G.R. No.

193038, March 11, 2015

JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B. NUEGA, Respondent.

DECISION

VILLARAMA, JR., J.:

At bar is a petition for review on certiorari of the Decision 1 dated May 14, 2010 and the
Resolution2 dated July 21, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 70235,
which affirmed with modification the assailed Decision3 dated February 14, 2001 of the
Regional Trial Court (RTC) of Marikina City, Branch 273, in Civil Case No. 96-274-MK.

The following facts are found by the trial court and affirmed by the appellate court:

Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on

September 1, 1990.4 Sometime in 1988 when the parties were still engaged, Shirley was
working as a domestic helper in Israel. Upon the request of Rogelio, Shirley sent him
money5 for the purchase of a residential lot in Marikina where they had planned to eventually
build their home. Rogelio was then also working abroad as a seaman. The following year, or
on September 13, 1989, Rogelio purchased the subject house and lot for One Hundred Two
Thousand Pesos (P102,000.00)6 from Rodeanna Realty Corporation. The subject property
has an aggregate area of one hundred eleven square meters (111 sq. m.) covered by
Transfer Certificate of Title (TCT) No. N-133844.7 Shirley claims that upon her arrival in the
Philippines sometime in 1989, she settled the balance for the equity over the subject property
with the developer through SSS8 financing. She likewise paid for the succeeding monthly
amortizations. On October 19, 1989, TCT No. 1719639 over the subject property was issued
by the Registry of Deeds of Marikina, Rizal solely under the name of Rogelio.

On September 1, 1990, Shirley and Rogelio got married and lived in the subject property. The
following year, Shirley returned to Israel for work. While overseas, she received information
that Rogelio had brought home another woman, Monica Escobar, into the family home. She
also learned, and was able to confirm upon her return to the Philippines in May 1992, that
Rogelio had been introducing Escobar as his wife.

In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the
Provincial Prosecution Office of Rizal, and another for Legal Separation and Liquidation of
Property before the RTC of Pasig City. Shirley later withdrew the complaint for legal
separation and liquidation of property, but re-filed10 the same on January 29, 1993. In
between the filing of these cases, Shirley learned that Rogelio had the intention of selling the
subject property. Shirley then advised the interested buyers - one of whom was their neighbor
and petitioner Josefina V. Nobleza (petitioner) - of the existence of the cases that she had
filed against Rogelio and cautioned them against buying the subject property until the cases
are closed and terminated. Nonetheless, under a Deed of Absolute Sale11 dated December
29, 1992, Rogelio sold the subject property to petitioner without Shirley's consent in the
amount of Three Hundred Eighty Thousand Pesos (P380,000.00), including petitioner's
undertaking to assume the existing mortgage on the property with the National Home
Mortgage Finance Corporation and to pay the real property taxes due thereon.

Meanwhile, in a Decision12 dated May 16, 1994, the RTC of Pasig City, Branch 70, granted
the petition for legal separation and ordered the dissolution and liquidation of the regime of
absolute community of property between Shirley and Rogelio, viz.:chanroblesvirtuallawlibrary

WHEREFORE, in view of the foregoing, the Court hereby grants the instant
petition for legal separation between the subject spouses with all its legal
effects as provided for in Art. 63 of the Family Code. Their community
property is consequently dissolved and must be liquidated in accordance with
Art. 102 of the New Family Code. The respondent is thus hereby enjoined
from selling, encumbering or in any way disposing or alienating any of their
 community property including the subject house and lot before the required
liquidation. Moreover, he, being the guilty spouse, must forfeit the net profits
of the community property in favor of the petitioner who is the innocent
spouse pursuant to Art. 43 of the aforesaid law. Finally, in the light of the
claim of ownership by the present occupants who have not been impleaded
in the instant case, a separate action must be instituted by the petitioner
against the alleged buyer or buyers thereof to determine their respective
rights thereon.

Let a copy of this decision be furnished the Local Civil Registrar of Manila,
the Register of Deeds of Marikina, Metro Manila and the National Statistics
Office (NSO), sta. Mesa, Manila.

SO ORDERED.13cralawlawlibrary
Rogelio appealed the above-quoted ruling before the CA which denied due course and
dismissed the petition. It became final and executory and a writ of execution was issued in
August 1995.14

On August 27, 1996, Shirley instituted a Complaint 15 for Rescission of Sale and Recoveiy of
Property against petitioner and Rogelio before the RTC of Marikina City, Branch 273. After
trial on the merits, the trial court rendered its decision on February 14,
2001, viz.:chanroblesvirtuallawlibrary
WHEREFORE, foregoing premises considered, judgment is hereby rendered
in favor of plaintiff Shirley Nuega and against defendant Josefina Nobleza, as
follows:

the Deed of Absolute Sale dated December 29, 1992 insofar as the 55.05 square meters
1) representing the one half (1/2) portion of plaintiff Shirley Nuega is concerned, is hereby
ordered rescinded, the same being null and void;

defendant Josefina Nobleza is ordered to reconvey said 55.05 square meters to plaintiff
2) Shirley Nuega, or in the alternative to pay plaintiff Shirley Nuega the present market
value of said 55.05 square meters; and

to pay plaintiff Shirley Nuega attorney's fees in the sum of Twenty Thousand Pesos
3)
(P20,000.00).

For lack of merit, defendant's counterclaim is hereby DENIED.

SO ORDERED.16
Petitioner sought recourse with the CA, while Rogelio did not appeal the ruling of the trial
court. In its assailed Decision promulgated on May 14, 2010, the appellate court affirmed with
modification the trial court's ruling, viz.:chanroblesvirtuallawlibrary
WHEREFORE, subject to the foregoing disquisition, the appeal is DENIED.
The Decision dated 14 February 2001 of the Regional Trial Court of Marikina
City, Branch 273 in Civil Case No. 96-274-
MK is AFFIRMED with MODIFICATION in that the Deed of Absolute Sale
dated 29 December 1992 is hereby declared null and void in its entirety, and
defendant-appellant Josefina V. Nobleza is ordered to reconvey the entire
subject property to plaintiff-appellee Shirley B. Nuega and defendant Rogelio
Nuega, without prejudice to said defendant-appellant's right to recover from
defendant Rogelio whatever amount she paid for the subject property. Costs
against defendant-appellant Nobleza.

SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration. In a Resolution dated July 21, 2010, the appellate court
denied the motion for lack of merit. Hence, this petition raising the following assignment of
errors:chanroblesvirtuallawlibrary
[I.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE
DECISION OF THE REGIONAL TRIAL COURT BY SUSTAINING THE FINDING THAT
 PETITIONER WAS NOT A PURCHASER IN GOOD FAITH.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT MODIFIED THE

[II.] DECISION OF THE REGIONAL TRIAL COURT BY DECLARING AS NULL AND VOID
THE DEED OF ABSOLUTE SALE DATED 29 DECEMBER 1992 IN ITS ENTIRETY.18
We deny the petition.

Petitioner is not a buyer in good faith.

An innocent purchaser for value is one who buys the property of another, without notice that
some other person has a right or interest in the property, for which a full and fair price is
paid by the buyer at the time of the purchase or before receipt of any notice of claims or
interest of some other person in the property.19 It is the party who claims to be an innocent
purchaser for value who has the burden of proving such assertion, and it is not enough to
invoke the ordinary presumption of good faith.20 To successfully invoke and be considered as
a buyer in good faith, the presumption is that first and foremost, the "buyer in good faith" must
have shown prudence and due diligence in the exercise of his/her rights. It presupposes that
the buyer did everything that an ordinary person would do for the protection and defense of
his/her rights and interests against prejudicial or injurious concerns when placed in such a
situation. The prudence required of a buyer in good faith is "not that of a person with training
in law, but rather that of an average man who 'weighs facts and circumstances without
resorting to the calibration of our technical rules of evidence of which his knowledge is
nil.'"21 A buyer in good faith does his homework and verifies that the particulars are in order
such as the title, the parties, the mode of transfer and the provisions in the deed/contract of
sale, to name a few. To be more specific, such prudence can be shown by making an ocular
inspection of the property, checking the title/ownership with the proper Register of Deeds
alongside the payment of taxes therefor, or inquiring into the minutiae such as the parameters
or lot area, the type of ownership, and the capacity of the seller to dispose of the property,
which capacity necessarily includes an inquiry into the civil status of the seller to ensure that if
married, marital consent is secured when necessary. In fine, for a purchaser of a property in
the possession of another to be in good faith, he must exercise due diligence, conduct an
investigation, and weigh the surrounding facts and circumstances like what any prudent man
in a similar situation would do.22

In the case at bar, petitioner claims that she is a buyer in good faith of the subject property
which is titled under the name of the seller Rogelio A. Nuega alone as evidenced by TCT No.
171963 and Tax Declaration Nos. D-012-04723 and D-012-04724.23 Petitioner argues, among
others, that since she has examined the TCT over the subject property and found the property
to have been registered under the name of seller Rogelio alone, she is an innocent purchaser
for value and "she is not required to go beyond the face of the title in verifying the status of
the subject property at the time of the consummation of the sale and at the date of the sale."24

We disagree with petitioner.

A buyer cannot claim to be an innocent purchaser for value by merely relying on the TCT of
the seller while ignoring all the other surrounding circumstances relevant to the sale.

In the case of Spouses Raymundo v. Spouses Bandong,25 petitioners therein - as does

petitioner herein - were also harping that due to the indefeasibility of a Torrens title, there was
nothing in the TCT of the property in litigation that should have aroused the buyer's suspicion
as to put her on guard that there was a defect in the title of therein seller. The Court held in
the Spouses Raymundo case that the buyer therein could not hide behind the cloak of being
an innocent purchaser for value by merely relying on the TCT which showed that the
registered owner of the land purchased is the seller. The Court ruled in this case that the
buyer was not an innocent purchaser for value due to the following attendant
circumstances, viz.:chanroblesvirtuallawlibrary
In the present case, we are not convinced by the petitioners' incessant
assertion that Jocelyn is an innocent purchaser for value. To begin with, she
is a grandniece of Eulalia and resides in the same locality where the latter
lives and conducts her principal business. It is therefore impossible for her
 not to acquire knowledge of her grand aunt's business practice of requiring
her biyaheros to surrender the titles to their properties and to sign the
corresponding deeds of sale over said properties in her favor, as security.
This alone should have put Jocelyn on guard for any possible abuses that
Eulalia may commit with the titles and the deeds of sale in her
possession.26cralawlawlibrary
Similarly, in the case of Arrofo v. Quiño,27 the Court held that while "the law does not require a
person dealing with registered land to inquire further than what the Torrens Title on its face
indicates," the rule is not absolute.28 Thus, finding that the buyer therein failed to take the
necessary precaution required of a prudent man, the Court held that Arrofo was not an
innocent purchaser for value, viz.:chanroblesvirtuallawlibrary
In the present case, the records show that Arrofo failed to act as a prudent
buyer. True, she asked her daughter to verify from the Register of Deeds if
the title to the Property is free from encumbrances. However, Arrofo admitted
that the Property is within the neighborhood and that she conducted an
ocular inspection of the Property. She saw the house constructed on the
Property. Yet, Arrofo did not even bother to inquire about the occupants of
the house. Arrofo also admitted that at the time of the sale, Myrna was
occupying a room in her house as her lessee. The fact that Myrna was
renting a room from Arrofo yet selling a land with a house should have put
Arrofo on her guard. She knew that Myrna was not occupying the house.
Hence, someone else must have been occupying the house.

Thus, Arrofo should have inquired who occupied the house, and if a lessee,
who received the rentals from such lessee. Such inquiry would have led
Arrofo to discover that the lessee was paying rentals to Quino, not to Renato
and Myrna, who claimed to own the Property.29cralawlawlibrary
An analogous situation obtains in the case at bar.

The TCT of the subject property states that its sole owner is the seller Rogelio himself who
was therein also described as "single". However, as in the cases of Spouses
Raymundo and Arrofo, there are circumstances critical to the case at bar which convince us
to affirm the ruling of both the appellate and lower courts that herein petitioner is not a buyer
in good faith.

First, petitioner's sister Hilda Bautista, at the time of the sale, was residing near Rogelio and
Shirley's house - the subject property - in Ladislao Diwa Village, Marikina City. Had petitioner
been more prudent as a buyer, she could have easily checked if Rogelio had the capacity to
dispose of the subject property. Had petitioner been more vigilant, she could have inquired
with such facility - considering that her sister lived in the same Ladislao Diwa Village where
the property is located - if there was any person other than Rogelio who had any right or
interest in the subject property.

To be sure, respondent even testified that she had warned their neighbors at Ladislao Diwa
Village - including petitioner's sister - not to engage in any deal with Rogelio relative to the
purchase of the subject property because of the cases she had filed against Rogelio.
Petitioner denies that respondent had given such warning to her neighbors, which includes
her sister, therefore arguing that such warning could not be construed as "notice" on her part
that there is a person other than the seller himself who has any right or interest in the subject
property. Nonetheless, despite petitioner's adamant denial, both courts a quo gave probative
value to the testimony of respondent, and the instant petition failed to present any convincing
evidence for this Court to reverse such factual finding. To be sure, it is not within our province
to second-guess the courts a quo, and the re-determination of this factual issue is beyond the
reach of a petition for review on certiorari where only questions of law may be reviewed.30

Second, issues surrounding the execution of the Deed of Absolute Sale also pose question
on the claim of petitioner that she is a buyer in good faith. As correctly observed by both
courts a quo, the Deed of Absolute Sale was executed and dated on December 29, 1992.
However, the Community Tax Certificates of the witnesses therein were dated January 2 and
20, 1993.31 While this irregularity is not a direct proof of the intent of the parties to the sale to
make it appear that the Deed of Absolute Sale was executed on December 29, 1992 - or
before Shirley filed the petition for legal separation on January 29, 1993 - it is circumstantial
and relevant to the claim of herein petitioner as an innocent purchaser for value.

That is not all.

In the Deed of Absolute Sale dated December 29, 1992, the civil status of Rogelio as seller
was not stated, while petitioner as buyer was indicated as
"single," viz.:chanroblesvirtuallawlibrary
ROGELIO A. NUEGA, of legal age, Filipino citizen and with postal address at
2-A-2 Ladislao Diwa St., Concepcion, Marikina, Metro Manila, hereinafter
referred to as the VENDOR

And

JOSEFINA V. NOBLEZA, of legal age, Filipino citizen, single and with postal
address at No. L-2-A-3 Ladislao Diwa St., Concepcion, Marikina, Metro
Manila, hereinafter referred to as the VENDEE.32cralawlawlibrary
It puzzles the Court that while petitioner has repeatedly claimed that Rogelio is "single" under
TCT No. 171963 and Tax Declaration Nos. D-012-04723 and D-012-04724, his civil status as
seller was not stated in the Deed of Absolute Sale - further creating a cloud on the claim of
petitioner that she is an innocent purchaser for value.

As to the second issue, we rule that the appellate court did not err when it modified the
decision of the trial court and declared that the Deed of Absolute Sale dated December 29,
1992 is void in its entirety.

The trial court held that while the TCT shows that the owner of the subject property is Rogelio
alone, respondent was able to prove at the trial court that she contributed in the payment of
the purchase price of the subject property. This fact was also settled with finality by the RTC
of Pasig City, Branch 70, and affirmed by the CA, in the case for legal separation and
liquidation of property docketed as JDRC Case No. 2510. The pertinent portion of the
decision reads:chanroblesvirtuallawlibrary
xxx Clearly, the house and lot jointly acquired by the parties prior to their
marriage forms part of their community property regime, xxx

From the foregoing, Shirley sufficiently proved her financial contribution for
the purchase of the house and lot covered by TCT 171963. Thus, the present
lot which forms part of their community property should be divided equally
between them upon the grant of the instant petition for legal separation.
Having established by preponderance of evidence the fact of her husband's
guilt in contracting a subsequent marriage xxx, Shirley alone should be
entitled to the net profits earned by the absolute community
property.33cralawlawlibrary
However, the nullity of the sale made by Rogelio is not premised on proof of respondent's
financial contribution in the purchase of the subject property. Actual contribution is not
relevant in determining whether a piece of property is community property for the law itself
defines what constitutes community property.

Article 91 of the Family Code thus provides:chanroblesvirtuallawlibrary

Art. 91. Unless otherwise provided in this Chapter or in the marriage
settlements, the community property shall consist of all the property owned
by the spouses at the time of the celebration of the marriage or acquired
thereafter.
The only exceptions from the above rule are: (1) those excluded from the absolute community
by the Family Code; and (2) those excluded by the marriage settlement.

Under the first exception are properties enumerated in Article 92 of the Family Code, which
states:chanroblesvirtuallawlibrary
 Art. 92. The following shall be excluded from the community property:

(1) Property acquired during the marriage by gratuitous title by either spouse,
and the fruits as well as the income thereof, if any, unless it is expressly
provided by the donor, testator or grantor that they shall form part of the
community property;

(2) Property for personal and exclusive use of either spouse; however,
jewelry shall form part of the community property;

(3) Property acquired before the marriage by either spouse who has
legitimate descendants by a former marriage, and the fruits as well as the
income, if any, of such property.
As held in Quiao v. Quiao:34ChanRoblesVirtualawlibrary
When a couple enters into a regime of absolute community, the husband and
the wife becomes joint owners of all the properties of the marriage. Whatever
property each spouse brings into the marriage, and those acquired during the
marriage (except those excluded under Article 92 of the Family Code) form
the common mass of the couple's properties. And when the couple's
marriage or community is dissolved, that common mass is divided between
the spouses, or their respective heirs, equally or in the proportion the parties
have established, irrespective of the value each one may have originally
owned.
Since the subject property does not fall under any of the exclusions provided in Article 92, it
therefore forms part of the absolute community property of Shirley and Rogelio. Regardless of
their respective contribution to its acquisition before their marriage, and despite the fact that
only Rogelio's name appears in the TCT as owner, the property is owned jointly by the
spouses Shirley and Rogelio.

Respondent and Rogelio were married on September 1, 1990. Rogelio, on his own and
without the consent of herein respondent as his spouse, sold the subject property via a Deed
of Absolute Sale dated December 29, 1992 - or during the subsistence of a valid contract of
marriage. Under Article 96 of Executive Order No. 209, otherwise known as The Family Code
of the Philippines, the said disposition of a communal property is
void, viz.:chanroblesvirtuallawlibrary
Art. 96. The administration and enjoyment of the community property shall
belong to both spouses jointly. In case of disagreement, the husband's
decision shall prevail, subject to recourse to the court by the wife for a proper
remedy, which must be availed of within five years from the date of the
contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to

participate in the administration of the common properties, the other spouse
may assume sole powers of administration. These powers do not include
the powers of disposition or encumbrance without the authority of the
court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be
void. However, the transaction shall be construed as a continuing offer on
the part of the consenting spouse and the third person, and may be perfected
as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both
offerors.35cralawlawlibrary
It is clear under the foregoing provision of the Family Code that Rogelio could not sell the
subject property without the written consent of respondent or the authority of the court.
Without such consent or authority, the entire sale is void. As correctly explained by the
appellate court:chanroblesvirtuallawlibrary
In the instant case, defendant Rogelio sold the entire subject property to
defendant-appellant Josefina on 29 December 1992 or during the existence
of Rogelio's marriage to plaintiff-appellee Shirley, without the consent of the
latter. The subject property forms part of Rogelio and Shirley's absolute
 community of property. Thus, the trial court erred in declaring the deed of
sale null and void only insofar as the 55.05 square meters representing the
one-half (1/2) portion of plaintiff-appellee Shirley. In absolute community of
property, if the husband, without knowledge and consent of the wife, sells
(their) property, such sale is void. The consent of both the husband Rogelio
and the wife Shirley is required and the absence of the consent of one
renders the entire sale null and void including the portion of the subject
property pertaining to defendant Rogelio who contracted the sale with
defendant-appellant Josefina. Since the Deed of Absolute Sale x x x entered
into by and between defendant-appellant Josefina and defendant Rogelio
dated 29 December 1992, during the subsisting marriage between plaintiff-
appellee Shirley and Rogelio, was without the written consent of Shirley, the
said Deed of Absolute Sale is void in its entirety. Hence, the trial court erred
in declaring the said Deed of Absolute Sale as void only insofar as the 1/2
portion pertaining to the share of Shirley is concerned.36cralawlawlibrary

Finally, consistent with our ruling that Rogelio solely entered into the contract of sale with
petitioner and acknowledged receiving the entire consideration of the contract under the Deed
of Absolute Sale, Shirley could not be held accountable to petitioner for the reimbursement of
her payment for the purchase of the subject property. Under Article 94 of the Family Code,
the absolute community of property shall only be "liable for x x x [d]ebts and obligations
contracted by either spouse without the consent of the other to the extent that the family may
have been benefited x x x." As correctly stated by the appellate court, there being no
evidence on record that the amount received by Rogelio redounded to the benefit of the
family, respondent cannot be made to reimburse any amount to petitioner.37

WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals dated May 14, 2010 and July 21, 2010, respectively, in
CA-G.R. CV No. 70235 are AFFIRMED.

Costs against petitioner.

SO ORDERED.chanroblesvirtuallawlibrary

G.R. No. 156125               August 25, 2010

FRANCISCO MUÑOZ, JR., Petitioner,

vs.
ERLINDA RAMIREZ and ELISEO CARLOS, Respondents.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari 1 filed by petitioner Francisco Muñoz,
Jr. (petitioner) to challenge the decision2 and the resolution3 of the Court of Appeals (CA) in
CA-G.R. CV No. 57126.4 The CA decision set aside the decision5 of the Regional Trial Court
(RTC), Branch 166, Pasig City, in Civil Case No. 63665. The CA resolution denied the
petitioner’s subsequent motion for reconsideration.

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly summarized below.

Subject of the present case is a seventy-seven (77)-square meter residential house and lot
located at 170 A. Bonifacio Street, Mandaluyong City (subject property), covered by Transfer
Certificate of Title (TCT) No. 7650 of the Registry of Deeds of Mandaluyong City in the name
of the petitioner.6
The residential lot in the subject property was previously covered by TCT No. 1427, in the
name of Erlinda Ramirez, married to Eliseo Carlos (respondents).7

On April 6, 1989, Eliseo, a Bureau of Internal Revenue employee, mortgaged TCT No. 1427,
with Erlinda’s consent, to the Government Service Insurance System (GSIS) to secure a
₱136,500.00 housing loan, payable within twenty (20) years, through monthly salary
deductions of ₱1,687.66.8 The respondents then constructed a thirty-six (36)-square meter,
two-story residential house on the lot.

On July 14, 1993, the title to the subject property was transferred to the petitioner by virtue of
a Deed of Absolute Sale, dated April 30, 1992, executed by Erlinda, for herself and as
attorney-in-fact of Eliseo, for a stated consideration of ₱602,000.00.9

On September 24, 1993, the respondents filed a complaint with the RTC for the nullification of
the deed of absolute sale, claiming that there was no sale but only a mortgage transaction,
and the documents transferring the title to the petitioner’s name were falsified.

The respondents alleged that in April 1992, the petitioner granted them a ₱600,000.00 loan,
to be secured by a first mortgage on TCT No. 1427; the petitioner gave Erlinda a
₱200,000.0010 advance to cancel the GSIS mortgage, and made her sign a document
purporting to be the mortgage contract; the petitioner promised to give the ₱402,000.00
balance when Erlinda surrenders TCT No. 1427 with the GSIS mortgage cancelled, and
submits an affidavit signed by Eliseo stating that he waives all his rights to the subject
property; with the ₱200,000.00 advance, Erlinda paid GSIS ₱176,445.27 11 to cancel the GSIS
mortgage on TCT No. 1427;12 in May 1992, Erlinda surrendered to the petitioner the clean
TCT No. 1427, but returned Eliseo’s affidavit, unsigned; since Eliseo’s affidavit was unsigned,
the petitioner refused to give the ₱402,000.00 balance and to cancel the mortgage, and
demanded that Erlinda return the ₱200,000.00 advance; since Erlinda could not return the
₱200,000.00 advance because it had been used to pay the GSIS loan, the petitioner kept the
title; and in 1993, they discovered that TCT No. 7650 had been issued in the petitioner’s
name, cancelling TCT No.1427 in their name.

The petitioner countered that there was a valid contract of sale. He alleged that the
respondents sold the subject property to him after he refused their offer to mortgage the
subject property because they lacked paying capacity and were unwilling to pay the incidental
charges; the sale was with the implied promise to repurchase within one year,13 during which
period (from May 1, 1992 to April 30, 1993), the respondents would lease the subject property
for a monthly rental of ₱500.00;14 when the respondents failed to repurchase the subject
property within the one-year period despite notice, he caused the transfer of title in his name
on July 14, 1993;15 when the respondents failed to pay the monthly rentals despite demand,
he filed an ejectment case16 against them with the Metropolitan Trial Court (MeTC), Branch
60, Mandaluyong City, on September 8, 1993, or sixteen days before the filing of the RTC
case for annulment of the deed of absolute sale.

During the pendency of the RTC case, or on March 29, 1995, the MeTC decided the
ejectment case. It ordered Erlinda and her family to vacate the subject property, to surrender
its possession to the petitioner, and to pay the overdue rentals.17

In the RTC, the respondents presented the results of the scientific examination18 conducted
by the National Bureau of Investigation of Eliseo’s purported signatures in the Special Power
of Attorney19 dated April 29, 1992 and the Affidavit of waiver of rights dated April 29,
1992,20 showing that they were forgeries.

The petitioner, on the other hand, introduced evidence on the paraphernal nature of the
subject property since it was registered in Erlinda’s name; the residential lot was part of a
large parcel of land owned by Pedro Ramirez and Fructuosa Urcla, Erlinda’s parents; it was
the subject of Civil Case No. 50141, a complaint for annulment of sale, before the RTC,
Branch 158, Pasig City, filed by the surviving heirs of Pedro against another heir, Amado
Ramirez, Erlinda’s brother; and, as a result of a compromise agreement, Amado agreed to
transfer to the other compulsory heirs of Pedro, including Erlinda, their rightful shares of the
land.21

THE RTC RULING

In a Decision dated January 23, 1997, the RTC dismissed the complaint. It found that the
subject property was Erlinda’s exclusive paraphernal property that was inherited from her
father. It also upheld the sale to the petitioner, even without Eliseo’s consent as the deed of
absolute sale bore the genuine signatures of Erlinda and the petitioner as vendor and vendee,
respectively. It concluded that the NBI finding that Eliseo’s signatures in the special power of
attorney and in the affidavit were forgeries was immaterial because Eliseo’s consent to the
sale was not necessary.22

The respondents elevated the case to the CA via an ordinary appeal under Rule 41 of the
Revised Rules of Court.

THE CA RULING

The CA decided the appeal on June 25, 2002. Applying the second paragraph of Article
15823 of the Civil Code and Calimlim-Canullas v. Hon. Fortun, 24 the CA held that the subject
property, originally Erlinda’s exclusive paraphernal property, became conjugal property when
it was used as collateral for a housing loan that was paid through conjugal funds – Eliseo’s
monthly salary deductions; the subject property, therefore, cannot be validly sold or
mortgaged without Eliseo’s consent, pursuant to Article 12425 of the Family Code. Thus, the
CA declared void the deed of absolute sale, and set aside the RTC decision.

When the CA denied26 the subsequent motion for reconsideration,27 the petitioner filed the
present petition for review on certiorari under Rule 45 of the Revised Rules of Court.

THE PETITION

The petitioner argues that the CA misapplied the second paragraph of Article 158 of the Civil
Code and Calimlim-Canullas28 because the respondents admitted in the complaint that it was
the petitioner who gave the money used to cancel the GSIS mortgage on TCT No. 1427;
Article 12029 of the Family Code is the applicable rule, and since the value of the house is less
than the value of the lot, then Erlinda retained ownership of the subject property. He also
argues that the contract between the parties was a sale, not a mortgage, because (a) Erlinda
did not deny her signature in the document; 30 (b) Erlinda agreed to sign a contract of lease
over the subject property;31 and, (c) Erlinda executed a letter, dated April 30, 1992, confirming
the conversion of the loan application to a deed of sale.32

THE CASE FOR THE RESPONDENTS

The respondents submit that it is unnecessary to compare the respective values of the house
and of the lot to determine ownership of the subject property; it was acquired during their
marriage and, therefore, considered conjugal property. They also submit that the transaction
between the parties was not a sale, but an equitable mortgage because (a) they remained in
possession of the subject property even after the execution of the deed of absolute sale, (b)
they paid the 1993 real property taxes due on the subject property, and (c) they received
₱200,000.00 only of the total stated price of ₱602,000.00.

THE ISSUE

The issues in the present case boil down to (1) whether the subject property is paraphernal or
conjugal; and, (2) whether the contract between the parties was a sale or an equitable
mortgage.
 OUR RULING

We deny the present Petition but for reasons other than those advanced by the CA.

This Court is not a trier of facts. However, if the inference, drawn by the CA, from the facts is
manifestly mistaken, as in the present case, we can review the evidence to allow us to arrive
at the correct factual conclusions based on the record.33

First Issue:

Paraphernal or Conjugal?

As a general rule, 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.34

In the present case, clear evidence that Erlinda inherited the residential lot from her father has
sufficiently rebutted this presumption of conjugal ownership.35 Pursuant to Articles 9236 and
10937 of the Family Code, properties acquired by gratuitous title by either spouse, during the
marriage, shall be excluded from the community property and be the exclusive property of
each spouse.38 The residential lot, therefore, is Erlinda’s exclusive paraphernal property.

The CA, however, held that the residential lot became conjugal when the house was built
thereon through conjugal funds, applying the second paragraph of Article 158 of the Civil
Code and Calimlim-Canullas.39 Under the second paragraph of Article 158 of the Civil Code, a
land that originally belonged to one spouse becomes conjugal upon the construction of
improvements thereon at the expense of the partnership. We applied this provision in
Calimlim-Canullas,40 where we held that when the conjugal house is constructed on land
belonging exclusively to the husband, the land ipso facto becomes conjugal, but the husband
is entitled to reimbursement of the value of the land at the liquidation of the conjugal
partnership.

The CA misapplied Article 158 of the

Civil Code and Calimlim-Canullas

We cannot subscribe to the CA’s misplaced reliance on Article 158 of the Civil Code and
Calimlim-Canullas.

As the respondents were married during the effectivity of the Civil Code, its provisions on
conjugal partnership of gains (Articles 142 to 189) should have governed their property
relations. However, with the enactment of the Family Code on August 3, 1989, the Civil Code
provisions on conjugal partnership of gains, including Article 158, have been superseded by
those found in the Family Code (Articles 105 to 133). Article 105 of the Family Code states:

xxxx

The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to
conjugal partnerships of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance with the Civil
Code or other laws, as provided in Article 256.

Thus, in determining the nature of the subject property, we refer to the provisions of the
Family Code, and not the Civil Code, except with respect to rights then already vested.

Article 120 of the Family Code, which supersedes Article 158 of the Civil Code, 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. Under this provision, 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.41

In the present case, we find that Eliseo paid a portion only of the GSIS loan through monthly
salary deductions. From April 6, 198942 to April 30, 1992,43 Eliseo paid about
₱60,755.76,44 not the entire amount of the GSIS housing loan plus interest, since the
petitioner advanced the ₱176,445.2745 paid by Erlinda to cancel the mortgage in 1992.
Considering the ₱136,500.00 amount of the GSIS housing loan, it is fairly reasonable to
assume that the value of the residential lot is considerably more than the ₱60,755.76 amount
paid by Eliseo through monthly salary deductions.

Thus, the subject property remained the exclusive paraphernal property of Erlinda at the time
she contracted with the petitioner; the written consent of Eliseo to the transaction was not
necessary. The NBI finding that Eliseo’s signatures in the special power of attorney and
affidavit were forgeries was immaterial.

Nonetheless, the RTC and the CA apparently failed to consider the real nature of the contract
between the parties.

Second Issue:
Sale or Equitable Mortgage?

Jurisprudence has defined an equitable mortgage "as one which although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless reveals
the intention of the parties to charge real property as security for a debt, there being no
impossibility nor anything contrary to law in this intent."46

Article 1602 of the Civil Code enumerates the instances when a contract, regardless of its
nomenclature, may be presumed to be an equitable mortgage: (a) when the price of a sale
with right to repurchase is unusually inadequate; (b) when the vendor remains in
possession as lessee or otherwise; (c) when upon or after the expiration of the right to
repurchase another instrument extending the period of redemption or granting a new period is
executed; (d) when the purchaser retains for himself a part of the purchase
price; (e) when the vendor binds himself to pay the taxes on the thing sold; and, (f) in
any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation. These instances apply to a contract purporting to be an absolute sale.47

For the presumption of an equitable mortgage to arise under Article 1602 of the Civil Code,
two (2) requisites must concur: (a) that the parties entered into a contract denominated as a
contract of sale; and, (b) that their intention was to secure an existing debt by way of a
mortgage. Any of the circumstances laid out in Article 1602 of the Civil Code, not the
concurrence nor an overwhelming number of the enumerated circumstances, is sufficient to
support the conclusion that a contract of sale is in fact an equitable mortgage.48

Contract is an equitable mortgage

In the present case, there are four (4) telling circumstances pointing to the existence of an
equitable mortgage.

First, the respondents remained in possession as lessees of the subject property; the parties,
in fact, executed a one-year contract of lease, effective May 1, 1992 to April 30, 1993.49
Second, the petitioner retained part of the "purchase price," the petitioner gave a ₱200,000.00
advance to settle the GSIS housing loan, but refused to give the ₱402,000.00 balance when
Erlinda failed to submit Eliseo’s signed affidavit of waiver of rights.

Third, respondents paid the real property taxes on July 8, 1993, despite the alleged sale on
April 30, 1992;50 payment of real property taxes is a usual burden attaching to ownership and
when, as here, such payment is coupled with continuous possession of the property, it
constitutes evidence of great weight that the person under whose name the realty taxes were
declared has a valid and rightful claim over the land.51

Fourth, Erlinda secured the payment of the principal debt owed to the petitioner with the
subject property. The records show that the petitioner, in fact, sent Erlinda a Statement of
Account showing that as of February 20, 1993, she owed ₱384,660.00, and the daily interest,
starting February 21, 1993, was ₱641.10.52 Thus, the parties clearly intended an equitable
mortgage and not a contract of sale.

That the petitioner advanced the sum of ₱200,000.00 to Erlinda is undisputed. This advance,
in fact, prompted the latter to transfer the subject property to the petitioner. Thus, before the
respondents can recover the subject property, they must first return the amount of
₱200,000.00 to the petitioner, plus legal interest of 12% per annum, computed from April 30,
1992.

We cannot sustain the ballooned obligation of ₱384,660.00, claimed in the Statement of

Account sent by the petitioner,53 sans any evidence of how this amount was arrived at.
Additionally, a daily interest of ₱641.10 or ₱19,233.00 per month for a ₱200,000.00 loan is
patently unconscionable. While parties are free to stipulate on the interest to be imposed on
monetary obligations, we can step in to temper the interest rates if they are unconscionable.54

In Lustan v. CA,55 where we established the reciprocal obligations of the parties under an

equitable mortgage, we ordered the reconveyance of the property to the rightful owner therein
upon the payment of the loan within ninety (90) days from the finality of the decision.56

WHEREFORE, in light of all the foregoing, we hereby DENY the present petition. The

assailed decision and resolution of the Court of Appeals in CA-G.R. CV No. 57126 are
AFFIRMED with the following MODIFICATIONS:

1. The Deed of Absolute Sale dated April 30, 1992 is hereby declared an equitable mortgage;
and

2. The petitioner is obligated to RECONVEY to the respondents the property covered by

Transfer Certificate of Title No. 7650 of the Register of Deeds of Mandaluyong City, UPON
THE PAYMENT OF ₱200,000.00, with 12% legal interest from April 30, 1992, by respondents
within NINETY DAYS FROM THE FINALITY OF THIS DECISION.

Costs against the petitioner.

SO ORDERED.

G.R. No. 118305 February 12, 1998

AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO, petitioners,

vs.
COURT OF APPEALS and SPOUSES ALFREDO & ENCARNACION CHING, respondents.

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 vs. 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 PBM's 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 AIDC's 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.

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. . . . 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 claim is 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           x x x          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 . . . . . . .

Article 121 of the Family Code provides that "The conjugal partnership shall be liable for: . . .
(2) All debts and obligations contracted during the marriage by the designated Administrator-
Spouse for the benefit of the conjugal partnership of gains . . . ." 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

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 . . . .

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.

Petitioners further contend that the ruling of the respondent court runs counter to the
pronouncement of this Court in the case of Cobb-Perez vs. 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. Osmeña, 10 Abella de Diaz vs. Erlanger & Galinger, Inc., 11 Cobb-

Perez vs. Lantin 12 and G-Tractors, Inc. vs. 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 wife's own property, which,
like those of her husband's, 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).

. . . 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 vs. Sheriff of Manila, Fidelity Insurance & Luzon Insurance
Co.,14 Liberty Insurance Corporation vs. Banuelos, 15 and Luzon Surety Inc.  vs. 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 . . . . 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 latter's
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 Ching's acting as surety redounded to the benefit of the
conjugal partnership. The reason for this is as lucidly explained by the respondent court:

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          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-appellant's 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. . . . . . .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 husband's 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 vs. Osmeña, 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 . . . 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
husband's 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 . . . 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 . . . 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 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 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.

. . . 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 surety's 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
husband's 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 partnership's 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 company's 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 petitioner's 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.

G.R. No. 124642             February 23, 2004

ALFREDO CHING and ENCARNACION CHING, petitioners

vs.
THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.

DECISION

CALLEJO, SR., J.:

This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision1 of
the Court of Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the
Resolution2 on April 2, 1996 denying the petitioners’ motion for reconsideration. The
impugned decision granted the private respondent’s petition for certiorari and set aside the
Orders of the trial court dated December 15, 19933 and February 17, 19944 nullifying the
attachment of 100,000 shares of stocks of the Citycorp Investment Philippines under the
name of petitioner Alfredo Ching.

The following facts are undisputed:

On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a
loan of ₱9,000,000.00 from the Allied Banking Corporation (ABC). By virtue of this loan, the
PBMCI, through its Executive Vice-President Alfredo Ching, executed a promissory note for
the said amount promising to pay on December 22, 1978 at an interest rate of 14% per
annum.5 As added security for the said loan, on September 28, 1978, Alfredo Ching, together
with Emilio Tañedo and Chung Kiat Hua, executed a continuing guaranty with the ABC
binding themselves to jointly and severally guarantee the payment of all the PBMCI
obligations owing the ABC to the extent of ₱38,000,000.00.6 The loan was subsequently
renewed on various dates, the last renewal having been made on December 4, 1980.7

Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount
of ₱13,000,000.00 payable in eighteen months at 16% interest per annum. As in the previous
loan, the PBMCI, through Alfredo Ching, executed a promissory note to evidence the loan
maturing on June 29, 1981.8 This was renewed once for a period of one month.9

The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC
filed a complaint for sum of money with prayer for a writ of preliminary attachment against the
PBMCI to collect the ₱12,612,972.88 exclusive of interests, penalties and other bank
charges. Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio Tañedo
and Chung Kiat Hua in their capacity as sureties of the PBMCI.

The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila,
Branch XVIII.10 In its application for a writ of preliminary attachment, the ABC averred that the
"defendants are guilty of fraud in incurring the obligations upon which the present action is
brought11 in that they falsely represented themselves to be in a financial position to pay their
obligation upon maturity thereof."12 Its supporting affidavit stated, inter alia, that the
"[d]efendants have removed or disposed of their properties, or [are] ABOUT to do so, with
intent to defraud their creditors."13

On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the
ABC’s application for a writ of preliminary attachment. The trial court decreed that the grounds
alleged in the application and that of its supporting affidavit "are all conclusions of fact and of
law" which do not warrant the issuance of the writ prayed for. 14 On motion for reconsideration,
however, the trial court, in an Order dated September 14, 1981, reconsidered its previous
order and granted the ABC’s application for a writ of preliminary attachment on a bond of
₱12,700,000. The order, in relevant part, stated:

With respect to the second ground relied upon for the grant of the writ of preliminary
attachment ex-parte, which is the alleged disposal of properties by the defendants with intent
to defraud creditors as provided in Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits
can only barely justify the issuance of said writ as against the defendant Alfredo Ching who
has allegedly bound himself jointly and severally to pay plaintiff the defendant corporation’s
obligation to the plaintiff as a surety thereof.

WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo
Ching requiring the sheriff of this Court to attach all the properties of said Alfredo Ching not
exceeding ₱12,612,972.82 in value, which are within the jurisdiction of this Court and not
exempt from execution upon, the filing by plaintiff of a bond duly approved by this Court in the
sum of Twelve Million Seven Hundred Thousand Pesos (₱12,700,000.00) executed in favor
of the defendant Alfredo Ching to secure the payment by plaintiff to him of all the costs which
may be adjudged in his favor and all damages he may sustain by reason of the attachment if
the court shall finally adjudge that the plaintiff was not entitled thereto.

SO ORDERED.15

Upon the ABC’s posting of the requisite bond, the trial court issued a writ of preliminary
attachment. Subsequently, summonses were served on the defendants,16 save Chung Kiat
Hua who could not be found.

Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for
suspension of payments with the Securities and Exchange Commission (SEC), docketed as
SEC Case No. 2250, at the same time seeking the PBMCI’s rehabilitation.17

On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, including its assets
and liabilities, under rehabilitation receivership, and ordered that "all actions for claims listed
in Schedule "A" of the petition pending before any court or tribunal are hereby suspended in
whatever stage the same may be until further orders from the Commission." 18 The ABC was
among the PBMCI’s creditors named in the said schedule.

Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to
Dismiss and/or motion to suspend the proceedings in Civil Case No. 142729 invoking the
PBMCI’s pending application for suspension of payments (which Ching co-signed) and over
which the SEC had already assumed jurisdiction.19 On February 4, 1983, the ABC filed its
Opposition thereto.20

In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment
the 100,000 common shares of Citycorp stocks in the name of Alfredo Ching.21

Thereafter, in an Order dated September 16, 1983, the trial court partially granted the
aforementioned motion by suspending the proceedings only with respect to the PBMCI. It
denied Ching’s motion to dismiss the complaint/or suspend the proceedings and pointed out
that P.D. No. 1758 only concerns the activities of corporations, partnerships and associations
and was never intended to regulate and/or control activities of individuals. Thus, it directed the
individual defendants to file their answers.22

Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend
Proceedings on the same ground of the pendency of SEC Case No. 2250. This motion met
the opposition from the ABC.23

On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-claim.24 Ching
eventually filed his Answer on July 12, 1984.25

On October 25, 1984, long after submitting their answers, Ching filed an Omnibus
Motion,26 again praying for the dismissal of the complaint or suspension of the proceedings on
the ground of the July 9, 1982 Injunctive Order issued in SEC Case No. 2250. He averred that
as a surety of the PBMCI, he must also necessarily benefit from the defenses of his principal.
The ABC opposed Ching’s omnibus motion.

Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion27 praying for the dismissal of the
complaint, arguing that the ABC had "abandoned and waived" its right to proceed against the
continuing guaranty by its act of resorting to preliminary attachment.

On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary
attachment bond from ₱12,700,000 to ₱6,350,000.28 Alfredo Ching opposed the motion,29 but
on April 2, 1987, the court issued an Order setting the incident for further hearing on May 28,
1987 at 8:30 a.m. for the parties to adduce evidence on the actual value of the properties of
Alfredo Ching levied on by the sheriff.30

On March 2, 1988, the trial court issued an Order granting the motion of the ABC and
rendered the attachment bond of ₱6,350,000.31

On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a
Motion to Set Aside the levy on attachment. She alleged inter alia that the 100,000 shares of
stocks levied on by the sheriff were acquired by her and her husband during their marriage
out of conjugal funds after the Citycorp Investment Philippines was established in 1974.
Furthermore, the indebtedness covered by the continuing guaranty/comprehensive suretyship
contract executed by petitioner Alfredo Ching for the account of PBMCI did not redound to the
benefit of the conjugal partnership. She, likewise, alleged that being the wife of Alfredo Ching,
she was a third-party claimant entitled to file a motion for the release of the properties.32 She
attached therewith a copy of her marriage contract with Alfredo Ching.33

The ABC filed a comment on the motion to quash preliminary attachment and/or motion to
expunge records, contending that:

2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus,
she has no personality to file any motion before this Honorable Court;

2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule
12 of the Rules of Court;

2.3 Said Motion cannot even be construed to be in the nature of a Third-Party Claim
conformably with Sec. 14, Rule 57 of the Rules of Court.

3. Furthermore, assuming in gracia argumenti that the supposed movant has the required
personality, her Motion cannot be acted upon by this Honorable Court as the above-entitled
case is still in the archives and the proceedings thereon still remains suspended. And there is
no previous Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by laches because the
shares of stocks were in custodia legis.

During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage
contract to Alfredo Ching to prove that they were married on January 8, 1960; 35 the articles of
incorporation of Citycorp Investment Philippines dated May 14, 1979;36 and, the General
Information Sheet of the corporation showing that petitioner Alfredo Ching was a member of
the Board of Directors of the said corporation and was one of its top twenty stockholders.

On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to
expunge records.

Acting on the aforementioned motion, the trial court issued on December 15, 1993 an
Order37 lifting the writ of preliminary attachment on the shares of stocks and ordering the
sheriff to return the said stocks to the petitioners. The dispositive portion reads:

WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9,

1993, is hereby granted. Let the writ of preliminary attachment subject matter of said motion,
be quashed and lifted with respect to the attached 100,000 common shares of stock of
Citycorp Investment Philippines in the name of the defendant Alfredo Ching, the said shares
of stock to be returned to him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo
who effected the levy thereon on July 26, 1983, or by whoever may be presently in
possession thereof.

SO ORDERED.38

The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but
denied the same on February 17, 1994. The petitioner bank forthwith filed a petition for
certiorari with the CA, docketed as CA-G.R. SP No. 33585, for the nullification of the said
order of the court, contending that:

1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking
cognizance of, and granting a "Motion" filed by a complete stranger to the case.

2. The respondent Judge committed a grave abuse of discretion in lifting the writ of
preliminary attachment without any basis in fact and in law, and contrary to established
jurisprudence on the matter.39

On November 27, 1995, the CA rendered judgment granting the petition and setting aside the
assailed orders of the trial court, thus:

WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the
questioned orders (dated December 15, 1993 and February 17, 1994) for being null and void.

SO ORDERED.40

The CA sustained the contention of the private respondent and set aside the assailed orders.
According to the CA, the RTC deprived the private respondent of its right to file a bond under
Section 14, Rule 57 of the Rules of Court. The petitioner Encarnacion T. Ching was not a
party in the trial court; hence, she had no right of action to have the levy annulled with a
motion for that purpose. Her remedy in such case was to file a separate action against the
private respondent to nullify the levy on the 100,000 Citycorp shares of stocks. The court
stated that even assuming that Encarnacion T. Ching had the right to file the said motion, the
same was barred by laches.

Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the presumption in Article
160 of the New Civil Code shall not apply where, as in this case, the petitioner-spouses failed
to prove the source of the money used to acquire the shares of stock. It held that the levied
shares of stocks belonged to Alfredo Ching, as evidenced by the fact that the said shares
were registered in the corporate books of Citycorp solely under his name. Thus, according to
the appellate court, the RTC committed a grave abuse of its discretion amounting to excess
or lack of jurisdiction in issuing the assailed orders. The petitioners’ motion for reconsideration
was denied by the CA in a Resolution dated April 2, 1996.

The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC
did not commit any grave abuse of discretion amounting to excess or lack of jurisdiction in
issuing the assailed orders in their favor; hence, the CA erred in reversing the same. They
aver that the source of funds in the acquisition of the levied shares of stocks is not the
controlling factor when invoking the presumption of the conjugal nature of stocks under Art.
160,42 and that such presumption subsists even if the property is registered only in the name
of one of the spouses, in this case, petitioner Alfredo Ching.43 According to the petitioners, the
suretyship obligation was not contracted in the pursuit of the petitioner-husband’s profession
or business.44 And, contrary to the ruling of the CA, where conjugal assets are attached in a
collection suit on an obligation contracted by the husband, the wife should exhaust her motion
to quash in the main case and not file a separate suit.45 Furthermore, the petitioners contend
that under Art. 125 of the Family Code, the petitioner-husband’s gratuitous suretyship is null
and void ab initio,46 and that the share of one of the spouses in the conjugal partnership
remains inchoate until the dissolution and liquidation of the partnership.47

In its comment on the petition, the private respondent asserts that the CA correctly granted its
petition for certiorari nullifying the assailed order. It contends that the CA correctly relied on
the ruling of this Court in Wong v. Intermediate Appellate Court. Citing Cobb-Perez v. Lantin
and G-Tractors, Inc. v. Court of Appeals, the private respondent alleges that the continuing
guaranty and suretyship executed by petitioner Alfredo Ching in pursuit of his profession or
business. Furthermore, according to the private respondent, the right of the petitioner-wife to
a share in the conjugal partnership property is merely inchoate before the dissolution of the
partnership; as such, she had no right to file the said motion to quash the levy on attachment
of the shares of stocks.

The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the
motion to quash the levy on attachment on the 100,000 shares of stocks in the Citycorp
Investment Philippines; (b) whether or not the RTC committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed orders.

On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the
said motion, although she was not a party in Civil Case No. 142729.48

In Ong v. Tating,49 we held that the sheriff may attach only those properties of the defendant
against whom a writ of attachment has been issued by the court. When the sheriff
erroneously levies on attachment and seizes the property of a third person in which the said
defendant holds no right or interest, the superior authority of the court which has authorized
the execution may be invoked by the aggrieved third person in the same case. Upon
application of the third person, the court shall order a summary hearing for the purpose of
determining whether the sheriff has acted rightly or wrongly in the performance of his duties in
the execution of the writ of attachment, more specifically if he has indeed levied on
attachment and taken hold of property not belonging to the plaintiff. If so, the court may then
order the sheriff to release the property from the erroneous levy and to return the same to the
third person. In resolving the motion of the third party, the court does not and cannot pass
upon the question of the title to the property with any character of finality. It can treat the
matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. If
the claimant’s proof does not persuade the court of the validity of the title, or right of
possession thereto, the claim will be denied by the court. The aggrieved third party may also
avail himself of the remedy of "terceria" by executing an affidavit of his title or right of
possession over the property levied on attachment and serving the same to the office making
the levy and the adverse party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should be a totally separate and
distinct action from the former case. The above-mentioned remedies are cumulative and any
one of them may be resorted to by one third-party claimant without availing of the other
remedies.50

In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the
100,000 shares of stocks in the name of petitioner-husband claiming that the said shares of
stocks were conjugal in nature; hence, not liable for the account of her husband under his
continuing guaranty and suretyship agreement with the PBMCI. The petitioner-wife had the
right to file the motion for said relief.

On the second issue, we find and so hold that the CA erred in setting aside and reversing the
orders of the RTC. The private respondent, the petitioner in the CA, was burdened to prove
that the RTC committed a grave abuse of its discretion amounting to excess or lack of
jurisdiction. The tribunal acts without jurisdiction if it does not have the legal purpose to
determine the case; there is excess of jurisdiction where the tribunal, being clothed with the
power to determine the case, oversteps its authority as determined by law. There is grave
abuse of discretion where the tribunal acts in a capricious, whimsical, arbitrary or despotic
manner in the exercise of its judgment and is equivalent to lack of jurisdiction.51

It was incumbent upon the private respondent to adduce a sufficiently strong demonstration
that the RTC acted whimsically in total disregard of evidence material to, and even decide of,
the controversy before certiorari will lie. A special civil action for certiorari is a remedy
designed for the correction of errors of jurisdiction and not errors of judgment. When a court
exercises its jurisdiction, an error committed while so engaged does not deprive it of its
jurisdiction being exercised when the error is committed.52

After a comprehensive review of the records of the RTC and of the CA, we find and so hold
that the RTC did not commit any grave abuse of its discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders.

Article 160 of the New Civil Code provides that all the properties acquired during the marriage
are presumed to belong to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband, or to the wife. In Tan v. Court of Appeals,53 we held that it is not
even necessary to prove that the properties were acquired with funds of the partnership. As
long as the properties were acquired by the parties during the marriage, they are presumed to
be conjugal in nature. In fact, even when the manner in which the properties were acquired
does not appear, the presumption will still apply, and the properties will still be considered
conjugal. The presumption of the conjugal nature of the properties acquired during the
marriage subsists in the absence of clear, satisfactory and convincing evidence to overcome
the same.54

In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of
stocks in the Citycorp Investment Philippines were issued to and registered in its corporate
books in the name of the petitioner-husband when the said corporation was incorporated on
May 14, 1979. This was done during the subsistence of the marriage of the petitioner-
spouses. The shares of stocks are, thus, presumed to be the conjugal partnership property of
the petitioners. The private respondent failed to adduce evidence that the petitioner-husband
acquired the stocks with his exclusive money.55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment Philippines solely in the name
of the petitioner-husband does not constitute proof that the petitioner-husband, not the
conjugal partnership, owned the same.56 The private respondent’s reliance on the rulings of
this Court in Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v. 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 Insurance case
where the uncontroverted evidence showed that the shares of stocks were acquired during
the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v.
Intermediate Appellate Court59 buttresses the case for the petitioners. In that case, we ruled
that he who claims that property acquired by the spouses during their marriage is not conjugal
partnership property but belongs to one of them as his personal property is burdened to prove
the source of the money utilized to purchase the same. In this case, the private respondent
claimed that the petitioner-husband acquired the shares of stocks from the Citycorp
Investment Philippines in his own name as the owner thereof. It was, thus, the burden of the
private respondent to prove that the source of the money utilized in the acquisition of the
shares of stocks was that of the petitioner-husband alone. As held by the trial court, the
private respondent failed to adduce evidence to prove this assertion.

The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship
agreement with the private respondent for the payment of the PBMCI loans, the petitioner-
husband was in the exercise of his profession, pursuing a legitimate business. The appellate
court erred in concluding that the conjugal partnership is liable for the said account of PBMCI
under Article 161(1) of the New Civil Code.

Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family Code of the
Philippines) provides:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal
partnership, and those contracted by the wife, also for the same purpose, in the cases where
she may legally bind the partnership.

The petitioner-husband signed the continuing guaranty and suretyship agreement as security
for the payment of the loan obtained by the PBMCI from the private respondent in the amount
of ₱38,000,000. In Ayala Investment and Development Corp. v. Court of Appeals,61 this Court
ruled "that the signing as surety is certainly not an exercise of an industry or profession. It is
not embarking in a business. No matter how often an executive acted on or was persuaded to
act as surety for his own employer, this should not be taken to mean that he thereby
embarked in the business of suretyship or guaranty."

For the conjugal partnership to be liable for a liability that should appertain to the husband
alone, there must be a showing that some advantages accrued to the spouses. Certainly, to
make a conjugal partnership responsible for a liability that should appertain alone to one of
the spouses is to frustrate the objective of the New Civil Code to show the utmost concern for
the solidarity and well being of the family as a unit. The husband, therefore, is denied the
power to assume unnecessary and unwarranted risks to the financial stability of the conjugal
partnership.62

In this case, the private respondent failed to prove that the conjugal partnership of the
petitioners was benefited by the petitioner-husband’s act of executing a continuing guaranty
and suretyship agreement with the private respondent for and in behalf of PBMCI. The
contract of loan was between the private respondent and the PBMCI, solely for the benefit of
the latter. No presumption can be inferred from the fact that when the petitioner-husband
entered into an accommodation agreement or a contract of surety, the conjugal partnership
would thereby be benefited. The private respondent was burdened to establish that such
benefit redounded to the conjugal partnership.63

It could be argued that the petitioner-husband was a member of the Board of Directors of
PBMCI and was one of its top twenty stockholders, and that the shares of stocks of the
petitioner-husband and his family would appreciate if the PBMCI could be rehabilitated
through the loans obtained; that the petitioner-husband’s career would be enhanced should
PBMCI survive because of the infusion of fresh capital. However, these are not the benefits
contemplated by Article 161 of the New Civil Code. The benefits must be those directly
resulting from the loan. They cannot merely be a by-product or a spin-off of the loan itself.64
 This is different from the situation where the husband borrows money or receives services to
be used for his own business or profession. In the Ayala case, we ruled that it is such a
contract that is one within the term "obligation for the benefit of the conjugal partnership."
Thus:

(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the
money and services to be used in or for his own business or his own profession, that contract
falls within the term "… obligations for the benefit of the conjugal partnership." Here, no actual
benefit may be proved. It is enough that the benefit to the family is apparent at the time of the
signing of the contract. From the very nature of the contract of loan or services, the family
stands to benefit from the loan facility or services to be rendered to the business or profession
of the husband. It is immaterial, if in the end, his business or profession fails or does not
succeed. Simply stated, where the husband contracts obligations on behalf of the family
business, the law presumes, and rightly so, that such obligation will redound to the benefit of
the conjugal partnership.65

The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors,
Inc. are not controlling because the husband, in those cases, contracted the obligation for his
own business. In this case, the petitioner-husband acted merely as a surety for the loan
contracted by the PBMCI from the private respondent.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals are SET ASIDE AND REVERSED. The assailed orders of
the RTC are AFFIRMED.

SO ORDERED.

THIRD DIVISION

G.R. No. 177667

Cleodia U. Francisco and Ceamantha U. Francisco,
represented by their grandmother Dra. Maida G.
Uriarte as their Attorney-in-Fact,
Petitioners, Present:
 
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus - CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
 
 
Spouses Jorge C. Gonzales and Promulgated:
PURIFicacion W. Gonzales,  
Respondents. September 17, 2008
x---------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Assailed in the present petition for review on certiorari under Rule 45 of the Rules of
Court is the Court of Appeals (CA) Decision dated April 30, 2007, which affirmed the
Regional Trial Court (RTC) Orders dated June 4, 2003 and July 31, 2003, denying
petitioners' motion to stop execution sale.

Petitioners Cleodia U. Francisco and Ceamantha U. Francisco are the minor

children of Cleodualdo M. Francisco (Cleodualdo) and Michele Uriarte Francisco
(Michele). In a Partial Decision dated November 29, 2000 rendered by the RTC of
Makati, Branch 144, in Civil Case No. 93-2289 for Declaration of Nullity of Marriage,
the Compromise Agreement entered into by the estranged couple was approved.
The Compromise Agreement contained in part the following provisions:

7. In their desire to manifest their genuine concern for their children, Cleodia and
Ceamantha, Cleodualdo and Michelle have voluntarily agreed to herein set forth
their obligations, rights and responsibilities on matters relating to their children's
support, custody, visitation, as well as to the dissolution of their conjugal partnership
of gains as follows:

(a) Title and ownership of the conjugal property consisting of a house and lot
located in Ayala Alabang, Muntinlupa, Metro Manila shall be transferred by way of a
deed of donation to Cleodia and Ceamantha, as co-owners, when they reach
nineteen (19) and eighteen (18) years old, respectively, subject to the following
conditions:

x x x1

The property subject of the Compromise Agreement is a house and lot covered by
Transfer Certificate of Title No. 167907 in the name of Cleodualdo M. Francisco,
married to Michele U. Francisco, with an area of 414 square meters, and located in
410 Taal St., Ayala Alabang Village, Muntinlupa City.2

Meanwhile, in a case for Unlawful Detainer with Preliminary Attachment filed by

spouses Jorge C. Gonzales and Purificacion W. Gonzales (respondents) against
George Zoltan Matrai (Matrai) and Michele, the Metropolitan Trial Court (MeTC) of
Muntinlupa City, Branch 80, rendered a Decision dated May 10, 2001, ordering
Matrai and Michele to vacate the premises leased to them located in
264 Lanka Drive, Ayala Alabang Village, Muntinlupa City, and to pay back rentals,
unpaid telephone bills and attorney's fees.3

Pending appeal with the RTC of Muntinlupa, Branch 256, an order was issued
granting respondents' prayer for the execution of the MeTC Decision. 4 A notice of
sale by execution was then issued by the sheriff covering the real property under
Transfer Certificate of Title No. T-167907 in the name of Cleodualdo M. Francisco,
married to Michele U. Francisco.5

When petitioners' grandmother learned of the scheduled auction, she, as guardian-

in-fact of petitioners, filed with the RTC an Affidavit of Third Party Claim6 and a Very
Urgent Motion to Stop Sale by Execution7 but this was denied in the Order dated
June 4, 2003.8 Petitioners' motion for reconsideration was denied per RTC Order
dated July 31, 2003.9

Petitioners then filed a petition for certiorari with the CA.

Pending resolution by the CA, the RTC issued an Order dated July 8, 2005,
granting respondents' petition for the issuance of a new certificate of title.10 The
RTC also issued an Order on February 13, 2006, granting respondents' motion for
the issuance of a writ of possession.11

On April 30, 2007, the CA dismissed the petition, the dispositive portion of which
reads:

WHEREFORE, premises considered, the Petition  is hereby DISMISSED.

The Order(s), dated June 4, 2003 and July 31, 2003, of the Regional Trial Court of
Muntinlupa City, Br. 256, in Civil Case No. 01-201, STAND. Costs against the
Petitioners.

SO ORDERED.12

Hence, herein petition. As prayed for, the Court issued a temporary restraining
order on July 11, 2007, enjoining respondents, the RTC, the Register of Deeds, and
the Sheriff from implementing or enforcing the RTC Order dated July 8, 2005,
canceling TCT No. 167907 and Order dated February 13, 2006, issuing a writ of
possession, until further orders from the Court.13

Petitioners argue that: (1) they are the rightful owners of the property as the Partial
Decision issued by the RTC of Makati in Civil Case No. 93-2289 had already
become final; (2) their parents already waived in their favor their rights over the
property; (3) the adjudged obligation of Michele in the ejectment case did not
redound to the benefit of the family; (4) Michele's obligation is a joint obligation
between her and Matrai, not joint and solidary.14

T_ftn4he Court finds that it was grave error for the RTC to proceed with the
execution, levy and sale of the subject property. The power of the court in executing
judgments extends only to properties unquestionably belonging to the judgment
debtor alone,15 in the present case to those belonging to Michele and Matrai. One
man's goods shall not be sold for another man's debts.16

_ftn4

To begin with, the RTC should not have ignored that TCT No. 167907 is in the
name of "Cleodualdo M. Francisco, married to Michele U. Francisco." On its face,
the title shows that the registered owner of the property is not Matrai and Michele
but Cleodualdo, married to Michele. This describes the civil status of Cleodualdo at
the time the property was acquired.17

Records show that Cleodualdo and Michele were married on June 12, 1986, prior to
the effectivity of the Family Code on August 3, 1988. As such, their property
relations are governed by the Civil Code on conjugal partnership of gains.

_ftn4

The CA acknowledged that ownership of the subject property is conjugal in

nature;18 however, it ruled that since Michele's obligation was not proven to be a
personal debt, it must be inferred that it is conjugal and redounded to the benefit of
the family, and hence, the property may be held answerable for it.19

_ftn4

The Court does not agree.

_ftn4

A wife may bind the conjugal partnership only when she purchases things
necessary for the support of the family, or when she borrows money for that
purpose upon her husband's failure to deliver the needed sum; when administration
of the conjugal partnership is transferred to the wife by the courts or by the
husband; or when the wife gives moderate donations for charity. Failure to establish
any of these circumstances means that the conjugal asset may not be bound to
answer for the wife's personal obligation.20 Considering that the foregoing
circumstances are evidently not present in this case as the liability incurred by
Michele arose from a judgment rendered in an unlawful detainer case against her
and her partner Matrai.

_ftn4

Furthermore, even prior to the issuance of the Notice of Levy on Execution on

November 28, 2001,21 there was already annotated on the title the following
inscription:

Entry No. 23341-42/T-167907 – Nullification of Marriage

By order of the Court RTC, NCR, Branch 144, Makati City dated July 4, 2001, which
become final and executory on October 18, 2001 declaring the Marriage Contract
between Michelle Uriarte and Cleodualdo M. Francisco, Jr. is null & void ab initio
and title of ownership of the conjugal property consisting of the above-described
property shall be transferred by way of a Deed of Donation to Cleodia Michaela U.
Francisco and Ceamantha Maica U. Francisco, as co-owners when they reach
nineteen (19) and eighteen (18) yrs. old to the condition that Cleodualdo, shall
retain usufructuary rights over the property until he reaches the age of 65 yrs. Old.

Date of instrument – Oct 18, 2001

Date of inscription – Oct 22, 2001.22

This annotation should have put the RTC and the sheriff on guard, and they should
not have proceeded with the execution of the judgment debt of Michele and Matrai.

_ftn4

While the trial court has the competence to identify and to secure properties and
interest therein held by the judgment debtor for the satisfaction of a money
judgment rendered against him, such exercise of its authority is premised on one
important fact: that the properties levied upon, or sought to be levied upon, are
properties unquestionably owned by the judgment debtor and are not exempt by
law from execution.23 Also, a sheriff is not authorized to attach or levy on property
not belonging to the judgment debtor, and even incurs liability if he wrongfully levies
upon the property of a third person. A sheriff has no authority to attach the property
of any person under execution except that of the judgment debtor.24

_ftn4It should be noted that the judgment debt for which the subject property was
being made to answer was incurred by Michele and her partner,25 Matrai.
Respondents allege that the lease of the property in Lanka Drive redounded to the
benefit of the family.26 By no stretch of one's imagination can it be concluded that
said debt/obligation was incurred for the benefit of the conjugal partnership or that
some advantage accrued to the welfare of the family. In BA Finance Corporation v.
Court of Appeals,27 the Court ruled that the petitioner cannot enforce the obligation
contracted by Augusto Yulo against his conjugal properties with respondent Lily
Yulo because it was not established that the obligation contracted by the husband
redounded to the benefit of the conjugal partnership under Article 161 of the Civil
Code. The Court stated:
_ftn4

In the present case, the obligation which the petitioner is seeking to enforce against
the conjugal property managed by the private respondent Lily Yulo was undoubtedly
contracted by Augusto Yulo for his own benefit because at the time he incurred the
obligation he had already abandoned his family and had left their conjugal home.
Worse, he made it appear that he was duly authorized by his wife in behalf of A & L
Industries, to procure such loan from the petitioner. Clearly, to make A & L
Industries liable now for the said loan would be unjust and contrary to the express
provision of the Civil Code. (Emphasis supplied)

_ftn4

Similarly in this case, Michele, who was then already living separately from
Cleodualdo,28 rented the house in Lanka Drive for her and Matrai’s own benefit. In
fact, when they entered into the lease agreement, Michele and Matrai purported
themselves to be husband and wife.29 Respondents’ bare allegation that petitioners
lived with Michele on the leased property is not sufficient to support the conclusion
that the judgment debt against Michele and Matrai in the ejectment suit redounded
to the benefit of the family of Michele and Cleodualdo and petitioners. Thus,
in Homeowners Savings and Loan Bank v. Dailo, the Court stated thus:

x x x Ei incumbit probatio qui dicit, non qui negat (he who asserts, not he who
denies, must prove). Petitioner’s sweeping conclusion that the loan obtained by the
late Marcelino Dailo, Jr. to finance the construction of housing units without a doubt
redounded to the benefit of his family, without adducing adequate proof, does not
persuade this Court. Other than petitioner’s bare allegation, there is nothing from
the records of the case to compel a finding that, indeed, the loan obtained by the
late Marcelino Dailo, Jr. redounded to the benefit of the family. Consequently, the
conjugal partnership cannot be held liable for the payment of the principal
obligation.30

_ftn4

To hold the property in Taal St. liable for the obligations of Michele and Matrai
would be going against the spirit and avowed objective of the Civil Code to give the
utmost concern for the solidarity and well-being of the family as a unit.31

_ftn4

In justifying the levy against the property, the RTC went over the Compromise
Agreement as embodied in the Partial Decision dated November 29, 2000. Oddly,
the RTC ruled that there was no effective transfer of ownership to the siblings
Cleodia and Ceamantha Francisco. In the same breath, the RTC astonishingly ruled
that Michele is now the owner of the property inasmuch as Cleodualdo already
waived his rights over the property. The Compromise Agreement must not be read
piece-meal but in its entirety. It is provided therein, thus:

7. In their desire to manifest their genuine concern for their children, Cleodia and
Ceamantha, Cleodualdo and Michelle have voluntarily agreed to herein set forth
their obligations, rights and responsibilities on matters relating to their children's
support, custody, visitation, as well as to the dissolution of their conjugal partnership
of gains as follows:

(a) Title and ownership of the conjugal property consisting of a house and lot
located in Ayala Alabang, Muntinlupa, Metro Manila shall be transferred by
way of a deed of donation to Cleodia and Ceamantha, as co-owners, when
they reach nineteen (19) and eighteen (18) years old, respectively, subject to
the following conditions:

a.1. Cleodualdo shall retain usufructuary rights over the property until he reaches
the age of 65 years old, with the following rights and responsibilities:

x x x x32 (Emphasis supplied)

From the foregoing, it is clear that both Michele and Cleodualdo have waived their
title to and ownership of the house and lot in Taal St. in favor of petitioners. The
property should not have been levied and sold at execution sale, for lack of legal
basis.

Verily, the CA committed an error in sustaining the RTC Orders dated June 4, 2003
and July 31, 2003.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision

dated April 30, 2007, affirming RTC Orders dated June 4, 2003 and July 31, 2003,
are hereby NULLIFIED and SET ASIDE. The temporary restraining order issued by
the Court per Resolution of July 11, 2007 is hereby made PERMANENT.

Costs against respondents.

SO ORDERED.

G.R. No. 145222               April 24, 2009

SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners,

vs.
THE HONORABLE COURT OF APPEALS, Former Division, and ROMULO
NICOL, Respondents.

DECISION

TINGA, J.:

Before this Court is a petition for certiorari assailing the 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 (₱30,000.00) pesos as
moral damages, five thousand (₱5,000.00) pesos as attorney’s fees and litigation expenses,
another five thousand (₱5,000.00) pesos as exemplary damages and the cost of suit.2
Said decision was affirmed, successively, by the Court of Appeals and this Court. It became
final and executory on 5 March 1992.

On 14 October 1992, the trial court issued a writ of execution, a portion of which provides:

Now, therefore, you are commanded that of the goods and chattels of the defendant Erlinda
Nicol, or from her estates or legal heirs, you cause the sum in the amount of forty thousand
pesos (₱40,000.00), Philippine Currency, representing the moral damages, attorney’s fees
and litigation expenses and exemplary damages and the cost of suit of the plaintiff aside from
your lawful fees on this execution and do likewise return this writ into court within sixty (60)
days from date, with your proceedings endorsed hereon.

But if sufficient personal property cannot be found whereof to satisfy this execution and lawful
fees thereon, then you are commanded that of the lands and buildings of said defendant you
make the said sum of money in the manner required by the Rules of Court, and make return
of your proceedings with this writ within sixty (60) days from date.3

Finding Erlinda Nicol’s personal properties insufficient to satisfy the judgment, the Deputy
Sheriff issued a notice of levy on real property on execution addressed to the Register of
Deeds of Cavite. The notice of levy was annotated on the Transfer Certificate of Title No. T-
125322.

On 20 November 1992, a notice of sheriff’s sale was issued.

Two (2) days before the public auction sale on 28 January 1993, an affidavit of third-party
claim from one Arnulfo F. Fulo was received by the deputy sheriff prompting petitioners to put
up a sheriff’s indemnity bond. The auction sale proceeded with petitioners as the highest
bidder.

On 4 February 1993, a certificate of sale was issued in favor of petitioners.

Almost a year later on 2 February 1994, Romulo Nicol (respondent), the husband of Erlinda
Nicol, filed a complaint for annulment of certificate of sale and damages with preliminary
injunction against petitioners and the deputy sheriff. Respondent, as plaintiff therein, alleged
that the defendants, now petitioners, connived and directly levied upon and execute his real
property without exhausting the personal properties of Erlinda Nicol. Respondent averred that
there was no proper publication and posting of the notice of sale. Furthermore, respondent
claimed that his property which was valued at ₱500,000.00 was only sold at a "very low price"
of ₱51,685.00, whereas the judgment obligation of Erlinda Nicol was only ₱40,000.00. The
case was assigned to Branch 21 of the RTC of Imus, Cavite.

In response, petitioners filed a motion to dismiss on the grounds of lack of jurisdiction and that
they had acted on the basis of a valid writ of execution. Citing De Leon v.
Salvador,4 petitioners claimed that respondent should have filed the case with Branch
19 where the judgment originated and which issued the order of execution, writ of execution,
notice of levy and notice of sheriff’s sale.

In an Order5 dated 18 April 1994, the RTC dismissed respondent’s complaint and ruled
that Branch 19 has jurisdiction over the case, thus:

As correctly pointed out by the defendants, any flaw in the implementation of the writ of
execution by the implementing sheriff must be brought before the court issuing the writ of
execution. Besides, there are two (2) remedies open to the plaintiff, if he feels that the
property being levied on belongs to him and not to the judgment debtor. The first remedy is to
file a third-party claim. If he fails to do this, a right is reserved to him to vindicate his claim
over the property by any proper action. But certainly, this is not the proper action reserved to
the plaintiff to vindicate his claim over the property in question to be ventilated before this
court. As earlier stated, this case should have been addressed to Branch 19, RTC Bacoor as
it was that court which issued the writ of execution.6

Respondent moved for reconsideration but it was denied on 26 July 1994.

On appeal, the Court of Appeals reversed the trial court and held that Branch 21 has
jurisdiction to act on the complaint filed by appellant. The dispositive portion reads:

WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. This
case is REMANDED to the Regional Trial Court of Imus, Cavite, Branch 21 for further
proceedings.

SO ORDERED.7

Petitioners’ motion for reconsideration was denied on 23 August 2000. Hence, the instant
petition attributing grave abuse of discretion on the part of the Court of Appeals.

A petition for certiorari is an extraordinary remedy that is adopted to correct errors of

jurisdiction committed by the lower court or quasi-judicial agency, or when there is grave
abuse of discretion on the part of such court or agency amounting to lack or excess of
jurisdiction. Where the error is not one of jurisdiction, but of law or fact which is a mistake of
judgment, the proper remedy should be appeal. In addition, an independent action for
certiorari may be availed of only when there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law.8

Nowhere in the petition was it shown that the jurisdiction of the Court of Appeals was
questioned. The issue devolves on whether the husband of the judgment debtor may file an
independent action to protect the conjugal property subject to execution. The alleged error
therefore is an error of judgment which is a proper subject of an appeal.

Nevertheless, even if we were to treat this petition as one for review, the case should still be
dismissed on substantive grounds.

Petitioners maintain that Branch 19 retained jurisdiction over its judgment to the exclusion of
all other co-ordinate courts for its execution and all incidents thereof, in line with De Leon v.
Salvador. Petitioners insist that respondent, who is the husband of the judgment debtor, is not
the "third party" contemplated in Section 17 (now Section 16), Rule 39 of the Rules of Court,
hence a separate action need not be filed. Furthermore, petitioners assert that the obligation
of the wife redounded to the benefit of the conjugal partnership and cited authorities to the
effect that the husband is liable for the tort committed by his wife.

Respondent on the other hand merely avers that the decision of the Court of Appeals is
supported by substantial evidence and in accord with law and jurisprudence.9

Verily, the question of jurisdiction could be resolved through a proper interpretation of Section
16, Rule 39 of the Rules of Court, which reads:

Sec. 16. Proceedings where property claimed by third person.

If the property levied on is claimed by any person other than the judgment obligor or his
agent, and such person makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves the same upon the officer making
the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep
the property, unless such judgment obligee, on demand of the officer, files a bond approved
by the court to indemnify the third-party claimant in a sum not less than the value of the
property levied on. In case of disagreement as to such value, the same shall be determined
by the court issuing the writ of execution. No claim for damages for the taking or keeping of
the property may be enforced against the bond unless the action therefor is filed within one
hundred twenty (120) days from the date of the filing of the bond.

The officer shall not be liable for damages for the taking or keeping of the property, to any
third-party claimant if such bond is filed. Nothing herein contained shall prevent such claimant
or any third person from vindicating his claim to the property in a separate action, or prevent
the judgment obligee from claiming damages in the same or a separate action against a third-
party claimant who filed a frivolous or plainly spurious claim.

When the writ of execution is issued in favor of the Republic of the Philippines, or any officer
duly representing it, the filing of such bond shall not be required, and in case the sheriff or
levying officer is sued for damages as a result of the levy, he shall be represented by the
Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be
paid by the National Treasurer out of such funds as may be appropriated for the purpose.
(Emphasis Supplied)

Apart from the remedy of terceria available to a third-party claimant or to a stranger to the
foreclosure suit against the sheriff or officer effecting the writ by serving on him an affidavit of
his title and a copy thereof upon the judgment creditor, a third-party claimant may also resort
to an independent separate action, the object of which is the recovery of ownership or
possession of the property seized by the sheriff, as well as damages arising from wrongful
seizure and detention of the property. If a separate action is the recourse, the third-party
claimant must institute in a forum of competent jurisdiction an action, distinct and separate
from the action in which the judgment is being enforced, even before or without need of filing
a claim in the court that issued the writ.101awphi1.zw+

A third-party claim must be filed a person other than the judgment debtor or his agent. In
other words, only a stranger to the case may file a third-party claim.

This leads us to the question: Is the husband, who was not a party to the suit but whose
conjugal property is being executed on account of the other spouse being the judgment
obligor, considered a "stranger?"

In determining whether the husband is a stranger to the suit, the character of the property
must be taken into account. In Mariano v. Court of Appeals,11 which was later adopted in
Spouses Ching v. Court of Appeals,12 this Court held that the husband of the judgment debtor
cannot be deemed a "stranger" to the case prosecuted and adjudged against his wife for an
obligation that has redounded to the benefit of the conjugal partnership. 13 On the other hand,
in Naguit v. Court of Appeals14 and Sy v. Discaya,15 the Court stated that a spouse is deemed
a stranger to the action wherein the writ of execution was issued and is therefore justified in
bringing an independent action to vindicate her right of ownership over his exclusive or
paraphernal property.lawphil.net

Pursuant to Mariano however, it must further be settled whether the obligation of the

judgment debtor redounded to the benefit of the conjugal partnership or not.

Petitioners argue that the obligation of the wife arising from her criminal liability is chargeable
to the conjugal partnership. We do not agree.

There is no dispute that contested property is conjugal in nature. Article 122 of the Family
Code16 explicitly provides that payment of personal debts contracted by the husband or the
wife before or during the marriage shall not be charged to the conjugal partnership except
insofar as they redounded to the benefit of the family.

Unlike in the system of absolute community where liabilities incurred by either spouse by
reason of a crime or quasi-delict  is chargeable to the absolute community of property, in the
absence or insufficiency of the exclusive property of the debtor-spouse, the same advantage
is not accorded in the system of conjugal partnership of gains. The conjugal partnership of
gains has no duty to make advance payments for the liability of the debtor-spouse.

Parenthetically, by no stretch of imagination can it be concluded that the civil obligation

arising from the crime of slander committed by Erlinda redounded to the benefit of the
conjugal partnership.

To reiterate, conjugal property cannot be held liable for the personal obligation contracted by
one spouse, unless some advantage or benefit is shown to have accrued to the conjugal
partnership.17

In Guadalupe v. Tronco,18 this Court held that the car which was claimed by the third party
complainant to be conjugal property was being levied upon to enforce "a judgment for
support" filed by a third person, the third-party claim of the wife is proper since the obligation
which is personal to the husband is chargeable not on the conjugal property but on his
separate property.

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.

G.R. No. 164201               December 10, 2012

EFREN PANA, Petitioner,
vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE, JR., Respondents.

DECISION

ABAD, J.:

This case is about the propriety of levy and execution on conjugal properties where one of the
spouses has been found guilty of a crime and ordered to pay civil indemnities to the victims'
heirs.

The Facts and the Case

The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and others of
murder before the. Regional Trial Court (RTC) of Surigao City in Criminal Cases 4232 and
4233.1

On July 9, 1997 the RTC rendered a consolidated decision 2 acquitting Efren of the charge for
insufficiency of evidence but finding Melecia and another person guilty as charged and
sentenced them to the penalty of death. The RTC ordered those found guilty to pay each of
the heirs of the victims, jointly and severally, P50,000.00 as civil indemnity, P50,000.00 each
as moral damages, and P150,000.00 actual damages.

On appeal to this Court, it affirmed on May 24, 2001 the conviction of both accused but
modified the penalty to reclusion perpetua. With respect to the monetary awards, the Court
also affirmed the award of civil indemnity and moral damages but deleted the award for actual
damages for lack of evidentiary basis. In its place, however, the Court made an award of
P15,000.00 each by way of temperate damages. In addition, the Court awarded P50,000.00
exemplary damages per victim to be paid solidarily by them.3 The decision became final and
executory on October 1, 2001.4

Upon motion for execution by the heirs of the deceased, on March 12, 2002 the RTC ordered
the issuance of the writ,5 resulting in the levy of real properties registered in the names of
Efren and Melecia.6 Subsequently, a notice of levy7 and a notice of sale on execution8 were
issued.

On April 3, 2002, petitioner Efren and his wife Melecia filed a motion to quash the writ of
execution, claiming that the levied properties were conjugal assets, not paraphernal assets of
Melecia.9 On September 16, 2002 the RTC denied the motion.10 The spouses moved for
reconsideration but the RTC denied the same on March 6, 2003.11

Claiming that the RTC gravely abused its discretion in issuing the challenged orders, Efren
filed a petition for certiorari before the Court of Appeals (CA). On January 29, 2004 the CA
dismissed the petition for failure to sufficiently show that the RTC gravely abused its
discretion in issuing its assailed orders. 12 It also denied Efren’s motion for reconsideration, 13 
prompting him to file the present petition for review on certiorari.

The Issue Presented

The sole issue presented in this case is whether or not the CA erred in holding that the
conjugal properties of spouses Efren and Melecia can be levied and executed upon for the
satisfaction of Melecia’s civil liability in the murder case.

Ruling of the Court

To determine whether the obligation of the wife arising from her criminal liability is chargeable
against the properties of the marriage, the Court has first to identify the spouses’ property
relations.

Efren claims that his marriage with Melecia falls under the regime of conjugal partnership of
gains, given that they were married prior to the enactment of the Family Code and that they
did not execute any prenuptial agreement.14 Although the heirs of the deceased victims do not
dispute that it was the Civil Code, not the Family Code, which governed the marriage, they
insist that it was the system of absolute community of property that applied to Efren and
Melecia. The reasoning goes:

Admittedly, the spouses were married before the effectivity of the Family Code. But that fact
does not prevent the application of [A]rt. 94, last paragraph, of the Family Code because their
property regime is precisely governed by the law on absolute community. This finds support in
Art. 256 of the Family Code which states:

"This code shall have retroactive effect in so far as it does not prejudice or impair vested or
acquired rights in accordance with the Civil Code or other laws."

None of the spouses is dead. Therefore, no vested rights have been acquired by each over
the properties of the community. Hence, the liabilities imposed on the accused-spouse may
properly be charged against the community as heretofore discussed.15

The RTC applied the same reasoning as above.16 Efren and Melecia’s property relation was
admittedly conjugal under the Civil Code but, since the transitory provision of the Family Code
gave its provisions retroactive effect if no vested or acquired rights are impaired, that property
relation between the couple was changed when the Family Code took effect in 1988. The
latter code now prescribes in Article 75 absolute community of property for all marriages
unless the parties entered into a prenuptial agreement. As it happens, Efren and Melecia had
no prenuptial agreement. The CA agreed with this position.17
Both the RTC and the CA are in error on this point. While it is true that the personal stakes of
each spouse in their conjugal assets are inchoate or unclear prior to the liquidation of the
conjugal partnership of gains and, therefore, none of them can be said to have acquired
vested rights in specific assets, it is evident that Article 256 of the Family Code does not
intend to reach back and automatically convert into absolute community of property relation
all conjugal partnerships of gains that existed before 1988 excepting only those with
prenuptial agreements.

The Family Code itself provides in Article 76 that marriage settlements cannot be modified
except prior to marriage.

Art. 76. In order that any modification in the marriage settlements may be valid, it must be
made before the celebration of the marriage, subject to the provisions of Articles 66, 67, 128,
135 and 136.

Clearly, therefore, the conjugal partnership of gains that governed the marriage between
Efren and Melecia who were married prior to 1988 cannot be modified except before the
celebration of that marriage.

Post-marriage modification of such settlements can take place only where: (a) the absolute
community or conjugal partnership was dissolved and liquidated upon a decree of legal
separation;18 (b) the spouses who were legally separated reconciled and agreed to revive
their former property regime;19 (c) judicial separation of property had been had on the ground
that a spouse abandons the other without just cause or fails to comply with his obligations to
the family;20 (d) there was judicial separation of property under Article 135; (e) the spouses
jointly filed a petition for the voluntary dissolution of their absolute community or conjugal
partnership of gains.21 None of these circumstances exists in the case of Efren and Melecia.

What is more, under the conjugal partnership of gains established by Article 142 of the Civil
Code, the husband and the wife place only the fruits of their separate property and incomes
from their work or industry in the common fund. Thus:

Art. 142. By means of the conjugal partnership of gains the husband and wife place in a
common fund the fruits of their separate property and the income from their work or industry,
and divide equally, upon the dissolution of the marriage or of the partnership, the net gains or
benefits obtained indiscriminately by either spouse during the marriage.

This means that they continue under such property regime to enjoy rights of ownership over
their separate properties. Consequently, to automatically change the marriage settlements of
couples who got married under the Civil Code into absolute community of property in 1988
when the Family Code took effect would be to impair their acquired or vested rights to such
separate properties.

The RTC cannot take advantage of the spouses’ loose admission that absolute community of
property governed their property relation since the record shows that they had been insistent
that their property regime is one of conjugal partnership of gains. 22 No evidence of a
prenuptial agreement between them has been presented.

What is clear is that Efren and Melecia were married when the Civil Code was still the
operative law on marriages. The presumption, absent any evidence to the contrary, is that
they were married under the regime of the conjugal partnership of gains. Article 119 of the
Civil Code thus provides:

Art. 119. The future spouses may in the marriage settlements agree upon absolute or relative
community of property, or upon complete separation of property, or upon any other regime. In
the absence of marriage settlements, or when the same are void, the system of relative
community or conjugal partnership of gains as established in this Code, shall govern the
property relations between husband and wife.
Of course, the Family Code contains terms governing conjugal partnership of gains that
supersede the terms of the conjugal partnership of gains under the Civil Code. Article 105 of
the Family Code states:

"x x x x

The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to
conjugal partnerships of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance with the Civil
Code or other laws, as provided in Article 256."23

Consequently, the Court must refer to the Family Code provisions in deciding whether or not
the conjugal properties of Efren and Melecia may be held to answer for the civil liabilities
imposed on Melecia in the murder case. Its Article 122 provides:

Art. 122. The payment of personal debts contracted by the husband or the wife before or
during the marriage shall not be charged to the conjugal properties partnership except insofar
as they redounded to the benefit of the family.

Neither shall the fines and pecuniary indemnities imposed upon them be charged to the
partnership.

However, the payment of personal debts contracted by either spouse before the marriage,
that of fines and indemnities imposed upon them, as well as the support of illegitimate
children of either spouse, may be enforced against the partnership assets after the
responsibilities enumerated in the preceding Article have been covered, if the spouse who is
bound should have no exclusive property or if it should be insufficient; but at the time of the
liquidation of the partnership, such spouse shall be charged for what has been paid for the
purpose above-mentioned.

Since Efren does not dispute the RTC’s finding that Melecia has no exclusive property of her
own,24 the above applies. The civil indemnity that the decision in the murder case imposed on
her may be enforced against their conjugal assets after the responsibilities enumerated in
Article 121 of the Family Code have been covered.25 Those responsibilities are as follows:

Art. 121. The conjugal partnership shall be liable for:

(1) The support of the spouse, their common children, and the legitimate children of either
spouse; however, the support of illegitimate children shall be governed by the provisions of
this Code on Support;

(2) All debts and obligations contracted during the marriage by the designated administrator-
spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of
them with the consent of the other;

(3) Debts and obligations contracted by either spouse without the consent of the other to the
extent that the family may have benefited;

(4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal
partnership property;

(5) All taxes and expenses for mere preservation made during the marriage upon the
separate property of either spouse;

(6) Expenses to enable either spouse to commence or complete a professional, vocational, or

other activity for self-improvement;
(7) Antenuptial debts of either spouse insofar as they have redounded to the benefit of the
family;

(8) The value of what is donated or promised by both spouses in favor of their common
legitimate children for the exclusive purpose of commencing or completing a professional or
vocational course or other activity for self-improvement; and

(9) Expenses of litigation between the spouses unless the suit is found to be groundless.

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be
solidarily liable for the unpaid balance with their separate properties.1âwphi1

Contrary to Efren’s contention, Article 121 above allows payment of the criminal indemnities
imposed on his wife, Melecia, out of the partnership assets even before these are liquidated.
Indeed, it states that such indemnities "may be enforced against the partnership assets after
the responsibilities enumerated in the preceding article have been covered."[26]  No prior
liquidation of those assets is required. This is not altogether unfair since Article 122 states
that "at the time of liquidation of the partnership, such [offending] spouse shall be charged for
what has been paid for the purposes above-mentioned."

WHEREFORE, the Court AFFIRMS with MODIFICATION the Resolutions of the Court of

Appeals in CA-G.R. SP 77198 dated January 29, 2004 and May 14, 2004. The Regional Trial
Court of Surigao City, Branch 30, shall first ascertain that, in enforcing the writ of execution on
the conjugal properties of spouses Efren and Melecia Pana for the satisfaction of the
indemnities imposed by final judgment on the latter accused in Criminal Cases 4232 and
4233, the responsibilities enumerated in Article 121 of the Family Code have been covered.

SO ORDERED.

G.R. No. L-61464 May 28, 1988

BA FINANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing
business under the name and style of A & L INDUSTRIES), respondents.

GUTIERREZ, JR., J.:

This is a petition for review seeking to set aside the decision of the Court of Appeals which
affirmed the decision of the then Court of First Instance of Manila, dismissing the complaint
instituted by the petitioner and ordering it to pay damages on the basis of the private
respondent's counterclaim.

On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the
amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and
as representative of the A & L Industries. Respondent Yulo presented an alleged special
power of attorney executed by his wife, respondent Lily Yulo, who manages A & L Industries
and under whose name the said business is registered, purportedly authorizing Augusto Yulo
to procure the loan and sign the promissory note. About two months prior to the loan,
however, Augusto Yulo had already left Lily Yulo and their children and had abandoned their
conjugal home. When the obligation became due and demandable, Augusto Yulo failed to
pay the same.

On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto
and Lily Yulo on the basis of the promissory note. It also prayed for the issuance of a writ of
attatchment alleging that the said spouses were guilty of fraud in contracting the debt upon
which the action was brought and that the fraud consisted of the spouses' inducing the
petitioner to enter into a contract with them by executing a Deed of Assignment in favor of the
petitioner, assigning all their rights, titles and interests over a construction contract executed
by and between the spouses and A. Soriano Corporation on June 19, 1974 for a
consideration of P615,732.50 when, in truth, the spouses did not have any intention of
remitting the proceeds of the said construction contract to the petitioner because despite the
provisions in the Deed of Assignment that the spouses shall, without compensation or costs,
collect and receive in trust for the petitioner all payments made upon the construction contract
and shall remit to the petitioner all collections therefrom, the said spouses failed and refuse to
remit the collections and instead, misappropriated the proceeds for their own use and benefit,
without the knowledge or consent of the petitioner.

The trial court issued the writ of attachment prayed for thereby enabling the petitioner to
attach the properties of A & L Industries. Apparently not contented with the order, the
petitioner filed another motion for the examination of attachment debtor, alleging that the
properties attached by the sheriff were not sufficient to secure the satisfaction of any
judgment that may be recovered by it in the case. This was likewise granted by the court.

Private respondent Lily Yulo filed her answer with counterclaim, alleging that although
Augusta Yulo and she are husband and wife, the former had abandoned her and their
children five (5) months before the filing of the complaint; that they were already separated
when the promissory note was executed; that her signature in the special power of attorney
was forged because she had never authorized Augusto Yulo in any capacity to transact any
business for and in behalf of A & L Industries, which is owned by her as a single proprietor,
that she never got a single centavo from the proceeds of the loan mentioned in the
promissory note; and that as a result of the illegal attachment of her properties, which
constituted the assets of the A & L Industries, the latter closed its business and was taken
over by the new owner.

After hearing, the trial court rendered judgment dismissing the petitioner's complaint against
the private respondent Lily Yulo and A & L Industries and ordering the petitioner to pay the
respondent Lily Yulo P660,000.00 as actual damages; P500,000.00 as unrealized profits;
P300,000.00 as exemplary damages; P30,000.00 as and for attorney's fees; and to pay the
costs.

The petitioner appealed. The Court of Appeals affirmed the trial court's decision except for the
exemplary damages which it reduced from P300,000.00 to P150,000.00 and the attorney's
fees which were reduced from P30,000.00 to P20,000.00.

In resolving the question of whether or not the trial court erred in holding that the signature of
respondent Lily Yulo in the special power of attorney was forged, the Court of Appeals said:

The crucial issue to be determined is whether or not the signatures of the appellee Lily Yulo in
Exhibits B and B-1 are forged. Atty. Crispin Ordoña, the Notary Public, admitted in open court
that the parties in the subject documents did not sign their signatures in his presence. The
same were already signed by the supposed parties and their supposed witnesses at the time
they were brought to him for ratification. We quote from the records the pertinent testimony of
Atty. Ordoña, thus:

Q. This document marked as Exhibit B-1, when this was presented to you by that common
friend, June Enriquez, it was already typewritten, it was already accomplished, all
typewritten.?

A. Yes, sir.

Q And the parties had already affixed their signatures in this document?
A. Yes, sir.

Q. In this document marked as Exhibit B although it appears here that this is an

acknowledgment, you have not stated here that the principal actually acknowledged this
document to be her voluntary act and deed?

A This in one of those things that escaped my attention. Actually I have not gone over the
second page. I believed it was in order I signed it. (TSN pp. 13-14, Hearing of Nov. 26, 1976).

The glaring admission by the Notary Public that he failed to state in the acknowledgment
portion of Exhibit B-1 that the appellee Lily Yulo acknowledged the said document to be her
own voluntary act and deed, is a very strong and commanding circumstance to show that she
did not appear personally before the said Notary Public and did not sign the document.

Additionally, the Notary Public admitted that, while June Enriquez is admittedly a mutual
friend of his and the defendant Augusta Yulo, and who is also an instrumental witness in said
Exhibit B-1., he could not recognize or tell which of the two signatures appearing therein, was
the signature of this June Enriquez.

Furthermore, as the issue is one of credibility of a witness, the findings and conclusions of the
trial court before whom said witness, Atty. Crispin Ordoña, the Notary Public before whom the
questioned document was supposedly ratified and acknowledged, deserve great respect and
are seldom disturbed on appeal by appellate tribunals, since it is in the best and peculiar
advantage of determining and observing the conduct, demeanor and deportment of a
particular witness while he is testifying in court, an opportunity not enjoyed by the appellate
courts who merely have to rely on the recorded proceedings which transpired in the court
below, and the records are bare of any circumstance of weight, which the trial court had
overlooked and which if duly considered, may radically affect the outcome of the case.

On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her signature in
Exhibit B-1, presented in court a handwriting expert witness in the person of Police Captain
Yakal Giron of the Integrated National Police Training Command, and who is also a
Document Examiner of the same Command's Crime Laboratory at Fort Bonifacio, Metro
Manila. His experience as an examiner of questioned and disputed documents, in our mind, is
quite impressive. To qualify him as a handwriting expert, he declared that he underwent
extensive and actual studies and examination of disputed or questioned document, both at
the National Bureau of Investigation Academy and National Bureau of Investigation
Questioned Document Laboratory, respectively, from July 1964, up to his appointment as
Document Examiner in June, 1975, and, to further his experience along this line, he attended
the 297th Annual Conference of the American Society of Questioned Docurnent Examiners
held at Seattle, Washington, in August 1971, as a representative of the Philippines, and
likewise conducted an observation of the present and modern trends of crime laboratories in
the West Coast, U.S.A., in 1971; that he likewise had conducted actual tests and examination
of about 100,000 documents, as requested by the different courts, administrative, and
governmental agencies of the Government, substantial portions of which relate to actual court
cases.

In concluding that the signatures of the appellee Lily Yulo, in the disputed document in
question (Exh. B-1), were all forgeries, and not her genuine signature, the expert witness
categorically recited and specified in open court what he observed to be about twelve (12)
glaring and material significant differences, in his comparison of the signatures appearing in
the genuine specimen signatures of the said appellee and with those appearing in the
questioned document (Exhibit B-1). Indeed, we have likewise seen the supposed notable
differences, found in the standard or genuine signatures of the appellee which were lifted and
obtained in the official files of the government, such as the Bureau of Internal Revenue on her
income tax returns, as compared to the pretended signature of the appellee appearing in
Exhibits B, B-1. It is also noteworthy to mention that the appellant did not even bother to
conduct a cross-examination of the handwriting expert witness, Capt. Giron, neither did the
appellant present another handwriting expert, at least to counter-act or balance the appellee's
handwriting expert.

Prescinding from the foregoing facts, we subscribe fully to the lower court's observations that
the signatures of the appellee Lily Yulo in the questioned document (Exh. B-1) were forged.
Hence, we find no factual basis to disagree. (pp. 28-30, Rollo)

As to the petitioner's contention that even if the signature of Lily Yulo was forged or even if the
attached properties were her exclusive property, the same can be made answerable to the
obligation because the said properties form part of the conjugal partnership of the spouses
Yulo, the appellate court held that these contentions are without merit because there is strong
preponderant evidence to show that A & L Industries belongs exclusively to respondent Lily
Yulo, namely: a) The Certificate of Registration of A & L Industries, issued by the Bureau of
Commerce, showing that said business is a single proprietorship, and that the registered
owner thereof is only Lily Yulo; b) The Mayor's Permit issued in favor of A & L Industries, by
the Caloocan City Mayor's Office showing compliance by said single proprietorship company
with the City Ordinance governing business establishments; and c) The Special Power of
Attorney itself, assuming but without admitting its due execution, is tangible proof that
Augusto Yulo has no interest whatsoever in the A & L Industries, otherwise, there would have
been no necessity for the Special Power of Attorney if he is a part owner of said single
proprietorship.

With regard to the award of damages, the Court of Appeals affirmed the findings of the trial
court that there was bad faith on the part of the petitioner as to entitle the private respondent
to damages as shown not only by the fact that the petitioner did not present the Deed of
Assignment or the construction agreement or any evidence whatsoever to support its claim of
fraud on the part of the private respondent and to justify the issuance of a preliminary
attachment, but also by the following findings:

Continuing and elaborating further on the appellant's mala fide actuations in securing the writ
of attachment, the lower court stated as follows:

Plaintiff not satisfied with the instant case where an order for attachment has already been
issued and enforced, on the strength of the same Promissory Note (Exhibit"A"), utilizing the
Deed of Chattel Mortgage (Exhibit "4"), filed a foreclosure proceedings before the Office of
the Sheriff of Caloocan (Exhibit"6") foreclosing the remaining properties found inside the
premises formerly occupied by the A & L Industries. A minute examination of Exhibit "4" will
show that the contracting parties thereto, as appearing in par. 1 thereof, are Augusto Yulo,
doing business under the style of A & L Industries (should be A & L Glass Industries
Corporation), as mortgagor and BA Finance Corporation as mortgagee, thus the enforcement
of the Chattel Mortgage against the property of A & L Industries exclusively owned by Lily T.
Yulo appears to be without any factual or legal basis whatsoever. The chattel mortgage,
Exhibit "4" and the Promissory Note, Exhibit A, are based on one and the same obligation.
Plaintiff tried to enforce as it did enforce its claim into two different modes a single obligation.

Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by virtue of a
complaint she filed with the Court of First Instance of Caloocan, seeking annulment of the
Promissory Note, the very basis of the plaintiff in filing this complaint, immediately after the
day it filed a Motion for the Issuance of an Alias Writ of Preliminary Attachment . . .Yet, inspite
of the knowledge and the filing of this Motion to Suspend Proceedings, the Plaintiff still filed a
Motion for the Issuance of a Writ of Attachment dated February 6, 1976 before this court. To
add insult to injury, plaintiff even filed a Motion for Examination of the Attachment Debtor,
although aware that Lily Yulo had already denied participation in the execution of Exhibits "A"
and "B". These incidents and actions taken by plaintiff, to the thinking of the court, are
sufficient to prove and establish the element of bad faith and malice on the part of plaintiff
which may warrant the award of damages in favor of defendant Lily Yulo. (Ibid., pp. 102-
103).<äre||anº•1àw>
Indeed, the existence of evident bad faith on the appellant's part in proceeding against the
appellee Lily Yulo in the present case, may likewise be distressed on the fact that its officer
Mr. Abraham Co, did not even bother to demand the production of at least the duplicate
original of the Special Power of Attorney (Exhibit B) and merely contended himself with a
mere xerox copy thereof, neither did he require a more specific authority from the A & L
Industries to contract the loan in question, since from the very content and recitals of the
disputed document, no authority, express or implied, has been delegated or granted to
August Yulo to contract a loan, especially with the appellant. (pp. 33-34, Rollo)

Concerning the actual damages, the appellate court ruled that the petitioner should have
presented evidence to disprove or rebut the private respondent's claim but it remained quiet
and chose not to disturb the testimony and the evidence presented by the private respondent
to prove her claim.

In this petition for certiorari, the petitioner raises three issues. The first issue deals with the
appellate court's affirmance of the trial court's findings that the signature of the private
respondent on the Special Power of Attorney was forged. According to the petitioner, the
Court of Appeals disregarded the direct mandate of Section 23, Rule 132 of the Rules of
Court which states in part that evidence of handwriting by comparison may be made "with
writings admitted or treated as genuine by the party against whom the evidence is offered, or
proved to be genuine to the satisfaction of the judge," and that there is no evidence on record
which proves or tends to prove the genuineness of the standards used.

There is no merit in this contention.

The records show that the signatures which were used as "standards" for comparison with the
alleged signature of the private respondent in the Special Power of Attorney were those from
the latter's residence certificates in the years 1973, 1974 and 1975, her income tax returns for
the years 1973 and 1975 and from a document on long bond paper dated May 18, 1977. Not
only were the signatures in the foregoing documents admitted by the private respondent as
hers but most of the said documents were used by the private respondent in her transactions
with the government. As was held in the case of Plymouth Saving & Loan Assn. No. 2 v.
Kassing (125 NE 488, 494):

We believe the true rule deduced from the authorities to be that the genuineness of a
"standard" writing may be established (1) by the admission of the person sought to be
charged with the disputed writing made at or for the purposes of the trial or by his testimony;
(2) by witnesses who saw the standards written or to whom or in whose hearing the person
sought to be charged acknowledged the writing thereof; (3) by evidence showing that the
reputed writer of the standard has acquiesced in or recognized the same, or that it has been
adopted and acted upon by him his business transactions or other concerns....

Furthermore, the judge found such signatures to be sufficient as standards. In the case
of Taylor-Wharton Iron & Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:

When a writing is offered as a standard of comparison it is for the presiding judge to decide
whether it is the handwriting of the party to be charged. Unless his finding is founded upon
error of law, or upon evidence which is, as matter of law, insufficient to justify the finding, this
court will not revise it upon exceptions." (Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648;
Nuñez v. Perry, 113 Mass, 274, 276.)

We cannot find any error on the part of the trial judge in using the above documents as
standards and also in giving credence to the expert witness presented by the private
respondent whose testimony the petitioner failed to rebut and whose credibility it likewise
failed to impeach. But more important is the fact that the unrebutted handwriting expert's
testimony noted twelve (12) glaring and material differences in the alleged signature of the
private respondent in the Special Power of Attorney as compared with the specimen
signatures, something which the appellate court also took into account. In Cesar v.
Sandiganbayan  (134 SCRA 105, 132), we ruled:

Mr. Maniwang pointed to other significant divergences and distinctive characteristics between
the sample signatures and the signatures on the questioned checks in his report which the
court's Presiding Justice kept mentioning during Maniwang's testimony.

In the course of his cross-examination, NBI expert Tabayoyong admitted that he saw the
differences between the exemplars used and the questioned signatures but he dismissed the
differences because he did not consider them fundamental. We rule that significant
differences are more fundamental than a few similarities. A forger always strives to master
some similarities.

The second issue raised by the petitioner is that while it is true that A & L Industries is a single
proprietorship and the registered owner thereof is private respondent Lily Yulo, the said
proprietorship was established during the marriage and its assets were also acquired during
the same. Therefore, it is presumed that this property forms part of the conjugal partnership of
the spouses Augusto and Lily Yulo and thus, could be held liable for the obligations
contracted by Augusto Yulo, as administrator of the partnership.

There is no dispute that A & L Industries was established during the marriage of Augusta and
Lily Yulo and therefore the same is presumed conjugal and the fact that it was registered in
the name of only one of the spouses does not destroy its conjugal nature (See Mendoza v.
Reyes, 124 SCRA 161, 165). However, for the said property to be held liable, the obligation
contracted by the husband must have redounded to the benefit of the conjugal partnership
under Article 161 of the Civil Code. In the present case, the obligation which the petitioner is
seeking to enforce against the conjugal property managed by the private respondent Lily Yulo
was undoubtedly contracted by Augusto Yulo for his own benefit because at the time he
incurred the obligation he had already abandoned his family and had left their conjugal home.
Worse, he made it appear that he was duly authorized by his wife in behalf of A & L
Industries, to procure such loan from the petitioner. Clearly, to make A & L Industries liable
now for the said loan would be unjust and contrary to the express provision of the Civil Code.
As we have ruled in Luzon Surety Co., Inc. v. De Gracia  (30 SCRA 111, 115-117):

As explained in the decision now under review: "It is true that the husband is the administrator
of the conjugal property pursuant to the provisions of Art. 163 of the new Civil Code.
However, as such administrator the only obligations incurred by the husband that are
chargeable against the conjugal property are those incurred in the legitimate pursuit of his
career, profession or business with the honest belief that he is doing right for the benefit of the
family. This is not true in the case at bar for we believe that the husband in acting as
guarantor or surety for another in an indemnity agreement as that involved in this case did not
act for the benefit of the conjugal partnership. Such inference is more emphatic in this case,
when no proof is presented that Vicente Garcia in acting as surety or guarantor received
consideration therefore, which may redound to the benefit of the conjugal partnership.(Ibid,
pp. 46-47).

xxx xxx xxx

xxx xxx xxx

In the most categorical language, a conjugal partnership under that provision is liable only for
such "debts and obligations contracted by the husband for the benefit of the conjugal
partnership." There must be the requisite showing then of some advantage which clearly
accrued to the welfare of the spouses. There is none in this case.

xxx xxx xxx

Moreover, it would negate the plain object of the additional requirement in the present Civil
Code that a debt contracted by the husband to bind a conjugal partnership must redound to
its benefit. That is still another provision indicative of the solicitude and tender regard that the
law manifests for the family as a unit. Its interest is paramount; its welfare uppermost in the
minds of the codifiers and legislators.

We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto
Yulo against his conjugal properties with respondent Lily Yulo. Thus, it follows that the writ of
attachment cannot issue against the said properties.

Finally, the third issue assails the award of actual damages according to the petitioner, both
the lower court and the appellate court overlooked the fact that the properties referred to are
still subject to a levy on attachment. They are, therefore, still under custodia legis and thus,
the assailed decision should have included a declaration as to who is entitled to the attached
properties and that assuming arguendo that the attachment was erroneous, the lower court
should have ordered the sheriff to return to the private respondent the attached properties
instead of condemning the petitioner to pay the value thereof by way of actual damages.

In the case of Lazatin v. Twaño (2 SCRA 842, 847), we ruled:

xxx xxx xxx

... It should be observed that Sec. 4 of Rule 59, does not prescribed the remedies available to
the attachment defendant in case of a wrongful attachment, but merely provides an action for
recovery upon the bond, based on the undertaking therein made and not upon the liability
arising from a tortuous act, like the malicious suing out of an attachment. Under the first,
where malice is not essential, the attachment defendant, is entitled to recover only the actual
damages sustained by him by reason of the attachment. Under the second, where the
attachment is maliciously sued out, the damages recoverable may include a compensation for
every injury to his credit, business or feed (Tyler v. Mahoney, 168 NC 237, 84 SE 362;
Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE 234). ...

The question before us, therefore, is whether the attachment of the properties of A & L
Industries was wrongful so as to entitle the petitioner to actual damages only or whether the
said attachment was made in bad faith and with malice to warrant the award of other kinds of
damages. Moreover, if the private respondent is entitled only to actual damages, was the
court justified in ordering the petitioner to pay for the value of the attached properties instead
of ordering the return of the said properties to the private respondent Yulo ?

Both the trial and appellate courts found that there was bad faith on the part of the petitioner
in securing the writ of attachment. We do not think so. "An attachment may be said to be
wrongful when, for instance, the plaintiff has no cause of action, or that there is no true
ground therefore, or that the plaintiff has a sufficient security other than the property attached,
which is tantamout to saying that the plaintiff is not entitled to attachment because the
requirements of entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule
57, Francisco, Revised Rules of Court).

Although the petitioner failed to prove the ground relied upon for the issuance of the writ of
attachment, this failure cannot be equated with bad faith or malicious intent. The steps which
were taken by the petitioner to ensure the security of its claim were premised, on the firm
belief that the properties involved could be made answerable for the unpaid obligation due it.
There is no question that a loan in the amount of P591,003.59 was borrowed from the bank.

We, thus, find that the petitioner is liable only for actual damages and not for exemplary
damages and attorney's fees. Respondent Lily Yulo has manifested before this Court that she
no longer desires the return of the attached properties since the said attachment caused her
to close down the business. From that time she has become a mere employee of the new
owner of the premises. She has grave doubts as to the running condition of the attached
machineries and equipments considering that the attachment was effected way back in 1975.
She states as a matter of fact that the petitioner has already caused the sale of the
machineries for fear that they might be destroyed due to prolonged litigation. We, therefore,
deem it just and equitable to allow private respondent Lily Yulo to recover actual damages
based on the value of the attached properties as proven in the trial court, in the amount of
P660,000.00. In turn, if there are any remaining attached properties, they should be
permanently released to herein petitioner.

We cannot, however, sustain the award of P500,000.00 representing unrealized profits

because this amount was not proved or justified before the trial court. The basis of the alleged
unearned profits is too speculative and conjectural to show actual damages for a future
period. The private respondent failed to present reports on the average actual profits earned
by her business and other evidence of profitability which are necessary to prove her claim for
the said amount (See G. A. Machineries, Inc. v. Yaptinchay, 126 SCRA 78, 88).

The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00
actual damages representing unrealized profits, P150,000.00 for exemplary damages and
P20,000.00 for attorney's fees. As stated earlier, the attached properties, should be released
in favor of the petitioner.

WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner
is ordered to pay the private respondent Lily Yulo the amount of SIX HUNDRED SIXTY
THOUSAND PESOS (P660,000.00) as actual damages. The remaining properties subject of
the attachment are ordered released in favor of the petitioner.

SO ORDERED.

G.R. No. 118784 September 2, 1999

HEIRS OF CHRISTINA AYUSTE, petitioner,

vs.
COURT OF APPEALS and VIENA MALABONGA, respondents.

GONZAGA-REYES, J.:

Before us is a petition for certiorari under Rule 45, asking this Court to review the decision of
the Court of Appeals dated January 23, 1995 in CA-G.R. CV No. 38232, 1 which overturned
the decision of the Regional Trial Court of Lucena City in Civil Case No. 90-33.

At the outset, we note that Christina Ayuste, the plaintiff in the lower court and the original
petitioner herein, died on November 21, 1995. 2 In his Comment dated January 14, 1998 to
private respondent's Manifestation informing the Court of Christina Ayuste's death, petitioner's
counsel re-affirmed such fact of death and informed the Court of the names of Christina
Ayuste's legal representatives. 3 The claim not having been extinguished by the death of
Christina Ayuste, we ordered the substitution of her heirs Marlon Ayuste and Arlaine Ayuste-
Yu for Christina Ayuste in our Resolution dated August 11, 1999.

Christina Ayuste married Rafael Ayuste on September 24, 1961. Although the couple resided
in Manila, they operated a machine shop in Barangay Iyam, Lucena City, which was managed
by Rafael Ayuste. In order to serve as a temporary residence for Rafael Ayuste while in
Lucena, the couple purchased on August 26, 1982 a parcel of land with an area of 180
square meters on which a residential house was built situated at Yale Street, University
Village, Barrio Ibabang Dupay, Lucena City from spouses Pedro and Aida David. A deed of
sale 4 was executed and signed by the parties and filed with the Register of Deeds of Lucena
City. On October 23, 1983, the Register of Deeds of Lucena City issued Transfer Certificate
of Title No. T-42972 in the name of "RAFAEL T. AYUSTE, married to Christina Ayuste. 5
On February 27, 1987, a deed of absolute sale 6 was executed by Rafael Ayuste in favor of
private respondent whereby the former sold the abovementioned parcel of land to the latter
for P40,000, which amount Rafael Ayuste acknowledged having received in the deed. On
page 2 of this deed appears the signature of Christina Ayuste below the phrase "With my
conformity." The deed of sale was registered with the Register of Deeds of Lucena City on
March 5, 1987 and Transfer Certificate of Title No. T-50046 was issued in the name of private
respondent. 7

After Rafael Ayuste's death on October 13, 1989, Christina Ayuste discovered, in the course
of an inventory of their properties, that the title to the land in Lucena was missing. She
searched for it in the office of her husband in Lucena City and it was then that she learned
from her employees about the sale of the house and lot by her husband to private
respondent.

On March 2, 1990, Christina Ayuste filed a complaint with the Regional Trial Court of Lucena
City for the annulment of the sale, cancellation of the title issued in the name of private
respondent and for the payment of moral, exemplary and actual damages. In her complaint
Christina Ayuste alleges that her signature on the deed of sale was forged and that her
husband Rafael Ayuste sold the property without her knowledge and consent.

The Regional Trial Court rendered its Decision on June 20, 1991, the dispositive portion of
which provides as follows —

WHEREFORE, judgment is hereby rendered as follows:

(1) Declaring null and void the Deed of Absolute Sale of House and Lot (Exhibit "C') executed
by defendant and plaintiffs husband, the deceased Rafael Ayuste, on February 27, 1987;

(2) Ordering defendant Viena Malabonga to return to plaintiff Christina Ayuste the possession
of the house and lot covered by Transfer Certificate of Title No. T-50045, now in the name of
defendant Viena Malabonga, together with the improvements thereon;

(3) Directing the Register of Deeds of Lucena City to cancel Transfer Certificate of Title No. T-
50046 and to issue in the name of plaintiff and her children by the late Rafael Ayuste new
Transfer Certificate of Title in lieu thereof, subject to all/any liens and encumbrances
annotated on the memorandum of the title to be cancelled;

(4) Ordering plaintiff Christina Ayuste to pay the defendant Vienna Malabonga the sum of
P258,200.00 for the improvements introduced on the lot and house as well as for
maintenance of the premises; and

(5) Ordering defendant to pay plaintiff the amount of rents received from the premises starting
March, 1990 until such time that she finally turns-over (sic) the possession of the house and
lot to plaintiff, at the rate of P2,700.00 per month.

With costs against defendant. 8

Both parties appealed the trial court's decision. On January 23, 1995, the Court of Appeals
reversed the trial court's ruling by holding that Christina Ayuste's right to bring an action for
the annulment of the sale is barred by laches because of her failure to file it during the
existence of the marriage in accordance with article 173 of the Civil Code. Also, it found
private respondent to be entitled to the protection of a buyer in good faith and for value. The
pertinent portion of the public respondent's decision provides —

Record shows that plaintiff-appellant wife (sic) instituted on March 2, 1990 her action for
annulment of the sale executed by her husband on February 27, 1987 — long after said
vendor-husband died in 1989. It is thus clear that the action for annulment of the sale was not
instituted "during the marriage" as required by Article 173, the very provision of law which
grants the wife the privilege/right to have the sale executed by her husband annulled, in
derogation of the suppose (sic) vested right of the buyer. The two periods provided for in said
Article 173 — "during the marriage" and "within 10 years" should concur.

We find no merit in plaintiff-appellant's claim that she discovered the sale, only after her
husband's death, when she made an inventory and found out that the pertinent titles to the
land subject of the sale were missing. It is settled in this jurisdiction that registration with the
Register of Deeds is notice to the whole world. The questioned deed of sale has long been
registered with the Register of Deeds of Lucena City — on March 5, 1987 — and in fact the
said property was registered in the name of defendant-appellant under Transfer Certificate of
Title No. T-50046. Said TCT in the name of defendant-appellant is now indefeasible.

The peculiar circumstances that militates in favor of defendant-appellant buyer are as follows:
The questioned deed of sale was not actually without the wife's signature signifying marital
consent, so to speak. Evidently, defendant-appellant was led to believe by the husband-
vendor that plaintiff-appellant gave her marital consent to the sale, as said husband presented
a deed of sale supposedly pre-signed by his wife, plaintiff-appellant. Defendant-appellant is
therefore undoubtedly a buyer in good faith and for value, with vested rights equally entitled to
the protection of the law. The questioned deed of sale was duly registered in the name of
defendant-appellant who was issued a Transfer Certificate of Title.

x x x           x x x          x x x

Unlike the statute of limitations, laches is not a mere question of time but is principally a
question of the inequity on unfairness of permitting a stale right to be enforced or asserted.
(Marcelino vs. CA, 210 SCRA 444). For failure of the plaintiff-appellant wife to institute her
action for annulment of sale, while her husband-vendor was still alive as required by Article
173 of the New Civil Code, plaintiff-appellant wife's right under Article 166 of the same Code
has become stale and is now barred by laches.

In view of the foregoing findings, We rule that the trial court erred in giving due course to the
action for annulment of sale. With the foregoing findings and resolution the other issues
raised in this appeal are now moot and academic.

WHEREFORE, in view of all the foregoing, judgment is hereby rendered giving due course to
the appeal of defendant-appellant, —and— dismissing the appeal of plaintiff-appellant.

The decision dated June 20, 1991 rendered by the Regional Trial Court is REVERSED and
SET ASIDE.

The Deed of Absolute Sale executed on February 27, 1987 by and between defendant-
appellant and plaintiff-appellant's husband is declared VALID and BINDING upon the plaintiff-
appellant. 9

Both the trial and appellate court decisions have established that Rafael Ayuste sold conjugal
property without the consent of Christina Ayuste, his wife. This factual finding shall not be
disturbed because only questions of law are reviewed in an appeal under Rule 45 of the
Rules of Court subject to certain well-defined exceptions none of which are present in the
instant case. The only issue which remains to be resolved is whether petitioners are entitled
to the annulment of the contract of sale entered into by Rafael Ayuste without the consent of
Christina Ayuste.

Petitioners claim that since the law expressly prohibits the husband from alienating real
property belonging to the conjugal partnership without his wife's consent, the contract of sale
in question is a nullity pursuant to article 1409 of the Civil Code which provides that contracts
expressly prohibited by law are inexistent and void from the beginning. It is further averred by
petitioners that the present action is not barred because the action to declare the nullity of a
contract does not prescribe. Furthermore, Christina Ayuste cannot be faulted for having
brought the action only after the death of her husband, despite the periods stated in article
173 of the Civil Code, since she had no knowledge of the sale during his lifetime as he
concealed the same from her. Finally, it is contended that article 166 is the relevant provision,
not article 173. 10

Under the Civil Code, although the husband is the administrator of the conjugal
partnership, 11 he cannot alienate or encumber any real property of the conjugal partnership
without his wife's consent, 12 subject only to certain exceptions specified in the law. 13 The
remedy available to the wife in case her husband should dispose of their conjugal property
without her consent is laid down in Article 173 of the Civil Code which states that —

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)

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. 14 The action for
annulment must be brought during the marriage and within ten years from the questioned
transaction by the wife. 15 Where the law speaks in clear and categorical language, there is no
room for interpretation — there is room only for application. 16

In the present case, the deed of sale was executed on February 27, 1987. Rafael Ayuste died
on October 13, 1989. However, it was only on March 2, 1990 that Christina Ayuste filed her
complaint with the lower court asking for the annulment of the sale. Although the action was
filed within ten years from the questioned transaction, it was not brought during the existence
of the marriage which was dissolved upon the death of Rafael Ayuste in 1989. 17 Clearly, the
action for annulment filed by Christina Ayuste was barred for having been filed out of time.

The fact that Christina Ayuste only learned of the sale after the death of her husband is not
material. We affirm public respondent's ruling that registration of the sale with the Register of
Deeds constitutes a notice to the whole world. 18 Precisely, the purpose of the legislature in
providing a system of registration is to afford a means of publicity so that persons dealing with
real property may search the records and thereby, acquire security against instruments the
execution of which have not been revealed to them. 19 Since the deed of sale was registered
on March 5, 1987, Christina Ayuste is presumed to have constructive notice of the sale from
such date.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No pronouncement as to

costs.

SO ORDERED.

Melo, Panganiban and Purisima, JJ., concur.

Vitug, J., please see concurring opinion.

Separate Opinions
 

VITUG., J, concurring opinion;

The questioned sale was concluded on 27 February 1987, before the Family Code took
effect; accordingly, the transaction could still be aptly governed by the then governing
provisions of the Civil Code. Under this Code, the husband could not alienate or encumber
any conjugal real property (acquired by the partnership after the effective date of the Civil
Code) without the consent, express or implied, of the wife 1 (Art. 166, Civil Code; Bautista vs.
Lovina, 98 Phil. 1006, 1956), otherwise, said the Supreme Court in Garcia vs. Court of
Appeals (130 SCRA 433, 1984), reiterating Tolentino vs.  Cardenas (123 Phil. 517, 1966), the
disposition would be void. I share the view of my colleagues that such a contract, absent the
wife's consent should be considered merely voidable consistently with article 173 2 of the Civil
Code under which provision, the wife could, during the marriage and within 10 years from the
questioned transaction, seek its annulment (Felipe vs. Heirs of Maximo Aldon, 120 SCRA 628
[1983]; Reyes vs. De Leon, 20 SCRA 369 [1967]; see Roxas vs. CA, 198 SCRA 541, 1991
which applied Art. 173 to a lease contract). Failing to do so, she or her heirs, after the
dissolution of the marriage, could demand the value of the property alienated (Art. 173, Civil
Code). It might not be amiss to say that an unauthorized sale by the husband of conjugal real
property, not being the administrator thereof, or of the exclusive parapherna of the wife, not
having obtained her prior consent thereto, could be void under the provisions of Article
1874 3 of the Civil Code.

A sale or encumbrance of conjugal (or community) property concluded after the effectivity of
the Family Code is governed by an entirely different rule that now treats such a disposition to
be void if done without the conjoint consent of the spouses or, in case of a spouse's inability,
the authority of the court (see Art. 124, 4 Family Code). The declaration that the disposition by
just one of the spouses is void settles the apparent conflict in some of the rulings during the
regime of the 1950 Civil Code, in construing the provisions of said code found in Articles 161,
162, 166, 171 and 173, in relation to Articles 1390, 7403 and 1874, thereof.

The Family Code has also abandoned the 1950 Civil Code concept of having the husband,
absent a contrary statement in a marriage settlement or in a public instrument executed by
the husband or an order of a court (Arts. 168, 190 and 196, Civil Code), as the statutory
administrator of the conjugal partnership of gains (Art. 165, Civil Code) that permitted suits to
bind the conjugal partnership even where the wife was not named as a party defendant along
with the husband (Stosa, Inc., vs. Court of Appeals, 182 SCRA 862). Article 124 of the Family
Code, like the rule established in the system of absolute community of property (see Arts. 96-
98, Family Code), instead confers the administration and enjoyment 5 of the conjugal property
on the spouses jointly. The marriage settlement, however, may provide for the administration
of the property by one of the spouses, the provisions of the Family Code on conjugal
partnership of gain being merely suppletory thereto. In case of disagreement in the joint
administration and enjoyment of the partnership property, the husband's decision shall prevail
but the wife may avail herself of the "proper remedy" in court "within five years from the date
of the contract implementing the decision."

Separate Opinions

VITUG., J, concurring opinion;

The questioned sale was concluded on 27 February 1987, before the Family Code took
effect; accordingly, the transaction could still be aptly governed by the then governing
provisions of the Civil Code. Under this Code, the husband could not alienate or encumber
any conjugal real property (acquired by the partnership after the effective date of the Civil
Code) without the consent, express or implied, of the wife 1 (Art. 166, Civil Code; Bautista vs.
Lovina, 98 Phil. 1006, 1956), otherwise, said the Supreme Court in Garcia vs. Court of
Appeals (130 SCRA 433, 1984), reiterating Tolentino vs.  Cardenas (123 Phil. 517, 1966), the
disposition would be void. I share the view of my colleagues that such a contract, absent the
wife's consent should be considered merely voidable consistently with article 173 2 of the Civil
Code under which provision, the wife could, during the marriage and within 10 years from the
questioned transaction, seek its annulment (Felipe vs. Heirs of Maximo Aldon, 120 SCRA 628
[1983]; Reyes vs. De Leon, 20 SCRA 369 [1967]; see Roxas vs. CA, 198 SCRA 541, 1991
which applied Art. 173 to a lease contract). Failing to do so, she or her heirs, after the
dissolution of the marriage, could demand the value of the property alienated (Art. 173, Civil
Code). It might not be amiss to say that an unauthorized sale by the husband of conjugal real
property, not being the administrator thereof, or of the exclusive parapherna of the wife, not
having obtained her prior consent thereto, could be void under the provisions of Article
1874 3 of the Civil Code.

A sale or encumbrance of conjugal (or community) property concluded after the effectivity of
the Family Code is governed by an entirely different rule that now treats such a disposition to
be void if done without the conjoint consent of the spouses or, in case of a spouse's inability,
the authority of the court (see Art. 124, 4 Family Code). The declaration that the disposition by
just one of the spouses is void settles the apparent conflict in some of the rulings during the
regime of the 1950 Civil Code, in construing the provisions of said code found in Articles 161,
162, 166, 171 and 173, in relation to Articles 1390, 7403 and 1874, thereof.

The Family Code has also abandoned the 1950 Civil Code concept of having the husband,
absent a contrary statement in a marriage settlement or in a public instrument executed by
the husband or an order of a court (Arts. 168, 190 and 196, Civil Code), as the statutory
administrator of the conjugal partnership of gains (Art. 165, Civil Code) that permitted suits to
bind the conjugal partnership even where the wife was not named as a party defendant along
with the husband (Stosa, Inc., vs. Court of Appeals, 182 SCRA 862). Article 124 of the Family
Code, like the rule established in the system of absolute community of property (see Arts. 96-
98, Family Code), instead confers the administration and enjoyment 5 of the conjugal property
on the spouses jointly. The marriage settlement, however, may provide for the administration
of the property by one of the spouses, the provisions of the Family Code on conjugal
partnership of gain being merely suppletory thereto. In case of disagreement in the joint
administration and enjoyment of the partnership property, the husband's decision shall prevail
but the wife may avail herself of the "proper remedy" in court "within five years from the date
of the contract implementing the decision."

Footnotes

1 Penned by Assaali S. Isnani; Corona Ibay Somera and Celia Lipana Reyes, concurring.

2 Rollo, 50.

3 Ibid., pp. 48-49.

4 Exhibit I.

5 Exhibit B.

6 Exhibit C.

7 Exhibit D.

8 Rollo, pp. 18-19.

9 Ibid., pp. 24-25.

10 Ibid., pp. 10-13.

11 Civil Code, art. 165.

12 Id., art. 166 provides —

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.

This article shall not apply to property acquired by the conjugal partnership before the
effective date of this Code.

13 See id., arts. 171, 161 and 162.

14 Felipe vs. Heirs of Maximo Aldon, 120 SCRA 628 (1983); Reyes vs. De Leon, 20 SCRA
369 (1967). However, in Garcia vs. Court of Appeal, 130 SCRA 433 (1984) and Tolentino vs.
Cardenas, 123 Phil 517 (1966), it was held that, pursuant to article 166 of the Civil Code, a
sale made by the husband without the wife's confent is void.

15 Felipe v. Heirs of Maximo Aldon, ibid.

16 Director of Lands vs. Court of Appeals, 276 SCRA 276 (1997).

17 Family Code, art. 126.

18 Olizon vs. Court of Appeals, 236 SCRA 148 (1994).

19 Pena, Pena, Pena, Registration of Land Titles and Deeds (1994), p. 9.

VITUG, J., concurring opinion;

1 If she refuses unreasonably to give such consent, the court may compel her to grant the
same. The consent of the wife would not be required if she has been declared a non compos
mentis or a spendthrift or is under civil interdiction or confined in a leprosarium (Art. 166, Civil
Code), or if the conveyance is for the purpose of discharging any of the obligations of the
conjugal partnership under Arts. 161 and 162, in relation to Art. 171 (see Tinitigan vs.
Tinitigan, 100 SCRA 619, 1980).

2 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)

3 Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void. (n)

4 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. (165a)

5 The terms "administration and enjoyment" do not encompass the sale or encumbrance of
property per Article 124, 2nd par., supra.

G.R. No. 143826               August 28, 2003

HEIRS OF IGNACIA AGUILAR-REYES, Petitioners,

vs.
Spouses CIPRIANO MIJARES and FLORENTINA MIJARES, Respondents.

DECISION

YNARES-SANTIAGO, J.:

Under the regime of the Civil Code, the alienation or encumbrance of a conjugal real property
requires the consent of the wife. The absence of such consent renders the entire transaction 1 
merely voidable and not void.2 The wife may, during the marriage and within ten years from
the transaction questioned, bring an action for the annulment of the contract entered into by
her husband without her consent.3

Assailed in this petition for review on certiorari are the January 26, 2000 Decision4 and June
19, 2000, Resolution5 of the Court of Appeals in CA-G.R. No. 28464 which declared
respondents as purchasers in good faith and set aside the May 31, 1990 and June 29, 1990
Orders of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-48018.

The controversy stemmed from a dispute over Lot No. 4349-B-2,6 approximately 396 square
meters, previously covered by Transfer Certificate of Title (TCT) No. 205445, located in
Balintawak, Quezon City and registered in the name of Spouses Vicente Reyes and Ignacia
Aguilar-Reyes.7 Said lot and the apartments built thereon were part of the spouses’ conjugal
properties having been purchased using conjugal funds from their garments business.8

Vicente and Ignacia were married in 1960, but had been separated de facto since 1974.9 
Sometime in 1984, Ignacia learned that on March 1, 1983, Vicente sold Lot No. 4349-B-2 to
respondent spouses Cipriano and Florentina Mijares for P40,000.00.10 As a consequence
thereof, TCT No. 205445 was cancelled and TCT No. 306087 was issued on April 19, 1983 in
the name of respondent spouses.11 She likewise found out that Vicente filed a petition for
administration and appointment of guardian with the Metropolitan Trial Court of Quezon City,
Branch XXI. Vicente misrepresented therein that his wife, Ignacia, died on March 22, 1982,
and that he and their 5 minor children were her only heirs.12 On September 29, 1983, the
court appointed Vicente as the guardian of their minor children.13 Subsequently, in its Order
dated October 14, 1983, the court authorized Vicente to sell the estate of Ignacia.14

On August 9, 1984, Ignacia, through her counsel, sent a letter to respondent spouses
demanding the return of her ½ share in the lot. Failing to settle the matter amicably, Ignacia
filed on June 4, 1996 a complaint15 for annulment of sale against respondent spouses. The
complaint was thereafter amended to include Vicente Reyes as one of the defendants.16

In their answer, respondent spouses claimed that they are purchasers in good faith and that
the sale was valid because it was duly approved by the court.17 Vicente Reyes, on the other
hand, contended that what he sold to the spouses was only his share in Lot No. 4349-B-2,
excluding the share of his wife, and that he never represented that the latter was already
dead.18 He likewise testified that respondent spouses, through the counsel they provided him,
took advantage of his illiteracy by filing a petition for the issuance of letters of administration
and appointment of guardian without his knowledge.19

On February 15, 1990, the court a quo rendered a decision declaring the sale of Lot No.
4349-B-2 void with respect to the share of Ignacia. It held that the purchase price of the lot
was P110,000.00 and ordered Vicente to return ½ thereof or P55,000.00 to respondent
spouses. The dispositive portion of the said decision, reads-

WHEREFORE, premises above considered, judgment is hereby rendered declaring the

subject Deed of Absolute Sale, dated March [1,] 1983 signed by and between defendants
Vicente Reyes and defendant Cipriano Mijares NULL AND VOID WITH RESPECT TO ONE-
HALF (1/2) OF THE SAID PROPERTY;

The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in
the names of defendant spouses Cipriano Mijares and Florentina Mijares and to issue a new
TCT in the name of the plaintiff Ignacia Aguilar-Reyes as owner in fee simple of one-half (1/2)
of said property and the other half in the names of defendant spouses Cipriano Mijares and
Florentin[a] Mijares, upon payment of the required fees therefore;

Said defendant spouses Mijares are also ordered to allow plaintiff the use and exercise of
rights, as well as obligations, pertinent to her one-half (1/2) ownership of the subject property;

Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with legal rate of
interest from the execution of the subject Deed of Absolute Sale on March 1, 1983, to the
defendant spouses Cipriano Mijares and Florentina Mijares which corresponds to the one-half
(1/2) of the actual purchase price by the said Mijares but is annulled in this decision (sic);

Defendant Vicente Reyes is hereby further ordered to pay plaintiff the amount of P50,000.00
by way of moral and exemplary damages, plus costs of this suit.

SO ORDERED.20

Ignacia filed a motion for modification of the decision praying that the sale be declared void in
its entirety and that the respondents be ordered to reimburse to her the rentals they collected
on the apartments built on Lot No. 4349-B-2 computed from March 1, 1983.1âwphi1

On May 31, 1990, the trial court modified its decision by declaring the sale void in its entirety
and ordering Vicente Reyes to reimburse respondent spouses the purchase price of
P110,000, thus –

WHEREFORE, premises considered, judgment is hereby rendered declaring the subject

Deed of Absolute Sale, dated March 1, 1983 signed by and between defendants Vicente
Reyes and defendant Cipriano Mijares as null and void ab initio, in view of the absence of the
wife’s conformity to said transaction.

Consequent thereto, the Register of Deeds for Quezon City is hereby ordered to cancel TCT
No. 306083 (sic) in the name of Cipriano Mijares and Florentin[a] Mijares and issue a new
TCT in the name of the plaintiff and defendant Ignacia Aguilar-Reyes and Vicente Reyes as
owners in fee simple, upon payment of required fees therefore.

Defendant Vicente Reyes is hereby ordered to pay the amount of one hundred ten thousand
pesos (P110,000.00) with legal rate of interest at 12% per annum from the execution of the
subject Deed of Absolute Sale on March 1, 1983.

Further, defendant Vicente Reyes is ordered to pay the amount of P50,000.00 by way of
moral and exemplary damages, plus costs of this suit.
SO ORDERED.21

On motion22 of Ignacia, the court issued an Order dated June 29, 1990 amending the
dispositive portion of the May 31, 1990 decision by correcting the Transfer Certificate of Title
of Lot No. 4349-B-2, in the name of Cipriano Mijares and Florentina Mijares, from TCT No.
306083 to TCT No. 306087; and directing the Register of Deeds of Quezon City to issue a
new title in the name of Ignacia Aguilar-Reyes and Vicente Reyes. The Order likewise
specified that Vicente Reyes should pay Ignacia Aguilar-Reyes the amount of P50,000.00 as
moral and exemplary damages.23

Both Ignacia Aguilar-Reyes and respondent spouses appealed the decision to the Court of
Appeals.24 Pending the appeal, Ignacia died and she was substituted by her compulsory
heirs.25

Petitioners contended that they are entitled to reimbursement of the rentals collected on the
apartment built on Lot No. 4349-B-2, while respondent spouses claimed that they are buyers
in good faith. On January 26, 2000, the Court of Appeals reversed and set aside the decision
of the trial court. It ruled that notwithstanding the absence of Ignacia’s consent to the sale, the
same must be held valid in favor of respondents because they were innocent purchasers for
value.26 The decretal potion of the appellate court’s decision states –

WHEREFORE, premises considered, the Decision appealed from and the Orders dated May
31, 1990 and June 29, 1990, are SET ASIDE and in lieu thereof a new one is rendered –

1. Declaring the Deed of Absolute Sale dated March 1, 1983 executed by Vicente Reyes in
favor of spouses Cipriano and [Florentina] Mijares valid and lawful;

2. Ordering Vicente Reyes to pay spouses Mijares the amount of P30,000.00 as attorney’s
fees and legal expenses; and

3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.

No pronouncement as to costs.

SO ORDERED.27

Undaunted by the denial of their motion for reconsideration,28 petitioners filed the instant
petition contending that the assailed sale of Lot No. 4392-B-2 should be annulled because
respondent spouses were not purchasers in good faith.

The issues for resolution are as follows: (1) What is the status of the sale of Lot No. 4349-B-2
to respondent spouses? (2) Assuming that the sale is annullable, should it be annulled in its
entirety or only with respect to the share of Ignacia? (3) Are respondent spouses purchasers
in good faith?

Articles 166 and 173 of the Civil Code,29 the governing laws at the time the assailed sale was
contracted, 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. If she refuses
unreasonably to give her consent, the court may compel her to grant the same…

Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership property. Should
the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband.

Pursuant to the foregoing provisions, the husband could not alienate or encumber any
conjugal real property without the consent, express or implied, of the wife otherwise, the
contract is voidable. Indeed, in several cases30 the Court had 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.31 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.32

In the case of Heirs of Christina Ayuste v. Court of Appeals,33 it was categorically held 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.34

Likewise, in Spouses Guiang v. Court of Appeals,35 the Court quoted with approval the ruling
of the trial court that under the Civil Code, the encumbrance or alienation of a conjugal real
property by the husband absent the wife’s consent, is voidable and not void. Thus –

…Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber
any real property of the conjugal partnership 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.

This particular provision giving the wife ten (10) years x x x 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…

In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal property having
been purchased using the conjugal funds of the spouses during the subsistence of their
marriage. It is beyond cavil therefore that the sale of said lot to respondent spouses without
the knowledge and consent of Ignacia is voidable. Her action to annul the March 1, 1983 sale
which was filed on June 4, 1986, before her demise is perfectly within the 10 year prescriptive
period under Article 173 of the Civil Code. Even if we reckon the period from November 25,
1978 which was the date when Vicente and the respondent spouses entered into a contract
concerning Lot No. 4349-B-2, Ignacia’s action would still be within the prescribed period.

Anent the second issue, the trial court correctly annulled the voidable sale of Lot No. 4349-B-
2 in its entirety. In Bucoy v. Paulino,36 a case involving the annulment of sale with assumption
of mortgages executed by the husband without the consent of the wife, it was held that the
alienation or encumbrance must be annulled in its entirety and not only insofar as the share of
the wife 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…

The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the
share of the wife, is not without its basis in the common-sense rule. To be underscored here
is that upon the provisions of Articles 161, 162 and 163 of the Civil Code, the conjugal
partnership is liable for many obligations while the conjugal partnership exists. Not only that.
The conjugal property is even subject to the payment of debts contracted by either spouse
before the marriage, as those for the payment of fines and indemnities imposed upon them
after the responsibilities in Article 161 have been covered (Article 163, par. 3), if it turns out
that the spouse who is bound thereby, "should have no exclusive property or if it should be
insufficient." These are considerations that go beyond the mere equitable share of the wife in
the property. These are reasons enough for the husband to be stopped from disposing of the
conjugal property without the consent of the wife. Even more fundamental is the fact that the
nullity is decreed by the Code not on the basis of prejudice but lack of consent of an
indispensable party to the contract under Article 166.37

With respect to the third issue, the Court finds that respondent spouses are not purchasers in
good faith. A purchaser in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays full and fair price for
the same, at the time of such purchase, or before he has notice of the claim or interest of
some other persons in the property. He buys the property with the belief that the person from
whom he receives the thing was the owner and could convey title to the property. A purchaser
cannot close his eyes to facts which should put a reasonable man on his guard and still claim
he acted in good faith.38

In the instant case, there existed circumstances that should have placed respondent spouses
on guard. The death certificate of Ignacia, shows that she died on March 22, 1982. The same
death certificate, however, reveals that – (1) it was issued by the Office of the Civil Registrar
of Lubao Pampanga on March 10, 1982; (2) the alleged death of Ignacia was reported to the
Office of the Civil Registrar on March 4, 1982; and (3) her burial or cremation would be
on March 8, 1982.39 These obvious flaws in the death certificate should have prompted
respondents to investigate further, especially so that respondent Florentina Mijares admitted
on cross examination that she asked for the death certificate of Ignacia because she was
suspicious that Ignacia was still alive.40 Moreover, respondent spouses had all the opportunity
to verify the claim of Vicente that he is a widower because it was their lawyer, Atty. Rodriguito
S. Saet, who represented Vicente in the special proceedings before the Metropolitan Trial
Court.

Neither can respondent spouses rely on the alleged court approval of the sale. Note that the
Order issued by the Metropolitan Trial Court of Quezon City, Branch XXXI, appointing Vicente
as guardian of his 5 minor children, as well as the Order authorizing him to sell the estate of
Ignacia were issued only on September 29, 1983 and October 14, 1983, respectively. On the
other hand, the sale of the entire Lot No. 4349-B-2 to respondent spouses appears to have
been made not on March 1, 1983, but even as early as November 25, 1978. In the
"Agreement" dated November 25, 1978, Vicente in consideration of the amount of
P110,000.00, sold to Cipriano Mijares Lot No. 4349-B-2 on installment basis, with the first
installment due on or before July 31, 1979.41 This was followed by a "Memorandum of
Understanding" executed on July 30, 1979, by Vicente and Cipriano – (1) acknowledging
Cipriano’s receipt of Vicente’s down payment in the amount of P50,000.00; and (2)
authorizing Florentina Mijares to collect rentals.42 On July 14, 1981, Vicente and Cipriano
executed another "Memorandum of Agreement," stating, among other, that out of the
purchase price of P110,000.00 Vicente had remaining balance of P19,000.00.43 Clearly
therefore, the special proceedings before the Metropolitan Trial Court of Quezon City, Branch
XXXI, could not have been the basis of respondent spouses’ claim of good faith because the
sale of Lot No. 4349-B-2 occurred prior thereto.

Respondent spouses cannot deny knowledge that at the time of the sale in 1978, Vicente was
married to Ignacia and that the latter did not give her conformity to the sale. This is so
because the 1978 "Agreement" described Vicente as "married" but the conformity of his wife
to the sale did not appear in the deed. Obviously, the execution of another deed of sale in
1983 over the same Lot No. 4349-B-2, after the alleged death of Ignacia on March 22, 1982,
as well as the institution of the special proceedings were, intended to correct the absence of
Ignacia’s consent to the sale. Even assuming that respondent spouses believed in good faith
that Ignacia really died on March 22, 1982, after they purchased the lot, the fact remains that
the sale of Lot No. 4349-B-2 prior to Ignacia’s alleged demise was without her consent and
therefore subject to annulment. The October 14, 1983 order authorizing the sale of the estate
of Ignacia, could not have validated the sale of Lot No. 4349-B-2 because said order was
issued on the assumption that Ignacia was already dead and that the sale dated March 1,
1983 was never categorically approved in the said order.

The fact that the 5 minor children44 of Vicente represented by the latter, signed the March 1,
1983 deed of sale of Lot No. 4349-B-2 will not estop them from assailing the validity thereof.
Not only were they too young at that time to understand the repercussions of the sale, they
likewise had no right to sell the property of their mother who, when they signed the deed, was
very much alive.

If a voidable contract is annulled, the restoration of what has been given is proper. The
relationship between parties in any contract even if subsequently annulled must always be
characterized and punctuated by good faith and fair dealing. Hence, for the sake of justice
and equity, and in consonance with the salutary principle of non-enrichment at another’s
expense, the Court sustains the trial court’s order directing Vicente to refund to respondent
spouses the amount of P110,000.00 which they have paid as purchase price of Lot No. 4349-
B-2.45 The court a quo correctly found that the subject of the sale was the entire Lot No. 4349-
B-2 and that the consideration thereof is not P40,000.00 as stated in the March 1, 1983 deed
of sale, but P110,000.00 as evidenced by the – (1) "Agreement" dated November 25, 1978 as
well as the July 30, 1979 "Memorandum of Understanding" and the July 14, 1981
"Memorandum of Agreement" which served as receipts of the installment payments made by
respondent Cipriano Mijares; and (2) the receipt duly signed by Vicente Reyes acknowledging
receipt of the amount of P110,000.00 from respondent spouses as payment of the sale of the
controverted lot.46

The trial court, however, erred in imposing 12% interest per annum on the amount due the
respondents. In Eastern Shipping Lines, Inc. v. Court of Appeals,47 it was held that interest on
obligations not constituting a loan or forbearance of money is six percent (6%) annually. If the
purchase price could be established with certainty at the time of the filing of the complaint, the
six percent (6%) interest should be computed from the date the complaint was filed until
finality of the decision. In Lui v. Loy,48 involving a suit for reconveyance and annulment of title
filed by the first buyer against the seller and the second buyer, the Court, ruling in favor of the
first buyer and annulling the second sale, ordered the seller to refund to the second buyer
(who was not a purchaser in good faith) the purchase price of the lots. It was held therein that
the 6% interest should be computed from the date of the filing of the complaint by the first
buyer. After the judgment becomes final and executory until the obligation is satisfied, the
amount due shall earn interest at 12% per year, the interim period being deemed equivalent
to a forbearance of credit.49

Accordingly, the amount of P110,000.00 due the respondent spouses which could be
determined with certainty at the time of the filing of the complaint shall earn 6% interest per
annum from June 4, 1986 until the finality of this decision. If the adjudged principal and the
interest (or any part thereof) remain unpaid thereafter, the interest rate shall be twelve percent
(12%) per annum computed from the time the judgment becomes final and executory until it is
fully satisfied.

Petitioner’s prayer for payment of rentals should be denied. Other than the allegation of
Ignacia in her Sinumpaang Salaysay that the apartments could be rented at P1,000.00 a
month, no other evidence was presented to substantiate her claim. In awarding rentals which
are in the nature of actual damages, the Court cannot rely on mere assertions, speculations,
conjectures or guesswork but must depend on competent proof and on the best evidence
obtainable regarding the actual amount of loss.50 None, having been presented in the case at
bar, petitioner’s claim for rentals must be denied.

While as a general rule, a party who has not appealed is not entitled to affirmative relief other
than the ones granted in the decision of the court below, law and jurisprudence authorize a
tribunal to consider errors, although unassigned, if they involve (1) errors affecting the lower
court’s jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical
errors.51 In this case, though defendant Vicente Reyes did not appeal, the "plain error"
committed by the court  a quo as to the award of moral and exemplary damages must be
corrected. These awards cannot be lumped together as was done by the trial court.52 Moral
and exemplary damages are different in nature, and require separate determination. Moral
damages are awarded where the claimant experienced physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury as a result of the act complained of.53 The award of exemplary
damages, on the other hand, is warranted when moral, temperate, liquidated, or
compensatory damages were likewise awarded by the court.54

Hence, the trial court’s award of "P50,000.00 by way of moral and exemplary damages"
should be modified. Vicente Reyes should be ordered to pay the amounts of P25,000.00 as
moral damages and P25,000.00 as exemplary damages. Since Vicente Reyes was among
the heirs substituted to the late Ignacia Aguilar-Reyes, payment of moral and exemplary
damages must be made by Vicente to his children, petitioners in this case.

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The
January 26, 2000 Decision and June 19, 2002, Resolution of the Court of Appeals in CA-G.R.
No. 28464 are REVERSED and SET ASIDE. The May 31, 1990 Order of the Regional Trial
Court of Quezon City, Branch 101, in Civil Case No. Q-48018, which annulled the March 1,
1983 Deed of Absolute Sale over Lot No. 4349-B-2, and ordered the Register of Deeds of
Quezon City to cancel TCT No. 306087 in the name of respondent spouses Cipriano Mijares
and Florentina Mijares covering the same property; as well as the June 29, 1990 Order
correcting the typographical errors in the order dated March 1, 1983, are REINSTATED, with
the following modifications –

(1) The Register of Deeds of Quezon City is ordered to issue a new certificate of title over Lot
No. 4349-B-2, in the name of petitioners as co-owners thereof;

(2) Vicente Reyes is ordered to reimburse the respondent spouses the amount of
P110,000.00 as purchase price of Lot No. 4349-B-2, with interest at 6% per annum from June
4, 1986, until finality of this decision. After this decision becomes final, interest at the rate of
12% per annum on the principal and interest (or any part thereof) shall be imposed until full
payment.

(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia Aguilar-Reyes, the
amounts of P25,000.00 as moral damages and P25,000.00 as exemplary damages.

SO ORDERED.

G.R. No. 141323               June 8, 2005

DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners,
vs.
MELKI E. PEREZ, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking the reversal of the
Decision1 of the Court of Appeals (CA) promulgated on April 20, 1999 which
reversed the Decision of the Regional Trial Court (RTC) of Panabo, Davao,
Branch 34, in Civil Case No. 91-46; and the CA Resolution dated December
17, 1999 denying petitioners’ motion for reconsideration.

The antecedent facts as aptly narrated by the CA are as follows:

David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11, 1988, conveyed
to Melki Perez (Perez) two parcels of agricultural land (the lots) situated in Panabo, Davao
which are portions of Lot 4192, Cad. 276 covered by OCT P-16873.

Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible
witnessed the execution of the deed.

Loreza, however, signed only on the third page in the space provided for witnesses on
account of which Perez’ application for registration of the deed with the Office of the Register
of Deeds in Tagum, Davao was denied.

Perez thereupon asked Loreza to sign on the first and second pages of the deed but she
refused, hence, he instituted on August 8, 1991 the instant complaint for specific performance
against her and her husband Pelayo (defendants).

The defendants moved to dismiss the complaint on the ground that it stated no cause of
action, citing Section 6 of RA 6656 otherwise known as the Comprehensive Agrarian Reform
Law which took effect on June 10, 1988 and which provides that contracts executed prior
thereto shall "be valid only when registered with the Register of Deeds within a period of three
(3) months after the effectivity of this Act."

The questioned deed having been executed on January 10, 1988, the defendants claimed
that Perez had at least up to September 10, 1988 within which to register the same, but as
they failed to, it is not valid and, therefore, unenforceable.

The trial court thus dismissed the complaint. On appeal to this Court, the dismissal was set
aside and the case was remanded to the lower court for further proceedings.

In their Answer, the defendants claimed that as the lots were occupied illegally by some
persons against whom they filed an ejectment case, they and Perez who is their friend and
known at the time as an activist/leftist, hence feared by many, just made it appear in the deed
that the lots were sold to him in order to frighten said illegal occupants, with the intentional
omission of Loreza’s signature so that the deed could not be registered; and that the deed
being simulated and bereft of consideration is void/inexistent.

Perez countered that the lots were given to him by defendant Pelayo in consideration of his
services as his attorney-in-fact to make the necessary representation and negotiation with the
illegal occupants-defendants in the ejectment suit; and that after his relationship with
defendant Pelayo became sour, the latter sent a letter to the Register of Deeds of Tagum
requesting him not to entertain any transaction concerning the lots title to which was entrusted
to Perez who misplaced and could [not] locate it.
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19, 1996, that the
deed was without his wife Loreza’s consent, hence, in light of Art. 166 of the Civil Code which
provides:

Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is
under civil interdiction or is confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership without the wife’s consent . . .

it is null and void.

The trial court, finding, among others, that Perez did not possess, nor pay the taxes on the
lots, that defendant Pelayo was indebted to Perez for services rendered and, therefore, the
deed could only be considered as evidence of debt, and that in any event, there was no
marital consent to nor actual consideration for the deed, held that the deed was null and void
and accordingly rendered judgment the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering and directing the defendants to pay
plaintiff Melki Perez the sum of TEN THOUSAND (₱10,000.00) Pesos as principal with 12%
interest per annum starting from the date of filing of the complaint on August 1, 1991 until
plaintiff is fully paid.

The defendants shall likewise pay to plaintiff the sum of THREE THOUSAND (₱3,000.00) as
attorney’s fees.

The court further orders that the Deed of Absolute Sale, (Annex ‘A’) of the complaint and
(Annex ‘C’) of the plaintiff’s Motion for Summary Judgment is declared null and void and
without force and it is likewise removed as a cloud over defendants’ title and property in suit. .
. ."2

The RTC Decision was appealed by herein respondent Perez to the CA. Petitioners failed to
file their appellees’ brief. The CA then promulgated its Decision on April 20, 1999 whereby it
ruled that by Lorenza’s signing as witness to the execution of the deed, she had knowledge of
the transaction and is deemed to have given her consent to the same; that herein petitioners
failed to adduce sufficient proof to overthrow the presumption that there was consideration for
the deed, and that petitioner David Pelayo, being a lawyer, is presumed to have acted with
due care and to have signed the deed with full knowledge of its contents and import. The CA
reversed and set aside the RTC Decision, declaring as valid and enforceable the questioned
deed of sale and ordering herein petitioner Lorenza Pelayo to affix her signature on all pages
of said document.

Petitioners moved for reconsideration of the decision but the same was denied per Resolution
dated December 17, 1999. The CA found said motion to have been filed out of time and ruled
that even putting aside technicality, petitioners failed to present any ground bearing on the
merits of the case to justify a reversal or setting aside of the decision.

Hence, this petition for review on certiorari on the following grounds:

1. The CA erred in ignoring the specific provision of Section 6, in relation to Section 4 of R.A.
No. 6657 otherwise known as the Comprehensive Agrarian Reform Law of 1988 which took
effect on June 15, 1988 and which provides that contracts executed prior thereto shall "be
valid only when registered with the Register of Deeds within a period of three (3) months after
the effectivity of this Act."

2. The CA erred in holding that the deed of sale was valid and considering the ₱10,000.00
adjudged by the trial court as Perez’s remuneration as the consideration for the deed of sale,
instead of declaring the same as null and void for being fictitious or simulated and on the
basis of Art. 491, Par. 2 of the New Civil Code which prohibits agents from acquiring by
purchase properties from his principal under his charge.
3. The CA made a novel ruling that there was implied marital consent of the wife of petitioner
David Pelayo.

4. Petitioners should have been allowed to file their appellees’ brief to ventilate their side,
considering the existence of peculiar circumstances which prevented petitioners from filing
said brief.

On the other hand, respondent points out that the CA, in resolving the first appeal docketed
as CA-G.R. SP No. 387003 brought by respondent assailing the RTC Order granting herein
petitioners’ motion to dismiss, already ruled that under R.A. No. 6657, the sale or transfer of
private agricultural land is allowed only when the area of the land being conveyed constitutes
or is a part of, the landowner-seller retained area and when the total landholding of the
purchaser-transferee, including the property sold, does not exceed five (5) hectares; that in
this case, the land in dispute is only 1.3 hectares and there is no proof that the transferee’s
(herein respondent) total landholding inclusive of the subject land will exceed 5 hectares, the
landholding ceiling prescribed by R.A. No. 6657; that the failure of respondent to register the
instrument was not due to his fault or negligence but can be attributed to Lorenza’s unjustified
refusal to sign two pages of the deed despite several requests of respondent; and that
therefore, the CA ruled that the deed of sale subject of this case is valid under R.A. No. 6657.

Respondent further maintains that the CA correctly held in its assailed Decision that there
was consideration for the contract and that Lorenza is deemed to have given her consent to
the deed of sale.

Respondent likewise opines that the CA was right in denying petitioners’ motion for
reconsideration where they prayed that they be allowed to file their appellees’ brief as their
counsel failed to file the same on account of said counsel’s failing health due to cancer of the
liver. Respondent emphasized that in petitioners’ motion for reconsideration, they did not
even cite any errors made by the CA in its Decision.

The issues boil down to the question of whether or not the deed of sale was null and void on
the following grounds: (a) for not complying with the provision in R.A. No. 6657 that such
document must be registered with the Register of Deeds within three months after the
effectivity of said law; (b) for lack of marital consent; (c) for being prohibited under Article
1491 (2) of the Civil Code; and (d) for lack of consideration.

We rule against petitioners.

The issue of whether or not the deed of sale is null and void under R.A. No. 6657, for
respondent’s failure to register said document with the Register of Deeds within three months
after the effectivity of R.A. No. 6657, had been resolved with finality by the CA in its Decision
dated November 24, 1994 in CA-G.R. SP No. 38700.4 Herein petitioners no longer elevated
said CA Decision to this Court and the same became final and executory on January 7,
1995.5

In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A. No. 6657, to
mean thus:

. . . the proper interpretation of both sections is that under R.A. No. 6657, the sale or transfer
of a private agricultural land is allowed only when said land area constitutes or is a part of the
landowner-seller retained area and only when the total landholdings of the purchaser-
transferee, including the property sold does not exceed five (5) hectares.

Aside from declaring that the failure of respondent to register the deed was not of his own
fault or negligence, the CA ruled that respondent’s failure to register the deed of sale within
three months after effectivity of The Comprehensive Agrarian Reform Law did not invalidate
the deed of sale as "the transaction over said property is not proscribed by R.A. No. 6657."
Thus, under the principle of law of the case, said ruling of the CA is now binding on
petitioners.1avvph!1 Such principle was elucidated in Cucueco vs. Court of Appeals,6 to wit:

Law of the case has been defined as the opinion delivered on a former appeal. It is a term
applied to an established rule that when an appellate court passes on a question and
remands the case to the lower court for further proceedings, the question there settled
becomes the law of the case upon subsequent appeal. It means that whatever is once
irrevocably established as the controlling legal rule or decision between the same parties in
the same case continues to be the law of the case, whether correct on general principles or
not, so long as the facts on which such decision was predicated continue to be the facts of the
case before the court.

Petitioners not having questioned the Decision of the CA dated November 24, 1994 which
then attained finality, the ruling that the deed of sale subject of this case is not among the
transactions deemed as invalid under R.A. No. 6657, is now immutable.

We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the Deed of
Sale on the space provided for witnesses, is deemed to have given her implied consent to the
contract of sale.

Sale is a consensual contract that is perfected by mere consent, which may either be express
or implied.7 A wife’s consent to the husband’s disposition of conjugal property does not
always have to be explicit or set forth in any particular document, so long as it is shown by
acts of the wife that such consent or approval was indeed given.8 In the present case,
although it appears on the face of the deed of sale that Lorenza signed only as an
instrumental witness, circumstances leading to the execution of said document point to the
fact that Lorenza was fully aware of the sale of their conjugal property and consented to the
sale.

In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they have been having
serious problems, including threats to the life of petitioner David Pelayo, due to conflicts with
the illegal occupants of the property in question, so that respondent, whom many feared for
being a leftist/activist, offered his help in driving out said illegal occupants.

Human experience tells us that a wife would surely be aware of serious problems such as
threats to her husband’s life and the reasons for such threats. As they themselves stated,
petitioners’ problems over the subject property had been going on for quite some time, so it is
highly improbable for Lorenza not to be aware of what her husband was doing to remedy
such problems. Petitioners do not deny that Lorenza Pelayo was present during the execution
of the deed of sale as her signature appears thereon. Neither do they claim that Lorenza
Pelayo had no knowledge whatsoever about the contents of the subject document. Thus, it is
quite

certain that she knew of the sale of their conjugal property between her husband and
respondent.

Under the rules of evidence, it is presumed that a person takes ordinary care of his
concerns.10 Petitioners did not even attempt to overcome the aforementioned presumption as
no evidence was ever presented to show that Lorenza was in any way lacking in her mental
faculties and, hence, could not have fully understood the ramifications of signing the deed of
sale. Neither did petitioners present any evidence that Lorenza had been defrauded, forced,
intimidated or threatened either by her own husband or by respondent into affixing her
signature on the subject document. If Lorenza had any objections over the conveyance of the
disputed property, she could have totally refrained from having any part in the execution of
the deed of sale. Instead, Lorenza even affixed her signature thereto.

Moreover, under Article 173, in relation to Article 166, both of the New Civil Code, which was
still in effect on January 11, 1988 when the deed in question was executed, the lack of marital
consent to the disposition of conjugal property does not make the contract void ab initio but
merely voidable. Said provisions of law provide:

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

...

Art. 173. The wife may, during the marriage, and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership property. Should
the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband.

Hence, it has been held that the contract is valid until the court annuls the same and only
upon an action brought by the wife whose consent was not obtained.11 In the present case,
despite respondent’s repeated demands for Lorenza to affix her signature on all the pages of
the deed of sale, showing respondent’s insistence on enforcing said contract, Lorenza still did
not file a case for annulment of the deed of sale. It was only when respondent filed a
complaint for specific performance on August 8, 1991 when petitioners brought up Lorenza’s
alleged lack of consent as an affirmative defense. Thus, if the transaction was indeed entered
into without Lorenza’s consent, we find it quite puzzling why for more than three and a half
years, Lorenza did absolutely nothing to seek the nullification of the assailed contract.

The foregoing circumstances lead the Court to believe that Lorenza knew of the full import of
the transaction between respondent and her

husband; and, by affixing her signature on the deed of sale, she, in effect, signified her
consent to the disposition of their conjugal property.

With regard to petitioners’ asseveration that the deed of sale is invalid under Article 1491,
paragraph 2 of the New Civil Code, we find such argument unmeritorious. Article 1491 (2)
provides:

Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:

...

(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;

...

In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas, designated one of her
sons as the administrator of several parcels of her land. The landowner subsequently
executed a Deed of Certification of Sale of Unregistered Land, conveying some of said land to
her son/administrator. Therein, we held that:

Under paragraph (2) of the above article, the prohibition against agents purchasing property
in their hands for sale or management is not absolute. It does not apply if the principal
consents to the sale of the property in the hands of the agent or administrator. In this case,
the deeds of sale signed by Iluminada Abiertas shows that she gave consent to the sale of
the properties in favor of her son, Rufo, who was the administrator of the properties. Thus, the
consent of the principal Iluminada Abiertas removes the transaction out of the prohibition
contained in Article 1491(2).13

The above-quoted ruling is exactly in point with this case before us. Petitioners, by signing the
Deed of Sale in favor of respondent, are also deemed to have given their consent to the sale
of the subject property in favor of respondent, thereby making the transaction an exception to
the general rule that agents are prohibited from purchasing the property of their principals.

Petitioners also argue that the CA erred in ruling that there was consideration for the sale. We
find no error in said appellate court’s ruling. The element of consideration for the sale is
indeed present. Petitioners, in adopting the trial court’s narration of antecedent facts in their
petition,14 thereby admitted that they authorized respondent to represent them in negotiations
with the "squatters" occupying the disputed property and, in consideration of respondent’s
services, they executed the subject deed of sale. Aside from such services rendered by
respondent, petitioners also acknowledged in the deed of sale that they received in full the
amount of Ten Thousand Pesos. Evidently, the consideration for the sale is respondent’s
services plus the aforementioned cash money.

Petitioners contend that the consideration stated in the deed of sale is excessively
inadequate, indicating that the deed of sale was merely simulated. We are not persuaded.
Our ruling in Buenaventura vs. Court of Appeals15 is pertinent, to wit:

. . . Indeed, there is no requirement that the price be equal to the exact value of the subject
matter of sale. . . . As we stated in Vales vs. Villa:

Courts cannot follow one every step of his life and extricate him from bad bargains, protect
him from unwise investments, relieve him from one-sided contracts, or annul the effects of
foolish acts. Courts cannot constitute themselves guardians of persons who are not legally
incompetent. Courts operate not because one person has been defeated or overcome by
another, but because he has been defeated or overcome illegally. Men may do foolish things,
make ridiculous contracts, use miserable judgment, and lose money by them – indeed, all
they have in the world; but not for that alone can the law intervene and restore. There must
be, in addition, a violation of the law, the commission of what the law knows as
an actionable wrong, before the courts are authorized to lay hold of the situation and remedy
it.16

Verily, in the present case, petitioners have not presented proof that there has been fraud,
mistake or undue influence exercised upon them by respondent. It is highly unlikely and
contrary to human experience that a layman like respondent would be able to defraud, exert
undue influence, or in any way vitiate the consent of a lawyer like petitioner David Pelayo who
is expected to be more knowledgeable in the ways of drafting contracts and other legal
transactions.

Furthermore, in their Reply to Respondent’s Memorandum,17 petitioners adopted the CA’s

narration of fact that petitioners stated in a letter they sent to the Register of Deeds of Tagum
that they have entrusted the titles over subject lots to herein respondent. Such act is a clear
indication that they intended to convey the subject property to herein respondent and the
deed of sale was not merely simulated or fictitious.

Lastly, petitioners claim that they were not able to fully ventilate their defense before the CA
as their lawyer, who was then suffering from cancer of the liver, failed to file their appellees’
brief. Thus, in their motion for reconsideration of the CA Decision, they prayed that they be
allowed to submit such appellees’ brief. The CA, in its Resolution dated December 17, 1999,
stated thus:

By movant-defendant-appellee’s own information, his counsel received a copy of the decision

on May 5, 1999. He, therefore, had fifteen (15) days from said date or up to May 20, 1999 to
file the motion. The motion, however, was sent through a private courier and, therefore,
considered to have been filed on the date of actual receipt on June 17, 1999 by the
addressee – Court of Appeals, was filed beyond the reglementary period.

Technicality aside, movant has not proffered any ground bearing on the merits of the case
why the decision should be set aside.1awphi1

Petitioners never denied the CA finding that their motion for reconsideration was filed beyond
the fifteen-day reglementary period. On that point alone, the CA is correct in denying due
course to said motion. The motion having been belatedly filed, the CA Decision had then
attained finality. Thus, in Abalos vs. Philex Mining Corporation,18 we held that:

. . . Nothing is more settled in law than that once a judgment attains finality it thereby
becomes immutable and unalterable. It may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be made by the court
rendering it or by the highest court of the land.

Moreover, it is pointed out by the CA that said motion did not present any defense or
argument on the merits of the case that could have convinced the CA to reverse or modify its
Decision.

We have consistently held that a petitioner’s right to due process is not violated where he was
able to move for reconsideration of the order or decision in question.19 In this case, petitioners
had the opportunity to fully expound on their defenses through a motion for reconsideration.
Petitioners did file such motion but they wasted such opportunity by failing to present therein
whatever errors they believed the CA had committed in its Decision. Definitely, therefore, the
denial of petitioners’ motion for reconsideration, praying that they be allowed to file appellees’
brief, did not infringe petitioners’ right to due process as any issue that petitioners wanted to
raise could and should have been contained in said motion for reconsideration.

IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the Court of
Appeals dated April 20, 1999 and its Resolution dated December 17, 1999 are
hereby AFFIRMED.

SO ORDERED.

G.R. No. 170166               April 6, 2011

JOE A. ROS and ESTRELLA AGUETE, Petitioners,

vs.
PHILIPPINE NATIONAL BANK - LAOAG BRANCH, Respondent.

DECISION

CARPIO, J.:

The Case

G.R. No. 170166 is a petition for review1 assailing the Decision2 promulgated on 17 October

2005 by the Court of Appeals (appellate court) in CA-G.R. CV No. 76845. The appellate court
granted the appeal filed by the Philippine National Bank – Laoag Branch (PNB). The appellate
court reversed the 29 June 2001 Decision of Branch 15 of the Regional Trial Court of Laoag
City (trial court) in Civil Case No. 7803.

The trial court declared the Deed of Real Estate Mortgage executed by spouses Jose A.
Ros3 (Ros) and Estrella Aguete (Aguete) (collectively, petitioners), as well as the subsequent
foreclosure proceedings, void. Aside from payment of attorney’s fees, the trial court also
ordered PNB to vacate the subject property to give way to petitioners’ possession.

The Facts

The appellate court narrated the facts as follows:

On January 13, 1983, spouses Jose A. Ros and Estrella Aguete filed a complaint for the
annulment of the Real Estate Mortgage and all legal proceedings taken thereunder against
PNB, Laoag Branch before the Court of First Instance, Ilocos Norte docketed as Civil Case
No. 7803.

The complaint was later amended and was raffled to the Regional Trial Court, Branch 15,
Laoag City.

The averments in the complaint disclosed that plaintiff-appellee Joe A. Ros obtained a loan of
₱115,000.00 from PNB Laoag Branch on October 14, 1974 and as security for the loan,
plaintiff-appellee Ros executed a real estate mortgage involving a parcel of land – Lot No.
9161 of the Cadastral Survey of Laoag, with all the improvements thereon described under
Transfer Certificate of Title No. T-9646.

Upon maturity, the loan remained outstanding. As a result, PNB instituted extrajudicial
foreclosure proceedings on the mortgaged property. After the extrajudicial sale thereof, a
Certificate of Sale was issued in favor of PNB, Laoag as the highest bidder. After the lapse of
one (1) year without the property being redeemed, the property was consolidated and
registered in the name of PNB, Laoag Branch on August 10, 1978.

Claiming that she (plaintiff-appellee Estrella Aguete) has no knowledge of the loan obtained
by her husband nor she consented to the mortgage instituted on the conjugal property – a
complaint was filed to annul the proceedings pertaining to the mortgage, sale and
consolidation of the property – interposing the defense that her signatures affixed on the
documents were forged and that the loan did not redound to the benefit of the family.1avvphi1

In its answer, PNB prays for the dismissal of the complaint for lack of cause of action, and
insists that it was plaintiffs-appellees’ own acts [of]

omission/connivance that bar them from recovering the subject property on the ground of
estoppel, laches, abandonment and prescription.4]

The Trial Court’s Ruling

On 29 June 2001, the trial court rendered its Decision5 in favor of petitioners. The trial court
declared that Aguete did not sign the loan documents, did not appear before the Notary
Public to acknowledge the execution of the loan documents, did not receive the loan
proceeds from PNB, and was not aware of the loan until PNB notified her in 14 August 1978
that she and her family should vacate the mortgaged property because of the expiration of the
redemption period. Under the Civil Code, the effective law at the time of the transaction, Ros
could not encumber any real property of the conjugal partnership without Aguete’s consent.
Aguete may, during their marriage and within ten years from the transaction questioned, ask
the courts for the annulment of the contract her husband entered into without her consent,
especially in the present case where her consent is required. The trial court, however, ruled
that its decision is without prejudice to the right of action of PNB to recover the amount of the
loan and its interests from Ros.

The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. DECLARING the Deed of Real Estate Mortgage (Exhibit "C") and the subsequent
foreclosure proceedings conducted thereon NULL and VOID;

2. ORDERING the Register of Deeds of the City of Laoag to cancel TCT No. T-15276 in the
name of defendant PNB and revert the same in the name of plaintiffs spouses Joe Ros and
Estrella Aguete;

3. ORDERING defendant to vacate and turnover the possession of the premises of the
property in suit to the plaintiffs; and

4. ORDERING defendant to pay plaintiffs attorney’s fee and litigation expenses in the sum of
TEN THOUSAND (₱10,000.00) PESOS.

No pronouncement as to costs.

SO ORDERED.6]

PNB filed its Notice of Appeal7 of the trial court’s decision on 13 September 2001 and paid the
corresponding fees. Petitioners filed on the same date a motion for execution pending
appeal,8 which PNB opposed.9 In their comment to the opposition10 filed on 10 October 2001,
petitioners stated that at the hearing of the motion on 3 October 2001, PNB’s lay
representative had no objection to the execution of judgment pending appeal. Petitioners
claimed that the house on the subject lot is dilapidated, a danger to life and limb, and should
be demolished. Petitioners added that they obliged themselves to make the house habitable
at a cost of not less ₱50,000.00. The repair cost would accrue to PNB’s benefit should the
appellate court reverse the trial court. PNB continued to oppose petitioners’ motion.11

In an Order12 dated 8 May 2002, the trial court found petitioners’ motion for execution pending
appeal improper because petitioners have made it clear that they were willing to wait for the
appellate court’s decision. However, as a court of justice and equity, the trial court allowed
petitioners to occupy the subject property with the condition that petitioners would voluntarily
vacate the premises and waive recovery of improvements introduced should PNB prevail on
appeal.

The Appellate Court’s Ruling

On 17 October 2005, the appellate court rendered its Decision13 and granted PNB’s appeal.
The appellate court reversed the trial court’s decision, and dismissed petitioners’ complaint.

The appellate court stated that the trial court concluded forgery without adequate proof; thus it
was improper for the trial court to rely solely on Aguete’s testimony that her signatures on the
loan documents were forged. The appellate court declared that Aguete affixed her signatures
on the documents knowingly and with her full consent.

Assuming arguendo that Aguete did not give her consent to Ros’ loan, the appellate court
ruled that the conjugal partnership is still liable because the loan proceeds redounded to the
benefit of the family. The records of the case reveal that the loan was used for the expansion
of the family’s business. Therefore, the debt obtained is chargeable against the conjugal
partnership.

Petitioners filed the present petition for review before this Court on 9 December 2005.

The Issues

Petitioners assigned the following errors:

I. The Honorable Court of Appeals erred in not giving weight to the findings and conclusions
of the trial court, and in reversing and setting aside such findings and conclusions without
stating specific contrary evidence;

II. The Honorable Court of Appeals erred in declaring the real estate mortgage valid;

III. The Honorable Court of Appeals erred in declaring, without basis, that the loan contracted
by husband Joe A. Ros with respondent Philippine National Bank – Laoag redounded to the
benefit of his family, aside from the fact that such had not been raised by respondent in its
appeal.14]

The Court’s Ruling

The petition has no merit. We affirm the ruling of the appellate court.

The Civil Code was the applicable law at the time of the mortgage. The subject property is
thus considered part of the conjugal partnership of gains. The pertinent articles of the Civil
Code provide:

Art. 153. The following are conjugal partnership property:

(1) That which is acquired by onerous title during the marriage at the expense of the common
fund, whether the acquisition be for the partnership, or for only one of the spouses;

(2) That which is obtained by the industry, or work or as salary of the spouses, or of either of
them;

(3) The fruits, rents or interest received or due during the marriage, coming from the common
property or from the exclusive property of each spouse.

Art. 160. All property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife.

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal
partnership, and those contracted by the wife, also for the same purpose, in the cases where
she may legally bind the partnership;

(2) Arrears or income due, during the marriage, from obligations which constitute a charge
upon property of either spouse or of the partnership;

(3) Minor repairs or for mere preservation made during the marriage upon the separate
property of either the husband or the wife; major repairs shall not be charged to the
partnership;

(4) Major or minor repairs upon the conjugal partnership property;

(5) The maintenance of the family and the education of the children of both husband and wife,
and of legitimate children of one of the spouses;

(6) Expenses to permit the spouses to complete a professional, vocational or other course.

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.

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 the property fraudulently alienated by the husband.

There is no doubt that the subject property was acquired during Ros and Aguete’s marriage.
Ros and Aguete were married on 16 January 1954, while the subject property was acquired in
1968.15 There is also no doubt that Ros encumbered the subject property when he mortgaged
it for P115,000.00 on 23 October 1974.16 PNB Laoag does not doubt that Aguete, as
evidenced by her signature, consented to Ros’ mortgage to PNB of the subject property. On
the other hand, Aguete denies ever having consented to the loan and also denies affixing her
signature to the mortgage and loan documents.

The husband cannot alienate or encumber any conjugal real property without the consent,
express or implied, of the wife. Should the husband do so, then the contract is
voidable.17 Article 173 of the Civil Code allows Aguete to question Ros’ encumbrance of the
subject property. However, the same article does not guarantee that the courts will declare
the annulment of the contract. Annulment will be declared only upon a finding that the wife did
not give her consent. In the present case, we follow the conclusion of the appellate court and
rule that Aguete gave her consent to Ros’ encumbrance of the subject property.

The documents disavowed by Aguete are acknowledged before a notary public, hence they
are public documents. Every instrument duly acknowledged and certified as provided by law
may be presented in evidence without further proof, the certificate of acknowledgment
being prima facie evidence of the execution of the instrument or document involved.18 The
execution of a document that has been ratified before a notary public cannot be disproved by
the mere denial of the alleged signer.19 PNB was correct when it stated that petitioners’
omission to present other positive evidence to substantiate their claim of forgery was fatal to
petitioners’ cause.20 Petitioners did not present any corroborating witness, such as a
handwriting expert, who could authoritatively declare that Aguete’s signatures were really
forged.

A notarized document carries the evidentiary weight conferred upon it with respect to its due
execution, and it has in its favor the presumption of regularity which may only be rebutted by
evidence so clear, strong and convincing as to exclude all controversy as to the falsity of the
certificate. Absent such, the presumption must be upheld. The burden of proof to overcome
the presumption of due execution of a notarial document lies on the one contesting the same.
Furthermore, an allegation of forgery must be proved by clear and convincing evidence, and
whoever alleges it has the burden of proving the same.21]

Ros himself cannot bring action against PNB, for no one can come before the courts with
unclean hands.1avvphi1 In their memorandum before the trial court, petitioners themselves
admitted that Ros forged Aguete’s signatures.

Joe A. Ros in legal effect admitted in the complaint that the signatures of his wife in the
questioned documents are forged, incriminating himself to criminal prosecution. If he were
alive today, he would be prosecuted for forgery. This strengthens the testimony of his wife
that her signatures on the questioned documents are not hers.

In filing the complaint, it must have been a remorse of conscience for having wronged his
family; in forging the signature of his wife on the questioned documents; in squandering the
P115,000.00 loan from the bank for himself, resulting in the foreclosure of the conjugal
property; eviction of his family therefrom; and, exposure to public contempt, embarassment
and ridicule.22]

The application for loan shows that the loan would be used exclusively "for additional working
[capital] of buy & sell of garlic & virginia tobacco."23 In her testimony, Aguete confirmed that
Ros engaged in such business, but claimed to be unaware whether it prospered. Aguete was
also aware of loans contracted by Ros, but did not know where he "wasted the
money."24 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.25

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
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.26]

For this reason, we rule that Ros’ loan from PNB redounded to the benefit of the conjugal
partnership. Hence, the debt is chargeable to the conjugal partnership.

WHEREFORE, we DENY the petition. The Decision of the Court of Appeals in CA-G.R. CV

No. 76845 promulgated on 17 October 2005 is AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. 146548               December 18, 2009

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.

DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari of the Decision 2 dated September 7, 2000 and
Resolution3 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. 1075344 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 complaint6 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 Estate9 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
Rights11 dated February 14, 1963 from Domingo Hernandez, Sr. to Camisura, the Irrevocable
SPA12 executed by the former in the latter’s favor, and a Deed of Sale of Right in a
Residential Land and Improvements Therein13 dated May 9, 1964 executed by Camisura in
favor of Plaridel Mingoa, Sr.

In its Order14 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 decision15 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 Answer17 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 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.

xxxx

[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; and

5) 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 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 Order21 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 assailed Decision 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
Resolution23 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. Calderon25 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/Certification26 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 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

xxx

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.

The SPA31 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 ₱6,500.00, 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
documents35 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 140936 of
the Civil Code. Petitioners likewise contend that an action for the declaration of the non-
existence of a contract under Article 141037 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.)

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. CA38 and Bucoy 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.

xxx

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.

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.

xxx

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.1avvphi1
xxx

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 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.

[ G.R. No. 190995, August 09, 2017 ]

BENJAMIN A. KO, EDUARDO A. KO, ALEXANDER A. KO, MA. CYNTHIA K. AZADA-
CHUA, GARY A. KO, ANTHONY A. KO, FELIX A. KO, AND DANTON C. KO,
PETITIONERS, V. VIRGINIA DY ARAMBURO, VICKY ARAMBURO, JULY ARAMBURO,
JESUS ARAMBURO, JOSEPHINE ARAMBURO, MARYJANE ARAMBURO, AUGUSTO
ARAMBURO, JR., JAIME ARAMBURO, JULIET ARAMBURO, JACKSON ARAMBURO,
JOCELYN ARAMBURO, AILEEN ARAMBURO, JUVY ARAMBURO,CORAZON ROTAIRO
ARAMBURO, AND NEIL VINCENT ARAMBURO, RESPONDENTS.
 DECISION
TIJAM, J.:

This is a Petition for Review on Certiorari[1] under Rule 45, assailing the Decision[2] dated
September 22, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 89611, affirming the
Decision dated February 16, 2006 of the Regional Trial Court (RTC) of Tabaco City, Branch
15, in Civil Case No. T-1693.
Factual and Procedural Antecedents

Respondent Virginia Dy Aramburo (Virginia) is Corazon Aramburo Ko's (Corazon) sister-in-

law, the former being the wife of the latter's brother, Simeon Aramburo (Simeon). Corazon
and Simeon have another sibling, Augusto Aramburo (Augusto), who predeceased them.
Virginia's co respondents herein are the heirs of Augusto, while the petitioners in the instant
case are the heirs of Corazon who substituted the latter after she died while the case was
pending before the CA.[3]

On November 26, 1993, Virginia, together with her co-respondents herein, filed a Complaint
for Recovery of Ownership with Declaration of Nullity and/or Alternatively Reconveyance and
Damages with Preliminary Injunction against Corazon, docketed as Civil Case No. T-1693.[4]

Subject of this case are seven parcels of land located in Tabaco City, Albay, to wit: (1)
Transfer Certificate of Title (TCT) No. T-41187 with an area of 176,549 square meters, more
or less; (2) TCT No. T-41183 with an area of 217,732 sq m, more or less; (3) TCT No. T-
41184 with an area of 39,674 sq m, more or less; (4) TCT No. T-28161 with an area of 86,585
sq m, more or less; (5) TCT No. T-41186 with an area of 4,325 sq m, more or less; (6) TCT
No. 49818 with an area of 27,281 sq m, more or less; and (7) TCT No. 49819 with an area of
35,760 sq m, more or less (subject properties), now all under the name of Corazon.[5]

The complaint alleged that Virginia and her husband Simeon (Spouses Simeon and Virginia),
together with Corazon and her husband Felix (Spouses Felix and Corazon), acquired the
subject properties from Spouses Eusebio and Epifania Casaul (Spouses Eusebio and
Epifania) through a Deed of Cession dated April 10, 1970.[6]

On April 13, 1970, Spouses Simeon and Virginia and Spouses Felix and Corazon executed a
Deed of Cession in favor of Augusto's heirs, subject of which is the one-third pro-
indiviso portion of the subject properties.[7]

However, allegedly with the use of falsified documents, Corazon was able to have the entire
subject properties transferred exclusively to her name, depriving her co-owners Virginia and
Augusto's heirs of their pro-indiviso share, as well as in the produce of the same.[8]

For her part, Corazon admitted having acquired the subject properties through cession from
their uncle and auntie, Spouses Eusebio and Epifania. She, however, intimated that although
the said properties were previously registered under Spouses Eusebio and Epifania's name,
the same were, in truth, owned by their parents, Spouses Juan and Juliana Aramburo
(Spouses Juan and Juliana). Hence, when her parents died, Spouses Eusebio and Epifania
allegedly merely returned the said properties to Spouses Juan and Juliana by ceding the
same to their children, Corazon and Simeon. She further averred that the said properties
were ceded only to her and Simeon, in that, her husband Felix's name and Virginia's name
appearing in the Deed were merely descriptive of her and Simeon's civil status, being married
to Felix and Virginia, respectively.[9]

Corazon alleged that she and Simeon thought of sharing a third of the subject properties with
the heirs of their brother Augusto who predeceased them, hence they executed a Deed of
Cession on April 13, 1970 but later on decided to recall and not implement the same. In fine,
thus, Corazon insisted that only she and Simeon share one-half portion each of the subject
properties. [10]

Corazon further alleged that on December 14, 1974, Simeon sold and conveyed his entire
one-half share in the co-owned properties in her favor. Hence, Corazon became the sole
owner thereof and consequently, was able to transfer the titles of the same to her name.
Corazon argued that the subject properties belong to Simeon's exclusive property, hence,
Virginia's conformity to such sale was not necessary.[11]

Corazon also raised in her Answer to the complaint, that respondents' action was barred by
prescription.[12]

Ruling of the RTC

During trial, it was established that Simeon and Virginia's marriage had been on bad terms. In
fact, since February 4, 1973 Simeon and Virginia had lived separately. Simeon lived with his
sister Corazon in Tabaco City, Albay, while Virginia and their children lived in Paco, Manila.
From these circumstances, the trial court deduced that it is highly suspicious that thereafter,
Virginia would sign a deed of sale, consenting to her husband's decision to sell their conjugal
assets to Corazon. Virginia vehemently disowned the signature appearing in the December
14, 1974 Deed of Absolute Sale. Verily, the National Bureau of Investigation (NBI)
examination report concluded that the questioned signature and the specimen signatures of
Virginia were not written by one and the same person and thus, the former is a forgery. [13]

Without the conformity of Virginia, according to the trial court, Simeon cannot alienate or
encumber any real property of the conjugal partnership.[14]

The trial court concluded, thus, that the December 14, 1974 Deed of Absolute Sale, being
falsified, is not a valid instrument to transfer the one third share of the subject properties.[15]

The trial court also did not accept Corazon's allegation that the April 13, 1970 Deed of
Cession in favor of Augusto's heirs as to the other one third portion of the subject properties,
was cancelled and not implemented. The trial court noted Corazon's testimony during trial
that she was merely administering the said portion for Augusto's heirs, her nephews and
nieces, who were still minors at that time.[16]

On February 16, 2006, the trial court rendered a Decision in favor of herein respondents,
thus:

WHEREFORE, foregoing premises considered, judgment is hereby rendered

in favor of the plaintiffs:

Declaring the plaintiffs Virginia Dy-Arambulo and Vicky Aramburo-Lee together with the
(1) interested parties the owner of ONE-THIRD (1/3) portion of the property subject mater of
this case;
   
Declaring the co-plaintiffs (heirs of Augusto Aramburo) likewise the owners of One-third
(2)
(1/3) portion of the property subject matter of this case;
   
Ordering the Cancellation of [TCT] Nos. T-41187,T-41183, T-41184, T-41185, T-41186,
T-48918[4] [sic] and T-49819 and another ones issued upon proper steps taken in the
(3) names of the plaintiffs and interested parties; and the other plaintiffs, Heirs of Augusto
Aramburo, conferring ownership over TWO-THIRDS (2/3) PORTION of the properties
subject matter of this case;
   
Ordering the defendant to reimburse the plaintiffs TWO-THIRDS (2/3) of the produce of
(4) the properties, subject matter of this case from the time she appropriated it to herself in
1974 until such time as the 2/3 share are duly delivered to them; and
   
Ordering the defendant to pay plaintiffs by way of damages the amount of Fifty
(5)
Thousand (P50,000.00) as attorney's fees; and
   

(6) To pay the cost of suit.

SO ORDERED.[17]

Ruling of the CA

On appeal, Corazon maintained that the subject properties are not part of Spouses Simeon
and Virginia's conjugal properties. This, according to her, is bolstered by the fact that the
subject properties are not included in the case for dissolution of conjugal partnership
docketed as Special Proceeding No. 67, and in the separation of properties case docketed as
Civil Case No. T-1032 between Simeon and Virginia.[18]

Respondents argued otherwise. Particularly, Virginia insisted that only a third portion of the
subject properties is owned by Simeon and that the same is conjugally-owned by her and
Simeon since it was acquired during their marriage. As such, the disposition by Simeon of the
one-half portion of the subject properties in favor of Corazon is not only void but also fictitious
not only because Simeon does not own the said one-half portion, but also because Virginia's
purported signature in the December 14, 1974 Deed of Absolute Sale as the vendor's wife
was a forgery as found by the NBI, which was upheld by the trial court.[19]

In its September 22, 2009 assailed Decision,[20] the CA affirmed the trial court's findings and
conclusion in its entirety, thus:

WHEREFORE, the present appeal is DISMISSED. Consequently, the

Decision of the [RTC], Branch 15, Tabaco City, in Civil Case No. T-1693 is
hereby AFFIRMED in toto.

SO ORDERED.[21]

Petitioners then, substituting deceased Corazon, filed a Motion for Reconsideration,[22] which

was likewise denied by the CA in its Resolution[23] dated January 13, 2010:

WHEREFORE, there being no cogent reason for US to depart from Our

assailed Decision, WE hereby DENY the Motion for Partial Reconsideration.

SO ORDERED.[24]

Hence, this petition.

Issue

Did the CA correctly sustain the RTC decision, declaring the parties as co-owners of the
subject properties? In the affirmative, may the subject titles be nullified and transferred to the
parties as to their respective portions?
 This Court's Ruling

The petition is partly meritorious.

At the outset, let it be stated that the law which governs the instant case is the Old Civil Code,
not the Family Code, as the circumstances of this case all occurred before the effectivity of
the Family Code on August 3, 1988.

Proceeding, thus, to the issue of ownership, We find no reason to depart from the RTC's
ruling as affirmed by the CA.

Augusto's heirs own one-third pro-indiviso

share in the subject properties
Respondents' (Augusto's heirs) claim concerning one-third of the subject properties, is
anchored upon the April 13, 1970 Deed of Cession executed by Spouses Felix and Corazon
and Spouses Simeon and Virginia in favor of Augusto's children. Petitioners, however,
maintain that the said deed was never given effect as it was recalled by the said spouses.

The courts a quo found that the said deed, ceding a third of the subject properties to
Augusto's heirs, was in fact implemented as evidenced by Corazon's testimony that she was
merely administering the said properties for Augusto's heirs as her nephews and nieces were
still minors at that time.

We find no cogent reason to depart from the the courts a quo's findings as to the existence
and effectivity of the April 13, 1970 Deed of Cession giving rights to Augusto's children over
the one-third portion of the subject property. For one, basic is the rule that factual findings of
the trial court, especially if affirmed by the appellate court, are binding and conclusive upon
this Court absent any clear showing of abuse, arbitrariness, or capriciousness committed by
the trial court.[25] In addition, We are not convinced of Corazon's bare assertion that the said
document was cancelled merely because she and her brother . Simeon decided not to
implement it anymore. Moreover, as can be gleaned from the testimony of respondent July
Aramburo, one of Augusto's heirs, which was notably quoted by the petitioners in this petition,
it is clear that he, together with his co-heirs, are co-owners of the subject properties along
with Spouses Simeon and Virginia and Spouses Felix and Corazon, by virtue of the Deed of
Cession executed in their favor. The said testimony clearly stated that Simeon was also
merely administering the subject properties.[26]

Simeon's heirs, which include Virginia,

also own one-third pro-indiviso share in
the subject properties
Respondent Virginia's claim as to the other one-third portion of the subject properties is
ultimately anchored upon the April 10, 1970 Deed of Cession. Corazon, however, countered
that inasmuch as her husband Felix's name in the said Deed of Cession was merely
descriptive of her status as being married to the latter, Virginia's name likewise appeared in
the said Deed of Cession merely to describe Simeon's status as being married to Virginia. In
fine, Corazon argued that the properties subject of the said Deed were given exclusively to
her and Simeon. Consequently, the one-half portion thereof pertains to Simeon's exclusive
property and does not belong to Simeon and Virginia's conjugal property. This, according to
Corazon, was bolstered by the fact that Simeon's share in the subject properties was not
included in the petition for separation of properties between Virginia and Simeon. Petitioners
maintain this argument.

We uphold the courts a quo's conclusion that one-third portion of the subject properties is
indeed part of Simeon and Virginia's conjugal properties.

It is undisputed that the subject properties were originally registered in the name of Spouses
Eusebio and Epifania. It is also undisputed that in a Deed of Cession dated April 10, 1970,
these parcels of land were ceded to Spouses Felix and Corazon, and Spouses Simeon and
Virginia. There is likewise no question that the subject properties were ceded to the said
spouses during Spouses Simeon and Virginia's marriage.

Article 160 of the Old Civil Code, which is the applicable provision since the property was
acquired prior to the enactment of the Family Code as stated above, provides that "all
property of the marriage is presumed to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband or to the wife." [27] This presumption in favor
of conjugality is rebuttable, but only with a strong, clear and convincing evidence; there must
be a strict proof of exclusive ownership of one of the spouses, [28] and the burden of proof rests
upon the party asserting it.[29]

Thus, in this case, the subject properties, having been acquired during the marriage, are still
presumed to belong to Simeon and Virginia's conjugal properties.

Unfortunately, Corazon, or the petitioners for that matter, failed to adduce ample evidence
that would convince this Court of the exclusive character of the properties.

Petitioners' argument that Virginia's name was merely descriptive of Simeon's civil status is
untenable. It bears stressing that if proof obtains on the acquisition of the property during the
existence of the marriage, as in this case, then the presumption of conjugal ownership
remains unless a strong, clear and convincing proof was presented to prove otherwise. In
fact, even the registration of a property in the name of one spouse does not destroy its
conjugal nature. What is material is the time when the property was acquired.[30]

We also give scant consideration on petitioners' bare allegation that the subject properties
were actually from the estate of Simeon and Corazon's parents, intimating that the same were
inherited by Simeon and Corazon, hence, considered their exclusive properties. The records
are bereft of any proof that will show that the subject properties indeed belonged to Simeon
and Corazon's parents. Again, what is established is that the subject properties were
originally registered under Spouses Eusebio and Epifania's name and thus, ceded by the
latter. Petitioners' bare allegation on the matter is so inadequate for the Court to reach a
conclusion that the acquisition of the subject properties was in a nature of inheritance than a
cession.

Likewise, the fact that the subject properties were not included in the cases for separation of
properties between Simeon and Virginia does not, in any way, prove that the same are not
part of Simeon and Virginia's conjugal properties. Such fact cannot be considered as a
strong, clear and convincing proof that the said properties exclusively belong to Simeon.
Besides, We note respondents' allegation in their Comment to this petition that the case for
separation of properties between Simeon and Virginia was not resolved by the trial court on
the merits as Simeon died during the pendency thereof, and also because there was actually
a disagreement as to the inventory the properties included therein. This could mean that
precisely, other properties may be part of the said spouses' conjugal properties and were not
included in the said case. Notably, such allegation was not denied by the petitioners.

At any rate, the question of whether petitioners were able to adduce proof to overthrow the
presumption of conjugality is a factual issue best addressed by the trial court. It cannot be
over-emphasized that factual determinations of the trial courts, especially when confirmed by
the appellate court, are accorded great weight by the Court and, as a rule, will not be
disturbed on appeal, except for the most compelling reasons, which We do not find in the
case at bar.[31]

Simeon could not have validly sold the

one-third share of Augusto's heirs, as well
as the one-third portion of his and
Virginia's conjugal share without the
latter's consent, to Corazon
We now proceed to determine the validity of the December 14, 1974 Deed of Absolute Sale
executed by Simeon in favor of Corazon, covering one-half of the subject properties which
was his purported share.

As for the one-third portion of the subject properties pertaining to Augusto's heirs, We are one
with the CA in ruling that the Deed of Absolute Sale is void as the said portion is owned by
Augusto's heirs as above-discussed and thus, Simeon had no right to sell the same. It is basic
that the object of a valid sales contract must be owned by the seller. [32] Nemo dat quod non
habet, as an ancient Latin maxim says. One cannot give what one does not have.[33]

However, as to the one-third portion commonly-owned by Spouses Simeon and Virginia,

Simeon's alienation of the same through sale without Virginia's conformity is merely voidable.

Article 166[34] of the Old Civil Code explicitly requires the consent of the wife before the
husband may alienate or encumber any real property of the conjugal partnership except when
there is a showing that the wife is incapacitated, under civil interdiction, or in like situations.

In this case, Virginia vehemently denies having conformed to the December 14, 1974 sale in
favor of Corazon. In fact, during trial, it has already been satisfactorily proven, through the
NBI's findings as upheld by the trial court, that Virginia's signature appearing on the said
Deed of Absolute Sale is a forgery. Concedingly, a finding of forgery does not depend entirely
on the testimonies of handwriting experts as even this Court may conduct an independent
examination of the questioned signature in order to arrive at a reasonable conclusion as to its
authenticity. We, however, do not have any means to evaluate the questioned signature in
this case as even the questioned Deed of Absolute Sale is not available in the records before
Us. Hence, We are constrained to the general rule that the factual findings of the RTC as
affirmed by the CA should not be disturbed by this Court unless there is a compelling reason
to deviate therefrom.

In addition, as correctly observed by the courts a quo, We cannot turn a blind eye on the
circumstances surrounding the execution of the said Deed of Absolute Sale. The CA, quoting
the RTC, held thus:

[T]he dubiety of its execution at a time that [Virginia] and her husband's
marital relationship was already stale is not to be taken for granted. It is a fact
that [Virginia] had lived separately from bed and board with her husband
[Simeon] as of February 4, 1973. It is, therefore, highly suspicious that [later
on], x x x she would consent to her husband's decision selling their conjugal
assets to [Corazon]. Precisely, her signature appearing in said Deed of
Absolute Sale dated December 14, 1974 x x x is being disowned by her as
being a forgery. Undoubtedly, the NBI Examination report anent this x x x
conducted by Sr. Document Examiner Rhoda B. Flores gave the conclusion
that the questioned and the standard/sample signatures of "[Virginia]" was
not written by one and the same person. x x x.[35]

The CA also correctly observed that the forgery, as found by the RTC, is evident from the
admitted fact of strained marital relationship between Simeon and Virginia and the fact that at
the time the question Deed of Absolute Sale was executed, Simeon had been living with
Corazon in Tabaco City, Albay, while Virginia and her children were living in Paco, Manila.[36]

Accordingly, without Virginia's conformity, the Deed of Absolute Sale executed on December
14, 1974 between Simeon and Corazon purportedly covering one-half of the subject
properties is voidable.

As for Augusto's heirs, the action to nullify

the sale of their share, being void is
imprescriptible; as for Virginia, the action
to nullify the sale of her share, being
merely voidable, is susceptible to
prescription
At this juncture, We differ from the CA's pronouncement that since the deed of sale involved
is a void contract, the action to nullify the same is imprescriptible.

We qualify.

For the share of Augusto's heirs sold by Simeon in the December 14, 1974 Deed of Absolute
Sale, the sale of the same is void as the object of such sale, not being owned by the seller,
did not exist at the time of the transaction.[37] Being a void contract, thus, the CA correctly
ruled that the action to impugn the sale of the same is imprescriptible pursuant to Article
1410[38] of the New Civil Code (NCC).

As for the share pertaining to Simeon and Virginia, We must emphasize that the governing
law in this case is the Old Civil Code. Under the said law, while the husband is prohibited from
selling the commonly-owned real property without his wife's consent, still, such sale is not
void but merely voidable.[39] Article 173 thereof gave Virginia the right to have the sale
annulled during the marriage within ten years from the date of the sale. Failing in that, she or
her heirs may demand, after dissolution of the marriage, only the value of the property that
Simeon erroneously sold.[40] Thus:

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.

In contrast, the Family Code does not provide a period within which the wife who gave no
consent may assail her husband's sale of real property. It simply provides that without the
other spouse's written consent or a court order allowing the sale, the same would be void.
[41]
 Thus, the provisions of the NCC governing contracts is applied as regards the issue on
prescription. Under the NCC, a void or inexistent contract has no force and effect from the
very beginning, and this rule applies to contracts that are declared void by positive provision
of law as in the case of a sale of conjugal property without the other spouse's written consent.
[42]
 Under Article 1410 of the NCC, the action or defense for the declaration of the inexistence
of a contract does not prescribe.

As this case, as far as Virginia is concerned, falls under the provisions of the Old Civil Code,
the CA erred in ruling that the subject Deed of Absolute Sale is void for the lack of the wife's
conformity thereto and thus, applying Article 1410 of the NCC stating that the action to
question a void contract is imprescriptible. Again, Simeon's sale of their conjugal property
without his wife's conformity under the Old Civil Code is merely voidable not void. The
imprescriptibility of an action assailing a void contract under Article 1410 of the NCC, thus,
does not apply in such case. The 10-year prescriptive period under Article 173 of the Old Civil
Code, therefore, should be applied in this case.

Here, the invalid sale was executed on December 14, 1974 while the action questioning the
same was filed in 1993, which is clearly way beyond the 10-year period prescribed under
Article 173 of the Old Civil Code. Virginia's recourse is, therefore, to demand only the value of
the property, i.e., the one-third portion of the subject properties invalidly sold by Simeon
without Virginia's conformity pursuant to the same provision.

In fine, while We uphold the courts a quo's findings that the parties herein are co-owners of
the subject properties, We reverse and set aside the said courts' ruling, ordering the
cancellation of titles of the entire subject properties and the transfer of the two-thirds portion
of the same to the respondents. While Augusto's heirs are entitled to the recovery of their
share in the subject properties, Virginia is only entitled to demand the value of her share
therefrom pursuant to Article 173 of the Old Civil Code above-cited.

WHEREFORE, premises considered, the petition is PARTLY GRANTED. The Decision dated
September 22, 2009 of the Court of Appeals in CA-G.R. CV No. 89611, affirming the Decision
dated February 16, 2006 of the Regional Trial Court of Tabaco City, Branch 15, in Civil Case
No. T-1693 is hereby AFFIRMED in all aspects EXCEPT insofar as it ordered the cancellation
of the titles of the entire subject properties.

Accordingly, petitioners Heirs of Corazon Aramburo Ko, respondents Virginia Dy Aramburo

and all persons claiming under her, as Heirs of Simeon Aramburo, and respondents Heirs of
Augusto Aramburo are deemed co-owners pro-indiviso of the subject properties in equal one-
third (1/3) share. As such, the titles over the subject properties are ORDERED cancelled
insofar as the heirs of Augusto Aramburo's share is concerned. Virginia Dy Aramburo and all
persons claiming under her have the right to demand for the value of their one-third (1/3)
share in a proper case.

SO ORDERED.

G.R. No. 125172 June 26, 1998

Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,

vs.
COURT OF APPEALS and GILDA COPUZ, respondents.

PANGANIBAN, J.:

The sale of a conjugal property requires the consent of both the husband and the wife. The
absence of the consent of one renders the sale null and void, while the vitiation thereof makes
it merely voidable. Only in the latter case can ratification cure the defect.

The Case

These were the principles that guided the Court in deciding this petition for review of the
Decision 1 dated January 30, 1996 and the Resolution 2 dated May 28, 1996, promulgated by
the Court of Appeals in CA-GR CV No. 41758, affirming the Decision of the lower court and
denying reconsideration, respectively.

On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complainant 3 against
her husband Judie Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said
Complaint sought the declaration of a certain deed of sale, which involved the conjugal
property of private respondent and her husband, null and void. The case was raffled to the
Regional Trial Court of Koronadal, South Cotabato, Branch 25. In due course, the trial court
rendered a Decision 4 dated September 9, 1992, disposing as follow: 5

ACCORDINGLY, judgment is rendered for the plaintiff and against the defendants,

1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. "A") and the
"amicable settlement" dated March 16, 1990 (Exh. "B") as null void and of no effect;

2. Recognizing as lawful and valid the ownership and possession of plaintiff Gilda Corpuz
over the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409 which has been the
subject of the Deed of Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda Guiang the amount of
NINE THOUSAND (P9,000.00) PESOS corresponding to the payment made by defendants
Guiangs to Manuel Callejo for the unpaid balance of the account of plaintiff in favor of Manuel
Callejo, and another sum of P379.62 representing one-half of the amount of realty taxes paid
by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-165409, both with legal interests
thereon computed from the finality of the decision.

No pronouncement as to costs in view of the factual circumstances of the case.

Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent Court,
in its challenged Decision, ruled as follow: 6

WHEREFORE, the appealed of the lower court in Civil Case No. 204 is hereby AFFIRMED by
this Court. No costs considering plaintiff-appellee's failure to file her brief despite notice.

Reconsideration was similarly denied by the same court in its assailed Resolution: 7

Finding that the issues raised in defendants-appellants motion for reconsideration of Our
decision in this case of January 30, 1996, to be a mere rehash of the same issues which we
have already passed upon in the said decision, and there [being] no cogent reason to disturb
the same, this Court RESOLVED to DENY the instant motion for reconsideration for lack of
merit.

The Facts

The facts of this case are simple. Over the objection of private respondent and while she was
in Manila seeking employment, her husband sold to the petitioners-spouses one half of their
conjugal peoperty, consisting of their residence and the lot on which it stood. The
circumstances of this sale are set forth in the Decision of Respondent Court, which quoted
from the Decision of the trial court as follows: 8

1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses. They were
married on December 24, 1968 in Bacolod City, before a judge. This is admitted by
defendants-spouses Antonio and Luzviminda Guiang in their answer, and also admitted by
defendant Judie Corpuz when he testified in court (tsn. p. 3, June 9, 1992), although the latter
says that they were married in 1967. The couple have three children, namely: Junie — 18
years old, Harriet — 17 years of age, and Jodie or Joji, the youngest, who was 15 years of
age in August, 1990 when her mother testified in court.

Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with plaintiff-wife Gilda
Corpuz as vendee, bought a 421 sq. meter lot located in Barangay Gen. Paulino Santos (Bo.
1), Koronadal, South Cotabato, and particularly known as Lot 9, Block 8, (LRC) Psd-165409
from Manuel Callejo who signed as vendor through a conditional deed of sale for a total
consideration of P14,735.00. The consideration was payable in installment, with right of
cancellation in favor of vendor should vendee fail to pay three successive installments (Exh.
"2", tsn p. 6, February 14, 1990).

2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half portion of
their Lot No. 9, Block 8, (LRC) Psd-165409 to the defendants-spouses Antonio and
Luzviminda Guiang. The latter have since then occupied the one-half portion [and] built their
house thereon (tsn. p. 4, May 22, 1992). They are thus adjoining neighbors of the Corpuzes.

3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was trying to look for
work abroad, in [the] Middle East. Unfortunately, she became a victim of an unscrupulous
illegal recruiter. She was not able to go abroad. She stayed for sometime in Manila however,
coming back to Koronadal, South Cotabato, . . . on March 11, 1990. Plaintiff's departure for
Manila to look for work in the Middle East was with the consent of her husband Judie Corpuz
(tsn. p. 16, Aug. 12, 1990; p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant Judie Corpuz seldom went home to the
conjugal dwelling. He stayed most of the time at his place of work at Samahang Nayon
Building, a hotel, restaurant, and a cooperative. Daughter Herriet Corpuz went to school at
King's College, Bo. 1, Koronadal, South Cotabato, but she was at the same time working as
household help of, and staying at, the house of Mr. Panes. Her brother Junie was not
working. Her younger sister Jodie (Jojie) was going to school. Her mother sometimes sent
them money (tsn. p. 14, Sept. 6, 1991.)

Sometime in January 1990, Harriet Corpuz learned that her father intended to sell the
remaining one-half portion including their house, of their homelot to defendants Guiangs. She
wrote a letter to her mother informing her. She [Gilda Corpuz] replied that she was objecting
to the sale. Harriet, however, did not inform her father about this; but instead gave the letter to
Mrs. Luzviminda Guiang so that she [Guiang] would advise her father (tsn. pp. 16-17, Sept. 6,
1991).

4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz pushed through
the sale of the remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409. On March 1,
1990, he sold to defendant Luzviminda Guiang thru a document known as "Deed of Transfer
of Rights" (Exh. "A") the remaining one-half portion of their lot and the house standing thereon
for a total consideration of P30,000.00 of which P5,000.00 was to be paid in June, 1990.
Transferor Judie Corpuz's children Junie and Harriet signed the document as witness.

Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever defect in
defendant Judie Corpuz's title over the lot transferred, defendant Luzviminda Guiang as
vendee executed another agreement over Lot 9, Block 8, (LRC) Psd-165408 (Exh. "3"), this
time with Manuela Jimenez Callejo, a widow of the original registered owner from whom the
couple Judie and Gilda Corpuz originally bought the lot (Exh. "2"), who signed as vendor for a
consideration of P9,000.00. Defendant Judie Corpuz signed as a witness to the sale (Exh. "3-
A"). The new sale (Exh. "3") describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408 but it
is obvious from the mass of evidence that the correct lot is Lot 8, Block 9, (LRC) Psd-165409,
the very lot earlier sold to the couple Gilda and Judie Corpuz.

5. Sometimes on March 11, 1990, plaintiff returned home. She found her children staying with
other households. Only Junie was staying in their house. Harriet and Joji were with Mr.
Panes. Gilda gathered her children together and stayed at their house. Her husband was
nowhere to be found. She was informed by her children that their father had a wife already.

6. For staying in their house sold by her husband, plaintiff was complained against by
defendant Luzviminda Guiang and her husband Antonio Guiang before the Barangay
authorities of Barangay General Paulino Santos (Bo. 1), Koronadal, South Cotabato, for
trespassing (tsn. p. 34, Aug. 17, 1990). The case was docketed by the barangay authorities
as Barangay Case No. 38 for "trespassing". On March 16, 1990, the parties thereat signed a
document known as "amicable settlement". In full, the settlement provides for, to wit:

That respondent, Mrs. Gilda Corpuz and her three children, namely: Junie, Hariet and Judie
to leave voluntarily the house of Mr. and Mrs. Antonio Guiang, where they are presently
boarding without any charge, on or before April 7, 1990.

FAIL NOT UNDER THE PENALTY OF THE LAW.

Believing that she had received the shorter end of the bargain, plaintiff to the Barangay
Captain of Barangay Paulino Santos to question her signature on the amicable settlement.
She was referred however to the Office-In-Charge at the time, a certain Mr. de la Cruz. The
latter in turn told her that he could not do anything on the matter (tsn. p. 31, Aug. 17, 1990).

This particular point not rebutted. The Barangay Captain who testified did not deny that Mrs.
Gilda Corpuz approached him for the annulment of the settlement. He merely said he forgot
whether Mrs. Corpuz had approached him (tsn. p. 13, Sept. 26, 1990). We thus conclude that
Mrs. Corpuz really approached the Barangay Captain for the annulment of the settlement.
Annulment not having been made, plaintiff stayed put in her house and lot.

7. Defendant-spouses Guiang followed thru the amicable settlement with a motion for the
execution of the amicable settlement, filing the same with the Municipal Trial Court of
Koronadal, South Cotabato. The proceedings [are] still pending before the said court, with the
filing of the instant suit.

8. As a consequence of the sale, the spouses Guiang spent P600.00 for the preparation of
the Deed of Transfer of Rights, Exh. "A", P9,000.00 as the amount they paid to Mrs. Manuela
Callejo, having assumed the remaining obligation of the Corpuzes to Mrs. Callejo (Exh. "3");
P100.00 for the preparation of Exhibit "3"; a total of P759.62 basic tax and special education
fund on the lot; P127.50 as the total documentary stamp tax on the various documents;
P535.72 for the capital gains tax; P22.50 as transfer tax; a standard fee of P17.00;
certification fee of P5.00. These expenses particularly the taxes and other expenses towards
the transfer of the title to the spouses Guiangs were incurred for the whole Lot 9, Block 8,
(LRC) Psd-165409.

Ruling of Respondent Court

Respondent Court found no reversible error in the trial court's ruling that any alienation or
encumbrance by the husband of the conjugal propety without the consent of his wife is null
and void as provided under Article 124 of the Family Code. It also rejected petitioners'
contention that the "amicable sttlement" ratified said sale, citing Article 1409 of the Code
which expressly bars ratification of the contracts specified therein, particularly those
"prohibited or declared void by law."

Hence, this petition. 9

The Issues

In their Memorandum, petitioners assign to public respondent the following errors: 10

Whether or not the assailed Deed of Transfer of Rights was validly executed.

II

Whether or not the Cour of Appeals erred in not declairing as voidable contract under Art.
1390 of the Civil Code the impugned Deed of Transfer of Rights which was validly ratified thru
the execution of the "amicable settlement" by the contending parties.

III

Whether or not the Court of Appeals erred in not setting aside the findings of the Court a
quo which recognized as lawful and valid the ownership and possession of private respondent
over the remaining one half (1/2) portion of the properly.

In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of Transfer of
Rights) was merely voidable, and (2) such contract was ratified by private respondent when
she entered into an amicable sttlement with them.

This Court's Ruling

The petition is bereft of merit.

 First Issue:  Void or Voidable Contract?

Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by the
parties-litigants in good faith and for valuable consideration. The absence of private
respondent's consent merely rendered the Deed voidable under Article 1390 of the Civil
Code, which provides:

Art. 1390. The following contracts are voidable or annullable, even though there may have
been no damage to the contracting parties:

x x x           x x x          x x x

(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.

x x x           x x x          x x x

ATTY. FUENTES:

Q When did you come back to Koronadal, South Cotabato?

A That was on March 11, 1990, Ma'am.

Q Now, when you arrived at Koronadal, was there any problem which arose concerning the
ownership of your residential house at Callejo Subdivision?

A When I arrived here in Koronadal, there was a problem which arose regarding my
residential house and lot because it was sold by my husband without my knowledge.

This being the case, said contract properly falls within the ambit of Article 124 of the Family
Code, which was correctly applied by the teo lower court:

Art. 124. The administration and enjoyment of the conjugal partnerhip properly shall belong to
both spouses jointly. In case of disgreement, the husband's decision shall prevail, subject
recourse to the court by the wife for proper remedy, which must be availed of within five years
from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance which
must have the authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance shall be void. However,
the transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer is withdrawn by either or both
offerors. (165a) (Emphasis supplied)

Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly
explained the amendatory effect of the above provision in this wise: 12

The legal provision is clear. The disposition or encumbrance is void. It becomes still clearer if
we compare the same with the equivalent provision of the Civil Code of the Philippines. Under
Article 166 of the Civil Code, the husband cannot generally alienate or encumber any real
property of the conjugal partnershit without the wife's consent. The alienation or encumbrance
if so made however is not null and void. It is merely voidable. The offended wife may bring an
action to annul the said alienation or encumbrance. Thus the provision of Article 173 of the
Civil Code of the Philippines, to wit:

Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership property. Should
the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband.(n)

This particular provision giving the wife ten (10) years . . . during [the] marriage to annul the
alienation or encumbrance was not carried over to the Family Code. It is thus clear that any
alienation or encumbrance made after August 3, 1988 when the Family Code took effect by
the husband of the conjugal partnership property without the consent of the wife is null and
void.

Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners
were perpetrated in the execution of the document embodying the amicable settlement. Gilda
Corpuz alleged during trial that barangay authorities made her sign said document through
misrepresentation and
coercion. 13 In any event, its execution does not alter the void character of the deed of sale
between the husband and the petitioners-spouses, as will be discussed later. The fact
remains that such contract was entered into without the wife's consent.

In sum, the nullity of the contract of sale is premised on the absence of private respondent's
consent. To constitute a valid contract, the Civil Code requires the concurrence of the
following elements: (1) cause, (2) object, and (3) consent, 14 the last element being indubitably
absent in the case at bar.

Second Issue: Amicable Settlement

Insisting that the contract of sale was merely voidable, petitioners aver that it was duly ratified
by the contending parties through the "amicable settlement" they executed on March 16, 1990
in Barangay Case No. 38.

The position is not well taken. The trial and the appellate courts have resolved this issue in
favor of the private respondent. The trial court correctly held: 15

By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to Transfer of
Rights (Exh. "A") cannot be ratified, even by an "amicable settlement". The participation by
some barangay authorities in the "amicable settlement" cannot otherwise validate an invalid
act. Moreover, it cannot be denied that the "amicable settlement (Exh. "B") entered into by
plaintiff Gilda Corpuz and defendent spouses Guiang is a contract. It is a direct offshoot of the
Deed of Transfer of Rights (Exh. "A"). By express provision of law, such a contract is also
void. Thus, the legal provision, to wit:
Art. 1422. Acontract which is the direct result of a previous illegal contract, is also void and
inexistent. (Civil Code of the Philippines).

In summation therefore, both the Deed of transfer of Rights (Exh. "A") and the "amicable
settlement" (Exh. "3") are null and void.

Doctrinally and clearly, a void contract cannot be ratified. 16

Neither can the "amicable settlement" be considered a continuing offer that was accepted and
perfected by the parties, following the last sentence of Article 124. The order of the pertinent
events is clear: after the sale, petitioners filed a complaint for trespassing against private
respondent, after which the barangay authorities secured an "amicable settlement" and
petitioners filed before the MTC a motion for its execution. The settlement, however, does not
mention a continuing offer to sell the property or an acceptance of such a continuing offer. Its
tenor was to the effect that private respondent would vacate the property. By no stretch of the
imagination, can the Court interpret this document as the acceptance mentioned in Article
124.

WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged Decision
and Resolution. Costs against petitioners.

SO ORDERED.

G.R. No. 147978            January 23, 2002

THELMA A. JADER-MANALO, petitioner,
vs.
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 ₱1,500,000.00 for the Taytay property and ₱2,100,000.00 for the
Makati property4 to be paid on installment basis with downpayments of ₱100,000.00 and
₱200,000.00, respectively, on April 15, 1992. The balance thereof was to be paid as follows5 :

  Taytay Property Makati Property

6th month P200,000.00 P300,000.00
12th month 700,000.00 1,600,000.00
18th month 500,000.00  

This agreement was handwritten by petitioner and signed by Edilberto. 6 When petitioner
pointed out the conjugal nature of the properties, Edilberto assured her of his wife's
conformity and consent to the sale.7 The formal typewritten Contracts to Sell were thereafter
prepared by petitioner. The following day, petitioner, the real estate broker and Edilberto met
in the latter's office for the formal signing of the typewritten Contracts to Sell. 8 After Edilberto
signed the contracts, petitioner delivered to him two checks, namely, UCPB Check No. 62807
dated April 15, 1992 for ₱200,000.00 and UCPB Check No. 62808 also dated April 15, 1992
for ₱100,000.00 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 Dismiss14 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 Judgment21 
asserting that there is no genuine issue as to any material fact on the basis of the pleadings
and admission of the parties considering that the wife's written consent was not obtained in
the contract to sell, the subject conjugal properties belonging to respondents; hence, the
contract was null and void.

On April 14, 1993, the trial court rendered a summary judgment dismissing the complaint on
the ground that under Art. 124 of the Family Code, the court cannot intervene to authorize the
transaction in the absence of the consent of the wife since said wife who refused to give
consent had not been shown to be incapacitated. The dispositive portion of the trial court's
decision reads:

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 (₱50,000.00) as Moral Damages and FIFTY THOUSAND
(₱50,000.00) 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 ₱50,000.00 as
damages and ₱50,000.00 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.

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.

G.R. No. 153802. March 11, 2005

HOMEOWNERS SAVINGS & LOAN BANK, Petitioner,

vs.
MIGUELA C. DAILO, Respondents.

DECISION

TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court,
assailing the Decision1 of the Court of Appeals in CA-G.R. CV No. 59986 rendered on June 3,
2002, which affirmed with modification the October 18, 1997 Decision2  of the Regional Trial
Court, Branch 29, San Pablo City, Laguna in Civil Case No. SP-4748 (97).

The following factual antecedents are undisputed.

Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8, 1967.
During their marriage, the spouses purchased a house and lot situated at Barangay San
Francisco, San Pablo City from a certain Sandra Dalida. The subject property was declared
for tax assessment purposes under Assessment of Real Property No. 94-051-2802. The
Deed of Absolute Sale, however, was executed only in favor of the late Marcelino Dailo, Jr. as
vendee thereof to the exclusion of his wife.3

On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in
favor of one Lilibeth Gesmundo, authorizing the latter to obtain a loan from petitioner
Homeowners Savings and Loan Bank to be secured by the spouses Dailo’s house and lot in
San Pablo City. Pursuant to the SPA, Gesmundo obtained a loan in the amount of
₱300,000.00 from petitioner. As security therefor, Gesmundo executed on the same day a
Real Estate Mortgage constituted on the subject property in favor of petitioner. The
abovementioned transactions, including the execution of the SPA in favor of Gesmundo, took
place without the knowledge and consent of respondent.4

Upon maturity, the loan remained outstanding. As a result, petitioner instituted extrajudicial
foreclosure proceedings on the mortgaged property. After the extrajudicial sale thereof, a
Certificate of Sale was issued in favor of petitioner as the highest bidder. After the lapse of
one year without the property being redeemed, petitioner, through its vice-president,
consolidated the ownership thereof by executing on June 6, 1996 an Affidavit of Consolidation
of Ownership and a Deed of Absolute Sale.5

In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her visits to the
subject property, respondent learned that petitioner had already employed a certain Roldan
Brion to clean its premises and that her car, a Ford sedan, was razed because Brion allowed
a boy to play with fire within the premises.

Claiming that she had no knowledge of the mortgage constituted on the subject property,
which was conjugal in nature, respondent instituted with the Regional Trial Court, Branch 29,
San Pablo City, Civil Case No. SP-2222 (97) for Nullity of Real Estate Mortgage and
Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of Sale, Reconveyance with
Prayer for Preliminary Injunction and Damages against petitioner. In the latter’s Answer with
Counterclaim, petitioner prayed for the dismissal of the complaint on the ground that the
property in question was the exclusive property of the late Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision on October 18, 1997. The
dispositive portion thereof reads as follows:

WHEREFORE, the plaintiff having proved by the preponderance of evidence the allegations
of the Complaint, the Court finds for the plaintiff and hereby orders:

ON THE FIRST CAUSE OF ACTION:

1. The declaration of the following documents as null and void:

(a) The Deed of Real Estate Mortgage dated December 1, 1993 executed before Notary
Public Romulo Urrea and his notarial register entered as Doc. No. 212; Page No. 44, Book
No. XXI, Series of 1993.

(b) The Certificate of Sale executed by Notary Public Reynaldo Alcantara on April 20, 1995.

(c) The Affidavit of Consolidation of Ownership executed by the defendant

(c) The Affidavit of Consolidation of Ownership executed by the defendant over the residential
lot located at Brgy. San Francisco, San Pablo City, covered by ARP No. 95-091-1236 entered
as Doc. No. 406; Page No. 83, Book No. III, Series of 1996 of Notary Public Octavio M.
Zayas.

(d) The assessment of real property No. 95-051-1236.

2. The defendant is ordered to reconvey the property subject of this complaint to the plaintiff.

ON THE SECOND CAUSE OF ACTION

1. The defendant to pay the plaintiff the sum of ₱40,000.00 representing the value of the car
which was burned.

ON BOTH CAUSES OF ACTION

1. The defendant to pay the plaintiff the sum of ₱25,000.00 as attorney’s fees;

2. The defendant to pay plaintiff ₱25,000.00 as moral damages;

3. The defendant to pay the plaintiff the sum of ₱10,000.00 as exemplary damages;

4. To pay the cost of the suit.

The counterclaim is dismissed.

SO ORDERED.6

Upon elevation of the case to the Court of Appeals, the appellate court affirmed the trial
court’s finding that the subject property was conjugal in nature, in the absence of clear and
convincing evidence to rebut the presumption that the subject property acquired during the
marriage of spouses Dailo belongs to their conjugal partnership.7 The appellate court
declared as void the mortgage on the subject property because it was constituted without the
knowledge and consent of respondent, in accordance with Article 124 of the Family Code.
Thus, it upheld the trial court’s order to reconvey the subject property to respondent. 8 With
respect to the damage to respondent’s car, the appellate court found petitioner to be liable
therefor because it is responsible for the consequences of the acts or omissions of the person
it hired to accomplish the assigned task.9 All told, the appellate court affirmed the trial
court’s Decision, but deleted the award for damages and attorney’s fees for lack of basis.10

Hence, this petition, raising the following issues for this Court’s consideration:

1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO

DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER THEREOF IS VALID AS TO
HIS UNDIVIDED SHARE.

2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE PAYMENT

OF THE LOAN OBTAINED BY THE LATE MARCELINO DAILO, JR. THE SAME HAVING
REDOUNDED TO THE BENEFIT OF THE FAMILY.11

First, petitioner takes issue with the legal provision applicable to the factual milieu of this
case. It contends that Article 124 of the Family Code should be construed in relation to Article
493 of the Civil Code, which states:

ART. 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when personal rights are involved. But the
effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
portion which may be allotted to him in the division upon the termination of the co-ownership.

Article 124 of the Family Code provides in part:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong
to both spouses jointly. . . .

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance which
must have the authority of the court or the written consent of the other spouse. In the absence
of such authority or consent, the disposition or encumbrance shall be void. . . .

Petitioner argues that although Article 124 of the Family Code requires the consent of the
other spouse to the mortgage of conjugal properties, the framers of the law could not have
intended to curtail the right of a spouse from exercising full ownership over the portion of the
conjugal property pertaining to him under the concept of co-ownership. 12 Thus, petitioner
would have this Court uphold the validity of the mortgage to the extent of the late Marcelino
Dailo, Jr.’s share in the conjugal partnership.

In Guiang v. Court of Appeals,13 it was held that the sale of a conjugal property requires the
consent of both the husband and wife.14 In applying Article 124 of the Family Code, this Court
declared that the absence of the consent of one renders the entire sale null and void,
including the portion of the conjugal property pertaining to the husband who contracted the
sale. The same principle in Guiang squarely applies to the instant case. As shall be discussed
next, there is no legal basis to construe Article 493 of the Civil Code as an exception to Article
124 of the Family Code.

Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In the absence
of a marriage settlement, the system of relative community or conjugal partnership of gains
governed the property relations between respondent and her late husband.15 With the
effectivity of the Family Code on August 3, 1988, Chapter 4 on Conjugal Partnership of
Gains in the Family Code was made applicable to conjugal partnership of gains already
established before its effectivity unless vested rights have already been acquired under the
Civil Code or other laws.16
The rules on co-ownership do not even apply to the property relations of respondent and the
late Marcelino Dailo, Jr. even in a suppletory manner. The regime of conjugal partnership of
gains is a special type of partnership, where the husband and wife place in a common fund
the proceeds, products, fruits and income from their separate properties and those acquired
by either or both spouses through their efforts or by chance.17 Unlike the absolute community
of property wherein the rules on co-ownership apply in a suppletory manner, 18 the conjugal
partnership shall be governed by the rules on contract of partnership in all that is not in
conflict with what is expressly determined in the chapter (on conjugal partnership of gains) or
by the spouses in their marriage settlements. 19 Thus, the property relations of respondent and
her late husband shall be governed, foremost, by Chapter 4 on Conjugal Partnership of
Gains of the Family Code and, suppletorily, by the rules on partnership under the Civil Code.
In case of conflict, the former prevails because the Civil Code provisions on partnership apply
only when the Family Code is silent on the matter.

The basic and established fact is that during his lifetime, without the knowledge and consent
of his wife, Marcelino Dailo, Jr. constituted a real estate mortgage on the subject property,
which formed part of their conjugal partnership. By express provision of Article 124 of the
Family Code, in the absence of (court) authority or written consent of the other spouse, any
disposition or encumbrance of the conjugal property shall be void.

The aforequoted provision does not qualify with respect to the share of the spouse who
makes the disposition or encumbrance in the same manner that the rule on co-ownership
under Article 493 of the Civil Code does. Where the law does not distinguish, courts should
not distinguish.20 Thus, both the trial court and the appellate court are correct in declaring the
nullity of the real estate mortgage on the subject property for lack of respondent’s consent.

Second, petitioner imposes the liability for the payment of the principal obligation obtained by
the late Marcelino Dailo, Jr. on the conjugal partnership to the extent that it redounded to the
benefit of the family.21

Under Article 121 of the Family Code, "[T]he conjugal partnership shall be liable for: . . . (3)
Debts and obligations contracted by either spouse without the consent of the other to the
extent that the family may have been benefited; . . . ." For the subject property to be held
liable, the obligation contracted by the late Marcelino Dailo, Jr. must have redounded to the
benefit of the conjugal partnership. There must be the requisite showing then of some
advantage which clearly accrued to the welfare of the spouses. Certainly, to make a conjugal
partnership respond for a liability that should appertain to the husband alone is to defeat and
frustrate the avowed objective of the new Civil Code to show the utmost concern for the
solidarity and well-being of the family as a unit.22

The burden of proof that the debt was contracted for the benefit of the conjugal partnership of
gains lies with the creditor-party litigant claiming as such.23 Ei incumbit probatio qui dicit, non
qui negat (he who asserts, not he who denies, must prove).24 Petitioner’s sweeping
conclusion that the loan obtained by the late Marcelino Dailo, Jr. to finance the construction of
housing units without a doubt redounded to the benefit of his family, without adducing
adequate proof, does not persuade this Court. Other than petitioner’s bare allegation, there is
nothing from the records of the case to compel a finding that, indeed, the loan obtained by the
late Marcelino Dailo, Jr. redounded to the benefit of the family. Consequently, the conjugal
partnership cannot be held liable for the payment of the principal obligation.

In addition, a perusal of the records of the case reveals that during the trial, petitioner
vigorously asserted that the subject property was the exclusive property of the late Marcelino
Dailo, Jr. Nowhere in the answer filed with the trial court was it alleged that the proceeds of
the loan redounded to the benefit of the family. Even on appeal, petitioner never claimed that
the family benefited from the proceeds of the loan. When a party adopts a certain theory in
the court below, he will not be permitted to change his theory on appeal, for to permit him to
do so would not only be unfair to the other party but it would also be offensive to the basic
rules of fair play, justice and due process.25 A party may change his legal theory on appeal
only when the factual bases thereof would not require presentation of any further evidence by
the adverse party in order to enable it to properly meet the issue raised in the new theory.26

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.

G.R. No. 190846

TOMAS P. TAN, JR., Petitioner,

vs.
JOSE G. HOSANA, Respondent.

DECISION

BRION, J.:

Before us is a petition for review on certiorari1 challenging the August 28, 2009 decision2 and
November 17, 2009 resolution3 of the Court of Appeals (CA)  in CA-G.R. CV No. 88645.

The Facts

The respondent Jose G. Hosana (Jose) married Milagros C. Hosana (Milagros)  on January

14, 1979.4 During their marriage, Jose and Milagros bought a house and lot located at Tinago,
Naga City, which lot was covered by Transfer Certificate of Title (TCT) No. 21229.5

On January 13, 1998, Milagros sold to the petitioner Tomas P. Tan, Jr. (Tomas) the subject
property, as evidenced by a deed of sale executed by Milagros herself and as attorney-in-fact
of Jose, by virtue of a Special Power of Attorney (SPA) executed by Jose in her favor.6 The
Deed of Sale stated that the purchase price for the lot was P200,000.00. 7 After the sale, TCT
No. 21229 was cancelled and TCT No. 32568 was issued in the name of Tomas.8

On October 19, 2001, Jose filed a Complaint for Annulment of Sale/Cancellation of

Title/Reconveyance and Damages  against Milagros, Tomas, and the Register of Deeds of
Naga City.9 The complaint was filed before the Regional Trial Court (RTC), Branch 62, Naga
City. In the complaint, Jose averred that while he was working in Japan, Milagros, without his
consent and knowledge, conspired with Tomas to execute the SPA by forging Jose’s
signature making it appear that Jose had authorized Milagros to sell the subject property to
Tomas.10

In his Answer, Tomas maintained that he was a buyer in good faith and for value. 11 Before he
paid the full consideration of the sale, Tomas claimed he sought advice from his lawyer-friend
who told him that the title of the subject lot was authentic and in order. 12 Furthermore, he
alleged that the SPA authorizing Milagros to sell the property was annotated at the back of
the title.13

Tomas filed a cross-claim against Milagros and claimed compensatory and moral damages,
attorney’s fees, and expenses for litigation, in the event that judgment be rendered in favor of
Jose.14

The RTC declared Milagros in default for her failure to file her answer to Jose’s complaint and
Tomas’ cross-claim.15 On the other hand, it dismissed Tomas’ complaint against the Register
of Deeds since it was only a nominal party.16

After the pre-trial conference, trial on the merits ensued.17

Jose presented his brother, Bonifacio Hosana (Bonifacio), as sole witness. Bonifacio testified
that he learned of the sale of the subject property from Milagros’ son. 18 When Bonifacio
confronted Milagros that Jose would get angry because of the sale, Milagros retorted that she
sold the property because she needed the money. Bonifacio immediately informed Jose, who
was then in Japan, of the sale.19

Jose was furious when he learned of the sale and went back to the Philippines. Jose and
Bonifacio verified with the Register of Deeds and discovered that the title covering the
disputed property had been transferred to Tomas.20

Bonifacio further testified that Jose’s signature in the SPA was forged.21 Bonifacio presented
documents containing the signature of Jose for comparison: Philippine passport, complaint-
affidavit, duplicate original of SPA dated 16 February 2002, notice of lis pendens, community
tax certificate, voter’s affidavit, specimen signatures, and a handwritten letter.22

On the other hand, Tomas submitted his own account of events as corroborated by Rosana
Robles (Rosana), his goddaughter. Sometime in December 1997, Tomas directed Rosana to
go to the house of Milagros to confirm if Jose knew about the sale transaction. Through a
phone call by Milagros to Jose, Rosana was able to talk to Jose who confirmed that he was
aware of the sale and had given his wife authority to proceed with the sale. Rosana informed
Tomas of Jose’s confirmation.23

With the assurance that all the documents were in order, Tomas made a partial payment of
P350,000.00 and another P350,000.00 upon the execution of the Deed of Absolute
Sale  (Deed of Sale). Tomas noticed that the consideration written by Milagros on the Deed of
Sale was only P200,000.00; he inquired why the written consideration was lower than the
actual consideration paid. Milagros explained that it was done to save on taxes. Tomas also
learned from Milagros that she needed money badly and had to sell the house because Jose
had stopped sending her money.24

The RTC Ruling

In its decision dated December 27, 2006,25 the RTC decided in favor of Jose and nullified the
sale of the subject property to Tomas. The RTC held that the SPA dated June 10, 1996,
wherein Jose supposedly appointed Milagros as his attorney-in-fact, was actually null and
void.

Tomas and Milagros were ordered to jointly and severally indemnify Jose the amount of
P20,000.00 as temperate damages.26

The CA Ruling

Tomas appealed the RTC’s ruling to the CA.

In a decision dated August 28, 2009,27 the CA affirmed the RTC ruling that the deed of sale
and the SPA were void. However, the CA modified the judgment of the RTC: first, by deleting
the award of temperate damages; and second, by directing Jose and Milagros to reimburse
Tomas the purchase price of P200,000.00, with interest, under the principle of unjust
enrichment. Despite Tomas’ allegation that he paid P700,000.00 for the subject lot, the CA
found that there was no convincing evidence that established this claim.28

Tomas filed a motion for the reconsideration of the CA decision on the ground that the
amount of P200,000.00 as reimbursement for the purchase price of the house and lot was
insufficient and not supported by the evidence formally offered before and admitted by the
RTC. Tomas contended that the actual amount he paid as consideration for the sale was
P700,000.00, as supported by his testimony before the RTC.29
The CA denied the motion for reconsideration for lack of merit" in a resolution dated
November 17, 2009.30

The Petition

Tomas filed the present petition for review on certiorari  to challenge the CA ruling which
ordered the reimbursement of P200,000.00 only, instead of the actual purchase price he paid
in the amount of P700,000.00.31

Tomas argues that, first, all matters contained in the deed of sale, including the consideration
stated, cannot be used as evidence since it was declared null and void; second, the deed of
sale was not specifically offered to prove the actual consideration of the sale;32 third, his
testimony establishing the actual purchase price of P700,000.00 paid was
uncontroverted;33 and, fourth, Jose must return the full amount actually paid under the
principle of solutio indebiti.34

Jose, on the other hand, argues that first, Jose is estopped from questioning the purchase
price indicated in the deed of dale for failing to immediately raise this question; and second,
the terms of an agreement reduced into writing are deemed to include all the terms agreed
upon and no other evidence can be admitted other than the terms of the agreement itself.35

The Issues

The core issues are (1) whether the deed of sale can be used as the basis for the amount of
consideration paid; and (2) whether the testimony of Tomas is sufficient to establish the actual
purchase price of the sale.

OUR RULING

We affirm the CA ruling and deny the petition.

Whether Tomas paid the purchase price of P700,000.00 is a question of fact not proper in a
petition for review on certiorari. Appreciation of evidence and inquiry on the correctness of the
appellate court's factual findings are not the functions of this Court, as we are not a trier of
facts.36

This Court does not address questions of fact which require us to rule on "the truth or
falsehood of alleged facts,"37 except in the following cases:

(1) when the findings are grounded entirely on speculations, surmises, or

conjectures; (2) when the inference made is manifestly mistaken, absurd, or
impossible; (3) when there is a grave abuse of discretion; (4) when the
judgment is based on misappreciation of facts; (5) when the findings of fact
are conflicting; (6) when in making its findings, the same are contrary to the
admissions of both appellant and appellee; (7) when the findings are contrary
to those 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; and (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on
record.38

The present case does not fall under any of these exceptions.

Whether Tomas sufficiently proved that he paid P700,000.00 for the subject property is a
factual question that the CA had already resolved in the negative. 39 The CA found Tomas’
claim of paying P700,000.00 for the subject property to be unsubstantiated as he failed to
tender any convincing evidence to establish his claim.

We uphold the CA’s finding.

In civil cases, the basic rule is that the party making allegations has the burden of proving
them by a preponderance of evidence.40 Moreover, the parties must rely on the strength of
their own evidence, not upon the weakness of the defense offered by their opponent.41

Preponderance of evidence is the weight, credit, and value of the aggregate evidence on

either side and is usually considered to be synonymous with the term "greater weight of the
evidence" or "greater weight of the credible evidence."42 Preponderance of evidence is a
phrase that, in the last analysis, means probability of the truth. It is evidence that is more
convincing to the court as it is worthier of belief than that which is offered in opposition
thereto.43

We agree with the CA that Tomas’ bare allegation that he paid Milagros the sum of
P700,000.00 cannot be considered as proof of payment, without any other convincing
evidence to establish this claim. Tomas’ bare allegation, while uncontroverted, does not
automatically entitle it to be given weight and credence.

It is settled in jurisprudence that one who pleads payment has the burden of proving it; 44 the
burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.45 A mere allegation is not evidence,46 and the person who alleges has the burden of
proving his or her allegation with the requisite quantum of evidence, which in civil cases is
preponderance of evidence.

The force and effect of a void contract is distinguished from its admissibility as
evidence.

The next question to be resolved is whether the CA correctly ordered the reimbursement of
P200,000.00, which is the consideration stated in the Deed of Sale, based on the principle of
unjust enrichment.

The petitioner argues that the CA erred in relying on the consideration stated in the deed of
sale as basis for the reimbursable amount because a null and void document cannot be used
as evidence.

We find no merit in the petitioner’s argument.

A void or inexistent contract has no force and effect from the very beginning. 47 This rule
applies to contracts that are declared void by positive provision of law, as in the case of a sale
of conjugal property without the other spouse’s written consent.48 A void contract is equivalent
to nothing and is absolutely wanting in civil effects.49 It cannot be validated either by
ratification or prescription.50 When, however, any of the terms of a void contract have been
performed, an action to declare its inexistence is necessary to allow restitution of what has
been given under it.51

It is basic that if a void contract has already "been performed, the restoration of what has
been given is in order."52 This principle springs from Article 22 of the New Civil Code which
states that "every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same." Hence, the restitution of what each party has given is a
consequence of a void and inexistent contract.

While the terms and provisions of a void contract cannot be enforced since it is deemed
inexistent, it does not preclude the admissibility of the contract as evidence to prove matters
that occurred in the course of executing the contract, i.e., what each party has given in the
execution of the contract.

Evidence is the means of ascertaining in a judicial proceeding the truth respecting a matter of

fact, sanctioned by the Rules of Court.53 The purpose of introducing documentary evidence is
to ascertain the truthfulness of a matter at issue, which can be the entire content or a specific
provision/term in the document.

The deed of sale as documentary evidence may be used as a means to ascertain the
truthfulness of the consideration stated and its actual payment. The purpose of introducing
the deed of sale as evidence is not to enforce the terms written in the contract, which is an
obligatory force and effect of a valid contract. The deed of sale, rather, is used as a means to
determine matters that occurred in the execution of such contract, i.e., the determination of
what each party has given under the void contract to allow restitution and prevent unjust
enrichment.

Evidence is admissible when it is relevant to the issue and is not excluded by the law of
these rules.54 There is no provision in the Rules of Evidence which excludes the admissibility
of a void document. The Rules only require that the evidence is relevant and not excluded by
the Rules for its admissibility.55

Hence, a void document is admissible as evidence because the purpose of introducing it as

evidence is to ascertain the truth respecting a matter of fact, not to enforce the terms of the
document itself.

It is also settled in jurisprudence that with respect to evidence which appears to be

of doubtful  relevancy, incompetency, or admissibility, the safer policy is to be liberal and not
reject them on doubtful or technical grounds, but admit them unless plainly irrelevant,
immaterial, or incompetent; for the reason that their rejection places them beyond the
consideration of the court, if they are thereafter found relevant or competent. On the other
hand, their admission, if they turn out later to be irrelevant or incompetent, can easily be
remedied by completely discarding them or ignoring them.56

In the present case, the deed of sale was declared null and void by positive provision of the
law prohibiting the sale of conjugal property without the spouse’s consent.1âwphi1 It does
not, however, preclude the possibility that Tomas paid the consideration stated therein. The
admission of the deed of sale as evidence is consistent with the liberal policy of the court to
admit the evidence which appears to be relevant in resolving an issue before the courts.

An offer to prove the regular execution of the deed of sale is basis for the court to
determine the presence of the essential elements of the sale, including the
consideration paid.

Tomas argues that the Deed of Sale was not specifically offered to prove the actual
consideration of the sale and, hence, cannot be considered by the court. Tomas is incorrect.

The deed of sale in the present case was formally offered by both parties as
evidence.57 Tomas, in fact, formally offered it for the purpose of proving its execution and the
regularity of the sale.58

The offer of the deed of sale to prove its regularity necessarily allowed the lower courts to
consider the terms written therein to determine whether all the essential elements59 for a valid
contract of sale are present, including the consideration of the sale. The fact that the sale was
declared null and void does not prevent the court from relying on consideration stated in the
deed of sale to determine the actual amount paid by the petitioner for the purpose of
preventing unjust enrichment.
Hence, the specific offer of the Deed of Sale to prove the actual consideration of the sale is
not necessary since it is necessarily included in determining the regular execution of the sale.

The consideration stated in the notarized Deed of Sale is prima facie  evidence of the
amount paid by the petitioner.

The notarized deed of sale is a public document and is prima facie  evidence of the truth of
the facts stated therein.60

Prima facie evidence is defined as evidence good and sufficient on its face. Such evidence
as, in the judgment of the law, is sufficient to establish a given fact, or the group or chain of
facts constituting the party’s claim or defense and which if not rebutted or contradicted, will
remain sufficient.61

In the present case, the consideration stated in the deed of sale constitutes prima
facie  evidence of the amount paid by Tomas for the transfer of the property to his name.
Tomas failed to adduce satisfactory evidence to rebut or contradict the consideration stated
as the actual consideration and amount paid to Milagros and Jose.

The deed of sale was declared null and void by a positive provision of law requiring the
consent of both spouses for the sale of conjugal property. There is, however, no question on
the presence of the consideration of the sale, except with respect to the actual amount paid.
While the deed of sale has no force and effect as a contract, it remains prima facie evidence
of the actual consideration paid.

As earlier discussed, Tomas failed to substantiate his claim that he paid to Milagros the
amount of P700,000.00, instead of the amount of P200,000.00 stated in the deed of sale. No
documentary or testimonial evidence to prove payment of the higher amount was presented,
apart from Tomas’ sole testimony. Tomas’ sole testimony of payment is self-serving and
insufficient to unequivocally prove that Milagros received P700,000.00 for the subject
property.

Hence, the consideration stated in the deed of sale remains sufficient evidence of the actual
amount the petitioner paid and the same amount which should be returned under the principle
of unjust enrichment.

Unjust enrichment exists "when a person unjustly retains a benefit at the loss of another, or
when a person retains money or property of another against the fundamental principles of
justice, equity, and good conscience."62 The prevention of unjust enrichment is a recognized
public policy of the State and is based on Article 22 of the Civil Code. 63

The principle of unjust enrichment requires Jose to return what he or Milagros received under
the void contract which presumably benefitted their conjugal partnership.

Accordingly, the CA correctly ordered Jose to return the amount of P,200,000.00 since this
the consideration stated in the Deed of Sale and given credence by the lower court. Indeed,
even Jose expressly stated in his comment that Tomas is entitled to recover the money paid
by him in the amount of P200,000.00 as appearing in the contract.

WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated

August 28, 2009 and the resolution dated November 17, 2009, of the Court of Appeals in CA-
G.R. CV No. 88645 is AFFIRMED. Costs against the petitioner.

SO ORDERED.

G.R. No. 178902               April 21, 2010

MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners,
vs.
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR
MALCAMPO, Respondents.

DECISION

ABAD, J.:

This case is about a husband’s sale of conjugal real property, employing a challenged
affidavit of consent from an estranged wife. The buyers claim valid consent, loss of right to
declare nullity of sale, and prescription.

The Facts and the Case

Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On October
11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of absolute
sale.1 But Tarciano did not for the meantime have the registered title transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and Leticia
Fuentes (the Fuentes spouses). They arranged to meet at the office of Atty. Romulo D.
Plagata whom they asked to prepare the documents of sale. They later signed an agreement
to sell that Atty. Plagata prepared2 dated April 29, 1988, which agreement expressly stated
that it was to take effect in six months.

The agreement required the Fuentes spouses to pay Tarciano a down payment of
₱60,000.00 for the transfer of the lot’s title to him. And, within six months, Tarciano was to
clear the lot of structures and occupants and secure the consent of his estranged wife,
Rosario Gabriel Roca (Rosario), to the sale. Upon Tarciano’s compliance with these
conditions, the Fuentes spouses were to take possession of the lot and pay him an additional
₱140,000.00 or ₱160,000.00, depending on whether or not he succeeded in demolishing the
house standing on it. If Tarciano was unable to comply with these conditions, the Fuentes
spouses would become owners of the lot without any further formality and payment.

The parties left their signed agreement with Atty. Plagata who then worked on the other
requirements of the sale. According to the lawyer, he went to see Rosario in one of his trips to
Manila and had her sign an affidavit of consent.3 As soon as Tarciano met the other
conditions, Atty. Plagata notarized Rosario’s affidavit in Zamboanga City. On January 11,
1989 Tarciano executed a deed of absolute sale4 in favor of the Fuentes spouses. They then
paid him the additional ₱140,000.00 mentioned in their agreement. A new title was issued in
the name of the spouses5 who immediately constructed a building on the lot. On January 28,
1990 Tarciano passed away, followed by his wife Rosario who died nine months afterwards.

Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents Conrado
G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal, together with Tarciano’s sister,
Pilar R. Malcampo, represented by her son, John Paul M. Trinidad (collectively, the Rocas),
filed an action for annulment of sale and reconveyance of the land against the Fuentes
spouses before the Regional Trial Court (RTC) of Zamboanga City in Civil Case 4707. The
Rocas claimed that the sale to the spouses was void since Tarciano’s wife, Rosario, did not
give her consent to it. Her signature on the affidavit of consent had been forged. They thus
prayed that the property be reconveyed to them upon reimbursement of the price that the
Fuentes spouses paid Tarciano.6

The spouses denied the Rocas’ allegations. They presented Atty. Plagata who testified that
he personally saw Rosario sign the affidavit at her residence in Paco, Manila, on September
15, 1988. He admitted, however, that he notarized the document in Zamboanga City four
months later on January 11, 1989.7 All the same, the Fuentes spouses pointed out that the
claim of forgery was personal to Rosario and she alone could invoke it. Besides, the four-year
prescriptive period for nullifying the sale on ground of fraud had already lapsed.

Both the Rocas and the Fuentes spouses presented handwriting experts at the trial.
Comparing Rosario’s standard signature on the affidavit with those on various documents she
signed, the Rocas’ expert testified that the signatures were not written by the same person.
Making the same comparison, the spouses’ expert concluded that they were.8

On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that the action
had already prescribed since the ground cited by the Rocas for annulling the sale, forgery or
fraud, already prescribed under Article 1391 of the Civil Code four years after its discovery. In
this case, the Rocas may be deemed to have notice of the fraud from the date the deed of
sale was registered with the Registry of Deeds and the new title was issued. Here, the Rocas
filed their action in 1997, almost nine years after the title was issued to the Fuentes spouses
on January 18, 1989.9

Moreover, the Rocas failed to present clear and convincing evidence of the fraud. Mere
variance in the signatures of Rosario was not conclusive proof of forgery.10 The RTC ruled
that, although the Rocas presented a handwriting expert, the trial court could not be bound by
his opinion since the opposing expert witness contradicted the same. Atty. Plagata’s
testimony remained technically unrebutted.11

Finally, the RTC noted that Atty. Plagata’s defective notarization of the affidavit of consent did
not invalidate the sale. The law does not require spousal consent to be on the deed of sale to
be valid. Neither does the irregularity vitiate Rosario’s consent. She personally signed the
affidavit in the presence of Atty. Plagata.12

On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient
evidence of forgery and did not give credence to Atty. Plagata’s testimony that he saw
Rosario sign the document in Quezon City. Its jurat said differently. Also, upon comparing the
questioned signature with the specimen signatures, the CA noted significant variance
between them. That Tarciano and Rosario had been living separately for 30 years since 1958
also reinforced the conclusion that her signature had been forged.

Since Tarciano and Rosario were married in 1950, the CA concluded that their property
relations were governed by the Civil Code under which an action for annulment of sale on the
ground of lack of spousal consent may be brought by the wife during the marriage within 10
years from the transaction. Consequently, the action that the Rocas, her heirs, brought in
1997 fell within 10 years of the January 11, 1989 sale.

Considering, however, that the sale between the Fuentes spouses and Tarciano was merely
voidable, the CA held that its annulment entitled the spouses to reimbursement of what they
paid him plus legal interest computed from the filing of the complaint until actual payment.
Since the Fuentes spouses were also builders in good faith, they were entitled under Article
448 of the Civil Code to payment of the value of the improvements they introduced on the lot.
The CA did not award damages in favor of the Rocas and deleted the award of attorney’s
fees to the Fuentes spouses.13

Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for
review.14

The Issues Presented

The case presents the following issues:

1. Whether or not Rosario’s signature on the document of consent to her husband Tarciano’s
sale of their conjugal land to the Fuentes spouses was forged;
2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the spouses
already prescribed; and

3. Whether or not only Rosario, the wife whose consent was not had, could bring the action to
annul that sale.

The Court’s Rulings

First. The key issue in this case is whether or not Rosario’s signature on the document of
consent had been forged. For, if the signature were genuine, the fact that she gave her
consent to her husband’s sale of the conjugal land would render the other issues merely
academic.

The CA found that Rosario’s signature had been forged. The CA observed a marked
difference between her signature on the affidavit of consent 15 and her specimen
signatures.16 The CA gave no weight to Atty. Plagata’s testimony that he saw Rosario sign the
document in Manila on September 15, 1988 since this clashed with his declaration in the jurat
that Rosario signed the affidavit in Zamboanga City on January 11, 1989.

The Court agrees with the CA’s observation that Rosario’s signature strokes on the affidavit
appears heavy, deliberate, and forced. Her specimen signatures, on the other hand, are
consistently of a lighter stroke and more fluid. The way the letters "R" and "s" were written is
also remarkably different. The variance is obvious even to the untrained eye.

Significantly, Rosario’s specimen signatures were made at about the time that she signed the
supposed affidavit of consent. They were, therefore, reliable standards for comparison. The
Fuentes spouses presented no evidence that Rosario suffered from any illness or disease
that accounted for the variance in her signature when she signed the affidavit of consent.
Notably, Rosario had been living separately from Tarciano for 30 years since 1958. And she
resided so far away in Manila. It would have been quite tempting for Tarciano to just forge her
signature and avoid the risk that she would not give her consent to the sale or demand a stiff
price for it.

What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent. That jurat
declared that Rosario swore to the document and signed it in Zamboanga City on January 11,
1989 when, as Atty. Plagata testified, she supposedly signed it about four months earlier at
her residence in Paco, Manila on September 15, 1988. While a defective notarization will
merely strip the document of its public character and reduce it to a private instrument, that
falsified jurat, taken together with the marks of forgery in the signature, dooms such document
as proof of Rosario’s consent to the sale of the land. That the Fuentes spouses honestly
relied on the notarized affidavit as proof of Rosario’s consent does not matter. The sale is still
void without an authentic consent.

Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the
Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950,
Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few
months after the Family Code took effect on August 3, 1988.

When Tarciano married Rosario, the Civil Code put in place the system of conjugal
partnership of gains on their property relations. While its Article 165 made Tarciano the sole
administrator of the conjugal partnership, Article 16617 prohibited him from selling commonly
owned real property without his wife’s consent. Still, if he sold the same without his wife’s
consent, the sale is not void but merely voidable. Article 173 gave Rosario the right to have
the sale annulled during the marriage within ten years from the date of the sale. Failing in
that, she or her heirs may demand, after dissolution of the marriage, only the value of the
property that Tarciano fraudulently sold. Thus:
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.

But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on
Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on
Property Relations Between Husband and Wife.18 Further, the Family Code provisions were
also made to apply to already existing conjugal partnerships without prejudice to vested
rights.19 Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without prejudice to
vested rights already acquired in accordance with the Civil Code or other laws, as provided in
Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11,
1989, the law that governed the disposal of that lot was already the Family Code.

In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a
period within which the wife who gave no consent may assail her husband’s sale of the real
property. It simply provides that without the other spouse’s written consent or a court order
allowing the sale, the same would be void. Article 124 thus provides:

Art. 124. 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 the powers of disposition or encumbrance which
must have the authority of the court or the written consent of the other spouse. In the absence
of such authority or consent, the disposition or encumbrance shall be void. x x x

Under the provisions of the Civil Code governing contracts, a void or inexistent contract has
no force and effect from the very beginning. And this rule applies to contracts that are
declared void by positive provision of law,20 as in the case of a sale of conjugal property
without the other spouse’s written consent. A void contract is equivalent to nothing and is
absolutely wanting in civil effects. It cannot be validated either by ratification or prescription.21

But, although a void contract has no legal effects even if no action is taken to set it aside,
when any of its terms have been performed, an action to declare its inexistence is necessary
to allow restitution of what has been given under it. 22 This action, according to Article 1410 of
the Civil Code does not prescribe. Thus:

Art. 1410. The action or defense for the declaration of the inexistence of a contract does not
prescribe.

Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale
and reconveyance of the real property that Tarciano sold without their mother’s (his wife’s)
written consent. The passage of time did not erode the right to bring such an action.

Besides, even assuming that it is the Civil Code that applies to the transaction as the CA held,
Article 173 provides that the wife may bring an action for annulment of sale on the ground of
lack of spousal consent during the marriage within 10 years from the transaction.
Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the
January 11, 1989 sale. It did not yet prescribe.

The Fuentes spouses of course argue that the RTC nullified the sale to them based on fraud
and that, therefore, the applicable prescriptive period should be that which applies to
fraudulent transactions, namely, four years from its discovery. Since notice of the sale may be
deemed given to the Rocas when it was registered with the Registry of Deeds in 1989, their
right of action already prescribed in 1993.

But, if there had been a victim of fraud in this case, it would be the Fuentes spouses in that
they appeared to have agreed to buy the property upon an honest belief that Rosario’s written
consent to the sale was genuine. They had four years then from the time they learned that her
signature had been forged within which to file an action to annul the sale and get back their
money plus damages. They never exercised the right.

If, on the other hand, Rosario had agreed to sign the document of consent upon a false
representation that the property would go to their children, not to strangers, and it turned out
that this was not the case, then she would have four years from the time she discovered the
fraud within which to file an action to declare the sale void. But that is not the case here.
Rosario was not a victim of fraud or misrepresentation. Her consent was simply not obtained
at all. She lost nothing since the sale without her written consent was void. Ultimately, the
Rocas ground for annulment is not forgery but the lack of written consent of their mother to
the sale. The forgery is merely evidence of lack of consent.

Third. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained,
that the law gave the right to bring an action to declare void her husband’s sale of conjugal
land. But here, Rosario died in 1990, the year after the sale. Does this mean that the right to
have the sale declared void is forever lost?

The answer is no. As stated above, that sale was void from the beginning. Consequently, the
land remained the property of Tarciano and Rosario despite that sale. When the two died,
they passed on the ownership of the property to their heirs, namely, the Rocas. 23 As lawful
owners, the Rocas had the right, under Article 429 of the Civil Code, to exclude any person
from its enjoyment and disposal.1avvphi1

In fairness to the Fuentes spouses, however, they should be entitled, among other things, to
recover from Tarciano’s heirs, the Rocas, the ₱200,000.00 that they paid him, with legal
interest until fully paid, chargeable against his estate.

Further, the Fuentes spouses appear to have acted in good faith in entering the land and
building improvements on it. Atty. Plagata, whom the parties mutually entrusted with closing
and documenting the transaction, represented that he got Rosario’s signature on the affidavit
of consent. The Fuentes spouses had no reason to believe that the lawyer had violated his
commission and his oath. They had no way of knowing that Rosario did not come to
Zamboanga to give her consent. There is no evidence that they had a premonition that the
requirement of consent presented some difficulty. Indeed, they willingly made a 30 percent
down payment on the selling price months earlier on the assurance that it was forthcoming.

Further, the notarized document appears to have comforted the Fuentes spouses that
everything was already in order when Tarciano executed a deed of absolute sale in their favor
on January 11, 1989. In fact, they paid the balance due him. And, acting on the documents
submitted to it, the Register of Deeds of Zamboanga City issued a new title in the names of
the Fuentes spouses. It was only after all these had passed that the spouses entered the
property and built on it. He is deemed a possessor in good faith, said Article 526 of the Civil
Code, who is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it.

As possessor in good faith, the Fuentes spouses were under no obligation to pay for their
stay on the property prior to its legal interruption by a final judgment against them. 24 What is
more, they are entitled under Article 448 to indemnity for the improvements they introduced
into the property with a right of retention until the reimbursement is made. Thus:
Art. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built
or planted to pay the price of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code, 25 of
indemnifying the Fuentes spouses for the costs of the improvements or paying the increase in
value which the property may have acquired by reason of such improvements.

WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the
decision of the Court of Appeals in CA-G.R. CV 00531 dated February 27, 2007 as follows:

1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor of
Manuel O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer Certificate of Title
T-90,981 that the Register of Deeds of Zamboanga City issued in the names of the latter
spouses pursuant to that deed of sale are DECLARED void;

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate of

Title 3533 in the name of Tarciano T. Roca, married to Rosario Gabriel;

3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar
Malcampo are ORDERED to pay petitioner spouses Manuel and Leticia Fuentes the
₱200,000.00 that the latter paid Tarciano T. Roca, with legal interest from January 11, 1989
until fully paid, chargeable against his estate;

4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar
Malcampo are further ORDERED, at their option, to indemnify petitioner spouses Manuel and
Leticia Fuentes with their expenses for introducing useful improvements on the subject land
or pay the increase in value which it may have acquired by reason of those improvements,
with the spouses entitled to the right of retention of the land until the indemnity is made; and

5. The RTC of Zamboanga City from which this case originated is DIRECTED to receive
evidence and determine the amount of indemnity to which petitioner spouses Manuel and
Leticia Fuentes are entitled.

SO ORDERED.

G.R. No. 206114

DOLORES ALEJO, Petitioner
vs.
SPOUSES ERNESTO CORTEZ and PRISCILLA SAN PEDRO, SPOUSES JORGE
LEONARDO and JACINTA LEONARDO and THE REGISTER OF DEEDS OF BULACAN,
Respondents

DECISION

TIJAM, J.:

Assailed in this Petition for Review1 under Rule 45 are the Decision2 dated October 3, 2012
and Resolution3 dated February 26, 2013 of the Court of Appeals 4 (CA) in CA-G.R. CV No.
95432, which reversed the Decision5 of the Regional Trial Court (R TC), 6 Branch 19 in the
City of Malolos, Bulacan. In its assailed Decision and Resolution, the CA declared void the
parties' agreement for the sale of a conjugal property for lack of written consent of the
husband.

The Facts and Antecedent Proceedings

At the heart of the instant controversy is a parcel of land measuring 255 square meters
located .at Cut-cot, Pulilan, Bulacan and covered by Transfer Certificate of Title No. T-
118170. The property belonged to the conjugal property/absolute community of property7 of
the respondent Spouses Jorge and Jacinta Leonardo (Spouses Leonardo) and upon which
their residential house was built.

It appears that sometime in March 1996, Jorge's father, Ricardo, approached his sister,
herein petitioner Dolores Alejo (Dolores), to negotiate the sale of the subject
property.8 Accordingly, on March 29, 1996, Jacinta executed a Kasunduan with Dolores for
the sale of the property. for a purchase price of PhP500,000. Under the Kasunduan,  Dolores
was to pay PhP70,000 as down payment,, while PhP230,000 is to be paid on April 30, 1996
and the remaining balance of PhP200,000 was to be paid before the end of the year
1996.9 The Kasunduan  was signed by Jacinta and Ricardo as witness. Jorge, however, did
not sign the agreement.

It further appears that the down payment of PhP70,000 and the PhP230,000 were paid by
Dolores10 on the dates agreed upon and thereafter, Dolores was allowed to possess the
property and introduce improvements thereon. 11

However, 9n July 3, 1996, Jorge wrote a letter to Dolores denying knowledge and consent to
the Kasunduan. Jorge further informed Dolores that Jacinta was retracting her consent to
the Kasunduan  due to Dolores' failure to comply with her obligations. This was followed by
another letter dated September 29, 1996 from Jorge to Dolores demanding that the latter pay
the balance of PhP200,000 on or before October 5, 1996, otherwise the purchase price shall
be increased to PhP700,000. 12 According to Dolores, she was being compelled by Jorge to
sign the agreement but that she refused to do so. As a result, Jorge went to her house,
destroyed its water pump and disconnected the electricity. Before· the officials of the
Barangay, Dolores tendered the balance of PhP200,000 but Jorge refused to accept the
same. Instead, Jorge filed cases for ejectment13 and annulment of sale, reconveyance and
recovery of possession14 against her. 15 These cases were later on dismissed by the trial court
on technical grounds.

However, during the pendency of said cases, the subject property was sold by Jorge and
Jacinta to respondents Spouses Ernesto Cortez and Priscilla San Pedro (Spouses Cortez)
under a Deed of Absolute Sale dated September 4, 1998 for a purchase price of PhP700,000.
A new transfer certificate of title was Issued in the latter's names. At the time of said sale,
Dolores was in possession of the subject property. 16

Consequently, Dolores filed the case a quo for annulment of deed of sale and damages
against the Spouses Cortez and the Spouses Leonardo.

The Ruling of the RTC

In its Decision, the RTC noted that while the Kasunduan patently lacks the written consent of
Jorge, the latter's acts reveal that he later on acquiesced and accepted the same. In
particular, the RTC observed that Jorge did not s~asonably and ~xpressly repudiate
the Kasunduan  but instead demanded from Dolores compliance therewith and that he
allowed Dolores to take possession of the property. Further, the RTC noted that the case for
annulment of sale, reconveyance and recovery of possession filed by Jorge. against Dolores
had been dismissed and said dismissal attained finality. As such, res judicata  set in
preventing Jorge from further assailing the Kasunduan.  17
Accordingly, the RTC declared the Kasunduan as a perfected contract and Dolores as the
rightful owner of the property. It further ordered the cancellation of titles issued in the names
of the Spouses Leonardo and the Spouses Cortez and the issuance of a new title in the name
of Dolores. Finally, the RTC ordered Dolores to pay the balance of PhP200,000 and the
Spouses Leonardo to pay moral damages, attorney's fees, litigation expenses and costs of
suit. 18

In disposal, the RTC pronounced:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Dolores Alejo and against

defendants [S]pouses Leonardo and Cortez, as follows:

1.) Declaring the "Kasunduan" dated March 29, 1996 a perfected contract,
legal, binding and subsisting having been accepted by defendant Jorge
Leonardo;

2.) Declaring the plaintiff the true, legal and rightful owner of the subject
property;

3.) Declaring TCT Nb. 18170 in the names of Spouses Jorge Leonardo,
Jacinta Leonardo cancelled and of no legal force and effect;

4.) Declaring TCT No. 121491 in the names of Spouses Ernesto Cortez and
Priscilla San Pedro null and void and therefore should be ordered cancelled
and of no legal force and effect;

5.) In lieu thereof, ordering the Register of Deeds of the Province of Bulacan
to issue a new title in the name of plaintiff Dolores Alejo;

6.) Ordering plaintiff Dolores Alejo to pay defendants Spouses Leonardo the
sum of Php200,000.00 to complete her obligation under the "Kasunduan";

7.) Ordering defendants Spouses Leonardo to pay plaintiff the sum of

Phpl00,000.00 as and by way of moral damages;

8.) Ordering defendants Spouses Leonardo to pay plaintiff the sum of

Php50,000.00, as and by way of attorney's fees and litigation expenses;

9.) Ordering defendants Spouses Leonardo to pay the cost of suit.

The claim of Php500,000.00 actual damages as well as Php 100,000.00 as

exemplary damages are denied for lack of legal as well as factual basis.· All
other claims and counterclaim are denied for lack of merit.

SO ORDERED. 19

The Spouses Leonardo and the Spouses Cortez seasonably appealed.

The Ruling of the CA

The CA granted the appeal. 20 Contrary to the findings of the R TC, the CA held that Jorge, by
imposing a new period within which Dolores was to pay the remaining balance and by
increasing the purchase price, only qualifiedly accepted the Kasunduan.  Being a qualified
acceptance, the same partakes of a counter-offer and is a rejection of the original offer.
Consequently, the CA declared the Kasunduan  as void absent Jorge's consent and
acceptance. Nevertheless, the CA found Dolores to be a possessor in good faith who is
entitled to reimbursement for the useful improvements introduced on the land or to the
increase in the value thereof, at the option of the Spouses Leonardo.

The CA accordingly disposed:

WHEREFORE, the appeal is hereby GRANTED. The assailed 14 January

2010 Decision of the Regional Trial Court, Branch 19 of Malolos City,
Bulacan is her.eby REVERSED and SET ASIDE. The Kasunduan dated 29
March 1996 is hereby declared VOID. TCT No. 121491 in the names of
Spouses Cortez and San Pedro is hereby declared VALID
and SUBSISTING. Appellants Spouses Leonardo are ORDERED to
reimburse Dolores Alejo the amount of Php300,000.00 that the latter paid to
Jacinta Leonardo, with legal interest until fully paid. Appellants Spouses
Leonardo are likewise ORDERED, at their option, to indemnify Dolores Alejo
with her expenses for introducing useful improvements on the subject land or
pay the increase in value which it may have acquired by reason of those
improvements, with Alejo entitled to the right of retention of the land until the
indemnity is made. Finally, the Regional Trial Court of Malolos City, Bulacan
from which this case originated is DIRECTED to receive evidence and
determine the amount of indemnity to which appellee Dolores Alejo is
entitled.

SO ORDERED.21

Dolores' motion for reconsideration was denied, hence the instant petition.

The Issues

Dolores argues that the Spouses Leonardo's and Spouses Cortez' appeals ought to have
been outrightly dismissed for failure to comply with the requirements of Section 13, Rule 44.
On the substantive issue, Dolores · maintains that the Kasunduan is a perfected and binding
contract as it was accepted by Jorge through his overt acts. She also argues that the
dismissal of Jorge's complaint for annulment of sale constitutes res judicata  thus preventing
Jorge from further questioning the validity of the Kasunduan.  Finally, she contends that the
Spouses Cortez were not buyers in good faith as they knew that the property was being
occupied by other persons.

The Ruling of this Court

The petition is denied.

Dismissal of Appeal Lies within the Sound Discretion of the Appellate Court

Technically, the CA may dismiss the appeal for failure to comply with the requirements under
Sec. 13, Rule 44. Thus, Section 1, Rule 50 provides that an appeal may be dismissed by the
Court of Appeals, on its own motion or on that of the appellee upon the ground, among
others, of absence of specific assignment of errors in the appellant's brief, or of page
references to the record.

Nevertheless, it has been consistently held that such provision confers a power, not a duty,
on the appellate court.22 The dismissal is directory, not mandatory, and as such, not a
ministerial duty of the appellate court.23 In other words, the CA enjoys ample discretion to
dismiss or not to dismiss the appeal. What is more, the exercise of such discretion is
presumed to have been sound and regular and it is thus incumbent upon Dolores to offset
such presumption. Yet, the records before this Court do not satisfactorily show that the CA
has gravely abused its discretion in not dismissing the Spouses Leonardo's and Spouses
Cortez' appeals.
On the contrary, We are of the view that the ends of justice will be better served if the instant
case is determined on the merits, after full opportunity to ventilate their respective claims and
defenses is afforded to all parties. After all, it is far better to decide a case on the merits, as
the ultimate end, rather on a technicality.

The key issue in this case is whether the Kasunduan for the sale of a conjugal real property
between Jacinta and Dolores as a continuing offer has been converted to a perfected and
binding contract. For, if Jorge has not accepted or consented to the said sale,
the Kasunduan  is considered void rendering the other issues raised herein merely academic.

Sale by one Spouse of Conjugal Real Property is Void Without the Written Consent of the
other Spouse

Any alienation or encumbrance of conjugal property made during the effectivity of the Family
Code is governed by Article 124 thereof which provides:

Article 124. The administration and enjoyment of the conjugal partnership

property shall belong to both spouses jointly. In case of disagreement, the
husband's decision shall prevail, subject to recourse to the court by the wife
for proper remedy, which must be availed of within five years from the date of
the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to

participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include
disposition or encumbrance without authority of the court or the written
consent of the other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the transaction shall be
construed as a continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer
is withdrawn by either or both offerors. (Emphasis supplied.)

The law is therefore unequivocal when it states that the disposition of conjugal property of one
spouse sans the written consent of the other is void. Here, it is an established fact that
the Kasunduan  was entered into solely by Jacinta and signed by her alone. By plain terms of
the law therefore, the Kasunduan  is void.

Nevertheless, We agree with the RTC and the CA when it held that the
void Kasunduan constitutes a continuing offer from Jacinta and Dolores and that Jorge had
the option of either accepting or rejecting the offer before it was withdrawn by either, or both,
Jacinta and Dolores.

The point of contention is whether Jorge accepted such continuing offer. If so, then
the Kasunduan  is perfected as a binding contract; otherwise, the Kasunduan remains void .

The RTC opined that Jorge's failure to expressly repudiate the Kasunduan  and his demand
that Dolores comply with her undertakings therein show Jorge's acceptance of the sale of the
conjugal property. On the other hand, the CA noted that in varying the terms of
the Kasunduan, i.e., in the time of payment and the purchase price, Jorge is deemed to have
only qualifiedly accepted the same.1âwphi1

We agree with the CA.

It is undisputed that after the execution of the Kasunduan, Jorge sent two letters to Dolores:
one, in forming her that he did not consent to the sale; and the other, demanding that' Dolores
pay the balance of the purchase price on or before October 5, 1996 and failing which, the
purchase price shall be increased to PhP700,000.
Clearly, Jorge's first letter was an outright and express repudiation of the Kasunduan.  The
second letter, while ostensibly a demand for compliance with Dolores' obligation under
the Kasunduan, varied its terms on material points, i.e.,  the date of payment of the balance
and the purchase price. Consequently, such counter-offer cannot be construed as evidencing
Jorge's consent to or acceptance of the Kasunduan  for it is settled that where the other
spouse's putative consent to the sale of the conjugal property appears in a separate
document which does not contain the same terms and conditions as in the first document
signed by the other spouse, a valid transaction could not have arisen.24

Neither can Jorge's subsequent letters to Dolores be treated as a ratification of

the Kasunduan for the basic reason that a void contract is not susceptible to ratification. Nor
can Jorge's alleged participation in the negotiation for the sale of the property or his
acquiescence to Dolores' transfer to and possession of the subject property be treated as
converting· such continuing offer into a binding contract as the law distinctly requires nothing
less than a written consent to the sale for its validity. Suffice to say that participation in or
awareness of the negotiations is not consent. 25

As above intimated, a determination that the Kasunduan  is void renders the other issues
raised by Dolores academic, i.e., whether the doctrine of res judicata applies and whether the
Spouses Cortez are buyers in bad faith; hence they merit no further discussion .

The CA Correctly Ruled that Dolores is a Possessor in Good Faith

While the Kasunduan  was void from the beginning, Dolores is, in all fairness, entitled to
recover from the Spouses Leonardo the amount of PhP300,000 with legal Interest until fully
paid.

Moreover, the CA correctly appreciated Dolores' standing as a possessor in good faith. It

appears that Dolores acted in good faith in entering the subject property and building
improvements on it. Ricardo represented that "Jacinta and Jorge wanted to sell the subject
property. Dolores had no reason to believe that Ricardo and Jacinta were lying. Indeed, upon
her own brother's prodding, Dolores willingly parted with her money and paid the down
payment on the selling price and later, a portion of the remaining balance. The signatures of
Jacinta and of Ricardo (as witness) as well as her successful entry to the property appear to
have comforted Dolores that everything was in order. Article 526 of the Civil Code provides
that she is deemed a possessor in good faith, who is not aware that there exists in her title or
mode of acquisition any flaw that invalidates it.

Likewise, as correctly held by the CA, Dolores, as possessor in good faith, is under no
obligation to pay for her stay on the property prior to its legal interruption by a final judgment.
She is further entitled under Article 448 to indemnity for the improvements introduced on the
property with a right of retention until reimbursement is made. The Spouses Leonardo have
the option under Article 546 of the Civil Code of indemnifying Dolores for the cost of the
improvements or paying the increase in value which the property may have acquired by
reason of such improvements. 26

WHEREFORE, the petition is DENIED. The Decision dated October 3, 2012 and Resolution

dated February 26, 2013 of the Court of Appeals in CA G.R. CV No. 95432 which (1) declared
void the Kasunduan  dated 29 March 1996; (2) declared valid the title issued in the names of
Spouses Cortez and San Pedro; (3) ordered the reimbursement of PhP300,000 with legal
interest to Dolores Alejo; (3) ordered the Spouses

Leonardo, at their option, to indemnify Dolores Alejo of her expenses on the useful
improvements or pay the increase in value on the subject property, with retention rights until
indemnity is made; and (4) remanded the case to the RTC for purposes of receiving evidence
and determining the amount of said indemnity are AFFIRMED in toto.

SO ORDERED.
G.R. No. 166496             November 9, 2006

JOSEFA BAUTISTA FERRER, Petitioner,

vs.
SPS. MANUEL M. FERRER & VIRGINIA FERRER and SPS. ISMAEL M. FERRER and
FLORA FERRER, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is an Appeal by Certiorari which assails the Decision1 of the Court of
Appeals dated 16 August 2004 in CA-G.R. SP No. 78525, reversing and setting aside the
Order2 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
Complaint3 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 ₱500,000.00; 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 Order11 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 directed in the
settlement of estate of her deceased husband Alfredo Ferrer pursuant to Article 12912 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 Resolution14 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 1616 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 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.

G.R. No. 149615 August 29, 2006

IN RE: PETITION FOR SEPARATION OF PROPERTY ELENA BUENAVENTURA

MULLER, Petitioner,
vs.
HELMUT MULLER, Respondent.

DECISION
YNARES-SANTIAGO, J.:

This petition for review on certiorari 1 assails the February 26, 2001 Decision 2 of the Court of
Appeals in CA-G.R. CV No. 59321 affirming with modification the August 12, 1996
Decision 3 of the Regional Trial Court of Quezon City, Branch 86 in Civil Case No. Q-94-
21862, which terminated the regime of absolute community of property between petitioner
and respondent, as well as the Resolution 4 dated August 13, 2001 denying the motion for
reconsideration.

The facts are as follows:

Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in
Hamburg, Germany on September 22, 1989. The couple resided in Germany at a house
owned by respondent’s parents but decided to move and reside permanently in the
Philippines in 1992. By this time, respondent had inherited the house in Germany from his
parents which he sold and used the proceeds for the purchase of a parcel of land in Antipolo,
Rizal at the cost of P528,000.00 and the construction of a house amounting to P2,300,000.00.
The Antipolo property was registered in the name of petitioner under Transfer Certificate of
Title No. 219438 5 of the Register of Deeds of Marikina, Metro Manila.

Due to incompatibilities and respondent’s alleged womanizing, drinking, and maltreatment,

the spouses eventually separated. On September 26, 1994, respondent filed a petition 6 for
separation of properties before the Regional Trial Court of Quezon City.

On August 12, 1996, the trial court rendered a decision which terminated the regime of
absolute community of property between the petitioner and respondent. It also decreed the
separation of properties between them and ordered the equal partition of personal properties
located within the country, excluding those acquired by gratuitous title during the marriage.
With regard to the Antipolo property, the court held that it was acquired using paraphernal
funds of the respondent. However, it ruled that respondent cannot recover his funds because
the property was purchased in violation of Section 7, Article XII of the Constitution. Thus –

However, pursuant to Article 92 of the Family Code, properties acquired by gratuitous title by
either spouse during the marriage shall be excluded from the community property. The real
property, therefore, inherited by petitioner in Germany is excluded from the absolute
community of property of the herein spouses. Necessarily, the proceeds of the sale of said
real property as well as the personal properties purchased thereby, belong exclusively to the
petitioner. However, the part of that inheritance used by the petitioner for acquiring the house
and lot in this country cannot be recovered by the petitioner, its acquisition being a violation of
Section 7, Article XII of the Constitution which provides that "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." The law
will leave the parties in the situation where they are in without prejudice to a voluntary
partition by the parties of the said real property. x x x

xxxx

As regards the property covered by Transfer Certificate of Title No. 219438 of the Registry of
Deeds of Marikina, Metro Manila, situated in Antipolo, Rizal and the improvements thereon,
the Court shall not make any pronouncement on constitutional grounds. 7

Respondent appealed to the Court of Appeals which rendered the assailed decision modifying
the trial court’s Decision. It held that respondent merely prayed for reimbursement for the
purchase of the Antipolo property, and not acquisition or transfer of ownership to him. It also
considered petitioner’s ownership over the property in trust for the respondent. As regards the
house, the Court of Appeals ruled that there is nothing in the Constitution which prohibits
respondent from acquiring the same. The dispositive portion of the assailed decision reads:
WHEREFORE, in view of the foregoing, the Decision of the lower court dated August 12,
1996 is hereby MODIFIED. Respondent Elena Buenaventura Muller is hereby ordered to
REIMBURSE the petitioner the amount of P528,000.00 for the acquisition of the land and the
amount of P2,300,000.00 for the construction of the house situated in Atnipolo, Rizal,
deducting therefrom the amount respondent spent for the preservation, maintenance and
development of the aforesaid real property including the depreciation cost of the house or in
the alternative to SELL the house and lot in the event respondent does not have the means to
reimburse the petitioner out of her own money and from the proceeds thereof, reimburse the
petitioner of the cost of the land and the house deducting the expenses for its maintenance
and preservation spent by the respondent. Should there be profit, the same shall be divided in
proportion to the equity each has over the property. The case is REMANDED to the lower
court for reception of evidence as to the amount claimed by the respondents for the
preservation and maintenance of the property.

SO ORDERED. 8

Hence, the instant petition for review raising the following issues:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE

RESPONDENT HEREIN IS ENTITLED TO REIMBURSEMENT OF THE AMOUNT USED TO
PURCHASE THE LAND AS WELL AS THE COSTS FOR THE CONSTRUCTION OF THE
HOUSE, FOR IN SO RULING, IT INDIRECTLY ALLOWED AN ACT DONE WHICH
OTHERWISE COULD NOT BE DIRECTLY x x x DONE, WITHOUT DOING VIOLENCE TO
THE CONSTITUTIONAL PROSCRIPTION THAT AN ALIEN IS PROHIBITED FROM
ACQUIRING OWNERSHIP OF REAL PROPERTIES LOCATED IN THE PHILIPPINES.

II

THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENT’S CAUSE

OF ACTION WHICH IS ACTUALLY A DESPERATE ATTEMPT TO OBTAIN OWNERSHIP
OVER THE LOT IN QUESTION, CLOTHED UNDER THE GUISE OF CLAIMING
REIMBURSEMENT.

Petitioner contends that respondent, being an alien, is disqualified to own private lands in the
Philippines; that respondent was aware of the constitutional prohibition but circumvented the
same; and that respondent’s purpose for filing an action for separation of property is to obtain
exclusive possession, control and disposition of the Antipolo property.

Respondent claims that he is not praying for transfer of ownership of the Antipolo property but
merely reimbursement; that the funds paid by him for the said property were in consideration
of his marriage to petitioner; that the funds were given to petitioner in trust; and that equity
demands that respondent should be reimbursed of his personal funds.

The issue for resolution is whether respondent is entitled to reimbursement of the funds used
for the acquisition of the Antipolo property.

The petition has merit.

Section 7, Article XII of the 1987 Constitution states:

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, are disqualified from acquiring lands of the public
domain. Hence, they are also disqualified from acquiring private lands. 9 The primary purpose
of the constitutional provision is the conservation of the national patrimony. In the case of
Krivenko v. Register of Deeds, 10 the Court held:

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:

"Sec. 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 aliens’ hands. It would certainly be futile to prohibit the alienation of
public agricultural lands to aliens if, after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of Filipino citizens. x x x

xxxx

If the term "private agricultural lands" is to be construed as not including residential lots or
lands not strictly agricultural, the result would be that "aliens may freely acquire and possess
not only residential lots and houses for themselves but entire subdivisions, and whole towns
and cities," and that "they may validly buy and hold in their names lands of any area for
building homes, factories, industrial plants, fisheries, hatcheries, schools, health and vacation
resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and purposes
that are not, in appellant’s words, strictly agricultural." (Solicitor General’s Brief, p. 6.) That
this is obnoxious to the conservative spirit of the Constitution is beyond question.

Respondent was aware of the constitutional prohibition and expressly admitted his knowledge
thereof to this Court. 11 He declared that he had the Antipolo property titled in the name of
petitioner because of the said prohibition. 12 His attempt at subsequently asserting or claiming
a right on the said property cannot be sustained.

The Court of Appeals erred in holding that an implied trust was created and resulted by
operation of law in view of petitioner’s marriage to respondent. Save for the exception
provided in cases of hereditary succession, respondent’s disqualification from owning lands in
the Philippines is absolute. Not even an ownership in trust is allowed. Besides, where the
purchase is made in violation of an existing statute and in evasion of its express provision, no
trust can result in favor of the party who is guilty of the fraud. 13 To hold otherwise would allow
circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a court of equity, is
likewise misplaced. It has been held that equity as a rule will follow the law and will not permit
that to be done indirectly which, because of public policy, cannot be done directly. 14 He who
seeks equity must do equity, and he who comes into equity must come with clean hands. The
latter is a frequently stated maxim which is also expressed in the principle that he who has
done inequity shall not have equity. It signifies that a litigant may be denied relief by a court of
equity on the ground that his conduct has been inequitable, unfair and dishonest, or
fraudulent, or deceitful as to the controversy in issue. 15

Thus, in the instant case, respondent cannot seek reimbursement on the ground of equity
where it is clear that he willingly and knowingly bought the property despite the constitutional
prohibition.
Further, the distinction made between transfer of ownership as opposed to recovery of funds
is a futile exercise on respondent’s part. To allow reimbursement would in effect permit
respondent to enjoy the fruits of a property which he is not allowed to own. Thus, it is likewise
proscribed by law. As expressly held in Cheesman v. Intermediate Appellate Court: 16

Finally, the fundamental law prohibits the sale to aliens of residential land. Section 14, Article
XIV of the 1973 Constitution ordains that, "Save in cases of hereditary succession, no private
land shall be transferred or conveyed except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain." Petitioner Thomas Cheesman was, of
course, charged with knowledge of this prohibition. Thus, assuming that it was his 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; the sale as to him was
null and void. In any event, he had and has no capacity or personality to question the
subsequent sale of the same property by his wife on the theory that in so doing he is merely
exercising the prerogative of a husband in respect of conjugal property. To sustain such a
theory would permit indirect controversion of the constitutional prohibition. If the property were
to be declared conjugal, this would accord to the alien husband a not insubstantial interest
and right over 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.

As already observed, the finding that his wife had used her own money to purchase the
property cannot, and will not, at this stage of the proceedings be reviewed and overturned.
But even if it were a fact that said wife had used conjugal funds to make the acquisition, the
considerations just set out to militate, on high constitutional grounds, against his recovering
and holding the property so acquired, or any part thereof. And whether in such an event, he
may recover from his wife any share of the money used for the purchase or charge her with
unauthorized disposition or expenditure of conjugal funds is not now inquired into; that would
be, in the premises, a purely academic exercise. (Emphasis added)

WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The Decision dated
February 26, 2001 of the Court of Appeals in CA-G.R. CV No. 59321 ordering petitioner Elena
Buenaventura Muller to reimburse respondent Helmut Muller the amount of P528,000 for the
acquisition of the land and the amount of P2,300,000 for the construction of the house in
Antipolo City, and the Resolution dated August 13, 2001 denying reconsideration thereof, are
REVERSED and SET ASIDE. The August 12, 1996 Decision of the Regional Trial Court of
Quezon City, Branch 86 in Civil Case No. Q-94-21862 terminating the regime of absolute
community between the petitioner and respondent, decreeing a separation of property
between them and ordering the partition of the personal properties located in the Philippines
equally, is REINSTATED.

SO ORDERED.

G.R. No. 157537               September 7, 2011

THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely: LEONOR,
SIMPLICIO, PROTACIO, JR., ANTONIO, BEVERLY ANN LORRAINNE, TITA,
CONSOLACION, LEONORA and ASUNCION, all surnamed GO, represented by
LEONORA B. GO, Petitioners,
vs.
ESTER L. SERVACIO and RITO B. GO, Respondents.

DECISION

BERSAMIN, J.:

The disposition by sale of a portion of the conjugal property by the surviving spouse without
the prior liquidation mandated by Article 130 of the Family Code is not necessarily void if said
portion has not yet been allocated by judicial or extrajudicial partition to another heir of the
deceased spouse. At any rate, the requirement of prior liquidation does not prejudice vested
rights.

Antecedents

On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a total area of 17,140
square meters situated in Southern Leyte to Protacio B. Go, Jr. (Protacio, Jr.). Twenty three
years later, or on March 29, 1999, Protacio, Jr. executed an Affidavit of Renunciation and
Waiver,1 whereby he affirmed under oath that it was his father, Protacio Go, Sr. (Protacio,
Sr.), not he, who had purchased the two parcels of land (the property).

On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr. and mother
of the petitioners.2 On December 28, 1999, Protacio, Sr. and his son Rito B. Go (joined by
Rito’s wife Dina B. Go) sold a portion of the property with an area of 5,560 square meters to
Ester L. Servacio (Servacio) for ₱5,686,768.00.3 On March 2, 2001, the petitioners demanded
the return of the property,4 but Servacio refused to heed their demand. After barangay
proceedings failed to resolve the dispute,5 they sued Servacio and Rito in the Regional Trial
Court in Maasin City, Southern Leyte (RTC) for the annulment of the sale of the property.

The petitioners averred that following Protacio, Jr.’s renunciation, the property became
conjugal property; and that the sale of the property to Servacio without the prior liquidation of
the community property between Protacio, Sr. and Marta was null and void.6

Servacio and Rito countered that Protacio, Sr. had exclusively owned the property because
he had purchased it with his own money.7

On October 3, 2002,8 the RTC declared that the property was the conjugal property of
Protacio, Sr. and Marta, not the exclusive property of Protacio, Sr., because there were three
vendors in the sale to Servacio (namely: Protacio, Sr., Rito, and Dina); that the participation of
Rito and Dina as vendors had been by virtue of their being heirs of the late Marta; that under
Article 160 of the Civil Code, the law in effect when the property was acquired, all property
acquired by either spouse during the marriage was conjugal unless there was proof that the
property thus acquired pertained exclusively to the husband or to the wife; and that Protacio,
Jr.’s renunciation was grossly insufficient to rebut the legal presumption.9

Nonetheless, the RTC affirmed the validity of the sale of the property, holding that: "xxx As
long as the portion sold, alienated or encumbered will not be allotted to the other heirs in the
final partition of the property, or to state it plainly, as long as the portion sold does not
encroach upon the legitimate (sic) of other heirs, it is valid."10 Quoting Tolentino’s commentary
on the matter as authority,11 the RTC opined:

In his comment on Article 175 of the New Civil Code regarding the dissolution of the conjugal
partnership, Senator Arturo Tolentino, says" [sic]

"Alienation by the survivor. — After the death of one of the spouses, in case it is necessary to
sell any portion of the community property in order to pay outstanding obligation of the
partnership, such sale must be made in the manner and with the formalities established by
the Rules of Court for the sale of the property of the deceased persons. Any sale, transfer,
alienation or disposition of said property affected without said formalities shall be null and
void, except as regards the portion that belongs to the vendor as determined in the liquidation
and partition. Pending the liquidation, the disposition must be considered as limited only to the
contingent share or interest of the vendor in the particular property involved, but not to the
corpus of the property.

This rule applies not only to sale but also to mortgages. The alienation, mortgage or disposal
of the conjugal property without the required formality, is not however, null ab initio, for the
law recognizes their validity so long as they do not exceed the portion which, after liquidation
and partition, should pertain to the surviving spouse who made the contract." [underlining
supplied]

It seems clear from these comments of Senator Arturo Tolentino on the provisions of the New
Civil Code and the Family Code on the alienation by the surviving spouse of the community
property that jurisprudence remains the same - that the alienation made by the surviving
spouse of a portion of the community property is not wholly void ab initio despite Article 103 of
the Family Code, and shall be valid to the extent of what will be allotted, in the final partition,
to the vendor. And rightly so, because why invalidate the sale by the surviving spouse of a
portion of the community property that will eventually be his/her share in the final partition?
Practically there is no reason for that view and it would be absurd.

Now here, in the instant case, the 5,560 square meter portion of the 17,140 square-meter
conjugal lot is certainly mush (sic) less than what vendors Protacio Go and his son Rito B. Go
will eventually get as their share in the final partition of the property. So the sale is still valid.

WHEREFORE, premises considered, complaint is hereby DISMISSED without

pronouncement as to cost and damages.

SO ORDERED.12

The RTC’s denial of their motion for reconsideration13 prompted the petitioners to appeal
directly to the Court on a pure question of law.

Issue

The petitioners claim that Article 130 of the Family Code is the applicable law; and that the
sale by Protacio, Sr., et al. to Servacio was void for being made without prior liquidation.

In contrast, although they have filed separate comments, Servacio and Rito both argue that
Article 130 of the Family Code was inapplicable; that the want of the liquidation prior to the
sale did not render the sale invalid, because the sale was valid to the extent of the portion that
was finally allotted to the vendors as his share; and that the sale did not also prejudice any
rights of the petitioners as heirs, considering that what the sale disposed of was within the
aliquot portion of the property that the vendors were entitled to as heirs.14

Ruling

The appeal lacks merit.

Article 130 of the Family Code reads:

Article 130. Upon the termination of the marriage by death, the conjugal partnership property
shall be liquidated in the same proceeding for the settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the
conjugal partnership property either judicially or extra-judicially within one year from the death
of the deceased spouse. If upon the lapse of the six month period no liquidation is made, any
disposition or encumbrance involving the conjugal partnership property of the terminated
marriage shall be void.

Should the surviving spouse contract a subsequent marriage without compliance with the
foregoing requirements, a mandatory regime of complete separation of property shall govern
the property relations of the subsequent marriage.

Article 130 is to be read in consonance with Article 105 of the Family Code, viz:
Article 105. In case the future spouses agree in the marriage settlements that the regime of
conjugal partnership of gains shall govern their property relations during marriage, the
provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains already
established between spouses before the effectivity of this Code, without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws, as provided in Article
256. (n) [emphasis supplied]

It is clear that conjugal partnership of gains established before and after the effectivity of the
Family Code are governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of
Title IV (Property Relations Between Husband And Wife) of the Family Code. Hence, any
disposition of the conjugal property after the dissolution of the conjugal partnership must be
made only after the liquidation; otherwise, the disposition is void.

Before applying such rules, however, the conjugal partnership of gains must be subsisting at
the time of the effectivity of the Family Code. There being no dispute that Protacio, Sr. and
Marta were married prior to the effectivity of the Family Code on August 3, 1988, their
property relation was properly characterized as one of conjugal partnership governed by the
Civil Code. Upon Marta’s death in 1987, the conjugal partnership was dissolved, pursuant to
Article 175 (1) of the Civil Code,15 and an implied ordinary co-ownership ensued among
Protacio, Sr. and the other heirs of Marta with respect to her share in the assets of the
conjugal partnership pending a liquidation following its liquidation.16 The ensuing implied
ordinary co-ownership was governed by Article 493 of the Civil Code,17 to wit:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when personal rights are involved. But the
effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
portion which may be allotted to him in the division upon the termination of the co-ownership.
(399)

Protacio, Sr., although becoming a co-owner with his children in respect of Marta’s share in
the conjugal partnership, could not yet assert or claim title to any specific portion of Marta’s
share without an actual partition of the property being first done either by agreement or by
judicial decree. Until then, all that he had was an ideal or abstract quota in Marta’s
share.18 Nonetheless, a co-owner could sell his undivided share; hence, Protacio, Sr. had the
right to freely sell and dispose of his undivided interest, but not the interest of his co-
owners.19 Consequently, the sale by Protacio, Sr. and Rito as co-owners without the consent
of the other co-owners was not necessarily void, for the rights of the selling co-owners were
thereby effectively transferred, making the buyer (Servacio) a co-owner of Marta’s
share.20 This result conforms to 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).21

Article 105 of the Family Code, supra, expressly provides that the applicability of the rules on
dissolution of the conjugal partnership is "without prejudice to vested rights already acquired
in accordance with the Civil Code or other laws." This provision gives another reason not to
declare the sale as entirely void. Indeed, such a declaration prejudices the rights of Servacio
who had already acquired the shares of Protacio, Sr. and Rito in the property subject of the
sale.

In their separate comments,22 the respondents aver that each of the heirs had already
received "a certain allotted portion" at the time of the sale, and that Protacio, Sr. and Rito sold
only the portions adjudicated to and owned by them. However, they did not present any public
document on the allocation among her heirs, including themselves, of specific shares in
Marta’s estate. Neither did they aver that the conjugal properties had already been liquidated
and partitioned. Accordingly, pending a partition among the heirs of Marta, the efficacy of the
sale, and whether the extent of the property sold adversely affected the interests of the
petitioners might not yet be properly decided with finality. The appropriate recourse to bring
that about is to commence an action for judicial partition, as instructed in Bailon-Casilao v.
Court of Appeals,23 to wit:

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided
share, a sale of the entire property by one

co-owner without the consent of the other co-owners is not null and void. However, only the
rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the
property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner
or co-owners who alienated their shares, but the DIVISION of the common property as if it
continued to remain in the possession of the co-owners who possessed and administered it
[Mainit v. Bandoy, supra].1avvphi1

Thus, it is now settled that the appropriate recourse of co-owners in cases where their
consent were not secured in a sale of the entire property as well as in a sale merely of the
undivided shares of some of the co-owners is an action for PARTITION under Rule 69 of the
Revised Rules of Court. xxx24

In the meanwhile, Servacio would be a trustee for the benefit of the co-heirs of her vendors in
respect of any portion that might not be validly sold to her. The following observations of
Justice Paras are explanatory of this result, viz:

xxx [I]f it turns out that the property alienated or mortgaged really would pertain to the share of
the surviving spouse, then said transaction is valid. If it turns out that there really would be,
after liquidation, no more conjugal assets then the whole transaction is null and
void.1âwphi1 But if it turns out that half of the property thus alienated or mortgaged belongs to
the husband as his share in the conjugal partnership, and half should go to the estate of the
wife, then that corresponding to the husband is valid, and that corresponding to the other is
not. Since all these can be determined only at the time the liquidation is over, it follows
logically that a disposal made by the surviving spouse is not void ab initio. Thus, it has been
held that the sale of conjugal properties cannot be made by the surviving spouse without the
legal requirements. The sale is void as to the share of the deceased spouse (except of course
as to that portion of the husband’s share inherited by her as the surviving spouse). The
buyers of the property that could not be validly sold become trustees of said portion for the
benefit of the husband’s other heirs, the cestui que trust ent. Said heirs shall not be barred by
prescription or by laches (See Cuison, et al. v. Fernandez, et al.,L-11764, Jan.31, 1959.)25

WHEREFORE, we DENY the petition for review on certiorari; and AFFIRM the decision of the
Regional Trial Court.

The petitioners shall pay the costs of suit.

SO ORDERED.

G.R. No. 200274

MELECIO DOMINGO, Petitioner,
vs.
SPOUSES GENARO MOLINA and ELENA B. MOLINA, substituted by ESTER
MOLINA, Respondents.

DECISION
BRION, J.:

We resolve the petition for review on certiorari1 filed by the petitioner Melecio

Domingo (Melecio) assailing the August 9, 2011 decision2 and January 10, 2012
resolution3 of the Court of Appeals (CA)  in CA-G.R. CV No. 94160.

THE FACTS

In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in Camiling,
Tarlac, consisting of a one-half undivided portion over an 18, 164 square meter parcel of land.
The sale was annotated on the Original Certificate of Title (OCT) No. 16354 covering the
subject property.

During his lifetime, Anastacio borrowed money from the respondent spouses Genaro and
Elena Molina (spouses Molina).  On September 10, 1978 or 10 years after Flora’s death4,
Anastacio sold his interest over the land to the spouses Molina to answer for his debts. The
sale to the spouses Molina was annotated at the OCT of the subject property.5 In 1986,
Anastacio died.6

In May 19, 1995, the sale of Anastacio’s interest was registered under Transfer Certificate of
Title (TCT) No. 272967[[7 ]]and transferred the entire one-half undivided portion of the land to
the spouses Molina.

Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed
a Complaint for Annulment of Title and Recovery of Ownership (Complaint) against the
spouses Molina on May 17, 1999.8

Melecio claims that Anastacio gave the subject property to the spouses Molina to serve as
collateral for the money that Anastacio borrowed. Anastacio could not have validly sold the
interest over the subject property without Flora’s consent, as Flora was already dead at the
time of the sale.

Melecio also claims that Genaro Molina must have falsified the document transferring
Anastacio and Flora’s one-half undivided interest over the land. Finally, Melecio asserts that
he occupied the subject property from the time of Anastacio’s death up to the time he filed
the Complaint.9

Melecio presented the testimonies of the Records Officer of the Register of Deeds of Tarlac,
and of Melecio’s nephew, George Domingo (George).10

The Records Officer testified that he could not locate the instrument that documents the
transfer of the subject property ownership from Anastacio to the spouses Molina. The
Records Officer also testified that the alleged sale was annotated at the time when Genaro
Molina’s brother was the Register of Deeds for Camiling, Tarlac.11

George, on the other hand, testified that he has been living on the subject property owned by
Anastacio since 1986. George testified, however, that aside from himself, there were also four
other occupants on the subject property, namely Jaime Garlitos, Linda Sicangco, Serafio
Sicangco and Manuel Ramos.12

The spouses Molina asserted that Anastacio surrendered the title to the subject property to
answer for his debts and told the spouses Molina that they already own half of the land. The
spouses Molina have been in possession of the subject property before the title was
registered under their names and have religiously paid the property’s real estate taxes.

The spouses Molina also asserted that Melecio knew of the disputed sale since he
accompanied Anastacio several times to borrow money. The last loan was even used to pay
for Melecio’s wedding. Finally, the spouses Molina asserted that Melecio built his nipa hut on
the subject property only in 1999, without their knowledge and consent.13

The spouses Molina presented Jaime Garlitos (Jaime) as their sole witness and who is one of
the occupants of the subject lot.

Jaime testified that Elena Molina permitted him to build a house on the subject property in
1993. Jaime, together with the other tenants, planted fruit bearing trees on the subject
property and gave portions of their harvest to Elena Molina without any complaint from
Melecio. Jaime further testified that Melecio never lived on the subject property and that only
George Domingo, as the caretaker of the spouses Molina, has a hut on the property.

Meanwhile, the spouses Molina died during the pendency of the case and were substituted by
their adopted son, Cornelio Molina.14

THE RTC RULING

The Regional Trial Court (RTC) dismissed15 the case because Melecio failed to establish his
claim that Anastacio did not sell the property to the spouses Molina.

The RTC also held that Anastacio could dispose of conjugal property without Flora’s consent
since the sale was necessary to answer for conjugal liabilities.

The RTC denied Melecio’s motion for reconsideration of the RTC ruling. From this ruling,
Melecio proceeded with his appeal to the CA.

THE CA RULING

In a decision dated August 9, 2011, the CA affirmed the RTC ruling in toto.

The CA held that Melecio failed to prove by preponderant evidence that there was fraud in the
conveyance of the property to the spouses Molina. The CA gave credence to the OCT
annotation of the disputed property sale.

The CA also held that Flora’s death is immaterial because Anastacio only sold his rights,
excluding Flora’s interest, over the lot to the spouses Molina.1âwphi1 The CA explained that
"[t]here is no prohibition against the sale by the widower of real property formerly belonging to
the conjugal partnership of gains"16.

Finally, the CA held that Melecio’s action has prescribed. According to the CA, Melecio failed
to file the action within one year after entry of the decree of registration.

Melecio filed a motion for reconsideration of the CA Decision. The CA denied Melecio’s
motion for reconsideration for lack of merit.17

THE PETITION

Melecio filed the present petition for review on certiorari  to challenge the CA ruling.

Melecio principally argues that the sale of land belonging to the conjugal partnership without
the wife’s consent is invalid.

Melecio also claims that fraud attended the conveyance of the subject property and the
absence of any document evidencing the alleged sale made the transfer null and void. Finally,
Melecio claims that the action has not yet prescribed.
The respondents, on the other hand, submitted and adopted their arguments in their Appeal
Brief18.

First, Melecio’s counsel admitted that Anastacio had given the lot title in payment of the debt
amounting to Php30,000.00. The delivery of the title is constructive delivery of the lot itself
based on Article 1498, paragraph 2 of

the Civil Code.

Second, the constructive delivery of the title coupled with the spouses Molina’s exercise of
attributes of ownership over the subject property, perfected the sale and completed the
transfer of ownership.

THE ISSUES

The core issues of the petition are as follows: (1) whether the sale of a conjugal property to
the spouses Molina without Flora’s consent is valid and legal; and (2) whether fraud attended
the transfer of the subject property to the spouses Molina.

OUR RULING

We deny the petition.

It is well settled that when the trial court’s factual findings have been affirmed by the CA, the
findings are generally conclusive and binding upon the Court and may no longer be reviewed
on Rule 45 petitions.19 While there are exceptions20 to this rule, the Court finds no applicable
exception with respect to the lower courts’ finding that the subject property was Anastacio and
Flora’s conjugal property. Records before the Court show that the parties did not dispute the
conjugal nature of the property.

Melecio argues that the sale of the disputed property to the spouses Molina is void without
Flora’s consent.

We do not find Melecio’s argument meritorious.

Anastacio and Flora’s

conjugal partnership was
dissolved upon Flora’s death.

There is no dispute that Anastacio and Flora Domingo married before the Family Code’s
effectivity on August 3, 1988 and their property relation is a conjugal partnership.21

Conjugal partnership of gains established before and after the effectivity of the Family Code
are governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV
(Property Relations Between Husband and Wife) of the Family Code. This is clear from Article
105 of the Family Code which states:

x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already
established between spouses before the effectivity of this Code, without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws, as provided in Article
256.

The conjugal partnership of Anastacio and Flora was dissolved when Flora died in
1968, pursuant to Article 175 (1) of the Civil Code22 (now Article 126 (1) of the Family Code).
Article 130 of the Family Code requires the liquidation of the conjugal partnership upon death
of a spouse and prohibits any disposition or encumbrance of the conjugal property prior to the
conjugal partnership liquidation, to quote:

Article 130. Upon the termination of the marriage by death, the conjugal partnership
property shall be liquidated in the same proceeding for the settlement of the estate of
the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the
conjugal partnership property either judicially or extrajudicially within one year from the death
of the deceased spouse. If upon the lapse of the six month period no liquidation is
made, any disposition or encumbrance involving the conjugal partnership property of
the terminated marriage shall be void. x x x (emphases supplied)

While Article 130 of the Family Code provides that any disposition involving the conjugal
property without prior liquidation of the partnership shall be void, this rule does not apply since
the provisions of the Family Code shall be "without prejudice to vested rights already acquired
in accordance with the Civil Code or other laws."23

An implied co-ownership
among Flora’s heirs governed
the conjugal properties
pending liquidation and
partition.

In the case of Taningco v. Register of Deeds of Laguna,24 we held that the properties of a
dissolved conjugal partnership fall under the regime of co-ownership among the surviving
spouse and the heirs of the deceased

spouse until final liquidation and partition. The surviving spouse, however, has an actual and
vested one-half undivided share of the properties, which does not consist of determinate and
segregated properties until liquidation

and partition of the conjugal partnership.

An implied ordinary co-ownership ensued among Flora’s surviving heirs, including Anastacio,
with respect to Flora’s share of the conjugal partnership until final liquidation and partition;
Anastacio, on the other hand, owns one-half of the original conjugal partnership properties as
his share, but this is an undivided interest.

Article 493 of the Civil Code on co-ownership provides:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when personal rights are involved. But
the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination
of the co-ownership. (399) (emphases supplied)

Thus, Anastacio, as co-owner, cannot claim title to any specific portion of the conjugal
properties without an actual partition being first done either by agreement or by judicial
decree. Nonetheless, Anastacio had the right to freely sell and dispose of his undivided
interest in the subject property.

The spouses Molina became

co-owners of the subject
property to the extent of
Anastacio’s interest.
The OCT annotation of the sale to the spouses Molina reads that "[o]nly the rights,
interests and participation of Anastacio Domingo, married to Flora Dela Cruz, is hereby
sold, transferred, and conveyed unto the said vendees for the sum of ONE THOUSAND
PESOS (P1,000.00) which pertains to an undivided one-half (1/2) portion and subject to
all other conditions specified in the document x x x" 25 (emphases supplied). At the time of the
sale, Anastacio’s undivided interest in the conjugal properties consisted of: (1) one-half of the
entire conjugal properties; and (2) his share as Flora’s heir on the conjugal properties.

Anastacio, as a co-owner, had the right to freely sell and dispose of his undivided interest, but
not the interest of his co-owners. Consequently, Anastactio’s sale to the spouses Molina
without the consent of the other co-owners was not totally void, for Anastacio’s rights or a
portion thereof were thereby effectively transferred, making the spouses Molina a co-owner of
the subject property to the extent of Anastacio’s interest. This result conforms with the well-
established principle that the binding force of a contract must be recognized as far as it is
legally possible to do so (quando res non valet ut ago, valeat quantum valere potest).26

The spouses Molina would be a trustee for the benefit of the co-heirs of Anastacio in respect
of any portion that might belong to the co-heirs after liquidation and partition. The
observations of Justice Paras cited in the case of Heirs of Protacio Go, Sr. V. Servacio 27  are
instructive:

x x x [I]f it turns out that the property alienated or mortgaged really would pertain to the share
of the surviving spouse, then said transaction is valid. If it turns out that there really would be,
after liquidation, no more conjugal assets then the whole transaction is null and void. But if it
turns out that half of the property thus alienated or mortgaged belongs to the husband as his
share in the conjugal partnership, and half should go to the estate of the wife, then that
corresponding to the husband is valid, and that corresponding to the other is not. Since all
these can be determined only at the time the liquidation is over, it follows logically that a
disposal made by the surviving spouse is not void ab initio. Thus, it has been held that the
sale of conjugal properties cannot be made by the surviving spouse without the legal
requirements. The sale is void as to the share of the deceased spouse (except of course as to
that portion of the husband’s share inherited by her as the surviving spouse). The buyers of
the property that could not be validly sold become trustees of said portion for the benefit of
the husband’s other heirs, the cestui que trust ent. Said heirs shall not be barred by
prescription or by laches.

Melecio’s recourse as a co-owner of the conjugal properties, including the subject property, is
an action for partition under Rule 69 of the Revised Rules of Court. As held in the case
of Heirs of Protacio Go, Sr., "it is now settled that the appropriate recourse of co-owners in
cases where their consent were not secured in a sale of the entire property as well as in a
sale merely of the undivided shares of some of the co-owners is an action for PARTITION
under Rule 69 of the Revised Rules of Court."28

The sale of the subject

property to the spouses Molina
was not attended with fraud.

On the issue of fraud, the lower courts found that there was no fraud in the sale of the
disputed property to the spouses Molina.

The issue of fraud would require the Court to inquire into the weight of evidentiary matters to
determine the merits of the petition and is essentially factual in nature. It is basic that factual
questions cannot be cannot be entertained in a Rule 45 petition, unless it falls under any of
the recognized exceptions29 found in jurisprudence. The present petition does not show that it
falls under any of the exceptions allowing factual review.

The CA and RTC conclusion that there is no fraud in the sale is supported by the evidence on
record.
Melecio' s argument that no document was executed for the sale is negated by the CA finding
that there was a notarized deed of conveyance executed between Anastacio and the spouses
Molina, as annotated on the OCT of the disputed property.

Furthermore, Melecio's belief that Anastacio could not have sold the property without his
knowledge cannot be considered as proof of fraud to invalidate the spouses Molina's
registered title over the subject property.30

Prevailing jurisprudence uniformly holds that findings of facts of the trial court, particularly
when affirmed by the Court of Appeals, are binding upon t his court. 31

Considering these findings, we find no need to discuss the other issues raised by Melecio.

WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated

August 9, 2011 of the Court of Appeals in CA-G.R. CV No. 94160 is AFFIRMED.

SO ORDERED.

G.R. No. 200612, April 05, 2017

RAFAEL C. UY (CABANGBANG STORE), Petitioner, v. ESTATE OF VIPA

FERNANDEZ, Respondents.

DECISION

REYES, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision2 dated November 26, 2010 and Resolution3 dated January
24, 2012 issued by the Court of Appeals (CA) in CA-G.R. SP No. 04481.

Facts

Vipa Fernandez Lahaylahay (Vipa) is the registered owner of a parcel of land situated in
Lopez Jaena Street, Jaro, Iloilo City covered by Transfer Certificate of Title No. T-26576
(subject property).4 Vipa and her husband, Levi Lahaylahay (Levi), have two children – Grace
Joy Somosierra (Grace Joy) and Jill Frances Lahaylahay (Jill Frances).5

Sometime in 1990, a contract of lease was executed between Vipa and Rafael Uy (Rafael)
over the subject property and the improvements thereon, pursuant to which, Rafael bound
himself to pay Vipa, as consideration for the lease of the property, the amount of
P3,000.00 per month, with a provision for a 10% increase every year thereafter.6

On March 5, 1994, Vipa died leaving no will or testament whatsoever. Grace Joy became
the de facto administrator of the estate of Vipa. After Vipa's death, Levi lived in Aklan.7

In June 1998, Rafael stopped paying the monthly rents.8 Consequently, on June 12, 2003, the
Estate of Vipa, through Grace Joy, filed a complaint9 for unlawful detainer with the Municipal
Trial Court in Cities (MTCC) of Iloilo City against Rafael. It was alleged therein that, as of
June 1998, Rafael was already bound to pay rent at the amount of P3,300.00 per month and
that his last payment was made in May 1998. Accordingly, at the time of the filing of the
Complaint, Rafael's unpaid rents amounted to P271,150.00.10 The Estate of Vipa claimed that
despite repeated demands, Rafael refused to pay the rents due.11

In his Answer,12 Rafael denied that he refused to pay the rent for the lease of the subject
property. He claimed that sometime in June 1998 Patria Fernandez-Cuenca (Patria), Vipa's
sister, demanded for the payment of the rents, claiming that she is the rightful heir of
Vipa.13 Since he had no idea on who is entitled to receive the rent for the subject property, he
deposited the amount of P10,000.00 with the Office of the Clerk of Court of the Regional Trial
Court (RTC) of Iloilo City on November 20, 1998 and that Grace Joy was informed of such
consignation.14 He claimed that a case for the settlement of the Estate of Vipa was instituted
by Patria with the RTC, which was docketed as Special Proceeding No. 6910. He averred that
he is willing to pay the rent on the leased property to the rightful heirs of Vipa and that he
made another consignation with the RTC in the amount of P6,000.00.15

On June 12, 2008, the MTCC rendered a Decision,16 the decretal portion of which reads:

WHEREFORE, in the light of the foregoing ratiocination, judgment is hereby

rendered in favor of the [Estate of Vipa] and against [Rafael], ordering the
latter, to wit:

1. to vacate the premises subject of this case and covered by TCT No.
T-26576 and to peacefully turn over the possession of the same to
the [Estate of Vipa];
2. to pay the [Estate of Vipa] the amount of Php271,150.00 as payment
for the unpaid rentals with 12% interest per annum from the last
demand on May 3, 2003 until the whole amount is paid;
3. to pay the [Estate of Vipa] the amount of Php3,000.00 per month with
12% interest per annum for the use and occupancy of the premises
computed from the date of the filing of this case on June 12, 2003
until fully paid;
4. to pay the [Estate of Vipa] attorney's fees in the amount of
Php20,000.00; [and]
5. to pay the costs of suit.

SO ORDERED.17

The MTCC found that after Vipa's death in 1994 until 1998, Rafael was paying the rent for the
lease of the subject property to Grace Joy.18 That the real reason why Patria claimed to be the
heir of Vipa is because she owed Rafael money which she could not pay. Patria then charged
the debt she owes to Rafael from the monthly rent of the subject property, an arrangement
that Rafael took advantage to avoid paying Grace Joy the monthly rents. The MTCC further
opined that the consignations made by Rafael in the total amount of P16,000.00 are not valid
since there was no prior tender of payment.19

On appeal, the RTC, in its Decision20 dated April 15, 2009, reversed the MTCC's Decision
dated June 12, 2008 and, thus, dismissed the complaint for unlawful detainer filed by the
Estate of Vipa. Thus:

WHEREFORE, premises considered, the Decision appealed from is

REVERSED and SET ASIDE; and the herein complaint is hereby
DISMISSED for lack of merit; and further DISMISSING [Rafael's]
counterclaim for failure to substantiate the same.

SO ORDERED.21

The RTC opined that Grace Joy was actually the plaintiff in the case and not the Estate of
Vipa. It then pointed out that Grace Joy failed to bring the dispute to the barangay for
conciliation prior to filing the complaint for unlawful detainer.22

The RTC further held that the MTCC erred in including the entire subject property as part of
the Estate of Vipa. The RTC explained that the subject property was acquired by Vipa during
the subsistence of her marriage with Levi and, as such, is part of their conjugal properties.
That after Vipa's death, the conjugal partnership was terminated, entitling Levi to one-half of
the property.23 The RTC then pointed out that Levi sold his share in the subject property to
Rafael, as evidenced by a Deed of Sale24 dated December 29, 2005.25 Accordingly, the RTC
ruled that Rafael, as co-owner of the subject property, having bought Levi's one-half share
thereof, had the right to possess the same.26

The Estate of Vipa sought a reconsideration27 of the Decision dated April 15, 2009, but it was
denied by the RTC in its Order dated July 28; 2009.28

The Estate of Vipa then filed a Petition for Review29 with the CA. On November 26, 2010, the
CA rendered a Decision,30 which declared:

WHEREFORE, in view of all the foregoing, the instant petition for review is
GRANTED and the April 15, 2009 Decision of the court a quo in Civil Case
No. 08-29842 is hereby REVERSED and SET ASIDE. Accordingly, the June
12, 2008 Decision of the Municipal Trial Court, Branch 4, Iloilo City, in Civil
Case No. 03-208 is hereby REINSTATED.

SO ORDERED.31

The CA held that there was no necessity to bring the dispute before the barangay for
conciliation since the Estate of Vipa, being a juridical person, cannot be impleaded to a
barangay conciliation proceeding. The CA likewise pointed out that any allegations against
Grace Joy's authority to represent the Estate of Vipa had been laid to rest when she was
appointed as administrator of the Estate of Vipa in Special Proceedings No. 6910 pending
before the RTC.32

Further, the CA held that Rafael raised the issue of ownership of the subject
property, i.e., Levi's sale of his one-half share in the subject property to Rafael, only for the
first time in his appeal with the RTC. Accordingly, it was error on the part of the RTC to have
resolved the issue of ownership of the subject property. 33 Furthermore, the CA agreed with
the MTCC that Rafael's consignation of the rent to the RTC is ineffective. It ruled that Rafael
made the consignation only twice and the amount consigned was patently insignificant
compared to the amount of rent due.34

Rafael's motion for reconsideration35 was denied by the CA in its Resolution 36 dated January
24, 2012.

Hence, the instant petition.

Rafael maintains that Grace Joy has no authority to represent the Estate of Vipa and, when
she filed the complaint for unlawful detainer with the MTCC, she did so in her personal
capacity. Thus, Rafael claims that the dispute should have been brought to the barangay for
conciliation before the complaint was filed in the MTCC. 37 He further claims that the CA erred
in . reversing the RTC's ruling on the issue of ownership of the subject property. He insists
that he already purchased Levi's one-half share in the subject property.38

On the other hand, the Estate of Vipa, in its Comment,39 avers that the supposed lack of
authority of Grace Joy to file the complaint for unlawful detainer and the ownership of the
subject property were never raised in the proceedings before the MTCC and, hence, could
not be passed upon by the RTC in the appellate proceedings. In any case, it pointed out that
the RTC's Decision40 dated October 28, 2005 in Special Proceedings No. 6910, which
appointed Grace Joy as the administrator of the intestate estate of Vipa, recognized that the
latter and Jill Frances are legitimate children of Vipa and Levi.

Issue

Essentially, the issue set forth for the Court's resolution is whether the CA erred in reversing
the RTC's Decision dated April 15, 2009.
 Ruling of the Court

The petition is partly meritorious.

Rafael's claim that the complaint below should have been dismissed since Grace Joy has no
authority to represent the Estate of Vipa and that there was lack of prior barangay conciliation
is untenable. Unlawful detainer cases are covered by the Rules on Summary
Procedure.41 Section 5 of the 1991 Revised Rules on Summary Procedure provides that
affirmative and negative defenses not pleaded in the answer shall be deemed waived, except
lack of jurisdiction over the subject matter.

Rafael failed to plead in the answer he filed with the MTCC that Grace Joy has no authority to
represent the Estate of Vipa. Neither did he raise therein the lack of barangay conciliation
between the parties herein prior to the filing of the complaint for unlawful detainer.
Accordingly, the foregoing defenses are already deemed waived.

In any case, the issue of the supposed lack of authority of Grace Joy to represent the Estate
of Vipa had already been rendered moot with the RTC's appointment of Grace Joy as the
administrator of the Estate of Vipa in Special Proceedings No. 6910.

Also, there was no need to refer the dispute between the parties herein to the barangay for
conciliation pursuant to the Katarungang Pambarangay Law.42 It bears stressing that only
individuals may be parties to barangay conciliation proceedings either as complainants or
respondents. Complaints by or against corporations, partnerships or other juridical entities
may not be filed with, received or acted upon by the barangay for conciliation. 43 The Estate of
Vipa, which is the complainant below, is a juridical entity that has a personality, which is
separate and distinct from that of Grace Joy.44 Thus, there is no necessity to bring the dispute
to the barangay for conciliation prior to filing of the complaint for unlawful detainer with the
MTCC.

The CA, nevertheless, erred in hastily dismissing Rafael's allegation as regards the
ownership of the subject property. In disregarding Rafael's claim that he owns Levi's one-half
undivided share in the subject property, the CA ruled that the said issue was raised for the
first time on appeal and should thus not have been considered by the RTC, viz.:

On the second issue, the records show that [Rafael] raised the issue of
ownership only for the first time on appeal; hence, the [RTC] erred in deciding
the appeal before it on the findings that part of the subject premises is owned
by petitioners, allegedly having bought the same from [Levi], the husband of
[Vipa].

The Court is not unmindful that in forcible entry and unlawful detainer cases,
the MTC may rule on the issue [of] ownership in order to determine the issue
of possession. However, the issue of ownership must be raised by the
defendant on the earliest opportunity; otherwise, it is already deemed waived.
Moreover, the instant case was covered by the Rules on Summary
Procedure, which expressly provide that affirmative and negative defenses
not pleaded therein shall be deemed waived, except for lack of jurisdiction
over the subject matter. Thus, the [RTC] erred in resolving the issue of
ownership for the first time on appeal.45 (Citations omitted)

It is true that fair play, justice, and due process dictate that parties should not raise for the first
time on appeal issues that they could have raised but never did during trial. However, before
a party may be barred from raising an issue for the first time on appeal, it is imperative that
the issue could have been raised during the trial.46 What escaped the appellate court's
attention is that the sale of the one-half undivided share in the subject property to Rafael was
consummated only on December 29, 2005, more than two years after Rafael filed with the
MTCC his answer to the complaint for unlawful detainer on July 18, 2003.47 Obviously, Rafael
could not have raised his acquisition of Levi's share in the subject property as an affirmative
defense in the answer he filed with the MTCC.

Moreover, Rafael's ownership of the one-half undivided share in the subject property would
necessarily affect the property relations between the parties herein. Thus, the CA should have
exerted efforts to resolve the said issue instead of dismissing the same on the flimsy ground
that it was not raised during the proceedings before the MTCC.

Levi and Vipa were married on March 24, 196148 and, in the absence of a marriage
settlement, the system of conjugal partnership of gains governs their property relations.49 It is
presumed that the subject property is part of the conjugal properties of Vipa and Levi
considering that the same was acquired during the subsistence of their marriage and there
being no proof to the contrary.50

When Vipa died on March 5, 1994, the conjugal partnership was automatically
terminated.51 Under Article 130 of the Family Code, the conjugal partnership property, upon
its dissolution due to the death of either spouse, should be liquidated either in the same
proceeding for the settlement of the estate of the deceased or, in the absence thereof, by the
surviving spouse within one year from the death of the deceased spouse. That absent any
liquidation, any disposition or encumbrance of the conjugal partnership property is void. Thus:

Article 130. Upon the termination of the marriage by death, the conjugal
partnership property shall be liquidated in the same proceeding for the
settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse

shall liquidate the conjugal partnership property either judicially or
extra-judicially within six months from the death of the deceased
spouse. If upon the lapse of the six-month period no liquidation is
made, any disposition or encumbrance involving the conjugal
partnership property of the terminated marriage shall be void.

Should the surviving spouse contract a subsequent marriage without

compliance with the foregoing requirements, a mandatory regime of complete
separation of property shall govern the property relations of the subsequent
marriage. (Emphasis ours)

Article 130 of the Family Code is applicable to conjugal partnership of gains already
established between the spouses prior to the effectivity of the Family Code pursuant to Article
105 thereof, viz.:

Article 105. In case the future spouses agree in the marriage settlements that
the regime of conjugal partnership of gains shall govern their property
relations during marriage, the provisions in this Chapter shall be of
supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships

of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance
with the Civil Code or other laws as provided in Article 256. (Emphasis ours)

Rafael bought Levi's one-half share in the subject property in consideration of P500,000.00 as
evidenced by the Deed of Sale52 dated December 29, 2005. At that time, the conjugal
partnership properties of Levi and Vipa were not yet liquidated. However, such disposition,
notwithstanding the absence of liquidation of the conjugal partnership properties, is not
necessarily void.
It bears stressing that under the regime of conjugal partnership of gains, the husband and
wife are co-owners of all the property of the conjugal partnership. 53 Thus, upon the
termination of the conjugal partnership of gains due to the death of either spouse, the
surviving spouse has an actual and vested one-half undivided share of the properties, which
does not consist of determinate and segregated properties until liquidation and partition of the
conjugal partnership.54 With respect, however, to the deceased spouse's share in the conjugal
partnership properties, an implied ordinary co-ownership ensues among the surviving spouse
and the other heirs of the deceased.55

Thus, upon Vipa's death, one half of the subject property was automatically reserved in favor
of the surviving spouse, Levi, as his share in the conjugal partnership. The other half, which is
Vipa's share, was transmitted to Vipa's heirs – Grace Joy, Jill Frances, and her husband Levi,
who is entitled to the same share as that of a legitimate child. The ensuing implied co-
ownership is governed by Article 493 of the Civil Code, which provides:

Article 493. Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign
or mortgage it, and even substitute another person in its enjoyment, except
when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the termination of the
co-ownership. (Emphasis ours)

Although Levi became a co-owner of the conjugal partnership properties with Grace Joy and
Jill Frances, he could not yet assert or claim title to any specific portion thereof without an
actual partition of the property being first done either by agreement or by judicial decree.
Before the partition of a land or thing held in common, no individual or co-owner can claim title
to any definite portion thereof. All that the co-owner has is an ideal or abstract quota or
proportionate share in the entire land or thing.56

Nevertheless, a co-owner could sell his undivided share; hence, Levi had the right to freely
sell and dispose of his undivided interest. Thus, the sale by Levi of his one-half undivided
share in the subject property was not necessarily void, for his right as a co-owner thereof was
effectively transferred, making the buyer, Rafael, a co-owner of the subject property. It must
be stressed 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).57

However, Rafael became a co-owner of the subject property only on December 29, 2005 –
the time when Levi sold his one-half undivided share over the subject property to the former.
Thus, from December 29, 2005 Rafael, as a co-owner, has the right to possess the subject
property as an incident of ownership. Otherwise stated, prior to his acquisition of Levi's one-
half undivided share, Rafael was a mere lessee of the subject property and is thus obliged to
pay the rent for his possession thereof.

Accordingly, Rafael could no longer be directed to vacate the subject property since he is
already a co-owner thereof. Nevertheless, Rafael is still bound to pay the unpaid rentals from
June 1998 until April 2003 in the amount of P271,150.00. In Nacar v. Gallery Frames, et
al.,58 the Court pointed out that pursuant to Resolution No. 796 of the Bangko Sentral ng
Pilipinas Monetary Board, the interest rate of loans or forbearance of money, in the absence
of stipulation shall be six percent (6%) effective only from July 1, 2013. Thus, prior to July 1,
2013, the rate of interest on loans or forbearance of money, in the absence of stipulation, is
still 12%. Accordingly, the amount of P271,150.00, representing the unpaid rentals shall earn
interest at the rates of 12% per annum from the date of the last demand on May 3, 2003 until
June 30, 2013 and 6% per annum from July 1, 2013 until fully paid.

Further, Rafael is likewise bound to pay reasonable rent for the use and occupancy of the
subject property from May 2003 until December 28, 2005 at the rate of P3,000.00 per month
with interest at the rate of 12% per annum from the date of the last demand, i.e., the filing of
the complaint with the MTCC on June 12, 2003, until June 30, 2013 and 6% per annum from
July 1, 2013 until fully paid.

The award of attorney's fees of P20,000.00 is likewise proper. Attorney's fees can be
awarded in the cases enumerated in Article 2208 of the Civil Code, specifically:

Article 2208. x x x

xxxx

(2) Where the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest[.]

Certainly, because of Rafael's unjustified refusal to pay the rents due on the lease of the
subject prope1iy, the Estate of Vipa was put to unnecessary expense and trouble to protect
its interest under paragraph (2), Article 2208 of the Civil Code. In unlawful detainer cases,
where attorney's fees are awarded, the same shall not exceed P20,000.00.59

WHEREFORE, in view of the foregoing disquisitions, the petition for review

on certiorari is PARTIALLY GRANTED. The Decision dated November 26, 2010 and
Resolution dated January 24, 2012 issued by the Court of Appeals in CA-G.R. SP No. 04481
are hereby REVERSED and SET ASIDE. Petitioner Rafael C. Uy is hereby directed to pay
the Estate of Vipa Fernandez the following:

1. The amount of P271,150.00, representing the unpaid rentals, with interest at the rates
of twelve percent (12%) per annum from the date of the last demand on May 3, 2003
until June 30, 2013, and six percent (6%) per annum from July 1, 2013 until fully paid;
2. Reasonable rent for the use and occupancy of the subject property from May 2003
until December 28, 2005 at the rate of P3,000.00 per month with interest at the rates
of twelve percent (12%) per annum from the date of the last demand, i.e., the filing of
the complaint for unlawful detainer on June 12, 2003, until June 30, 2013, and six
percent (6%) per annum from July 1, 2013 until fully paid; and
3. The amount of P20,000.00 as attorney's fees.

SO ORDERED.

G.R. No. 234533

SPOUSES JULIETA B. CARLOS and FERNANDO P. CARLOS, Petitioners

vs.
JUAN CRUZ TOLENTINO, Respondent

DECISION

VELASCO, JR., J.:

Nature of the Case

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the April 5, 2017 Decision1 and the September 27, 2017 Resolution2 of the Court of
Appeals (CA) in CA-G.R. CV No. 106430. The challenged rulings reversed and set aside the
October 16, 2015 Decision3 and the December 9, 2015 Order4 of the Regional Trial Court
(RTC) of Quezon City, Branch 87 which dismissed respondent's complaint for annulment of
title against the petitioners.

The Facts
The instant case arose from a complaint for annulment of title with damages filed by
respondent Juan Cruz Tolentino (Juan) against his wife, Mercedes Tolentino (Mercedes), his
grandson, Kristoff M. Tolentino (Kristoff), herein petitioners Spouses Julieta B. Carlos (Julieta)
and Fernando P. Carlos (Spouses Carlos), and the Register of Deeds of Quezon City.

The subject matter of the action is a parcel of land with an area of 1,000 square meters and
all the improvements thereon located in Novaliches,5 Quezon City, covered by Transfer
Certificate of Title (TCT) No. RT-90746 (116229) issued on March 17, 1967 and registered in
the name of Juan C. Tolentino, married to Mercedes Tolentino (the subject property). 6

Without Juan's knowledge and consent, Mercedes and Kristoff, who were then residing in the
subject property, allegedly forged a Deed of Donation 7 dated February 15, 2011, thereby
making it appear that Juan and Mercedes donated the subject property to Kristoff. Thus, by
virtue of the alleged forged Deed of Donation, Kristoff caused the cancellation of TCT No. RT-
90764 (116229), and in lieu thereof, TCT No. 004-2011003320 8 was issued in his name on
March 9, 2011. 9

In April 2011, Kristoff offered the sale of the subject property to Julieta's brother, Felix Bacal
(Felix), who is also the administrator of the lot owned by Julieta which is adjacent to the
subject property. When Felix informed Julieta of the availability of the subject property,
Spouses Carlos then asked him to negotiate for its purchase with Kristoff. Kristoff and Felix
then arranged for the ocular inspection of the subject property. Thereafter, Kristoff
surrendered to Felix copies of the title and tax declaration covering the said property. 10

After a series of negotiations, Kristoff and Julieta executed a Memorandum of

Agreement11 (MOA) dated April 12, 2011 stating that Kristoff is selling the subject property to
Julieta in the amount of Two Million Three Hundred Thousand Pesos (P2,300,000.00),
payable in two (2) installments. On May 28, 2011, Julieta made the first payment in the
amount of Two Million Pesos (₱2,000,000.00) 12 while the second payment in the amount of
Three Hundred Thousand Pesos (P300,000.00) was made on June 30, 2011. 13 On the same
day, a Deed of Absolute Sale 14 was executed between Kristoff and Julieta.

Upon learning of the foregoing events, Juan executed an Affidavit of Adverse Claim which
was annotated on TCT No. 004-2011003320 on July 15, 2011, to wit:

NOTICE OF ADVERSE CLAIM : EXECUTED UNDER OATH BY JUAN C. TOLENTINO,

CLAIMING FOR THE RIGHTS, INTEREST AND PARTICIPATION OVER THE PROPERTY,
STATING AMONG OTHERS THAT HE DISCOVERED ON JULY 14, 2011 THAT SAID
PARCEL OF LAND HAS BEEN DONATED TO KRISTOFF M. TOLENTINO BY VIRTUE OF
A DEED OF DONATION PU[R]PORTEDL Y EXECUTED BY JUAN C. TOLENTINO &
MERCEDES SERRANO ONFEB. 15, 2011. THAT AS A RESULT OF THE FORGED DEED
OF DONATION, HIS TITLE WAS CANCELLED. THAT HE DECLARE THAT HE HA VE NOT
SIGNED ANY DEED OF DONATION IN FAVOR OF SAID KRISTOFF M. TOLENTINO.
NEITHER DID HE SELL, TRANSFER NOR WAIVE ms RIGHTS OF OWNERSHIP OVER
THE SAID PROPERTY. OTHER CONDITIONS SET FORTH IN DOC. NO. 253, PAGE NO.
52, BOOK NO. V, SERIES OF 2011 OF NOTARY PUBLIC OF QC, MANNY GRAGASIN.
DATE INSTRUMENT- JUNE 15, 2011 15

Juan also filed a criminal complaint for Falsification of Public Document before the Office of
the City Prosecutor of Quezon City against Kristoff. 16 A Resolution for the filing of Information
for Falsification of Public Document against Kristoff was then issued on January 10, 2012.
Accordingly, an Information dated February 15, 2012 was filed against him. 17

Meanwhile, Kristoff and Julieta executed another Deed of Absolute Sale18 dated September
12, 2011 over the subject property and, by virtue thereof, the Register of Deeds of Quezon
City cancelled TCT No. 004- 2011003320 and issued TCT No. 004-201101350219 on
December 5, 2011 in favor of Spouses Carlos. The affidavit of adverse claim executed by
Juan was duly carried over to the title of Spouses Carlos.
On February 23, 2012, Juan filed a complaint for annulment of title with damages against
Mercedes, Kristoff, Spouses Carlos, and the Register of Deeds of Quezon City before the R
TC of Quezon City. The case was raffled to Branch 87 and docketed as Civil Case No. Q-12-
70832.

RTC Ruling

In its October 16, 2015 Decision, the RTC found that Juan's signature in the Deed of Donation
dated Februaru 15, 2011 was a forgery. 20 Despite such finding, however, it dismissed Juan's
complaint.

The R TC found that at the time Spouses Carlos fully paid the agreed price in the MOA on
June 30, 2011, which culminated in the execution of the Deed of Absolute Sale on even date,
Kristoff was the registered owner of the subject property covered by TCT No. 004-
2011003320. Further, when the MOA and the Deed of Absolute Sale dated June 30, 2011
were executed, nothing was annotated on the said title to indicate the adverse claim of Juan
or any other person. It was only on July 15, 2011 when Juan's adverse claim was annotated
on Kristoff's title.21

The fact that a second Deed of Absolute Sale dated September 12, 2011 was executed is
immaterial since the actual sale of the subject property took place on June 30, 2011 when
Spouses Carlos fully paid the purchase price. Thus, relying on the face of Kristoff s title
without any knowledge of irregularity in the issuance thereof and having paid a fair and full
price of the subject property before they could be charged with knowledge of Juan's adverse
claim, the RTC upheld Spouses Carlos' right over the subject property. The dispositive portion
of the October 16, 2015 Decision states:

WHEREFORE, viewed in the light of the foregoing, the instant complaint for
Annulment of Title and Damages against the defendant spouses Fernando
and Julieta Carlos is hereby DISMISSED for failure of the plaintiff to prove his
cause of action. This is without prejudice, however to any appropriate remedy
the plaintiff may take against Kristoff Tolentino and Mercedes Tolentino.

The defendant spouses' counterclaim is DISMISSED for lack of merit.

SO ORDERED.22

Juan moved for reconsideration of the said decision but was denied by the R TC in its
December 9, 2015 Order. Thus, he interposed an appeal before the CA.

CA Ruling

On appeal, the CA found that Spouses Carlos were negligent in not taking the necessary
steps to determine the status of the subject property prior to their purchase thereof. It
stressed that Julieta failed to examine Kristoff s title and other documents before the sale as
she merely relied on her brother, Felix.23 Accordingly, the CA ruled that Juan has a better right
over the subject property. The fallo of the April 5, 2017 Decision reads:

WHEREFORE, the appeal is GRANTED. The appealed Decision of the RTC

of Quezon City dated October 16, 2015 is
hereby REVERSED and SET ASIDE. Accordingly, plaintiff-appellant Juan
Cruz Tolentino is recognized to have a better right over the subject property.
The Register of Deeds of Quezon City is ORDERED to reinstate TCT No.
RT-90746 (116229) in the name of Juan Cruz Tolentino and to cancel TCT
No. 004-2011013502 in the names of Spouses Julieta and Fernando Carlos,
and the latter to surrender possession of the subject property to Juan Cruz
Tolentino.
SO ORDERED.24

Spouses Carlos then filed a motion for reconsideration but the same was denied by the CA in
its September 27, 2017 Resolution.

Hence, the instant petition.

The Issue

Spouses Carlos anchor their plea for the reversal of the assailed Decision on the following
grounds: 25

The Court of Appeals acted injudiciously, and with grievous abuse of

discretion in the appreciation of facts and in disregard of jurisprudence, when
it granted respondent's appeal, and thereby arbitrarily and despotically
ratiocinated that -

I. Petitioners are not buyers in good faith of the litigated real property, but
who are otherwise devoid of notice let alone knowledge of any flaw or
infirmity in the title of the person selling the property at the time of purchase.

II. Petitioners are not purchasers in good faith, on the basis of the
Memorandum of Agreement dated April 12, 2011 and the Deed of Absolute
Sale dated June 30, 2011.

III. Respondent Juan Cruz Tolentino was the previous registered owner of the
land in dispute, thereby acting on oblivion to the fact that the real property is
essentially conjugal in nature.

IV. In failing to rule and rationalize that at least one-half of the subject real
property should belong to petitioners.

V. The litigated property must be awarded and returned m favour of

respondent Juan Cruz Tolentino in its entirety.

At bottom, the crux of the controversy is who, between Juan and Spouses Carlos, has the
better to right to claim ownership over the subject property.

The Court's Ruling

The present controversy necessitates an inquiry into the facts. While, as a general rule,
factual issues are not within the province of this Court, nonetheless, in light of the conflicting
factual findings of the two courts below, an examination of the facts obtaining in this case is in
order. 26

Juan and Mercedes appear to have been married before the effectivity of the Family Code on
August 3, 1988. There being no indication that they have adopted a different property regime,
the presumption is that their property relations is governed by the regime of conjugal
partnership of gains.27 Article 119 of the Civil Code thus provides:

Article 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.
Likewise, the Family Code contains terms governing conjugal partnership of gains that
supersede the terms of the conjugal partnership of gains under the Civil Code. Article 105 of
the Family Code states:

Article 105. In case the future spouses agree in the marriage settlements that
the regime of conjugal partnership of gains shall govern their property
relations during marriage, the provisions in this Chapter shall be of
supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of

gains already established between spouses before the effectivity of this
Code, without prejudice to vested rights already acquired in accordance with
the Civil Code or other laws, as provided in Article 256.

Since the subject property was acquired on March 17, 196728 during the marriage of Juan and
Mercedes, it formed part of their conjugal partnership. 29 It follows then that Juan and
Mercedes are the absolute owners of their undivided one-half interest, respectively, over the
subject property.

Meanwhile, as in any other property relations between husband and wife, the conjugal
partnership is terminated upon the death of either of the spouses.30 In respondent Juan's
Comment filed before the Court, the Verification which he executed on February 9, 2018
states that he is already a widower. Hence, the Court takes due notice of the fact of
Mercedes' death which inevitably results in the dissolution of the conjugal partnership.

In retrospect, as absolute owners of the subject property then covered by TCT No. RT-90746
(116229), Juan and Mercedes may validly exercise rights of ownership by executing deeds
which transfer title thereto such as, in this case, the Deed of Donation dated February 15,
2011 in favor of their grandson, Kristoff.

With regard to Juan's consent to the afore-stated donation, the RTC, however, found that
such was lacking since his signature therein was forged. Notably, the CA did not overturn
such finding, and in fact, no longer touched upon the issue of forgery. On the other hand, it
must be pointed out that the signature of Mercedes in the Deed of Donation was never
contested and is, therefore, deemed admitted.

In Arrogante v. Deliarte,31 We ruled that a deed of sale of the subject lot therein executed by
the Deliarte siblings in favor of their brother, respondent Beethoven Deliarte (Beethoven), was
void for being a conveyance of future inheritance. Nonetheless, the provisions in the written
agreement and the Deliarte siblings' signature thereon are equivalent to an express waiver of
all their rights and interests. Thus, the Court upheld the quieting of title in favor of respondent
Beethoven after finding that the deed of sale, albeit void, evidenced the consent and
acquiescence of each Deliarte sibling to said transaction.

In the present case, while it has been settled that the congruence of the wills of the spouses
is essential for the valid disposition of conjugal property, 32 it cannot be ignored that Mercedes'
consent to the disposition of her one-half interest in the subject property remained
undisputed. It is apparent that Mercedes, during her lifetime, relinquished all her rights
thereon in favor of her grandson, Kristoff.

Furthermore, Mercedes' knowledge of and acquiescence to the subsequent sale of the

subject property to Spouses Carlos is evidenced by her signature appearing in the
MOA33 dated April 12, 2011 and the Deed of Absolute Sale34 dated September 12, 2011. We
are also mindful of the fact that Spouses Carlos had already paid a valuable consideration in
the amount of Two Million Three Hundred Thousand Pesos (P2,300,000.00) for the subject
property before Juan's adverse claim was annotated on Kristoff s title. The said purchase and
acquisition for valuable consideration deserves a certain degree of legal protection.
Given the foregoing, the Court is disinclined to rule that the Deed of Donation is wholly
void ab initio and that the Spouses Carlos should be totally stripped of their right over the
subject property. In consonance with justice and equity, We deem it proper to uphold the
validity of the Deed of Donation dated February 15, 2011 but only to the extent of Mercedes'
one half share in the subject property. And rightly so, because why invalidate Mercedes'
disposition of her one-half portion of the conjugal property that will eventually be her share
after the termination of the conjugal partnership? It will practically be absurd, especially in the
instant case, since the conjugal partnership had already been terminated upon Mercedes'
death.

Accordingly, the right of Kristoff, as donee, is limited only to the one-half undivided portion
that Mercedes owned.1âwphi1 The Deed of Donation insofar as it covered the remaining one-
half undivided portion of the subject property is null and void, Juan not having consented to
the donation of his undivided half.

Upon the foregoing perspective, Spouses Carlos' right, as vendees in the subsequent sale of
the subject property, is confined only to the one-half undivided portion thereof. The other
undivided half still belongs to Juan. As owners pro indiviso of a portion of the lot in question,
either Spouses Carlos or Juan may ask for the partition of the lot and their property rights
shall be limited to the portion which may be allotted to them in the division upon the
termination of the co-ownership.35 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 vale re potest. 36

Lastly, as a matter of fairness and in line with the principle that no person should unjustly
enrich himself at the expense of another, 37 Kristoff should be liable to reimburse Spouses
Carlos of the amount corresponding to one-half of the purchase price of the subject property.

WHEREFORE, in view of the foregoing, the petition is PARTIALLY GRANTED. The donation

and subsequent sale of the subject property is declared NULL and VOID with respect to the
undivided 1/2 portion owned by Juan Cruz Tolentino, but VALID with respect to the other
undivided 1/2 portion belonging to Mercedes Tolentino. Accordingly, petitioners Spouses
Carlos and respondent Juan Cruz Tolentino are hereby declared as co-owners of the subject
property. The Register of Deeds of Quezon City is ordered to cancel TCT No. 004-
2011013502 and to issue a new transfer certificate of title in the names of Julieta B. Carlos,
married to Fernando P. Carlos, and Juan Cruz Tolentino on a 50-50 undivided interest in the
lot.

We order Kristoff M. Tolentino to pay Spouses Carlos the amount of One Million One
Hundred Fifty Thousand Pesos (P1,150,000.00) corresponding to one-half of the amount paid
by Spouses Carlos for the subject property, with legal interest at the rate of 6% computed
from the finality of this Decision.

SO ORDERED.

G.R. NO. 155409              June 8, 2007

VIRGILIO MAQUILAN, petitioner,
vs.
DITA MAQUILAN, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Decision1 dated August 30, 2002 promulgated by the Court of Appeals (CA) in
CA-G.R. SP No. 69689, which affirmed the Judgment on Compromise Agreement dated
January 2, 2002 of the Regional Trial Court (RTC), Branch 3, Nabunturan, Compostela
Valley, and the RTC Orders dated January 21, 2002 and February 7, 2002 (ORDERS) in Civil
Case No. 656.

The facts of the case, as found by the CA, are as follows:

Herein petitioner and herein private respondent are spouses who once had a blissful married
life and out of which were blessed to have a son. However, their once sugar coated romance
turned bitter when petitioner discovered that private respondent was having illicit sexual affair
with her paramour, which thus, prompted the petitioner to file a case of adultery against
private respondent and the latter’s paramour. Consequently, both the private respondent and
her paramour were convicted of the crime charged and were sentenced to suffer an
imprisonment ranging from one (1) year, eight (8) months, minimum of prision correccional as
minimum penalty, to three (3) years, six (6) months and twenty one (21) days, medium of
prision correccional as maximum penalty.

Thereafter, private respondent, through counsel, filed a Petition for Declaration of Nullity of
Marriage, Dissolution and Liquidation of Conjugal Partnership of Gains and Damages on June
15, 2001 with the Regional Trial Court, Branch 3 of Nabunturan, Compostela Valley, docketed
as Civil Case No. 656, imputing psychological incapacity on the part of the petitioner.

During the pre-trial of the said case, petitioner and private respondent entered into a
COMPROMISE AGREEMENT in the following terms, to wit:

1. In partial settlement of the conjugal partnership of gains, the parties agree to the following:

a. ₱500,000.00 of the money deposited in the bank jointly in the name of the spouses shall be
withdrawn and deposited in favor and in trust of their common child, Neil Maquilan, with the
deposit in the joint account of the parties.

The balance of such deposit, which presently stands at ₱1,318,043.36, shall be withdrawn
and divided equally by the parties;

b. The store that is now being occupied by the plaintiff shall be allotted to her while the
bodega shall be for the defendant. The defendant shall be paid the sum of ₱50,000.00 as his
share in the stocks of the store in full settlement thereof.

The plaintiff shall be allowed to occupy the bodega until the time the owner of the lot on which
it stands shall construct a building thereon;

c. The motorcycles shall be divided between them such that the Kawasaki shall be owned by
the plaintiff while the Honda Dream shall be for the defendant;

d. The passenger jeep shall be for the plaintiff who shall pay the defendant the sum of
₱75,000.00 as his share thereon and in full settlement thereof;

e. The house and lot shall be to the common child.

2. This settlement is only partial, i.e., without prejudice to the litigation of other conjugal
properties that have not been mentioned;

xxxx

The said Compromise Agreement was given judicial imprimatur by the respondent judge in
the assailed Judgment On Compromise Agreement, which was erroneously dated January
2, 2002.2
However, petitioner filed an Omnibus Motion dated January 15, 2002, praying for the
repudiation of the Compromise Agreement and the reconsideration of the Judgment on
Compromise Agreement by the respondent judge on the grounds that his previous lawyer did
not intelligently and judiciously apprise him of the consequential effects of the Compromise
Agreement.

The respondent Judge in the assailed Order dated January 21, 2002, denied the
aforementioned Omnibus Motion.

Displeased, petitioner filed a Motion for Reconsideration of the aforesaid Order, but the same
was denied in the assailed Order dated February 7, 2002.3 (Emphasis supplied)

The petitioner filed a Petition for Certiorari and Prohibition with the CA under Rule 65 of the
Rules of Court claiming that the RTC committed grave error and abuse of discretion
amounting to lack or excess of jurisdiction (1) in upholding the validity of the Compromise
Agreement dated January 11, 2002; (2) when it held in its Order dated February 7, 2002 that
the Compromise Agreement was made within the cooling-off period; (3) when it denied
petitioner’s Motion to Repudiate Compromise Agreement and to Reconsider Its Judgment on
Compromise Agreement; and (4) when it conducted the proceedings without the appearance
and participation of the Office of the Solicitor General and/or the Provincial Prosecutor.4

On August 30, 2002, the CA dismissed the Petition for lack of merit. The CA held that the
conviction of the respondent of the crime of adultery does not ipso facto disqualify her from
sharing in the conjugal property, especially considering that she had only been sentenced
with the penalty of prision correccional, a penalty that does not carry the accessory penalty of
civil interdiction which deprives the person of the rights to manage her property and to
dispose of such property inter vivos; that Articles 43 and 63 of the Family Code, which pertain
to the effects of a nullified marriage and the effects of legal separation, respectively, do not
apply, considering, too, that the Petition for the Declaration of the Nullity of Marriage filed by
the respondent invoking Article 36 of the Family Code has yet to be decided, and, hence, it is
premature to apply Articles 43 and 63 of the Family Code; that, although adultery is a ground
for legal separation, nonetheless, Article 63 finds no application in the instant case since no
petition to that effect was filed by the petitioner against the respondent; that the spouses
voluntarily separated their property through their Compromise Agreement with court approval
under Article 134 of the Family Code; that the Compromise Agreement, which embodies the
voluntary separation of property, is valid and binding in all respects because it had been
voluntarily entered into by the parties; that, furthermore, even if it were true that the petitioner
was not duly informed by his previous counsel about the legal effects of the Compromise
Agreement, this point is untenable since the mistake or negligence of the lawyer binds his
client, unless such mistake or negligence amounts to gross negligence or deprivation of due
process on the part of his client; that these exceptions are not present in the instant case; that
the Compromise Agreement was plainly worded and written in simple language, which a
person of ordinary intelligence can discern the consequences thereof, hence, petitioner’s
claim that his consent was vitiated is highly incredible; that the Compromise Agreement was
made during the existence of the marriage of the parties since it was submitted during the
pendency of the petition for declaration of nullity of marriage; that the application of Article
2035 of the Civil Code is misplaced; that the cooling-off period under Article 58 of the Family
Code has no bearing on the validity of the Compromise Agreement; that the Compromise
Agreement is not contrary to law, morals, good customs, public order, and public policy; that
this agreement may not be later disowned simply because of a change of mind; that the
presence of the Solicitor General or his deputy is not indispensable to the execution and
validity of the Compromise Agreement, since the purpose of his presence is to curtail any
collusion between the parties and to see to it that evidence is not fabricated, and, with this in
mind, nothing in the Compromise Agreement touches on the very merits of the case of
declaration of nullity of marriage for the court to be wary of any possible collusion; and, finally,
that the Compromise Agreement is merely an agreement between the parties to separate
their conjugal properties partially without prejudice to the outcome of the pending case of
declaration of nullity of marriage.
Hence, herein Petition, purely on questions of law, raising the following issues:

I.

WHETHER OF NOT A SPOUSE CONVICTED OF EITHER CONCUBINAGE OR

ADULTERY, CAN STILL SHARE IN THE CONJUGAL PARTNERSHIP;

II

WHETHER OR NOT A COMPROMISE AGREEMENT ENTERED INTO BY SPOUSES, ONE

OF WHOM WAS CONVICTED OF ADULTERY, GIVING THE CONVICTED SPOUSE A
SHARE IN THE CONJUGAL PROPERTY, VALID AND LEGAL;

III

WHETHER OR NOT A JUDGMENT FOR ANNULMENT AND LEGAL SEPARATION IS A

PRE-REQUISITE BEFORE A SPOUSE CONVICTED OF EITHER CONCUBINAGE OR
ADULTERY, BE DISQUALIFIED AND PROHIBITED FROM SHARING IN THE CONJUGAL
PROPERTY;

IV

WHETHER OR NOT THE DISQUALIFICATION OF A CONVICTED SPOUSE OF

ADULTERY FROM SHARING IN A CONJUGAL PROPERTY, CONSTITUTES CIVIL
INTERDICTION.5

The petitioner argues that the Compromise Agreement should not have been given judicial
imprimatur since it is against law and public policy; that the proceedings where it was
approved is null and void, there being no appearance and participation of the Solicitor
General or the Provincial Prosecutor; that it was timely repudiated; and that the respondent,
having been convicted of adultery, is therefore disqualified from sharing in the conjugal
property.

The Petition must fail.

The essential question is whether the partial voluntary separation of property made by the
spouses pending the petition for declaration of nullity of marriage is valid.

First. The petitioner contends that the Compromise Agreement is void because it circumvents
the law that prohibits the guilty spouse, who was convicted of either adultery or concubinage,
from sharing in the conjugal property. Since the respondent was convicted of adultery, the
petitioner argues that her share should be forfeited in favor of the common child under
Articles 43(2)6 and 637 of the Family Code.

To the petitioner, it is the clear intention of the law to disqualify the spouse convicted of
adultery from sharing in the conjugal property; and because the Compromise Agreement is
void, it never became final and executory.

Moreover, the petitioner cites Article 20358 of the Civil Code and argues that since adultery is
a ground for legal separation, the Compromise Agreement is therefore void.

These arguments are specious. The foregoing provisions of the law are inapplicable to the
instant case.

Article 43 of the Family Code refers to Article 42, to wit:

Article 42. The subsequent marriage referred to in the preceding Article 9 shall be
automatically terminated by the recording of the affidavit of reappearance of the absent
spouse, unless there is a judgment annulling the previous marriage or declaring it void ab
initio.

A sworn statement of the fact and circumstances of reappearance shall be recorded in the
civil registry of the residence of the parties to the subsequent marriage at the instance of any
interested person, with due notice to the spouses of the subsequent marriage and without
prejudice to the fact of reappearance being judicially determined in case such fact is disputed.

where a subsequent marriage is terminated because of the reappearance of an absent

spouse; while Article 63 applies to the effects of a decree of legal separation. The present
case involves a proceeding where the nullity of the marriage is sought to be declared under
the ground of psychological capacity.

Article 2035 of the Civil Code is also clearly inapplicable. The Compromise Agreement
partially divided the properties of the conjugal partnership of gains between the parties and
does not deal with the validity of a marriage or legal separation. It is not among those that are
expressly prohibited by Article 2035.

Moreover, the contention that the Compromise Agreement is tantamount to a circumvention

of the law prohibiting the guilty spouse from sharing in the conjugal properties is misplaced.
Existing law and jurisprudence do not impose such disqualification.

Under Article 143 of the Family Code, separation of property may be effected voluntarily or for
sufficient cause, subject to judicial approval. The questioned Compromise Agreement which
was judicially approved is exactly such a separation of property allowed under the law. This
conclusion holds true even if the proceedings for the declaration of nullity of marriage was still
pending. However, the Court must stress that this voluntary separation of property is subject
to the rights of all creditors of the conjugal partnership of gains and other persons with
pecuniary interest pursuant to Article 136 of the Family Code.

Second. Petitioner’s claim that since the proceedings before the RTC were void in the
absence of the participation of the provincial prosecutor or solicitor, the voluntary separation
made during the pendency of the case is also void. The proceedings pertaining to the
Compromise Agreement involved the conjugal properties of the spouses. The settlement had
no relation to the questions surrounding the validity of their marriage. Nor did the settlement
amount to a collusion between the parties.

Article 48 of the Family Code states:

Art. 48. In all cases of annulment or declaration of absolute nullity of marriage, the Court shall
order the prosecuting attorney or fiscal assigned to it to appear on behalf of the State to take
steps to prevent collusion between the parties and to take care that the evidence is not
fabricated or suppressed. (Emphasis supplied)

Section 3(e) of Rule 9 of the 1997 Rules of Court provides:

SEC. 3. Default; declaration of.- x x x x

xxxx

(e) Where no defaults allowed.— If the defending party in action for annulment or declaration
of nullity 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 if
there is no collusion, to intervene for the State in order to see to it that the evidence submitted
is not fabricated. (Emphasis supplied
Truly, the purpose of the active participation of the Public Prosecutor or the Solicitor General
is to ensure that the interest of the State is represented and protected in proceedings for
annulment and declaration of nullity of marriages by preventing collusion between the parties,
or the fabrication or suppression of evidence.10 While the appearances of the Solicitor
General and/or the Public Prosecutor are mandatory, the failure of the RTC to require their
appearance does not per se nullify the Compromise Agreement. This Court fully concurs with
the findings of the CA:

x x x. It bears emphasizing that the intendment of the law in requiring the presence of the
Solicitor General and/or State prosecutor in all proceedings of legal separation and annulment
or declaration of nullity of marriage is to curtail or prevent any possibility of collusion between
the parties and to see to it that their evidence respecting the case is not fabricated. In the
instant case, there is no exigency for the presence of the Solicitor General and/or the State
prosecutor because as already stated, nothing in the subject compromise agreement touched
into the very merits of the case of declaration of nullity of marriage for the court to be wary of
any possible collusion between the parties. At the risk of being repetiti[ve], the compromise
agreement pertains merely to an agreement between the petitioner and the private
respondent to separate their conjugal properties partially without prejudice to the outcome of
the pending case of declaration of nullity of marriage.11

Third. The conviction of adultery does not carry the accessory of civil interdiction. Article 34 of
the Revised Penal Code provides for the consequences of civil interdiction:

Art. 34. Civil Interdiction. – Civil interdiction shall deprive the offender during the time of his
sentence of the rights of parental authority, or guardianship, either as to the person or
property of any ward, of marital authority, of the right to manage his property and of the right
to dispose of such property by any act or any conveyance inter vivos.

Under Article 333 of the same Code, the penalty for adultery is prision correccional in its
medium and maximum periods. Article 333 should be read with Article 43 of the same Code.
The latter provides:

Art. 43. Prision correccional – Its accessory penalties. – The penalty of prision correccional
shall carry with it that of suspension from public office, from the right to follow a profession or
calling, and that of perpetual special disqualification from the right of suffrage, if the duration
of said imprisonment shall exceed eighteen months. The offender shall suffer the
disqualification provided in this article although pardoned as to the principal penalty, unless
the same shall have been expressly remitted in the pardon.

It is clear, therefore, and as correctly held by the CA, that the crime of adultery does not carry
the accessory penalty of civil interdiction which deprives the person of the rights to manage
her property and to dispose of such property inter vivos.

Fourth. Neither could it be said that the petitioner was not intelligently and judiciously
informed of the consequential effects of the compromise agreement, and that, on this basis,
he may repudiate the Compromise Agreement. The argument of the petitioner that he was not
duly informed by his previous counsel about the legal effects of the voluntary settlement is not
convincing. Mistake or vitiation of consent, as now claimed by the petitioner as his basis for
repudiating the settlement, could hardly be said to be evident. In Salonga v. Court of
Appeals,12 this Court held:

[I]t is well-settled that the negligence of counsel binds the client. This is based on the rule that
any act performed by a lawyer within the scope of his general or implied authority is regarded
as an act of his client. Consequently, the mistake or negligence of petitioners' counsel may
result in the rendition of an unfavorable judgment against them.
Exceptions to the foregoing have been recognized by the Court in cases where reckless or
gross negligence of counsel deprives the client of due process of law, or when its application
"results in the outright deprivation of one's property through a technicality." x x x x13

None of these exceptions has been sufficiently shown in the present case.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED
with MODIFICATION that the subject Compromise Agreement is VALID without prejudice to
the rights of all creditors and other persons with pecuniary interest in the properties of the
conjugal partnership of gains.

SO ORDERED.

G.R. No. 188289               August 20, 2014

DAVID A. NOVERAS, Petitioner,
vs.
LETICIA T. NOVERAS, Respondent.

DECISION

PEREZ, J.:

Before the Court is a petition for review assailing the 9 May 2008 Decision1 of the Court of
Appeals in CA-G.R .. CV No. 88686, which affirmed in part the 8 December 2006 Decision 2 of
the Regional Trial Court (RTC) of Baler, Aurora, Branch 96.

The factual antecedents are as follow:

David A. Noveras (David) and Leticia T. Noveras (Leticia) were married on 3 December 1988
in Quezon City, Philippines. They resided in California, United States of America (USA) where
they eventually acquired American citizenship. They then begot two children, namely: Jerome
T.

Noveras, who was born on 4 November 1990 and JenaT. Noveras, born on 2 May 1993.
David was engaged in courier service business while Leticia worked as a nurse in San
Francisco, California.

During the marriage, they acquired the following properties in the Philippines and in the USA:

PHILIPPINES
PROPERTY FAIR MARKET VALUE
House and Lot with an area of 150 sq. m.
located at 1085 Norma Street, Sampaloc, ₱1,693,125.00
Manila (Sampaloc property)
Agricultural land with an area of 20,742 sq. m.
₱400,000.00
located at Laboy, Dipaculao, Aurora
A parcel of land with an area of 2.5 hectares
₱490,000.00
located at Maria Aurora, Aurora
A parcel of land with an area of 175 sq.m. 3
₱175,000.00
located at Sabang Baler, Aurora
3-has. coconut plantation in San Joaquin Maria
₱750,000.00
Aurora, Aurora
 USA
PROPERTY FAIR MARKET VALUE
House and Lot at 1155 Hanover Street, Daly
City, California
$550,000.00
(unpaid debt of $285,000.00)
Furniture and furnishings $3,000
Jewelries (ring and watch) $9,000
2000 Nissan Frontier 4x4 pickup truck $13,770.00
Bank of America Checking Account $8,000
Bank of America Cash Deposit
Life Insurance (Cash Value) $100,000.00
4
Retirement, pension, profit-sharing, annuities $56,228.00

The Sampaloc property used to beowned by David’s parents. The parties herein secured a
loan from a bank and mortgaged the property. When said property was about to be
foreclosed, the couple paid a total of ₱1.5 Million for the redemption of the same.

Due to business reverses, David left the USA and returned to the Philippines in 2001. In
December 2002,Leticia executed a Special Power of Attorney (SPA) authorizing David to sell
the Sampaloc property for ₱2.2 Million. According to Leticia, sometime in September 2003,
David abandoned his family and lived with Estrellita Martinez in Aurora province. Leticia
claimed that David agreed toand executed a Joint Affidavit with Leticia in the presence of
David’s father, Atty. Isaias Noveras, on 3 December 2003 stating that: 1) the ₱1.1Million
proceeds from the sale of the Sampaloc property shall be paid to and collected by Leticia; 2)
that David shall return and pay to Leticia ₱750,000.00, which is equivalent to half of the
amount of the redemption price of the Sampaloc property; and 3) that David shall renounce
and forfeit all his rights and interest in the conjugal and real properties situated in the
Philippines.5 David was able to collect ₱1,790,000.00 from the sale of the Sampaloc property,
leaving an unpaid balance of ₱410,000.00.

Upon learning that David had an extra-marital affair, Leticia filed a petition for divorce with the
Superior Court of California, County of San Mateo, USA. The California court granted the
divorce on 24 June 2005 and judgment was duly entered on 29 June 2005. 6 The California
court granted to Leticia the custody of her two children, as well as all the couple’s properties
in the USA.7

On 8 August 2005, Leticia filed a petition for Judicial Separation of Conjugal Property before
the RTC of Baler, Aurora. She relied on the 3 December 2003 Joint Affidavit and David’s
failure to comply with his obligation under the same. She prayed for: 1) the power to
administer all conjugal properties in the Philippines; 2) David and his partner to cease and
desist from selling the subject conjugal properties; 3) the declaration that all conjugal
properties be forfeited in favor of her children; 4) David to remit half of the purchase price as
share of Leticia from the sale of the Sampaloc property; and 5) the payment of₱50,000.00
and ₱100,000.00 litigation expenses.8

In his Answer, David stated that a judgment for the dissolution of their marriage was entered
on 29 June 2005 by the Superior Court of California, County of San Mateo. He demanded
that the conjugal partnership properties, which also include the USA properties, be liquidated
and that all expenses of liquidation, including attorney’s fees of both parties be charged
against the conjugal partnership.9
The RTC of Baler, Aurora simplified the issues as follow:

1. Whether or not respondent David A. Noveras committed acts of abandonment and marital
infidelity which can result intothe forfeiture of the parties’ properties in favor of the petitioner
and their two (2) children.

2. Whether or not the Court has jurisdiction over the properties in California, U.S.A. and the
same can be included in the judicial separation prayed for.

3. Whether or not the "Joint Affidavit" x x x executed by petitioner Leticia T. Noveras and
respondent David A. Noveras will amount to a waiver or forfeiture of the latter’s property rights
over their conjugal properties.

4. Whether or not Leticia T. Noveras isentitled to reimbursement of onehalf of the ₱2.2

[M]illion sales proceeds of their property in Sampaloc, Manila and one-half of the ₱1.5
[M]illion used to redeem the property of Atty. Isaias Noveras, including interests and charges.

5. How the absolute community properties should be distributed.

6. Whether or not the attorney’s feesand litigation expenses of the parties were chargeable
against their conjugal properties.

Corollary to the aboveis the issue of:

Whether or not the two common children of the parties are entitled to support and
presumptive legitimes.10

On 8 December 2006, the RTC rendered judgment as follows:

1. The absolute community of property of the parties is hereby declared DISSOLVED;

2. The net assets of the absolute community of property ofthe parties in the Philippines are
hereby ordered to be awarded to respondent David A. Noveras only, with the properties in the
United States of America remaining in the sole ownership of petitioner Leticia Noveras a.k.a.
Leticia Tacbiana pursuant to the divorce decree issuedby the Superior Court of California,
County of San Mateo, United States of America, dissolving the marriage of the parties as of
June 24, 2005. The titles presently covering said properties shall be cancelled and new titles
be issued in the name of the party to whom said properties are awarded;

3. One-half of the properties awarded to respondent David A. Noveras in the preceding

paragraph are hereby given to Jerome and Jena, his two minor children with petitioner
LeticiaNoveras a.k.a. Leticia Tacbiana as their presumptive legitimes and said legitimes must
be annotated on the titles covering the said properties.Their share in the income from these
properties shall be remitted to them annually by the respondent within the first half of January
of each year, starting January 2008;

4. One-half of the properties in the United States of America awarded to petitioner Leticia
Noveras a.k.a. Leticia Tacbiana in paragraph 2 are hereby given to Jerome and Jena, her two
minor children with respondent David A. Noveras as their presumptive legitimes and said
legitimes must be annotated on the titles/documents covering the said properties. Their share
in the income from these properties, if any, shall be remitted to them annually by the petitioner
within the first half of January of each year, starting January 2008;

5. For the support of their two (2) minor children, Jerome and Jena, respondent David A.
Noveras shall give them US$100.00 as monthly allowance in addition to their income from
their presumptive legitimes, while petitioner Leticia Tacbiana shall take care of their food,
clothing, education and other needs while they are in her custody in the USA. The monthly
allowance due from the respondent shall be increased in the future as the needs of the
children require and his financial capacity can afford;

6. Of the unpaid amount of ₱410,000.00 on the purchase price of the Sampaloc property, the
Paringit Spouses are hereby ordered to pay ₱5,000.00 to respondent David A. Noveras and
₱405,000.00 to the two children. The share of the respondent may be paid to him directly but
the share of the two children shall be deposited with a local bank in Baler, Aurora, in a joint
account tobe taken out in their names, withdrawal from which shall only be made by them or
by their representative duly authorized with a Special Power of Attorney. Such
payment/deposit shall be made withinthe period of thirty (30) days after receipt of a copy of
this Decision, with the passbook of the joint account to be submitted to the custody of the
Clerk of Court of this Court within the same period. Said passbook can be withdrawn from the
Clerk of Court only by the children or their attorney-in-fact; and

7. The litigation expenses and attorney’s fees incurred by the parties shall be shouldered by
them individually.11

The trial court recognized that since the parties are US citizens, the laws that cover their legal
and personalstatus are those of the USA. With respect to their marriage, the parties are
divorced by virtue of the decree of dissolution of their marriage issued by the Superior Court
of California, County of San Mateo on 24June 2005. Under their law, the parties’ marriage
had already been dissolved. Thus, the trial court considered the petition filed by Leticia as one
for liquidation of the absolute community of property regime with the determination of the
legitimes, support and custody of the children, instead of an action for judicial separation of
conjugal property.

With respect to their property relations, the trial court first classified their property regime as
absolute community of property because they did not execute any marriage settlement before
the solemnization of their marriage pursuant to Article 75 of the Family Code. Then, the trial
court ruled that in accordance with the doctrine of processual presumption, Philippine law
should apply because the court cannot take judicial notice of the US law since the parties did
not submit any proof of their national law. The trial court held that as the instant petition does
not fall under the provisions of the law for the grant of judicial separation of properties, the
absolute community properties cannot beforfeited in favor of Leticia and her children.
Moreover, the trial court observed that Leticia failed to prove abandonment and infidelity with
preponderant evidence.

The trial court however ruled that Leticia is not entitled to the reimbursements she is praying
for considering that she already acquired all of the properties in the USA. Relying still on the
principle of equity, the Court also adjudicated the Philippine properties to David, subject to the
payment of the children’s presumptive legitimes. The trial court held that under Article 89 of
the Family Code, the waiver or renunciation made by David of his property rights in the Joint
Affidavit is void.

On appeal, the Court of Appeals modified the trial court’s Decision by directing the equal
division of the Philippine properties between the spouses. Moreover with respect to the
common children’s presumptive legitime, the appellate court ordered both spouses to each
pay their children the amount of ₱520,000.00, thus:

WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4 and 6 of the

assailedDecision dated December 8, 2006 of Branch 96, RTC of Baler, Aurora Province, in
Civil Case No. 828 are hereby MODIFIED to read as follows:

2. The net assets of the absolute community of property of the parties in the Philippines are
hereby divided equally between petitioner Leticia Noveras a.k.a. Leticia Tacbiana (sic) and
respondent David A. Noveras;

xxx
4. One-half of the properties awarded to petitioner Leticia Tacbiana (sic) in paragraph 2 shall
pertain to her minor children, Jerome and Jena, as their presumptive legitimes which shall be
annotated on the titles/documents covering the said properties. Their share in the income
therefrom, if any, shall be remitted to them by petitioner annually within the first half of
January, starting 2008;

xxx

6. Respondent David A. Noveras and petitioner Leticia Tacbiana (sic) are each ordered to pay
the amount of₱520,000.00 to their two children, Jerome and Jena, as their presumptive
legitimes from the sale of the Sampaloc property inclusive of the receivables therefrom, which
shall be deposited to a local bank of Baler, Aurora, under a joint account in the latter’s names.
The payment/deposit shall be made within a period of thirty (30) days from receipt ofa copy of
this Decision and the corresponding passbook entrusted to the custody ofthe Clerk of Court a
quowithin the same period, withdrawable only by the children or their attorney-in-fact.

A number 8 is hereby added, which shall read as follows:

8. Respondent David A. Noveras is hereby ordered to pay petitioner Leticia Tacbiana (sic) the
amount of ₱1,040,000.00 representing her share in the proceeds from the sale of the
Sampaloc property.

The last paragraph shall read as follows:

Send a copy of this Decision to the local civil registry of Baler, Aurora; the local civil registry of
Quezon City; the Civil RegistrarGeneral, National Statistics Office, Vibal Building, Times
Street corner EDSA, Quezon City; the Office of the Registry of Deeds for the Province of
Aurora; and to the children, Jerome Noveras and Jena Noveras.

The rest of the Decision is AFFIRMED.12

In the present petition, David insists that the Court of Appeals should have recognized the
California Judgment which awarded the Philippine properties to him because said judgment
was part of the pleading presented and offered in evidence before the trial court. David
argues that allowing Leticia to share in the Philippine properties is tantamount to unjust
enrichment in favor of Leticia considering that the latter was already granted all US properties
by the California court.

In summary and review, the basic facts are: David and Leticia are US citizens who own
properties in the USA and in the Philippines. Leticia obtained a decree of divorce from the
Superior Court of California in June 2005 wherein the court awarded all the properties in the
USA to Leticia. With respect to their properties in the Philippines, Leticiafiled a petition for
judicial separation ofconjugal properties.

At the outset, the trial court erred in recognizing the divorce decree which severed the bond of
marriage between the parties. In Corpuz v. Sto. Tomas,13 we stated that:

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that
our courts do not take judicial notice of foreign judgments and laws. Justice Herrera explained
that, as a rule, "no sovereign is bound to give effect within its dominion to a judgment
rendered by a tribunal of another country." This means that the foreign judgment and its
authenticity must beproven as facts under our rules on evidence, together with the alien’s
applicable national law to show the effect of the judgment on the alien himself or herself. The
recognition may be made in an action instituted specifically for the purpose or in another
action where a party invokes the foreign decree as an integral aspect of his claim or
defense.14
The requirements of presenting the foreign divorce decree and the national law of the
foreigner must comply with our Rules of Evidence. Specifically, for Philippine courts to
recognize a foreign judgment relating to the status of a marriage, a copy of the foreign
judgment may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and
25, in relation to Rule 39, Section 48(b) of the Rules of Court.15

Under Section 24 of Rule 132, the record of public documents of a sovereign authority or
tribunal may be proved by: (1) an official publication thereof or (2) a copy attested by the
officer having the legal custody thereof. Such official publication or copy must
beaccompanied, if the record is not kept in the Philippines, with a certificate that the attesting
officer has the legal custody thereof. The certificate may be issued by any of the authorized
Philippine embassy or consular officials stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office. The attestation must state, in substance, that
the copy is a correct copy of the original, or a specific part thereof, asthe case may be, and
must be under the official seal of the attesting officer.

Section 25 of the same Rule states that whenever a copy of a document or record is attested
for the purpose of evidence, the attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may be. The attestation must be
under the official seal of the attesting officer, if there be any, or if hebe the clerk of a court
having a seal, under the seal of such court.

Based on the records, only the divorce decree was presented in evidence. The required
certificates to prove its authenticity, as well as the pertinent California law on divorce were not
presented.

It may be noted that in Bayot v. Court of Appeals,16 we relaxed the requirement on

certification where we held that "[petitioner therein] was clearly an American citizenwhen she
secured the divorce and that divorce is recognized and allowed in any of the States of the
Union, the presentation of a copy of foreign divorce decree duly authenticatedby the foreign
court issuing said decree is, as here, sufficient." In this case however, it appears that there is
no seal from the office where the divorce decree was obtained.

Even if we apply the doctrine of processual presumption17 as the lower courts did with respect
to the property regime of the parties, the recognition of divorce is entirely a different matter
because, to begin with, divorce is not recognized between Filipino citizens in the Philippines.
Absent a valid recognition of the divorce decree, it follows that the parties are still legally
married in the Philippines. The trial court thus erred in proceeding directly to liquidation.

As a general rule, any modification in the marriage settlements must be made before the
celebration of marriage. An exception to this rule is allowed provided that the modification
isjudicially approved and refers only to the instances provided in Articles 66,67, 128, 135 and
136 of the Family Code.18

Leticia anchored the filing of the instant petition for judicial separation of property on
paragraphs 4 and 6 of Article 135 of the Family Code, to wit:

Art. 135. Any of the following shall be considered sufficient cause for judicial separation of
property:

(1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil
interdiction;

(2) That the spouse of the petitioner has been judicially declared an absentee;

(3) That loss of parental authority ofthe spouse of petitioner has been decreed by the court;
(4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or
her obligations to the family as provided for in Article 101;

(5) That the spouse granted the power of administration in the marriage settlements has
abused that power; and

(6) That at the time of the petition, the spouses have been separated in fact for at least one
year and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2), and (3), the presentation of the final judgment
against the guiltyor absent spouse shall be enough basis for the grant of the decree ofjudicial
separation of property. (Emphasis supplied).

The trial court had categorically ruled that there was no abandonment in this case to
necessitate judicial separation of properties under paragraph 4 of Article 135 of the Family
Code. The trial court ratiocinated:

Moreover, abandonment, under Article 101 of the Family Code quoted above, must be for a
valid cause and the spouse is deemed to have abandoned the other when he/she has left the
conjugal dwelling without intention of returning. The intention of not returning is prima facie
presumed if the allegedly [sic] abandoning spouse failed to give any information as to his or
her whereabouts within the period of three months from such abandonment.

In the instant case, the petitioner knows that the respondent has returned to and stayed at his
hometown in Maria Aurora, Philippines, as she even went several times to visit him there after
the alleged abandonment. Also, the respondent has been going back to the USA to visit her
and their children until the relations between them worsened. The last visit of said respondent
was in October 2004 when he and the petitioner discussed the filing by the latter of a petition
for dissolution of marriage with the California court. Such turn for the worse of their
relationship and the filing of the saidpetition can also be considered as valid causes for the
respondent to stay in the Philippines.19

Separation in fact for one year as a ground to grant a judicial separation of property was not
tackled in the trial court’s decision because, the trial court erroneously treated the petition as
liquidation of the absolute community of properties.

The records of this case are replete with evidence that Leticia and David had indeed
separated for more than a year and that reconciliation is highly improbable. First, while actual
abandonment had not been proven, it is undisputed that the spouses had been living
separately since 2003 when David decided to go back to the Philippines to set up his own
business. Second, Leticia heard from her friends that David has been cohabiting with
Estrellita Martinez, who represented herself as Estrellita Noveras. Editha Apolonio, who
worked in the hospital where David was once confined, testified that she saw the name of
Estrellita listed as the wife of David in the Consent for Operation form. 20 Third and more
significantly, they had filed for divorce and it was granted by the California court in June 2005.

Having established that Leticia and David had actually separated for at least one year, the
petition for judicial separation of absolute community of property should be granted.

The grant of the judicial separation of the absolute community property automatically
dissolves the absolute community regime, as stated in the 4th paragraph of Article 99 ofthe
Family Code, thus:

Art. 99. The absolute community terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled or declared void; or

(4) In case of judicial separation of property during the marriage under Articles 134 to 138.
(Emphasis supplied).

Under Article 102 of the same Code, liquidation follows the dissolution of the absolute
community regime and the following procedure should apply:

Art. 102. Upon dissolution of the absolute community regime, the following procedure shall
apply:

(1) An inventory shall be prepared, listing separately all the properties of the absolute
community and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its assets. In
case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid
balance with their separate properties in accordance with the provisions of the second
paragraph of Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered
to each of them.

(4) The net remainder of the properties of the absolute community shall constitute its net
assets, 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 of such share provided in this Code. For purposes of computing the net
profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2),the said
profits shall be the increase in value between the market value of the community property at
the time of the celebration of the marriage and the market value at the time of its dissolution.

(5) The presumptive legitimes of the common children shall be delivered upon partition, in
accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the
conjugal dwelling and the lot on which it is situated shall be adjudicated tothe spouse with
whom the majority of the common children choose to remain. Children below the age of
seven years are deemed to have chosen the mother, unless the court has decided otherwise.
In case there is no such majority, the court shall decide, taking into consideration the best
interests of said children. At the risk of being repetitious, we will not remand the case to the
trial court. Instead, we shall adopt the modifications made by the Court of Appeals on the trial
court’s Decision with respect to liquidation.

We agree with the appellate court that the Philippine courts did not acquire jurisdiction over
the California properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly
states that real property as well as personal property is subject to the law of the country
where it is situated. Thus, liquidation shall only be limited to the Philippine properties.

We affirm the modification madeby the Court of Appeals with respect to the share of the
spouses in the absolutecommunity properties in the Philippines, as well as the payment of
their children’s presumptive legitimes, which the appellate court explained in this wise:

Leticia and David shall likewise have an equal share in the proceeds of the Sampaloc
property.1âwphi1 While both claimed to have contributed to the redemption of the Noveras
property, absent a clear showing where their contributions came from, the same is presumed
to have come from the community property. Thus, Leticia is not entitled to reimbursement of
half of the redemption money.

David's allegation that he used part of the proceeds from the sale of the Sampaloc property
for the benefit of the absolute community cannot be given full credence. Only the amount of
₱120,000.00 incurred in going to and from the U.S.A. may be charged thereto. Election
expenses in the amount of ₱300,000.00 when he ran as municipal councilor cannot be
allowed in the absence of receipts or at least the Statement of Contributions and
Expenditures required under Section 14 of Republic Act No. 7166 duly received by the
Commission on Elections. Likewise, expenses incurred to settle the criminal case of his
personal driver is not deductible as the same had not benefited the family. In sum, Leticia and
David shall share equally in the proceeds of the sale net of the amount of ₱120,000.00 or in
the respective amounts of ₱1,040,000.00.

xxxx

Under the first paragraph of Article 888 of the Civil Code, "(t)he legitime of legitimate children
and descendants consists of one-half or the hereditary estate of the father and of the mother."
The children arc therefore entitled to half of the share of each spouse in the net assets of the
absolute community, which shall be annotated on the titles/documents covering the same, as
well as to their respective shares in the net proceeds from the sale of the Sampaloc property
including the receivables from Sps. Paringit in the amount of ₱410,000.00. Consequently,
David and Leticia should each pay them the amount of ₱520,000.00 as their presumptive
legitimes therefrom.21

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA
G.R. CV No. 88686 is AFFIRMED.

SO ORDERED.