ORDERED.

Ilusorio v. Bildner GR# 139789 / 139808 / JULY 19, 2001 361 SCRA 427

[G.R. No. 139789.  July 19, 2001]

IN THE MATTER OF THE PETITION FOR HABEAS CORPUS OF POTENCIANO ILUSORIO, ERLINDA K. ILUSORIO, petitioner, vs. ERLINDA K. ILUSORIO-BILDNER SYLVIA K. ILUSORIO-YAP, JOHN DOES and JANE DOES, respondents.

R E S O L U T I O N

PARDO, J.:

Once again we see the sad tale of a prominent family shattered by conflicts on expectancy in fabled fortune.

On March 11, 1999, Erlinda K. Ilusorio, the matriarch who was so lovingly inseparable from her husband some years ago, filed a petition with the Court of Appeals[1] for habeas corpus to have custody of her husband in consortium.

On April 5, 1999, the Court of Appeals promulgated its decision dismissing the petition for lack of unlawful restraint or detention of the subject, Potenciano Ilusorio.

Thus, on October 11, 1999, Erlinda K. Ilusorio filed with the Supreme Court an appeal via certiorari pursuing her desire to have custody of her husband Potenciano Ilusorio.[2] This case was consolidated with another case[3] filed by Potenciano Ilusorio and his children, Erlinda I. Bildner and Sylvia K. Ilusorio appealing from the order giving visitation rights to his wife, asserting that he never refused to see her.

On May 12, 2000, we dismissed the petition for habeas corpus[4] for lack of merit, and granted the petition[5] to nullify the Court of Appeals' ruling[6] giving visitation rights to Erlinda K. Ilusorio.[7]

What is now before the Court is Erlinda' s motion to reconsider the decision.[8]

On September 20, 2000, we set the case for preliminary conference on October 11, 2000, at 10:00 a. m., without requiring the mandatory presence of the parties.

In that conference, the Court laid down the issues to be resolved, to wit:

(a) To determine the propriety of a physical and medical examination of petitioner Potenciano Ilusorio;

(b) Whether the same is relevant; and

(c) If relevant, how the Court will conduct the same.[9]

The parties extensively discussed the issues.  The Court, in its resolution, enjoined the parties and their lawyers to initiate steps towards an amicable settlement of the case through mediation and other means.

On November 29, 2000, the Court noted the manifestation and compliance of the parties with the resolution of October 11, 2000.[10]

On January 31, 2001, the Court denied Erlinda Ilusorio's manifestation and motion praying that Potenciano Ilusorio be produced before the Court and be medically examined by a team of medical experts appointed by the Court.[11]

On March 27, 2001, we denied with finality Erlinda' s motion to reconsider the Court's order of January 31, 2001.[12]

The issues raised by Erlinda K. Ilusorio in her motion for reconsideration are mere reiterations of her arguments that have been resolved in the decision.

Nevertheless, for emphasis, we shall discuss the issues thus:

First.  Erlinda K. Ilusorio claimed that she was not compelling Potenciano to live with her in consortium and that Potenciano' s mental state was not an issue. However, the very root cause of the entire petition is her desire to have her husband's custody.[13] Clearly, Erlinda cannot now deny that she wanted Potenciano Ilusorio to live with her.

28YUMI- CIVIL LAW 1

Second.  One reason why Erlinda K. Ilusorio sought custody of her husband was that respondents Lin and Sylvia were illegally restraining Potenciano Ilusorio to fraudulently deprive her of property rights out of pure greed.[14] She claimed that her two children were using their sick and frail father to sign away Potenciano and Erlinda' s property to companies controlled by Lin and Sylvia.  She also argued that since Potenciano retired as director and officer of Baguio Country Club and Philippine Oversees Telecommunications, she would logically assume his position and control.  Yet, Lin and Sylvia were the ones controlling the corporations.[15]

The fact of illegal restraint has not been proved during the hearing at the Court of Appeals on March 23, 1999.[16] Potenciano himself declared that he was not prevented by his children from seeing anybody and that he had no objection to seeing his wife and other children whom he loved.

Erlinda highlighted that her husband suffered from various ailments.  Thus, Potenciano Ilusorio did not have the mental capacity to decide for himself.  Hence, Erlinda argued that Potenciano be brought before the Supreme Court so that we could determine his mental state.

We were not convinced that Potenciano Ilusorio was mentally incapacitated to choose whether to see his wife or not.  Again, this is a question of fact that has been decided in the Court of Appeals.

As to whether the children were in fact taking control of the corporations, these are matters that may be threshed out in a separate proceeding, irrelevant inhabeas corpus.

Third.  Petitioner failed to sufficiently convince the Court why we should not rely on the facts found by the Court of Appeals.  Erlinda claimed that the facts mentioned in the decision were erroneous and incomplete.  We see no reason why the High Court of the land need go to such length.  The hornbook doctrine states that findings of fact of the lower courts are conclusive on the Supreme Court.[17] We emphasize, it is not for the Court to weigh evidence all over again.[18] Although there are exceptions to the rule,[19] Erlinda failed to show that this is an exceptional instance.

Fourth.  Erlinda states that Article XII of the 1987 Constitution and Articles 68 and 69 of the Family Code support her position that as spouses, they (Potenciano and Erlinda) are duty bound to live together and care for each other.  We agree.

The law provides that the husband and the wife are obliged to live together, observe mutual love, respect and fidelity.[20] The sanction therefor is the "spontaneous, mutual affection between husband and wife and not any legal mandate or court order" to enforce consortium.[21]

Obviously, there was absence of empathy between spouses Erlinda and Potenciano, having separated from bed and board since 1972.  We defined empathy as a shared feeling between husband and wife experienced not only by having spontaneous sexual intimacy but a deep sense of spiritual communion.  Marital union is a two-way process.

Marriage is definitely for two loving adults who view the relationship with "amor gignit amorem” respect, sacrifice and a continuing commitment to togetherness, conscious of its value as a sublime social institution.[22]

On June 28, 2001, Potenciano Ilusorio gave his soul to the Almighty, his Creator and Supreme Judge.  Let his soul rest in peace and his survivors continue the much prolonged fracas ex aequo et bono.

IN VIEW WHEREOF, we DENY Erlinda's motion for reconsideration.  At any rate, the case has been rendered moot by the death of subject.

SO ORDERED.

Ong vs. CA GR# 63025 / NOV. 29, 1991 204 SCRA 299

G.R. No. L-63025 November 29, 1991RAMON C. ONG, petitioner, vs.COURT OF APPEALS, FRANCISCO BOIX and ARSENIO CAMINO AS DEPUTY SHERIFF OF CAMARINES NORTE, respondents.

.

 

PARAS, J.:p

The instant petitioner for certiorari seeks are reversal of the decision ** of herein public respondent Court of Appeals dated October 24, 1977 in CA-G.R. No. 47063-R and its resolution dated January 14, 1983 denying herein petitioner's Motion for Reconsideration.

The Court of Appeals narrates the facts thus:

The record shows that on November 16, 1961, Ramon C. Ong filed a complaint against defendants Arsenio Camino as Deputy Sheriff of Camarines Norte and Francisco Boix, to annul the auction sale of a parcel of land, allegedly owners conjugally by plaintiff and his former wife Teodora B. Ong, awarded in favor of Boix, as highest bidder, in an auction sale conducted on October 10, 1958 by the Deputy Sheriff of Camarines Norte, herein defendant Camino, pursuant to a writ of execution dated August 8, 1958 (Exhibits "C", "2-A") issued by the Court of First Instance of Manila, Branch IV, to enforce its decision in Civil Case No. 33396, entitled, "Francisco Boix, Plaintiff vs. Teodora B. Ong and Ramon C. Ong, Defendants" wherein judgment was rendered to wit: WHEREFORE, judgment is hereby rendered in favor of plaintiff, ordering the defendant Teodora B. Ong to pay to the plaintiff the sum P2,827.83, with interest of 8% per annumon the sum of P1,000.00 from September 5, 1955, on the sum of P827.83 from December 30, 1955 plus 15% on the total amount of P2,827.83 as attorney's fees; and the further amount of P2,503 with interest at 6% per annum from date of the filing of the complaint, and the costs of the suit. (Exhibit "1")

29YUMI- CIVIL LAW 1

The title to the property, in favor of the execution-creditor Boix was duly registered in the Office of the Register of Deeds of Camarines Norte (Exhibit "4").

It is not disputed that plaintiff's wife, Teodora B. Ong conducted her own logging business in Camarines Sur. In furtherance of her business operation, on August 18, 1955, she secured from Francisco Boix a loan in the amount of P2,827.83. Unfortunately, because of mismanagement, Teodora defaulted in her obligation. This prompted Boix to file a complaint, based on the promissory notes executed by Teodora, to collect the sum legally due plus interest against Teodora and Ramon Ong, the latter being joined as husband of the former. Defendant-spouses were declared in default and judgment was rendered, as aforesaid, in favor of Boix.

After the aforementioned decision became final and executory, Boix moved to execute the judgment. The motion was granted and a corresponding writ of execution, dated August 8, 1958 (Exhibits "C", "2-A"), was issued. Accordingly, the Sheriff of Camarines Norte levied and attached a parcel of land situated at Diego Linan St., Daet, Camarines Norte, declared under Tax No. 05378 in the sole name of Teodora B. Ong, subject-parcel of herein suit. In a notice of levy on Execution dated August 22, 1958 (Exhibit "2-B"), and notice of Public Auction sale dated September 10, 1958 (Exhibit "2-C"), auction sales was held on October 10, 1958 and as already mentioned, defendant Boix was adjudged highest bidder. A writ of possession was issued to place the execution-creditor in possession of the property levied upon and sold on execution. A corresponding Certificate of Sale (Exhibit "H") was also issued in favor of Boix.

Subsequently, thereafter, Ramon C. Ong filed an Omnibus motion dated October 2, 1961 (Exhibit "D") with the same Court of First Instance of Manila asking to quash the writ of possession, which was denied in an order dated December 6, 1961. A motion for reconsideration dated December 29, 1961 (Exhibit "F") was likewise denied in an order dated February 10, 1962 (Exhibit "G"). (Pp. 1-4, Decision; pp. 11-14 Rollo)

Consequently, petitioner brought the case to the Court of Appeals to annul the auction sale allegedly irregularly executed on the following grounds, namely, that the property was conjugal and thus could not be held liable for personal debts contracted by the wife, and that the there was no valid publication thus making the auction sale void.

The Court of Appeals affirmed the decision of the trial court, prompting petitioner to file a motion for reconsideration thereof. Said motion was denied on January 15, 1983; hence, the present petition.

Petitioner contends that the auction sale of the property in dispute is null and void, having been made on a date different from that reflected in the advertisement thereof, aside from having been published in a newspaper which is not of general circulation in the province where the property is situated. According to the petitioner, respondent court's failure to touch on such a jurisdictional issue constitutes grave abuse of discretion which justifies a reversal of its decision affirming the finding of the trial court which in itself constitutes a misappreciation of facts.

The other argument advanced by the petitioner is that the subject property is really conjugal which the wife in the case at bar could not legally bind, and considering that the indebtedness was contracted by the wife only, the levy of the subject property not owned exclusively by the wife owned jointly with the husband is improper.

Against petitioner's argument that the auction sale is null and void is the trial court's assessment of the validity thereof, that is, that the notice of public auction sale was published in accordance with law. Such a factual finding of the trial court is entitled to great weight and should not be disturbed on appeal. "Factual questions should be resolved by the lower courts and the Supreme Court has no jurisdiction as a rule to reverse the findings of the lower courts except in a clear showing of a grave abuse of discretion" (Korean Air Lines vs. Court of Appeals, 154 SCRA 211). In the instant case, petitioner failed to show any grave abuse of discretion committed, by the lower court in appreciating private respondent's allegation that petitioner was previously notified of the supposed transfer of the date of public auction from September 25, 1958 to October 10, 1958.

Petitioner's other argument is also based on factual considerations. Against the Court of Appeals' finding that the subject property is paraphernal property, in view of the fact that it was "declared, under Tax No. 05378, in the name of Teodora B. Ong while the house erected thereon was declared under Tax No. 06022 in the name of Ramon C. Ong and Teodora B. Ong (Exhibits "B", "2-B", "2-C, "4") (Decision, p. 4) is petitioner's claim that the subject property is conjugal. Petitioner stresses heavily on the fact that since the surname "Ong" (which is the surname of the husband Ramon C. Ong) was carried by Teodora in the aforesaid declaration, that indicates that the subject property was acquired during the marriage. By reason thereof, the property in dispute is presumed to be owned jointly by both spouses.

We disagree. The mere use of the surname of the husband in the tax declaration of the subject property is not sufficient proof that said property was acquired during the marriage and is therefore conjugal. It is undisputed that the subject parcel was declared solely in the wife's name, but the house built thereon was declared in the name of the spouses. Under such circumstances, coupled with a careful scrutiny of the records of the present case, We hold that the lot in question is paraphernal, and is therefore, liable for the personal debts of the wife.

Thus, it was held in the case of Maramba vs. Lozano, 20 SCRA 474, that

The presumption that property is conjugal (Art. 160, New Civil Code) refers to property acquired during the marriage. When there is no showing as to when the property was acquired by a spouse, the fact that the title is in the spouse's name is an indication that the property belongs exclusively to said spouse.

As correctly pointed out by the respondent Court, the party who invokes the presumption that all property of the marriage belongs to the conjugal partnership (Art. 160, New Civil Code) must first prove that the property was acquired during the marriage. Proof of acquisition during the marriage is a condition sine qua non for the operation of the presumption in favor of the conjugal partnership. (Cobb-Perez, et al. vs. Lantin, et al., 23 SCRA 637; Jose Ponce de Leon vs. Rehabilitation Finance Corp., 36 SCRA 289). In the same manner, the recent case of PNB vs. Court of Appeals, 153 SCRA 435 affirms that:

When the property is registered in the name of the a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse. And this presumption under Art. 160 of the Civil Code cannot prevail when the title is in the name of only one spouse and the rights of innocent third parties are involved.

30YUMI- CIVIL LAW 1

Furthermore, even assuming for the sake of argument that the property in dispute is conjugal, the same may still be held liable for the debts of the wife in this case. Under Art. 117 of the Civil Code, the wife may engage in business although the husband may object (but subject to certain conditions). It is clear from the records that the wife was engaged in the logging business with the husband's knowledge and apparently without any objection on his part. The acts of the husband show that he gave his implied consent to the wife's engagement in business. According to Justice Ameurfina-Herrera (then Associate Justice of the Court of Appeals) in her concurring opinion, the rule that should govern in that case is that the wife's paraphernal properties, as well as those of their conjugal partnership, shall be liable for the obligations incurred by the wife in the course of her business (Arts. 117, 140, 172, 203, and 236, Civil Code; Art. 10, Code of Commerce, cited in Commentaries on Phil. Commercial Laws, Martin, T.C. Vol. 1, 1970 Revised Edition, pp. 14-15). After all, whatever profits are earned by the wife from her business go to the conjugal partnership. It would only be just and equitable that the obligations contracted by the wife in connection with her business may also be chargeable not only against her paraphernal property but also against the conjugal property of the spouses.

Let it be noted that due to the length of time that this case has remained pending, private respondents Francisco Boix and Arsenio Camino have allegedly already died in the process. No proper substitution of parties have apparently been made. Nevertheless, despite such supervening events, for failure on the part of petitioner to show any grave abuse of discretion or reversible error committed by respondent appellate court, We deem it wise to affirm the said court's decision. Besides, the decision of the trial court is in accordance with law and the evidence presented.

WHEREFORE, the petition is hereby DISMISSED for lack of merit without pronouncement as to costs.

SO ORDERED.

Go vs. CA GR# 114791 / MAY 29, 1997

G.R. No. 114791 May 29, 1997

NANCY GO AND ALEX GO, petitioners, vs.THE HONORABLE COURT OF APPEALS, HERMOGENES ONG and JANE C. ONG, respondents.

 

ROMERO, J.:

No less than the Constitution commands us to protect marriage as an inviolable social institution and the foundation of the family. 1 In our society, the importance of a wedding ceremony cannot be underestimated as it is the matrix of the family and, therefore, an occasion worth reliving in the succeeding years.

It is in this light that we narrate the following undisputed facts:

Private respondents spouses Hermogenes and Jane Ong were married on June 7, 1981, in Dumaguete City. The video coverage of the wedding was provided by petitioners at a contract price of P1,650.00. Three times thereafter, the newlyweds tried to claim the video tape of their wedding, which they planned to show to their

relatives in the United States where they were to spend their honeymoon, and thrice they failed because the tape was apparently not yet processed. The parties then agreed that the tape would be ready upon private respondents' return.

When private respondents came home from their honeymoon, however, they found out that the tape had been erased by petitioners and therefore, could no longer be delivered.

Furious at the loss of the tape which was supposed to be the only record of their wedding, private respondents filed on September 23, 1981 a complaint for specific performance and damages against petitioners before the Regional Trial Court, 7th Judicial District, Branch 33, Dumaguete City. After a protracted trial, the court a quorendered a decision, to wit:

WHEREFORE, judgment is hereby granted:

1. Ordering the rescission of the agreement entered into between plaintiff Hermogenes Ong and defendant Nancy Go;

2. Declaring defendants Alex Go and Nancy Go jointly and severally liable to plaintiffs Hermogenes Ong and Jane C. Ong for the following sums:

a) P450.00 , the down payment made at contract time;b) P75,000.00, as moral damages;c) P20,000.00, as exemplary damages;d) P5,000.00, as attorney's fees; ande) P2,000.00, as litigation expenses;

Defendants are also ordered to pay the costs.SO ORDERED.

Dissatisfied with the decision, petitioners elevated the case to the Court of Appeals which, on September 14, 1993, dismissed the appeal and affirmed the trial court's decision.

Hence, this petition.

Petitioners contend that the Court of Appeals erred in not appreciating the evidence they presented to prove that they acted only as agents of a certain Pablo Lim and, as such, should not have been held liable. In addition, they aver that there is no evidence to show that the erasure of the tape was done in bad faith so as to justify the award of damages. 2

The petition is not meritorious.

Petitioners claim that for the video coverage, the cameraman was employed by Pablo Lim who also owned the video equipment used. They further assert that they merely get a commission for all customers solicited for their principal. 3

This contention is primarily premised on Article 1883 of the Civil Code which states thus:

Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal.

31YUMI- CIVIL LAW 1

xxx xxx xxx

Petitioners' argument that since the video equipment used belonged to Lim and thus the contract was actually entered into between private respondents and Lim is not deserving of any serious consideration. In the instant case, the contract entered into is one of service, that is, for the video coverage of the wedding. Consequently, it can hardly be said that the object of the contract was the video equipment used. The use by petitioners of the video equipment of another person is of no consequence.

It must also be noted that in the course of the protracted trial below, petitioners did not even present Lim to corroborate their contention that they were mere agents of the latter. It would not be unwarranted to assume that their failure to present such a vital witness would have had an adverse result on the case. 4

As regards the award of damages, petitioners would impress upon this Court their lack of malice or fraudulent intent in the erasure of the tape. They insist that since private respondents did not claim the tape after the lapse of thirty days, as agreed upon in their contract, the erasure was done in consonance with consistent business practice to minimize losses. 5

We are not persuaded.

As correctly observed by the Court of Appeals, it is contrary to human nature for any newlywed couple to neglect to claim the video coverage of their wedding; the fact that private respondents filed a case against petitioners belies such assertion. Clearly, petitioners are guilty of actionable delay for having failed to process the video tape. Considering that private respondents were about to leave for the United States, they took care to inform petitioners that they would just claim the tape upon their return two months later. Thus, the erasure of the tape after the lapse of thirty days was unjustified.

In this regard, Article 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of fraud, negligence or delay, and those who is any manner contravene the tenor thereof, are liable for damages."

In the instant case, petitioners and private respondents entered into a contract whereby, for a fee, the former undertook to cover the latter's wedding and deliver to them a video copy of said event. For whatever reason, petitioners failed to provide private respondents with their tape. Clearly, petitioners are guilty of contravening their obligation to said private respondents and are thus liable for damages.

The grant of actual or compensatory damages in the amount of P450.00 is justified, as reimbursement of the downpayment paid by private respondents to petitioners. 6

Generally, moral damages cannot be recovered in an action for breach of contract because this case is not among those enumerated in Article 2219 of the Civil Code. However, it is also accepted in this jurisdiction that liability for a quasi-delict may still exist despite the presence of contractual relations, that is, the act which violates the contract may also constitute a quasi-delict. 7 Consequently, moral damages are recoverable for the breach of contractwhich was palpably wanton, reckless, malicious or in bad faith, oppressive or abusive. 8

Petitioners' act or omission in recklessly erasing the video coverage of private respondents' wedding was precisely the cause of the suffering private respondents had to undergo.

As the appellate court aptly observed:

Considering the sentimental value of the tapes and the fact that the event therein recorded — a wedding which in our culture is a significant milestone to be cherished and remembered — could no longer be reenacted and was lost forever, the trial court was correct in awarding the appellees moral damages albeit in the amount of P75,000.00, which was a great reduction from plaintiffs' demand in the complaint in compensation for the mental anguish, tortured feelings, sleepless nights and humiliation that the appellees suffered and which under the circumstances could be awarded as allowed under Articles 2217 and 2218 of the Civil Code. 9

Considering the attendant wanton negligence committed by petitioners in the case at bar, the award of exemplary damages by the trial court is justified 10 to serve as a warning to all entities engaged in the same business to observe due diligence in the conduct of their affairs.

The award of attorney' s fees and litigation expenses are likewise proper, consistent with Article 2208 11 of the Civil Code.

Finally, petitioner Alex Go questions the finding of the trial and appellate courts holding him jointly and severally liable with his wife Nancy regarding the pecuniary liabilities imposed. He argues that when his wife entered into the contract with private respondent, she was acting alone for her sole interest. 12

We find merit in this contention. Under Article 117 of the Civil Code (now Article 73 of the Family Code), the wife may exercise any profession, occupation or engage in business without the consent of the husband. In the instant case, we are convinced that it was only petitioner Nancy Go who entered into the contract with private respondent. Consequently, we rule that she is solely liable to private respondents for the damages awarded below, pursuant to the principle that contracts produce effect only as between the parties who execute them. 13

WHEREFORE, the assailed decision dated September 14, 1993 is hereby AFFIRMED with the MODIFICATION that petitioner Alex Go is absolved from any liability to private respondents and that petitioner Nancy Go is solely liable to said private respondents for the judgment award. Costs against petitioners.

SO ORDERED.

32YUMI- CIVIL LAW 1

TITLE IV. PROPERTY RELATIONS BET. HUSBAND & WIFE (Articles 74- 148)

CHAPTER 1. GENERAL PROVISIONS (Articles 74-81)

CHAPTER 2. DONATIONS BY REASON OF MARRIAGE (Articles 82-87)

Agapay vs. Palang GR# 116668 / JULY 28, 1997

G.R. No. 116668 July 28, 1997

ERLINDA A. AGAPAY, petitioner, vs.CARLINA (CORNELIA) V. PALANG and HERMINIA P. DELA CRUZ, respondents.

 

ROMERO, J.:

Before us is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 24199 entitled "Erlinda Agapay v. Carlina (Cornelia) Palang and Herminia P. Dela Cruz" dated June 22, 1994 involving the ownership of two parcels of land acquired during the cohabitation of petitioner and private respondent's legitimate spouse.

Miguel Palang contracted his first marriage on July 16, 1949 when he took private respondent Carlina (or Cornelia) Vallesterol as a wife at the Pozorrubio Roman Catholic Church in Pangasinan. A few months after the wedding, in October 1949, he left to work in Hawaii. Miguel and Carlina's only child, Herminia Palang, was born on May 12, 1950.

Miguel returned in 1954 for a year. His next visit to the Philippines was in 1964 and during the entire duration of his year-long sojourn he stayed in Zambales with his brother, not in Pangasinan with his wife and child. The trial court found evidence that as early as 1957, Miguel had attempted to divorce Carlina in Hawaii. 1 When he

returned for good in 1972, he refused to live with private respondents, but stayed alone in a house in Pozorrubio, Pangasinan.

On July 15, 1973, the then sixty-three-year-old Miguel contracted his second marriage with nineteen-year-old Erlinda Agapay, herein petitioner. 2 Two months earlier, on May 17, 1973, Miguel and Erlinda, as evidenced by the Deed of Sale, jointly purchased a parcel of agricultural land located at San Felipe, Binalonan, Pangasinan with an area of 10,080 square meters. Consequently, Transfer Certificate of Title No. 101736 covering said rice land was issued in their names.

A house and lot in Binalonan, Pangasinan was likewise purchased on September 23, 1975, allegedly by Erlinda as the sole vendee. TCT No. 143120 covering said property was later issued in her name.

On October 30, 1975, Miguel and Cornelia Palang executed a Deed of Donation as a form of compromise agreement to settle and end a case filed by the latter. 3 The parties therein agreed to donate their conjugal property consisting of six parcels of land to their only child, Herminia Palang. 4

Miguel and Erlinda's cohabitation produced a son, Kristopher A. Palang, born on December 6, 1977. In 1979, Miguel and Erlinda were convicted of Concubinage upon Carlina's complaint. 5 Two years later, on February 15, 1981, Miguel died.

On July 11, 1981, Carlina Palang and her daughter Herminia Palang de la Cruz, herein private respondents, instituted the case at bar, an action for recovery of ownership and possession with damages against petitioner before the Regional Trial Court in Urdaneta, Pangasinan (Civil Case No. U-4265). Private respondents sought to get back the riceland and the house and lot both located at Binalonan, Pangasinan allegedly purchased by Miguel during his cohabitation with petitioner.

Petitioner, as defendant below, contended that while the riceland covered by TCT No. 101736 is registered in their names (Miguel and Erlinda), she had already given her half of the property to their son Kristopher Palang. She added that the house and lot covered by TCT No. 143120 is her sole property, having bought the same with her own money. Erlinda added that Carlina is precluded from claiming aforesaid properties since the latter had already donated their conjugal estate to Herminia.

After trial on the merits, the lower court rendered its decision on June 30, 1989 dismissing the complaint after declaring that there was little evidence to prove that the subject properties pertained to the conjugal property of Carlina and Miguel Palang. The lower court went on to provide for the intestate shares of the parties, particularly of Kristopher Palang, Miguel's illegitimate son. The dispositive portion of the decision reads.

WHEREFORE, premises considered, judgment is herebyrendered —

1) Dismissing the complaint, with costs against plaintiffs;

2) Confirming the ownership of defendant Erlinda Agapay of the residential lot located at Poblacion, Binalonan, Pangasinan, as evidenced by TCT No. 143120, Lot 290-B including the old house standing therein;

33YUMI- CIVIL LAW 1

3) Confirming the ownership of one-half (1/2) portion of that piece of agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan, consisting of 10,080 square meters and as evidenced by TCT No. 101736, Lot 1123-A to Erlinda Agapay;

4. Adjudicating to Kristopher Palang as his inheritance from his deceased father, Miguel Palang, the one-half (1/2) of the agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan, under TCT No. 101736 in the name of Miguel Palang, provided that the former (Kristopher) executes, within 15 days after this decision becomes final and executory, a quit-claim forever renouncing any claims to annul/reduce the donation to Herminia Palang de la Cruz of all conjugal properties of her parents, Miguel Palang and Carlina Vallesterol Palang, dated October 30, 1975, otherwise, the estate of deceased Miguel Palang will have to be settled in another separate action;

5) No pronouncement as to damages and attorney's fees. SO ORDERED. 6

On appeal, respondent court reversed the trial court's decision. The Court of Appeals rendered its decision on July 22, 1994 with the following dispositive portion;

WHEREFORE, PREMISES CONSIDERED, the appealed decision in hereby REVERSED and another one entered:

1. Declaring plaintiffs-appellants the owners of the properties in question;

2. Ordering defendant-appellee to vacate and deliver the properties in question to herein plaintiffs-appellants;

3. Ordering the Register of Deeds of Pangasinan to cancel Transfer Certificate of Title Nos. 143120 and 101736 and to issue in lieu thereof another certificate of title in the name of plaintiffs-appellants.

No pronouncement as to costs. 7

Hence, this petition.

Petitioner claims that the Court of Appeals erred in not sustaining the validity of two deeds of absolute sale covering the riceland and the house and lot, the first in favor of Miguel Palang and Erlinda Agapay and the second, in favor of Erlinda Agapay alone. Second, petitioner contends that respondent appellate court erred in not declaring Kristopher A. Palang as Miguel Palang's illegitimate son and thus entitled to inherit from Miguel's estate. Third, respondent court erred, according to petitioner, "in not finding that there is sufficient pleading and evidence that Kristopher A. Palang or Christopher A. Palang should be considered as party-defendant in Civil Case No. U-4625 before the trial court and in CA-G.R. No. 24199. 8

After studying the merits of the instant case, as well as the pertinent provisions of law and jurisprudence, the Court denies the petition and affirms the questioned decision of the Court of Appeals.

The first and principal issue is the ownership of the two pieces of property subject of this action. Petitioner assails the validity of the deeds of conveyance over the same parcels of land. There is no dispute that the transfer of ownership from the original owners of the riceland and the house and lot, Corazon Ilomin and the spouses Cespedes, respectively, were valid.

The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda. The provision of law applicable here is Article 148 of the Family Code providing for cases of cohabitation when a man and a woman who are notcapacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage. While Miguel and Erlinda contracted marriage on July 15, 1973, said union was patently void because the earlier marriage of Miguel and Carlina was still subsisting and unaffected by the latter'sde facto separation.

Under Article 148, only the properties acquired by both of the parties through their actual joint contribution of money, property or industry shall be owned by them in common in proportion to their respective contributions. It must be stressed that actual contribution is required by this provision, in contrast to Article 147 which states that efforts in the care and maintenance of the family and household, are regarded as contributions to the acquisition of common property by one who has no salary or income or work or industry. If the actual contribution of the party is not proved, there will be no co-ownership and no presumption of equal shares. 9

In the case at bar, Erlinda tried to establish by her testimony that she is engaged in the business of buy and sell and had a sari-sari store 10 but failed to persuade us that she actually contributed money to buy the subject riceland. Worth noting is the fact that on the date of conveyance, May 17, 1973, petitioner was only around twenty years of age and Miguel Palang was already sixty-four and a pensioner of the U.S. Government. Considering her youthfulness, it is unrealistic to conclude that in 1973 she contributed P3,750.00 as her share in the purchase price of subject property, 11 there being no proof of the same.

Petitioner now claims that the riceland was bought two months before Miguel and Erlinda actually cohabited. In the nature of an afterthought, said added assertion was intended to exclude their case from the operation of Article 148 of the Family Code. Proof of the precise date when they commenced their adulterous cohabitation not having been adduced, we cannot state definitively that the riceland was purchased even before they started living together. In any case, even assuming that the subject property was bought before cohabitation, the rules of co-ownership would still apply and proof of actual contribution would still be essential.

Since petitioner failed to prove that she contributed money to the purchase price of the riceland in Binalonan, Pangasinan, we find no basis to justify her co-ownership with Miguel over the same. Consequently, the riceland should, as correctly held by the Court of Appeals, revert to the conjugal partnership property of the deceased Miguel and private respondent Carlina Palang.

Furthermore, it is immaterial that Miguel and Carlina previously agreed to donate their conjugal property in favor of their daughter Herminia in 1975. The trial court erred in holding that the decision adopting their compromise agreement "in effect partakes the nature of judicial confirmation of the separation of property between spouses and the termination of the conjugal partnership." 12 Separation of property between spouses during the marriage shall not take place except by judicial order or without judicial conferment when there is an express stipulation in the marriage settlements. 13 The judgment which resulted from the parties' compromise was not specifically and expressly for separation of property and should not be so inferred.

34YUMI- CIVIL LAW 1

With respect to the house and lot, Erlinda allegedly bought the same for P20,000.00 on September 23, 1975 when she was only 22 years old. The testimony of the notary public who prepared the deed of conveyance for the property reveals the falsehood of this claim. Atty. Constantino Sagun testified that Miguel Palang provided the money for the purchase price and directed that Erlinda's name alone be placed as the vendee. 14

The transaction was properly a donation made by Miguel to Erlinda, but one which was clearly void and inexistent by express provision of law because it was made between persons guilty of adultery or concubinage at the time of the donation, under Article 739 of the Civil Code. Moreover, Article 87 of the Family Code expressly provides that the prohibition against donations between spouses now applies to donations between persons living together as husband and wife without a valid marriage, 15 for otherwise, the condition of those who incurred guilt would turn out to be better than those in legal union. 16

The second issue concerning Kristopher Palang's status and claim as an illegitimate son and heir to Miguel's estate is here resolved in favor of respondent court's correct assessment that the trial court erred in making pronouncements regarding Kristopher's heirship and filiation "inasmuch as questions as to who are the heirs of the decedent, proof of filiation of illegitimate children and the determination of the estate of the latter and claims thereto should be ventilated in the proper probate court or in a special proceeding instituted for the purpose and cannot be adjudicated in the instant ordinary civil action which is for recovery of ownership and possession." 17

As regards the third issue, petitioner contends that Kristopher Palang should be considered as party-defendant in the case at bar following the trial court's decision which expressly found that Kristopher had not been impleaded as party defendant but theorized that he had submitted to the court's jurisdiction through his mother/guardian ad litem. 18 The trial court erred gravely. Kristopher, not having been impleaded, was, therefore, not a party to the case at bar. His mother, Erlinda cannot be called his guardian ad litem for he was not involved in the case at bar. Petitioner adds that there is no need for Kristopher to file another action to prove that he is illegitimate son of Miguel, in order to avoid multiplicity of suits. 19 Petitioner's grave error has been discussed in the preceding paragraph where the need for probate proceedings to resolve the settlement of Miguel's estate and Kristopher's successional rights has been pointed out.

WHEREFORE, the instant petition is hereby DENIED. The questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERE

Arcaba vs. Batocael GR# 146683 / NOV.22, 2001 370 SCRA 414

[G.R. No. 146683.  November 22, 2001]

CIRILA ARCABA, petitioner, vs. ERLINDA TABANCURA VDA. DE BATOCAEL, SEIGFREDO C. TABANCURA, DORIS C. TABANCURA, LUZELLI C.

TABANCURA, BELEN C. TABANCURA, RAUL A. COMILLE, BERNADETTE A. COMILLE, and ABNER A. COMILLE, respondents.

D E C I S I O N

MENDOZA, J.:

Petitioner Cirila Arcaba seeks review on certiorari of the decision[1] of the Court of Appeals, which affirmed with modification the decision[2] of the Regional Trial Court, Branch 10, Dipolog City, Zamboanga del Norte in Civil Case No. 4593, declaring as void a deed of donation inter vivos executed by the late Francisco T. Comille in her favor and its subsequent resolution[3] denying reconsideration.

The facts are as follows:

On January 16, 1956, Francisco Comille and his wife Zosima Montallana became the registered owners of Lot No. 437-A located at the corner of Calle Santa Rosa (now Balintawak Street) and Calle Rosario (now Rizal Avenue) in Dipolog City, Zamboanga del Norte.  The total area of the lot was 418 square meters.[4]After the death of Zosima on October 3, 1980, Francisco and his mother-in-law, Juliana Bustalino Montallana, executed a deed of extrajudicial partition with waiver of rights,

in which the latter waived her share consisting of one-fourth (1

/4

) of the property to

Francisco.[5] On June 27, 1916, Francisco registered the lot in his name with the Registry of Deeds.[6]

Having no children to take care of him after his retirement, Francisco asked his niece Leticia Bellosillo,[7] the latter’s cousin, Luzviminda Paghacian,[8] and petitioner Cirila Arcaba, then a widow, to take care of his house, as well as the store inside.[9]

Conflicting testimonies were offered as to the nature of the relationship between Cirila and Francisco.  Leticia Bellosillo said Francisco and Cirila were lovers since they slept in the same room,[10] while Erlinda Tabancura,[11] another niece of Francisco, claimed that the latter had told her that Cirila was his mistress.[12] On the other hand, Cirila said she was a mere helper who could enter the master’s bedroom only when the old man asked her to and that Francisco in any case was too old for her.  She denied they ever had sexual intercourse.[13]

It appears that when Leticia and Luzviminda were married, only Cirila was left to take care of Francisco.[14] Cirila testified that she was a 34-year old widow while Francisco was a 75-year old widower when she began working for the latter; that he could still walk with her assistance at that time;[15] and that his health eventually deteriorated and he became bedridden.[16] Erlinda Tabancura testified that Francisco’s sole source of income consisted of rentals from his lot near the public streets.[17] He did not pay Cirila a regular cash wage as a househelper, though he provided her family with food and lodging.[18]

On January 24, 1991, a few months before his death, Francisco executed an instrument denominated “Deed of Donation Inter Vivos,” in which he ceded a portion of Lot 437-A, consisting of 150 square meters, together with his house, to Cirila, who

35YUMI- CIVIL LAW 1

accepted the donation in the same instrument.  Francisco left the larger portion of 268 square meters in his name.  The deed stated that the donation was being made in consideration of “the faithful services [Cirila Arcaba] had rendered over the past ten (10) years.” The deed was notarized by Atty. Vic T. Lacaya, Sr.[19] and later registered by Cirila as its absolute owner.[20]

On October 4, 1991, Francisco died without any children.  In 1993, the lot which Cirila received from Francisco had a market value of P57,105.00 and an assessed value of P28,550.00.[21]

On February 18, 1993, respondents filed a complaint against petitioner for declaration of nullity of a deed of donation inter vivos, recovery of possession, and damages. Respondents, who are the decedent’s nephews and nieces and his heirs by intestate succession, alleged that Cirila was the common-law wife of Francisco and the donation inter vivos made by Francisco in her favor is void under Article 87 of the Family Code, which provides:

Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing.  The prohibition shall also apply to persons living together as husband and wife without a valid marriage.

On February 25, 1999, the trial court rendered judgment in favor of respondents, holding the donation void under this provision of the Family Code.  The trial court reached this conclusion based on the testimony of Erlinda Tabancura and certain documents bearing the signature of one “Cirila Comille.” The documents were (1) an application for a business permit to operate as real estate lessor, dated January 8, 1991, with a carbon copy of the signature “Cirila Comille”;[22] (2) a sanitary permit to operate as real estate lessor with a health certificate showing the signature “Cirila Comille” in black ink;[23] and (3) the death certificate of the decedent with the signature “Cirila A. Comille” written in black ink.[24] The dispositive portion of the trial court’s decision states:

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

1. Declaring the Deed of Donation Inter Vivos executed by the late Francisco Comille recorded as Doc. No. 7; Page No. 3; Book No. V; Series of 1991 in the Notarial Register of Notary Public Vic T. Lacaya (Annex “A” to the Complaint) null and void;

2. Ordering the defendant to deliver possession of the house and lot subject of the deed unto the plaintiffs within thirty (30) days after finality of this decision; and finally

3. Ordering the defendant to pay attorney’s fees in the sum of P10,000.00.

SO ORDERED.[25]

Petitioner appealed to the Court of Appeals, which rendered on June 19, 2000 the decision subject of this appeal.  As already stated, the appeals court denied reconsideration.  Its conclusion was based on (1) the testimonies of Leticia, Erlinda, and Cirila; (2) the copies of documents purportedly showing Cirila’s use of Francisco’s surname; (3) a pleading in another civil case mentioning payment of rentals to Cirila as Francisco’s common-law wife; and (4) the fact that Cirila did not receive a regular cash wage.

Petitioner assigns the following errors as having been committed by the Court of Appeals:

(a) The judgment of the Court of Appeals that petitioner was the common-law wife of the late Francisco Comille is not correct and is a reversible error because it is based on a misapprehension of facts, and unduly breaks the chain of circumstances detailed by the totality of the evidence, its findings being predicated on totally incompetent or hearsay evidence, and grounded on mere speculation, conjecture or possibility.  (Salazar v. Gutierrez, 33 SCRA 243 and other cases; cited in Quiason, Philippine Courts and their Jurisdictions, 1993 ed., p. 604)

(b) The Court of Appeals erred in shifting the burden of evidence from the plaintiff to defendant.  (Bunyi v. Reyes, 39 SCRA 504; Quiason, id.)

(c) The Court of Appeals decided the case in a way probably not in accord with law or with the applicable jurisprudence in Rodriguez v. Rodriguez, 20 SCRA 908, and Liguez v. CA, 102 Phil. 577, 584.[26]

The issue in this case is whether the Court of Appeals correctly applied Art. 87 of the Family Code to the circumstances of this case.  After a review of the records, we rule in the affirmative.

The general rule is that only questions of law may be raised in a petition for review under Rule 45 of the Rules of Court, subject only to certain exceptions: (a) when the conclusion is a finding grounded entirely on speculations, surmises, or conjectures; (b) when the inference made is manifestly mistaken, absurd, or impossible; (c) where there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; (g) when the findings of the Court of Appeals are contrary to those of the trial court; (h) when the findings of fact are conclusions without citation of specific evidence on which they are based; (i) when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence but is contradicted by the evidence on record; and (j) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion.[27] It appearing that the Court of Appeals based its findings on evidence presented by both parties, the general rule should apply.

In Bitangcor v. Tan,[28] we held that the term “cohabitation” or “living together as husband and wife” means not only residing under one roof, but also having repeated sexual intercourse.  Cohabitation, of course, means more than sexual intercourse, especially when one of the parties is already old and may no longer be interested in sex.  At the very least, cohabitation is the public assumption by a man and a woman of the marital relation, and dwelling together as man and wife, thereby holding themselves out to the public as such.  Secret meetings or nights clandestinely spent together, even if often repeated, do not constitute such kind of cohabitation; they are merely meretricious.[29] In this jurisdiction, this Court has considered as sufficient proof of common-law relationship the stipulations between the parties,[30] a conviction of concubinage,[31] or the existence of illegitimate children.[32]

36YUMI- CIVIL LAW 1

Was Cirila Francisco’s employee or his common-law wife? Cirila admitted that she and Francisco resided under one roof for a long time.  It is very possible that the two consummated their relationship, since Cirila gave Francisco therapeutic massage and Leticia said they slept in the same bedroom.  At the very least, their public conduct indicated that theirs was not just a relationship of caregiver and patient, but that of exclusive partners akin to husband and wife.

Aside from Erlinda Tabancura’s testimony that her uncle told her that Cirila was his mistress, there are other indications that Cirila and Francisco were common-law spouses.  Seigfredo Tabancura presented documents apparently signed by Cirila using the surname “Comille.” As previously stated, these are an application for a business permit to operate as a real estate lessor,[33] a sanitary permit to operate as real estate lessor with a health certificate,[34] and the death certificate of Francisco.[35] These documents show that Cirila saw herself as Francisco’s common-law wife, otherwise, she would not have used his last name.  Similarly, in the answer filed by Francisco’s lessees in “Erlinda Tabancura, et al. vs. Gracia Adriatico Sy and Antonio Sy,” RTC Civil Case No. 4719 (for collection of rentals), these lessees referred to Cirila as “the common-law spouse of Francisco.”  Finally, the fact that Cirila did not demand from Francisco a regular cash wage is an indication that she was not simply a caregiver-employee, but Francisco’s common law spouse.  She was, after all, entitled to a regular cash wage under the law.[36] It is difficult to believe that she stayed with Francisco and served him out of pure beneficence.  Human reason would thus lead to the conclusion that she was Francisco’s common-law spouse.

Respondents having proven by a preponderance of evidence that Cirila and Francisco lived together as husband and wife without a valid marriage, the inescapable conclusion is that the donation made by Francisco in favor of Cirila is void under Art. 87 of the Family Code.

WHEREFORE, the decision of the Court of Appeals affirming the decision of the trial court is hereby AFFIRMED.SO ORDERED.

CHAPTER 3. SYSTEM OF ABSOLUTE COMMUNITY (Articles 88-104)

Section 1. General Provisions (Articles 88-90)

Section 2. What constitutes Community Property (Articles 91-93)Section 3. Charges Upon & Obligations of the Absolute Community (Articles 94-95)

Sunga-Chan v. CA GR# 164401 / JUNE 25, 2008 LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners, vs.THE HONORABLE COURT OF APPEALS; THE HONORABLE PRESIDING JUDGE, Regional Trial Court, Branch 11, Sindangan, Zamboanga Del Norte; THE REGIONAL TRIAL COURT SHERIFF, Branch 11, Sindangan, Zamboanga Del Norte; THE CLERK OF COURT OF MANILA, as Ex-Officio Sheriff; and LAMBERTO T. CHUA, respondents.

 

VELASCO, JR., J.:The Case

 Before us is a petition for review under Rule 45, seeking to nullify and set

aside the Decision[1] and Resolution datedNovember 6, 2003 and July 6, 2004, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 75688. The impugned CA Decision and Resolution denied the petition for certiorari interposed by petitioners assailing the Resolutions[2] dated November 6, 2002 and January 7, 2003, respectively, of the Regional Trial Court (RTC), Branch 11 in Sindangan, Zamboanga Del Norte in Civil Case No. S-494, a suit for winding up of partnership affairs, accounting, and recovery of shares commenced thereat by respondent Lamberto T. Chua.

The Facts In 1977, Chua and Jacinto Sunga formed a partnership to engage in the

marketing of liquefied petroleum gas.  For convenience, the business, pursued under the name, Shellite Gas Appliance Center (Shellite), was registered as a sole proprietorship in the name of Jacinto, albeit the partnership arrangement called for equal sharing of the net profit.

 After Jacinto’s death in 1989, his widow, petitioner Cecilia Sunga, and

married daughter, petitioner Lilibeth Sunga-Chan, continued with the business without Chua’s consent. Chua’s subsequent repeated demands for accounting and winding up went unheeded, prompting him to file on June 22, 1992 a Complaint for Winding Up of a Partnership Affairs, Accounting, Appraisal and Recovery of Shares and Damages with Writ of Preliminary Attachment, docketed as Civil Case No. S-494 of the RTC in Sindangan, Zamboanga del Norte and raffled to Branch 11 of the court.

 After trial, the RTC rendered, on October 7, 1997, judgment finding for

Chua, as plaintiff a quo. The RTC’s decision would subsequently be upheld by the CA in CA-G.R. CV No. 58751 and by this Court per its Decision dated August 15, 2001 in G.R. No. 143340.[3]  The corresponding Entry of Judgment[4] would later issue declaring the October 7, 1997 RTC decision final and executory as of December 20, 2001. The fallo of the RTC’s decision reads: 

 WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, as follows:

 (1)  DIRECTING them to render an accounting in acceptable form under accounting procedures and standards of the properties, assets, income and profits of [Shellite] since the time of death of Jacinto L. Sunga , from whom they continued the business operations including all businesses derived from [Shellite]; submit an inventory, and appraisal of all these properties, assets, income, profits, etc. to the Court and to plaintiff for approval or disapproval;

 (2)  ORDERING them to return and restitute to the partnership any and all properties, assets, income and profits they misapplied and converted to their own use and advantage that legally pertain to the plaintiff

37YUMI- CIVIL LAW 1

and account for the properties mentioned in pars. A and B on pages 4-5 of this petition as basis;

 (3)  DIRECTING them to restitute and pay to the plaintiff ½ shares and interest of the plaintiff in the partnership of the listed properties, assets and good will in schedules A, B and C, on pages 4-5 of the petition;

 (4)  ORDERING them to pay the plaintiff earned but unreceived income and profits from the partnership from 1988 to May 30, 1992, when the plaintiff learned of the closure of the store the sum of P35,000.00 per month, with legal rate of interest until fully paid;

 (5)  ORDERING them to wind up the affairs of the partnership and terminate its business activities pursuant to law, after delivering to the plaintiff all the ½ interest, shares, participation and equity in the partnership, or the value thereof in money or money’s worth, if the properties are not physically divisible;

 (6)  FINDING them especially Lilibeth Sunga-Chan guilty of breach of trust and in bad faith and hold them liable to the plaintiff the sum of P50,000.00 as moral and exemplary damages; and,

 (7) DIRECTING them to reimburse and pay the sum of P25,000.00 as attorney’s [fee] and P25,000.00 as litigation expenses.NO special pronouncements as to COSTS.SO ORDERED.[5]  (Emphasis supplied.)

  Via an Order[6] dated January 16, 2002, the RTC granted Chua’s motion for

execution. Over a month later, the RTC, acting on another motion of Chua, issued an amended writ of execution.[7]

 It seems, however, that the amended writ of execution could not be

immediately implemented, for, in an omnibus motion of April 3, 2002, Chua, inter alia, asked the trial court to commission a certified public accountant (CPA) to undertake the accounting work and inventory of the partnership assets if petitioners refuse to do it within the time set by the court.  Chua later moved to withdraw his motion and instead ask the admission of an accounting report prepared by CPA Cheryl A. Gahuman. In the report under the heading, Computation of Claims,[8] Chua’s aggregate claim, arrived at using the compounding-of-interest method, amounted to PhP 14,277,344.94. Subsequently, the RTC admitted and approved the computation of claims in view of petitioners’ failure and refusal, despite notice, to appear and submit an accounting report on the winding up of the partnership on the scheduled hearings on April 29 and 30, 2002.[9]

 After another lengthy proceedings, petitioners, on September 24, 2002,

submitted their own CPA-certified valuation and accounting report. In it, petitioners limited Chua’s entitlement from the winding up of partnership affairs to an aggregate amount of PhP 3,154,736.65 only.[10]  Chua, on the other hand, submitted a new computation,[11] this time applying simple interest on the various items covered by

his claim. Under this methodology, Chua’s aggregate claim went down to PhP 8,733,644.75. 

 On November 6, 2002, the RTC issued a Resolution,[12] rejecting the

accounting report petitioners submitted, while approving the new computation of claims Chua submitted. The fallo of the resolution reads:   

 WHEREFORE, premises considered, this Court resolves,

as it is hereby resolved, that the Computation of Claims submitted by the plaintiff dated October 15, 2002 amounting to P8,733,644.75 be APPROVED in all respects as the final computation and accounting of the defendants’ liabilities in favor of the plaintiff in the above-captioned case, DISAPPROVING for the purpose, in its entirety, the computation and accounting filed by the defendants.

 SO RESOLVED.[13]

Petitioners sought reconsideration, but their motion was denied by the RTC per its Resolution of January 7, 2003.[14]

 In due time, petitioners went to the CA on a petition for certiorari[15] under

Rule 65, assailing the November 6, 2002 and January 7, 2003 resolutions of the RTC, the recourse docketed as CA-G.R. SP No. 75688.

 The Ruling of the CA

 As stated at the outset, the CA, in the herein assailed Decision of November

6, 2003, denied the petition for certiorari, thus: 

WHEREFORE, the foregoing considered, the Petition is hereby DENIED for lack of merit.

 SO ORDERED.[16]  

The CA predicated its denial action on the ensuing main premises: 1. Petitioners, by not appearing on the hearing dates, i.e., April 29 and 30,

2002, scheduled to consider Chua’s computation of claims, or rendering, as required, an accounting of the winding up of the partnership, are deemed to have waived their right to interpose any objection to the computation of claims thus submitted by Chua. 

 2. The 12% interest added on the amounts due is proper as the

unwarranted keeping by petitioners of Chua’s money passes as an involuntary loan and forbearance of money.

 3. The reiterative arguments set forth in petitioners’ pleadings below were

part of their delaying tactics.  Petitioners had come to the appellate court at least thrice and to this Court twice.  Petitioners had more than enough time to question the award and it is now too late in the day to change what had become final and executory.

38YUMI- CIVIL LAW 1

 Petitioners’ motion for reconsideration was rejected by the appellate court

through the assailed Resolution[17] dated July 6, 2004.  Therein, the CA explained that the imposition of the 12% interest for forbearance of credit or money was proper pursuant to paragraph 1 of the October 7, 1997 RTC decision, as the computation done by CPA Gahuman was made in “acceptable form under accounting procedures and standards of the properties, assets, income and profits of [Shellite].”[18]  Moreover, the CA ruled that the imposition of interest is not based on par. 3 of the October 7, 1997 RTC decision as the phrase “shares and interests” mentioned therein  refers not to an imposition of interest for use of money in a loan or credit, but to a legal share or right.  The appellate court also held that the imposition of interest on the partnership assets falls under par. 2 in relation to par. 1 of the final RTC decision as the restitution mentioned therein does not simply mean restoration but also reparation for the injury or damage committed against the rightful owner of the property.

 Finally, the CA declared the partnership assets referred to in the final

decision as “liquidated claim” since the claim of Chua is ascertainable by mathematical computation; therefore, interest is recoverable as an element of damage.

 The Issues

 Hence, the instant petition with petitioners raising the following issues for

our consideration:I.

 Whether or not the Regional Trial Court can [impose] interest on a final judgment of unliquidated claims.

 II.

 Whether or not the Sheriff can enforce the whole divisible obligation under judgment only against one Defendant. 

III. Whether or not the absolute community of property of spouses Lilibeth Sunga Chan with her husband Norberto Chan can be lawfully made to answer for the liability of Lilibeth Chan under the judgment.[19] 

 Significant Intervening Events

 In the meantime, pending resolution of the instant petition for review and

even before the resolution by the CA of its CA-G.R. SP No. 75688, the following relevant events transpired:

 

1. Following the RTC’s approval of Chua’s computation of claims in the amount of PhP 8,733,644.75, the sheriff of Manilalevied upon petitioner Sunga-Chan’s property located along Linao St., Paco, Manila, covered by Transfer Certificate of Title (TCT) No. 208782,[20] over which a building leased to the Philippine National Bank (PNB) stood. In the auction sale of the levied lot, Chua, with a tender of PhP 8 million,[21] emerged as the winning bidder.

 2. On January 21, 2005, Chua moved for the issuance of a final deed of sale

and a writ of possession. He also asked the RTC to order the Registry of Deeds of Manila to cancel TCT No. 208782 and to issue a new certificate. Despite petitioners’ opposition on the ground of prematurity, a final deed of sale[22] was issued on February 16, 2005.

3. On February 18, 2005, Chua moved for the confirmation of the sheriff’s final deed of sale and for the issuance of an order for the cancellation of TCT No. 208782.  Petitioners again interposed an opposition in which they informed the RTC that this Court had already granted due course to their petition for review on January 31, 2005;

 4. On April 11, 2005, the RTC, via a Resolution, confirmed the sheriff’s final

deed of sale, ordered the Registry of Deeds of Manila to cancel TCT No. 208782, and granted a writ of possession[23] in favor of Chua.

 5. On May 3, 2005, petitioners filed before this Court a petition for the

issuance of a temporary restraining order (TRO).  OnMay 24, 2005, the sheriff of Manila issued a Notice to Vacate[24] against petitioners, compelling petitioners to repair to this Court anew for the resolution of their petition for a TRO.

 6. On May 31, 2005, the Court issued a TRO,[25] enjoining the RTC and

the sheriff from enforcing the April 11, 2005 writ of possession and the May 24, 2005 Notice to Vacate.  Consequently, the RTC issued an Order[26] on June 17, 2005, suspending the execution proceedings before it.

 7. Owing to the clashing ownership claims over the leased Paco property,

coupled with the filing of an unlawful detainer suit before the Metropolitan Trial Court (MeTC) in Manila against PNB, the Court, upon the bank’s motion, allowed, by Resolution[27]dated April 26, 2006, the consignation of the monthly rentals with the MeTC hearing the ejectment case.

  

 The Court’s Ruling

 The petition is partly meritorious. 

First Issue: Interest Proper in Forbearance of Credit Petitioners, citing Article 2213[28] of the Civil Code, fault the trial court for

imposing, in the execution of its final judgment, interests on what they considered as unliquidated claims.  Among these was the claim for goodwill upon which the RTC attached a monetary value of PhP 250,000.  Petitioners also question the imposition

39YUMI- CIVIL LAW 1

of 12% interest on the claimed monthly profits of PhP 35,000, reckoned from 1988 to October 15, 1992. To petitioners, the imposable rate should only be 6% and computed from the finality of the RTC’s underlying decision, i.e., from December 20, 2001.  

 Third on the petitioners’ list of unliquidated claims is the yet-to-be

established value of the one-half partnership share and interest adjudicated to Chua, which, they submit, must first be determined with reasonable certainty in a judicial proceeding. And in this regard, petitioners, citing Eastern Shipping Lines, Inc. v. Court of Appeals,[29]  would ascribe error on the RTC for adding  a 12% per annum interest on the approved valuation of the one-half share of the assets, inclusive of goodwill, due Chua.  

 Petitioners are partly correct. For clarity, we reproduce the summary valuations and accounting reports on

the computation of claims certified to by the parties’ respective CPAs.  Chua claimed the following:

 A 50% share on assets (exclusive of goodwill) at fair

market value (Schedule 1)                                P          1,613,550.00 

B  50% share in the monetary value of goodwill(P500,000 x 50%)                                                           250,000.00

 C  Legal interest on share of assets from June 1, 1992 to

Oct. 15, 2002 at 12% interest per year (Schedule 2)      2,008,869.75

 D  Unreceived profits from 1988 to 1992 and its corresponding            interest from Jan. 1, 1988 to Oct. 15, 2002            (Schedule 3)                                                                  4,761,225.00 E  Damages                                                                                     50,000.00 F  Attorney’s fees                                                                            25,000.00 G  Litigation fees                                                                                   25,000.00  TOTAL AMOUNT                                                     P                         8,733,644.75    

On the other hand, petitioners acknowledged the following to be due to Chua:

  Total Assets – Schedule 1                                                         P2,431,956.3550% due to Lamberto Chua                                                      P1,215,978.16Total Alleged Profit, Net of Payments Made,

May 1992-Sch. 2                                                           1,613,758.4950% share in the monetary value of goodwill            (500,000 x 50%)                                                               250,000.00Moral and Exemplary Damages                                                       50,000.00Attorney’s Fee                                                                                25,000.00Litigation Fee                                                                                        25,000.00  TOTAL AMOUNT                                                                 P3,154,736.65   As may be recalled, the trial court admitted and approved Chua’s

computation of claims amounting to PhP 8,733,644.75, but rejected that of petitioners, who came up with the figure of only PhP 3,154,736.65. We highlight the substantial differences in the accounting reports on the following items, to wit:  (1) the aggregate amount of the partnership assets bearing on the 50% share of Chua thereon; (2) interests added on Chua’s share of the assets; (3) amount of profits from 1988 through May 30, 1992, net of alleged payments made to Chua; and (4) interests added on the amount entered as profits.

  From the foregoing submitted valuation reports, there can be no dispute

about the goodwill earned thru the years by Shellite. In fact, the parties, by their own judicial admissions, agreed on the monetary value, i.e., PhP 250,000, of this item. Clearly then, petitioners contradict themselves when they say that such amount of goodwill is without basis. Thus, the Court is loathed to disturb the trial court’s approval of the amount of        PhP 250,000, representing the monetary value of the goodwill, to be paid to Chua.

 Neither is the Court inclined to interfere with the CA’s conclusion as to the

total amount of the partnership profit, that is, PhP 1,855,000, generated for the period January 1988 through May 30, 1992, and the total partnership assets of PhP 3,227,100, 50% of which, or PhP 1,613,550,  pertains to  Chua as his share. To be sure, petitioners have not adduced adequate evidence to belie the above CA’s factual determination, confirmatory of the trial court’s own. Needless to stress, it is not the duty of the Court, not being a trier of facts, to analyze or weigh all over again

40YUMI- CIVIL LAW 1

the evidence or premises supportive of such determination, absent, as here, the most compelling and cogent reasons.

 This brings us to the question of the propriety of the imposition of interest

and, if proper, the imposable rate of interest applicable.    In Reformina v. Tomol, Jr.,[30] the Court held that the legal interest at 12%

per annum under Central Bank (CB) Circular No. 416 shall be adjudged only in cases involving the loan or forbearance of money. And for transactions involving payment of indemnities in the concept of damages arising from default in the performance of obligations in general and/or for money judgment not involving a loan or forbearance of money, goods, or credit, the governing provision is Art. 2209 of the Civil Code prescribing a yearly 6% interest.  Art. 2209 pertinently provides:

 Art. 2209.  If the obligation consists in the payment of a

sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.  The term “forbearance,” within the context of usury law, has been described

as a contractual obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay the loan or debt then due and payable.[31]

 Eastern Shipping Lines, Inc. synthesized the rules on the imposition of

interest, if proper, and the applicable rate, as follows: The 12% per annum rate under CB Circular No. 416 shall apply only to loans or forbearance of money, goods, or credits, as well as to judgments involving such loan or forbearance of money, goods, or credit, while the 6% per annum under Art. 2209 of the Civil Code applies “when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general,”[32] with the application of both rates reckoned “from the time the complaint was filed until the [adjudged] amount is fully paid.”[33] In either instance, the reckoning period for the commencement of the running of the legal interest shall be subject to the condition “that the courts are vested with discretion, depending on the equities of each case, on the award of interest.”[34]

  Otherwise formulated, the norm to be followed in the future on the rates and

application thereof is:  I. – When an obligation, regardless of its source, is

breached, the contravenor can be held liable for damages. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable damages.

 II. – With regard particularly to an award of interest in the

concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

 1.  When the obligation breached consists in the payment

of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing.  Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded.  In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

 2.  When an obligation not constituting loans or

forbearance of money is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.  No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty.  Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained).  The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

 3.  When the judgment of the court awarding a sum of

money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.[35]  Guided by the foregoing rules, the award to Chua of the amount

representing earned but unremitted profits, i.e.. PhP 35,000 monthly, from January 1988 until May 30, 1992, must earn interest at 6% per annum reckoned from October 7, 1997, the rendition date of the RTC decision, until December 20, 2001, when the said decision became final and executory.  Thereafter, the total of the monthly profits inclusive of the add on 6% interest shall earn 12% per annum reckoned from December 20, 2001 until fully paid, as the award for that item is considered to be, by then, equivalent to a forbearance of credit.  Likewise, the PhP 250,000 award, representing the goodwill value of the business, the award of PhP 50,000 for moral and exemplary damages, PhP 25,000 attorney’s fee, and PhP 25,000 litigation fee shall earn 12% per annum from December 20, 2001 until fully paid. 

41YUMI- CIVIL LAW 1

 Anent the impasse over the partnership assets, we are inclined to agree

with petitioners’ assertion that Chua’s share and interest on such assets partake of an unliquidated claim which, until reasonably determined, shall not earn interest for him. As may be noted, the legal norm for interest to accrue is “reasonably determinable,” not, as Chua suggested and the CA declared, determinable by mathematical computation. 

 The Court has certainly not lost sight of the fact that the October 7, 1997

RTC decision clearly directed petitioners to render an accounting, inventory, and appraisal of the partnership assets and then to wind up the partnership affairs by restituting and delivering to Chua his one-half share of the accounted partnership assets.  The directive itself is a recognition that the exact share and interest of Chua over the partnership cannot be determined with reasonable precision without going through with the inventory and accounting process. In fine, a liquidated claim cannot validly be asserted without accounting. In net effect, Chua’s interest and share over the partnership asset, exclusive of the goodwill, assumed the nature of a liquidated claim only after the trial court, through its November 6, 2002 resolution, approved the assets inventory and accounting report on such assets.

 Considering that Chua’s computation of claim, as approved by the trial

court, was submitted only on October 15, 2002, no interest in his favor can be added to his share of the partnership assets. Consequently, the computation of claims of Chua should be as follows:

 (1) 50% share on assets (exclusive of goodwill)

                at fair market value                                              PhP 1,613,550.00 

          (2) 50% share in the monetary value of goodwill               (PhP 500,000 x 50%)                                                      250,000.00           (3) 12% interest on share of goodwill from December                20, 2001 to October 15, 2000                [PhP 250,000 x 0.12 x 299/365 days]                             24,575.34

           (4) Unreceived profits from 1988 to May 30, 1992           1,855,000.00           (5) 6% interest on unreceived profits from January                1, 1988 to December 20, 2001[36]                                1,360,362.50                   (6) 12% interest on unreceived profits from December                20, 2001 to October 15, 2002                [PhP 3,215,362.50 x 12% x 299/365 days]                   316,074.54           (7) Moral and exemplary damages                                        50,000.00           (8) Attorney’s fee                                                                25,000.00           (9) Litigation fee                                                                  25,000.00 

                    (10) 12% interest on moral and exemplary damages,                  attorney’s fee, and litigation fee from December                  20, 2001 to October 15, 2002                  [PhP 100,000 x 12% x 299/365 days]                             9,830.14           TOTAL AMOUNT                                                PhP 5,529,392.52 

  

Second Issue: Petitioners’ Obligation Solidary Petitioners, on the submission that their liability under the RTC decision is

divisible, impugn the implementation of the amended writ of execution, particularly the levy on execution of the absolute community property of spouses petitioner Sunga-Chan and Norberto Chan. Joint, instead of solidary, liability for any and all claims of Chua is obviously petitioners’ thesis.

 Under the circumstances surrounding the case, we hold that the obligation

of petitioners is solidary for several reasons. For one, the complaint of Chua for winding up of partnership affairs,

accounting, appraisal, and recovery of shares and damages is clearly a suit to enforce a solidary or joint and several obligation on the part of petitioners.  As it were, the continuance of the business and management of Shellite by petitioners against the will of Chua gave rise to a solidary obligation, the acts complained of not being severable in nature. Indeed, it is well-nigh impossible to draw the line between when the liability of one petitioner ends and the liability of the other starts.  In this kind of situation, the law itself imposes solidary obligation. Art. 1207 of the Civil Code thus provides:

Art. 1207.  The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each of the latter is bound to render, entire compliance with the prestation.  There is solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.  (Emphasis ours.)

  Any suggestion that the obligation to undertake an inventory, render an

accounting of partnership assets, and to wind up the partnership affairs is divisible ought to be dismissed.

 For the other, the duty of petitioners to remit to Chua his half interest and

share of the total partnership assets proceeds from petitioners’ indivisible obligation to render an accounting and inventory of such assets.  The need for the imposition of a solidary liability becomes all the more pronounced considering the impossibility of

42YUMI- CIVIL LAW 1

quantifying how much of the partnership assets or profits was misappropriated by each petitioner.

 And for a third, petitioners’ obligation for the payment of damages and

attorney’s and litigation fees ought to be solidary in nature, they having resisted in bad faith a legitimate claim and thus compelled Chua to litigate.

 Third Issue: Community Property Liable

 Primarily anchored as the last issue is the erroneous theory of divisibility of

petitioners’ obligation and their joint liability therefor. The Court needs to dwell on it lengthily.

 Given the solidary liability of petitioners to satisfy the judgment award,

respondent sheriff cannot really be faulted for levying upon and then selling at public auction the property of petitioner Sunga-Chan to answer for the whole obligation of petitioners.  The fact that the levied parcel of land is a conjugal or community property, as the case may be, of spouses Norberto and Sunga-Chan does not per se vitiate the levy and the consequent sale of the property. Verily, said property is not among those exempted from execution under Section 13,[37] Rule 39 of the Rules of Court.

 And it cannot be overemphasized that the TRO issued by the Court on May

31, 2005 came after the auction sale in question.   Parenthetically, the records show that spouses Sunga-Chan and Norberto

were married on February 4, 1992, or after the effectivity of the Family Code on August 3, 1988. Withal, their absolute community property may be held liable for the obligations contracted by either spouse.  Specifically, Art. 94 of said Code pertinently provides:

 Art. 94.  The absolute community of property shall be

liable for:

(1)  x x x x

(2)  All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community, or by both spouses, or by one spouse 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 been benefited. (Emphasis ours.)  Absent any indication otherwise, the use and appropriation by petitioner

Sunga-Chan of the assets of Shellite even after the business was discontinued on May 30, 1992 may reasonably be considered to have been used for her and her husband’s benefit.

 It may be stressed at this juncture that Chua’s legitimate claim against

petitioners, as readjusted in this disposition, amounts to only                     PhP 5,529,392.52, whereas Sunga-Chan’s auctioned property which Chua acquired, as the highest bidder, fetched a price of PhP 8 million.  In net effect, Chua owes petitioner Sunga-Chan the amount of PhP 2,470,607.48, representing the excess of the purchase price over his legitimate claims.

 Following the auction, the corresponding certificate of sale dated January

15, 2004 was annotated on TCT No. 208782. On January 21, 2005, Chua moved for the issuance of a final deed of sale (1) to order the Registry of Deeds of Manila to cancel TCT No. 208782; (2) to issue a new TCT in his name; and (3) for the RTC to issue a writ of possession in his favor.  And as earlier stated, the RTC granted Chua’s motion, albeit the Court restrained the enforcement of the RTC’s package of orders via a TRO issued on May 31, 2005.  

 Therefore, subject to the payment by Chua of PhP 2,470,607.48 to

petitioner Sunga-Chan, we affirm the RTC’s April 11, 2005 resolution, confirming the sheriff’s final deed of sale of the levied property, ordering the Registry of Deeds of Manila to cancel TCT No. 208782, and issuing a writ of possession in favor of Chua.

 WHEREFORE, this petition is PARTLY GRANTED.  Accordingly, the

assailed decision and resolution of the CA in CA-G.R. SP No. 75688 are hereby AFFIRMED with the following MODIFICATIONS:

 (1)     The Resolutions dated November 6, 2002 and January 7, 2003 of

the RTC, Branch 11 in Sindangan, Zamboanga Del Norte in Civil Case No. S-494, as effectively upheld by the CA, are AFFIRMED with the modification that the approved claim of respondent Chua is hereby corrected and adjusted to cover only the aggregate amount of PhP 5,529,392.52;  

 (2)     Subject to the payment by respondent Chua of PhP 2,470,607.48 to

petitioner Sunga-Chan, the Resolution dated April 11, 2005 of the RTC, confirming the sheriff’s final deed of sale of the levied property, ordering the Registry of Deeds of Manila to cancel TCT No. 208782, and issuing a writ of possession in favor of respondent Chua, is AFFIRMED; and

 The TRO issued by the Court on May 31, 2005 in the instant petition

is LIFTED.

No pronouncement as to costs.

SO ORDERED.

43YUMI- CIVIL LAW 1

Section 4. Ownership, Administration, Enjoyment & Disposition of the Community Property (Articles 96-98)

Section 5. Dissolution of Absolute Community Regime (Arts 99-101)

Section 6. Liquidation of the Absolute Community Assets & Liabilities (Arts 102-104)

CHAPTER 4. CONJUGAL PARTNERSHIP OF GAINS

Section 1. General Provisions (Articles 105-108); See also Articles 88 & 89, FC;Articles 165, 166, 173 NCC; Section 7, Article XII, 1987 Constitution

Villanueva et., al vs. CA et al. GR# 143286 / APR. 14, 2004427 SCRA 439

[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.

D E C I S I O N

CARPIO, J.:

This petition for review on certiorari[1] 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

3.             A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24953;4.             A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24954;5.             A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24956;6.             A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24957;7.             A parcel of land located at Pulpugan, Consolacion, Cebu under tax dec. No. 24958;8.             A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No. 01042;9.             A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No. 01043;10.           A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No. 01046;11.           A parcel of land located at Tipolo, Mandaue City, covered by tax dec. No. 01041;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;16.           A parcel of land located at Tipolo, Mandaue City covered by tax dec. No.01048;17.           A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01051;18.           A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01047;19.           A parcel of land located at Banilad, Mandaue City covered by tax dec. No. 02381;20.           A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01049;21.           A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01045;22.           A parcel of land located at Tipolo, Mandaue City covered by tax dec. No. 01450 (in the name of Pacita Villanueva).’

44YUMI- CIVIL LAW 1

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 P10,800.00;

b)             Barben Wood Industries, Inc. – for Lot 148 covered by TCT No. 1731 for an annual rental of P21,600.00;

c)             Metaphil, Inc. – parcel of land consisting of 2,790.51 sq. meters at the rate of P2,700.00 annually for the first five (5) years, and P3,240.00 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 P3,500.00 renewable for another 20 years after April 1, 1995 at an annual rate of P4,000.00;

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 P9,500.00 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 P4,000.00;

g)             House lessees listed in Exhibit “13” with total monthly rentals of P1,975.00 a month for the 24 lessees or P24,700.00 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 P50,000.00 by way of attorney’s fees and expenses of litigation in the sum of P5,000.00 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  P50,000.00 is deleted.

45YUMI- CIVIL LAW 1

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. 152[2] 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:

46YUMI- CIVIL LAW 1

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 properties[16] 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 105[18] 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 declarations[23] 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.

47YUMI- CIVIL LAW 1

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-9602[27] 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 Code[34] 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 thatactual 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.

De Leon v. De Leon GR# 185063 / JULY 23, 2009

SPS. LITA DE LEON and FELIX RIO TARROSA, Petitioners, vs.ANITA B. DE LEON, DANILO B. DE LEON, and VILMA B. DE LEON, Respondents. 

VELASCO, JR., J.:The Case

48YUMI- CIVIL LAW 1

           Before us is a Petition for Review on Certiorari under Rule 45 assailing and seeking to set aside the Decision[1] and Resolution[2] dated August 27, 2008 and October 20, 2008, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 88571. The CA affirmed with modification the October 4, 2006 Decision[3] in Civil Case No. Q04-51595 of the Regional Trial Court (RTC), Branch 22 in Quezon City.

 The Facts

           On July 20, 1965, Bonifacio O. De Leon, then single, and the People’s Homesite and Housing Corporation (PHHC) entered into a Conditional Contract to Sell for the purchase on installment of a 191.30 square-meter lot situated in Fairview, Quezon City. Subsequently, on April 24, 1968, Bonifacio married Anita de Leon in a civil rite officiated by the Municipal Mayor of Zaragosa, Nueva Ecija.   To this union were born Danilo and Vilma.           Following the full payment of the cost price for the lot thus purchased, PHHC executed, on June 22, 1970, a Final Deed of Sale in favor of Bonifacio.  Accordingly, Transfer Certificate of Title (TCT) No. 173677 was issued on February 24, 1972 in the name of Bonifacio, “single.”           Subsequently, Bonifacio, for PhP 19,000, sold the subject lot to her sister, Lita, and husband Felix Rio Tarrosa (Tarrosas), petitioners herein.  The conveying Deed of Sale dated January 12, 1974 (Deed of Sale) did not bear the written consent and signature of Anita.           Thereafter, or on May 23, 1977, Bonifacio and Anita renewed their vows in a church wedding at St. John the Baptist Parish inSan Juan, Manila.           On February 29, 1996, Bonifacio died.           Three months later, the Tarrosas registered the Deed of Sale and had TCT No. 173677 canceled.  They secured the issuance in their names of TCT No. N-173911 from the Quezon City Register of Deeds.           Getting wind of the cancellation of their father’s title and the issuance of TCT No. N-173911, Danilo and Vilma filed on May 19, 2003 a Notice of Adverse Claim before the Register of Deeds of Quezon City to protect their rights over the subject property. Very much later, Anita, Danilo, and Vilma filed a reconveyance suit before the RTC in Quezon City.  In their complaint, Anita and her children alleged, among other things, that fraud attended the execution of the Deed of Sale and that subsequent acts of Bonifacio would show that he was still the owner of the parcel of land.  In support of their case, they presented, inter alia, the following documents: 

a.         A Real Estate Mortgage execution by Bonifacio in favor of spouses Cesar Diankinay and Filomena Almero on July 22, 1977.

 

b.         A Civil Complaint filed by Bonifacio against spouses Cesar Diankinay and Filomena Almero on November 27, 1979 for nullification of the Real Estate Mortgage.

 c.         The Decision issued by the Court of First Instance

of Rizal, Quezon City, promulgated on July 30, 1982, nullifying the Real Estate Mortgage.[4]

  

The Tarrosas, in their Answer with Compulsory Counterclaim, averred that the lot Bonifacio sold to them was his exclusive property inasmuch as he was still single when he acquired it from PHHC.  As further alleged, they were not aware of the supposed marriage between Bonifacio and Anita at the time of the execution of the Deed of Sale.

 After several scheduled hearings, both parties, assisted by their respective

counsels, submitted a Joint Stipulation of Facts with Motion, to wit:1.                  The parties have agreed to admit the

following facts: a.         Bonifacio O. De Leon, while still single x x x,

purchased from the [PHHC] through a Conditional Contract to Sell on July 20, 1965 a parcel of land with an area of 191.30 square meters situated in Fairview, Quezon City for P841.72;

 b.         On April 24, 1968, Bonifacio O. De Leon married

plaintiff Anita B. De Leon before the Municipal Mayor of Zaragosa, Nueva Ecija.  Both parties stipulate that said marriage is valid and binding under the laws of the Philippines;

 c.         On June 22, 1970, Bonifacio O. De Leon paid

[PHHC] the total amount of P1,023.74 x x x.  The right of ownership over the subject parcel of land was transferred to the late Bonifacio O. De Leon on June 22, 1970, upon the full payment of the total [price] of P1,023.74 and upon execution of the Final Deed of Sale;

 d.         After full payment, Bonifacio O. De Leon was

issued [TCT] No. 173677 on February 24, 1972; e.         On January 12, 1974, Bonifacio O. De Leon

executed a Deed of Sale in favor of defendants-spouses Felix Rio Tarrosa and Lita O. De Leon disposing the parcel of land under TCT No. 173677 for valuable consideration amount of P19,000.00 and subscribed before Atty. Salvador R. Aguinaldo who was commissioned to [notarize] documents on said date.  The parties stipulate that the Deed of Sale is valid and genuine.  However, plaintiff Anita De Leon was not a signatory to the Deed of Sale executed on January 12, 1974;

 49

YUMI- CIVIL LAW 1

f.          That plaintiff Anita B. De Leon and the late Bonifacio O. De Leon were married in church rites on May 23, 1977 x x x;

 g.         The late Bonifacio O. De Leon died on February

29, 1996 at the UST Hospital, España, Manila; h.         The said “Deed of Sale” executed on January 12,

1974 was registered on May 8, 1996 before the Office of the Register of Deeds of Quezon City and [TCT] No. N-173911 was issued to Lita O. De Leon and Felix Rio Tarrosa.[5]

  

The Ruling of the Trial Court           On October 4, 2006, the RTC, on the finding that the lot in question was the conjugal property of Bonifacio and Anita, rendered judgment in favor of Anita and her children.  The dispositive portion of the decision reads:

           WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs and against defendants in the following manner: 

(1)        Declaring the Deed of Sale dated January 12, 1974 executed by the late Bonifacio O. De Leon in favor of defendants-spouses Lita De Leon and Felix Rio Tarrosa void ab initio; 

(2)        Directing the Register of Deed of Quezon City to cancel Transfer Certificate of Title No. N-173911 in the name of “Lita O. De Leon, married to Felix Rio Tarrosa” and restore Transfer Certificate of Title No. 173667 in the name of “Bonifacio O. De Leon”; 

(3)        Ordering the defendants-spouses to pay plaintiffs the following sums: 

(a)        P25,000.00 as moral damages;(b)        P20,000.00 as exemplary damages;(c)        P50,000.00 as attorney’s fees plus appearance

fee of P2,500.00 per court appearance;(d)       Costs of this suit.

 SO ORDERED.

          Aggrieved, the Tarrosas appealed to the CA.  As they would submit, the RTC erred: 

(1)               in finding for the plaintiffs-appellees by declaring that the land subject matter of the case is conjugal property;

(2)               in not declaring the land as the exclusive property of Bonifacio O. De Leon when sold to defendant-appellants;

(3)               in ruling that defendant-appellants did not adduce any proof that the property was acquired solely by the efforts of Bonifacio O. De Leon;

(4)               in declaring that one-half of the conjugal assets does not vest to Bonifacio O. De Leon because of the absence of liquidation;

(5)               in cancelling TCT No. N-173911 and restored TCT No. [173677] in the name of Bonifacio O. De Leon;

(6)               in awarding moral and exemplary damages and attorney’s fees to the plaintiffs-appellees.[6]        

  

The Ruling of the Appellate Court           On August 27, 2008, the CA rendered a decision affirmatory of that of the RTC, save for the award of damages, attorney’s fees, and costs of suit which the appellate court ordered deleted.  The fallo of the CA decision reads: 

          WHEREFORE, in view of the foregoing, the assailed decision dated October 4, 2006, of the Regional Trial Court, Branch 22, Quezon Cityin Civil Case No. Q-04-51595 is hereby AFFIRMED with MODIFICATION, in that the award of moral and exemplary damages as well as attorney’s fees, appearance fee and costs of suit are hereby DELETED.             SO ORDERED.  

          Just like the RTC, the CA held that the Tarrosas failed to overthrow the legal presumption that the parcel of land in dispute was conjugal.  The appellate court held further that the cases they cited were inapplicable.           As to the deletion of the grant of moral and exemplary damages, the CA, in gist, held that no evidence was adduced to justify the award.  Based on the same reason, it also deleted the award of attorney’s fees and costs of suit.           The Tarrosas moved but was denied reconsideration by the CA in its equally assailed resolution of October 20, 2008.           Hence, they filed this petition. 

The Issues 

I Whether the [CA] gravely erred in concluding that the land purchased on installment by Bonifacio O. De Leon before marriage

50YUMI- CIVIL LAW 1

although some installments were paid during the marriage is conjugal and not his exclusive property.

 II

 Whether the [CA] gravely erred in ruling that the Lorenzo, et al. vs. Nicolas, et al., and Alvarez vs. Espiritu cases do not apply in the case at bar because in the latter the land involved is not a friar land unlike in the former.                                 

III Whether the [CA] gravely erred in affirming the decision of the trial court a quo which ruled that petitioners did not adduce any proof that the land was acquired solely by the efforts of Bonifacio O. De Leon. 

IV Whether the court of appeals gravely erred in affirming the decision of the trial court which ruled that one-half (1/2) of the conjugal assets do not vest to Bonifacio O. De Leon because of the absence of liquidation.  

Our Ruling 

The petition lacks merit. 

The Subject Property is theConjugal Property of Bonifacio and Anita

           The first three issues thus raised can be summed up to the question of whether or not the subject property is conjugal.           Petitioners assert that, since Bonifacio purchased the lot from PHHC on installment before he married Anita, the land was Bonifacio’s exclusive property and not conjugal, even though some installments were paid and the title was issued to Bonifacio during the marriage.  In support of their position, petitioners cite Lorenzo v. Nicolas[7] and Alvarez v. Espiritu.[8]           We disagree.           Article 160 of the 1950 Civil Code, the governing provision in effect at the time Bonifacio and Anita contracted marriage, provides that all property of the marriage is presumed to belong to the conjugal partnership unless it is proved that it pertains exclusively to the husband or the wife.  For the presumption to arise, it is not, as Tan v. Court of Appeals[9] teaches, even necessary to prove that the property was acquired with funds of the partnership.  Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal.  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.[10]           In the case at bar, ownership over what was once a PHHC lot and covered by the PHHC-Bonifacio Conditional Contract to Sell was only transferred during the marriage of Bonifacio and Anita.  It is well settled that a conditional sale is akin, if not equivalent, to a contract to sell.  In both types of contract, the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, usually the full payment of the purchase price, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.[11]  In other words, in a contract to sell ownership is retained by the seller and is not passed to the buyer until full payment of the price, unlike in a contract of sale where title passes upon delivery of the thing sold.[12]           Such is the situation obtaining in the instant case.  The conditional contract to sell executed by and between Bonifacio and PHHC on July 20, 1965 provided that ownership over and title to the property will vest on Bonifacio only upon execution of the final deed of sale which, in turn, will be effected upon payment of the full purchase price, to wit: 

14.       Titles to the property subject of this contract remains with the CORPORATION and shall pass to, and be transferred in the name of the APPLICANT only upon the execution of the final Deed of Sale provided for in the next succeeding paragraph. 15.       Upon the full payment by the APPLICANT of the price of the lot above referred to together with all the interest due thereon, taxes and other charges, and upon his faithful compliance with all the conditions of this contract the CORPORATION agrees to execute in favor of the APPLICANT a final deed of sale of the aforesaid land, and the APPLICANT agrees to accept said deed, as full performance by the CORPORATION of its covenants and undertakings hereunder.[13]  x x x  Evidently, title to the property in question only passed to Bonifacio after he

had fully paid the purchase price on June 22, 1970.  This full payment, to stress, was made more than two (2) years after his marriage to Anita on April 24, 1968.  In net effect, the property was acquired during the existence of the marriage; as such, ownership to the property is, by law, presumed to belong to the conjugal partnership.

 Such presumption is rebuttable only with strong, clear, categorical, and

convincing evidence.[14]  There must be clear evidence of the exclusive ownership of one of the spouses,[15] and the burden of proof rests upon the party asserting it.[16]

 Petitioners’ argument that the disputed lot was Bonifacio’s exclusive

property, since it was registered solely in his name, is untenable.  The mere registration of a property in the name of one spouse does not destroy its conjugal nature.[17]  What is material is the time when the property was acquired.

51YUMI- CIVIL LAW 1

 Thus, the question of whether petitioners were able to adduce proof to

overthrow the presumption is a factual issue best addressed by the trial court.  As a matter of long and sound practice, factual determinations of the trial courts,[18] especially when confirmed by the appellate court, are accorded great weight by the Court and, as rule, will not be disturbed on appeal, except for the most compelling reasons.[19]  Petitioners have not, as they really cannot, rebut the presumptive conjugal nature of the lot in question.  In this regard, the Court notes and quotes with approval the following excerpts from the trial court’s disposition:

 The defendants, however, did not adduce any proof that

the property in question was acquired solely by the efforts of [Bonifacio].  The established jurisprudence on the matter leads this Court to the conclusion that the property involved in this dispute is indeed the conjugal property of the deceased [Bonifacio] De Leon.

 In fact, defendant even admitted that [Bonifacio] brought

into his marriage with plaintiff Anita the said land, albeit in the concept of a possessor only as it was not yet registered in his name.  The property was registered only in 1972 during the existence of the marriage.  However, the absence of evidence on the source of funding has called for the application of the presumption under Article 160 in favor of the plaintiffs.[20]

  

          The cases petitioners cited are without governing applicability to this case simply because they involved a law specifically enacted to govern the disposition of and ownership of friar lands.  In Lorenzo, the Court held that the pervading legislative intent of Act No. 1120 is “to sell the friar lands acquired by the Government to actual settlers and occupants of the same.”[21]  The Court went on further to say in Alvarez that “under the Friar Lands Act of 1120, the equitable and beneficial title to the land passes to the purchaser the moment the first installment is paid and a certificate of sale is issued.”[22]  Plainly, the said cases are not applicable here considering that the disputed property is not friar land.           There can be no quibbling that Anita’s conformity to the sale of the disputed lot to petitioners was never obtained or at least not formally expressed in the conveying deed.  The parties admitted as much in their Joint Stipulation of Facts with Motion earlier reproduced.  Not lost on the Court of course is the fact that petitioners went to the process of registering the deed after Bonifacio’s death in 1996, some 22 years after its execution.  In the interim, petitioners could have had work—but did not—towards securing Anita’s marital consent to the sale.           It cannot be over-emphasized that the 1950 Civil Code is very explicit on the consequence of the husband alienating or encumbering any real property of the conjugal partnership without the wife’s consent.[23]  To a specific point, the sale of a conjugal piece of land by the husband, as administrator, must, as a rule, be with the wife’s consent.  Else, the sale is not valid.  So it is that in several cases we ruled that the sale by the husband of property belonging to the conjugal partnership without the consent of the wife is void ab initio, absent any showing that the latter is

incapacitated, under civil interdiction, or like causes.  The nullity, as we have explained, proceeds from the fact that sale is in contravention of the mandatory requirements of Art. 166 of the Code.[24]  Since Art. 166 of the Code requires the consent of the wife before the husband may alienate or encumber any real property of the conjugal partnership, it follows that the acts or transactions executed against this mandatory provision are void except when the law itself authorized their validity.[25]           Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and the Tarrosas covering the PHHC lot is void. 

Interest in the Conjugal Partnership IsMerely Inchoate until Liquidation

           As a final consideration, the Court agrees with the CA that the sale of one-half of the conjugal property without liquidation of the partnership is void.  Prior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets isinchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into a title until it appears that there are assets in the community as a result of the liquidation and settlement.[26]  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.[27]  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.[28]           Therefore, even on the supposition that Bonifacio only sold his portion of the conjugal partnership, the sale is still theoretically void, for, as previously stated, the right of the husband or the wife to one-half of the conjugal assets does not vest until the liquidation of the conjugal partnership.           Nevertheless, this Court is mindful of the fact that the Tarrosas paid a valuable consideration in the amount of PhP 19,000 for the property in question.  Thus, as a matter of fairness and equity, the share of Bonifacio after the liquidation of the partnership should be liable to reimburse the amount paid by the Tarrosas.  It is a well-settled principle that no person should unjustly enrich himself at the expense of another.[29]           WHEREFORE, the petition is DENIED.  The CA Decision in CA-G.R. CV No. 88571 is AFFIRMED.  Costs against petitioners.           SO ORDERED.

Hernandez v. Mingoa GR# 146548 / DEC 18, 2009

52YUMI- CIVIL LAW 1

HEIRS OF DOMINGO HERNANDEZ, SR., namely: SERGIA V. HERNANDEZ (Surviving Spouse), DOMINGO V. HERNANDEZ, JR., and MARIA LEONORA WILMA HERNANDEZ, Petitioners, vs. PLARIDEL MINGOA, SR., DOLORES CAMISURA, MELANIE MINGOA AND QUEZON CITY REGISTER OF DEEDS,1 Respondents

LEONARDO-DE CASTRO, J.: 

This is a petition for review on certiorari of the Decision[2] dated September 7, 2000 and Resolution[3] dated December 29, 2000, both of the Court of Appeals (CA), in CA-G.R. CV No. 54896.  The CA Decision reversed and set aside the decision of the Regional Trial Court (RTC) of Quezon City (Branch 92), which ruled in favor of herein petitioners in the action for reconveyance filed by the latter in said court against the respondents.  The CA Resolution denied the petitioners’ motion for reconsideration.

 The subject matter of the action is a parcel of land with an area of 520.50

square meters situated in Diliman, Quezon City, described as Lot 15, Block 89 of the subdivision plan Psd-68807, covered by Transfer Certificate of Title (TCT) No. 107534[4]issued on May 23, 1966 and registered in the name of Domingo B. Hernandez, Sr. married to Sergia V. Hernandez.  Later on, said TCT No. 107534 was cancelled and in lieu thereof, TCT No. 290121[5] was issued in favor of Melanie Mingoa.

 These are the factual antecedents of this case: On February 11, 1994, a complaint[6] was filed with the RTC of Quezon City

by herein petitioners, heirs of Domingo Hernandez, Sr., namely, spouse Sergia Hernandez and their surviving children Domingo, Jr. and Maria Leonora Wilma, against the respondents herein, Dolores Camisura, Melanie Mingoa, Atty. Plaridel Mingoa, Sr. and all persons claiming rights under the latter, and the Quezon City Register of Deeds.  The case was docketed as Civil Case No. 094-19276.

 In their complaint, the petitioners asked for (a)  the annulment and/or

declaration of nullity of TCT No. 290121 including all its derivative titles, the Irrevocable Special Power of Attorney (SPA) dated February 14, 1963 in favor of Dolores Camisura,[7] the SPA dated May 9, 1964 in favor of Plaridel Mingoa, Sr.,[8] and the Deed of Absolute Sale of Real Estate[9] dated July 9, 1978 executed by Plaridel Mingoa, Sr. in favor of Melanie Mingoa for being products of forgery and falsification; and (b) the reconveyance and/or issuance to them (petitioners) by the Quezon City Register of Deeds of the certificate of title covering the subject property.

 Respondents filed a Motion to Dismiss[10] the complaint interposing the

following grounds: the claim or demand has been paid, waived, abandoned or otherwise extinguished; lack of cause of action; lack of jurisdiction over the person of the defendants or over the subject or nature of the suit; and prescription.  The following were attached to said motion: a Deed of Transfer of Rights[11]dated February 14, 1963 from Domingo Hernandez, Sr. to Camisura, the Irrevocable

SPA[12] executed by the former in the latter’s favor, and a Deed of Sale of Right in a Residential Land and Improvements Therein[13] dated May 9, 1964 executed by Camisura in favor of Plaridel Mingoa, Sr.

 In its Order[14] dated September 1, 1994, the trial court denied

respondents’ motion to dismiss. 

          Respondents filed a petition for certiorari and prohibition with the CA assailing the aforementioned Order of denial by the RTC.  Their initial petition was dismissed for being insufficient in form.  Respondents then re-filed their petition, which was docketed as CA-G.R. SP No. 36868.  In a decision[15] dated May 26, 1995, respondents’ re-filed petition was denied due course by the CA. Having been filed beyond the reglementary period, respondents’ subsequent motion for reconsideration was simply noted by the CA in its Resolution of July 7, 1995.  On the basis of a technicality, this Court, in a Resolution dated September 27, 1995, dismissed respondents' appeal which was docketed as G.R. No. 121020.  Per Entry of Judgment,[16] said Resolution became final and executory on January 2, 1996.

 Meanwhile, respondents filed their Answer[17] in the main case therein

denying the allegations of the complaint and averring as defenses the same grounds upon which they anchored their earlier motion to dismiss.

 The parties having failed to amicably settle during the scheduled pre-trial

conference, the case proceeded to trial.         

The evidence respectively presented by the parties is summarized as follows:[18]

 x x x [It] appears that in the early part of 1958, Domingo Hernandez, Sr. (who was then a Central Bank employee) and his spouse Sergia V. Hernandez were awarded a piece of real property by the Philippine Homesite and Housing Corporation (PHHC) by way of salary deduction.  On October 18, 1963, the [petitioners] then having paid in full the entire amount of P6,888.96, a Deed of Absolute Sale of the property was executed by the PHHC in their favor.  TCT No. 107534, covering the property was issued to the [petitioners] on May 23, 1966.  It bears an annotation of the retention period of the property by the awardee (i.e., restriction of any unauthorized sale to third persons within a certain period).  Tax payments due on the property were religiously paid (until 1955) by the [petitioners] as evidenced by receipts under the [petitioners’] name.

             Hernandez, Sr. died intestate in April 1983 and it was only after his burial that his heirs found out that TCT No. 107534 was already cancelled a year before (in 1982), and in lieu thereof, TCT No. 290121 was issued to the [respondents].  Upon diligent inquiry, [petitioners] came to know that the cancellation of TCT (No. 107534) in favor of the [respondents’] xxx TCT (No. 290121) was based upon three sets of documents, namely, (1) Irrevocable

53YUMI- CIVIL LAW 1

Power of Attorney; (2) Irrevocable Special Power of Attorney; and (3) Deed of Absolute Sale.             [Petitioners] also allege that because of financial difficulties, they were only able to file a complaint on February 11, 1995 after consulting with several lawyers. 

x x x x 

[Respondents] xxx on the other hand do not deny that Hernandez, Sr. was indeed awarded a piece of real property by the PHHC. According to the [respondents] xxx, Hernandez, Sr. was awarded by the PHHC the Right to Purchase the property in question; however, the late Hernandez, Sr. failed to pay all the installments due on the said property.  Thus, afraid that he would forfeit his right to purchase the property awarded to him, Hernandez, Sr. sold to Dolores Camisura his rights for the sum of P6,500.00 on February 14, 1963, through a deed of transfer of rights, seemingly a printed form from the PHHC.  Simultaneous to this, Hernandez, Sr. and his spouse executed an irrevocable special power of attorney, appointing Dolores Camisura as their attorney-in-fact with express power to sign, execute and acknowledge any contract of disposition, alienation and conveyance of her right over the aforesaid parcel of land.                   Apparently, this special power of attorney was executed for the purpose of securing her right to transfer the property to a third person considering that there was a prohibition to dispose of the property by the original purchaser within one (1) year from full payment.  Else wise stated, the irrevocable power of attorney was necessary in order to enable the buyer, Dolores Camisura, to sell the lot to another, Plaridel Mingoa, without the need of requiring Hernandez, to sign a deed of conveyance.             On May 9, 1964, Dolores Camisura sold her right over the said property to Plaridel Mingoa for P7,000.00.  Camisura then executed a similar irrevocable power of attorney and a deed of sale of right in a residential land and improvements therein in favor of Plaridel Mingoa.  Upon such payment and on the strength of the said irrevocable power of attorney, Plaridel Mingoa took possession of the said property and began paying all the installments due on the property to PHHC.  Plaridel Mingoa further secured TCT No. 107534 (issued in the name of Domingo Hernandez, Sr.) on May, 1966.  On July 9, 1978, Plaridel Mingoa sold to his eldest child, Melanie Mingoa, the property in question for P18,000.00.  TCT No. 107534 was thus cancelled and TCT No. 290121 was issued in the name of Melanie Mingoa.  It is further claimed that since 1966 until 1982, Plaridel Mingoa religiously paid all the taxes due on the said property; and that from 1983 up to the present, Melanie Mingoa paid all the property taxes due thereon

aside from having actual possession of the said property. (words in brackets ours)

 On May 9, 1996, the RTC rendered a decision[19] in favor of the petitioners,

with the following dispositive portion: 

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs as follows:

 1)  TCT No. 290121 and all its derivative titles are hereby declared null and void;

 2)   Ordering the Register of Deeds of Quezon City to cancel TCT No. 290121 issued in the name of defendant Melanie Mingoa and corresponding owner’s duplicate certificate and all its derivative title[s];3)   Ordering defendant Melanie Mingoa and all derivative owners to surrender owner’s duplicate copies of transfer certificate of title to the Register of Deeds of Quezon City for cancellation upon finality of this decision;4) Ordering the defendants except the Register of Deeds of Quezon City to turn over to the plaintiffs the peaceful possession of the subject property; and5)  Ordering the defendants except the Register of Deeds of Quezon City to jointly and severally (sic) pay the plaintiffs the sum of P10,000.00 as attorney’s [fees] and to pay the costs of suit.  SO ORDERED. In ruling in favor of petitioners, the trial court reasoned as follows:[20]

 The two (2) parties in the case at bar gave out conflicting versions as to who paid for the subject property.  The plaintiffs claim that they were the ones who paid the entire amount out of the conjugal funds while it is the contention of the defendant Mingoa that the former were not able to pay. The defendant alleged that the right to purchase was sold to him and he was able to pay the whole amount.  The Court is of the opinion that petitioners’ version is more credible taken together with the presence of the irrevocable power of attorney which both parties admitted.  In light of the version of the defendants, it is highly improbable that a Power of Attorney would be constituted by the plaintiffs authorizing the former to sell the subject property.  This is because for all intents and purposes, the land is already the defendants’ for if we are to follow their claim, they paid for the full amount of the same.  It can be safely concluded then that the Power of Attorney was unnecessary because the defendants, as buyers, can compel the plaintiff-sellers to execute the transfer of the said property after the period of prohibition has lapsed.  The defendants, as owners, will have the right to do whatever they want with the land even without an Irrevocable Power of Attorney.  Since the presence of the Irrevocable Power of Attorney is established, it is now the task of this Court to determine the validity of the sale made by virtue of the said Power of Attorney.  As what was said earlier, the Court subscribes to the points raised by the plaintiffs.  It was proved

54YUMI- CIVIL LAW 1

during trial that the signature of the wife was falsified. Therefore, it is as if the wife never authorized the agent to sell her share of the subject land, it being conjugal property.  It follows that the sale of half of the land is invalid.  However, it must be pointed out that the signature of the deceased husband was never contested and is therefore deemed admitted.  We now come to the half which belongs to the deceased husband.  The Law on Sales expressly prohibits the agent from purchasing the property of the principal without the latter’s consent (Article 1491 of the Civil Code).  It was established from the records that defendant Plaridel Mingoa sold the subject land to his daughter Melanie.  It is now for the Court to decide whether this transaction is valid. x x x Considering that the sale took place in July 1978, it follows from simple mathematical computation that Melanie was then a minor (20 years of age) when she allegedly bought the property from her father.  Since Melanie’s father is the sub-agent of the deceased principal, he is prohibited by law from purchasing the land without the latter’s consent.  This being the case, the sale is invalid for it appears that Plaridel Mingoa sold the land to himself.  It should be noted that the defendants could have easily presented Melanie’s birth certificate, it being at their disposal, but they chose not to.  Because of this, this Court is of the belief that the presumption that evidence willfully suppressed would be adverse if produced arises. 

The trial court denied respondents’ motion for reconsideration of the aforementioned decision in its Order[21] of August 22, 1996.

 Aggrieved, the respondents appealed to the CA, where their case was

docketed as CA-G.R. CV No. 54896.  Holding that the petitioners were barred by prescription and laches to take any action against the respondents, the CA, in its herein assailedDecision[22] dated September 7, 2000, reversed and set aside the appealed decision, thereby dismissing the complaint filed by the petitioners before the trial court.  In full, the disposition reads:

 WHEREFORE, in view of the foregoing, the Decision of the RTC Branch 92, Quezon City, in Civil Case No. Q-94-19276, entitled, “Heirs of Domingo Hernandez, Sr. vs. Dolores Camisura, et. al.,” is hereby REVERSED AND SET ASIDE.  A new one is hereby entered, DISMISSING the complaint in Civil Case No. Q-94-19276 entitled, “Heirs of Domingo Hernandez, Sr. vs. Dolores Camisura, et. al.,” filed by the plaintiffs-appellees before the RTC Branch 92, Quezon City for lack of merit.SO ORDERED.

 Petitioners’ subsequent motion for reconsideration was denied by the CA in

its impugned Resolution[23] dated December 29, 2000. 

Hence, petitioners are now before this Court via the present recourse. The ten (10) assigned errors set forth in the petition all boil down to the essential issue of whether the title of the subject property in the name of respondent Melanie Mingoa may still be reconveyed to the petitioners.  As we see it, the resolution thereof hinges on these two pivotal questions: (1) whether there was a valid alienation involving the subject property; and (2) whether the action impugning the validity of such alienation has prescribed and/or was barred by laches.         

           The Court shall deal first with the procedural issues raised by the respondents in their Comment.[24]           We held in Vera-Cruz v. Calderon[25] that:

       As a general rule, only questions of law may be raised in a petition for review on certiorari to the Supreme Court.  Although it has long been settled that findings of fact are conclusive upon this Court, there are exceptional circumstances which would require us to review findings of fact of the Court of Appeals, to wit:

 (1) the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the decision as well as in the petitioner’s main and reply briefs are not disputed by the respondents; (10) the finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by evidence on record.  (emphasis ours)

 The petition before us raises factual issues which are not proper in a petition for review under Rule 45 of the Rules of Court. However, we find that one of the exceptional circumstances qualifying a factual review by the Court exists, that is, the factual findings of the CA are at variance with those of the trial court.   We shall then give due course to the instant petition and review the factual findings of the CA. 

           Even if only petitioner Domingo Hernandez, Jr. executed the Verification/Certification[26] against forum-shopping, this will not deter us from proceeding with the judicial determination of the issues in this petition.  As we ratiocinated in Heirs of Olarte v. Office of the President:[27]

             The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and the signature of only one of them is insufficient.  However, the Court has also stressed that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification.  This is because the requirement of strict compliance with the provisions regarding the certification of non-forum shopping merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its

55YUMI- CIVIL LAW 1

requirements completely disregarded.  Thus, under justifiable circumstances, the Court has relaxed the rule requiring the submission of such certification considering that although it is obligatory, it is not jurisdictional.  

            In HLC Construction and Development Corporation v. Emily Homes Subdivision Homeowners Association, it was held that the signature of only one of the petitioners in the certification against forum shopping substantially complied with rules because all the petitioners share a common interest and invoke a common cause of action or defense.             The same leniency was applied by the Court in Cavile v. Heirs of Cavile, because the lone petitioner who executed the certification of non-forum shopping was a relative and co-owner of the other petitioners with whom he shares a common interest. x x x       

           x x x

                        In the instant case, petitioners share a common interest and defense inasmuch as they collectively claim a right not to be dispossessed of the subject lot by virtue of their and their deceased parents’ construction of a family home and occupation thereof for more than 10 years.  The commonality of their stance to defend their alleged right over the controverted lot thus gave petitioners xxx authority to inform the Court of Appeals in behalf of the other petitioners that they have not commenced any action or claim involving the same issues in another court or tribunal, and that there is no other pending action or claim in another court or tribunal involving the same issues.                         x x x

                   Here, all the petitioners are immediate relatives who share a common interest in the land sought to be reconveyed and a common cause of action raising the same arguments in support thereof.  There was sufficient basis, therefore, for Domingo Hernandez, Jr. to speak for and in behalf of his co-petitioners when he certified that they had not filed any action or claim in another court or tribunal involving the same issues.  Thus, the Verification/Certification that Hernandez, Jr. executed constitutes substantial compliance under the Rules. 

Anent the contention that the petition erroneously impleaded the CA as respondent in contravention of Section 4(a)[28] of Rule 45 of the 1997 Rules of Civil Procedure, we shall apply our ruling in Simon v. Canlas,[29] wherein we held that:

 x x x [The] Court agrees that the correct procedure, as mandated by Section 4, Rule 45 of the 1997 Rules of Civil Procedure, is not to implead the lower court which rendered the assailed decision.  However, impleading the lower court as respondent in the petition for review on certiorari does not automatically mean the dismissal of the appeal but merely authorizes the dismissal of the petition.  Besides, formal defects in petitions are not uncommon.  The Court has encountered previous petitions for review on certiorari that erroneously impleaded the CA.  In those cases, the Court

merely called the petitioners’ attention to the defects and proceeded to resolve the case on their merits.

 The Court finds no reason why it should not afford the same liberal treatment in this case.  While unquestionably, the Court has the discretion to dismiss the appeal for being defective, sound policy dictates that it is far better to dispose of cases on the merits, rather than on technicality as the latter approach may result in injustice. This is in accordance with Section 6, Rule 1 of the 1997 Rules of Civil Procedure which encourages a reading of the procedural requirements in a manner that will help secure and not defeat justice. We now come to the substantive issues. As correctly found by the appellate court, the following facts are

undisputed:[30] 

1.      Domingo Hernandez, Sr. was awarded a piece of real property in 1958 by the PHHC as part of the government’s housing program at the time.  Title over the said property was issued in 1966 in the name of Hernandez, Sr., after full payment for the property was received by the PHHC.

 2.      Neither [petitioners] nor Hernandez, Sr., took possession of the

said property.  On the other hand, the [respondents] took possession of the said property in 1966 and are in actual and physical possession thereof up to the present, and have made considerable improvements thereon, including a residential house where they presently reside.

 3.      The Owner’s Duplicate Copy of the title over the property given by

the PHHC to Hernandez, Sr. was in the possession of Plaridel Mingoa, the latter being able to facilitate the cancellation of the said title and [the issuance of] a new TCT   xxx   in the name of Melanie Mingoa.

 4.      The realty taxes have been paid by [respondents], albeit in the

name of Hernandez, Sr., but all official receipts of tax payments are kept by the [respondents].

 5.      From 1966 (the time when the [respondents] were able to

possess the property) to 1983 (the time when the [petitioners] had knowledge that the TCT in the name of Hernandez, Sr. had already been cancelled by the Registry of Deeds of Quezon City) covers almost a span of 17 years; and from 1983 to 1995 (the time when the Heirs filed the original action) is a period of another 12 years.

 

56YUMI- CIVIL LAW 1

The SPA[31] in favor of Dolores Camisura pertinently states that the latter is the lawful attorney-in-fact of Domingo B. Hernandez, Sr., married to Sergia Hernandez, to do and perform, among others, the following acts and deeds:

 1.  To sign, execute and acknowledge all such contracts, deeds or other instruments which may be required by the People’s Homesite and Housing Corporation with respect to the purchase of that certain parcel of land known and designated as Lot No. 15 Block E-89 of the Malaya Avenue Subdivision, situated in Quezon City and containing an area of 520 square meters, more or less, which I have acquired thru the CENTRAL BANK STAFF HOUSING CORPORATION; 2.  To sign, execute and acknowledge all such contracts or other instruments which may deem necessary or be required to sign, execute and acknowledge for the purpose of selling, transferring, conveying, disposing of or alienating  whatever rights I may have over that parcel of land mentioned above;  x x x. The Deed of Transfer of Rights,[32] also executed by Hernandez, Sr. in

Camisura’s favor, expressly states that the former, in consideration of the amount of P6,500.00, transfers his rights over the subject property to the latter.  Notably, such deed was simultaneously executed with the SPA on February 14, 1963.

 From the foregoing, the Court cannot but conclude that the SPA executed by

Hernandez, Sr. in respondent Camisura's favor was, in reality, an alienation involving the subject property.  We particularly note that Hernandez, Sr., aside from executing said SPA, likewise sold his rights and interests over the property awarded by the PHHC to Camisura.  The CA committed no error when it ruled:[33] 

 x x x Appreciating the case in its entirety, the purported SPA appear to be merely a grant of authority to Camisura (and then to Plaridel Mingoa) to sell and dispose of the subject property as well as a grant of right to purchase the said property; but in essence, such SPA are disguised deeds of sale of the property executed in circumventing the retention period restriction over the said property.  Verily, the parties knew that the land in question could not be alienated in favor of any third person within one (1) year without the approval of the PHHC.

 Having ruled that the SPA in favor of Camisura was a contract of sale, the

next question is whether or not such sale was valid. 

To constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1) cause, (2) object, and (3) consent.

           The consent of Domingo Hernandez, Sr. to the contract is undisputed, thus, the sale of his ½ share in the conjugal property was valid.  With regard to the consent of his wife, Sergia Hernandez, to the sale involving their conjugal property, the trial

court found that it was lacking because said wife’s signature on the SPA was falsified.  Notably, even the CA observed that the forgery was so blatant as to be remarkably noticeable to the naked eye of an ordinary person.  Having compared the questioned signature on the SPA[34] with those of the documents[35] bearing the sample standard signature of Sergia Hernandez, we affirm both lower courts' findings regarding the forgery.

 

However, Sergia’s lack of consent to the sale did not render the transfer of her share invalid.                     Petitioners contend that such lack of consent on the part of Sergia Hernandez rendered the SPAs and the deed of sale fictitious, hence null and void in accordance with Article 1409[36] of the Civil Code.  Petitioners likewise contend that an action for the declaration of the non-existence of a contract under Article 1410[37] does not prescribe.           We find, after meticulous review of the facts, that Articles 1409 and 1410 are not applicable to the matter now before us.            It bears stressing that the subject matter herein involves conjugal property.  Said property was awarded to Domingo Hernandez, Sr. in 1958.  The assailed SPAs were executed in 1963 and 1964.  Title in the name of Domingo Hernandez, Sr. covering the subject property was issued on May 23, 1966.  The sale of the property to Melanie Mingoa and the issuance of a new title in her name happened in 1978.  Since all these events occurred before the Family Code took effect in 1988, the provisions of the New Civil Code govern these transactions.  We quote the applicable provisions, to wit:  

          Art. 165. The husband is the administrator of the conjugal partnership. 

Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife’s consent.  If she refuses unreasonably to give her consent, the court may compel her to grant the same. x  x  x.

 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. (Emphasis ours.) 

57YUMI- CIVIL LAW 1

          Notwithstanding the foregoing, petitioners argue that the disposition of conjugal property made by a husband without the wife’s consent is null and void and the right to file an action thereon is imprescriptible, in accordance with Garcia v. CA[38] andBucoy v. Paulino.[39].           Concededly, in the aforementioned cases of Garcia and Bucoy, the contracts involving the sale of conjugal property by the husband without the wife's consent were declared null and void by this Court.  But even in Bucoy, we significantly ruled, in reference to Article 173, that:

 The plain meaning attached to the plain language of the

law is that the contract, in its entirety, executed by the husband without the wife’s consent, may be annulled by the wife.[40] (emphasis ours) In succeeding cases, we held that alienation and/or encumbrance of

conjugal property by the husband without the wife’s consent is not null and void but merely voidable.         

In Sps. Alfredo v. Sps. Borras,[41] we held that:             The Family Code, which took effect on 3 August 1988, provides that any alienation or encumbrance made by the husband of the conjugal partnership property without the consent of the wife is void.  However, when the sale is made before the effectivity of the Family Code, the applicable law is the Civil Code. 

Article 173 of the Civil Code provides that the disposition of conjugal property without the wife's consent is not void but merely voidable.

 We likewise made the same holding in Pelayo v. Perez :[42]            xxx [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.

           In Vera-Cruz v. Calderon,[43] the Court noted the state of jurisprudence and

elucidated on the matter, thus: In the recent case of Heirs of Ignacia Aguilar-Reyes v.

Spouses Mijares, we reiterated the rule that the husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife, otherwise, the contract is voidable.  To wit:

 Indeed, in several cases the Court has

ruled that such alienation or encumbrance by the

husband is void.  The better view, however, is to consider the transaction as merely voidable and not void.  This is consistent with Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10 years from the questioned transaction, seek its annulment.

                         x x x

 Likewise, in the case of Heirs of Christina Ayuste v. Court

of Appeals, we declared that: 

There is no ambiguity in the wording of the law.  A sale of real property of the conjugal partnership made by the husband without the consent of his wife is voidable.  The action for annulment must be brought during the marriage and within ten years from the questioned transaction by the wife.  Where the law speaks in clear and categorical language, there is no room for interpretation – there is room only for application.

 x x x  (Emphasis ours.)

                   Here, the husband’s first act of disposition of the subject property occurred in 1963 when he executed the SPA and the Deed of Transfer of Rights in favor of Dolores Camisura.  Thus, the right of action of the petitioners accrued in 1963, as Article 173 of the Civil Code provides that the wife may file for annulment of a contract entered into by the husband without her consent within ten (10) years from the transaction questioned. Petitioners filed the action for reconveyance in 1995.  Even if we were to consider that their right of action arose when they learned of the cancellation of TCT No. 107534 and the issuance of TCT No. 290121 in Melanie Mingoa’s name in 1993, still, twelve (12) years have lapsed since such discovery, and they filed the petition beyond the period allowed by law.  Moreover, when Sergia Hernandez, together with her children, filed the action for reconveyance, the conjugal partnership of property with Hernandez, Sr. had already been terminated by virtue of the latter's death on April 16, 1983.  Clearly, therefore, petitioners’ action has prescribed. 

And this is as it should be, for in the same Vera-Cruz case, we further held that:[44]

  xxx [Under] Article 173 of the New Civil Code, an action

for the annulment of any contract entered into by the husband without the wife’s consent must be filed (1) during the marriage; and (2) within ten years from the transaction questioned.  Where any one of these two conditions is lacking, the action will be considered as having been filed out of time.

58YUMI- CIVIL LAW 1

                       In the case at bar, while respondent filed her complaint for annulment of the deed of sale on July 8, 1994, i.e., within the ten-year period counted from the execution of the deed of sale of the property on June 3, 1986, the marriage between her and Avelino had already been dissolved by the death of the latter on November 20, 1993.  In other words, her marriage to Avelino was no longer subsisting at the time she filed her complaint.  Therefore, the civil case had already been barred by prescription. (Emphasis ours.) Thus, the failure of Sergia Hernandez to file with the courts an action for

annulment of the contract during the marriage and within ten (10) years from the transaction necessarily barred her from questioning the sale of the subject property to third persons.

 As we held in Vda. De Ramones v. Agbayani:[45]

              In Villaranda v. Villaranda, et al., this Court, through Mr. Justice Artemio V. Panganiban, ruled that without the wife’s consent, the husband’s alienation or encumbrance of conjugal property prior to the effectivity of the Family Code is not void, but merely voidable.  However, the wife’s failure to file with the courts an action for annulment of the contract during the marriage and within ten (10) years from the transaction shall render the sale valid. x x x (emphasis ours) More than having merely prescribed, petitioners’ action has likewise become

stale, as it is barred by laches.           In Isabela Colleges v. Heirs of Nieves-Tolentino,[46] this Court held:

             Laches means the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of due diligence, could or should have been done earlier.  It is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert his right either has abandoned or declined to assert it.  Laches thus operates as a bar in equity. 

x x x             The time-honored rule anchored on public policy is that relief will be denied to a litigant whose claim or demand has become “stale,” or who has acquiesced for an unreasonable length of time, or who has not been vigilant or who has slept on his rights either by negligence, folly or inattention.  In other words, public policy requires, for peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to the

assertion or enforcement of a right which has become, under the circumstances, inequitable or unfair to permit. Pertinently, in De la Calzada-Cierras v. CA,[47] we ruled that a complaint to

recover the title and possession of the lot filed 12 years after the registration of the sale is considered neglect for an unreasonably long time to assert a right to the property.     

                                           Here, petitioners' unreasonably long period of inaction in asserting their purported rights over the subject property weighs heavily against them.  We quote with approval the findings of the CA that:[48] 

          It was earlier shown that there existed a period of 17 years during which time Hernandez, Sr. xxx never even questioned the defendants-appellants possession of the property; also there was another interval of 12 years after discovering that the TCT of the property in the name of Hernandez, Sr. before the Heirs of Hernandez instituted an action for the reconveyance of the title of the property. 

 x x x             The fact that the Mingoa's were able to take actual possession of the subject property for such a long period without any form of cognizable protest from Hernandez, Sr. and the plaintiffs-appellees strongly calls for the application of the doctrine of laches.  It is common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard to the cautious and prudent purchaser usually takes, and should he find out that the land he intends to buy is occupied by anybody else other than the seller who is not in actual possession, it could then be incumbent upon the purchaser to verify the extent of the occupant's possessory rights.  The plaintiffs-appellees asseverate that the award was made in favor of Hernandez, Sr. in 1958; full payment made in 1963; and title issued in 1966.  It would thus be contrary to ordinary human conduct (and prudence dictates otherwise) for any awardee of real property not to visit and inspect even once, the property awarded to him and find out if there are any transgressors in his property.                       Furthermore, Hernandez, Sr.'s inaction during his lifetime lends more credence to the defendants-appellants assertion that the said property was indeed sold by Hernandez, Sr. by way of the SPAs, albeit without the consent of his wife.  xxx                       In addition, the reasons of poverty and poor health submitted by the plaintiffs-appellees could not justify the 12 years of delay in filing a complaint against the defendants-appellants.  The records are bereft of any evidence to support the idea that the plaintiffs-appellees diligently asserted their rights over

59YUMI- CIVIL LAW 1

the said property after having knowledge of the cancellation of the TCT issued in Hernandez name.  Moreover the Court seriously doubts the plausibility of this contention since what the plaintiffs-appellees are trying to impress on this Court's mind is that they did not know anything at all except only shortly before the death of Hernandez.  To accept that not even the wife knew of the transactions made by Hernandez, Sr. nor anything about the actual possession of the defendants-appellants for such a long period is to Us absurd if not fantastic.

 In sum, the rights and interests of the spouses Hernandez over the subject

property were validly transferred to respondent Dolores Camisura.  Since the sale of the conjugal property by Hernandez, Sr. was without the consent of his wife, Sergia, the same is voidable; thus, binding unless annulled.  Considering that Sergia failed to exercise her right to ask for the annulment of the sale within the prescribed period, she is now barred from questioning the validity thereof.  And more so, she is precluded from assailing the validity of the subsequent transfers from Camisura to Plaridel Mingoa and from the latter to Melanie Mingoa.  Therefore, title to the subject property cannot anymore be reconveyed to the petitioners by reason of prescription and laches.  The issues of prescription and laches having been resolved, it is no longer necessary to discuss the other issues raised in this petition.           WHEREFORE, the instant petition is DENIED and the assailed Decision dated September 7, 2000 and Resolution dated December 29, 2000 of the Court of Appeals are hereby AFFIRMED.            Costs against the petitioners.           SO ORDERED.

PHILIP MATTHEWS, Petitioner, vs.BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents. 

NACHURA, J.: 

           Assailed in this petition for review on certiorari are the Court of Appeals (CA) December 19, 2003 Decision[1] and July 14, 2004 Resolution[2] in CA-G.R. CV No. 59573.  The assailed decision affirmed and upheld the June 30, 1997 Decision[3] of the Regional Trial Court (RTC), Branch 8, Kalibo, Aklan in Civil Case No. 4632 for Declaration of Nullity of Agreement of Lease with Damages.           On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British subject, married Joselyn C. Taylor (Joselyn), a 17-year old Filipina.[4]  On June 9, 1989, while their marriage was subsisting, Joselyn bought from Diosa M. Martin a 1,294 square-meter lot (Boracay property) situated at Manoc-Manoc, Boracay Island,

Malay, Aklan, for and in consideration of P129,000.00.[5]  The sale was allegedly financed by Benjamin.[6]  Joselyn and Benjamin, also using the latter’s funds, constructed improvements thereon and eventually converted the property to a vacation and tourist resort known as the Admiral Ben Bow Inn.[7] All required permits and licenses for the operation of the resort were obtained in the name of Ginna Celestino, Joselyn’s sister.[8]            However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim Philippsen. On June 8, 1992, Joselyn executed a Special Power of Attorney (SPA) in favor of Benjamin, authorizing the latter to maintain, sell, lease, and sub-lease and otherwise enter into contract with third parties with respect to their Boracay property.[9]           On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee, entered into an Agreement of Lease[10](Agreement) involving the Boracay property for a period of 25 years, with an annual rental of P12,000.00.  The agreement was signed by the parties and executed before a Notary Public. Petitioner thereafter took possession of the property and renamed the resort as Music Garden Resort.            Claiming that the Agreement was null and void since it was entered into by Joselyn without his (Benjamin’s) consent, Benjamin instituted an action for Declaration of Nullity of Agreement of Lease with Damages[11] against Joselyn and the petitioner.  Benjamin claimed that his funds were used in the acquisition and improvement of the Boracay property, and coupled with the fact that he was Joselyn’s husband, any transaction involving said property required his consent.           No Answer was filed, hence, the RTC declared Joselyn and the petitioner in defeault.  On March 14, 1994, the RTC rendered judgment by default declaring the Agreement null and void.[12]  The decision was, however, set aside by the CA in CA-G.R. SP No. 34054.[13]  The CA also ordered the RTC to allow the petitioner to file his Answer, and to conduct further proceedings.           In his Answer,[14] petitioner claimed good faith in transacting with Joselyn.  Since Joselyn appeared to be the owner of the Boracay property, he found it unnecessary to obtain the consent of Benjamin.  Moreover, as appearing in the Agreement, Benjamin signed as a witness to the contract, indicating his knowledge of the transaction and, impliedly, his conformity to the agreement entered into by his wife.  Benjamin was, therefore, estopped from questioning the validity of the Agreement.           There being no amicable settlement during the pre-trial, trial on the merits ensued.           On June 30, 1997, the RTC disposed of the case in this manner: 

          WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants as follows: 

60YUMI- CIVIL LAW 1

1.      The Agreement of Lease dated July 20, 1992 consisting of eight (8) pages (Exhibits “T”, “T-1”, “T-2”, “T-3”, “T-4”, “T-5”, “T-6” and “T-7”) entered into by and between Joselyn C. Taylor and Philip Matthews before Notary Public Lenito T. Serrano under Doc. No. 390, Page 79, Book I, Series of 1992 is hereby declared NULL and VOID;

 2.      Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of SIXTEEN THOUSAND (P16,000.00) PESOS as damages representing unrealized income for the residential building and cottages computed monthly from July 1992 up to the time the property in question is restored to plaintiff; and 

 3.      Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of TWENTY THOUSAND (P20,000.00) PESOS, Philippine Currency, for attorney’s fees and other incidental expenses.

 SO ORDERED.[15]    

           The RTC considered the Boracay property as community property of Benjamin and Joselyn; thus, the consent of the spouses was necessary to validate any contract involving the property.  Benjamin’s right over the Boracay property was bolstered by the court’s findings that the property was purchased and improved through funds provided by Benjamin. Although the Agreement was evidenced by a public document, the trial court refused to consider the alleged participation of Benjamin in the questioned transaction primarily because his signature appeared only on the last page of the document and not on every page thereof.           On appeal to the CA, petitioner still failed to obtain a favorable decision.  In its December 19, 2003 Decision,[16] the CA affirmed the conclusions made by the RTC.  The appellate court was of the view that if, indeed, Benjamin was a willing participant in the questioned transaction, the parties to the Agreement should have used the phrase “with my consent” instead of “signed in the presence of.”  The CA noted that Joselyn already prepared an SPA in favor of Benjamin involving the Boracay property; it was therefore unnecessary for Joselyn to participate in the execution of the Agreement.  Taken together, these circumstances yielded the inevitable conclusion that the contract was null and void having been entered into by Joselyn without the consent of Benjamin.           Aggrieved, petitioner now comes before this Court in this petition for review on certiorari based on the following grounds:     

             4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS NOT REQUIRED IN THE AGREEMENT OF LEASE DATED 20 JULY 1992.  GRANTING ARGUENDO THAT HIS CONSENT IS REQUIRED, BENJAMIN TAYLOR IS DEEMED TO HAVE GIVEN HIS CONSENT WHEN HE AFFIXED HIS SIGNATURE IN THE AGREEMENT OF LEASE AS WITNESS IN THE LIGHT OF THE RULING OF THE SUPREME COURT IN THE CASE OF

SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO. 141323, JUNE 8, 2005.             4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT OF LEASE IS THE EXCLUSIVE PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO CITIZEN, IN THE LIGHT OF CHEESMAN VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.             4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE 96 OF THE FAMILY CODE OF THE PHILIPPINES WHICH IS A PROVISION REFERRING TO THE ABSOLUTE COMMUNITY OF PROPERTY.  THE PROPERTY REGIME GOVERNING THE PROPERTY RELATIONS OF BENJAMIN TAYLOR AND JOSELYN TAYLOR IS THE CONJUGAL PARTNERSHIP OF GAINS BECAUSE THEY WERE MARRIED ON 30 JUNE 1988 WHICH IS PRIOR TO THE EFFECTIVITY OF THE FAMILY CODE.  ARTICLE 96 OF THE FAMILY CODE OF THE PHILIPPINES FINDS NO APPLICATION IN THIS CASE.             4.4. THE HONORABLE COURT OF APPEALS IGNORED THE PRESUMPTION OF REGULARITY IN THE EXECUTION OF NOTARIAL DOCUMENTS.              4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON THE COUNTERCLAIM OF PETITIONER DESPITE THE FACT THAT IT WAS NOT CONTESTED AND DESPITE THE PRESENTATION OF EVIDENCE ESTABLISHING SAID CLAIM.[17]

           The petition is impressed with merit.           In fine, we are called upon to determine the validity of an Agreement of Lease of a parcel of land entered into by a Filipino wife without the consent of her British husband.  In addressing the matter before us, we are confronted not only with civil law or conflicts of law issues, but more importantly, with a constitutional question.           It is undisputed that Joselyn acquired the Boracay property in 1989.  Said acquisition was evidenced by a Deed of Sale with Joselyn as the vendee.  The property was also declared for taxation purposes under her name.  When Joselyn leased the property to petitioner, Benjamin sought the nullification of the contract on two grounds: first, that he was the actual owner of the property since he provided the funds used in purchasing the same; and second, that Joselyn could not enter into a valid contract involving the subject property without his consent.            The trial and appellate courts both focused on the property relations of petitioner and respondent in light of the Civil Code and Family Code provisions.  They, however, failed to observe the applicable constitutional principles, which, in fact, are the more decisive.

61YUMI- CIVIL LAW 1

             Section 7, Article XII of the 1987 Constitution states:[18]      

          Section 7.  Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. 

           Aliens, whether individuals or corporations, have been disqualified from acquiring lands of the public domain.  Hence, by virtue of the aforecited constitutional provision, they are also disqualified from acquiring private lands.[19] The primary purpose of this constitutional provision is the conservation of the national patrimony.[20]  Our fundamental law cannot be any clearer.  The right to acquire lands of the public domain is reserved only to Filipino citizens or corporations at least sixty percent of the capital of which is owned by Filipinos.[21]           In Krivenko v. Register of Deeds,[22] cited in Muller v. Muller,[23] we had the occasion to explain the constitutional prohibition: Under Section 1 of Article XIII of the Constitution, “natural resources, with the exception of public agricultural land, shall not be alienated,” and with respect to public agricultural lands, their alienation is limited to Filipino citizens.  But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens.  It is partly to prevent this result that Section 5 is included in Article XIII, and it reads as follows:

 “Section 5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines.”

This constitutional provision closes the only remaining avenue through which agricultural resources may leak into alien’s hands.  It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if, after all, they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. x x x

 x x x x

 If the term “private agricultural lands” is to be construed as not including residential lots or lands not strictly agricultural, the result would be that “aliens may freely acquire and possess not only residential lots and houses for themselves but entire subdivisions, and whole towns and cities,” and that “they may validly buy and hold in their names lands of any area for building homes, factories, industrial plants, fisheries, hatcheries, schools, health and vacation resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and purposes that are not, in appellant’s words, strictly

agricultural.” (Solicitor General’s Brief, p. 6) That this is obnoxious to the conservative spirit of the Constitution is beyond question.[24]               The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or private lands in the Philippines, save only in constitutionally recognized exceptions.[25] There is no rule more settled than this constitutional prohibition, as more and more aliens attempt to circumvent the provision by trying to own lands through another.  In a long line of cases, we have settled issues that directly or indirectly involve the above constitutional provision.  We had cases where aliens wanted that a particular property be declared as part of their father’s estate;[26] that they be reimbursed the funds used in purchasing a property titled in the name of another;[27] that an implied trust be declared in their (aliens’) favor;[28] and that a contract of sale be nullified for their lack of consent.[29]           In Ting Ho, Jr. v. Teng Gui,[30] Felix Ting Ho, a Chinese citizen, acquired a parcel of land, together with the improvements thereon.  Upon his death, his heirs (the petitioners therein) claimed the properties as part of the estate of their deceased father, and sought the partition of said properties among themselves.  We, however, excluded the land and improvements thereon from the estate of Felix Ting Ho, precisely because he never became the owner thereof in light of the above-mentioned constitutional prohibition.           In Muller v. Muller,[31] petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in Germany. During the subsistence of their marriage, respondent purchased a parcel of land in Antipolo City and constructed a house thereon. The Antipolo property was registered in the name of the petitioner.  They eventually separated, prompting the respondent to file a petition for separation of property.  Specifically, respondent prayed for reimbursement of the funds he paid for the acquisition of said property.  In deciding the case in favor of the petitioner, the Court held that respondent was aware that as an alien, he was prohibited from owning a parcel of land situated in the Philippines. He had,  in fact, declared that when the spouses acquired the Antipolo property, he had it titled in the name of the petitioner because of said prohibition.  Hence, we denied his attempt at subsequently asserting a right to the said property in the form of a claim for reimbursement. Neither did the Court declare that an implied trust was created by operation of law in view of petitioner’s marriage to respondent.  We said that to rule otherwise would permit circumvention of the constitutional prohibition.             In Frenzel v. Catito,[32] petitioner, an Australian citizen, was married to Teresita Santos; while respondent, a Filipina, was married to Klaus Muller.  Petitioner and respondent met and later cohabited in a common-law relationship, during which petitioner acquired real properties; and since he was disqualified from owning lands in the Philippines, respondent’s name appeared as the vendee in the deeds of sale.  When their relationship turned sour, petitioner filed an action for the recovery of the real properties registered in the name of respondent, claiming that he was the real owner.  Again, as in the other cases, the Court refused to declare petitioner as the owner mainly because of the constitutional prohibition.  The Court added that being a party to an illegal contract, he could not come to court and ask to have his illegal objective carried out.  One who loses his money or property by knowingly engaging in an illegal contract may not maintain an action for his losses.  

62YUMI- CIVIL LAW 1

                   Finally, in Cheesman v. Intermediate Appellate Court,[33] petitioner (an American citizen) and Criselda Cheesman acquired a parcel of land that was later registered in the latter’s name.  Criselda subsequently sold the land to a third person without the knowledge of the petitioner.  The petitioner then sought the nullification of the sale as he did not give his consent thereto.  The Court held that assuming that it was his (petitioner’s) intention that the lot in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; thus, the sale as to him was null and void.          

In light of the foregoing jurisprudence, we find and so hold that Benjamin has no right to nullify the Agreement of Lease between Joselyn and petitioner.  Benjamin, being an alien, is absolutely prohibited from acquiring private and public lands in thePhilippines.  Considering that Joselyn appeared to be the designated “vendee” in the Deed of Sale of said property, she acquired sole ownership thereto.  This is true even if we sustain Benjamin’s claim that he provided the funds for such acquisition. By entering into such contract knowing that it was illegal, no implied trust was created in his favor; no reimbursement for his expenses can be allowed; and no declaration can be made that the subject property was part of the conjugal/community property of the spouses.   In any event, he had and has no capacity or personality to question the subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merely exercising the prerogative of a husband in respect of conjugal property.  To sustain such a theory would countenance indirect controversion of the constitutional prohibition.  If the property were to be declared conjugal, this would accord the alien husband a substantial interest and right over the land, as he would then have a decisive vote as to its transfer or disposition.  This is a right that the Constitution does not permit him to have.[34]           In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be nullified on the grounds advanced by Benjamin.  Thus, we uphold its validity.  

With the foregoing disquisition, we find it unnecessary to address the other issues raised by the petitioner.          

WHEREFORE, premises considered, the December 19, 2003 Decision and July 14, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 59573, are REVERSED and SET ASIDE and a new one is entered DISMISSING the complaint against petitioner Philip Matthews.

 SO ORDERED.  

Borromeo v. Descallar GR # 159310, Feb. 24, 2009

CAMILO F. BORROMEO, Petitioner, vs.ANTONIETTA O. DESCALLARRespondent. 

 PUNO, C.J.:

      What are the rights of an alien (and his successor-in-interest) who acquired real properties in the country as against his former Filipina girlfriend in whose sole name the properties were registered under the Torrens system? 

          The facts are as follows:

Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he was assigned by his employer, Simmering-Graz Panker A.G., an Austrian company, to work at a project in Mindoro.  In 1984, he transferred to Cebu and worked at the Naga II Project of the National Power Corporation.  There, he met respondent Antonietta Opalla-Descallar, a separated mother of two boys who was working as a waitress at St. Moritz Hotel.  Jambrich befriended respondent and asked her to tutor him in English.  In dire need of additional income to support her children, respondent agreed. The tutorials were held in Antonietta’s residence at a squatters’ area in Gorordo Avenue.

 Jambrich and respondent fell in love and decided to live together in a rented

house in Hernan Cortes, Mandaue City.  Later, they transferred to their own house and lots at Agro-Macro Subdivision, Cabancalan, Mandaue City.  In the Contracts to Sell dated November 18, 1985[1] and March 10, 1986[2] covering the properties, Jambrich and respondent were referred to as the buyers.  A Deed of Absolute Sale dated November 16, 1987[3] was likewise issued in their favor.  However, when the Deed of Absolute Sale was presented for registration before the Register of Deeds, registration was refused on the ground that Jambrich was an alien and could not acquire alienable lands of the public domain.  Consequently, Jambrich’s name was erased from the document.  But it could be noted that his signature remained on the left hand margin of page 1, beside respondent’s signature as buyer on page 3, and at the bottom of page 4 which is the last page.  Transfer Certificate of Title (TCT) Nos. 24790, 24791 and 24792 over the properties were issued in respondent’s name alone. 

Jambrich also formally adopted respondent’s two sons in Sp. Proc. No. 39-MAN,[4] and per Decision of the Regional TrialCourt of Mandaue City dated May 5, 1988.[5]

However, the idyll lasted only until April 1991.  By then, respondent found a new boyfriend while Jambrich began to live with another woman in Danao City.  Jambrich supported respondent’s sons for only two months after the break up.

63YUMI- CIVIL LAW 1

Jambrich met petitioner Camilo F. Borromeo sometime in 1986.  Petitioner was engaged in the real estate business.  He also built and repaired speedboats as a hobby.  In 1989, Jambrich purchased an engine and some accessories for his boat from petitioner, for which he became indebted to the latter for about P150,000.00.  To pay for his debt, he sold his rights and interests in the Agro-Macro properties to petitioner for P250,000, as evidenced by a “Deed of Absolute Sale/Assignment.”[6]  On July 26, 1991, when petitioner sought to register the deed of assignment, he discovered that titles to the three lots have been transferred in the name of respondent, and that the subject property has already been mortgaged.

On August 2, 1991, petitioner filed a complaint against respondent for recovery of real property before the Regional TrialCourt of Mandaue City.  Petitioner alleged that the Contracts to Sell dated November 18, 1985 and March 10, 1986 and the Deed of Absolute Sale dated November 16, 1987 over the properties which identified both Jambrich and respondent as buyers do not reflect the true agreement of the parties since respondent did not pay a single centavo of the purchase price and was not in fact a buyer; that it was Jambrich alone who paid for the properties using his exclusive funds; that Jambrich was the real and absolute owner of the properties; and, that petitioner acquired absolute ownership by virtue of the Deed of Absolute Sale/Assignment dated July 11, 1991 which Jambrich executed in his favor. 

In her Answer, respondent belied the allegation that she did not pay a single centavo of the purchase price.  On the contrary, she claimed that she “solely and exclusively used her own personal funds to defray and pay for the purchase price of the subject lots in question,” and that Jambrich, being an alien, was prohibited to acquire or own real property in the Philippines.

At the trial, respondent presented evidence showing her alleged financial capacity to buy the disputed property with money from a supposed copra business.  Petitioner, in turn, presented Jambrich as his witness and documentary evidence showing the substantial salaries which Jambrich received while still employed by the Austrian company, Simmering-Graz Panker A.G.

In its decision, the court a quo found—Evidence on hand clearly show that at the time of the

purchase and acquisition of [the] properties under litigation that Wilhelm Jambrich was still working and earning much.  This fact of Jambrich earning much is not only supported by documentary evidence but also by the admission made by the defendant Antoniet[t]a Opalla.  So that, Jambrich’s financial capacity to acquire and purchase the properties . . . is not disputed.[7]

 x   x   x

 On the other hand, evidence . . . clearly show that before defendant met Jambrich sometime in the latter part of 1984, she was only working as a

waitress at the St. Moritz Hotel with an income of P1,000.00 a month and was . . . renting and living only in . . . [a] room at . . . [a] squatter area at Gorordo Ave., Cebu City; that Jambrich took pity of her and the situation of her children that he offered her a better life which she readily accepted.  In fact, this miserable financial situation of hers and her two children . . . are all stated and reflected in the Child Study Report dated April 20, 1983 (Exhs. “G” and “G-1”) which facts she supplied to the Social Worker who prepared the same when she was personally interviewed by her in connection with the adoption of her two children by Wilhelm Jambrich.  So that, if such facts were not true because these are now denied by her . . . and if it was also true that during this time she was already earning as much as  P8,000.00 to P9,000.00 as profit per month from her copra business, it would be highly unbelievable and impossible for her to be living only in such a miserable condition since it is the observation of this Court that she is not only an extravagant but also an expensive person and not thrifty as she wanted to impress this Court in order to have a big saving as clearly shown by her actuation when she was already cohabiting and living with Jambrich that according to her . . . the allowance given . . . by him in the amount of $500.00 a month is not enough to maintain the education and maintenance of  her children.[8]

 This being the case, it is highly improbable and

impossible that she could acquire the properties under litigation or could contribute any amount for their acquisition which according to her is worth more than P700,000.00 when while she was working as [a] waitress at St. Moritz Hotel earning P1,000.00 a month as salary and tips of more or less P2,000.00 she could not even provide [for] the daily needs of her family so much so that it is safe to conclude that she was really in financial distress when she met and accepted the offer of Jambrich to come and live with him because that was a big financial opportunity for her and her children who were already abandoned by her husband.[9]

 x   x   x

The only probable and possible reason why her name appeared and was included in [the contracts to sell dated November 18, 1985 and March 10, 1986 and finally, the deed of absolute sale dated November 16, 1987] as buyer is because as observed by the Court, she being a scheming and exploitive woman, she has taken advantage of the goodness of Jambrich who at that time was still bewitched by her beauty, sweetness, and good attitude shown by her to him since he could still very well provide for everything she needs, he being earning (sic) much yet at that time.  In fact, as observed by this Court, the acquisition of these properties under litigation was at the time when their relationship was still going smoothly and harmoniously.[10] [Emphasis supplied.]      

 The dispositive portion of the Decision states:

 

64YUMI- CIVIL LAW 1

WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and against the defendant Antoniet[t]a Opalla by:

 1) Declaring plaintiff as the owner in fee simple over the residential house of strong materials and three parcels of land designated as Lot Nos. 1, 3 and 5 which are covered by TCT Nos. 24790, 24791 and 24792 issued by the Register of Deeds of Mandaue City;

 2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the name of defendant Antoniet[t]a Descallar by the Register of Deeds of Mandaue City;

 3)  Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790, 24791 and 24792 in the name of defendant Antoniet[t]a Descallar and to issue new ones in the name of plaintiff Camilo F. Borromeo;

 4)  Declaring the contracts now marked as Exhibits “I,” “K” and “L” as avoided insofar as they appear to convey rights and interests over the properties in question to the defendant Antoniet[t]a Descallar;

 5)  Ordering the defendant to pay plaintiff attorney’s fees in the amount of P25,000.00 and litigation expenses in the amount of  P10,000.00; and,

 6)  To pay the costs.[11]

Respondent appealed to the Court of Appeals.  In a Decision dated April 10, 2002,[12] the appellate court reversed the decision of the trial court.  In ruling for the respondent, the Court of Appeals held:

We disagree with the lower court’s conclusion.  The circumstances involved in the case cited by the lower court and similar cases decided on by the Supreme Court which upheld the validity of the title of the subsequent Filipino purchasers are absent in the case at bar.  It should be noted that in said cases, the title to the subject property has been issued in the name of the alien transferee (Godinez et al., vs. Fong Pak Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of Manila, 79 Phils. 461; United Church Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the case of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547; Tejido vs. Zamacoma, 138 SCRA 78).  In the case at bar, the title of the subject property is not in the name of Jambrich but in the name of defendant-appellant.  Thus, Jambrich could not have transferred a property he has no title thereto.[13]

Petitioner’s motion for reconsideration was denied.

Hence, this petition for review.

Petitioner assigns the following errors:I.                    THE HONORABLE COURT OF APPEALS

SERIOUSLY ERRED IN DISREGARDING RESPONDENT’S JUDICIAL ADMISSION AND OTHER OVERWHELMING EVIDENCE ESTABLISHING JAMBRICH’S PARTICIPATION, INTEREST AND OWNERSHIP OF THE PROPERTIES IN QUESTION AS FOUND BY THE HONORABLE TRIAL COURT.

 II.                 THE HONORABLE COURT OF APPEALS

SERIOUSLY ERRED IN HOLDING THAT JAMBRICH HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY NOT THEREFORE TRANSFER AND ASSIGN ANY RIGHTS AND INTERESTS IN FAVOR OF PETITIONER.

 III.             THE HONORABLE COURT OF APPEALS SERIOUSLY

ERRED IN REVERSING THE WELL-REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING DOUBLE COSTS AGAINST HEREIN PETITIONER (THEN, PLAINTIFF-APPELLEE).[14]

First, who purchased the subject properties?

The evidence clearly shows, as pointed out by the trial court, who between respondent and Jambrich possesses the financial capacity to acquire the properties in dispute.  At the time of the acquisition of the properties in 1985 to 1986, Jambrich was gainfully employed at Simmering-Graz Panker A.G., an Austrian company.  He was earning an estimated monthly salary of P50,000.00.  Then, Jambrich was assigned to Syria for almost one year where his monthly salary was approximately P90,000.00. 

On the other hand, respondent was employed as a waitress from 1984 to 1985 with a monthly salary of not more thanP1,000.00.  In 1986, when the parcels of land were acquired, she was unemployed, as admitted by her during the pre-trial conference.  Her allegations of income from a copra business were unsubstantiated.  The supposed copra business was actually the business of her mother and their family, with ten siblings.  She has no license to sell copra, and had not filed any income tax return. All the motorized bancas of her mother were lost to fire, and the last one left standing was already scrap.  Further, the Child Study Report[15] submitted by the Department of Social Welfare and Development (DSWD) in the adoption proceedings of respondent’s two sons by Jambrich disclosed that:

Antonietta tried all types of job to support the children until she was accepted as a waitress at St. Moritz Restaurant in 1984. At first she had no problem with money because most of the customers of St. Moritz are (sic) foreigners and they gave good tips

65YUMI- CIVIL LAW 1

but towards the end of 1984 there were no more foreigners coming because of the situation in the Philippines at that time. Her financial problem started then. She was even renting a small room in a squatters area in Gorordo Ave., Cebu City. It was during her time of great financial distress that she met Wilhelm Jambrich who later offered her a decent place for herself and her children.[16]

 The DSWD Home Study Report[17] further disclosed that:

[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta Descallar, one of the waitresses of the said Restaurants. He made friends with the girl and asked her to tutor him in [the] English language. Antonietta accepted the offer because she was in need of additional income to support [her] 2 young children who were abandoned by their father. Their session was agreed to be scheduled every afternoon at the residence of Antonietta in the squatters area in Gorordo Avenue, Cebu City. The Austrian was observing the situation of the family particularly the children who were malnourished. After a few months sessions, Mr. Jambrich offered to transfer the family into a decent place. He told Antonietta that the place is not good for the children. Antonietta who was miserable and financially distressed at that time accepted the offer for the sake of the children.[18] 

Further, the following additional pieces of evidence point to Jambrich as the source of fund used to purchase the three parcels of land, and to construct the house thereon:

(1)     Respondent Descallar herself affirmed under oath, during her re-direct examination and during the proceedings for the adoption of her minor children, that Jambrich was the owner of the properties in question, but that his name was deleted in the Deed of Absolute Sale because of legal constraints.  Nonetheless, his signature remained in the deed of sale, where he signed as buyer.

(2)     The money used to pay the subject parcels of land in installments was in postdated checks issued by Jambrich. Respondent has never opened any account with any bank.  Receipts of the installment payments were also in the name of Jambrich and respondent.

(3)     In 1986-1987, respondent lived in Syria with Jambrich and her two children for ten months, where she was completely under the support of Jambrich.

(4)     Jambrich executed a Last Will and Testament, where he, as owner, bequeathed the subject properties to respondent.

Thus, Jambrich has all authority to transfer all his rights, interests and participation over the subject properties to petitioner by virtue of the Deed of Assignment he executed on July 11, 1991.

Well-settled is the rule that this Court is not a trier of facts.  The findings of fact of the trial court are accorded great weight and respect, if not finality by this Court, subject to a number of exceptions.  In the instant case, we find no reason to disturb the factual findings of the trial court.  Even the appellate court did not controvert the factual findings of the trial court.  They differed only in their conclusions of law.

Further, the fact that the disputed properties were acquired during the couple’s cohabitation also does not help respondent. The rule that co-ownership applies to a man and a woman living exclusively with each other as husband and wife without the benefit of marriage, but are otherwise capacitated to marry each other, does not apply.[19]  In the instant case, respondent was still legally married to another when she and Jambrich lived together.  In such an adulterous relationship, no co-ownership exists between the parties.  It is necessary for each of the partners to prove his or her actual contribution to the acquisition of property in order to be able to lay claim to any portion of it.  Presumptions of co-ownership and equal contribution do not apply.[20]

Second, we dispose of the issue of registration of the properties in the name of respondent alone.  Having found that the true buyer of the disputed house and lots was the Austrian Wilhelm Jambrich, what now is the effect of registration of the properties in the name of respondent?

It is settled that registration is not a mode of acquiring ownership.[21] It is only a means of confirming the fact of its existence with notice to the world at large.[22]  Certificates of title are not a source of right.  The mere possession of a title does not make one the true owner of the property.  Thus, the mere fact that respondent has the titles of the disputed properties in her name does not necessarily, conclusively and absolutely make her the owner.  The rule on indefeasibility of title likewise does not apply to respondent.  A certificate of title implies that the title is quiet,[23] and that it is perfect, absolute and indefeasible.[24]  However, there are well-defined exceptions to this rule, as when the transferee is not a holder in good faith and did not acquire the subject properties for a valuable consideration. [25]  This is the situation in the instant case.  Respondent did not contribute a single centavo in the acquisition of the properties.  She had no income of her own at that time, nor did she have any savings.  She and her two sons were then fully supported by Jambrich.

Respondent argued that aliens are prohibited from acquiring private land.  This is embodied in Section 7, Article XII of the 1987 Constitution,[26] which is basically a reproduction of Section 5, Article XIII of the 1935 Constitution,[27] and Section 14, Article XIV of the 1973 Constitution.[28]  The capacity to acquire private land is dependent on the capacity “to acquire or hold lands of the public domain.”  Private land may be transferred only to individuals or entities “qualified to acquire or hold lands of the public domain.”  Only Filipino citizens or corporations at least 60% of the capital of which is owned by Filipinos are qualified to acquire or hold lands of the public domain.  Thus, as the rule now stands, the fundamental law

66YUMI- CIVIL LAW 1

explicitly prohibits non-Filipinos from acquiring or holding title to private lands, except only by way of legal succession or if the acquisition was made by a former natural-born citizen.[29]

Therefore, in the instant case, the transfer of land from Agro-Macro Development Corporation to Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is a Filipino citizen.  In United Church Board for World Ministries v. Sebastian,[30] the Court reiterated the consistent ruling in a number of cases[31] that if land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid.  Applying United Church Board for World Ministries, the trial court ruled in favor of petitioner, viz.:

[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the properties under litigation [were] void ab initio since [they were] contrary to the Constitution of the Philippines, he being a foreigner, yet, the acquisition of these properties by plaintiff who is a Filipino citizen from him, has cured the flaw in the original transaction and the title of the transferee is valid.

 The trial court upheld the sale by Jambrich in favor of petitioner and ordered the cancellation of the TCTs in the name of respondent.  It declared petitioner as owner in fee simple of the residential house of strong materials and three parcels of land designated as Lot Nos. 1, 3 and 5, and ordered the Register of Deeds of Mandaue City to issue new certificates of title in his name. The trial court likewise ordered respondent to pay petitioner P25,000 as attorney’s fees and P10,000 as litigation expenses, as well as the costs of suit.

We affirm the Regional Trial Court.

The rationale behind the Court’s ruling in United Church Board for World Ministries, as reiterated in subsequent cases,[32] is this – since the ban on aliens is intended to preserve the nation’s land for future generations of Filipinos, that aim is achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization or those transfers made by aliens to Filipino citizens.  As the property in dispute is already in the hands of a qualified person, a Filipino citizen, there would be no more public policy to be protected. The objective of the constitutional provision to keep our lands in Filipino hands has been achieved.

IN VIEW WHEREOF, the petition is GRANTED.  The Decision of the Court of Appeals in C.A. G.R. CV No. 42929 dated April 10, 2002 and its Resolution dated July 8, 2003 are REVERSED and SET ASIDE.  The Decision of the Regional TrialCourt of Mandaue City in Civil Case No. MAN-1148 is REINSTATED.

SO ORDERED.

Section 2. Exclusive Property of Each Spouse (Articles 109-115)

Villegas v. Lingan GR# 153839 / JUNE 29, 2007526 SCRA 63

“Accurate ruling?”

 D E C I S I O N

  AUSTRIA-MARTINEZ,  J . :  

Before the Cour t is a Pet i t ion for Review on  Cert iorar i  under Rule 45 of the Rules of Cour t assai l ing the Decis ion [1] dated November 28, 2001 promulgated by the Cour t o f Appeals (CA) in CA-G.R. CV No. 55837, which af f i rmed   in to to   the Decis ion dated December 19, 1996 of the Regional Tr ia l Cour t (RTC), Branch 4, Tuguegarao, Cagayan in Civ i l Case No. 5036; and the CA Resolut ion [2] dated June 10, 2002, denying the Mot ion for Reconsiderat ion f i led by Isaac Vi l legas (pet i t ioner) .

 Th is case or ig inated f rom a Compla in t for Annulment o f T i t le

and Inst rument wi th Damages f i led by the pet i t ioner against V ic tor L ingan ( respondent) and At ty . Ernesto Carreon as the Regis ter o f Deeds of Cagayan.    The respondent f i led h is Answer and pre- t r ia l ensued.    The RTC issued a Pre-Tr ia l Order where in i t dec lared that no factua l issue ex is ts and that the so le legal issue to be reso lved is : 

Whether or not the power o f a t torney is a genera l power o f a t torney or a specia l power o f a t torney.    Corro lar i ly , whether upon the terms thereof , the at torney- in- fact Glor ia Roa Catra l , had author i ty , or none at a l l , to execute the deed of sa le in favor o f [ respondent ] V ic tor L ingan. [3]

  On the bas is o f the pre- t r ia l order and upon mot ion of counsel for pet i t ioner , wi thout any ob ject ions f rom respondent , the case was submi t ted for summary judgment .                As found by the RTC and conf i rmed by the CA, the undisputed facts are as fo l lows:

 

67YUMI- CIVIL LAW 1

                    [Pet i t ioner ] Isaac Vi l legas was the reg is tered owner o f a parce l o f land in Tuguegarao, Cagayan, known as  Lot  2637-C of the Subdiv is ion p lan Psd.2-01-019664, be ing a por t ion of  Lot  2637, Cad. 151, conta in ing an area of 1 ,267 square meters, more or less, s i tuated at Bgy. Pengue, Tuguegarao, Cagayan, covered by Transfer Cer t i f icate of T i t le No. T-63809 of the Regis ter o f Deeds of Cagayan.     In order to secure the payment o f a loan f rom the Development Bank of the Phi l ipp ines (DBP) the [pet i t ioner ] const i tu ted a rea l estate mor tgage over the sa id parce l o f land in favor o f DBP.    The sa id loan and mortgage was subsequent ly t ransferred by the DBP to the Home Mutual Development Fund (HMDF).    When the [pet i t ioner ] fa i led to set t le h is loan, the rea l estate mor tgage he const i tu ted over the proper ty was forec losed, the proper ty was so ld a t publ ic auct ion and, as the HMDF was i tse l f the h ighest b idder a t such publ ic auct ion, a cer t i f icate of sher i f f ’s sa le was issued and, thereaf ter , reg is tered wi th the Regis ter o f Deeds on March 8, 1996.    By v i r tue of a power o f a t torney executed by [pet i t ioner ’s ] wi fe , Mar i lou C. V i l legas in favor o f Glor ia Roa Catra l , the la t ter redeemed the proper ty f rom the HMDF. x x x [4]  

               On May 17, 1996, Glor ia R. Catra l (Catra l ) , by v i r tue of the same power o f a t torney, executed a Deed of Sale in favor o f respondent . [5]

 Pet i t ioner c la ims that the power o f a t torney executed in favor

o f Catra l , pet i t ioner ’s mother- in- law, created a pr inc ipa l -agent re la t ionship on ly between h is wi fe , Mar i lou Catra l -V i l legas (Mar i lou) as pr inc ipa l , and Catra l , as agent , and then on ly for the la t ter to admin is ter the proper t ies o f the former; that he never author ized Catra l to admin is ter h is proper t ies, par t icu lar ly , here in subject proper ty ; and that Catra l had no author i ty to execute the Deed of Absolute Sale in favor o f the respondent , s ince f rom the very word ings of the power o f a t torney, she had no specia l author i ty to se l l or convey any speci f ic rea l proper ty . [6]                 On December 19, 1996, the RTC d ismissed the Compla in t , ru l ing that the tenor o f the power o f a t torney in quest ion is broad enough to inc lude the author i ty to se l l any proper ty o f the pr inc ipa l , who, in th is case, is the pet i t ioner ; that the act o f the agent , Cat ra l , in execut ing the Deed of Absolute Sale in favor o f respondent was wi th in her power or author i ty ; that the power “ to enter in to any and a l l cont racts and agreements” qual i f ied the sa id power o f a t torney as a specia l power o f a t torney; that the Deed of Absolute Sale is va l id and b inds the pr inc ipa l , here in pet i t ioner ; that the author i ty to

se l l came f rom both the pet i t ioner and h is wi fe , Mar i lou, s ince the pet i t ioner h imsel f s igned the power o f a t torney af f i rming the author i ty o f the agent , Cat ra l ; and that even i f Cat ra l in fact exceeded her author i ty , the act is deemed to have been per formed wi th in the scope of the agent ’s author i ty i f such is wi th in the terms of the power o f a t torney as wr i t ten.                    D issat is f ied, the pet i t ioner appealed the adverse judgment to the CA c la iming that the t r ia l cour t er red in f ind ing that there was a pr inc ipa l -agent re la t ionship between pet i t ioner and Catra l ; and that the t r ia l cour t er red in conclud ing that the power o f a t torney is a specia l power o f a t torney wi th an author i ty to se l l . [7] 

On November 28, 2001, the CA rendered the here in assai led Decis ion, a f f i rming   in to to   the RTC Judgment and d ismiss ing the appeal for lack of mer i t . [8]                The CA held that when the redempt ion of the proper ty had been made by Catra l by v i r tue of a Genera l Power o f At torney executed in her favor by Mar i lou, i t fo l lows that the pet i t ioner is no longer the owner o f the subject proper ty but h is wi fe , Mar i lou; that the issue as to whether the power o f a t torney was a specia l or genera l one is o f no moment , because the pet i t ioner was no longer the owner o f the proper ty when i t was so ld ; in o ther words, any d isposi t ion of the proper ty needs no power o f a t torney f rom the pet i t ioner h imsel f ; that the pet i t ioner s igned the Genera l Power o f At torney above the word “conforme,” connot ing an impl ied admiss ion that he was not anymore the owner o f the sa id proper ty ; and, f ina l ly , that the Deed of Sale between Mar i lou ( through Catra l ) and respondent is va l id .                Hence, here in Pet i t ion, on the fo l lowing grounds: 

I . 

IT IS SUBMITTED THAT THE COURT OF APPEALS DISREGARDED THE LAW AND APPLICABLE DECISIONS OF THE HONORABLE COURT WHEN IT DISMISSED THE COMPLAINT ON THE GROUND THAT PETITIONER WAS NO LONGER THE OWNER OF THE PROPERTY SUBJECT OF THE CASE.    AS A CONSEQUENCE, IT DID NOT MATTER WHETHER OR NOT THE GENERAL POWER OF ATTORNEY OR A SPECIAL POWER OF ATTORNEY WAS ISSUED IN THIS INSTANT CASE. 

I I . 

IT IS FURTHER SUBMITTED THAT THE COURT OF APPEALS DISREGARDED THE LAW AND THE

68YUMI- CIVIL LAW 1

APPLICABLE DECISIONS OF THE HONORABLE COURT WHEN IT UPHELD THE VALIDITY OF THE DEED OF ABSOLUTE SALEEXECUTED IN FAVOR OF VICTOR LINGAN. [9]

 In h is Memorandum, pet i t ioner argues that the genera l power

o f a t torney of Catra l d id not c lo the her wi th author i ty to se l l the proper ty o f pet i t ioner ; and that the Deed of Absolute Sale executed between the respondent and Catra l was not va l id . [10]                 

On the other hand, respondent , in h is Memoranda, contends that the pet i t ioner has no cause of act ion against h im.    He mainta ins that pet i t ioner lost h is ownersh ip o f the proper ty a f ter i t was ext ra-jud ic ia l ly forec losed and so ld to HMDF;     that what was le f t for pet i t ioner was on ly the r ight o f redempt ion, a r ight he shared wi th h is wi fe ;     that i f there was rea l ly a legal defect in the sa le , the person who has the legal s tanding and the r ight to quest ion the va l id i ty o f the sa le in h is name is Mar i lou, the person who exerc ised the r ight o f redempt ion and the person in whom the r ight to d ispose legal ly res ides; and that Mar i lou has a l l th is t ime remained pass ive.[11]

                The pet i t ion must fa i l .                            There are two pr inc ipa l issues ra ised by the p leadings in the present pet i t ion that must be reso lved:  Firs t ,whether Mar i lou, the wi fe o f the pet i t ioner , as successor- in- in terest , may va l id ly redeem the proper ty in quest ion; and second,  whether the pet i t ioner has a cause of act ion against the respondent . 

Was there a va l id redempt ion ef fected by Mar i lou? The answer is in the af f i rmat ive. Sect ion 6 of Act No. 3135 prov ides:

 Sec. 6 . In a l l cases in which an ext ra jud ic ia l

sa le is made under the specia l power here inbefore re fer red to ,   the debtor, his successors- in-interest  or any jud ic ia l cred i tor or judgment cred i tor o f sa id debtor , or any person hav ing a l ien on the proper ty subsequent to the mortgage or deed of t rust under which the proper ty is so ld , may redeem the same at any t ime wi th in the term of one year f rom and af ter the date of sa le ; and  such redemption shal l be governed by the provisions of sect ion four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civi l Procedure, in so far as these are not inconsistent with the provisions of this Act .   (emphasis suppl ied)

                             Sect ion 27, Rule 39 of the 1997 Rules of Civ i l Procedure, prov ides: 

SEC. 27.    Who may redeem real proper ty so so ld .  –Real proper ty so ld as prov ided in the last preceding sect ion, or any par t thereof so ld separate ly , may be redeemed in the manner here inaf ter prov ided, by the fo l lowing persons: 

(a)    The judgment ob l igor , or h is successor- in-in terest in the whole or any par t o f the proper ty ;

 x x x x

 The “successor- in- in terest ” o f the judgment debtor re fer red

to in the above prov is ion inc ludes a person who succeeds to h is proper ty by operat ion of law, or a person wi th a jo in t in terest in the proper ty , or h is spouse or he i rs . [12] 

 Sect ion 33, Rule 39, Rules of Cour t , s ta tes: 

SEC. 33.    Deed and possess ion to be g iven at exp i ra t ion of redempt ion per iod; by whom executed or g iven.  – I f no redempt ion be made wi th in one (1) year f rom the date of the reg is t ra t ion of the cer t i f icate of sa le , the purchaser is ent i t led to a conveyance and possess ion of the proper ty ;  or, i f so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and not ice thereof given, and the t ime for redemption has expired, the last redemptioner is ent i t led to the conveyance and possession; but in al l cases the judgment obl igor shal l have the ent ire per iod of one (1) year from the date of the registrat ion of the sale to redeem the property.    The deed shal l be executed by the of f icer making the sa le or by h is successor in o f f ice, and in the la t ter case shal l have the same va l id i ty as though the of f icer making the sa le had cont inued in o f f ice and executed i t .

 Upon the expirat ion of the r ight of

redemption, the purchaser or redemptioner shal l be subst i tuted to and acquire al l the r ights, t i t le , interest and claim of the judgment obl igor to the property at the t ime of the levy. The possession of the property shal l be given to the purchaser or last redemptioner by the same off icer unless a third

69YUMI- CIVIL LAW 1

party is actual ly holding the property adversely to the judgment obl igor.   (emphasis suppl ied) 

               Under the above prov is ion, pet i t ioner could have redeemed the proper ty f rom Mar i lou af ter she had redeemed i t . The p leadings f i led and the records of th is case do not show that pet i t ioner exerc ised sa id r ight .    Consequent ly , as correct ly he ld by the CA, Mar i lou acqui red ownersh ip o f the subject proper ty . A l l r ights and t i t le o f the judgment ob l igor are t ransferred upon the expi ra t ion of the r ight o f redempt ion. [13]                 And where the redempt ion is made under a proper ty reg ime governed by the conjugal par tnersh ip o f ga ins, Ar t ic le 109 of the Fami ly Code prov ides that proper ty acqui red by r ight o f redempt ion is the exc lus ive proper ty o f the spouses redeeming the proper ty .                  C lear ly , therefore, Mar i lou, as owner , had the r ight to se l l the proper ty to another .                Th is br ings us to the reso lu t ion of the second issue - - whether pet i t ioner has a cause of act ion against respondent - - and the answer is in the negat ive. 

A cause of act ion is an act or omiss ion of the defendant in v io la t ion of the legal r ight o f the p la in t i f f . A compla in t s ta tes a cause of act ion when i t conta ins three essent ia l e lements:     (1) a r ight in favor o f the p la in t i f f by whatever means and under whatever law i t ar ises; (2) an ob l igat ion of the defendant to respect such r ight ; and (3) the act or omiss ion of the defendant v io la tes the r ight o f the p la in t i f f . [14]

                 In the present case, there is no proper ty r ight that ex is ts in favor o f the pet i t ioner , and, wi th more reason, no such ob l igat ion ar ises in behal f o f the defendant , here in respondent , to respect such r ight .    There was no v io la t ion of a legal r ight o f the pet i t ioner .                   I t must be s t ressed that there is no a l legat ion or proof that Mar i lou redeemed the proper ty in behal f o f the pet i t ioner—Mar i lou d id not act as agent o f the pet i t ioner . Rather , she exerc ised the r ight o f redempt ion in her own r ight as successor- in- in terest o f the pet i t ioner .  Under the circumstances, should there be any r ight v iolated, the aggrieved party is Mari lou, pet i t ioner’s wife. The property in quest ion was the exclusive property of Mari lou by vir tue of her redemption.  Thus, pet i t ioner has no va l id cause of act ion against the respondent .                Consequent ly , the quest ion whether Catra l had va l id ly so ld the subject proper ty to respondent by v i r tue of the Genera l Power o f At torney executed by Mar i lou, is not wi th in the rea lm of the Cour t ’s

jur isd ic t ion to reso lve in th is case as sa id issue is not proper ly ra ised by the r ight person, Mar i lou.                  D ivested of a l l in terest over the proper ty , the pet i t ioner has ceased to be the proper par ty who may chal lenge the va l id i ty o f the sa le . Moreover , s ince, as a ru le , the agency, as a cont ract , is b ind ing on ly between the cont ract ing par t ies, [15]  then on ly the par t ies, as wel l as the th i rd person who t ransacts wi th the par t ies themselves, may quest ion the va l id i ty o f the agency or the v io la t ion of the terms and condi t ions found there in .    Th is ru le is a coro l lary o f the foregoing doct r ine on the r ights o f rea l par t ies in in terest . 

The Cour t cannot grant the re l ie f prayed for in pet i t ioner ’s Compla in t as to damages, cons ider ing that the issue on damages was deemed waived when the par t ies l imi ted themselves to the legal issue arr ived at dur ing the pre- t r ia l in the RTC. [16]

 WHEREFORE , the pet i t ion is  DENIED .   The Decis ion and

Resolut ion of the Cour t o f Appeals are AFFIRMED.       

Costs against the pet i t ioner . SO ORDERED.

Section 3. Conjugal Partnership Property (Articles 116-120); Article 160 NCC

Pisueña vs. Heirs of Petra Unating GR# 132803 / AUG 31, 1999 313 SCRA 384

G.R. No. 132803           August 31, 1999JESSIE V. PISUEÑA, petitioner, vs.HEIRS OF PETRA UNATING and AQUILINO VILLAR Represented by Salvador Upod and Dolores Bautista,respondents.

PANGANIBAN, J.:

Real property acquired during marriage is presumed to be conjugal. Such prima facie presumption, however, can be overturned by a cadastral courts' specific finding,

70YUMI- CIVIL LAW 1

which has long become final, that the lot in question was paraphernal in character. The title to the entire property shall pass by operation of law to the buyer once the seller acquires title over it by hereditary succession, even if at the time of the execution of the deed of sale, the seller owned only a portion of the property.

The Case

Before us is a Petition for Review on Certiorari seeking to set aside the February 26, 1997 Decision of the Court of Appeals1 (CA) in CA-GR CV No. 39955,2 as well as its February 12, 1998 Resolution denying reconsideration. The assailed Decision affirmed in toto the ruling3 of the Regional Trial Court (RTC) of Roxas City in Civil Case No. V-5462, which disposed as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the court renders judgment:

1. Declaring the "Escritura de Venta Absoluta" by Felix Villar and Catalina Villar in favor of Agustin Navarra, defendant's predecessor-in-interest, as valid with respect to the one-half share of the whole Lot. No. 1201, Cadastral 228 of the Cadastral of Ivisan, Capiz, located at Barangay Cabugao, Municipality of Ivisan, Province of Capiz, which is registered in the name of Petra Unating married to Aquilino Villar under Original Certificate of Title No. RO-6316 (18422) while the other half belongs to the plaintiffs as Heirs of Aquilino Villar;

2. Dismissing the complaint for lack of merits;

3. Dismissing parties' claim for damages and attorney's fees.

No costs.

The Facts

The present case is rooted in an action for recovery of (1) possession and ownership of a parcel of land, as well as (2) a sum of money and damages. Before the RTC of Roxas City on May 15, 1989, this case was originally filed against herein petitioner, Jessie Pisueña, by herein respondents, the heirs of Petra Unating and Aquilino Villar represented by Salvador Upod and Dolores Bautista.4

The CA adopted the trial court's summation of the facts as follows:5

The lot in dispute, known as Lot 1201, Cadastral 228 of the Cadastral of Ivisan, Capiz, located at Barangay Cabugao, Municipality of Ivisan, Province of Capiz, is a registered land in the name of Petra Unating married to Aquilino Villar under Original Certificate of Title No. 18422, containing an area of 83,536 square meters, more or less. Petra Unating died on October 1, 1948 while Aquilino Villar died on January 14, 1953. The spouses had two [legitimate] children, namely Felix Villar and Catalina Villar. Felix Villar died on October 24, 1962, while Catalina Villar died on February 21, 1967.1âwphi1.nêt

For the purpose of this case, Felix Villar is represented by Dolores Villar Bautista, the eldest of his four children while Catalina Villar is represented by Salvador Villar Upod, the eldest of her three (3) children, all as plaintiffs [herein respondents].

Defendant [herein petitioner], Jessie Pisueña, is the son-in-law of Agustin Navarra who was once a [m]unicipal [m]ayor of the Municipality of Ivisan. Agustin Navarra died on October 30, 1958.

The land in question was a subject of court litigations between Dolores Bautista and Salvador Upod on one hand, and defendant Jessie Pisueña on the other. Thus, when Salvador Upod filed a petition for reconstitution of its title in Reconstitution Case No. 1408 before Branch I, then Court of First Instance of Capiz, defendant Jessie Pisueña filed his opposition. Nevertheless, the title was reconstituted in the name of the registered owners pursuant to the resolution of the court dated August 6, 1980 and it now has a reconstituted title under OCT No. RO-6316 (18422) in the name of the original registered owners.

Defendant Jessie Pisueña filed a petition for the surrender of withheld owner's duplicate certificate of title under Special Case No. 4610 against Salvador Upod, et. al. for [Quieting] of Title and Damages with Writ of Preliminary Prohibitory Injunction before this court then presided by Hon. Odon C. Yrad, Jr. who dismissed said complaint on August 27, 1984.

Plaintiffs' evidence further show[s] that Salvador Upod and Dolores Bautista filed a complaint for ejectment with damages against defendant Jessie, Pisueña and Norberto Tugna before, the Municipal Court of Ivisan as Civil Case No. 94.

x x x           x x x           x x x

Plaintiffs [respondents herein] contend that during the lifetime of the registered owners, Petra Unating and Aquilino Villar, they enjoyed the absolute ownership and possession of Lot No. 1201. However, sometime in 1950 (after the death of Petra Unating on October 1, 1948) Aquilino Villar entered into an oral partnership agreement for ten (10) years with Agustin Navarra involving the swampy portion of the lot in question consisting of around four (4) hectares. It was agreed that the area of around three (3) hectares shall further be developed into a fishpond while about one (1) hectare shall be converted into a fishpond with the investment capital of Agustin Navarra. Whatever excess there was in the capital so invested shall be used to make the fishpond productive. Parties agreed that the net income after deducting expenses shall be divided equally between Aquilino Villar and his co-heirs on one hand and Agustin Navarra on the other. The upland portion of the land was not included in the transaction, hence it remained in the possession of the plaintiffs. While alive, Agustin Navarra, who managed the partnership, religiously gave Aquilino Villar and his co-heirs their share. This arrangement continued until Aquilino Villar died on January 14, 1953. Thereafter, his share in the income of the partnership was delivered by Agustin Navarra to Felix Villar and Catalina Villar.

Since Agustin Navarra died in 1958, Felix and Catalina Villar repossessed the land in question. They maintained their possession up to the time Felix and Catalina Villar died. Thereafter, the children of Felix and Catalina Villar continued the possession of their predecessor-in-interest until the defendant disturbed their possession sometime in 1974. However, in 1975, they

71YUMI- CIVIL LAW 1

regained physical possession of the disputed area. From 1975, there were intermittent disturbances and intrusions of their physical possession of the land in dispute by the defendant particularly the fishpond portion consisting of about four (4) hectares more or less which resulted [in] the filing of cases against one and the other as earlier stated.

Sometime in 1982, the defendant in the company of several men including policemen, wrested physical possession from the plaintiffs which possession of the defendant continued up to the present. Hence, this complaint for its recovery particularly the fishpond portion.

On the other hand, defendant counters that the whole land in dispute was sold by Felix Villar and Catalina Villar to Agustin Navarra on February 2, 1949. The contract in Spanish captioned "ESCRITURA DE VENTA ABSOLUTA" to evidence such sale was duly notarized by Jose Villagracia, Notary Public, and was entered in his Notarial Register as Document No. 517; Page 7; Book IV; Series of 1949.

On December 31, 1968, which [was] more than ten (10) years after the death of Agustin Navarra on October 30, 1958, his heirs executed a Deed of Extra Judicial Partition and Deed of Sale of the land in question in favor of the Spouses Jessie Pisueña and Rosalie Navarra. The document was notarized by Jose P. Brotarly, Notary Public, and docketed in his notarial register as Document No. 409; Page 83; Book No. VI; Series of 1968. From the time of the sale up to the present, the fishpond portion was in the possession of the spouses Jessie Pisueña and Rosalie Navarra. However, the upland portion is in the possession of Salvador Upod and Dolores Bautista by mere tolerance of the defendant. The latter denies any partnership agreement o[n] the fishpond portion by Agustin Navarra, their predecessor-in-interest, and the plaintiffs.

x x x           x x x           x x x

On June 24, 1992, the trial court ruled that since the disputed lot was the conjugal property of Spouses Petra Unating and Aquilino Villar, its purported sale by Felix and Catalina Villar to Agustin Navarra could be considered valid. The court, however, ruled that its validity pertained only to the share of the late Petra Unating, considering that at the time of the sale, Aquilino Villar was still alive. It likewise held that the respondents, as heirs of Aquilino Villar, were entitled to his one-half share in the disputed lot.

Before the Court of Appeals, Dolores Bautista, and Salvador Upod assailed the trial court's ruling upholding the validity of the Escritura de Venta Absoluta. Jessie Pisueña, on the other hand, questioned the court's conclusion that the subject lot was conjugal. He claimed that it was paraphernal, and that the Deed of Sale transferred the whole lot to Agustin Navarra, his predecessor-in-interest.

Ruling of the Court of Appeals

The appellate court affirmed the trial court's ruling in toto, holding that the disputed lot belonged to the conjugal partnership of Petra Unating and Aquilino Villar, viz.:

Anent the first issue, defendant argues that Lot. 1201 was a paraphernal property of Petra Unating. In support of his argument, he mentions the decision of the Court of First Instance of Capiz in Reconstitution Case No. 1408, where in the dispositive portion thereof, said court ordered the reconstitution of the Original and Owner's copy of the Original Certificate of Title covering Lot 1201 "in the name of Petra Unating, 40 years old, married to Aquilino Villar, Filipino and residents of Ivisan, Capiz, having inherited said lot from her mother Margarita Argamaso." He further argues that the mention of the name Aquilino Villar in the certificate of title is merely descriptive of the civil status of Petra Unating and the same could not convert the property into a conjugal one.

We are not persuaded. The lower court rejected the statement of the Court of First Instance of Capiz in Reconstitution Case No. 1408 that Lot 1201 was inherited by Petra Unating from her mother. We agree with the lower court when it found the phrase "having inherited said lot from her mother Margarita Argamaso" as a mere obiter, a finding of fact which we find no justifiable reason to set aside. It must be considered that the authority of the Court of First Instance of Capiz to declare Lot 1201 as having been inherited by Petra Unating from her mother is doubtful. We quote the pertinent ruling of the lower court, thus:

Reconstitution of a certificate of title [denotes] restoration of the instrument which is supposed to have been lost or destroyed in its original form and condition. It is limited to the reconstitution of the certificate as it stood at the time of its loss or destruction and should not be stretched to include later changes which alter or affect the title of the registered owner. The original registered owner of Lot 1201 being Petra Unating married to Aquilino Villar. [That t]he title should be reconstituted in the same names and findings of said court as to the ownership of the land as paraphernal property of Petra Unating is an obiter. It therefore did not decide whether Lot 1201 is a paraphernal or a conjugal property of the registered owners.

We further agree with the lower court when it held that "in the absence [o]f any evidence o[f] any system [o]f property relation between Petra Unating and Aquilino Villar, it is presumed that it is one of conjugal partnership." Besides, it appears that Lot 1201 was acquired during the marriage of the Spouses Petra Unating and Aquilino Villar, since the Original Certificate of Title indicates that Lot 1201 was registered in the name of Petra Unating, married to Aquilino Villar. Thus, the property is presumed conjugal.

In resolving the question of presumption of conjugality, the Supreme Court had occasion to rule that:

The presumption is a strong one. As stated in Camia de Reyes v. Reyes de Ilano (63 Phil. 629, 639), "it is sufficient to prove that the property was acquired during the marriage in order that the same may be deemed conjugal property." And in Laluan v. Malpaya (65 Phil 494, 504), we stated, "proof of acquisition of the property in dispute during the marriage suffices to render the

72YUMI- CIVIL LAW 1

statutory presumption operative." (Mendoza vs. Reyes, 124 SCRA 154; emphasis supplied).

Additionally, defendant Pisueña, who brought up the question of Lot 1201 being the paraphernal property of Petra Unating failed to adduce convincing and concrete evidence that would rebut the presumption of conjugality of the subject lot. Moreover, it is settled that registration alone of the property in the name of one of the spouses does not destroy the conjugal nature of the property. (Mendoza vs. Reyes, supra and Bucoy vs. Paulino, 23 SCRA 248).

The Court of Appeals also rejected Salvador Upod's attack on the Escritura de Venta Absoluta, reasoning that the Deed of Sale was duly notarized and that no evidence was presented to rebut its due execution, validity and admissibility as evidence. Furthermore, the appellate court noted that the respondents were aware of the nature and the content of the assailed Deed, and that they did not object to its translation given in the trial court.

Likewise, the CA debunked Upod's contention that Pisueña's cause of action had prescribed. It ruled:

On the fourth issue, plaintiff Salvador Upod contends that defendant Pisueña could no longer enforce his right since Article 1144 of the Civil Code provides that an action based upon a written contract must be brought within ten years from the time the right of action accrues.

The contention is not meritorious. It is obvious that the above-mentioned article does not apply in the case at bench since defendant Pisueñas [was] not the one who filed the complaint. Furthermore, defendant is in possession of the fishpond portion of the property in dispute. Assuming ex gratia argumenti that the aforementioned article is applicable, the claim of defendant Pisueña has not yet prescribed. Defendant Pisueña obtained his right over Lot 1201 by virtue of the Deed of Extrajudicial Partition and Deed of Sale dated December 31, 1968. In 1974, within the ten year prescriptive period, he filed his Answer to the complaint for ejectment filed by plaintiffs[,] (Exh. "G") raising therein his ownership over Lot 1201. Also, he filed his Opposition (Exh. "U") to the petition for reconstitution filed by plaintiff Salvador Upod. To our minds, this action and [the] leadings filed by defendant Pisueña interrupted the prescriptive period.

Anent the fifth issue, plaintiff Salvador Upod posits that the trial court failed to consider the decision of this court dated January 31, 1985 in AC-UDK Sp. No. 2273 which passed upon the defendant-appellant's rights over the subject property.

A perusal of this Court's decision in said case (Exh. "P") shows that, contrary to plaintiffs['] allegation, this Court thru Mr. Justice Purisima did not pass upon the rights of defendant Pisueña over Lot 1201. We take note that while the "petition for Review" of the defendant was dismissed by this Court, the dismissal was anchored on the ground that 1) Petition for Review was not the appropriate remedy; 2) the summary proceedings for the surrender of the owner's duplicate provided for under Section 107 of P.D. 1529 or Section 112 of Act 496 is unavailing as there [exist] serious conflicting claims of ownership; and 3) the ordinary civil action for quieting of title to Lot

1201 is not the proper remedy, since it is only the registered owner of the property affected who can sue as plaintiff. Clearly, the dismissal of said petition did not have any effect on the present case.

x x x           x x x           x x x

However, we agree with the plaintiffs' statement that the law applicable is the Old Civil Code, considering that Petra Unating died in 1948 before the effectivity in 1950 of the New Civil Code. Suffice it to say that we agree with the lower court when it ruled citing Prades vs. Tecson (49 Phil 479) and Rodriguez v. Borromeo(43 Phil 479) that "when a spouse dies and the conjugal assets are not liquidated, a co-ownership over said assets may be formed among the surviving spouse and the heirs of the decedent." Absent any showing that there are debts and charges against the conjugal assets, we therefore declare Aquilino Villar, the surviving spouse of Petra Unating, as the owner of the undivided one-half of their conjugal property, while their children, Felix and Catalina Villar, are the owners of the other undivided half, pursuant to Article 1426 of the Old Civil Code. . . .

In all, the CA agreed with the trial court that the disputed lot should be divided equally between the heirs of Petra Unating on the one hand, and Jessie Pisueña on the other.

Asserting full ownership over the disputed property and claiming that the CA erred in ruling that Felix and Catalina could have sold only their one-half share in the property, Petitioner Pisueña filed this Petition for Review.6

Issues

Petitioner ascribes to the Court of Appeals the following specific errors:

I. The Honorable Court of Appeals erred in affirming the ruling of the lower court that the phrase "having inherited said lot from her mother Margarita Argamaso" [i]s a mere obiter.

II. The Honorable Court of Appeals erred in ruling that Lot 1201 belongs to the conjugal [partnership] of Petra Unating and Aquilino Villar.

The Court's Ruling

The Petition is meritorious.

First Issue:

Paraphernal or Conjugal?

Both the CA and the RTC held that the disputed lot was conjugal and dismissed, as obiter, the phrase "having inherited said lot from her [Petra Unating's] mother, Margarita Argamaso" found in the dispositive portion of the Decision of the Court of First Insurance (CFI) of Capiz in Reconstitution Case No. 1408. They explained that the CFI had no authority to include the phrase, because the only objective of reconstitution was to "restore the certificate covering the property as it stood at the

73YUMI- CIVIL LAW 1

time of its loss or destruction, and should not be stretched to include later changes which alter of affect the title of the registered owner."7

We do not agree. It must be emphasized that the dispositive portion of the 1930 Decision, which was rendered by the same CFI of Capiz acting as a cadastral court, already contained the questioned phrase. Therefore, it cannot be said that the CFI in 1980 exceeded its authority when it ordered the reconstitution, in Petra Unating's name, of the original certificate of title covering the disputed lot or in stating therein that she had inherited it from her mother. After all, such disposition was copied from the same court's 1930 Decision, as evidenced by an authentic copy of it on file with the Bureau of Lands in Capiz.

Cadastral proceedings are proceedings in rem; like ordinary registration proceedings, they are governed by the usual rules of practice, procedure and evidence.8 A cadastral decree and a certificate of title are issued only after the applicants prove that they are entitled to the claimed lots, all parties are heard, and evidence is considered.

Thus, the finding of the cadastral court that Petra Unating inherited the lot in question from her mother cannot be dismissed as an obiter, which is "an observation by the court not necessary to the decision rendered."9 The conclusion of the cadastral court was found in the dispositive portion of its Decision, and it was material to the nature of Petra Unating's ownership of the lot. Furthermore, it was based on the evidence presented by the parties and considered by the said court. In any event, it must be pointed out that the Decision became final a long time ago, and a final judgment in a cadastral proceeding, or any other in rem proceeding for that matter, is binding and conclusive upon the whole world.10 Therefore, the lot in dispute can properly be considered as a paraphernal property of Petra Unating.11

Concededly, properties acquired during the marriage are presumed to be conjugal. However, this prima faciepresumption cannot prevail over the cadastral court's specific finding, reached in adversarial proceedings, that the lot was inherited by Petra Unating from her mother. Noteworthy is the fact that the parties do not assail the validity of the cadastral court's Decision. The 1980 reconstitution of the title to the lot in the name of "Petra Unating, 40 years old, married to Aquilino Villar, Filipino and resident of Ivisan, Capiz, having inherited said lot from her mother Margarita Argamaso . . ." was notice to the world, including her heirs and successors-in-interest, that it belonged to Petra as her paraphernal property. Thus, the words "married to" were merely descriptive of Petra Unating's status at the time the lot was awarded and registered in her name.12

Second Issue:

Efficacy of the Escritura de Venta Absoluta

Petitioner Jessie Pisueña traces his claim over the disputed lot to his father-in-law, Agustin Navarra, who in turn acquired it on February 4, 1949 from Felix and Catalina Villar, Petra Unating's children. His claim is evidenced by a notarized Deed of Sale written in Spanish, captioned Escritura de Venta Absoluta. Private Respondent Salvador Upod, on the other hand, asserts that both the trial and the appellate courts erred in admitting the Deed, citing Section 33, Rule 132 of the Rules of Court, which provides:

Documents written in an unofficial language shall not be admitted as evidence, unless accompanied with a translation into English or Filipino. To avoid interruption of the proceedings, parties or their attorneys are directed to have such translation prepared before trial.

We do not agree. Instead, we uphold the Court of Appeals' disquisition, which we quote:

The assertion is without merit. The aforementioned rule is not always taken literally so long as there was no prejudice caused to the opposing party (People v. Salison, G.R. No. 115690, February 20, 1996). The records show that there was no prejudice caused to the plaintiffs who appear to be familiar with the contents or the nature of Exhibit "1". As proof thereof, they even questioned the defendant on the subject document. Importantly, when required by the court to comment on the English translation of Exhibit "1" (p. 316, records) plaintiffs did not bother to comment giving rise to the presumption that the translation submitted was correct (p. 340, records). Hence, the court a quo did not err in admitting the Escritura de Venta Absoluta.13

Furthermore, the respondents were not able to impugn the due execution and validity of the notarized Deed.

Neither are we persuaded by Upod's argument that the petitioner's right has prescribed under Article 1144 of the Civil Code.14 It is undisputed that he was already in possession of the fishpond when the present case was filed.

Petitioner and His Wife Are Owners of the Disputed Lot

As already shown, the disputed lot was paraphernal. Since Petra Unating did not leave any other property, will or debt upon her demise in 1948, the property in question was thus inherited by her children, Felix and Catalina Villar; and her husband, Aquilino Villar.15 The two children were entitled to the two-thirds of their mother's estate,16 while the husband was entitled to the remaining one-third.17

By virtue of the Deed of Sale they executed, Felix and Catalina effectively transferred to Agustin Navarra on February 4, 1949, their title over their two-thirds share in the disputed lot. However, they could not have disposed of their father's share in the same property at the time, as they were not yet its owners. At the most, being the only children, they had an inchoate interest in their father's share.

When Aquilino Villar died in 1953 without disposing of his one-third share in the disputed property, Felix and Catalina's inchoate interest in it was actualized, because succession vested in them the title to their father's share and, consequently, to the entire lot. Thus, that title passed to Agustin Navarra, pursuant to Article 1434 of the present Civil Code, which was already in force at the time of Aquilino's death in 1953. This provision reads:

When a person who is not the owner of the thing sells or alienates or delivers it, and later, the seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee.

The aforequoted article was applied in Llacer v. Muñoz,18 Estoque v. Pajimula,19 Bucton v. Gabar20 and Quijada v. Court of Appeal.21 In each of these

74YUMI- CIVIL LAW 1

cases, the Court upheld the validity of the sale by one who previously did not have, but who subsequently acquired, title to the property sold.

Thus, although Felix and Catalina Villar were not yet the owners of the remaining one third of the disputed lot when they sold to Agustin Navarra on February 4, 1949, they became its owners upon their father's death on January 14, 1953. Pursuant to Article 1434, the title to the lot passed to Agustin Navarra.22 It must be noted that at the time Felix and Catalina executed the Deed of Sale covering the disputed lot, they intended to sell the entire lot, not just their interest therein, as can be gleaned from a pertinent portion of the Deed, the English translation of which reads:

x x x           x x x           x x x

DESCRIPTION

A piece of mangrove and coconut grove land (Lot. No. 1201 of Cadastre of Ivisan), and its improvements, situated in the Municipality of Ivisan, Capiz; that is bounded N to Dapdap Creek; E. to Lot No. 1196, Sunsunan Creek; and S to Lots Nos. 1239 and 1151; and W to Dapdap Creek YB B.M. No. 21; and containing an area of Eighty Three Thousand Five Hundred Thirty Six square meters (83,536 sq. mts.) more or less; declared under Tax No. 609 and valued/appraised at P490.00.

x x x           x x x           x x x

And finally, we make known, that from/on this date we hand over the said property, its possession/holding and absolute dominion of the aforesaid piece of land to the buyer, namely Mr. Agustin Navarra, his heirs and assignees, free from liens and liabilities/obligations, and of such title we promise and assure to defend now and always against all possible just claims/demands and claimants or those that may present them.

x x x           x x x           x x x23

Consequently, upon the death of Aquilino Villar, the ownership of the whole of Lot No. 1201 became vested in Jessie Pisueña and his wife.

WHEREFORE, the Petition is hereby GRANTED and the assailed Decision is SET ASIDE. Petitioner Jessie Pisueña and his wife, Rosalie Navarra, are hereby declared the owners of Lot. No. 1201, Cadastral 228 of the Cadastral of Ivisan, Capiz. The Register of Deeds of Capiz is AUTHORIZED to cancel the Original Certificate of Title in the name of Petra Unating and to issue a new Transfer Certificate of Title in the name of Spouses Jessie Pisueña and Rosalie Navarra. No costs.

SO ORDERED.

Ching vs. CA GR# 124642 / FEB. 23, 2004 423 SCRA 356

[G.R. No. 124642.  February 23, 2004]

ALFREDO CHING and ENCARNACION CHING, petitioners, vs. THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.

D E C I S I O N

CALLEJO, SR., J.:

This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision[1] of the Court of Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution[2] 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, 1993[3]and February 17, 1994[4] 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 P9,000,000.00 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 P38,000,000.00.[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 P13,000,000.00 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 P12,612,972.88 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 brought[11] 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]

75YUMI- CIVIL LAW 1

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 ofP12,700,000.  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 P12,612,972.82 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 (P12,700,000.00) 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 Motion[27] 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 P12,700,000 toP6,350,000.[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 P6,350,000.[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]

76YUMI- CIVIL LAW 1

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 Order[37] 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]

77YUMI- CIVIL LAW 1

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. Lantinand 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. Lozano[57] and Associated Insurance & Surety Co., Inc. v. Banzon[58] 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 Insurancecase where the uncontroverted

78YUMI- CIVIL LAW 1

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 Court[59] 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 P38,000,000.  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.

Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

Ferrer v. Ferrer GR# 166496 / NOV. 29, 2006508 SCRA 57

79YUMI- CIVIL LAW 1

JOSEFA BAUTISTA FERRER, Petitioner, vs. SPS. MANUEL M. FERRER & VIRGINIA FERRER and SPS. ISMAEL M. FERRER and FLORA FERRER, Respondents.

Before this Court is an Appeal by Certiorari which assails the Decision[1] of the Court of Appeals dated 16 August 2004 in CA-G.R. SP No. 78525, reversing and setting aside the Order[2] dated 16 December 2002 of the Regional Trial Court (RTC), Mandaluyong City, Branch 212 in Civil Case No. MC02-1780. The Court of Appeals ordered the dismissal of the Complaint[3] filed by petitioner Josefa Bautista Ferrer against respondents Sps. Manuel M. Ferrer and Virginia Ferrer, and Sps. Ismael M. Ferrer and Flora Ferrer in the aforesaid Civil Case No. MC02-1780.

In her Complaint for payment of conjugal improvements, sum of money, and accounting with prayer for injunction and damages, petitioner alleged that she is the widow of Alfredo Ferrer (Alfredo), a half-brother of respondents Manuel M. Ferrer (Manuel) and Ismael M. Ferrer (Ismael). Before her marriage to Alfredo, the latter acquired a piece of lot, covered by Transfer Certificate of Title (TCT) No. 67927.[4] He applied for a loan with the Social Security System (SSS) to build improvements thereon, including a residential house and a two-door apartment building. However, it was during their marriage that payment of the loan was made using the couple’s conjugal funds. From their conjugal funds, petitioner posited, they constructed a warehouse on the lot. Moreover, petitioner averred that respondent Manuel occupied one door of the apartment building, as well as the warehouse; however, in September 1991, he stopped paying rentals thereon, alleging that he had acquired ownership over the property by virtue of a Deed of Sale executed by Alfredo in favor of respondents, Manuel and Ismael and their spouses. TCT No. 67927 was cancelled, and TCT. No. 2728 was issued and registered in the names of respondents.

It is petitioner’s contention that on 2 October 1989, when her husband was already bedridden, respondents Ismael and Flora Ferrer made him sign a document, purported to be his last will and testament. The document, however, was a Deed of Sale covering Alfredo’s lot and the improvements thereon. Learning of this development, Alfredo filed with the RTC of Pasig, a Complaint for Annulment of the said sale against respondents, docketed as Civil Case No. 61327.[5] On 22 June 1993, the RTC dismissed the same.[6] The RTC found that the terms and conditions of the Deed of Sale are not contrary to law, morals, good customs, and public policy, and should be complied with by the parties in good faith, there being no compelling reason

under the law to do otherwise. The dismissal was affirmed by the Court of Appeals. Subsequently, on 7 November 1994, this Court, in G.R. No. L-117067, finding no reversible error committed by the appellate court in affirming the dismissal of the RTC, affirmed the Decision of the Court of Appeals.[7]

Further, in support of her Complaint, petitioner alluded to a portion of the Decision dated 22 June 1993 of the RTC in Civil Case No. 61327, which stated, to wit:

In determining which property is the principal and which is the accessory, the property of greater value shall be considered the principal. In this case, the lot is the principal and the improvements the accessories. Since Article 120 of the Family Code provides the rule that the ownership of accessory follows the ownership of the principal, then the subject lot with all its improvements became an exclusive and capital property of Alfredo with an obligation to reimburse the conjugal partnership of the cost of improvements at the time of liquidation of [the] conjugal partnership. Clearly, Alfredo has all the rights to sell the subject property by himself without need of Josefa’s consent.[8]

According to petitioner, the ruling of the RTC shows that, when Alfredo died on 29 September 1999, or at the time of the liquidation of the conjugal partnership, she had the right to be reimbursed for the cost of the improvements on Alfredo’s lot. She alleged that the cost of the improvements amounted to P500,000.00; hence, one-half thereof should be reimbursed and paid by respondents as they are now the registered owners of Alfredo’s lot. She averred that respondents cannot claim lack of knowledge about the fact that the improvements were constructed using conjugal funds as they had occupied one of the apartment buildings on Alfredo’s lot, and even paid rentals to petitioner. In addition, petitioner prayed that respondents be ordered to render an accounting from September, 1991, on the income of the boarding house constructed thereon which they had appropriated for themselves, and to remit one-half thereof as her share. Finally, petitioner sought from respondents moral and exemplary damages, litigation and incidental expenses.

For their part, respondents filed a Motion to Dismiss,[9] contending that petitioner had no cause of action against them, and that the cause of action was barred by prior judgment.

On 16 December 2002, the RTC rendered an Order,[10] denying the Motion to Dismiss. According to the RTC, no pronouncement as to the improvements constructed on Alfredo’s lot has been made in Civil Case No. 61327, and the payment of petitioner’s share in the conjugal partnership constitutes a separate cause of action. A subsequent Order[11] dated 17 January 2003 was issued by the RTC, denying respondents’ Motion for Reconsideration.Aggrieved, respondents elevated the case to the Court of Appeals by way of a Petition for Certiorari, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the RTC in denying the dismissal. On 16 August 2004, the Court of Appeals rendered a Decision granting the Petition. It held that petitioner’s Complaint failed to state a cause of action. The appellate court rationalized as follows:

[W]e believe that the instant complaint is not the proper action for the respondent to enforce her right of reimbursement of the cost of the improvement[s] on the subject property. As correctly pointed out by the petitioners, the same should be made and

80YUMI- CIVIL LAW 1

directed in the settlement of estate of her deceased husband Alfredo Ferrer pursuant to Article 129[12] of the Family Code. Such being the case, it appears that the complaint herein fails to state a cause of action against the petitioners, the latter not being the proper parties against whom the subject action for reimbursement must be directed to. A complaint states a cause of action where it contains three essential elements of a cause of action, namely: (1) the legal right of the plaintiff; (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right. If these elements are absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action. Albeit the respondent herein has the legal right to be reimbursed of the cost of the improvements of the subject property, it is not the petitioners but the estate of her deceased husband which has the obligation to pay the same. The complaint herein is therefore dismissible for failure to state a cause of action against the petitioners. Needless to say, the respondent is not without any further recourse as she may file her claim against the estate of her deceased husband.

In light of the foregoing, we find that the public respondent committed grave abuse of discretion in denying the petitioners’ motion to dismiss for failure to state a cause of action.[13]Aggrieved, petitioner filed a Motion for Reconsideration thereon. However, on 17 December 2004, the Court of Appeals rendered a Resolution[14] denying the motion.

Hence, the present recourse.

Petitioner submits the following grounds for the allowance of the instant Petition, to wit:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER’S COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST THE RESPONDENTS, THE LATTER NOT BEING THE PROPER PARTIES AGAINST WHOM THE SUBJECT ACTION FOR REIMBURSEMENT MUST BE DIRECTED TO.

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PUBLIC RESPONDENT, HON. RIZALINA T. CAPCO-UMALI, COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING THE [RESPONDENTS’] MOTION TO DISMISS FOR FAILURE TO STATE A CAUSE OF ACTION.[15]

Both arguments raise the sole issue of whether the Court of Appeals erred in dismissing petitioner’s Complaint for failure to state a cause of action.

Section 1(g) Rule 16[16] of the 1997 Rules of Civil Procedure makes it clear that failure to make a sufficient allegation of a cause of action in the complaint warrants the dismissal thereof. Section 2, Rule 2 of the 1997 Rules of Civil Procedure defines a cause of action as the act or omission by which a party violates the right of another. It is the delict or the wrongful act or omission committed by the defendant in violation of the primary right of the plaintiff.[17]

A cause of action has the following essential elements, viz:

(1) A right in favor of the plaintiff by whatever means and under whatever law it arises or is created;

(2) An obligation on the part of the named defendant to respect or not to violate such right; and

(3) Act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other appropriate relief.[18]

A complaint states a cause of action only when it has the three indispensable elements.[19]

In the determination of the presence of these elements, inquiry is confined to the four corners of the complaint. Only the statements in the Complaint may be properly considered.[20] The absence of any of these elements makes a complaint vulnerable to a Motion to Dismiss on the ground of a failure to state a cause of action.[21]

After a reading of the allegations contained in petitioner’s Complaint, we are convinced that the same failed to state a cause of action.

In the case at bar, petitioner asserts a legal right in her favor by relying on the Decision of the RTC in Civil Case No. 61327. It can be recalled that the aforesaid case is an action for Annulment filed by Alfredo and petitioner against the respondents to seek annulment of the Deed of Sale, executed by Alfredo in respondents’ favor and covering the herein subject premises. The Complaint was dismissed by the RTC, and subsequently affirmed by the Court of Appeals and by this Court in G.R. No. L-117067.

According to petitioner, while the RTC in Civil Case No. 61327 recognized that the improvements constructed on Alfredo’s lots were deemed as Alfredo’s exclusive and capital property, the court also held that petitioner, as Alfredo’s spouse, has the right to claim reimbursement from the estate of Alfredo. It is argued by petitioner that her husband had no other property, and his only property had been sold to the respondents; hence, she has the legal right to claim for reimbursement from the respondents who are now the owners of the lot and the improvements thereon. In fine, petitioner asseverates that the Complaint cannot be dismissed on the ground of failure to state a cause of action because the respondents have the correlative obligation to pay the value of the improvements.

Petitioner was not able to show that there is an obligation on the part of the respondents to respect or not to violate her right. While we could concede that Civil Case No. 61327 made a reference to the right of the spouse as contemplated in

81YUMI- CIVIL LAW 1

Article 120[22] of the Family Code to be reimbursed for the cost of the improvements, the obligation to reimburse rests on the spouse upon whom ownership of the entire property is vested. There is no obligation on the part of the purchaser of the property, in case the property is sold by the owner-spouse.

Indeed, Article 120 provides the solution in determining the ownership of the improvements that are made on the separate property of the spouses at the expense of the partnership or through the acts or efforts of either or both spouses. Thus, when the cost of the improvement and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement. The subject property was precisely declared as the exclusive property of Alfredo on the basis of Article 120 of the Family Code.

What is incontrovertible is that the respondents, despite the allegations contained in the Complaint that they are the buyers of the subject premises, are not petitioner’s spouse nor can they ever be deemed as the owner-spouse upon whom the obligation to reimburse petitioner for her costs rested. It is the owner-spouse who has the obligation to reimburse the conjugal partnership or the spouse who expended the acts or efforts, as the case may be. Otherwise stated, respondents do not have the obligation to respect petitioner’s right to be reimbursed.

On this matter, we do not find an act or omission on the part of respondents in violation of petitioner’s rights. The right of the respondents to acquire as buyers the subject premises from Alfredo under the assailed Deed of Sale in Civil Case No. 61327 had been laid to rest. This is because the validity of the Deed of Sale had already been determined and upheld with finality. The same had been similarly admitted by petitioner in her Complaint. It can be said, thus, that respondents’ act of acquiring the subject property by sale was not in violation of petitioner’s rights. The same can also be said of the respondents’ objection to reimburse petitioner. Simply, no correlative obligation exists on the part of the respondents to reimburse the petitioner. Corollary thereto, neither can it be said that their refusal to reimburse constituted a violation of petitioner’s rights. As has been shown in the foregoing, no obligation by the respondents under the law exists. Petitioner’s Complaint failed to state a cause of action against the respondents, and for this reason, the Court of Appeals was not in error in dismissing the same.

WHEREFORE, the Petition is DENIED. The Decision dated 16 August 2004 and the Resolution dated 17 December 2004 of the Court of Appeals in CA G.R. SP. No. 78525 are AFFIRMED. Costs de oficio.

SO ORDERED.

MBTC v. Pascual GR# 163744 / FEB. 29, 2008547 SCRA 246

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

Respondent Nicholson Pascual and Florencia Nevalga were married on January 19, 1985. During the union, Florencia bought from spouses Clarito and Belen Sering a 250-square meter lot with a three-door apartment standing thereon located in Makati City. Subsequently, Transfer Certificate of Title (TCT) No. S-101473/T-510 covering the purchased lot was canceled and, in lieu thereof, TCT No. 156283[1] of the Registry of Deeds of Makati City was issued in the name of Florencia, “married to Nelson Pascual” a.k.a. Nicholson Pascual.

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

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

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

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

82YUMI- CIVIL LAW 1

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

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

The RTC Declared the REM Invalid

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

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

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

1. PhP100,000.00 by way of moral damages;2. PhP75,000.00 by way of attorney’s fees; and

3. The costs.

SO ORDERED.[5]

Even as it declared the invalidity of the mortgage, the trial court found the said lot to be conjugal, the same having been acquired during the existence of the marriage of Nicholson and Florencia. In so ruling, the RTC invoked Art. 116 of the Family Code, providing that “all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.” To the trial court, Metrobank had not overcome the presumptive conjugal nature of the lot. And being conjugal, the RTC concluded that the disputed property may not be validly encumbered by Florencia without Nicholson’s consent.The RTC also found the deed of waiver Florencia submitted to Metrobank to be fatally defective. For let alone the fact that Nicholson denied executing the same and that the signature of the notarizing officer was a forgery, the waiver document was allegedly executed on April 9, 1995 or a little over three months before the issuance of the RTC decision declaring the nullity of marriage between Nicholson and Florencia.

The trial court also declared Metrobank as a mortgagee in bad faith on account of negligence, stating the observation that certain data appeared in the supporting contract documents, which, if properly scrutinized, would have put the bank on guard

against approving the mortgage. Among the data referred to was the date of execution of the deed of waiver.

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

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

The CA Affirmed with Modification the RTC’s Decision

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

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED WITH MODIFICATION with respect to the award of moral damages and attorney’s fees which is hereby DELETED. SO ORDERED.[6]

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

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy x x x.In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

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

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

83YUMI- CIVIL LAW 1

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

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

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

ci.

Our Ruling

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

The Disputed Property is Conjugal

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

To bolster its thesis on the paraphernal nature of the disputed property, Metrobank cites Francisco v. Court of Appeals[9] and Jocson v. Court of Appeals,[10] among other cases, where this Court held that a property registered in the name of a certain person with a description of being married is no proof that the property was acquired during the spouses’ marriage.

On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance Corporation[11] and Wong v. IAC,[12] contends that Metrobank failed to overcome the legal presumption that the disputed property is conjugal. He asserts that Metrobank’s arguments on the matter of presumption are misleading as only one postulate needs to be shown for the presumption in favor of conjugal ownership to arise, that is, the fact of acquisition during marriage. Nicholson dismisses, as inapplicable, Francisco and Jocson, noting that they are relevant only when there is no indication as to the exact date of acquisition of the property alleged to be conjugal.

As a final point, Nicholson invites attention to the fact that Metrobank had virtually recognized the conjugal nature of the property in at least three instances. The first was when the bank lumped him with Florencia in Civil Case No. 00-789 as co-mortgagors and when they were referred to as “spouses” in the petition for extrajudicial foreclosure of mortgage. Then came the published notice of foreclosure sale where Nicholson was again designated as co-mortgagor. And third, in its demand-letter[13] to vacate the disputed lot, Metrobank addressed Nicholson and Florencia as “spouses,” albeit the finality of the decree of nullity of marriage between them had long set in.

We find for Nicholson.

First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not Art. 116 of the Family Code, is the applicable legal provision since the property was acquired prior to the enactment of the Family Code, it errs in its theory that, before conjugal ownership could be legally presumed, there must be a showing that the property was acquired during marriage using conjugal funds. Contrary to Metrobank’s submission, the Court did not, in Manongsong,[14] add the matter of the use of conjugal funds as an essential requirement for the presumption of conjugal ownership to arise. Nicholson is correct in pointing out that only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. Indeed, if proof on the use of conjugal is still required as a necessary condition before the presumption can arise, then the legal presumption set forth in the law would veritably be a superfluity. As we stressed in Castro v. Miat:Petitioners also overlook Article 160 of the New Civil Code. It provides that “all property of the marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife.” This article does not require proof that the property was acquired with funds of the partnership. The presumption applies even when the manner in which the property was acquired does not appear.[15] (Emphasis supplied.)

Second, Francisco and Jocson do not reinforce Metrobank’s theory. Metrobank would thrust on the Court, invoking the two cases, the argument that the registration of the property in the name of “Florencia Nevalga, married to Nelson Pascual” operates to describe only the marital status of the title holder, but not as proof that the property was acquired during the existence of the marriage.Metrobank is wrong. As Nicholson aptly points out, if proof obtains on the acquisition of the property during the existence of the marriage, then the presumption of conjugal ownership applies. The correct lesson of Francisco and Jocson is that proof of acquisition during the marital coverture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. When there is no showing as to when the property was acquired by the spouse, the fact that a title is in the name of the spouse is an indication that the property belongs exclusively to said spouse.[16]

The Court, to be sure, has taken stock of Nicholson’s arguments regarding Metrobank having implicitly acknowledged, thus being in virtual estoppel to question,

84YUMI- CIVIL LAW 1

the conjugal ownership of the disputed lot, the bank having named the former in the foreclosure proceedings below as either the spouse of Florencia or her co-mortgagor. It is felt, however, that there is no compelling reason to delve into the matter of estoppel, the same having been raised only for the first time in this petition. Besides, however Nicholson was designated below does not really change, one way or another, the classification of the lot in question.

Termination of Conjugal Property Regime does not ipso facto End the Nature of Conjugal OwnershipMetrobank next maintains that, contrary to the CA’s holding, Art. 129 of the Family Code is inapplicable. Art. 129 in part reads:

Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply:(7) The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code.Apropos the aforequoted provision, Metrobank asserts that the waiver executed by Nicholson, effected as it were before the dissolution of the conjugal property regime, vested on Florencia full ownership of all the properties acquired during the marriage.

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

We again find for Nicholson.

While the declared nullity of marriage of Nicholson and Florencia severed their marital bond and dissolved the conjugal partnership, the character of the properties acquired before such declaration continues to subsist as conjugal properties until and after the liquidation and partition of the partnership. This conclusion holds true whether we apply Art. 129 of the Family Code on liquidation of the conjugal partnership’s assets and liabilities which is generally prospective in application, or Section 7, Chapter 4, Title IV, Book I (Arts. 179 to 185) of the Civil Code on the subject, Conjugal Partnership of Gains. For, the relevant provisions of both Codes first require the liquidation of the conjugal properties before a regime of separation of property reigns.In Dael v. Intermediate Appellate Court, we ruled that pending its liquidation following its dissolution, the conjugal partnership of gains is converted into an implied ordinary co-ownership among the surviving spouse and the other heirs of the deceased.[17]

In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the property relationship between the former spouses, where: Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-

owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (Emphasis supplied.)

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

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

Upon the foregoing perspective, Metrobank’s right, as mortgagee and as the successful bidder at the auction of the lot, is confined only to the 1/2 undivided portion thereof heretofore pertaining in ownership to Florencia. The other undivided half belongs to Nicholson. As owner pro indiviso of a portion of the lot in question, Metrobank may ask for the partition of the lot and its property rights “shall be limited to the portion which may be allotted to [the bank] in the division upon the termination of the co-ownership.”[18] This disposition is in line with the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so––quando res non valet ut ago, valeat quantum valere potest.[19]

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

But as found by the CA, however, Metrobank’s failure to comply with the due diligence requirement was not the result of a dishonest purpose, some moral obliquity or breach of a known duty for some interest or ill-will that partakes of fraud that would justify damages.WHEREFORE, the petition is PARTLY GRANTED. The appealed Decision of the CA dated January 28, 2004, upholding with modification the Decision of the RTC, Branch 65 in Makati City, in Civil Case No. 00-789, is AFFIRMED with the MODIFICATION

85YUMI- CIVIL LAW 1

that the REM over the lot covered by TCT No. 156283 of the Registry of Deeds of Makati City is hereby declared valid only insofar as the pro indiviso share of Florencia thereon is concerned.

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

The claims of Nicholson for moral damages and attorney’s fees are DENIED for lack of merit.No pronouncement as to costs. SO ORDERED.

Section 4. Charges Upon & Obligations of the Conjugal Partnership (Articles 121-123)

Ayala Invest & Dev't. Corp. vs. CA GR# 118305 / FEB. 12, 1998 286 SCRA 272

G.R. No. 118305. February 12, 1998AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO, Petitioners, vs. COURT OF APPEALS and SPOUSES ALFREDO & ENCARNACION CHING, Respondents.

D E C I S I O N

MARTINEZ, J.:

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

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

The petitioner assails the decision dated April 14, 1994 of the respondent Court of Appeals in Spouses Alfredo and Encarnacion Ching v. Ayala Investment and

Development Corporation, et. al., docketed as CA-G.R. CV No. 29632,1

upholding the decision of the Regional Trial Court of Pasig, Branch 168, which ruled that the conjugal partnership of gains of respondents-spouses Alfredo and Encarnacion

Ching is not liable for the payment of the debts secured by respondent-husband Alfredo Ching.

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

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

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

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

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

On June 9, 1982, private respondents filed a case of injunction against petitioners with the then Court of First Instance of Rizal (Pasig), Branch XIII, to enjoin the auction sale alleging that petitioners cannot enforce the judgment against the conjugal partnership levied on the ground that, among others, the subject loan did not

redound to the benefit of the said conjugal partnership.2

 Upon application of private respondents, the lower court issued a temporary restraining order to prevent petitioner Magsajo from proceeding with the enforcement of the writ of execution and with the sale of the said properties at public auction.

AIDC filed a petition for certiorari before the Court of Appeals,3

 questioning the order of the lower court enjoining the sale. Respondent Court of Appeals issued a

Temporary Restraining Order on June 25, 1982, enjoining the lower court4

 from enforcing its Order of June 14, 1982, thus paving the way for the scheduled auction sale of respondents-spouses conjugal properties.

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

86YUMI- CIVIL LAW 1

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

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

made as to costs. x x x x.5

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

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

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

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

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

x x x

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

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

The dispositive portion of the decision reads:

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

AFFIRMED in toto.6

Petitioner filed a Motion for Reconsideration which was denied by the respondent

court in a Resolution dated November 28, 1994.7

Hence, this petition for review. Petitioner contends that the respondent court erred in ruling that the conjugal partnership of private respondents is not liable for the obligation by the respondent-husband.

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

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

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

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

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

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

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

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

benefit accrued.8

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

87YUMI- CIVIL LAW 1

Petitioners further contend that the ruling of the respondent court runs counter to the

pronouncement of this Court in the case of Cobb-Perez v. Lantin,9

 that the husband as head of the family and as administrator of the conjugal partnership is presumed to have contracted obligations for the benefit of the family or the conjugal partnership.

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

In the cases of Javier vs. Osmea,10

 Abella de Diaz v. Erlanger & Galinger,

Inc.,11

 Cobb-Perez v. Lantin12

 and G-Tractors, Inc. v. Court of Appeals,13

 cited by the petitioners, we held that:

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

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

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

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

However, in the cases of Ansaldo v. Sheriff of Manila, Fidelity Insurance & Luzon

Insurance Co.,14

 Liberty Insurance Corporation v. Banuelos,15

 and Luzon Surety

Inc. v. De Garcia,16

 cited by the respondents, we ruled that:

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

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

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

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

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

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

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

The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed as surety for the P50M loan contracted on behalf of PBM. Petitioner should have adduced evidence to prove that Alfredo Chings acting as surety redounded to the benefit of the conjugal partnership. The reason for this is as lucidly explained by the respondent court:

88YUMI- CIVIL LAW 1

The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming Mills and not for the benefit of the conjugal partnership of petitioners-appellees. Philippine Blooming Mills has a personality distinct and separate from the family of petitioners-appellees - this despite the fact that the members of the said family happened to be stockholders of said corporate entity.

x x x

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

appellees. x x x x x x. 17

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

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

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

accommodation contract cases, where this Court ruled that they were for the benefit of third parties.

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

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

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

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

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

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

In all our decisions involving accommodation contracts of the husband,18

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

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

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

89YUMI- CIVIL LAW 1

or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family.

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

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

only incidental but also speculative.19

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

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

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

is benefited.20

These are all in keeping with the spirit and intent of the other provisions of the Civil Code which prohibits any of the spouses to donate or convey gratuitously any part of

the conjugal property.21

 Thus, when co-respondent Alfredo Ching entered into a surety agreement he, from then on, definitely put in peril the conjugal property (in this case, including the family home) and placed it in danger of being taken gratuitously as in cases of donation.

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

This theory is new as it is novel.

The respondent court correctly observed that:

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

instant case. Signing as a surety is not embarking in a business.22

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

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

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

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

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

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

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

Carlos vs. Abelardo GR# 146504 / ARP. 09, 2002 380 SCRA 361

[G.R. No. 146504.  April 9, 2002]

HONORIO L. CARLOS, petitioner, vs. MANUEL T. ABELARDO, respondent.

KAPUNAN, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is the decision of the Court of Appeals dated November 10, 2000 in CA-G.R. CV No. 54464 which reversed and set aside the decision of the Regional Trial Court

90YUMI- CIVIL LAW 1

of Valenzuela, Branch 172, and dismissed for insufficiency of evidence the complaint for a sum of money and damages filed by herein petitioner Honorio Carlos against respondent Manuel Abelardo, his son-in-law, and the latter’s wife, Maria Theresa Carlos-Abelardo.

Petitioner averred in his complaint filed on October 13, 1994 that in October 1989, respondent and his wife Maria Theresa Carlos-Abelardo approached him and requested him to advance the amount of US$25,000.00 for the purchase of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila. To enable and assist the spouses conduct their married life independently and on their own, petitioner, in October 31, 1989, issued a check in the name of a certain Pura Vallejo, seller of the property, who acknowledged receipt thereof.[1]

When petitioner inquired from the spouses in July 1991 as to the status of the amount he loaned to them, the latter acknowledged their obligation but pleaded that they were not yet in a position to make a definite settlement of the same.

[2] Thereafter, respondent expressed violent resistance to petitioner’s inquiries on the

amount to the extent of making various death threats against petitioner.[3]

On August 24, 1994, petitioner made a formal demand for the payment of the amount of US$25,000.00 but the spouses failed to comply with their obligation.[4]Thus, on October 13, 1994, petitioner filed a complaint for collection of a sum of money and damages against respondent and his wife before the Regional Trial Court of Valenzuela, Branch 172, docketed as Civil Case No. 4490-V-94. In the complaint, petitioner asked for the payment of the US$25,000.00 or P625,000.00, its equivalent in Philippine currency plus legal interest from date of extra-judicial demand.

[5] Petitioner likewise claimed moral and exemplary damages, attorney’s fees and

costs of suit from respondent.[6]

As they were separated in fact for more than a year prior to the filing of the complaint, respondent and his wife filed separate answers. Maria Theresa Carlos-

Abelardo admitted securing a loan together with her husband, from petitioner.[7] She

claimed, however, that said loan was payable on a staggered basis so she was surprised when petitioner demanded immediate payment of the full amount.[8]

In his separate Answer, respondent admitted receiving the amount of US$25,000.00 but claimed that:

xxx

a. Defendant (respondent) xxx revived that otherwise dormant construction firm H.L. CARLOS CONSTRUCTION of herein plaintiff which suffered tremendous setback after the assassination of Senator Benigno Aquino;

b. Working day and night and almost beyond human endurance, defendant devoted all his efforts and skill, used all his business and personal connection to be able to revive the construction business of plaintiff;

c. Little-by-little, starting with small construction business, defendant was able to obtain various construction jobs using the name H.L. CARLOS CONSTRUCTION and the income derived therefrom were deposited in the name of such firm of plaintiff,

d. Defendant xxx was made to believe that the earnings derived from such construction will be for him and his family since he was the one working to secure the contract and its completion, he was allowed to use the facilities of the plaintiff;

e. The plaintiff seeing the progress brought about by defendant xxx to his company proposed a profit sharing scheme to the effect that all projects amounting to more than P10 million shall be for the account of plaintiff; lower amount shall be for defendant’s account but still using H.L. CARLOS CONSTRUCTION.

f. But, to clear account on previous construction contracts that brought income to H.L.CARLOS CONSTRUCTION, out of which defendant derived his income, plaintiff gave the amount of US$25,000.00 to defendant to square off account and to start the arrangement in paragraph (e) supra;

g. That, the said US$25,000.00 was never intended as loan of defendant. It was his share of income on contracts obtained by defendant;

xxx [9]

Respondent denied having made death threats to petitioner and by way of compulsory counterclaim, he asked for moral damages from petitioner for causing the alienation of his wife’s love and affection, attorney’s fees and costs of suit. [10]

On June 26, 1996, the Regional Trial Court rendered a decision in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Ordering the defendants to pay plaintiff the amount of US$25,000.00 or its equivalent in Philippine Currency at the time of its payment, plus legal interest thereon from August 24, 1994 until fully paid;

2. Ordering the defendant Manuel T.Abelardo to pay the plaintiff the amount of P500,000.00 representing moral damages and the further amount of P50,000.00 as exemplary damages; and

3. Ordering the defendants to pay the plaintiff the amount of P100,000.00 as attorney’s fees, plus the costs of suit.

SO ORDERED. [11]

Respondent appealed the decision of the trial court to the Court of Appeals. On November 10, 2000, the Court of Appeals reversed and set aside the trial court’s decision and dismissed the complaint for insufficiency of evidence to show that the subject amount was indeed loaned by petitioner to respondent and his wife. The Court of Appeals found that the amount of US$25,000.00 was respondent’s share in

91YUMI- CIVIL LAW 1

the profits of H.L. Carlos Construction. The dispositive portion of the Court of Appeals’ decision states:

WHEREFORE, premises considered, the Decision of the Regional Trial Court of Valenzuela, Branch 172 in Civil Case No. 4490-V-94 is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the Complaint for insufficiency of evidence.

The claim for damages by defendant-appellant is likewise DISMISSED, also for insufficiency of evidence, because of his failure to present substantial evidence to prove that plaintiff-appellee caused the defendant-spouses’ separation.

Costs against the plaintiff-appellee.

SO ORDERED. [12]

A motion for reconsideration of the above decision having been denied on, petitioner brought this appeal assigning the following errors:

THE COURT OF APPEALS ERRED IN FINDING INSUFFICIENT EVIDENCE TO PROVE THAT THE AMOUNT OF US$25,000.00 WAS A LOAN OBTAINED BY PRIVATE RESPONDENT AND HIS WIFE FROM PETITIONER.

THE COURT OF APPEALS ERRED IN HOLDING THAT THE US$25,000.00 WAS GIVEN AS PRIVATE RESPONDENT’S SHARE IN THE PROFITS OF H.L. CARLOS CONSTRUCTION, INC. AND THAT THE FILING OF THE COMPLAINT IS A HOAX.

THE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF DAMAGES FOR LACK OF PROOF THEREOF.

We find merit in the petition.

As gleaned from the records, the following facts are undisputed: (1) there was a check in the amount of US$25,000.00 issued by petitioner; (2) this amount was received by respondent and his wife and given to a certain Pura Vallejo for the full payment of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila; (3) this house and lot became the conjugal dwelling of respondent and his wife; and (4) respondent’s wife executed an instrument acknowledging the loan but which respondent did not sign.

To prove his claim that the amount was in the nature of a loan or an advance he extended to respondent and his wife, petitioner presented Banker’s Trust Check No. 337 in the amount of US$25,000.00 he issued on October 31, 1989 to Pura Vallejo.[13] He also introduced in evidence an instrument executed by respondent’s wife on July 31, 1991 acknowledging her and her husband’s accountability to petitioner for the said amount which was advanced in payment of a house and lot located at #19952 Chestnut Street, Executive Heights Subdivision, Paranaque. [14] A formal demand letter by counsel for petitioner dated August 24, 1994 sent to and received by respondent was also on record. [15]

All these pieces of evidence, taken together with respondent’s admission that he and his wife received the subject amount and used the same to purchase their

house and lot, sufficiently prove by a preponderance of evidence petitioner’s claim that the amount of US$25,000.00 was really in the nature of a loan.

Respondent tried to rebut petitioner’s evidence by claiming that the US$25,000.00 was not a loan but his share in the profits of H.L. Carlos Construction. He alleged that he received money from petitioner amounting to almost P3 million as his share in the profits of the corporation. To prove this, he presented ten (10) Bank

of the Philippine Islands (BPI) checks allegedly given to him by petitioner.[16] He

argued that if indeed, he and his wife were indebted to petitioner, the latter could have easily deducted the amount of the said loan from his share of the profits.

Respondent fails to convince this Court.

All the checks presented by respondent, which he claims to be his share in the profits of petitioner’s company, were all in the account of H.L. Carlos Construction.[17] On the other hand, the Banker’s Trust Check in the amount of US$25,000.00

was drawn from the personal account of petitioner.[18] Assuming to be true that the

checks presented by respondent were his profits from the corporation, then all the more does this prove that the amount of US$25,000.00 was not part of such profits because it was issued by petitioner from his own account. Indeed, if such amount was respondent’s share of the profits, then the same should have been issued under the account of H.L. Carlos Construction.

Moreover, respondent failed to substantiate his claim that he is entitled to the profits and income of the corporation. There was no showing that respondent was a stockholder of H.L. Carlos Construction. His name does not appear in the Articles of Incorporation as well as the Organizational Profile of said company either as

stockholder or officer.[19] Not being a stockholder, he cannot be entitled to the profits

or income of said corporation. Neither did respondent prove that he was an employee or an agent so as to be entitled to salaries or commissions from the corporation.

We quote with favor the disquisition of the trial court on this point:

Early in time, it must be noted 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. The defendants never denied that the check of US$25,000.00 was used to purchase the subject house and lot. They do not deny that the same served as their conjugal home, thus benefiting the family. On the same principle, acknowledgment of the loan made by the defendant-wife binds the conjugal partnership since its proceeds redounded to the benefit of the family. Hence, defendant-husband and defendant-wife are jointly and severally liable in the payment of the loan.

Defendant-husband cannot allege as a defense that the amount of US $25,000.00 was received as his share in the income or profits of the corporation and not as a loan. Firstly, defendant-husband does not appear to be a stockholder nor an employee nor an agent of the corporation, H. L. Carlos Construction, Inc. Since he is not a stockholder, he has no right to participate in the income or profits thereof. In the same manner that as he is not an employee nor an agent of H. L. Carlos

92YUMI- CIVIL LAW 1

Construction, Inc., he has no right to receive any salary or commission therefrom. Secondly, the amount advanced for the purchase of the house and lot came from the personal account of the plaintiff. If, indeed, it was to be construed as defendant-husband’s share in the profits of the corporation, the checks should come from the corporation’s account and not from the plaintiff’s personal account, considering that the corporation has a personality separate and distinct from that of its stockholders and officers.

Even granting that the checks amount to US $3,000.000.00 given by the plaintiff to the defendant-spouses was their share in the profits of the corporation, still there is no sufficient evidence to establish that the US $25,000.00 is to be treated similarly. Defendant-husband in invoking the defense of compensation argued that if indeed they were indebted to the plaintiff, the latter could have applied their share in the proceeds or income of the corporation to the concurrent amount of the alleged loan, instead of giving the amount of P3,000,000.00 to them. This argument is untenable. Article 1278 of the Civil Code provides that compensation shall take place when two persons, in their own right, are debtors and creditors of each other. As its indicates, compensation is a sort of balancing between two obligations. In the instant case, the plaintiff and the defendant-husband are not debtors and creditors of each other. Even granting that the defendant-husband’s claim to the profits of the corporation is justified, still compensation cannot extinguish his loan obligation to the plaintiff because under such assumption, the defendant is dealing with the corporation and not with the plaintiff in his personal capacity. Hence, compensation cannot take place.

The Court of Appeals, thus, erred in finding that respondent’s liability was not proved by preponderance of evidence. On the contrary, the evidence adduced by petitioner sufficiently established his claim that the US$25,000.00 he advanced to respondent and his wife was a loan.

The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family Code:

Article 121. The conjugal partnership shall be liable for:

xxx

(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 been benefited;

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.

xxx

While respondent did not and refused to sign the acknowledgment executed and signed by his wife, undoubtedly, the loan redounded to the benefit of the family because it was used to purchase the house and lot which became the conjugal home of respondent and his family. Hence, notwithstanding the alleged lack of consent of respondent, under Art. 21 of the Family Code, he shall be solidarily liable for such loan together with his wife.

We also find sufficient basis for the award of damages to petitioner, contrary to the findings of the Court of Appeals that petitioner is not entitled thereto.

Petitioner’s allegations of verbal and written threats directed against him by respondent is duly supported by evidence on record. He presented two witnesses, Irineo Pajarin and Randy Rosal, who testified on separate incidents where threats were made by respondent against petitioner.

Randy Rosal, driver of petitioner, declared that around three o’ clock in the afternoon of September 15, 1991, he was sent by respondent’s wife on an errand to deliver the acknowledgment letter to respondent for him to sign. Respondent did not sign the acknowledgment and instead, wrote a letter addressed to petitioner threatening him. He narrated what took place thereafter:

xxx

Q       When you were requested by Ma. Theresa C. Abelardo to bring a letter to herein defendant Manuel Abelardo for him to sign the same, do you know whether that letter was actually signed by Manuel Abelardo?

A       No, sir.

 xxx

Q       And what happened when Manuel Abelardo refused to sign that letter coming from the other defendant?

A       He made me wait and he prepared a letter to Mr. Honorio Carlos, sir.

xxx

Q       Where were you at the time when this defendant Manuel Abelardo prepared this letter?

A       In his house, sir.

Q       And where did he actually prepare that letter?

A       At the dining table, sir.

Q       How far were you from Manuel Abelardo from the dining table at the time when he was preparing a letter.

A       Around 1 meter, sir.

Q       And do you know where in, what particular paper did Mr. Abelardo prepare or write this letter?

93YUMI- CIVIL LAW 1

A       He wrote it in a Manila envelope, sir.

xxx

Q       What happened after Manuel Abelardo prepared this letter in a Manila envelope?

A       He got a small envelope and placed there the name of Mr. Carlos as the addressee, sir.

xxx

Q       After preparing this letter on a Manila  envelope and then getting another envelope and writing on it the address of herein plaintiff, what did the defendant Manuel Abelardo do, if any?

A       He instructed me to mail the letter which he prepared, sir.

 xxx

Q       And did you actually accede to the request of herein defendant Manuel Abelardo for you to mail that letter to Engr. Carlos?

A       I got the envelope but I did not mail it, sir.

xxx

Q       May we know from you the reason why you did not mail said letter?

A       Because Engr. Carlos might become frightened, sir.

Q       What did you do with that letter, although you did not mail it?

A       I kept it, sir.

xxx

Q       And what did you do next after keeping the letter for several days?

A       I gave the letter personally to Engr. Carlos, sir.

Q       What prompted you to give that letter to Engr. Carlos instead of mailing it?

A       So that Engr. Carlos can prepare, sir.

 xxx [20]

This incident was duly entered and recorded in the Police Blotter on October 7, 1991 by a certain Sgt. Casile of the Valenzuela Police Station. [21] A photocopy of this written threat was also attached to the Police Report and presented in evidence. [22]

Another witness, Irineo Pajarin, recounted an incident which occurred in the afternoon of May 25, 1994, to wit:

xxx

Q       Now Mr. Witness, on May 25, 1994 at around 2:30 in the afternoon do you recall where you were on that particular date and time?

A       I was at B.F. Homes, Paranaque, sir.

Q       What were you doing at that time?

A       I was waiting for Sargie Cornista, sir.

xxx

Q       Will you please narrate to this Honorable Court that unusual incident?

A       Manuel Abelardo passed by and when he saw me he called me. I approached him while he was then on board his car and asked me who was my companion, sir.

Q       And what was your answer to him?

A       I told him it was Sargie, sir.

Q       And what was his reply if any?

A       He again asked me if I have in my company one of his children, sir.

Q       What was your reply?

A       I answered none, sir.

Q       Incidentally Mr. Witness, where or in what particular place did this conversation between you and Manuel T. Abelardo take place?

A       Parking Area of Academy I, Gov. Santos corner Aguirre St., sir.

Q       Now, what else happened after you talk[ed] with this Manuel T. Abelardo?

A       He said I may be fooling him because he said I once fooled him when I ran away with his children which he is going to take back, sir.

Q       And what was your reply to that?

A       I answered I did not do that and he said that once he discovered that I did it he would box me, sir.

Q       What else if any did he tell you at that time?

A       He asked me who instructed me, sir.

Q       Instructed you about what?

A       To run away with the children, sir.

Q       And what was your reply?

A       None, he was the one who said “was it your Ate Puppet?” But I did not answer, sir.

94YUMI- CIVIL LAW 1

Q       What happened next when you failed to answer?

A       “Or my father in law?”

Q       And when he said his father in law to whom was he referring at that time?

A       Mr. Honorio Carlos, sir.

Q       After mentioning the name of his father-in-law Mr. Honorio Carlos what happened next?

A       He told me “Sabihin mo sa biyenan ko babarilin ko siya pag nakita ko siya.”

Q       Where was Manuel Abelardo at that particular time when he told this threatening remark against Honorio Carlos?

A       He was inside his car in Aguirre St., sir.

Q       How about you where were you approximately at that particular time when he narrated that message to you threatening the herein plaintiff?

A       I was outside looking in his vehicle at Aguirre St., sir.

xxx

Q       And what was your reply or reaction when he made this threatening remarks?

A       None, because he left. I was left behind, sir. [23]

This testimony was in part corroborated by an entry dated May 28, 1994 in the Police Blotter of the Paranaque Police Station narrating the aforementioned incident. [24]

The testimonies of these witnesses on the two separate incidents of threat are positive, direct and straightforward. Petitioner also declared on the witness stand that on several occasions, he received telephone calls from respondent cursing and

threatening him. [25] These incidents of threat were also evidenced by a letter written

by respondent’s wife and addressed to her father-in-law (father of respondent).

[26] The letter recounted the instances when threats were made by her husband

against petitioner, particularly, the incident reported by Pajarin and the threats made by respondent through the telephone. [27]

All these circumstances sufficiently establish that threats were directed by respondent against petitioner justifying the award of moral damages in favor of petitioner. However, the Court finds the amount of P500,000.00 as moral damages too exorbitant under the circumstances and the same is reduced to P50,000.00. The exemplary damages and attorney’s fees are likewise reduced to P20,000.00 and P50,000.00, respectively.

WHEREFORE, the petition is hereby GRANTED and the decision of the Court of Appeals in CA GR-CV No. 54464 is MODIFIED in that respondent is ordered to pay petitioner the amounts of (1) US$25,000 or its equivalent in Philippine currency at the time of payment, plus legal interest from August 4, 1994, until fully paid; (2) P50,000.00 as moral damages; (3) P20,000.00 as exemplary damages; and (4) P50,000.00 as attorney’s fees.

SO ORDERED.

SBTC v. Mar Tierra Corp GR# 143382 / NOV. 29, 2006 508 SCRA 419

 SECURITY BANK and TRUST COMPANY Petitioner, VS/ MAR TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL J. LACSON andRICARDO A. LOPA, Respondents.              

D E C I S I O NCORONA, 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 decision[1] 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 P12,000,000 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 respondentsWilfrido 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 P14,000,000. 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 P9,952,000 which it undertook to pay on or before November 30, 1981. It was able to pay P4,648,000 for the principal loan and P2,729,195.56 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

95YUMI- CIVIL LAW 1

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 decision[3] on June 20, 1994. It held respondent corporation and individual respondent Martinez jointly and severally liable to petitioner for P5,304,000 plus 12% interest per annum and 5% penalty commencing on June 21, 1982 until fully paid, plus P10,000 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 intoto. 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 P9,952,000 only from its credit line and not the entire P14,000,000 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 P9,952,000. 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 P9,952,000.”[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 consideredfor 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 Garcia[9] 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.

96YUMI- CIVIL LAW 1

Buado v. CA GR# 145222 / APR. 24, 2009

SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners, vs. THE HONORABLE COURT OF APPEALS, Former Division, and ROMULO NICOL, Respondents.

Before this Court is a petition for certiorari assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 47029 and its Resolution denying the motion for reconsideration thereof. The case stemmed from the following factual backdrop:

On 30 April 1984, Spouses Roberto and Venus Buado (petitioners) filed a complaint for damages against Erlinda Nicol (Erlinda) with Branch 19 of the Regional Trial Court (RTC) of Bacoor, Cavite, docketed as Civil Case No. 84-33. Said action originated from Erlinda Nicol’s civil liability arising from the criminal offense of slander filed against her by petitioners. On 6 April 1987, the trial court rendered a decision ordering Erlinda to pay damages. The dispositive portion reads:

Wherefore, judgment is hereby rendered in favor of the plaintiff[s] and against defendant ordering the latter to pay the former the amount of thirty thousand (P30,000.00) pesos as moral damages, five thousand (P5,000.00) pesos as attorney’s fees and litigation expenses, another five thousand (P5,000.00) pesos as exemplary damages and the cost of suit.[2]Said decision was affirmed, successively, by the Court of Appeals and this Court. It became final and executory on 5 March 1992.On 14 October 1992, the trial court issued a writ of execution, a portion of which provides:Now, therefore, you are commanded that of the goods and chattels of the defendant Erlinda Nicol, or from her estates or legal heirs, you cause the sum in the amount of forty thousand pesos (P40,000.00), Philippine Currency, representing the moral damages, attorney’s fees and litigation expenses and exemplary damages and the cost of suit of the plaintiff aside from your lawful fees on this execution and do likewise return this writ into court within sixty (60) days from date, with your proceedings endorsed hereon. But if sufficient personal property cannot be found whereof to satisfy this execution and lawful fees thereon, then you are commanded that of the lands and buildings of said defendant you make the said sum of money in the manner required by the Rules of Court, and make return of your proceedings with this writ within sixty (60) days from date.[3]Finding Erlinda Nicol’s personal properties insufficient to satisfy the judgment, the Deputy Sheriff issued a notice of levy on real property on execution addressed to the Register of Deeds of Cavite. The notice of levy was annotated on the Transfer Certificate of Title No. T-125322.On 20 November 1992, a notice of sheriff’s sale was issued.

Two (2) days before the public auction sale on 28 January 1993, an affidavit of third-party claim from one Arnulfo F. Fulo was received by the deputy sheriff prompting petitioners to put up a sheriff’s indemnity bond. The auction sale proceeded with petitioners as the highest bidder.

On 4 February 1993, a certificate of sale was issued in favor of petitioners. Almost a year later on 2 February 1994, Romulo Nicol (respondent), the husband of Erlinda Nicol, filed a complaint for annulment of certificate of sale and damages with preliminary injunction against petitioners and the deputy sheriff. Respondent, as plaintiff therein, alleged that the defendants, now petitioners, connived and directly levied upon and execute his real property without exhausting the personal properties of Erlinda Nicol. Respondent averred that there was no proper publication and posting of the notice of sale. Furthermore, respondent claimed that his property which was valued at P500,000.00 was only sold at a “very low price” of P51,685.00, whereas the judgment obligation of Erlinda Nicol was only P40,000.00. The case was assigned to Branch 21 of the RTC of Imus, Cavite.In response, petitioners filed a motion to dismiss on the grounds of lack of jurisdiction and that they had acted on the basis of a valid writ of execution. Citing De Leon v. Salvador,[4] petitioners claimed that respondent should have filed the case with Branch 19 where the judgment originated and which issued the order of execution, writ of execution, notice of levy and notice of sheriff’s sale.

In an Order[5] dated 18 April 1994, the RTC dismissed respondent’s complaint and ruled that Branch 19 has jurisdiction over the case, thus:

As correctly pointed out by the defendants, any flaw in the implementation of the writ of execution by the implementing sheriff must be brought before the court issuing the writ of execution. Besides, there are two (2) remedies open to the plaintiff, if he feels that the property being levied on belongs to him and not to the judgment debtor. The first remedy is to file a third-party claim. If he fails to do this, a right is reserved to him to vindicate his claim over the property by any proper action. But certainly, this is not the proper action reserved to the plaintiff to vindicate his claim over the property in question to be ventilated before this court. As earlier stated, this case should have been addressed to Branch 19, RTC Bacoor as it was that court which issued the writ of execution.[6]

Respondent moved for reconsideration but it was denied on 26 July 1994.On appeal, the Court of Appeals reversed the trial court and held that Branch 21 has jurisdiction to act on the complaint filed by appellant. The dispositive portion reads:WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. This case is REMANDED to the Regional Trial Court of Imus, Cavite, Branch 21 for further proceedings.SO ORDERED.[7]Petitioners’ motion for reconsideration was denied on 23 August 2000. Hence, the instant petition attributing grave abuse of discretion on the part of the Court of Appeals.

A petition for certiorari is an extraordinary remedy that is adopted to correct errors of jurisdiction committed by the lower court or quasi-judicial agency, or when there is

97YUMI- CIVIL LAW 1

grave abuse of discretion on the part of such court or agency amounting to lack or excess of jurisdiction. Where the error is not one of jurisdiction, but of law or fact which is a mistake of judgment, the proper remedy should be appeal. In addition, an independent action for certiorari may be availed of only when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.[8] Nowhere in the petition was it shown that the jurisdiction of the Court of Appeals was questioned. The issue devolves on whether the husband of the judgment debtor may file an independent action to protect the conjugal property subject to execution. The alleged error therefore is an error of judgment which is a proper subject of an appeal. Nevertheless, even if we were to treat this petition as one for review, the case should still be dismissed on substantive grounds.

Petitioners maintain that Branch 19 retained jurisdiction over its judgment to the exclusion of all other co-ordinate courts for its execution and all incidents thereof, in line with De Leon v. Salvador. Petitioners insist that respondent, who is the husband of the judgment debtor, is not the “third party” contemplated in Section 17 (now Section 16), Rule 39 of the Rules of Court, hence a separate action need not be filed. Furthermore, petitioners assert that the obligation of the wife redounded to the benefit of the conjugal partnership and cited authorities to the effect that the husband is liable for the tort committed by his wife.

Respondent on the other hand merely avers that the decision of the Court of Appeals is supported by substantial evidence and in accord with law and jurisprudence.[9]

Verily, the question of jurisdiction could be resolved through a proper interpretation of Section 16, Rule 39 of the Rules of Court, which reads:

Sec. 16. Proceedings where property claimed by third person. If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.

The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or a separate action against a third-party claimant who filed a frivolous or plainly spurious claim.

When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case

the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose. (Emphasis Supplied) Apart from the remedy of terceria available to a third-party claimant or to a stranger to the foreclosure suit against the sheriff or officer effecting the writ by serving on him an affidavit of his title and a copy thereof upon the judgment creditor, a third-party claimant may also resort to an independent separate action, the object of which is the recovery of ownership or possession of the property seized by the sheriff, as well as damages arising from wrongful seizure and detention of the property. If a separate action is the recourse, the third-party claimant must institute in a forum of competent jurisdiction an action, distinct and separate from the action in which the judgment is being enforced, even before or without need of filing a claim in the court that issued the writ.[10]

A third-party claim must be filed a person other than the judgment debtor or his agent. In other words, only a stranger to the case may file a third-party claim.

This leads us to the question: Is the husband, who was not a party to the suit but whose conjugal property is being executed on account of the other spouse being the judgment obligor, considered a "stranger?"

In determining whether the husband is a stranger to the suit, the character of the property must be taken into account. In Mariano v. Court of Appeals,[11] which was later adopted in Spouses Ching v. Court of Appeals,[12] this Court held that the husband of the judgment debtor cannot be deemed a “stranger” to the case prosecuted and adjudged against his wife for an obligation that has redounded to the benefit of the conjugal partnership.[13] On the other hand, in Naguit v. Court of Appeals[14] and Sy v. Discaya,[15] the Court stated that a spouse is deemed a stranger to the action wherein the writ of execution was issued and is therefore justified in bringing an independent action to vindicate her right of ownership over his exclusive or paraphernal property.

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[16] explicitly provides that payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family.Unlike in the system of absolute community where liabilities incurred by either spouse by reason of a crime or quasi-delict is chargeable to the absolute community of property, in the absence or insufficiency of the exclusive property of the debtor-spouse, the same advantage is not accorded in the system of conjugal partnership of gains. The conjugal partnership of gains has no duty to make advance payments for the liability of the debtor-spouse.

98YUMI- CIVIL LAW 1

Parenthetically, by no stretch of imagination can it be concluded that the civil obligation arising from the crime of slander committed by Erlinda redounded to the benefit of the conjugal partnership.To reiterate, conjugal property cannot be held liable for the personal obligation contracted by one spouse, unless some advantage or benefit is shown to have accrued to the conjugal partnership.[17]

In Guadalupe v. Tronco,[18] this Court held that the car which was claimed by the third party complainant to be conjugal property was being levied upon to enforce "a judgment for support" filed by a third person, the third-party claim of the wife is proper since the obligation which is personal to the husband is chargeable not on the conjugal property but on his separate property. Hence, the filing of a separate action by respondent is proper and jurisdiction is thus vested on Branch 21. Petitioners failed to show that the Court of Appeals committed grave abuse of discretion in remanding the case to Branch 21 for further proceedings.WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioners.SO ORDERED.

Section 5. Administration of the Conjugal Partnership Property (Articles 124-125); Article 165, 173, 1390 NCC; Rule on Forum Shopping; Article 124 FC v. Guardianship v. Summary Proceedings;

Roxas vs. CA GR# 92245 / JUNE 26, 1991

MELANIA A. ROXAS, petitioner, vs.THE HON. COURT OF APPEALS and ANTONIO M. CAYETANO, respondents.

 

PARAS, J.:p

The only issue before Us is whether or not a husband, as the administrator of the conjugal partnership, may legally enter into a contract of lease involving conjugal real property without the knowledge and consent of the wife.

According to the Decision * rendered by the respondent Court of Appeals, the pertinent facts of the case as alleged in plaintiff-petitioner's complaint indicate:

1. That plaintiff is of legal age, married but living separately from husband, one of the defendants herein and presently residing at No. 4 Ambrocia St., Quezon City; while defendant Antonio S. Roxas is likewise of legal age and living separately from his wife,

plaintiff herein, with residence at No. 950 Quirino Highway, Novaliches, Quezon City where he may be served with summons; and defendant Antonio M. Cayetano is of legal age and residing at No. 28 Mariano Olondriz Street, BF Homes, Paranaque, Metro Manila where he may be served with summons;

2. That only recently, plaintiff discovered that her estranged husband, defendant Antonio S. Roxas, had entered into a contract of lease with defendant Antonio M. Cayetano sometime on March 30, 1987 covering a portion of their conjugal lot situated at 854 Quirino Highway, Novaliches, Quezon City, described in T.C.T. No. 378197 (formerly T.C.T. No. 23881) of the Land Registry for Quezon City without her previous knowledge, much less her marital consent-xerox; copy of which lease contract is hereto attached as Annex "A", and made an integral part hereof.

3. That on the same lot, plaintiff had planned to put up her flea market with at least twenty (20) stalls and mini-mart for grocery and dry goods items for which she had filed an application for the corresponding Mayor's Permit and Municipal License which had been approved since 1986, but when she attempted to renew it for 1986, the same was disapproved last month due to the complaint lodged by defendant Antonio M. Cayetano whose application for renewal of Mayor's Permit and License for the same business of putting up a flea market, had been allegedly earlier approved;

4. That for the planning and initial construction of plaintiffs project to put up her own business of flea market and mini-mart grocery and wet and dry stores which she had intended to operate partly by herself and lease the rest of the twenty (20) stalls thereon, she had spent some P135,000.00 for the said construction, including materials and labor, where she had expected to earn as daily net income in the minimum amount of P500.00 daily;

5. That due to the illegal lease contract entered into between the herein defendants and the resultant unlawful deprivation of plaintiff from operating her own legitimate business on the same lot of which she is a conjugal owner, plaintiff has been compelled to seek redress and ventilate her grievance to the court for which she has to engage the services of counsel with whom she agreed to pay as and for attorney's fees the sum of P10,000.00; plus the amount equivalent to 20% of whatever damages may be awarded to her in addition to the sum of P500.00 per appearance in court.

xxx xxx xxx

xxx xxx xxx

Dated July 31, 1989 defendant Antonio M. Cayetano moved to dismiss the complaint on the sole ground that the complaint states no cause of action, to which an Opposition was filed by plaintiff (now petitioner herein), while defendant Antonio S. Roxas, estranged husband of plaintiff-petitioner, filed an answer.

99YUMI- CIVIL LAW 1

Confronted with the private respondent's Motion to Dismiss, on August 16, 1989, respondent Judge resolved said Motion by dismissing plaintiff-petitioner's complaint in its Order dated August 16, 1989, the dispositive portion of which reads, as follows:

It is said that the test of sufficiency of the cause of action is whether admitting the facts alleged to be true, the court could render a valid judgment in accordance with the prayer in the complaint. After examining the material allegations in the complaint, the Court finds that the complaint failed to satisfy the test of sufficiency.

WHEREFORE, the complaint is dismissed for failure to state a sufficient cause of action.

IT IS SO ORDERED. (p. 2 Order, dated August 16, 1989).

Plaintiff-petitioner filed a Motion for Reconsideration, which was denied by respondent Judge in its Order dated September 29, 1989. (Decision of Court of Appeals, pp. 1-4; Rollo, Annex "A", pp. 26-29)

Petitioner directly appealed the Decision of the lower court to the Supreme Court.

On November 27, 1989, the Second Division of this Court referred this case to the Court of Appeals for "proper determination and disposition."

Respondent Court of Appeals rendered judgment affirming in toto the Order of the trial court.

Hence, this petition.

Under the New Civil Code (NCC), "Art. 165. The husband is the administrator of the conjugal partnership," in view of the fact that the husband is principally responsible for the support of the wife and the rest of the family. If the conjugal partnership does not have enough assets, it is the husband's capital that is responsible for such support, not the paraphernal property. Responsibility should carry authority with it.

The husband is not an ordinary administrator, for while a mere administrator has no right to dispose of, sell, or otherwise alienate the property being administered, the husband can do so in certain cases allowed by law. He is not required by law to render an accounting. Acts done under administration do not need the prior consent of the wife.

However, administration does not include acts of ownership. For while the husband can administer the conjugal assets unhampered, he cannot alienate or encumber the conjugal realty. Thus, under Art. 166 of NCC "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 the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same." This rule prevents abuse on the part of the husband, and guarantees the rights of the wife, who is partly

responsible for the acquisition of the property, particularly the real property. Contracts entered into by the husband in violation of this prohibition are voidable and subject to annulment at the instance of the aggrieved wife. (Art. 173 of the Civil Code)

As stated in Black's Law Dictionary, the word "alienation" means 'the transfer of the property and possession of lands, tenements, or other things from one person to another . . . The act by which the title to real estate is voluntarily assigned by one person to another and accepted by the latter, in the form prescribed by law. Cf. In re Enrhardt U.S.D.C. 19 F. 2d 406, 407 . . . ." While encumbrance "has been defined to be every right to, or interest in, the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance; any (act) that impairs the use or transfer of property or real estate . . ." (42 C.J.S., p. 549).

The pivotal issue in this case is whether or not a lease is an encumbrance and/or alienation within the scope of Art. 166 of the New Civil Code.

Under Art. 1643 of the New Civil Code "In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid." Under the law, lease is a grant of use and possession: it is not only a grant of possession as opined by the Court of Appeals. The right to possess does not always include the right to use. For while the bailee in the contract of deposit holds the property in trust, he is not granted by law the right to make use of the property in deposit.

In the contract of lease, the lessor transfers his light of use in favor of the lessee. The lessor's right of use is impaired, therein. He may even be ejected by the lessee if the lessor uses the leased realty. Therefore, lease is a burden on the land, it is an encumbrance on the land. The opinion of the Court of Appeals that lease is not an encumbrance is not supported by law. The concept of encumbrance includes lease, thus "an encumbrance is sometimes construed broadly to include not only liens such as mortgages and taxes, but also attachment, LEASES, inchoate dower rights, water rights, easements, and other RESTRICTIONS on USE." (Capitalization is Ours) (533 Pacific Reporter [second series] 9, 12).

Moreover, lease is not only an encumbrance but also a "qualified alienation, with the lessee becoming, for all legal intents and purposes, and subject to its terms, the owner of the thing affected by the lease." (51 C C.J.S., p. 522)

Thus, the joinder of the wife, although unnecessary for an oral lease of conjugal realty which does not exceed one year in duration, is required in a lease of conjugal realty for a period of more than one year, such a lease being considered a conveyance and encumbrance within the provisions of the Civil Code requiring the joinder of the wife in the instrument by which real property is conveyed or encumbered (See also 41 C.J.S., p. 1149). In case the wife's consent is not secured by the husband as required by law, the wife has the remedy of filing an action for the annulment of the contract. Art. 173 of the Civil Code states "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. . . .

100YUMI- CIVIL LAW 1

In the case at bar, the allegation in paragraph 2 of the complaint indicates that petitioner's estranged husband, defendant Antonio S. Roxas had entered into a contract of lease with defendant Antonio M. Cayetano without her marital consent being secured as required by law under Art. 166 of the Civil Code. Petitioner, therefore, has a cause of action under Art. 173 to file a case for annulment of the contract of lease entered into without her consent. Petitioner has a cause of action not only against her husband but also against the lessee, Antonio M. Cayetano, who is a party to the contract of lease.

PREMISES CONSIDERED, the decision of the Court of Appeals is hereby SET ASIDE and this case is hereby REMANDED to the Regional Trial court for further proceedings.

SO ORDERED.

Guiang vs. CA GR# 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

101YUMI- CIVIL LAW 1

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

102YUMI- CIVIL LAW 1

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

I

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?

103YUMI- CIVIL LAW 1

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

104YUMI- CIVIL LAW 1

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.

Jader-Manalo vs. Camaisa GR# 147978 / JAN. 23, 2002

THELMA A. JADER-MANALO, Petitioner, v. NORMA FERNANDEZ C. CAMAISA and EDILBERTO CAMAISA, Respondents.

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 sale of their ten-door apartment in Makati, as well as that in Taytay, Rizal.

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]:

                                  Taytay Property                       Makati Property

6th month                 P200,000.00                            P300,000.0012th 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.

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 Counter-claim, 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 checks 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

105YUMI- CIVIL LAW 1

said wife who refused to give consent had not been shown to be incapacitated. The dispositive portion of the trial court’s decision reads:

WHEREFORE, considering these premises, judgment is hereby rendered:

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:

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, RESPONDENT 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 show 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.

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:

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.  (Underscoring ours.)

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.

106YUMI- CIVIL LAW 1

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.[25]

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.

SO ORDERED.

Jardeleza vs. Jardeleza GR# 112014 / DEC. 05, 2000

TEODORO L. JARDELEZA, petitioner, vs. GILDA L. JARDELEZA, ERNESTO L. JARDELEZA, JR., MELECIO GIL L. JARDELEZA, and GLENDA L. JARDELEZA, respondents.

D E C I S I O N

PARDO, J.:

The case is a petition for review on certiorari assailing the order[1] dismissing Special Proceedings No. 4689 of the Regional Trial Court, Iloilo City for appointment of judicial guardian over the person and estate of Dr. Ernesto Jardeleza, Sr. on the ground that such guardianship is superfluous and will only serve to duplicate the powers of the wife, Mrs. Gilda L. Jardeleza, under the explicit provisions of Article 124, second paragraph, of the Family Code.

Dr. Ernesto Jardeleza, Sr. and Gilda L. Jardeleza were married long before 03 August 1988, when the Family Code took effect.  The union produced five children, namely: petitioner, Ernesto, Jr., Melecio, Glenda and Rolando, all surnamed L. Jardeleza.

On 25 March 1991, Dr. Ernesto Jardeleza, Sr. then 73 years old, suffered a stroke and lapsed into comatose condition.  To date, his condition has not materially improved.

On 06 June 1991, petitioner commenced with the Regional Trial Court, Iloilo City Special Proceedings No. 45689, a petition for appointment of judicial guardian over the person and property of Dr. Jardeleza, Sr. and prayed for the issuance of letters of guardianship to his mother, Gilda L. Jardeleza.[2]

On 19 June 1991, the trial court issued an order setting the petition for hearing so that all persons concerned may appear and show cause if any why the petition should not be granted.[3]

On 3 July 1991, petitioner filed with the trial court a motion for the issuance of  letters of guardianship to him, rather than to his mother, on the ground that she considered the property acquired by Dr. Jardeleza as her own and did not want to be appointed guardian.[4]

On 09 August 1991, respondents filed with the trial court an opposition to the petition for guardianship and the motion for issuance of letters of guardianship to petitioner.[5]

On 20 August 1993, the trial court issued an order dismissing the petition for guardianship.[6] The trial court concluded, without explanation, that the petition is superfluous and would only serve to duplicate the powers of the wife under the explicit provisions of Article 124, second paragraph, of the Family Code.

On 17 September 1993, petitioner filed a motion for reconsideration pointing out that the Court of Appeals held in a case under Article 124 of the Family Code where the incapacitated spouse is incapable of being notified or unable to answer the petition, the procedural recourse is guardianship of the incapacitated spouse.[7]

On 24 September 1993, the trial court denied the motion for reconsideration finding it unmeritorious.[8]

Hence, this petition.[9]

The petition raises a pure legal question, to wit:  whether Article 124 of the Family Code renders “superfluous” the appointment of a judicial guardian over the person and estate of an incompetent married person.

Very recently, in a related case, we ruled that Article 124 of the Family Code was not applicable to the situation of Dr. Ernesto Jardeleza, Sr. and that the proper procedure was an application for appointment of judicial guardian under Rule 93 of the 1964 Revised Rules of Court.[10]

WHEREFORE, the Court grants the petition, reverses and sets aside the resolutions of the Regional Trial Court, Iloilo City, in Special Proceedings No. 4689.

107YUMI- CIVIL LAW 1

The Court remands the case to the trial court for further proceedings consistent with this decision.

No costs.SO ORDERED.

Uy (Jardeleza) vs. CA (Jardeleza) GR# 10955 / NOV. 29, 2000

JOSE UY and his Spouse GLENDA J. UY and GILDA L. JARDELEZA, petitioners, vs. COURT OF APPEALS and TEODORO L. JARDELEZA, respondents.D E C I S I O N

PARDO, J.:

The case is an appeal via certiorari from the decision[1] of the Court of Appeals and its resolution denying reconsideration[2] reversing that of the Regional Trial Court, Iloilo, Branch  32[3] 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.

108YUMI- CIVIL LAW 1

Villanueva v. Chiong GR# 159889 / JUNE 05, 2008

Walter Villanueva, et al. Vs. Florentino Chong, et al.

QUISUMBING, J.:

This petition for review on certiorari seeks the modification of the Decision[1] dated December 17, 2002 of the Court of Appeals in CA-G.R. CV. No. 68383, which had affirmed the Joint Decision[2] dated July 19, 2000 of the Regional Trial Court (RTC) of Dipolog City, Branch 6, in Civil Case No. 4460.  The RTC annulled the sale made by respondent Florentino Chiong in favor of petitioners Walter and Aurora Villanueva conveying a portion of a parcel of land which respondents acquired during their marriage.

The pertinent facts are as follows:

Respondents Florentino and Elisera Chiong were married sometime in January 1960 but have been separated in fact since 1975.  During their marriage, they acquired Lot No. 997-D-1 situated at Poblacion, Dipolog City and covered by Transfer Certificate of Title (TCT) No. (T-19393)-2325,[3] issued by the Registry of Deeds of Zamboanga del Norte.  Sometime in 1985, Florentino sold the one-half western portion of the lot to petitioners for P8,000, payable in installments.  Thereafter, Florentino allowed petitioners to occupy[4] the lot and build a store, a shop, and a house thereon.  Shortly  after  their  last   installment   payment   on December   13,   1986,[5] petitioners demanded from respondents the execution of a deed of sale in their favor.  Elisera, however, refused to sign a deed of sale.

On July 5, 1991, Elisera filed with the RTC a Complaint[6] for Quieting of Title with Damages, docketed as Civil Case No. 4383.  On February 12, 1992, petitioners filed with the RTC a Complaint[7] for Specific Performance with Damages, docketed as Civil Case No. 4460.  Upon proper motion, the RTC consolidated these two cases.[8]

On May 13, 1992, Florentino executed the questioned Deed of Absolute Sale[9] in favor of petitioners.

On July 19, 2000, the RTC, in its Joint Decision, annulled the deed of absolute sale dated May 13, 1992, and ordered petitioners to vacate the lot and remove all improvements therein. The RTC likewise dismissed Civil Case No. 4460,

but ordered Florentino to return to petitioners the consideration of the sale with interest from May 13, 1992.[10]  The fallo of the decision reads:

WHEREFORE, by preponderance of evidence, judgment is hereby rendered as follows:

For Civil Case No. 4383, (a) annulling the Deed of Sale executed by Florentino Chiong in favor of Walter Villanueva, dated May 13, 1992 (Exhibit “2”); ordering defendant Walter Villanueva to vacate the entire land in question and to remove all buildings therein, subject to [i]ndemnity of whatever damages he may incur by virtue of the removal of such buildings, within a period of 60 days from the finality of this decision; award of damages is hereby denied for lack of proof.

In Civil Case No. 4460, complaint is hereby dismissed, but defendant Florentino Chiong, having received the amount of P8,000.00 as consideration of the sale of the land subject of the controversy, the sale being annulled by this Court, is ordered to return the said amount to [the]  spouses Villanueva, with interest to be computed from the date of the annulled deed of sale, until the same is fully paid, within the period of 60 days from finality of this judgment.  Until such amount is returned, together with the interest, [the] spouses Villanueva may continue to occupy the premises in question.No pronouncement as to costs.IT IS SO ORDERED.[11]

The Court of Appeals affirmed the RTC’s decision: WHEREFORE, premises considered, the appealed decision dated July 19, 2000 of the Regional Trial Court, Branch 6, Dipolog City is hereby AFFIRMED.SO ORDERED.[12]

Petitioners sought reconsideration, but to no avail.  Hence, this petition.

Petitioners assign the following errors as issues for our resolution:

I.

THAT THE COURT A QUO AS WELL AS THE HONORABLE COURT OF APPEALS ... GRAVELY ERRED IN NOT HOLDING THAT THE LAND IN QUESTION BELONGED SOLELY TO RESPONDENT FLORENTINO CHIONG AND ULTIMATELY TO THE HEREIN PETITIONERS.

II.

THAT THE LOWER COURT AS WELL AS THE HONORABLE COURT OF APPEALS … LIKEWISE ERRED IN DECLARING AS

109YUMI- CIVIL LAW 1

NULL AND VOID THE DEED OF SALE EXECUTED BY RESPONDENT FLORENTINO CHIONG IN FAVOR OF THE HEREIN PETITIONERS.[13]

Simply put, the basic issues are:  (1) Is the subject lot an exclusive property of Florentino or a conjugal property of respondents?  (2)  Was its sale by Florentino without Elisera’s consent valid?

Petitioners contend that the Court of Appeals erred when it held that the lot is conjugal property.  They claim that the lot belongs exclusively to Florentino because respondents were already separated in fact at the time of sale and that the share of Elisera, which pertains to the eastern part of Lot No. 997-D-1, had previously been sold to Spouses Jesus Y. Castro and Aida Cuenca.  They also aver that while there was no formal liquidation of respondents’ properties, their separation in fact resulted in its actual liquidation.  Further, assuming arguendo that the lot is still conjugal, the transaction should not be entirely voided as Florentino had one-half share over it.

Elisera, for her part, counters that the sale of the lot to petitioners without her knowledge, consent or authority, was void because the lot is conjugal property.  She adds that the sale was neither authorized by any competent court nor did it redound to her or their children’s benefit.  As proof of the lot’s conjugal nature, she presented a transfer certificate of title, a real property   tax   declaration,   and   a   Memorandum   of   Agreement[14]   dated November 19, 1979 which she and her husband had executed for the administration of their conjugal properties.[15]

Anent the first issue, petitioners’ contention that the lot belongs exclusively to Florentino because of his separation in fact from his wife, Elisera, at the time of sale dissolved their property relations, is bereft of merit.  Respondents’ separation in fact neither affected the conjugal nature of the lot nor prejudiced Elisera’s interest over it.  Under Article 178[16] of the Civil Code, the separation in fact between husband and wife without judicial approval shall not affect the conjugal partnership.  The lot retains its conjugal nature.

Likewise, under Article 160[17] of the Civil Code, all property acquired by the spouses 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.  Petitioners’ mere insistence as to the lot’s supposed exclusive nature is insufficient to overcome such presumption when taken against all the evidence for respondents.

On the basis alone of the certificate of title, it cannot be presumed that the lot was acquired during the marriage and that it is conjugal property since it was registered “in the name of Florentino Chiong, Filipino, of legal age, married to Elisera Chiong… .”[18]  But Elisera also presented a real property tax declaration acknowledging her and Florentino as owners of the lot.  In addition, Florentino and

Elisera categorically declared in the Memorandum of Agreement they executed that the lot is a conjugal property.[19]  Moreover, the conjugal nature of the lot was admitted by Florentino in the Deed of Absolute Sale dated May 13, 1992, where he declared his capacity to sell as a co-owner of the subject lot.[20]

Anent the second issue, the sale by Florentino without Elisera’s consent is not, however, void ab initio.  In Vda. de Ramones v. Agbayani,[21] citing Villaranda v. Villaranda,[22] we held that without the wife’s consent, the husband’s alienation or encumbrance of conjugal property prior to the effectivity of the Family Code on August 3, 1988 is not void, but merely voidable.  Articles 166 and 173 of the Civil Code [23] 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 partnership without the wife’s consent…

This article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.

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.  (Emphasis supplied.)

Applying Article 166, the consent of both Elisera and Florentino is necessary for the sale of a conjugal property to be valid.  In this case, the requisite consent of Elisera was not obtained when Florentino verbally sold the lot in 1985 and executed the Deed of Absolute Sale on May 13, 1992.  Accordingly, the contract entered by Florentino is annullable at Elisera’s instance, during the marriage and within ten years from the transaction questioned, conformably with Article 173.  Fortunately, Elisera timely questioned the sale when she filed Civil Case No. 4383 on July 5, 1991, perfectly within ten years from the date of sale and execution of the deed.

Petitioners finally contend that, assuming arguendo the property is still conjugal, the transaction should not be entirely voided as Florentino had one-half share over the lot.  Petitioners’ stance lacks merit.  In Heirs of Ignacia Aguilar-Reyes v. Mijares [24] citing Bucoy v. Paulino, et al.,[25] a case involving the annulment of sale executed by the husband without the consent of the wife, it was held that the alienation must be annulled in its entirety and not only insofar as the share of the wife

110YUMI- CIVIL LAW 1

in the conjugal property is concerned.  Although the transaction in the said case was declared void and not merely voidable, the rationale for the annulment of the whole transaction is the same.  Thus:

The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the husband without the wife's consent, may be annulled by the wife.  Had Congress intended to limit such annulment in so far as the contract shall “prejudice” the wife, such limitation should have been spelled out in the statute.  It is not the legitimate concern of this Court to recast the law.  As Mr. Justice Jose B. L. Reyes of this Court and Judge Ricardo C. Puno of the Court of First Instance correctly stated, “[t]he rule (in the first sentence of Article 173) revokes Baello vs. Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca, 45 Phil. 430,” in which cases annulment was held to refer only to the extent of the one-half interest of the wife… .[26]

Now, if a voidable contract is annulled, the restoration of what has been given is proper.[27]  Article 1398 of the Civil Code provides:

An obligation having been annulled, the contracting parties shall restore to each other the things which have been the subject matter of the contract, with their fruits, and the price with its interest, except in cases provided by law.

            In obligations to render service, the value thereof shall be the basis for damages.

The effect of annulment of the contract is to wipe it out of existence, and to restore the parties, insofar as legally and equitably possible, to their original situation before the contract was entered into.[28]

          Strictly applying Article 1398 to the instant case, petitioners should return to respondents the land with its fruits[29] and respondent Florentino should return to petitioners the sum of P8,000, which he received as the price of the land, together with interest thereon.

          On the matter of fruits and interests, we take into consideration that petitioners have been using the land and have derived benefit from it just as respondent Florentino has used the price of the land in the sum of P8,000.  Hence, if, as ordered by the lower court, Florentino is to pay a reasonable amount or legal interest for the use of the money then petitioners should also be required to pay a reasonable amount for the use of the land.[30]  Under the particular circumstances of this case, however, it would be equitable to consider the two amounts as offsetting each other.  Hence, the award of the trial court for the payment of interest should be deleted.

WHEREFORE, the petition is DENIED for lack of merit.  The assailed Decision dated December 17, 2002 of the Court of Appeals in CA-G.R. CV. No. 68383 affirming the Joint Decision dated July 19, 2000 of the Regional Trial Court of Dipolog City, Branch 6, in Civil Case No. 4460 is hereby AFFIRMED with MODIFICATION.  The order for the payment of interest is DELETED.SO ORDERED.

De la Cruz v. Segovia GR# 149801 / JUNE 26, 2008

SPOUSES RENATO AND FLORINDA DELA CRUZ, PETITIONERS, VS. SPOUSES GIL AND LEONILA SEGOVIA, RESPONDENTS.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 17, 2001 Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 64487, as reiterated in its Resolution[2] of September 4, 2001, affirming the decision of the Regional Trial Court (RTC) of Manila, Branch 44 in its Civil Case No. 96-77509, an action for Nullity of Contract/Agreement with Damages thereat commenced by spouses Renato and Florinda dela Cruz (petitioners) against respondent spouses Gil and Leonila Segovia.

The facts, as culled from the records, are as follows.

Sometime in July 1985, petitioner Florinda dela Cruz (Florinda) wanted to purchase two (2) parcels of land located at Paltok Street, Sta. Mesa, Manila, Lot 503 with an apartment unit erected thereon and Lot 505 with a residential house.  The two lots were being sold together for P180,000.00. Inasmuch as Florinda had only P144,000.00 at hand, she asked her sister, respondent Leonila Segovia (Leonila), to contribute P36,000.00 to complete the purchase price.   The sisters agreed that Lot 503 and the apartment unit thereat would belong to Leonila upon full payment of its purchase price of P80,000.00, while Lot 505 with a residential house would belong to Florinda. The properties were then registered in the name of petitioner Renato dela Cruz married to Florinda.   The parties, however, verbally agreed that Leonila and her family would stay at Lot 505 until she had fully paid for Lot 503.

Desiring to reduce the verbal agreement into writing, the parties executed and signed a handwritten covenant entitled Note of Agreement[3] dated April 28, 1990, which read:

Ano mang oras o panahon maaring ilipat kay Mo/Gil Segovia [respondent] ang pag-aari ng sasakyan at bahay kung mababayaran nila ang P18,000 at P34,000 na balance sa Apt. na walang ano mang condition, interest at ano mang hangad hanggang year 1999.

Ang halagang P18,000 ay may interest na 2% hanggang sa ito ay mabayaran kay Flor dela Cruz [petitioner]. Ang halagang P34,000 ay

111YUMI- CIVIL LAW 1

walang interest at ito ay babayaran up to 1999. Ang upa sa apt. ay cocolectahin ni Flor kapalit sa residential house.

Ang ano mang mga gastos sa papeles ay sasagutin ni Mo/Gil Segovia [respondent] kung ililipat sa pangalan niya ang sasakyan na Pinoy Fierra-Van NEX 741. Ang pagbili sa lupa at bahay 503 Paltok ay ganoon din. (underscoring supplied)

Sometime in 1991, Linda Duval, a sister of Florinda and Leonila, arrived from the United States to attend their mother's funeral.  Linda noticed the strained relations between her two siblings.   When she inquired about the status of her sisters' agreement regarding Lot 503, Leonila informed Linda that the agreement was yet to be reduced into a formal contract.   Linda offered to prepare a contract between Florinda and Leonila who acceded to the offer.   Thus, on September 9, 1991, Florinda and Leonila signed an Agreement[4] embodying the detailed scheme of payment for the lot covered by the sisters' agreement, to wit:

We, Gil and Leonila Segovia, husband and wife, of legal age, residing at 505 A. Paltok Street, Sta. Mesa, Manila, jointly agrees to pay Florinda dela Cruz the sum of P34,000.00 pesos Philippine currency in the following terms and conditions:

1. All previous contract or agreement is superseded by this existing contract.

2. Payment of the said amount will be payable in installment basis; in a monthly fashion respectively with no specific amount of payment within the period of ten (10) years; effectively after the contract is signed by both parties. P314.81 per month or P 3,1777.77 (sic) per year. And by the year 1999 will be P34,000.00.

3. The borrowers (Sps. Segovia) agree to put their real property located at 505 B Paltok St., Sta. Mesa, Mla., with TCT # 177862- Registry of deeds (public document) as guarantees for the above loan, which has a monthly rent of P1,200.00 and will be collected by the Lender (Florinda) as part of the agreement of the loan.

4. As part of the agreement, the borrowers will live in the Lender's house, located at 505 Paltok St. in exchange for her property rents.

5. The lender also agrees that the borrowers manage the collection of rents around the house and endorse said rents to the owner who is the Lender. Lender gives her full consent to the borrowers to sub-rent whatever rooms she chooses inside her premises.

6. If payment was not made after ten (10) years, the Lender will take ownership of the property described above.

7. If payment is made on or before the due date of the agreement, the Lender shall immediately take care of all the necessary action with regards to impediment, attachment, encumbrances to the property.

x x x

After the Note of Agreement of April 28, 1990 and Agreement of September 9, 1991, Leonila continued paying the balance she owed Florinda. Particularly, she paid the amount of P10,000.00 in September 1990 and P7,555.44 on May 16, 1995.  Finally, in October 1995, Leonila attempted to pay the remaining balance of P26,444.56 in full satisfaction of her obligation but Florinda refused to accept the same on the ground that, the ten-year period for the payment of the balance, reckoned from July 1985, the alleged date of the verbal agreement between them, had already expired. Thereafter Florinda demanded that Leonila and her family vacate the house at 505 Paltok Street, which prompted respondents to consign the P26,444.56 in court.[5]

On March 8, 1996, petitioners filed with the RTC of Manila, Branch 44, a complaint for Nullity of Contract/Agreement with Damages on the ground that the Agreement executed on September 9, 1991 did not contain the true intention of the parties because Florinda's consent thereto was vitiated by mistake. Allegedly, Florinda did not know that the agreement provided that the ten-year period for payment of the balance commenced from September 1991 and not from July 1985 which was her true intention.

On May 5, 1999, the RTC rendered a decision dismissing the complaint for Nullity of Contract/Agreement with Damages and declaring the subject Agreement valid and subsisting. The decision's dispositive portion reads:

WHEREFORE, in view of the foregoing considerations and a thorough examination of the evidence, and the pleadings together with the supporting documents, this Court finds the Agreement valid and subsisting - thus, the complaint filed by plaintiffs on March 8, 1996 is hereby ordered dismissed for lack of merit.

The defendants are hereby ordered to pay the amount of P26,000.00 which is the remaining balance to complete the purchase price of the 503 Paltok Street, Sta. Mesa, Manila property to the plaintiffs afterwhich the latter and all the persons claiming under them, to surrender the ownership of 503 Paltok Street, Sta. Mesa, Manila, vacate and to surrender possession thereof.

The plaintiffs are hereby ordered to pay defendants attorney's fees in the amount of P50,000.00, and to pay the costs.

The counterclaim is denied.

112YUMI- CIVIL LAW 1

SO ORDERED.[6]

In arriving at its decision, the RTC explained:

Granting arguendo, that Florinda dela Cruz's allegation that she has not read the Agreement is true, signing a contract without fully knowing the stipulations does not vitiate consent.  Prudence dictates that Florinda dela Cruz who presented the agreement for signature should acquaint herself first with the "fine prints" of a contract before stamping her approval thereto.  As it is, the fact remains that Florinda dela Cruz signed the agreement voluntarily on September 9, 1991 binding themselves that the balance of P34,000.00 be paid in installments within ten (10) years upon signing the agreement or until 1999.  Indeed, the evidence will show that Florinda dela Cruz voluntarily entered into the Agreement and participated in the preparation thereof and after it has been prepared, the same was read to and by the parties themselves including Florinda dela Cruz and later voluntarily affixed her signature.  Renato dela Cruz was also present at the time of the signing of the Agreement and presented a copy thereof.

A further reading of the complaint in paragraph 7 thereof, it is clear from the allegations that the Agreement is a valid existing contract only it did not express the intention of the parties, which may be a ground for reformation of contract only under Article 1359 of the Civil Code of the Philippines which provides that "when, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed."

x x x

Thus, the four year period to file the action for annulment, assuming there were indeed mistakes therein which vitiated plaintiffs' [petitioners] consent commenced to run on September 9, 1991.  The action had already prescribed or lapsed and plaintiffs [petitioners] could no longer ask for the annulment of the agreement.

As to the contention that the subject agreement had no force and effect on account of the absence of the signature of Florinda's husband, petitioner Renato dela Cruz (Renato), the RTC ruled to the contrary, thus:

Indeed, Renato dela Cruz did not sign the Agreement, however, he was present at the time the Agreement was signed by the parties and their witnesses, and the same was presented to him for his signature.   In fact, attempts were even made to procure his signature, but plaintiff wife Florinda dela Cruz insisted that her signature already carries that

of her husband Renato dela Cruz.  The parties never insisted that Renato dela Cruz sign the Agreement as the wife has spoken.   It is further observed that by his actuations Renato dela Cruz has agreed and has given his conformity to the agreement.   He also did not object to the execution of the same at the time it was signed by his wife Florinda dela Cruz on September 9, 1991, even he was present and he was shown and furnished a copy of the said agreement.

x x x

It must be pointed out that plaintiff Florinda dela Cruz always consult her husband, Renato dela Cruz on all matters respecting their transactions (pp. 42-43, tsn, Sept. 13, 1996; p. 25, tsn, Aug. 15, 1997).

So that the claim of Florinda dela Cruz that she has never informed her husband involving a very substantial property registered in his name, for ten years that it had allegedly been in effect and that she has been regularly collecting defendants staggered installment payments for the said property for a number of years lacks basis.

More, Renato's claim that he was never aware of the agreement between the parties is doomed, since he was present at the time of the purchase of the property where he witnessed Leonila Segovia contributed their hard earned savings in the amount of P36,000.00 to complete their share to the purchase price of P180,000.00 of the properties in question, and who reminded defendants that the subject property will ultimately be theirs upon completion of their amortizations.

Finally, the RTC ruled that the action for annulment had already lapsed when the Complaint was filed on March 8, 1996.

The action for annulment shall be brought within four (4) years from the time of discovery of the mistake (Art. 1391, New Civil Code of the Philippines).

On the other hand, the defendants' [respondents'] evidence that after the preparation by Linda Duval on September 9, 1991, the Agreement was read to and by the parties, shown and signed by the parties and furnished each a copy of the agreement.  Therefore, it could not be said that plaintiffs [petitioners] were not aware of the terms and conditions of the Agreement and did not discover the alleged mistakes contained therein on September 9, 1991.

More, plaintiffs [petitioners] likewise never raise any objection nor declare that there were mistakes in the agreement.  It was only on March 8, 1996 that the present action for annulment was filed.

Their motion for reconsideration having been denied, petitioners filed with the RTC a Notice of Appeal.[7]   Respondents too filed a Notice of Partial Appeal[8] questioning

113YUMI- CIVIL LAW 1

the dismissal of their counter-claim for damages. Accordingly, the records of the case were elevated to the CA, where both appeals were docketed as CA-G.R. CV No. 64487.

The CA affirmed the findings of the RTC in its decision,[9] promulgated on April 17, 2001.   In so ruling, the CA also declared that, while the expiry date of the payment period was an important stipulation, it could not be considered as the substance of the contract nor the primary motivation for which the parties entered into the agreement.   The substance of the Agreement was the sale of the property at 503 Paltok Street.  The "mistake" that petitioners point to pertains to their interpretation of the contract, which is not a ground to annul the same.   The CA found that the stipulations of the written agreement, signed on September 9, 1991, clearly intended to give the respondents ten (10) years from 1991 within which to effect payment of the balance of the consideration for the sale of the 503 property.   In view of the explicit terms of the said written agreement, the verbal agreement of July 1985 was already of no moment.

The motion for reconsideration of petitioners was denied by the CA in the resolution dated September 4, 2001.

Aggrieved by the foregoing CA decision, petitioners elevated the case to this Court raising the following assignment of errors:

I.

THE COURT OF APPEALS WITH DUE RESPECT SERIOUSLY ERRED IN HOLDING THAT THE AGREEMENT IS VALID AND SUBSISTING AND ORDERING THE PETITIONERS TO SURRENDER OWNERSHIP OF THE SUBJECT PROPERTY TO THE RESPONDENTS.

II.

THE COURT OF APPEALS WITH DUE RESPECT SERIOUSLY ERRED IN HOLDING THAT PETITIONER RENATO DELA CRUZ BY HIS ACTUATIONS HAD AGREED AND HAD GIVEN HIS CONFORMITY TO THE AGREEMENT.

We deny the petition.

We agree with the two courts below when they declared that the four (4)-year period for filing an action for annulment of the September 9, 1991 Agreement, on ground of vitiated consent, had already lapsed when the complaint subject of the present controversy was filed on March 8, 1996.

This is in accordance with Article 1391 of the Civil Code, whichpertinently reads:

Art. 1391.  The action for annulment shall be brought within four years.

This period shall begin:xxxIn case of mistake or fraud, from the time of the discovery of the same.

xxx.

The complaint for Nullity of Contract/ Agreement with Damages was filed on March 7, 1996, while the agreement subject thereof was entered into on September 9, 1991.   The Agreement was read to the parties before they affixed their signatures thereon. Petitioners were thereafter furnished a copy of the subject Agreement.  Petitioners are presumed to have discovered the alleged mistake on September 9, 1991.  Hence, the action for annulment which was filed four years and six months from the time of the discovery of the mistake had already prescribed.  Evidently, the Agreement could no longer be set aside.

We also agree with the ruling that the absence of Renato's signature in the September 9, 1991 Agreement bears little significance to its validity. Article 124 of the Family Code relied upon by petitioners provides that the administration of the conjugal partnership is now a joint undertaking of the husband and the wife.  In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal partnership, the other spouse may assume sole powers of administration. However, the power of administration does not include the power to dispose or encumber property belonging to the conjugal partnership. In all instances, the present law specifically requires the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal partnership property without which, the disposition or encumbrance shall be void.

The foregoing provision finds no application in this case because the transaction between Florinda and Leonila in reality did not involve any disposition of property belonging to any of the sisters' conjugal assets. It may be recalled that the agreement was for the acquisition of two lots which were being sold together for P180,000.00. Florinda who had only P144,000.00 asked Leonila to contribute P36,000.00 to complete the purchase price of said lots. With money pooled together, the sisters agreed that Lot 503 be valued at P80,000.00 and Lot 505 valued at P100,000.00. The P36,000.00 contribution of Leonila shall be applied to the 503 property which upon full payment of the remaining balance of P44,000.00 advanced by Florinda shall belong to Leonila. On the other hand, of Florinda's P144,000.00 contribution, P 100,000.00 shall be considered as full payment for the purchase of the 505 property and the P44,000.00 which was the balance of the purchase price of Lot 503, as loan to Leonila. To secure payment of the loan, Lot 503 was provisionally registered in the name of petitioners. Hence Lot 503 was at the outset not intended to be part of the conjugal asset of the petitioners but only as a security for the payment of the  P44,000.00 due from respondents.

Moreover, while Florinda's husband did not affix his signature to the above-mentioned Agreement, we find no ground to disturb the uniform findings of the trial court and appellate court that Renato, by his actuations, agreed and gave his conformity to the Agreement. As found by the courts below, Renato's consent to the Agreement was drawn from the fact that he was present at the time it was signed by

114YUMI- CIVIL LAW 1

the sisters and their witnesses; he had knowledge of the Agreement as it was presented to him for his signature, although he did not sign the same because his wife Florinda insisted that her signature already carried that of her husband; Renato witnessed the fact that Leonila contributed her hard earned savings in the amount of P36,000.00 to complete their share in the purchase price of the properties in question in the total amount of P180,000.00. The aforesaid factual findings of the courts below are beyond review at this stage.[10]

WHEREFORE, the petition is DENIED and the assailed decision and resolution of the Court of Appeals are AFFIRMED.

Costs against the petitioners.

SO ORDERED.

Ravina v. Villa Abrille GR# 160708 / OCT. 16, 2009

PATROCINIA RAVINA AND WILFREDO RAVINA, Petitioners, vs.MARY ANN P. VILLA ABRILLE, for herself and in behalf of INGRID D'LYN P. VILLA ABRILLE, INGREMARK D'WIGHT VILLA ABRILLE, INGRESOLL DIELS VILLA ABRILLE AND INGRELYN DYAN VILLA ABRILLE, Respondents.

QUISUMBING, Acting C.J.:

For review are the Decision[1] dated February 21, 2002 and the Resolution[2] dated October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560.  The appellate court modified the Decision[3] dated September 26, 1995 of the Regional Trial Court (RTC) of Davao City, Branch 15.

Simply stated, the facts as found by the Court of Appeals[4] are as follows:

Respondent Mary Ann Pasaol Villa Abrille and Pedro Villa Abrille are husband and wife.  They have four children, who are also parties to the instant case and are represented by their mother, Mary Ann.

In 1982, the spouses acquired a 555-square meter parcel of land denominated as Lot 7, located at Kamuning Street, Juna Subdivision, Matina, Davao City, and covered by Transfer Certificate of Title (TCT) No. T-88674 in their names.  Said lot is adjacent to a parcel of land which Pedro acquired when he was still single and which is registered solely in his name under TCT No. T-26471.

Through their joint efforts and the proceeds of a loan from the Development Bank of the Philippines (DBP), the spouses built a house on Lot 7 and Pedro’s lot.  

The house was finished in the early 1980’s but the spouses continuously made improvements, including a poultry house and an annex.

In 1991, Pedro got a mistress and began to neglect his family.  Mary Ann was forced to sell or mortgage their movables to support the family and the studies of her children.  By himself, Pedro offered to sell the house and the two lots to herein petitioners, Patrocinia and Wilfredo Ravina.  Mary Ann objected and notified the petitioners of her objections, but Pedro nonetheless sold the house and the two lots without Mary Ann’s consent, as evidenced by a Deed of Sale[5] dated June 21, 1991.  It appears on the said deed that Mary Ann did not sign on top of her name.

On July 5, 1991 while Mary Ann was outside the house and the four children were in school, Pedro together with armed members of the Civilian Armed Forces Geographical Unit (CAFGU) and acting in connivance with petitioners[6] began transferring all their belongings from the house to an apartment.

When Mary Ann and her daughter Ingrid Villa Abrille came home, they were stopped from entering it.  They waited outside the gate until evening under the rain.  They sought help from the Talomo Police Station, but police authorities refused to intervene, saying that it was a family matter.  Mary Ann alleged that the incident caused stress, tension and anxiety to her children, so much so that one flunked at school.  Thus, respondents Mary Ann and her children filed a complaint for Annulment of Sale, Specific Performance, Damages and Attorney’s Fees with Preliminary Mandatory Injunction[7] against Pedro and herein petitioners (the Ravinas) in the RTC of Davao City.

During the trial, Pedro declared that the house was built with his own money.  Petitioner Patrocinia Ravina testified that they bought the house and lot from Pedro, and that her husband, petitioner Wilfredo Ravina, examined the titles when they bought the property.

On September 26, 1995, the trial court ruled in favor of herein respondent Mary Ann P. Villa Abrille as follows:

WHEREFORE, judgment is rendered as follows:

1.                  The sale of lot 8 covered by TCT No. 26471 by defendant Pedro Abrille appearing in the Deed of Sale marked as Exh. “E” is void as to one half or 277.5 square meters representing the share of plaintiff Mary Villa Abrille.

2.                  That sale of Lot 7 covered by TCT No. [88674] by defendant Pedro Villa Abrille in the Deed of Sale (Exh. “A”) is valid as to one half or 277.5 square meters of the 555 square meters as one half belongs to defendant Pedro Abrille but it

115YUMI- CIVIL LAW 1

is void as to the other half or 277.5 square meters as it belongs to plaintiff Mary Abrille who did not sell her share nor give her consent to the sale.

3.                  That sale of the house mentioned in the Deed of Sale (Exh. “A”) is valid as far as the one half of the house representing the share of defendant Pedro Abrille is concerned but void as to the other half which is the share of plaintiff Mary Abrille because she did not give her consent/sign the said sale.

4.                  The defendants shall jointly pay the plaintiffs.

4. A.    Seventeen Thousand Pesos (P17,000.00) representing the value of the movables and belonging[s] that were lost when unknown men unceremoniously and without their knowledge and consent removed their movables from their house and brought them to an apartment.

 

4. B.    One Hundred Thousand Pesos (P 100,000.00) to plaintiff Mary Abrille as moral damages.

 

4. C.    Fifty Thousand Pesos (P50,000.00) to each of the four children as moral damages, namely:

 

a)         Ingrid Villa Abrille – Fifty Thousand Pesos (P50,000.00), b) Ingremark Villa Abrille – Fifty Thousand Pesos (P50,000.00), c) Ingresoll Villa Abrille – Fifty Thousand Pesos (P50,000.00) and d) Ingrelyn Villa Abrille – Fifty Thousand Pesos (P50,000.00).

 

5.         Ten Thousand Pesos (P10,000.00) as exemplary damages by way of example and correction for the public good.          

 

6.       The costs of suit.[8]

On appeal, the Court of Appeals modified the decision, thus:

WHEREFORE, the appealed judgment is hereby MODIFIED as follows:

 1.                  The sale of lot covered by TCT No. 26471 in favor of defendants spouses Wilfredo and Patrocinia Ravina is declared valid.

 

2.                  The sale of lot covered by TCT No. 88674 in favor of said defendants spouses Ravina, together with the house thereon, is declared null and void.

 

3.         Defendant Pedro Abrille is ordered to return the value of the consideration for the lot covered by TCT No. 88674 and the house thereon to co-defendants spouses Ravina.

 

4.         Defendants spouses Ravina [a]re ordered to reconvey the lot and house covered by TCT No. 88674 in favor of spouses Pedro and Mary Villa Abrille and to deliver possession to them.           

 

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

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

 

a)         One Hundred Thousand Pesos (P100,000.00) to plaintiff Mary Villa Abrille as moral damages.

 

b)         Fifty Thousand Pesos (P50,000.00) as moral damages to each of the four children, namely: Ingrid Villa Abrille, Ingremark Villa Abrille, Ingresoll Villa Abrille and Ingrelyn Villa Abrille.

 

c)                  Ten Thousand (P10,000.00) as exemplary damages by way of example and correction for the public good.

 

SO ORDERED.[9]

Their Motion for Reconsideration having been denied, petitioners filed this petition.  Petitioners argue that:

                                                            I.

THE COURT OF APPEALS ERRED WHEN IT DECLARED x x x THE SALE OF LOT COVERED BY TCT NO. 88674 IN FAVOR OF SPOUSES RAVINA, TOGETHER WITH THE HOUSE THEREON, AS NULL AND VOID SINCE IT IS CLEARLY CONTRARY TO LAW AND EVIDENCE.

116YUMI- CIVIL LAW 1

                                                            II.

THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE NOT INNOCENT PURCHASERS FOR VALUE, THE SAME BEING CONTRARY TO LAW AND EVIDENCE.

                                                            III.

THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE LIABLE FOR DAMAGES, THE SAME BEING CONTRARY TO LAW AND EVIDENCE.[10]

In essence, petitioners assail the appellate court’s declaration that the sale to them by Pedro of the lot covered by TCT No. T-88674 is null and void.  However, in addressing this issue, it is imperative to determine: (1) whether the subject property covered by TCT No. T-88674 is an exclusive property of Pedro or conjugal property, and (2) whether its sale by Pedro was valid considering the absence of Mary Ann’s consent.

Petitioners assert that the subject lot covered by TCT No. T-88674 was the exclusive property of Pedro having been acquired by him through barter or exchange.[11]  They allege that the subject lot was acquired by Pedro with the proceeds of the sale of one of his exclusive properties.  Allegedly, Pedro and his sister Carmelita initially agreed to exchange their exclusive lots covered by TCT No. T-26479 and TCT No. T-26472, respectively.  Later, however, Pedro sold the lot covered by TCT No. T-26472 to one Francisca Teh Ting and purchased the property of Carmelita using the proceeds of the sale.  A new title, TCT No. T-88674, was issued thereafter.  Thus, petitioners insist that the subject lot remains to be an exclusive property of Pedro as it was acquired or purchased through the exclusive funds or money of the latter.

We are not persuaded. Article 160 of the New Civil Code provides, “All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.”

There is no issue with regard to the lot covered by TCT No. T-26471, which was an exclusive property of Pedro, having been acquired by him before his marriage to Mary Ann.  However, the lot covered by TCT No. T-88674 was acquired in 1982 during the marriage of Pedro and Mary Ann. No evidence was adduced to show that the subject property was acquired through exchange or barter.  The presumption of the conjugal nature of the property subsists in the absence of clear, satisfactory and convincing evidence to overcome said presumption or to prove that the subject property is exclusively owned by Pedro.[12]  Petitioners’ bare assertion would not suffice to overcome the presumption that TCT No. T-88674, acquired during the marriage of Pedro and Mary Ann, is conjugal.  Likewise, the house built thereon is

conjugal property, having been constructed through the joint efforts of the spouses, who had even obtained a loan from DBP to construct the house.

Significantly, a sale or encumbrance of conjugal property concluded after the effectivity of the Family Code on August 3, 1988, is governed by Article 124 of the same Code that now treats such a disposition to be void if done (a) without the consent of both the husband and the wife, or (b) in case of one spouse’s inability, the authority of the court.  Article 124 of the Family Code, the governing law at the time the assailed sale was contracted, is explicit:

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

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration.  These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse.  In the absence of such authority or consent, the disposition or encumbrance shall be void.  However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.  (Emphasis supplied.)

The particular provision in the New Civil Code giving the wife ten (10) years to annul the alienation or encumbrance was not carried over to the Family Code.  It is thus clear that alienation or encumbrance of the conjugal partnership property by the husband without the consent of the wife is null and void.

Hence, just like the rule in absolute community of property, if the husband, without knowledge and consent of the wife, sells conjugal property, such sale is void.  If the sale was with the knowledge but without the approval of the wife, thereby resulting in a disagreement, such sale is annullable at the instance of the wife who is given five (5) years from the date the contract implementing the decision of the husband to institute the case.[13]

Here, respondent Mary Ann timely filed the action for annulment of sale within five (5) years from the date of sale and execution of the deed.  However, her action to annul the sale pertains only to the conjugal house and lot and does not

117YUMI- CIVIL LAW 1

include the lot covered by TCT No. T-26471, a property exclusively belonging to Pedro and which he can dispose of freely without Mary Ann’s consent.

On the second assignment of error, petitioners contend that they are buyers in good faith.[14]  Accordingly, they need not inquire whether the lot was purchased by money exclusively belonging to Pedro or of the common fund of the spouses and may rely on the certificates of title.

The contention is bereft of merit.  As correctly held by the Court of Appeals, a purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of the claim or interest of some other person in the property.[15]  To establish his status as a buyer for value in good faith, a person dealing with land registered in the name of and occupied by the seller need only show that he relied on the face of the seller’s certificate of title.  But for a person dealing with land registered in the name of and occupied by the seller whose capacity to sell is restricted, such as by Articles 166 and 173 of the Civil Code or Article 124 of the Family Code, he must show that he inquired into the latter’s capacity to sell in order to establish himself as a buyer for value in good faith.[16]

In the present case, the property is registered in the name of Pedro and his wife, Mary Ann.  Petitioners cannot deny knowledge that during the time of the sale in 1991, Pedro was married to Mary Ann.  However, Mary Ann’s conformity did not appear in the deed.  Even assuming that petitioners believed in good faith that the subject property is the exclusive property of Pedro, they were apprised by Mary Ann’s lawyer of her objection to the sale and yet they still proceeded to purchase the property without Mary Ann’s written consent.  Moreover, the respondents were the ones in actual, visible and public possession of the property at the time the transaction was being made.  Thus, at the time of sale, petitioners knew that Mary Ann has a right to or interest in the subject properties and yet they failed to obtain her conformity to the deed of sale.  Hence, petitioners cannot now invoke the protection accorded to purchasers in good faith.

Now, if a voidable contract is annulled, the restoration of what has been given is proper.  The relationship between the parties in any contract even if subsequently annulled must always be characterized and punctuated by good faith and fair dealing.[17]  Hence, in consonance with justice and equity and the salutary principle of non-enrichment at another’s expense, we sustain the appellate court’s order directing Pedro to return to petitioner spouses the value of the consideration for the lot covered by TCT No. T-88674 and the house thereon.

However, this court rules that petitioners cannot claim reimbursements for improvements they introduced after their good faith had ceased.  As correctly found by the Court of Appeals, petitioner Patrocinia Ravina made improvements and renovations on the house and lot at the time when the complaint against them was

filed.  Ravina continued introducing improvements during the pendency of the action.[18]

Thus, Article 449 of the New Civil Code is applicable.  It provides that, “(h)e who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.”[19]

On the last issue, petitioners claim that the decision awarding damages to respondents is not supported by the evidence on record.[20]

The claim is erroneous to say the least.  The manner by which respondent and her children were removed from the family home deserves our condemnation.  On July 5, 1991, while respondent was out and her children were in school, Pedro Villa Abrille acting in connivance with the petitioners[21] surreptitiously transferred all their personal belongings to another place.  The respondents then were not allowed to enter their rightful home or family abode despite their impassioned pleas.

Firmly established in our civil law is the doctrine that: “Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”[22]  When a right is exercised in a manner that does not conform with such norms and results in damages to another, a legal wrong is thereby committed for which the wrong doer must be held responsible.  Similarly, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damages caused.[23]  It is patent in this case that petitioners’ alleged acts fall short of these established civil law standards.

WHEREFORE, we deny the instant petition for lack of merit.  The Decision dated February 21, 2002 and the Resolution dated October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560 are AFFIRMED.

Costs against petitioners.

SO ORDERED.

118YUMI- CIVIL LAW 1

Section 6. Dissolution of the Conjugal Partnership Regime (Articles 126-128)

Partosa-Jo vs. CA GR# 82606 / DEC. 18, 1992

PRIMA PARTOSA-JO, petitioner, vs.THE HONORABLE COURT OF APPEALS and HO HANG (with aliases JOSE JO and CONSING), respondents.

 

CRUZ, J.:

The herein private respondent, Jose Jo, admits to having cohabited with three women and fathered fifteen children. The first of these women, the herein petitioner, claims to be his legal wife whom he begot a daughter, Monina Jo. The other women and their respective offspring are not parties of these case.

In 1980, the petitioner filed a complaint against Jo for judicial separation of conjugal property, docketed as Civil Case No. 51, in addition to an earlier action for support, also against him and docketed as Civil Case No. 36, in the Regional Trial Court of Negros Oriental, Branch 35.

The two cases were consolidated and tried jointly. On November 29, 1983, Judge German G. Lee, Jr. rendered an extensive decision, the dispositive portion of which read:

WHEREFORE, in view of all the foregoing arguments and considerations, this court hereby holds that the plaintiff Prima Partosa was legally married to Jose Jo alias Ho Hang, alias Consing, and, therefore, is entitled to support as the lawfully wedded wife and the defendant is hereby ordered to give a monthly support of P500.00 to the plaintiff Prima Partosa, to be paid on or before the 5th day of every month, and to give to the plaintiff the amount of P40,000.00 for the construction of the house in Zamboanguita, Negros Oriental where she may live separately from the defendant being entitled under the law to separate maintenance being the innocent spouse and to pay the amount of P19,200.00 to the plaintiff by way of support in arrears and to pay the plaintiff the amount of P3,000.00 in the concept of attorney's fees.

As will be noticed, there was a definite disposition of the complaint for support but none of the complaint for judicial separation of conjugal property.

Jo elevated the decision to the Court of Appeals, which affirmed the ruling of the trial

court in the complaint for support. 1 The complaint for judicial separation of conjugal property was dismissed for lack of a cause of action and on the ground that separation by agreement was not covered by Article 178 of the Civil Code.

When their motions for reconsideration were denied, both parties came to this Court for relief. The private respondent's petition for review on certiorari was dismissed for tardiness in our resolution dated February 17, 1988, where we also affirmed the legality of the marriage between Jose and Prima and the obligation of the former to support her and her daughter.

This petition deals only with the complaint for judicial separation of conjugal property.

It is here submitted that the Court of Appeals erred in holding that: a) the judicial separation of conjugal property sought was not allowed under Articles 175, 178 and 191 of the Civil Code; and b) no such separation was decreed by the trial court in the dispositive portion of its decision.

The private respondent contends that the decision of the trial court can longer be reviewed at this time because it has a long since become final and executory. As the decretal portion clearly made no disposition of Civil Case No. 51, that case should be considered impliedly dismissed. The petitioner should have called the attention of the trial court to the omission so that the proper rectification could be made on time. Not having done so, she is now concluded by the said decision, which can no longer be corrected at this late hour.

We deal first with the second ground.

While admitting that no mention was made of Civil Case No. 51 in the dispositive portion of the decision of the trial court, the petitioner argues that a disposition of the case was nonetheless made in the penultimate paragraph of the decision reading as follows:

It is, therefore, hereby ordered that all properties in question are considered properties of Jose Jo, the defendant in this case, subject to separation of property under Article 178, third paragraph of the Civil Code, which is subject of separate proceedings as enunciated herein.

The petitioner says she believed this to be disposition enough and so did not feel it was necessary for her to appeal, particularly since the order embodied in that paragraph was in her favor. It was only when the respondent court observed that there was no dispositive portion regarding that case and so ordered its dismissal that she found it necessary to come to this Court for relief.

The petitioner has a point.

The dispositive portion of the decision in question was incomplete insofar as it carried no ruling on the complaint for judicial separation of conjugal property although it was extensively discussed in the body of the decision. The drafting of the decision was indeed not exactly careful. The petitioner's counsel, noting this, should have taken immediate steps for the rectification for the omission so that the ruling expressed in the text of the decision could have been embodied in the decretal portion. Such alertness could have avoided this litigation on a purely technical issue.

Nevertheless, the technicality invoked in this case should not be allowed to prevail over considerations of substantive justive. After all, the technical defect is not insuperable. We have said time and again that where there is an ambiguity caused by an omission or a mistake in the dispositive portion of the decision, this Court may clarify such an ambiguity by an amendment even after the judgment have become

final. 2 In doing so, the Court may resort to the pleading filed by the parties and the findings of fact and the conclusions of law expressed in the text or body of the

decision. 3

119YUMI- CIVIL LAW 1

The trial court made definite findings on the complaint for judicial separation of conjugal property, holding that the petitioner and the private respondent were legally married and that the properties mentioned by the petitioner were acquired by Jo during their marriage although they were registered in the name of the apparent dummy.

There is no question therefore that the penultimate paragraph of the decision of the trial court was a ruling based upon such findings and so should have been embodied in the dispositive portion. The respondent court should have made the necessary modification instead of dismissing Civil Case No. 51 and thus upholding mere form over substance.

In the interest of substantive justice, and to expedite these proceedings, we hereby make such modification.

And now to the merits of Civil Case No. 51.

The Court of Appeals dismissed the complaint on the ground that the separation of the parties was due to their agreement and not because of abondonment. The respondent court relied mainly on the testimony of the petitioner, who declared under oath that she left Dumaguete City, where she and Jo were living together "because that was our agreement." It held that a agreement to live separately without just cause was void under Article 221 of the Civil Code and could not sustain any claim of abandonment by the aggrieved spouse. Its conclusion was that the only remedy

availabe to the petitioner was legal separation under Article 175 of the Civil Code, 4

by virtue of which the conjugal partnership of property would be terminated.

The petitioner contends that the respondent court has misinterpreted Articles 175, 178 and 191 of the Civil Code. She submits that the agreement between her and the private respondent was for her to temporarily live with her parents during the initial period of her pregnancy and for him to visit and support her. They never agreed to separate permanently. And even if they did, this arrangement was repudiated and ended in 1942, when she returned to him at Dumaguete City and he refused to accept her.

The petitioner invokes Article 178 (3) of the Civil Code, which reads:

Art. 178. The separation in fact between husband and wife without judicial approval, shall not affect the conjugal partnership, except that:

xxx xxx xxx

(3) If the husband has abandoned the wife without just cause for at least one year, she may petition the court for a receivership, or administration by her of the conjugal partnership property or separation of property.

The above-quoted provision has been superseded by Article 128 of the Family Code, which states:

Art. 128. If a spouse without just cause abandons the other or fails to comply with his or her obligations to the family, the aggrieved spouse may petition the court for receivership, for judicial

separation of property, of for authority to be the sole administrator of the conjugal partnership property, subject to such precautionary conditions as the court may impose.

The obligations to the family mentioned in the preceding paragraph refer to martial, parental or property relations.

A spouse is deemed to have abondoned the other when he or she has left the conjugal dwelling without any intention of returning. The spouse who has left the conjugal dwelling for a period of three months or has failed within the same period to give any information as to his or her whereabouts shall be prima facie presumed to have no intention of returning to the conjugal dwelling.

Under the this provision, the aggrieved spouse may petition for judicial separation on either of these grounds:

1. Abondonment by a spouse of the other without just cause; and

2. Failure of one spouse to comply with his or her obligations to the family without just cause, even if she said spouse does not leave the other spouse.

Abandonment implies a departure by one spouse with the avowed intent never to return, followed by prolonged absence without just cause, and without in the

meantime providing in the least for one's family although able to do so. 5 There must be absolute cessation of marital relations, duties and rights, with the intention of

perpetual separation. 6 This idea is clearly expressed in the above-quoted provision, which states that "a spouse is deemed to have abandoned the other when he or she has left the conjugal dwelling without any intention of returning."

The record shows that as early as 1942, the private respondent had already rejected the petitioner, whom he denied admission to their conjugal home in Dumaguete City when she returned from Zamboanguita. The fact that she was not accepted by Jo demonstrates all too clearly that he had no intention of resuming their conjugal relationship. Moreover, beginning 1968 until the determination by this Court of the action for support in 1988, the private respondent refused to give financial support to the petitioner. The physical separation of the parties, coupled with the refusal by the private respondent to give support to the petitioner, sufficed to constitute abandonment as a ground for the judicial separation of their conjugal property.

In addition, the petitioner may also invoke the second ground allowed by Article 128, for the fact is that he has failed without just cause to comply with his obligations to the family as husband or parent. Apart form refusing to admit his lawful wife to their conjugal home in Dumaguete City, Jo has freely admitted to cohabiting with other women and siring many children by them. It was his refusal to provide for the petitioner and their daughter that prompted her to file the actions against him for support and later for separation of the conjugal property, in which actions, significantly, he even denied being married to her. The private respondent has not established any just cause for his refusal to comply with his obligations to his wife as dutiful husband.

120YUMI- CIVIL LAW 1

Their separation thus falls also squarely under Article 135 of the Family Code, providing as follows:

Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property:

xxx xxx xxx

(6) That at the time of the petition, the spouse have been separated in fact for at least one year and reconciliation is highly improbable.

The amendments introduced in the Family Code are applicable to the case before us although they became effective only on August 3, 1988. As we held in Ramirez v.

Court of Appeals: 7

The greater weight of authority is inclined to the view that an appellate court, in reviewing a judgment on appeal, will dispose of a question according to the law prevailing at the term of such disposition, and not according to the law prevailing at the time of rendition of the appealed judgement. The court will therefore reverse a judgement which was correct at the time it was originally rendered where, by statute, there has been an intermediate change in the law which renders such judgement erroneous at the time the case was finally disposed of on appeal.

The order of judicial separation of the properties in question is based on the finding of both the trial and respondent courts that the private respondent is indeed their real owner. It is these properties that should now be divided between him and the petitioner, on the assumption that they were acquired during coverture and so belong to the spouses half and half. As the private respondent is a Chinese citizen, the division must include such properties properly belonging to the conjugal partnership as may have been registered in the name of other persons in violation of the Anti-Dummy Law.

The past has caught up with the private respondent. After his extramarital flings and a succession of illegitimate children, he must now make an accounting to his lawful wife of the properties he denied her despite his promise to their of his eternal love and care.

WHEREFORE, the petition is GRANTED and the assailed decision of the respondent court is MODIFIED. Civil Case No. 51 is hereby decided in favor the plaintiff, the petitioner herein, and the conjugal property of the petitioner and the private respondent is hereby ordered divided between them, share and share alike. This division shall be implemented by the trial court after determination of all the properties pertaining to the said conjugal partnership, including those that may have been illegally registered in the name of the persons.

SO ORDERED.

Padilla, Griño-Aquino and Bellosillo, JJ., concur.

Alipio vs. CA GR# 134100 / SEPT. 29, 2000

-Collection of suits against the partnership; death of a spouse

PURITA ALIPIO, Petitioner, vs. COURT OF APPEALS and ROMEO G. JARING, represented by his Attorney-In-Fact RAMON G. JARING, Respondents.

D E C I S I O N

MENDOZA, J.:

The question for decision in this case is whether a creditor can sue the surviving spouse for the collection of a debt which is owed by the conjugal partnership of gains, or whether such claim must be filed in proceedings for the settlement of the estate of the decedent. The trial court and the Court of Appeals ruled in the affirmative. We reverse.

The facts are as follows:

Respondent Romeo Jaring[1 was the lessee of a 14.5 hectare fishpond in Barito, Mabuco, Hermosa, Bataan. The lease was for a period of five years ending on September 12, 1990. On June 19, 1987, he subleased the fishpond, for the remaining period of his lease, to the spouses Placido and Purita Alipio and the spouses Bienvenido and Remedios Manuel. The stipulated amount of rent was P485,600.00, payable in two installments of P300,000.00 and P185,600.00, with the second installment falling due on June 30, 1989. Each of the four sublessees signed the contract.

The first installment was duly paid, but of the second installment, the sublessees only satisfied a portion thereof, leaving an unpaid balance of P50,600.00. Despite due demand, the sublessees failed to comply with their obligation, so that, on October 13, 1989, private respondent sued the Alipio and Manuel spouses for the collection of the said amount before the Regional Trial Court, Branch 5, Dinalupihan, Bataan. In the alternative, he prayed for the rescission of the sublease contract should the defendants fail to pay the balance.

Petitioner Purita Alipio moved to dismiss the case on the ground that her husband, Placido Alipio, had passed away on December 1, 1988.[2 She based her action on Rule 3, 21 of the 1964 Rules of Court which then provided that "when the action is for recovery of money, debt or interest thereon, and the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the manner especially provided in these rules." This provision has been amended so that now Rule 3, 20 of the 1997 Rules of Civil Procedure provides:

When the action is for the recovery of money arising from contract, express or implied, and the defendant dies before entry of final judgment in the court in which the action was pending at the time of such death, it shall not be dismissed but shall instead be allowed to continue until entry of final judgment. A favorable judgment obtained by the plaintiff therein shall be enforced in the manner especially provided in these Rules for prosecuting claims against the estate of a deceased person.

121YUMI- CIVIL LAW 1

The trial court denied petitioner's motion on the ground that since petitioner was herself a party to the sublease contract, she could be independently impleaded in the suit together with the Manuel spouses and that the death of her husband merely resulted in his exclusion from the case.[3 The Manuel spouses failed to file their answer. For this reason, they were declared in default.

On February 26, 1991, the lower court rendered judgment after trial, ordering petitioner and the Manuel spouses to pay private respondent the unpaid balance of P50,600.00 plus attorney's fees in the amount of P10,000.00 and the costs of the suit.

Petitioner appealed to the Court of Appeals on the ground that the trial court erred in denying her motion to dismiss. In its decision[4 rendered on July 10, 1997, the appellate court dismissed her appeal. It held:

The rule that an action for recovery of money, debt or interest thereon must be dismissed when the defendant dies before final judgment in the regional trial court, does not apply where there are other defendants against whom the action should be maintained. This is the teaching of Climaco v. Siy Uy, wherein the Supreme Court held:

Upon the facts alleged in the complaint, it is clear that Climaco had a cause of action against the persons named as defendants therein. It was, however, a cause of action for the recovery of damages, that is, a sum of money, and the corresponding action is, unfortunately, one that does not survive upon the death of the defendant, in accordance with the provisions of Section 21, Rule 3 of the Rules of Court.

x x x

However, the deceased Siy Uy was not the only defendant, Manuel Co was also named defendant in the complaint. Obviously, therefore, the order appealed from is erroneous insofar as it dismissed the case against Co. (Underlining added)

Moreover, it is noted that all the defendants, including the deceased, were signatories to the contract of sub-lease. The remaining defendants cannot avoid the action by claiming that the death of one of the parties to the contract has totally extinguished their obligation as held in Imperial Insurance, Inc. v. David:

We find no merit in this appeal. Under the law and well settled jurisprudence, when the obligation is a solidary one, the creditor may bring his action in toto against any of the debtors obligated in solidum. Thus, if husband and wife bound themselves jointly and severally, in case of his death, her liability is independent of and separate from her husband's; she may be sued for the whole debt and it would be error to hold that the claim against her as well as the claim against her husband should be made in the decedent's estate. (Agcaoili vs. Vda. de Agcaoili, 90 Phil. 97).[5

Petitioner filed a motion for reconsideration, but it was denied on June 4, 1998.[6 Hence this petition based on the following assignment of errors:

A. THE RESPONDENT COURT COMMITTED REVERSIBLE ERROR IN APPLYING CLIMACO v. SIY UY, 19 SCRA 858, IN SPITE OF THE FACT THAT THE PETITIONER WAS NOT SEEKING THE DISMISSAL OF THE CASE AGAINST REMAINING DEFENDANTS BUT ONLY WITH RESPECT TO THE CLAIM FOR

PAYMENT AGAINST HER AND HER HUSBAND WHICH SHOULD BE PROSECUTED AS A MONEY CLAIM.

B. THE RESPONDENT COURT COMMITTED REVERSIBLE ERROR IN APPLYING IMPERIAL INSURANCE INC. v. DAVID, 133 SCRA 317, WHICH IS NOT APPLICABLE BECAUSE THE SPOUSES IN THIS CASE DID NOT BIND THEMSELVES JOINTLY AND SEVERALLY IN FAVOR OF RESPONDENT JARING.[7

The petition is meritorious. We hold that a creditor cannot sue the surviving spouse of a decedent in an ordinary proceeding for the collection of a sum of money chargeable against the conjugal partnership and that the proper remedy is for him to file a claim in the settlement of estate of the decedent.

First. Petitioner's husband died on December 1, 1988, more than ten months before private respondent filed the collection suit in the trial court on October 13, 1989. This case thus falls outside of the ambit of Rule 3, 21 which deals with dismissals of collection suits because of the death of the defendant during the pendency of the case and the subsequent procedure to be undertaken by the plaintiff, i.e., the filing of claim in the proceeding for the settlement of the decedent's estate. As already noted, Rule 3, 20 of the 1997 Rules of Civil Procedure now provides that the case will be allowed to continue until entry of final judgment. A favorable judgment obtained by the plaintiff therein will then be enforced in the manner especially provided in the Rules for prosecuting claims against the estate of a deceased person. The issue to be resolved is whether private respondent can, in the first place, file this case against petitioner.

Petitioner and her late husband, together with the Manuel spouses, signed the sublease contract binding themselves to pay the amount of stipulated rent. Under the law, the Alipios' obligation (and also that of the Manuels) is one which is chargeable against their conjugal partnership. Under Art. 161(1) of the Civil Code, the conjugal partnership is liable for

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.[8

When petitioner's husband died, their conjugal partnership was automatically dissolved[9 and debts chargeable against it are to be paid in the settlement of estate proceedings in accordance with Rule 73, 2 which states:

Where estate settled upon dissolution of marriage. When the marriage is dissolved by the death of the husband or wife, the community property shall be inventoried, administered, and liquidated, and the debts thereof paid, in the testate or intestate proceedings of the deceased spouse. If both spouses have died, the conjugal partnership shall be liquidated in the testate or intestate proceedings of either.

As held in Calma v. Taedo,[10 after the death of either of the spouses, no complaint for the collection of indebtedness chargeable against the conjugal partnership can be brought against the surviving spouse. Instead, the claim must be made in the proceedings for the liquidation and settlement of the conjugal property. The reason for this is that upon the death of one spouse, the powers of administration of the surviving spouse ceases and is passed to the administrator appointed by the court

122YUMI- CIVIL LAW 1

having jurisdiction over the settlement of estate proceedings.[11 Indeed, the surviving spouse is not even a de facto administrator such that conveyances made by him of any property belonging to the partnership prior to the liquidation of the mass of conjugal partnership property is void.[12

The ruling in Calma v. Taedo was reaffirmed in the recent case of Ventura v. Militante.[13 In that case, the surviving wife was sued in an amended complaint for a sum of money based on an obligation allegedly contracted by her and her late husband. The defendant, who had earlier moved to dismiss the case, opposed the admission of the amended complaint on the ground that the death of her husband terminated their conjugal partnership and that the plaintiff's claim, which was chargeable against the partnership, should be made in the proceedings for the settlement of his estate. The trial court nevertheless admitted the complaint and ruled, as the Court of Appeals did in this case, that since the defendant was also a party to the obligation, the death of her husband did not preclude the plaintiff from filing an ordinary collection suit against her. On appeal, the Court reversed, holding that

as correctly argued by petitioner, the conjugal partnership terminates upon the death of either spouse. . . . Where a complaint is brought against the surviving spouse for the recovery of an indebtedness chargeable against said conjugal [partnership], any judgment obtained thereby is void. The proper action should be in the form of a claim to be filed in the testate or intestate proceedings of the deceased spouse.

In many cases as in the instant one, even after the death of one of the spouses, there is no liquidation of the conjugal partnership. This does not mean, however, that the conjugal partnership continues. And private respondent cannot be said to have no remedy. Under Sec. 6, Rule 78 of the Revised Rules of Court, he may apply in court for letters of administration in his capacity as a principal creditor of the deceased . . . if after thirty (30) days from his death, petitioner failed to apply for administration or request that administration be granted to some other person.[14

The cases relied upon by the Court of Appeals in support of its ruling, namely, Climaco v. Siy Uy[15 and Imperial Insurance, Inc. v. David,[16 are based on different sets of facts. In Climaco, the defendants, Carlos Siy Uy and Manuel Co, were sued for damages for malicious prosecution. Thus, apart from the fact the claim was not against any conjugal partnership, it was one which does not survive the death of defendant Uy, which merely resulted in the dismissal of the case as to him but not as to the remaining defendant Manuel Co.

With regard to the case of Imperial, the spouses therein jointly and severally executed an indemnity agreement which became the basis of a collection suit filed against the wife after her husband had died. For this reason, the Court ruled that since the spouses' liability was solidary, the surviving spouse could be independently sued in an ordinary action for the enforcement of the entire obligation.

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.[17 Thus, when the spouses are sued for the enforcement of an 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 or solidary liability, as between them, does not apply. But even assuming the contrary to be true, the nature of the obligation involved in this case, as will be discussed later, is not solidary but rather merely joint, making Imperial still inapplicable to this case.

From the foregoing, it is clear that private respondent cannot maintain the present suit against petitioner. Rather, his remedy is to file a claim against the Alipios in the proceeding for the settlement of the estate of petitioner's husband or, if none has been commenced, he can file a petition either for the issuance of letters of administration[18 or for the allowance of will,[19 depending on whether petitioner's husband died intestate or testate. Private respondent cannot short-circuit this procedure by lumping his claim against the Alipios with those against the Manuels considering that, aside from petitioner's lack of authority to represent their conjugal estate, the inventory of the Alipios' conjugal property is necessary before any claim chargeable against it can be paid. Needless to say, such power exclusively pertains to the court having jurisdiction over the settlement of the decedent's estate and not to any other court.

Second. The trial court ordered petitioner and the Manuel spouses to pay private respondent the unpaid balance of the agreed rent in the amount of P50,600.00 without specifying whether the amount is to be paid by them jointly or solidarily. In connection with this, Art. 1207 of the Civil Code provides:

The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestations. There is a solidary liability only when the obligation expressly so estates, or when the law or the nature of the obligation requires solidarity.

Indeed, if from the law or the nature or the wording of the obligation the contrary does not appear, an obligation is presumed to be only joint, i.e., the debt is divided into as many equal shares as there are debtors, each debt being considered distinct from one another.[20

Private respondent does not cite any provision of law which provides that when there are two or more lessees, or in this case, sublessees, the latter's obligation to pay the rent is solidary. To be sure, should the lessees or sublessees refuse to vacate the leased property after the expiration of the lease period and despite due demands by the lessor, they can be held jointly and severally liable to pay for the use of the property. The basis of their solidary liability is not the contract of lease or sublease but the fact that they have become joint tortfeasors.[21 In the case at bar, there is no allegation that the sublessees refused to vacate the fishpond after the expiration of the term of the sublease. Indeed, the unpaid balance sought to be collected by private respondent in his collection suit became due on June 30, 1989, long before the sublease expired on September 12, 1990.

Neither does petitioner contend that it is the nature of lease that when there are more than two lessees or sublessees their liability is solidary. On the other hand, the pertinent portion of the contract involved in this case reads:[22

2. That the total lease rental for the sub-leased fishpond for the entire period of three (3) years and two (2) months is FOUR HUNDRED EIGHT-FIVE THOUSAND SIX HUNDRED (P485,600.00) PESOS, including all the improvements, prawns,

123YUMI- CIVIL LAW 1

milkfishes, crabs and related species thereon as well all fishing equipment, paraphernalia and accessories. The said amount shall be paid to the Sub-Lessor by the Sub-Lessees in the following manner, to wit:

A. Three hundred thousand (P300,000.00) Pesos upon signing this contract; and

B. One Hundred Eight-Five Thousand Six-Hundred (P185,6000.00) Pesos to be paid on June 30, 1989.

Clearly, the liability of the sublessees is merely joint. Since the obligation of the Manuel and Alipio spouses is chargeable against their respective conjugal partnerships, the unpaid balance of P50,600.00 should be divided into two so that each couple is liable to pay the amount of P25,300.00.

WHEREFORE, the petition is GRANTED. Bienvenido Manuel and Remedios Manuel are ordered to pay the amount of P25,300.00, the attorney's fees in the amount of P10,000.00 and the costs of the suit. The complaint against petitioner is dismissed without prejudice to the filing of a claim by private respondent in the proceedings for the settlement of estate of Placido Alipio for the collection of the share of the Alipio spouses in the unpaid balance of the rent in the amount of P25,300.00.

SO ORDERED.

Relucio vs. Lopez GR# 138497 / JAN. 16, 2001

The Case

The case is a petition for review on certiorari[1 seeking to set aside the decision[2 of the Court of Appeals that denied a petition for certiorari assailing the trial courts order denying petitioners motion to dismiss the case against her inclusion as party defendant therein.

The Facts

The facts, as found by the Court of Appeals, are as follows:

On September 15, 1993, herein private respondent Angelina Mejia Lopez (plaintiff below) filed a petition for APPOINTMENT AS SOLE ADMINISTRATRIX OF CONJUGAL PARTNERSHIP OF PROPERTIES, FORFEITURE, ETC., against defendant Alberto Lopez and petitioner Imelda Relucio, docketed as Spec. Proc. M-3630, in the Regional Trial Court of Makati, Branch 141. In the petition, private-respondent alleged that sometime in 1968, defendant Lopez, who is legally married to the private respondent, abandoned the latter and their four legitimate children; that he arrogated unto himself full and exclusive control and administration of the conjugal properties, spending and using the same for his sole gain and benefit to the total exclusion of the private respondent and their four children; that defendant Lopez, after abandoning his family, maintained an illicit relationship and cohabited with herein petitioner since 1976.

It was further alleged that defendant Lopez and petitioner Relucio, during their period of cohabitation since 1976, have amassed a fortune consisting mainly of

stockholdings in Lopez-owned or controlled corporations, residential, agricultural, commercial lots, houses, apartments and buildings, cars and other motor vehicles, bank accounts and jewelry. These properties, which are in the names of defendant Lopez and petitioner Relucio singly or jointly or their dummies and proxies, have been acquired principally if not solely through the actual contribution of money, property and industry of defendant Lopez with minimal, if not nil, actual contribution from petitioner Relucio.

In order to avoid defendant Lopez obligations as a father and husband, he excluded the private respondent and their four children from sharing or benefiting from the conjugal properties and the income or fruits there from. As such, defendant Lopez either did not place them in his name or otherwise removed, transferred, stashed away or concealed them from the private-respondent. He placed substantial portions of these conjugal properties in the name of petitioner Relucio.

It was also averred that in the past twenty five years since defendant Lopez abandoned the private-respondent, he has sold, disposed of, alienated, transferred, assigned, canceled, removed or stashed away properties, assets and income belonging to the conjugal partnership with the private-respondent and either spent the proceeds thereof for his sole benefit and that of petitioner Relucio and their two illegitimate children or permanently and fraudulently placed them beyond the reach of the private-respondent and their four children.

On December 8, 1993, a Motion to Dismiss the Petition was filed by herein petitioner on the ground that private respondent has no cause of action against her.

An Order dated February 10, 1994 was issued by herein respondent Judge denying petitioner Relucios Motion to Dismiss on the ground that she is impleaded as a necessary or indispensable party because some of the subject properties are registered in her name and defendant Lopez, or solely in her name.

Subsequently thereafter, petitioner Relucio filed a Motion for Reconsideration to the Order of the respondent Judge dated February 10, 1994 but the same was likewise denied in the Order dated May 31, 1994.[3

On June 21, 1994, petitioner filed with the Court of Appeals a petition for certiorari assailing the trial courts denial of her motion to dismiss.[4

On May 31, 1996, the Court of Appeals promulgated a decision denying the petition.[5 On June 26, 1996, petitioner filed a motion for reconsideration.[6 However, on April 6, 1999, the Court of Appeals denied petitioners motion for reconsideration.[7

Hence, this appeal.[8

The Issues

1. Whether respondents petition for appointment as sole administratrix of the conjugal property, accounting, etc. against her husband Alberto J. Lopez established a cause of action against petitioner.

2. Whether petitioners inclusion as party defendant is essential in the proceedings for a complete adjudication of the controversy.[9

The Courts Ruling

124YUMI- CIVIL LAW 1

We grant the petition. We resolve the issues in seriatim.

First issue: whether a cause of action exists against petitioner in the proceedings below. A cause of action is an act or omission of one party the defendant in violation of the legal right of the other.[10 The elements of a cause of action are:

(1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created;

(2) an obligation on the part of the named defendant to respect or not to violate such right; and

(3) an act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages.[11

A cause of action is sufficient if a valid judgment may be rendered thereon if the alleged facts were admitted or proved.[12

In order to sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been merely defectively stated or is ambiguous, indefinite or uncertain.[13

Hence, to determine the sufficiency of the cause of action alleged in Special Proceedings M-3630, we assay its allegations.

In Part Two on the Nature of [the] Complaint, respondent Angelina Mejia Lopez summarized the causes of action alleged in the complaint below.

The complaint is by an aggrieved wife against her husband.

Nowhere in the allegations does it appear that relief is sought against petitioner. Respondents causes of action were all against her husband.

The first cause of action is for judicial appointment of respondent as administratrix of the conjugal partnership or absolute community property arising from her marriage to Alberto J. Lopez. Petitioner is a complete stranger to this cause of action. Article 128 of the Family Code refers only to spouses, to wit:

If a spouse without just cause abandons the other or fails to comply with his or her obligations to the family, the aggrieved spouse may petition the court for receivership, for judicial separation of property, or for authority to be the sole administrator of the conjugal partnership property xxx

The administration of the property of the marriage is entirely between them, to the exclusion of all other persons. Respondent alleges that Alberto J. Lopez is her husband. Therefore, her first cause of action is against Alberto J. Lopez. There is no right-duty relation between petitioner and respondent that can possibly support a cause of action. In fact, none of the three elements of a cause of action exists.

The second cause of action is for an accounting by respondent husband.[14 The accounting of conjugal partnership arises from or is an incident of marriage.

Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez. Hence, no cause of action can exist against petitioner on this ground.

Respondents alternative cause of action is for forfeiture of Alberto J. Lopez share in the co-owned property acquired during his illicit relationship and cohabitation with [petitioner][15 and for the dissolution of the conjugal partnership of gains between him [Alberto J. Lopez] and the [respondent].

The third cause of action is essentially for forfeiture of Alberto J. Lopez share in property co-owned by him and petitioner. It does not involve the issue of validity of the co-ownership between Alberto J. Lopez and petitioner. The issue is whether there is basis in law to forfeit Alberto J. Lopez share, if any there be, in property co-owned by him with petitioner.

Respondents asserted right to forfeit extends to Alberto J. Lopez share alone. Failure of Alberto J. Lopez to surrender such share, assuming the trial court finds in respondents favor, results in a breach of an obligation to respondent and gives rise to a cause of action.[16 Such cause of action, however, pertains to Alberto J. Lopez, not petitioner.

The respondent also sought support. Support cannot be compelled from a stranger.

The action in Special Proceedings M-3630 is, to use respondent Angelina M. Lopez own words, one by an aggrieved wife against her husband.[17 References to petitioner in the common and specific allegations of fact in the complaint are merely incidental, to set forth facts and circumstances that prove the causes of action alleged against Alberto J. Lopez.

Finally, as to the moral damages, respondents claim for moral damages is against Alberto J. Lopez, not petitioner.

To sustain a cause of action for moral damages, the complaint must have the character of an action for interference with marital or family relations under the Civil Code.

A real party in interest is one who stands to be benefited or injured by the judgment of the suit.[18 In this case, petitioner would not be affected by any judgment in Special Proceedings M-3630.

If petitioner is not a real party in interest, she cannot be an indispensable party. An indispensable party is one without whom there can be no final determination of an action.[19 Petitioners participation in Special Proceedings M-3630 is not indispensable. Certainly, the trial court can issue a judgment ordering Alberto J. Lopez to make an accounting of his conjugal partnership with respondent, and give support to respondent and their children, and dissolve Alberto J. Lopez conjugal partnership with respondent, and forfeit Alberto J. Lopez share in property co-owned by him and petitioner. Such judgment would be perfectly valid and enforceable against Alberto J. Lopez.

Nor can petitioner be a necessary party in Special Proceedings M-3630. A necessary party as one who is not indispensable but who ought to be joined as party if complete relief is to be accorded those already parties, or for a complete determination or settlement of the claim subject of the action.[20 In the context of her petition in the lower court, respondent would be accorded complete relief if Alberto J. Lopez were ordered to account for his alleged conjugal partnership property with respondent, give support to respondent and her children, turn over his share in the co-ownership with

125YUMI- CIVIL LAW 1

petitioner and dissolve his conjugal partnership or absolute community property with respondent.

The Judgment

WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the Court of Appeals.[21 The Court DISMISSES Special Proceedings M-3630 of the Regional Trial Court, Makati, Branch 141as against petitioner.

No costs.

SO ORDERED.

373 SCRA 578De Ugalde v. De Ysasi GR# 130623 / FEB. 29, 2008

LOREA DE UGALDE, Petitioner, vs. JON DE YSASI, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

Before the Court is a petition for review[1] assailing the 21 November 1996 Decision[2] and 2 September 1997 Resolution[3] of the Court of Appeals in CA-G.R. CV No. 41121.

The Antecedent Facts

On 15 February 1951, Lorea de Ugalde (petitioner) and Jon de Ysasi (respondent) got married before Municipal Judge Remigio Peña of Hinigaran, Negros Occidental. On 1 March 1951,[4] Rev. Msgr. Flaviano Arriola solemnized their church wedding at the San Sebastian Cathedral in Bacolod City. Petitioner and respondent did not execute any ante-nuptial agreement. They had a son named Jon de Ysasi III.

Petitioner and respondent separated sometime in April 1957.[5] On 26 May 1964, respondent allegedly contracted another marriage with Victoria Eleanor Smith (Smith) before Judge Lucio M. Tanco of Pasay City. Petitioner further alleged that respondent and Smith had been acquiring and disposing of real and personal properties to her prejudice as the lawful wife. Petitioner alleged that she had been defrauded of rental income, profits, and fruits of their conjugal properties.

On 12 December 1984, petitioner filed a petition for dissolution of the conjugal partnership of gains against respondent before the Regional Trial Court of Negros Occidental, Bacolod City, Branch 48 (trial court). The case was docketed as Special Proceedings No. 3330. In particular, petitioner asked for her conjugal share in respondent’s inheritance as per the settlement of the estate of respondent’s

parents, Juan Ysasi[6] and Maria Aldecoa de Ysasi, who died on 17 November 1975 and 25 February 1979, respectively.[7] Petitioner also prayed for a monthly support of P5,000 to be deducted from her share in the conjugal partnership; the appointment of a receiver during the pendency of the litigation; the annulment of all contracts, agreements, and documents signed and ratified by respondent with third persons without her consent; and payment of appearance and attorney’s fees.

Respondent countered that on 2 June 1961, he and petitioner entered into an agreement which provided, among others, that their conjugal partnership of gains shall be deemed dissolved as of 15 April 1957. Pursuant to the agreement, they submitted an Amicable Settlement in Civil Case No. 4791[8] then pending before the Court of First Instance of Negros Occidental (CFI). The Amicable Settlement stipulates:

2. That the petitioner shall pay the respondent the sum of THIRTY THOUSAND PESOS (P30,000.00) in full satisfaction of and/or consideration for and to cover any and all money and/or property claims she has or may have against the petitioner in the future, including but not limited to pensions, allowances, alimony, support, share in the conjugal property (if any), inheritance, etc.;

3. That for and in consideration of the foregoing premises and the payment of THIRTY THOUSAND pesos (P30,000.00), the receipt of which sum is hereby acknowledged and confessed by and to the entire satisfaction of the respondent, she hereby completely and absolutely transfer, convey, assign, set over, waive, remise, release and forever quitclaim, unto petitioner, his successors and administrators, any and all rights, claims and interests which the respondent has or may hereafter have against the petitioner arising, directly or indirectly, from the fact that the petitioner and respondent were married on March 1, 1951, including but not limited to any and all money and/or property claims mentioned in the paragraph immediately preceding;

4. That, except with reference to the custody of the boy, the parties herein hereby waive any and all rights to question the validity and effectivity of the provisions of this amicable settlement, as well as the right to raise these matters on appeal[.][9]

In its Order[10] dated 6 June 1961, the CFI approved the Amicable Settlement.

Respondent further alleged that petitioner already obtained a divorce from him before the Supreme Court of Mexico. Petitioner then contracted a second marriage with Richard Galoway (Galoway). After Galoway’s death, petitioner contracted a third marriage with Frank Scholey. Respondent moved for the dismissal of the petition for dissolution of the conjugal partnership of gains on the grounds of estoppel, laches, and res judicata.

In his Supplemental Affirmative Defense, respondent alleged that the marriage

126YUMI- CIVIL LAW 1

between him and petitioner was void because it was executed without the benefit of a marriage license.

The Ruling of the Trial Court

On 22 November 1991, the trial court[11] rendered judgment as follows:

WHEREFORE, after collating the evidence, the evidence for the respondent is preponderant to prove his affirmative and special defenses that the petition does not state a sufficient cause of action. On these bases and under the doctrine of res judicata, the petition is hereby DISMISSED. Without pronouncements as to costs and attorney’s fees.

SO ORDERED.[12]

The trial court ruled that the existence of a conjugal partnership of gains is predicated on a valid marriage. Considering that the marriage between petitioner and respondent was solemnized without a marriage license, the marriage was null and void, and no community of property was formed between them. The trial court further ruled that assuming that the marriage was valid, the action was barred by res judicata. The trial court noted that petitioner and respondent entered into an amicable settlement in Civil Case No. 4791. The amicable settlement was approved by the CFI and petitioner may no longer repudiate it. Finally, the trial court ruled that there was no proof to show that during their union, petitioner and respondent acquired properties.

Petitioner appealed from the trial court’s Decision before the Court of Appeals.

The Ruling of the Court of Appeals

On 21 November 1996, the Court of Appeals affirmed the trial court’s Decision.

The Court of Appeals ruled that the absence of a marriage license is fatal and made the marriage between petitioner and respondent a complete nullity. Hence, the trial court did not err in finding that there was no conjugal partnership of gains between petitioner and respondent. The Court of Appeals further ruled that the compromise agreement is a valid contract between the parties Since the compromise agreement was entered into freely, voluntarily, and with the full understanding of its consequences, it is conclusive and binding on the parties. The Court of Appeals also ruled that the action was barred by laches since it was filed by petitioner 23 years from the time the CFI approved the additional amicable settlement in Civil Case No. 4791. The Court of Appeals sustained the trial court’s ruling that respondent’s right over the estate of his deceased parents was only inchoate and there was no evidence that petitioner and respondent acquired any property that could be considered conjugal.

Petitioner filed a motion for reconsideration. In its 2 September 1997 Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition before this Court, raising the following assignment of errors:

The lower court erred in ruling that since the marriage of the plaintiff and respondent was void due to the absence of a marriage license, no conjugal partnership arose from their union.

The lower court erred in ruling that the amicable settlement in Civil Case No. 4791 bars all claims by the plaintiff under the principle of res judicata.

The lower court erred in ruling that respondent’s right to [the] estate of his deceased parents was merely inchoate, thus, no property devolved to respondent and no conjugal partnership was formed.

The lower court erred in ruling that the appellant’s petition did not sufficiently state a cause of action.[13]

The Issue

The issue in this case is whether the Court of Appeals committed a reversible error in affirming the trial court’s Decision which dismissed the action for dissolution of conjugal partnership of gains.

The Ruling of this Court

The petition is without merit.

Validity of Petitioner and Respondent’s Marriageis the Subject of a Different Court Proceeding

Special Proceedings No. 3330 is an action for Dissolution of Conjugal Partnership of Gains. In its 22 November 1991 Decision, the trial court ruled that the existence of conjugal partnership of gains is predicated on a valid marriage. The trial court then proceeded to rule on the validity of petitioner and respondent’s marriage. The trial court ruled that it was shown by competent evidence that petitioner and respondent failed to obtain a marriage license. Hence, the marriage between petitioner and respondent was null and void, and no community of property was formed between them.

The trial court exceeded its jurisdiction in ruling on the validity of petitioner and respondent’s marriage, which was only raised by respondent as a defense to the action for dissolution of the conjugal partnership of gains. The validity of petitioner and respondent’s marriage was the subject of another action, Civil Case No. 430 for Judicial Declaration of Absolute Nullity of Marriage before the Regional Trial Court of Himamaylan, Negros Occidental, Branch 55. In a Decision[14] dated 31 May 1995, Civil Case No. 430 was resolved, as follows:

In this jurisdiction it is required, except in certain cases, that the marriage license must first be secured by the parties and shown to the judge before the latter can competently solemnize the marriage. In this present case, none was ever secured. Failure to comply with the formal and essential requirements of the law renders the marriage void ab initio. Since void marriage can be assailed anytime as the action on

127YUMI- CIVIL LAW 1

assailing it does not prescribe, the plaintiff is well within his right to seek judicial relief.

WHEREFORE, premises considered[,] judgment is hereby rendered declaring the marriage between JON A. DE YSASI and LOREA DE UGALDE as NULL and VOID AB INITIO. The Local Civil Registrar for the Municipality of Hinigaran is hereby directed to cancel the entry of marriage between JON A. DE YSASI and LOREA DE UGALDE from the Marriage register and to render the same of no force and effect.

Lastly, furnish copy of this decision the National Census and Statistics Office, Manila, to make the necessary cancellation of the entry of marriage between the plaintiff and the defendant.

SO ORDERED.[15]

No appeal or motion for reconsideration of the 31 May 1995 Decision in Civil Case No. 430 has been filed by any of the parties, and a Certification of finality was issued on 20 November 1995. Thus, the marriage between petitioner and respondent was already judicially annulled as of 20 November 1995. The trial court had no jurisdiction to annul again in Special Proceedings No. 3330 the marriage of petitioner and respondent.

Conjugal Partnership of Gains Dissolvedin Civil Case No. 4791

The finality of the 6 June 1961 CFI Order in Civil Case No. 4791 resulted in the dissolution of the petitioner and respondent’s conjugal partnership of gains.

Petitioner and respondent were married on 15 February 1951. The applicable law at the time of their marriage was Republic Act No. 386, otherwise known as the Civil Code of the Philippines (Civil Code) which took effect on 30 August 1950.[16] Pursuant to Article 119 of the Civil Code, the property regime of petitioner and respondent was conjugal partnership of gains, thus:

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.

Article 142 of the Civil Code defines conjugal partnership of gains, as follows:

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.

Under Article 175 of the Civil Code, the judicial separation of property results in the termination of the conjugal partnership of gains:

Art. 175. The conjugal partnership of gains terminates:

(1) Upon the death of either spouse;(2) When there is a decree of legal separation;(3) When the marriage is annulled;(4) In case of judicial separation of property under Article 191. (Emphasis supplied)

The finality of the 6 June 1961 Order in Civil Case No. 4791 approving the parties’ separation of property resulted in the termination of the conjugal partnership of gains in accordance with Article 175 of the Family Code. Hence, when the trial court decided Special Proceedings No. 3330, the conjugal partnership between petitioner and respondent was already dissolved.

Petitioner alleges that the CFI had no authority to approve the Compromise Agreement because the case was for custody, and the creditors were not given notice by the parties, as also required under Article 191 of the Civil Code. Petitioner cannot repudiate the Compromise Agreement on this ground. A judgment upon a compromise agreement has all the force and effect of any other judgment, and conclusive only upon parties thereto and their privies, and not binding on third persons who are not parties to it.[17]

The Amicable Settlement had become final as between petitioner and respondent when it was approved by the CFI on 6 June 1961. The CFI’s approval of the Compromise Agreement on 6 June 1961 resulted in the dissolution of the conjugal partnership of gains between petitioner and respondent on even date.

WHEREFORE, we DENY the petition. We AFFIRM the result of the 21 November 1996 Decision and of the 2 September 1997 Resolution of the Court of Appeals in CA-G.R. CV No. 41121.

SO ORDERED.

MBTC v. Pascual GR# 163744 / FEB. 29, 2008

Metropolitan Bank & Trust Co. Vs. Pascual.

Respondent Nicholson Pascual and Florencia Nevalga were married on January 19, 1985.  During the union, Florencia bought from spouses Clarito and Belen Sering a 250-square meter lot with a three-door apartment standing thereon located in Makati City.  Subsequently, Transfer Certificate of Title (TCT) No. S-101473/T-510 covering

128YUMI- CIVIL LAW 1

the purchased lot was canceled and, in lieu thereof, TCT No. 156283[1] of the Registry of Deeds of Makati City was issued in the name of Florencia, “married to Nelson Pascual” a.k.a. Nicholson Pascual.

 In 1994, Florencia filed a suit for the declaration of nullity of marriage under

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

 On April 30, 1997, Florencia, together with spouses Norberto and Elvira

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

 Due to the failure of Florencia and the spouses Oliveros to pay their loan

obligation when it fell due, Metrobank, on November 29, 1999, initiated foreclosure proceedings under Act No. 3135, as amended, before the Office of the Notary Public of Makati City. Subsequently, Metrobank caused the publication of the notice of sale on three issues of Remate.[3]  At the auction sale on January 21, 2000, Metrobank emerged as the highest bidder.

 Getting wind of the foreclosure proceedings, Nicholson filed on June 28,

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

  Metrobank, in its Answer with Counterclaim and Cross-Claim,[4] alleged

that the disputed lot, being registered in Florencia’s name, was paraphernal.  Metrobank also asserted having approved the mortgage in good faith.

 Florencia did not file an answer within the reglementary period and, hence,

was subsequently declared in default. 

The RTC Declared the REM Invalid

 After trial on the merits, the RTC rendered, on September 24, 2001,

judgment finding for Nicholson. The fallo reads:

 PREMISES CONSIDERED, the Court renders judgment

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

 The Court further orders defendants [Metrobank and

Florencia] jointly and severally to pay plaintiff [Nicholson]: 1.      PhP100,000.00 by way of moral damages;2.      PhP75,000.00 by way of attorney’s fees; and3.      The costs. SO ORDERED.[5]

  Even as it declared the invalidity of the mortgage, the trial court found the

said lot to be conjugal, the same having been acquired during the existence of the marriage of Nicholson and Florencia.  In so ruling, the RTC invoked Art. 116 of the Family Code, providing that “all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.” To the trial court, Metrobank had not overcome the presumptive conjugal nature of the lot.  And being conjugal, the RTC concluded that the disputed property may not be validly encumbered by Florencia without Nicholson’s consent.

 The RTC also found the deed of waiver Florencia submitted to Metrobank to

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

 The trial court also declared Metrobank as a mortgagee in bad faith on

account of negligence, stating the observation that certain data appeared in the supporting contract documents, which, if properly scrutinized, would have put the bank on guard against approving the mortgage.  Among the data referred to was the date of execution of the deed of waiver. 

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

ex-spouses.  Metrobank’s motion for reconsideration was denied.  Undeterred, Metrobank

appealed to the Court of Appeals (CA), the appeal docketed as CA-G.R. CV No. 74874.

 The CA Affirmed with Modification the RTC’s Decision

 

129YUMI- CIVIL LAW 1

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

 WHEREFORE, premises considered, the appealed

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

 SO ORDERED.[6]

 Like the RTC earlier held, the CA ruled that Metrobank failed to overthrow

the presumption established in Art. 116 of the Family Code. And also decreed as going against Metrobank was Florencia’s failure to comply with the prescriptions of the succeeding Art. 124 of the Code on the disposition of conjugal partnership property. Art. 124 states:

 Art. 124.  The administration and enjoyment of the

conjugal partnership property shall belong to both spouses jointly.  In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy x x x.

 In the event that one spouse is incapacitated or otherwise

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

  As to the deletion of the award of moral damages and attorney’s fees, the

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

 Metrobank moved but was denied reconsideration by the CA.

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

 a.                   Whether or not the [CA] erred in declaring subject

property as conjugal by applying Article 116 of the Family Code.

 

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

 c.                 Whether or not the [CA] erred in ruling that the

petitioner is an innocent purchaser for value.[7]    

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

 The Disputed Property is Conjugal

 It is Metrobank’s threshold posture that Art. 160 of the Civil Code providing

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

 To bolster its thesis on the paraphernal nature of the disputed property,

Metrobank cites Francisco v. Court of Appeals[9] and Jocson v. Court of Appeals,[10] among other cases, where this Court held that a property registered in the name of a certain person with a description of being married is no proof that the property was acquired during the spouses’ marriage.

 On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance

Corporation[11] and Wong v. IAC,[12]  contends that Metrobank failed to overcome the legal presumption that the disputed property is conjugal.  He asserts that Metrobank’s arguments on the matter of presumption are misleading as only one postulate needs to be shown for the presumption in favor of conjugal ownership to arise, that is, the fact of acquisition during marriage. Nicholson dismisses, as inapplicable, Francisco and Jocson, noting that they are relevant only when there is no indication as to the exact date of acquisition of the property alleged to be conjugal. 

 As a final point, Nicholson invites attention to the fact that Metrobank had

virtually recognized the conjugal nature of the property in at least three instances. The first was when the bank lumped him with Florencia in Civil Case No. 00-789 as co-mortgagors and when they were referred to as “spouses” in the petition for extrajudicial foreclosure of mortgage. Then came the published notice of foreclosure

130YUMI- CIVIL LAW 1

sale where Nicholson was again designated as co-mortgagor. And third, in its demand-letter[13] to vacate the disputed lot, Metrobank addressed Nicholson and Florencia as “spouses,” albeit the finality of the decree of nullity of marriage between them had long set in.

 We find for Nicholson. First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not

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

 Petitioners also overlook Article 160 of the New Civil

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

  

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

 Metrobank is wrong. As Nicholson aptly points out, if proof obtains on the

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

  The Court, to be sure, has taken stock of Nicholson’s arguments regarding

Metrobank having implicitly acknowledged, thus being in virtual estoppel to question, the conjugal ownership of the disputed lot, the bank having named the former in the foreclosure proceedings below as either the spouse of Florencia or her co-mortgagor. It is felt, however, that there is no compelling reason to delve into the matter of

estoppel, the same having been raised only for the first time in this petition.  Besides, however Nicholson was designated below does not really change, one way or another, the classification of the lot in question.

 Termination of Conjugal Property Regime does

not ipso facto End the Nature of Conjugal Ownership  Metrobank next maintains that, contrary to the CA’s holding, Art. 129 of the

Family Code is inapplicable.  Art. 129 in part reads:   Art. 129.  Upon the dissolution of the conjugal partnership

regime, the following procedure shall apply: x  x  x  x (7)  The net remainder of the conjugal partnership

properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code.

  Apropos the aforequoted provision, Metrobank asserts that the waiver

executed by Nicholson, effected as it were before the dissolution of the conjugal property regime, vested on Florencia full ownership of all the properties acquired during the marriage.

 Nicholson counters that the mere declaration of nullity of marriage, without

more, does not automatically result in a regime of complete separation when it is shown that there was no liquidation of the conjugal assets.

 We again find for Nicholson. While the declared nullity of marriage of Nicholson and Florencia severed

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

 In Dael v. Intermediate Appellate Court, we ruled that pending its liquidation

following its dissolution, the conjugal partnership of gains is converted into an implied

131YUMI- CIVIL LAW 1

ordinary co-ownership among the surviving spouse and the other heirs of the deceased.[17]

 In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the

property relationship between the former spouses, where:             Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved.  But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (Emphasis supplied.)  In the case at bar, Florencia constituted the mortgage on the disputed lot on

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

   The conclusion would have, however, been different if Nicholson indeed

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

   Upon the foregoing perspective, Metrobank’s right, as mortgagee and as the

successful bidder at the auction of the lot, is confined only to the 1/2 undivided portion thereof heretofore pertaining in ownership to Florencia.  The other undivided half belongs to Nicholson. As owner pro indiviso of a portion of the lot in question, Metrobank may ask for the partition of the lot and its property rights “shall be limited to the portion which may be allotted to [the bank] in the division upon the termination of the co-ownership.”[18] This disposition is in line with the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so––quando res non valet ut ago, valeat quantum valere potest.[19]

 In view of our resolution on the validity of the auction of the lot in favor of

Metrobank, there is hardly a need to discuss at length whether or not Metrobank was

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

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

 WHEREFORE, the petition is PARTLY GRANTED.  The appealed Decision

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

 As modified, the Decision of the RTC shall read: 

          PREMISES CONSIDERED, the real estate mortgage on the property covered by TCT No. 156283 of the Registry of Deeds of Makati City and all proceedings thereon are NULL and VOID with respect to the undivided 1/2 portion of the disputed property owned by Nicholson, but VALID with respect to the other undivided 1/2 portion belonging to Florencia.           The claims of Nicholson for moral damages and attorney’s fees are DENIED for lack of merit.           No pronouncement as to costs.

           SO ORDERED.

 

132YUMI- CIVIL LAW 1

133YUMI- CIVIL LAW 1