Assignment No. 8 - Civrev Perfam

Assignment No.
8 – CivRev PERFAM
[69]
[No. 9374. February 16, 1915.]

FRANCISCO DEL VAL ET AL., plaintiffs and appellants, vs. ANDRES DEL, VAL,
defendant and appellee.
1. 1.PLEADING; DEFECTS IN COMPLAINT; CURE.—Even though a

complaint is defective to the extent of failing to allege facts sufficient to
constitute a cause of action, if, on the trial of the cause, evidence is offered
which establishes the cause of action which it was intended the complaint
should allege, and such evidence is received without objection, the defect is
thereby cured and cannot be made the ground of a subsequent objection.
1. 2.ID.; ID.; ID.—An objection, made after trial, that the complaint in an

action in partition was defective in that it failed to describe the lands sought
to be partitioned, is unavailing, where it appears that evidence was
introduced on the trial, without objection, clearly describing the real estate
sought to be partitioned.
1. 3.PARTITION OF PERSONAL PROPERTY; JURISDICTION OF

COURT OF FIRST INSTANCE.—The Courts of First Instance of the
Philippine Islands have jurisdiction to divide personal property between the
common owners thereof. If actual partition thereof cannot be made, it may
be sold under the direction of the court and the proceeds divided among the
owners after the necessary expenses have been deducted.
1. 4.PARTITION OF REAL PROPERTY; JURISDICTION OF COURT OF

FIRST INSTANCE.—The court has no authority to partition real property
among the common owners thereof without a proceeding in proper form
begun by one or more of such owners.
1. 5.PARTITION; ORDER DISCHARGING ADMINISTRATOR NO BAR

TO SUBSEQUENT ACTION.—The heirs of real and personal property
have the right to ask the probate court to turn such property over to them
without division; and where such request is unanimous, it is the duty of the
court to comply with it and
1. there is nothing in section 753 of the Code of Civil Procedure which

prohibits it. In case the property is turned over to the heirs by the probate
court in bulk and without division, an order finally settling the estate and
discharging the administrator is not a bar to a subsequent action for a
division of either the real or personal property among the heirs as owners
thereof.
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Assignment No. 8 – CivRev PERFAM
1. 6.JUDGMENT; PLEA OF "RES JUDICATA."—The defense of res
judicata, to be available, must be pleaded" or the facts demonstrating its
existence must be proved on the trial without objection.
1. 7.LIFE INSURANCE; PROCEEDS; HEIR AS BENEFICIARY.—Where a

life-insurance policy is made payable to one of the heirs of the person
whose life is insured, the proceeds of the policy on the death of the insured
belong exclusively to the beneficiary and not to the estate of the person
whose life was insured; and such proceeds are his individual property and
not the property of the heirs of the person whose life was insured.
1. 8.ID.; ID.; ID.; ARTICLE 1035, CIVIL CODE.—Article 1035 of the Civil

Code, providing that "an heir by force of law surviving with others of the
same character to a succession must bring into the hereditary estate the
property or securities he may have received from the deceased during the
life of the same, by way of dowry, gift, or for any good consideration, in
order to compute it in fixing the legal portions and in the account of the
division," is not applicable to the proceeds of an insurance policy made
payable to one of the heirs of the insured by name, nor can the proceeds of
such a policy be considered a gift under article 819 of the Civil Code.
1. 9.ID.; ID.; ID.; CODE OF COMMERCE.—The contract of life insurance is

?. special contract and the destination of the proceeds thereof is determined
by special laws which deal exclusively with that subject. The Civil Code
has no provisions which relate directly and specifically to life-insurance
contracts or to the destination of life-insurance proceeds. That subject is
regulated exclusively by the Code of Commerce, which provides for the
terms of the contract, the relations of the parties and the destination of the
proceeds of the policy.
APPEAL from a judgment of the Court of First Instance of Manila. Lobingier, J.

The facts are stated in the opinion of the court.
Ledesma, Lim & Irureta Goyena for appellants.

O'Brien & DeWitt for appellee.
MORELAND, J.:
This is an appeal from a judgment of the Court of First Instance of the city of Manila
dismissing the complaint with costs.
The pleadings set forth that the plaintiffs and defendant are brother and sisters; that
they are the only heirs at law and next of kin of Gregorio Nacianceno del Val, who
died in Manila on August 4, 1910, intestate; that an administrator was appointed for
Page 2 of 232
the estate of the deceased, and, after a partial administration, it was closed and the
administrator discharged by order of the Court of First Instance dated December 9,
1911; that during the lifetime of the deceased he took out insurance on his life for
the sum of P40,000 and made it payable to the defendant as sole beneficiary; that
after his death the defendant collected the face of the policy; that of said policy he
paid the sum of P18,365.20 to redeem certain real estate which the decedent had
sold to third persons with a right to repurchase; that the redemption of said
premises was made by the attorney of the defendant in the name of the plaintiff and
the defendant as heirs of the deceased vendor; that the redemption of said
premises they have had the use and benefit thereof; that during that time the
plaintiffs paid no taxes and made no repairs.
It further appears from the pleadings that the defendant, on the death of the
deceased, took possession of most of his personal property, which he still has in
his possession, and that he has also the balance on said insurance policy
amounting to P21,634.80.
Plaintiffs contend that the amount of the insurance policy belonged to the estate of
the deceased and not to the defendant personally; that, therefore, they are entitled
to a partition not only of the real and personal property, but also of the P40,000 life
insurance. The complaint prays a partition of all the property, both real and
personal, left by the deceased; that the defendant account for P21,634.80, and that
that sum be divided equally among the plaintiffs and defendant along with the other
property of deceased.
The defendant denies the material allegations of the complaint and sets up as
special defense and counterclaim that the redemption of the real estate sold by his
father was made in the name of the plaintiffs and himself instead of in his name
alone without his knowledge or consent; and that it was not his intention to use the
proceeds of the insurance policy for the benefit of any person but himself, he
alleging that he was and is the sole owner thereof and that it is his individual
property. He, therefore, asks that he be declared the owner of the real estate
redeemed by the payment of the P18,365.20, the owner of the remaining
P21,634.80, the balance of the insurance policy, and that the plaintiff's account for
the use and occupation of the premises so redeemed since the date of the
redemption.
The learned trial court refused to give relief to either party and dismissed the action.
It says in its opinion: "This purports to be an action for partition, brought against an
heir by his coheirs. The complaint, however, fails to comply with Code Civ., Pro.
sec. 183, in that it does not 'contain an adequate description of the real property of
which partition is demanded.' Because of this defect (which has not been called to
our attention and was discovered only after the cause was submitted) it is more
Page 3 of 232
than doubtful whether any relief can be awarded under the complaint, except by
agreement of all the parties."
This alleged defect of the complaint was made one of the two bases for the
dismissal of the action.
We do not regard this as sufficient reason for dismissing the action. It is the
doctrine of this court, set down in several decisions, Lizarraga Hermanos vs. Yap
Tico, 24 Phil. Rep., 504, that, even though the complaint is defective to the extent
of failing in allegations necessary to constitute a cause of action, if, on the trial of
the cause, evidence is offered which establishes the cause of action which the
complaint intended to allege, and such evidence is received without objection, the
defect is thereby cured and cannot be made the ground of a subsequent objection.
If, therefore, evidence was introduced on the trial in this case definitely and clearly
describing the real estate sought to be partitioned, the defect in the complaint was
cured in that regard and should not have been used to dismiss the action. We do
not stop to inquire whether such evidence was or was not introduced on the trial,
inasmuch as this case must be turned for a new trial with opportunity to both parties
to present such evidence as is necessary to establish their respective claims.
The court in its decision further says: "It will be noticed that the provision above
quoted refers exclusively to real estate. . . . It is, in other words, an exclusive real
property action, and the institution thereof gives the court no jurisdiction over
chattels. . . . But no relief could possibly be granted in this action as to any property
except the last (real estate), for the law contemplated that all the personal property
of an estate be distributed before the administration is closed. Indeed, it is only in
exceptional cases that the partition of the real estate is provided for, and this too is
evidently intended to be effected as a part of the administration, but here the
complaint alleges that the estate was finally closed on December 9, 1911, and we
find upon referring to the record in that case that subsequent motion to reopen the
same were denied; so that the matter of the personal property at least must be
considered res judicata (for the final judgment in the administration proceedings
must be treated as concluding not merely what was adjudicated, but what might
have been). So far, therefore, as the personal property at least is concerned,
plaintiffs' only remedy was an appeal from said order."
We do not believe that the law is correctly laid down in this quotation. The courts of
the Islands have jurisdiction to divide personal property between the common
owners thereof and that power is as full and complete as is the power to partition
real property. If an actual partition of personal property cannot be made it will be
sold under the direction of the court and the proceeds divided among the owners
after the necessary expenses have been deducted.
Page 4 of 232
The administration of the estate of the decedent consisted simply, so far as the
record shows, in the payment of the debts. No division of the property, either real or
personal, seems to have been made. On the contrary, the property appears, from
the record, to have been turned over to the heirs in bulk. The failure to partition the
real property may have been due either to the lack of request to the court by one or
more of the heirs to do so, as the court has no authority to make a partition of the
real estate without such request; or it may have been due to the fact that all the real
property of decedent had been sold under pacto de retro and that, therefore, he
was not the owner of any real estate at the time of his death. As to the personal
property, it does not appear that it was disposed of in the manner provided by law.
(Sec. 753, Code of Civil Procedure.) So far as this action is concerned, however, it
is sufficient for us to know that none of the property was actually divided among the
heirs in the administration proceeding and that they remain coowners and tenants-
in- common thereof at the present time. To maintain an action to partition real or
personal property it is necessary to show only that it is owned in common.
The order finally closing the administration and discharging the administrator,
referred to in the opinion of the trial court, has nothing to do with the division of
either the real or the personal property. The heirs have the right to ask the probate
court to turn over to them both the real and personal property without division; and
where that request is unanimous it is the duty of the court to comply with it, and
there is nothing in section 753 of the Code of Civil Procedure which prohibits it. In
such case an order finally settling the estate and discharging the administrator
would not bar a subsequent action to require a division of either the real or personal
property. If, on the other hand, an order had been made in the administration
proceedings dividing the personal or the real property, or both, among the heirs,
then it is quite possible that, to a subsequent action brought by one of the heirs for
a partition of the real or personal property, or both, there could have been
interposed a plea of res judicata based on such order. As the matter now stands,
however, there is no ground on which to base such a plea. Moreover, no such plea
has been made and no evidence offered to support it.
With the finding of the trial court that the proceeds of the life-insurance policy
belong exclusively to the defendant as his individual and separate property, we
agree. That the proceeds of an insurance policy belong exclusively to the
beneficiary and not to the estate of the person whose life was insured, and that
such proceeds are the separate and individual property of the beneficiary, and not
of the heirs of the person whose life was insured, is the doctrine in America. We
believe that the same doctrine obtains in these Islands by virtue of section 428 of
the Code of Commerce, which reads:
The amount which the underwriter must deliver to the person insured, in
fulfillment of the contract, shall be the property of the latter, even against the
Page 5 of 232
claims of the legitimate heirs or creditors of any kind whatsoever of the
person who effected the insurance in favor of the former.
It is claimed by the attorney for the plaintiffs that the section just quoted is
subordinate to the provisions of the Civil Code as found in article 1035. This article
reads:
An heir by force of law surviving with others of the same character to a

succession must bring into the hereditary estate the property or securities he
may have received from the deceased during the life of the same, by way of
dowry, gift, or for any good consideration, in order to compute it in fixing the
legal portions and in the account of the division.
Counsel also claim that the proceeds of the insurance policy were a donation or gift
made by the father during his lifetime to the defendant and that, as such, its
ultimate destination is determined by those provisions of the Civil Code which relate
to donations, especially article 819. This article provides that "gifts made to children
which are not betterments shall be considered as part of their legal portion."
We cannot agree with these contentions. The contract of life insurance is a special
contract and the destination of the proceeds thereof is determined by special laws
which deal exclusively with that subject. The Civil Code has no provisions which
relate directly and specifically to life- insurance contracts or to the destination of life
insurance proceeds. That subject is regulated exclusively by the Code of
Commerce which provides for the terms of the contract, the relations of the parties
and the destination of the proceeds of the policy.
The proceeds of the life-insurance policy being the exclusive property of the
defendant and he having used a portion thereof in the repurchase of the real estate
sold by the decedent prior to his death with right to repurchase, and such
repurchase having been made and the conveyance taken in the names of all of the
heirs instead of the defendant alone, plaintiffs claim that the property belongs to the
heirs in common and not to the defendant alone.
We are not inclined to agree with this contention unless the fact appear or be
shown that the defendant acted as he did with the intention that the other heirs
should enjoy with him the ownership of the estate — in other words, that he
proposed, in effect, to make a gift of the real estate to the other heirs. If it is
established by the evidence that that was his intention and that the real estate was
delivered to the plaintiffs with that understanding, then it is probable that their
contention is correct and that they are entitled to share equally with the defendant
therein. If, however, it appears from the evidence in the case that the conveyances
were taken in the name of the plaintiffs without his knowledge or consent, or that it
was not his intention to make a gift to them of the real estate, then it belongs to
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him. If that facts are as stated, he has two remedies. The one is to compel the
plaintiffs to reconvey to him and the other is to let the title stand with them and to
recover from them the sum he paid on their behalf.
For the complete and proper determination of the questions at issue in this case,
we are of the opinion that the cause should be returned to the trial court with
instructions to permit the parties to frame such issues as will permit the settlement
of all the questions involved and to introduce such evidence as may be necessary
for the full determination of the issues framed. Upon such issues and evidence
taken thereunder the court will decide the questions involved according to the
evidence, subordinating his conclusions of law to the rules laid down in this opinion.
We do not wish to be understood as having decided in this opinion any question of

fact which will arise on the trial and be there in controversy. The trial court is left
free to find the facts as the evidence requires. To the facts as so found he will apply
the law as herein laid down.
The judgment appealed from is set aside and the cause returned to the Court of
First Instance whence it came for the purpose hereinabove stated. So ordered.
Page 7 of 232
[70]
No. L-23002. July 31, 1967.

CONCEPCION FELIX VDA. DE RODRIGUEZ, plaintiff-appellant, vs. GERONIMO
RODRIGUEZ, ET AL., defendants-appellees.
Contracts; Intimidation; Charge of duress should be treated with caution.—The
charge of duress in the execution of a conveyance of land should be treated with caution.
Duress, like fraud, is not to be lightly laid at the door of a man already dead.
Same; Annulment of contract on the ground of intimidation; Prescription; Time

within which action should be brought; Estoppel.—An action to annul a contract on the
ground of duress, which is a mere vice or defect of consent, must be brought within four
years after it had ceased. Where the Intimidation ceased 28 years before the action for
annulment was filed and nine years had passed after the person, who allegedly employed
intimidation had died, the action has prescribed. Moreover the plaintiff had entered into a
series of subsequent transactions which confirmed the contracts, which she is seeking to
annul on the ground of duress. Her action is clearly barred.
Same; Simulated contracts; Characteristic of simulation.—The characteristic of

simulation is the fact that the apparent contract is not really desired or intended to produce
legal effects or in any way alter the juridical situation of the parties, Thus, where a person,
in order to place his property beyond the reach of his creditors, simulates a transfer of it to
another, he does not really intend to divest himself of his title and control of the property;
hence, the deed of transfer is but a sham.
Same; Husband and wife; Prohibition against donations.—Where the wife

purportedly sold her paraphernal fishponds to her daughter and the latter in turn purportedly
sold them to her stepfather or the husband of her mother, it is apparent that the mother and
daughter must have intended the two conveyances to be real and effective. The supposed
intention to circumvent the prohibition against donations between husband and wife does
not render them simulated contracts.
Same; Simulated contracts distinguished from fraudulent contracts.—Simulated

contracts are fictitious contracts. Fraudulent contracts are serious, real and intended for the
attainment of a prohibited result. Simulation is intended to hide the violation of the law.
Same; Consideration; Promise of a thing or service is a sufficient consideration.—

The consideration need not pass from one party to the other at the time the contract is
entered into. The consideration need not be paid at the time of the promise. The one promise
is a consideration for the other. In a sale, the buyer's obligation to pay the price is a
sufficient consideration. The fact that it is not paid does not make the sale inexistent for
want of causa.
Page 8 of 232
Same; Prohibition against donations between husband and wife; Rule of in pari
delicto.—Where the wife purportedly sold her fishponds to her daughter, who in turn
purportedly sold the same to her stepfather, the husband of her mother, allegedly in order to
circumvent the prohibition against donations between husband and wife, the illicit purpose
became an illegal causa but then the wife cannot bring an action to recover f ishponds
because of the rule of in pari delicto non oritur actio.
Same; Laches; Estoppel; Stale claim.—An action filed in 1962 to annul conveyances
made in 1934 is barred by laches. Ignorance of the nullity of the conveyance is not an
excuse for laches. Plaintiff's execution of other agreements relative to the same fishponds
placed her in estoppel to question the validity of the transfer of said fishponds.
APPEAL from a decision of the Court of First Instance of Bulacan.
REYES, J.B.L., J.:
This is an appeal by Concepcion Felix Vda. de Rodriguez from the decision of the
Court of First Instance of Bulacan in Civil Case No. 2565, which she commenced
on May 28, 1962, to secure declaration, of nullity of two contracts executed on
January 24, 1934 and for recovery of certain properties.
The facts of this case may be briefly stated as follows:
Concepcion Felix, widow of the late Don Felipe Calderon and with whom she had
one living child, Concepcion Calderon, contracted a second marriage on June 20,
1929, with Domingo Rodriguez, widower with four children by a previous marriage,
named Geronimo, Esmeragdo, Jose and Mauricio, all surnamed Rodriguez. There
was no issue in this second marriage.
Prior to her marriage to Rodriguez, Concepcion Felix was the registered owner of 2
fishponds located in the barrio of Babañgad, municipality of Bulacan, Bulacan
province. with a total area of 557,711 square meters covered by OCT Nos. 605 and
807. Under date of January 24, 1934, Concepcion Felix appeared to have executed
a deed of sale conveying ownership of the aforesaid properties to her daughter,
Concepcion Calderon, for the sum of P2,500.00, which the latter in turn appeared
to have transferred to her mother and stepfather by means of a document dated
January 27, 1934. Both deeds, notarized by Notary Public Jose D. Mendoza, were
registered in the office of the Register of Deeds of Bulacan on January 29, 1934, as
a consequence of which, the original titles were cancelled and TCT Nos. 13815 and
13816 were issued in the names of the spouses Domingo Rodriguez and
Concepcion Felix.
On March 6, 1953, Domingo Rodriguez died intestate, survived by the widow,

Concepcion Felix, his children Geronimo Esmeragdo and Mauricio and
Page 9 of 232
grandchildren Oscar, Juan and Ana, surnamed Rodriguez, children of a son, Jose,
who had predeceased him.
On March 16, 1953, the above-named widow, children and grandchildren of the
deceased entered into an extra-judicial settlement of his (Domingo's) estate,
consisting of one-half of the properties allegedly belonging to the conjugal
partnership. Among the properties listed as conjugal were the two parcels of land in
Bulacan, Bulacan, which, together with another piece of property, were divided
among the heirs in this manner:
WHEREAS, the parties have furthermore agreed that the fishpond covered
by TCT Nos. 13815, 13816 and 24109 of the Office of the Register of Deeds
of Bulacan, containing an area of 557,971 sq. m., which is likewise the
conjugal property of the deceased and his surviving spouse; 1/2 of the same
or 278,985.5 sq. m. belongs to said Concepcion Felix Vda. de Rodriguez, as
her share in the conjugal property; and 3/4 of the remaining half or
209,239.125 sq. m. are transferred in full ownership to Geronimo Rodriguez,
Esmeragdo Rodriguez and Mauricio Rodriguez, share and share alike, while
the other 1/4 or 69,746.375 sq. m. of the said remaining half goes in equal
shares to Oscar Rodriguez, Juan Rodriguez and Ana Rodriguez.
As a result of this partition, TCT Nos. 13815 and 13816 were cancelled and TCT
Nos. T-11431 and T-14432 were issued in the names of the said heirs of the
deceased.
On March 23, 1953, in a power of attorney executed by the children and

grandchildren of Domingo Rodriguez, Concepcion Felix Vda. de Rodriguez was
named their attorney in-fact, authorized to manage their shares in the fishponds
(Exh. 4).
On July 2, 1954, the heirs ended their co-ownership by executing a deed of

partition, dividing and segregating their respective shares in the properties,
pursuant to a consolidation and subdivision plan (PCS-3702), in accordance with
which, Concepcion Felix Vda. de Rodriguez obtained TCT No. T-12910, for the
portion pertaining to her (Exh. L), while TCT No. T-12911 was issued to the other
heirs, for their shares. This latter title was subsequently replaced by TCT No. 16660
(Exh. M).
On October 12, 1954, the Rodriguez children executed another document granting
unto the widow lifetime usufruct over one-third of the fishpond which they received
as hereditary share in the estate of Domingo Rodriguez, which grant was accepted
by Concepcion Felix Vda. de Rodriguez.
Page 10 of 232
Then, in a contract dated December 15, 1961, the widow appeared to have leased
from the Rodriguez children and grandchildren the fishpond (covered by TCT No.
16660) for a period of 5 years commencing August 16, 1962, for an annual rental of
P7,161.37 (Exh. 5).1äwphï1.ñët
At about this time, it seemed that the relationship between the widow and her
stepchildren had turned for the worse. Thus, when she failed to deliver to them the
balance of the earnings of the fishponds, in the amount of P3,000.00, her
stepchildren endorsed the matter to their lawyer who, on May 16, 1962, sent a
letter of demand to the widow for payment thereof. On, May 28, 1962, Concepcion
Felix Vda. de Rodriguez filed the present action in the Court of First Instance of
Manila naming as defendants, Geronimo Rodriguez, Esmeragdo Rodriguez, Oscar
Rodriguez, Concepcion Bautista Vda. de Rodriguez, as guardian of the minors
Juan and Ana Rodriguez, and Antonio Diaz de Rivera and Renato Diaz de Rivera,
as guardians of the minors Maria Ana, Mercedes, Margarita, Mauricio, Jr. and
Domingo (Children of Mauricio Rodriguez who had also died).
The action to declare null and void the deeds of transfer of plaintiff's properties to
the conjugal partnership was based on the alleged employment or exercise by
plaintiff's deceased husband of force and pressure on her; that the conveyances of
the properties — from plaintiff to her daughter and then to the conjugal partnership
of plaintiff and her husband — are both without consideration; that plaintiff
participated in the extrajudicial settlement of estate (of the deceased Domingo
Rodriguez) and in other subsequent deeds or instruments involving the properties
in dispute, on the false assumption that the said properties had become conjugal by
reason of the execution of the deeds of transfer in 1934; that laboring under the
same false assumption, plaintiff delivered to defendants, as income of the
properties from 1956 to 1961, the total amount of P56,976.58. As alternative cause
of action, she contended that she would claim for her share, as surviving widow, of
1/5 of the properties in controversy, should such properties be adjudged as
belonging to the conjugal partnership. Thus, plaintiff prayed that the deeds of
transfer mentioned in the complaint be declared fictitious and simulated; that the
"Extrajudicial Settlement of Estate" be also declared null and void; that TCT No.
16660 of the Registry of Deeds of Bulacan be cancelled and another one be issued
in the name of plaintiff, Concepcion Felix Vda. de Felix; that defendants be ordered
to pay plaintiff the sum of P56,976.58, with legal interest thereon from the date of
the filing of the complaint, and for appropriate relief in connection with her
alternative cause of action.
In their separate answers, defendants not only denied the material allegations of
the complaint, but also set up as affirmative defenses lack of cause of action,
prescription, estoppel and laches. As counterclaim, they asked for payment by the
plaintiff of the unpaid balance of the earnings of the land up to August 15, 1962 in
the sum of P3,000.00, for attorney's fees and expenses of litigation.
Page 11 of 232
On October 5, 1963, judgment was rendered for the defendants. In upholding the
validity of the contracts, the court found that although the two documents, Exhibits
A and B, were executed for the purpose of converting plaintiff's separate properties
into conjugal assets of the marriage with Domingo Rodriguez, the consent of the
parties thereto was voluntary, contrary to the allegations of plaintiff and her witness.
The court also ruled that having taken part in the questioned transactions, plaintiff
was not the proper party to plead lack of consideration to avoid the transfers; that
contracts without consideration are not inexistent, but are only voidable, following
the ruling in the case of Concepcion vs. Sta. Ana (87 Phil. 787); that there was
ratification or confirmation by the plaintiff of the transfer of her property, by her
execution (with the other heirs) of the extrajudicial settlement of estate; that being a
voluntary party to the contracts, Exhibits A and B, plaintiff cannot recover the
properties she gave thereunder. Plaintiff's alternative cause of action was also
rejected on the ground that action for rescission of the deed of extrajudicial
settlement should have been filed within 4 years from its execution (on March 16,
1953).
From the decision of the Court of First Instance, plaintiff duly appealed to this
Court, insisting that the conveyances in issue were obtained through duress, and
were inexistent, being simulated and without consideration.
We agree with the trial Court that the evidence is not convincing that the contracts
of transfer from Concepcion Felix to her daughter, and from the latter to her mother
and stepfather were executed through violence or intimidation. The charge is
predicated solely upon the improbable and biased testimony of appellant's
daughter, Concepcion C. Martelino, whom the trial court, refused to believe,
considering that her version of violence and harassment was contradicted by
Bartolome Gualberto who had lived with the Rodriguez spouses from 1917 to 1953,
and by the improbability of Rodriguez threatening his stepdaughter in front of the
Notary Public who ratified her signature. Furthermore, as pointed out by the
appealed decision, the charge of duress should be treated with caution considering
that Rodriguez had already died when the suit was brought, for duress, like fraud, is
not to be lightly paid at the door of men already dead. (Cf. Prevost vs. Gratz, 6
Wheat. [U.S.] 481, 498; Sinco vs. Longa, 51 Phil. 507).
What is more decisive is that duress being merely a vice or defect of consent, an
action based upon it must be brought within four years after it has ceased; 1 and the
present action was instituted only in 1962, twenty eight (28) years after the
intimidation is claimed to have occurred, and no less than nine (9) years after the
supposed culprit died (1953). On top of it, appellant entered into a series of
subsequent transactions with appellees that confirmed the contracts that she now
tries to set aside. Therefore, this cause of action is clearly barred.
Page 12 of 232
Appellant's main stand in attacking the conveyances in question is that they are
simulated or fictitious, and inexistent for lack of consideration. We shall examine
each purported defect separately.
The charge of simulation is untenable, for the characteristic of simulation is the fact
that the apparent contract is not really desired or intended to produce legal effects
or in way alter the juridical situation of the parties. Thus, where a person, in order to
place his property beyond the reach of his creditors, simulates a transfer of it to
another, he does not really intend to divest himself of his title and control of the
property; hence, the deed of transfer is but a sham. But appellant contends that the
sale by her to her daughter, and the subsequent sale by the latter to appellant and
her husband, the late Domingo Rodriguez, were done for the purpose of converting
the property from paraphernal to conjugal, thereby vesting a half interest in
Rodriguez, and evading the prohibition against donations from one spouse to
another during coverture (Civil Code of 1889, Art. 1334). If this is true, then the
appellant and her daughter must have intended the two conveyance to be real and
effective; for appellant could not intend to keep the ownership of the fishponds and
at the same time vest half of them in her husband. The two contracts of sale then
could not have been simulated, but were real and intended to be fully operative,
being the means to achieve the result desired.
Nor does the intention of the parties to circumvent by these contracts the law
against donations between spouses make them simulated ones.
Ferrara, in his classic book, "La Simulacion de los Negocios Juridicos" (Sp. trans,
1926), pp. 95, 105, clearly explains the difference between simulated transactions
and transactions in fraudem legis:
Otra figura que debe distinguirse de la simulacion es el fraus legis. Tambien

aqui se da una gran confusion que persiste aun en la jurisprudencia,
apegada tenazmente a antiguos errores. Se debe a Bahr el haber defendido
con vigor la antitesis teorica que existe entre negocio fingido y negocio
fraudulento y haber atacado la doctrina comun que hacia una mescolanza
con los dos conceptos.
Se confunde — dice (2) —, el negocio in fraudem legis con el negocio

simulado; aunque la naturaleza de ambos sea totalmente diversa. El
negocio fraudulento no es, en absolute, un negocio aparente. Es
perfectamente serio: se quiere realmente. Es mas, se quiere tal como se ha
realizado, con todas las consecuencias que correspondent a la forma
juridica elegida. Muchas veces, estas consecuencias con incomodas para
una u otra de las partes, aunque serian mucho mas incomodas las
consecuencias que lievaria consigo el acto prohibido.
Page 13 of 232
xxx xxx xxx
El resultado de las precedentes investigaciones es el siguiente el negocio

simulado quiere producir una apariencia; el negocio fraudulente, una
realidad; los negocios simulados son ficticios, no queridos; los negocios in
fraudem son serios, reales, y realizados en tal forma por las partes para
consequir un resultado prohibido: la simulacion nunca es un medio para
eludir la ley sino para ocultar su violation. La transgresion del contenido
verbal e inmediato de la norma se encubre bajo el manto de un negocio
licito, lo cual no altera el caracter del contra legem agere. Tan verdad es,
que si se ha redactado una contra-escritura que documentary y declara la
verdadera naturaleza del negocio realizado, no queda mas que aplicar pura
y simplementela prohibicion.
Tambien el fraude quiere perjudicar la ley, pero emplea para ello medios
diversos y sigue distintos caminus. No oculta el acto exterior, sino que lo
deja claro y visible, tratando de huir sesgadamente de la aplicacion de la ley
merced a una artistica y sabia combinacion de varios medios juridicos no
reprobados.
Appellant invokes our decision in Vasquez vs. Porta, 98 Phil. 490, but to no
purpose. The mortgage and foreclosure sale involved in that case were typical
simulations merely apparent but not really intended to produce legal effects, as
approved by the Court's finding that the alleged creditor and buyer at the
foreclosure sale "Porta himself ostensibly acknowledged by his inertia in allowing
the doctor (alleged mortgagor debtor) to exercise dominical power thereon without
any protest on his part." (cas. cit., p. 495). Not only this, but the mortgagor's wife,
when her husband died, "found among his papers Porta's cancellation of the
mortgage in his favor and the draft of the complaint for foreclosure." Plainly, the
precedent cited is here inapplicable.
Were the two conveyances from appellant to her daughter and from the latter to the
spouses Rodriguez void ab initio or inexistent for lack of consideration? We do not
find them to be so. In the first transaction, the price of P2,500.00 is recited in the
deed itself (Exh. A); in the second (Exh. B), the consideration set forth is
P3,000.00. Now, Article 1274 of the Civil Code of 1889 (in force when the deeds
were executed) provided that —
In onerous contracts the cause is understood to be, for each contracting

party, the prestation or promise of a thing or service by the other. (emphasis
supplied.)
Since in each conveyance the buyer became obligated to pay a definite price in
money, such undertaking constituted in themselves actual causa or consideration
Page 14 of 232
for the conveyance of the fishponds. That the prices were not paid (assuming ad
arguendo that Concepcion Martelino's testimony, to this effect is true) does not
make the sales inexistent for want of causa. As ruled in Enriquez de la Cavada vs.
Diaz, 37 Phil. 982, "the consideration (causa) need not pass from one (party) to the
other at the time the contract is entered into x x x . The consideration need not be
paid at the time of the promise. The one promise is a consideration for the other."
What would invalidate the conveyances now under scrutiny is the fact that they
were resorted to in order to circumvent the legal prohibition against donations
between spouses contained in Article 1334, paragraph 1, of the Civil Code of 1889,
then prevailing. That illegal purpose tainted the contracts, for as held by the
Spanish Tribunal Supreme in its decision of 2 April 1941.
ha de ser reputado ineficaz, por exigencias includibles del caracter social y

moral del Derecho, todo contrato que persiga un fin ilicito o immoral, sea
cualquiera el medio empleado por los contratantes para lograr esa finalidad,
no justificada por un interes digno de ser socialmente protegido.
The illicit purpose then becomes illegal causa within the terms of the old Civil
Code, for as declared by the same Spanish Court in its decision of 14 December
1940 —
toda vez que lo que caracteriza fundamentalmente la ilicitud de la causa es

la lesion de un interos general juridica 6 moral.
a ruling reiterated in the decision of 2 April 1941 when the Court ruled:
El concepto de la causa ilicita, tal como la desenvuelve y aplica con gran

amplitud y flexibilidad la doctrina moderna, permite cobijar, no solo las
convenciones ilicitas por razon de su objeto o de su motivo ... sino tambien
multiples convenciones que no encerrando en si ningun elemento de directa
antijuricidad son ilicitas por el matiz immoral que reviste la operation en su
conjunto x x x .
Unfortunately for herein appellant, in contracts invalidated by illegal subject matter

or illegal causa, Articles 1305 and 1306 of the Civil Code then in force apply
rigorously the rule in pari delicto non oritur action, denying all recovery to the guilty
parties inter se. And appellant is clearly as guilty as her husband in the attempt to
evade the legal interdiction of Article 1334 of the Code, already cited. Wherefore,
her present action to reivindicate the, conveyed properties was correctly repulsed
by the Court below.
Art. 1306. If the act which constitutes the illicit consideration is neither a
crime nor a misdemeanor, the following rules shall be observed:
Page 15 of 232
1. When both parties are guilty, neither of them can recover what he may
have given by virtue of the contract, or enforce the performance of the
undertaking of the other party;
xxx xxx xxx
That Article 1306 applies to cases where the nullity arises from the illegality of the
consideration or the purpose of the contract was expressly recognized by this
Supreme Court in Gustilo vs. Maravilla, 48 Phil. 449-450.2
Finally, it cannot be denied that plaintiff-appellant had knowledge of the nullity of

the contract for the transfer of her properties in 1934, because she was even a
party thereto. And yet, her present action was filed only on May 28, 1962 and after
the breaking up of friendly relations between her and defendants-appellees.
Appellant's inaction to enforce her right, for 28 years, cannot be justified by the
lame excuse that she assumed that the transfer was valid. Knowledge of the effect
of that transaction would have been obtained by the exercise of diligence.
Ignorance which is the effect of inexcusable negligence, it has been said, is no
excuse for laches. (Go Chi Gun, etc., et al. vs. Co Cho, et al., G.R. No. L-5208,
Feb. 28, 1955). Even assuming for the sake of argument that appellant held her
peace, during the lifetime of her husband, out of legitimate fear for her life, there is
no justification for her future to bring the proper action after his death in 1953.
Instead, she entered into a series of agreements with herein appellees, the children
of her husband by a prior marriage, of partition, usufruct and lease of their share in
the fishponds, transactions that necessarily assumed that Rodriguez had acquired
one-half of the litigated fishponds. In the circumstances, appellant's cause has
become a stale demand and her conduct placed her in estoppel to question the
Validity of the transfer of her properties. (Manila, et al. vs. Galvan, et al., G.R. No.
L-23507, May 24, 1967; Perez vs. Herranz, 7 Phil. 695-696).
In view of the foregoing, the decision appealed from is affirmed. Costs against
appellant Concepcion Felix Vda. de Rodriguez. So ordered.
Page 16 of 232
[71]
G.R. No. 118305. February 12, 1998.*

AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO,
petitioners, vs. COURT OF AP-PEALS and SPOUSES ALFREDO & ENCARNACION
CHING, respondents.
Civil Law; Family Code; Conjugal Partnerships; 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.—If the husband himself
is the principal obligor in the contract, i.e., he directly received the money and services to be
used in or for his own business or his own profession, that contract falls within the term “x
x x x obligations for the benefit of the conjugal partnership.” Here, no actual benefit may be
proved. It is enough that the benefit to the family is apparent at the time of the signing of the
contract. From the very nature of the contract of loan or services, the family stands to
benefit from the loan facility or services to be rendered to the business or profession of the
husband. It is immaterial, if in the end, his business or profession fails or does not succeed.
Simply stated, where the husband contracts obligations on behalf of the family business, the
law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal
partnership.
Same; Same; Same; 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.”—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.
Same; Same; Same; 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.—
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 appelleehusband 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.
Page 17 of 232
Same; Same; Same; Signing as a surety is certainly not an exercise of an industry or

profession.—“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.”
Same; Same; Same; 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.—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.
PETITION for review on certiorari of a decision of the Court of Appeals.
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.
Page 18 of 232
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 court 4 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
Page 19 of 232
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
Page 20 of 232
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 . . . .
Page 21 of 232
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)
Page 22 of 232
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:
Page 23 of 232
(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
Page 24 of 232
. . . . 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.
Page 25 of 232
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-
Page 26 of 232
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
Page 27 of 232
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.
Page 28 of 232
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.
Page 29 of 232
[72]
G.R. No. 143826. August 28, 2003.*

HEIRS OF IGNACIA AGUILAR-REYES, petitioners, vs. SPOUSES CIPRIANO
MIJARES and FLORENTINA MIJARES, respondents.
Civil Law; Marriage; Conjugal Property; 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.—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 cases 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. 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.
Same; Same; Same; 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.—The
trial court correctly annulled the voidable sale of Lot No. 4349-B-2 in its entirety. In Bucoy
v. Paulino, 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.
Same; Property; Sales; 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.—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.
Same; Same; Same; If a voidable contract is annulled the restoration of what has

been given is proper.—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.
Page 30 of 232
Same; Interests; Interest on obligations not constitute
ing a loan or forbearance of money is six percent (6%) annually; 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.—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, 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. 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.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
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 transaction1 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, Resolution 5 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,
Page 31 of 232
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 complaint 15 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,
Page 32 of 232
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
Page 33 of 232
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:
Page 34 of 232
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 cases 30 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:
Page 35 of 232
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…
Page 36 of 232
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,
Page 37 of 232
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 children 44 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
Page 38 of 232
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
Page 39 of 232
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.
Page 40 of 232
(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.
Page 41 of 232
[73]
G.R. No. 155043. September 30, 2004.*

ARTURO R. ABALOS, petitioner, vs. DR. GALICANO S. MACATANGAY, JR.,
respondent.
Civil Law; Contracts; Elements; Contracts, in general, require the presence of three

essential elements: (1) consent of the contracting parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the obligation which is established.—
Contracts, in general, require the presence of three essential elements: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract; and (3)
cause of the obligation which is established.
Same; Same; In a contract of sale, the seller must consent to transfer ownership in
exchange for the price, the subject matter must be determinate, and the price must be
certain in money or its equivalent.—Until the contract is perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation. In a contract of sale,
the seller must consent to transfer ownership in exchange for the price, the subject matter
must be determinate, and the price must be certain in money or its equivalent. Being
essentially consensual, a contract of sale is perfected at the moment there is a meeting of the
minds upon the thing which is the object of thecontract and upon the price. However,
ownership of the thing sold shall not be transferred to the vendee until actual or constructive
delivery of the property.
Same; Same; An accepted unilateral promise which specifies the thing to be sold and
the price to be paid, when coupled with a valuable consideration distinct and separate from
the price, is what may properly be termed a perfected contract of option.—An accepted
unilateral promise which specifies the thing to be sold and the price to be paid, when
coupled with a valuable consideration distinct and separate from the price, is what may
properly be termed a perfected contract of option. An option merely grants a privilege to
buy or sell within an agreed time and at a determined price. It is separate and distinct from
that which the parties may enter into upon the consummation of the option. A perfected
contract of option does not result in the perfection or consummation of the sale; only when
the option is exercised may a sale be perfected. The option must, however, be supported by
a consideration distinct from the price.
Same; Same; As a rule, the holder of the option, after accepting the promise and
before he exercises his option, is not bound to buy.—As a rule, the holder of the option,
after accepting the promise and before he exercises his option, is not bound to buy. He is
free either to buy or not to buy later. In Sanchez v. Rigos we ruled that in an accepted
unilateral promise to sell, the promissor is not bound by his promise and may, accordingly,
withdraw it, since there may be no valid contract without a cause or consideration. Pending
notice of its withdrawal, his accepted promise partakes of the nature of an offer to sell
which, if acceded or consented to, results in a perfected contract of sale.
Page 42 of 232
Same; Same; Under the law, a void contract cannot be ratified and the action or
defense for the declaration of the inexistence of a contract does not prescribe.—The nullity
of the RMOA as a contract of sale emanates not only from lack of Esther’s consent thereto
but also from want of consideration and absence of respondent’s signature thereon. Such
nullity cannot be obliterated by Esther’s subsequent confirmation of the putative transaction
as expressed in the Contract to Sell. Under the law, a void contract cannot be ratified and
the action or defense for the declaration of the inexistence of a contract does not prescribe.
A void contract produces no effect either against or in favor of anyone–it cannot create,
modify or extinguish the juridical relation to which it refers.
Same; Conjugal Partnership; Under the Civil Code, the husband, as the administrator
of the conjugal partnership, cannot validly alienate or encumber any real property of the
conjugal partnership without the wife’s consent, and vise versa.—Under the Civil Code, the
husband is the administrator of the conjugal partnership. This right is clearly granted to him
by law. More, the husband is the sole administrator. The wife is not entitled as of right to
joint administration.
Same; Same; The right of the husband or wife to one-half of the conjugal assets does
not vest until the dissolution and liquidation of the conjugal partnership, or after
dissolution of the marriage, when it is finally determined that, after settlement of conjugal
obligations, there are net assets left which can be divided between the spouses or their
respective heirs.—It has been held that prior to the liquidation of the conjugal partnership,
the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which
constitutes neither a legal nor an equitable estate, and does not ripen into title until it
appears that there are assets in the community as a result of the liquidation and settlement.
The interest of each spouse is limited to the net remainder or “remanente liquido” (haber
ganancial) resulting from the liquidation of the affairs of the partnership after its
dissolution. Thus, the right of the husband or wife to one-half of the conjugal assets does
not vest until the dissolution and liquidation of the conjugal partnership, or after dissolution
of the marriage, when it is finally determined that, after settlement of conjugal obligations,
there are net assets left which can be divided between the spouses or their respective heirs.
Same; Same; The sale by the husband of property belonging to the conjugal

partnership without the consent of the wife when there is no showing that the latter is
incapacitated is void ab initio because it is in contravention of the mandatory requirements
of Article 166 of the Civil Code.—We ruled that the sale by the husband of property
belonging to the conjugal partnership without the consent of the wife when there is no
showing that the latter is incapacitated is void ab initio because it is in contravention of the
mandatory requirements of Article 166 of the Civil Code. Since Article 166 of the Civil
Code requires the consent of the wife before the husband may alienate or encumber any real
property of the conjugal partnership, it follows that acts or transactions executed against this
mandatory provision are void except when the law itself authorizes their validity.
Page 43 of 232
Same; Same; As an exception, the husband may dispose of conjugal property without
the wife’s consent if such sale is necessary to answer for conjugal liabilities mentioned in
Articles 161 and 162 of the Civil Code.—As an exception, the husband may dispose of
conjugal property without the wife’s consent if such sale is necessary to answer for conjugal
liabilities mentioned in Articles 161 and 162 of the Civil Code. In Tinitigan v.
Tinitigan, Sr., the Court ruled that the husband may sell property belonging to the conjugal
partnership even without the consent of the wife if the sale is necessary to answer for a big
conjugal liability which might endanger the family’s economic standing. This is one
instance where the wife’s consent is not required and, impliedly, no judicial intervention is
necessary.
Same; Family Code; The Family Code now requires the written consent of the other
spouse, or authority of the court for the disposition or encumbrance of conjugal partnership
property without which, the disposition or encumbrance shall be void.—The Family Code
has introduced some changes particularly on the aspect of the administration of the conjugal
partnership. The new law provides that the administration of the conjugal partnership is now
a joint undertaking of the husband and the wife. In the event that one spouse is incapacitated
or otherwise unable to participate in the administration of the conjugal partnership, the other
spouse may assume sole powers of administration. However, the power of administration
does not include the power to dispose or encumber property belonging to the conjugal
partnership. In all instances, the present law specifically requires the written consent of the
other spouse, or authority of the court for the disposition or encumbrance of conjugal
partnership property without which, the disposition or encumbrance shall be void.
The facts are stated in the opinion of the Court.

TINGA, J.:
The instant petition seeks a reversal of the Decision of the Court of Appeals in CA-
G.R. CV No. 48355 entitled "Dr. Galicano S. Macatangay, Jr. v. Arturo R. Abalos
and Esther Palisoc-Abalos," promulgated on March 14, 2002. The appellate court
reversed the trial court’s decision which dismissed the action for specific
performance filed by respondent, and ordered petitioner and his wife to execute in
favor of herein respondent a deed of sale over the subject property.
Spouses Arturo and Esther Abalos are the registered owners of a parcel of land
with improvements located at Azucena St., Makati City consisting of about three
hundred twenty-seven (327) square meters, covered by Transfer Certificate of Title
(TCT) No. 145316 of the Registry of Deeds of Makati.
Page 44 of 232
Armed with a Special Power of Attorney dated June 2, 1988, purportedly issued by
his wife, Arturo executed a Receipt and Memorandum of Agreement (RMOA) dated
October 17, 1989, in favor of respondent, binding himself to sell to respondent the
subject property and not to offer the same to any other party within thirty (30) days
from date. Arturo acknowledged receipt of a check from respondent in the amount
of Five Thousand Pesos (₱5,000.00), representing earnest money for the subject
property, the amount of which would be deducted from the purchase price of One
Million Three Hundred Three Hundred Thousand Pesos (₱1,300,000.00). Further,
the RMOA stated that full payment would be effected as soon as possession of the
property shall have been turned over to respondent.
Subsequently, Arturo’s wife, Esther, executed a Special Power of Attorney dated

October 25, 1989, appointing her sister, Bernadette Ramos, to act for and in her
behalf relative to the transfer of the property to respondent. Ostensibly, a marital
squabble was brewing between Arturo and Esther at the time and to protect his
interest, respondent caused the annotation of his adverse claim on the title of the
spouses to the property on November 14, 1989.
On November 16, 1989, respondent sent a letter to Arturo and Esther informing
them of his readiness and willingness to pay the full amount of the purchase price.
The letter contained a demand upon the spouses to comply with their obligation to
turn over possession of the property to him. On the same date, Esther, through her
attorney-in-fact, executed in favor of respondent, a Contract to Sell the property to
the extent of her conjugal interest therein for the sum of six hundred fifty thousand
pesos (₱650,000.00) less the sum already received by her and Arturo. Esther
agreed to surrender possession of the property to respondent within twenty (20)
days from November 16, 1989, while the latter promised to pay the balance of the
purchase price in the amount of one million two hundred ninety thousand pesos
(₱1,290,000.00) after being placed in possession of the property. Esther also
obligated herself to execute and deliver to respondent a deed of absolute sale upon
full payment.
In a letter dated December 7, 1989, respondent informed the spouses that he had
set aside the amount of One Million Two Hundred Ninety Thousand Pesos
(₱1,290,000.00) as evidenced by Citibank Check No. 278107 as full payment of the
purchase price. He reiterated his demand upon them to comply with their obligation
to turn over possession of the property. Arturo and Esther failed to deliver the
property which prompted respondent to cause the annotation of another adverse
claim on TCT No. 145316. On January 12, 1990, respondent filed a complaint for
specific performance with damages against petitioners. Arturo filed his answer to
the complaint while his wife was declared in default.
The Regional Trial Court (RTC) dismissed the complaint for specific performance. It
ruled that the Special Power of Attorney (SPA) ostensibly issued by Esther in favor
Page 45 of 232
of Arturo was void as it was falsified. Hence, the court concluded that the SPA
could not have authorized Arturo to sell the property to respondent. The trial court
also noted that the check issued by respondent to cover the earnest money was
dishonored due to insufficiency of funds and while it was replaced with another
check by respondent, there is no showing that the second check was issued as
payment for the earnest money on the property.
On appeal taken by respondent, the Court of Appeals reversed the decision of the
trial court. It ruled that the SPA in favor of Arturo, assuming that it was void, cannot
affect the transaction between Esther and respondent. The appellate court
ratiocinated that it was by virtue of the SPA executed by Esther, in favor of her
sister, that the sale of the property to respondent was effected. On the other hand,
the appellate court considered the RMOA executed by Arturo in favor of respondent
valid to effect the sale of Arturo’s conjugal share in the property.
Dissatisfied with the appellate court’s disposition of the case, petitioner seeks a
reversal of its decision alleging that:
I.
The Court of Appeals committed serious and manifest error when it decided
on the appeal without affording petitioner his right to due process.
II.
The Court of Appeals committed serious and manifest error in reversing and
setting aside the findings of fact by the trial court.
III.
The Court of Appeals erred in ruling that a contract to sell is a contract of

sale, and in ordering petitioner to execute a registrable form of deed of sale
over the property in favor of respondent.1
Petitioner contends that he was not personally served with copies of summons,
pleadings, and processes in the appeal proceedings nor was he given an
opportunity to submit an appellee’s brief. He alleges that his counsel was in the
United States from 1994 to June 2000, and he never received any news or
communication from him after the proceedings in the trial court were terminated.
Petitioner submits that he was denied due process because he was not informed of
the appeal proceedings, nor given the chance to have legal representation before
the appellate court.
Page 46 of 232
We are not convinced. The essence of due process is an opportunity to be heard.
Petitioner’s failure to participate in the appeal proceedings is not due to a cause
imputable to the appellate court but because of petitioner’s own neglect in
ascertaining the status of his case. Petitioner’s counsel is equally negligent in
failing to inform his client about the recent developments in the appeal proceedings.
Settled is the rule that a party is bound by the conduct, negligence and mistakes of
his counsel.2 Thus, petitioner’s plea of denial of due process is downright baseless.
Petitioner also blames the appellate court for setting aside the factual findings of
the trial court and argues that factual findings of the trial court are given much
weight and respect when supported by substantial evidence. He asserts that the
sale between him and respondent is void for lack of consent because the SPA
purportedly executed by his wife Esther is a forgery and therefore, he could not
have validly sold the subject property to respondent.
Next, petitioner theorizes that the RMOA he executed in favor of respondent was
not perfected because the check representing the earnest money was dishonored.
He adds that there is no evidence on record that the second check issued by
respondent was intended to replace the first check representing payment of earnest
money.
Respondent admits that the subject property is co-owned by petitioner and his wife,
but he objects to the allegations in the petition bearing a relation to the supposed
date of the marriage of the vendors. He contends that the alleged date of marriage
between petitioner and his wife is a new factual issue which was not raised nor
established in the court a quo. Respondent claims that there is no basis to annul
the sale freely and voluntarily entered into by the husband and the wife.
The focal issue in the instant petition is whether petitioner may be compelled to
convey the property to respondent under the terms of the RMOA and the Contract
to Sell. At bottom, the resolution of the issue entails the ascertainment of the
contractual nature of the two documents and the status of the contracts contained
therein.
Contracts, in general, require the presence of three essential elements: (1) consent
of the contracting parties; (2) object certain which is the subject matter of the
contract; and (3) cause of the obligation which is established. 3
Until the contract is perfected, it cannot, as an independent source of obligation,

serve as a binding juridical relation. 4 In a contract of sale, the seller must consent to
transfer ownership in exchange for the price, the subject matter must be
determinate, and the price must be certain in money or its equivalent. 5 Being
essentially consensual, a contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract and upon
Page 47 of 232
6
the price. However, ownership of the thing sold shall not be transferred to the
vendee until actual or constructive delivery of the property. 7
On the other hand, an accepted unilateral promise which specifies the thing to be
sold and the price to be paid, when coupled with a valuable consideration distinct
and separate from the price, is what may properly be termed a perfected contract of
option.8 An option merely grants a privilege to buy or sell within an agreed time and
at a determined price. It is separate and distinct from that which the parties may
enter into upon the consummation of the option. 9 A perfected contract of option
does not result in the perfection or consummation of the sale; only when the option
is exercised may a sale be perfected. 10 The option must, however, be supported by
a consideration distinct from the price.11
Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the property to
respondent for a price certain within a period of thirty days. The RMOA does not
impose upon respondent an obligation to buy petitioner’s property, as in fact it does
not even bear his signature thereon. It is quite clear that after the lapse of the thirty-
day period, without respondent having exercised his option, Arturo is free to sell the
property to another. This shows that the intent of Arturo is merely to grant
respondent the privilege to buy the property within the period therein stated. There
is nothing in the RMOA which indicates that Arturo agreed therein to transfer
ownership of the land which is an essential element in a contract of sale.
Unfortunately, the option is not binding upon the promissory since it is not
supported by a consideration distinct from the price. 12
As a rule, the holder of the option, after accepting the promise and before he
exercises his option, is not bound to buy. He is free either to buy or not to buy later.
In Sanchez v. Rigos13 we ruled that in an accepted unilateral promise to sell, the
promissor is not bound by his promise and may, accordingly, withdraw it, since
there may be no valid contract without a cause or consideration. Pending notice of
its withdrawal, his accepted promise partakes of the nature of an offer to sell which,
if acceded or consented to, results in a perfected contract of sale.
Even conceding for the nonce that respondent had accepted the offer within the
period stated and, as a consequence, a bilateral contract of purchase and sale was
perfected, the outcome would be the same. To benefit from such situation,
respondent would have to pay or at least make a valid tender of payment of the
price for only then could he exact compliance with the undertaking of the other
party.14 This respondent failed to do. By his own admission, he merely informed
respondent spouses of his readiness and willingness to pay. The fact that he had
set aside a check in the amount of One Million Two Hundred Ninety Thousand
Pesos (₱1,290,000.00) representing the balance of the purchase price could not
help his cause. Settled is the rule that tender of payment must be made in legal
tender. A check is not legal tender, and therefore cannot constitute a valid tender of
Page 48 of 232
15
payment. Not having made a valid tender of payment, respondent’s action for
specific performance must fail.
With regard to the payment of Five Thousand Pesos (₱5,000.00), the Court is of
the view that the amount is not earnest money as the term is understood in Article
1482 which signifies proof of the perfection of the contract of sale, but merely a
guarantee that respondent is really interested to buy the property. It is not the
giving of earnest money, but the proof of the concurrence of all the essential
elements of the contract of sale which establishes the existence of a perfected
sale.16 No reservation of ownership on the part of Arturo is necessary since, as
previously stated, he has never agreed to transfer ownership of the property to
respondent.
Granting for the sake of argument that the RMOA is a contract of sale, the same
would still be void not only for want of consideration and absence of respondent’s
signature thereon, but also for lack of Esther’s conformity thereto. Quite glaring is
the absence of the signature of Esther in the RMOA, which proves that she did not
give her consent to the transaction initiated by Arturo. The husband cannot alienate
any real property of the conjugal partnership without the wife’s consent. 17
However, it was the Contract to Sell executed by Esther through her attorney-in-
fact which the Court of Appeals made full use of. Holding that the contract is valid,
the appellate court explained that while Esther did not authorize Arturo to sell the
property, her execution of the SPA authorizing her sister to sell the land to
respondent clearly shows her intention to convey her interest in favor of
respondent. In effect, the court declared that the lack of Esther’s consent to the
sale made by Arturo was cured by her subsequent conveyance of her interest in
the property through her attorney-in-fact.
We do not share the ruling.
The nullity of the RMOA as a contract of sale emanates not only from lack of
Esther’s consent thereto but also from want of consideration and absence of
respondent’s signature thereon. Such nullity cannot be obliterated by Esther’s
subsequent confirmation of the putative transaction as expressed in the Contract to
Sell. Under the law, a void contract cannot be ratified 18 and the action or defense
for the declaration of the inexistence of a contract does not prescribe. 19 A void
contract produces no effect either against or in favor of anyone–it cannot create,
modify or extinguish the juridical relation to which it refers. 20
True, in the Contract to Sell, Esther made reference to the earlier RMOA executed
by Arturo in favor of respondent. However, the RMOA which Arturo signed is
different from the deed which Esther executed through her attorney-in-fact. For
one, the first is sought to be enforced as a contract of sale while the second is
Page 49 of 232
purportedly a contract to sell only. For another, the terms and conditions as to the
issuance of title and delivery of possession are divergent.
The congruence of the wills of the spouses is essential for the valid disposition of
conjugal property. Where the conveyance is contained in the same document
which bears the conformity of both husband and wife, there could be no question
on the validity of the transaction. But when there are two (2) documents on which
the signatures of the spouses separately appear, textual concordance of the
documents is indispensable. Hence, in this case where the wife’s putative consent
to the sale of conjugal property appears in a separate document which does not,
however, contain the same terms and conditions as in the first document signed by
the husband, a valid transaction could not have arisen.
Quite a bit of elucidation on the conjugal partnership of gains is in order.
Arturo and Esther appear to have been married before the effectivity of the Family
Code. There being no indication that they have adopted a different property regime,
their property relations would automatically be governed by the regime of conjugal
partnership of gains.21
The subject land which had been admittedly acquired during the marriage of the
spouses forms part of their conjugal partnership. 22
Under the Civil Code, the husband is the administrator of the conjugal partnership.
This right is clearly granted to him by law. 23 More, the husband is the sole
administrator. The wife is not entitled as of right to joint administration. 24
The husband, even if he is statutorily designated as administrator of the conjugal

partnership, cannot validly alienate or encumber any real property of the conjugal
partnership without the wife’s consent. 25 Similarly, the wife cannot dispose of any
property belonging to the conjugal partnership without the conformity of the
husband. The law is explicit that the wife cannot bind the conjugal partnership
without the husband’s consent, except in cases provided by law. 26
More significantly, it has been held that prior to the liquidation of the conjugal
partnership, the interest of each spouse in the conjugal assets is inchoate, a mere
expectancy, which constitutes neither a legal nor an equitable estate, and does not
ripen into title until it appears that there are assets in the community as a result of
the liquidation and settlement. The interest of each spouse is limited to the net
remainder or "remanente liquido" (haber ganancial) resulting from the liquidation of
the affairs of the partnership after its dissolution. 27 Thus, the right of the husband or
wife to one-half of the conjugal assets does not vest until the dissolution and
liquidation of the conjugal partnership, or after dissolution of the marriage, when it
Page 50 of 232
is finally determined that, after settlement of conjugal obligations, there are net
assets left which can be divided between the spouses or their respective heirs. 28
In not a few cases, we ruled that the sale by the husband of property belonging to
the conjugal partnership without the consent of the wife when there is no showing
that the latter is incapacitated is void ab initio because it is in contravention of the
mandatory
requirements of Article 166 of the Civil Code. 29 Since Article 166 of the Civil Code
requires the consent of the wife before the husband may alienate or encumber any
real property of the conjugal partnership, it follows that acts or transactions
executed against this mandatory provision are void except when the law itself
authorizes their validity.30
Quite recently, in San Juan Structural and Steel Fabricators, Inc. v. Court of
Appeals,31 we ruled that neither spouse could alienate in favor of another, his or her
interest in the partnership or in any property belonging to it, or ask for partition of
the properties before the partnership itself had been legally dissolved. Nonetheless,
alienation of the share of each spouse in the conjugal partnership could be had
after separation of property of the spouses during the marriage had been judicially
decreed, upon their petition for any of the causes specified in Article 191 32 of the
Civil Code in relation to Article 21433 thereof.
As an exception, the husband may dispose of conjugal property without the wife’s
consent if such sale is necessary to answer for conjugal liabilities mentioned in
Articles 161 and 162 of the Civil Code. 34 In Tinitigan v. Tinitigan, Sr.,35 the Court
ruled that the husband may sell property belonging to the conjugal partnership even
without the consent of the wife if the sale is necessary to answer for a big conjugal
liability which might endanger the family’s economic standing. This is one instance
where the wife’s consent is not required and, impliedly, no judicial intervention is
necessary.
Significantly, the Family Code has introduced some changes particularly on the
aspect of the administration of the conjugal partnership. The new law provides that
the administration of the conjugal partnership is now a joint undertaking of the
husband and the wife. In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal partnership, the other
spouse may assume sole powers of administration. However, the power of
administration does not include the power to dispose or encumber property
belonging to the conjugal partnership. 36 In all instances, the present law specifically
requires the written consent of the other spouse, or authority of the court for the
disposition or encumbrance of conjugal partnership property without which, the
disposition or encumbrance shall be void.37
Page 51 of 232
Inescapably, herein petitioner’s action for specific performance must fail. Even on
the supposition that the parties only disposed of their respective shares in the
property, the sale, assuming that it exists, is still void for as previously stated, the
right of the husband or the wife to one-half of the conjugal assets does not vest
until the liquidation of the conjugal partnership. Nemo dat qui non habet. No one
can give what he has not.
WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE. The

complaint in Civil Case No. 90-106 of the Regional Trial Court of Makati is
ordered DISMISSED. No pronouncement as to costs.
SO ORDERED.
Page 52 of 232
[74]
G.R. No. 102330. November 25, 1998.*

TERESITA C. FRANCISCO, petitioner, vs. HON. COURT OF APPEALS; and
CONCHITA EVANGELISTA and Her Husband SIMEON EVANGELISTA; ARACELI F.
MARILLA and Her Husband FREDDY MARILLA; ANTONIO V. FRANCISCO; and
EUSEBIO FRANCISCO, respondents.
Marriage; Husband and Wife; Conjugal Partnerships; Family Code; The repeal of

Articles 158 and 160 of the New Civil Code does not operate to prejudice or otherwise
affect rights which have become vested or accrued while the said provisions were in force.
—Indeed, Articles 158 and 160 of the New Civil Code have been repealed by the Family
Code of the Philippines which took effect on August 3, 1988. The aforecited articles fall
under Title VI, Book I of the New Civil Code which was expressly repealed by Article 254
(not Article 253 as alleged by petitioner in her petition and reply) of the Family Code.
Nonetheless, we cannot invoke the new law in this case without impairing prior vested
rights pursuant to Article 256 in relation to Article 105 (second paragraph) of the Family
Code. Accordingly, the repeal of Articles 158 and 160 of the New Civil Code does not
operate to prejudice or otherwise affect rights which have become vested or accrued while
the said provisions were in force. Hence, the rights accrued and vested while the cited
articles were in effect survive their repeal. We shall therefore resolve the issue of the nature
of the contested properties based on the provisions of the New Civil Code.
Same; Same; Same; The party who invokes the presumption of Article 160 of the New
Civil Code provides that “all property of the marriage is presumed to belong to the
conjugal partnership” must first prove that the property in controversy was acquired
during the marriage—the presumption refers only to the property acquired during the
marriage and does not operate when there is no showing as to when property alleged to be
conjugal was acquired.—Article 160 of the New Civil Code provides that “all property of
the marriage is presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife.” However, the party who invokes this
presumption must first prove that the property in controversy was acquired during the
marriage. Proof of acquisition during the coverture is a condition sine qua non for the
operation of the presumption in favor of the conjugal partnership. The party who asserts this
presumption must first prove said time element. Needless to say, the presumption refers
only to the property acquired during the marriage and does not operate when there is no
showing as to when property alleged to be conjugal was acquired. Moreover, this
presumption in favor of conjugality is rebuttable, but only with strong, clear and convincing
evidence; there must be a strict proof of exclusive ownership of one of the spouses.
Same; Same; Same; The fact that one is the applicant or licensee is not determinative
of the issue as to whether or not the property is conjugal or not.—As regards the house,
apartment and sari-sari store, private respondents aver that these properties were either
constructed or established by their father during his first marriage. On the other hand,
Page 53 of 232
petitioner insists that the said assets belong to conjugal partnership. In support of her claim,
petitioner relied on the building permits for the house and the apartment, with her as the
applicant although in the name of Eusebio. She also invoked the business license for the
sari-sari store issued in her name alone. It must be emphasized that the aforementioned
documents in no way prove that the improvements were acquired during the second
marriage. And the fact that one is the applicant or licensee is not determinative of the issue
as to whether or not the property is conjugal or not.
Same; Same; Same; Land Titles; The fact that the land was registered in the name of
a certain person with a description that he is married to a particular spouse is no proof that
the property was acquired during the spouses’ coverture.—It must be stressed that the
certificate of title upon which petitioner anchors her claim is inadequate. The fact that the
land was registered in the name of “Eusebio Francisco, married to Teresita Francisco,” is no
proof that the property was acquired during the spouses’ coverture. Acquisition of title and
registration thereof are two different acts. It is well settled that registration does not confer
title but merely confirms one already existing. The phrase “married to” preceding “Teresita
Francisco” is merely descriptive of the civil status of Eusebio Francisco.
QUISUMBING, J.:
This petition for review on certiorari seeks to reverse respondent appellate court's

decision1 promulgated on October 7, 1991, affirming in toto the judgment of the
Regional Trial Court which ruled,2 thus:
WHEREFORE, premises considered, this Court renders judgment in

favor of the defendants and against the plaintiff, as follows:
1) Ordering the dismissal of the Complaint with costs

against the plaintiff;
2) Declaring the defendant Eusebio Francisco the

administrator of the properties described in paragraph
eight (8) of the Complaint; and
3) Sentencing the plaintiff to pay the defendants the

sum of P10,000.00 as and for attorney's fees.
SO ORDERED.
Petitioner is the legal wife of private respondent Eusebio Francisco (Eusebio) by his
second marriage. Private respondents Conchita Evangelista, Araceli F. Marilla and
Antonio Francisco are children of Eusebio by his first marriage.
Page 54 of 232
Petitioner alleges that since their marriage on February 10, 1962, she and Eusebio
have acquired the following: (1) a sari-sari store, a residential house and lot, and an
apartment house, all situated at Col. S. Cruz St., Barangay Balite, Rodriguez
(formerly Montalban), Rizal, and; (2) a house and lot at Barrio San Isidro,
Rodriguez, Rizal. Petitioner further avers that these properties were administered
by Eusebio until he was invalidated on account of tuberculosis, heart disease and
cancer, thereby, rendering him unfit to administer them. Petitioner also claims that
private respondents succeeded in convincing their father to sign a general power of
attorney which authorized Conchita Evangelista to administer the house and lot
together with the apartments situated in Rodriguez, Rizal.
On August 31, 1988, petitioner filed a suit for damages and for annulment of said
general power of attorney, and thereby enjoining its enforcement. Petitioner also
sought to be declared as the administratrix of the properties in dispute. In due
course, the trial court rendered judgment in favor of private respondents. It held that
the petitioner failed to adduce proof that said properties were acquired during the
existence of the second conjugal partnership, or that they pertained exclusively to
the petitioner. Hence, the court ruled that those properties belong exclusively to
Eusebio, and that he has the capacity to administer them.
On appeal, the Court of Appeals affirmed in toto the decision of the trial court.
Hence, this petition.
Petitioner raised the following errors allegedly committed by the appellate court:
FIRST ASSIGNMENT OF ERROR
RESPONDENT COURT ERRED IN APPLYING ARTICLES 160 AND

158, UNDER TITLE VI OF THE (NEW) CIVIL CODE BECAUSE SAID
TITLE, TOGETHER WITH THE OTHERS, HAVE (SIC) ALREADY
BEEN REPEALED BY ARTICLE 253 OF THE FAMILY CODE.
SECOND ASSIGNMENT OF ERROR
RESPONDENT COURT FURTHER ERRED IN NOT APPLYING

ARTICLE 124 OF THE FAMILY CODE. 3
But in her reply, petitioner posed the sole issue "whether or not Article 116 of the
Family Code applies to this case because Article 253 of the same Code [which]
expressly repeals Arts. 158 and 160 of the Civil Code" 4
To our mind, the crucial issue in this petition is whether or not the appellate court
committed reversible error in affirming the trial court's ruling that the properties,
Page 55 of 232
subject matter of controversy, are not conjugal but the capital properties of Eusebio
exclusively.
Indeed, Articles 1585 and 1606 of the New Civil Code have been repealed by the
Family Code of the Philippines which took effect on August 3, 1988. The aforecited
articles fall under Title VI, Book I of the New Civil Code which was expressly
repealed by Article 2547 (not Article 253 as alleged by petitioner in her petition and
reply) of the Family Code. Nonetheless, we cannot invoke the new law in this case
without impairing prior vested rights pursuant to Article 256 8 in relation to Article
1059 (second paragraph) of the Family Code. Accordingly, the repeal of Articles
158 and 160 of the New Civil Code does not operate to prejudice or otherwise
affect rights which have become vested or accrued while the said provisions were
in force. 10 Hence, the rights accrued and vested while the cited articles were in
effect survive their repeal. 11 We shall therefore resolve the issue of the nature of
the contested properties based on the provisions of the New Civil Code.
Petitioner contends that the subject properties are conjugal, thus, she should
administer these on account of the incapacity of her husband. On the other hand,
private respondents maintain that the assets in controversy claimed by petitioner as
"conjugal" are capital properties of Eusebio exclusively as these were acquired by
the latter either through inheritance or through his industry prior to his second
marriage. Moreover, they stress that Eusebio is not incapacitated contrary to
petitioner's allegation.
We find petitioner's contention lacks merit, as hereafter elucidated.
Art. 160 of the New Civil Code provides that "all property of the marriage is
presumed to belong to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife". However, the party who invokes this
presumption must first prove that the property in controversy was acquired during
the marriage. 12 Proof of acquisition during the coverture is a condition sine qua
non for the operation of the presumption in favor of the conjugal partnership. 13 The
party who asserts this presumption must first prove said time element. Needless to
say, the presumption refers only to the property acquired during the marriage and
does not operate when there is no showing as to when property alleged to be
conjugal was acquired. 14 Moreover, this presumption in favor of conjugality is
rebuttable, but only with strong, clear and convincing evidence; there must be a
strict proof of exclusive ownership of one of the spouses. 15
In this case, petitioner failed to adduce ample evidence to show that the properties
which she claimed to be conjugal were acquired during her marriage with Eusebio.
With respect to the land at Col. Cruz St., Balite, Rodriguez, Rizal, petitioner failed to
refute the testimony of Eusebio that he inherited the same from his parents.
Page 56 of 232
Interestingly, petitioner even admitted that Eusebio brought into their marriage the
said land, albeit in the concept of a possessor only as it was not yet registered in
his name.
Whether Eusebio succeeded to the property prior or subsequent to his second

marriage is inconsequential. The property should be regarded as his own
exclusively, as a matter of law, pursuant to Article 148 16 of the New Civil Code.
Essentially, property already owned by a spouse prior to the marriage, and brought
to the marriage, is considered his or her separate property. 17 Acquisitions by
lucrative title refers to properties acquired gratuitously and include those acquired
by either spouse during the marriage by inheritance, devise, legacy, or
donation. 18 Hence, even if it be assumed that Eusebio's acquisition by succession
of the land took place during his second marriage, the land would still be his
"exclusive property" because it was acquired by him, "during the marriage, by
lucrative title." 19
As regards the house, apartment and sari-sari store, private respondents aver that
these properties were either constructed or established by their father during his
first marriage. On the other hand, petitioner insists that the said assets belong to
conjugal partnership. In support of her claim, petitioner relied on the building
permits for the house and the apartment, with her as the applicant although in the
name of Eusebio. She also invoked the business license for the sari-sari store
issued in her name alone.
It must be emphasized that the aforementioned documents in no way prove that the
improvements were acquired during the second marriage. And the fact that one is
the applicant or licensee is not determinative of the issue as to whether or not the
property is conjugal or not. As the appellate court aptly noted:
. . . . And the mere fact that plaintiff-appellant [petitioner herein] is the

licensee of the sari-sari store (Exhibit "F-3"; Exhibit "G", pp. 44-47,
Record) or is the supposed applicant for a building permit does not
establish that these improvements were acquired during her marriage
with Eusebio Francisco, especially so when her exhibits ("D-1", "E",
"E-I", "T", "T-1", "T-2", "U", "U-l" and "U-2"; pp. 38-40; 285-290,
Record; TSN, January 17, 1989, page 6-7) are diametrically opposed
to her pretense as they all described Eusebio Francisco as the owner
of the structures (Article 1431, New Civil Code; Section 4. Rule 129,
Revised Rules on Evidence).
Neither is it plausible to argue that the sari-sari store constructed on

the land of Eusebio Francisco has thereby become conjugal for want
of evidence to sustain the proposition that it was constructed at the
Page 57 of 232
expense of their partnership (second paragraph, Article 158, New
Civil Code). Normally, this absence of evidence on the source of
funding will call for the application of the presumption under Article
160 of the New Civil Code that the store is really conjugal but it
cannot be so in this particular case again, by reason of the dearth in
proof that it was erected during the alleged second marriage (5
Sanchez Roman 840-841; 9 Manresa; cited in Civil Code of the
Philippines by Tolentino, Volume 1, 1983 Edition, page
421).20
Regarding the property at San Isidro, Rodriguez, Rizal, private respondents assert
that their father purchased it during the lifetime of their mother. In contrast,
petitioner claims ownership over said property in as much as the title thereto is
registered in the name of "Eusebio Francisco, married to Teresita Francisco."
It must be stressed that the certificate of title upon which petitioner anchors her
claim is inadequate. The fact that the land was registered in the name of "Eusebio
Francisco, married to Teresita Francisco", is no proof that the property was
acquired during the spouses coverture. Acquisition of title and registration thereof
are two different acts. 21 It is well settled that registration does not confer title but
merely confirms one already existing. 22 The phrase "married to" preceding
"Teresita Francisco" is merely descriptive of the civil status of Eusebio Francisco. 23
In the light of the foregoing circumstances, the appellate court cannot be said to
have been without valid basis in affirming the lower court's ruling that the properties
in controversy belong exclusively to Eusebio.
Now, insofar as the administration of the subject properties is concerned, it follows

that Eusebio shall retain control thereof considering that the assets are exclusively
his capital. 24 Even assuming for the sake of argument that the properties are
conjugal, petitioner cannot administer themn inasmuch as Eusebio is not
incapacitated. Contrary to the allegation of petitioner, Eusebio, as found by the
lower court, is not suffering from serious illness so as to impair his fitness to
administer his properties. That he is handicapped due to a leg injury sustained in a
bicycle accident, allegedly aggravated when petitioner pushed him to the ground in
one of their occasional quarrels, did not render him, in the Court's view,
incapacitated to perform acts of administration over his own properties.
WHEREFORE, petition is hereby DENIED. The Decision of the Court of Appeals is

AFFIRMED.
Costs against petitioner. SO ORDERED.
Page 58 of 232
[75]
G.R. No. 124642. February 23, 2004.*
ALFREDO CHING and ENCARNACION CHING, petitioners, vs. THE HON. COURT OF
APPEALS and ALLIED BANKING CORPORATION, respondents.
Actions; Parties; Attachment; Remedies of Third Parties Against Wrongful

Attachments; 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, and 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, more specifically if he has indeed levied on
attachment and taken hold of property not belonging to the plaintiff; 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, or 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.–In Ong v. Tating, 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.
Page 59 of 232
Same; Certiorari; Words and Phrases; 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.–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.
Same; Same; 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.–
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.
Husband and Wife; Conjugal Partnerships; Art. 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–as
long as the properties were acquired by the parties during the marriage, they are presumed
to be conjugal in nature.–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, 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.
Same; Same; The signing as surety is certainly not an exercise of an industry or

profession–no matter how often an executive acted on or is 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.– The petitioner-husband signed the continuing guaranty
and suretyship agreement as security for the payment of the loan obtained by the PBMCI
Page 60 of 232
from the private respondent in the amount of P38,000,000. In Ayala Investment and
Development Corp. v. Court of Appeals, 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.”
Same; Same; 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 is denied the power to assume unnecessary and unwarranted risks to the financial
stability of the conjugal partnership; No presumption can be inferred from the fact that
when the husband enters into an accommodation agreement or a contract of surety, the
conjugal partnership would thereby be benefited.–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. 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.
Same; Same; Loans; The benefits contemplated by Art. 161 of the New Civil Code
must be those directly resulting from a loan, not merely a byproduct or a spin-off of the
loan itself; 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.–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 byproduct or a spin-off of
the loan itself. This is different from the situation where the husband borrows money or
receives services to be used for his own business or profession. In the Ayala case, we ruled
that it is such a contract that is one within the term “obligation for the benefit of the
conjugal partnership.” Thus: (A) If the husband himself is the principal obligor in the
Page 61 of 232
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.
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 Resolution 2 on April 2, 1996 denying the petitioners’
motion for reconsideration. The impugned decision granted the private
respondent’s petition for certiorari and set aside the Orders of the trial court dated
December 15, 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
Page 62 of 232
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 brought 11 in that they falsely represented
themselves to be in a financial position to pay their obligation upon maturity
thereof."12 Its supporting affidavit stated, inter alia, that the "[d]efendants have
removed or disposed of their properties, or [are] ABOUT to do so, with intent to
defraud their creditors."13
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
Page 63 of 232
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
Page 64 of 232
No. 2250. He averred that as a surety of the PBMCI, he must also necessarily
benefit from the defenses of his principal. The ABC opposed Ching’s omnibus
motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion 27 praying for the
dismissal of the complaint, arguing that the ABC had "abandoned and waived" its
right to proceed against the continuing guaranty by its act of resorting to preliminary
attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his
preliminary attachment bond from ₱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.
Page 65 of 232
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.
Page 66 of 232
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
Page 67 of 232
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
Page 68 of 232
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
Page 69 of 232
subsists in the absence of clear, satisfactory and convincing evidence to overcome
the same.54
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000
shares of stocks in the Citycorp Investment Philippines were issued to and
registered in its corporate books in the name of the petitioner-husband when the
said corporation was incorporated on May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-spouses. The shares of stocks are,
thus, presumed to be the conjugal partnership property of the petitioners. The
private respondent failed to adduce evidence that the petitioner-husband acquired
the stocks with his exclusive money.55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment Philippines solely in
the name of the petitioner-husband does not constitute proof that the petitioner-
husband, not the conjugal partnership, owned the same. 56 The private respondent’s
reliance on the rulings of this Court in Maramba v. Lozano 57 and Associated
Insurance & Surety Co., Inc. v. Banzon58 is misplaced. In the Maramba case, we
held that where there is no showing as to when the property was acquired, the fact
that the title is in the wife’s name alone is determinative of the ownership of the
property. The principle was reiterated in the Associated Insurance case where the
uncontroverted evidence showed that the shares of stocks were acquired during
the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court in
Wong v. Intermediate Appellate Court 59 buttresses the case for the petitioners. In
that case, we ruled that he who claims that property acquired by the spouses
during their marriage is not conjugal partnership property but belongs to one of
them as his personal property is burdened to prove the source of the money utilized
to purchase the same. In this case, the private respondent claimed that the
petitioner-husband acquired the shares of stocks from the Citycorp Investment
Philippines in his own name as the owner thereof. It was, thus, the burden of the
private respondent to prove that the source of the money utilized in the acquisition
of the shares of stocks was that of the petitioner-husband alone. As held by the trial
court, the private respondent failed to adduce evidence to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and
suretyship agreement with the private respondent for the payment of the PBMCI
loans, the petitioner-husband was in the exercise of his profession, pursuing a
legitimate business. The appellate court erred in concluding that the conjugal
partnership is liable for the said account of PBMCI under Article 161(1) of the New
Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3] 60 of the Family Code
of the Philippines) provides:
Page 70 of 232
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
Page 71 of 232
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.
Page 72 of 232
[76]
G.R. No. 55322. February 16, 1989.*
MOISES JOCSON, petitioner, vs. HON. COURT OF APPEALS, AGUSTINA JOCSON-
VASQUEZ, ERNESTO VASQUEZ, respondents.
Civil Law; Obligations and Contracts; Voidable Contracts; Sales; Contract of
Sale; Consideration; The slight difference between the market value and the purchase
price of the properties in question may be disregarded considering that the contracts of sale
were executed between the father and the daughter, in which case, filial love must be taken
into consideration.—Secondly, neither may the contract be declared void because of alleged
inadequacy of price. To begin with, there was no showing that the prices were grossly
inadequate. In fact, the total purchase price paid by Agustina Jocson-Vasquez is above the
total assessed value of the properties alleged by petitioner. In his Second Amended
Complaint, petitioner alleged that the total assessed value of the properties mentioned in
Exhibit 3 was P8.920; Exhibit 4, P3,500; and Exhibit 2, P24,840, while the purchase price
paid was P10,000, P5,000, and P8,000, respectively, the latter for the 1/3 share of Emilio
Jocson from the paraphernal properties of his wife, Alejandra Poblete. And any difference
between the market value and the purchase price, which as admitted by Emilio Jocson was
only slight, may not be so shocking considering that the sales were effected by a father to
her daughter in which case filial love must be taken into consideration (Alsua-Betts vs.
Court of Appeals, No. L-46430-31, April 30, 1979, 92 SCRA 332).
Same; Property; Persons and Family Relations; Conjugal Partnership; Proof of

acquisition during the coverture is a condition sine qua non for the application of the
presumption in favor of conjugal partnership.—There is another ground relied upon by
petitioner in assailing Exhibits 3 and 4, that the properties subject matter therein are
conjugal properties of Emilio Jocson and Alejandra Poblete. It is the position of petitioner
that since the properties sold to Agustina Jocson-Vasquez under Exhibit 3 were registered in
the name of “Emilio Jocson, married to Alejandra Poblete,” the certificates of title he
presented as evidence (Exhibits “E” to “J”, pp. 4-9, Records) were enough proof to show
that the properties covered therein were acquired during the marriage of their parents, and,
therefore, under Article 160 of the Civil Code, presumed to be conjugal properties. Article
160 of the Civil Code provides that: “All property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to
the wife.” In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23 SCRA
637, 644, We held that: “Anent their claim that the shares in question are conjugal assets,
the spouses Perez adduced not a modicum of evidence, although they repeatedly invoked
article 160 of the New Civil Code which provides that x x x. As interpreted by this Court,
the party who invokes this presumption must first prove that the property in controversy
was acquired during the marriage. In other words, proof of acquisition during the coverture
is a condition sine qua non for the operation of the presumption in favor of conjugal
ownership. Thus in Camia de Reyes vs. Reyes de Ilano [62 Phil. 629, 639], it was held that
‘according to law and jurisprudence, it is sufficient to prove that the property was acquired
during the marriage in order that the same may be deemed conjugal property,’ In the recent
Page 73 of 232
case of Maramba vs. Lozano, et. al, [L-21533, June 29, 1967, 20 SCRA 474], this Court,
thru Mr. Justice Makalintal, reiterated that ‘the presumption under Article 160 of the Civil
Code refers to property acquired during the marriage,’ and then concluded that since there is
no showing as to when the property in question was acquired x x x the fact that the title is in
the wife’s name alone is determinative.’ Similarly, in the case at bar, since there is no
evidence as to when the shares of stock were acquired, the fact that they are registered in the
name of the husband alone is an indication that the shares belong exclusively to said
spouse.”
Same; Same; Same; Same; Same; The fact that the subject properties were registered
in the name of “Emilio Jocson married to Alejandro Poblete” is no proof that said
properties were acquired during the spouses’ marriage.—It is thus clear that before Moises
Jocson may validly invoke the presumption under Article 160 he must first present proof
that the disputed properties were acquired during the marriage of Emilio Jocson and
Alexandra Poblete. The certificates of title, however, upon which petitioner rests his claim
is insufficient. The fact that the properties were registered in the name of “Emilio Jocson,
married to Alejandra Poblete” is no proof that the properties were acquire during the
spouses coverture. Acquisition of title and registration thereof are two different acts. It is
well settled that registration does not confer title but merely confirms one already existing
(See Torela vs. Torela, supra). It may be that the properties under dispute were acquired by
Emilio Jocson when he was still a bachelor but were registered only after his marriage to
Alejandra Poblete, which explains why he was described in the certificates of title as
married to the latter.
Same; Same; Same; Same; Same; Same; The words “married to” preceding the

name Alejandra Poblete are merely descriptive of Emilio Jocsons’s civil status.—Contrary
to petitioner’s position, the certificates of title show, on their face, that the properties were
exclusively Emilio Jocson’s, the registered owner. This is so because the words “married
to” preceding “Alejandra Poblete” are merely descriptive of the Civil status of Emilio
Jocson (Litam v. Rivera, 100 Phil. 354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4
SCRA 1143; Magallon V. Montejo, G.R. No. 73733, December 16, 1986, 146 SCRA 282).
In other words, the import from the certificates of title is that Emilio Jocson is the owner of
the properties, the same having been registered in his name alone, and that he is married to
Alejandra Poblete.
PETITION for certiorari to review the decision of the Court of Appeals.
This is a petition for review on certiorari under Rule 45 of the Rules of Court of the
decision of the Court of Appeals in CA- G.R. No. 63474, promulgated on April 30,
1980, entitled "MOISES JOCSON, plaintiff-appellee, versus AGUSTINA JOCSON-
VASQUEZ and ERNESTO VASQUEZ, defendant-appellants," upholding the
validity of three (3) documents questioned by Moises Jocson, in total reversal of the
decision of the then Court of First Instance of Cavite, Branch I, which declared
Page 74 of 232
them as null and void; and of its resolution, dated September 30, 1980, denying
therein appellee's motion for reconsideration.
Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the only
surviving offsprings of the spouses Emilio Jocson and Alejandra Poblete, while
respondent Ernesto Vasquez is the husband of Agustina. Alejandra Poblete
predeceased her husband without her intestate estate being settled. Subsequently,
Emilio Jocson also died intestate on April 1, 1972.
As adverted to above, the present controversy concerns the validity of three (3)
documents executed by Emilio Jocson during his lifetime. These documents
purportedly conveyed, by sale, to Agustina Jocson-Vasquez what apparently
covers almost all of his properties, including his one-third (1/3) share in the estate
of his wife. Petitioner Moises Jocson assails these documents and prays that they
be declared null and void and the properties subject matter therein be partitioned
between him and Agustina as the only heirs of their deceased parents.
The documents, which were presented as evidence not by Moises Jocson, as the
party assailing its validity, but rather by herein respondents, are the following:
1) "Kasulatan ng Bilihan ng Lupa," marked as Exhibit 3 (pp. 12-13,

Records) for the defendant in the court a quo, dated July 27, 1968. By
this document Emilio Jocson sold to Agustina Jocson-Vasquez six (6)
parcels of land, all located at Naic, Cavite, for the sum of ten
thousand P10,000.00 pesos. On the same document Emilio Jocson
acknowledged receipt of the purchase price, thus:
Na ngayon, alang-alang sa halagang SAMPUNG LIBONG PISO

(P10,000) salaping Pilipino na aking tinanggap ng buong kasiyahan
loob at ang pagkakatanggap ay aking hayagang inaamin sa
pamamagitan ng kasulatang ito, sa aking anak na si Agustina
Jocson, na may sapat na gulang, mamamayang Pilipino, asawa ni
Ernesto Vasquez, at naninirahan sa Poblacion, Naic, Cavite, ay aking
ipinagbile ng lubusan at kagyat at walang ano mang pasubali ang
nabanggit na anim na pirasong lupa na nasa unang dahon ng
dokumentong ito, sa nabanggit na Agustina Jocson, at sa kaniyang
tagapagmana o makakahalili at gayon din nais kong banggitin na
kahit na may kamurahan ang ginawa kong pagbibile ay dahilan sa
ang nakabile ay aking anak na sa akin at mapaglingkod, madamayin
at ma-alalahanin, na tulad din ng isa ko pang anak na lalaki. Ang
kuartang tinanggap ko na P10,000.00, ay gagamitin ko sa aking
katandaan at mga huling araw at sa aking mga ibang mahahalagang
pangangailangan. [Emphasis supplied]
Page 75 of 232
Na nais ko ring banggitin na ang ginawa kong ito ay hindi labag sa
ano mang batas o kautusan, sapagkat ang aking pinagbile ay akin at
nasa aking pangalan. Ang mga lupang nasa pangalan ng aking
nasirang asawa ay hindi ko ginagalaw ni pinakikialaman at iyon ay
dapat na hatiin ng dalawa kong anak alinsunod sa umiiral na batas (p.
13, Records.)
2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968, marked as

Exhibit 4 (p. 14, Records). On the face of this document, Emilio
Jocson purportedly sold to Agustina Jocson-Vasquez, for the sum of
FIVE THOUSAND (P5,000.00) PESOS, two rice mills and a camarin
(camalig) located at Naic, Cavite. As in the first document, Moises
Jocson acknowledged receipt of the purchase price:
'Na alang-alang sa halagang LIMANG LIBONG PISO (P5,000.00)

salaping Pilipino na aking tinanggap ng buong kasiyahan loob sa
aking anak na Agustina Jocson .... Na ang halagang ibinayad sa akin
ay may kamurahan ng kaunti ngunit dahil sa malaking pagtingin ko sa
kaniya ... kaya at pinagbile ko sa kaniya ang mga nabanggit na
pagaari kahit na hindi malaking halaga ... (p. 14, Records).
3) Lastly, the "Deed of Extrajudicial Partition and Adjudication with

Sale, "dated March 9, 1969, marked as Exhibit 2 (p. 10-11, Records),
whereby Emilio Jocson and Agustina Jocson-Vasquez, without the
participation and intervention of Moises Jocson, extrajudicially
partitioned the unsettled estate of Alejandra Poblete, dividing the
same into three parts, one-third (1/3) each for the heirs of Alejandra
Poblete, namely: Emilio Jocson, Agustina Jocson-Vasquez and
Moises Jocson. By the same instrument, Emilio sold his one- third
(1/3) share to Agustin for the sum of EIGHT THOUSAND (P8,000.00)
PESOS. As in the preceding documents, Emilio Jocson
acknowledged receipt of the purchase price:
Now for and in consideration of the sum of only eight thousand

(P8,000.00) pesos, which I, the herein Emilio Jocson had received
from my daughter Agustina Jocson, do hereby sell, cede, convey and
transfer, unto the said Agustina Jocson, her heirs and assigns,
administrators and successors in interests, in the nature of absolute
and irrevocable sale, all my rights, interest, shares and participation,
which is equivalent to one third (1/3) share in the properties herein
mentioned and described the one third being adjudicated unto
Agustina Jocson and the other third (1/3) portion being the share of
Moises Jocson. (p. 11, Records).
Page 76 of 232
These documents were executed before a notary public. Exhibits 3 and 4 were
registered with the Office of the Register of Deeds of Cavite on July 29, 1968 and
the transfer certificates of title covering the properties therein in the name of Emilio
Jocson, married to Alejandra Poblete," were cancelled and new certificates of title
were issued in the name of Agustina Jocson-Vasquez. Exhibit 2 was not registered
with the Office of the Register of Deeds.
Herein petitioner filed his original complaint (Record on Appeal, p. 27, Rollo) on
June 20,1973 with the then Court of First Instance of Naic, Cavite (docketed as
Civil Case No. TM- 531), and which was twice amended. In his Second Amended
Complaint (pp. 47-58, Record on Appeal), herein petitioner assailed the above
documents, as aforementioned, for being null and void.
It is necessary to partly quote the allegation of petitioner in his complaint for the
reason that the nature of his causes of action is at issue, thus:
8. [With regard the first document, that] the defendants, through fraud,
deceit, undue pressure and influence and other illegal machinations,
were able to induce, led, and procured their father ... to sign [the]
contract of sale ..., for the simulated price of P10,000.00, which is a
consideration that is shocking to the conscience of ordinary man and
despite the fact that said defendants have no work or livelihood of
their own ...; that the sale is null and void, also, because it is fictitious,
simulated and fabricated contract x x x (pp. 52-53, Record on
Appeal). [Emphasis supplied]
xxx xxx xxx
12. [With regards the second and third document, that they] are null
and void because the consent of the father, Emilio Jocson, was
obtained with fraud, deceit, undue pressure, misrepresentation and
unlawful machinations and trickeries committed by the defendant on
him; and that the said contracts are simulated, fabricated and
fictitious, having been made deliberately to exclude the plaintiff from
participating and with the dishonest and selfish motive on the part of
the defendants to defraud him of his legitimate share on said
properties [subject matter thereof]; and that without any other
business or employment or any other source of income, defendants
who were just employed in the management and administration of the
business of their parents, would not have the sufficient and ample
means to purchase the said properties except by getting the earnings
of the business or by simulated consideration ... (pp. 54-55, Record
on Appeal). [Emphasis supplied]
Page 77 of 232
Petitioner explained that there could be no real sale between a father and daughter
who are living under the same roof, especially so when the father has no need of
money as the properties supposedly sold were all income-producing. Further,
petitioner claimed that the properties mentioned in Exhibits 3 and 4 are the
unliquidated conjugal properties of Emilio Jocson and Alejandra Poblete which the
former, therefore, cannot validly sell (pp. 53, 57, Record on Appeal). As far as
Exhibit 2 is concerned, petitioner questions not the extrajudicial partition but only
the sale by his father to Agustina of the former's 1/3 share (p. 13, Rollo).
The trial court sustained the foregoing contentions of petitioner (pp. 59-81, Record
on Appeal). It declared that the considerations mentioned in the documents were
merely simulated and fictitious because: 1) there was no showing that Agustina
Jocson-Vasquez paid for the properties; 2) the prices were grossly inadequate
which is tantamount to lack of consideration at all; and 3) the improbability of the
sale between Emilio Jocson and Agustina Jocson-Vasquez, taking into
consideration the circumstances obtaining between the parties; and that the real
intention of the parties were donations designed to exclude Moises Jocson from
participating in the estate of his parents. It further declared the properties
mentioned in Exhibits 3 and 4 as conjugal properties of Emilio Jocson and
Alejandra Poblete, because they were registered in the name of "Emilio Jocson,
married to Alejandra Poblete" and ordered that the properties subject matter of all
the documents be registered in the name of herein petitioners and private
respondents.
On appeal, the Court of Appeals in CA-G.R. No. 63474-R rendered a decision (pp.
29-42, Rollo) and reversed that of the trial court's and ruled that:
1. That insofar as Exhibits 3 and 4 are concerned the appellee's

complaint for annulment, which is indisputably based on fraud, and
undue influence, is now barred by prescription, pursuant to the settled
rule that an action for annulment of a contract based on fraud must be
filed within four (4) years, from the discovery of the fraud, ... which in
legal contemplation is deemed to be the date of the registration of
said document with the Register of Deeds ... and the records
admittedly show that both Exhibits 3 and 4, were all registered on July
29, 1968, while on the other hand, the appellee's complaint was filed
on June 20, 1973, clearly beyond the aforesaid four-year prescriptive
period provided by law;
2. That the aforesaid contracts, Exhibits 2, 3, and 4, are decisively not

simulated or fictitious contracts, since Emilio Jocson actually and
really intended them to be effective and binding against him, as to
divest him of the full dominion and ownership over the properties
subject of said assailed contracts, as in fact all his titles over the
Page 78 of 232
same were all cancelled and new ones issued to appellant Agustina
Jocson-Vasquez ...;
3. That in regard to Exhibit 2, the same is valid and subsisting, and

the partition with sale therein made by and between Emilio Jocson
and Agustina Jocson-Vasquez, affecting the 2/3 portion of the subject
properties described therein have all been made in accordance with
Article 996 of the New Civil Code on intestate succession, and the
appellee's (herein petitioner) remaining 1/3 has not been prejudiced
(pp. 41-42, Rollo).
In this petition for review, Moises Jocson raised the following assignments of errors:
1. HAS THE RESPONDENT COURT OF APPEALS ERRED IN

CONCLUDING THAT THE SUIT FOR THE ANNULMENT OF
CONTRACTS FILED BY PETITIONERS WITH THE TRIAL COURT
IS "BASED ON FRAUD" AND NOT ON ITS INEXISTENCE AND
NULLITY BECAUSE OF IT'S BEING SIMULATED OR FICTITIOUS
OR WHOSE CAUSE IS CONTRARY TO LAW, MORALS AND
GOOD CUSTOMS?
II. HAS THE RESPONDENT COURT OF APPEALS ERRED IN

CONCLUDING THAT THE COMPLAINT FILED BY PETITIONER IN
THE TRIAL COURT IS BARRED BY PRESCRIPTION?
III. HAS THE RESPONDENT COURT OF APPEALS ERRED IN NOT

DECLARING AS INEXISTENT AND NULL AND VOID THE
CONTRACTS IN QUESTION AND IN REVERSING THE
DECLARING DECISION OF THE TRIAL COURT? (p. 2, Rollo)
I.
The first and second assignments of errors are related and shall be jointly
discussed.
According to the Court of Appeals, herein petitioner's causes of action were based
on fraud. Under Article 1330 of the Civil Code, a contract tainted by vitiated
consent, as when consent was obtained through fraud, is voidable; and the action
for annulment must be brought within four years from the time of the discovery of
the fraud (Article 1391, par. 4, Civil Code), otherwise the contract may no longer be
contested. Under present jurisprudence, discovery of fraud is deemed to have
taken place at the time the convenant was registered with the Register of Deeds
(Gerona vs. De Guzman, No. L-19060, May 29,1964, 11 SCRA 153). Since
Exhibits 3 and 4 were registered on July 29, 1968 but Moises Jocson filed his
Page 79 of 232
complaint only on June 20, 1973, the Court of Appeals ruled that insofar as these
documents were concerned, petitioner's "annulment suit" had prescribed.
If fraud were the only ground relied upon by Moises Jocson in assailing the
questioned documents, We would have sustained the above pronouncement. But it
is not so. As pointed out by petitioner, he further assailed the deeds of conveyance
on the ground that they were without consideration since the amounts appearing
thereon as paid were in fact merely simulated.
According to Article 1352 of the Civil Code, contracts without cause produce no
effect whatsoever. A contract of sale with a simulated price is void (Article 1471;
also Article 1409 [3]]), and an action for the declaration of its nullity does not
prescribe (Article 1410, Civil Code; See also, Castillo v. Galvan, No. L-27841,
October 20, l978, 85 SCRA 526). Moises Jocsons saction, therefore, being for the
judicial declaration of nullity of Exhibits 3 and 4 on the ground of simulated price, is
imprescriptible.
II.
For petitioner, however, the above discussion may be purely academic. The burden
of proof in showing that contracts lack consideration rests on he who alleged it. The
degree of proof becomes more stringent where the documents themselves show
that the vendor acknowledged receipt of the price, and more so where the
documents were notarized, as in the case at bar. Upon consideration of the records
of this case, We are of the opinion that petitioner has not sufficiently proven that the
questioned documents are without consideration.
Firstly, Moises Jocson's claim that Agustina Jocson-Vasquez had no other source
of income other than what she derives from helping in the management of the
family business (ricefields and ricemills), and which was insufficient to pay for the
purchase price, was contradicted by his own witness, Isaac Bagnas, who testified
that Agustina and her husband were engaged in the buy and sell of palay and rice
(p. 10, t.s.n., January 14, 1975). Amazingly, petitioner himself and his wife testified
that they did not know whether or not Agustina was involved in some other
business (p. 40, t.s.n., July 30, 1974; p. 36, t.s.n., May 24, 1974).
On the other hand, Agustina testified that she was engaged in the business of
buying and selling palay and rice even before her marriage to Ernesto Vasquez
sometime in 1948 and continued doing so thereafter (p. 4, t.s.n., March 15, 1976).
Considering the foregoing and the presumption that a contract is with a
consideration (Article 1354, Civil Code), it is clear that petitioner miserably failed to
prove his allegation.
Page 80 of 232
Secondly, neither may the contract be declared void because of alleged
inadequacy of price. To begin with, there was no showing that the prices were
grossly inadequate. In fact, the total purchase price paid by Agustina Jocson-
Vasquez is above the total assessed value of the properties alleged by petitioner.
In his Second Amended Complaint, petitioner alleged that the total assessed value
of the properties mentioned in Exhibit 3 was P8,920; Exhibit 4, P3,500; and Exhibit
2, P 24,840, while the purchase price paid was P10,000, P5,000, and P8,000,
respectively, the latter for the 1/3 share of Emilio Jocson from the paraphernal
properties of his wife, Alejandra Poblete. And any difference between the market
value and the purchase price, which as admitted by Emilio Jocson was only slight,
may not be so shocking considering that the sales were effected by a father to her
daughter in which case filial love must be taken into consideration (Alsua-Betts vs.
Court of Appeals, No. L-46430-31, April 30, 1979, 92 SCRA 332).
Further, gross inadequacy of price alone does not affect a contract of sale, except
that it may indicate a defect in the consent, or that the parties really intended a
donation or some other act or contract (Article 1470, Civil Code) and there is
nothing in the records at all to indicate any defect in Emilio Jocson's consent.
Thirdly, any discussion as to the improbability of a sale between a father and his
daughter is purely speculative which has no relevance to a contract where all the
essential requisites of consent, object and cause are clearly present.
There is another ground relied upon by petitioner in assailing Exhibits 3 and 4, that
the properties subject matter therein are conjugal properties of Emilio Jocson and
Alejandra Poblete. It is the position of petitioner that since the properties sold to
Agustina Jocson-Vasquez under Exhibit 3 were registered in the name of "Emilio
Jocson, married to Alejandra Poblete," the certificates of title he presented as
evidence (Exhibits "E', to "J', pp. 4-9, Records) were enough proof to show that the
properties covered therein were acquired during the marriage of their parents, and,
therefore, under Article 160 of the Civil Code, presumed to be conjugal properties.
Article 160 of the Civil Code provides that:
All property of the marriage is presumed to belong to the conjugal

partnership, unless it be proved that it pertains exclusively to the
husband or to the wife.
In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23 SCRA
637, 644, We held that:
Anent their claim that the shares in question are conjugal assets, the
spouses Perez adduced not a modicum of evidence, although they
repeatedly invoked article 160 of the New Civil Code which provides
Page 81 of 232
that ... . As interpreted by this Court, the party who invokes this
presumption must first prove that the property in controversy was
acquired during the marriage. In other words, proof of acquisition
during the coverture is a condition sine qua non for the operation of
the presumption in favor of conjugal ownership. Thus in Camia de
Reyes vs. Reyes de Ilano [62 Phil. 629, 639], it was held that
"according to law and jurisprudence, it is sufficient to prove that the
Property was acquired during the marriage in order that the same
may be deemed conjugal property." In the recent case of Maramba
vs. Lozano, et. al. [L-21533, June 29, 1967, 20 SCRA 474], this
Court, thru Mr. Justice Makalintal, reiterated that "the presumption
under Article 160 of the Civil Code refers to property acquired during
the marriage," and then concluded that since "there is no showing as
to when the property in question was acquired...the fact that the title is
in the wife's name alone is determinative." Similarly, in the case at
bar, since there is no evidence as to when the shares of stock were
acquired, the fact that they are registered in the name of the husband
alone is an indication that the shares belong exclusively to said
spouse.'
This pronouncement was reiterated in the case of Ponce de Leon vs. Rehabilitation
Finance Corporation, No. L-24571, December 18, 1970, 36 SCRA 289, and later in
Torela vs. Torela, No. 1,27843, October 11, 1979, 93 SCRA 391.
It is thus clear that before Moises Jocson may validly invoke the presumption under
Article 160 he must first present proof that the disputed properties were acquired
during the marriage of Emilio Jocson and Alejandra Poblete. The certificates of title,
however, upon which petitioner rests his claim is insufficient. The fact that the
properties were registered in the name of "Emilio Jocson, married to Alejandra
Poblete" is no proof that the properties were acquired during the spouses'
coverture. Acquisition of title and registration thereof are two different acts. It is well
settled that registration does not confer title but merely confirms one already
existing (See Torela vs. Torela, supra). It may be that the properties under dispute
were acquired by Emilio Jocson when he was still a bachelor but were registered
only after his marriage to Alejandra Poblete, which explains why he was described
in the certificates of title as married to the latter.
Contrary to petitioner's position, the certificates of title show, on their face, that the
properties were exclusively Emilio Jocson's, the registered owner. This is so
because the words "married to' preceding "Alejandra Poblete' are merely
descriptive of the civil status of Emilio Jocson Litam v. Rivera, 100 Phil. 354; Stuart
v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143; Magallon v. Montejo, G.R.
No. L-73733, December 16, 1986, 146 SCRA 282). In other words, the import from
the certificates of title is that Emilio Jocson is the owner of the properties, the same
Page 82 of 232
having been registered in his name alone, and that he is married to Alejandra
Poblete.
We are not unmindful that in numerous cases We consistently held that registration
of the property in the name of only one spouse does not negate the possibility of it
being conjugal (See Bucoy vs. Paulino, No. L-25775, April 26, 1968, 23 SCRA
248). But this ruling is not inconsistent with the above pronouncement for in those
cases there was proof that the properties, though registered in the name of only
one spouse, were indeed conjugal properties, or that they have been acquired
during the marriage of the spouses, and therefore, presumed conjugal, without the
adverse party having presented proof to rebut the presumption (See Mendoza vs-
Reyes, No. L-31618, August 17, 1983, 124 SCRA 154).
In the instant case, had petitioner, Moises Jocson, presented sufficient proof to
show that the disputed properties were acquired during his parents' coverture. We
would have ruled that the properties, though registered in the name of Emilio
Jocson alone, are conjugal properties in view of the presumption under Article 160.
There being no such proof, the condition sine qua non for the application of the
presumption does not exist. Necessarily, We rule that the properties under Exhibit 3
are the exclusive properties of Emilio Jocson.
There being no showing also that the camarin and the two ricemills, which are the
subject of Exhibit 4, were conjugal properties of the spouses Emilio Jocson and
Alejandra Poblete, they should be considered, likewise, as the exclusive properties
of Emilio Jocson, the burden of proof being on petitioner.
ACCORDINGLY, the petition is DISMISSED and the decision of the Court of

Appeals is AFFIRMED.
SO ORDERED.
Page 83 of 232
[77]
No. L-57757. August 31, 1987.*
PHILIPPINE NATIONAL BANK, petitioner, vs. THE HONORABLE COURT OF
APPEALS, PRAGMACIO VITUG AND MAXIMO VITUG, respondents.
Civil Law; Land Registration; Mortgage; The PNB had the right to rely on what
appears in the certificate of title where on its face the properties are owned by the
mortgagor, and there is no reason to doubt the status of the registered owner and her
ownership thereof.—When the subject properties were mortgaged to the PNB they were
registered in the name of Donata Montemayor, widow. Relying on the torrens certificate of
title covering said properties the mortgage loan applications of Donata were granted by the
PNB and the mortgages were duly constituted and registered in the office of the Register of
Deeds. In processing the loan applications of Donata Montemayor, the PNB had the right to
rely on what appears in the certificates of title and no more. On its face the properties are
owned by Donata Montemayor, a widow. The PNB had no reason to doubt nor question the
status of said registered owner and her ownership thereof. Indeed, there are no liens and
encumbrances covering the same.
Same; Same; Same; Same; Rule that a person dealing with a registered land has a

right to rely upon the face of the Torrens certificates of title and to dispense with the need
of inquiring further; Exception.—The well-known rule in this jurisdiction is that a person
dealing with a registered land has a right to rely upon the f ace of the torrens certificate of
title and to dispense with the need of inquiring further, except when the party concerned has
actual knowledge of facts and circumstances that would impel a reasonably cautious man to
make such inquiry.
Same; Same; Same; Same; Same; A Torrens title concludes all controversies over

ownership of the land covered by a final decree of registration.—A torrens title concludes
all controversy over ownership of the land covered by a final decree of registration. Once
the title is registered the owner may rest assured without the necessity of stepping into the
portals of the court or sitting in the mirador de su casa to avoid the possibility of losing his
land.
Same; Same; Same; Property; Presumption of conjugality, not a case of; When the
property is registered in the name of a spouse only and there is no showing as to when the
property was acquired by said spouse, the property belongs exclusively to said spouse;
Presumption under Art 160 of the Civil Code cannot prevail when the title is in the name of
only one spouse and the rights of innocent third parties are involved.—The presumption
applies to property acquired during the lifetime of the husband and wife. In this case, it
appears on the face of the title that the properties were acquired by Donata Montemayor
when she was already a widow. When the property is registered in the name of a spouse
only and there is no showing as to when the property was acquired by said spouse, this is an
indication that the property belongs exclusively to said spouse. And this presumption under
Page 84 of 232
Article 160 of the Civil Code cannot prevail when the title is in the name of only one spouse
and the rights of innocent third parties are involved.
Same; Same; Same; Same; PNB is a mortgagee in good faith as it was not aware that
at the time the mortgages were constituted there was a flaw of the mortgagor's title. —The
PNB had a reason to rely on what appears on the certificates of title of the properties
mortgaged. For all legal purposes, the PNB is a mortgagee in good faith for at the time the
mortgages covering said properties were constituted the PNB was not aware to any flaw of
the title of the mortgagor.
Same; Same; Same; Same; Parties; Although actions for recovery of real property

and for partition are real actions, they are actions in personam that bind only the
particular individuals who are parties thereto; PNB, not being a party to the cases earlier
decided nor aware of said decisions, it is not bound by said decisions; PNB was a
purchaser for value in good faith, when the properties were sold at public auction.—At any
rate, although actions for recovery of real property and for partition are real actions,
however, they are actions in personam that bind only the particular individuals who are
parties thereto. The PNB not being a party in said cases is not bound by the said decisions,
Nor does it appear that the PNB was aware of the said decisions when it extended the above
described mortgage loans. Indeed, if the PNB knew of the conjugal nature of said properties
it would not have approved the mortgage applications covering said properties of Donata
Montemayor without requiring the consent of all the other heirs or co-owners thereof.
Moreover, when said properties were sold at public auction, the PNB was a purchaser for
value in good faith so its right thereto is beyond question.
Same; Same; Same; Same; Estoppel; Laches; Respondents are in estoppel when they

never raised the conjugal nature of the property nor took issue as to the ownership of their
mother; For failure of respondents to assert their rights over the property, respondents are
guilty of laches.—Pragmacio and Maximo Vitug are now estopped from questioning the
title of Donata Montemayor to the said properties. They never raised the conjugal nature of
the property nor took issue as to the ownership of their mother, Donata Montemayor, over
the same. Indeed private respondents were among the defendants in said two cases wherein
in their answers to the complaint they asserted that the properties in question are
paraphernal properties belonging exclusively to Donata Montemayor and are not conjugal
in nature. Thus they leased the properties from their mother Donata Montemayor for many
years knowing her to be the owner. They were in possession of the property for a long time
and they knew that the same were mortgaged by their mother to the PNB and thereafter
were sold at public auction, but they did not do anything. It is only after 17 years that they
remembered to assert their rights. Certainly, they are guilty of laches.
PETITION for certiorari to review the decision of the Court of Appeals.
GANCAYCO, J.:
Page 85 of 232
Does the presumption of conjugality of properties acquired by the spouses during
coverture provided for in Article 160 of the Civil Code apply to property covered by
a Torrens certificate of title in the name of the widow? This is the issue posed in
this petition to review on certiorari of the decision of the Court of Appeals in CA-
G.R. No. 60903 which is an action for reconveyance and damages. *
On November 28, 1952, Donata Montemayor, through her son, Salvador M. Vitug,
mortgaged to the Philippine National Bank (PNB) several parcels of land covered
by Transfer Certificate of Title (TCT) No. 2289 — Pampanga to guarantee the loan
granted by the PNB to Salvador Jaramilla and Pedro Bacani in the amount of
P40,900.00 which was duly registered in the Office of the Register of Deeds of
Pampanga. 1
On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB certain

properties covered by TCT Nos. 2887 and 2888-Pampanga to guarantee the
payment of the loan account of her son Salvador Vitug in the amount of
P35,200.00, which mortgage was duly registered in the Register of Deeds of
Pampanga. 2
The above-mentioned Transfer Certificates of Titles covering said properties were

all in the name of Donata Montemayor, of legal age, Filipino, widow and a resident
of Lubao, Pampanga at the time they were mortgaged to PNB 3 and were free from
all hens and encumbrances. 4
Salvador Vitug failed to pay his account so the bank foreclosed the mortgaged
properties covered by TCT Nos. 2887 and 2888. They were sold at public auction
on May 20, 1968 in which the PNB was the highest bidder. The titles thereto were
thereafter consolidated in the name of PNB.
Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their accounts with
the PNB so the latter foreclosed the properties covered by TCT No. 2889 which
were sold at public auction and likewise PNB was the buyer thereof. On August 30,
1968, a certificate of sale was issued by the Register of Deeds covering said
properties in favor of the PNB. When the title of the PNB was consolidated a new
title was issued in its name. 5
On September 2, 1969, the PNB sold the properties covered by TCT Nos. 2887
and 2888 — Pampanga to Jesus M. Vitug, Anunciacion V. de Guzman, Prudencia
V. Fajardo, Salvador Vitug and Aurora V. Gutierrez in those names the
corresponding titles were issued. 6
During the lifetime of Clodualdo Vitug he married two times. His first wife was
Gervacia Flores with whom he had 3 children, namely, Victor, Lucina and Julio all
surnamed Vitug. Victor now dead is survived by his 5 children: Leonardo, Juan,
Page 86 of 232
Candida Francisco and Donaciano, an surnamed Vitug. Juan Vitug is also dead
and is survived by his only daughter Florencia Vitug.
The second wife of Clodualdo Vitug was Donata Montemayor with whom he had 8
children, namely, Pragmacio, Maximo, Jesus, Salvador, Prudencio and
Anunciacion, all surnamed Vitug, the late Enrique Vitug represented by his wife
Natalia Laquian, and the late Francisco Vitug who is survived by 11 children,
namely, Antonio, Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno,
Eligio Jesus and Luz.
Clodualdo Vitug died intestate on May 20, 1929 so his estate was settled and
distributed in Special Proceeding No. 422 in the Court of First Instance of
Pampanga wherein Donata Montemayor was the Administratrix. 7
Meanwhile, on May 12,1958, Donata Montemayor executed a contract of lease of

Lot No. 24, which is covered by TCT No. 2887-R in favor of her children Pragmacio
and Maximo both surnamed Vitug. This lease was extended on August 31, 1963.
By virtue of a general power of attorney executed by Donata Montemayor on Sept.
19, 1966 in favor of Pragmacio Vitug, the latter executed a contract of lease on
Sept. 19, 1967 of the said lot in favor of Maximo Vitug. 8
On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for partition
and reconveyance with damages in the Court of First Instance of Pampanga
against Marcelo Mendiola, special administrator of the intestate estate of Donata
Montemayor who died earlier, Jesus Vitug, Sr., Salvador, Natalia, Prudencia,
Anunciacion, all surnamed Vitug, Antonio, Francisco, Aurora, Pedro, Honorio,
Corazon, Anselmo, Benigno, Eligio Jesus and Luz, all surnamed Fajardo and the
PNB.
The subject of the action is 30 parcels of land which they claim to be the conjugal
property of the spouses Donata Montemayor and Clodualdo Vitug of which they
claim a share of 2/11 of 1/2 thereof. They assailed the mortgage to the PNB and
the public auction of the properties as null and void. They invoked the case of Vitug
vs. Montemayor, L-5297 decided by this Court on Oct. 20, 1953 which is an action
for partition and liquidation of the said 30 parcels of land wherein the properties
were found to be conjugal in nature.
In a decision of Sept. 15, 1975, the lower court dismissed the complaint with costs
against the plaintiffs and ordered them to pay attorney's fees of P5,000.00 to the
defendant's counsel. Plaintiffs then interposed an appeal to the Court of Appeals,
wherein in due course a decision was rendered on May 20, 1981, the dispositive
part of which reads as follows:
Page 87 of 232
WHEREFORE, in the light of the foregoing, the decision appealed
from is hereby reversed and set aside, and another one entered in
accordance with the tenor of the prayer of appellant's complaint with
the modification that the sale at public auction of the 22 parcels be
considered valid with respect to the 1/2 thereof. No costs.
Hence the herein petition for certiorari filed by the PNB raising the following
assignments of error:
THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING

TO THE CASE AT BAR THE RULING OF THIS HONORABLE
SUPREME COURT IN FLORENCIA VITUG VS. DONATA
MONTEMAYOR, ET AL., 91 PHIL. 286 (1953) BECAUSE:
A. BETWEEN A PROVISION OF A SPECIAL LAW AND

THE JUDICIAL INTERPRETATION AND/OR
APPLICATION OF A PROVISION OF A GENERAL
LAW, THE FORMER PREVAILS.
B. THE DOCTRINE OF STARE DECISIS IS NOT A

MECHANICAL FORMULA OF ADHERENCE.
C. PNB WAS NOT A PARTY, AND HAD NO

KNOWLEDGE OF THE ABOVECITED CASE.
D. SIMILARLY, PRAGMACIO VITUG AND MAXIMO

VITUG WERE NOT PARTIES IN SAID CASE.
II
THE RESPONDENT COURT OF APPEALS ERRED IN NOT

RECOGNIZING THE CONCLUSIVENESS OF THE CERTIFICATE,
OF TITLE, AS PROVIDED IN ACT 496, AS AMENDED (THE LAND
REGISTRATION).
III
THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING

THE CONCLUSIVENESS OF OWNERSHIP OF DONATA
MONTEMAYOR OVER THE PROPERTIES WHICH WERE
REGISTERED EXCLUSIVELY IN HER NAME WHEN PRIVATE
RESPONDENTS (PRAGMACIO VITUG AND MAXIMO VITUG), AS
Page 88 of 232
LESSEES, ENTERED INTO A CONTRACT OF LEASE WITH
DONATA MONTEMAYOR AS THE OWNER-LESSOR.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN

CONCLUDING THAT PNB WAS A MORTGAGEE IN BAD FAITH.
The petition is impressed with merit.
When the subject properties were mortgaged to the PNB they were registered in
the name of Donata Montemayor, widow. Relying on the torrens certificate of title
covering said properties the mortgage loan applications of Donata were granted by
the PNB and the mortgages were duly constituted and registered in the office of the
Register of Deeds.
In processing the loan applications of Donata Montemayor, the PNB had the right
to rely on what appears in the certificates of title and no more. On its face the
properties are owned by Donata Montemayor, a widow. The PNB had no reason to
doubt nor question the status of said registered owner and her ownership thereof.
Indeed, there are no liens and encumbrances covering the same.
The well-known rule in this jurisdiction is that a person dealing with a registered
land has a right to rely upon the face of the torrens certificate of title and to
dispense with the need of inquiring further, except when the party concerned has
actual knowledge of facts and circumstances that would impel a reasonably
cautious man make such inquiry. 9
A torrens title concludes all controversy over ownership of the land covered by a
final degree of registration. 10 Once the title is registered the owner may rest
assured without the necessity of stepping into the portals of the court or sitting in
the mirador de su casa to avoid the possibility of losing his land. 11
Article 160 of the Civil Code provides as follows:
Art. 160. All property of the marriage is presumed to belong to the

conjugal partnership, unless it be proved that it pertains exclusively to
the husband or to the wife.
The presumption applies to property acquired during the lifetime of the husband
and wife. In this case, it appears on the face of the title that the properties were
acquired by Donata Montemayor when she was already a widow. When the
property is registered in the name of a spouse only and there is no showing as to
when the property was acquired by said spouse, this is an indication that the
Page 89 of 232
property belongs exclusively to said spouse. 12 And this presumption under Article
160 of the Civil Code cannot prevail when the title is in the name of only one
spouse and the rights of innocent third parties are involved. 13
The PNB had a reason to rely on what appears on the certificates of title of the
properties mortgaged. For all legal purposes, the PNB is a mortgagee in goodfaith
for at the time the mortgages covering said properties were constituted the PNB
was not aware to any flaw of the title of the mortgagor. 14
True it is that in the earlier cases decided by this Court, namely Vitug VS.
Montemayor decided on May 15, 1952, which is an action for recovery of
possession of a share in said parcels of land, 15 and in the subsequent action for
partition between the same parties decided on Oct. 20, 1953, 16 this court found
the 30 parcels of land in question to be conjugal in nature and awarded the
corresponding share to the property of Florencia Vitug, an heir of the late Clodualdo
Vitug from the first marriage. In said cases this Court affirmed the decision of the
lower court. In the dispositive part of the decision of the trial court it made the
observation that "but from the conduct of Clodualdo Vitug and Donata Montemayor
during the existence of their marital life, the inference is clear that Clodualdo had
the unequivocal intention of transmitting the full ownership of the 30 parcels of land
to his wife Donata Montemayor, thus considering the 1/2 of the funds of the
conjugal property so advanced for the purchase of said parcels of land as
reimbursible to the estate of Clodualdo Vitug on his death. 17 That must be the
reason why the property was registered in the name of Donata Montemayor as
widow after the death of Clodualdo Vitug. 18
At any rate, although actions for recovery of real property and for partition are real
actions, however, they are actions in personam that bind only the particular
individuals who are parties thereto. 19 The PNB not being a party in said cases is
not bound by the said decisions. Nor does it appear that the PNB was aware of the
said decisions when it extended the above describe mortgage loans. Indeed, if the
PNB knew of the conjugal nature of said properties it would not have approved the
mortgage applications covering said properties of Donata Montemayor without
requiring the consent of all the other heirs or co-owners thereof. Moreover, when
said properties were sold at public auction, the PNB was a purchaser for value in
good faith. So its right thereto is beyond question. 20
Pragmacio and Maximo Vitug are now estopped from questioning the title of
Donata Montemayor to the said properties. They never raised the conjugal nature
of the property nor took issue as to the ownership of their mother, Donata
Montemayor, over the same. Indeed private respondents were among the
defendants in said two cases wherein in their answers to the complaint they
asserted that the properties in question are paraphernal properties belonging
exclusively to Donata Montemayor and are not conjugal in nature. 21 Thus they
Page 90 of 232
leased the properties from their mother Donata Montemayor for many years
knowing her to be the owner. They were in possession of the property for a long
time and they knew that the same were mortgaged by their mother to the PNB and
thereafter were sold at public auction, but they did not do anything. 22 It is only after
17 years that they remembered to assert their rights. Certainly, they are guilty of
laches. 23
Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug as
occupants and lessees of the property in question cannot now dispute the
ownership of their mother over the same who was their lessor. 24
WHEREFORE, the subject decision of the respondent Court of Appeals is hereby

REVERSED and set aside and another decision is hereby rendered DISMISSING
the complaint and ordering private respondents to pay attomey's fees and
expenses of litigation to petitioner PNB in the amount of P20,000.00 and the costs
of the suit.
SO ORDERED.
Page 91 of 232
[78]
No. L-8748. December 26, 1961.
TESTATE ESTATE OF NARCISO A. PADILLA,deceased. ISA-BEL B. VDA.DE
PADILLA, executrix-appellant, vs. CON-CEPCION PATERNO, administratrix-appellee.
Executors and administrators; Conjugal and paraphernal properties; Income due to

widow during period of administration; Law of the case.—As sole owner of those
properties that never became a conjugal because the conjugal improvements thereon were
destroyed before they could be paid for the widow, as well as those properties that never
ceased to be paraphernal because there were paraphernal buildings thereon at the time of the
termination of the conjugal partnership, the widow is also the owner of all their income that
accrued during their administration by the executrix-appellant until they were finally
delivered to the estate of the said widow, who later died, minus the administration expenses
incurred by said executrix-appellant with respect to those paraphernal properties. A
recommendation by a board of commissioners appointed to execute a decision of the court,
if approved by the trial court, and, later, by the Supreme Court, becomes part of the “law of
the case”, and, as such, is binding, conclusive and irrevocable.
Same; Conjugal partnership; Acquisition of property subject to suspensive

condition; Retroactive effects of fulfillment of condition.—Where the acquisition by the
partnership of certain properties was subject to the suspensive condition that their values
would be reimbursed to the widow at the liquidation of the conjugal partnership, once paid,
the effects of the fulfillment of the condition should be deemed to retroact to the date of the
obligation was constituted (Art. 1187, N.C.C.). Consequently, all the fruits of these
properties, after the dissolution of the partnership by the death of the husband, until final
partition, logically belonged to the universal heir of said husband and to the surviving
widow in co-ownership, share and share alike.
APPEAL from an order of the probate court.

Padilla Law Office & Associates for executrix-appel-lant.
Claro M. Recto for administratrix-appellee.
REYES, J.B.L., J.:
This appeal from an order of the probate court in the special proceeding for the
settlement of the testate estate of the deceased Narciso A. Padilla involves the
same properties that had already been the subject-matter of two earlier appeals
also brought to this Court by the executrix-appellant Isabel B. Vda. de Padilla, G.R.
No. 48137 decided October 4, 1943, during the war, and G.R. No. L-4130, decided
September 30, 1953, after the war.
Page 92 of 232
The facts of the case, up to the time the second appeal (G.R. No. L-4130) was
taken by the executrix to this Court, were summed up in our 1953 decision as
follows:
Narciso A. Padilla died February 12, 1934, leaving a childless widow,

Concepcion Paterno, whom he had married in 1912. His last will, which was
probated in due course, instituted his mother, Ysabel Bibby Vda. de Padilla,
as universal heiress.
In the proceedings for the settlement of his estate in Manila (Civil Cases
46058-63), his widow moved for delivery of her paraphernal property
together with some reimbursements and indemnities, and for one-half of the
conjugal partnership property. She also asked that her usufructuary right as
surviving spouse be imposed on the corresponding portion of her husband's
assets. The heiress, who was executrix, opposed several such claims.
After hearing evidence on both sides, the Court rendered on January 15,
1940, a decision which, as amended by its resolution of April 24, 1940,
declared as paraphernal certain personal and real properties. Other realties,
although originally paraphernal, were considered part of the conjugal assets
because of buildings erected thereon during coverture, but reimbursement of
their value was directed. The main bulk was adjudged conjugal property.
The Court ordered the appointment of commissioners to estimate the
amounts to be reimbursed, to divide the matrimonial assets into two equal
parts for the spouses, and to determine the specific portion of the
deceased's estate to be encumbered with the widow's usufruct (¹/3). Other
minor directives are omitted for the sake of brevity.
The executrix appealed to this Supreme Court, wherein, dated October 4,

1943, a decision was promulgated upholding the judgment of the Manila
court with a slight modification as to payment of interest.
(That year Concepcion Paterno died. She is now represented by her testate
heirs and legatees.)
For compliance with the decision, the records went back to the Manila court.
Therein three commissioners were duly appointed: Vicente A. Rufino,
chosen by the widow's side, Augusto J. D. Cortes by the heiress-executrix,
and V. R. Endaya by the Court.
After hearings held before the said committee (May-November, 1947),

Vicente A. Rufino submitted his report dated July 9, 1948 which was
concurred in toto by V. R. Endaya. A few days later Augusta J. D. Cortes
Page 93 of 232
filed his own report, wholly at variance with his colleague's recommendations
on many important particulars.
In December, 1948, counsel for the executrix interposed legal and factual
objections to the Rufino report. In May, 1949, Atty. Claro M. Recto, for the
Paterno relatives, replied to said objections and prayed that they be
overruled with the approval the aforesaid report.
On July 3, 1950, Judge Rafael Amparo of the Manila Court approved the
majority report except that he declared: (1) lot No. 50 on Juan Luna Street
was conjugal, and (2) the usufruct of the widow shall be constituted on the
one-third estate. (Report on Appeal, pp. 149-151).
After the return of the records to the probate court for partition in accordance with
our decision in G.R. No. L-4130, which affirmed the decision appealed from with
the exception of the modification that one piece of property (the R. Hidalgo
property) adjudicated to the widow was assigned instead to the estate of the
deceased, in exchange for another property (in Azcarraga-Reina Regente) given to
the widow, and after delivery by the executrix on December 7, 1953 of the
properties constituting the widow's share in the partition of the conjugal estate, the
executrix, on March 3, 1954, filed a petition for the final closure of the testate
proceedings. A day before the filing of this petition, however, the trial court had
issued an order, upon motion of the administratrix of the estate of the widow
Concepcion Paterno, for a final accounting of the 1951, 1952, and 1953 credit
balances of the estate, and to determine the rentals or income of those properties
found to be paraphernal assets of the widow, so that the undelivered portions of
said rentals could be turned over to the widow's estate. Accordingly, the estate of
the widow opposed the petition for closure pending the final accounting required of
the executrix in the court's order of March 2, 1954; and also pending determination
of the share of the widow in the additional value of the R. Hidalgo property, due to
the construction of the Illusion Theater, that in 1952 would become property of the
owner of the land. The administratrix of the widow's estate likewise sought an
amendment of the court's order of March 2, 1954, so as to require the executrix to
account for the undelivered rentals or fruits of the widow's paraphernal properties
from October 5, 1938, when the executrix started her administration, until
December 7, 1953, when they were finally turned over to the widow's estate.
On March 15, 1954, the executrix submitted an accounting of the credit balances of
the estate for the years 1951, 1952, and 1953, but in subsequent pleadings
objected to the accounting of the fruits of the properties declared to be paraphernal
on the theory that (1) said properties were actually held conjugal, subject only to
paraphernal claims; and that (2) consequently, their income belonged to the
conjugal estate and had been periodically divided equally between the executrix as
the universal heir of the deceased and the widow's estate. As for the R. Hidalgo
Page 94 of 232
property, the executrix also objected to any further determination of an additional
share of the widow on the improvements thereon, claiming that the widow's estate
was bound by the value of P189,240 given to this property by the Rufino report
from which the administratrix of the widow's estate did not appeal.
Reply and counter-reply having been filed by the parties on the above issues, the
probate court finally resolved the same in its order of July 31, 1954, the pertinent
portions of which are as follows:
The questions that should be passed upon by this Court are those raised by
the administratrix of the estate of Concepcion Paterno in her motion for
reconsideration, to wit: (1) Should the herein executrix be made to account
for the income of the paraphernal properties belonging to Concepcion
Paterno as prayed for by said administratrix? (2) Is it necessary to determine
the additional value of the R. Hidalgo property as sought by said
administratrix?
The answer to the first question is in the affirmative. The Civil Code of 1889
provided that upon dissolution of marriage the husband or his heirs may be
compelled to make immediate restitution of the paraphernal property which
has been turned over to the husband for administration (Art. 1391 in
connection with Art. 1369). The Code of Civil Procedure provided in its
Section 726 that 'where a deceased person in his lifetime held lands in trust
for another person, the court may, after notice given as required in the
preceding section, grant license to the executor or administrator, and the
person, his executor, or administrator, for whose use and benefit they are
holders; and the court may decree the execution of such trust, whether
created by deed or by law.' Upon the death of Narciso Padilla his marriage
with Concepcion Paterno was dissolved. From the moment of his death, his
heir was bound to return the paraphernal properties of Concepcion Paterno,
and from said moment any income or fruit derived from said paraphernal
properties belonged to the owner thereof. It is contended by the executrix
herein that the properties under administration in this proceeding are
conjugal subject to the paraphernal claims of the widow, Concepcion
Paterno, and that the rentals from one or the other property cannot be
excluded 'for such exclusions cannot be justified, as the definite character of
the properties as adjudicated in favor of the wife or of the husband became
absolute and definite only after the decision of the Hon. Supreme Court late
in 1953'. This contention is not well taken, because the determination made
by the Supreme Court of the character of the properties in question retroacts
to the date Narciso Padilla died.
It appears that Ysabel Bibby was appointed special administratrix in this

proceeding on August 29, 1938.
Page 95 of 232
The other question refers to the R. Hidalgo property. With respect to this
property, the Supreme Court in its decision in G.R. No. L-4130 said —
This Illusion Theatre was not reckoned with in the Rufino report.
Apparently it would pass to the estate in 1952 upon the occurrence of
specified contingencies. If it has passed the matter could undoubtedly
be the subject of further deliberation upon appropriate motions. It
would only be a question of determining the additional value of the R.
Hidalgo property and of requiring the herein appellant to pay the
Paterno estate its corresponding share.
The above quoted portion of the decision is clear and needs no further
elucidation.
WHEREFORE, the executrix herein is directed to submit within ten (10) days
from receipt of this order an accounting of the income of the paraphernal
properties in question covering the period from August 29, 1938 to
December 7, 1953.
Regarding the R. Hidalgo property, this proceeding is hereby set for hearing
on August 19, 1954, at 8:30 a.m. for the purpose of determining the
additional value of said property in consonance with the above indicated
decision of the Supreme Court.
The executrix herein is hereby authorized and directed to deliver

immediately to the estate of Concepcion Paterno the one-half portion of the
credit balance on the 1953 annual accounting.
The consideration of the prayer to close this proceeding is hereby deferred

until the accounting herein above called for shall have been submitted and
passed upon and the additional value of the R. Hidalgo property shall have
been determined.
Let the corrections indicated by the administratrix of the estate of

Concepcion Paterno be made.
IT IS SO ORDERED.
(Record on Appeal, pp. 60-62.)
The executrix sought but failed to have the above order reconsidered; whereupon,
she filed this her third appeal before this Court. 1
Page 96 of 232
The executrix-appellant assigns six errors, which may be reduced to the following
propositions:
(1) That the lower court erred in holding that some of the properties included in the
estate are paraphernal in character and that all their income belonged to the widow
Concepcion Paterno;
(2) That the widow having already raised the question of her right to all the fruits of
her alleged paraphernal properties in a petition for the liquidation of their fruits filed
before the probate court even before the war, and no fruits having been awarded to
her by the probate court in its decision of January 15, 1940, as amended by its
resolution of April 24, 1940, or by this Court in its 1954 decision in G.R. No. 48137
or in its 1953 decision in G.R. No. L-4130, the widow or her estate is now barred
from raising again the question of her exclusive right to such fruits either by the
principle of res judicata or that of conclusiveness of judgment;
(3) As to the R. Hidalgo property of the estate, the lower court erred in sustaining
the additional claim of the widow's estate over the improvements therein.
In support of her first proposition, that the lower court erred in holding that some of
the properties in the estate are paraphernal and that all their income belonged the
widow Concepcion Paterno, the executrix-appellant claims that our decision in G.R.
No. L-4130 did not declare any properties in the estate of the deceased Narciso A.
Padilla paraphernal, but that certain properties therein were declared "conjugal
assets, subject to paraphernal claims", and that this decision is the "law of the
case" in this incident and appeal.
The above argument appears to be a mere reiteration of the claims already urged
by this same appellant in G.R. No. L-4130, where she similarly argued that the
probate court, and this Court in G.R. No. 48137, did not hold any properties in the
estate paraphernal, but the certain properties therein were declared conjugal
partnership properties, with the widow being entitled to reimbursement for the value
of her paraphernal claims (see Appellant's Brief in G.R. No. L-4130, pp. 70-71, 103,
106). Rejecting this argument in our decision in G.R. No. L-4130, we said:
The Rufino report which is printed in full on pages 169-192 of the Record on
Appeal, states that the buildings constructed by the partnership on the two
lots were destroyed by fire during the battle of liberation of Manila in 1945.
Then it goes on to adjudicate:
As already stated, the conjugal improvements on the lots on Arquiza

and Juan Luna have been destroyed by fire, and the Supreme Court
having held that the lands on which said improvements were erected
remained paraphernal until the value of said lands were paid to the
Page 97 of 232
widow Concepcion Paterno Vda. de Padilla, said lands must be
returned to the Testate Estate of Concepcion Paterno Vda. de Padilla.
However, any amount due or that may be received from the War
Damage Commission for the improvements that were destroyed on
those two pieces of property shall be divided share and share alike
between the estate of Ysabel Bibby Vda. de Padilla and the estate of
Concepcion Paterno Vda. de Padilla. (Record on Appeal, p. 177).
The executrix earnestly challenges the first paragraph contending that the
lots became conjugal properties from the time the buildings were erected
thereon, and the subsequent destruction of such buildings did not make
them paraphernal. She also argues that the indemnity to the widow for said
lots should be their value at the time of the construction of the buildings, or
at most, at the time of the dissolution of the partnership in 1934.
These contentions may not be upheld in view of the decision of the Manila
Court and the confirmatory decision of this Tribunal in 1943. There are, to be
sure, some propositions in said decision which we may now hesitate to
ratify, especially the pronouncement that the lot continued to be paraphernal
until its value had been actually paid. But that judgment is now the law of the
case. (Record on Appeal, pp. 151-152).
In other words, we maintained in G.R. No. L-4130, as the law of the case, our
previous decision in G.R. No. 48137 that —
The ownership of the land is retained by the wife until she is paid the value
of the lot, as a result of the liquidation of the conjugal partnership. The mere
construction of a building from common funds does not automatically convey
the ownership of the wife's land to the conjugal partnership. (Record on
Appeal, p. 138).
Considering that our decision in G.R. No. L-4130 is, in executrix-appellant's own
words, "the last and final decision of this Honorable court intended to definitely
settle and close this estate" (Appellant's Brief, p. 49), and that the "law of the case"
in this appeal are all the previous decisions herein, "including the 1953 decision
G.R. No. L-4130" (idem, p. 17), the dispositions made in our decision in G.R. No. L-
4130 should be considered as final and conclusive on the parties in this case and
its incidents.
But to what extent does the "law of the case", as expressed in the above decisions,
bear on the more important question in this appeal — namely, the alleged exclusive
right of widow Concepcion Paterno to all the fruits of the properties of the estate
declared paraphernal from the time the conjugal partnership was terminated by the
Page 98 of 232
death of the husband Narciso A. Padilla up to their final delivery to the estate of the
widow Concepcion Paterno on December 7, 1953?
On this matter, we must perforce distinguish those paraphernal properties that did
not cease to be such all throughout and were, accordingly, turned over to the
widow's estate on December 7, 1953, from those that, having been paid or
indemnified in full to the widow upon the final partition and division of the conjugal
estate, had finally been converted into conjugal assets. To determine the properties
that belong to either class, we must go back to the records of these settlement
proceedings before this appeal, the proceedings taken in the court below in the
course of the execution of our final judgment in G.R. No. L-4130.
Let us recall that in its original resolution of January 15, 1940, the probate court
found the following properties to be paraphernal:
(1) the lot at 305 Arquiza Street and the demolished improvements therein;
(2) the lot at 1393-1409 Juan Luna Street and the improvements therein that
had been torn down;
(3) the lot and improvements (except the building constructed during the
marriage) at 401-407 Camba Street;
(4) that lot at 613-631 and 634-636 Martin Ocampo Street, with the original
"accesorias" and a camarin which was destroyed in order that new
"accesorias" might be constructed, these new "accesorias" being conjugal
property;
(5) the property at 620-H, Callejon De la Fe;
(6) one-half of the property at 631 Regidor Street; and
(7) 9/29 of the property at 302-306 R. Hidalgo Street. (Record on Appeal, pp.
133-134).
The findings of the probate court as to the nature of the above properties were
affirmed in toto by this Court in our decision in G.R. No. 48137 dated October 4,
1943.
After the above-mentioned decision was returned to the lower court for execution,
the battle for the liberation of Manila supervened and as a result of the general
conflagration in the city sometime in February, 1945, the conjugal buildings on the
Arquiza and Juan Luna properties were completely destroyed. As for the property
at 631 Regidor Street, the same was later expropriated by the government.
Page 99 of 232
When the commissioners appointed to execute the judgment submitted their report,
therefore, the majority of the commissioners (whose report, otherwise known as the
"Rufino Report," the lower court approved) made the following recommendations:
(1) As to the Arquiza and Juan Luna properties, the improvements of which
were destroyed during the battle for the liberation of Manila:
As already stated, the conjugal improvements on the lots on Arquiza and

Juan Luna have been destroyed by fire, and the Supreme Court having held
that the lands in which said improvements were erected remained
paraphernal until the value of said lands were paid to the widow Concepcion
Paterno Vda. de Padilla, said lands must be returned to the Testate Estate
of Concepcion Paterno Vda. de Padilla, (Record on Appeal in G.R. L-4130,
p. 177).
(2) As to the Camba property:
According to the evidence presented, the portion of this lot located right at
the corner of San Nicolas and Camba Streets, otherwise known as Lot No.
6-A, and the building existing thereon, are both paraphernal properties. They
should, therefore, be delivered to the Testate Estate of Concepcion Paterno
Vda. de Padilla.
The portion of said lot which is otherwise known as Lot No. 6-B likewise
originally paraphernal, but a building was erected thereon by the conjugal
partnership, so that it would become conjugal partnership property upon the
reimbursement to the wife of its present value. According to the evidence,
Lot No. 6-B has an area of 83.422 sq. ms., and the present value thereof per
square meter is P30.00. This Testate Estate, therefore, should reimburse the
Testate Estate of Concepcion Paterno Vda. de Padilla in the sum of
P2,502.66. After said reimbursement, Lot No. 6-B and the existing
improvement thereon shall become conjugal partnership property and
should be divided accordingly for purposes of distribution. (Record on
Appeal in L-4130, pp. 179-80).
(3) As to the Martin Ocampo property:
According to the evidence the portion of the lot occupied by paraphernal

building or the accesoria otherwise known as Nos. 612, 614, 616, 620, 624,
626, 628 Quezon Boulevard, has a total area of 360.5 sq. m.; while the
interior portion of said lot actually occupied by the accesoria constructed
during the marriage of the spouses contained an area of 528.1 sq. ms. This
interior portion is the one which must be appraised by the Commissioners,
and its value reimbursed to the Estate of Concepcion Paterno Vda. de
Page 100 of 232
Padilla, in view of the ruling of the Court that "el valor actual del suelo
ocupado por dicha accesoria construida durante el matrimonio se
determinara por los Comisionados y se adjudicara a la Viuda en concepto
de indemnizacion." The outer portion of 360.5 sq. ms. having been declared
paraphernal property, should be delivered to the Estate of Concepcion
Paterno Vda. de Padilla.
The evidence further shows that the reasonable value of said interior portion
is P125 per sq. m., so that the amount to be reimbursed is P66,012.50. As
soon as said reimbursement is made, said portion of the lot and the
buildings existing thereon as conjugal property should be divided accordingly
for purposes of distribution. (Record on Appeal, Ibid, p. 181)
(4) As to the Callejon De la Fe property:
In view of the fact that finding of the Supreme Court was that this property
and the improvement which used to exist thereon were both paraphernal,
the lot should be delivered to the Testate Estate of Concepcion Paterno Vda.
de Padilla and whatever amount is paid by the War Damage Commission as
compensation for the destruction of said building should also be totally paid
to it. (Record on appeal, ibid, p. 182).
(5) As to the Regidor property, which was expropriated by the government:
The compensation received for the expropriation of the Regidor property,

should be divided between the spouses in accordance with the finding of the
decision of the Supreme Court as to the character of said property. ( Ibid, p.
192)
(6) And as to R. Hidalgo property:
The R. Hidalgo property is partly conjugal and partly paraphernal. Nine-

twenty-ninths thereof belong to the Testate Estate of Concepcion Paterno
Vda. de Padilla as paraphernal property, ten-twenty-ninths thereof belong to
it as share in the conjugal partnership, while the remaining ten-twenty-ninths
should belong to Dña. Isabela B. Vda. de Padilla as her inheritance from the
decedent herein. It has a total area of 1962 square meters. At the rate of
P200 per square meter, it has a total value of P189,240.00.
The lot shall become conjugal property and divided accordingly after the
Testate Estate of Concepcion Paterno Vda. de Padilla shall have been
reimbursed in the sum of P58,729,67.
Page 101 of 232

Any payment made by the War Damage Commission shall be divided in the same
proportion, to wit: nine-twenty-ninths shall belong to the Testate Estate of
Concepcion Paterno Vda. de Padilla, and the remaining ten-twenty-ninths shall
belong to Dña. Isabel B. Vda. de Padilla. (Idem., pp. 182-183).
All the above recommendations were approved by the trial court, and in her appeal
from the order of approval (which is G.R. No. L-4130), wherein the executrix-
appellant specially protested against the declaration that upon the destruction of
the improvements on the Arquiza and Juan Luna properties, they remained
paraphernal and must be returned to the estate of the widow, as well as the
recommendation to subdivide the Camba and Martin Ocampo properties, declaring
those portions thereof occupied by paraphernal buildings as paraphernal and
should be returned to the widow's estate, the same recommendations were
affirmed by this Court.
Considering, then, the "law of the case" in this appeal as expressed in the Rufino
report and approved by both the probate court and this Court in G.R. No. L-4130,
we find no error in the lower court's pronouncement that as sole owner of those
properties that never became conjugal because the conjugal improvements thereon
were destroyed before they could be paid for the widow (i.e., the Arquiza and Juan
Luna properties), as well as Lot No. 6-B on Camba Street, the outer portion of the
Martin Ocampo lot, and the Callejon de la Fe property, that never ceased to be
paraphernal because there were paraphernal buildings thereon at the time of the
termination of the conjugal partnership, the widow Concepcion Paterno is also the
sole owner of all their income that accrued during their administration by the
executrix-appellant until they were finally delivered to the estate of the deceased
Concepcion Paterno on December 7, 1953; minus of course, the administration
expenses incurred by said executrix-appellant with respect to these paraphernal
properties. This is also in accordance with that portion of the Rufino report making
the following recommendation as to the rentals of said properties during the period
of settlement:
E. RENTALS AND OTHER INCOME DURING SETTLEMENT
For a complete liquidation of the estate under administration, the rentals

from real properties, and other income, such as proceeds from expropriation,
etc., should be disposed in the following manner:
The rentals of property declared paraphernal, after deducting administration

expenses, must be delivered to the estate of Concepcion Paterno; while the
rentals from conjugal property, after deducting administration expenses,
should be divided equally between the heir of the husband and those of the
wife.... (Record on Appeal in L-4130, p. 192).
Page 102 of 232

Appellant claims that the above recommendation is void because the
commissioners appointed to execute our 1943 decision in G.R. No. 48137 were
vested only with the limited authority of putting said decision into effect, and said
decision made no disposition as to rentals or fruits of the paraphernal properties.
This contention is unmeritorious because the above recommendation was
approved by the trial court in its order of July 3, 1950, and by this Court in the 1953
decision in G.R. No. L-4130, and has become part of the "law of the case;" as such
it is now binding, conclusive, and irrevocable in this appeal. Indeed, it nowhere,
appears in the brief submitted by the executrix-appellant in G.R. No.
L-4130 that she then questioned the disposition, made by the Rufino report and by
the lower court, as to the rentals of the properties declared paraphernal during the
period of her administration, and it is now too late for her to raise this objection
many years after our decision in L-4130 had become final and executory. With this
result, it becomes unnecessary for us to discuss the executrix-appellant's
proposition that the lower court order of January 15, 1940, as amended by its
resolution of April 24, 1940, and this Court's decision in G.R. 48137, both of which
came ahead of our decision in G.R. No. L-4130, are res judicata by passing sub
silentio this issue of the exclusive right of the widow to the fruits of her paraphernal
properties.
The above discussion does not, however, imply that the estate of the widow
Concepcion Paterno has also the exclusive right to the fruits of those properties
which, although originally paraphernal, had finally become converted to conjugal
assets after their values were reimbursed or paid to the estate of the widow
Concepcion Paterno in the final partition and division of the estate left by the
deceased Narciso A. Padilla. These properties are the following:
(1) Lot No. 6-B of the Camba property;
(2) The interior portion of the Martin Ocampo property; and
(3) the 9/29 share of the widow in the R. Hidalgo property.
As to the above properties, their conversion from paraphernal to conjugal assets

should be deemed to retroact to the time the conjugal buildings were first
constructed thereon or at the very latest, to the time immediately before the death
of Narciso A. Padilla that ended the conjugal partnership. They can not be
considered to have become conjugal property only as of the time their values were
paid to the estate of the widow Concepcion Paterno because by that time the
conjugal partnership no longer existed and it could not acquire the ownership of
said properties. The acquisition by the partnership of these properties was, under
the 1943 decision, subject to the suspensive condition that their values would be
reimbursed to the widow at the liquidation of the conjugal partnership; once paid,
the effects of the fulfillment of the condition should be deemed to retroact to the
Page 103 of 232
date the obligation was constituted (Art. 1187, New Civil Code). As a consequence,
all the fruits of these properties, after the dissolution of the partnership by the death
of the husband, until final partition, logically belonged to the universal heir of said
husband (his mother Isabel Bibby) and to the surviving widow in co-ownership,
share and share alike. As there has been periodical equal distribution between
these two parties of the current income of the estate, there is no need for the
executrix-appellant to make any new accounting for the fruits of these properties.
Coming now to the third issue in this appeal, namely, the right of the widow to an
additional share in the improvements on the R. Hidalgo property that was
adjudicated to the estate of the husband Narciso A. Padilla in the 1953 decision,
G.R. No. L-4130, we find and no merit to the claim of appellant that —
When the R. Hidalgo property was appraised by the Rufino Report on July 9,
1948, at P189,240.00 and under such appraisement awarded to the estate
of the widow, we respectfully submit that the value as appraised included not
only the land but also the improvement which was then already existing, the
same having been built in 1947.
because the Rufino report states in clear and unmistakable terms that only the
land was appraised in the report and only its value included in the project of
partition:
The R. Hidalgo property is partly conjugal and partly paraphernal. Nine-

twenty-ninths thereof belongs to the Testate Estate of Concepcion Paterno
Vda. de Padilla as paraphernal property, while ten-twenty-ninths thereof
belongs to it as share in the conjugal partnership, while the remaining ten-
twenty-ninths should belong to Dña. Isabel B. Vda. de Padilla as her
inheritance from the decedent herein. It has a total area of 946.2 square
meters. At the rate of P200 per square meter, it has a total value of
P189,240.00. The lot shall become conjugal property and divided
accordingly after the Testate Estate of Concepcion Paterno Vda. de Padilla
shall have been reimbursed in the sum of P58,729.67. (Record on Appeal in
L-4130, pp. 182-183)
Indeed, the Rufino report could not have included the value of the improvements at
the time the commissioners appraised this property for purposes of partition
between the parties, because the old improvements thereon were destroyed during
the war and whatever improvements were found therein by the commissioners in
1948 still belonged to the lessee of said property. This was admitted in the
executrix-appellant's own brief in G.R. No. L-4130 (pp. 119-120), to wit:
The increase in the valuation of the share of the widow in the R. Hidalgo
property from P45,608.26 to P58,729.59 is certainly unjustified, considering,
Page 104 of 232
as above stated, that the permanent improvements on the R. Hidalgo
property were totally destroyed by fire during liberation. Besides, if the
property present has increased in value, it is due to the executrix-appellant
who, after liberation, entered into a contract of lease with Cinema Operators,
Inc., which built the Illusion Theatre and the commercial establishments
nearby. The improvements built by the lessee will become the property of
the estate of Narciso A. Padilla after the expiration of said contract of
lease.lawphil.net
Hence, the footnote in our decision in L-4130 to the following effect:
This Illusion Theatre was not reckoned with in the Rufino report. Apparently
it would pass to the estate in 1952 upon the occurrence of certain specified
contingencies. If it has passed the matter could undoubtedly be the subject
of further deliberation upon appropriate motions. It would only be a question
of determining the additional value of the R. Hidalgo property and of
requiring the herein appellant to pay the Paterno estate its corresponding
share. (Record on Appeal, p. 157)
As correctly observed by the lower court in the order now appealed from, "the
above-quoted portion of the decision is clear and needs no further elucidation"
(Record on Appeal p. 62).
Considering that the improvements on the R. Hidalgo property accrued to the

owner of the land only after the expiration of the seven-year lease entered into by
the executrix-appellant with the tenant on February 2, 1946, the lower court did not
err in ordering the appraisal of said improvement with the view of determining the
additional share therein of the widow Concepcion Paterno.
WHEREFORE, with the clarification that the accounting of the income of the
paraphernal properties to be made by the executrix-appellant should refer only to
the Arquiza, Juan Luna, and Callejon de la Fe properties, to Lot No. 6-A of the
Camba property, and to the outer portion of the Martin Ocampo property, the order
appealed from is affirmed. Without special pronouncement as to costs.
Page 105 of 232

[79]
No. L-21533. June 29, 1967.
HERMOGENES MARAMBA, plaintiff-appellant, vs'. NIEVES DE LOZANO, ET AL..
defendants-appellees.
Judgments; Final and executory judgment cannot be corrected; Exception.—
A judgment, which has become final and executory, can no longer be amended or corrected
by the court, except for clerical errors or mistakes, However erroneous it may be, it cannot
be disobeyed; otherwise, litigations would be endless and no question could be considered
finally settled.
Same; When nunc pro tunc order is allowed.—An amendment of a judgment which
involves not merely clerical errors but the very substance of the controversy, cannot be
accomplished by means of a nunc pro tunc order. The purpose of a nunc pro tunc order is to
make a present record of an order which the court rendered at a previous term when the
thing ordered has previously been made but, by inadvertence, has not been entered. When
there was no such order previously made by the court, there is nothing thereafter to be
recorded.
Same; When liability of judgment debtor is joint only.—When the judgment does not
order the defendants to make a solidary payment to the plaintiff, their liability is merely
joint. No one of them may be compelled to satisfy the judgment in full (Art 1137, New
Civil Code).
Husband and wife; Conjugal partnership; When property in the name of one spouse is
not presumed to be conjugal.—The presumption that property is conjugal refers to property
acquired during the marriage. When there is no showing as to when the property was
acquired by a spouse, the fact that the title is in the spouse's name is an indication that the
property belongs exclusively to said spouse.
Same; House constructed on separate lot of a, spouse does not automatically become

conjugal.—The construction of a house at conjugal expense on the exclusive property of a
spouse does not automatically make it conjugal. It is true that, in the meantime, the conjugal
partnership may use both the land and building, but it does so not as owner but as
usufructuary. The ownership of the land remains the same until the value thereof is paid.
This payment can only be demanded in the liquidation of the partnership.
Appeals; Facts occurring after the appeal.—A petition filed in the appellate court,

during the pendency of an appeal, which petition alleges facts occurring after the perfection
of the appeal, should be passed upon by the trial court in connection with the
implementation of the judgment rendered on appeal.
APPEAL from an order of the Court of First Instance of, Dagupan City. San Diego, J..
Page 106 of 232

MAKALINTAL, J.:
Appeal from an order of the Court of First Instance of Dagupan City in its Civil Case
No. 10485, dated June 28, 1961. This case was originally brought to the Court of
Appeals, but subsequently certified to Us on the ground that the issues raised are
purely legal.
It appears that on November 3, 1948, the plaintiff filed an action against the
defendant Nieves de Lozano and her husband Pascual Lozano for the collection of
a sum of money. After trial, the court a quo on June 23, 1959 rendered its decision,
the dispositive part of which is as follows:
WHEREFORE, the court hereby renders judgment, sentencing the

defendants herein, Nieves de Lozano and Pascual Lozano, to pay unto the
herein plaintiff, Hermogenes Maramba, the total sum of Three Thousand
Five Hundred Pesos and Seven Centavos (P3,500.07), with legal interest
thereon from date of the filing of the instant complaint until fully paid.
With costs against the said defendants.
Not satisfied with the judgment, the defendants interposed an appeal to the Court
of Appeals but the appeal was dismissed on March 30, 1960 for failure of the
defendants to file their brief on time. After the record the case was remanded to the
court a quo, a writ of execution was issued, and on August 18, 1960 levy was made
upon a parcel of land covered by transfer certificate title No. 8192 of Pangasinan in
the name of Nieves de Lozano. The notice of sale at public auction was published
in accordance with law and scheduled for September 16, 1960.
On that date, however, defendant Nieves de Lozano made a partial satisfaction of

the judgment in the amount P2,000.00, and requested for an adjournment of the
sale to October 26, 1960. On October 17, 1960, she filed amended motion, dated
October 14, alleging that on November 11, 1952, during the pendency of the case,
defendant Pascual Lozano died and that the property levied upon was her
paraphernal property, and praying that her liability be fixed at one-half (½) of the
amount awarded in the judgment and that pending the resolution of the issue an
order be issued restraining the Sheriff from carrying out the auction sale scheduled
on October 26, 1960.
On that date the sale proceeded anyway, and the property of Nieves de Lozano
which has been levied upon was sold to the judgment creditor, as the highest
bidder, for the amount of P4,175.12, the balance of the judgment debt.1äwphï1.ñët
Page 107 of 232

On October 27, 1960, plaintiff filed an opposition to the defendant's amended
motion dated October 14, 1960. And on June 28, 1961, the trial court issued the
questioned order, the dispositive part of which is as follows:
WHEREFORE, the court hereby grants the motion of counsel for defendant
Nieves de Lozano, dated October 5, 1960, which was amended on October
14, 1960, and holds that the liability of the said defendant under the
judgment of June 23, 1959, is only joint, or P1,750.04, which is one-half (½)
of the judgment debt of P3,500.07 awarded to the plaintiff and that the writ of
execution be accordingly modified in the sense that the liability of defendant
Nieves de Lozano be only P1,750.04 with legal interest from the date of the
filing of the complaint on November 5, 1948 until fully paid, plus the amount
of P21.28 which is also one-half (½) of the costs taxed by the Clerk of Court
against the defendant spouses. Let the auction sale of the above-mentioned
property of defendant Nieves de Lozano proceed to satisfy her liability of
P1,750.04 with legal interest as above stated and the further sum of P21.28
representing the costs, unless she voluntarily pays the same to the judgment
creditor (herein plaintiff).
Plaintiff interposed an appeal from the above-quoted order and assigned several
errors, which present three major issues, to wit:
(a) whether or not the decision of the lower court dated June 23, 1959 could
still be questioned;
(b) whether or not the judgment was joint or solidary; and
(c) whether or not the judgment debt could be satisfied from the proceeds of
the properties sold at public auction.
Plaintiff-appellant submits that a "nunc pro tunc" order should have been issued by
the trial court dismissing, as of November 11, 1952, the case against the late
Pascual Lozano by reason of his death, and that the lower court should have
corrected its decision of June 23, 1959, by striking out the letter "s" in the word
"defendants" and deleting the words "and Pascual Lozano."
We do not think that the action suggested would be legally justified. It would entail a
substantial amendment of the decision of June 23, 1959, which has long become
final and in fact partially executed. A decision which has become final and
executory can no longer be amended or corrected by the court except for clerical
errors or mistakes,1 and however erroneous it may be, cannot be
disobeyed;2 otherwise litigations would be endless and no questions could be
considered finally settled.3 The amendment sought by appellee involves not merely
clerical errors but the very substance of the controversy. And it cannot be
Page 108 of 232
accomplished by the issuance of a "nunc pro tunc" order such as that sought in this
case. The purpose of an "nunc pro tunc" is to make a present record of an which
the court made at a previous term, but which not then recorded. It can only be
made when the ordered has previously been made, but by inadvertence not been
entered. In the instant case there was no order previously made by the court and
therefore there is no now to be recorded.
Now then, it is clear that the decision of June 23, 1959 does not specify the extent
of the liability of each defendant. The rule is that when the judgment does not order
the defendants to pay jointly and severally their liability is merely joint, and none of
them may be compelled to satisfy the judgment in full. This is in harmony with
Articles 1137 and 1138 of the Civil Code.
Plaintiff-appellant contends that in any event the entire judgment debt can be
satisfied from the proceeds the property sold at public auction in view of the
presumption that it is conjugal in character although in the of only one of the
spouses. The contention is incorrect. The presumption under Article 160 of the Civil
Code to property acquired during the marriage. But in the instant case there is no
showing as to when the property in question was acquired and hence the fact that
the title is in the wife's name alone is determinative. Furthermore, appellant himself
admits in his brief (p. 17) that the property in question is paraphernal.
Appellant next points out that even if the land levied upon were originally
paraphernal, it became conjugal property by virtue of the construction of a house
thereon at the expense of the common fund, pursuant to Article 158 paragraph 2 of
the Civil Code. However, it has been by this Court that the construction of a house
at conjugal expense on the exclusive property of one of the spouses doe not
automatically make it conjugal. It is true that meantime the conjugal partnership
may use both in the land and the building, but it does so not as owner but in the
exercise of the right of usufruct. The ownership of the land remains the same until
the value thereof is paid, and this payment can only be demanded in the liquidation
of the partnership (Coingco vs. Flores, 82 Phil. 284; Paterno vs. Bibby Vda. de
Padilla, 74 Phil. 377; Testate Estate of Narciso Padilla, G.R.No. L-8748, Dec. 26,
1961). The record does not show that there has already been a liquidation of the
conjugal partnership between the late Pascual Lozano and Nieves de Lozano.
Consequently, the property levied upon, being the separate property of defendant
Nieves de Lozano, cannot be made to answer for the liability of the other
defendant.
On May 18, 1967 counsel for defendants-appellees filed with Us a petition

alleging, inter alia; that prior to the expiration of the redemption period and pursuant
to an order of the lower court defendants filed a surety bond in the amount of
P3,175.12 as the redemption price, which bond was duly approved by the lower
court; that sometime last September 1966, defendants filed a petition before the
Page 109 of 232
lower court praying that the sheriff of Pangasinan be ordered to execute the
corresponding deed of redemption in favor of defendant Nieves de Lozano
represented by her judicial administrator or that, in the alternative, the Register of
Deeds of Dagupan City be directed to cancel Entries Nos. 19234 and 20042 at the
back of TCT No. 8192; and that said petition was denied by the lower court. The
same prayer made below is reiterated in the said petition of May 18, 1967.
The foregoing petition of May 18, 1967 alleges facts which occurred after the
perfection of the present appeal and which should therefore be submitted to and
passed upon by the trial court in connection with the implementation of the order
appealed from, which is hereby affirmed, with costs.
Page 110 of 232

[80]
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.
Appeals; Certiorari; Pleadings and Practice; 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.—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.
Actions; Third-Party Claims; Pleadings and Practice; 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.—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.
Same; Same; Husband and Wife; Conjugal Properties; Parties; A third-party claim
must be filedby a person other than the judgment debtor or his agent—only a stranger to
the case may file a third-party claim; In determining whether the husband is a stranger to
the suit, the character of the property must be taken into account.—A third-party claim
must be filed by a person other than the judgment debtor or his agent. In other words, only a
stranger to the case may file a third-party claim. This leads us to the question: Is the
husband, who was not a party to the suit but whose conjugal property is being executed on
account of the other spouse being the judgment obligor, considered a “stranger?” 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, 174 SCRA 59 (1989), which was
later adopted in Spouses Ching v. Court of Appeals, 423 SCRA 356 (2004) this Court held
Page 111 of 232

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. On the other hand, in Naguit v. Court of Appeals, 347 SCRA 60
(2000), and Sy v. Discaya, 181 SCRA 378 (1990), 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.
Same; Same; Same; Same; 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; By no stretch of imagination can it be concluded that the
civil obligation arising from the crime of slander committed by the spouse redounded to the
benefit of the conjugal partnership.—There is no dispute that contested property is conjugal
in nature. Article 122 of the Family Code explicitly provides that payment of personal debts
contracted by the husband or the wife before or during the marriage shall not be charged to
the conjugal partnership except insofar as they redounded to the benefit of the family.
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.
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.
Page 112 of 232

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.
Page 113 of 232

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
Page 114 of 232

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
Page 115 of 232
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
Page 116 of 232
13
the benefit of the conjugal partnership. 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.
Page 117 of 232

WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals
is AFFIRMED. Costs against petitioners.
SO ORDERED.
Page 118 of 232

[81]
G.R. No. 143826. August 28, 2003.*
HEIRS OF IGNACIA AGUILAR-REYES, petitioners, vs. SPOUSES CIPRIANO
MIJARES and FLORENTINA MIJARES, respondents.
Civil Law; Marriage; Conjugal Property; 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.—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 cases 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. 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.
Same; Same; Same; 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.—The
trial court correctly annulled the voidable sale of Lot No. 4349-B-2 in its entirety. In Bucoy
v. Paulino, 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.
Same; Property; Sales; 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.—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.
Same; Same; Same; If a voidable contract is annulled the restoration of what has

been given is proper.—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.
Page 119 of 232

Same; Interests; Interest on obligations not constituting a loan or forbearance of

money is six percent (6%) annually; 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.—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, 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. 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.
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 transaction1 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, Resolution 5 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
Page 120 of 232

11
spouses. 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 complaint 15 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;
Page 121 of 232
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
Page 122 of 232
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:
Page 123 of 232
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…
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 cases 30 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:
Page 124 of 232
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…
Page 125 of 232

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,
Page 126 of 232
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 children 44 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
Page 127 of 232
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
Page 128 of 232
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.
Page 129 of 232

(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.
Page 130 of 232

[82]
[No. L-387. Octubre 25, 1946]

BALBINA MENDOZA, recurrente, contra PACIANO DIZON, en su capacidad como
Auditor General, recurrido.
LEY ADMINISTRATIVA; GRATIFICACIÓN (GRATUITY); SIGNIFICACIÓN o
CONCEPTO.—La Orden Administrativa No. 27 de 7 de Diciembre de 1945, usa la
palabra gratuity que tiene una significación conocida, categórica y terminante en la ley y
en la jurisprudencia. Las autoridades establecen de consuno que gratuity no equivale a
sueldo, salario, o cualquier otro emolumento. Significa regalo, premio, presente, algo
que se da y se recibe portítulo lucrativo. En el presente caso acentúase más la diferencia
entre ambos conceptos si se considera que el Congreso, en su Resolución Conjunta No. 5
aprobada el 28 de Julio, 1945, recomendaba el estudio de "ways and means to pay the
back salaries, gratuities, bonuses or other emoluments of the loyal and deserving
employees of the Commonwealth * * *." El hecho, pues, de que el Presidente escogiera
el término gratuity, dejando a un lado los otros vocablos, indica que se trata de una
concesión bien calculada; denota claramente la intención de limitar estrictamente el
alcance del privilegio a la letra de la ley.
JUICIO ORIGINAL en el Tribunal Supremo. Revision de un dictamen del Auditor General.
Los hechos aparecen relacionados en la decision del Tribunal.

Sres. Eulalio Chaves y Eugenio P. La Rosa en representación de la recurrente.
El Procurador General Auxiliar Sr. Alvendia y el Procurador Sr. Carreon en
representación del recurrido.
BRIONES, M.:
Versa este expediente sobre la solicitud presentada originariamenteante esta Corte

por Balbina Mendoza, recurrente,en la que esta pide que, en virtud de la
competenciay facultad que nos confiere la regla 45 del Reglamento delos
Tribunales, revisemos el dictamen expedido por la oficinadel recurrido Paciano
Dizon, en su concepto de AuditorGeneral, en el asunto de la gratificaction o
gratuity del finadoJuan M. Cuevas, hijo legitimo de la recurrente. Loshechos y
putnos esenciales del caso son los siguientes:
Desempeñando del cargo de Auditor de la provincia deIlocos Sur, Juan M. Cuevas

fallecio en Vigan, capital dedicha provincia, el 3 de Noviembre de 1945. Al
estallarla guerra el 8 de Diciembre de 1941, estaba en servicioactivo como tal
Auditor.
Page 131 of 232

En 1932 Cuevas contrajo matrimonio con FlorenciaCocadiz. Este matrimonio
quedo definitivamente disueltoel 21 de Marzo de 1944 en virtud de un decreto
firme dedivorcio expedido por el Juzgado de Primera Instanciade Batangas en la
mencionada fecha. No habia ningunaprole. No se discute que Balbina Mendoza, la
recurrente,es la parienta mas proxima del difunto y, por tanto, conderecho a
heredarle, con exclusion de los hermanos ysobrinos que el mismo dejo.
El 7 de Diciembre de 1945 el Presidente del Commonwealthde Filipinas expidio la

Orden Administrativa No.27 en la que bajo ciertas condiciones se disponia el
pagode gratificaciones o gratuities a funcionarios y empleadosdel Gobierno
Nactional que hubieran estado en activo servicioel 8 de Diciembre de 1941, hayan
sido o no llamadospara volver a ocupar sus puestos despues de la liberacion.Dicha
Orden Administrativa se expidio por el Presidente "en virtud de la autoridad a mi
conferida por la ley existente (se alude a los poderes de emergencia) y para llevara
cabo las recomendaciones del Comite creado bajo la ResolucionConjunta No. 5
del Congreso de Filipinas aprobadael 28 de Julio de 1945."
Antes del 7 de Diciembre, o sea el 4 de aquel mes, ya larecurrente habia dirigido

una instancia al Auditor General,acompanada de los correspondientes documents
que la sostenian,exponiendo la circunstancia de su parentesco con elfinado Juan
M. Cuevas y una relacion de los bienes relictosde este, entre ellos ciertas
cantidades de dinero en poderdel Gobierno, del Bank Nacional Filipino y del
BancoPostal de Ahorros, y pidiendo en consecuencia "que se ladesignase como la
parienta mas proxima a fin de habilitarlapara recibir sin demora cualquier cantidad
que sedebiera a su difunto hijo. . . ."
Florencia Cocadiz, la esposa divorciada, no ha comparecidooficialmente ante el

Auditor General, ni ha presentado ninguna instancia.
El expediente demuestra que al pricipio el Auditor GeneralDelegado elevo el

asunto en consulta al Departamentode Justicia tratando de recabar una opinion,
entre otrospuntos, sobre si "la esposa divorciada aqui mencionada tiene algun
derecho a la gratificacion o gratuity a la cualel difunto marido o su intestado es
acreedor bajo la Orden Administrativa No. 27 fechada el 7 de Diciembre, 1945,
considerando que dicha gratuity es equivalente a sus sueldos correspondientes a
los meses de Enero y Febrero, 1942." El Departamento de Justicia rehoso emitir la
opinion solicitada, entre otras razones porque la consulta versaba sobre un caso
hipotetico, teniendo en cuenta que no habia un conflicto de reclamanciones, pues
la esposa divorciada no era reclamante, no habiendo mas instancia que la
presentada por Balbina Mendoza, la madre superviviente.
Posteriormente — 12 de Marso de 1946 — el Auditor General Delegado, haciendo

uso evidentemente de la facultad que le confiere el articulo 262 del Codigo
Page 132 of 232

Administrativo, resolvio en su fondo la instancia de Balbina Mendoza, dictando el
siguiente fallo:
"Memorandum for Auditor Pedro Rivera
Central office
As the gratuity of the late Juan M. Cuevas under Administrative Order

No. 27, dated December 7, 1945, corresponds to his salary for the
months of January and February, 1942, during which his marriage
with Florencia Cocadiz in 1932 was not yet dissolved, the decree of
their divorce having been issued by the Court of First Instance of
Batangas only on March 21, 1944, the said gratuity should be
deemed to be a part of their conjugal estate. Only one-half thereof
may, therefore, be paid to his surviving mother, the herein claimant,
who is hereby designated as his next of kin, the other half being
payable to his divorced wife as her share.
(Sgd.) Juan Concon

Deputy Auditor General
De este fallo la peticionaria ha interpuesto oportunamente su apelacion, la cual

procedemos ahora a decidir.
El Procurador General, en su alegato presentado en nombrey representacion del

Gobierno, plantea la contencionentre las partes en el siguiente resumen, hecho
con apropiada brevedad y justeza:
La cuestion suscitada por la apelante es si la gratificacion (gratuity)

pagadera al finado Juna Cuevas bajo la Orden Administrativa No. 27 de
fecha 7 de Diciembre, 1945, pertenece a su herencia yacente, o si
dicha gratuity debe ser considerada como perteneciente alos bienes
gananciales del difunto y de su esposa divorciada. El Gobierno, en si, no
tiene interes en la cuestion; admite la obligation de pagar la gratuity y esta
dispuesto a hacerlo a quien fuere declarado con derecho a ello.
La apelante sostiene que la Orden Administrativa No. 27, al disponerel pago

de gratuities, usa este vocablo y no otro; que gratuity es sinonima o
equivalente a regalo o presente otorgado libremente; que las gratificaciones
concedidas en dicha Orden Administrativa solohan venido a ser exigibles y
pagaderas desde su promulgacion; y que, por tanto, el derecho del finado
Cuevas a reciber tales gratuities quedo efectivo mucho tiempo despues de
haber quedado firme eldecreto por el cual se divorcio de su esposa.
Despues de madura deliberacion, esta representacion se siente obligada,
Page 133 of 232
por las razones dadas por la apelante y por otras que mas adelante se van
a exponer, a prestar su adhesion al criterio de que las gratuities encuestion
deben pertenecer a la herencia y acente del finado Cuevas. (Alegato del
Procurador General, paginas 2 y 3.).lawphil.net
Juzgamos acertadas y arregladas a derecho las apreciaciones y conclusiones del

Procurador General.
Las gratificaciones o gratuities de que se trata debenregirse por la ley que las
provee, esto es, por la Orden Adminitrativa No. 27 que tiene caracter y fuerza de
leyen virtud de los poderes de emergencia otorgados por la Legislatura al
Presidente de Filipinas a raiz de la guerra, de acuerdo con la Constitution. El
articulo 1090 de Codigo Civil preceptua que "las obligaciones derivadas dela ley no
se presumen. Solo son exigibles las expresamente determinadas en este Codigo o
en leyes especiales, y seregiran por los preceptos de la ley que las hubiere
establecido; . . . ."
Ahora bien, la citada Orden Administrativa usa la palabra gratuity que tiene una

significacion conocida, categorica y terminante en la ley y en la jurisprudencia.
Lasautoridades establecen de consuno que gratuity no equivalea sueldo, salario, o
cualquier otro emolumento. Significa regalo, premio, presente, algo que se da y se
recibe portitulo lucrativo. En el presente caso acentuase mas ladiferencia entre
ambos conceptos si se considera que el Congreso, en su Resolucion Conjunta No.
5 aprobada el 28 de Julio, 1945, recomendaba el estudio de "ways and means to
pay the back salaries, gratuities, bonuses or other emoluments of the loyal and
deserving employees of the Commonwealth . . . ." El hecho, pues, de que el
Presidente escogiera el termino gratuity, dejando a un ladolos otros vocables,
indica que se trata de una concesion bien calculada; denota claramente la
intencion de limita restrictamente el alcance del privilegio a la letra de la ley.
Cuando no hay ninguna ambiguedad en la fraseologia dela ley, la funcion judicial
tiene que ser necesariamente literalista, ministerial — no tiene por que hacer
sutilezas y deducciones, jugando con los conceptos como el juglar consus
cubiletes. . . .
Lo manifestado por el Auditor en su dictamen de quela gratuity en cuestion

corresponde a los sueldos de Cuevas por los meses de Enero y Febrery de 1942 y
que, portanto, la esposa divorciada tiene derecho a percibir la mitad porque en
aquel tiempo los conyuges no estaban aun legalmente divorciados, carece
absolutamente de fundamento, pues nada hay en la Orden Administrativa No. 27
quediga que las gratuities en ella concedidas corresponden especificamente a los
meses referidos. Los terminos de la disposicion son los siguientes:
"The gratuities herein authorized shall be equivalent to two months' basic salary at
the rates actually received on December 8, 1941." Esevidente que la frase "dos
meses" esta aqui puesta tansolo para fines de computacion o determinacion de la
Page 134 of 232
cuantiade la gratuity, y lo mismo puede corresponder a dosmeses cualesquiera de
1942, 1943 o 1944, como a otros dosmeses cualesquiera del ano 1945, despues
ya de la liberacion.
Parece superfluo decir que lo resuelto en el presenteasunto nada tiene que ver con
la cuestion de si los funcionarios y empleados del Gobierno del Commonwealth en
activo servicio al estallar la pasada guerra tenian o no derechoa sueldos atrasados
(back salaries), hayan o noservido durante la ocupacion enemiga, o con la otra
cuestionde si el Gobierno de la Republica esta o no obligadoa pagarles tales
sueldos. Ninguna de dichas cuestionesesta ante Nos para su determinacion y
resolucion.
En meritos de lo expuesto, se modifica el dictamen objetode apelacion y se declara

que la recurrente tiene derechoa percibir la cantidad total de
la gratuity perteneciente alfinado Juan M. Cuevas, sin perjuicio desde luego de
cualquier reclamacion valida contra los bienes relictos de dichofinado bajo las
disposiciones legales en materia de bienesde difuntos. Sin costas. Asi se ordena.
Please see translation here:

https://pdfslide.net/documents/mendoza-vs-dizon-77-phil-533-1946.html
Page 135 of 232

[83]
[G.R. No. 42551. September 4, 1935.]
ALEKO E. LILIUS, for himself and as guardian ad litem of his minor child,
Brita Marianne Lilius, and SONJA MARIA LILIUS, Plaintiffs-Appellees, v.
MANILA RAILROAD COMPANY, Defendant. LAURA LINDLEY SHUMAN,
MANILA WINE MERCHANTS, LTD., BANK OF THE PHILIPPINE ISLANDS
AND MANILA MOTOR CO., INC., intervenors-appellants, and W. H.
WATEROUS, M. MARFORI, JOHN R. MCFIE, JR., ERLANGER & GALINGER,
INC., PHILIPPINE EDUCATION CO., INC. HAMILTON BROWN SHOE CO.,
ESTRELLA DEL NORTE AND EASTERN & PHILIPPINE SHIPPING
AGENCIES, LTD., intervenors- appellees.
1. PREFERENCES AND PRIORITIES; FINAL JUDGMENTS AND DEBTS

EVIDENCED BY PUBLIC DOCUMENTS; SERVICES. — The fact that the
trial court did not direct the defendant Railroad Company to pay directly
to the claimant L. L. S. the amount of her claim does not modify or do
away with her equitable right to the same status as that given to the two
doctors W and M. The inevitable conclusion is that the claims of those
doctors have o preference over her claim for her services as a nurse.
2. ID.; ID.; COSTS; RULE 38, REVISED RULES OF COURTS OF FIRST

INSTANCE. — Rule 38 of the Revised Rules of Courts of First Instances
requires that." . . costs shall be taxed by the clerk on five days’ written
notice given by the prevailing party to the adverse party, with which
notice a statement of the items of cost claimed by the prevailing party,
verified by his oath or that of his attorney, shall be served. . . ." The
proper evidence, therefore, of the costs in this case would have been the
bill of costs and the taxation of such costs by the clerk. In order to
recover such costs in a separate proceeding, such as this, evidence must
be presented as to the amount of the same. As there was no evidence
offered as to the amount of said costs, the lower court was correct of
disallowing that item.
3. ID.; ID.; DAMAGES ARISING FROM AN INJURY CONSIDERED AS

PARAPHERNAL PROPERTY. — There are two distinct theories as to
whether damages arising from an injury suffered by one of the spouses
should be considered conjugal or separate property of the injured
spouse. The theory holding that such damages should form part of the
Page 136 of 232
conjugal partnership property is based wholly on the proposition that by
the injury the earning capacity of the injured spouse is diminished to the
consequent prejudice of the conjugal partnership. Assuming the
correctness of this theory, a reading of the decision of this court in G. R.
No. 39587 will show that the sum of P10,000 was awarded to S. M. L.
"by way of indemnity for patrimonial and moral damages." It is held that
the sum of P10,000 was awarded to S. M. L. "by way of indemnity for
patrimonial and moral damages." It is held that the sum of P10,000 with
interest thereon awarded to S. M. L. as damages is paraphernal
property.
4. ID.; ID.; CHATTEL MORTGAGE. — Under section 5 of Act No. 1507, as

amended by Act No. 2496, a chattel mortgage does not have to be
acknowledged before a notary public. As against creditors and
subsequent encumbrancers, the law does require an affidavit of good
faith appended to the mortgage and recorded with it. (See Giberson v.
A. N. Jureidini Bros., 44 Phil., 216, and Betita v. Ganzon, 49 Phil., 87.) A
chattel mortgage may, however, be valid as between the parties without
such an affidavit of good faith.
5. ID.; ID.; ID. — In 11 Corpus Juris, page 482, the rule is expressly
stated that as between the parties and as to third persons who have no
rights against the mortgagor, no affidavit of good faith is necessary. It
will thus be seen that under the law, a valid chattel mortgage may exist
between the parties without its being evidenced by a public document.
This court would not be justified, merely from the reference by the lower
court to a mortgage, in assuming that its date appears in a public
document.
6. ID.; ID.; ID. — It is essential that the nature and the date of the
document be established by competent evidence before the court can
allow a preference as against the other parties to this proceeding.
Inasmuch as the claimant failed to establish its preference, based on a
public document, the lower court properly held that its claim against the
said A. E. L. was based on the final judgment in civil case No. 41159 of
the Court of First Instance of Manila of May 3, 1932. That court,
therefore, committed no error in holding that the claim of the Manila
Motor Co., Inc., was inferior in preference to those of the appellees in
this case.
DECISION
Page 137 of 232
GODDARD, J.:
In this case Laura Lindley Shuman, the Manila Wine Merchants, Ltd., the
Bank of the Philippine Islands and the Manila Motor Co., Inc., have
appealed from an order of the Court of First Instance of Manila fixing the
degree of preference of the claimants and distributing the proceeds of
the judgment of this court in the case of Lilius v. Manila Railroad Co. (59
Phil., 758), the amount of which judgment in the sum of P33,525.03,
including interest and costs, was deposited by the railroad company with
the clerk of the lower court in that case. After deducting the attorneys’
fees in the sum of P8,016.88, which is not questioned, the net amount in
the hands of the clerk of the lower court pertaining to each of the
plaintiffs in the original action is as follows:chanrob1es virtual 1aw
library
Aleko E. Lilius P13,181.33
Sonja Maria Lilius 8,218.54
Brita Marianne Lilius 4,109.28
There was a total of twenty-eight claimants to these funds, whose claims

were presented and decided without objection in the original case in the
lower court.
The trial court in its order from which these appeals are taken,
allowed:chanrob1es virtual 1aw library
(a) As against the sum of P8,218.54, separately awarded to the plaintiff

Sonja Maria Lilius, the following claims or portions thereof in the order
stated:chanrob1es virtual 1aw library
One-half of the claim of Dr. W. H. Waterous by virtue of
a written assignment of March 9, 1933, by the said Sonja
Maria Lilius to him P1,500.00
One-third of the claim of the appellant Laura Lindley

Page 138 of 232
Shuman by virtue of a joint judgment obtained by her on
August 10, 1933, in Case No. 44254 of the Court of First
Instance of Manila, against the said Sonja Maria Lilius,
Aleko E. Lilius and Brita Marianne Lilius P661.13
One-third of the claim of the St. Paul’s Hospital by
virtue of a joint written assignment of September 21, 1933,
by the said Sonja Maria Lilius, Aleko E. Lilius and Brita
Marianne Lilius to it P581.19
and the balance of the award was ordered paid to the said Sonja Maria
Lilius.
(b) As against the sum of P4,109.28, separately awarded to the plaintiff

Brita Marianne Lilius, the following claims or portions thereof in the order
One-third of the claim of Laura Lindley Shuman by
virtue of a joint judgment obtained by her on August 10,
1933, in Case No. 44254 of the Court of First Instanceof
Manila, against the said Brita Marianne Lilius, Sonja Ma-
ria Lilius and Aleko E. Lilius P661.13
One-third of the claim of St. Paul’s Hospital by virtue
of a joint written assignment of September 21, 1933, by the
said Brita Marianne Lilius, Sonja Maria Lilius and Aleko
E. Lilius P518.18
Page 139 of 232

and the balance of the award was ordered paid to the said Brita
Marianne Lilius, and
(c) As against the sum of P13,181.33, awarded to the plaintiff Aleko E.

Lilius, the following claims or portions thereof in the order
The other half of the claim of Dr. W. H. Waterous by
virtue of the final judgment in the original case, G. R. No.
39587 P1,500.00.
The claim of Dr. M. Marfori, by virtue of the final judgment
in the original case, G. R. No. 39587 250.00.
The claim of John R. McFie, jr., by virtue of a written
assignment to him by the said Aleko E. Lilius of November
13, 1931 500.00.
The balance of P10,931.33 of that judgment pertaining to the said Aleko

E. Lilius was allowed and distributed by the lower court proportionately
among the following claimants by virtue of their written assignment of
January 27, 1932:chanrob1es virtual 1aw library
Erlanger & Galinger, Inc 3,374.50
Philippine Education Co., Inc 3,394.94
Hamilton Brown Shoe Co 1,878.98
Estrella del Norte 1,850.76
Eastern & Philippine Shipping Agencies, Ltd 432.15
APPEAL OF LAURA LINDLEY SHUMAN.
First assignment of error: "The lower court erred in holding that Dr. W.
H. Waterous and Dr. M. Marfori had a claim against the plaintiff, Aleko E.
Page 140 of 232
Lilius, superior to the claim of the appellant, Laura Lindley Shuman,
against him."cralaw virtua1aw library
One of the contentions of this appellant under this assignment of error is

that her claim, having been made the basis of the plaintiffs’ action and
of the award for damages, as shown in the original decision herein,
should constitute, and does constitute a superior lien against the funds
awarded said plaintiffs, to those of any other claimants, except the two
doctors, the hospital and the other nurse, and that as to the claims of
the two doctors, the hospital and the other nurse the claim of this
appellant has equal preference with their claims.
The following items were made the basis of a part of the judgment for
damages awarded to the plaintiffs in the original action against the
Manila Railroad Company:chanrob1es virtual 1aw library
Por honorarios del Dr. Waterous (Exhibit N-2) P3,000.00
Por la primera cura hecha en el Hospital de Calauang
(Exhibit N-5) 250.00
Por el alquiler de la ambulancia del Hospital General
(Exhibit N-4) 10.00
Por la estancia en el Hospital Saint Paul
(Exhibit N-3) 3,355.00
Por los servicios prestados por la enfermera Laura Shuman
(Exhibit N-6) 2,156.00
Por los servicios prestados por la enfermera Alejandra Alcayaga
(Exhibit N-9) 1,450.00
Por los servicios prestados por la enfermera Carmen Villanueva
(Exhibit N-11) 240.00
Page 141 of 232

Por la perdida de la camara fotografica, pluma fuente y lapiz
(Exhibit N-1) 43.00
Por trajes dañados en el choque 131.00
—————
Total 10,635.00
The trial court in that case directed the defendant Railroad Company to
pay P3,000 to Dr. Waterous and to pay to Dr. Marfori P250, but failed to
direct the defendant to pay the corresponding sums to the other persons
and entities mentioned in the portion of the decision copied above.
It must be admitted that the amounts due Dr. Waterous and the others
mentioned is the original decision, including the appellant Shuman, were
all used as a basis for a part of the judgment which plaintiffs secured
against the defendant Railroad Company.
From the foregoing it is clear that the claim of this appellant rests upon
the same ground as those of Doctors Waterous and Marfori. She was
also among those who rendered services to plaintiffs in aid of their
recovery from the injuries received by them in the accident for which
damages were awarded them in the case against the Railroad Company.
The fact that the trial court did not direct the defendant Railroad
Company to pay directly to this appellant the amount of her claim does
not modify or do away with her equitable right to the same status as
that given to the two doctors mentioned above. The inevitable
conclusion is that the claims of Waterous and Marfori have no preference
over her claim for her services as a nurse. This assignment of error
should be and is hereby sustained.
This appellant in her second assignment of error contends that the trial
court erred in failing to allow her claim in the sum of P61.94 as costs in
the case in which judgment was rendered in her favor against the herein
plaintiffs-appellees. The record shows that the reason for the
disallowance of this item was because no proof was offered as to the
amount of costs in case No. 44254, as shown by the bill of costs, was
P61.94. Rule 38 of the Revised Rules of Courts of First Instance requires
that." . . costs shall be taxed by the clerk on five days’ written notice
given by the prevailing party to the adverse party, with which notice a
Page 142 of 232
statement of the items of cost claimed by the prevailing party, verified
by his oath or that of his attorney, shall be served. . . ." The proper
evidence, therefore of the costs in that case would have been the bill of
costs and the taxation of such costs by the clerk. In order to recover
such costs in a separate proceeding, such as this, evidence must be
presented as to the amount of the same. As there was no evidence
offered in this case as to the amount of said costs, the lower court was
correct in disallowing that item. This assignment of error is overruled.
Under her third assignment of error this appellant contends (1) that the
funds separately awarded the wife, Sonja Maria Lilius, partake of the
nature of conjugal property, at least to the extent of the sum of P800
awarded to her as interest on the principal award of P10,000 made in
her favor by the trial court, and as such should respond and (2) that
even assuming that the sums awarded separately to Sonja Maria Lilius
are not conjugal property, but her own paraphernal property, still under
the provisions of the Civil code payment may be required out of said
funds, her husband being insolvent, under her liability for the medical
expenses incurred by her husband, one of the obligations imposed by
law upon the wife.
The second contention under this assignment of error can be disposed of

by calling attention to the fact that there is no proof in this case that her
husband is insolvent. It has not been proved that Aleko E. Lilius had no
other property outside of the sum awarded to him in the case against
the Railroad Company.
APPEAL OF THE MANILA WINE MERCHANTS, LTD., AND
THE BANK OF THE PHILIPPINE ISLANDS
The appellants, the Manila Wine Merchants, Ltd., and the Bank of the
Philippine Islands also contend that the sum separately awarded Sonja
Maria Lilius is conjugal property and therefore liable for the payment of
the private debts of her husband, Aleko E. Lilius, contracted during her
marriage.
It is contended that damages awarded for personal injury are not

classified as separate property of each of the spouse in article 1396 of
the Civil Code and they should therefore be presumed conjugal. In
answer to this, article 1401 of the same Code, in enumerating the
property belonging to the conjugal partnership, does not mention
Page 143 of 232
damages for personal injury.
The question raised by these appellants is one of first impression in this

jurisdiction and apparently has never been passed upon by the Supreme
Court of Spain. .
The following comment is found in Colin y Capitant, Vol. 6, pages 217

and 218:jgc:chanrobles.com.ph
"No esta resuelta expresamente en la legislacion española la cuestion de

si las indemnizaciones debidas por accidentes del trabajo tienen la
consideracion de gananciales o son bienes particulares de los conyuges.
"Inclinan a la solucion de que estas indemnizaciones deben ser

consideradas como gananciales, el hecho de que la sociedad pierde la
capacidad de trabajo con el accidente, que a ella le pertenece, puesto
que de la sociedad son lost frutos de ese trabajo; en cambio, la
consideracion de que de igual manera que los bienes que sustituyen a
los que cada conyuge lleva al matrimonio como propios tienen el
caracter de propios tienen el caracter de propios, hace pensar que las
indemnizaciones que vengan a suplir la capacidad de trabajo aportada
por cada conyuge a la sociedad, deben ser juridicamente reputadas
como bienes propios del conyuge que haya sufrido el accidente. Asi se
llega a la misma solucion aportada por la jurisprudencia francesa."cralaw
virtua1aw library
From the above it appears that there are two distinct theories as to
whether damages arising from an injury suffered by one of the spouses
should be considered conjugal or separate property of the injured
spouse. The theory holding that such damages should form part of the
conjugal partnership property is based wholly on the proposition, also
advanced by the Manila Wine Merchants, Ltd., that by the injury the
earning capacity of the injured spouse is diminished to the consequent
prejudice of the conjugal partnership. Assuming the correctness of this
theory, a reading of the decision of this court in G. R. No. 39587 will
show that the sum of P10,000 was awarded to Sonja Maria Lilius "by
way of indemnity for patrimonial and moral damages." The pertinent
part of that decision on this point reads:jgc:chanrobles.com.ph
"Taking into consideration the fact that the plaintiff Sonja Maria Lilius,
wife of the plaintiff Aleko E. Lilius is — in the language of the court,
which saw her at the trial — ’young and beautiful and the big scar, which
Page 144 of 232
she has on her forehead caused by the lacerated wound received by her
from the accident, disfigures her face and that the fracture of her left leg
has caused a permanent deformity which renders it very difficult for her
to walk’, and taking into further consideration her social standing,
neither is the sum of P10,000, adjudicated to her by the said trial court
by way of indemnity for patrimonial and moral damages,
excessive."cralaw virtua1aw library
It should be added that the interest on that sum is part of the damages
"patrimonial and moral" awarded to Sonja Maria Lilius.
Furthermore it appears in the decision of the trial court in G. R. No.

39587 that Aleko E. Lilius claimed the sum of P10,000 as damages on
account of the loss of the services of Sonja Maria Lilius as secretary and
translator, her particular work as a member of the conjugal partnership.
The trial court disallowed this claim and neither of the plaintiffs in that
case appealed to this court.
In view of the foregoing it is held that the sum of P10,000 with interest
thereon awarded to Sonja Maria Lilius as damages is paraphernal
property.
The third assignment of error of the appellant Shuman, the second

assignment of error of the appellant Bank of the Philippine Islands and
the sole assignment of error of the appellant Manila Wine Merchants,
Ltd., are overruled.
In its first assignment of error it is contended by the Bank of the

Philippine Islands that by virtue of its writ of garnishment served on the
Manila Railroad Company of February 8, 1933, it acquired a lien superior
to the preference granted by article 1924 of the Civil Code to prior
judgments. This error, if at all, is however non- prejudicial as the record
shows that all the creditors declared by the court as having a right to
participate in the proceeds of the judgment in favor of Aleko E. Lilius
were so held by virtue of deeds of assignment executed prior to the date
of the service of notice of the bank’s writ of garnishment on the Manila
Railroad Company. These creditors are John R. McFie, jr., whose claim is
based on a deed of assignment dated November 13, 1931, and Erlanger
& Galinger, Philippine Education Co., Inc., Hamilton-Brown Shoe Co.,
Estrella del Norte and Eastern & Philippine Shipping Agencies, Ltd.,
whose claims are based on a deed of assignment dated November 17,
1931. As the record shows that whatever was left of the judgment in
Page 145 of 232
favor of Aleko E. Lilius is not sufficient to pay in full the credits of the
above mentioned creditors and furthermore, in view of the fact that
strictly speaking, there was no existing credit in favor of Aleko E. Lilius
to be garnished on February 3, 1933, as it had been assigned, before
that date, to this creditors, this assignment of error, therefore, must be
overruled.
APPEAL OF THE MANILA MOTOR CO., INC.
The two errors assigned by this appellant read as

follows:jgc:chanrobles.com.ph
"I. The lower court erred in considering the date of the judgment, Exhibit
A, Manila Motor Co., Inc., instead of the date of the public document
upon which it was based in determining the preference among the
several claims filed and litigated in this proceeding.
"II. The lower court erred in not holding the claim of the claimant-
appellant, Manila Motor Co., Inc., preferred over all other claims against
Aleko E. Lilius evidenced by public instruments and final
judgments."cralaw virtua1aw library
The claimant has not proven that its credit is evidenced by a public
document within the meaning of article 1924 of the Civil Code. The only
evidence offered by the Manila Motor Co., Inc., in support of its claim of
preference against the fund of Aleko E. Lilius was a certified copy of its
judgment against him in civil case No. 41159 of the Court of First
Instance of Manila, together with a certified copy of the writ of execution
and the garnishment issued by virtue of said judgment. These
documents appear in the record as Exhibits A, B and C. The alleged
public document evidencing its claim was not offered in evidence and
counsel of the Manila Motor Co., Inc., merely stated at the hearing in the
lower court that its judgment was based on a public document dated
May 10, 1931. There is no explanation as to why it was not presented as
evidence along with Exhibits A, B and C. In their brief in this court,
counsel for the Manila Motor Co., Inc., merely assume that its credit is
evidenced by a public document dated May 10, 1931, because the court,
in its judgment in said civil case No. 41159, refers to a mortgage
appearing in the evidence in that case as Exhibit A as the basis of its
judgment, without mentioning the date of the execution of that exhibit.
This reference in said judgment to a mortgage is not competent or
satisfactory evidence as against third persons upon which to base a
Page 146 of 232
finding that the Manila Motor Company’s credit is evidenced by a public
document within the meaning of article 1924 of the Civil Code. This court
is not authorized to make use of that judgment as a basis for its findings
of fact in this proceeding. This is shown by the decision of this court in
the case of Martinez v. Diza (20 Phil., 498). In the syllabus of that
decision it is stated:jgc:chanrobles.com.ph
"1. COURTS OF FIRST INSTANCE; JUDGMENT IN FORMER CIVIL ACTION

AS BASIS FOR FINDINGS OF FACT; ERROR. - A person who was not a
party to a former civil action, or who did not acquire his rights from one
of the parties thereto after the entry of judgment therein, is not bound
by such judgment; nor can it be used against him as a basis for the
findings of fact in a judgment rendered in a subsequent action."cralaw
virtua1aw library
But even if the court is authorized to accept the statement in that

judgment as a basis for its finding of fact in relation to this claim, still it
would not establish the claim of preference of the Manila Motor Co., Inc.
Granting that a mortgage existed between the Manila Motor Co., Inc.,
and Aleko E. Lilius, this does not warrant the conclusion that the
instrument evidencing that mortgage is a public document entitled to
preference under article 1924 of the Civil Code. Under section 5 of Act
No. 1507 as amended by Act No. 2496, a chattel mortgage does not
have to be acknowledged before a notary public. As against creditors
and subsequent encumbrancers, the law does require an affidavit of
good faith appended to the mortgage and recorded with it. (See
Giberson v. A. N. Jureidini Bros., 44 Phil., 216, and Betita v. Ganzon, 49
Phil., 87.) A chattel mortgage may, however, be valid as between the
parties without such an affidavit of good faith. In 11 Corpus Juris, 482,
the rule is expressly stated that as between the parties and as to third
persons who have no rights against the mortgagor, no affidavit of good
faith is necessary. It will thus be seen that under the law, a valid
mortgage may exist between the parties without its being evidenced by
a public document. This court would not be justified, merely from the
reference by the lower court in that case to a mortgage, in assuming
that its date appears in a public document. If the Manila Motor Co., Inc.,
desired to rely upon a public document in the form of a mortgage as
establishing its preference in this case, it should have offered that
document in evidence, so that the court might satisfy itself as to its
nature and unquestionably fix the date of its execution. There is nothing
either in the judgment relied upon or in the evidence to show the date of
said mortgage. The burden was upon the claimant to prove that it
Page 147 of 232
actually had a public instrument within the meaning of article 1924 of
the Civil Code. It is essential that the nature and the date of the
document be established by competent evidence before the court can
allow a preference as against the other parties to this proceeding.
Inasmuch as the claimant failed to establish its preference, based on a
public document, the lower court properly held that its claim against the
said Aleko E. Lilius was based on the final judgment in civil case No.
41159 of the Court of First Instance of Manila of May 3, 1932. That
court, therefore, committed no error in holding that the claim of the
Manila Motor Co., Inc., was inferior in preference to those of the
appellees in this case.
This appellant’s assignments of error are overruled.
In view of the foregoing the following portion of the dispositive part of

the decision of the trial court is affirmed.
"Por estas consideraciones, se ordena y se decreta (a) que del saldo de

P8,218.54, que pertenece a Sonja Maria Lilius y que se halla depositado
en la Escribania del Juzgado, se pague por el Escribano al Dr. W. H.
Waterous la suma de mil quinientos pesos (P1,500), a Laura L. Shuman,
seiscientos sesenta y un pesos con trece centavos (P661.13), y al St.
Paul’s Hospital, quinientos diez y ocho pesos con diez y ocho centavos
(P518.18), y el remanente de cinco mil cuatrocientos setenta y siete
pesos con veinticuatro centavos (P5,477.24), a Sonja Maria Lilius, o su
apolderado; (b) que del saldo de P4,109.28 que pertenece a Brita
Marianne Lilius y que se halla depositado en la Escribania del Juzgado,
se pague por el Escribano a Laura Shuman, la suma de seiscientos
sesenta y un pesos con trece centavos (P661.13); y al St. Paul’s
Hospital, quinientos diez y ocho pesos con diez y ocho centavos
(P518.18), y el saldo de dos mil ochocientos sesenta y siete pesos con
noventa y siete centavos (P2,867.97), a Brita Marianne Lilius, por
conducto de su tutor;"
The remaining portion of the dispositive part of the decision of the trial
court is modified as follows:jgc:chanrobles.com.ph
"That from the sum of P13,181.33 pertaining to Aleko E. Lilius, which is

deposited with the clerk of the trial court, the following claims shall first
be paid:chanrob1es virtual 1aw library
Dr. W. H. Waterous P1,500.00

Page 148 of 232
Dr. M. Marfori 250.00
Laura Lindley Shuman 661.13
John R. McFie, jr 500.00.
and the balance of the sum pertaining to Aleko E. Lilius shall be divided
among the following entities in proportion to their respective
claims:chanrob1es virtual 1aw library
Amount of
claim
Erlanger & Galinger, Inc P3,672.76
Philippine Education Co., Inc 3,695.20
Hamilton-Brown Shoe Co 2,045.17
Estrella del Norte 2,014.45
Eastern and Philippine Shipping Agencies, Ltd 470.38"
So ordered without special pronouncement as to costs.
Page 149 of 232

[84]
No. L-28589. January 8, 1973.

RAFAEL ZULUETA, ET AL., plaintiffs-appellees, vs. PAN AMERICAN
WORLDAIRWAYS,INC., defendant-appellant.
Courts; Jurisdiction; Question of jurisdictional amount; Where original claim less

than jurisdictional amount, counter-claim within original jurisdiction of court filed cures
defect.—– Although the original claim involves less than the jurisdictional amount,
jurisdiction can be sustained if the counterclaim (of the compulsory type)—– based upon
the damages allegedly suffered by the defendant in consequence of the filing of the
complaint—– exceeds the jurisdictional amount.
Same; Same; When party estopped from impugning jurisdiction of the court.—–The

defendant not only failed to question the jurisdiction of the trial court—– either in that court
or in the Supreme Court, before the rendition of the latter’s decision, and even subsequently
thereto, by filing the aforementioned motion for reconsideration and seeking the reliefs
therein prayed for—– but, also, urged both courts to exercise jurisdiction over the merits of
the case, defendant is now estopped from impugning said jurisdiction.
Same; Same; Nature of claim for damages as one not capable of pecuniary estimation
and, therefore, within the original jurisdiction of courts of first instance; Reasons therefor.
—– A claim for moral damages is one not susceptible of pecuniary estimation. Article 2217
of the Civil Code of the Philippines explicitly provides that “(t)hough incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of
the defendant’s wrongful act or omission.” Hence, “(n)o proof of pecuniary loss is
necessary”—– pursuant to article 2216 of the same Code—– “in order that moral x x x
damages may be adjudicated.” And (t)the assessment of such damages x x x is left to the
discretion of the court”—– said article adds—– “according to the circumstances of each
case.”
Civil law; Damages; Breach by common carrier of contract of carriage justifies

award of damages to passenger(s); Case at bar.—–The plaintiffs had a contract of carriage
with the defendant, as a common carrier, pursuant to which the latter was bound, for a
substantial monetary consideration paid by the former, not merely to transport them to
Manila, but, also, to do so with “extraordinary diligence” or “utmost diligence.” The
responsibility of the common carrier, under said contract, as regards the passenger’s safety
is of such a nature, affecting as it does public interest, that it “cannot be dispensed with” or
even “lessened by stipulation, by the posting of notices, by statements on tickets, or
otherwise.” In the case at bar, the defendant did not only fail to comply with its obligation
to transport the plaintiff to Manila, but, also, acted in a manner calculated to humiliate him,
to chastise him, to make him suffer, to cause to him the greatest possible inconvenience by
leaving him in a desolate island, in the expectation that he would be stranded there for a
“minimum of one week” and, in addition thereto, charged therefor $13.30 a day.
Page 150 of 232

Same; Same; Award of exemplary damages; When justified; Case at bar.—It is
obvious that in off-loading the plaintiff at Wake Island, under the circumstances heretofore
adverted to. the defendant’s agents had acted with malice aforethought and evident bad
faith. If “gross negligence” warrants the award of exemplary damages, with more reason is
its imposition justified when the act performed is deliberate, malicious and tainted with bad
faith.
Same; Same; Award of attorney’s fees; When proper; Case at bar.—–Article 2208 of

the Civil Code expressly authorizes the award of attorney’s fees “when exemplary damages
are award-ed,”—– as they are in the case at bar—– as well as “in any other case where the
court deems it just and equitable that attorney’s fees x x x be recovered.”
Same; Same; Same; Factors considered in awarding attorney’s fees.—–The quantity
and quality of the services rendered by the plaintiffs’ counsel appearing on record, apart
from the nature of the case and the amount involved therein, as well as his prestige as one of
the most distinguished members of the legal profession in the Philippines, of which judicial
cognizance may be taken, amply justify the award, which is a little over 10% of the
damages (P700,000) collectible by the plaintiffs herein.
Same; Conjugal partnership; Damages claimed in case at bar form part of conjugal

partnership property.—–Considering that the damages in question have arisen from, inter
alia, a breach of plaintiffs’ contract of carriage with the defendant, for which plaintiffs paid
their fare with funds presumably belonging to the conjugal partnership, the said damages
fall under paragraph (1) of article 153 of the Civil Code, the right thereto having been
“acquired by onerous title during the marriage x x x.”
Same; Same; Same; Reasons therefor.—–The damages involved in the case at bar do
not come under any of the provisions of article 148 or of other provisions forming part of
Chapter 3, Title VI, of Book I of the Civil Code, which chapter is entitled “Paraphernal
Property.” What is more, if “(t)hat which is acquired by right of redemption or by exchange
with other property belonging to only one of the spouses,” and “(t)hat which is purchased
with exclusive money of the wife or of the husband,” belong exclusively to such wife or
husband it follows necessarily that that which is acquired with money of the conjugal
partnership belongs thereto or forms part thereof.
Same; Same; Where husband and wife plaintiffs or defendants in a common cause,

settlement with one of the spouses not favored.—–It is true that the law favors and
encourages the settlement of litigations by compromise agreement between the contending
parties, but, it certainly does not favor a settlement with one of the spouses, both of whom
are plaintiffs or defendants in a common cause, such as defense of the rights of the conjugal
partnership, when the effect, even if indirect, of the compromise is to jeopardize “the
solidarity of the family”—– which the law seeks to protect—– by creating an additional
cause for the misunderstanding that had arisen between such spouses during the litigation,
and thus rendering more difficult, a reconciliation between them.
MOTION FOR RECONSIDERATION of a decision of the Supreme Court.

Page 151 of 232
The facts are stated in the resolution of the Court.
.
RESOLUTION
CONCEPCION, C.J.:
Both parties in this case have moved for the reconsideration of the decision of this
Court promulgated on February 29, 1972. Plaintiffs maintain that the decision
appealed from should be affirmed in toto. The defendant, in turn, prays that the
decision of this Court be "set aside ... with or without a new trial, ... and that the
complaint be dismissed, with costs; or, in the alternative, that the amount of the
award embodied therein be considerably reduced." .
Subsequently to the filing of its motion for reconsideration, the defendant filed a
"petition to annul proceedings and/or to order the dismissal of plaintiffs-appellees'
complaint" upon the ground that "appellees' complaint actually seeks the recovery
of only P5,502.85 as actual damages, because, for the purpose of determining the
jurisdiction of the lower court, the unspecified sums representing items of alleged
damages, may not be considered, under the settled doctrines of this Honorable
Court," and "the jurisdiction of courts of first instance when the complaint in the
present case was filed on Sept. 30, 1965" was limited to cases "in which the
demand, exclusive of interest, or the value of the property in controversy amounts
to more than ten thousand pesos" and "the mere fact that the complaint also prays
for unspecified moral damages and attorney's fees, does not bring the action within
the jurisdiction of the lower court."
We find no merit in this contention. To begin with, it is not true that "the unspecified
sums representing items or other alleged damages, may not be considered" — for
the purpose of determining the jurisdiction of the court — "under the settled
doctrines of this Honorable Court." In fact, not a single case has been cited in
support of this allegation.
Secondly, it has been held that a clam for moral damages is one not susceptible of
pecuniary estimation.1 In fact, Article 2217 of the Civil Code of the Philippines
explicitly provides that "(t)hough incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of the defendant's
wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary" —
pursuant to Article 2216 of the same Code — "in order that moral ... damages may
be adjudicated." And "(t)he assessment of such damages ... is left to the discretion
of the court" - said article adds - "according to the circumstances of each case."
Appellees' complaint is, therefore, within the original jurisdiction of courts of first
instance, which includes "all civil actions in which the subject of the litigation is not
capable of pecuniary estimation."2
Page 152 of 232

Thirdly, in its answer to plaintiffs' original and amended complainants, defendant
had set up a counterclaim in the aggregate sum of P12,000, which is, also, within
the original jurisdiction of said courts, thereby curing the alleged defect if any, in
plaintiffs' complaint.3
We need not consider the jurisdictional controversy as to the amount

the appellant sues to recover because the counterclaim interposed
establishes the jurisdiction of the District Court. Merchants' Heat &
Light Co. v. James B. Clow & Sons, 204 U.S. 286, 27 S. Ct. 285, 51
L. Ed. 488; O. J. Lewis Mercantile Co. v. Klepner, 176 F. 343 (C.C.A.
2), certiorari denied 216 U.S. 620, 30 S Ct. 575, 54 L. Ed. 641. ... . 4
... courts have said that "when the jurisdictional amount is in question,
the tendering of a counterclaim in an amount which in itself, or added
to the amount claimed in the petition, makes up a sum equal to the
amount necessary to the jurisdiction of this court, jurisdiction is
established, whatever may be the state of the plaintiff's complaint."
American Sheet & Tin Plate Co. v. Winzeler (D.C.) 227 F. 321, 324. 5
Thus, in Ago v. Buslon,6 We held:
... . Then, too, petitioner's counterclaim for P37,000.00 was, also,

within the exclusive original jurisdiction of the latter courts, and there
are ample precedents to the effect that "although the original claim
involves less than the jurisdictional amount, ... jurisdiction can be
sustained if the counterclaim (of the compulsory type)" — such as the
one set up by petitioner herein, based upon the damages allegedly
suffered by him in consequence of the filing of said complaint —
"exceeds the jurisdictional amount." (Moore Federal Practice, 2nd ed.
[1948], Vol. 3, p. 41; Ginsburg vs. Pacific Mutual Life Ins. Co. of
California, 69 Fed. [2d] 97; Home Life Ins. Co. vs. Sipp., 11 Fed.
[2d]474; American Sheet & Tin Plate Co. vs. Winzeler [D.C.], 227
Fed. 321, 324; Brix vs. People's Mutual Life Ins. Co., 41 P. 2d. 537, 2
Cal. 2d. 446; Emery vs. Pacific Employees Ins. Co., 67 P. 2d. 1046, 8
Cal. 2d. 663).
Needless to say, having not only failed to question the jurisdiction of the trial court
— either in that court or in this Court, before the rendition of the latter's decision,
and even subsequently thereto, by filing the aforementioned motion for
reconsideration and seeking the reliefs therein prayed for — but, also, urged both
courts to exercise jurisdiction over the merits of the case, defendant is now
estopped from impugning said jurisdiction.7
Page 153 of 232

Before taking up the specific questions raised in defendant's motion for
reconsideration, it should be noted that the same is mainly predicated upon the
premise that plaintiffs' version is inherently incredible, and that this Court should
accept the theory of the defense to the effect that petitioner was off-loaded because
of a bomb-scare allegedly arising from his delay in boarding the aircraft and
subsequent refusal to open his bags for inspection. We need not repeat here the
reasons given in Our decision for rejecting defendant's contention and not
disturbing the findings of fact of His Honor, the Trial Judge, who had the decided
advantage — denied to Us — of observing the behaviour of the witnesses in the
course of the trial and found those of the plaintiffs worthy of credence, not the
evidence for the defense.
It may not be amiss however, to stress the fact that, in his written report, made in
transit from Wake to Manila — or immediately after the occurrence and before the
legal implications or consequences thereof could have been the object of mature
deliberation, so that it could, in a way, be considered as part of the res gestae —
Capt. Zentner stated that Zulueta had been off-loaded "due to drinking" and
"belligerent attitude," thereby belying the story of the defense about said alleged
bomb-scare, and confirming the view that said agent of the defendant had acted
out of resentment because his ego had been hurt by Mr. Zulueta's adamant refusal
to be bullied by him. Indeed, had there been an iota of truth in said story of the
defense, Capt. Zentner would have caused every one of the passengers to be
frisked or searched and the luggage of all of them examined — as it is done now —
before resuming the flight from Wake Island. His failure to do so merely makes the
artificious nature of defendant's version more manifest. Indeed, the fact that Mrs.
Zulueta and Miss Zulueta were on board the plane shows beyond doubt that Mr.
Zulueta could not possibly have intended to blow it up.
The defense tries to explain its failure to introduce any evidence to contradict the
testimony of Mr. Zulueta as to why he had gone to the beach and what he did
there, alleging that, in the very nature of things, nobody else could have witnessed
it. Moreover, the defense insists, inter alia, that the testimony of Mr. Zulueta is
inherently incredible because he had no idea as to how many toilets the plane had;
it could not have taken him an hour to relieve himself in the beach; there were eight
(8) commodes at the terminal toilet for men ; if he felt the need of relieving himself,
he would have seen to it that the soldiers did not beat him to the terminal toilets; he
did not tell anybody about the reason for going to the beach, until after the plane
had taken off from Wake.
We find this pretense devoid of merit. Although Mr. Zulueta had to look for a
secluded place in the beach to relieve himself, beyond the view of others,
defendant's airport manager, whom Mr. Zulueta informed about it, soon after the
departure of the plane, could have forthwith checked the veracity of Mr. Zulueta's
Page 154 of 232

statement by asking him to indicate the specific place where he had been in the
beach and then proceeding thereto for purposes of verification.
Then, again, the passenger of a plane seldom knows how many toilets it has. As a
general rule, his knowledge is limited to the toilets for the class — first class or
tourist class — in which he is. Then, too, it takes several minutes for the
passengers of big aircrafts, like those flying from the U.S. to the Philippines, to
deplane. Besides, the speed with which a given passenger may do so depends,
largely, upon the location of his seat in relation to the exit door. He cannot go over
the heads of those nearer than he thereto. Again, Mr. Zulueta may have stayed in
the toilet terminal for some time, expecting one of the commodes therein to be
vacated soon enough, before deciding to go elsewhere to look for a place suitable
to his purpose. But he had to walk, first, from the plane to the terminal building and,
then, after vainly waiting therein for a while, cover a distance of about 400 yards
therefrom to the beach, and seek there a place not visible by the people in the
plane and in the terminal, inasmuch as the terrain at Wake Island is flat. What is
more, he must have had to takeoff part, at least, of his clothing, because, without
the facilities of a toilet, he had to wash himself and, then, dry himself up before he
could be properly attired and walk back the 400 yards that separated him from the
terminal building and/or the plane. Considering, in addition to the foregoing, the fact
that he was not feeling well, at that time, We are not prepared to hold that it could
not have taken him around an hour to perform the acts narrated by him.
But, why — asks the defendant — did he not reveal the same before the plane took
off? The record shows that, even before Mr. Zulueta had reached the ramp leading
to the plane, Capt. Zentner was already demonstrating at him in an intemperate
and arrogant tone and attitude ("What do you think you are?), thereby impelling Mr.
Zulueta to answer back in the same vein. As a consequence, there immediately
ensued an altercation in the course of which each apparently tried to show that he
could not be cowed by the other. Then came the order of Capt. Zentner to off-load
all of the Zuluetas, including Mrs. Zulueta and the minor Miss Zulueta, as well as
their luggage, their overcoats and other effects handcarried by them; but, Mr.
Zulueta requested that the ladies be allowed to continue the trip. Meanwhile, it had
taken time to locate his four (4) pieces of luggage. As a matter of fact, only three (3)
of them were found, and the fourth eventually remained in the plane. In short, the
issue between Capt. Zentner and Mr. Zulueta had been limited to determining
whether the latter would allow himself to be browbeaten by the former. In the heat
of the altercation, nobody had inquired about the cause of Mr. Zulueta's delay in
returning to the plane, apart from the fact that it was rather embarrassing for him to
explain, in the presence and within the hearing of the passengers and the crew,
then assembled around them, why he had gone to the beach and why it had taken
him some time to answer there a call of nature, instead of doing so in the terminal
building.
Page 155 of 232

Defendant's motion for reconsideration assails: (1) the amount of damages
awarded as excessive; (2) the propriety of accepting as credible plaintiffs' theory;
(3) plaintiffs' right to recover either moral or exemplary damages; (4) plaintiffs' right
to recover attorney's fees; and (5) the non-enforcement of the compromise
agreement between the defendant and plaintiff's wife, Mrs. Zulueta. Upon the other
hand, plaintiffs' motion for reconsideration contests the decision of this Court
reducing the amount of damages awarded by the trial court to approximately one-
half thereof, upon the ground, not only that, contrary to the findings of this Court, in
said decision, plaintiff had not contributed to the aggravation of his altercation or
incident with Capt. Zentner by reacting to his provocation with extreme belligerency
thereby allowing himself to be dragged down to the level on which said agent of the
defendant had placed himself, but, also, because the purchasing power of our local
currency is now much lower than when the trial court rendered its appealed
decision, over five (5) years ago, on July 5, 1967, which is an undeniable and
undisputed fact. Precisely, for this reason, defendant's characterization as
exorbitant of the aggregate award of over P700,000 by way of damages, apart from
attorney's fees in the sum of P75,000, is untenable. Indeed, said award is now
barely equivalent to around 100,000 U. S. dollars.
It further support of its contention, defendant cites the damages awarded in

previous cases to passengers of airlines, 8 as well as in several criminal cases, and
some cases for libel and slander. None of these cases is, however, in point. Said
cases against airlines referred to passengers who were merely constrained to take
a tourist class accommodation, despite the fact that they had first class tickets, and
that although, in one of such cases, there was proof that the airline involved had
acted as it did to give preference to a "white" passenger, this motive was not
disclosed until the trial in court. In the case at bar, plaintiff Rafael Zulueta was "off-
loaded" at Wake Island, for having dared to retort to defendant's agent in a tone
and manner matching, if not befitting his intemperate language and arrogant
attitude. As a consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta
had boomeranged against him (Zentner), in the presence of the other passengers
and the crew. It was, also, in their presence that defendant's agent had referred to
the plaintiffs as "monkeys," a racial insult not made openly and publicly in the
abovementioned previous cases against airlines.
In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft
and its passengers, but to retaliate and punish him for the embarrassment and loss
of face thus suffered by defendant's agent. This vindictive motive is made more
manifest by the note delivered to Mr. Zulueta by defendant's airport manager at
Wake Island, Mr. Sitton, stating that the former's stay therein would be "for
a minimum of one week," during which he would be charged $13.30 per day. This
reference to a "minimum of one week" revealed the intention to keep him there
stranded that long, for no other plane, headed for Manila, was expected within said
Page 156 of 232

period of time, although Mr. Zulueta managed to board, days later, a plane that
brought him to Hawaii, whence he flew back to the Philippines, via Japan.
Neither may criminal cases, nor the cases for libel and slander cited in the
defendant's motion for reconsideration, be equated with the present case. Indeed,
in ordinary criminal cases, the award for damages is, in actual practice, of purely
academic value, for the convicts generally belong to the poorest class of society.
There is, moreover, a fundamental difference between said cases and the one at
bar. The Zuluetas had a contract of carriage with the defendant, as a common
carrier, pursuant to which the latter was bound, for a substantial monetary
consideration paid by the former, not merely to transport them to Manila, but, also,
to do so with "extraordinary diligence" or "utmost diligence." 9 The responsibility of
the common carrier, under said contract, as regards the passenger's safety, is of
such a nature, affecting as it does public interest, that it "cannot be dispensed with"
or even "lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise." 10 In the present case, the defendant did not only fail to
comply with its obligation to transport Mr. Zulueta to Manila, but, also, acted in a
manner calculated to humiliate him, to chastise him, to make him suffer, to cause to
him the greatest possible inconvenience, by leaving him in a desolate island, in the
expectation that he would be stranded there for a "minimum of one week" and, in
addition thereto, charged therefor $13.30 a day.
It is urged by the defendant that exemplary damages are not recoverable in quasi-
delicts, pursuant to Article 2231 of our Civil Code, except when the defendant has
acted with "gross negligence," and that there is no specific finding that it had so
acted. It is obvious, however, that in off-loading plaintiff at Wake Island, under the
circumstances heretofore adverted to, defendant's agents had acted with malice
aforethought and evident bad faith. If "gross negligence" warrants the award of
exemplary damages, with more reason is its imposition justified when the act
performed is deliberate, malicious and tainted with bad faith. Thus, in Lopez v.
PANAM, 11 We held:
The rationale behind exemplary or corrective damages is, as the

name implies, to provide an example or correction for public good.
Defendant having breached its contracts in bad faith, the court, as
stated earlier, may award exemplary damages in addition to moral
damages (Articles 2229, 2232, New Civil Code.)
Similarly, in NWA v. Cuenca, 12 this Court declared that an award for exemplary

damages was justified by the fact that the airline's "agent had acted in a wanton,
reckless and oppressive manner" in compelling Cuenca, upon arrival at Okinawa,
to transfer, over his objection, from the first class, where he was accommodated
from Manila to Okinawa, to the tourist class, in his trip to Japan, "under threat of
Page 157 of 232

otherwise leaving him in Okinawa," despite the fact that he had paid in full the first
class fare and was issued in Manila a first class ticket.
Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not

liable for exemplary damages owing to acts of his agent unless the former has
participated in said acts or ratified the same. Said case involved, however, the
subsidiary civil liability of an employer arising from criminal acts of his employee,
and "exemplary damages ... may be imposed when the crime was committed with
one or more aggravating circumstances." 14 Accordingly, the Rotea case is not in
point, for the case at bar involves a breach of contract, as well as a quasi-delict.
Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be

equated with the case at bar. The Palisoc case dealt with the liability of school
officials for damages arising from the death of a student (Palisoc) due to fist blows
given by another student (Daffon), in the course of a quarrel between them, while in
a laboratory room of the Manila Technical Institute. In an action for damages, the
head thereof and the teacher in charge of said laboratory were held jointly and
severally liable with the student who caused said death, for failure of the school to
provide "adequate supervision over the activities of the students in the school
premises," to protect them "from harm, whether at the hands of fellow students or
other parties." Such liability was predicated upon Article 2180 of our Civil Code, the
pertinent part of which reads:
ART. 2180. The obligation imposed by Article 2176 is demandable

not only for one's own acts or omissions, but also for those of persons
for whom one is responsible.
xxx xxx xxx
Lastly, teachers or heads of establishments of arts and trades shall

be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody.
xxx xxx xxx
Obviously, the amount of damages warded in the Palisoc case is not and cannot
serve as the measure of the damages recoverable in the present case, the latter
having been caused directly and intentionally by an employee or agent of the
defendant, whereas the student who killed the young Palisoc was in no wise an
agent of the school. Moreover, upon her arrival in the Philippines, Mrs. Zulueta
reported her husband's predicament to defendant's local manager and asked him
to forthwith have him (Mr. Zulueta) brought to Manila, which defendant's
aforementioned manager refused to do, thereby impliedly ratifying the off-loading of
Mr. Zulueta at Wake Island.
Page 158 of 232
It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta
was bound to be present at the time scheduled for the departure of defendant's
plane and that he had, consequently, violated said contract when he did not show
up at such time. This argument might have had some weight had defendant's plane
taken off before Mr. Zulueta had shown up. But the fact is that he was ready, willing
and able to board the plane about two hours before it actually took off, and that he
was deliberately and maliciously off-loaded on account of his altercation with Capt.
Zentner. It should, also, be noted that, although Mr. Zulueta was delayed some 20
to 30 minutes, the arrival or departure of planes is often delayed for much longer
periods of time. Followed to its logical conclusion, the argument adduced by the
defense suggests that airlines should be held liable for damages due to the
inconvenience and anxiety, aside from actual damages, suffered by many
passengers either in their haste to arrive at the airport on scheduled time just to find
that their plane will not take off until later, or by reason of the late arrival of the
aircraft at its destination.
PANAM impugns the award of attorney's fees upon the ground that no penalty
should be imposed upon the right to litigate; that, by law, it may be awarded only in
exceptional cases; that the claim for attorney's fees has not been proven; and that
said defendant was justified in resisting plaintiff's claim "because it was patently
exorbitant."
Nothing, however, can be farther from the truth. Indeed apart from plaintiff's claim
for actual damages, the amount of which is not contested, plaintiffs did not ask any
specific sum by way of exemplary and moral damages, as well as attorney's fees,
and left the amount thereof to the "sound discretion" of the lower court. This,
precisely, is the reason why PANAM, now, alleges — without justification that the
lower court had no jurisdiction over the subject matter of the present case.
Moreover, Article 2208 of our Civil Code expressly authorizes the award of

attorney's fees "when exemplary damages are awarded," — as they are in this
case —as well as "in any other case where the court deems it just and equitable
that attorney's fees ... be recovered," and We so deem it just and equitable in the
present case, considering the "exceptional" circumstances obtaining therein,
particularly the bad faith with which defendant's agent had acted, the place where
and the conditions under which Rafael Zulueta was left at Wake Island, the
absolute refusal of defendant's manager in Manila to take any step whatsoever to
alleviate Mr. Zulueta's predicament at Wake and have him brought to Manila —
which, under their contract of carriage, was defendant's obligation to discharge with
"extra-ordinary" or "utmost" diligence — and, the "racial" factor that had, likewise,
tainted the decision of defendant's agent, Capt. Zentner, to off-load him at Wake
Island.
Page 159 of 232

As regards the evidence necessary to justify the sum of P75,000 awarded as
attorney's fees in this case, suffice it to say that the quantity and quality of the
services rendered by plaintiffs' counsel appearing on record, apart from the nature
of the case and the amount involved therein, as well as his prestige as one of the
most distinguished members of the legal profession in the Philippines, of which
judicial cognizance may be taken, amply justify said award, which is a little over
10% of the damages (P700,000) collectible by plaintiffs herein. Indeed, the
attorney's fees in this case is proportionally much less than that adjudged in Lopez
v. PANAM 16 in which the judgment rendered for attorney's fees (P50,000) was
almost 20% of the damages (P275,000) recovered by the plaintiffs therein.
The defense assails the last part of the decision sought to be reconsidered, in
which — relying upon Article 172 of our Civil Code, which provides that "(t)he wife
cannot bind the conjugal partnership without the husband's consent, except in
cases provided by law," and it is not claimed that this is one of such cases — We
denied a motion, filed by Mrs. Zulueta, for the dismissal of this case, insofar as she
is concerned - she having settled all her differences with the defendant, which
appears to have paid her the sum of P50,000 therefor - "without prejudice to this
sum being deducted from the award made in said decision." Defendant now alleges
that this is tantamount to holding that said compromise agreement is both effective
and ineffective.
This, of course, is not true. The payment is effective, insofar as it is deductible from

the award, and, because it is due (or part of the amount due) from the
defendant, with or without its compromise agreement with Mrs. Zulueta. What is
ineffective is the compromise agreement, insofar as the conjugal partnership is
concerned. Mrs. Zulueta's motion was for the dismissal of the case insofar as she
was concerned, and the defense cited in support thereof Article 113 of said Code,
pursuant to which "(t)he husband must be joined in all suits by or against the wife
except: ... (2) If they have in fact been separated for at least one year." This
provision, We held, however, refers to suits in which the wife is the principal or real
party in interest, not to the case at bar, "in which the husband is the main party in
interest, both as the person principally aggrieved and as administrator of the
conjugal partnership ... he having acted in this capacity in entering into the contract
of carriage with PANAM and paid the amount due to the latter, under the contract,
with funds of the conjugal partnership," to which the amounts recoverable for
breach of said contract, accordingly, belong. The damages suffered by Mrs.
Zulueta were mainly an in accident of the humiliation to which her husband had
been subjected. The Court ordered that said sum of P50,00 paid by PANAM to Mrs.
Zulueta be deducted from the aggregate award in favor of the plaintiffs herein for
the simple reason that upon liquidation of the conjugal partnership, as provided by
law, said amount would have to be reckoned with, either as part of her share in the
partnership, or as part of the support which might have been or may be due to her
as wife of Rafael Zulueta. It would surely be inane to sentence the defendant to pay
Page 160 of 232
the P700,000 due to the plaintiffs and to direct Mrs. Zulueta to return said P50,000
to the defendant.
In this connection, it is noteworthy that, for obvious reasons of public policy, she is
not allowed by law to waive her share in the conjugal partnership, before the
dissolution thereof. 17 She cannot even acquire any property by gratuitous title,
without the husband's consent, except from her ascendants, descendants, parents-
in-law, and collateral relatives within the fourth degree. 18
It is true that the law favors and encourages the settlement of litigations by
compromise agreement between the contending parties, but, it certainly does not
favor a settlement with one of the spouses, both of whom are plaintiffs or
defendants in a common cause, such as the defense of the rights of the conjugal
partnership, when the effect, even if indirect, of the compromise is to jeopardize
"the solidarity of the family" — which the
law 19 seeks to protect — by creating an additional cause for the misunderstanding
that had arisen between such spouses during the litigation, and thus rendering
more difficult a reconciliation between them.
It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that
neither is there any evidence that the money used to pay the plane tickets came
from the conjugal funds and that the award to Mrs. Zulueta was for her personal
suffering or injuries. There was, however, no individual or specific award in favor of
Mrs. Zulueta or any of the plaintiffs. The award was made in their favor collectively.
Again, in the absence of said proof, the presumption is that the purpose of the trip
was for the common benefit of the plaintiffs and that the money had come from the
conjugal funds, for, unless there is proof to the contrary, it is presumed "(t)hat
things have happened according to the ordinary course of nature and the ordinary
habits of life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when
the source of the money used therefor is not established, even if the purchase had
been made by the wife. 22 And this is the rule obtaining in the Philippines. Even
property registered, under the Torrens system, in the name of one of the spouses,
or in that of the wife only, if acquired during the marriage, is presumed to belong to
the conjugal partnership, unless there is competent proof to the contrary. 23
PANAM maintains that the damages involved in the case at bar are not among
those forming part of the conjugal partnership pursuant to Article 153 of the Civil
Code, reading:
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;
Page 161 of 232
(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 interests received or due during the marriage,
coming from the common property or from the exclusive property of
each spouse.
Considering that the damages in question have arisen from, inter alia, a breach of
plaintiffs' contract of carriage with the defendant, for which plaintiffs paid their fare
with funds presumably belonging to the conjugal partnership, We hold that said
damages fall under paragraph (1) of said Article 153, the right thereto having been
"acquired by onerous title during the marriage ... ." This conclusion is bolstered up
by Article 148 of our Civil Code, according to which:
ART. 148. The following shall be the exclusive property of each

spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires, during the marriage, by lucrative title;
(3) That which is acquired by right of redemption or by exchange with

other property belonging to only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of the
husband.
The damages involved in the case at bar do not come under any of these
provisions or of the other provisions forming part of Chapter 3, Title VI, of Book I of
the Civil Code, which chapter is entitled "Paraphernal Property." What is more, if
"(t)hat which is acquired by right of redemption or by exchange with other property
belonging to only one of the spouses," and "(t)hat which is purchased with
exclusive money of the wife or of the husband," 24 belong exclusively to such wife or
husband, it follows necessarily that that which is acquired with money of the
conjugal partnership belongs thereto or forms part thereof. The rulings in Maramba
v. Lozano 25 and Perez v. Lantin, 26 cited in defendant's motion for reconsideration,
are, in effect, adverse thereto. In both cases, it was merely held that the
presumption under Article 160 of our Civil Code — to the effect that all property of
the marriage belong to the conjugal partnership — does not apply unless it is
shown that it was acquired during marriage. In the present case, the contract of
carriage was concededly entered into, and the damages claimed by the plaintiffs
were incurred, during marriage. Hence, the rights accruing from said contract,
including those resulting from breach thereof by the defendant, are presumed to
belong to the conjugal partnership of Mr. and Mrs. Zulueta. The fact that such
Page 162 of 232
breach of contract was coupled, also, with a quasi-delict constitutes an aggravating
circumstance and can not possibly have the effect of depriving the conjugal
partnership of such property rights.
Defendant insists that the use of conjugal funds to redeem property does not make
the property redeemed conjugal if the right of redemption pertained to the wife. In
the absence, however, of proof that such right of redemption pertains to the wife —
and there is no proof that the contract of carriage with PANAM or the money paid
therefor belongs to Mrs. Zulueta — the property involved, or the rights arising
therefrom, must be presumed, therefore, to form part of the conjugal partnership.
It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and
moral damages" awarded to a young and beautiful woman by reason of a scar — in
consequence of an injury resulting from an automobile accident — which disfigured
her face and fractured her left leg, as well as caused a permanent deformity, are
her paraphernal property. Defendant cites, also, in support of its contention the
following passage from Colin y Capitant:
No esta resuelta expresamente en la legislacion española la cuestion

de si las indemnizaciones debidas por accidentes del trabaho tienen
la consideracion de gananciales, o son bienes particulares de los
conyuges.
Inclinan a la solucion de que estas indemnizaciones deben ser

consideradas como gananciales, el hecho de que la sociedad pierde
la capacidad de trabajocon el accidente, que a ella le pertenece,
puesto que de la sociedad son losfrutos de ese trabajo; en cambio, la
consideracion de que igual manera que losbienes que sustituyen a
los que cada conyuge lleva al matrimonio como propiostienen el
caracter de propios, hace pensar que las indemnizaciones que
vengana suplir la capacidad de trabajo aportada por cada conyuge a
la sociedad, debenser juridicamente reputadas como bienes
propios del conyuge que haya sufrido elaccidente. Asi se llega a la
misma solucion aportada por la jurisprudencia francesca. 28
This opinion is, however, undecisive, to say the least. It should be noted that Colin
y Capitant were commenting on the French Civil Code; that their comment referred
to indemnities due in consequence of "accidentes del trabajo "resulting
in physical injuries sustained by one of the spouses (which Mrs. Zulueta
has not suffered); and that said commentators admit that the question whether or
not said damages are paraphernal property or belong to the conjugal partnership is
not settled under the Spanish law. 29 Besides, the French law and jurisprudence —
to which the comments of Planiol and Ripert, likewise, refer — are inapposite to the
question under consideration, because they differ basically from the Spanish law in
Page 163 of 232
the treatment of the property relations between husband and wife. Indeed, our Civil
Code, like the Spanish Civil Code, favors the system of conjugal partnership of
gains. Accordingly, the former provides that, "(i)n the absence of marriage
settlements, or when the same are void, the system of relative community or
conjugal partnership of gains ... shall govern the property relations between" the
spouses. 30 Hence, "(a)ll 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." 31
No similar rules are found in the French Civil Code. What is more, under the
provisions thereof, the conjugal partnership exists only when so stipulated in the
"capitulaciones matrimoniales" or by way of exception. In the language of Manresa
—
Prescindimos de los preceptos de los Condigos de Francia, Italia,

Holanda, Portugal, Alemania y Suiza, porsue solo excepcionalmente,
o cuando asi se pacta en las capitulaciones, admiten el sistema de
gananciales. 32
Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered
for physical injuries suffered by the wife. In the case at bar, the party mainly injured,
although not physically, is the husband.
Accordingly, the other Philippine cases 33 and those from Louisiana — whose civil
law is based upon the French Civil Code — cited by the defendant, which similarly
refer to moral damages due to physical injuries suffered by the wife, are, likewise,
inapplicable to the case at bar.
We find, therefore, no plausible reason to disturb the views expressed in Our

decision promulgated on February 29, 1972.
WHEREFORE, the motions for reconsideration above-referred to should be, as

they are hereby denied.
Page 164 of 232

[85]
[No. 34583. October 22, 1931]
THE BANK OF THE PHILIPPINE ISLANDS, administrator of the estate of the late
Adolphe Oscar Schuetze, plaintiff and appellant, vs. JUAN POSADAS, jr., Collector of
Internal Revenue, defendant and appellee.
1. 1.LIFE INSURANCE; AMOUNT OF POLICY; KIND OF PROPERTY.—

The proceeds of a life-insurance policy payable to the insured person's
estate, on which the premiums were paid by the conjugal partnership,
constitute community property, and belong onehalf to the husband
exclusively, and the other half to the wife.
1. 2.ID.; ID.; ID.—If the premiums were paid partly with paraphernal and

partly conjugal funds, the proceeds are in like proportion paraphernal in
part and conjugal in part.
1. 3.ID.; ID.; INHERITANCE TAX.—The proceeds of a lif e-insurance

policy payable to the insured person's estate as beneficiary, if delivered to
the testamentary administrator of the former as part of the assets of said
estate under probate administration, are subject to the inheritance tax
according to the law on the matter, if they belong to the assured
exclusively, and it is immaterial that he was domiciled in these Islands or
outside.
APPEAL from a judgment of the Court of First Instance of Manila. Sison, J.
VlLLA-REAL, J.:
The Bank of the Philippine Islands, as administrator of the estate of the deceased
Adolphe Oscar Schuetze, has appealed to this court from the judgment of the Court
of First Instance of Manila absolving the defendant Juan Posadas, Jr., Collector of
Internal Revenue, from the complaint filed against him by said plaintiff bank, and
The appellant has assigned the following alleged errors as committed by the trial
court in its judgment, to wit:
1. The lower court erred in holding that the testimony of Mrs. Schuetze was
inefficient to established the domicile of her husband.
2. The lower court erred in holding that under section 1536 of the
Administrative Code the tax imposed by the defendant is lawful and valid.
Page 165 of 232

3. The lower court erred in not holding that one-half (½) of the proceeds of
the policy in question is community property and that therefore no
inheritance tax can be levied, at least on one-half (½) of the said proceeds.
4. The lower court erred in not declaring that it would be unconstitutional to

impose an inheritance tax upon the insurance policy here in question as it
would be a taking of property without due process of law.
The present complaint seeks to recover from the defendant Juan Posadas, Jr.,
Collector of Internal Revenue, the amount of P1,209 paid by the plaintiff under
protest, in its capacity of administrator of the estate of the late Adolphe Oscar
Schuetze, as inheritance tax upon the sum of P20,150, which is the amount of an
insurance policy on the deceased's life, wherein his own estate was named the
beneficiary.
At the hearing, in addition to documentary and parol evidence, both parties

submitted the following agreed statement of facts of the court for consideration:
It is hereby stipulated and agreed by and between the parties in the above-
entitled action through their respective undersigned attorneys:
1. That the plaintiff, Rosario Gelano Vda. de Schuetze, window of the late
Adolphe Oscar Schuetze, is of legal age, a native of Manila, Philippine
Islands, and is and was at all times hereinafter mentioned a resident of
Germany, and at the time of the death of her husband, the late Adolphe
Oscar Schuetze, she was actually residing and living in Germany;
2. That the Bank of the Philippine Islands, is and was at all times hereinafter
mentioned a banking institution duly organized and existing under and by
virtue of the laws of the Philippine Islands;
3. That on or about August 23, 1928, the herein plaintiff before notary public
Salvador Zaragoza, drew a general power appointing the above-mentioned
Bank of the Philippine Islands as her attorney-in-fact, and among the powers
conferred to said attorney-in-fact was the power to represent her in all legal
actions instituted by or against her;
4. That the defendant, of legal age, is and at all times hereinafter mentioned
the duly appointed Collector of Internal Revenue with offices at Manila,
Philippine Islands;
5. That the deceased Adolphe Oscar Schuetze came to the Philippine

Islands for the first time of March 31, 1890, and worked in the several
Page 166 of 232

German firms as a mere employee and that from the year 1903 until the year
1918 he was partner in the business of Alfredo Roensch;
6. That from 1903 to 1922 the said Adolphe Oscar Schuetze was in the habit
of making various trips to Europe;
7. That on December 3, 1927, the late Adolphe Oscar Schuetze coming from
Java, and with the intention of going to Bremen, landed in the Philippine
Islands where he met his death on February 2, 1928;
8. That on March 31, 1926, the said Adolphe Oscar Schuetze, while in
Germany, executed a will, in accordance with its law, wherein plaintiff was
named his universal heir;
9. That the Bank of the Philippine Islands by order of the Court of First
Instance of Manila under date of May 24, 1928, was appointed administrator
of the estate of the deceased Adolphe Oscar Schuetze;
10. That, according to the testamentary proceedings instituted in the Court of

First Instance of Manila, civil case No. 33089, the deceased at the time of
his death was possessed of not only real property situated in the Philippine
Islands, but also personal property consisting of shares of stock in nineteen
(19) domestic corporations;
11. That the fair market value of all the property in the Philippine Islands left
by the deceased at the time of his death in accordance with the inventory
submitted to the Court of First Instance of Manila, civil case No. 33089, was
P217,560.38;
12. That the Bank of the Philippine Islands, as administrator of the estate of
the deceased rendered its final account on June 19, 1929, and that said
estate was closed on July 16, 1929;
13. That among the personal property of the deceased was found life-
insurance policy No. 194538 issued at Manila, Philippine Islands, on January
14, 1913, for the sum of $10,000 by the Sun Life Assurance Company of
Canada, Manila branch, a foreign corporation duly organized and existing
under and by virtue of the laws of Canada, and duly authorized to transact
business in the Philippine Islands;
14. That in the insurance policy the estate of the said Adolphe Oscar
Schuetze was named the beneficiary without any qualification whatsoever;
Page 167 of 232

15. That for five consecutive years, the deceased Adolphe Oscar Schuetze
paid the premiums of said policy to the Sun Life Assurance Company of
Canada, Manila branch;
16. That on or about the year 1918, the Sun Life Assurance Company of
Canada, Manila branch, transferred said policy to the Sun Life Assurance
Company of Canada, London branch;
17. That due to said transfer the said Adolphe Oscar Schuetze from 1918 to
the time of his death paid the premiums of said policy to the Sun Life
Assurance Company of Canada, London Branch;
18. That the sole and only heir of the deceased Adolphe Oscar Schuetze is
his widow, the plaintiff herein;
19. That at the time of the death of the deceased and at all times thereafter
including the date when the said insurance policy was paid, the insurance
policy was not in the hands or possession of the Manila office of the Sun Life
Assurance Company of Canada, nor in the possession of the herein plaintiff,
nor in the possession of her attorney-in-fact the Bank of the Philippine
Islands, but the same was in the hands of the Head Office of the Sun Life
Assurance Company of Canada, at Montreal, Canada;
20. That on July 13, 1928, the Bank of the Philippine Islands as
administrator of the decedent's estate received from the Sun Life Assurance
Company of Canada, Manila branch, the sum of P20,150 representing the
proceeds of the insurance policy, as shown in the statement of income and
expenses of the estate of the deceased submitted on June 18, 1929, by the
administrator to the Court of First Instance of Manila, civil case No. 33089;
21. That the Bank of the Philippine Islands delivered to the plaintiff herein
the said sum of P20,150;
22. That the herein defendant on or about July 5, 1929, imposed an

inheritance tax upon the transmission of the proceeds of the policy in
question in the sum of P20,150 from the estate of the late Adolphe Oscar
Schuetze to the sole heir of the deceased, or the plaintiff herein, which
inheritance tax amounted to the sum of P1,209;
23. That the Bank of the Philippine Islands as administrator of the

decedent's estate and as attorney-in-fact of the herein plaintiff, having been
demanded by the herein defendant to pay inheritance tax amounting to the
sum of P1,209, paid to the defendant under protest the above-mentioned
sum;
Page 168 of 232
24. That notwithstanding the various demands made by plaintiff to the
defendant, said defendant has refused and refuses to refund to plaintiff the
above mentioned sum of P1,209;
25. That plaintiff reserves the right to adduce evidence as regards the
domicile of the deceased, and so the defendant, the right to present rebuttal
evidence;
26. That both plaintiff and defendant submit this stipulation of facts without
prejudice to their right to introduce such evidence, on points not covered by
the agreement, which they may deem proper and necessary to support their
respective contentions.
In as much as one of the question raised in the appeal is whether an insurance

policy on said Adolphe Oscar Schuetze's life was, by reason of its ownership,
subject to the inheritance tax, it would be well to decide first whether the amount
thereof is paraphernal or community property.
According to the foregoing agreed statement of facts, the estate of Adolphe Oscar
Schuetze is the sole beneficiary named in the life-insurance policy for $10,000,
issued by the Sun Life Assurance Company of Canada on January 14, 1913.
During the following five years the insured paid the premiums at the Manila branch
of the company, and in 1918 the policy was transferred to the London branch.
The record shows that the deceased Adolphe Oscar Schuetze married the plaintiff-
appellant Rosario Gelano on January 16, 1914.
With the exception of the premium for the first year covering the period from
January 14, 1913 to January 14, 1914, all the money used for paying the
premiums, i. e., from the second year, or January 16, 1914, or when the deceased
Adolphe Oscar Schuetze married the plaintiff-appellant Rosario Gelano, until his
death on February 2, 1929, is conjugal property inasmuch as it does not appear to
have exclusively belonged to him or to his wife (art. 1407, Civil Code). As the sum
of P20,150 here in controversy is a product of such premium it must also be
deemed community property, because it was acquired for a valuable consideration,
during said Adolphe Oscar Schuetze's marriage with Rosario Gelano at the
expense of the common fund (art. 1401, No. 1, Civil Code), except for the small
part corresponding to the first premium paid with the deceased's own money.
In his Commentaries on the Civil Code, volume 9, page 589, second edition,
Manresa treats of life insurance in the following terms, to wit:
The amount of the policy represents the premiums to be paid, and the right
to it arises the moment the contract is perfected, for at the moment the
Page 169 of 232
power of disposing of it may be exercised, and if death occurs payment may
be demanded. It is therefore something acquired for a valuable
consideration during the marriage, though the period of its fulfillment,
depend upon the death of one of the spouses, which terminates the
partnership. So considered, the question may be said to be decided by
articles 1396 and 1401: if the premiums are paid with the exclusive property
of husband or wife, the policy belongs to the owner; if with conjugal property,
or if the money cannot be proved as coming from one or the other of the
spouses, the policy is community property.
The Supreme Court of Texas, United States, in the case of Martin vs. Moran (11
Tex. Civ. A., 509) laid down the following doctrine:
COMMUNITY PROPERTY — LIFE INSURANCE POLICY. — A husband

took out an endowment life insurance policy on his life, payable "as directed
by will." He paid the premiums thereon out of community funds, and by his
will made the proceeds of the policy payable to his own estate. Held, that the
proceeds were community estate, one-half of which belonged to the wife.
In In re Stan's Estate, Myr. Prob. (Cal.), 5, the Supreme Court of California laid
down the following doctrine:
A testator, after marriage, took out an insurance policy, on which he paid the
premiums from his salary. Held that the insurance money was community
property, to one-half of which, the wife was entitled as survivor.
In In re Webb's Estate, Myr. Prob. (Cal.), 93, the same court laid down the following
doctrine:
A decedent paid the first third of the amount of the premiums on his life-
insurance policy out of his earnings before marriage, and the remainder from
his earnings received after marriage. Held, that one-third of the policy
belonged to his separate estate, and the remainder to the community
property.
Thus both according to our Civil Code and to the ruling of those North American
States where the Spanish Civil Code once governed, the proceeds of a life-
insurance policy whereon the premiums were paid with conjugal money, belong to
the conjugal partnership.
The appellee alleges that it is a fundamental principle that a life-insurance policy

belongs exclusively to the beneficiary upon the death of the person insured, and
that in the present case, as the late Adolphe Oscar Schuetze named his own estate
as the sole beneficiary of the insurance on his life, upon his death the latter became
Page 170 of 232
the sole owner of the proceeds, which therefore became subject to the inheritance
tax, citing Del Val vs. Del Val (29 Phil., 534), where the doctrine was laid down that
an heir appointed beneficiary to a life-insurance policy taken out by the deceased,
becomes the absolute owner of the proceeds of such policy upon the death of the
insured.
The estate of a deceased person cannot be placed on the same footing as an

individual heir. The proceeds of a life-insurance policy payable to the estate of the
insured passed to the executor or administrator of such estate, and forms part of its
assets (37 Corpus Juris, 565, sec. 322); whereas the proceeds of a life-insurance
policy payable to an heir of the insured as beneficiary belongs exclusively to said
heir and does not form part of the deceased's estate subject to administrator. (Del
Val vs. Del Val, supra; 37 Corpus Juris, 566, sec. 323, and articles 419 and 428 of
the Code of Commerce.)
Just as an individual beneficiary of a life-insurance policy taken out by a married

person becomes the exclusive owner of the proceeds upon the death of the insured
even if the premiums were paid by the conjugal partnership, so, it is argued, where
the beneficiary named is the estate of the deceased whose life is insured, the
proceeds of the policy become a part of said estate upon the death of the insured
even if the premiums have been paid with conjugal funds.
In a conjugal partnership the husband is the manager, empowered to alienate the

partnership property without the wife's consent (art. 1413, Civil Code), a third
person, therefore, named beneficiary in a life-insurance policy becomes the
absolute owner of its proceeds upon the death of the insured even if the premiums
should have been paid with money belonging to the community property. When a
married man has his life insured and names his own estate after death, beneficiary,
he makes no alienation of the proceeds of conjugal funds to a third person, but
appropriates them himself, adding them to the assets of his estate, in contravention
of the provisions of article 1401, paragraph 1, of the Civil Code cited above, which
provides that "To the conjugal partnership belongs" (1) Property acquired for a
valuable consideration during the marriage at the expense of the common fund,
whether the acquisition is made for the partnership or for one of the spouses only."
Furthermore, such appropriation is a fraud practised upon the wife, which cannot
be allowed to prejudice her, according to article 1413, paragraph 2, of said Code.
Although the husband is the manager of the conjugal partnership, he cannot of his
own free will convert the partnership property into his own exclusive property.
As all the premiums on the life-insurance policy taken out by the late Adolphe
Oscar Schuetze, were paid out of the conjugal funds, with the exceptions of the
first, the proceeds of the policy, excluding the proportional part corresponding to the
first premium, constitute community property, notwithstanding the fact that the
policy was made payable to the deceased's estate, so that one-half of said
Page 171 of 232
proceeds belongs to the estate, and the other half to the deceased's widow, the
plaintiff-appellant Rosario Gelano Vda. de Schuetze.
The second point to decide in this appeal is whether the Collector of Internal
Revenue has authority, under the law, to collect the inheritance tax upon one-half
of the life-insurance policy taken out by the late Adolphe Oscar Schuetze, which
belongs to him and is made payable to his estate.
According to the agreed statement of facts mentioned above, the plaintiff-appellant,

the Bank of the Philippine Islands, was appointed administrator of the late Adolphe
Oscar Schuetze's testamentary estate by an order dated March 24, 1928, entered
by the Court of First Instance of Manila. On July 13, 1928, the Sun Life Assurance
Company of Canada, whose main office is in Montreal, Canada, paid Rosario
Gelano Vda. de Schuetze upon her arrival at Manila, the sum of P20,150, which
was the amount of the insurance policy on the life of said deceased, payable to the
latter's estate. On the same date Rosario Gelano Vda. de Schuetze delivered the
money to said Bank of the Philippine Islands, as administrator of the deceased's
estate, which entered it in the inventory of the testamentary estate, and then
returned the money to said widow.
Section 1536 of the Administrative Code, as amended by section 10 of Act No.

2835 and section 1 of Act No. 3031, contains the following relevant provision:
SEC. 1536. Conditions and rate of taxation. — Every transmission by virtue

of inheritance, devise, bequest, gift mortis causa or advance in anticipation
of inheritance, devise, or bequest of real property located in the Philippine
Islands and real rights in such property; of any franchise which must be
exercised in the Philippine Islands; of any shares, obligations, or bonds
issued by any corporation or sociedad anonima organized or constituted in
the Philippine Islands in accordance with its laws; of any shares or rights in
any partnership, business or industry established in the Philippine Islands or
of any personal property located in the Philippine Islands shall be subject to
the following tax:
xxx xxx xxx
In as much as the proceeds of the insurance policy on the life of the late Adolphe
Oscar Schuetze were paid to the Bank of the Philippine Islands, as administrator of
the deceased's estate, for management and partition, and as such proceeds were
turned over to the sole and universal testamentary heiress Rosario Gelano Vda. de
Schuetze, the plaintiff-appellant, here in Manila, the situs of said proceeds is the
Philippine Islands.
Page 172 of 232

In his work "The Law of Taxation," Cooley enunciates the general rule governing
the levying of taxes upon tangible personal property, in the following words:
GENERAL RULE. — The suits of tangible personal property, for purposes of

taxation may be where the owner is domiciled but is not necessarily so.
Unlike intangible personal property, it may acquire a taxation situs in a state
other than the one where the owner is domiciled, merely because it is
located there. Its taxable situs is where it is more or less permanently
located, regardless of the domicile of the owner. It is well settled that the
state where it is more or less permanently located has the power to tax it
although the owner resides out of the state, regardless of whether it has
been taxed for the same period at the domicile of the owner, provided there
is statutory authority for taxing such property. It is equally well settled that
the state where the owner is domiciled has no power to tax it where the
property has acquired an actual situs in another state by reason of its more
or less permanent location in that state. ... (2 Cooley, The Law of Taxation,
4th ed., p. 975, par. 451.)
With reference to the meaning of the words "permanent" and "in transit," he has the
following to say:
PERMANENCY OF LOCATION; PROPERTY IN TRANSIT. — In order to

acquire a situs in a state or taxing district so as to be taxable in the state or
district regardless of the domicile of the owner and not taxable in another
state or district at the domicile of the owner, tangible personal property must
be more or less permanently located in the state or district. In other words,
the situs of tangible personal property is where it is more or less
permanently located rather than where it is merely in transit or temporarily
and for no considerable length of time. If tangible personal property is more
or less permanently located in a state other than the one where the owner is
domiciled, it is not taxable in the latter state but is taxable in the state where
it is located. If tangible personal property belonging to one domiciled in one
state is in another state merely in transitu or for a short time, it is taxable in
the former state, and is not taxable in the state where it is for the time
being. . . . .
Property merely in transit through a state ordinarily is not taxable there.

Transit begins when an article is committed to a carrier for transportation to
the state of its destination, or started on its ultimate passage. Transit ends
when the goods arrive at their destination. But intermediate these points
questions may arise as to when a temporary stop in transit is such as to
make the property taxable at the place of stoppage. Whether the property is
taxable in such a case usually depends on the length of time and the
purpose of the interruption of transit. . . . .
Page 173 of 232
. . . It has been held that property of a construction company, used in
construction of a railroad, acquires a situs at the place where used for an
indefinite period. So tangible personal property in the state for the purpose of
undergoing a partial finishing process is not to be regarded as in the course
of transit nor as in the state for a mere temporary purpose. (2 Cooley, The
Law of Taxation, 4th ed., pp. 982, 983 and 988, par. 452.)
If the proceeds of the life-insurance policy taken out by the late Adolphe Oscar
Schuetze and made payable to his estate, were delivered to the Bank of the
Philippine Islands for administration and distribution, they were not in transit but
were more or less permanently located in the Philippine Islands, according to the
foregoing rules. If this be so, half of the proceeds which is community property,
belongs to the estate of the deceased and is subject to the inheritance tax, in
accordance with the legal provision quoted above, irrespective of whether or not
the late Adolphe Oscar Schuetze was domiciled in the Philippine Islands at the time
of his death.
By virtue of the foregoing, we are of opinion and so hold: (1) That the proceeds of a
life-insurance policy payable to the insured's estate, on which the premiums were
paid by the conjugal partnership, constitute community property, and belong one-
half to the husband and the other half to the wife, exclusively; (2) that if the
premiums were paid partly with paraphernal and partly conjugal funds, the
proceeds are likewise in like proportion paraphernal in part and conjugal in part;
and (3) that the proceeds of a life-insurance policy payable to the insured's estate
as the beneficiary, if delivered to the testamentary administrator of the former as
part of the assets of said estate under probate administration, are subject to the
inheritance tax according to the law on the matter, if they belong to the assured
exclusively, and it is immaterial that the insured was domiciled in these Islands or
outside.1awphil.net
Wherefore, the judgment appealed from is reversed, and the defendant is ordered
to return to the plaintiff the one-half of the tax collected upon the amount of
P20,150, being the proceeds of the insurance policy on the life of the late Adolphe
Oscar Schuetze, after deducting the proportional part corresponding to the first
premium, without special pronouncement of costs. So ordered.
Avanceña, C.J., Johnson, Street, Malcolm, Villamor, and Ostrand, JJ., concur.
Separate Opinions
Page 174 of 232

IMPERIAL, J., dissenting:
I cannot concur with the majority in holding that one-half of the insurance policy on
the life of the late Adolphe Oscar Schuetze, excepting the proportional part
corresponding to the first year's premium is community property belonging to the
deceased's widow, named Rosario Gelano, and as such is not subject to the
inheritance tax.
There is no question in regard to the facts: It is admitted that Schuetze insured

himself in the Sun Life Insurance Company of Canada in Manila, and that the policy
was issued on January 14, 1913, payable to his estate after death. He died in
Manila on February 2, 1928, leaving his widow as his sole testamentary heiress.
The appellant, the Bank of the Philippine Islands, as administrator of the late
Schuetze's testamentary estate, received from the insurer the amount of this policy,
or the net sum of P20,150.
It is an established and generally recognized principle that in a life-insurance policy

where the insured has named a beneficiary, the proceeds belong to said
beneficiary, and to him alone. "Vested Interest of Beneficiary. — In practically every
jurisdiction it is the rule that in an ordinary life insurance policy made payable to a
beneficiary, and which does not authorize a change of beneficiary, the named
beneficiary has an absolute, vested interest in the policy from the date of its
issuance, delivery and acceptance, and this is true of a policy payable to the
children of the insured equally, without naming them, or their executors,
administrators or assigns." (14 R.C.L., 1376.) (Del Val vs. Del Val, 29 Phil., 534 et
seq.; Gercio vs. Sun Life Assurance Co. of Canada, 48 Phil., 53 et seq.) When in a
life-insurance policy the insured's estate is named beneficiary, the proceeds must
be delivered not to the decedent's heirs, but to his administrator or legal
representative. "Policy Payable to Insured, His Estate, or Legal Representatives. ...
Ordinarily the proceeds of a life insurance policy are payable to the executor or
administrator of insured as assets of his estate where by the terms of the policy the
proceeds are payable to insured, his estate, his legal representatives, his executors
or administrators, his "executors, administrators, or assigns," or even his "heirs,
executors, administrators, or assigns." ..." (37 C.J., 565.) "Personal
Representatives or Legal Representatives. — While there is some authority to the
effect that "legal representatives" means the persons entitled to the estate of the
insured, and not his executor or administrator, the better view is that ordinarily the
proceeds of such a policy pass to his executor or administrator." (14 R.C.L., 1372.)
If the foregoing are the principles which should govern life-insurance policies with
reference to beneficiaries and the right to the proceeds of such policies, it is evident
that Schuetze's estate, and not his widow or the conjugal partnership, is entitled to
the proceeds of said policy exclusively, and may receive them from the insurer. The
parties must have so understood it when the insurer delivered the net amount of
Page 175 of 232
the policy to the Bank of the Philippine Islands, as judicial administrator of the
insured.
It is stated in the majority opinion that the money with which the premiums were
paid during the marriage of the Schuetzes is presumed to have been taken from
the conjugal funds, according to article 1407 of the Civil Code, which provides that
"All the property of the spouses shall be deemed partnership property in the
absence of proof that it belongs exclusively to the husband or to the wife." This is
the very argument which led to the settlement of the point of law raised. The
provisions of the Civil Code on conjugal property have been improperly applied
without considering that a life-insurance contract is a peculiar contract governed by
special laws, such as Act No. 2427 with its amendments, and the Code of
Commerce, which is still in force. In Del Val, supra, it was already held:
We cannot agree with these contentions. The contract of life insurance is a

special contract and the destination of the proceeds thereof is determined by
special laws which deal exclusively with that subject. The Civil Code has no
provisions which relate directly and specially to life insurance contracts or to
the destination of life insurance proceeds. That subject is regulated
exclusively by the Code of Commerce which provides for the terms of the
contract, the relations of the parties and the destination of the proceeds of
the policy.
The main point to be decided was not whether the premiums were paid out of
conjugal or personal funds of one of the spouses, but whether or not the proceeds
of the policy became assets of the insured's estate. If it be admitted that the estate
is the sole owner of the aforesaid proceeds, which cannot be denied, inasmuch as
the policy itself names the estate as the beneficiary, it is beside the point to discuss
the nature and origin of the amounts used to pay the premiums, as the title to the
proceeds of the policy is vested in the insured's estate, and any right the widow
might have should be vindicated in another action. In such a case she might be
entitled to reimbursement of her share in the conjugal funds, but not in the present
case, for she has been instituted the sole testamentary heiress.
From the foregoing, it follows that as the proceeds of the policy belong to
Schuetze's estate, and inasmuch as the inheritance tax is levied upon the
transmission of a deceased person's estate upon, or, on the occasion of his death,
it is clear that the whole proceeds, and not one-half thereof, are subject to such tax.
In my opinion the judgment appealed from should have been affirmed in its entirely.
Page 176 of 232

[86]
[No. 9374. February 16, 1915.]
FRANCISCO DEL VAL ET AL., plaintiffs and appellants, vs. ANDRES DEL, VAL,

defendant and appellee.
1.PLEADING; DEFECTS IN COMPLAINT; CURE.—Even though a complaint is

defective to the extent of failing to allege facts sufficient to constitute a cause of action, if,
on the trial of the cause, evidence is offered which establishes the cause of action which it
was intended the complaint should allege, and such evidence is received without objection,
the defect is thereby cured and cannot be made the ground of a subsequent objection.
2.ID.; ID.; ID.—An objection, made after trial, that the complaint in an action in partition
was defective in that it failed to describe the lands sought to be partitioned, is unavailing,
where it appears that evidence was introduced on the trial, without objection, clearly
describing the real estate sought to be partitioned.
3.PARTITION OF PERSONAL PROPERTY; JURISDICTION OF COURT OF FIRST

INSTANCE.—The Courts of First Instance of the Philippine Islands have jurisdiction to
divide personal property between the common owners thereof. If actual partition thereof
cannot be made, it may be sold under the direction of the court and the proceeds divided
among the owners after the necessary expenses have been deducted.
4.PARTITION OF REAL PROPERTY; JURISDICTION OF COURT OF FIRST

INSTANCE.—The court has no authority to partition real property among the common
owners thereof without a proceeding in proper form begun by one or more of such owners.
5.PARTITION; ORDER DISCHARGING ADMINISTRATOR NO BAR TO

SUBSEQUENT ACTION.—The heirs of real and personal property have the right to ask
the probate court to turn such property over to them without division; and where such
request is unanimous, it is the duty of the court to comply with it and there is nothing in
section 753 of the Code of Civil Procedure which prohibits it. In case the property is turned
over to the heirs by the probate court in bulk and without division, an order finally settling
the estate and discharging the administrator is not a bar to a subsequent action for a division
of either the real or personal property among the heirs as owners thereof.
6.JUDGMENT; PLEA OF "RES JUDICATA."—The defense of res judicata, to be

available, must be pleaded" or the facts demonstrating its existence must be proved on the
trial without objection.
7.LIFE INSURANCE; PROCEEDS; HEIR AS BENEFICIARY.—Where a life-insurance

policy is made payable to one of the heirs of the person whose life is insured, the proceeds
of the policy on the death of the insured belong exclusively to the beneficiary and not to the
Page 177 of 232

estate of the person whose life was insured; and such proceeds are his individual property
and not the property of the heirs of the person whose life was insured.
8.ID.; ID.; ID.; ARTICLE 1035, CIVIL CODE.—Article 1035 of the Civil Code, providing

that "an heir by force of law surviving with others of the same character to a succession
must bring into the hereditary estate the property or securities he may have received from
the deceased during the life of the same, by way of dowry, gift, or for any good
consideration, in order to compute it in fixing the legal portions and in the account of the
division," is not applicable to the proceeds of an insurance policy made payable to one of
the heirs of the insured by name, nor can the proceeds of such a policy be considered a gift
under article 819 of the Civil Code.
9.ID.; ID.; ID.; CODE OF COMMERCE.—The contract of life insurance is ?. special

contract and the destination of the proceeds thereof is determined by special laws which
deal exclusively with that subject. The Civil Code has no provisions which relate directly
and specifically to life-insurance contracts or to the destination of life-insurance proceeds.
That subject is regulated exclusively by the Code of Commerce, which provides for the
terms of the contract, the relations of the parties and the destination of the proceeds of the
policy.
APPEAL from a judgment of the Court of First Instance of Manila. Lobingier, J.

The facts are stated in the opinion of the court.
MORELAND, J.:
This is an appeal from a judgment of the Court of First Instance of the city of Manila
The pleadings set forth that the plaintiffs and defendant are brother and sisters; that
they are the only heirs at law and next of kin of Gregorio Nacianceno del Val, who
died in Manila on August 4, 1910, intestate; that an administrator was appointed for
the estate of the deceased, and, after a partial administration, it was closed and the
administrator discharged by order of the Court of First Instance dated December 9,
1911; that during the lifetime of the deceased he took out insurance on his life for
the sum of P40,000 and made it payable to the defendant as sole beneficiary; that
after his death the defendant collected the face of the policy; that of said policy he
paid the sum of P18,365.20 to redeem certain real estate which the decedent had
sold to third persons with a right to repurchase; that the redemption of said
premises was made by the attorney of the defendant in the name of the plaintiff and
the defendant as heirs of the deceased vendor; that the redemption of said
premises they have had the use and benefit thereof; that during that time the
plaintiffs paid no taxes and made no repairs.
Page 178 of 232

It further appears from the pleadings that the defendant, on the death of the
deceased, took possession of most of his personal property, which he still has in
his possession, and that he has also the balance on said insurance policy
amounting to P21,634.80.
Plaintiffs contend that the amount of the insurance policy belonged to the estate of
the deceased and not to the defendant personally; that, therefore, they are entitled
to a partition not only of the real and personal property, but also of the P40,000 life
insurance. The complaint prays a partition of all the property, both real and
personal, left by the deceased; that the defendant account for P21,634.80, and that
that sum be divided equally among the plaintiffs and defendant along with the other
property of deceased.
The defendant denies the material allegations of the complaint and sets up as
special defense and counterclaim that the redemption of the real estate sold by his
father was made in the name of the plaintiffs and himself instead of in his name
alone without his knowledge or consent; and that it was not his intention to use the
proceeds of the insurance policy for the benefit of any person but himself, he
alleging that he was and is the sole owner thereof and that it is his individual
property. He, therefore, asks that he be declared the owner of the real estate
redeemed by the payment of the P18,365.20, the owner of the remaining
P21,634.80, the balance of the insurance policy, and that the plaintiff's account for
the use and occupation of the premises so redeemed since the date of the
redemption.
The learned trial court refused to give relief to either party and dismissed the action.
It says in its opinion: "This purports to be an action for partition, brought against an
heir by his coheirs. The complaint, however, fails to comply with Code Civ., Pro.
sec. 183, in that it does not 'contain an adequate description of the real property of
which partition is demanded.' Because of this defect (which has not been called to
our attention and was discovered only after the cause was submitted) it is more
than doubtful whether any relief can be awarded under the complaint, except by
agreement of all the parties."
This alleged defect of the complaint was made one of the two bases for the
dismissal of the action.
We do not regard this as sufficient reason for dismissing the action. It is the
doctrine of this court, set down in several decisions, Lizarraga Hermanos vs. Yap
Tico, 24 Phil. Rep., 504, that, even though the complaint is defective to the extent
of failing in allegations necessary to constitute a cause of action, if, on the trial of
the cause, evidence is offered which establishes the cause of action which the
complaint intended to allege, and such evidence is received without objection, the
Page 179 of 232
defect is thereby cured and cannot be made the ground of a subsequent objection.
If, therefore, evidence was introduced on the trial in this case definitely and clearly
describing the real estate sought to be partitioned, the defect in the complaint was
cured in that regard and should not have been used to dismiss the action. We do
not stop to inquire whether such evidence was or was not introduced on the trial,
inasmuch as this case must be turned for a new trial with opportunity to both parties
to present such evidence as is necessary to establish their respective claims.
The court in its decision further says: "It will be noticed that the provision above
quoted refers exclusively to real estate. . . . It is, in other words, an exclusive real
property action, and the institution thereof gives the court no jurisdiction over
chattels. . . . But no relief could possibly be granted in this action as to any property
except the last (real estate), for the law contemplated that all the personal property
of an estate be distributed before the administration is closed. Indeed, it is only in
exceptional cases that the partition of the real estate is provided for, and this too is
evidently intended to be effected as a part of the administration, but here the
complaint alleges that the estate was finally closed on December 9, 1911, and we
find upon referring to the record in that case that subsequent motion to reopen the
same were denied; so that the matter of the personal property at least must be
considered res judicata (for the final judgment in the administration proceedings
must be treated as concluding not merely what was adjudicated, but what might
have been). So far, therefore, as the personal property at least is concerned,
plaintiffs' only remedy was an appeal from said order."
We do not believe that the law is correctly laid down in this quotation. The courts of
the Islands have jurisdiction to divide personal property between the common
owners thereof and that power is as full and complete as is the power to partition
real property. If an actual partition of personal property cannot be made it will be
sold under the direction of the court and the proceeds divided among the owners
after the necessary expenses have been deducted.
The administration of the estate of the decedent consisted simply, so far as the
record shows, in the payment of the debts. No division of the property, either real or
personal, seems to have been made. On the contrary, the property appears, from
the record, to have been turned over to the heirs in bulk. The failure to partition the
real property may have been due either to the lack of request to the court by one or
more of the heirs to do so, as the court has no authority to make a partition of the
real estate without such request; or it may have been due to the fact that all the real
property of decedent had been sold under pacto de retro and that, therefore, he
was not the owner of any real estate at the time of his death. As to the personal
property, it does not appear that it was disposed of in the manner provided by law.
(Sec. 753, Code of Civil Procedure.) So far as this action is concerned, however, it
is sufficient for us to know that none of the property was actually divided among the
heirs in the administration proceeding and that they remain coowners and tenants-
Page 180 of 232
in- common thereof at the present time. To maintain an action to partition real or
personal property it is necessary to show only that it is owned in common.
The order finally closing the administration and discharging the administrator,
referred to in the opinion of the trial court, has nothing to do with the division of
either the real or the personal property. The heirs have the right to ask the probate
court to turn over to them both the real and personal property without division; and
where that request is unanimous it is the duty of the court to comply with it, and
there is nothing in section 753 of the Code of Civil Procedure which prohibits it. In
such case an order finally settling the estate and discharging the administrator
would not bar a subsequent action to require a division of either the real or personal
property. If, on the other hand, an order had been made in the administration
proceedings dividing the personal or the real property, or both, among the heirs,
then it is quite possible that, to a subsequent action brought by one of the heirs for
a partition of the real or personal property, or both, there could have been
interposed a plea of res judicata based on such order. As the matter now stands,
however, there is no ground on which to base such a plea. Moreover, no such plea
has been made and no evidence offered to support it.
With the finding of the trial court that the proceeds of the life-insurance policy
belong exclusively to the defendant as his individual and separate property, we
agree. That the proceeds of an insurance policy belong exclusively to the
beneficiary and not to the estate of the person whose life was insured, and that
such proceeds are the separate and individual property of the beneficiary, and not
of the heirs of the person whose life was insured, is the doctrine in America. We
believe that the same doctrine obtains in these Islands by virtue of section 428 of
the Code of Commerce, which reads:
The amount which the underwriter must deliver to the person insured, in
fulfillment of the contract, shall be the property of the latter, even against the
claims of the legitimate heirs or creditors of any kind whatsoever of the
person who effected the insurance in favor of the former.
It is claimed by the attorney for the plaintiffs that the section just quoted is
subordinate to the provisions of the Civil Code as found in article 1035. This article
reads:
An heir by force of law surviving with others of the same character to a

succession must bring into the hereditary estate the property or securities he
may have received from the deceased during the life of the same, by way of
dowry, gift, or for any good consideration, in order to compute it in fixing the
legal portions and in the account of the division.
Page 181 of 232

Counsel also claim that the proceeds of the insurance policy were a donation or gift
made by the father during his lifetime to the defendant and that, as such, its
ultimate destination is determined by those provisions of the Civil Code which relate
to donations, especially article 819. This article provides that "gifts made to children
which are not betterments shall be considered as part of their legal portion."
We cannot agree with these contentions. The contract of life insurance is a special
contract and the destination of the proceeds thereof is determined by special laws
which deal exclusively with that subject. The Civil Code has no provisions which
relate directly and specifically to life- insurance contracts or to the destination of life
insurance proceeds. That subject is regulated exclusively by the Code of
Commerce which provides for the terms of the contract, the relations of the parties
and the destination of the proceeds of the policy.
The proceeds of the life-insurance policy being the exclusive property of the
defendant and he having used a portion thereof in the repurchase of the real estate
sold by the decedent prior to his death with right to repurchase, and such
repurchase having been made and the conveyance taken in the names of all of the
heirs instead of the defendant alone, plaintiffs claim that the property belongs to the
heirs in common and not to the defendant alone.
We are not inclined to agree with this contention unless the fact appear or be
shown that the defendant acted as he did with the intention that the other heirs
should enjoy with him the ownership of the estate — in other words, that he
proposed, in effect, to make a gift of the real estate to the other heirs. If it is
established by the evidence that that was his intention and that the real estate was
delivered to the plaintiffs with that understanding, then it is probable that their
contention is correct and that they are entitled to share equally with the defendant
therein. If, however, it appears from the evidence in the case that the conveyances
were taken in the name of the plaintiffs without his knowledge or consent, or that it
was not his intention to make a gift to them of the real estate, then it belongs to
him. If that facts are as stated, he has two remedies. The one is to compel the
plaintiffs to reconvey to him and the other is to let the title stand with them and to
recover from them the sum he paid on their behalf.
For the complete and proper determination of the questions at issue in this case,
we are of the opinion that the cause should be returned to the trial court with
instructions to permit the parties to frame such issues as will permit the settlement
of all the questions involved and to introduce such evidence as may be necessary
for the full determination of the issues framed. Upon such issues and evidence
taken thereunder the court will decide the questions involved according to the
evidence, subordinating his conclusions of law to the rules laid down in this opinion.
Page 182 of 232

We do not wish to be understood as having decided in this opinion any question of
fact which will arise on the trial and be there in controversy. The trial court is left
free to find the facts as the evidence requires. To the facts as so found he will apply
the law as herein laid down.
The judgment appealed from is set aside and the cause returned to the Court of
First Instance whence it came for the purpose hereinabove stated. So ordered.
Page 183 of 232

[87]
G.R. No. 116668. July 28, 1997.*

ERLINDA A. AGAPAY, petitioner, vs. CARLINA (CORNELIA) V. PALANG and
HERMINIA P. DELA CRUZ, respondents.
Family Code; Husband and Wife; Cohabitation; Co-Ownership; Under Article 148 of

the Family Code, only the properties acquired by both of the parties through their actual
joint contribution of money, property or industry shall be owned by them in common in
proportion to their respective contributions.—The sale of the riceland on May 17, 1973,
was made in favor of Miguel and Erlinda. The provision of law applicable here is Article
148 of the Family Code providing for cases of cohabitation when a man and a woman who
are not capacitated to marry each other live exclusively with each other as husband and wife
without the benefit of marriage or under a void marriage. While Miguel and Erlinda
contracted marriage on July 15, 1973, said union was patently void because the earlier
marriage of Miguel and Carlina was still subsisting and unaffected by the latter’s de
facto separation. Under Article 148, only the properties acquired by both of the parties
through their actual joint contribution of money, property or industry shall be owned by
them in common in proportion to their respective contributions. It must be stressed that
actual contribution is required by this provision, in contrast to Article 147 which states that
efforts in the care and maintenance of the family and household, are regarded as
contributions to the acquisition of common property by one who has no salary or income or
work or industry. If the actual contribution of the party is not proved, there will be no co-
ownership and no presumption of equal shares.
Same; Same; Same; Same; Considering the youthfulness of the woman, she being

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

to prove that she contributed money to the purchase price of a riceland, there is no basis to
justify her co-ownership over the same—the riceland should revert to the conjugal
partnership property of the man and his lawful wife.—Since petitioner failed to prove that
she contributed money to the purchase price of the riceland in Binalonan, Pangasinan, we
find no basis to justify her co-ownership with Miguel over the same. Consequently, the
Page 184 of 232

riceland should, as correctly held by the Court of Appeals, revert to the conjugal partnership
property of the deceased Miguel and private respondent Carlina Palang.
Same; Same; Same; Separation of Property; Compromise Agreements; Separation of

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

applies to donations between persons living together as husband and wife without a valid
marriage.—With respect to the house and lot, Erlinda allegedly bought the same for
P20,000.00 on September 23, 1975 when she was only 22 years old. The testimony of the
notary public who prepared the deed of conveyance for the property reveals the falsehood of
this claim. Atty. Constantino Sagun testified that Miguel Palang provided the money for the
purchase price and directed that Erlinda’s name alone be placed as the vendee. The
transaction was properly a donation made by Miguel to Erlinda, but one which was clearly
void and inexistent by express provision of law because it was made between persons guilty
of adultery or concubinage at the time of the donation, under Article 739 of the Civil Code.
Moreover, Article 87 of the Family Code expressly provides that the prohibition against
donations between spouses now applies to donations between persons living together as
husband and wife without a valid marriage, for otherwise, the condition of those who
incurred guilt would turn out to be better than those in legal union.
Same; Same; Same; Parent and Child; Illegitimate

Children; Filiation; Succession; Probate Proceedings; Questions as to who are the heirs
of the decedent, proof of filiation of illegitimate children and the determination of the estate
of the latter and claims thereto should be ventilated in the proper probate court or in a
special proceeding instituted for the purpose and cannot be adjudicated in an ordinary civil
action for recovery of ownership and possession.—The second issue concerning Kristopher
Palang’s status and claim as an illegitimate son and heir to Miguel’s estate is here resolved
in favor of respondent court’s correct assessment that the trial court erred in making
pronouncements regarding Kristopher’s heirship and filiation “inasmuch as questions as to
who are the heirs of the decedent, proof of filiation of illegitimate children and the
determination of the estate of the latter and claims thereto should be ventilated in the proper
Page 185 of 232
probate court or in a special proceeding instituted for the purpose and cannot be adjudicated
in the instant ordinary civil action which is for recovery of ownership and possession.”
Same; Same; Same; Same; Actions; Pleadings and Practice; Parties; Guardians; A

minor who has not been impleaded is not a party to the case and neither can his mother be
called guardian ad litem.—As regards the third issue, petitioner contends that Kristopher
Palang should be considered as party-defendant in the case at bar following the trial court’s
decision which expressly found that Kristopher had not been impleaded as party defendant
but theorized that he had submitted to the court’s jurisdiction through his
mother/guardian ad litem. The trial court erred gravely. Kristopher, not having been
impleaded, was, therefore, not a party to the case at bar. His mother, Erlinda, cannot be
called his guardian ad litem for he was not involved in the case at bar. Petitioner adds that
there is no need for Kristopher to file another action to prove that he is the illegitimate son
of Miguel, in order to avoid multiplicity of suits. Petitioner’s grave error has been discussed
in the preceding paragraph where the need for probate proceedings to resolve the settlement
of Miguel’s estate and Kristopher’s successional rights has been pointed out.

Simplicio M. Sevilleja for petitioner.
Ray L. Basbas and Fe Fernandez-Bautista for private respondents.
ROMERO, J.:
Before us is a petition for review of the decision of the Court of Appeals in CA-G.R.
CV No. 24199 entitled "Erlinda Agapay v. Carlina (Cornelia) Palang and Herminia
P. Dela Cruz" dated June 22, 1994 involving the ownership of two parcels of land
acquired during the cohabitation of petitioner and private respondent's legitimate
spouse.
Miguel Palang contracted his first marriage on July 16, 1949 when he took private
respondent Carlina (or Cornelia) Vallesterol as a wife at the Pozorrubio Roman
Catholic Church in Pangasinan. A few months after the wedding, in October 1949,
he left to work in Hawaii. Miguel and Carlina's only child, Herminia Palang, was
born on May 12, 1950.
Miguel returned in 1954 for a year. His next visit to the Philippines was in 1964 and
during the entire duration of his year-long sojourn he stayed in Zambales with his
brother, not in Pangasinan with his wife and child. The trial court found evidence
that as early as 1957, Miguel had attempted to divorce Carlina in Hawaii. 1 When he
returned for good in 1972, he refused to live with private respondents, but stayed
alone in a house in Pozorrubio, Pangasinan.
Page 186 of 232

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

23, 1975, allegedly by Erlinda as the sole vendee. TCT No. 143120 covering said
property was later issued in her name.
On October 30, 1975, Miguel and Cornelia Palang executed a Deed of Donation as
a form of compromise agreement to settle and end a case filed by the latter. 3 The
parties therein agreed to donate their conjugal property consisting of six parcels of
land to their only child, Herminia Palang.4
Miguel and Erlinda's cohabitation produced a son, Kristopher A. Palang, born on

December 6, 1977. In 1979, Miguel and Erlinda were convicted of Concubinage
upon Carlina's complaint.5 Two years later, on February 15, 1981, Miguel died.
On July 11, 1981, Carlina Palang and her daughter Herminia Palang de la Cruz,
herein private respondents, instituted the case at bar, an action for recovery of
ownership and possession with damages against petitioner before the Regional
Trial Court in Urdaneta, Pangasinan (Civil Case No. U-4265). Private respondents
sought to get back the riceland and the house and lot both located at Binalonan,
Pangasinan allegedly purchased by Miguel during his cohabitation with petitioner.
Petitioner, as defendant below, contended that while the riceland covered by TCT
No. 101736 is registered in their names (Miguel and Erlinda), she had already
given her half of the property to their son Kristopher Palang. She added that the
house and lot covered by TCT No. 143120 is her sole property, having bought the
same with her own money. Erlinda added that Carlina is precluded from claiming
aforesaid properties since the latter had already donated their conjugal estate to
Herminia.
After trial on the merits, the lower court rendered its decision on June 30, 1989
dismissing the complaint after declaring that there was little evidence to prove that
the subject properties pertained to the conjugal property of Carlina and Miguel
Palang. The lower court went on to provide for the intestate shares of the parties,
particularly of Kristopher Palang, Miguel's illegitimate son. The dispositive portion of
the decision reads.
WHEREFORE, premises considered, judgment is hereby

rendered —
Page 187 of 232
1) Dismissing the complaint, with costs against plaintiffs;
2) Confirming the ownership of defendant Erlinda Agapay of the residential

lot located at Poblacion, Binalonan, Pangasinan, as evidenced by TCT No.
143120, Lot 290-B including the old house standing therein;
3) Confirming the ownership of one-half (1/2) portion of that piece of

agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan,
consisting of 10,080 square meters and as evidenced by TCT No. 101736,
Lot 1123-A to Erlinda Agapay;
4. Adjudicating to Kristopher Palang as his inheritance from his deceased

father, Miguel Palang, the one-half (1/2) of the agricultural land situated at
Balisa, San Felipe, Binalonan, Pangasinan, under TCT No. 101736 in the
name of Miguel Palang, provided that the former (Kristopher) executes,
within 15 days after this decision becomes final and executory, a quit-claim
forever renouncing any claims to annul/reduce the donation to Herminia
Palang de la Cruz of all conjugal properties of her parents, Miguel Palang
and Carlina Vallesterol Palang, dated October 30, 1975, otherwise, the
estate of deceased Miguel Palang will have to be settled in another separate
action;
5) No pronouncement as to damages and attorney's fees.
SO ORDERED.6
On appeal, respondent court reversed the trial court's decision. The Court of
Appeals rendered its decision on July 22, 1994 with the following dispositive
portion;
WHEREFORE, PREMISES CONSIDERED, the appealed decision in hereby

REVERSED and another one entered:
1. Declaring plaintiffs-appellants the owners of the properties in question;
2. Ordering defendant-appellee to vacate and deliver the properties in

question to herein plaintiffs-appellants;
3. Ordering the Register of Deeds of Pangasinan to cancel Transfer

Certificate of Title Nos. 143120 and 101736 and to issue in lieu thereof
another certificate of title in the name of plaintiffs-appellants.
No pronouncement as to costs.7
Page 188 of 232

Petitioner claims that the Court of Appeals erred in not sustaining the validity of two
deeds of absolute sale covering the riceland and the house and lot, the first in favor
of Miguel Palang and Erlinda Agapay and the second, in favor of Erlinda Agapay
alone. Second, petitioner contends that respondent appellate court erred in not
declaring Kristopher A. Palang as Miguel Palang's illegitimate son and thus entitled
to inherit from Miguel's estate. Third, respondent court erred, according to
petitioner, "in not finding that there is sufficient pleading and evidence that
Kristopher A. Palang or Christopher A. Palang should be considered as party-
defendant in Civil Case No. U-4625 before the trial court and in CA-G.R. No.
24199.8
After studying the merits of the instant case, as well as the pertinent provisions of
law and jurisprudence, the Court denies the petition and affirms the questioned
decision of the Court of Appeals.
The first and principal issue is the ownership of the two pieces of property subject
of this action. Petitioner assails the validity of the deeds of conveyance over the
same parcels of land. There is no dispute that the transfer of ownership from the
original owners of the riceland and the house and lot, Corazon Ilomin and the
spouses Cespedes, respectively, were valid.
The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda.
The provision of law applicable here is Article 148 of the Family Code providing for
cases of cohabitation when a man and a woman who are not capacitated to marry
each other live exclusively with each other as husband and wife without the benefit
of marriage or under a void marriage. While Miguel and Erlinda contracted
marriage on July 15, 1973, said union was patently void because the earlier
marriage of Miguel and Carlina was still subsisting and unaffected by the latter's de
facto separation.
Under Article 148, only the properties acquired by both of the parties through
their actual joint contribution of money, property or industry shall be owned by them
in common in proportion to their respective contributions. It must be stressed that
actual contribution is required by this provision, in contrast to Article 147 which
states that efforts in the care and maintenance of the family and household, are
regarded as contributions to the acquisition of common property by one who has no
salary or income or work or industry. If the actual contribution of the party is not
proved, there will be no co-ownership and no presumption of equal shares. 9
In the case at bar, Erlinda tried to establish by her testimony that she is engaged in
the business of buy and sell and had a sari-sari store10 but failed to persuade us
that she actually contributed money to buy the subject riceland. Worth noting is the
Page 189 of 232
fact that on the date of conveyance, May 17, 1973, petitioner was only around
twenty years of age and Miguel Palang was already sixty-four and a pensioner of
the U.S. Government. Considering her youthfulness, it is unrealistic to conclude
that in 1973 she contributed P3,750.00 as her share in the purchase price of
subject property,11 there being no proof of the same.
Petitioner now claims that the riceland was bought two months before Miguel and
Erlinda actually cohabited. In the nature of an afterthought, said added assertion
was intended to exclude their case from the operation of Article 148 of the Family
Code. Proof of the precise date when they commenced their adulterous
cohabitation not having been adduced, we cannot state definitively that the riceland
was purchased even before they started living together. In any case, even
assuming that the subject property was bought before cohabitation, the rules of co-
ownership would still apply and proof of actual contribution would still be essential.
Since petitioner failed to prove that she contributed money to the purchase price of
the riceland in Binalonan, Pangasinan, we find no basis to justify her co-ownership
with Miguel over the same. Consequently, the riceland should, as correctly held by
the Court of Appeals, revert to the conjugal partnership property of the deceased
Miguel and private respondent Carlina Palang.
Furthermore, it is immaterial that Miguel and Carlina previously agreed to donate

their conjugal property in favor of their daughter Herminia in 1975. The trial court
erred in holding that the decision adopting their compromise agreement "in effect
partakes the nature of judicial confirmation of the separation of property between
spouses and the termination of the conjugal partnership." 12 Separation of property
between spouses during the marriage shall not take place except by judicial order
or without judicial conferment when there is an express stipulation in the marriage
settlements.13 The judgment which resulted from the parties' compromise was not
specifically and expressly for separation of property and should not be so inferred.
With respect to the house and lot, Erlinda allegedly bought the same for
P20,000.00 on September 23, 1975 when she was only 22 years old. The
testimony of the notary public who prepared the deed of conveyance for the
property reveals the falsehood of this claim. Atty. Constantino Sagun testified that
Miguel Palang provided the money for the purchase price and directed that
Erlinda's name alone be placed as the vendee. 14
The transaction was properly a donation made by Miguel to Erlinda, but one which
was clearly void and inexistent by express provision of law because it was made
between persons guilty of adultery or concubinage at the time of the donation,
under Article 739 of the Civil Code. Moreover, Article 87 of the Family Code
expressly provides that the prohibition against donations between spouses now
applies to donations between persons living together as husband and wife without
Page 190 of 232
15
a valid marriage, for otherwise, the condition of those who incurred guilt would
turn out to be better than those in legal union. 16
The second issue concerning Kristopher Palang's status and claim as an

illegitimate son and heir to Miguel's estate is here resolved in favor of respondent
court's correct assessment that the trial court erred in making pronouncements
regarding Kristopher's heirship and filiation "inasmuch as questions as to who are
the heirs of the decedent, proof of filiation of illegitimate children and the
determination of the estate of the latter and claims thereto should be ventilated in
the proper probate court or in a special proceeding instituted for the purpose and
cannot be adjudicated in the instant ordinary civil action which is for recovery of
ownership and possession."17
As regards the third issue, petitioner contends that Kristopher Palang should be
considered as party-defendant in the case at bar following the trial court's decision
which expressly found that Kristopher had not been impleaded as party defendant
but theorized that he had submitted to the court's jurisdiction through his
mother/guardian ad litem.18 The trial court erred gravely. Kristopher, not having
been impleaded, was, therefore, not a party to the case at bar. His mother, Erlinda
cannot be called his guardian ad litem for he was not involved in the case at bar.
Petitioner adds that there is no need for Kristopher to file another action to prove
that he is illegitimate son of Miguel, in order to avoid multiplicity of
suits.19 Petitioner's grave error has been discussed in the preceding paragraph
where the need for probate proceedings to resolve the settlement of Miguel's estate
and Kristopher's successional rights has been pointed out.
WHEREFORE, the instant petition is hereby DENIED. The questioned decision of

the Court of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.
Page 191 of 232

[88]
G.R. No. 137359. September 13, 2004.*

EDWIN N. TRIBIANA, petitioner, vs. LOURDES M. TRIBIANA, respondent.
Remedial Law; Dismissal of Actions; A dismissal under Section 1(j) of Rule 16 is

warranted only if there is a failure to comply with a condition precedent. Given that the
alleged defect is a mere failure to allege compliance with a condition precedent, the proper
solution is not an outright dismissal of the action, but an amendment under Section 1 of
Rule 10 of the 1997 Rules of Civil Procedure.—A dismissal under Section 1(j) of Rule 16 is
warranted only if there is a failure to comply with a condition precedent. Given that the
alleged defect is a mere failure to allege compliance with a condition precedent, the proper
solution is not an outright dismissal of the action, but an amendment under Section 1 of
Rule 10 of the 1997 Rules of Civil Procedure. It would have been a different matter if
Edwin had asserted that no efforts to arrive at a compromise have been made at all.
Same; Habeas Corpus; In a habeas corpus proceeding involving the welfare and
custody of a child of tender age, the paramount concern is to resolve immediately the issue
of who has the legal custody of the child. Technicalities should not stand in the way of
giving such child of tender age full protection.—In a habeas corpus proceeding involving
the welfare and custody of a child of tender age, the paramount concern is to resolve
immediately the issue of who has legal custody of the child. Technicalities should not stand
in the way of giving such child of tender age full protection. This rule has sound statutory
basis in Article 213 of the Family Code, which states, “No child under seven years of age
shall be separated from the mother unless the court finds compelling reasons to order
otherwise.”
PETITION for review on certiorari of the resolutions of the Court of Appeals.
CARPIO, J.:
The Case
This petition for review on certiorari 1 seeks to reverse the Court of Appeals’
Resolutions2 dated 2 July 1998 and 18 January 1999 in CA-G.R. SP No. 48049.
The Court of Appeals affirmed the Order 3 of the Regional Trial Court, Branch 19,
Bacoor, Cavite ("RTC"), denying petitioner Edwin N. Tribiana’s ("Edwin") motion to
dismiss the petition for habeas corpus filed against him by respondent Lourdes
Tribiana ("Lourdes").
Antecedent Facts
Page 192 of 232

Edwin and Lourdes are husband and wife who have lived together since 1996 but
formalized their union only on 28 October 1997. On 30 April 1998, Lourdes filed a
petition for habeas corpus before the RTC claiming that Edwin left their conjugal
home with their daughter, Khriza Mae Tribiana ("Khriza"). Edwin has since deprived
Lourdes of lawful custody of Khriza who was then only one (1) year and four (4)
months of age. Later, it turned out that Khriza was being held by Edwin’s mother,
Rosalina Tribiana ("Rosalina"). Edwin moved to dismiss Lourdes’ petition on the
ground that the petition failed to allege that earnest efforts at a compromise were
made before its filing as required by Article 151 of the Family Code.
On 20 May 1998, Lourdes filed her opposition to Edwin’s motion to dismiss

claiming that there were prior efforts at a compromise, which failed. Lourdes
attached to her opposition a copy of the Certification to File Action from their
Barangay dated 1 May 1998.
On 18 May 1998, the RTC denied Edwin’s motion to dismiss and reiterated a
previous order requiring Edwin and his mother, Rosalina to bring Khriza before the
RTC. Upon denial of his motion for reconsideration, Edwin filed with the Court of
Appeals a petition for prohibition and certiorari under Rule 65 of the Rules of Civil
Procedure. The appellate court denied Edwin’s petition on 2 July 1998. The
appellate court also denied Edwin’s motion for reconsideration.
The Rulings of the RTC and the Court of Appeals
The RTC denied Edwin’s motion to dismiss on the ground that the Certification to
File Action attached by Lourdes to her opposition clearly indicates that the parties
attempted to reach a compromise but failed.
The Court of Appeals upheld the ruling of the RTC and added that under Section
412 (b) (2) of the Local Government Code, conciliation proceedings before the
barangay are not required in petitions for habeas corpus.
The Issue
Edwin seeks a reversal and raises the following issue for resolution:
WHETHER THE TRIAL AND APPELLATE COURTS SHOULD HAVE

DISMISSED THE PETITION FOR HABEAS CORPUS ON THE GROUND
OF FAILURE TO COMPLY WITH THE CONDITION PRECEDENT UNDER
ARTICLE 151 OF THE FAMILY CODE.
The Ruling of the Court

Page 193 of 232
The petition lacks merit.
Edwin argues that Lourdes’ failure to indicate in her petition for habeas corpus that
the parties exerted prior efforts to reach a compromise and that such efforts failed
is a ground for the petition’s dismissal under Section 1(j), Rule 16 of the 1997 Rules
of Civil Procedure.4 Edwin maintains that under Article 151 of the Family Code, an
earnest effort to reach a compromise is an indispensable condition precedent.
Article 151 provides:
No suit between members of the same family shall prosper unless it should
appear from the verified complaint or petition that earnest efforts toward a
compromise have been made, but that the same have failed. If it is shown
that no such efforts were in fact made, the case must be dismissed.
This rule shall not apply to cases which may not be the subject of compromise
under the Civil Code.
Edwin’s arguments do not persuade us.
It is true that the petition for habeas corpus filed by Lourdes failed to allege that she
resorted to compromise proceedings before filing the petition. However, in her
opposition to Edwin’s motion to dismiss, Lourdes attached a Barangay Certification
to File Action dated 1 May 1998. Edwin does not dispute the authenticity of the
Barangay Certification and its contents. This effectively established that the parties
tried to compromise but were unsuccessful in their efforts. However, Edwin would
have the petition dismissed despite the existence of the Barangay Certification,
which he does not even dispute.
Evidently, Lourdes has complied with the condition precedent under Article 151 of
the Family Code. A dismissal under Section 1(j) of Rule 16 is warranted only if
there is a failure to comply with a condition precedent. Given that the alleged defect
is a mere failure to allege compliance with a condition precedent, the proper
solution is not an outright dismissal of the action, but an amendment under Section
1 of Rule 10 of the 1997 Rules of Civil Procedure. 5 It would have been a different
matter if Edwin had asserted that no efforts to arrive at a compromise have been
made at all.
In addition, the failure of a party to comply with a condition precedent is not a

jurisdictional defect.6 Such defect does not place the controversy beyond the
court’s power to resolve. If a party fails to raise such defect in a motion to dismiss,
such defect is deemed waived.7 Such defect is curable by amendment as a matter
of right without leave of court, if made before the filing of a responsive pleading. 8 A
motion to dismiss is not a responsive pleading. 9 More importantly, an amendment
alleging compliance with a condition precedent is not a jurisdictional matter. Neither
Page 194 of 232
does it alter the cause of action of a petition for habeas corpus. We have held that
in cases where the defect consists of the failure to state compliance with a
condition precedent, the trial court should order the amendment of the
complaint.10 Courts should be liberal in allowing amendments to pleadings to avoid
multiplicity of suits and to present the real controversies between the parties. 11
Moreover, in a habeas corpus proceeding involving the welfare and custody of a

child of tender age, the paramount concern is to resolve immediately the issue of
who has legal custody of the child. Technicalities should not stand in the way of
giving such child of tender age full protection. 12 This rule has sound statutory basis
in Article 213 of the Family Code, which states, "No child under seven years of age
shall be separated from the mother unless the court finds compelling reasons to
order otherwise." In this case, the child (Khriza) was only one year and four months
when taken away from the mother.
The Court of Appeals dismissed Edwin’s contentions by citing as an additional

ground the exception in Section 412 (b) (2) of the Local Government Code ("LGC")
on barangay conciliation, which states:
(b) Where the parties may go directly to court. – the parties may go directly
to court in the following instances:
xxx
2) Where a person has otherwise been deprived of personal liberty

calling for habeas corpus proceedings;
xxx.
Under Rule 102 of the 1997 Rules of Civil Procedure, a party may resort to
a habeas corpus proceeding in two instances. The first is when any person
is deprived of liberty either through illegal confinement or through detention.
The second instance is when custody of any person is withheld from the
person entitled to such custody. The most common case falling under the
second instance involves children who are taken away from a parent by
another parent or by a relative. The case filed by Lourdes falls under this
category.
The barangay conciliation requirement in Section 412 of the LGC does not apply
to habeas corpus proceedings where a person is "deprived of personal liberty." In
such a case, Section 412 expressly authorizes the parties "to go directly to court"
without need of any conciliation proceedings. There is deprivation of personal
liberty warranting a petition for habeas corpus where the "rightful custody of any
person is withheld from the person entitled thereto." 13 Thus, the Court of Appeals
Page 195 of 232
did not err when it dismissed Edwin’s contentions on the additional ground that
Section 412 exempts petitions for habeas corpus from the barangay conciliation
requirement.
The petition for certiorari filed by Edwin questioning the RTC’s denial of his motion
to dismiss merely states a blanket allegation of "grave abuse of discretion." An
order denying a motion to dismiss is interlocutory and is not a proper subject of a
petition for certiorari.14 Even in the face of an error of judgment on the part of a
judge denying the motion to dismiss, certiorari will not lie. Certiorari is not a remedy
to correct errors of procedure.15 The proper remedy against an order denying a
motion to dismiss is to file an answer and interpose as affirmative defenses the
objections raised in the motion to dismiss. It is only in the presence of extraordinary
circumstances evincing a patent disregard of justice and fair play where resort to a
petition for certiorari is proper.16
The litigation of substantive issues must not rest on a prolonged contest on

technicalities. This is precisely what has happened in this case. The circumstances
are devoid of any hint of the slightest abuse of discretion by the RTC or the Court of
Appeals. A party must not be allowed to delay litigation by the sheer expediency of
filing a petition for certiorari under Rule 65 based on scant allegations of grave
abuse. More importantly, any matter involving the custody of a child of tender age
deserves immediate resolution to protect the child’s welfare.
WHEREFORE, we DISMISS the instant petition for lack of merit. We AFFIRM the

Resolutions of the Court of Appeals dated 2 July 1998 and 18 January 1999 in CA-
G.R. SP No. 48049. The Regional Trial Court, Branch 19, Bacoor, Cavite is ordered
to act with dispatch in resolving the petition for habeas corpus pending before it.
This decision is IMMEDIATELY EXECUTORY.
SO ORDERED.
Page 196 of 232

[89]
G.R. No. 129242. January 16, 2001.*

PILAR S. VDA. DE MANALO, ANTONIO S. MANALO, ORLANDO S. MANALO, and
ISABELITA MANALO, petitioners, vs. HON. COURT OF APPEALS, HON. REGIONAL
TRIAL COURT OF MANILA (BRANCH 35), PURITA S. JAYME, MILAGROS M.
TERRE, BELEN M. ORILLANO, ROSALINA M. ACUIN, ROMEO S. MANALO,
ROBERTO S. MANALO, AMALIA MANALO and IMELDA MANALO, respondents.
Pleadings and Practice; Estate Proceedings; Probate Courts; It is a fundamental rule

that, in the determination of the nature of an action or proceeding, the averments and the
character of the relief sought in the complaint, or petition, shall be controlling; The fact of
death of the decedent and of his residence within the country are foundation facts upon
which all the subsequent proceedings in the administration of the estate rest.—It is a
fundamental rule that, in the determination of the nature of an action or proceeding, the
averments and the character of the relief sought in the complaint, or petition, as in the case
at bar, shall be controlling. A careful scrutiny of the Petition for Issuance of Letters of
Administration, Settlement and Distribution of Estate in SP. PROC. No. 92-63626 belies
herein petitioners’ claim that the same is in the nature of an ordinary civil action. The said
petition contains sufficient jurisdictional facts required in a petition for the settlement of
estate of a deceased person such as the fact of death of the late Troadio Manalo on February
14, 1992, as well as his residence in the City of Manila at the time of his said death. The
fact of death of the decedent and of his residence within the country are foundation facts
upon which all the subsequent proceedings in the administration of the estate rest. The
petition in SP. PROC. No. 92-63626 also contains an enumeration of the names of his legal
heirs including a tentative list of the properties left by the deceased which are sought to be
settled in the probate proceedings. In addition, the reliefs prayed for in the said petition
leave no room for doubt as regard the intention of the petitioners therein (private
respondents herein) to seek judicial settlement of the estate of their deceased father, Troadio
Manalo.
Same; Same; Same; A party may not be allowed to defeat the purpose of an

essentially valid petition for the settlement of the estate of a decedent by raising matters
that are irrelevant and immaterial to the said petition; A trial court, sitting as a probate
court, has limited and special jurisdiction and cannot hear and dispose of collateral
matters and issues which may be properly threshed out only in an ordinary civil action.—It
is our view that herein petitioners may not be allowed to defeat the purpose of the
essentially valid petition for the settlement of the estate of the late Troadio Manalo by
raising matters that are irrelevant and immaterial to the said petition. It must be emphasized
that the trial court, sitting as a probate court, has limited and special jurisdiction and cannot
hear and dispose of collateral matters and issues which may be properly threshed out only in
an ordinary civil action. In addition, the rule has always been to the effect that the
jurisdiction of a court, as well as the concomitant nature of an action, is determined by the
averments in the complaint and not by the defenses contained in the answer. If it were
Page 197 of 232

otherwise, it would not be too difficult to have a case either thrown out of court or its
proceedings unduly delayed by simple strategem. So it should be in the instant petition for
settlement of estate.
Same; Same; Same; Motion to Dismiss; A party may not take refuge under the
provisions of Rule 1, Section 2, of the Rules of Court to justify an invocation of Article 222
of the Civil Code for the dismissal of a petition for settlement of estate.—The argument is
misplaced. Herein petitioners may not validly take refuge under the provisions of Rule 1,
Section 2, of the Rules of Court to justify the invocation of Article 222 of the Civil Code of
the Philippines for the dismissal of the petition for settlement of the estate of the deceased
Troadio Manalo inasmuch as the latter provision is clear enough, to wit: Art. 222.
No suit shall be filed or maintained between members of the same family unless it should
appear that earnest efforts toward a compromise have been made, but that the same have
failed, subject to the limitations in Article 2035.
Same; Same; Article 222 of the Civil Code applies only to civil actions which are
essentially adversarial and involve members of the same family.—The above-quoted
provision of the law is applicable only to ordinary civil actions. This is clear from the term
“suit” that it refers to an action by one person or persons against another or others in a court
of justice in which the plaintiff pursues the remedy which the law affords him for the
redress of an injury or the enforcement of a right, whether at law or in equity. A civil action
is thus an action filed in a court of justice, whereby a party sues another for the enforcement
of a right, or the prevention or redress of a wrong. Besides, an excerpt from the Report of
the Code Commission unmistakably reveals the intention of the Code Commission to make
that legal provision applicable only to civil actions which are essentially adversarial and
involve members of the same family, thus: It is difficult to imagine a sadder and more tragic
spectacle than a litigation between members of the same family. It is necessary that every
effort should be made toward a compromise before a litigation is allowed to breed hate and
passion in the family. It is known that lawsuit between close relatives generates deeper
bitterness than strangers.
Same; Same; Special Proceedings; A petition for issuance of letters of administration,

settlement and distribution of estate is a special proceeding and, as such, it is a remedy
whereby the petitioner therein seek to establish a status, a right, or a particular fact.—It
must be emphasized that the oppositors (herein petitioners) are not being sued in SP. PROC.
No. 92-63626 for any cause of action as in fact no defendant was impleaded therein. The
Petition for Issuance of Letters of Administration, Settlement and Distribution of Estate in
SP. PROC. No. 92-63626 is a special proceeding and, as such, it is a remedy whereby the
petitioners therein seek to establish a status, a right, or a particular fact. The petitioners
therein (private respondents herein) merely seek to establish the fact of death of their father
and subsequently to be duly recognized as among the heirs of the said deceased so that they
can validly exercise their right to participate in the settlement and liquidation of the estate of
the decedent consistent with the limited and special jurisdiction of the probate court.
Page 198 of 232


Caneba, Flores, Ranee, Acuesta and Masigla Law Firm for petitioners.
Ricardo E. Aragones for respondents.
DE LEON, JR., J.:
This is a petition for review on certiorari filed by petitioners Pilar S. Vda De Manalo,
et. Al., seeking to annul the Resolution 1 of the Court of Appeals 2 affirming the
Orders 3 of the Regional Trial Court and the Resolution 4 which denied petitioner'
motion for reconsideration.
The antecedent facts 5 are as follows:
Troadio Manalo, a resident of 1996 Maria Clara Street, Sampaloc, Manila died
intestate on February 14, 1992. He was survived by his wife, Pilar S. Manalo, and
his eleven (11) children, namely: Purita M. Jayme, Antonio Manalo, Milagros M.
Terre, Belen M. Orillano, Isabelita Manalo, Rosalina M. Acuin, Romeo Manalo,
Roberto Manalo, Amalia Manalo, Orlando Manalo and Imelda Manalo, who are all
of legal age.1âwphi1.nêt
At the time of his death on February 14, 1992, Troadio Manalo left several real
properties located in Manila and in the province of Tarlac including a business
under the name and style Manalo's Machine Shop with offices at No. 19 Calavite
Street, La Loma, Quezon City and at NO. 45 General Tinio Street, Arty Subdivision,
Valenzuela, Metro Manila.
On November 26, 1992, herein respondents, who are eight (8) of the surviving
children of the late Troadio Manalo, namely; Purita, Milagros, Belen Rocalina,
Romeo, Roberto, Amalia, and Imelda filed a petition 6 with the respondent Regional
Trial Court of Manila 7 of the judicial settlement of the estate of their late father,
Troadio Manalo, and for the appointment of their brother, Romeo Manalo, as
administrator thereof.
On December 15, 1992, the trial court issued an order setting the said petition for
hearing on February 11, 1993 and directing the publication of the order for three (3)
consecutive weeks in a newspaper of general circulation in Metro Manila, and
further directing service by registered mail of the said order upon the heirs named
in the petition at their respective addresses mentioned therein.
Page 199 of 232

On February 11, 1993, the date set for hearing of the petition, the trial court issued
an order 'declaring the whole world in default, except the government," and set the
reception of evidence of the petitioners therein on March 16, 1993. However, the
trial court upon motion of set this order of general default aside herein petitioners
(oppositors therein) namely: Pilar S. Vda. De Manalo, Antonio, Isabelita and
Orlando who were granted then (10) days within which to file their opposition to the
petition.
Several pleadings were subsequently filed by herein petitioners, through counsel,

culminating in the filling of an Omnibus Motion 8 on July 23, 1993 seeking; (1) to
seat aside and reconsider the Order of the trial court dated July 9, 1993 which
denied the motion for additional extension of time file opposition; (2) to set for
preliminary hearing their affirmative defenses as grounds for dismissal of the case;
(3) to declare that the trial court did not acquire jurisdiction over the persons of the
oppositors; and (4) for the immediate inhibition of the presiding judge.
On July 30, 1993, the trial court issued an order 9 which resolved, thus:
A. To admit the so-called Opposition filed by counsel for the oppositors on

July 20, 1993, only for the purpose of considering the merits thereof;
B. To deny the prayer of the oppositors for a preliminary hearing of their

affirmative defenses as ground for the dismissal of this proceeding, said
affirmative defenses being irrelevant and immaterial to the purpose and
issue of the present proceeding;
C. To declare that this court has acquired jurisdiction over the persons of the
oppositors;
D. To deny the motion of the oppositors for the inhibition of this Presiding
Judge;
E. To set the application of Romeo Manalo for appointment as regular

administrator in the intestate estate of the deceased Troadio Manalo for
hearing on September 9, 1993 at 2:00 o'clock in the afternoon.
Herein petitioners filed a petition for certiorari under Rule 65 of the Rules of Court
with the Court of Appeals, docketed as CA-G.R. SP. No. 39851, after the trial court
in its Order 10 dated September 15, 1993. In their petition for improperly laid in SP.
PROC. No. 92-63626; (2) the trial court did not acquire jurisdiction over their
persons; (3) the share of the surviving spouse was included in the intestate
proceedings; (4) there was absence of earnest efforts toward compromise among
members of the same family; and (5) no certification of non-forum shopping was
attached to the petition.
Page 200 of 232
Finding the contentions untenable, the Court of Appeals dismissed the petition for
certiorari in its Resolution11 promulgated on September 30, 1996. On May 6, 1997
the motion for reconsideration of the said resolution was likewise dismissed. 12
The only issue raised by herein petitioners in the instant petition for review is
whether or not the respondent Court of Appeals erred in upholding the questioned
orders of the respondent trial court which denied their motion for the outright
dismissal of the petition for judicial settlement of estate despite the failure of the
petitioners therein to aver that earnest efforts toward a compromise involving
members of the same family have been made prior to the filling of the petition but
that the same have failed.
Herein petitioners claim that the petition in SP. PROC. No. 92-63626 is actually an
ordinary civil action involving members of the same family. They point out that it
contains certain averments, which, according to them, are indicative of its
adversarial nature, to wit:
X X X
Par. 7. One of the surviving sons, ANTONIO MANALO, since the death of
his father, TROADIO MANALO, had not made any settlement, judicial or
extra-judicial of the properties of the deceased father TROADIO MANALO.
Par. 8. xxx the said surviving son continued to manage and control the
properties aforementioned, without proper accounting, to his own benefit and
advantage xxx.
X X X
Par. 12. That said ANTONIO MANALO is managing and controlling the
estate of the deceased TROADIO MANALO to his own advantage and to the
damage and prejudice of the herein petitioners and their co-heirs xxx.
X X X
Par. 14. For the protection of their rights and interests, petitioners were
compelled to bring this suit and were forced to litigate and incur expenses
and will continue to incur expenses of not less than, P250,000.00 and
engaged the services of herein counsel committing to pay P200,000.00 as
and attorney's fees plus honorarium of P2,500.00 per appearance in court
xxx.13
Consequently, according to herein petitioners, the same should be dismissed under

Rule 16, Section 1(j) of the Revised Rules of Court which provides that a motion to
Page 201 of 232
dismiss a complaint may be filed on the ground that a condition precedent for filling
the claim has not been complied with, that is, that the petitioners therein failed to
aver in the petition in SP. PROC. No. 92-63626, that earnest efforts toward a
compromise have been made involving members of the same family prior to the
filling of the petition pursuant to Article 222 14 of the Civil Code of the Philippines.
The instant petition is not impressed with merit.
It is a fundamental rule that in the determination of the nature of an action or

proceeding, the averments15 and the character of the relief sought 16 in the
complaint, or petition, as in the case at bar, shall be controlling. A careful srutiny of
the Petition for Issuance of Letters of Administration, Settlement and Distribution of
Estatein SP. PROC. No. 92-63626 belies herein petitioners' claim that the same is
in the nature of an ordinary civil action. The said petition contains sufficient
jurisdictional facts required in a petition for the settlement of estate of a deceased
person such as the fat of death of the late Troadio Manalo on February 14, 1992,
as well as his residence in the City of Manila at the time of his said death. The fact
of death of the decedent and of his residence within he country are foundation facts
upon which all the subsequent proceedings in the administration of the estate
rest.17 The petition is SP.PROC No. 92-63626 also contains an enumeration of the
names of his legal heirs including a tentative list of the properties left by the
deceased which are sought to be settled in the probate proceedings. In addition,
the relief's prayed for in the said petition leave no room for doubt as regard the
intention of the petitioners therein (private respondents herein) to seek judicial
settlement of the estate of their deceased father, Troadio Manalo, to wit;
PRAYER
WHEREFORE, premises considered, it is respectfully prayed for of this Honorable

Court:
a. That after due hearing, letters of administration be issued to petitioner

ROMEO MANALO for the administration of the estate of the deceased
TROADIO MANALO upon the giving of a bond in such reasonable sum that
this Honorable Court may fix.
b. That after all the properties of the deceased TROADIO MANALO have
been inventoried and expenses and just debts, if any, have been paid and
the legal heirs of the deceased fully determined, that the said estate of
TROADIO MANALO be settled and distributed among the legal heirs all in
accordance with law.
c. That the litigation expenses of these proceedings in the amount of

P250,000.00 and attorney's fees in the amount of P300,000.00 plus
Page 202 of 232
honorarium of P2,500.00 per appearance in court in the hearing and trial of
this case and costs of suit be taxed solely against ANTONIO MANALO. 18
Concededly, the petition in SP. PROC. No. 92-63626 contains certain averments
which may be typical of an ordinary civil action. Herein petitioners, as oppositors
therein, took advantage of the said defect in the petition and filed their so-called
Opposition thereto which, as observed by the trial court, is actually an Answer
containing admissions and denials, special and affirmative defenses and
compulsory counterclaims for actual, moral and exemplary damages, plus
attorney's fees and costs 19 in an apparent effort to make out a case of an ordinary
civil action and ultimately seek its dismissal under Rule 16, Section 1(j) of the Rules
of Court vis-à-vis, Article 222 of civil of the Civil Code.
It is our view that herein petitioners may not be allowed to defeat the purpose of the
essentially valid petition for the settlement of the estate of the late Troadio Manalo
by raising matters that as irrelevant and immaterial to the said petition. It must be
emphasized that the trial court, siting as a probate court, has limited and special
jurisdiction 20 and cannot hear and dispose of collateral matters and issues which
may be properly threshed out only in an ordinary civil action. In addition, the rule
has always been to the effect that the jurisdiction of a court, as well as the
concomitant nature of an action, is determined by the averments in the complaint
and not by the defenses contained in the answer. If it were otherwise, it would not
be too difficult to have a case either thrown out of court or its proceedings unduly
delayed by simple strategem.21 So it should be in the instant petition for settlement
of estate.
Herein petitioners argue that even if the petition in SP. PROC. No. 92-63626 were
to be considered as a special proceeding for the settlement of estate of a deceased
person, Rule 16, Section 1(j) of the Rules of Court vis-à-vis Article 222 of the Civil
Code of the Philippines would nevertheless apply as a ground for the dismissal of
the same by virtue of ule 1, Section 2 of the Rules of Court which provides that the
'rules shall be liberally construed in order to promote their object and to assist the
parties in obtaining just, speedy and inexpensive determination of every action and
proceedings.' Petitioners contend that the term "proceeding" is so broad that it must
necessarily include special proceedings.
The argument is misplaced. Herein petitioners may not validly take refuge under
the provisions of Rule 1, Section 2, of the Rules of Court to justify the invocation of
Article 222 of the Civil Code of the Philippines for the dismissal of the petition for
settlement of the estate of the deceased Troadio Manalo inasmuch as the latter
provision is clear enough. To wit:
Art. 222. No suit shall be filed or maintained between members of the same family
unless it should appear that earnest efforts toward a compromise have been made,
Page 203 of 232
but that the same have failed, subject to the limitations in Article 2035(underscoring
supplied).22
The above-quoted provision of the law is applicable only to ordinary civil actions.
This is clear from the term 'suit' that it refers to an action by one person or persons
against another or other in a court of justice in which the plaintiff pursues the
remedy which the law affords him for the redress of an injury or the enforcement of
a right, whether at law or in equity. 23 A civil action is thus an action filed in a court
of justice, whereby a party sues another for the enforcement of a right, or the
prevention or redress of a wrong. 24 Besides, an excerpt form the Report of the
Code Commission unmistakably reveals the intention of the Code Commission to
make that legal provision applicable only to civil actions which are essentially
adversarial and involve members of the same family, thus:
It is difficult to imagine a sadder and more tragic spectacle than a litigation

between members of the same family. It is necessary that every effort
should be made toward a compromise before litigation is allowed to breed
hate and passion in the family. It is know that lawsuit between close relatives
generates deeper bitterness than stranger. 25
It must be emphasized that the oppositors (herein petitioners) are not being sued in
SP. PROC. No. 92-63626 for any cause of action as in fact no defendant was
imploded therein. The Petition for issuance of letters of Administration, Settlement
and Distribution of Estate in SP. PROC. No. 92-63626 is a special proceeding and,
as such, it is a remedy whereby the petitioners therein seek to establish a status, a
right, or a particular fact. 26 the petitioners therein (private respondents herein)
merely seek to establish the fat of death of their father and subsequently to be duly
recognized as among the heirs of the said deceased so that they can validly
exercise their right to participate in the settlement and liquidation of the estate of
the decedent consistent with the limited and special jurisdiction of the probate
court.1âwphi1.nêt
WHEREFORE, the petition in the above-entitled case, is DENIED for lack of merit,
Costs against petitioners.
Page 204 of 232

[90]
No. L-28394. November 26, 1970.

PEDRO G AYON, plaintiff-appellant, vs. SILVESTRE GAYON and GENOVEVA DE
GAYON, defendants-appellees.
Civil Law; Succession; Acquisition of Ownership; Legitime; Widow's Interest.—As a

widow, she is one of her deceased husband's compulsory heirs [Art. 887(3), Civil Code] and
has, accordingly, an interest in the property in question.
Same; Same; Suit against heirs.—Inasmuch as succession takes place by operation of

law, "from the moment of the death of the decedent" (Arts. 774 and 777, Civil Code) and
"the inheritance includes all the property, rights and obligations of a person which are not
extinguished by his death," (Art. 776, Civil Code) it follows that if his heirs were included
as defendants, they would be sued, not as "representatives" of the decedent, but
as owners of an aliquot interest in the property in question, even if the precise extent of their
interest may still be undetermined and they have derived it from the decedent. Hence, they
may be sued without a previous declaration of heirship, provided there is no pending special
proceeding for the settlement of the estate of the decedent.
Same; Same; Family Relations; Suit between members of the same family, defined.—

It is noteworthy that the impediment arising from the provision of Art. 222 of the Civil
Code applies to suits "filed or maintained between members of the same family." This
phrase, "members of the same family," should, however, be construed in the light of Article
217 of the same Code.
Same; Same; Same; Suit against sister-in-law, nephews and nieces.—Inasmuch as a

sister-in-law, nephew or niece is not included in the enumeration contained in Article 217,
Civil Code, which should be construed strictly, it being an exception to the general rule, it
follows that the same does not come within the purview of Art. 222, and plaintiff's failure to
seek a compromise before filing the complaint does not bar the same.
APPEAL from an order of the Court of First Instance of Iloilo. Rovira, J.
CONCEPCION, C.J.:
Appeal, taken by plaintiff Pedro Gayon, from an order of the Court of First Instance
of Iloilo dismissing his complaint in Civil Case No. 7334 thereof.
The records show that on July 31, 1967, Pedro Gayon filed said complaint against
the spouses Silvestre Gayon and Genoveva de Gayon, alleging substantially that,
on October 1, 1952, said spouses executed a deed — copy of which was attached
to the complaint, as Annex "A" — whereby they sold to Pedro Gelera, for the sum
of P500.00, a parcel of unregistered land therein described, and located in the
barrio of Cabubugan, municipality of Guimbal, province of Iloilo, including the
Page 205 of 232
improvements thereon, subject to redemption within five (5) years or not later than
October 1, 1957; that said right of redemption had not been exercised by Silvestre
Gayon, Genoveva de Gayon, or any of their heirs or successors, despite the
expiration of the period therefor; that said Pedro Gelera and his wife Estelita
Damaso had, by virtue of a deed of sale — copy of which was attached to the
complaint, as Annex "B" — dated March 21, 1961, sold the aforementioned land to
plaintiff Pedro Gayon for the sum of P614.00; that plaintiff had, since 1961,
introduced thereon improvements worth P1,000; that he had, moreover, fully paid
the taxes on said property up to 1967; and that Articles 1606 and 1616 of our Civil
Code require a judicial decree for the consolidation of the title in and to a land
acquired through a conditional sale, and, accordingly, praying that an order be
issued in plaintiff's favor for the consolidation of ownership in and to the
aforementioned property.
In her answer to the complaint, Mrs. Gayon alleged that her husband, Silvestre
Gayon, died on January 6, 1954, long before the institution of this case; that Annex
"A" to the complaint is fictitious, for the signature thereon purporting to be her
signature is not hers; that neither she nor her deceased husband had ever
executed "any document of whatever nature in plaintiff's favor"; that the complaint
is malicious and had embarrassed her and her children; that the heirs of Silvestre
Gayon had to "employ the services of counsel for a fee of P500.00 and incurred
expenses of at least P200.00"; and that being a brother of the deceased Silvestre
Gayon, plaintiff "did not exert efforts for the amicable settlement of the case" before
filing his complaint. She prayed, therefore, that the same be dismissed and that
plaintiff be sentenced to pay damages.
Soon later, she filed a motion to dismiss, reproducing substantially the averments
made in her answer and stressing that, in view of the death of Silvestre Gayon,
there is a "necessity of amending the complaint to suit the genuine facts on record."
Presently, or on September 16, 1967, the lower court issued the order appealed
from, reading:
Considering the motion to dismiss and it appearing from Exhibit "A"

annexed to the complaint that Silvestre Gayon is the absolute owner
of the land in question, and considering the fact that Silvestre Gayon
is now dead and his wife Genoveva de Gayon has nothing to do with
the land subject of plaintiff's complaint, as prayed for, this case is
hereby dismissed, without pronouncement as to costs. 1
A reconsideration of this order having been denied, plaintiff interposed the present
appeal, which is well taken.
Said order is manifestly erroneous and must be set aside. To begin with, it is not
true that Mrs. Gayon "has nothing to do with the land subject of plaintiff's
Page 206 of 232
complaint." As the widow of Silvestre Gayon, she is one of his compulsory
heirs2and has, accordingly, an interest in the property in question. Moreover, her
own motion to dismiss indicated merely "a necessity of amending the complaint," to
the end that the other successors in interest of Silvestre Gayon, instead of the
latter, be made parties in this case. In her opposition to the aforesaid motion for
reconsideration of the plaintiff, Mrs. Gayon alleged, inter alia, that the "heirs cannot
represent the dead defendant, unless there is a declaration of heirship." Inasmuch,
however, as succession takes place, by operation of law, "from the moment of the
death of the decedent" 3 and "(t)he inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death," 4 it follows that if
his heirs were included as defendants in this case, they would be sued, not as
"representatives" of the decedent, but as owners of an aliquot interest in the
property in question, even if the precise extent of their interest may still be
undetermined and they have derived it from the decent. Hence, they may be sued
without a previous declaration of heirship, provided there is no pending special
proceeding for the settlement of the estate of the decedent. 5
As regards plaintiff's failure to seek a compromise, as an alleged obstacle to the

present case, Art. 222 of our Civil Code provides:
No suit shall be filed or maintained between members of the same

family unless it should appear that earnest efforts toward a
compromise have been made, but that the same have failed, subject
to the limitations in article 2035.
It is noteworthy that the impediment arising from this provision applies to suits "filed
or maintained between members of the same family." This phrase, "members of the
same family," should, however, be construed in the light of Art. 217 of the same
Code, pursuant to which:
Family relations shall include those:
(1) Between husband and wife;
(2) Between parent and child;
(3) Among other ascendants and their descendants;
(4) Among brothers and sisters.
Mrs. Gayon is plaintiff's sister-in-law, whereas her children are his nephews and/or
nieces. Inasmuch as none of them is included in the enumeration contained in said
Art. 217 — which should be construed strictly, it being an exception to the general
rule — and Silvestre Gayon must necessarily be excluded as party in the case at
Page 207 of 232
bar, it follows that the same does not come within the purview of Art. 222, and
plaintiff's failure to seek a compromise before filing the complaint does not bar the
same.
WHEREFORE, the order appealed from is hereby set aside and the case
remanded to the lower court for the inclusion, as defendant or defendants therein,
of the administrator or executor of the estate of Silvestre Gayon, if any, in lieu of the
decedent, or, in the absence of such administrator or executor, of the heirs of the
deceased Silvestre Gayon, and for further proceedings, not inconsistent with this
decision, with the costs of this instance against defendant-appellee, Genoveva de
Gayon. It is so ordered.
Page 208 of 232

[91]
G.R. No. 104875.November 13, 1992.*

FLORANTE F. MANACOP, petitioner, vs. COURT OF APPEALS & F.F., CRUZ & CO.,
INC., respondents.
Remedial Law; Provisional Remedy; Attachment; A verified statement incorporated
in the complaint without a separate affidavit is sufficient and valid to obtain the attachment.
—“Anent the petitioner’s claim that the writ of attachment was issued without jurisdiction
because of the lack of supporting affidavit, We subscribe to the recent ruling of the Highest
Tribunal that a verified statement incorporated in the complaint without a separate affidavit
is sufficient and valid to obtain the attachment (Nasser vs. Court of Appeals, 191 SCRA
783). In the case at bar, the original as well as the amended complaint filed by herein
private respondent were verified, in substantial compliance with the requirements of the
law.
Same; Same; Same; No principle, statutory or jurisprudential, prohibits its issuance

by any court before acquisition of jurisdiction over the person of the defendant.—“A
preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other proper party may, at the commencement of the
action or at any time thereafter, have the property of the adverse party taken into the
custody of the court as security for the satisfaction of any judgment that may be recovered.
It is a remedy which is purely statutory in respect of which the law requires a strict
construction of the provisions granting it. Withal no principle, statutory or jurisprudential,
prohibits its issuance by any court before acquisition of jurisdiction over the person of the
defendant.
Same; Same; Same; Rule 57 says quite clearly that after an action is properly

commenced, the plaintiff may apply for and obtain a writ of preliminary attachment upon
fulfillment of the pertinent requisites laid down by law and that he may do so at any time
either before or after service of summons on the defendant.—“Rule 57 in fact speaks of the
grant of the remedy “at the commencement of the action or any time thereafter.” The
phrase, “at the commencement of the action,” obviously refers to the date of the filing of the
complaint—which, as above pointed out, is the date that marks “the commencement of the
action; and the reference plainly is to a time before summons is served on the defendant, or
even before summons issues. What the rule is saying quite clearly is that after an action is
properly commenced—by the filing of the complaint and the payment of all requisite docket
and other fees—the plaintiff may apply for and obtain a writ of preliminary attachment
upon fulfillment of the pertinent requisites laid down by law, and that he may do so at an
time, either before or after service of summons on the defendant. And this indeed, has been
the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other appropriate pleading
(counterclaim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-
parte at the commencement of the action if it finds the application otherwise sufficient in
form and substance.”
Page 209 of 232

Same; Civil Law; Family Home; The residential house and lot of petitioner was
deemed constituted as a family home upon the effectivity of the Family Code on August 3,
1988.—“In the present case, the residential house and lot of petitioner was not constituted
as a family home whether judicially or extrajudicially under the Civil Code. It became a
family home by operation of law only under Article 153 of the Family Code. It is deemed
constituted as a family home upon the effectivity of the Family Code on August 3, 1988 not
August 4, one year after its publication in the Manila Chronicle on August 4, 1987.
Same; Same; Same; Contention of petitioner that it should be considered a family

home from the time it was occupied by petitioner and his family in 1969 is not well-taken.
—“The contention of petitioner that it should be considered a family home from the time it
was occupied by petitioner and his family in 1969 is not well-taken. Under Article 162 of
the Family Code, it is provided that “the provisions of this Chapter shall also govern
existing family residences insofar as said provisions are applicable.” It does not mean that
Articles 152 and 153 of said Code have a retroactive effect such that all existing family
residences are deemed to have been constituted as family homes at the time of their
occupation prior to the effectivity of the Family Code and are exempt from execution for
the payment of obligations incurred before the effectivity of the Family Code. Article 162
simply means that all existing family residences at the time of the effectivity of the Family
Code, are considered family homes and are prospectively entitled to the benefits accorded to
a family home under the Family Code. Article 162 does not state that the provisions of
Chapter 2, Title V have a retroactive effect.
Same; Same; Same; This case does not fall under the exemptions from execution
provided in the Family Code.—“Is the family home of petitioner exempt from execution of
the money judgment aforecited? No. The debt or liability which was the basis of the
judgment arose or was incurred at the time of the vehicular accident on March 16, 1976 and
the money judgment arising therefrom was rendered by the appellate court on January 29,
1988. Both preceded the effectivity of the Family Code on August 3, 1988. This case does
not fall under the exemptions from execution provided in the Family Code.”
PETITION for review from the decision of the Court of Appeals. Ynares-Santiago,J.
Jose F. Manacop for petitioner.
Topacio/Tagoc & Associates for private respondent.
MELO,J.:
Following the dismissal of his petition for certiorari in C.A.-G.R. SP No. 23651 by

the Thirteenth Division of respondent Court (Justice Buena (P), Gonzaga-Reyes
and Abad Santos, Jr., JJ.; Page 60, Rollo), petitioner airs his concern over the
propriety thereof by claiming in the petition at hand that the disposition, in practical
effect, allows a writ of preliminary attachment issued by the court of origin against
Page 210 of 232

his corporation to be implemented on his family home which is ordinarily exempt
from the mesne process.
Owing to the failure to pay the sub-contract cost pursuant to a deed of assignment
signed between petitioner's corporation and private respondent herein, the latter
filed on July 3, 1989, a complaint for a sum of money, with a prayer for preliminary
attachment, against the former. As a consequence of the order on July 28, 1989,
the corresponding writ for the provisional remedy was issued on August 11, 1989
which triggered the attachment of a parcel of land in Quezon City owned by
Manacop Construction President Florante F. Manacop, herein petitioner.
In lieu of the original complaint, private respondent submitted an amended

complaint on August 18, 1989 intended to substitute Manacop Construction with
Florante F. Manacop as defendant who is "doing business under the name and
style of F.F. Manacop Construction Co., Inc.". After the motion for issuance of
summons to the substituted defendant below was granted, petitioner filed his
answer to the amended complaint on November 20, 1989.
Petitioner's Omnibus Motion filed on September 5, 1990 grounded on (1)

irregularity that attended the issuance of the disputed writ inspite the absence of an
affidavit therefor; (2) the feasibility of utilizing the writ prior to his submission as
party-defendant, and (3) exemption from attachment of his family home (page 3,
Petition; page 8, Rollo), did not merit the serious consideration of the court of origin.
This nonchalant response constrained petitioner to elevate the matter to
respondent court which, as aforesaid, agreed with the trial court on the strength of
the ensuing observations:
Anent the petitioner's claim that the writ of attachment was issued
without jurisdiction because of the lack of supporting affidavit, We
subscribe to the recent ruling of the Highest Tribunal that a verified
statement incorporated in the complaint without a separate affidavit is
sufficient and valid to obtain the attachment (Nasser vs. Court of
Appeals, 191 SCRA 783). In the case at bar, the original as well as
the amended complaint filed by herein private respondent were
verified, in substantial compliance with the requirements of the law.
Finally, the petitioner insists that the attached property is a family

home, having been occupied by him and his family since 1972, and is
therefore exempt from attachment.
The contention is not well-taken.
While Article 153 of the Family Code provides that the family home is
deemed constituted on a house and lot from the time it is occupied as
Page 211 of 232
a family residence, it does not mean that said article has a retroactive
effect such that all existing family residences, petitioner's included,
are deemed to have been constituted as family homes at the time of
their occupation prior to the effectivity of the Family Code and
henceforth, are exempt from execution for the payment of obligations
incurred before the effectivity of the Family Code on August 3, 1988
(Mondequillo vs. Breva, 185 SCRA 766). Neither does Article 162 of
said Code state that the provisions of Chapter 2, Title V thereof have
retroactive effect. It simply means that all existing family residences at
the time of the effectivity of the Family Code are considered family
homes and are prospectively entitled to the benefits accorded to a
family home under the Family Code (Mondequillo vs. Breva, supra).
Since petitioner's debt was incurred as early as November 25, 1987, it
preceded the effectivity of the Family Code. His property is therefore
not exempt from attachment (Annex "O", Plaintiff's Position Paper and
Memorandum of Authorities, p. 78). (pp. 5-6, Decision; pp. 64-
65, Rollo).
The attempt to reconsider respondent court's stance was to no avail (page

75, Rollo); hence, the petition at bar.
Did respondent court err in dismissing the challenge posed by petitioner against the
denial of his omnibus motion?
We are not ready to accept the negative aspersions put forward by petitioner
against respondent court in the petition before Us.
Petitioner harps on the supposition that the appellate court should not have pierced
the veil of corporate fiction because he is distinct from the personality of his
corporation and, therefore, the writ of attachment issued against the corporation
cannot be used to place his own family home in custodia legis. This puerile
argument must suffer rejection since the doctrine in commercial law adverted to
and employed in exculpation by petitioner, during the pendency of his petition
for certiorari in the appellate court and even at this stage, may not be permitted to
simply sprout from nowhere for such subtle experiment is prescribed by the
omnibus motion rule under Section 8, Rule 15 of the Revised Rules of Court, thus:
A motion attacking a pleading or a proceeding shall include all

objections then available, and all objections not so included shall be
deemed waived.
The spirit that surrounds the foregoing statutory norm is to require the movant to
raise all available exceptions for relief during a single opportunity so that multiple
and piece-meal objections may be avoided (Rafanan, et al. vs. Rafanan, 98 Phil.
Page 212 of 232
162 [1955]; 1 Martin, Rules of Court with Notes and Comments, 1989 Rev. Edition,
p. 492; Savit vs. Rodas, 73 Phil. 310 [1941]).
Another mistaken notion entertained by petitioner concerns the impropriety of

issuing the writ of attachment on August 11, 1989 when he "was not yet a
defendant in this case." This erroneous perception seems to suggest that
jurisdiction over the person of petitioner, as defendant below, must initially attach
before the provisional remedy involved herein can be requested by a plaintiff.
A contrario, Chief Justice Narvasa obliterated this unfounded assertion in Davao
Light and Power Co., Inc. vs. Court of Appeals (204 SCRA [1991]) whose
dissertation on the subject as related and applied to the present inquiry is quite
enlightening:
It is incorrect to theorize that after an action or proceeding has been

commenced and jurisdiction over the person of the plaintiff has been
vested in the court, but before the acquisition of jurisdiction over the
person of the defendant (either by service of summons or his
voluntary submission to the court's authority), nothing can be validly
done by the plaintiff or the court. It is wrong to assume that the validity
of acts done during this period should be dependent on, or held in
suspension until, the actual obtention of jurisdiction over the
defendant's person. The obtention by the court of jurisdiction over the
person of the defendant is one thing; quite another is the acquisition
of jurisdiction over the person of the plaintiff or over the subject-matter
or nature of the action, or the res or object thereof.
An action or proceeding is commenced by the filing of the complaint

or other initiatory pleading. By that act, the jurisdiction of the court
over the subject matter or nature of the action or proceeding is
invoked or called into activity, and it thus that the court acquires over
said subject matter or nature of the action. And it is by that self-same
act of the plaintiff (or petitioner) of filing the complaint (or other
appropriate pleading) — by which he signifies his submission to the
court's power and authority — that jurisdiction is acquired by the court
over his person. On the other hand, jurisdiction over the person of the
defendant is obtained, as above stated, by the service of summons or
other coercive process upon him or by his voluntary submission to the
authority of the court.
The events that follow the filing of the complaint as a matter of routine
are well known. After the complaint is filed, summons issues to the
defendant, the summons is then transmitted to the sheriff, and finally,
service of the summons is effected on the defendant in any of the
ways authorized by the Rules of Court. There is thus ordinarily some
Page 213 of 232
appreciable interval of time between the day of filing of the complaint
and the day of service of summons of the defendant. During this
period, different acts may be done by the plaintiff or by the Court,
which are of unquestionable validity and propriety. Among these, for
example, are the appointment of a guardian ad litem, the grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, the
amendment of the complaint by the plaintiff as a matter of right
without leave of court, authorization by the Court of service of
summons by publication, the dismissal of the action by the plaintiff on
mere notice.
This, too, is true with regard to the provisional remedies of preliminary

attachment, preliminary injunction, receivership or replevin. They may
be validly and properly applied for and granted even before the
defendant is summoned or heard from.
A preliminary attachment may be defined, paraphrasing the Rules of

Court, as the provisional remedy in virtue of which a plaintiff or other
proper party may, at the commencement of the action or at any time
thereafter, have the property of the adverse party taken into the
custody of the court as security for the satisfaction of any judgment
that may be recovered. It is a remedy which is purely statutory in
respect of which the law requires a strict construction of the
provisions granting it. Withal no principle, statutory or jurisprudential,
prohibits its issuance by any court before acquisition of jurisdiction
over the person of the defendant.
Rule in fact speaks of the grant of the remedy "at the commencement
of the action or at any time thereafter," The phrase, "at the
commencement of the action," obviously refers to the date of the filing
of the complaint — which, as above pointed out, is the date that
marks "the commencement of the action; and the reference plainly is
to a time before summons is served on the defendant, or even before
summons issues. What the rule is saying quite clearly is that after an
action is properly commenced — by the filing of the complaint and the
payment of all requisite docket and other fees — the plaintiff may
apply for and obtain a writ of preliminary attachment upon fulfillment
of the pertinent requisites laid down by law, and that he may do so at
any time, either before or after service of summons on the defendant.
And this indeed, has been the immemorial practice sanctioned by the
courts: for the plaintiff or other proper party to incorporate the
application for attachment in the complaint or other appropriate
pleading (counterclaim, cross-claim, third-party claim) and for the Trial
Page 214 of 232

Court to issue the writ ex-parte at the commencement application
otherwise sufficient in form and substance. (at pp. 347-350.)
Petitioner seeks to capitalize on the legal repercussion that ipso facto took place

when the complaint against him was amended. He proffers the idea that the
extinction of a complaint via a superseding one carries with it the cessation of the
ancilliary writ of preliminary attachment. We could have agreed with petitioner along
this line had he expounded the adverse aftermath of an amended complaint in his
omnibus motion. But the four corners of his motion in this respect filed on
September 5, 1990 are circumscribed by other salient points set forth by Us relative
to the propriety of the assailed writ itself. This being so, petitioner's eleventh hour
effort in pressing a crucial factor for exculpation must be rendered ineffective and
barred by the omnibus motion rule.
Lastly, petitioner is one of the belief that his abode at Quezon City since 1972 is a
family home within the purview of the Family Code and therefore should not have
been subjected to the vexatious writ. Yet, petitioner must concede that respondent
court properly applied the discussion conveyed by Justice Gancayco in this regard
when he spoke for the First Division of this Court in Modequillo vs. Breva (185
SCRA 766 [1990]) that:
Article 155 of the Family Code also provides as follows:
Art. 155. The family home shall be exempt from

execution, forced sale or attachment except:
(1) For non-payment of taxes;
(2) For debts incurred prior to the constitution of the

family home;
(3) For debts secured by mortgages on the premises

before or after such constitution; and
(4) For debts due to laborers, mechanics, architects,

builders, materialmen and others who have rendered
service for the construction of the building.
The exemption provided as aforestated is effective from the time of

the constitution of the family home as such, and lasts so long as any
of its beneficiaries actually resides therein.
In the present case, the residential house and lot of petitioner was
constituted as a family home whether judicially or extrajudicially under
Page 215 of 232
the Civil Code. It became a family home by operation of law under
Article 153 of the Family Code. It is deemed constituted as a family
home upon the effectivity of the Family Code on August 3, 1988 not
August 4, one year after its publication in the Manila Chronicle on
August 4, 1987 (1988 being a leap year).
The contention of petitioner that it should be considered a family

home from the time it was occupied by petitioner and his family in
1969 is not well-taken. Under Article 162 of the Family Code, it is
provided that "the provisions of this Chapter shall also govern existing
family residences insofar as said provisions are applicable." It does
not mean that Articles 152 and 153 of said Code have a retroactive
effect such that all existing family residences are deemed to have
been constituted as family homes at the time of their occupation prior
to the effectivity of the Family Code and are exempt from execution
for the payment of obligations incurred before the effectivity of the
Family Code. Article 162 simply means that all existing family
residences at the time of the effectivity of the Family Code, are
considered family homes and are prospectively entitled to the benefits
accorded to a family home under the Family Code. Article 162 does
not state that the provisions of Chapter 2, Title V have a retroactive
effect.
Is the family home of petitioner exempt from execution of the money

judgment aforecited? No. The debt or liability which was the basis of
the judgment arose or was incurred at the time of the vehicular
accident on March 16, 1976 and the money judgment arising
therefrom was rendered by the appellate court on January 29, 1988.
Both preceded the effectivity of the Family Code on August 3, 1988.
This case does not fall under the exemptions from execution provided
in the Family Code. (at pp. 771-772).
Verily, according to petitioner, his debt was incurred in 1987 or prior to the
effectivity on August 3, 1988 of the Family Code (page 17, petition; page 22, Rollo).
This fact alone will militate heavily against the so-called exemption by sheer force
of exclusion embodied under paragraph 2, Article 155 of the Family Code cited
in Modequillo.
WHEREFORE, the petition is hereby DISMISSED, with costs against petitioner.
SO ORDERED.
Page 216 of 232

[92]
G.R. No. 170829. November 20, 2006.*

PERLA G. PATRICIO, petitioner, vs. MARCELINO G. DARIO III and THE
HONORABLE COURT OF APPEALS, Second Division, respondents.
Civil Law; Family Home; The family home is deemed constituted from the time it is
occupied as a family residence.—The family home is a sacred symbol of family love and is
the repository of cherished memories that last during one’s lifetime. It is the dwelling house
where husband and wife, or by an unmarried head of a family, reside, including the land on
which it is situated. It is constituted jointly by the husband and the wife or by an unmarried
head of a family. The family home is deemed constituted from the time it is occupied as a
family residence. From the time of its constitution and so long as any of its beneficiaries
actually resides therein, the family home continues to be such and is exempt from
execution, forced sale or attachment except as hereinafter provided and to the extent of the
value allowed by law.
Same; Same; Occupancy of the family home either by the owner thereof or by “any of
its beneficiaries” must be actual.—The law explicitly provides that occupancy of the family
home either by the owner thereof or by “any of its beneficiaries” must be actual. That which
is “actual” is something real, or actually existing, as opposed to something merely possible,
or to something which is presumptive or constructive. Actual occupancy, however, need not
be by the owner of the house specifically. Rather, the property may be occupied by the
“beneficiaries” enumerated in Article 154 of the Family Code, which may include the in-
laws where the family home is constituted jointly by the husband and wife. But the law
definitely excludes maids and overseers. They are not the beneficiaries contemplated by the
Code.
Same; Same; Beneficiaries of a family home enumerated in Article 154 of the Family

Code; Requisites to be a beneficiary of the family home.—Article 154 of the Family Code
enumerates who are the beneficiaries of a family home: (1) The husband and wife, or an
unmarried person who is the head of a family; and (2) Their parents, ascendants,
descendants, brothers and sisters, whether the relationship be legitimate or illegitimate, who
are living in the family home and who depend upon the head of the family for legal support.
To be a beneficiary of the family home, three requisites must concur: (1) they must be
among the relationships enumerated in Art. 154 of the Family Code; (2) they live in the
family home; and (3) they are dependent for legal support upon the head of the family.
Same; Same; The family home shall continue despite the death of one or both spouses
or of the unmarried head of the family for a period of 10 years or for as long as there is a
minor beneficiary, and the heirs cannot partition the same unless the court finds compelling
reasons therefor; Rule shall apply regardless of whoever owns the property or constituted
the family home.—Moreover, Article 159 of the Family Code provides that the family home
shall continue despite the death of one or both spouses or of the unmarried head of the
Page 217 of 232

family for a period of 10 years or for as long as there is a minor beneficiary, and the heirs
cannot partition the same unless the court finds compelling reasons therefor. This rule shall
apply regardless of whoever owns the property or constituted the family home.
Same; Same; Words and Phrases; Legal Support; Characteristics of legal support.—

Legal support, also known as family support, is that which is provided by law, comprising
everything indispensable for sustenance, dwelling, clothing, medical attendance, education
and transportation, in keeping with the financial capacity of the family. Legal support has
the following characteristics: (1) It is personal, based on family ties which bind the obligor
and the obligee; (2) It is intransmissible; (3) It cannot be renounced; (4) It cannot be
compromised; (5) It is free from attachment or execution; (6) It is reciprocal; (7) It is
variable in amount.
Same; Property; Co-ownership; Partition; No co-owner ought to be compelled to

stay in a co-ownership indefinitely, and may insist on partition on the common property at
any time; An action to demand partition is imprescriptible or cannot be barred by laches.—
The law does not encourage co-ownerships among individuals as oftentimes it results in
inequitable situations such as in the instant case. Coowners should be afforded every
available opportunity to divide their co-owned property to prevent these situations from
arising. As we ruled in Santos v. Santos, 342 SCRA 753 (2000), no co-owner ought to be
compelled to stay in a co-ownership indefinitely, and may insist on partition on the common
property at any time. An action to demand partition is imprescriptible or cannot be barred
by laches. Each co-owner may demand at any time the partition of the common property.
Same; Same; Same; Same; An action for partition is at once an action for declaration

of co-ownership and for segregation and conveyance of a determinate portion of the
properties involved.—In Vda. de Daffon v. Court of Appeals, 387 SCRA 427 (2002), we
held that an action for partition is at once an action for declaration of coownership and for
segregation and conveyance of a determinate portion of the properties involved. If the court
after trial should find the existence of co-ownership among the parties, the court may and
should order the partition of the properties in the same action.
PETITION for review on certiorari of a resolution of the Court of Appeals.

Ma. Patricia S. EncarnacionForia for petitioner.
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to
annul and set aside the Resolution of the Court of Appeals dated December 9,
20051 in CA-G.R. CV No. 80680, which dismissed the complaint for partition filed
by petitioner for being contrary to law and evidence.
Page 218 of 232

On July 5, 1987, Marcelino V. Dario died intestate. He was survived by his wife,
petitioner Perla G. Patricio and their two sons, Marcelino Marc Dario and private
respondent Marcelino G. Dario III. Among the properties he left was a parcel of
land with a residential house and a pre-school building built thereon situated at 91
Oxford corner Ermin Garcia Streets in Cubao, Quezon City, as evidenced by
Transfer Certificate of Title (TCT) No. RT-30731 (175992) of the Quezon City
Registry of Deeds, covering an area of seven hundred fifty five (755) square
meters, more or less.2
On August 10, 1987, petitioner, Marcelino Marc and private respondent,

extrajudicially settled the estate of Marcelino V. Dario. Accordingly, TCT No. RT-
30731 (175992) was cancelled and TCT No. R-213963 was issued in the names of
petitioner, private respondent and Marcelino Marc.
Thereafter, petitioner and Marcelino Marc formally advised private respondent of

their intention to partition the subject property and terminate the co-ownership.
Private respondent refused to partition the property hence petitioner and Marcelino
Marc instituted an action for partition before the Regional Trial Court of Quezon City
which was docketed as Civil Case No. Q-01-44038 and raffled to Branch 78.
On October 3, 2002,3 the trial court ordered the partition of the subject property in
the following manner: Perla G. Patricio, 4/6; Marcelino Marc G. Dario, 1/6; and
Marcelino G. Dario III, 1/6. The trial court also ordered the sale of the property by
public auction wherein all parties concerned may put up their bids. In case of
failure, the subject property should be distributed accordingly in the aforestated
manner.4
Private respondent filed a motion for reconsideration which was denied by the trial
court on August 11, 2003, 5 hence he appealed before the Court of Appeals, which
denied the same on October 19, 2005. However, upon a motion for reconsideration
filed by private respondent on December 9, 2005, the appellate court partially
reconsidered the October 19, 2005 Decision. In the now assailed Resolution, the
Court of Appeals dismissed the complaint for partition filed by petitioner and
Marcelino Marc for lack of merit. It held that the family home should continue
despite the death of one or both spouses as long as there is a minor beneficiary
thereof. The heirs could not partition the property unless the court found compelling
reasons to rule otherwise. The appellate court also held that the minor son of
private respondent, who is a grandson of spouses Marcelino V. Dario and Perla G.
Patricio, was a minor beneficiary of the family home.6
Hence, the instant petition on the following issues:
I.
Page 219 of 232

THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN
REVERSING ITS EARLIER DECISION OF OCTOBER 19, 2005 WHICH
AFFIRMED IN TOTO THE DECISION OF THE TRIAL COURT DATED 03
OCTOBER 2002 GRANTING THE PARTITION AND SALE BY PUBLIC
AUCTION OF THE SUBJECT PROPERTY.
II.
COROLLARILY, THE HONORABLE COURT OF APPEALS PATENTLY

ERRED IN APPLYING ARTICLE 159 IN RELATION TO ARTICLE 154 OF
THE FAMILY CODE ON FAMILY HOME INSTEAD OF ARTICLE 494 IN
RELATION TO ARTICLES 495 AND 498 OF THE NEW CIVIL CODE ON
CO-OWNERSHIP.7
The sole issue is whether partition of the family home is proper where one of the
co-owners refuse to accede to such partition on the ground that a minor beneficiary
still resides in the said home.
Private respondent claims that the subject property which is the family home duly
constituted by spouses Marcelino and Perla Dario cannot be partitioned while a
minor beneficiary is still living therein namely, his 12-year-old son, who is the
grandson of the decedent. He argues that as long as the minor is living in the family
home, the same continues as such until the beneficiary becomes of age. Private
respondent insists that even after the expiration of ten years from the date of death
of Marcelino on July 5, 1987, i.e., even after July 1997, the subject property
continues to be considered as the family home considering that his minor son,
Marcelino Lorenzo R. Dario IV, who is a beneficiary of the said family home, still
resides in the premises.
On the other hand, petitioner alleges that the subject property remained as a family
home of the surviving heirs of the late Marcelino V. Dario only up to July 5, 1997,
which was the 10th year from the date of death of the decedent. Petitioner argues
that the brothers Marcelino Marc and private respondent Marcelino III were already
of age at the time of the death of their father, 8 hence there is no more minor
beneficiary to speak of.
The family home is a sacred symbol of family love and is the repository of
cherished memories that last during one’s lifetime. 9 It is the dwelling house where
husband and wife, or by an unmarried head of a family, reside, including the land
on which it is situated.10 It is constituted jointly by the husband and the wife or by an
unmarried head of a family. 11 The family home is deemed constituted from the time
it is occupied as a family residence. From the time of its constitution and so long as
any of its beneficiaries actually resides therein, the family home continues to be
Page 220 of 232

such and is exempt from execution, forced sale or attachment except as hereinafter
provided and to the extent of the value allowed by law. 12
The law explicitly provides that occupancy of the family home either by the owner
thereof or by "any of its beneficiaries" must be actual. That which is "actual" is
something real, or actually existing, as opposed to something merely possible, or to
something which is presumptive or constructive. Actual occupancy, however, need
not be by the owner of the house specifically. Rather, the property may be occupied
by the "beneficiaries" enumerated in Article 154 of the Family Code, which may
include the in-laws where the family home is constituted jointly by the husband and
wife. But the law definitely excludes maids and overseers. They are not the
beneficiaries contemplated by the Code.13
Article 154 of the Family Code enumerates who are the beneficiaries of a family
home: (1) The husband and wife, or an unmarried person who is the head of a
family; and (2) Their parents, ascendants, descendants, brothers and sisters,
whether the relationship be legitimate or illegitimate, who are living in the family
home and who depend upon the head of the family for legal support.
To be a beneficiary of the family home, three requisites must concur: (1) they must
be among the relationships enumerated in Art. 154 of the Family Code; (2) they live
in the family home; and (3) they are dependent for legal support upon the head of
the family.
Moreover, Article 159 of the Family Code provides that the family home shall
continue despite the death of one or both spouses or of the unmarried head of the
family for a period of 10 years or for as long as there is a minor beneficiary, and the
heirs cannot partition the same unless the court finds compelling reasons therefor.
This rule shall apply regardless of whoever owns the property or constituted the
family home.
Article 159 of the Family Code applies in situations where death occurs to persons
who constituted the family home.1âwphi1 Dr. Arturo M. Tolentino comments on the
effect of death of one or both spouses or the unmarried head of a family on the
continuing existence of the family home:
Upon the death of the spouses or the unmarried family head who constituted the
family home, or of the spouse who consented to the constitution of his or her
separate property as family home, the property will remain as family home for ten
years or for as long as there is a minor beneficiary living in it. If there is no more
beneficiary left at the time of death, we believe the family home will be
dissolved or cease, because there is no more reason for its existence. If
there are beneficiaries who survive living in the family home, it will continue
for ten years, unless at the expiration of the ten years, there is still a minor
Page 221 of 232
beneficiary, in which case the family home continues until that beneficiary
becomes of age.
After these periods lapse, the property may be partitioned by the heirs. May the
heirs who are beneficiaries of the family home keep it intact by not partitioning the
property after the period provided by this article? We believe that although the
heirs will continue in ownership by not partitioning the property, it will cease
to be a family home.14 (Emphasis supplied)
Prof. Ernesto L. Pineda further explains the import of Art. 159 in this manner:
The family home shall continue to exist despite the death of one or both spouses or
of the unmarried head of the family. Thereafter, the length of its continued
existence is dependent upon whether there is still a minor-beneficiary
residing therein. For as long as there is one beneficiary even if the head of
the family or both spouses are already dead, the family home will continue to
exist (Arts. 153, 159). If there is no minor-beneficiary, it will subsist until 10
years and within this period, the heirs cannot partition the same except when
there are compelling reasons which will justify the partition. This rule applies
regardless of whoever owns the property or who constituted the family
home.15 (Emphasis supplied)
The rule in Article 159 of the Family Code may thus be expressed in this wise: If
there are beneficiaries who survive and are living in the family home, it will continue
for 10 years, unless at the expiration of 10 years, there is still a minor beneficiary, in
which case the family home continues until that beneficiary becomes of age.
It may be deduced from the view of Dr. Tolentino that as a general rule, the family
home may be preserved for a minimum of 10 years following the death of the
spouses or the unmarried family head who constituted the family home, or of the
spouse who consented to the constitution of his or her separate property as family
home. After 10 years and a minor beneficiary still lives therein, the family home
shall be preserved only until that minor beneficiary reaches the age of majority. The
intention of the law is to safeguard and protect the interests of the minor
beneficiary until he reaches legal age and would now be capable of supporting
himself. However, three requisites must concur before a minor beneficiary is
entitled to the benefits of Art. 159: (1) the relationship enumerated in Art. 154 of the
Family Code; (2) they live in the family home, and (3) they are dependent for legal
support upon the head of the family.
Thus, the issue for resolution now is whether Marcelino Lorenzo R. Dario IV, the
minor son of private respondent, can be considered as a beneficiary under Article
154 of the Family Code.
Page 222 of 232

As to the first requisite, the beneficiaries of the family home are: (1) The husband
and wife, or an unmarried person who is the head of a family; and (2) Their parents,
ascendants, descendants, brothers and sisters, whether the relationship be
legitimate or illegitimate. The term "descendants" contemplates all descendants of
the person or persons who constituted the family home without distinction; hence, it
must necessarily include the grandchildren and great grandchildren of the spouses
who constitute a family home. Ubi lex non distinguit nec nos distinguire debemos.
Where the law does not distinguish, we should not distinguish. Thus, private
respondent’s minor son, who is also the grandchild of deceased Marcelino V. Dario
satisfies the first requisite.
As to the second requisite, minor beneficiaries must be actually living in the family
home to avail of the benefits derived from Art. 159. Marcelino Lorenzo R. Dario IV,
also known as Ino, the son of private respondent and grandson of the decedent
Marcelino V. Dario, has been living in the family home since 1994, or within 10
years from the death of the decedent, hence, he satisfies the second requisite.
However, as to the third requisite, Marcelino Lorenzo R. Dario IV cannot demand

support from his paternal grandmother if he has parents who are capable of
supporting him. The liability for legal support falls primarily on Marcelino Lorenzo R.
Dario IV’s parents, especially his father, herein private respondent who is the head
of his immediate family. The law first imposes the obligation of legal support upon
the shoulders of the parents, especially the father, and only in their default is the
obligation imposed on the grandparents.
Marcelino Lorenzo R. Dario IV is dependent on legal support not from his

grandmother, but from his father.1âwphi1 Thus, despite residing in the family home
and his being a descendant of Marcelino V. Dario, Marcelino Lorenzo R. Dario IV
cannot be considered as beneficiary contemplated under Article 154 because he
did not fulfill the third requisite of being dependent on his grandmother for legal
support. It is his father whom he is dependent on legal support, and who must now
establish his own family home separate and distinct from that of his parents, being
of legal age.
Legal support, also known as family support, is that which is provided by law,
comprising everything indispensable for sustenance, dwelling, clothing, medical
attendance, education and transportation, in keeping with the financial capacity of
the family.16 Legal support has the following characteristics: (1) It is personal, based
on family ties which bind the obligor and the obligee; (2) It is intransmissible; (3) It
cannot be renounced; (4) It cannot be compromised; (5) It is free from attachment
or execution; (6) It is reciprocal; (7) It is variable in amount. 17
Professor Pineda is of the view that grandchildren cannot demand support directly
from their grandparents if they have parents (ascendants of nearest degree) who
Page 223 of 232
are capable of supporting them. This is so because we have to follow the order of
support under Art. 199.18 We agree with this view.
The reasons behind Art. 199 as explained by Pineda and Tolentino: the closer the
relationship of the relatives, the stronger the tie that binds them. Thus, the
obligation to support under Art. 199 which outlines the order of liability for support is
imposed first upon the shoulders of the closer relatives and only in their default is
the obligation moved to the next nearer relatives and so on.
There is no showing that private respondent is without means to support his son;
neither is there any evidence to prove that petitioner, as the paternal grandmother,
was willing to voluntarily provide for her grandson’s legal support. On the contrary,
herein petitioner filed for the partition of the property which shows an intention to
dissolve the family home, since there is no more reason for its existence after the
10-year period ended in 1997.
With this finding, there is no legal impediment to partition the subject property.
The law does not encourage co-ownerships among individuals as oftentimes it

results in inequitable situations such as in the instant case. Co-owners should be
afforded every available opportunity to divide their co-owned property to prevent
these situations from arising.
As we ruled in Santos v. Santos,19 no co-owner ought to be compelled to stay in a

co-ownership indefinitely, and may insist on partition on the common property at
any time. An action to demand partition is imprescriptible or cannot be barred by
laches. Each co-owner may demand at any time the partition of the common
property.20
Since the parties were unable to agree on a partition, the court a quo should have
ordered a partition by commissioners pursuant to Section 3, Rule 69 of the Rules of
Court. Not more than three competent and disinterested persons should be
appointed as commissioners to make the partition, commanding them to set off to
the plaintiff and to each party in interest such part and proportion of the property as
the court shall direct.
When it is made to appear to the commissioners that the real estate, or a portion
thereof, cannot be divided without great prejudice to the interest of the parties, the
court may order it assigned to one of the parties willing to take the same, provided
he pays to the other parties such sum or sums of money as the commissioners
deem equitable, unless one of the parties interested ask that the property be sold
instead of being so assigned, in which case the court shall order the commissioners
to sell the real estate at public sale, and the commissioners shall sell the same
accordingly.21
Page 224 of 232
The partition of the subject property should be made in accordance with the rule
embodied in Art. 996 of the Civil Code. 22 Under the law of intestate succession, if
the widow and legitimate children survive, the widow has the same share as that of
each of the children. However, since only one-half of the conjugal property which is
owned by the decedent is to be allocated to the legal and compulsory heirs (the
other half to be given exclusively to the surviving spouse as her conjugal share of
the property), the widow will have the same share as each of her two surviving
children. Hence, the respective shares of the subject property, based on the law on
intestate succession are: (1) Perla Generosa Dario, 4/6; (2) Marcelino Marc G.
Dario II, 1/6 and (3) Marcelino G. Dario III, 1/6.
In Vda. de Daffon v. Court of Appeals,23 we held that an action for partition is at

once an action for declaration of co-ownership and for segregation and conveyance
of a determinate portion of the properties involved. If the court after trial should find
the existence of co-ownership among the parties, the court may and should order
the partition of the properties in the same action. 24
WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals

in CA-G.R. CV No. 80680 dated December 9, 2005, is REVERSED and SET
ASIDE. The case is REMANDED to the Regional Trial Court of Quezon City,
Branch 78, who is directed to conduct a PARTITION BY COMMISSIONERS and
effect the actual physical partition of the subject property, as well as the
improvements that lie therein, in the following manner: Perla G. Dario, 4/6;
Marcelino Marc G. Dario, 1/6 and Marcelino G. Dario III, 1/6. The trial court is
DIRECTED to appoint not more than three (3) competent and disinterested
persons, who should determine the technical metes and bounds of the property and
the proper share appertaining to each heir, including the improvements, in
accordance with Rule 69 of the Rules of Court. When it is made to the
commissioners that the real estate, or a portion thereof, cannot be divided without
great prejudice to the interest of the parties, the court a quo may order it assigned
to one of the parties willing to take the same, provided he pays to the other parties
such sum or sums of money as the commissioners deem equitable, unless one of
the parties interested ask that the property be sold instead of being so assigned, in
which case the court shall order the commissioners to sell the real estate at public
sale, and the commissioners shall sell the same accordingly, and thereafter
distribute the proceeds of the sale appertaining to the just share of each heir. No
pronouncement as to costs.
SO ORDERED.
Page 225 of 232

[93]
ANNOTATION
IS ARTICLE 148 OF THE FAMILY CODE NECESSARY?
By
JORGE R. COQUIA*
______________
1. § I.Introduction, p. 690
2. § II.Various Ways of Illicit Cohabitation, p. 691
3. § III.The Adulterous Relationship, p. 691
4. § IV.Application of Article148 of the Family Code to the Sagun vs.
Hon. Court of Appeals Case, p. 692
5. § V.The Early Application of Article 148 of the Family Code, p. 693
6. § VI.Property Acquired by a Married Man During Cohabitation with a
Paramour Deemed Conjugal, p. 695
7. § VII.De Santos vs. Angeles A Case of a Married Man in a State of
Concubinage, 251 SCRA 206 (1995), p. 696
8. § VIII.Conclusion, p. 697
______________
§ I. Introduction
In this era of “free love” it is a common occurrence that men and women not married to
each other cohabit freely and even openly as husbands and wives. Problems usually arise
when their relationship turns sour ending in their separation. Instead of passion and love,
hatred prevails is Art. 148 necessary? Problems usually arise with respect to the ownership
of the property they have acquired during their cohabitation. The hatred becomes intense as
material considerations motivate the parties. Instead of the mutual love, greed and
selfishness prevail in the dispute over the property both have acquired.
In the court litigation brought by the parties, the judge is in a dilemma as he cannot avail
of a reconciliation of the parties in cases of dispute between couples in legal separation (Art.
59 of the Family Code). By reconciling them, the unmarried couple, he will be promoting
immorality.
The decision of the Supreme Court in JACINTO SAGUID vs. HON. COURT OF
APPEALS, THE REGIONAL TRIAL COURT BR. 94, BOAC, MARINDUQUE and GINA S.
REY, respondents, G.R. No. 150611, June 10, 2003, is a typical case of a man and a woman
not married to each other who lived as husband and wife and ended in their separation.
Their separation ended in a protracted litigation between them as their dispute on property
both acquired during their illicit cohabitation.
Page 226 of 232

§ II. Various Ways of Illicit Cohabitation
A common illicit cohabitation is the “live-in” or “common law” relationship, or relationship

under a void marriage. Both the man and the woman have the capacity to marry each other
but do not decide to marry. The effect of this relationship is that their wages or salaries shall
be owned by them in equal shares. The property acquired by them from their work is
governed by the rules of co-ownership (Art. 147, Family Code). There will be no question
on paraphernal property or exclusive property of the husband.
The second type of illicit cohabitation is when both are incapacitated to marry each other
(First par. of Article 148, Family Code). The third type of illicit cohabitation is either the
state of concubinage or adulterous or bigamous relationship.
§ III. The Adulterous Relationship
In this case under annotation, Gina S. Rey was married but separated from her husband,
then cohabited with Jacinto Saguid but were childless. Both have their own means of
livelihood, the man working as patron in vessel, while the woman as fish dealer an later as
entertainer in Japan. The woman continuously was away hence their 9-year relationship
resulted in their separation and court litigation. The woman filed a complaint for partition of
property and recovery of possession of personal property. The adulterous relationship of the
parties is governed by the second paragraph of Article 148 of the Family Code. Article 148
of the Family Code which amended Article 133 of the New Civil Code as it now applies to
(a) bigamous relationship, (b) adulterous relationship, (c) state of concubinage where the
man is married to another woman, while the woman is single, (d) where both man and
woman are married to other persons, and (e) multiple alliances of the same married man.
Article 138 of the Family Code does not cover wages/salaries by both parties.
§ IV. Application of Article 148 of the Family Code to the Saguid vs. Hon. Court of
Appeals Case
Although the adulterous relationship of the parties started in 1987, when the Family Code
was not yet in force, the Court applied Article 148 of the Family Code prospectively in
order to determine the property relations of the parties. Before the enactment of Article 148
of the Family Code, there was no specific law that governed the property relations of
couples living in adulterous or concubinage relations. The law then existing was Article 144
of the Civil Code which governed cohabitation of man and woman who are incapacitated to
contract marriage. The Civil Code then recognized the existence of a common law marriage
which is prevalent in the country of men and women living together as husbands and wives
without the benefit of marriage. Although not morally acceptable, it necessitated a law to
govern their property rights which they have acquired during their cohabitation. Article 144
of the Civil Code applies only when the man and woman living together are not
Page 227 of 232
incapacitated to contract marriage, and during their cohabitation they acquired properties
through their work, industry, employment or occupation of both or either of them. If the
couple decide to get married, their properties become conjugal.
The Spanish Civil Code, was the law applied before the enactment of the New Civil
Code did not contain any provision similar to Article 144. The jurisprudence, however was
that when a man and woman cohabit without the benefit of marriage, both had an equal
interest in the properties acquired during their cohabitation. Ambrosio Padilla in his Civil
Code, Annotated, Vol. I, p. 481 cited an unreported decision in Marata vs. Dionisio, G.R.
No. 24449, December 31, 1925. But if the property was not acquired through the joint
efforts, the same would belong to the person who acquired it. (Flores vs. Rehabilitation
Finance Corporation, 50 O.G., cited in Padilla, op. cit., p. 481)
A man and a woman living together without being married, there is between them an
informal civil partnership which would entitle them to an equal interest in the property by
their joint efforts. (Ilesca vs. Felix Vda. de Lesaca, 91 Phil. 135 [1952])
Article 144 of the Civil Code cannot be invoked by a married man and a married woman
living together. A married man and a married woman who lived together as husband and
wife who during their cohabitation, who made various deposits in the bank were able to
construct two houses before the effectivity of the New Civil Code. Upon their separation,
the woman invoking Article 144 of the Civil Code demanded one-half share of the two
houses. The Court held that Article 144 of the Civil Code cannot be invoked to entitle to
one half of the two houses. On grounds of equity however, she has the right to be
reimbursed on her savings. (Samson vs. Salaysay, 56 O.G. 2402, cited in Padilla, op. cit., p.
183)
For Article 144 of the Civil Code to apply in order to establish co-ownership, the man
and woman living together are not incapacitated to marry. (Balcodero vs. Court of
Appeals, 227 SCRA 303 [1993]; Juaniza vs. Jose, 89 SCRA 306 [1978])
§ V. The Early Application of Article 148 of the Family
Code
Agapay vs. Palang, 276 SCRA 340 (1997) was one of the first cases in which the Court
applied Article 148 of the Family Code. This provision governs the properties acquired
during the cohabitation of a man and a woman where there is an impediment of marriage
between them. In the said cases the man had an existing marriage with another woman but
contracted a second marriage. Under Article 148 of the Family Code only the properties
acquired by both parties thru their actual contribution of money, property or industry shall
be owned by them in common in proportion to their respective contributions. Actual
contribution is required in contrast to Article 147 of the Family Code. The case concerned a
twenty-year old girl who cohabited with a 64-year old U.S. war pensioner With the young
woman who had no visible means of livelihood, it was highly doubtful that she, contributed
a substantial amount for purchase of a riceland.
Similar to the Agapay case was Tumlos vs. Fernandez, 330 SCRA 718 (2000), where a man

and a woman not legally capacitated to marry each other, lived together conjugally, were
deemed co-owners of a property acquired during the cohabitation upon proof that each
Page 228 of 232
made an actual contribution to its acquisition. The Court said that mere cohabitation without
proof of contribution will not result in co-ownership. .
In Adriano vs. Court of Appeals, 328 SCRA 738 (2000), the Court applied Article 144 of
the Civil Code where a man and woman, not incapacitated to marry each other, cohabit as
husband and wife without the benefit of marriage. Co-ownership of the property during said
cohabitation exists. Considering that the man had a valid and pre-existing marriage with a
woman, such property was presumed to be conjugal unless it be proved that it pertains
exclusively to the husband or to the wife, citing Alcovero vs. Court of Appeals, 313 SCRA
384 (1999) that property acquired by a man living with a common law wife during the
subsistence of his marriage is conjugal property even when the title was titled in the name
of the common law wife. In such cases, a constructive trust is deemed to have been created
by operation of Article 1458 of the Civil Code.
In Cariño vs. Cariño, 351 SCRA 127 (2001), a man contracted two marriages both of
which were void ab initio, Articles 147 and 148 of the Family Code were applied in
determining the distribution of the property left by the man after his death. In the said case
police officer Santiago S. Cariño contracted marriage with Susan Nicdao with whom he had
two children. Santiago later married Susan Yee with whom he had no children in spite of
their cohabitation for ten years.
Santiago became ill and Susan Yee took care of him until his death. Susan Nicdao and
Susan Yee claimed the benefits pertaining to Santiago who served in the government. Susan
Yee filed a case for collection of money received by Susan Nicdao from the monetary
benefits granted by the government’s several agencies. In the course of the hearing, Susan
Yee admitted that she contracted marriage with Santiago not aware of the marriage with
Susan Nicdao. It was established, however, that the marriage of Santiago with Susan Nicdao
was void ab initio because the same was solemnized without the required marriage license.
On the other hand, the marriage of Santiago with Susan Yee was also voidbecause there was
no judicial declaration on the nullity of the first marriage. Nevertheless, since there was no
judicial declaration of the nullity of the marriage with Susan Nicdao, the Court held that
said marriage was presumed to be valid, hence the marriage of Santiago with Susan Yee
was bigamous. Article 148 of the Family Code was then applied.
The disputed amount of P146,000 represented the monetary benefits of Santiago from
the NAPOLCOM, AFP Mutual Benefits Association, Inc., PCCUI, Commutation and Pag-
Ibig, hence, Susan Yee has no contribution at all to the said fund. By intestate succession,
the death benefits of the deceased belong to the legal heirs who are Susan Nicdao and her
children. The Court went on to rule that the property regime was to be governed by Article
147 of the Family Code.
With due respect, the Court should have simply applied the ruling in Balcodero vs.
Court of Appeals, 227 SCRA 303 (1993) followed by Adriano vs. Court of Appeals, 328
SCRA 738 (2000) that the property acquired by a married man who cohabited with a
Page 229 of 232
paramour is conjugal property. In the Balcodero case the title of the property purchased by
a married man at the time he was living with his paramour was conjugal property. Even if
the title to the land was registered in the name of the paramour, the latter was ordered to
reconvey it to the man’s legal wife. A similar ruling was made in Adriano vs. Court of
Appeals, 328 SCRA 738 (2000).
§ VI. Property Acquired by a Married Man During Cohabitation with a Paramour Deemed

Conjugal
In Balcodero vs. Court of Appeals, 227 SCRA 303 (1993) a lawfully married man, with
whom he begot three children abandoned the conjugal home and cohabited with another
woman. During the illicit cohabitation he acquired a parcel of land. The certificate of title
was placed in the name of the man and the paramour. It appeared the man purchase the land
on installment. In the meantime, the man married his paramour even during the existence of
his marriage with his lawful wife. When the installment of the land was completed, the
certificate of title was registered in the name of the man married to the paramour whom he
subsequently married.
The Court held that the property was deemed conjugal with his lawful wife despite the
fact that the registration of the title to the property was made upon request of the man and
his paramour whom he married but was a bigamous marriage. Justice Vitug, the ponente of
the said decision, ruled that Articles 147 and 148 of the Family Code cannot be applied due
to vested rights acquired in accordance with Article 256 of the Family Code.
A similar case was Adriano vs. Court of Appeals, 328 SCRA 738 (2000). In the said
case, Lucio Adriano was married to Gliceria Dorado with whom he had three children.
Lucio abandoned Gliceria and lived with Vicenta Villa with whom he had eight children.
Five months after the death of Gliceria, Lucio eventually married Vicenta.
Lucio executed a will bequething all his properties to his second wife Vicenta and their
children. It appeared that the property acquired by Lucio with his first wife were titled in the
name of Vicenta who became his second wife.
The Court ruled that the property acquired by a man while living with a common law
wife during the subsistence of his marriage is conjugal property even when the property was
titled in the name of his common law wife, otherwise, the heirs of the lawful pre-existing
marriage soon to be deprived of their inheritance, citing Balcodero vs. Court of
Appeals, 227 SCRA 303 (1993). The designation of Vicenta, a co-owner of the property in
the title was a mistake which needs to be rectified under the principles of trusteeship.
§ VII. The De Santos vs. Angeles Case, 251 SCRA 206 (1995)
The De Santos vs. Angeles case also involved cohabitation of a married man to another
woman in a state of concubinage. The case, however, was decided on the basis of who are
the legitimate and illegitimate or spurious children but nevertheless determined the nature of
the property acquired during the illicit cohabitation.
Dr. Antonio De Santos was married to Sofia Bona with whom he had a child, Maria de
Santos, the petitioner. Their relationship became strained and Antonio fell in love with a
fellow physician, Conchita Talag and cohabited with her and begot eleven children. Antonio
attempted to divorce Sofia but he realized that said divorce is not valid in the Philippines.
Page 230 of 232
Antonio and his paramour went to Tokyo, Japan where they were married. After the death
of Sofia, Antonio and Conchita got married in Tagaytay.
The issue raised in the intestate proceedings initiated by Sofia is who are entitled to the
estate left by Antonio who died with an estimated value of P15 million.
The majority opinion penned by Justice Romero held that the marriage with Conchita
was bigamous and considered void from the beginning as there was valid and pre-existing
marriage with Sofia. It followed that the children born during the bigamous marriage cannot
be considered natural children proper for at the time of their birth were disqualified to marry
each other.
The case was decided under the Civil Code and not under the Family Code, which
recognized only legitimate and illegitimate children. Petitioner Maria De Santos was the
only legitimate child hence she is entitled to such rights.
§ VIII. Conclusion
With due respect to the members of the Civil Code Revision Committee who drafted the
Family Code, Article 148 of the said Code was not altogether proper and in fact was not
necessary the article. It even recognizes, if not encourages, bigamous marriages, adulterous
relationships, a state of concubinage, relationships of married men and women illegally
cohabiting with other persons who are not their spouses, and a married man having relations
with several women. The Civil Code only properly recognized Article 144 governing the
common law relationships when the man and woman have the capacity to get married.
There is no marriage of either or both involved. While the cohabitation of both a man and
woman who are single or who have been previously married but are widowed or widower
or their respective marriages have been declared valid is not altogether legal and non-moral,
but at least there is an expectation or hope that they will eventually get married. Article 148
of the Family Code even dignified bigamous, adulterous relationship on state of
concubinage instead of discouraging them. The framers of the New Civil Code were quite
right in not giving dignify such relationship. While it is true that the illicit relationships
exists under as referred to in Article 148 of the Family Code it was not altogether necessary.
The rulings in Balcodero vs. Court of Appeals and Adriano vs. Court of Appeals would
apply on any property acquired by a married man during his cohabitation with a woman not
his wife, is conjugal property of the man and his legal wife. The same can be true that if a
married woman cohabits with a man not her husband, the property belongs to her with the
legal husband.
Lastly, Article 148 tries to distinguish between parties in good or bad faith. Not one of
the persons in the relations and referred to in Article 148 of the Family Code can say that
they are in good faith knowing fully well that they are cohabiting with a person with whom
they are not legally married.
——o0o——
Page 231 of 232

Page 232 of 232

Assignment No. 8 - Civrev Perfam

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Assignment No. 8 - Civrev Perfam

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Assignment No.

[No. 9374. February 16, 1915.]

1. 1.PLEADING; DEFECTS IN COMPLAINT; CURE.—Even though a

1. 2.ID.; ID.; ID.—An objection, made after trial, that the complaint in an

1. 3.PARTITION OF PERSONAL PROPERTY; JURISDICTION OF

1. 4.PARTITION OF REAL PROPERTY; JURISDICTION OF COURT OF

1. 5.PARTITION; ORDER DISCHARGING ADMINISTRATOR NO BAR

1. there is nothing in section 753 of the Code of Civil Procedure which

1. 7.LIFE INSURANCE; PROCEEDS; HEIR AS BENEFICIARY.—Where a

1. 8.ID.; ID.; ID.; ARTICLE 1035, CIVIL CODE.—Article 1035 of the Civil

1. 9.ID.; ID.; ID.; CODE OF COMMERCE.—The contract of life insurance is

APPEAL from a judgment of the Court of First Instance of Manila. Lobingier, J.

Ledesma, Lim & Irureta Goyena for appellants.

An heir by force of law surviving with others of the same character to a

We do not wish to be understood as having decided in this opinion any question of

No. L-23002. July 31, 1967.

Same; Annulment of contract on the ground of intimidation; Prescription; Time

Same; Simulated contracts; Characteristic of simulation.—The characteristic of

Same; Husband and wife; Prohibition against donations.—Where the wife

Same; Simulated contracts distinguished from fraudulent contracts.—Simulated

Same; Consideration; Promise of a thing or service is a sufficient consideration.—

APPEAL from a decision of the Court of First Instance of Bulacan.

The facts of this case may be briefly stated as follows:

On March 6, 1953, Domingo Rodriguez died intestate, survived by the widow,

On March 23, 1953, in a power of attorney executed by the children and

On July 2, 1954, the heirs ended their co-ownership by executing a deed of

Otra figura que debe distinguirse de la simulacion es el fraus legis. Tambien

Se confunde — dice (2) —, el negocio in fraudem legis con el negocio

El resultado de las precedentes investigaciones es el siguiente el negocio

In onerous contracts the cause is understood to be, for each contracting

ha de ser reputado ineficaz, por exigencias includibles del caracter social y

toda vez que lo que caracteriza fundamentalmente la ilicitud de la causa es

El concepto de la causa ilicita, tal como la desenvuelve y aplica con gran

Unfortunately for herein appellant, in contracts invalidated by illegal subject matter

Finally, it cannot be denied that plaintiff-appellant had knowledge of the nullity of

G.R. No. 118305. February 12, 1998.*

Civil Law; Family Code; Conjugal Partnerships; Where the husband contracts

Same; Same; Same; Signing as a surety is certainly not an exercise of an industry or

Same; Same; Same; Payment of personal debts contracted by the husband or the wife

PETITION for review on certiorari of a decision of the Court of Appeals.

A chronology of the essential antecedent facts is necessary for a clear

Philippine Blooming Mills (hereinafter referred to as PBM) obtained a

On June 9, 1982, private respondents filed a case of injunction against petitioners

AIDC filed a petition for certiorari before the Court of Appeals,3 questioning the

In the meantime, the respondent court, on August 4, 1982, decided CA-G.R. SP

WHEREFORE, the petition for certiorari in this case is granted and

The loan procured from respondent-appellant AIDC was for the

As to the applicable law, whether it is Article 161 of the New Civil

Article 121 of the Family Code provides that "The conjugal

The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby

I. RESPONDENT COURT ERRED IN RULING THAT

II. RESPONDENT COURT ERRED IN RULING THAT

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

1) all debts and obligations contracted by

Contrary to the contention of the petitioners, the case of Cobb-Perez is not

In the cases of Javier vs. Osmeña, 10 Abella de Diaz vs. Erlanger & Galinger,

The husband, as the manager of the partnership (Article 1412, Civil

. . . if he incurs an indebtedness in the legitimate pursuit of his career

When there is no showing that the execution of an indemnity

In the most categorical language, a conjugal partnership under Article

The evidence of petitioner indubitably show that co-respondent Alfredo Ching