G.R. No.
133706 May 7, 2002
FRANCISCO ESTOLAS, petitioner,
vs.
ADOLFO MABALOT, respondent.
PANGANIBAN, J.:
Agrarian laws must be interpreted liberally in favor of the grantee, in
order to give full force and effect to their clear intent, which is "to achieve
a dignified existence for the small farmers" and to make them "more
independent, self-reliant and responsible citizens, and a source of
genuine strength in our democratic society."
The Case
Before us is a Petition for Review on Certiorari assailing the April 7, 1998
Decision1 of the Court of Appeals2 (CA) in CA-GR SP No. 38268. The
decretal portion of the assailed Decision reads thus:
"WHEREFORE, in view of the foregoing, the Petition is hereby
DENIED DUE COURSE and consequently, DISMISSED. No
pronouncement as to costs."3
The Facts
The facts of the case are summarized by the CA as follows:
"On November 11, 1973, a Certificate of Land Transfer
(hereinafter referred to as CLT) was issued in favor of respondent
over a 5,000 square meter lot (hereinafter referred to as subject
land) located in Barangay Samon, Sta. Maria, Pangasinan.
Sometime in May, 1978, needing money for medical treatment,
respondent passed on the subject land to the petitioner for the
amount of P5,800.00 and P200.00 worth of rice. According to
respondent, there was only a verbal mortgage; while according to
petitioner, a sale had taken place. Acting on the transfer, the DAR
officials in Sta. Maria, Pangasinan authorized the survey and
issuance of an Emancipation Patent, leading to the issuance of a
Transfer Certificate of Title No. 3736 on December 4, 1987, in
favor of the petitioner.
"Sometime in May, 1988, respondent filed a Complaint against
the petitioner before the Barangay Lupon in Pangasinan for the
purpose of redeeming the subject land. When no amicable
settlement was reached, the case was referred to the Department
of Agrarian Reforms (hereinafter referred to as DAR) regional
office at Pilar, Sta. Maria, Pangasinan.
"On July 8, 1988, Atty. Linda F. Peralta of the DARs District
Office submitted her investigation report finding that respondent
merely gave the subject land to petitioner as guarantee for the
payment of a loan he had incurred from the latter; and
recommending that the CLT remain in the name of respondent
and that the money loan be returned to petitioner.
"Meanwhile, in a letter, dated September 20, 1988, petitioner
insisted that the subject land had been sold to him by respondent
and requested the DAR to cancel the CLT in respondents name.
Another investigation was conducted on the matter which led to
the Order dated March 9, 1989, issued by DAR Regional Director
Antonio M. Nuesa. In the said Order, the DAR found the act of
respondent in surrendering the subject land in favor of petitioner
as constituting abandonment thereof, and denied respondents
prayer for redemption of the subject land. Respondents request
for reinvestigation was denied in a Resolution, dated April 11,
1989.
"Thus, on May 3, 1989, respondent appealed the case to the
DAR Central Office which, on August 28, 1990, issued an Order
reversing the assailed Order of DAR Regional Director Antonio M.
Nuesa and ordering the petitioner to return the subject land to
respondent. Petitioners Motion for Reconsideration was denied
on June 8, 1992. He filed an Appeal with the Office of the
President which was dismissed in a Decision dated August 29,
1994. Petitioners Motion for Reconsideration of the said Decision
was also denied in an Order dated November 28, 1994. Likewise,
petitioners second Motion for Reconsideration was denied in an
Order dated July 5, 1995."4
Ruling of the Court of Appeals
The appellate court ruled that the subject land had been acquired by
respondent by virtue of Presidential Decree (PD) No. 27. This law
prohibits the transfer of the land except by hereditary succession to the
heirs or by other legal modes to the government. Hence, the transfer of
the subject land to petitioner is void; it should be returned to respondent.
The CA further held that respondent had not effectively abandoned the
property, because he tried to redeem it in 1981 and 1983. The effort,
however, failed because petitioner had demanded P15,000 for it. The
appellate court also noted that respondent continued to hold on to the
Certificate of Land Transfer (CLT) covering the subject land, and that he
"would not have even thought of bringing an action for the recovery of the
same if he honestly believed that he had already given it up in favor of
[petitioner]."5
Hence, this recourse.6
Issues
In his anemic 6-page Memorandum,7 petitioner raises the following
issues:
"A. Whether or not in law there is a valid abandonment made by
Respondent Mabalot.
B. Whether the act of Respondent Mabalot in conveying to
petitioner the right to possess and cultivate the disputed parcel of
land constitutes a valid abandonment thereby rendering the
property available for transfer to other bonafide farmers.
C. Whether the continuous possession and cultivation by
petitioner since 1976 up to the present has ripened into
ownership over the five thousand (5,000) square meters parcel in
dispute.
D. Whether the issuance of an emancipation patent and
thereafter a transfer certificate of title in the name of petitioner
has validated and legitimized possession and ownership over the
disputed property."8
The main issue may be worded as follows: did respondent abandon the
subject property, thereby making it available to other qualified farmer-
grantees?
The Courts Ruling
The Petition has no merit.
Main Issue:
Abandonment
The subject property was awarded to respondent by virtue of PD 27. On
November 11, 1973,9 a CLT was issued in his favor. PD 27 specifically
provides that when private agricultural land -- whether classified as
landed estate or not is primarily devoted to rice and corn under a
system of sharecrop or lease tenancy, the tenant farmers thereof shall be
deemed owners of a portion constituting a family-size farm of five (5)
hectares if not irrigated, and three (3) hectares if irrigated.
Petitioner avers that respondent neither protested when the former had
the subject land surveyed and planted with 40 mango trees, nor
attempted to return the money he had borrowed from petitioner in 1976.
Because the lot has been abandoned by respondent, the beneficiary, and
because PD 27 does not prohibit the transfer of properties acquired
under it, petitioner theorizes that the Department of Agrarian Reform
(DAR) may award the land to another qualified farmer-grantee.10
Non-transferability of Land Awarded Under PD 27
We do not agree. PD 27 specifically provides that title to land acquired
pursuant to its mandate or to that of the Land Reform Program of the
government shall not be transferable except to the grantees heirs by
hereditary succession, or back to the government by other legal means.
The law is clear and leaves no room for interpretation.
Upon the promulgation of PD 27, farmer-tenants were deemed owners of
the land they were tilling. Their emancipation gave them the rights to
possess, cultivate and enjoy the landholding for themselves. These rights
were granted by the government to them as the tillers and to no other.
Thus, to insure their continuous possession and enjoyment of the
property, they could not, under the law, effect any transfer except back to
the government or, by hereditary succession, to their successors.11
Furthermore, this Court has always ruled that agrarian laws must be
interpreted liberally in favor of the grantees in order to give full force and
effect to the clear intent of such laws: "to achieve a dignified existence for
the small farmers"; and to make them "more independent, self-reliant and
responsible citizens, and a source of genuine strength in our democratic
society."12
Neither are we convinced that an award under PD 27 may be transferred
to another in case the grantee abandons it. The law is explicit. Title
acquired pursuant to PD 27 shall not be transferable except to the
grantees heirs by hereditary succession, or back to the government by
other legal means.
If a statute is clear, plain and free from ambiguity, it must be given its
literal meaning and applied without any interpretation.13 This rule rests on
the presumption that the words employed by the legislature correctly
express its intent and preclude the courts from construing the law
differently.14 Similarly, a statute should be so construed as to effectuate
its intent, advance the remedy and suppress any mischief contemplated
by the framers.15
This Court is not unaware of the various subterfuges resorted to by
unscrupulous individuals, who have sought to deprive grantees of their
land by taking advantage of loopholes in the law and the ignorance of
poor beneficiaries. Consequently, the farmers who were intended to be
protected and uplifted by these laws find themselves back to where they
started, sometimes worse. This vicious cycle must be stopped.16
No Abandonment
The CA correctly opined that respondent has not abandoned the subject
land. It said:
"x x x. It appears that respondent tried to pay off the loan and
redeem the subject land in 1981 and in 1983, but did not succeed
because of petitioners demands for the payment of P15,000.00
(see Petition, Annex G, p. 1; Rollo, p. 29). It likewise appears
that respondent did not deliver to petitioner his CLT which
remains in his possession to date (see Comment, p. 5; Rollo, p.
48a). Finally, respondent would not have even thought of
bringing an action for the recovery of the same if he honestly
believed that he had already given it up in favor of (petitioner); he
would not waste his time, effort and money, especially if he is
poor, to prosecute an unworthy action."17
For abandonment to exist, the following requisites must be proven: (a) a
clear and absolute intention to renounce a right or claim or to desert a
right or property and (b) an external act by which that intention is
expressed or carried into effect. There must be an actual, not merely a
projected, relinquishment; otherwise, the right or claim is not vacated or
waived and, thus, susceptible of being appropriated by
another.18 Administrative Order No. 2, issued on March 7, 1994, defines
abandonment or neglect as a "willful failure of the agrarian reform
beneficiary, together with his farm household, to cultivate, till or develop
his land to produce any crop, or to use the land for any specific economic
purpose continuously for a period of two calendar years." In the present
case, no such "willful failure" has been demonstrated. Quite the contrary,
respondent has continued to claim dominion over the land.
No Valid Reallocation
Furthermore, even if respondent did indeed abandon his right to possess
and cultivate the subject land, any transfer of the property may only be
made in favor of the government. In Corpuz v. Grospe,19 the Court held
that there was a valid transfer of the land after the farmer-grantee had
signed his concurrence to the Samahang Nayon Resolution surrendering
his possession of the landholding. This voluntary surrender to the
Samahang Nayon constituted a surrender or transfer to the government
itself.
Such action forms part of the mechanism for the disposition and the
reallocation of farmholdings of tenant-farmers who refuse to become
beneficiaries of PD 27. Under Memorandum Circular No. 8-80 of the then
Ministry of Agrarian Reform, the Samahan shall, upon notice from the
agrarian reform team leader, recommend other tenant-farmers who shall
be substituted to all rights and obligations of the abandoning or
surrendering tenant-farmer. Such cooperative or samahan is established
precisely to provide a strong social and economic organization that will
ensure that farmers will reap and enjoy the benefits of agrarian reform.20
In the present case, there was no valid transfer in favor of the
government. It was petitioner himself who requested the DAR to cancel
respondents CLT and to issue another one in his favor.21 Unlike in the
above-cited case, respondents land was not turned over to the
government or to any entity authorized by the government to reallocate
the farmholdings of tenant-farmers who refuse to become beneficiaries of
PD 27. Petitioner cannot, by himself, take over a farmer-beneficiarys
landholding, allegedly on the ground that it was abandoned. The proper
procedure for reallocation must be followed to ensure that there was
indeed an abandonment, and that the subsequent beneficiary is a
qualified farmer-tenant as provided by law.
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision AFFIRMED. Costs against petitioner. SO ORDERED.
G.R. No. 165879 November 10, 2006
MARIA B. CHING, Petitioner,
vs.
JOSEPH C. GOYANKO, JR., EVELYN GOYANKO, JERRY GOYANKO,
IMELDA GOYANKO, JULIUS GOYANKO, MARY ELLEN GOYANKO
AND JESS GOYANKO, Respondents.
DECISION
CARPIO MORALES, J.:
On December 30, 1947, Joseph Goyanko (Goyanko) and Epifania dela
Cruz (Epifania) were married.1 Out of the union were born respondents
Joseph, Jr., Evelyn, Jerry, Imelda, Julius, Mary Ellen and Jess, all
surnamed Goyanko.
Respondents claim that in 1961, their parents acquired a 661 square
meter property located at 29 F. Cabahug St., Cebu City but that as they
(the parents) were Chinese citizens at the time, the property was
registered in the name of their aunt, Sulpicia Ventura (Sulpicia).
On May 1, 1993, Sulpicia executed a deed of sale2 over the property in
favor of respondents father Goyanko. In turn, Goyanko executed on
October 12, 1993 a deed of sale3 over the property in favor of his
common-law-wife-herein petitioner Maria B. Ching. Transfer Certificate of
Title (TCT) No. 138405 was thus issued in petitioners name.
After Goyankos death on March 11, 1996, respondents discovered that
ownership of the property had already been transferred in the name of
petitioner. Respondents thereupon had the purported signature of their
father in the deed of sale verified by the Philippine National Police Crime
Laboratory which found the same to be a forgery.4
Respondents thus filed with the Regional Trial Court of Cebu City a
complaint for recovery of property and damages against petitioner,
praying for the nullification of the deed of sale and of TCT No. 138405
and the issuance of a new one in favor of their father Goyanko.
In defense, petitioner claimed that she is the actual owner of the property
as it was she who provided its purchase price. To disprove that
Goyankos signature in the questioned deed of sale is a forgery, she
presented as witness the notary public who testified that Goyanko
appeared and signed the document in his presence.
By Decision of October 16, 1998,5 the trial court dismissed the complaint
against petitioner, the pertinent portions of which decision read:
There is no valid and sufficient ground to declare the sale as null and
void, fictitious and simulated. The signature on the questioned Deed of
Sale is genuine. The testimony of Atty. Salvador Barrameda who
declared in court that Joseph Goyanko, Sr. and Maria Ching together
with their witnesses appeared before him for notarization of Deed of Sale
in question is more reliable than the conflicting testimonies of the two
document examiners. Defendant Maria Ching asserted that the Deed of
Sale executed by Joseph Goyanko, Sr. in her favor is valid and genuine.
The signature of Joseph Goyanko, Sr. in the questioned Deed of
Absolute Sale is genuine as it was duly executed and signed by Joseph
Goyanko, Sr. himself.
The parcel of lands known as Lot No. 6 which is sought to be recovered
in this case could never be considered as the conjugal property of the
original Spouses Joseph C. Goyanko and Epifania dela Cruz or the
exclusive capital property of the husband. The acquisition of the said
property by defendant Maria Ching is well-elicited from the
aforementioned testimonial and documentary evidence presented by the
defendant. Although for a time being the property passed through Joseph
Goyanko, Sr. as a buyer yet his ownership was only temporary and
transitory for the reason that it was subsequently sold to herein defendant
Maria Ching. Maria Ching claimed that it was even her money which was
used by Joseph Goyanko, Sr. in the purchase of the land and so it was
eventually sold to her. In her testimony, defendant Ching justified her
financial capability to buy the land for herself. The transaction undertaken
was from the original owner Sulpicia Ventura to Joseph Goyanko, Sr. and
then from Joesph Goyanko, Sr. to herein defendant Maria Ching.
The land subject of the litigation is already registered in the name of
defendant Maria Ching under TCT No. 138405. By virtue of the Deed of
Sale executed in favor of Maria Ching, Transfer Certificate of Title No.
138405 was issued in her favor. In recognition of the proverbial virtuality
of a Torrens title, it has been repeatedly held that, unless bad faith can
be established on the part of the person appearing as owner on the
certificate of title, there is no other owner than that in whose favor it has
been issued. A Torrens title is not subject to collateral attack. It is a well-
known doctrine that a Torrens title, as a rule, is irrevocable and
indefeasible, and the duty of the court is to see to it that this title is
maintained and respected unless challenged in a direct proceedings
[sic].6 (Citations omitted; underscoring supplied)
Before the Court of Appeals where respondents appealed, they argued
that the trial court erred:
1. . . . when it dismissed the complaint a quo . . . , in effect,
sustaining the sale of the subject property between Joseph, Sr.
and the defendant-appellee, despite the proliferation in the
records and admissions by both parties that defendant-appellee
was the "mistress" or "common-law wife" of Joseph, Sr..
2. . . . when it dismissed the complaint a quo . . . , in effect,
sustaining the sale of the subject property between Joseph, Sr.
and the defendant-appellee, despite the fact that the marriage of
Joseph, Sr. and Epifania was then still subsisting thereby
rendering the subject property as conjugal property of Joseph, Sr.
and Epifania.
3. . . . in dismissing the complaint a quo . . . , in effect, sustaining
the validity of the sale of the subject property between Joseph,
Sr. and the defendant-appellee, despite the clear findings of
forgery and the non-credible testimony of notary public.7
By Decision dated October 21, 2003,8 the appellate court reversed that of
the trial court and declared null and void the questioned deed of sale and
TCT No. 138405. Held the appellate court:
. . . The subject property having been acquired during the existence of a
valid marriage between Joseph Sr. and Epifania dela Cruz-Goyanko,
is presumed to belong to the conjugal partnership. Moreover, while this
presumption in favor of conjugality is rebuttable with clear and convincing
proof to the contrary, we find no evidence on record to conclude
otherwise. The record shows that while Joseph Sr. and his wife Epifania
have been estranged for years and that he and defendant-appellant
Maria Ching, have in fact been living together as common-law husband
and wife, there has never been a judicial decree declaring the dissolution
of his marriage to Epifania nor their conjugal partnership. It is therefore
undeniable that the 661-square meter property located at No. 29 F.
Cabahug Street, Cebu City belongs to the conjugal partnership.
Even if we were to assume that the subject property was not conjugal,
still we cannot sustain the validity of the sale of the property by Joseph,
Sr. to defendant-appellant Maria Ching, there being overwhelming
evidence on records that they have been living together as common-law
husband and wife. On this score, Art. 1352 of the Civil Code provides:
"Art. 1352. Contracts without cause, or with unlawful cause, produce no
effect whatsoever. The cause is unlawful if it is contrary to law, morals,
good customs, public order or public policy."
We therefore find that the contract of sale in favor of the defendant-
appellant Maria Ching was null and void for being contrary to morals and
public policy. The purported sale, having been made by Joseph Sr. in
favor of his concubine, undermines the stability of the family, a basic
social institution which public policy vigilantly protects. Furthermore, the
law emphatically prohibits spouses from selling property to each other,
subject to certain exceptions. And this is so because transfers or
conveyances between spouses, if allowed during the marriage would
destroy the system of conjugal partnership, a basic policy in civil law. The
prohibition was designed to prevent the exercise of undue influence by
one spouse over the other and is likewise applicable even to common-
law relationships otherwise, "the condition of those who incurred guilt
would turn out to be better than those in legal union.9 (Underscoring
supplied)
Hence, the present petition, petitioners arguing that the appellate court
gravely erred in:
I.
. . . APPLYING THE STATE POLICY ON PROHIBITION
AGAINST CONVEYANCES AND TRANSFERS OF
PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW
SPOUSES ON THE SUBJECT PROPERTY, THE SAME BEING
FOUND BY THE COURT A QUO, AS THE EXCLUSIVE
PROPERTY OF PETITIONER, AND THAT THE SAME WAS
NEVER PART OF THE CONJUGAL PROPERTY OF THE
MARRIAGE BETWEEN RESPONDENTS MOTHER EPIFANIA
GOYANKO AND PETITIONERS COMMON LAW HUSBAND,
JOSEPH GOYANKO, SR., NOR THE EXCLUSIVE OR CAPITAL
PROPERTY OF THE LATTER AT ANYTIME BEFORE THE
SAME WAS VALIDLY ACQUIRED BY PETITIONER.
 II.
. . . NOT FINDING THAT A JURIDICAL RELATION OF TRUST
AS PROVIDED FOR UNDER ARTICLES 1448 AND 1450 OF
THE NEW CIVIL CODE CAN VALIDLY EXIST BETWEEN
COMMON LAW SPOUSES.
III.
. . . NOT FINDING THAT A CONVEYANCE OVER A PROPERTY
MADE BY A TRUSTEE, WHO BECAME AS SUCH IN
CONTEMPLATION OF LAW, AND WHO HAPPENS TO BE A
COMMON LAW HUSBAND OF THE BENEFICIARY, IS NOT A
VIOLATION OF A STATE POLICY ON PROHIBITION AGAINST
CONVEYANCES AND TRANSFERS OF PROPERTIES
BETWEEN LEGITIMATE AND COMMON LAW SPOUSES.
IV.
. . . ALLOWING RESPONDENTS TO ABANDON THEIR
ORIGINAL THEORY OF THEIR CASE DURING APPEAL.10
The pertinent provisions of the Civil Code which apply to the present
case read:
ART. 1352. Contracts without cause, or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law, morals,
good customs, public order or public policy.
ART. 1409. The following contracts are inexistent and void from the
beginning:
(1) Those whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the
transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the
principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.
ARTICLE 1490. The husband and wife cannot sell property to each other,
except:
(1) When a separation of property was agreed upon in the
marriage settlements; or
(2) When there has been a judicial separation of property under
Article 191. (Underscoring supplied)
The proscription against sale of property between spouses applies even
to common law relationships. So this Court ruled in Calimlim-Canullas v.
Hon. Fortun, etc., et al.:11
Anent the second issue, we find that the contract of sale was null and
void for being contrary to morals and public policy. The sale was made
by a husband in favor of a concubine after he had abandoned his
family and left the conjugal home where his wife and children lived
and from whence they derived their support. The sale was
subversive of the stability of the family, a basic social institution
which public policy cherishes and protects.
Article 1409 of the Civil Code states inter alia that: contracts whose
cause, object, or purposes is contrary to law, morals, good customs,
public order, or public policy are void and inexistent from the very
beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful
cause, produce no effect whatsoever. The cause is unlawful if it is
contrary to law, morals, good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses from
selling property to each other subject to certain
exceptions. Similarly, donations between spouses during marriage
1wph i1
are prohibited. And this is so because if transfers or conveyances
between spouses were allowed during marriage, that would destroy the
system of conjugal partnership, a basic policy in civil law. It was also
designed to prevent the exercise of undue influence by one spouse over
the other, as well as to protect the institution of marriage, which is the
cornerstone of family law. The prohibitions apply to a couple living as
husband and wife without benefit of marriage, otherwise, "the
condition of those who incurred guilt would turn out to be better
than those in legal union." Those provisions are dictated by public
interest and their criterion must be imposed upon the will of the parties. . .
.12 (Italics in the original; emphasis and underscoring supplied)
As the conveyance in question was made by Goyangko in favor of his
common- law-wife-herein petitioner, it was null and void.
Petitioners argument that a trust relationship was created between
Goyanko as trustee and her as beneficiary as provided in Articles 1448
and 1450 of the Civil Code which read:
ARTICLE 1448. There is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by another for the
purpose of having the beneficial interest of the property. The former is the
trustee, while the latter is the beneficiary. However, if the person to whom
the title is conveyed is a child, legitimate or illegitimate, of the one paying
the price of the sale, no trust is implied by law, it being disputably
presumed that there is a gift in favor of the child.
ARTICLE 1450. If the price of a sale of property is loaned or paid by one
person for the benefit of another and the conveyance is made to the
lender or payor to secure the payment of the debt, a trust arises by
operation of law in favor of the person to whom the money is loaned or
for whom it is paid. The latter may redeem the property and compel a
conveyance thereof to him.
does not persuade.
For petitioners testimony that it was she who provided the purchase
price is uncorroborated. That she may have been considered the
breadwinner of the family and that there was proof that she earned a
living do not conclusively clinch her claim.
As to the change of theory by respondents from forgery of their fathers
signature in the deed of sale to sale contrary to public policy, it too does
not persuade. Generally, a party in a litigation is not permitted to freely
and substantially change the theory of his case so as not to put the other
party to undue disadvantage by not accurately and timely apprising him
of what he is up against,13 and to ensure that the latter is given the
opportunity during trial to refute all allegations against him by presenting
evidence to the contrary. In the present case, petitioner cannot be said to
have been put to undue disadvantage and to have been denied the
chance to refute all the allegations against her. For the nullification of the
sale is anchored on its illegality per se, it being violative of the above-
cited Articles 1352, 1409 and 1490 of the Civil Code.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioner.
SO ORDERED
G.R. No. 179010 April 11, 2011
ELENITA M. DEWARA, epresented by her Attorney-in-Fact,
FERDINAND MAGALLANES, Petitioner,
vs.
SPOUSES RONNIE AND GINA LAMELA and STENILE
ALVERO, Respondents.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court, assailing the Decision1dated November 6, 2006 and the
Resolution2 dated July 10, 2007 of the Court of Appeals (CA) in CA-G.R.
CV No. 64936, which reversed and set aside the Decision3 dated
September 2, 1999 of the Regional Trial Court (RTC), Branch 54,
Bacolod City, in Civil Case No. 93-7942.
The Facts
Eduardo Dewara (Eduardo) and petitioner Elenita Magallanes Dewara
(Elenita) were married before the enactment of the Family Code. Thus,
the Civil Code governed their marital relations. Husband and wife were
separated-in-fact because Elenita went to work in California, United
States of America, while Eduardo stayed in Bacolod City.
On January 20, 1985, Eduardo, while driving a private jeep registered in
the name of Elenita,4 hit respondent Ronnie Lamela (Ronnie). Ronnie
filed a criminal case for serious physical injuries through reckless
imprudence5against Eduardo before the Municipal Trial Court in Cities
(MTCC), Branch IV, Bacolod City. The MTCC found Eduardo guilty of the
charge and sentenced him to suffer the penalty of imprisonment of two
(2) months and one (1) day to (3) months, and to pay civil indemnity of
Sixty-Two Thousand Five Hundred Ninety-Eight Pesos and Seventy
Centavos (62,598.70) as actual damages and Ten Thousand Pesos
(10,000.00) as moral damages. On appeal, the RTC6 affirmed the
decision of the MTCC7 and it became final and executory.8
The writ of execution on the civil liability was served on Eduardo, but it
was returned unsatisfied because he had no property in his name.
Ronnie requested the City Sheriff, respondent Stenile Alvero, to levy on
Lot No. 234-C, Psd. 26667 of the Bacolod Cadastre, with an area of One
Thousand Four Hundred Forty (1,440) square meters (sq m), under
Transfer Certificate of Title (TCT) No. T-80054, in the name of "ELENITA
M. DEWARA, of legal age, Filipino, married to Eduardo Dewara, and
resident of Bacolod City," to satisfy the judgment on the civil liability of
Eduardo. The City Sheriff served a notice of embargo on the title of the
lot and subsequently sold the lot in a public auction. In the execution
sale, there were no interested buyers other than Ronnie. The City Sheriff
issued a certificate of sale to spouses Ronnie and Gina Lamela to satisfy
the civil liability in the decision against Eduardo.9 Ronnie then caused the
consolidation of title in a Cadastral Proceeding before the RTC, which
ordered the cancellation of TCT No. T-80054 in the name of Elenita and
the issuance of a new certificate of title in the name of respondent
spouses.10
The levy on execution, public auction, issuance of certificate of sale, and
cancellation of title of the lot in the name of Elenita were done while
Elenita was working in California.11 Thus, Elenita, represented by her
attorney-in-fact, Ferdinand Magallanes, filed a case for annulment of sale
and for damages against respondent spouses and ex-officio sheriff
Stenile Alvero before the RTC of Bacolod City. Petitioner claimed that the
levy on execution of Lot No. 234-C was illegal because the said property
was her paraphernal or exclusive property and could not be made to
answer for the personal liability of her husband. Furthermore, as the
registered owner of the property, she received no notice of the execution
sale. She sought the annulment of the sale and the annulment of the
issuance of the new TCT in the name of respondent spouses.12
On the other hand, respondent spouses averred that the subject lot was
the conjugal property of petitioner Elenita and Eduardo. They asserted
that the property was acquired by Elenita during her marriage to
Eduardo; that the property was acquired with the money of Eduardo
because, at the time of the acquisition of the property, Elenita was a plain
housewife; that the jeep involved in the accident was registered in the
name of petitioner; and that Elenita did not interpose any objection
pending the levy on execution of the property.13
On September 2, 1999, the RTC rendered a decision in favor of
petitioner, the fallo of which reads:
WHEREFORE, judgment is hereby rendered in favor of the [petitioner]
and against the [respondents]:
1. The levy on execution on Lot No. 234-C of the Bacolod
Cadastre covered by TCT No. 80054 in the name of [petitioner]
Elenita M. Dewara, the public auction of the property, and the
consolidation of the title and issuance of new TCT No. 167403 in
the name of [respondent] Ronnie Lamela, are hereby declared
null and void;
2. The Register of Deeds of Bacolod City is ordered to cancel
TCT No. 167403 in the name of [respondent] Ronnie Lamela and
TCT No. 80054 be reinstated or a new one issued in the name of
[petitioner] Elenita M. Dewara;
3. There is no pronouncement on damages with cost de officio.
SO ORDERED.14
The RTC declared that said property was paraphernal in nature. It arrived
at this conclusion by tracing how Elenita acquired the subject property.
Based on the documentary evidence submitted, Elenitas grandfather,
Exequiel Magallanes, originally owned Lot No. 234-C. Upon his demise,
his children, Jesus (Elenitas father), Salud, and Concepcion, inherited
the property, each entitled to a share equal to one-third (1/3) of the total
area of the land. They were issued a new title (TCT No. T-17541) for the
property. On July 6, 1966, petitioners aunt, Salud, executed a waiver of
rights duly registered with the Office of the Register of Deeds under Entry
No. 76392, thereby waiving her rights and participation over her 1/3
share of the property in favor of her siblings, Jesus and Concepcion. The
two siblings then became the owners of the property, each owning one-
half (1/2) of the property. Jesus subsequently sold his share to his
daughter, Elenita, for the sum of Five Thousand Pesos (5,000.00),
based on the deed of sale dated March 26, 1975. The deed of sale was
duly registered with the Register of Deeds under Entry No. 76393.
Concepcion also sold her share to her niece, Elenita, for the sum of Ten
Thousand Pesos (10,000.00), based on the deed of sale dated April 29,
1975, which was duly registered with the Register of Deeds under Entry
No. 76394. By virtue of the sale transactions, TCT No. T-17541 was
cancelled and a new title, TCT No. T-80054, was issued in the name of
Elenita.15
The RTC gave credence to the testimony of Elenita on the circumstances
surrounding the sale of the property. First, it was sold to her by her father
and her aunt so that the family would remain on the lot. Second, the
minimal and inadequate consideration for the 1,440 sq m property was
for the purpose of helping her expand her capital in her business at the
time. Thus, the sale was essentially a donation and was therefore
gratuitous in character.16
Having declared that the property was the paraphernal property of
Elenita, the RTC ruled that the civil liability of Eduardo, which was
personal to him, could not be charged to the exclusive property of his
wife.17
On appeal, the CA reversed the decision of the RTC. The dispositive
portion of the Decision reads:
WHEREFORE, in view of all the foregoing, the instant appeal is
GRANTED. The assailed decision of the Regional Trial Court of Bacolod
City, Branch 54, dated September 2, 1999, in Civil Case No. 93-7942 is
hereby REVERSED and SET ASIDE, and a new Decision is entered
DISMISSING the complaint for lack of merit. Let a copy of this Decision
be furnished to the Office of the Register of Deeds of Bacolod City,
Negros Occidental [which] is hereby ordered to cancel Transfer
Certificate of Title No. T-80054 or any transfer certificate of title covering
Lot No. 234-C issued in the name of Elenita M. Dewara, and reinstate
Transfer Certificate of Title No. 167403 or issue a new transfer certificate
of title covering Lot No. 234-C in the name of Ronnie Lamela. No
pronouncement as to costs.
SO ORDERED.18
In reversing the decision of the RTC, the CA elucidated that the gross
inadequacy of the price alone does not affect a contract of sale, except
that it may indicate a defect in the consent, or that the parties really
intended a donation or some other act or contract. Except for the
assertions of Elenita, there was nothing in the records that would indicate
a defect in Jesus and Concepcion Magallanes consent to the sale.19 The
CA ruled that Elenita and Eduardo acquired the property by onerous title
during their marriage through their common fund. Thus, it belonged to the
conjugal partnership of gains and might be levied upon to answer for civil
liabilities adjudged against Eduardo.20
Hence, this petition.
The Issue
The sole issue for resolution is whether the subject property is the
paraphernal/exclusive property of Elenita or the conjugal property of
spouses Elenita and Eduardo.
The answer to this question will define whether the property may be
subject to levy and execution sale to answer for the civil liability adjudged
against Eduardo in the criminal case for serious physical injuries, which
judgment had already attained finality.
The Ruling of the Court
All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband
or to the wife.21 Registration in the name of the husband or the wife alone
does not destroy this presumption.22 The separation-in-fact between the
husband and the wife without judicial approval shall not affect the
conjugal partnership. The lot retains its conjugal nature.23 Moreover, the
presumption of conjugal ownership applies even when the manner in
which the property was acquired does not appear. The use of the
conjugal funds is not an essential requirement for the presumption to
arise.24
There is no dispute that the subject property was acquired by spouses
Elenita and Eduardo during their marriage. It is also undisputed that their
marital relations are governed by the conjugal partnership of gains, since
they were married before the enactment of the Family Code and they did
not execute any prenuptial agreement as to their property relations. Thus,
the legal presumption of the conjugal nature of the property applies to the
lot in question. The presumption that the property is conjugal property
may be rebutted only by strong, clear, categorical, and convincing
evidencethere must be strict proof of the exclusive ownership of one of
the spouses, and the burden of proof rests upon the party asserting it.25
Aside from the assertions of Elenita that the sale of the property by her
father and her aunt was in the nature of a donation because of the
alleged gross disparity between the actual value of the property and the
monetary consideration for the sale, there is no other evidence that would
convince this Court of the paraphernal character of the property. Elenita
proffered no evidence of the market value or assessed value of the
subject property in 1975. Thus, we agree with the CA that Elenita has not
sufficiently proven that the prices involved in the sales in question were
so inadequate for the Court to reach a conclusion that the transfers were
in the nature of a donation rather than a sale.
Furthermore, gross inadequacy of the price does not affect a contract of
sale, except as it may indicate a defect in the consent, or that the parties
really intended a donation or some other act or contract.26 The records
are bereft of proof that the consent of petitioners father and her aunt
were vitiated or that, in reality, they intended the sale to be a donation or
some other contract. Inadequacy of the price per se will not rule out the
transaction as one of sale; the price must be grossly inadequate or
shocking to the conscience, such that the mind would revolt at it and
such that a reasonable man would neither directly nor indirectly consent
to it.27
However, even after having declared that Lot No. 234-C is the conjugal
property of spouses Elenita and Eduardo, it does not necessarily follow
that it may automatically be levied upon in an execution to answer for
debts, obligations, fines, or indemnities of one of the spouses. Before
debts and obligations may be charged against the conjugal partnership, it
must be shown that the same were contracted for, or the debts and
obligations should have redounded to, the benefit of the conjugal
partnership. Fines and pecuniary indemnities imposed upon the husband
or the wife, as a rule, may not be charged to the partnership. However, if
the spouse who is bound should have no exclusive property or if the
property should be insufficient, the fines and indemnities may be
enforced upon the partnership assets only after the responsibilities
enumerated in Article 161 of the Civil Code have been covered.
In this case, it is just and proper that Ronnie be compensated for the
serious physical injuries he suffered. It should be remembered that even
though the vehicle that hit Ronnie was registered in the name of Elenita,
she was not made a party in the said criminal case. Thus, she may not
be compelled to answer for Eduardos liability. Nevertheless, their
conjugal partnership property may be held accountable for it since
Eduardo has no property in his name. The payment of indemnity
adjudged by the RTC of Bacolod City in Criminal Case No. 7155 in favor
of Ronnie may be enforced against the partnership assets of spouses
Elenita and Eduardo after the responsibilities enumerated under Article
161 of the Civil Code have been covered. This remedy is provided for
under Article 163 of the Civil Code, viz.:
Art. 163. The payment of debts contracted by the husband or the wife
before the marriage shall not be charged to the conjugal partnership.1wphi 1
Neither shall the fines and pecuniary indemnities imposed upon them be
charged to the partnership.
However, the payment of debts contracted by the husband or the wife
before the marriage, and that of fines and indemnities imposed upon
them, may be enforced against the partnership assets after the
responsibilities enumerated in Article 161 have been covered, if the
spouse who is bound should have no exclusive property or if it should be
insufficient; but at the time of the liquidation of the partnership such
spouse shall be charged for what has been paid for the purposes above-
mentioned.28
Article 161 of the Civil Code enumerates the obligations which the
conjugal partnership may be held answerable, viz.:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the
benefit of the conjugal partnership, and those contracted by the
wife, also for the same purpose, in the cases where she may
legally bind the partnership;
(2) Arrears or income due, during the marriage, from obligations
which constitute a charge upon property of either spouse or of the
partnership;
 (3) Minor repairs or for mere preservation made during the
marriage upon the separate property of either the husband or the
wife; major repairs shall not be charged to the partnership;
(4) Major or minor repairs upon the conjugal partnership property;
(5) The maintenance of the family and the education of the
children of both the husband and wife, and of legitimate children
of one of the spouses;
(6) Expenses to permit the spouses to complete a professional,
vocational or other course.
The enumeration above-listed should first be complied with before the
conjugal partnership may be held to answer for the liability adjudged
against Eduardo.
Finally, the indemnity imposed against Eduardo shall earn an interest at
the rate of twelve percent per annum, in accordance with our ruling in
Eastern Shipping Lines, Inc. v. Court of Appeals.29
WHEREFORE, in view of the foregoing, the Decision dated November 6,
2006 and the Resolution dated July 10, 2007 of the Court of Appeals in
CA-G.R. CV No. 64936 are hereby ANNULLED and SET ASIDE. The
decision dated September 2, 1999 of the Regional Trial Court of Bacolod
City in Civil Case No. 93-7942 is hereby REINSTATED WITH
MODIFICATION that the conjugal properties of spouses Elenita Dewara
and Eduardo Dewara shall be held to answer for the judgment of
Seventy-Two Thousand Five Hundred Ninety-Eight Pesos and Seventy
Centavos (72,598.70), plus an interest rate of twelve (12) percent per
annum from the date of finality of the decision of the Regional Trial Court
of Bacolod City in Criminal Case No. 7155, after complying with the
provisions of Article 161 of the Civil Code.
SO ORDERED.
G.R. No. 202932 October 23, 2013
EDILBERTO U. VENTURA JR., Petitioner,
vs.
SPOUSES PAULINO and EVANGELINE ABUDA, Respondents.
DECISION
CARPIO, J.:
The Case
This petition for review on certiorari seeks to annul the Decision1 dated 9
March 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 92330 and
the Resolution2 dated 3 August 2012 denying the motion for
reconsideration. The Decision and Resolution dismissed the Appeal
dated 23 October 2009 and affirmed with modification the Decision3dated
24 November 2008 of the Regional Trial Court of Manila, Branch 32
(RTC-Manila).
The Facts
The RTC-Manila and the CA found the facts to be as follows:
Socorro Torres (Socorro) and Esteban Abletes (Esteban) were married
on 9 June 1980. Although Socorro and Esteban never had common
children, both of them had children from prior marriages: Esteban had a
daughter named Evangeline Abuda (Evangeline), and Socorro had a son,
who was the father of Edilberto U. Ventura, Jr. (Edilberto), the petitioner
in this case.
Evidence shows that Socorro had a prior subsisting marriage to Crispin
Roxas (Crispin) when she married Esteban. Socorro married Crispin on
18 April 1952. This marriage was not annulled, and Crispin was alive at
the time of Socorros marriage to Esteban.
Estebans prior marriage, on the other hand, was dissolved by virtue of
his wifes death in 1960. According to Edilberto, sometime in 1968,
Esteban purchased a portion of a lot situated at 2492 State Alley,
Bonifacio Street, Vitas, Tondo, Manila (Vitas property). The remaining
portion was thereafter purchased by Evangeline on her fathers behalf
sometime in 1970.4 The Vitas property was covered by Transfer
Certificate of Title No. 141782, dated 11 December 1980, issued to
"Esteban Abletes, of legal age, Filipino, married to Socorro Torres."5
Edilberto also claimed that starting 1978, Evangeline and Esteban
operated small business establishments located at 903 and 905 Delpan
Street, Tondo, Manila (Delpan property).6
On 6 September 1997, Esteban sold the Vitas and Delpan properties to
Evangeline and her husband, Paulino Abuda (Paulino).7 According to
Edilberto:
when Esteban was diagnosed with colon cancer sometime in 1993, he
decided to sell the Delpan and Vitas properties to Evangeline. Evangeline
continued paying the amortizations on the two (2) properties situated in
Delpan Street. The amortizations, together with the amount of Two
Hundred Thousand Pesos (Php 200,000.00), which Esteban requested
as advance payment, were considered part of the purchase price of the
Delpan properties. Evangeline likewise gave her father Fifty Thousand
Pesos (Php 50,000.00) for the purchase of the Vitas properties and she
shouldered his medical expenses.8
Esteban passed away on 11 September 1997, while Socorro passed
away on 31 July 1999.
Sometime in 2000, Leonora Urquila (Leonora), the mother of Edilberto,
discovered the sale. Thus, Edilberto, represented by Leonora, filed a
Petition for Annulment of Deeds of Sale before the RTC-Manila. Edilberto
alleged that the sale of the properties was fraudulent because Estebans
signature on the deeds of sale was forged. Respondents, on the other
hand, argued that because of Socorros prior marriage to Crispin, her
subsequent marriage to Esteban was null and void. Thus, neither
Socorro nor her heirs can claim any right or interest over the properties
purchased by Esteban and respondents.9
The Ruling of the RTC-Manila
The RTC-Manila dismissed the petition for lack of merit.
The RTC-Manila ruled that the marriage between Socorro and Esteban
was void from the beginning.10 Article 83 of the Civil Code, which was the
governing law at the time Esteban and Socorro were married, provides:
Art. 83. Any marriage subsequently contracted by any person during the
lifetime of the first spouse of such person shall be illegal and void from its
performance unless:
1. The first marriage was annulled or dissolved; or
2. The first spouse had been absent for seven consecutive years
at the time of the second marriage without the spouse present
having news of the absentee being alive, or if the absentee,
though he has been absent for less than seven years, is generally
considered as dead and believed to be so by the spouse present
at the time of contracting such subsequent marriage, or if the
absentee is presumed dead according to articles 390 and 391.
The marriage so contracted shall be valid in any of the three
cases until declared null and void.
During trial, Edilberto offered the testimony of Socorros daughter-in-law
Conchita Ventura (Conchita). In her first affidavit, Conchita claimed that
Crispin, who was a seaman, had been missing and unheard from for 35
years. However, Conchita recanted her earlier testimony and executed
an Affidavit of Retraction.11
The RTC-Manila ruled that the lack of a judicial decree of nullity does not
affect the status of the union. It applied our ruling in Nial v. Badayog:12
Jurisprudence under the Civil Code states that no judicial decree is
necessary in order to establish the nullity of a marriage. x x x
Under ordinary circumstances, the effect of a void marriage, so far as
concerns the conferring of legal rights upon the parties, is as though no
marriage had ever taken place. And therefore, being good for no legal
purpose, its invalidity can be maintained in any proceeding in which [the]
fact of marriage may be material, either direct or collateral, in any civil
court between any parties at any time, whether before or after the death
of either or both the husband and the wife, and upon mere proof of the
facts rendering such marriage void, it will be disregarded or treated as
non-existent by the courts.13
According to the RTC-Manila, the Vitas and Delpan properties are not
conjugal, and are governed by Articles 144 and 485 of the Civil Code, to
wit:
Art. 144. When a man and a woman live together as husband and wife,
but they are not married, or their marriage is void from the beginning, the
property acquired by either or both of them through their work or industry
or their wages and salaries shall be governed by the rules on co-
ownership.
Art. 485. The share of the co-owners, in the benefits as well as in the
charges, shall be proportional to their respective interests. Any stipulation
in a contract to the contrary shall be void.
The portions belonging to the co-owners in the co-ownership shall be
presumed equal, unless the contrary is proved.
The RTC-Manila then determined the respective shares of Socorro and
Esteban in the properties. It found that:
with respect to the property located at 2492 State Alley, Bonifacio St.
Vitas, Tondo, Manila covered by TCT No. 141782, formerly Marcos
Road, Magsaysay Village, Tondo, Manila, [Evangeline] declared that part
of it was first acquired by her father Esteban Abletes sometime in 1968
when he purchased the right of Ampiano Caballegan. Then, in 1970, she
x x x bought the right to one-half of the remaining property occupied by
Ampiano Caballegan. However, during the survey of the National
Housing Authority, she allowed the whole lot to be registered in her
fathers name. As proof thereof, she presented Exhibits "8" to "11" x x x.
These documents prove that that she has been an occupant of the said
property in Vitas, Tondo even before her father and Socorro Torres got
married in June, 1980.14
Anent the parcels of land and improvements thereon 903 and 905 Del
Pan Street, Tondo, Manila, x x x Evangeline professed that in 1978,
before her father met Socorro Torres and before the construction of the
BLISS Project thereat, her father [already had] a bodega of canvas (lona)
and a sewing machine to sew the canvas being sold at 903 Del Pan
Street, Tondo Manila. In 1978, she was also operating Vangies Canvas
Store at 905 Del Pan Street, Tondo, Manila, which was evidenced by
Certificate of Registration of Business Name issued in her favor on 09
November 1998 x x x. When the BLISS project was constructed in 1980,
the property became known as Units D-9 and D-10. At first, her father
[paid] for the amortizations for these two (2) parcels of land but when he
got sick with colon cancer in 1993, he asked respondents to continue
paying for the amortizations x x x. [Evangeline] paid a total of
195,259.52 for Unit D-9 as shown by the 37 pieces of receipts x x x and
the aggregate amount of 188,596.09 for Unit D-10, as evidenced by 36
receipts x x x.15
The RTC-Manila concluded that Socorro did not contribute any funds for
the acquisition of the properties. Hence, she cannot be considered a co-
owner, and her heirs cannot claim any rights over the Vitas and Delpan
properties.16
Aggrieved, Edilberto filed an appeal before the CA.
The Ruling of the CA
In its Decision17 dated 9 March 2012, the CA sustained the decision of
the RTC-Manila. The dispositive portion of the CA Decision reads:
WHEREFORE, the Appeal is hereby DENIED and the challenged
Decision of the court a quo STANDS.
SO ORDERED.18
The CA ruled, however, that the RTC-Manila should have applied Article
148 of the Family Code, and not Articles 144 and 485 of the Civil Code.
Article 148 of the Family Code states that in unions between a man and a
woman who are incapacitated to marry each other:
x x x only the properties acquired by both of the parties through their
actual joint contribution of money, property, or industry shall be owned by
them in common in proportion to their respective contributions. In the
absence of proof to the contrary, their contributions and corresponding
shares are presumed to be equal. The same rule and presumption shall
apply to joint deposits of money and evidences of credit.
If one of the parties is validly married to another, his or her share in the
co-ownership shall accrue to the absolute community or conjugal
partnership existing in such valid marriage. If the party who acted in bad
faith is not validly married to another, his or her share shall be forfeited in
the manner provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties
are in bad faith.
The CA applied our ruling in Saguid v. Court of Appeals,19 and held that
the foregoing provision applies "even if the cohabitation or the acquisition
of the property occurred before the effectivity of the Family Code."20 The
CA found that Edilberto failed to prove that Socorro contributed to the
purchase of the Vitas and Delpan properties. Edilberto was unable to
provide any documentation evidencing Socorros alleged contribution.21
On 2 April 2012, Edilberto filed a Motion for Reconsideration,22 which was
denied by the CA in its Resolution dated 3 August 2012.23
Hence, this petition.
The Ruling of this Court
We deny the petition.
Edilberto admitted that in unions between a man and a woman who are
incapacitated to marry each other, the ownership over the properties
acquired during the subsistence of that relationship shall be based on the
actual contribution of the parties. He even quoted our ruling in Borromeo
v. Descallar24 in his petition:
It is necessary for each of the partners to prove his or her actual
contribution to the acquisition of property in order to be able to lay claim
to any portion of it. Presumptions of co-ownership and equal contribution
do not apply.25
This is a reiteration of Article 148 of the Family Code, which the CA
applied in the assailed decision:
Art 148. In cases of cohabitation [wherein the parties are incapacitated to
marry each other], only the properties acquired by both of the parties
through their actual joint contribution of money, property, or industry shall
be owned by them in common in proportion to their respective
contributions. In the absence of proof to the contrary, their contributions
and corresponding shares are presumed to be equal. The same rule and
presumption shall apply to joint deposits of money and evidences of
credit.
If one of the parties is validly married to another, his or her share in the
co-ownership shall accrue to the absolute community or conjugal
partnership existing in such valid marriage. If the party who acted in bad
faith is not validly married to another, his or her share shall be forfeited in
the manner provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties
are in bad faith.
Applying the foregoing provision, the Vitas and Delpan properties can be
considered common property if: (1) these were acquired during the
cohabitation of Esteban and Socorro; and (2) there is evidence that the
properties were acquired through the parties actual joint contribution of
money, property, or industry.
Edilberto argues that the certificate of title covering the Vitas property
shows that the parcel of land is co-owned by Esteban and Socorro
because: (1) the Transfer Certificate of Title was issued on 11 December
1980, or several months after the parties were married; and (2) title to the
land was issued to "Esteban Abletes, of legal age, married to Socorro
Torres."26
We disagree. The title itself shows that the Vitas property is owned by
Esteban alone. The phrase "married to Socorro Torres" is merely
1wphi 1
descriptive of his civil status, and does not show that Socorro co-owned
the property.27The evidence on record also shows that Esteban acquired
ownership over the Vitas property prior to his marriage to Socorro, even if
the certificate of title was issued after the celebration of the marriage.
Registration under the Torrens title system merely confirms, and does not
vest title. This was admitted by Edilberto on page 9 of his petition wherein
he quotes an excerpt of our ruling in Borromeo:
Registration is not a mode of acquiring ownership. It is only a means of
confirming the fact of its existence with notice to the world at large.
Certificates of title are not a source of right. The mere possession of a
title does not make one the true owner of the property. Thus, the mere
fact that respondent has the titles of the disputed properties in her name
does not necessarily, conclusively and absolutely make her the owner.
The rule on indefeasibility of title likewise does not apply to respondent. A
certificate of title implies that the title is quiet, and that it is perfect,
absolute and indefeasible. However, there are well-defined exceptions to
this rule, as when the transferee is not a holder in good faith and did not
acquire the subject properties for a valuable consideration.
Edilberto claims that Esteban s actual contribution to the purchase of the
Delpan property was not sufficiently proven since Evangeline shouldered
some of the amortizations.28 Thus, the law presumes that Esteban and
Socorro jointly contributed to the acquisition of the Del pan property.
We cannot sustain Edilberto s claim. Both the RTC-Manila and the CA
found that the Delpan property was acquired prior to the marriage of
Esteban and Socorro.29 Furthermore, even if payment of the purchase
price of the Delpan property was made by Evangeline, such payment
was made on behalf of her father. Article 1238 of the Civil Code provides:
Art. 1238. Payment made by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires the
debtor s consent. But the payment is in any case valid as to the creditor
who has accepted it.
Thus, it is clear that Evangeline paid on behalf of her father, and the
parties intended that the Delpan property would be owned by and
registered under the name of Esteban.
During trial, the Abuda spouses presented receipts evidencing payments
of the amortizations for the Delpan property. On the other hand,
1w phi 1
Edilberto failed to show any evidence showing Socorro s alleged
monetary contributions. As correctly pointed out by the CA:
settled is the rule that in civil cases x x x the burden of proof rests upon
the party who, as determined by the pleadings or the nature of the case,
asserts the affirmative of an issue. x x x. Here it is Appellant who is duty
bound to prove the allegations in the complaint which undoubtedly, he
miserably failed to do so.30
WHEREFORE, the petition is DENIED. The Decision dated 9 March 2012
of the Court of Appeals in CA-G.R. CV No. 92330 is AFFIRMED.
SO ORDERED.
G.R. No. 146504 April 9, 2002
HONORIO L. CARLOS, petitioner,
vs.
MANUEL T. ABELARDO, respondent.
KAPUNAN, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules
of Court is the decision of the Court of Appeals dated November 10, 2000
in CA-G.R. CV No. 54464 which reversed and set aside the decision of
the Regional Trial Court of Valenzuela, Branch 172, and dismissed for
insufficiency of evidence the complaint for a sum of money and damages
filed by herein petitioner Honorio Carlos against respondent Manuel
Abelardo, his son-in-law, and the latters wife, Maria Theresa Carlos-
Abelardo.
Petitioner averred in his complaint filed on October 13, 1994 that in
October 1989, respondent and his wife Maria Theresa Carlos-Abelardo
approached him and requested him to advance the amount of
US$25,000.00 for the purchase of a house and lot located at #19952
Chestnut Street, Executive Heights Village, Paranaque, Metro Manila. To
enable and assist the spouses conduct their married life independently
and on their own, petitioner, in October 31, 1989, issued a check in the
name of a certain Pura Vallejo, seller of the property, who acknowledged
receipt thereof.1 The amount was in full payment of the property.
When petitioner inquired from the spouses in July 1991 as to the status
of the amount he loaned to them, the latter acknowledged their obligation
but pleaded that they were not yet in a position to make a definite
settlement of the same.2 Thereafter, respondent expressed violent
resistance to petitioners inquiries on the amount to the extent of making
various death threats against petitioner.3
On August 24, 1994, petitioner made a formal demand for the payment of
the amount of US$25,000.00 but the spouses failed to comply with their
obligation.4 Thus, on October 13, 1994, petitioner filed a complaint for
collection of a sum of money and damages against respondent and his
wife before the Regional Trial Court of Valenzuela, Branch 172, docketed
as Civil Case No. 4490-V-94. In the complaint, petitioner asked for the
payment of the US$25,000.00 or P625,000.00, its equivalent in Philippine
currency plus legal interest from date of extra-judicial demand.5 Petitioner
likewise claimed moral and exemplary damages, attorneys fees and
costs of suit from respondent.6
As they were separated in fact for more than a year prior to the filing of
the complaint, respondent and his wife filed separate answers. Maria
Theresa Carlos-Abelardo admitted securing a loan together with her
husband, from petitioner.7 She claimed, however, that said loan was
payable on a staggered basis so she was surprised when petitioner
demanded immediate payment of the full amount.8
In his separate Answer, respondent admitted receiving the amount of
US$25,000.00 but claimed that:
xxx
a. Defendant (respondent) xxx revived that otherwise dormant
construction firm H.L. CARLOS CONSTRUCTION of herein
plaintiff which suffered tremendous setback after the
assassination of Senator Benigno Aquino;
b. Working day and night and almost beyond human endurance,
defendant devoted all his efforts and skill, used all his business
and personal connection to be able to revive the construction
business of plaintiff;
c. Little-by-little, starting with small construction business,
defendant was able to obtain various construction jobs using the
name H.L. CARLOS CONSTRUCTION and the income derived
therefrom were deposited in the name of such firm of plaintiff,
d. Defendant xxx was made to believe that the earnings derived
from such construction will be for him and his family since he was
the one working to secure the contract and its completion, he was
allowed to use the facilities of the plaintiff;
e. The plaintiff seeing the progress brought about by defendant
xxx to his company proposed a profit sharing scheme to the effect
that all projects amounting to more than P10 million shall be for
the account of plaintiff; lower amount shall be for defendants
account but still using H.L. CARLOS CONSTRUCTION.
f. But, to clear account on previous construction contracts that
brought income to H.L.CARLOS CONSTRUCTION, out of which
defendant derived his income, plaintiff gave the amount of
US$25,000.00 to defendant to square off account and to start the
arrangement in paragraph (e) supra;
g. That, the said US$25,000.00 was never intended as loan of
defendant. It was his share of income on contracts obtained by
defendant;
xxx 9
Respondent denied having made death threats to petitioner and by way
of compulsory counterclaim, he asked for moral damages from petitioner
for causing the alienation of his wifes love and affection, attorneys fees
and costs of suit.10
On June 26, 1996, the Regional Trial Court rendered a decision in favor
of petitioner, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. Ordering the defendants to pay plaintiff the amount of
US$25,000.00 or its equivalent in Philippine Currency at the time
of its payment, plus legal interest thereon from August 24, 1994
until fully paid;
2. Ordering the defendant Manuel T. Abelardo to pay the plaintiff
the amount of P500,000.00 representing moral damages and the
further amount of P50,000.00 as exemplary damages; and
3. Ordering the defendants to pay the plaintiff the amount of
P100,000.00 as attorneys fees, plus the costs of suit.
SO ORDERED.11
Respondent appealed the decision of the trial court to the Court of
Appeals. On November 10, 2000, the Court of Appeals reversed and set
aside the trial courts decision and dismissed the complaint for
insufficiency of evidence to show that the subject amount was indeed
loaned by petitioner to respondent and his wife. The Court of Appeals
found that the amount of US$25,000.00 was respondents share in the
profits of H.L. Carlos Construction. The dispositive portion of the Court of
Appeals decision states:
 WHEREFORE, premises considered, the Decision of the
Regional Trial Court of Valenzuela, Branch 172 in Civil Case No.
4490-V-94 is hereby REVERSED and SET ASIDE and a new one
entered DISMISSING the Complaint for insufficiency of evidence.
The claim for damages by defendant-appellant is likewise
DISMISSED, also for insufficiency of evidence, because of his
failure to present substantial evidence to prove that plaintiff-
appellee caused the defendant-spouses separation.
Costs against the plaintiff-appellee.
SO ORDERED.12
A motion for reconsideration of the above decision having been denied
on, petitioner brought this appeal assigning the following errors:
THE COURT OF APPEALS ERRED IN FINDING INSUFFICIENT
EVIDENCE TO PROVE THAT THE AMOUNT OF US$25,000.00
WAS A LOAN OBTAINED BY PRIVATE RESPONDENT AND
HIS WIFE FROM PETITIONER.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
US$25,000.00 WAS GIVEN AS PRIVATE RESPONDENTS
SHARE IN THE PROFITS OF H.L. CARLOS CONSTRUCTION,
INC. AND THAT THE FILING OF THE COMPLAINT IS A HOAX.
THE COURT OF APPEALS ERRED IN NULLIFYING THE
AWARD OF DAMAGES FOR LACK OF PROOF THEREOF.
We find merit in the petition.
As gleaned from the records, the following facts are undisputed: (1) there
was a check in the amount of US$25,000.00 issued by petitioner; (2) this
amount was received by respondent and his wife and given to a certain
Pura Vallejo for the full payment of a house and lot located at #19952
Chestnut Street, Executive Heights Village, Paranaque, Metro Manila; (3)
this house and lot became the conjugal dwelling of respondent and his
wife; and (4) respondents wife executed an instrument acknowledging
the loan but which respondent did not sign.
To prove his claim that the amount was in the nature of a loan or an
advance he extended to respondent and his wife, petitioner presented
Bankers Trust Check No. 337 in the amount of US$25,000.00 he issued
on October 31, 1989 to Pura Vallejo.13 He also introduced in evidence an
instrument executed by respondents wife on July 31, 1991
acknowledging her and her husbands accountability to petitioner for the
said amount which was advanced in payment of a house and lot located
at #19952 Chestnut Street, Executive Heights Subdivision,
Paranaque.14 A formal demand letter by counsel for petitioner dated
August 24, 1994 sent to and received by respondent was also on
record.15
All these pieces of evidence, taken together with respondents admission
that he and his wife received the subject amount and used the same to
purchase their house and lot, sufficiently prove by a preponderance of
evidence petitioners claim that the amount of US$25,000.00 was really in
the nature of a loan.
Respondent tried to rebut petitioners evidence by claiming that the
US$25,000.00 was not a loan but his share in the profits of H.L. Carlos
Construction. He alleged that he received money from petitioner
amounting to almost P3 million as his share in the profits of the
corporation. To prove this, he presented ten (10) Bank of the Philippine
Islands (BPI) checks allegedly given to him by petitioner.16 He argued that
if indeed, he and his wife were indebted to petitioner, the latter could
have easily deducted the amount of the said loan from his share of the
profits.
Respondent fails to convince this Court.
All the checks presented by respondent, which he claims to be his share
in the profits of petitioners company, were all in the account of H.L.
Carlos Construction.17 On the other hand, the Bankers Trust Check in the
amount of US$25,000.00 was drawn from the personal account of
petitioner.18 Assuming to be true that the checks presented by respondent
were his profits from the corporation, then all the more does this prove
that the amount of US$25,000.00 was not part of such profits because it
was issued by petitioner from his own account. Indeed, if such amount
was respondents share of the profits, then the same should have been
issued under the account of H.L. Carlos Construction.
Moreover, respondent failed to substantiate his claim that he is entitled to
the profits and income of the corporation. There was no showing that
respondent was a stockholder of H.L. Carlos Construction. His name
does not appear in the Articles of Incorporation as well as the
Organizational Profile of said company either as stockholder or
officer.19Not being a stockholder, he cannot be entitled to the profits or
income of said corporation. Neither did respondent prove that he was an
employee or an agent so as to be entitled to salaries or commissions
from the corporation.
We quote with favor the disquisition of the trial court on this point:
Early in time, it must be noted that payment of personal debts
contracted by the husband or the wife before or during the
marriage shall not be charged to the conjugal partnership except
insofar as they redounded to the benefit of the family. The
defendants never denied that the check of US$25,000.00 was
used to purchase the subject house and lot. They do not deny
that the same served as their conjugal home, thus benefiting the
family. On the same principle, acknowledgment of the loan made
by the defendant-wife binds the conjugal partnership since its
proceeds redounded to the benefit of the family. Hence,
defendant-husband and defendant-wife are jointly and severally
liable in the payment of the loan.
Defendant-husband cannot allege as a defense that the amount
of US $25,000.00 was received as his share in the income or
profits of the corporation and not as a loan. Firstly, defendant-
husband does not appear to be a stockholder nor an employee
nor an agent of the corporation, H. L. Carlos Construction, Inc.
Since he is not a stockholder, he has no right to participate in the
income or profits thereof. In the same manner that as he is not an
employee nor an agent of H. L. Carlos Construction, Inc., he has
no right to receive any salary or commission therefrom. Secondly,
the amount advanced for the purchase of the house and lot came
from the personal account of the plaintiff. If, indeed, it was to be
construed as defendant-husbands share in the profits of the
corporation, the checks should come from the corporations
account and not from the plaintiffs personal account, considering
that the corporation has a personality separate and distinct from
that of its stockholders and officers.1wphi1.nt
Even granting that the checks amount to US $3,000.000.00 given
by the plaintiff to the defendant-spouses was their share in the
profits of the corporation, still there is no sufficient evidence to
establish that the US $25,000.00 is to be treated similarly.
Defendant-husband in invoking the defense of compensation
argued that if indeed they were indebted to the plaintiff, the latter
could have applied their share in the proceeds or income of the
corporation to the concurrent amount of the alleged loan, instead
of giving the amount of P3,000,000.00 to them. This argument is
untenable. Article 1278 of the Civil Code provides that
compensation shall take place when two persons, in their own
right, are debtors and creditors of each other. As its indicates,
compensation is a sort of balancing between two obligations. In
the instant case, the plaintiff and the defendant-husband are not
debtors and creditors of each other. Even granting that the
defendant-husbands claim to the profits of the corporation is
justified, still compensation cannot extinguish his loan obligation
to the plaintiff because under such assumption, the defendant is
dealing with the corporation and not with the plaintiff in his
personal capacity. Hence, compensation cannot take place.
The Court of Appeals, thus, erred in finding that respondents liability was
not proved by preponderance of evidence. On the contrary, the evidence
adduced by petitioner sufficiently established his claim that the
US$25,000.00 he advanced to respondent and his wife was a loan.
The loan is the liability of the conjugal partnership pursuant to Article 121
of the Family Code:
Article 121. The conjugal partnership shall be liable for:
xxx
(2) All debts and obligations contracted during the marriage by
the designated administrator-spouse for the benefit of the
conjugal partnership of gains, or by both spouses or by one of
them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the
consent of the other to the extent that the family may have been
benefited;
If the conjugal partnership is insufficient to cover the foregoing
liabilities, the spouses shall be solidarily liable for the unpaid
balance with their separate properties.
xxx
While respondent did not and refused to sign the acknowledgment
executed and signed by his wife, undoubtedly, the loan redounded to the
benefit of the family because it was used to purchase the house and lot
which became the conjugal home of respondent and his family. Hence,
notwithstanding the alleged lack of consent of respondent, under Art. 21
of the Family Code, he shall be solidarily liable for such loan together
with his wife.
We also find sufficient basis for the award of damages to petitioner,
contrary to the findings of the Court of Appeals that petitioner is not
entitled thereto.
Petitioners allegations of verbal and written threats directed against him
by respondent is duly supported by evidence on record. He presented
two witnesses, Irineo Pajarin and Randy Rosal, who testified on separate
incidents where threats were made by respondent against petitioner.
Randy Rosal, driver of petitioner, declared that around three o clock in
the afternoon of September 15, 1991, he was sent by respondents wife
on an errand to deliver the acknowledgment letter to respondent for him
to sign. Respondent did not sign the acknowledgment and instead, wrote
a letter addressed to petitioner threatening him. He narrated what took
place thereafter:
xxx
Q When you were requested by Ma. Theresa C. Abelardo to bring a letter
to herein defendant Manuel Abelardo for him to sign the same, do you
know whether that letter was actually signed by Manuel Abelardo?
A No, sir.
xxx
Q And what happened when Manuel Abelardo refused to sign that letter
coming from the other defendant?
A He made me wait and he prepared a letter to Mr. Honorio Carlos, sir.
xxx
Q Where were you at the time when this defendant Manuel Abelardo
prepared this letter?
A In his house, sir.
Q And where did he actually prepare that letter?
A At the dining table, sir.
Q How far were you from Manuel Abelardo from the dining table at the
time when he was preparing a letter.
A Around 1 meter, sir.
Q And do you know where in, what particular paper did Mr. Abelardo
prepare or write this letter?
A He wrote it in a Manila envelope, sir.
xxx
Q What happened after Manuel Abelardo prepared this letter in a
Manila envelope?
A He got a small envelope and placed there the name of Mr. Carlos as
the addressee, sir.
xxx
Q After preparing this letter on a Manila envelope and then getting
another envelope and writing on it the address of herein plaintiff, what did
the defendant Manuel Abelardo do, if any?
A He instructed me to mail the letter which he prepared, sir.
xxx
Q And did you actually accede to the request of herein defendant
Manuel Abelardo for you to mail that letter to Engr. Carlos?
A I got the envelope but I did not mail it, sir.
xxx
Q May we know from you the reason why you did not mail said letter?
A Because Engr. Carlos might become frightened, sir.
Q What did you do with that letter, although you did not mail it?
A I kept it, sir.
xxx
Q And what did you do next after keeping the letter for several days?
A I gave the letter personally to Engr. Carlos, sir.
Q What prompted you to give that letter to Engr. Carlos instead of
mailing it?
A So that Engr. Carlos can prepare, sir.
x x x20
This incident was duly entered and recorded in the Police Blotter on
October 7, 1991 by a certain Sgt. Casile of the Valenzuela Police Station.21 A
photocopy of this written threat was also attached to the Police Report and
presented in evidence.22
Another witness, Irineo Pajarin, recounted an incident which occurred in the
afternoon of May 25, 1994, to wit:
xxx
Q Now Mr. Witness, on May 25, 1994 at around 2:30 in the afternoon do
you recall where you were on that particular date and time?
A I was at B.F. Homes, Paranaque, sir.
Q What were you doing at that time?
A I was waiting for Sargie Cornista, sir.
xxx
Q Will you please narrate to this Honorable Court that unusual incident?
A Manuel Abelardo passed by and when he saw me he called me. I
approached him while he was then on board his car and asked me who was
my companion, sir.
Q And what was your answer to him?
A I told him it was Sargie, sir.
Q And what was his reply if any?
A He again asked me if I have in my company one of his children, sir.
Q What was your reply?
A I answered none, sir.
Q Incidentally Mr. Witness, where or in what particular place did this
conversation between you and Manuel T. Abelardo take place?
A Parking Area of Academy I, Gov. Santos corner Aguirre St., sir.
Q Now, what else happened after you talk[ed] with this Manuel T.
Abelardo?
A He said I may be fooling him because he said I once fooled him when I
ran away with his children which he is going to take back, sir.
Q And what was your reply to that?
A I answered I did not do that and he said that once he discovered that I
did it he would box me, sir.
Q What else if any did he tell you at that time?
A He asked me who instructed me, sir.
Q Instructed you about what?
A To run away with the children, sir.
Q And what was your reply?
A None, he was the one who said "was it your Ate Puppet?" But I did not
answer, sir.
Q What happened next when you failed to answer?
A "Or my father in law?"
Q And when he said his father in law to whom was he referring at that
time?
A Mr. Honorio Carlos, sir.
Q After mentioning the name of his father-in-law Mr. Honorio Carlos
what happened next?
A He told me "Sabihin mo sa biyenan ko babarilin ko siya pag nakita ko
siya."
Q Where was Manuel Abelardo at that particular time when he told this
threatening remark against Honorio Carlos?
A He was inside his car in Aguirre St., sir.
Q How about you where were you approximately at that particular time
when he narrated that message to you threatening the herein plaintiff?
A I was outside looking in his vehicle at Aguirre St., sir.
xxx
Q And what was your reply or reaction when he made this threatening
remarks?
A None, because he left. I was left behind, sir.23
This testimony was in part corroborated by an entry dated May 28, 1994
in the Police Blotter of the Paranaque Police Station narrating the
aforementioned incident.24
The testimonies of these witnesses on the two separate incidents of
threat are positive, direct and straightforward. Petitioner also declared on
the witness stand that on several occasions, he received telephone calls
from respondent cursing and threatening him.25 These incidents of threat
were also evidenced by a letter written by respondents wife and
addressed to her father-in-law (father of respondent).26 The letter
recounted the instances when threats were made by her husband against
petitioner, particularly, the incident reported by Pajarin and the threats
made by respondent through the telephone.27
All these circumstances sufficiently establish that threats were directed by
respondent against petitioner justifying the award of moral damages in
favor of petitioner. However, the Court finds the amount of 500,000.00
as moral damages too exorbitant under the circumstances and the same
is reduced to 50,000.00. The exemplary damages and attorneys fees
are likewise reduced to 20,000.00 and 50,000.00, respectively.
WHEREFORE, the petition is hereby GRANTED and the decision of the
Court of Appeals in CA GR-CV No. 54464 is MODIFIED in that
respondent is ordered to pay petitioner the amounts of (1) US$25,000 or
its equivalent in Philippine currency at the time of payment, plus legal
interest from August 4, 1994, until fully paid; (2) 50,000.00 as moral
damages; (3) 20,000.00 as exemplary damages; and (4) 50,000.00 as
attorneys fees.
1wphi1.nt
SO ORDERED.
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING
CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court,
assails the Decision1 of the Court of Appeals (CA) dated November 27,
1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April 2,
1996 denying the petitioners motion for reconsideration. The impugned
decision granted the private respondents petition for certiorariand 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 Taedo and
Chung Kiat Hua, executed a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee the payment of all the
PBMCI obligations owing the ABC to the extent of 38,000,000.00.6 The
loan was subsequently renewed on various dates, the last renewal
having been made on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the
PBMCI in the amount of 13,000,000.00 payable in eighteen months at
16% interest per annum. As in the previous loan, the PBMCI, through
Alfredo Ching, executed a promissory note to evidence the loan maturing
on June 29, 1981.8 This was renewed once for a period of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August
21, 1981, the ABC filed a complaint for sum of money with prayer for a
writ of preliminary attachment against the PBMCI to collect the
12,612,972.88 exclusive of interests, penalties and other bank charges.
Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio
Taedo and Chung Kiat Hua in their capacity as sureties of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial
Court of Manila, Branch XVIII.10 In its application for a writ of preliminary
attachment, the ABC averred that the "defendants are guilty of fraud in
incurring the obligations upon which the present action is brought11 in that
they falsely represented themselves to be in a financial position to pay
their obligation upon maturity thereof."12 Its supporting affidavit stated,
inter alia, that the "[d]efendants have removed or disposed of their
properties, or [are] ABOUT to do so, with intent to defraud their
creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an
Order denying the ABCs 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.14On motion for
reconsideration, however, the trial court, in an Order dated September
14, 1981, reconsidered its previous order and granted the ABCs
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 corporations obligation to the plaintiff as a surety
thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the
defendant Alfredo Ching requiring the sheriff of this Court to attach all the
properties of said Alfredo Ching not exceeding 12,612,972.82 in value,
which are within the jurisdiction of this Court and not exempt from
execution upon, the filing by plaintiff of a bond duly approved by this
Court in the sum of Twelve Million Seven Hundred Thousand Pesos
(12,700,000.00) executed in favor of the defendant Alfredo Ching to
secure the payment by plaintiff to him of all the costs which may be
adjudged in his favor and all damages he may sustain by reason of the
attachment if the court shall finally adjudge that the plaintiff was not
entitled thereto.
SO ORDERED.15
Upon the ABCs 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 PBMCIs rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCIs 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 PBMCIs 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 PBMCIs 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 Chings 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, Taedo filed his Answer with counterclaim and
cross-claim.24 Ching eventually filed his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed an
Omnibus Motion,26 again praying for the dismissal of the complaint or
suspension of the proceedings on the ground of the July 9, 1982
Injunctive Order issued in SEC Case No. 2250. He averred that as a
surety of the PBMCI, he must also necessarily benefit from the defenses
of his principal. The ABC opposed Chings omnibus motion.
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion27 praying for
the dismissal of the complaint, arguing that the ABC had "abandoned and
waived" its right to proceed against the continuing guaranty by its act of
resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of
his preliminary attachment bond from 12,700,000 to
6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2, 1987,
the court issued an Order setting the incident for further hearing on May
28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual
value of the properties of Alfredo Ching levied on by the sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion of
the ABC and rendered the attachment bond of 6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her husband
Alfredo Ching, filed a Motion to Set Aside the levy on attachment. She
alleged inter alia that the 100,000 shares of stocks levied on by the
sheriff were acquired by her and her husband during their marriage out of
conjugal funds after the Citycorp Investment Philippines was established
in 1974. Furthermore, the indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by petitioner
Alfredo Ching for the account of PBMCI did not redound to the benefit of
the conjugal partnership. She, likewise, alleged that being the wife of
Alfredo Ching, she was a third-party claimant entitled to file a motion for
the release of the properties.32 She attached therewith a copy of her
marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment
and/or motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to
this present case; thus, she has no personality to file any motion
before this Honorable Court;
2.2 Said supposed movant did not file any Motion for Intervention
pursuant to Section 2, Rule 12 of the Rules of Court;
2.3 Said Motion cannot even be construed to be in the nature of a
Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules
of Court.
3. Furthermore, assuming in gracia argumenti that the supposed movant
has the required personality, her Motion cannot be acted upon by this
Honorable Court as the above-entitled case is still in the archives and the
proceedings thereon still remains suspended. And there is no previous
Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by
laches because the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in
evidence her marriage contract to Alfredo Ching to prove that they were
married on January 8, 1960;35 the articles of incorporation of Citycorp
Investment Philippines dated May 14, 1979;36 and, the General
Information Sheet of the corporation showing that petitioner Alfredo
Ching was a member of the Board of Directors of the said corporation
and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition
to the motion to expunge records.
Acting on the aforementioned motion, the trial court issued on December
15, 1993 an Order37 lifting the writ of preliminary attachment on the
shares of stocks and ordering the sheriff to return the said stocks to the
petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment,
dated November 9, 1993, is hereby granted. Let the writ of preliminary
attachment subject matter of said motion, be quashed and lifted with
respect to the attached 100,000 common shares of stock of Citycorp
Investment Philippines in the name of the defendant Alfredo Ching, the
said shares of stock to be returned to him and his movant-spouse by
Deputy Sheriff Apolonio A. Golfo who effected the levy thereon on July
26, 1983, or by whoever may be presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the
reconsideration of the order but denied the same on February 17, 1994.
The petitioner bank forthwith filed a petition for certiorari with the CA,
docketed as CA-G.R. SP No. 33585, for the nullification of the said order
of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted
without jurisdiction in taking cognizance of, and granting a
"Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave abuse of discretion
in lifting the writ of preliminary attachment without any basis in
fact and in law, and contrary to established jurisprudence on the
matter.39
On November 27, 1995, the CA rendered judgment granting the petition
and setting aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby
setting aside the questioned orders (dated December 15, 1993 and
February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set aside
the assailed orders. According to the CA, the RTC deprived the private
respondent of its right to file a bond under Section 14, Rule 57 of the
Rules of Court. The petitioner Encarnacion T. Ching was not a party in
the trial court; hence, she had no right of action to have the levy annulled
with a motion for that purpose. Her remedy in such case was to file a
separate action against the private respondent to nullify the levy on the
100,000 Citycorp shares of stocks. The court stated that even assuming
that Encarnacion T. Ching had the right to file the said motion, the same
was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the
presumption in Article 160 of the New Civil Code shall not apply where,
as in this case, the petitioner-spouses failed to prove the source of the
money used to acquire the shares of stock. It held that the levied shares
of stocks belonged to Alfredo Ching, as evidenced by the fact that the
said shares were registered in the corporate books of Citycorp solely
under his name. Thus, according to the appellate court, the RTC
committed a grave abuse of its discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders. The petitioners motion for
reconsideration was denied by the CA in a Resolution dated April 2,
1996.
The petitioner-spouses filed the instant petition for review on certiorari,
asserting that the RTC did not commit any grave abuse of discretion
amounting to excess or lack of jurisdiction in issuing the assailed orders
in their favor; hence, the CA erred in reversing the same. They aver that
the source of funds in the acquisition of the levied shares of stocks is not
the controlling factor when invoking the presumption of the conjugal
nature of stocks under Art. 160,42 and that such presumption subsists
even if the property is registered only in the name of one of the spouses,
in this case, petitioner Alfredo Ching.43 According to the petitioners, the
suretyship obligation was not contracted in the pursuit of the petitioner-
husbands profession or business.44 And, contrary to the ruling of the CA,
where conjugal assets are attached in a collection suit on an obligation
contracted by the husband, the wife should exhaust her motion to quash
in the main case and not file a separate suit.45 Furthermore, the
petitioners contend that under Art. 125 of the Family Code, the petitioner-
husbands 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 claimants proof does not
persuade the court of the validity of the title, or right of possession
thereto, the claim will be denied by the court. The aggrieved third party
may also avail himself of the remedy of "terceria" by executing an
affidavit of his title or right of possession over the property levied on
attachment and serving the same to the office making the levy and the
adverse party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should be a
totally separate and distinct action from the former case. The above-
mentioned remedies are cumulative and any one of them may be
resorted to by one third-party claimant without availing of the other
remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy on
attachment of the 100,000 shares of stocks in the name of petitioner-
husband claiming that the said shares of stocks were conjugal in nature;
hence, not liable for the account of her husband under his continuing
guaranty and suretyship agreement with the PBMCI. The petitioner-wife
had the right to file the motion for said relief.
On the second issue, we find and so hold that the CA erred in setting
aside and reversing the orders of the RTC. The private respondent, the
petitioner in the CA, was burdened to prove that the RTC committed a
grave abuse of its discretion amounting to excess or lack of jurisdiction.
The tribunal acts without jurisdiction if it does not have the legal purpose
to determine the case; there is excess of jurisdiction where the tribunal,
being clothed with the power to determine the case, oversteps its
authority as determined by law. There is grave abuse of discretion where
the tribunal acts in a capricious, whimsical, arbitrary or despotic manner
in the exercise of its judgment and is equivalent to lack of jurisdiction.51
It was incumbent upon the private respondent to adduce a sufficiently
strong demonstration that the RTC acted whimsically in total disregard of
evidence material to, and even decide of, the controversy before
certiorari will lie. A special civil action for certiorari is a remedy designed
for the correction of errors of jurisdiction and not errors of judgment.
When a court exercises its jurisdiction, an error committed while so
engaged does not deprive it of its jurisdiction being exercised when the
error is committed.52
After a comprehensive review of the records of the RTC and of the CA,
we find and so hold that the RTC did not commit any grave abuse of its
discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
Article 160 of the New Civil Code provides that all the properties acquired
during the marriage are presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband, or to the
wife. In Tan v. Court of Appeals,53 we held that it is not even necessary to
prove that the properties were acquired with funds of the partnership. As
long as the properties were acquired by the parties during the marriage,
they are presumed to be conjugal in nature. In fact, even when the
manner in which the properties were acquired does not appear, the
presumption will still apply, and the properties will still be considered
conjugal. The presumption of the conjugal nature of the properties
acquired during the marriage subsists in the absence of clear,
satisfactory and convincing evidence to overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that
the 100,000 shares of stocks in the Citycorp Investment Philippines were
issued to and registered in its corporate books in the name of the
petitioner-husband when the said corporation was incorporated on May
14, 1979. This was done during the subsistence of the marriage of the
petitioner-spouses. The shares of stocks are, thus, presumed to be the
conjugal partnership property of the petitioners. The private respondent
failed to adduce evidence that the petitioner-husband acquired the stocks
with his exclusive money.55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment Philippines
solely in the name of the petitioner-husband does not constitute proof
that the petitioner-husband, not the conjugal partnership, owned the
same.56 The private respondents reliance on the rulings of this Court in
Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v.
Banzon58 is misplaced. In the Maramba case, we held that where there is
no showing as to when the property was acquired, the fact that the title is
in the wifes name alone is determinative of the ownership of the
property. The principle was reiterated in the Associated Insurance case
where the uncontroverted evidence showed that the shares of stocks
were acquired during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this
Court in Wong v. Intermediate Appellate Court59 buttresses the case for
the petitioners. In that case, we ruled that he who claims that property
acquired by the spouses during their marriage is not conjugal partnership
property but belongs to one of them as his personal property is burdened
to prove the source of the money utilized to purchase the same. In this
case, the private respondent claimed that the petitioner-husband
acquired the shares of stocks from the Citycorp Investment Philippines in
his own name as the owner thereof. It was, thus, the burden of the
private respondent to prove that the source of the money utilized in the
acquisition of the shares of stocks was that of the petitioner-husband
alone. As held by the trial court, the private respondent failed to adduce
evidence to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing
guaranty and suretyship agreement with the private respondent for the
payment of the PBMCI loans, the petitioner-husband was in the exercise
of his profession, pursuing a legitimate business. The appellate court
erred in concluding that the conjugal partnership is liable for the said
account of PBMCI under Article 161(1) of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the
Family Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the benefit of
the conjugal partnership, and those contracted by the wife, also for the
same purpose, in the cases where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship
agreement as security for the payment of the loan obtained by the
PBMCI from the private respondent in the amount of 38,000,000.
In Ayala Investment and Development Corp. v. Court of Appeals,61 this
Court ruled "that the signing as surety is certainly not an exercise of an
industry or profession. It is not embarking in a business. No matter how
often an executive acted on or was persuaded to act as surety for his
own employer, this should not be taken to mean that he thereby
embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should
appertain to the husband alone, there must be a showing that some
advantages accrued to the spouses. Certainly, to make a conjugal
partnership responsible for a liability that should appertain alone to one of
the spouses is to frustrate the objective of the New Civil Code to show
the utmost concern for the solidarity and well being of the family as a unit.
The husband, therefore, is denied the power to assume unnecessary and
unwarranted risks to the financial stability of the conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the petitioner-husbands
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-husbands career would be enhanced should
PBMCI survive because of the infusion of fresh capital. However, these
are not the benefits contemplated by Article 161 of the New Civil Code.
The benefits must be those directly resulting from the loan. They cannot
merely be a by-product or a spin-off of the loan itself.64
This is different from the situation where the husband borrows money or
receives services to be used for his own business or profession. In the
Ayala case, we ruled that it is such a contract that is one within the term
"obligation for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he
directly received the money and services to be used in or for his own
business or his own profession, that contract falls within the term "
obligations for the benefit of the conjugal partnership." Here, no actual
benefit may be proved. It is enough that the benefit to the family is
apparent at the time of the signing of the contract. From the very nature
of the contract of loan or services, the family stands to benefit from the
loan facility or services to be rendered to the business or profession of
the husband. It is immaterial, if in the end, his business or profession fails
or does not succeed. Simply stated, where the husband contracts
obligations on behalf of the family business, the law presumes, and
rightly so, that such obligation will redound to the benefit of the conjugal
partnership.65
The Court held in the same case that the rulings of the Court in Cobb-
Perez and G-Tractors, Inc. are not controlling because the husband, in
those cases, contracted the obligation for his own business. In this case,
the petitioner-husband acted merely as a surety for the loan contracted
by the PBMCI from the private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
Decision and Resolution of the Court of Appeals are SET ASIDE AND
REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.
G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY
YULO (doing business under the name and style of A & L
INDUSTRIES), respondents.
GUTIERREZ, JR., J.:
This is a petition for review seeking to set aside the decision of the Court of Appeals which affirmed the
decision of the then Court of First Instance of Manila, dismissing the complaint instituted by the
petitioner and ordering it to pay damages on the basis of the private respondent's counterclaim.
On July 1, 1975, private respondent Augusto Yulo secured a loan from
the petitioner in the amount of P591,003.59 as evidenced by a
promissory note he signed in his own behalf and as representative of the
A & L Industries. Respondent Yulo presented an alleged special power of
attorney executed by his wife, respondent Lily Yulo, who manages A & L
Industries and under whose name the said business is registered,
purportedly authorizing Augusto Yulo to procure the loan and sign the
promissory note. About two months prior to the loan, however, Augusto
Yulo had already left Lily Yulo and their children and had abandoned their
conjugal home. When the obligation became due and demandable,
Augusto Yulo failed to pay the same.
On October 7, 1975, the petitioner filed its amended complaint against
the spouses Augusto and Lily Yulo on the basis of the promissory note. It
also prayed for the issuance of a writ of attatchment alleging that the said
spouses were guilty of fraud in contracting the debt upon which the action
was brought and that the fraud consisted of the spouses' inducing the
petitioner to enter into a contract with them by executing a Deed of
Assignment in favor of the petitioner, assigning all their rights, titles and
interests over a construction contract executed by and between the
spouses and A. Soriano Corporation on June 19, 1974 for a
consideration of P615,732.50 when, in truth, the spouses did not have
any intention of remitting the proceeds of the said construction contract to
the petitioner because despite the provisions in the Deed of Assignment
that the spouses shall, without compensation or costs, collect and receive
in trust for the petitioner all payments made upon the construction
contract and shall remit to the petitioner all collections therefrom, the said
spouses failed and refuse to remit the collections and instead,
misappropriated the proceeds for their own use and benefit, without the
knowledge or consent of the petitioner.
The trial court issued the writ of attachment prayed for thereby enabling
the petitioner to attach the properties of A & L Industries. Apparently not
contented with the order, the petitioner filed another motion for the
examination of attachment debtor, alleging that the properties attached
by the sheriff were not sufficient to secure the satisfaction of any
judgment that may be recovered by it in the case. This was likewise
granted by the court.
Private respondent Lily Yulo filed her answer with counterclaim, alleging
that although Augusta Yulo and she are husband and wife, the former
had abandoned her and their children five (5) months before the filing of
the complaint; that they were already separated when the promissory
note was executed; that her signature in the special power of attorney
was forged because she had never authorized Augusto Yulo in any
capacity to transact any business for and in behalf of A & L Industries,
which is owned by her as a single proprietor, that she never got a single
centavo from the proceeds of the loan mentioned in the promissory note;
and that as a result of the illegal attachment of her properties, which
constituted the assets of the A & L Industries, the latter closed its
business and was taken over by the new owner.
After hearing, the trial court rendered judgment dismissing the petitioner's
complaint against the private respondent Lily Yulo and A & L Industries
and ordering the petitioner to pay the respondent Lily Yulo P660,000.00
as actual damages; P500,000.00 as unrealized profits; P300,000.00 as
exemplary damages; P30,000.00 as and for attorney's fees; and to pay
the costs.
The petitioner appealed. The Court of Appeals affirmed the trial court's
decision except for the exemplary damages which it reduced from
P300,000.00 to P150,000.00 and the attorney's fees which were reduced
from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in holding
that the signature of respondent Lily Yulo in the special power of attorney
was forged, the Court of Appeals said:
The crucial issue to be determined is whether or not the
signatures of the appellee Lily Yulo in Exhibits B and B-1
are forged. Atty. Crispin Ordoa, the Notary Public,
 admitted in open court that the parties in the subject
documents did not sign their signatures in his presence.
The same were already signed by the supposed parties
and their supposed witnesses at the time they were
brought to him for ratification. We quote from the records
the pertinent testimony of Atty. Ordoa, thus:
Q. This document marked as Exhibit B-1, when this was presented to you
by that common friend, June Enriquez, it was already typewritten, it was
already accomplished, all typewritten.?
A. Yes, sir.
Q And the parties had already affixed their signatures in this document?
A. Yes, sir.
Q. In this document marked as Exhibit B although it appears here that
this is an acknowledgment, you have not stated here that the principal
actually acknowledged this document to be her voluntary act and deed?
A This in one of those things that escaped my attention. Actually I have
not gone over the second page. I believed it was in order I signed it.
(TSN pp. 13-14, Hearing of Nov. 26, 1976).
The glaring admission by the Notary Public that he failed to state in the
acknowledgment portion of Exhibit B-1 that the appellee Lily Yulo
acknowledged the said document to be her own voluntary act and deed,
is a very strong and commanding circumstance to show that she did not
appear personally before the said Notary Public and did not sign the
document.
Additionally, the Notary Public admitted that, while June Enriquez is
admittedly a mutual friend of his and the defendant Augusta Yulo, and
who is also an instrumental witness in said Exhibit B-1., he could not
recognize or tell which of the two signatures appearing therein, was the
signature of this June Enriquez.
Furthermore, as the issue is one of credibility of a witness, the findings
and conclusions of the trial court before whom said witness, Atty. Crispin
Ordoa, the Notary Public before whom the questioned document was
supposedly ratified and acknowledged, deserve great respect and are
seldom disturbed on appeal by appellate tribunals, since it is in the best
and peculiar advantage of determining and observing the conduct,
demeanor and deportment of a particular witness while he is testifying in
court, an opportunity not enjoyed by the appellate courts who merely
have to rely on the recorded proceedings which transpired in the court
below, and the records are bare of any circumstance of weight, which the
trial court had overlooked and which if duly considered, may radically
affect the outcome of the case.
On the other hand, the appellee Lily Yulo, to back up her claim of forgery
of her signature in Exhibit B-1, presented in court a handwriting expert
witness in the person of Police Captain Yakal Giron of the Integrated
National Police Training Command, and who is also a Document
Examiner of the same Command's Crime Laboratory at Fort Bonifacio,
Metro Manila. His experience as an examiner of questioned and disputed
documents, in our mind, is quite impressive. To qualify him as a
handwriting expert, he declared that he underwent extensive and actual
studies and examination of disputed or questioned document, both at the
National Bureau of Investigation Academy and National Bureau of
Investigation Questioned Document Laboratory, respectively, from July
1964, up to his appointment as Document Examiner in June, 1975, and,
to further his experience along this line, he attended the 297th Annual
Conference of the American Society of Questioned Docurnent Examiners
held at Seattle, Washington, in August 1971, as a representative of the
Philippines, and likewise conducted an observation of the present and
modern trends of crime laboratories in the West Coast, U.S.A., in 1971;
that he likewise had conducted actual tests and examination of about
100,000 documents, as requested by the different courts, administrative,
and governmental agencies of the Government, substantial portions of
which relate to actual court cases.
In concluding that the signatures of the appellee Lily Yulo, in the disputed
document in question (Exh. B-1), were all forgeries, and not her genuine
signature, the expert witness categorically recited and specified in open
court what he observed to be about twelve (12) glaring and material
significant differences, in his comparison of the signatures appearing in the
genuine specimen signatures of the said appellee and with those appearing
in the questioned document (Exhibit B-1). Indeed, we have likewise seen the
supposed notable differences, found in the standard or genuine signatures
of the appellee which were lifted and obtained in the official files of the
government, such as the Bureau of Internal Revenue on her income tax
returns, as compared to the pretended signature of the appellee appearing
in Exhibits B, B-1. It is also noteworthy to mention that the appellant did not
even bother to conduct a cross-examination of the handwriting expert
witness, Capt. Giron, neither did the appellant present another handwriting
expert, at least to counter-act or balance the appellee's handwriting expert.
Prescinding from the foregoing facts, we subscribe fully to the lower
court's observations that the signatures of the appellee Lily Yulo in the
questioned document (Exh. B-1) were forged. Hence, we find no factual
basis to disagree. (pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily Yulo was
forged or even if the attached properties were her exclusive property, the
same can be made answerable to the obligation because the said
properties form part of the conjugal partnership of the spouses Yulo, the
appellate court held that these contentions are without merit because
there is strong preponderant evidence to show that A & L Industries
belongs exclusively to respondent Lily Yulo, namely: a) The Certificate of
Registration of A & L Industries, issued by the Bureau of Commerce,
showing that said business is a single proprietorship, and that the
registered owner thereof is only Lily Yulo; b) The Mayor's Permit issued
in favor of A & L Industries, by the Caloocan City Mayor's Office showing
compliance by said single proprietorship company with the City
Ordinance governing business establishments; and c) The Special Power
of Attorney itself, assuming but without admitting its due execution, is
tangible proof that Augusto Yulo has no interest whatsoever in the A & L
Industries, otherwise, there would have been no necessity for the Special
Power of Attorney if he is a part owner of said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed the
findings of the trial court that there was bad faith on the part of the
petitioner as to entitle the private respondent to damages as shown not
only by the fact that the petitioner did not present the Deed of
Assignment or the construction agreement or any evidence whatsoever
to support its claim of fraud on the part of the private respondent and to
justify the issuance of a preliminary attachment, but also by the following
findings:
Continuing and elaborating further on the appellant's mala
fide actuations in securing the writ of attachment, the
lower court stated as follows:
Plaintiff not satisfied with the instant case where an order for attachment
has already been issued and enforced, on the strength of the same
Promissory Note (Exhibit"A"), utilizing the Deed of Chattel Mortgage
(Exhibit "4"), filed a foreclosure proceedings before the Office of the
Sheriff of Caloocan (Exhibit"6") foreclosing the remaining properties
found inside the premises formerly occupied by the A & L Industries. A
minute examination of Exhibit "4" will show that the contracting parties
thereto, as appearing in par. 1 thereof, are Augusto Yulo, doing business
under the style of A & L Industries (should be A & L Glass Industries
Corporation), as mortgagor and BA Finance Corporation as mortgagee,
thus the enforcement of the Chattel Mortgage against the property of A &
L Industries exclusively owned by Lily T. Yulo appears to be without any
factual or legal basis whatsoever. The chattel mortgage, Exhibit "4" and
the Promissory Note, Exhibit A, are based on one and the same
obligation. Plaintiff tried to enforce as it did enforce its claim into two
different modes a single obligation.
Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings
by virtue of a complaint she filed with the Court of First Instance of
Caloocan, seeking annulment of the Promissory Note, the very basis of
the plaintiff in filing this complaint, immediately after the day it filed a
Motion for the Issuance of an Alias Writ of Preliminary Attachment . . .Yet,
inspite of the knowledge and the filing of this Motion to Suspend
Proceedings, the Plaintiff still filed a Motion for the Issuance of a Writ of
Attachment dated February 6, 1976 before this court. To add insult to
injury, plaintiff even filed a Motion for Examination of the Attachment
Debtor, although aware that Lily Yulo had already denied participation in
the execution of Exhibits "A" and "B". These incidents and actions taken
by plaintiff, to the thinking of the court, are sufficient to prove and
establish the element of bad faith and malice on the part of plaintiff which
may warrant the award of damages in favor of defendant Lily Yulo. (Ibid.,
pp. 102-103). <re||an 1w>
Indeed, the existence of evident bad faith on the appellant's part in
proceeding against the appellee Lily Yulo in the present case, may
likewise be distressed on the fact that its officer Mr. Abraham Co, did not
even bother to demand the production of at least the duplicate original of
the Special Power of Attorney (Exhibit B) and merely contended himself
with a mere xerox copy thereof, neither did he require a more specific
authority from the A & L Industries to contract the loan in question, since
from the very content and recitals of the disputed document, no authority,
express or implied, has been delegated or granted to August Yulo to
contract a loan, especially with the appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the
petitioner should have presented evidence to disprove or rebut the
private respondent's claim but it remained quiet and chose not to disturb
the testimony and the evidence presented by the private respondent to
prove her claim.
In this petition for certiorari, the petitioner raises three issues. The first
issue deals with the appellate court's affirmance of the trial court's
findings that the signature of the private respondent on the Special Power
of Attorney was forged. According to the petitioner, the Court of Appeals
disregarded the direct mandate of Section 23, Rule 132 of the Rules of
Court which states in part that evidence of handwriting by comparison
may be made "with writings admitted or treated as genuine by the party
against whom the evidence is offered, or proved to be genuine to the
satisfaction of the judge," and that there is no evidence on record which
proves or tends to prove the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as "standards" for
comparison with the alleged signature of the private respondent in the
Special Power of Attorney were those from the latter's residence
certificates in the years 1973, 1974 and 1975, her income tax returns for
the years 1973 and 1975 and from a document on long bond paper dated
May 18, 1977. Not only were the signatures in the foregoing documents
admitted by the private respondent as hers but most of the said
documents were used by the private respondent in her transactions with
the government. As was held in the case of Plymouth Saving & Loan
Assn. No. 2 v. Kassing (125 NE 488, 494):
We believe the true rule deduced from the authorities to be that the
genuineness of a "standard" writing may be established (1) by the
admission of the person sought to be charged with the disputed writing
made at or for the purposes of the trial or by his testimony; (2) by
witnesses who saw the standards written or to whom or in whose hearing
the person sought to be charged acknowledged the writing thereof; (3) by
evidence showing that the reputed writer of the standard has acquiesced
in or recognized the same, or that it has been adopted and acted upon by
him his business transactions or other concerns....
Furthermore, the judge found such signatures to be sufficient as
standards. In the case of Taylor-Wharton Iron & Steel Co. v.
Earnshaw (156 N.E. 855, 856), it was held:
When a writing is offered as a standard of comparison it is for the
presiding judge to decide whether it is the handwriting of the party to be
charged. Unless his finding is founded upon error of law, or upon
evidence which is, as matter of law, insufficient to justify the finding, this
court will not revise it upon exceptions." (Costelo v. Crowell, 139 Mass.
588, 590, 2 N.E. 648; Nuez v. Perry, 113 Mass, 274, 276.)
We cannot find any error on the part of the trial judge in using the above
documents as standards and also in giving credence to the expert
witness presented by the private respondent whose testimony the
petitioner failed to rebut and whose credibility it likewise failed to
impeach. But more important is the fact that the unrebutted handwriting
expert's testimony noted twelve (12) glaring and material differences in
the alleged signature of the private respondent in the Special Power of
Attorney as compared with the specimen signatures, something which
the appellate court also took into account. In Cesar v.
Sandiganbayan (134 SCRA 105, 132), we ruled:
Mr. Maniwang pointed to other significant divergences and distinctive
characteristics between the sample signatures and the signatures on the
questioned checks in his report which the court's Presiding Justice kept
mentioning during Maniwang's testimony.
In the course of his cross-examination, NBI expert Tabayoyong admitted
that he saw the differences between the exemplars used and the
questioned signatures but he dismissed the differences because he did
not consider them fundamental. We rule that significant differences are
more fundamental than a few similarities. A forger always strives to
master some similarities.
The second issue raised by the petitioner is that while it is true that A & L
Industries is a single proprietorship and the registered owner thereof is
private respondent Lily Yulo, the said proprietorship was established
during the marriage and its assets were also acquired during the same.
Therefore, it is presumed that this property forms part of the conjugal
partnership of the spouses Augusto and Lily Yulo and thus, could be held
liable for the obligations contracted by Augusto Yulo, as administrator of
the partnership.
There is no dispute that A & L Industries was established during the
marriage of Augusta and Lily Yulo and therefore the same is presumed
conjugal and the fact that it was registered in the name of only one of the
spouses does not destroy its conjugal nature (See Mendoza v. Reyes,
124 SCRA 161, 165). However, for the said property to be held liable, the
obligation contracted by the husband must have redounded to the benefit
of the conjugal partnership under Article 161 of the Civil Code. In the
present case, the obligation which the petitioner is seeking to enforce
against the conjugal property managed by the private respondent Lily
Yulo was undoubtedly contracted by Augusto Yulo for his own benefit
because at the time he incurred the obligation he had already abandoned
his family and had left their conjugal home. Worse, he made it appear
that he was duly authorized by his wife in behalf of A & L Industries, to
procure such loan from the petitioner. Clearly, to make A & L Industries
liable now for the said loan would be unjust and contrary to the express
provision of the Civil Code. As we have ruled in Luzon Surety Co., Inc. v.
De Gracia (30 SCRA 111, 115-117):
As explained in the decision now under review: "It is true that the
husband is the administrator of the conjugal property pursuant to the
provisions of Art. 163 of the new Civil Code. However, as such
administrator the only obligations incurred by the husband that are
chargeable against the conjugal property are those incurred in the
legitimate pursuit of his career, profession or business with the honest
belief that he is doing right for the benefit of the family. This is not true in
the case at bar for we believe that the husband in acting as guarantor or
surety for another in an indemnity agreement as that involved in this case
did not act for the benefit of the conjugal partnership. Such inference is
more emphatic in this case, when no proof is presented that Vicente
Garcia in acting as surety or guarantor received consideration therefore,
which may redound to the benefit of the conjugal partnership.(Ibid, pp.
46-47).
xxx xxx xxx
xxx xxx xxx
In the most categorical language, a conjugal partnership under that
provision is liable only for such "debts and obligations contracted by the
husband for the benefit of the conjugal partnership." There must be the
requisite showing then of some advantage which clearly accrued to the
welfare of the spouses. There is none in this case.
xxx xxx xxx
Moreover, it would negate the plain object of the additional requirement in
the present Civil Code that a debt contracted by the husband to bind a
conjugal partnership must redound to its benefit. That is still another
provision indicative of the solicitude and tender regard that the law
manifests for the family as a unit. Its interest is paramount; its welfare
uppermost in the minds of the codifiers and legislators.
We, therefore, rule that the petitioner cannot enforce the obligation
contracted by Augusto Yulo against his conjugal properties with
respondent Lily Yulo. Thus, it follows that the writ of attachment cannot
issue against the said properties.
Finally, the third issue assails the award of actual damages according to
the petitioner, both the lower court and the appellate court overlooked the
fact that the properties referred to are still subject to a levy on
attachment. They are, therefore, still under custodia legis and thus, the
assailed decision should have included a declaration as to who is entitled
to the attached properties and that assuming arguendo that the
attachment was erroneous, the lower court should have ordered the
sheriff to return to the private respondent the attached properties instead
of condemning the petitioner to pay the value thereof by way of actual
damages.
In the case of Lazatin v. Twao (2 SCRA 842, 847), we ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59, does not prescribed the
remedies available to the attachment defendant in case of a wrongful
attachment, but merely provides an action for recovery upon the bond,
based on the undertaking therein made and not upon the liability arising
from a tortuous act, like the malicious suing out of an attachment. Under
the first, where malice is not essential, the attachment defendant, is
entitled to recover only the actual damages sustained by him by reason
of the attachment. Under the second, where the attachment is maliciously
sued out, the damages recoverable may include a compensation for
every injury to his credit, business or feed (Tyler v. Mahoney, 168 NC
237, 84 SE 362; Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE 234).
...
The question before us, therefore, is whether the attachment of the
properties of A & L Industries was wrongful so as to entitle the petitioner
to actual damages only or whether the said attachment was made in bad
faith and with malice to warrant the award of other kinds of damages.
Moreover, if the private respondent is entitled only to actual damages,
was the court justified in ordering the petitioner to pay for the value of the
attached properties instead of ordering the return of the said properties to prove her claim for the said amount (See G. A. Machineries, Inc. v.
the private respondent Yulo ? Yaptinchay, 126 SCRA 78, 88).

Both the trial and appellate courts found that there was bad faith on the
part of the petitioner in securing the writ of attachment. We do not think
so. "An attachment may be said to be wrongful when, for instance, the
plaintiff has no cause of action, or that there is no true ground therefore,
or that the plaintiff has a sufficient security other than the property
attached, which is tantamout to saying that the plaintiff is not entitled to
attachment because the requirements of entitling him to the writ are
wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco, Revised
Rules of Court).
Although the petitioner failed to prove the ground relied upon for the
issuance of the writ of attachment, this failure cannot be equated with
bad faith or malicious intent. The steps which were taken by the petitioner
to ensure the security of its claim were premised, on the firm belief that
the properties involved could be made answerable for the unpaid
obligation due it. There is no question that a loan in the amount of
P591,003.59 was borrowed from the bank.
The judgment is therefore set aside insofar as it holds the petitioner liable
for P500,000.00 actual damages representing unrealized profits,
P150,000.00 for exemplary damages and P20,000.00 for attorney's fees.
As stated earlier, the attached properties, should be released in favor of
the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET
ASIDE and the petitioner is ordered to pay the private respondent Lily
Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS
(P660,000.00) as actual damages. The remaining properties subject of
the attachment are ordered released in favor of the petitioner.
SO ORDERED.

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

We cannot, however, sustain the award of P500,000.00 representing CUEVAS, J.:

unrealized profits because this amount was not proved or justified before
the trial court. The basis of the alleged unearned profits is too speculative
and conjectural to show actual damages for a future period. The private
respondent failed to present reports on the average actual profits earned
by her business and other evidence of profitability which are necessary to
Assailed and challenged in this Petition for Review is the Decision dated
April 29, 1977 of the then Court of Appeals in its CA-G.R. No. SP-05920,
the dispositive portion of which reads as follows
WHEREFORE, the petition is hereby granted. The levy on execution
dated February 11, 1976, the sheriff's certificate of sale dated March 25,
1975 and final deed of sale, and the orders of the respondent judge
dated April 26, 1976, July 12, 1976 and August 26, 1976, are set aside
and declared null and void. The writ of preliminary injunction heretofore in
force is made permanent. Costs against private respondent.
SO ORDERED.
Private respondent Luis R. Narciso is a businessman. He is engaged in
business as a producer and exporter of Philippine mahogany logs and
operates a logging concession at del Gallego, Camarines Sur. He is
legally married to the other private respondent Josefina Salak Narciso.
Petitioner G-Tractors, Inc. upon the other hand, is a domestic corporation
engaged primarily in the business of leasing heavy equipments such as
tractors, bulldozers, and the like.
Sometime in February 26, 1973, private respondent Luis R. Narciso
entered into a Contract of Hire of Heavy Equipment with petitioner G-
Tractors under the terms of which the latter leased to the former tractors
for the purpose of constructing switchroads and hauling felled trees at the
jobsite of Narciso's logging concession at del Gallego, Camarines Sur.
The contract provided for payment of rental for the use of said tractors.
Luis R. Narciso defaulted in his rental payments. Hence, on August 15,
1974, G-Tractors instituted an action against him to collect the total
amount of P155,410.25 with legal interest thereon, representing unpaid
rentals for the leased tractors, 25% thereof as liquidated damages,
P30,000.00 as and for attorney's fees, and the costs of suit, before the
then Court of First Instance of Rizal, Quezon City, Branch IX. The case
was docketed thereat as Civil Case No. Q-19173.
Luis R. Narciso was declared in default. On his representations, however,
G-Tractors accepted his offer for a compromise agreement. A
compromise agreement was thereupon signed by G-Tractors and Luis R.
Narciso and on the basis thereof, judgment thereon was rendered on
October 10, 1974.
The compromise agreement stipulated for payment by Luis R. Narciso of
the total claim of G-Tractors on an installment plan. Luis R. Narciso failed
to comply and so on November 29, 1974, G-Tractors filed a motion for
execution. This was opposed by Luis R. Narciso who asked for the
suspension of the issuance of a writ of execution on the ground that he
allegedly has a pending loan with a banking institution. The lower court,
finding the allegation without legal basis, denied the request for
suspension and ordered the issuance of a writ of execution to enforce the
judgment based on the compromise agreement. The writ of execution
was issued on February 7, 1975. 1 Levy was acc rdingly made on
February 19, 1975 by the City Sheriff of Quezon City on certain personal
properties of private respondents-at their residence at 208 Retiro Street,
Quezon City. Auction sale was held on March 1, 1975, and G-Tractors,
being the highest bidder, was awarded the sale by the City Sheriff of
Quezon City of all the personal properties listed under the levy, for the
total amount of P4,090.00.
On March 5, 1975, Luis R. Narciso offered to redeem and/or buy back all
the personal properties sold to G-Tractors for the same amount of
P4,090.00 which the latter agreed and for which a Deed of
Reconveyance was executed by G-Tractors.
Likewise, on February 12, 1975, the Sheriff of Quezon City made a levy
on "all rights, interest, title, participation which the defendant Luis R.
Narciso" may have over a parcel of residential land covered by TCT No.
120923 of the Registry of Deeds of Quezon City 2 which parcel of land is
allegedly the conjugal property of the spouses Luis R. Narciso and
Josefina Salak Narciso.
On February 22, 1975, the Sheriff notified the general public, in his
Notice of Sheriff's sale, that on March 25, 1975 he would sell at public
auction to the highest bidder for cash "the rights, interest and
participation of the aforementioned defendant Luis R. Narciso in the
aforesaid real estate property covered by Transfer Certificate of Title No.
120923, together with all the improvements existing thereon" to satisfy
the aforementioned writ of execution. 3
On March 25, 1975, a "Certificate of Sale" was issued to the effect that
"on said date (March 25, 1975) by virtue of the writ of execution issued by
the Honorable Ulpiano Sarmiento in Civil Case No. Q-19173, the ex-
oficio Sheriff of Quezon City sold at public auction to the highest bidder
(plaintiff G-Tractors, Inc.) for P180,000.00 the real estate property
covered by TCT No. 120923, Quezon City, and levied upon on February
12, 1975, together with all the improvements thereon. 4 At that time,
however, TCT No. 120923 was mortgaged to Mercantile Financing
Corporation to guarantee an outstanding unpaid account of Luis R.
Narciso and his wife in the amount of P74,327.52.
Soon after the issuance of the aforesaid Certificate of Sale, Luis R.
Narciso and G-Tractors, Inc. executed a contract of lease over the
aforesaid property whereby the former obligated himself to pay a monthly
rental of P1,000.00 and by virtue of the said contract of lease, Luis R.
Narciso actually paid to G-Tractors, Inc. the amount of P12,000.00 as
rental for one year.
On March 31, 1976, Josefina Salak Narciso and her husband Luis R.
Narciso filed a complaint in the same Court of First Instance of Quezon
City for "declaration of nullity of levy on execution and auction sale of
plaintiff's conjugal property with damages and injunction," docketed as
Civil Case No. Q-21267. Among other things, the complaint alleged that
whatever transpired in Civil Case No. Q-19173 could be binding only on
the husband Luis R. Narciso and could not affect or bind the plaintiff-wife
Josefina Salak Narciso who was not a party to that case; that the nature
of the Sheriff's sale clearly stated that only the property of the husband
may be sold to satisfy the money judgment against him; that the conjugal
property of the plaintiffs-spouses could not be made liable for the
satisfaction of the judgment in Civil Case No. Q-19173 considering that
the subject matter of said case was never used for the benefit of the
conjugal partnership or of the family; and that the levy of the wife's share
in the conjugal property to satisfy the money judgment against her
husband is null and void. 5
On April 5, 1976, the President of G-Tractors, Inc. executed an affidavit
of consolidation of ownership and on the next day, April 6, 1976, the
sheriff issued a Sheriff's Final Deed of Sale. 6
On April 12, 1976, G-Tractors, Inc. filed in Civil Case No. Q-19173, a
"Motion for Entry and Issuance of New Torrens Certificate of Title" asking
the Court to direct the Register of Deeds of Quezon City to cancel TCT
No. 120923 and to allow the entry and issuance of a new torrens title in
the name of G-Tractors, Inc.
On April 22, 1976, Luis R. Narciso filed an opposition to the aforesaid
motion calling attention to the fact that he and his wife had filed a
complaint which was docketed as Civil Case No. Q-21267 and pointing
out that the Sheriff's final deed of sale and affidavit of consolidation of
ownership would have no effect should the levy on execution and the
subsequent auction sale of the conjugal property be nullified. 7
Civil Case No. Q-21267 was subsequently transferred to Branch IX of the
same Court of First Instance which tried Civil Case No. Q-19173.
On April 26, 1976, Judge Sarmiento issued an Order cancelled TCT No.
120923 and directing the Register of Deeds of Quezon City to issue in
lieu thereof a new title in the name of G-Tractors, Inc. 8
Luis R. Narciso move to reconsider the aforesaid order of April 26, 1976.
This was followed by a motion filed by the Narciso spouses for a
preliminary injunction in Civil Case No. Q-21267. Meanwhile, immediately
after receiving a copy of the order of April 26, 1976, G-Tractors, Inc.
caused the cancellation of TCT No. 120923 and the issuance of TCT No.
218552 in its name.
On May 21, 1976, the lower court enjoined G-Tractors, Inc. from
transferring, conveying or in any manner alienating the property covered
by TCT No. 218552 until the motion for reconsideration of the order of
April 26, 1976 has been resolved.
On July 12, 1976, two (2) orders were issued by the lower court, one
denying the motion for reconsideration and the other denying the motion
for preliminary injunction. A motion to reconsider the order denying the
preliminary injunction was likewise denied.
Hence, on October 2, 1976, the spouses Luis R. Narciso and Josefina
Salak Narciso filed before the then Court of Appeals, a petition for
certiorari with Preliminary Injunction, docketed in the said court as CA-
G.R. No. SP-05920, seeking-
A To annul, set aside and declare null and void the following:
(1) Levy on execution dated February 11, 1975;
(2) Sheriff's Certificate of sale dated March 25, 1975;
(3) Sheriff's Final Deed of Sale dated April 6, 1976;
(4) Order of respondent Judge dated April 26, 1976;
(5) Orders of the respondent Judge both dated July 12, 1976; and
(6) Order of the respondent Judge dated August 26, 1976.
B To restrain and enjoin the respondent from further giving force and
effect to the levy and sale on execution and to the disputed orders; the
private respondent G-Tractors, Inc. from alienating the Lot covered by
TCT No. 218552 and from dispossessing the petitioners of said Lot and
the house standing thereon; the respondent Judge from further
proceeding in Civil Case Nos. Q-19173 and Q-21267; and
C To direct the Register of Deeds of Quezon City to cancel TCT No.
218552 in the name of G-Tractors, Inc. and to issue a new one in the
name of petitioners-spouses.
On April 29, 1977, the then Court of Appeals rendered its now assailed
Decision, annulling the levy on execution dated February 11, 1975, the
sheriff's certificate of sale dated March 25, 1975, as well as the sheriff's
final deed of sale; and the Orders dated April 26, July 12 and August
26,1976.
G-Tractors, Inc.'s motion for reconsideration having been denied, the
instant petition for Review on certiorari was filed before this Court,
petitioner contending that respondent Court of Appeals erred
1. In holding that a levy on a residential land does not include the
residential house or any improvement erected and existing thereon;
2. In holding that the judgment debt of private respondent Luis R.
Narciso, subject of Civil Case No. Q-19173, entitled G-Tractors, Inc. vs.
Luis R. Narciso, Court of First Instance of Rizal, Quezon City, Branch IX
was not the conjugal debt of private respondents-spouses Luis R.
Narciso and Josefina Salak Narciso;
3. In not holding that there was laches and delay in the firing by private
respondents-spouses of CA-G.R. No. 05920-SP with the respondent
Court of Appeals.
4. In granting the writs applied for by private respondents spouses in CA-
G.R. No. 05920, the petition itself not being the proper remedy.
The crucial issue that poses itself for our resolution in the instant petition
is-whether or not the judgment debt of private respondent Luis R. Narciso
is a conjugal debt for which the conjugal partnership property can be held
answerable.
Article 161 of the New Civil Code provides that the conjugal partnership
shall be liable for:
(1) All the 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.
There is no question that private respondent Luis R. Narciso is engage in
business as a producer and exporter of Philippine mahogany logs. He
operates a logging concession at del Gallego, Camarines Sur and holds
office right in the conjugal dwelling at 208 Retiro Street, Talayan Village,
Quezon City, Metro Manila, where he and his family reside. His account
with petitioner G-Tractors, Inc. represents rentals for the use of
petitioner's tractors which he leased for the purpose of constructing
switchroads and hauling felled trees at the jobsite of the logging
concession at del Gallego, Camarines Sur which is not his exclusive
property but that of his family. There is no doubt then that his account
with the petitioner was brought about in order to enhance the productivity
of said logging business, a commercial enterprise for gain which he had
the right to embark the conjugal partnership.
This is the finding of the trial court and we find no cogent reason to
deviate therefrom. It held:
Lastly, the contention that the conjugal partnership is not liable because
the obligation contracted by the husband is personal in nature is not
applicable in this case. The record shows that Luis R. Narciso is a
producer and exporter of Philippine mahogany logs and that the
bulldozers leased to him was used for the construction of switchroads for
logging. It is very clear, therefore, that the obligations were contracted in
connection with his legitimate business as a producer and exporter in
mahogany logs and certainly benefited the conjugal partnership. Justice
J.B.L. Reyes is very liberal in interpreting Art. 161 of the Civil Code when
he declared in Luzon Surety Co., Inc. versus de Garcia (30 SCRA 118)
that the words in said article "all debts and obligations contracted by the
husband for the benefit of the conjugal partnership "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.9
In the case of Cobb-Perez vs. Lantin, 10 citing the case of Abella de Diaz
vs- Erlanger and Galinger, 11 and Javier vs. Osmena, 12 this court ruled-
The aforesaid obligation was contracted in the purchase of leather used
in the shoe manufacturing business of the petitioner husband. Said
business is an ordinary commercial enterprise for gain, in the pursuit of
which Damaso Perez had the right to embark the partnership. It is well
settled that the 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.
(Emphasis supplied)
The husband is the administrator of the conjugal partnership and as long
as he believes he is doing right to his family, he should not be made to
suffer and answer alone.13 So that, 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. Such is the nature of the judgment debt of private
respondent Luis R. Narciso to petitioner. Consequently, the conjugal
partnership of gains of private respondents Narcisos, must answer for the
same. 14 Necessarily the sale at public auction by the Sheriff of Quezon
City of TCT No. 120923 belonging to the conjugal partnership of gains of
the private respondents Narcisos in order to satisfy the judgment debt of
the private respondent Luis R. Narciso with petitioner, was validly and
legally made in accordance with law and not legally assailable as held in
the analogous case of Vda. de Sta. Romana vs. Philippine Commercial
and Industrial Bank 15 where We laid down the following dictum :
contracted by the husband for the benefit of the conjugal partnership.
(Art. 161(l), Civil Code)
The non-inclusion of the herein petitioner as a party-defendant in Civil
Case No. 7678 is immaterial. There is no rule or law requiring that in a
suit against the husband to enforce an obligation, either pertaining to him
alone or one chargeable against the conjugal partnership, the defendant
husband must be joined by his wife. The contrary rule is prescribed in
Sec. 4, Rule 3, of the Rules of Court and Article 113 of the Civil Code, but
not the other way around, obviously in recognition of the legal status of
the husband as the administrator of the conjugal partnership. (Art. 112,
Civil Code) There was therefore, no need of including the petitioner as a
party in Civil Case No. 7678 for the purpose of binding the conjugal
partnership properties for the satisfaction of the judgment that could be
rendered thereon. (Emphasis supplied)
WHEREFORE, the Decision of the then Court of Appeals sought to be
reviewed is hereby REVERSED and SET ASIDE. No pronouncement as
to costs.
SO ORDERED.

Petitioner assails the pronouncement by the respondent court that Civil

Case No. 13553 is barred by res judicata on the principal ground that, not
being a party in Civil Case No. 7678, she could not be bound by the
judgment rendered in said case and, consequently, the writ of attachment
and the consequent writ of execution which levied on Lot No. 1258-F,
together with its existing improvements, are null and void insofar as her
ONE-HALF () interest in said properties is concerned.

We find no merit in this contention of the petitioner.

The action filed by private respondent against the petitioner Ramon Sta. G.R. No. 114791 May 29, 1997
Romana was clearly a suit to enforce an obligation of the conjugal
partnership. Civil Case No. 7678 arose out of the failure of Ramon Sta. NANCY GO AND ALEX GO, petitioners,
Romana to pay the purchase price of a lot he bought from C.N. Hodges vs.
presumably in behalf of the conjugal partnership. Petitioner does not THE HONORABLE COURT OF APPEALS, HERMOGENES ONG and
deny the conjugal nature of both Lots Nos. 1258-G and 1258-F. Indeed, JANE C. ONG, respondents.
she bases her contention on the claim that at least Lot No. 1258-F,
together with its improvements existing thereon, constitutes property of
the conjugal partnership. It may not be denied, therefore, that the liability
incurred by Ramon Sta. Romana is chargeable against the conjugal ROMERO, J.:
partnership assets, it being undisputed that the said obligation was
No less than the Constitution commands us to protect marriage as an
inviolable social institution and the foundation of the family. 1 In our
society, the importance of a wedding ceremony cannot be
underestimated as it is the matrix of the family and, therefore, an
occasion worth reliving in the succeeding years.
It is in this light that we narrate the following undisputed facts:
Private respondents spouses Hermogenes and Jane Ong were married
on June 7, 1981, in Dumaguete City. The video coverage of the wedding
was provided by petitioners at a contract price of P1,650.00. Three times
thereafter, the newlyweds tried to claim the video tape of their wedding,
which they planned to show to their relatives in the United States where
they were to spend their honeymoon, and thrice they failed because the
tape was apparently not yet processed. The parties then agreed that the
tape would be ready upon private respondents' return.
When private respondents came home from their honeymoon, however,
they found out that the tape had been erased by petitioners and
therefore, could no longer be delivered.
Furious at the loss of the tape which was supposed to be the only record
of their wedding, private respondents filed on September 23, 1981 a
complaint for specific performance and damages against petitioners
before the Regional Trial Court, 7th Judicial District, Branch 33,
Dumaguete City. After a protracted trial, the court a quo rendered a
decision, to wit:
WHEREFORE, judgment is hereby granted:
1. Ordering the rescission of the agreement entered into
between plaintiff Hermogenes Ong and defendant Nancy
Go;
2. Declaring defendants Alex Go and Nancy Go jointly
and severally liable to plaintiffs Hermogenes Ong and
Jane C. Ong for the following sums:
a) P450.00 , the down payment made at contract time;
b) P75,000.00, as moral damages;
c) P20,000.00, as exemplary damages;
d) P5,000.00, as attorney's fees; and
e) P2,000.00, as litigation expenses;
Defendants are also ordered to pay the costs.
SO ORDERED.
Dissatisfied with the decision, petitioners elevated the case to the Court
of Appeals which, on September 14, 1993, dismissed the appeal and
affirmed the trial court's decision.
Hence, this petition.
Petitioners contend that the Court of Appeals erred in not appreciating
the evidence they presented to prove that they acted only as agents of a
certain Pablo Lim and, as such, should not have been held liable. In
addition, they aver that there is no evidence to show that the erasure of
the tape was done in bad faith so as to justify the award of damages. 2
The petition is not meritorious.
Petitioners claim that for the video coverage, the cameraman was
employed by Pablo Lim who also owned the video equipment used. They
further assert that they merely get a commission for all customers
solicited for their principal. 3
This contention is primarily premised on Article 1883 of the Civil Code
which states thus:
Art. 1883. If an agent acts in his own name, the principal has no right of
action against the persons with whom the agent has contracted; neither
have such persons against the principal.
In such case the agent is the one directly bound in favor of the person
with whom he has contracted, as if the transaction were his own, except
when the contract involves things belonging to the principal.
xxx xxx xxx
Petitioners' argument that since the video equipment used belonged to
Lim and thus the contract was actually entered into between private
respondents and Lim is not deserving of any serious consideration. In the
instant case, the contract entered into is one of service, that is, for the
video coverage of the wedding. Consequently, it can hardly be said that
the object of the contract was the video equipment used. The use by
petitioners of the video equipment of another person is of no
consequence.
It must also be noted that in the course of the protracted trial below,
petitioners did not even present Lim to corroborate their contention that
they were mere agents of the latter. It would not be unwarranted to
assume that their failure to present such a vital witness would have had
an adverse result on the case. 4
As regards the award of damages, petitioners would impress upon this
Court their lack of malice or fraudulent intent in the erasure of the tape.
They insist that since private respondents did not claim the tape after the
lapse of thirty days, as agreed upon in their contract, the erasure was
done in consonance with consistent business practice to minimize
losses. 5
We are not persuaded.
As correctly observed by the Court of Appeals, it is contrary to human
nature for any newlywed couple to neglect to claim the video coverage of
their wedding; the fact that private respondents filed a case against
petitioners belies such assertion. Clearly, petitioners are guilty of
actionable delay for having failed to process the video tape. Considering
that private respondents were about to leave for the United States, they
took care to inform petitioners that they would just claim the tape upon
their return two months later. Thus, the erasure of the tape after the lapse
of thirty days was unjustified.
In this regard, Article 1170 of the Civil Code provides that "those who in
the performance of their obligations are guilty of fraud, negligence or
delay, and those who is any manner contravene the tenor thereof, are
liable for damages."
In the instant case, petitioners and private respondents entered into a
contract whereby, for a fee, the former undertook to cover the latter's
wedding and deliver to them a video copy of said event. For whatever
reason, petitioners failed to provide private respondents with their tape.
Clearly, petitioners are guilty of contravening their obligation to said
private respondents and are thus liable for damages.
The grant of actual or compensatory damages in the amount of P450.00
is justified, as reimbursement of the downpayment paid by private
respondents to petitioners. 6
Generally, moral damages cannot be recovered in an action for breach of
contract because this case is not among those enumerated in Article
2219 of the Civil Code. However, it is also accepted in this jurisdiction
that liability for a quasi-delict may still exist despite the presence of
contractual relations, that is, the act which violates the contract may also
constitute a quasi-delict. 7 Consequently, moral damages are recoverable
for the breach of contract
which was palpably wanton, reckless, malicious or in bad faith,
oppressive or abusive. 8
Petitioners' act or omission in recklessly erasing the video coverage of
private respondents' wedding was precisely the cause of the suffering
private respondents had to undergo.
As the appellate court aptly observed:
Considering the sentimental value of the tapes and the fact that the event
therein recorded a wedding which in our culture is a significant
milestone to be cherished and remembered could no longer be
reenacted and was lost forever, the trial court was correct in awarding the
appellees moral damages albeit in the amount of P75,000.00, which was
a great reduction from plaintiffs' demand in the complaint in
compensation for the mental anguish, tortured feelings, sleepless nights
and humiliation that the appellees suffered and which under the
circumstances could be awarded as allowed under Articles 2217 and
2218 of the Civil Code. 9
Considering the attendant wanton negligence committed by petitioners in
the case at bar, the award of exemplary damages by the trial court is
justified 10 to serve as a warning to all entities engaged in the same
business to observe due diligence in the conduct of their affairs.
The award of attorney' s fees and litigation expenses are likewise proper,
consistent with Article 2208 11 of the Civil Code.
Finally, petitioner Alex Go questions the finding of the trial and appellate
courts holding him jointly and severally liable with his wife Nancy
regarding the pecuniary liabilities imposed. He argues that when his wife
entered into the contract with private respondent, she was acting alone
for her sole interest. 12
We find merit in this contention. Under Article 117 of the Civil Code (now
Article 73 of the Family Code), the wife may exercise any profession,
occupation or engage in business without the consent of the husband. In
the instant case, we are convinced that it was only petitioner Nancy Go
who entered into the contract with private respondent. Consequently, we
rule that she is solely liable to private respondents for the damages
awarded below, pursuant to the principle that contracts produce effect
only as between the parties who execute them. 13
WHEREFORE, the assailed decision dated September 14, 1993 is
hereby AFFIRMED with the MODIFICATION that petitioner Alex Go is
absolved from any liability to private respondents and that petitioner
Nancy Go is solely liable to said private respondents for the judgment
award. Costs against petitioners.
SO ORDERED.
G.R. No. 145222 April 24, 2009
SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, Former Division, and
ROMULO NICOL, Respondents.
DECISION
TINGA, J.:
Before this Court is a petition for certiorari assailing the Decision1 of the
Court of Appeals in CA-G.R. CV No. 47029 and its Resolution denying
the motion for reconsideration thereof.
The case stemmed from the following factual backdrop:
On 30 April 1984, Spouses Roberto and Venus Buado (petitioners) filed a
complaint for damages against Erlinda Nicol (Erlinda) with Branch 19 of
the Regional Trial Court (RTC) of Bacoor, Cavite, docketed as Civil Case
No. 84-33. Said action originated from Erlinda Nicols civil liability arising
from the criminal offense of slander filed against her by petitioners.
On 6 April 1987, the trial court rendered a decision ordering Erlinda to
pay damages. The dispositive portion reads:
Wherefore, judgment is hereby rendered in favor of the plaintiff[s] and
against defendant ordering the latter to pay the former the amount of
thirty thousand (30,000.00) pesos as moral damages, five thousand
(5,000.00) pesos as attorneys 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, attorneys 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 Nicols 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 sheriffs 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 sheriffs indemnity bond.
The auction sale proceeded with petitioners as the highest bidder.
On 4 February 1993, a certificate of sale was issued in favor of
petitioners.
Almost a year later on 2 February 1994, Romulo Nicol (respondent), the
husband of Erlinda Nicol, filed a complaint for annulment of certificate of
sale and damages with preliminary injunction against petitioners and the
deputy sheriff. Respondent, as plaintiff therein, alleged that the
defendants, now petitioners, connived and directly levied upon and
execute his real property without exhausting the personal properties of
Erlinda Nicol. Respondent averred that there was no proper publication
and posting of the notice of sale. Furthermore, respondent claimed that
his property which was valued at 500,000.00 was only sold at a "very
low price" of 51,685.00, whereas the judgment obligation of Erlinda
Nicol was only 40,000.00. The case was assigned to Branch 21 of the
RTC of Imus, Cavite.
In response, petitioners filed a motion to dismiss on the grounds of lack
of jurisdiction and that they had acted on the basis of a valid writ of
execution. Citing De Leon v. Salvador,4 petitioners claimed that
respondent should have filed the case with Branch 19 where the
judgment originated and which issued the order of execution, writ of
execution, notice of levy and notice of sheriffs sale.
In an Order5 dated 18 April 1994, the RTC dismissed respondents
complaint and ruled that Branch 19 has jurisdiction over the case, thus:
As correctly pointed out by the defendants, any flaw in the
implementation of the writ of execution by the implementing sheriff must
be brought before the court issuing the writ of execution. Besides, there
are two (2) remedies open to the plaintiff, if he feels that the property
being levied on belongs to him and not to the judgment debtor. The first
remedy is to file a third-party claim. If he fails to do this, a right is
reserved to him to vindicate his claim over the property by any proper
action. But certainly, this is not the proper action reserved to the plaintiff
to vindicate his claim over the property in question to be ventilated before
this court. As earlier stated, this case should have been addressed to
Branch 19, RTC Bacoor as it was that court which issued the writ of
execution.6
Respondent moved for reconsideration but it was denied on 26 July
1994.
On appeal, the Court of Appeals reversed the trial court and held
that Branch 21 has jurisdiction to act on the complaint filed by appellant.
The dispositive portion reads:
WHEREFORE, the Orders appealed from are hereby REVERSED and
SET ASIDE. This case is REMANDED to the Regional Trial Court of
Imus, Cavite, Branch 21 for further proceedings.
SO ORDERED.7
Petitioners motion for reconsideration was denied on 23 August 2000.
Hence, the instant petition attributing grave abuse of discretion on the
part of the Court of Appeals.
A petition for certiorari is an extraordinary remedy that is adopted to
correct errors of jurisdiction committed by the lower court or quasi-judicial
agency, or when there is grave abuse of discretion on the part of such
court or agency amounting to lack or excess of jurisdiction. Where the
error is not one of jurisdiction, but of law or fact which is a mistake of
judgment, the proper remedy should be appeal. In addition, an
independent action for certiorari may be availed of only when there is no
appeal or any plain, speedy and adequate remedy in the ordinary course
of law.8
Nowhere in the petition was it shown that the jurisdiction of the Court of
Appeals was questioned. The issue devolves on whether the husband of
the judgment debtor may file an independent action to protect the
conjugal property subject to execution. The alleged error therefore is an
error of judgment which is a proper subject of an appeal.
Nevertheless, even if we were to treat this petition as one for review, the
case should still be dismissed on substantive grounds.
Petitioners maintain that Branch 19 retained jurisdiction over its
judgment to the exclusion of all other co-ordinate courts for its execution
and all incidents thereof, in line with De Leon v. Salvador. Petitioners
insist that respondent, who is the husband of the judgment debtor, is not
the "third party" contemplated in Section 17 (now Section 16), Rule 39 of
the Rules of Court, hence a separate action need not be filed.
Furthermore, petitioners assert that the obligation of the wife redounded
to the benefit of the conjugal partnership and cited authorities to the
effect that the husband is liable for the tort committed by his wife.
Respondent on the other hand merely avers that the decision of the
Court of Appeals is supported by substantial evidence and in accord with
law and jurisprudence.9
Verily, the question of jurisdiction could be resolved through a proper
interpretation of Section 16, Rule 39 of the Rules of Court, which reads:
Sec. 16. Proceedings where property claimed by third person.
If the property levied on is claimed by any person other than the
judgment obligor or his agent, and such person makes an affidavit of his
title thereto or right to the possession thereof, stating the grounds of such
right or title, and serves the same upon the officer making the levy and a
copy thereof upon the judgment obligee, the officer shall not be bound to
keep the property, unless such judgment obligee, on demand of the
officer, files a bond approved by the court to indemnify the third-party
claimant in a sum not less than the value of the property levied on. In
case of disagreement as to such value, the same shall be determined by
the court issuing the writ of execution. No claim for damages for the
taking or keeping of the property may be enforced against the bond
unless the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the
property, to any third-party claimant if such bond is filed. Nothing herein
contained shall prevent such claimant or any third person from
vindicating his claim to the property in a separate action, or prevent the
judgment obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or plainly
spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond shall
not be required, and in case the sheriff or levying officer is sued for
damages as a result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages adjudged by the
court shall be paid by the National Treasurer out of such funds as may be
appropriated for the purpose. (Emphasis Supplied)
Apart from the remedy of terceria available to a third-party claimant or to
a stranger to the foreclosure suit against the sheriff or officer effecting the
writ by serving on him an affidavit of his title and a copy thereof upon the
judgment creditor, a third-party claimant may also resort to an
independent separate action, the object of which is the recovery of
ownership or possession of the property seized by the sheriff, as well as
damages arising from wrongful seizure and detention of the property. If a
separate action is the recourse, the third-party claimant must institute in a
forum of competent jurisdiction an action, distinct and separate from the
action in which the judgment is being enforced, even before or without
need of filing a claim in the court that issued the writ.10
1aw phi 1.zw+
A third-party claim must be filed a person other than the judgment debtor
or his agent. In other words, only a stranger to the case may file a third-
party claim.
This leads us to the question: Is the husband, who was not a party to the
suit but whose conjugal property is being executed on account of the
other spouse being the judgment obligor, considered a "stranger?"
In determining whether the husband is a stranger to the suit, the
character of the property must be taken into account. In Mariano v. Court
of Appeals,11 which was later adopted in Spouses Ching v. Court of
Appeals,12 this Court held that the husband of the judgment debtor cannot
be deemed a "stranger" to the case prosecuted and adjudged against his
wife for an obligation that has redounded to the benefit of the conjugal
partnership.13 On the other hand, in Naguit v. Court of Appeals14 and Sy
v. Discaya,15 the Court stated that a spouse is deemed a stranger to the
action wherein the writ of execution was issued and is therefore justified
in bringing an independent action to vindicate her right of ownership over
his exclusive or paraphernal property. law phil.net
Pursuant to Mariano however, it must further be settled whether the
obligation of the judgment debtor redounded to the benefit of the conjugal
partnership or not.
Petitioners argue that the obligation of the wife arising from her criminal
liability is chargeable to the conjugal partnership. We do not agree.
There is no dispute that contested property is conjugal in nature. Article
122 of the Family Code16 explicitly provides that payment of personal
debts contracted by the husband or the wife before or during the
marriage shall not be charged to the conjugal partnership except insofar
as they redounded to the benefit of the family.
Unlike in the system of absolute community where liabilities incurred by
either spouse by reason of a crime or quasi-delict is chargeable to the
absolute community of property, in the absence or insufficiency of the
exclusive property of the debtor-spouse, the same advantage is not
accorded in the system of conjugal partnership of gains. The conjugal
partnership of gains has no duty to make advance payments for the
liability of the debtor-spouse.
Parenthetically, by no stretch of imagination can it be concluded that the
civil obligation arising from the crime of slander committed by Erlinda
redounded to the benefit of the conjugal partnership.
To reiterate, conjugal property cannot be held liable for the personal
obligation contracted by one spouse, unless some advantage or benefit
is shown to have accrued to the conjugal partnership.17
In Guadalupe v. Tronco,18 this Court held that the car which was claimed
by the third party complainant to be conjugal property was being levied
upon to enforce "a judgment for support" filed by a third person, the third-
party claim of the wife is proper since the obligation which is personal to
the husband is chargeable not on the conjugal property but on his
separate property.
Hence, the filing of a separate action by respondent is proper and
jurisdiction is thus vested on Branch 21. Petitioners failed to show that
the Court of Appeals committed grave abuse of discretion in remanding
the case to Branch 21 for further proceedings.
WHEREFORE, the petition is DISMISSED. The Decision of the Court of
Appeals is AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 82753 December 19, 1989
ESTELA COSTUNA, petitioner,
vs.
LAUREANA DOMONDON THE HON. PRESIDING JUDGE, REGIONAL
TRIAL COURT, BRANCH XCVIII, QUEZON CITY, THE HON.
PRESIDING JUSTICES OF THE COURT OF APPEALS, 13TH
DIVISION, MANILA, respondents.
SARMIENTO, J.:
The reversal and setting of the decision* of the Court of Appeals'
Thirteenth Division, in CA-G.R. CV No. 10948, entitled Laureana
Domondon, plaintiff-appellee, vs. Estela Costuna, defendant-appellant,
promulgated on March 28, 1988, affirming the decision of the Regional
Trial Court, Branch XCVIII, Quezon City, dated November 22, 1984, are
sought by the petitioner in this petition for review on certiorari.
Culled from the records, the facts are as follows:
The spouses Amadeo and Estela Costuna (hereinafter referred to as
Amadeo and the petitioner, respectively) during their marriage acquired
three parcels of land with an aggregate area of 599 square meters, more
or less, and covered by Transfer Certificates of title Nos. 1235,18118,
and 24365, all of which lots are located in San Francisco del Monte,
Quezon City, and registered in the name of Amadeo Costuna.
On November 8,1976, Amadeo executed his last will and testament. He
was then 68 years old. Following the execution of the last will and
testament aforesaid, the spouses were beset with marital problems.
Sometime in November, 1977, Amadeo sustained third degree burns on
his legs for which he was treated at various hospitals, such as the
Bonifacio Maternity Clinic and the Bago-Bantay General Hospital, on
different dates. While already ill, or on April 17,1977, relatives of Amadeo
requested that he be brought to Samar as there were documents that
needed his signature pertaining to his Samar properties. Since then,
Amadeo was never returned to the petitioner and stayed with his sister.
Thus, a feud ensued among Amadeo's relatives (sister Zosima Barada,
nephews, and nieces) and the petitioner over his custody prompting the
latter to institute a petition for habeas corpus on June 1 8, 1978, before
the then Court of First Instance of Quezon City, docketed as Special
Proceedings No. 25601. Five days later, or on June 23, 1978, Amadeo
filed an action for partition before the then Juvenile Domestic and
Relations Court, docketed as Case No. Q-25545. Failing to get the
petitioner's consent to the desired partition notwithstanding repeated
demands therefor, Amadeo was constrained to execute a deed of sale,
on July 10, 1978, over the one-half (1/2) undetermined portion of the
conjugal property, without his wife's consent, in favor of Laureana
Domondon (hereinafter referred to as the respondent). The death of
Amadeo on November 5, 1978, however, rendered the aforecited cases
moot and academic.
With Amadeo's death, Special Proceedings No. Q-26351 was instituted
by his widow (petitioner) with the then Court of First Instance of Rizal,
Quezon City, Branch LVIII. Claiming pro indiviso one half (1/2) share over
the earlier mentioned three lots by virtue of the deed of sale executed in
her favor by Amadeo on July 10, 1978, the respondent opposed the
allowance of the will. For lack of jurisdiction, no ruling was however made
on her claim, but the probate court decreed the allowance of the last will
and testament and ordered the issuance of Letters of Administration
(should correctly be letters testamentary) in favor of petitioner in a
decision rendered on December 29,1981. 1
Consequently, an action to compel the petitioner to give her conformity to
the deed of sale executed by her husband in favor of the respondent was
instituted by the latter in the Regional Trial Court of Quezon City, Branch
XCVIII, docketed as Q34527, which court, making the following
disquisition:
On the confronting issue of whether or not the defendant can be
compelled to signify her conformity in the deed of sale, it is the
considered opinion of the court that weighing their respective evidence
and the end line of arguments of the parties in view of the peculiar
circumstances attendant to the case that the refusal of the defendant to
give consent to the sale of what rightly belongs to her husband was
unreasonable. Consequently, the court believes and so holds that
defendant can be compelled to grant the same consistent with the last
provision of Article 166 of the New Civil Code whichever one-half (1/2)
portion of the whole estate she may choose from the survey plan of the
project of partition (Exh. 28, Q- 25601) shall be segregated.
As can be gathered from the records, the present case presupposes a
situation where the husband disposed of his legitimate share one-half
(1/2) of the conjugal property so that his pressing financial needs for
medical and hospitalization expenses could be met. The defendant
appears to have been accorded all the formalities required of the marital
companionship in securing her consent but none of the representations
were heeded. The fact that letters (Exh. E, Q-34527; Exh. 28, Q-25601)
for a proposed partition and seeking of conformity for her to stamp
approval of the deed of sale were never denied since this was confirmed
by the records of the proceedings (t.s.n. July 28,1978, pp. 1920, Q-
25601). While it is argued that tills has been done upon the prodding of
other interested parties, nowhere has it been shown that the defendant
ever reacted when she acknowledged the subject letters. The contents of
said letters were significant since the proposed partition and/or
conveyance of the husband's one-half share means life and death to the
latter. To the husband's mind, this so far is the only remaining alternative
to keep him alive. There is a wife who is so near yet so far and while
there are relatives who are willing to help, they themselves are similarly
poor and impoverished. In the case of Baello vs. Villanueva," 54 Phil.
213, the Court held that "For as conjugal properties belong equally to
husband and wife, any alienation by the husband without the consent of
his wife prejudices her in so far as it includes a part or whole of the wife's
half and is to that extent invalid." This decision of the court fortifies the
relative significance of article 900 of the Civil Code providing that if the
only survivor is the widow or widower, she or he shall be entitled to one-
half of the hereditary estate of the deceased spouse, and the testator
may freely dispose of the other half. The aforesaid decision sustains the
belief of the court that the disposition or alienation of the conjugal
property is not valid only to the extent of prejudicing the wife's one-half
share of the realty and with respect to his own one-half share, the
disposition has been done in its right perspective. In the present situation,
consent to alienate his onehalf (1/2) share of the conjugal property has
been sought and this was manifested in plaintiff s letters (Exh. E, Q-
34527 and Exh. 28, Q-25601) and defendant's refusal was never
justified. To the mind of the court, the defendant's failure to give the
rationale of her refusal to act on a situation that demands the propriety of
a reply is unreasonable in the concept of Article 166 and therefore, the
court may compel her to grant the same. 2
decided in favor of plaintiff Laureana Domondon and ordered the
defendant Estela Costuna to affix her signature on the deed of sale.
Aggrieved by the decision of the trial court, Estela Costuna appealed to
the Court of Appeals, which appeal was docketed as CA-G.R. CV No.
10948. In disposing the issue as to the validity of the sale, the Court of
Appeals stated thus:
The third assignment of error is primarily based on the allegation that no
sale of conjugal properties by the husband may be validly made without
the consent of the wife. Appellant cited Articles 166 and 167 of the New
Civil Code which provide, viz:
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.
This article shall not apply to property acquired by the conjugal
partnership before the effective date of this Code. (1413a).
Art. 167. In case of abuse of powers of administration of the conjugal
partnership property by the husband, the courts, on petition of the wife,
may provide for a receivership, or administration by the wife, or
separation of property. (n).
The general rule is, the husband may not validly sell real estates
belonging to the conjugal partnership without the wife's consent.
However, this rule accepts exceptions, wherein the husband may sell the
real properties owned by the conjugal partnership even without the
consent of the wife: 1) sale of personal properties; 2) real properties
acquired before the effectivity of the New Civil Code; 3) real properties
acquired after effectivity of the New Civil Code if wife is confined in a
leprosarium, declared non compos mentis or spendthrift, or under civil
interdiction; 4) if the purpose is to pay conjugal liabilities (Article 161); 5) if
the purpose is to secure the future of their chi1dren or finishing a career
(Art. 162); and 6) moderate gift for charity (Art. 174).
The sale by Amadeo of one-half (1/2) of each of the conjugal properties
to Domondon was allegedly for the purpose of paying the husband's
hospital expenses in order that he would get well. In a decided case, it
was held that while the marriage and the legal conjugal partnership
subsists, the support of the wife, conversely, of the husband, is a charge
upon the partnership. (Sumulong v. Cembrano, 51 Phil. 719). The
partnership is not relieved of this obligation by the mere fact that the
spouses do not live under the same roof (Ibid.). The amounts advanced
by third persons for the subsistence of the wife (or husband) are
chargeable against the property of the conjugal partnership (Sochayseng
v. Trijillo, 31 Phil. 153; Galang v. CA, 103 SCRA 90).
Estela Costuna never rebutted the appellee's assertion that the proceeds
of the sale were utilized for the hospitalization and medication of
Amadeo. Whether her refusal to support her ailing and aging husband
was because of her outright refusal to do so or her financial incapability
to give, does not matter. It was sufficient that Amadeo had no other
recourse but to sell his share in the conjugal property.
Article 171 of the New Civil Code provides that "the husband may
dispose of the conjugal partnership property for purposes specified in
Articles 161 and 162". This means that the husband may alienate the
conjugal properties even without the consent of the wife if the proceeds
thereof will be utilized for those provided under Articles 161 and 162.
In the case at bar, the applicable provision is paragraph (1) of Article 161
which provides:
(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 support of either spouses (sic) is definitely for the benefit of the
conjugal partnership. For if either of them is physically ill, the conjugal
partnership likewise suffers.
Considering the above reasons, We are predisposed to decree that the
sale of one-half of the conjugal properties made by the husband for his
hospitalization and medical purposes was valid.
Lastly, Estela Costuna alleged that the sale was void because it was
merely simulated and in fact the consideration thereof was not given.
After a careful and thorough perusal of the transcript of stenographic
notes and the evidence presented therein, We find that the consideration
was paid and indeed utilized for the hospitalization and medication of
Amadeo Costuna. Appellant's allegation is conjectural. She failed to
prove her assertions. The documentary evidence on record showed that
the consideration was received and utilized for the purpose alleged in the
deed of sale.
WHEREFORE, premises considered, the decision appealed from is
hereby AFFIRMED with costs against appellant. 3
In view of the decision of the Court of Appeals, the petitioner filed the
present petition.
In her petition, the petitioner faults the Court of Appeals in deciding a
question of substance not in accordance with the applicable law (Articles
166 and 167) of the new Civil Code and jurisprudence. 4
The central issue is the validity or nullity of the deed of sale executed by
Amadeo in favor of the respondent over his one-half (1/2) aliquot share in
the conjugal partnership without the consent of his wife. The ancillary
issue is whether or not the conjugal partnership should be made liable for
the payment of the hospital and medical expenses of Amadeo who
allegedly abandoned the conjugal home and his wife.
The petitioner submits that the deed of sale executed by Amadeo in favor
of private respondent over his undetermined one-half (1/2) share in the
conjugal partnership is spurious and simulated, hence invalid. Firstly, the
element of consent (her consent) is wanting. Secondly, the alleged sale
was not a voluntary act of Amadeo but was orchestrated by the persons
who were desirous of depriving her of her inheritance which fact is
bolstered by the following: a) at the time of the execution of the deed of
sale, Amadeo was 81 years old and gravely ill; b) while the deed of sale
was signed by Amadeo, his signature was illegible; c) the probability that
he was unconscious at the time that he signed the document and that
somebody may have guided his hand is not remote; d) the absence of
the signature of both parties in the acknowledgment portion of the deed,
and e) the variance between the dates appearing in the deed itself and
the acknowledgment; thirdly, because of want of consideration. Not only
is the supposed buyer financially incapable to pay the purchase price,
there is also the uncertainty of the amount actually paid. The petitioner
maintains that Amadeo's hospital and medical expenses should not be
chargeable against the conjugal partnership as Amadeo by his own free
will deserted and abandoned her and their conjugal home when he opted
to live with his relatives. She claims that never was she remiss in her
duties to her husband. She asserts that her husband's relatives held him
(husband) in "captivity" making it impossible for her to give him the care,
attention, and love that he most needed. Nonetheless, she avers that all
efforts were exerted by her, to regain custody of her husband but in vain.
In fact, as a last ditch effort, she filed habeas corpus proceedings which
case was unfortunately rendered moot and academic by the death of
Amadeo on November 5,1979. She claims to have shouldered the
funeral bills and other miscellaneous expenses of Amadeo as the
relatives suddenly abandoned him. Finally, she theorizes that Art. 161 of
the new Civil Code does not include illness or old age of one or both of
the spouses as among the expenses for which the conjugal partnership
may be held hable and that the case of Sumulong vs. Cembrano 5 is not
applicable to the case at bar because here Amadeo abandoned her and
the conjugal home.
The private respondent on the other hand naturally supports the common
ruling of the trial court and the Court of Appeals that the deed of sale is
valid, notwithstanding the absence of consent, because the disposition of
the one-half (1/2) undivided portion of the conjugal partnership properties
was intended to generate funds to cover Amadeo's hospital and medical
expenses. She argues that the disposition of one half (1/2) of the
conjugal estate should be effected by either one of the spouses without
the consent and conformity of the other for as long as what belongs to
the other by such act would not suffer or be prejudiced. She submits that
if consent is wanting, it was not Amadeo's fault as it can not be denied
that the petitioner's consent, first to the intended partition and later to the
sale, was repeatedly sought by Amadeo, as required by law and out of
marital courtesy, but the petitioner tenaciously withheld her consent. She
asserts that the petitioner's refusal was not only unreasonable,
unjustified, but above all, cruel, for Amadeo was asking for his legitimate
share not to squander but to enable him to settle his hospital bills and
defray the cost of his medication. The private respondent theorizes that
the petitioner in turning her back and denying her husband the moral and
financial assistance at the time when most needed and her refusal to
stamp her approval on the deed of sale are devoid of cogent reason. She
asserts that no other motive could be attributed to the petitioner but her
selfishness and cupidity thinking that perhaps she could own all the
conjugal partnership properties upon her husband's death, they having
no children. She contends that the Court of Appeals did not err when it
applied the provisions of Art. 161 of the Civil Code because the payment
of the hospital and medical expenses no doubt redounded to the benefit
of the conjugal partnership. She maintains that there is here no case of
abandonment. That while it is true that Amadeo left the conjugal home,
the reason for his leaving was his desire for survival.
There is no denying that Amadeo sought the petitioner's consent to the
deed of sale which consent was adamantly withheld by the petitioner. As
may be gleaned from the records, her refusal stemmed from her belief
that the deed of sale was executed in fraud of her, yet she did not do
anything to impugn the said deed notwithstanding that the right is vested
on her by law. 6 She assailed for the first time the validity of the sale only
when Civil Case No. Q-34527 was instituted by the respondent in the
Regional Trial Court of Quezon City, to compel her to give her consent.
Notably, what was sold by Amadeo without the petitioner's consent was
only an undetermined one-half (1/2) share in the community properties.
He left intact that other undetermined 1/2 share which should belong to
the petitioner. And the reason for the sale was, as correctly found by the
trial court and Court of Appeals, for Amadeo's hospitalization and
medication. It was therefore Amadeo's understandable human spirit to
live longer that induced him to execute the deed of sale without the
consent of the petitioner.
We concede that the consent of the petitioner is essential for the validity
of the sale, but, in this case, where consent was unreasonably withheld,
we are constrained to relax the application of the law and consider the
sale as falling within the recognized exceptions, The Court can not
overlook the vital fact that Amadeo executed a last will and testament
designating the petitioner as his sole heir. In this connection, we find
merit in the respondent's assertion that no other motive could be
attributed to the petitioner but her greed.
The question of whether or not Amadeo's hospital and medical expenses
are chargeable to the conjugal partnership is answered in the affirmative
and finds firm support in Art. 161 of the Civil Code, which provides inter
alia:
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 benefit required by this article need not be quantified into pesos or
square meters of real property. It is enough that the transaction would
result to some discernible advantage or good to the conjugal partnership,
directly or indirectly. Thus, the health and well-being of both or either of
the spouses would undeniably redound to the benefit of their conjugal
partnership. The advancement of the interests of the conjugal partnership
depends in great measure on the soundness of the body and mind of the
partners.
Considering all the foregoing, we hold that the conjugal partnership
property is liable for the hospital and medical expenses of Amadeo.
There is in this case no convincing reason to disturb the findings of fact of
the Court of Appeals which are generally binding on this Court.
WHEREFORE, the petition is hereby DENIED, and the decision of the
Court of Appeals is AFFIRMED in toto. With costs against the petitioner.
SO ORDERED.
G.R. No. 155043 September 30, 2004
ARTURO R. ABALOS, petitioner,
vs.
DR. GALICANO S. MACATANGAY, JR., respondent.
DECISION
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 courts 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.
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, Arturos 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 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 Arturos conjugal share in the property.
Dissatisfied with the appellate courts 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 appellees 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.
We are not convinced. The essence of due process is an opportunity to
be heard. Petitioners failure to participate in the appeal proceedings is
not due to a cause imputable to the appellate court but because of
petitioners own neglect in ascertaining the status of his case. Petitioners
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,
petitioners 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 the price.6 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
petitioners 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 payment.15 Not having made
a valid tender of payment, respondents 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 respondents signature thereon, but also for lack of Esthers
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 wifes 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 Esthers 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 Esthers consent thereto but also from want of consideration and
absence of respondents signature thereon. Such nullity cannot be
obliterated by Esthers subsequent confirmation of the putative
transaction as expressed in the Contract to Sell. Under the law, a void
contract cannot be ratified18 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 anyoneit 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 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 wifes 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 wifes
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
husbands 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 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 19132 of the
Civil Code in relation to Article 21433 thereof.
As an exception, the husband may dispose of conjugal property without
the wifes 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.,35the 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 familys economic standing. This is one
instance where the wifes 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
Inescapably, herein petitioners 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.

G.R. No. 149801 June 26, 2008
SPOUSES RENATO and FLORINDA DELA CRUZ, petitioners,
vs.
SPOUSES GIL and LEONILA SEGOVIA, respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the April 17, 2001 Decision1 of the Court of
Appeals (CA) in CA-G.R. CV No. 64487, as reiterated in its Resolution2 of
September 4, 2001, affirming the decision of the Regional Trial Court
(RTC) of Manila, Branch 44 in its Civil Case No. 96-77509, an action for
Nullity of Contract/Agreement with Damages thereat commenced by
spouses Renato and Florinda dela Cruz (petitioners) against respondent
spouses Gil and Leonila Segovia.
The facts, as culled from the records, are as follows.
Sometime in July 1985, petitioner Florinda dela Cruz (Florinda) wanted to
purchase two (2) parcels of land located at Paltok Street, Sta. Mesa,
Manila, Lot 503 with an apartment unit erected thereon and Lot 505 with
a residential house. The two lots were being sold together
for P180,000.00. Inasmuch as Florinda had only P144,000.00 at hand,
she asked her sister, respondent Leonila Segovia (Leonila), to
contribute P36,000.00 to complete the purchase price. The sisters
agreed that Lot 503 and the apartment unit thereat would belong to
Leonila upon full payment of its purchase price of P80,000.00, while Lot
505 with a residential house would belong to Florinda. The properties
were then registered in the name of petitioner Renato dela Cruz married
to Florinda. The parties, however, verbally agreed that Leonila and her
family would stay at Lot 505 until she had fully paid for Lot 503.
Desiring to reduce the verbal agreement into writing, the parties executed
and signed a handwritten covenant entitled Note of Agreement3 dated
April 28, 1990, which read:
Ano mang oras o panahon maaring ilipat kay Mo/Gil Segovia
[respondent] ang pag-aari ng sasakyan at bahay kung mababayaran nila
ang P18,000 at P34,000 na balance sa Apt. na walang ano mang
condition, interest at ano mang hangad hanggang year 1999.
Ang halagang P18,000 ay may interest na 2% hanggang sa ito ay
mabayaran kay Flor dela Cruz [petitioner]. Ang halagang P34,000 ay
walang interest at ito ay babayaran up to 1999. Ang upa sa apt. ay
cocolectahin ni Flor kapalit sa residential house.
Ang ano mang mga gastos sa papeles ay sasagutin ni Mo/Gil Segovia
[respondent] kung ililipat sa pangalan niya ang sasakyan na Pinoy Fierra-
Van NEX 741. Ang pagbili sa lupa at bahay 503 Paltok ay ganoon din.
(underscoring supplied)
Sometime in 1991, Linda Duval, a sister of Florinda and Leonila, arrived
from the United States to attend their mothers funeral. Linda noticed the
strained relations between her two siblings. When she inquired about the
status of her sisters agreement regarding Lot 503, Leonila informed
Linda that the agreement was yet to be reduced into a formal contract.
Linda offered to prepare a contract between Florinda and Leonila who
acceded to the offer. Thus, on September 9, 1991, Florinda and Leonila
signed an Agreement4 embodying the detailed scheme of payment for the
lot covered by the sisters agreement, to wit:
We, Gil and Leonila Segovia, husband and wife, of legal age, residing at
505 A. Paltok Street, Sta. Mesa, Manila, jointly agrees to pay Florinda
dela Cruz the sum of P34,000.00 pesos Philippine currency in the
following terms and conditions:
1. All previous contract or agreement is superseded by this existing
contract.
2. Payment of the said amount will be payable in installment basis; in a
monthly fashion respectively with no specific amount of payment within
the period of ten (10) years; effectively after the contract is signed by
both parties. P314.81 per month or P 3,1777.77 (sic) per year. And by
the year 1999 will be P34,000.00.
3. The borrowers (Sps. Segovia) agree to put their real property located
at 505 B Paltok St., Sta. Mesa, Mla., with TCT # 177862- Registry of
deeds (public document) as guarantees for the above loan, which has a
monthly rent of P1,200.00 and will be collected by the Lender (Florinda)
as part of the agreement of the loan.
4. As part of the agreement, the borrowers will live in the Lender's house,
located at 505 Paltok St. in exchange for her property rents.
5. The lender also agrees that the borrowers manage the collection of
rents around the house and endorse said rents to the owner who is the
Lender. Lender gives her full consent to the borrowers to sub-rent
whatever rooms she chooses inside her premises.
6. If payment was not made after ten (10) years, the Lender will take
ownership of the property described above.
7. If payment is made on or before the due date of the agreement, the
Lender shall immediately take care of all the necessary action with
regards to impediment, attachment, encumbrances to the property.
xxx
After the Note of Agreement of April 28, 1990 and Agreement of
September 9, 1991, Leonila continued paying the balance she owed
Florinda. Particularly, she paid the amount of P10,000.00 in September
1990 and P7,555.44 on May 16, 1995. Finally, in October 1995, Leonila
attempted to pay the remaining balance of P26,444.56 in full satisfaction
of her obligation but Florinda refused to accept the same on the ground
that, the ten-year period for the payment of the balance, reckoned from
July 1985, the alleged date of the verbal agreement between them, had
already expired. Thereafter Florinda demanded that Leonila and her
family vacate the house at 505 Paltok Street, which prompted
respondents to consign the P26,444.56 in court.5
On March 8, 1996, petitioners filed with the RTC of Manila, Branch 44, a
complaint for Nullity of Contract/Agreement with Damages on the ground
that the Agreement executed on September 9, 1991 did not contain the
true intention of the parties because Florindas consent thereto was
vitiated by mistake. Allegedly, Florinda did not know that the agreement
provided that the ten-year period for payment of the balance commenced
from September 1991 and not from July 1985 which was her true
intention.
On May 5, 1999, the RTC rendered a decision dismissing the complaint
for Nullity of Contract/Agreement with Damages and declaring the subject
Agreement valid and subsisting. The decisions dispositive portion reads:
WHEREFORE, in view of the foregoing considerations and a thorough
examination of the evidence, and the pleadings together with the
supporting documents, this Court finds the Agreement valid and
subsisting thus, the complaint filed by plaintiffs on March 8, 1996 is
hereby ordered dismissed for lack of merit.
The defendants are hereby ordered to pay the amount of P26,000.00
which is the remaining balance to complete the purchase price of the 503
Paltok Street, Sta. Mesa, Manila property to the plaintiffs afterwhich the
latter and all the persons claiming under them, to surrender the
ownership of 503 Paltok Street, Sta. Mesa, Manila, vacate and to
surrender possession thereof.
The plaintiffs are hereby ordered to pay defendants attorneys fees in the
amount of P50,000.00, and to pay the costs.
The counterclaim is denied.
SO ORDERED.6
In arriving at its decision, the RTC explained:
Granting arguendo, that Florinda dela Cruzs allegation that she has not
read the Agreement is true, signing a contract without fully knowing the
stipulations does not vitiate consent. Prudence dictates that Florinda dela
Cruz who presented the agreement for signature should acquaint herself
first with the "fine prints" of a contract before stamping her approval
thereto. As it is, the fact remains that Florinda dela Cruz signed the
agreement voluntarily on September 9, 1991 binding themselves that the
balance of P34,000.00 be paid in installments within ten (10) years upon
signing the agreement or until 1999. Indeed, the evidence will show that
Florinda dela Cruz voluntarily entered into the Agreement and
participated in the preparation thereof and after it has been prepared, the
same was read to and by the parties themselves including Florinda dela
Cruz and later voluntarily affixed her signature. Renato dela Cruz was
also present at the time of the signing of the Agreement and presented a
copy thereof.
A further reading of the complaint in paragraph 7 thereof, it is clear from
the allegations that the Agreement is a valid existing contract only it did
not express the intention of the parties, which may be a ground for
reformation of contract only under Article 1359 of the Civil Code of the
Philippines which provides that "when, there having been a meeting of
the minds of the parties to a contract, their true intention is not expressed
in the instrument purporting to embody the agreement, by reason of
mistake, fraud, inequitable conduct or accident, one of the parties may
ask for the reformation of the instrument to the end that such true
intention may be expressed."
xxx
Thus, the four year period to file the action for annulment, assuming there
were indeed mistakes therein which vitiated plaintiffs [petitioners]
consent commenced to run on September 9, 1991. The action had
already prescribed or lapsed and plaintiffs [petitioners] could no longer
ask for the annulment of the agreement.
As to the contention that the subject agreement had no force and effect
on account of the absence of the signature of Florindas husband,
petitioner Renato dela Cruz (Renato), the RTC ruled to the contrary, thus:
Indeed, Renato dela Cruz did not sign the Agreement, however, he was
present at the time the Agreement was signed by the parties and their
witnesses, and the same was presented to him for his signature. In fact,
attempts were even made to procure his signature, but plaintiff wife
Florinda dela Cruz insisted that her signature already carries that of her
husband Renato dela Cruz. The parties never insisted that Renato dela
Cruz sign the Agreement as the wife has spoken. It is further observed
that by his actuations Renato dela Cruz has agreed and has given his
conformity to the agreement. He also did not object to the execution of
the same at the time it was signed by his wife Florinda dela Cruz on
September 9, 1991, even he was present and he was shown and
furnished a copy of the said agreement.
xxx
It must be pointed out that plaintiff Florinda dela Cruz always consult her
husband, Renato dela Cruz on all matters respecting their transactions
(pp. 42-43, tsn, Sept. 13, 1996; p. 25, tsn, Aug. 15, 1997).
So that the claim of Florinda dela Cruz that she has never informed her
husband involving a very substantial property registered in his name, for
ten years that it had allegedly been in effect and that she has been
regularly collecting defendants staggered installment payments for the
said property for a number of years lacks basis.
More, Renatos claim that he was never aware of the agreement between
the parties is doomed, since he was present at the time of the purchase
of the property where he witnessed Leonila Segovia contributed their
hard earned savings in the amount of P36,000.00 to complete their share
to the purchase price of P180,000.00 of the properties in question, and
who reminded defendants that the subject property will ultimately be
theirs upon completion of their amortizations.
Finally, the RTC ruled that the action for annulment had already lapsed
when the Complaint was filed on March 8, 1996.
The action for annulment shall be brought within four (4) years from the
time of discovery of the mistake (Art. 1391, New Civil Code of the
Philippines).
On the other hand, the defendants [respondents] evidence that after the
preparation by Linda Duval on September 9, 1991, the Agreement was
read to and by the parties, shown and signed by the parties and
furnished each a copy of the agreement. Therefore, it could not be said
that plaintiffs [petitioners] were not aware of the terms and conditions of
the Agreement and did not discover the alleged mistakes contained
therein on September 9, 1991.
More, plaintiffs [petitioners] likewise never raise any objection nor declare
that there were mistakes in the agreement. It was only on March 8, 1996
that the present action for annulment was filed.
Their motion for reconsideration having been denied, petitioners filed with
the RTC a Notice of Appeal.7Respondents too filed a Notice of Partial
Appeal8 questioning the dismissal of their counter-claim for damages.
Accordingly, the records of the case were elevated to the CA, where both
appeals were docketed as CA-G.R. CV No. 64487.
The CA affirmed the findings of the RTC in its decision,9 promulgated on
April 17, 2001. In so ruling, the CA also declared that, while the expiry
date of the payment period was an important stipulation, it could not be
considered as the substance of the contract nor the primary motivation
for which the parties entered into the agreement. The substance of the
Agreement was the sale of the property at 503 Paltok Street. The
"mistake" that petitioners point to pertains to their interpretation of the
contract, which is not a ground to annul the same. The CA found that the
stipulations of the written agreement, signed on September 9, 1991,
clearly intended to give the respondents ten (10) years from 1991 within
which to effect payment of the balance of the consideration for the sale of
the 503 property. In view of the explicit terms of the said written
agreement, the verbal agreement of July 1985 was already of no
moment.
The motion for reconsideration of petitioners was denied by the CA in the
resolution dated September 4, 2001.
Aggrieved by the foregoing CA decision, petitioners elevated the case to
this Court raising the following assignment of errors:
I.
THE COURT OF APPEALS WITH DUE RESPECT SERIOUSLY
ERRED IN HOLDING THAT THE AGREEMENT IS VALID AND
SUBSISTING AND ORDERING THE PETITIONERS TO
SURRENDER OWNERSHIP OF THE SUBJECT PROPERTY TO
THE RESPONDENTS.
II.
THE COURT OF APPEALS WITH DUE RESPECT SERIOUSLY
ERRED IN HOLDING THAT PETITIONER RENATO DELA
CRUZ BY HIS ACTUATIONS HAD AGREED AND HAD GIVEN
HIS CONFORMITY TO THE AGREEMENT.
We deny the petition.
We agree with the two courts below when they declared that the four (4)-
year period for filing an action for annulment of the September 9, 1991
Agreement, on ground of vitiated consent, had already lapsed when the
complaint subject of the present controversy was filed on March 8, 1996.
This is in accordance with Article 1391 of the Civil Code, which
pertinently reads:
Art. 1391. The action for annulment shall be brought within four years.
This period shall begin:
xxx
In case of mistake or fraud, from the time of the discovery of the same.
xxx.
The complaint for Nullity of Contract/ Agreement with Damages was filed
on March 7, 1996, while the agreement subject thereof was entered into
on September 9, 1991. The Agreement was read to the parties before
they affixed their signatures thereon. Petitioners were thereafter
furnished a copy of the subject Agreement. Petitioners are presumed to
have discovered the alleged mistake on September 9, 1991. Hence, the
action for annulment which was filed four years and six months from the
time of the discovery of the mistake had already prescribed. Evidently,
the Agreement could no longer be set aside.
We also agree with the ruling that the absence of Renatos signature in
the September 9, 1991 Agreement bears little significance to its validity.
Article 124 of the Family Code relied upon by petitioners provides that the
administration of the conjugal partnership is now a joint undertaking of
the husband and the wife. In the event that one spouse is incapacitated
or otherwise unable to participate in the administration of the conjugal
partnership, the other spouse may assume sole powers of administration.
However, the power of administration does not include the power to
dispose or encumber property belonging to the conjugal partnership. In
all instances, the present law specifically requires the written consent of
the other spouse, or authority of the court for the disposition or
encumbrance of conjugal partnership property without which, the
disposition or encumbrance shall be void.
The foregoing provision finds no application in this case because the
transaction between Florinda and Leonila in reality did not involve any
disposition of property belonging to any of the sisters conjugal assets. It
may be recalled that the agreement was for the acquisition of two lots
which were being sold together for P180,000.00. Florinda who had
only P144,000.00 asked Leonila to contribute P36,000.00 to complete the
purchase price of said lots. With money pooled together, the sisters
agreed that Lot 503 be valued at P80,000.00 and Lot 505 valued
at P100,000.00. The P36,000.00 contribution of Leonila shall be applied
to the 503 property which upon full payment of the remaining balance
of P44,000.00 advanced by Florinda shall belong to Leonila. On the other
hand, of Florindas P144,000.00 contribution, P 100,000.00 shall be
considered as full payment for the purchase of the 505 property and
the P44,000.00 which was the balance of the purchase price of Lot 503,
as loan to Leonila. To secure payment of the loan, Lot 503 was
provisionally registered in the name of petitioners. Hence Lot 503 was at G.R. No. 141323 June 8, 2005
the outset not intended to be part of the conjugal asset of the petitioners
but only as a security for the payment of the P44,000.00 due from
DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners,
respondents.
vs.
MELKI E. PEREZ, Respondent.
Moreover, while Florindas husband did not affix his signature to the
above-mentioned Agreement, we find no ground to disturb the uniform
DECISION
findings of the trial court and appellate court that Renato, by his
actuations, agreed and gave his conformity to the Agreement. As found
by the courts below, Renatos consent to the Agreement was drawn from AUSTRIA-MARTINEZ, J.:
the fact that he was present at the time it was signed by the sisters and
their witnesses; he had knowledge of the Agreement as it was presented This resolves the petition for review on certiorari seeking the reversal of
to him for his signature, although he did not sign the same because his the Decision1 of the Court of Appeals (CA) promulgated on April 20, 1999
wife Florinda insisted that her signature already carried that of her which reversed the Decision of the Regional Trial Court (RTC) of Panabo,
husband; Renato witnessed the fact that Leonila contributed her hard Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution dated
earned savings in the amount of P36,000.00 to complete their share in December 17, 1999 denying petitioners motion for reconsideration.
the purchase price of the properties in question in the total amount
of P180,000.00. The aforesaid factual findings of the courts below are The antecedent facts as aptly narrated by the CA are as follows:
beyond review at this stage.10
David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January
WHEREFORE, the petition is DENIED and the assailed decision and 11, 1988, conveyed to Melki Perez (Perez) two parcels of agricultural
resolution of the Court of Appeals are AFFIRMED. land (the lots) situated in Panabo, Davao which are portions of Lot 4192,
Cad. 276 covered by OCT P-16873.
Costs against the petitioners.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose
SO ORDERED. signature is illegible witnessed the execution of the deed.

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

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

The defendants moved to dismiss the complaint on the ground that it

stated no cause of action, citing Section 6 of RA 6656 otherwise known
as the Comprehensive Agrarian Reform Law which took effect on June
10, 1988 and which provides that contracts executed prior thereto shall
"be valid only when registered with the Register of Deeds within a period
of three (3) months after the effectivity of this Act."
The questioned deed having been executed on January 10, 1988, the
defendants claimed that Perez had at least up to September 10, 1988
within which to register the same, but as they failed to, it is not valid and,
therefore, unenforceable.
The trial court thus dismissed the complaint. On appeal to this Court, the
dismissal was set aside and the case was remanded to the lower court
for further proceedings.
In their Answer, the defendants claimed that as the lots were occupied
illegally by some persons against whom they filed an ejectment case,
they and Perez who is their friend and known at the time as an
activist/leftist, hence feared by many, just made it appear in the deed that
the lots were sold to him in order to frighten said illegal occupants, with
the intentional omission of Lorezas signature so that the deed could not
be registered; and that the deed being simulated and bereft of
consideration is void/inexistent.
Perez countered that the lots were given to him by defendant Pelayo in
consideration of his services as his attorney-in-fact to make the
necessary representation and negotiation with the illegal occupants-
defendants in the ejectment suit; and that after his relationship with
defendant Pelayo became sour, the latter sent a letter to the Register of
Deeds of Tagum requesting him not to entertain any transaction
concerning the lots title to which was entrusted to Perez who misplaced
and could [not] locate it.
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on
March 19, 1996, that the deed was without his wife Lorezas consent,
hence, in light of Art. 166 of the Civil Code which provides:
Article 166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is confined in a leprosarium, the
husband cannot alienate or encumber any real property of the conjugal
partnership without the wifes consent . . .
it is null and void.
The trial court, finding, among others, that Perez did not possess, nor pay
the taxes on the lots, that defendant Pelayo was indebted to Perez for
services rendered and, therefore, the deed could only be considered as
evidence of debt, and that in any event, there was no marital consent to
nor actual consideration for the deed, held that the deed was null and
void and accordingly rendered judgment the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered ordering and directing the
defendants to pay plaintiff Melki Perez the sum of TEN THOUSAND
(10,000.00) Pesos as principal with 12% interest per annum starting
from the date of filing of the complaint on August 1, 1991 until plaintiff is
fully paid.
The defendants shall likewise pay to plaintiff the sum of THREE
THOUSAND (3,000.00) as attorneys fees.
The court further orders that the Deed of Absolute Sale, (Annex A) of
the complaint and (Annex C) of the plaintiffs Motion for Summary
Judgment is declared null and void and without force and it is likewise
removed as a cloud over defendants title and property in suit. . . ."2
The RTC Decision was appealed by herein respondent Perez to the CA.
Petitioners failed to file their appellees brief. The CA then promulgated
its Decision on April 20, 1999 whereby it ruled that by Lorenzas signing
as witness to the execution of the deed, she had knowledge of the
transaction and is deemed to have given her consent to the same; that
herein petitioners failed to adduce sufficient proof to overthrow the
presumption that there was consideration for the deed, and that petitioner
David Pelayo, being a lawyer, is presumed to have acted with due care
and to have signed the deed with full knowledge of its contents and
import. The CA reversed and set aside the RTC Decision, declaring as
valid and enforceable the questioned deed of sale and ordering herein
petitioner Lorenza Pelayo to affix her signature on all pages of said
document.
Petitioners moved for reconsideration of the decision but the same was
denied per Resolution dated December 17, 1999. The CA found said
motion to have been filed out of time and ruled that even putting aside
technicality, petitioners failed to present any ground bearing on the merits
of the case to justify a reversal or setting aside of the decision.
Hence, this petition for review on certiorari on the following grounds:
 1. The CA erred in ignoring the specific provision of Section 6, in
relation to Section 4 of R.A. No. 6657 otherwise known as the
Comprehensive Agrarian Reform Law of 1988 which took effect
on June 15, 1988 and which provides that contracts executed
prior thereto shall "be valid only when registered with the Register
of Deeds within a period of three (3) months after the effectivity of
this Act."
2. The CA erred in holding that the deed of sale was valid and
considering the 10,000.00 adjudged by the trial court as Perezs
remuneration as the consideration for the deed of sale, instead of
declaring the same as null and void for being fictitious or
simulated and on the basis of Art. 491, Par. 2 of the New Civil
Code which prohibits agents from acquiring by purchase
properties from his principal under his charge.
3. The CA made a novel ruling that there was implied marital
consent of the wife of petitioner David Pelayo.
4. Petitioners should have been allowed to file their appellees
brief to ventilate their side, considering the existence of peculiar
circumstances which prevented petitioners from filing said brief.
On the other hand, respondent points out that the CA, in resolving the
first appeal docketed as CA-G.R. SP No. 387003 brought by respondent
assailing the RTC Order granting herein petitioners motion to dismiss,
already ruled that under R.A. No. 6657, the sale or transfer of private
agricultural land is allowed only when the area of the land being
conveyed constitutes or is a part of, the landowner-seller retained area
and when the total landholding of the purchaser-transferee, including the
property sold, does not exceed five (5) hectares; that in this case, the
land in dispute is only 1.3 hectares and there is no proof that the
transferees (herein respondent) total landholding inclusive of the subject
land will exceed 5 hectares, the landholding ceiling prescribed by R.A.
No. 6657; that the failure of respondent to register the instrument was not
due to his fault or negligence but can be attributed to Lorenzas
unjustified refusal to sign two pages of the deed despite several requests
of respondent; and that therefore, the CA ruled that the deed of sale
subject of this case is valid under R.A. No. 6657.
Respondent further maintains that the CA correctly held in its assailed
Decision that there was consideration for the contract and that Lorenza is
deemed to have given her consent to the deed of sale.
Respondent likewise opines that the CA was right in denying petitioners
motion for reconsideration where they prayed that they be allowed to file
their appellees brief as their counsel failed to file the same on account of
said counsels failing health due to cancer of the liver. Respondent
emphasized that in petitioners motion for reconsideration, they did not
even cite any errors made by the CA in its Decision.
The issues boil down to the question of whether or not the deed of sale
was null and void on the following grounds: (a) for not complying with the
provision in R.A. No. 6657 that such document must be registered with
the Register of Deeds within three months after the effectivity of said law;
(b) for lack of marital consent; (c) for being prohibited under Article 1491
(2) of the Civil Code; and (d) for lack of consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and void under R.A.
No. 6657, for respondents failure to register said document with the
Register of Deeds within three months after the effectivity of R.A. No.
6657, had been resolved with finality by the CA in its Decision dated
November 24, 1994 in CA-G.R. SP No. 38700.4 Herein petitioners no
longer elevated said CA Decision to this Court and the same became
final and executory on January 7, 1995.5
In said decision, the CA interpreted Section 4, in relation to Section 70 of
R.A. No. 6657, to mean thus:
. . . the proper interpretation of both sections is that under R.A. No. 6657,
the sale or transfer of a private agricultural land is allowed only when said
land area constitutes or is a part of the landowner-seller retained area
and only when the total landholdings of the purchaser-transferee,
including the property sold does not exceed five (5) hectares.
Aside from declaring that the failure of respondent to register the deed
was not of his own fault or negligence, the CA ruled that respondents
failure to register the deed of sale within three months after effectivity of
The Comprehensive Agrarian Reform Law did not invalidate the deed of
sale as "the transaction over said property is not proscribed by R.A. No.
6657."
Thus, under the principle of law of the case, said ruling of the CA is now
binding on petitioners. Such principle was elucidated in Cucueco vs.
1avvph!1
Court of Appeals,6 to wit:
Law of the case has been defined as the opinion delivered on a former
appeal. It is a term applied to an established rule that when an appellate
court passes on a question and remands the case to the lower court for
further proceedings, the question there settled becomes the law of the
case upon subsequent appeal. It means that whatever is once
irrevocably established as the controlling legal rule or decision between
the same parties in the same case continues to be the law of the
case, whether correct on general principles or not, so long as the facts on
which such decision was predicated continue to be the facts of the case
before the court.
Petitioners not having questioned the Decision of the CA dated
November 24, 1994 which then attained finality, the ruling that the deed
of sale subject of this case is not among the transactions deemed as
invalid under R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her
signature to the Deed of Sale on the space provided for witnesses, is
deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent, which
may either be express or implied.7 A wifes consent to the husbands
disposition of conjugal property does not always have to be explicit or set
forth in any particular document, so long as it is shown by acts of the wife
that such consent or approval was indeed given.8 In the present case,
although it appears on the face of the deed of sale that Lorenza signed
only as an instrumental witness, circumstances leading to the execution
of said document point to the fact that Lorenza was fully aware of the
sale of their conjugal property and consented to the sale.
In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they
have been having serious problems, including threats to the life of
petitioner David Pelayo, due to conflicts with the illegal occupants of the
property in question, so that respondent, whom many feared for being a
leftist/activist, offered his help in driving out said illegal occupants.
Human experience tells us that a wife would surely be aware of serious
problems such as threats to her husbands life and the reasons for such
threats. As they themselves stated, petitioners problems over the subject
property had been going on for quite some time, so it is highly improbable
for Lorenza not to be aware of what her husband was doing to remedy
such problems. Petitioners do not deny that Lorenza Pelayo was present
during the execution of the deed of sale as her signature appears
thereon. Neither do they claim that Lorenza Pelayo had no knowledge
whatsoever about the contents of the subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between her
husband and respondent.
Under the rules of evidence, it is presumed that a person takes ordinary
care of his concerns.10 Petitioners did not even attempt to overcome the
aforementioned presumption as no evidence was ever presented to show
that Lorenza was in any way lacking in her mental faculties and, hence,
could not have fully understood the ramifications of signing the deed of
sale. Neither did petitioners present any evidence that Lorenza had been
defrauded, forced, intimidated or threatened either by her own husband
or by respondent into affixing her signature on the subject document. If
Lorenza had any objections over the conveyance of the disputed
property, she could have totally refrained from having any part in the
execution of the deed of sale. Instead, Lorenza even affixed her
signature thereto.
Moreover, under Article 173, in relation to Article 166, both of the New
Civil Code, which was still in effect on January 11, 1988 when the deed in
question was executed, the lack of marital consent to the disposition of
conjugal property does not make the contract void ab initio but merely
voidable. Said provisions of law provide:
Art. 166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is confined in a leprosarium, the
husband cannot alienate or encumber any real property of the conjugal
property without the wifes consent. If she refuses unreasonably to give
her consent, the court may compel her to grant the same.
...
Art. 173. The wife may, during the marriage, and within ten years from
the transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when such
consent is required, or any act or contract of the husband which tends to
defraud her or impair her interest in the conjugal partnership property.
Should the wife fail to exercise this right, she or her heirs, after the
dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
Hence, it has been held that the contract is valid until the court annuls the
same and only upon an action brought by the wife whose consent was
not obtained.11 In the present case, despite respondents repeated
demands for Lorenza to affix her signature on all the pages of the deed of
sale, showing respondents insistence on enforcing said contract,
Lorenza still did not file a case for annulment of the deed of sale. It was
only when respondent filed a complaint for specific performance on
August 8, 1991 when petitioners brought up Lorenzas alleged lack of
consent as an affirmative defense. Thus, if the transaction was indeed
entered into without Lorenzas consent, we find it quite puzzling why for
more than three and a half years, Lorenza did absolutely nothing to seek
the nullification of the assailed contract.
The foregoing circumstances lead the Court to believe that Lorenza knew
of the full import of the transaction between respondent and her
husband; and, by affixing her signature on the deed of sale, she, in effect,
signified her consent to the disposition of their conjugal property.
With regard to petitioners asseveration that the deed of sale is invalid
under Article 1491, paragraph 2 of the New Civil Code, we find such
argument unmeritorious. Article 1491 (2) provides:
Art. 1491. The following persons cannot acquire by purchase, even at a
public or judicial auction, either in person or through the mediation of
another:
...
(2) Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been given;
...
In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas,
designated one of her sons as the administrator of several parcels of her
land. The landowner subsequently executed a Deed of Certification of
Sale of Unregistered Land, conveying some of said land to her
son/administrator. Therein, we held that:
Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not
absolute. It does not apply if the principal consents to the sale of the
property in the hands of the agent or administrator. In this case, the
deeds of sale signed by Iluminada Abiertas shows that she gave consent
to the sale of the properties in favor of her son, Rufo, who was the
administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition
contained in Article 1491(2).13
The above-quoted ruling is exactly in point with this case before us.
Petitioners, by signing the Deed of Sale in favor of respondent, are also
deemed to have given their consent to the sale of the subject property in
favor of respondent, thereby making the transaction an exception to the
general rule that agents are prohibited from purchasing the property of
their principals.
Petitioners also argue that the CA erred in ruling that there was
consideration for the sale. We find no error in said appellate courts
ruling. The element of consideration for the sale is indeed present.
Petitioners, in adopting the trial courts narration of antecedent facts in
their petition,14 thereby admitted that they authorized respondent to
represent them in negotiations with the "squatters" occupying the
disputed property and, in consideration of respondents services, they
executed the subject deed of sale. Aside from such services rendered by
respondent, petitioners also acknowledged in the deed of sale that they
received in full the amount of Ten Thousand Pesos. Evidently, the
consideration for the sale is respondents services plus the
aforementioned cash money.
Petitioners contend that the consideration stated in the deed of sale is
excessively inadequate, indicating that the deed of sale was merely
simulated. We are not persuaded. Our ruling in Buenaventura vs. Court
of Appeals15 is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal to the exact
value of the subject matter of sale. . . . As we stated in Vales vs. Villa:
Courts cannot follow one every step of his life and extricate him from bad
bargains, protect him from unwise investments, relieve him from one-
sided contracts, or annul the effects of foolish acts. Courts cannot
constitute themselves guardians of persons who are not legally
incompetent. Courts operate not because one person has been defeated
or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts,
use miserable judgment, and lose money by them indeed, all they have
in the world; but not for that alone can the law intervene and restore.
There must be, in addition, a violation of the law, the commission of what
the law knows as an actionable wrong, before the courts are authorized
to lay hold of the situation and remedy it.16
Verily, in the present case, petitioners have not presented proof that
there has been fraud, mistake or undue influence exercised upon them
by respondent. It is highly unlikely and contrary to human experience that
a layman like respondent would be able to defraud, exert undue
influence, or in any way vitiate the consent of a lawyer like petitioner
David Pelayo who is expected to be more knowledgeable in the ways of
drafting contracts and other legal transactions.
Furthermore, in their Reply to Respondents Memorandum,17 petitioners
adopted the CAs narration of fact that petitioners stated in a letter they
sent to the Register of Deeds of Tagum that they have entrusted the titles
over subject lots to herein respondent. Such act is a clear indication that
they intended to convey the subject property to herein respondent and
the deed of sale was not merely simulated or fictitious.
Lastly, petitioners claim that they were not able to fully ventilate their
defense before the CA as their lawyer, who was then suffering from
cancer of the liver, failed to file their appellees brief. Thus, in their motion
for reconsideration of the CA Decision, they prayed that they be allowed
to submit such appellees brief. The CA, in its Resolution dated
December 17, 1999, stated thus:
By movant-defendant-appellees own information, his counsel received a
copy of the decision on May 5, 1999. He, therefore, had fifteen (15) days
from said date or up to May 20, 1999 to file the motion. The motion,
however, was sent through a private courier and, therefore, considered to
have been filed on the date of actual receipt on June 17, 1999 by the
addressee Court of Appeals, was filed beyond the reglementary period.
Technicality aside, movant has not proffered any ground bearing on the
merits of the case why the decision should be set aside. 1awphi1
Petitioners never denied the CA finding that their motion for
reconsideration was filed beyond the fifteen-day reglementary period. On
that point alone, the CA is correct in denying due course to said motion.
The motion having been belatedly filed, the CA Decision had then
attained finality. Thus, in Abalos vs. Philex Mining Corporation,18 we held
that:
. . . Nothing is more settled in law than that once a judgment attains
finality it thereby becomes immutable and unalterable. It may no longer
be modified in any respect, even if the modification is meant to correct
what is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the
court rendering it or by the highest court of the land.
Moreover, it is pointed out by the CA that said motion did not present any
defense or argument on the merits of the case that could have convinced
the CA to reverse or modify its Decision.
We have consistently held that a petitioners right to due process is not
violated where he was able to move for reconsideration of the order or
decision in question.19 In this case, petitioners had the opportunity to fully
expound on their defenses through a motion for reconsideration.
Petitioners did file such motion but they wasted such opportunity by
failing to present therein whatever errors they believed the CA had
committed in its Decision. Definitely, therefore, the denial of petitioners
motion for reconsideration, praying that they be allowed to file appellees
brief, did not infringe petitioners right to due process as any issue that
petitioners wanted to raise could and should have been contained in said
motion for reconsideration.
IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision
of the Court of Appeals dated April 20, 1999 and its Resolution dated
December 17, 1999 are hereby AFFIRMED.
SO ORDERED.

G.R. No. 92245 June 26, 1991
MELANIA A. ROXAS, petitioner,
vs.
THE HON. COURT OF APPEALS and ANTONIO M.
CAYETANO, respondents.
PARAS, J.:
The only issue before Us is whether or not a husband, as the
administrator of the conjugal partnership, may legally enter into a contract
of lease involving conjugal real property without the knowledge and
consent of the wife.
According to the Decision * rendered by the respondent Court of
Appeals, the pertinent facts of the case as alleged in plaintiff-petitioner's
complaint indicate:
1. That plaintiff is of legal age, married but living separately from
husband, one of the defendants herein and presently residing at No. 4
Ambrocia St., Quezon City; while defendant Antonio S. Roxas is likewise
of legal age and living separately from his wife, plaintiff herein, with
residence at No. 950 Quirino Highway, Novaliches, Quezon City where
he may be served with summons; and defendant Antonio M. Cayetano is
of legal age and residing at No. 28 Mariano Olondriz Street, BF Homes,
Paranaque, Metro Manila where he may be served with summons;
2. That only recently, plaintiff discovered that her estranged husband,
defendant Antonio S. Roxas, had entered into a contract of lease with
defendant Antonio M. Cayetano sometime on March 30, 1987 covering a
portion of their conjugal lot situated at 854 Quirino Highway, Novaliches,
Quezon City, described in T.C.T. No. 378197 (formerly T.C.T. No. 23881)
of the Land Registry for Quezon City without her previous knowledge,
much less her marital consent-xerox; copy of which lease contract is
hereto attached as Annex "A", and made an integral part hereof.
3. That on the same lot, plaintiff had planned to put up her flea market
with at least twenty (20) stalls and mini-mart for grocery and dry goods
items for which she had filed an application for the corresponding Mayor's
Permit and Municipal License which had been approved since 1986, but
when she attempted to renew it for 1986, the same was disapproved last
month due to the complaint lodged by defendant Antonio M. Cayetano
whose application for renewal of Mayor's Permit and License for the
same business of putting up a flea market, had been allegedly earlier
approved;
4. That for the planning and initial construction of plaintiffs project to put
up her own business of flea market and mini-mart grocery and wet and
dry stores which she had intended to operate partly by herself and lease
the rest of the twenty (20) stalls thereon, she had spent some
P135,000.00 for the said construction, including materials and labor,
where she had expected to earn as daily net income in the minimum
amount of P500.00 daily;
5. That due to the illegal lease contract entered into between the herein
defendants and the resultant unlawful deprivation of plaintiff from
operating her own legitimate business on the same lot of which she is a
conjugal owner, plaintiff has been compelled to seek redress and
ventilate her grievance to the court for which she has to engage the
services of counsel with whom she agreed to pay as and for attorney's
fees the sum of P10,000.00; plus the amount equivalent to 20% of
whatever damages may be awarded to her in addition to the sum of
P500.00 per appearance in court.
xxx xxx xxx
xxx xxx xxx
Dated July 31, 1989 defendant Antonio M. Cayetano moved to dismiss
the complaint on the sole ground that the complaint states no cause of
action, to which an Opposition was filed by plaintiff (now petitioner
herein), while defendant Antonio S. Roxas, estranged husband of
plaintiff-petitioner, filed an answer.
Confronted with the private respondent's Motion to Dismiss, on August
16, 1989, respondent Judge resolved said Motion by dismissing plaintiff-
petitioner's complaint in its Order dated August 16, 1989, the dispositive
portion of which reads, as follows:
It is said that the test of sufficiency of the cause of action is whether
admitting the facts alleged to be true, the court could render a valid
judgment in accordance with the prayer in the complaint. After examining
the material allegations in the complaint, the Court finds that the
complaint failed to satisfy the test of sufficiency.
WHEREFORE, the complaint is dismissed for failure to
state a sufficient cause of action.
IT IS SO ORDERED. (p. 2 Order, dated August 16,
1989).
Plaintiff-petitioner filed a Motion for Reconsideration, which was denied
by respondent Judge in its Order dated September 29, 1989. (Decision of
Court of Appeals, pp. 1-4; Rollo, Annex "A", pp. 26-29)
Petitioner directly appealed the Decision of the lower court to the
Supreme Court.
On November 27, 1989, the Second Division of this Court referred this
case to the Court of Appeals for "proper determination and disposition."
Respondent Court of Appeals rendered judgment affirming in toto the
Order of the trial court.
Hence, this petition.
Under the New Civil Code (NCC), "Art. 165. The husband is the
administrator of the conjugal partnership," in view of the fact that the
husband is principally responsible for the support of the wife and the rest
of the family. If the conjugal partnership does not have enough assets, it
is the husband's capital that is responsible for such support, not the
paraphernal property. Responsibility should carry authority with it.
The husband is not an ordinary administrator, for while a mere
administrator has no right to dispose of, sell, or otherwise alienate the
property being administered, the husband can do so in certain cases
allowed by law. He is not required by law to render an accounting. Acts
done under administration do not need the prior consent of the wife.
However, administration does not include acts of ownership. For while
the husband can administer the conjugal assets unhampered, he cannot
alienate or encumber the conjugal realty. Thus, under Art. 166 of NCC
"unless the wife has been declared a non-compos mentis or a spendthrift,
or is under civil interdiction or is confined in a leprosarium, the husband
cannot alienate or encumber any real property of the conjugal partnership
the wife's consent. If she refuses unreasonably to give her consent, the
court may compel her to grant the same." This rule prevents abuse on
the part of the husband, and guarantees the rights of the wife, who is
partly responsible for the acquisition of the property, particularly the real
property. Contracts entered into by the husband in violation of this
prohibition are voidable and subject to annulment at the instance of the
aggrieved wife. (Art. 173 of the Civil Code)
As stated in Black's Law Dictionary, the word "alienation" means 'the
transfer of the property and possession of lands, tenements, or other
things from one person to another . . . The act by which the title to real
estate is voluntarily assigned by one person to another and accepted by
the latter, in the form prescribed by law. Cf. In re Enrhardt U.S.D.C. 19 F.
2d 406, 407 . . . ." While encumbrance "has been defined to be every
right to, or interest in, the land which may subsist in third persons, to the
diminution of the value of the land, but consistent with the passing of the
fee by the conveyance; any (act) that impairs the use or transfer of
property or real estate . . ." (42 C.J.S., p. 549).
The pivotal issue in this case is whether or not a lease is an
encumbrance and/or alienation within the scope of Art. 166 of the New
Civil Code.
Under Art. 1643 of the New Civil Code "In the lease of things, one of the
parties binds himself to give to another the enjoyment or use of a thing
for a price certain, and for a period which may be definite or indefinite.
However, no lease for more than ninety-nine years shall be valid." Under
the law, lease is a grant of use and possession: it is not only a grant of
possession as opined by the Court of Appeals. The right to possess does
not always include the right to use. For while the bailee in the contract of
deposit holds the property in trust, he is not granted by law the right to
make use of the property in deposit.
In the contract of lease, the lessor transfers his light of use in favor of the
lessee. The lessor's right of use is impaired, therein. He may even be
ejected by the lessee if the lessor uses the leased realty. Therefore,
lease is a burden on the land, it is an encumbrance on the land. The
opinion of the Court of Appeals that lease is not an encumbrance is not
supported by law. The concept of encumbrance includes lease, thus "an
encumbrance is sometimes construed broadly to include not only liens
such as mortgages and taxes, but also attachment, LEASES, inchoate
dower rights, water rights, easements, and other RESTRICTIONS on
USE." (Capitalization is Ours) (533 Pacific Reporter [second series] 9,
12).
G.R. No. 164584 June 22, 2009
Moreover, lease is not only an encumbrance but also a "qualified
alienation, with the lessee becoming, for all legal intents and purposes, PHILIP MATTHEWS, Petitioner,
and subject to its terms, the owner of the thing affected by the lease." (51 vs.
C C.J.S., p. 522) BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.

Thus, the joinder of the wife, although unnecessary for an oral lease of DECISION
conjugal realty which does not exceed one year in duration, is required in
a lease of conjugal realty for a period of more than one year, such a NACHURA, J.:
lease being considered a conveyance and encumbrance within the
provisions of the Civil Code requiring the joinder of the wife in the
Assailed in this petition for review on certiorari are the Court of Appeals
instrument by which real property is conveyed or encumbered (See also
(CA) December 19, 2003 Decision1 and July 14, 2004 Resolution2 in CA-
41 C.J.S., p. 1149). In case the wife's consent is not secured by the
G.R. CV No. 59573. The assailed decision affirmed and upheld the June
husband as required by law, the wife has the remedy of filing an action
30, 1997 Decision3 of the Regional Trial Court (RTC), Branch 8, Kalibo,
for the annulment of the contract. Art. 173 of the Civil Code states "the
Aklan in Civil Case No. 4632 for Declaration of Nullity of Agreement of
wife may, during the marriage and within ten years from the transaction
Lease with Damages.
questioned, ask the courts for the annulment of any contract of the
husband entered into without her consent, when such consent is
required. . . . On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British
subject, married Joselyn C. Taylor (Joselyn), a 17-year old Filipina.4 On
June 9, 1989, while their marriage was subsisting, Joselyn bought from
In the case at bar, the allegation in paragraph 2 of the complaint indicates
Diosa M. Martin a 1,294 square-meter lot (Boracay property) situated at
that petitioner's estranged husband, defendant Antonio S. Roxas had
Manoc-Manoc, Boracay Island, Malay, Aklan, for and in consideration of
entered into a contract of lease with defendant Antonio M. Cayetano
129,000.00.5 The sale was allegedly financed by Benjamin.6 Joselyn
without her marital consent being secured as required by law under Art.
and Benjamin, also using the latters funds, constructed improvements
166 of the Civil Code. Petitioner, therefore, has a cause of action under
thereon and eventually converted the property to a vacation and tourist
Art. 173 to file a case for annulment of the contract of lease entered into
resort known as the Admiral Ben Bow Inn.7 All required permits and
without her consent. Petitioner has a cause of action not only against her
licenses for the operation of the resort were obtained in the name of
husband but also against the lessee, Antonio M. Cayetano, who is a
Ginna Celestino, Joselyns sister.8
party to the contract of lease.
However, Benjamin and Joselyn had a falling out, and Joselyn ran away
PREMISES CONSIDERED, the decision of the Court of Appeals is
with Kim Philippsen. On June 8, 1992, Joselyn executed a Special Power
hereby SET ASIDE and this case is hereby REMANDED to the Regional
of Attorney (SPA) in favor of Benjamin, authorizing the latter to maintain,
Trial court for further proceedings. SO ORDERED.
sell, lease, and sub-lease and otherwise enter into contract with third
parties with respect to their Boracay property.9

On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as

lessee, entered into an Agreement of Lease10(Agreement) involving the
Boracay property for a period of 25 years, with an annual rental of
12,000.00. The agreement was signed by the parties and executed
before a Notary Public. Petitioner thereafter took possession of the
property and renamed the resort as Music Garden Resort. 1avv phi1
Claiming that the Agreement was null and void since it was entered into
by Joselyn without his (Benjamins) consent, Benjamin instituted an
action for Declaration of Nullity of Agreement of Lease with
Damages11 against Joselyn and the petitioner. Benjamin claimed that his
funds were used in the acquisition and improvement of the Boracay
property, and coupled with the fact that he was Joselyns husband, any
transaction involving said property required his consent.
No Answer was filed, hence, the RTC declared Joselyn and the petitioner
in defeault. On March 14, 1994, the RTC rendered judgment by default
declaring the Agreement null and void.12 The decision was, however, set
aside by the CA in CA-G.R. SP No. 34054.13 The CA also ordered the
RTC to allow the petitioner to file his Answer, and to conduct further
proceedings.
In his Answer,14 petitioner claimed good faith in transacting with Joselyn.
Since Joselyn appeared to be the owner of the Boracay property, he
found it unnecessary to obtain the consent of Benjamin. Moreover, as
appearing in the Agreement, Benjamin signed as a witness to the
contract, indicating his knowledge of the transaction and, impliedly, his
conformity to the agreement entered into by his wife. Benjamin was,
therefore, estopped from questioning the validity of the Agreement.
There being no amicable settlement during the pre-trial, trial on the merits
ensued.
On June 30, 1997, the RTC disposed of the case in this manner:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff and against the defendants as follows:
1. The Agreement of Lease dated July 20, 1992 consisting of
eight (8) pages (Exhibits "T", "T-1", "T-2", "T-3", "T-4", "T-5", "T-6"
and "T-7") entered into by and between Joselyn C. Taylor and
Philip Matthews before Notary Public Lenito T. Serrano under
Doc. No. 390, Page 79, Book I, Series of 1992 is hereby declared
NULL and VOID;
2. Defendants are hereby ordered, jointly and severally, to pay
plaintiff the sum of SIXTEEN THOUSAND (16,000.00) PESOS
as damages representing unrealized income for the residential
building and cottages computed monthly from July 1992 up to the
time the property in question is restored to plaintiff; and
3. Defendants are hereby ordered, jointly and severally, to pay
plaintiff the sum of TWENTY THOUSAND (20,000.00) PESOS,
Philippine Currency, for attorneys fees and other incidental
expenses.
SO ORDERED.15
The RTC considered the Boracay property as community property of
Benjamin and Joselyn; thus, the consent of the spouses was necessary
to validate any contract involving the property. Benjamins right over the
Boracay property was bolstered by the courts findings that the property
was purchased and improved through funds provided by Benjamin.
Although the Agreement was evidenced by a public document, the trial
court refused to consider the alleged participation of Benjamin in the
questioned transaction primarily because his signature appeared only on
the last page of the document and not on every page thereof.
On appeal to the CA, petitioner still failed to obtain a favorable decision.
In its December 19, 2003 Decision,16 the CA affirmed the conclusions
made by the RTC. The appellate court was of the view that if, indeed,
Benjamin was a willing participant in the questioned transaction, the
parties to the Agreement should have used the phrase "with my consent"
instead of "signed in the presence of." The CA noted that Joselyn already
prepared an SPA in favor of Benjamin involving the Boracay property; it
was therefore unnecessary for Joselyn to participate in the execution of
the Agreement. Taken together, these circumstances yielded the
inevitable conclusion that the contract was null and void having been
entered into by Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in this petition for
review on certiorari based on the following grounds:
4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN
TAYLOR IS NOT REQUIRED IN THE AGREEMENT OF LEASE
DATED 20 JULY 1992. GRANTING ARGUENDO THAT HIS
CONSENT IS REQUIRED, BENJAMIN TAYLOR IS DEEMED TO
HAVE GIVEN HIS CONSENT WHEN HE AFFIXED HIS
SIGNATURE IN THE AGREEMENT OF LEASE AS WITNESS IN
THE LIGHT OF THE RULING OF THE SUPREME COURT IN
THE CASE OF SPOUSES PELAYO VS. MELKI PEREZ, G.R.
NO. 141323, JUNE 8, 2005.
 4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT
OF LEASE IS THE EXCLUSIVE PROPERTY OF JOCELYN C.
TAYLOR, A FILIPINO CITIZEN, IN THE LIGHT OF CHEESMAN
VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.
4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE
96 OF THE FAMILY CODE OF THE PHILIPPINES WHICH IS A
PROVISION REFERRING TO THE ABSOLUTE COMMUNITY
OF PROPERTY. THE PROPERTY REGIME GOVERNING THE
PROPERTY RELATIONS OF BENJAMIN TAYLOR AND
JOSELYN TAYLOR IS THE CONJUGAL PARTNERSHIP OF
GAINS BECAUSE THEY WERE MARRIED ON 30 JUNE 1988
WHICH IS PRIOR TO THE EFFECTIVITY OF THE FAMILY
CODE. ARTICLE 96 OF THE FAMILY CODE OF THE
PHILIPPINES FINDS NO APPLICATION IN THIS CASE.
4.4. THE HONORABLE COURT OF APPEALS IGNORED THE
PRESUMPTION OF REGULARITY IN THE EXECUTION OF
NOTARIAL DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS FAILED TO
PASS UPON THE COUNTERCLAIM OF PETITIONER DESPITE
THE FACT THAT IT WAS NOT CONTESTED AND DESPITE
THE PRESENTATION OF EVIDENCE ESTABLISHING SAID
CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of an Agreement of
Lease of a parcel of land entered into by a Filipino wife without the
consent of her British husband. In addressing the matter before us, we
are confronted not only with civil law or conflicts of law issues, but more
importantly, with a constitutional question.
It is undisputed that Joselyn acquired the Boracay property in 1989. Said
acquisition was evidenced by a Deed of Sale with Joselyn as the vendee.
The property was also declared for taxation purposes under her name.
When Joselyn leased the property to petitioner, Benjamin sought the
nullification of the contract on two grounds: first, that he was the actual
owner of the property since he provided the funds used in purchasing the
same; and second, that Joselyn could not enter into a valid contract
involving the subject property without his consent.
The trial and appellate courts both focused on the property relations of
petitioner and respondent in light of the Civil Code and Family Code
provisions. They, however, failed to observe the applicable constitutional
principles, which, in fact, are the more decisive.
Section 7, Article XII of the 1987 Constitution states:18
Section 7. Save in cases of hereditary succession, no private lands shall
be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain. 1avv phi 1
Aliens, whether individuals or corporations, have been disqualified from
acquiring lands of the public domain. Hence, by virtue of the aforecited
constitutional provision, they are also disqualified from acquiring private
lands.19The primary purpose of this constitutional provision is the
conservation of the national patrimony.20 Our fundamental law cannot be
any clearer. The right to acquire lands of the public domain is reserved
only to Filipino citizens or corporations at least sixty percent of the capital
of which is owned by Filipinos.21
In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we had the
occasion to explain the constitutional prohibition:
Under Section 1 of Article XIII of the Constitution, "natural resources, with
the exception of public agricultural land, shall not be alienated," and with
respect to public agricultural lands, their alienation is limited to Filipino
citizens. But this constitutional purpose conserving agricultural resources
in the hands of Filipino citizens may easily be defeated by the Filipino
citizens themselves who may alienate their agricultural lands in favor of
aliens. It is partly to prevent this result that Section 5 is included in Article
XIII, and it reads as follows:
"Section 5. Save in cases of hereditary succession, no private agricultural
land will be transferred or assigned except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain in the
Philippines."
This constitutional provision closes the only remaining avenue through
which agricultural resources may leak into aliens hands. It would
certainly be futile to prohibit the alienation of public agricultural lands to
aliens if, after all, they may be freely so alienated upon their becoming
private agricultural lands in the hands of Filipino citizens. x x x
xxxx
If the term "private agricultural lands" is to be construed as not including
residential lots or lands not strictly agricultural, the result would be that
"aliens may freely acquire and possess not only residential lots and
houses for themselves but entire subdivisions, and whole towns and
cities," and that "they may validly buy and hold in their names lands of
any area for building homes, factories, industrial plants, fisheries,
hatcheries, schools, health and vacation resorts, markets, golf courses,
playgrounds, airfields, and a host of other uses and purposes that are
not, in appellants words, strictly agricultural." (Solicitor Generals Brief, p.
6) That this is obnoxious to the conservative spirit of the Constitution is
beyond question.24
The rule is clear and inflexible: aliens are absolutely not allowed to
acquire public or private lands in the Philippines, save only in
constitutionally recognized exceptions.25 There is no rule more settled
than this constitutional prohibition, as more and more aliens attempt to
circumvent the provision by trying to own lands through another. In a long
line of cases, we have settled issues that directly or indirectly involve the
above constitutional provision. We had cases where aliens wanted that a
particular property be declared as part of their fathers estate;26 that they
be reimbursed the funds used in purchasing a property titled in the name
of another;27 that an implied trust be declared in their (aliens) favor;28 and
that a contract of sale be nullified for their lack of consent.29
In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen, acquired a
parcel of land, together with the improvements thereon. Upon his death,
his heirs (the petitioners therein) claimed the properties as part of the
estate of their deceased father, and sought the partition of said properties
among themselves. We, however, excluded the land and improvements
thereon from the estate of Felix Ting Ho, precisely because he never
became the owner thereof in light of the above-mentioned constitutional
prohibition.
In Muller v. Muller,31 petitioner Elena Buenaventura Muller and
respondent Helmut Muller were married in Germany. During the
subsistence of their marriage, respondent purchased a parcel of land in
Antipolo City and constructed a house thereon. The Antipolo property
was registered in the name of the petitioner. They eventually separated,
prompting the respondent to file a petition for separation of property.
Specifically, respondent prayed for reimbursement of the funds he paid
for the acquisition of said property. In deciding the case in favor of the
petitioner, the Court held that respondent was aware that as an alien, he
was prohibited from owning a parcel of land situated in the Philippines.
He had, in fact, declared that when the spouses acquired the Antipolo
property, he had it titled in the name of the petitioner because of said
prohibition. Hence, we denied his attempt at subsequently asserting a
right to the said property in the form of a claim for reimbursement. Neither
did the Court declare that an implied trust was created by operation of
law in view of petitioners marriage to respondent. We said that to rule
otherwise would permit circumvention of the constitutional prohibition.
In Frenzel v. Catito,32 petitioner, an Australian citizen, was married to
Teresita Santos; while respondent, a Filipina, was married to Klaus
Muller. Petitioner and respondent met and later cohabited in a common-
law relationship, during which petitioner acquired real properties; and
since he was disqualified from owning lands in the Philippines,
respondents name appeared as the vendee in the deeds of sale. When
their relationship turned sour, petitioner filed an action for the recovery of
the real properties registered in the name of respondent, claiming that he
was the real owner. Again, as in the other cases, the Court refused to
declare petitioner as the owner mainly because of the constitutional
prohibition. The Court added that being a party to an illegal contract, he
could not come to court and ask to have his illegal objective carried out.
One who loses his money or property by knowingly engaging in an illegal
contract may not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner (an
American citizen) and Criselda Cheesman acquired a parcel of land that
was later registered in the latters name. Criselda subsequently sold the
land to a third person without the knowledge of the petitioner. The
petitioner then sought the nullification of the sale as he did not give his
consent thereto. The Court held that assuming that it was his
(petitioners) intention that the lot in question be purchased by him and
his wife, he acquired no right whatever over the property by virtue of that
purchase; and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the Constitution;
thus, the sale as to him was null and void.
In light of the foregoing jurisprudence, we find and so hold that Benjamin
has no right to nullify the Agreement of Lease between Joselyn and
petitioner. Benjamin, being an alien, is absolutely prohibited from
acquiring private and public lands in the Philippines. Considering that
Joselyn appeared to be the designated "vendee" in the Deed of Sale of
said property, she acquired sole ownership thereto. This is true even if
we sustain Benjamins claim that he provided the funds for such
acquisition. By entering into such contract knowing that it was illegal, no
implied trust was created in his favor; no reimbursement for his expenses
can be allowed; and no declaration can be made that the subject property
was part of the conjugal/community property of the spouses. In any
event, he had and has no capacity or personality to question the
subsequent lease of the Boracay property by his wife on the theory that
in so doing, he was merely exercising the prerogative of a husband in
respect of conjugal property. To sustain such a theory would
countenance indirect controversion of the constitutional prohibition. If the
property were to be declared conjugal, this would accord the alien
husband a substantial interest and right over the land, as he would then
have a decisive vote as to its transfer or disposition. This is a right that
the Constitution does not permit him to have.34
In fine, the Agreement of Lease entered into between Joselyn and
petitioner cannot be nullified on the grounds advanced by Benjamin.
Thus, we uphold its validity.
With the foregoing disquisition, we find it unnecessary to address the
other issues raised by the petitioner.
WHEREFORE, premises considered, the December 19, 2003 Decision
and July 14, 2004 Resolution of the Court of Appeals in CA-G.R. CV No.
59573, are REVERSED and SET ASIDE and a new one is entered
DISMISSING the complaint against petitioner Philip Matthews.
SO ORDERED.
G.R. No. 74833 January 21, 1991
THOMAS C. CHEESMAN, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and ESTELITA
PADILLA, respondents.
Estanislao L. Cesa, Jr. for petitioner.
Benjamin I. Fernandez for private respondent.
NARVASA, J.:
This appeal concerns the attempt by an American citizen (petitioner
Thomas Cheesman) to annul for lack of consent on his part the
sale by his Filipino wife (Criselda) of a residential lot and building to
Estelita Padilla, also a Filipino.
Thomas Cheesman and Criselda P. Cheesman were married on
December 4, 1970 but have been separated since February 15,1981.1
On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights"
was executed by Armando Altares conveying a parcel of unregistered
land and the house thereon (at No. 7 Neptune Street, Gordon Heights,
Olongapo City) in favor of "Criselda P. Cheesman, of legal age, Filipino
citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8,
Filtration Road, Sta. Rita, Olongapo City . . ."2 Thomas Cheesman,
although aware of the deed, did not object to the transfer being made
only to his wife.3
Thereafterand again with the knowledge of Thomas Cheesman and
also without any protest by himtax declarations for the property
purchased were issued in the name only of Criselda Cheesman and
Criselda assumed exclusive management and administration of said
property, leasing it to tenants.4
On July 1, 1981, Criselda Cheesman sold the property to Estelita M.
Padilla, without the knowledge or consent of Thomas Cheesman.5 The
deed described Criselda as being" . . . of legal age, married to an
American citizen,. . ."6
Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in
the Court of First Instance at Olongapo City against his wife, Criselda,
and Estelita Padilla, praying for the annulment of the sale on the ground
that the transaction had been executed without his knowledge and
consent.7 An answer was filed in the names of both defendants, alleging
that (1) the property sold was paraphernal, having been purchased by
Criselda with funds exclusively belonging to her ("her own separate
money"); (2) Thomas Cheesman, being an American, was disqualified to
have any interest or right of ownership in the land; and (3) Estelita Padilla
was a buyer in good faith.8
During the pre-trial conference, the parties agreed upon certain facts
which were subsequently set out in a pre-trial Order dated October 22,
1981,9 as follows:
1. Both parties recognize the existence of the Deed of Sale over
the residential house located at No. 7 Granada St., Gordon
Heights, Olongapo City, which was acquired from Armando
Altares on June 4, 1974 and sold by defendant Criselda
Cheesman to Estelita Padilla on July 12, 1981; and
2. That the transaction regarding the transfer of their property
took place during the existence of their marriage as the couple
were married on December 4, 1970 and the questioned property
was acquired sometime on June 4,1974.
The action resulted in a judgment dated June 24, 1982,10 declaring
void ab initio the sale executed by Criselda Cheesman in favor of Estelita
M. Padilla, and ordering the delivery of the property to Thomas
Cheesman as administrator of the conjugal partnership property, and the
payment to him of P5,000.00 as attorney's fees and expenses of
litigation.11
The judgment was however set aside as regards Estelita Padilla on a
petition for relief filed by the latter, grounded on "fraud, mistake and/or
excusable negligence" which had seriously impaired her right to present
her case adequately.12 "After the petition for relief from judgment was
given due course," according to petitioner, "a new judge presided over
the case."13
Estelita Padilla filed a supplemental pleading on December 20, 1982 as
her own answer to the complaint, and a motion for summary judgment on
May 17, 1983. Although there was initial opposition by Thomas
Cheesman to the motion, the parties ultimately agreed on the rendition by
the court of a summary judgment after entering into a stipulation of facts,
at the hearing of the motion on June 21, 1983, the stipulation being of the
following tenor:14
(1) that the property in question was bought during the existence
of the marriage between the plaintiff and the defendant Criselda
P. Cheesman;
(2) that the property bought during the marriage was registered in
the name of Criselda Cheesman and that the Deed of Sale and
Transfer of Possessory Rights executed by the former owner-
vendor Armando Altares in favor of Criselda Cheesman made no
mention of the plaintiff;
(3) that the property, subject of the proceedings, was sold by
defendant Criselda Cheesman in favor of the other defendant
Estelita M. Padilla, without the written consent of the plaintiff.
Obviously upon the theory that no genuine issue existed any longer and
there was hence no need of a trial, the parties having in fact submitted,
as also stipulated, their respective memoranda each praying for a
favorable verdict, the Trial Court15 rendered a "Summary Judgment" dated
August 3, 1982 declaring "the sale executed by . . . Criselda Cheesman
in favor of . . . Estelita Padilla to be valid," dismissing Thomas
Cheesman's complaint and ordering him "to immediately turn over the
possession of the house and lot subject of . . . (the) case to . . . Estelita
Padilla . . ."16
The Trial Court found that
1) the evidence on record satisfactorily overcame the disputable
presumption in Article 160 of the Civil Codethat all property of
the marriage belongs to the conjugal partnership "unless it be
proved that it pertains exclusively to the husband or to the wife"
and that the immovable in question was in truth Criselda's
paraphernal property;
2) that moreover, said legal presumption in Article 160 could not
apply "inasmuch as the husband-plaintiff is an American citizen
and therefore disqualified under the Constitution to acquire and
own real properties; and
 3) that the exercise by Criselda of exclusive acts of dominion with
the knowledge of her husband "had led . . . Estelita Padilla to
believe that the properties were the exclusive properties of
Criselda Cheesman and on the faith of such a belief she bought
the properties from her and for value," and therefore, Thomas
Cheesman was, under Article 1473 of the Civil Code, estopped to
impugn the transfer to Estelita Padilla.
Thomas Cheesman appealed to the Intermediate Appellate Court. There
he assailed the Trial Court acts (1) of granting Estelita Padilla's petition
for relief, and its resolution of matters not subject of said petition; (2) of
declaring valid the sale to Estelita Padilla despite the lack of consent
thereto by him, and the presumption of the conjugal character of the
property in question pursuant to Article 160 of the Civil Code; (3) of
disregarding the judgment of June 24, 1982 which, not having been set
aside as against Criselda Cheesman, continued to be binding on her; and
(4) of making findings of fact not supported by evidence. All of these
contentions were found to be without merit by the Appellate Tribunal
which, on January 7, 1986, promulgated a decision (erroneously
denominated, "Report")17affirming the "Summary Judgment complained
of," "having found no reversible error" therein.
Once more, Thomas Cheesman availed of the remedy of appeal, this
time to this Court. Here, he argues that it was reversible error for the
Intermediate Appellate Court
1) to find that the presumption that the property in question is conjugal in
accordance with Article 160 had been satisfactorily overcome by Estelita
Padilla;18
2) to rule that Estelita Padilla was a purchaser of said property in good
faith, it appearing:
a) that the deed by which the property was conveyed to
Criselda Cheesman described her as "married to Thomas
C. Cheesman," as well as the deed by which the property
was later conveyed to Estelita Padilla by Criselda
Cheesman also described her as "married to an American
citizen," and both said descriptions had thus "placed
Estelita on knowledge of the conjugal nature of the
property;" and
b) that furthermore, Estelita had admitted to stating in the
deed by which she acquired the property a price much
lower than that actually paid "in order to avoid payment of
more obligation to the government;"19
3) to decline to declare that the evidence did not warrant the grant of
Estelita Padilla's petition for relief on the ground of "fraud, mistake and/or
excusable negligence;"20
4) to hold that Thomas Cheesman had waived his objection to Estelita's
petition for relief by failing to appeal from the order granting the same;
5) to accord to Estelita Padilla a relief other than that she had specifically
prayed for in her petition for relief, ie., "the restoration of the purchase
price which Estelita allegedly paid to Criselda;"21 and
6) to fail to declare that Thomas Cheesman's citizenship is not a bar to
his action to recover the lot and house for the conjugal partnership.22
Such conclusions as that (1) fraud, mistake or excusable negligence
existed in the premises justifying relief to Estelita Padilla under Rule 38 of
the Rules of Court, or (2) that Criselda Cheesman had used money she
had brought into her marriage to Thomas Cheesman to purchase the lot
and house in question, or (3) that Estelita Padilla believed in good faith
that Criselda Cheesman was the exclusive owner of the property that she
(Estelita) intended to and did in fact buyderived from the evidence
adduced by the parties, the facts set out in the pleadings or otherwise
appearing on recordare conclusions or findings of fact. As
distinguished from a question of lawwhich exists "when the doubt or
difference arises as to what the law is on a certain state of facts"
"there is a question of fact when the doubt or difference arises as to the
truth or the falsehood of alleged facts;"23 or when the "query necessarily
invites calibration of the whole evidence considering mainly the credibility
of witnesses, existence and relevancy of specific surrounding
circumstances, their relation; to each other and to the whole and the
probabilities of the situation."24
Now, it is axiomatic that only questions of law, distinctly set forth, may be
raised in a petition for the review oncertiorari of a decision of the Court of
Appeals presented to this Court.25 As everyone knows or ought to know,
the appellate jurisdiction of this Court is limited to reviewing errors of law,
accepting as conclusive the factual findings of the lower court upon its
own assessment of the evidence.26 The creation of the Court of Appeals
was precisely intended to take away from the Supreme Court the work of
examining the evidence, and confine its task to the determination of
questions which do not call for the reading and study of transcripts
containing the testimony of witnesses.27 The rule of conclusiveness of the
factual findings or conclusions of the Court of Appeals is, to be sure,
subject to certain exceptions,28 none of which however obtains in the case
at bar.
It is noteworthy that both the Trial Court and the Intermediate Appellate
Court reached the same conclusions on the three (3) factual matters
above set forth, after assessment of the evidence and determination of
the probative value thereof. Both Courts found that the facts on record
adequately proved fraud, mistake or excusable negligence by which
Estelita Padilla's rights had been substantially impaired; that the funds
used by Criselda Cheesman was money she had earned and saved prior
to her marriage to Thomas Cheesman, and that Estelita Padilla did
believe in good faith that Criselda Cheesman was the sole owner of the
property in question. Consequently, these determinations of fact will not
be here disturbed, this Court having been cited to no reason for doing so.
These considerations dispose of the first three (3) points that petitioner
Cheesman seeks to make in his appeal. They also make unnecessary an
1wphi1
extended discussion of the other issues raised by him. As to them, it
should suffice to restate certain fundamental propositions.
An order of a Court of First Instance (now Regional Trial Court) granting a
petition for relief under Rule 38 is interlocutory and is not appealable.
Hence, the failure of the party who opposed the petition to appeal from
said order, or his participation in the proceedings subsequently had,
cannot be construed as a waiver of his objection to the petition for relief
so as to preclude his raising the same question on appeal from the
judgment on the merits of the main case. Such a party need not repeat
his objections to the petition for relief, or perform any act thereafter (e.g.,
take formal exception) in order to preserve his right to question the same
eventually, on appeal, it being sufficient for this purpose that he has
made of record "the action which he desires the court to take or his
objection to the action of the court and his grounds therefor."29
Again, the prayer in a petition for relief from judgment under Rule 38 is
not necessarily the same prayer in the petitioner's complaint, answer or
other basic pleading. This should be obvious. Equally obvious is that
once a petition for relief is granted and the judgment subject thereof set
aside, and further proceedings are thereafter had, the Court in its
judgment on the merits may properly grant the relief sought in the
petitioner's basic pleadings, although different from that stated in his
petition for relief.
Finally, the fundamental law prohibits the sale to aliens of residential
land. Section 14, Article XIV of the 1973 Constitution ordains that, "Save
in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain."30Petitioner Thomas
Cheesman was, of course, charged with knowledge of this prohibition.
Thus, assuming that it was his intention that the lot in question be
purchased by him and his wife, he acquired no right whatever over the
property by virtue of that purchase; and in attempting to acquire a right or
interest in land, vicariously and clandestinely, he knowingly violated the
Constitution; the sale as to him was null and void.31 In any event, he had
and has no capacity or personality to question the subsequent sale of the
same property by his wife on the theory that in so doing he is merely
exercising the prerogative of a husband in respect of conjugal property.
To sustain such a theory would permit indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal,
this would accord to the alien husband a not insubstantial interest and
right over land, as he would then have a decisive vote as to its transfer or
disposition. This is a right that the Constitution does not permit him to
have.
As already observed, the finding that his wife had used her own money to
purchase the property cannot, and will not, at this stage of the
proceedings be reviewed and overturned. But even if it were a fact that
said wife had used conjugal funds to make the acquisition, the
considerations just set out militate, on high constitutional grounds,
against his recovering and holding the property so acquired or any part
thereof. And whether in such an event, he may recover from his wife any
share of the money used for the purchase or charge her with
unauthorized disposition or expenditure of conjugal funds is not now
inquired into; that would be, in the premises, a purely academic exercise.
An equally decisive consideration is that Estelita Padilla is a purchaser in
good faith, both the Trial Court and the Appellate Court having found that
Cheesman's own conduct had led her to believe the property to be
exclusive property of the latter's wife, freely disposable by her without his
consent or intervention. An innocent buyer for value, she is entitled to the
protection of the law in her purchase, particularly as against Cheesman,
who would assert rights to the property denied him by both letter and
spirit of the Constitution itself.
WHEREFORE, the appealed decision is AFFIRMED, with costs against
petitioner.
SO ORDERED.
G.R. No. 195670 December 3, 2012
WILLEM BEUMER, Petitioner,
vs.
AVELINA AMORES, Respondent.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a Petition for Review on Certiorari1 under Rule 45 of
the Rules of CoLlli assailing the October 8, 2009 Decision2 and January
24, 2011 Resolution3 of the court of Appeals (CA) in CA-G.R. CV No.
01940, which affirmed the February 28, 2007 Decision4 of the Regional
Trial Court (RTC) of Negros Oriental, Branch 34 in Civil Case No. I 2884.
The foregoing rulings dissolved the conjugal partnership of gains of
Willem Beumer (petitioner) and Avelina Amores (respondent) and
distributed the properties forming part of the said property regime.
The Factual Antecedents
Petitioner, a Dutch National, and respondent, a Filipina, married in March
29, 1980. After several years, the RTC of Negros Oriental, Branch 32,
declared the nullity of their marriage in the Decision5 dated November 10,
2000 on the basis of the formers psychological incapacity as
contemplated in Article 36 of the Family Code.
Consequently, petitioner filed a Petition for Dissolution of Conjugal
Partnership6 dated December 14, 2000 praying for the distribution of the
following described properties claimed to have been acquired during the
subsistence of their marriage, to wit:
By Purchase:
a. Lot 1, Block 3 of the consolidated survey of Lots 2144 & 2147
of the Dumaguete Cadastre, covered by Transfer Certificate of
Title (TCT) No. 22846, containing an area of 252 square meters
(sq.m.), including a residential house constructed thereon.
b. Lot 2142 of the Dumaguete Cadastre, covered by TCT No.
21974, containing an area of 806 sq.m., including a residential
house constructed thereon.
c. Lot 5845 of the Dumaguete Cadastre, covered by TCT No.
21306, containing an area of 756 sq.m.
d. Lot 4, Block 4 of the consolidated survey of Lots 2144 & 2147
of the Dumaguete Cadastre, covered by TCT No. 21307,
containing an area of 45 sq.m.
By way of inheritance:
e. 1/7 of Lot 2055-A of the Dumaguete Cadastre, covered by TCT
No. 23567, containing an area of 2,635 sq.m. (the area that
appertains to the conjugal partnership is 376.45 sq.m.).
f. 1/15 of Lot 2055-I of the Dumaguete Cadastre, covered by TCT
No. 23575, containing an area of 360 sq.m. (the area that
appertains to the conjugal partnership is 24 sq.m.).7
In defense,8 respondent averred that, with the exception of their two (2)
residential houses on Lots 1 and 2142, she and petitioner did not acquire
any conjugal properties during their marriage, the truth being that she
used her own personal money to purchase Lots 1, 2142, 5845 and 4 out
of her personal funds and Lots 2055-A and 2055-I by way of
inheritance.9 She submitted a joint affidavit executed by her and petitioner
attesting to the fact that she purchased Lot 2142 and the improvements
thereon using her own money.10 Accordingly, respondent sought the
dismissal of the petition for dissolution as well as payment for attorneys
fees and litigation expenses.11
During trial, petitioner testified that while Lots 1, 2142, 5845 and 4 were
registered in the name of respondent, these properties were acquired
with the money he received from the Dutch government as his disability
benefit12 since respondent did not have sufficient income to pay for their
acquisition. He also claimed that the joint affidavit they submitted before
the Register of Deeds of Dumaguete City was contrary to Article 89 of the
Family Code, hence, invalid.13
For her part, respondent maintained that the money used for the
purchase of the lots came exclusively from her personal funds, in
particular, her earnings from selling jewelry as well as products from
Avon, Triumph and Tupperware.14 She further asserted that after she filed
for annulment of their marriage in 1996, petitioner transferred to their
second house and brought along with him certain personal properties,
consisting of drills, a welding machine, grinders, clamps, etc. She alleged
that these tools and equipment have a total cost of P500,000.00.15
The RTC Ruling
On February 28, 2007, the RTC of Negros Oriental, Branch 34 rendered
its Decision, dissolving the parties conjugal partnership, awarding all the
parcels of land to respondent as her paraphernal properties; the tools
and equipment in favor of petitioner as his exclusive properties; the two
(2) houses standing on Lots 1 and 2142 as co-owned by the parties, the
dispositive of which reads:
WHEREFORE, judgment is hereby rendered granting the dissolution of
the conjugal partnership of gains between petitioner Willem Beumer and
respondent Avelina Amores considering the fact that their marriage was
previously annulled by Branch 32 of this Court. The parcels of land
covered by Transfer Certificate of Titles Nos. 22846, 21974, 21306,
21307, 23567 and 23575 are hereby declared paraphernal properties of
respondent Avelina Amores due to the fact that while these real
properties were acquired by onerous title during their marital union,
Willem Beumer, being a foreigner, is not allowed by law to acquire any
private land in the Philippines, except through inheritance.
The personal properties, i.e., tools and equipment mentioned in the
complaint which were brought out by Willem from the conjugal dwelling
are hereby declared to be exclusively owned by the petitioner.
The two houses standing on the lots covered by Transfer Certificate of
Title Nos. 21974 and 22846 are hereby declared to be co-owned by the
petitioner and the respondent since these were acquired during their
marital union and since there is no prohibition on foreigners from owning
buildings and residential units. Petitioner and respondent are, thereby,
directed to subject this court for approval their project of partition on the
two houses aforementioned.
The Court finds no sufficient justification to award the counterclaim of
respondent for attorneys fees considering the well settled doctrine that
there should be no premium on the right to litigate. The prayer for moral
damages are likewise denied for lack of merit.
No pronouncement as to costs.
SO ORDERED.16
It ruled that, regardless of the source of funds for the acquisition of Lots
1, 2142, 5845 and 4, petitioner could not have acquired any right
whatsoever over these properties as petitioner still attempted to acquire
them notwithstanding his knowledge of the constitutional prohibition
against foreign ownership of private lands.17 This was made evident by the
sworn statements petitioner executed purporting to show that the subject
parcels of land were purchased from the exclusive funds of his wife, the
herein respondent.18 Petitioners plea for reimbursement for the amount he
had paid to purchase the foregoing properties on the basis of equity was
likewise denied for not having come to court with clean hands.
The CA Ruling
Petitioner elevated the matter to the CA, contesting only the RTCs award
of Lots 1, 2142, 5845 and 4 in favor of respondent. He insisted that the
money used to purchase the foregoing properties came from his own
capital funds and that they were registered in the name of his former wife
only because of the constitutional prohibition against foreign ownership.
Thus, he prayed for reimbursement of one-half (1/2) of the value of what
he had paid in the purchase of the said properties, waiving the other half
in favor of his estranged ex-wife.19
On October 8, 2009, the CA promulgated a Decision20 affirming in toto the
judgment rendered by the RTC of Negros Oriental, Branch 34. The CA
stressed the fact that petitioner was "well-aware of the constitutional
prohibition for aliens to acquire lands in the Philippines."21 Hence, he
cannot invoke equity to support his claim for reimbursement.
Consequently, petitioner filed the instant Petition for Review on Certiorari
assailing the CA Decision due to the following error:
UNDER THE FACTS ESTABLISHED, THE COURT ERRED IN NOT
SUSTAINING THE PETITIONERS ATTEMPT AT SUBSEQUENTLY
ASSERTING OR CLAIMING A RIGHT OF HALF OR WHOLE OF THE
PURCHASE PRICE USED IN THE PURCHASE OF THE REAL
PROPERTIES SUBJECT OF THIS CASE.22 (Emphasis supplied)
The Ruling of the Court
The petition lacks merit.
The issue to be resolved is not of first impression. In In Re: Petition For
Separation of Property-Elena Buenaventura Muller v. Helmut Muller23 the
Court had already denied a claim for reimbursement of the value of
purchased parcels of Philippine land instituted by a foreigner Helmut
Muller, against his former Filipina spouse, Elena Buenaventura Muller. It
held that Helmut Muller cannot seek reimbursement on the ground of
equity where it is clear that he willingly and knowingly bought the property
despite the prohibition against foreign ownership of Philippine
land24enshrined under Section 7, Article XII of the 1987 Philippine
Constitution which reads:
Section 7. Save in cases of hereditary succession, no private lands shall
be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.
Undeniably, petitioner openly admitted that he "is well aware of the
above-cited constitutional prohibition"25 and even asseverated that,
because of such prohibition, he and respondent registered the subject
properties in the latters name.26 Clearly, petitioners actuations showed
his palpable intent to skirt the constitutional prohibition. On the basis of
such admission, the Court finds no reason why it should not apply the
Muller ruling and accordingly, deny petitioners claim for reimbursement.
As also explained in Muller, the time-honored principle is that he who
seeks equity must do equity, and he who comes into equity must come
with clean hands. Conversely stated, he who has done inequity shall not
be accorded equity. Thus, a litigant may be denied relief by a court of
equity on the ground that his conduct has been inequitable, unfair and
dishonest, or fraudulent, or deceitful.27
In this case, petitioners statements regarding the real source of the funds
used to purchase the subject parcels of land dilute the veracity of his
claims: While admitting to have previously executed a joint affidavit that
respondents personal funds were used to purchase Lot 1,28 he likewise
claimed that his personal disability funds were used to acquire the same.
Evidently, these inconsistencies show his untruthfulness. Thus, as
petitioner has come before the Court with unclean hands, he is now
precluded from seeking any equitable refuge.
In any event, the Court cannot, even on the grounds of equity, grant
reimbursement to petitioner given that he acquired no right whatsoever
over the subject properties by virtue of its unconstitutional purchase. It is
well-established that equity as a rule will follow the law and will not permit
that to be done indirectly which, because of public policy, cannot be done
directly.29 Surely, a contract that violates the Constitution and the law is
null and void, vests no rights, creates no obligations and produces no
legal effect at all.30 Corollary thereto, under Article 1412 of the Civil
Code,31 petitioner cannot have the subject properties deeded to him or
allow him to recover the money he had spent for the purchase thereof.
The law will not aid either party to an illegal contract or agreement; it
leaves the parties where it finds them.32 Indeed, one cannot salvage any
rights from an unconstitutional transaction knowingly entered into.
Neither can the Court grant petitioners claim for reimbursement on the
basis of unjust enrichment.33 As held in Frenzel v. Catito, a case also
involving a foreigner seeking monetary reimbursement for money spent
on purchase of Philippine land, the provision on unjust enrichment does
not apply if the action is proscribed by the Constitution, to wit:
Futile, too, is petitioner's reliance on Article 22 of the New Civil Code
which reads:
Art. 22. Every person who through an act of performance by another, or
any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him.1wphi1
The provision is expressed in the maxim: "MEMO CUM ALTERIUS
DETER DETREMENTO PROTEST" (No person should unjustly enrich
himself at the expense of another). An action for recovery of what has
been paid without just cause has been designated as an accion in rem
verso. This provision does not apply if, as in this case, the action is
proscribed by the Constitution or by the application of the pari delicto
doctrine. It may be unfair and unjust to bar the petitioner from filing an
accion in rem verso over the subject properties, or from recovering the
money he paid for the said properties, but, as Lord Mansfield stated in
the early case of Holman v. Johnson: "The objection that a contract is
immoral or illegal as between the plaintiff and the defendant, sounds at
all times very ill in the mouth of the defendant. It is not for his sake,
however, that the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of, contrary
to the real justice, as between him and the plaintiff."34(Citations omitted)
Nor would the denial of his claim amount to an injustice based on his
foreign citizenship.35 Precisely, it is the Constitution itself which
demarcates the rights of citizens and non-citizens in owning Philippine
land. To be sure, the constitutional ban against foreigners applies only to
ownership of Philippine land and not to the improvements built thereon,
such as the two (2) houses standing on Lots 1 and 2142 which were
properly declared to be co-owned by the parties subject to partition.
Needless to state, the purpose of the prohibition is to conserve the
national patrimony36 and it is this policy which the Court is duty-bound to
protect.
WHEREFORE, the petition is DENIED. Accordingly, the assailed October
8, 2009 Decision and January 24, 2011 Resolution of the Court of
Appeals in CA-G.R. CV No. 01940 are AFFIRMED.
SO ORDERED.
G.R. No. 157537 September 7, 2011
THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely:
LEONOR, SIMPLICIO, PROTACIO, JR., ANTONIO, BEVERLY ANN
LORRAINNE, TITA, CONSOLACION, LEONORA and ASUNCION, all
surnamed GO, represented by LEONORA B. GO, Petitioners,
vs.
ESTER L. SERVACIO and RITO B. GO, Respondents.
DECISION
BERSAMIN, J.:
The disposition by sale of a portion of the conjugal property by the
surviving spouse without the prior liquidation mandated by Article 130 of
the Family Code is not necessarily void if said portion has not yet been
allocated by judicial or extrajudicial partition to another heir of the
deceased spouse. At any rate, the requirement of prior liquidation does
not prejudice vested rights.
Antecedents
On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a
total area of 17,140 square meters situated in Southern Leyte to Protacio
B. Go, Jr. (Protacio, Jr.). Twenty three years later, or on March 29, 1999,
Protacio, Jr. executed an Affidavit of Renunciation and Waiver,1 whereby
he affirmed under oath that it was his father, Protacio Go, Sr. (Protacio,
Sr.), not he, who had purchased the two parcels of land (the property).
On November 25, 1987, Marta Barola Go died. She was the wife of
Protacio, Sr. and mother of the petitioners.2 On December 28, 1999,
Protacio, Sr. and his son Rito B. Go (joined by Ritos wife Dina B. Go)
sold a portion of the property with an area of 5,560 square meters to
Ester L. Servacio (Servacio) for 5,686,768.00.3 On March 2, 2001, the
petitioners demanded the return of the property,4 but Servacio refused to
heed their demand. After barangay proceedings failed to resolve the
dispute,5 they sued Servacio and Rito in the Regional Trial Court in
Maasin City, Southern Leyte (RTC) for the annulment of the sale of the
property.
The petitioners averred that following Protacio, Jr.s renunciation, the
property became conjugal property; and that the sale of the property to
Servacio without the prior liquidation of the community property between
Protacio, Sr. and Marta was null and void.6
Servacio and Rito countered that Protacio, Sr. had exclusively owned the
property because he had purchased it with his own money.7
8
On October 3, 2002, the RTC declared that the property was the
conjugal property of Protacio, Sr. and Marta, not the exclusive property of
Protacio, Sr., because there were three vendors in the sale to Servacio
(namely: Protacio, Sr., Rito, and Dina); that the participation of Rito and
Dina as vendors had been by virtue of their being heirs of the late Marta;
that under Article 160 of the Civil Code, the law in effect when the
property was acquired, all property acquired by either spouse during the
marriage was conjugal unless there was proof that the property thus
acquired pertained exclusively to the husband or to the wife; and that
Protacio, Jr.s renunciation was grossly insufficient to rebut the legal
presumption.9
Nonetheless, the RTC affirmed the validity of the sale of the property,
holding that: "xxx As long as the portion sold, alienated or encumbered
will not be allotted to the other heirs in the final partition of the property,
or to state it plainly, as long as the portion sold does not encroach upon
the legitimate (sic) of other heirs, it is valid."10 Quoting Tolentinos
commentary on the matter as authority,11 the RTC opined:
In his comment on Article 175 of the New Civil Code regarding the
dissolution of the conjugal partnership, Senator Arturo Tolentino, says"
[sic]
"Alienation by the survivor. After the death of one of the spouses, in
case it is necessary to sell any portion of the community property in order
to pay outstanding obligation of the partnership, such sale must be made
in the manner and with the formalities established by the Rules of Court
for the sale of the property of the deceased persons. Any sale, transfer,
alienation or disposition of said property affected without said formalities
shall be null and void, except as regards the portion that belongs to the
vendor as determined in the liquidation and partition. Pending the
liquidation, the disposition must be considered as limited only to the
contingent share or interest of the vendor in the particular property
involved, but not to the corpus of the property.
This rule applies not only to sale but also to mortgages. The alienation,
mortgage or disposal of the conjugal property without the required
formality, is not however, null ab initio, for the law recognizes their validity
so long as they do not exceed the portion which, after liquidation and
partition, should pertain to the surviving spouse who made the contract."
[underlining supplied]
It seems clear from these comments of Senator Arturo Tolentino on the
provisions of the New Civil Code and the Family Code on the alienation
by the surviving spouse of the community property that jurisprudence
remains the same - that the alienation made by the surviving spouse of a
portion of the community property is not wholly void ab initio despite
Article 103 of the Family Code, and shall be valid to the extent of what
will be allotted, in the final partition, to the vendor. And rightly so,
because why invalidate the sale by the surviving spouse of a portion of
the community property that will eventually be his/her share in the final
partition? Practically there is no reason for that view and it would be
absurd.
Now here, in the instant case, the 5,560 square meter portion of the
17,140 square-meter conjugal lot is certainly mush (sic) less than what
vendors Protacio Go and his son Rito B. Go will eventually get as their
share in the final partition of the property. So the sale is still valid.
WHEREFORE, premises considered, complaint is hereby DISMISSED
without pronouncement as to cost and damages.
SO ORDERED.12
The RTCs denial of their motion for reconsideration13 prompted the
petitioners to appeal directly to the Court on a pure question of law.
Issue
The petitioners claim that Article 130 of the Family Code is the applicable
law; and that the sale by Protacio, Sr., et al. to Servacio was void for
being made without prior liquidation.
In contrast, although they have filed separate comments, Servacio and
Rito both argue that Article 130 of the Family Code was inapplicable; that
the want of the liquidation prior to the sale did not render the sale invalid,
because the sale was valid to the extent of the portion that was finally
allotted to the vendors as his share; and that the sale did not also
prejudice any rights of the petitioners as heirs, considering that what the
sale disposed of was within the aliquot portion of the property that the
vendors were entitled to as heirs.14
Ruling
The appeal lacks merit.
Article 130 of the Family Code reads:
Article 130. Upon the termination of the marriage by death, the conjugal
partnership property shall be liquidated in the same proceeding for the
settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the surviving spouse
shall liquidate the conjugal partnership property either judicially or extra-
judicially within one year from the death of the deceased spouse. If upon
the lapse of the six month period no liquidation is made, any disposition
or encumbrance involving the conjugal partnership property of the
terminated marriage shall be void.
Should the surviving spouse contract a subsequent marriage without
compliance with the foregoing requirements, a mandatory regime of
complete separation of property shall govern the property relations of the
subsequent marriage.
Article 130 is to be read in consonance with Article 105 of the Family
Code, viz:
Article 105. In case the future spouses agree in the marriage settlements
that the regime of conjugal partnership of gains shall govern their
property relations during marriage, the provisions in this Chapter shall be
of supplementary application.
The provisions of this Chapter shall also apply to conjugal partnerships of
gains already established between spouses before the effectivity of this
Code, without prejudice to vested rights already acquired in accordance
with the Civil Code or other laws, as provided in Article 256. (n)
[emphasis supplied]
It is clear that conjugal partnership of gains established before and after
the effectivity of the Family Code are governed by the rules found in
Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property Relations
Between Husband And Wife) of the Family Code. Hence, any disposition
of the conjugal property after the dissolution of the conjugal partnership
must be made only after the liquidation; otherwise, the disposition is void.
Before applying such rules, however, the conjugal partnership of gains
must be subsisting at the time of the effectivity of the Family Code. There
being no dispute that Protacio, Sr. and Marta were married prior to the
effectivity of the Family Code on August 3, 1988, their property relation
was properly characterized as one of conjugal partnership governed by
the Civil Code. Upon Martas death in 1987, the conjugal partnership was
dissolved, pursuant to Article 175 (1) of the Civil Code,15 and an implied
ordinary co-ownership ensued among Protacio, Sr. and the other heirs of
Marta with respect to her share in the assets of the conjugal partnership
pending a liquidation following its liquidation.16 The ensuing implied
ordinary co-ownership was governed by Article 493 of the Civil Code,17 to
wit:
Article 493. Each co-owner shall have the full ownership of his part and of
the fruits and benefits pertaining thereto, and he may therefore alienate,
assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited
to the portion which may be allotted to him in the division upon the
termination of the co-ownership. (399)
Protacio, Sr., although becoming a co-owner with his children in respect
of Martas share in the conjugal partnership, could not yet assert or claim
title to any specific portion of Martas share without an actual partition of
the property being first done either by agreement or by judicial decree.
Until then, all that he had was an ideal or abstract quota in Martas
share.18 Nonetheless, a co-owner could sell his undivided share; hence,
Protacio, Sr. had the right to freely sell and dispose of his undivided
interest, but not the interest of his co-owners.19 Consequently, the sale by
Protacio, Sr. and Rito as co-owners without the consent of the other co-
owners was not necessarily void, for the rights of the selling co-owners
were thereby effectively transferred, making the buyer (Servacio) a co-
owner of Martas share.20 This result conforms to the well-established
principle that the binding force of a contract must be recognized as far as
it is legally possible to do so (quando res non valet ut ago, valeat
quantum valere potest).21
Article 105 of the Family Code, supra, expressly provides that the
applicability of the rules on dissolution of the conjugal partnership is
"without prejudice to vested rights already acquired in accordance with
the Civil Code or other laws." This provision gives another reason not to
declare the sale as entirely void. Indeed, such a declaration prejudices
the rights of Servacio who had already acquired the shares of Protacio,
Sr. and Rito in the property subject of the sale.
xxx [I]f it turns out that the property alienated or mortgaged really would
pertain to the share of the surviving spouse, then said transaction is valid.
If it turns out that there really would be, after liquidation, no more conjugal
assets then the whole transaction is null and void. But if it turns out that
1w phi 1

In their separate comments,22 the respondents aver that each of the heirs
had already received "a certain allotted portion" at the time of the sale,
and that Protacio, Sr. and Rito sold only the portions adjudicated to and
owned by them. However, they did not present any public document on
the allocation among her heirs, including themselves, of specific shares
in Martas estate. Neither did they aver that the conjugal properties had
already been liquidated and partitioned. Accordingly, pending a partition
among the heirs of Marta, the efficacy of the sale, and whether the extent
of the property sold adversely affected the interests of the petitioners
might not yet be properly decided with finality. The appropriate recourse
to bring that about is to commence an action for judicial partition, as
instructed in Bailon-Casilao v. Court of Appeals,23 to wit:
From the foregoing, it may be deduced that since a co-owner is entitled
to sell his undivided share, a sale of the entire property by one
co-owner without the consent of the other co-owners is not null and void.
However, only the rights of the co-owner-seller are transferred, thereby
making the buyer a co-owner of the property.
half of the property thus alienated or mortgaged belongs to the husband
as his share in the conjugal partnership, and half should go to the estate
of the wife, then that corresponding to the husband is valid, and that
corresponding to the other is not. Since all these can be determined only
at the time the liquidation is over, it follows logically that a disposal made
by the surviving spouse is not void ab initio. Thus, it has been held that
the sale of conjugal properties cannot be made by the surviving spouse
without the legal requirements. The sale is void as to the share of the
deceased spouse (except of course as to that portion of the husbands
share inherited by her as the surviving spouse). The buyers of the
property that could not be validly sold become trustees of said portion for
the benefit of the husbands other heirs, the cestui que trust ent. Said
heirs shall not be barred by prescription or by laches (See Cuison, et al.
v. Fernandez, et al.,L-11764, Jan.31, 1959.)25
WHEREFORE, we DENY the petition for review on certiorari; and
AFFIRM the decision of the Regional Trial Court.
The petitioners shall pay the costs of suit.

The proper action in cases like this is not for the nullification of the sale or SO ORDERED.
for the recovery of possession of the thing owned in common from the
third person who substituted the co-owner or co-owners who alienated
their shares, but the DIVISION of the common property as if it continued
to remain in the possession of the co-owners who possessed and
administered it [Mainit v. Bandoy, supra]. 1av vphi1

Thus, it is now settled that the appropriate recourse of co-owners in

cases where their consent were not secured in a sale of the entire
property as well as in a sale merely of the undivided shares of some of
the co-owners is an action for PARTITION under Rule 69 of the Revised
Rules of Court. xxx24

In the meanwhile, Servacio would be a trustee for the benefit of the co-
heirs of her vendors in respect of any portion that might not be validly
sold to her. The following observations of Justice Paras are explanatory
of this result, viz: