FIRST DIVISION the motion of UTNAI, Albert was declared in default and UTNAI was allowed
to present evidence ex parte.14chanrobleslaw
G.R. No. 221047, September 14, 2016
MICHAEL A. ONSTOTT, Petitioner, v. UPPER TAGPOS NEIGHBORHOOD
ASSOCIATION, INC., Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated May
7, 2015 and the Resolution3dated October 8, 2015 rendered by the Court of
Appeals (CA) in CA-G.R. CV No. 98383, which reversed and set aside the
Order4 dated January 3, 2012 of the Regional Trial Court of Binangonan,
Rizal, Branch 67 (RTC), insofar as it ordered the Register of Deeds of
Binangonan, Rizal to cancel Transfer Certificate of Title (TCT) No. B-9655 in
the name of respondent Upper Tagpos Neighborhood Association, Inc.
(UTNAI) and to reinstate Original Certificate of Title (OCT) No. (-2645-) M-
556 in the name of Albert W. Onstott (Albert).
The Facts
Albert, an American citizen, was the registered owner of a parcel of land with
an approximate area of 18,589 square meters, covered by OCT No. (-2645-)
M-5565 situated in the Province of Rizal (subject property). Due to non-
payment of realty taxes, the Provincial Government of Rizal sold the subject
property at public auction to one Amelita A. De Serra (De Serra), the highest
bidder, as evidenced by the Certificate of Sale6 dated June 29,
2004.7 Respondent UTNAI, an association representing the actual occupants
of the subject property, subsequently redeemed8 the same from De
Sena.9chanrobleslaw
Thereafter, or on March 31, 2008, UTNAI filed a complaint10 for cancellation
of OCT No. (-2645-) M-556 and for the issuance of a new title in its name
before the RTC against Albert and Federico M. Cas (Cas), the Register of
Deeds for the Province of Rizal.11 It alleged, among others, that it became
the owner of the subject property upon redemption thereof from De Sena and
that, consequently, it must be issued a new title. Moreover, Albert was an
American citizen who, under Philippine law, is not allowed to own a parcel of
land in the Philippines.12chanrobleslaw
Efforts to serve summons upon Albert proved futile as he was not a resident
of the Philippines. Thus, summons was served through
publication.13 Nonetheless, Albert still failed to file his answer. Hence, upon
The RTC Ruling and Subsequent Proceedings
In a Decision15 dated March 30, 2009, the RTC found that UTNAI was able to
prove, by a preponderance of evidence, that it is the owner of the subject
property after having legally redeemed the same from De Serra, the highest
bidder at a public auction. Accordingly, it directed Cas to: (1) annotate its
Decision on OCT No. (-2645-) M-556; (2) cancel the same; and (3) issue a
new title in the name of UTNAI.16chanrobleslaw
In an Order17 dated June 16, 2009, the RTC clarified that its March 30, 2009
Decision directing the cancellation of OCT No. (-2645-) M-556 and the
issuance of a new one in its stead in the name of UTNAI necessarily includes
a declaration that the owner's duplicate copy of OCT No. (-2645-) M-556 is
void and of no effect.
The RTC Decision lapsed into finality. As a consequence, TCT No. B-9655
was issued in favor of UTNAI.18chanrobleslaw
On August 26, 2009, herein petitioner Michael Onstott (Michael), claiming to
be the legitimate son19 of Albert with a certain Josephine Arrastia Onstott
(Josephine) filed a Petition for Relief from Judgment (Petition for
Relief),20 alleging that UTNAI, in its complaint, impleaded only Albert,
notwithstanding knowledge of the latter's death.21 He averred that, as parties
to the case, UTNAI fraudulently and intentionally failed to implead him and
Josephine in order to prevent them from participating in the proceedings and
to ensure a favorable judgment.22 He contended that his mother Josephine
was an indispensable party to the present case, being the owner of half of
the subject property, which he claimed to be conjugal in nature.23 Moreover,
he argued that UTNAI had no legal personality to redeem the subject
property as provided for in Section 26124 of Republic Act No. (RA) 7160,
otherwise known as the "Local Government Code of
1991."25cralawredchanrobleslaw
Later, Michael filed an Omnibus Motion:26 (1) to recall and/or set aside the
Certification of Finality of Judgment; (2) to set aside the Order dated June 16,
2009; and (3) to cancel TCT No. B-9655 and reinstate OCT No. (-2645-) M-
556. He maintained that, based on the records, the Decision dated March 30,
2009 of the RTC was not served upon the defendant, Albert, by publication,
as required under Section 9,27 Rule 13 of the Rules of Court; hence, the
same has not yet attained finality.28 Accordingly, the Certification of Finality of
the said Decision was prematurely issued and must therefore be set
aside.29 In addition, TCT No. B-9655 in favor of UTNAI must be cancelled
and OCT No. (-2645-) M-556 in the name of Albert should be reinstated.
1

Treating the Petition for Relief as a motion for reconsideration30of its
Decision, the RTC, in an Order31dated January 3, 2012, denied the same
and ruled that UTNAI, having legal interest in the subject property and having
redeemed the same from the highest bidder in a tax auction, must be issued
a new title in its name. It added that the matters raised by Michael are best
ventilated in a separate case for reconveyance. However, while the RTC
denied the petition, it found that its March 30, 2009 Decision never attained
finality for not having been served upon Albert by publication in accordance
with Section 9, Rule 13 of the Rules of Court. Thus, the issuance of the
certificate of finality was erroneous. Consequently, the cancellation of OCT
No. (-2645-) M-556 in Albert's name and the issuance of TCT No. B-9655 in
UTNAI's name were premature; hence, it directed the Register of Deeds to
cancel TCT No. B-9655 and to reinstate OCT No. (-2645-) M-
556.32chanrobleslaw
Dissatisfied, both parties separately appealed33 to the CA. In its appeal,
UTNAI ascribed error to the RTC in finding that its March 30, 2009 Decision
never attained finality for failure to publish the same and that it also erred in
declaring that the cancellation of OCT No. (-2645-) M-556 in Albert's name
and the issuance of TCT No. B-9655 in its name were
premature.34chanrobleslaw
On the other hand, Michael insisted that at the time of the filing of the instant
case in 2008, Albert was already dead, which means that the ownership of
the subject property had already devolved to his compulsory heirs.
Consequently, the latter should have been impleaded as defendants, failing
which, the Decision rendered by the RTC was null and void for lack of
jurisdiction. Moreover, he asserted that his mother Josephine was an
indispensable party to this case, being a compulsory heir and the owner of
the half portion of the subject property, which he claimed was conjugal in
nature. He reiterated that UTNAI had no legal interest to redeem the subject
property.35chanrobleslaw
The CA Ruling
In a Decision36 dated May 7, 2015, the CA found UTNAI's appeal meritorious.
Although it found that the March 30, 2009 Decision of the RTC did not attain
finality, not having been served upon Albert by publication, the CA also held
that UTNAI was entitled to the issuance of a new title in its name as a matter
of right. It concurred with UTNAI's contention that the cancellation of Albert's
OCT No. (-2645-) M-556 is the direct legal consequence of UTNAI's
redemption of the subject property from the highest bidder at the public
auction sale. Thus, as the absolute owner of the subject property, UTNAI has
the right to be placed in possession thereof following the consolidation of
ownership in its name and the issuance of the corresponding
title.37chanrobleslaw
On the other hand, the CA dismissed Michael's appeal and rejected his
theory that his mother Josephine was an indispensable party to the complaint
filed by UTNAI against Albert. It found that the subject property was
registered in the name of "Albert Onstott, American citizen, married to
Josephine Arrastia" which is merely descriptive of the civil status of Albert
and does not show that Josephine co-owned the subject property. Hence,
contrary to Michael's stance, the subject property was not conjugal in nature
and it cannot be presumed to be conjugal in the absence of evidence
showing that it was acquired during their marriage.38chanrobleslaw
Furthermore, the CA pointed out that if Michael were indeed Albert's
compulsory heir, he could have transferred the subject property in his name
by right of succession upon his father's death, or redeemed the same in 2005
after it was sold at public auction in 2004, or intervened in the proceedings
before the RTC. Having failed to avail of any of the said legal remedies, he
can no longer claim ownership of the subject property by the simple
expedient of filing a petition for relief. Parenthetically, considering that the
March 30, 2009 Decision of the RTC had not yet attained finality as of the
filing of said petition for relief, the same was without legal
basis.39chanrobleslaw
Meanwhile, it appears that UTNAI published a copy of the March 30, 2009
Decision of the RTC for two (2) consecutive weeks in a newspaper of general
circulation.40chanrobleslaw
In view of its findings, the CA reversed and set aside the Order dated
January 3, 2012 rendered by the RTC, insofar as it directed the Register of
Deeds to cancel TCT No. B-9655 issued in UTNAI's name and reinstate OCT
No. (-2645-) M-556 in the name of Albert. It likewise declared the March 30,
2009 Decision of the RTC final and executory.41chanrobleslaw
Michael's motion for reconsideration42 was denied in a Resolution43 dated
October 8, 2015; hence, this petition.
The Issue Before the Court
The issue to be resolved by the Court is whether or not the CA erred in
directing the issuance of a title in favor of UTNAI notwithstanding (a) the lack
of jurisdiction over the person of Albert, the registered owner of the subject
property who has been dead prior to the institution of UTNAI'S complaint; (b)
the failure to implead his mother, Josephine, as an indispensable party, since
the subject property was allegedly conjugal in nature; and (c) the lack of legal
interest on the part of UTNAI to redeem the subject property.
2
 The Court's Ruling
The petition is partly meritorious.
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint.
On the other hand, jurisdiction over the defendants in a civil case is acquired
either through the service of summons upon them or through their voluntary
appearance in court and their submission to its authority.44chanrobleslaw
In Philippine Commercial International Bank v. Spouses Dy Hong Pi,45 it was
ruled that "[a]s a general proposition, one who seeks an affirmative relief is
deemed to have submitted to the jurisdiction of the court. It is by reason of
this rule that we have had occasion to declare that the filing of motions to
admit answer, for additional time to file answer, for reconsideration of a
default judgment, and to lift order of default with motion for reconsideration, is
considered voluntary submission to the court's jurisdiction. This, however, is
tempered by the concept of conditional appearance, such that a p who
makes a special appearance to challenge, among others, the court's
jurisdiction over his person cannot be considered to have submitted to its
authority. Prescinding from the foregoing, it is thus clear that:
chanRoblesvirtualLawlibrary
(1) Special appearance operates as an exception to the general rule on
voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of
the defendant must be explicitly made, i.e., set forth in an unequivocal
manner; and cralawlawlibrary
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the
court, especially in instances where a pleading or motion seeking affirmative
relief is filed and submitted to the court for resolution."46
In this case, records show that Albert, the defendant in UTNAI's complaint,
died in the United States of America in 2004.47 Thus, on the strength of his
right as Albert's compulsory heir who has an interest in the subject property,
Michael filed the Petition for Relief before the RTC, assailed the proceedings
therein for failure to implead him and his mother, Josephine, as an
indispensable party, and sought affirmative relief, i.e., the reversal of the
RTC's March 30, 2009 Decision and the reinstatement of OCT No. (-2645-)
M-556.48 The RTC, holding that its own Decision never attained finality for
failure to publish the same, treated the Petition for Relief as a motion for
reconsideration and after due proceedings, ruled upon its merits.
Based on the foregoing factual milieu, the Court finds that although it may be
true that jurisdiction was not initially acquired over the person of the
defendant,49i.e., Albert in this case whose death, notably, was never brought
to the attention of the RTC until after it rendered judgment the defect in the
lack of jurisdiction over his person was effectively cured by the voluntary
appearance of his successor-in-interest/compulsory heir, Michael, who
sought affirmative relief before the RTC through the filing of the Petition for
Relief which the RTC treated as a motion for reconsideration of its judgment.
Michael voluntarily submitted to the jurisdiction of the RTC when, without any
qualification, he directly and squarely challenged the RTC's March 30, 2009
Decision as aforementioned. Having sought positive relief from an
unfavorable judgment, the RTC, therefore, acquired jurisdiction over his
person, and the due process requirements of the law have been satisfied.
That the RTC Decision was null and void for failure to implead an
indispensable party, Josephine, on the premise that the subject property is
conjugal in nature, is likewise specious. Michael posits that Josephine, being
Albert's wife, was entitled to half of the portion of the subject property, which
was registered as "Albert Onstott, American citizen, married to Josephine
Arrastia."
The Court is not convinced.
Article 160 of the New Civil Code50 provides that all property of the marriage
is presumed to belong to the conjugal partnership, unless it is proved that it
pertains exclusively to the husband or to the wife. However, the p who
invokes this presumption must first prove that the property in controversy
was acquired during the marriage. Proof of acquisition during the coverture is
a condition sine qua non for the operation of the presumption in favor of the
conjugal partnership. The party who asserts this presumption must first prove
the said time element. Needless to say, the presumption refers only to the
property acquired during the marriage and does not operate when there
is no showing as to when the property alleged to be conjugal was
acquired. Moreover, this presumption in favor of conjugality is rebuttable, but
only with strong, clear and convincing evidence; there must be a strict proof
of exclusive ownership of one of the spouses.51chanrobleslaw
As Michael invokes the presumption of conjugality, he must first establish
that the subject property was acquired during the marriage of Albert and
Josephine, failing in which, the presumption cannot stand. Indeed, records
are bereft of any evidence from which the actual date of acquisition of the
subject property can be ascertained. Considering that the presumption of
conjugality does not operate if there is no showing when the property alleged
to be conjugal was acquired,52 the subject property is therefore considered to
be Albert's exclusive property. Consequently, Michael's insistence that
Josephine who, the Court notes, has never personally appeared in these
proceedings to directly challenge the disposition of the subject
property sans her participation is a co-owner thereof and necessarily, an
3
indispensable party to the instant case, must therefore fail.
With respect, however, to the question of whether UTNAI has legal interest to
redeem the subject property from the highest bidder at the tax delinquency
public auction sale, the Court finds that the CA erred in its disquisition.
Section 261 of RA 7160 provides:ChanRoblesVirtualawlibrary
Section 261. Redemption of Property Sold. - Within one (1) year from the
date of sale, the owner of the delinquent real property or person having
legal interest therein, or his representative, shall have right to redeem
the property upon payment to the local treasurer of the amount of the
delinquent tax, including the interest due thereon, and the expenses of sale
from the date of delinquency to the date of sale, plus interest of not more
than two percent (2%) per month on the purchase price from the date of the
sale to the date of redemption. Such payment shall invalidate the certificate
of sale issued to the purchaser and the owner of the delinquent real property
or person having legal interest therein shall be entitled to a certificate of
redemption which shall be issued by the local treasurer or his deputy.
From the date of sale until expiration of the period of redemption, the
delinquent real property shall remain in the possession of the owner or
person having legal interest therein who shall be entitled to the income and
other fruits thereof.
The local treasurer or his deputy, upon receipt from the purchaser of the
certificate of sale, shall forthwith return to the latter the entire amount paid by
him plus interest of not more than two percent (2%) per month. Thereafter,
the property shall be free from the lien of such delinquent tax, interest due
thereon and expenses of sale. (Emphasis supplied)
"Legal interest" is defined as interest in property or a claim cognizable at
law, equivalent to that of a legal owner who has legal title to the property.53 It
must be one that is actual and material, direct and immediate, not simply
contingent or expectant.54 Moreover, although the taxable person who has
actual and beneficial use and possession of a property may be charged with
the payment of unpaid realty tax due thereon, such assumption of liability
does not clothe the said person with the legal title or interest over the
property.55chanrobleslaw
In this case and based on the above-given definition, UTNAI, whose
members are the occupants of the subject property, has no legal interest to
redeem the same. Mere use or possession of the subject property alone
does not vest them with legal interest therein sufficient to clothe them with
the legal personality to redeem it, in accordance with Section 261 above-
quoted. To rule otherwise would be to defeat the true owner's rights by
allowing lessees or other occupants of a property to assert ownership by the
simple expedient of redeeming the same at a tax delinquency sale.
Consequently, UTNAI's redemption of the subject property as well as the
issuance of a Certificate of Redemption56 in its favor was erroneous. Since
the redemption is of no legal effect, the said Certificate of Redemption must
therefore be cancelled, without prejudice to the right of UTNAI to recover the
full amount of the redemption price paid by it in the appropriate proceeding
therefor.
As things stand, UTNAI's redemption should be deemed void for being
contrary to law. As a result, all proceedings springing from the redemption
ought to be nullified57 and the status quo prior thereto should revert. Thus, as
previously stated, UTNAI may recover the full amount it had paid for the
redemption of the property subject of the public auction in the appropriate
proceeding therefor. In the same vein, De Sena and the Provincial
Government of Rizal, who have not been impleaded as parties in this case,
may commence the appropriate proceedings to assert their rights under the
law consequent to this disposition.
WHEREFORE, the petition is PARTLY GRANTED. The Certificate of
Redemption issued by the Provincial Treasurer of the Provincial Government
of Rizal in favor of respondent Upper Tagpos Neighborhood Association, Inc.
is hereby declared VOID and of no legal effect, and Transfer Certificate of
Title No. B-9655 issued in the latter's name shall be
permanently CANCELLED.
SO ORDERED.chanRobles
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6335 July 31, 1954
GLICERIA ROSETE, plaintiff-appellee,
vs.
PROVINCIAL SHERIFF OF ZAMBALES, SIMPLICIO YAP and CORAZON
YAP, defendants-appellants.
Ricardo N. Agbunag for appellants.
Jorge A. Pascua for appellee.
BAUTISTA ANGELO, J.:
In criminal case No. 2897 for murder of the Court of First Instance of
Zambales, Epifanio Fularon was convicted and sentenced to indemnify the
heirs of the victim in the amount of P2,000.
4
On February 10, 1949, to satisfy said indemnity, a writ of execution was
issued and the sheriff levied upon four parcels of land belonging to the
conjugal partnership of Epifanio Fularon and Gliceria Rosete. These parcels
of land were sold at public auction as required by the rules for the sum of
P1,385.00, leaving an unsatisfied balance of P739.34.
On March 8, 1950, Gliceria Rosete redeemed two of the four parcels of land
which were sold at public auction for the sum of P879.20, the sheriff having
executed in her favor the corresponding deed of repurchase.
On April 10, 1950, an alias execution was issued to satisfy the balance of the
indemnity and the sheriff levied upon the two parcels of land which were
redeemed by Gliceria Rosete and set a date for their sale. Prior to the arrival
of this date, however, Gliceria Rosete filed a case for conjunction to restrain
the sheriff from carrying out the sale praying at the same time for a writ of
preliminary injunction. This writ was issued upon the filing of the requisite
bond but was later dissolved upon a motion filed by defendants who put up
counter-bond.
The dissolution of the injunction enabled the sheriff to carry out the sale as
originally scheduled and the property was sold to one Raymundo de Jesus
for the sum of P970. This development prompted the plaintiff to amend her
complaint by praying therein, among other things, that the sale carried out by
the sheriff be declared null and void. After due trial, wherein the parties
practically agreed on the material facts pertinent to the issue, the court
rendered decision declaring the sale null and void. The defendants appealed,
and the case was certified to this court on the plea that the appeal involves
purely questions of law.
The question to be decided is whether the sale made by the sheriff on May 9,
1950 of the two parcels of land which were redeemed by Gliceria Rosete in
the exercise of her right of redemption is valid it appearing that they formed
part of the four parcels of land belonging to the conjugal partnership which
were originally sold to satisfy the same judgment of indemnity awarded in the
criminal case. The lower court declared the sale null and void on the strength
of the ruling laid down in the case of Lichauco vs. Olegario, 43 Phil., 540, and
this finding is now disputed by the appellants.
In the case above adverted to, Lichauco obtained a judgment against
Olegario for the sum of P72,766.37. To satisfy this judgment, certain real
estate belonging to Olegario was levied in execution and at the sale Lichauco
bid for it for the sum of P10,000. Olegario, on the same day, sold his right of
redemption to his cousin Dalmacio. Later, Lichauco asked for an alias writ of
execution and the sheriff proceeded with the sale of the right of redemption
of Olegario whereat Lichauco himself bid for the sum of P10,000. As
Lichauco failed to register the sale owing to the fact that the sale executed by
Olegario in favor of his cousin was already recorded, Lichauco brought the
matter to court to test the validity of the latter sale. One of the issues raised
was, "Whether or not Faustino Lichauco, as an execution creditor and
purchaser at the auction in question was entitled, after his judgment had thus
been executed but not wholly satisfied, to have it executed again by levying
upon the right of redemption over said properties." The court ruled that this
cannot be done for it would render nugatory and means secured by law to an
execution debtor to avoid the sale of his property made at an auction under
execution. Said this Court:
We, therefore, find that the plaintiff, as a judgment creditor, was not, and is
not, entitled, after an execution has been levied upon the real properties in
question by virtue of the judgment in his favor, to have another execution
levied upon the same properties by virtue of the same judgment to reach the
right of redemption which the execution debtor and his privies retained over
them.
Inasmuch as the Lichauco case refers to the levy and sale of the right of
redemption belonging to a judgment debtor and not to the levy of the very
property which has been the subject of execution for the satisfaction of the
same judgment, it is now contended that it cannot be considered as a
precedent in the present case for here the second levy was effected on the
same property subject of the original execution. But this argument falls on its
own weight when we consider the following conclusion of the court, "... what
we wish to declare is that a judgment by virtue of which a property is sold at
public auction can have no further effect on such property." (Emphasis
supplied)
Nevertheless, when this case came up for discussion some members of the
Court expressed doubt as to the applicability of the Lichauco case
considering that it does not decide squarely whether the same property may
be levied on an alias execution if it is reacquired by the judgment debtor in
the exercise of his right of redemption and as on this matter the requisite
majority could not be obtained the injury turned to another issue which for
purposes of this case is sufficient to decide the controversy.
5
The issue is: Since it appears that plaintiff redeemed the two parcels of land
in question with money obtained by her from her father, has the property
become paraphernal and as such is beyond the reach of further execution?
We are of the opinion that the question should be answered in the affirmative
for the following reasons:
(a) Gliceria Rosete, the wife, redeemed the property, not in behalf of her
husband, but as successor in interest in the whole or part of the property, it
being then conjugal. The term "successor in interest" appearing in
subdivision (a), Section 25, Rule 39, includes, according to Chief Justice
Moran, "one who succeeds to the interest of the debtor by operation of law"
or "the wife as regards her husband's homestead by reason of the fact that
some portion of her husband's title passes to her (Comments on the Rules of
Court, 1952 ed., Vol. 1, pp. 841-842); and (b) a property is deemed to belong
exclusively to the wife (1) when acquired by her by-right of redemption, and
(2) with money belonging exclusively to her (Article 1396, old Civil Code).
The interest which a wife has in conjugal property in this jurisdiction may be
likened to that of a wife in a homestead in American jurisdiction. That interest
is known as "inchoate right of dower", or a "contingent interest." By virtue of
this inchoate right, a wife has a right of redemption of a homestead
as successor in interest of her husband. Thus, in Hepfner vs. Urton, 12 Pac.,
486, it was held that by the declaration of homestead by the husband of the
property sold a portion of his title passed to his wife, and "she had the right of
residence thereon with him and the family during their joint lives, with some
rights in case she should survive him. She had a right of redemption as
his successor in interest." (Emphasis supplied) In Taylor vs. Taylor, 92 So.,
109, where a mortgage was executed on a homestead and the husband
refused to pay the indebtedness, it was held that "the wife's "inchoate right of
dower", which is more than a possibility and may well be denominated a
contingent interest, was a sufficient interest in the lands to confer the right of
equitable redemption under the mortgage." And in Malone vs. Nelson, et al.,
167 So., 714, it was declared that "the right of the wife of redeem is rested
upon her interest — inchoate right of dower — a right subject to a monetary
valuation." These authorities have persuasive effect considering the source
of our rule on the matter.
The property in question has therefore become the exclusive property of the
plaintiff. She has acquired it by right of redemption as successor in interest of
her husband. It has ceased to be the property of the judgment debtor. It can
no longer therefore be the subject of execution under a judgment exclusively
affecting the personal liability of the latter. The conclusion reached by the
lower court on this matter is therefore not warranted by law.
Wherefore, the decision appealed from is modified as follows: the sale of the
two parcels of land executed by the sheriff on May 9, 1950 in favor of
Raymundo de Jesus for P970 is hereby declared null and void, and the deed
of repurchase executed by the sheriff in favor of the plaintiff on March 8,
1950 is hereby revived and maintained. The rest of the decision is declared
without effect. No pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28589 January 8, 1973
RAFAEL ZULUETA, ET AL., plaintiffs-appellees,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.
Alfredo L. Benipayo for plaintiffs-appellee Rafael Zulueta and Carolina
Zulueta.
Justo L. Albert for plaintiff-appellee Telly Albert Zulueta.
V.E. del Rosario and Associates and Salcedo, Del Rosario, Bito, Misa and
Lozada for defendant-appellant.
RESOLUTION
CONCEPCION, C.J.:
Both parties in this case have moved for the reconsideration of the decision
of this Court promulgated on February 29, 1972. Plaintiffs maintain that the
decision appealed from should be affirmed in toto. The defendant, in turn,
prays that the decision of this Court be "set aside ... with or without a new
6
trial, ... and that the complaint be dismissed, with costs; or, in the alternative,
that the amount of the award embodied therein be considerably reduced." .
Subsequently to the filing of its motion for reconsideration, the defendant filed
a "petition to annul proceedings and/or to order the dismissal of plaintiffs-
appellees' complaint" upon the ground that "appellees' complaint actually
seeks the recovery of only P5,502.85 as actual damages, because, for the
purpose of determining the jurisdiction of the lower court, the unspecified
sums representing items of alleged damages, may not be considered, under
the settled doctrines of this Honorable Court," and "the jurisdiction of courts
of first instance when the complaint in the present case was filed on Sept. 30,
1965" was limited to cases "in which the demand, exclusive of interest, or the
value of the property in controversy amounts to more than ten thousand
pesos" and "the mere fact that the complaint also prays for unspecified moral
damages and attorney's fees, does not bring the action within the jurisdiction
of the lower court."
We find no merit in this contention. To begin with, it is not true that "the
unspecified sums representing items or other alleged damages, may not be
considered" — for the purpose of determining the jurisdiction of the court —
"under the settled doctrines of this Honorable Court." In fact, not a single
case has been cited in support of this allegation.
Secondly, it has been held that a clam for moral damages is one not
susceptible of pecuniary estimation.1 In fact, Article 2217 of the Civil Code of
the Philippines explicitly provides that "(t)hough incapable of pecuniary
computation, moral damages may be recovered if they are the proximate
result of the defendant's wrongful act or omission." Hence, "(n)o proof
pecuniary loss necessary" — pursuant to Article 2216 of the same Code —
"in order that moral ... damages may be adjudicated." And "(t)he assessment
of such damages ... is left to the discretion of the court" - said article adds -
"according to the circumstances of each case." Appellees' complaint is,
therefore, within the original jurisdiction of courts of first instance, which
includes "all civil actions in which the subject of the litigation is not capable of
pecuniary estimation."2
Thirdly, in its answer to plaintiffs' original and amended complainants,
defendant had set up a counterclaim in the aggregate sum of P12,000, which
is, also, within the original jurisdiction of said courts, thereby curing the
alleged defect if any, in plaintiffs' complaint.3
We need not consider the jurisdictional controversy as to the amount the
appellant sues to recover because the counterclaim interposed establishes
the jurisdiction of the District Court. Merchants' Heat & Light Co. v. James B.
Clow & Sons, 204 U.S. 286, 27 S. Ct. 285, 51 L. Ed. 488; O. J. Lewis
Mercantile Co. v. Klepner, 176 F. 343 (C.C.A. 2), certiorari denied 216 U.S.
620, 30 S Ct. 575, 54 L. Ed. 641. ... .4
... courts have said that "when the jurisdictional amount is in question, the
tendering of a counterclaim in an amount which in itself, or added to the
amount claimed in the petition, makes up a sum equal to the amount
necessary to the jurisdiction of this court, jurisdiction is established, whatever
may be the state of the plaintiff's complaint." American Sheet & Tin Plate Co.
v. Winzeler (D.C.) 227 F. 321, 324.5
Thus, in Ago v. Buslon,6 We held:
... . Then, too, petitioner's counterclaim for P37,000.00 was, also, within the
exclusive original jurisdiction of the latter courts, and there are ample
precedents to the effect that "although the original claim involves less than
the jurisdictional amount, ... jurisdiction can be sustained if the counterclaim
(of the compulsory type)" — such as the one set up by petitioner herein,
based upon the damages allegedly suffered by him in consequence of the
filing of said complaint — "exceeds the jurisdictional amount." (Moore
Federal Practice, 2nd ed. [1948], Vol. 3, p. 41; Ginsburg vs. Pacific Mutual
Life Ins. Co. of California, 69 Fed. [2d] 97; Home Life Ins. Co. vs. Sipp., 11
Fed. [2d]474; American Sheet & Tin Plate Co. vs. Winzeler [D.C.], 227 Fed.
321, 324; Brix vs. People's Mutual Life Ins. Co., 41 P. 2d. 537, 2 Cal. 2d.
446; Emery vs. Pacific Employees Ins. Co., 67 P. 2d. 1046, 8 Cal. 2d. 663).
Needless to say, having not only failed to question the jurisdiction of the trial
court — either in that court or in this Court, before the rendition of the latter's
decision, and even subsequently thereto, by filing the aforementioned motion
for reconsideration and seeking the reliefs therein prayed for — but,
also, urged both courts to exercise jurisdiction over the merits of the case,
defendant is now estopped from impugning said jurisdiction.7
Before taking up the specific questions raised in defendant's motion for
reconsideration, it should be noted that the same is mainly predicated upon
the premise that plaintiffs' version is inherently incredible, and that this Court
should accept the theory of the defense to the effect that petitioner was off-
loaded because of a bomb-scare allegedly arising from his delay in boarding
the aircraft and subsequent refusal to open his bags for inspection. We need
7
not repeat here the reasons given in Our decision for rejecting defendant's
contention and not disturbing the findings of fact of His Honor, the Trial
Judge, who had the decided advantage — denied to Us — of observing the
behaviour of the witnesses in the course of the trial and found those of the
plaintiffs worthy of credence, not the evidence for the defense.
It may not be amiss however, to stress the fact that, in his written
report, made in transit from Wake to Manila — or immediately after the
occurrence and before the legal implications or consequences thereof could
have been the object of mature deliberation, so that it could, in a way, be
considered as part of the res gestae — Capt. Zentner stated that Zulueta had
been off-loaded "due to drinking" and "belligerent attitude," thereby belying
the story of the defense about said alleged bomb-scare, and confirming the
view that said agent of the defendant had acted out of resentment because
his ego had been hurt by Mr. Zulueta's adamant refusal to be bullied by him.
Indeed, had there been an iota of truth in said story of the defense, Capt.
Zentner would have caused every one of the passengers to be frisked or
searched and the luggage of all of them examined — as it is done now —
before resuming the flight from Wake Island. His failure to do so merely
makes the artificious nature of defendant's version more manifest. Indeed,
the fact that Mrs. Zulueta and Miss Zulueta were on board the plane shows
beyond doubt that Mr. Zulueta could not possibly have intended to blow it up.
The defense tries to explain its failure to introduce any evidence to contradict
the testimony of Mr. Zulueta as to why he had gone to the beach and what
he did there, alleging that, in the very nature of things, nobody else could
have witnessed it. Moreover, the defense insists, inter alia, that the testimony
of Mr. Zulueta is inherently incredible because he had no idea as to how
many toilets the plane had; it could not have taken him an hour to relieve
himself in the beach; there were eight (8) commodes at the terminal toilet for
men ; if he felt the need of relieving himself, he would have seen to it that the
soldiers did not beat him to the terminal toilets; he did not tell anybody about
the reason for going to the beach, until after the plane had taken off from
Wake.
We find this pretense devoid of merit. Although Mr. Zulueta had to look for a
secluded place in the beach to relieve himself, beyond the view of others,
defendant's airport manager, whom Mr. Zulueta informed about it, soon
after the departure of the plane, could have forthwith checked the veracity of
Mr. Zulueta's statement by asking him to indicate the specific place where he
had been in the beach and then proceeding thereto for purposes of
verification.
Then, again, the passenger of a plane seldom knows how many toilets it has.
As a general rule, his knowledge is limited to the toilets for the class — first
class or tourist class — in which he is. Then, too, it takes several minutes for
the passengers of big aircrafts, like those flying from the U.S. to the
Philippines, to deplane. Besides, the speed with which a given passenger
may do so depends, largely, upon the location of his seat in relation to the
exit door. He cannot go over the heads of those nearer than he thereto.
Again, Mr. Zulueta may have stayed in the toilet terminal for some time,
expecting one of the commodes therein to be vacated soon enough, before
deciding to go elsewhere to look for a place suitable to his purpose. But he
had to walk, first, from the plane to the terminal building and, then, after
vainly waiting therein for a while, cover a distance of about 400 yards
therefrom to the beach, and seek there a place not visible by the people in
the plane and in the terminal, inasmuch as the terrain at Wake Island is flat.
What is more, he must have had to takeoff part, at least, of his clothing,
because, without the facilities of a toilet, he had to wash himself and, then,
dry himself up before he could be properly attired and walk back the 400
yards that separated him from the terminal building and/or the plane.
Considering, in addition to the foregoing, the fact that he was not feeling well,
at that time, We are not prepared to hold that it could not have taken him
around an hour to perform the acts narrated by him.
But, why — asks the defendant — did he not reveal the same before the
plane took off? The record shows that, even before Mr. Zulueta had reached
the ramp leading to the plane, Capt. Zentner was already demonstrating at
him in an intemperate and arrogant tone and attitude ("What do you think you
are?), thereby impelling Mr. Zulueta to answer back in the same vein. As a
consequence, there immediately ensued an altercation in the course of which
each apparently tried to show that he could not be cowed by the other. Then
came the order of Capt. Zentner to off-load all of the Zuluetas, including Mrs.
Zulueta and the minor Miss Zulueta, as well as their luggage, their overcoats
and other effects handcarried by them; but, Mr. Zulueta requested that the
ladies be allowed to continue the trip. Meanwhile, it had taken time to locate
his four (4) pieces of luggage. As a matter of fact, only three (3) of them were
found, and the fourth eventually remained in the plane. In short, the issue
between Capt. Zentner and Mr. Zulueta had been limited to determining
whether the latter would allow himself to be browbeaten by the former. In the
heat of the altercation, nobody had inquired about the cause of Mr. Zulueta's
8
delay in returning to the plane, apart from the fact that it was rather
embarrassing for him to explain, in the presence and within the hearing of the
passengers and the crew, then assembled around them, why he had gone to
the beach and why it had taken him some time to answer there a call of
nature, instead of doing so in the terminal building.
Defendant's motion for reconsideration assails: (1) the amount of damages
awarded as excessive; (2) the propriety of accepting as credible plaintiffs'
theory; (3) plaintiffs' right to recover either moral or exemplary damages; (4)
plaintiffs' right to recover attorney's fees; and (5) the non-enforcement of the
compromise agreement between the defendant and plaintiff's wife, Mrs.
Zulueta. Upon the other hand, plaintiffs' motion for reconsideration contests
the decision of this Court reducing the amount of damages awarded by the
trial court to approximately one-half thereof, upon the ground, not only that,
contrary to the findings of this Court, in said decision, plaintiff had not
contributed to the aggravation of his altercation or incident with Capt. Zentner
by reacting to his provocation with extreme belligerency thereby allowing
himself to be dragged down to the level on which said agent of the defendant
had placed himself, but, also, because the purchasing power of our local
currency is now much lower than when the trial court rendered its appealed
decision, over five (5) years ago, on July 5, 1967, which is an undeniable and
undisputed fact. Precisely, for this reason, defendant's characterization as
exorbitant of the aggregate award of over P700,000 by way of damages,
apart from attorney's fees in the sum of P75,000, is untenable. Indeed, said
award is now barely equivalent to around 100,000 U. S. dollars.
It further support of its contention, defendant cites the damages awarded in
previous cases to passengers of airlines,8 as well as in several criminal
cases, and some cases for libel and slander. None of these cases is,
however, in point. Said cases against airlines referred to passengers who
were merely constrained to take a tourist class accommodation, despite the
fact that they had first class tickets, and that although, in one of such cases,
there was proof that the airline involved had acted as it did to give preference
to a "white" passenger, this motive was not disclosed until the trial in court. In
the case at bar, plaintiff Rafael Zulueta was "off-loaded" at Wake Island, for
having dared to retort to defendant's agent in a tone and manner matching, if
not befitting his intemperate language and arrogant attitude. As a
consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta had
boomeranged against him (Zentner), in the presence of the other passengers
and the crew. It was, also, in their presence that defendant's agent had
referred to the plaintiffs as "monkeys," a racial insult not made openly and
publicly in the abovementioned previous cases against airlines.
In other words, Mr. Zulueta was off-loaded, not to protect the safety of the
aircraft and its passengers, but to retaliate and punish him for the
embarrassment and loss of face thus suffered by defendant's agent. This
vindictive motive is made more manifest by the note delivered to Mr. Zulueta
by defendant's airport manager at Wake Island, Mr. Sitton, stating that the
former's stay therein would be "for a minimum of one week," during which he
would be charged $13.30 per day. This reference to a "minimum of one
week" revealed the intention to keep him there stranded that long, for no
other plane, headed for Manila, was expected within said period of time,
although Mr. Zulueta managed to board, days later, a plane that brought him
to Hawaii, whence he flew back to the Philippines, via Japan.
Neither may criminal cases, nor the cases for libel and slander cited in the
defendant's motion for reconsideration, be equated with the present case.
Indeed, in ordinary criminal cases, the award for damages is, in actual
practice, of purely academic value, for the convicts generally belong to the
poorest class of society. There is, moreover, a fundamental difference
between said cases and the one at bar. The Zuluetas had a contract of
carriage with the defendant, as a common carrier, pursuant to which the
latter was bound, for a substantial monetary considerationpaid by the former,
not merely to transport them to Manila, but, also, to do so with "extraordinary
diligence" or "utmost diligence."9 The responsibility of the common carrier,
under said contract, as regards the passenger's safety, is of such a nature,
affecting as it does public interest, that it "cannot be dispensed with" or even
"lessened by stipulation, by the posting of notices, by statements on tickets,
or otherwise." 10 In the present case, the defendant did not only fail to comply
with its obligation to transport Mr. Zulueta to Manila, but, also, acted in a
manner calculated to humiliate him, to chastise him, to make him suffer, to
cause to him the greatest possible inconvenience, by leaving him in a
desolate island, in the expectation that he would be stranded there for a
"minimum of one week" and, in addition thereto, charged therefor $13.30 a
day.
It is urged by the defendant that exemplary damages are not recoverable in
quasi-delicts, pursuant to Article 2231 of our Civil Code, except when the
defendant has acted with "gross negligence," and that there is no specific
finding that it had so acted. It is obvious, however, that in off-loading plaintiff
at Wake Island, under the circumstances heretofore adverted to, defendant's
9
agents had acted with malice aforethought and evident bad faith. If "gross
negligence" warrants the award of exemplary damages, with more reason is
its imposition justified when the act performed is deliberate, malicious and
tainted with bad faith. Thus, in Lopez v. PANAM, 11 We held:
The rationale behind exemplary or corrective damages is, as the name
implies, to provide an example or correction for public good. Defendant
having breached its contracts in bad faith, the court, as stated earlier, may
award exemplary damages in addition to moral damages (Articles 2229,
2232, New Civil Code.)
Similarly, in NWA v. Cuenca, 12 this Court declared that an award for
exemplary damages was justified by the fact that the airline's "agent had
acted in a wanton, reckless and oppressive manner" in compelling Cuenca,
upon arrival at Okinawa, to transfer, over his objection, from the first class,
where he was accommodated from Manila to Okinawa, to the tourist class, in
his trip to Japan, "under threat of otherwise leaving him in Okinawa," despite
the fact that he had paid in full the first class fare and was issued in Manila a
first class ticket.
Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal
is not liable for exemplary damages owing to acts of his agent unless the
former has participated in said acts or ratified the same. Said case involved,
however, the subsidiary civil liability of an employer arising from criminal acts
of his employee, and "exemplary damages ... may be imposed when the
crime was committed with one or more aggravating
circumstances." 14Accordingly, the Rotea case is not in point, for the case at
bar involves a breach of contract, as well as a quasi-delict.
Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be
equated with the case at bar. The Palisoc case dealt with the liability of
school officials for damages arising from the death of a student (Palisoc) due
to fist blows given by another student (Daffon), in the course of a quarrel
between them, while in a laboratory room of the Manila Technical Institute. In
an action for damages, the head thereof and the teacher in charge of said
laboratory were held jointly and severally liable with the student who caused
said death, for failure of the school to provide "adequate supervision over the
activities of the students in the school premises," to protect them "from harm,
whether at the hands of fellow students or other parties." Such liability was
predicated upon Article 2180 of our Civil Code, the pertinent part of which
reads:
ART. 2180. The obligation imposed by Article 2176 is demandable not only
for one's own acts or omissions, but also for those of persons for whom one
is responsible.
xxx xxx xxx
Lastly, teachers or heads of establishments of arts and trades shall be liable
for damages caused by their pupils and students or apprentices, so long as
they remain in their custody.
xxx xxx xxx
Obviously, the amount of damages warded in the Palisoc case is not and
cannot serve as the measure of the damages recoverable in the present
case, the latter having been caused directly and intentionally by an employee
or agent of the defendant, whereas the student who killed the young Palisoc
was in no wise an agent of the school. Moreover, upon her arrival in the
Philippines, Mrs. Zulueta reported her husband's predicament to defendant's
local manager and asked him to forthwith have him (Mr. Zulueta) brought to
Manila, which defendant's aforementioned manager refused to do, thereby
impliedly ratifying the off-loading of Mr. Zulueta at Wake Island.
It is next urged that, under the contract of carriage with the defendant, Mr.
Zulueta was bound to be present at the time scheduled for the departure of
defendant's plane and that he had, consequently, violated said contract when
he did not show up at such time. This argument might have had some weight
had defendant's plane taken off beforeMr. Zulueta had shown up. But the fact
is that he was ready, willing and able to board the plane about two
hours before it actually took off, and that he was deliberately and maliciously
off-loaded on account of his altercation with Capt. Zentner. It should, also, be
noted that, although Mr. Zulueta was delayed some 20 to 30 minutes, the
arrival or departure of planes is often delayed for much longer periods of
time. Followed to its logical conclusion, the argument adduced by the
defense suggests that airlines should be held liable for damages due to the
inconvenience and anxiety, aside from actual damages, suffered by many
passengers either in their haste to arrive at the airport on scheduled time just
to find that their plane will not take off until later, or by reason of the late
arrival of the aircraft at its destination.
PANAM impugns the award of attorney's fees upon the ground that no
penalty should be imposed upon the right to litigate; that, by law, it may be
awarded only in exceptional cases; that the claim for attorney's fees has not
10
been proven; and that said defendant was justified in resisting plaintiff's claim
"because it was patently exorbitant."
Nothing, however, can be farther from the truth. Indeed apart from plaintiff's
claim for actual damages, the amount of which is not contested, plaintiffs
did not ask any specific sum by way of exemplary and moral damages, as
well as attorney's fees, and left the amount thereof to the "sound discretion"
of the lower court. This, precisely, is the reason why PANAM, now, alleges —
without justification that the lower court had no jurisdiction over the subject
matter of the present case.
Moreover, Article 2208 of our Civil Code expressly authorizes the award of
attorney's fees "when exemplary damages are awarded," — as they are in
this case —as well as "in any other case where the court deems it just and
equitable that attorney's fees ... be recovered," and We so deem it just and
equitable in the present case, considering the "exceptional" circumstances
obtaining therein, particularly the bad faith with which defendant's agent had
acted, the place where and the conditions under which Rafael Zulueta was
left at Wake Island, the absolute refusal of defendant's manager in Manila to
take any step whatsoever to alleviate Mr. Zulueta's predicament at Wake and
have him brought to Manila — which, under their contract of carriage, was
defendant's obligation to discharge with "extra-ordinary" or "utmost" diligence
— and, the "racial" factor that had, likewise, tainted the decision of
defendant's agent, Capt. Zentner, to off-load him at Wake Island.
As regards the evidence necessary to justify the sum of P75,000 awarded as
attorney's fees in this case, suffice it to say that the quantity and quality of the
services rendered by plaintiffs' counsel appearing on record, apart from the
nature of the case and the amount involved therein, as well as his prestige as
one of the most distinguished members of the legal profession in the
Philippines, of which judicial cognizance may be taken, amply justify said
award, which is a little over 10% of the damages (P700,000) collectible by
plaintiffs herein. Indeed, the attorney's fees in this case is proportionally
much less than that adjudged in Lopez v. PANAM 16 in which the judgment
rendered for attorney's fees (P50,000) was almost 20% of the damages
(P275,000) recovered by the plaintiffs therein.
The defense assails the last part of the decision sought to be reconsidered,
in which — relying upon Article 172 of our Civil Code, which provides that
"(t)he wife cannot bind the conjugal partnership without the husband's
consent, except in cases provided by law," and it is not claimed that this is
one of such cases — We denied a motion, filed by Mrs. Zulueta, for the
dismissal of this case, insofar as she is concerned - she having settled all her
differences with the defendant, which appears to have paid her the sum of
P50,000 therefor - "without prejudice to this sum being deducted from the
award made in said decision." Defendant now alleges that this is tantamount
to holding that said compromise agreement is both effective and ineffective.
This, of course, is not true. The payment is effective, insofar as it is
deductible from the award, and, because it is due (or part of the amount due)
from the defendant, with or without its compromise agreement with Mrs.
Zulueta. What is ineffective is the compromise agreement, insofar as the
conjugal partnership is concerned. Mrs. Zulueta's motion was for the
dismissal of the case insofar as she was concerned, and the defense cited in
support thereof Article 113 of said Code, pursuant to which "(t)he husband
must be joined in all suits by or against the wife except: ... (2) If they have in
fact been separated for at least one year." This provision, We held, however,
refers to suits in which the wife is the principal or real party in interest, not to
the case at bar, "in which the husband is the main party in interest, both as
the person principally aggrieved and as administrator of the conjugal
partnership ... he having acted in this capacity in entering into the contract of
carriage with PANAM and paid the amount due to the latter, under the
contract, with funds of the conjugal partnership," to which the amounts
recoverable for breach of said contract, accordingly, belong. The damages
suffered by Mrs. Zulueta were mainly an in accident of the humiliation to
which her husband had been subjected. The Court ordered that said sum of
P50,00 paid by PANAM to Mrs. Zulueta be deducted from the aggregate
award in favor of the plaintiffs herein for the simple reason that upon
liquidation of the conjugal partnership, as provided by law, said amount
would have to be reckoned with, either as part of her share in the
partnership, or as part of the support which might have been or may be due
to her as wife of Rafael Zulueta. It would surely be inane to sentence the
defendant to pay the P700,000 due to the plaintiffs and to direct Mrs. Zulueta
to return said P50,000 to the defendant.
In this connection, it is noteworthy that, for obvious reasons of public policy,
she is not allowed by law to waive her share in the conjugal partnership,
before the dissolution thereof. 17 She cannot even acquire any property by
gratuitous title, without the husband's consent, except from her ascendants,
descendants, parents-in-law, and collateral relatives within the fourth
degree. 18
11
It is true that the law favors and encourages the settlement of litigations by
compromise agreement between the contending parties, but, it certainly does
not favor a settlement with one of the spouses, both of whom are plaintiffs or
defendants in a common cause, such as the defense of the rights of the
conjugal partnership, when the effect, even if indirect, of the compromise is
to jeopardize "the solidarity of the family" — which the
law 19 seeks to protect — by creating an additional cause for the
misunderstanding that had arisen between such spouses during the litigation,
and thus rendering more difficult a reconciliation between them.
It is urged that there is no proof as to the purpose of the trip of the plaintiffs,
that neither is there any evidence that the money used to pay the plane
tickets came from the conjugal funds and that the award to Mrs. Zulueta was
for her personal suffering or injuries. There was, however, no individual or
specific award in favor of Mrs. Zulueta or any of the plaintiffs. The award was
made in their favor collectively. Again, in the absence of said proof, the
presumption is that the purpose of the trip was for the common benefit of the
plaintiffs and that the money had come from the conjugal funds, for, unless
there is proof to the contrary, it is presumed "(t)hat things have happened
according to the ordinary course of nature and the ordinary habits of
life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when the
source of the money used therefor is not established, even if the purchase
had been made by the wife. 22 And this is the rule obtaining in the
Philippines. Even property registered, under the Torrens system, in the name
of one of the spouses, or in that of the wife only, if acquired during the
marriage, is presumed to belong to the conjugal partnership, unless there is
competent proof to the contrary. 23
PANAM maintains that the damages involved in the case at bar are not
among those forming part of the conjugal partnership pursuant to Article 153
of the Civil Code, reading:
ART. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at the
expense of the common fund, whether the acquisition be for the partnership,
or for only one of the spouses;
(2) That which is obtained by the industry, or work, or as salary of the
spouses, or of either of them;
(3) The fruits, rents or interests received or due during the marriage, coming
from the common property or from the exclusive property of each spouse.
Considering that the damages in question have arisen from, inter alia, a
breach of plaintiffs' contract of carriage with the defendant, for which plaintiffs
paid their fare with funds presumably belonging to the conjugal partnership,
We hold that said damages fall under paragraph (1) of said Article 153, the
right thereto having been "acquired by onerous title during the marriage ... ."
This conclusion is bolstered up by Article 148 of our Civil Code, according to
which:
ART. 148. The following shall be the exclusive property of each spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires, during the marriage, by lucrative title;
(3) That which is acquired by right of redemption or by exchange with other
property belonging to only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of the
husband.
The damages involved in the case at bar do not come under any of these
provisions or of the other provisions forming part of Chapter 3, Title VI, of
Book I of the Civil Code, which chapter is entitled "Paraphernal Property."
What is more, if "(t)hat which is acquired by right of redemption or by
exchange with other property belonging to only one of the spouses," and
"(t)hat which is purchased with exclusive money of the wife or of the
husband," 24 belong exclusively to such wife or husband, it follows
necessarily that that which is acquired with money of the conjugal
partnership belongs thereto or forms part thereof. The rulings in Maramba v.
Lozano 25 and Perez v. Lantin, 26 cited in defendant's motion for
reconsideration, are, in effect, adverse thereto. In both cases, it was merely
held that the presumption under Article 160 of our Civil Code — to the effect
that all property of the marriage belong to the conjugal partnership — does
not apply unless it is shown that it was acquired during marriage. In the
present case, the contract of carriage was concededly entered into, and the
damages claimed by the plaintiffs were incurred, during marriage. Hence, the
rights accruing from said contract, including those resulting from breach
thereof by the defendant, are presumed to belong to the conjugal partnership
of Mr. and Mrs. Zulueta. The fact that such breach of contract was coupled,
12
also, with a quasi-delict constitutes an aggravating circumstance and can not
possibly have the effect of depriving the conjugal partnership of such
property rights.
Defendant insists that the use of conjugal funds to redeem property does not
make the property redeemed conjugal if the right of redemption pertained to
the wife. In the absence, however, of proof that such right of redemption
pertains to the wife — and there is no proof that the contract of carriage with
PANAM or the money paid therefor belongs to Mrs. Zulueta — the property
involved, or the rights arising therefrom, must be presumed, therefore, to
form part of the conjugal partnership.
It is true that in Lilius v. Manila Railroad Co., 27 it was held that the
"patrimonial and moral damages" awarded to a young and beautiful woman
by reason of a scar — in consequence of an injury resulting from an
automobile accident — which disfigured her face and fractured her left leg,
as well as caused a permanent deformity, are her paraphernal property.
Defendant cites, also, in support of its contention the following passage from
Colin y Capitant:
No esta resuelta expresamente en la legislacion española la cuestion de si
las indemnizaciones debidas por accidentes del trabaho tienen la
consideracion de gananciales, o son bienes particulares de los conyuges.
Inclinan a la solucion de que estas indemnizaciones deben ser consideradas
como gananciales, el hecho de que la sociedad pierde la capacidad de
trabajocon el accidente, que a ella le pertenece, puesto que de la sociedad
son losfrutos de ese trabajo; en cambio, la consideracion de que igual
manera que losbienes que sustituyen a los que cada conyuge lleva al
matrimonio como propiostienen el caracter de propios, hace pensar que las
indemnizaciones que vengana suplir la capacidad de trabajo aportada por
cada conyuge a la sociedad, debenser juridicamente reputadas como bienes
propios del conyuge que haya sufrido elaccidente. Asi se llega a la misma
solucion aportada por la jurisprudencia francesca. 28
This opinion is, however, undecisive, to say the least. It should be noted that
Colin y Capitant were commenting on the French Civil Code; that their
comment referred to indemnities due in consequence of "accidentes del
trabajo "resulting in physical injuries sustained by one of the spouses (which
Mrs. Zulueta has not suffered); and that said commentators admit that the
question whether or not said damages are paraphernal property or belong to
the conjugal partnership is not settled under the Spanish law. 29 Besides, the
French law and jurisprudence — to which the comments of Planiol and
Ripert, likewise, refer — are inapposite to the question under consideration,
because they differ basically from the Spanish law in the treatment of the
property relations between husband and wife. Indeed, our Civil Code, like the
Spanish Civil Code, favors the system of conjugal partnership of gains.
Accordingly, the former provides that, "(i)n the absence of marriage
settlements, or when the same are void, the system of relative community or
conjugal partnership of gains ... shall govern the property relations between"
the spouses. 30Hence, "(a)ll property of the marriage is presumed to belong
to the conjugal partnership, unless it be proved that it pertains exclusively to
the husband or to the wife." 31
No similar rules are found in the French Civil Code. What is more, under the
provisions thereof, the conjugal partnership exists only when so stipulated in
the "capitulaciones matrimoniales" or by way of exception. In the language of
Manresa —
Prescindimos de los preceptos de los Condigos de Francia, Italia, Holanda,
Portugal, Alemania y Suiza, porsue solo excepcionalmente, o cuando asi se
pacta en las capitulaciones, admiten el sistema de gananciales. 32
Again, Colin y Capitant, as well as the Lilius case, refer to damages
recovered for physical injuries suffered by the wife. In the case at bar, the
party mainly injured, although not physically, is the husband.
Accordingly, the other Philippine cases 33 and those from Louisiana — whose
civil law is based upon the French Civil Code — cited by the defendant,
which similarly refer to moral damages due to physical injuries suffered by
the wife, are, likewise, inapplicable to the case at bar.
We find, therefore, no plausible reason to disturb the views expressed in Our
decision promulgated on February 29, 1972.
WHEREFORE, the motions for reconsideration above-referred to should be,
as they are hereby denied.
SECOND DIVISION
[G.R. No. 38052. December 23, 1933.]
CONCEPCION ABELLA DE DIAZ, Plaintiff-Appellee, v. ERLANGER &
13
GALINGER, INC., ET AL., Defendants. ERLANGER & GALINGER,
INC., Appellant.
Vicente Ribaya and J. A. Wolfson for Appellant.
Manly & Reyes and Norberto Romualdez for Appellee.
SYLLABUS
1. HUSBAND AND WIFE; CONJUGAL PARTNERSHIP; RIGHT OF
HUSBAND. — The husband, as the manager of the partnership (article 1412,
Civil Code), has a right to embark the partnership in an ordinary commercial
enterprise for gain, and the fact that the wife may not approve of a venture
does not make it a private and personal one of the husband.
2. ID.; ID.; PROPERTY OF PARTNERSHIP LIABLE TO SEIZURE. — The
obligation, not being a personal one of the husband, article 1386 has no
application, and any property belonging to the conjugal partnership must be
held liable to seizure.
3. ID.; ID.; LIABILITY OF FRUITS OF PARAPHERNAL PROPERTY FOR
DEBTS OF CONJUGAL PARTNERSHIP. — As the fruits of the paraphernal
property belonged to the conjugal partnership, they are responsible for the
debts of that partnership.
DECISION
HULL, J.:
Erlanger & Galinger, Inc., secured a judgment in civil case No. 3722 of the
Court of First Instance of Albay against Domingo Diaz, the husband of the
plaintiff herein, and on an execution issued to enforce the above-mentioned
judgment, the sheriff levied on certain properties.
Plaintiff thereupon brought this action in the Court of First Instance of
Camarines Sur alleging that the properties which had been levied upon were
her own paraphernal property.
The court issued a temporary injunction and after hearing, declared that the
properties levied upon were paraphernal, that the obligation which was the
basis of the judgment was a personal obligation of the husband, and that
under article 1386 of the Civil Code, the fruits of the paraphernal property of
the wife were exempt from execution in this case. The court held that all the
property was unlawfully levied upon and made the preliminary injunction
permanent.
Defendant appeals, and the first question for consideration is whether
buildings erected on paraphernal property of the wife with the private funds of
the wife are exempt from execution for the debts contracted by the husband.
Article 1404 of the Civil Code provides:jgc:chanrobles.com.ph
"ART. 1404. Any useful expenditures made for the benefit of the separate
property or either one of the spouses by means of advances made by the
partnership, or by the industry of the husband or wife, are partnership
property.
"Buildings constructed during the marriage on land belonging to one of the
spouses shall also belong to the partnership, but the value of the land shall
be paid to the spouse owning the same."cralaw virtua1aw library
We shall not disturb the findings of fact of the trial court that a commercial
building, the camarin, and the granary, the buildings in dispute, were built on
the lands of appellee with the appellee’s own personal money. At first view
there is no limitation on the second paragraph of the abovequoted article, but
Manresa in his Commentaries, volume 9, page 608, holds that if the building
is constructed by the owner of the land with her private money, the building
does not belong to the partnership but to the owner of the land, and no
reason occurs to us why such holding is not a correct and just interpretation
of this section. We therefore concur with the trial court that these buildings
are not subject to levy and sale in this case.
As to the items of palay and lumber, we are not convinced from the evidence
that they belong exclusively to appellee, but on the contrary, we believe that
14
they are part of the conjugal property (article 1407, Civil Code). Likewise, as paraphernal property belonged to the conjugal partnership, they are
to the Buick automobile. While it may be true that at the time of their responsible for the debts of that partnership. The injunction is too broad and
marriage, the wife had an automobile, that automobile has long since passed must be modified.
out of existence, and the mere fact that each successive car was turned in as
part of the purchase price of a new car, would not make every automobile in The judgment of the Court of First Instance of Camarines Sur is affirmed so
the future paraphernal, but on the contrary, it becomes conjugal and far as it relates to the ownership of the buildings. As to the other items,
responsible for the debts of the partnership. including the rents of the paraphernal property, it is reversed. The case will
be remanded to the Court of First Instance of Camarines Sur for action in
As above stated, the trial court relied to a great extent in its judgment on conformity with this opinion. No expression as to costs. So ordered.
article 1386 of the Civil Code which reads:jgc:chanrobles.com.ph
SECOND DIVISION
"ART. 1386. The fruits of the paraphernal property cannot be subject to the
payment of personal obligations of the husband, unless it be proved that
such obligations were productive of some benefit to the family."cralaw
virtua1aw library
ANTONIA R. DELA PEA and G.R. No. 187490
It will therefore be necessary to consider briefly the transaction out of which ALVIN JOHN B. DELA PEA,
arose the judgment, the basis of the existing writ of execution. The husband,
Domingo Diaz, while a member of the Legislature, secured the passage of Petitioners,
Act No. 2644 granting to his brother a franchise to construct and operate an
electric light plant at Tabaco, Albay. Domingo Diaz purchased from Erlanger
& Galinger, Inc., machinery and equipment for the construction and
installation of that plant, and judgment was obtained by Erlanger & Galinger, Present:
Inc., against Diaz for the balance of the purchase price.

Appellee contends that she was opposed to her husband’s going into the
CARPIO, J.,
electric light business and that therefore the business was a personal one of
- versus -
his and not an enterprise of the conjugal partnership. Such a contention is Chairperson,
fundamentally erroneous. The husband, as the manager of the partnership
(article 1412, Civil Code), has a right to embark the partnership in an ordinary BRION,
commercial enterprise for gain, and the fact that the wife may not approve of
a venture does not make it a private and personal one of the husband. PEREZ,

SERENO, and
The obligation, not being a personal one of the husband, article 1386 has no
application, and any property belonging to the conjugal partnership must be REYES, JJ.
held liable to seizure.

In the preliminary injunction which was made permanent by the trial court,
appellant and the sheriff were forbidden to attempt to collect by legal process
any of the rents or fruits of the paraphernal property. As the fruits of the GEMMA REMILYN C. AVILA and

15
FAR EAST BANK & TRUST CO.,
Respondents.
Promulgated:
February 8, 2012
x-------------------------------------------------------
- - - - -x
DECISION
PEREZ, J.:
Filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, this petition
for review on certiorari seeks the reversal and setting aside of the
Decision[1] dated 31 March 2009 rendered by the then Second Division of the
Court of Appeals in CA-G.R. CV No. 90485,[2] the dispositive portion of which
states:
WHEREFORE, premises considered, the appeal is GRANTED and the
assailed Decision, dated December 18, 2007, of the Regional Trial Court of
Marikina City, Branch 272, is hereby REVERSED and SET ASIDE. The
Deed of Absolute Sale in favor of Gemma Avila dated November 4, 1997 and
the subsequent sale on auction of the subject property to FEBTC (now Bank
of the Philippine Islands) on March 15, 1999 are upheld as valid and binding.
SO ORDERED.[3]
The Facts
The suit concerns a 277 square meter parcel of residential land, together
with the improvements thereon, situated in Marikina City and previously
registered in the name of petitioner Antonia R. Dela Pea (Antonia), married to
Antegono A. Dela Pea (Antegono) under Transfer Certificate of Title (TCT)
No. N-32315 of the Registry of Deeds of Rizal.[4] On 7 May 1996, Antonia
obtained from A.C. Aguila & Sons, Co. (Aguila) a loan in the sum
of P250,000.00 which, pursuant to the Promissory Note the former executed
in favor of the latter, was payable on or before 7 July 1996, with interest
pegged at 5% per month.[5] On the very same day, Antonia also executed in
favor of Aguila a notarized Deed of Real Estate Mortgage over the property,
for the purpose of securing the payment of said loan obligation. The deed
provided, in part, that (t)his contract is for a period of Three (3) months from
the date of this instrument.[6]
On 4 November 1997, Antonia executed a notarized Deed of Absolute
Sale over the property in favor of respondent Gemma Remilyn C. Avila
(Gemma), for the stated consideration of P600,000.00.[7] Utilizing the
document, Gemma caused the cancellation of TCT No. N-32315 as well as
the issuance of TCT No. 337834 of the Marikina City Registry of Deeds,
naming her as the owner of the subject realty.[8]On 26 November 1997,
Gemma also constituted a real estate mortgage over said parcel in favor of
respondent Far East Bank and Trust Company [now Bank of the Philippine
Islands] (FEBTC-BPI), to secure a loan facility with a credit limit
of P1,200,000.00.[9] As evidenced by the Promissory Notes she executed
from 12 December 1997 to 10 March 1998,[10] Gemma obtained the following
loans from Visayas Avenue Branch of the FEBTC-BPI, in the aggregate sum
of P1,200,000.00, to wit:
Promissory Note Date Amount Matu
16
BDS#970779 12/02/97 P300,000.00
BDS#970790 12/15/97 P100,000.00
BDS#980800 01/16/98 P100,000.00
BDS#980805 02/06/98 P100,000.00
BDS#980817 02/27/98 P150,000.00
BDS#980821 03/10/98 P450,000.00
On 3 March 1998, in the meantime, Antonia filed with the Register of Deeds
of Marikina an Affidavit of Adverse Claim to the effect, among others, that
she was the true and lawful owner of the property which had been titled in
the name of Gemma under TCT No. 32315; and, that the Deed of Absolute
Sale Gemma utilized in procuring her title was simulated.[11] As a
consequence, Antonias Affidavit of Adverse Claim was inscribed on TCT No.
337834 as Entry No. 501099 on 10 March 1998. [12] In view of Gemmas
failure to pay the principal as well as the accumulated interest and penalties
on the loans she obtained, on the other hand, FEBTC-BPI caused the
extrajudicial foreclosure of the real estate mortgage constituted over the
property. As the highest bidder at the public auction conducted in the
premises,[13]FEBTC-BPI later consolidated its ownership over the realty and
caused the same to be titled in its name under TCT No. 415392 of
the Marikina registry.[14]
On 18 May 1998, Antonia and her son, petitioner Alvin John B. Dela Pea
(Alvin), filed against Gemma the complaint for annulment of deed of sale
docketed before Branch 272 of the Regional Trial Court (RTC)
of Marikina City as Civil Case No. 98-445-MK. Claiming that the subject
realty was conjugal property, the Dela Peas alleged, among other matters,
that the 7 May 1996 Deed of Real Estate MortgageAntonia executed in favor
of Aguila was not consented to by Antegono who had, by then, already died;
that despite its intended 1998 maturity date, the due date of the loan secured
by the mortgage was shortened by Gemma who, taking advantage of her
04/30/98
proximate relationship with Aguila, altered the same to 1997; and, that the 4
November 1997 Deed of Absolute Sale in favor of Gemma was executed by
04/14/98
Antonia who was misled into believing that the transfer was necessary for the
loan the former promised to procure on her behalf from FEBTC-BPI. In
04/30/98
addition to the annulment of said Deed of Absolute Sale for being simulated
and derogatory of Alvins successional rights, the Dela Peas sought the
04/30/98
reconveyance of the property as well as the grant of their claims for moral
and exemplary damages, attorneys fees and the costs.[15]
04/30/98
04/30/98
Served with summons, Gemma specifically denied the material allegations of
the foregoing complaint in her 1 July 1998 answer. Maintaining that the realty
was the exclusive property of Antonia who misrepresented that her husband
was still alive, Gemma averred that the former failed to pay the P250,000.00
loan she obtained from Aguila on its stipulated 7 July 1996 maturity; that
approached to help prevent the extrajudicial foreclosure of the mortgage
constituted on the property, she agreed to settle the outstanding obligation to
Aguila and to extend Antonia a P50,000.00 loan, with interest pegged at 10%
per month; that to pay back the foregoing accommodations, Antonia agreed
to the use of the property as collateral for a loan to be obtained by her from
FEBTC-BPI, hence, the execution of the impugned Deed of Absolute Sale;
and, that conformably with the foregoing agreement, she obtained loans in
the total sum of P1,200,000.00 from FEBTC-BPI and applied the proceeds
thereof to the sums owed by Antonia. Together with the dismissal of the
complaint, Gemma also prayed for the grant of her counterclaims for moral
and exemplary damages, attorneys fees, litigation expenses and the costs. [16]
On 25 September 1999, the Dela Peas filed a supplemental complaint,
impleading FEBTC-BPI as additional defendant. Calling attention to Antonias
3 March 1998 Affidavit of Adverse Claim and the Notice of Lis Pendens they
purportedly caused to be annotated on TCT No. 337834 on 10 December
1999, the Dela Peas alleged that FEBTC-BPI was in bad faith when it
purchased the property at public auction on 15 March 1999.[17] In their 12
November 1999 answer, FEBTC-BPI, in turn, asserted that the property was
already titled in Gemmas name when she executed the 26 November 1997
real estate mortgage thereon, to secure the payment of the loans she
obtained in the sum of P1,200,000.00; and, that not being privy to Antonias
transaction with Gemma and unaware of any adverse claim on the property,
17
it was a mortgagee in good faith, entitled to foreclose the mortgage upon
Gemmas failure to pay the loans she obtained. Seeking the dismissal of the
complaint and the grant of its counterclaims for damages against the Dela
Peas, FEBTC-BPI alternatively interposed cross-claims against Gemma for
the payment of the subject loans, the accumulated interests and penalties
thereon as well as such sums for which it may be held liable in the
premises.[18]
On 14 April 2000, the RTC issued the order terminating the pre-trial stage
and declaring Gemma in default for failure to attend the pre-trial settings and
to engage the services of a new lawyer despite due notice and the
withdrawal of her counsel of record.[19] In support of their complaint,
Antonia[20] and Alvin[21] both took the witness stand and, by way of
corroborative evidence, presented the testimony of one Alessandro
Almoden[22] who claimed to have referred Antonia to Gemma for the purpose
of obtaining a loan. By way of defense evidence, on the other hand, FEBTC-
BPI adduced the oral evidence elicited from Eleanor Abellare, its Account
Officer who handled Gemmas loans,[23] and Zenaida Torres, the National
Bureau of Investigation (NBI) Document Examiner who, after analyzing
Antonias specimen signatures on the 7 May 1996 Deed of Real Estate
Mortgage and 4 November 1997Deed of Absolute Sale,[24] issued NBI
Questioned Documents Report No. 482-802 to the effect, among others, that
said signatures were written by one and the same person.[25]
On 18 December 2007, the RTC went on to render a Decision finding that
the subject property was conjugal in nature and that the 4 November
1997 Deed of Absolute Sale Antonia executed in favor of Gemma was void
as a disposition without the liquidation required under Article 130 of
the Family Code. Brushing aside FEBTC-BPIs claim of good faith,[26] the RTC
disposed of the case in the following wise:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in
favor of the plaintiffs and against the defendants, as follows:
1). Declaring the Deed of Absolute dated November 04, 1997 in favor of
defendant, [Gemma] as null and void;
2). Ordering defendant [FEBTC-BPI] to execute a deed of reconveyance in
favor of the [Dela Peas] involving the subject property now covered by
Transfer Certificate of Title No. 415392 in the name of [FEBTC-BPI];
3). Ordering [Gemma] to pay the [Dela Peas] the following:
a). the amount of P200,000.00 as moral damages; and
b). the amount of P20,000.00 as and for attorneys fees; and
c). costs of the suit
On the cross-claim, [Gemma] is hereby ordered to pay [FEBTC-BPI] the
amount of P2,029,317.17 as of November 10, 1999, with twelve (12%)
percent interest per annum until fully paid.
SO ORDERED.[27]
Aggrieved, FEBTC-BPI perfected the appeal which was docketed before the
CA as CA-G.R. CV No. 90485. On 31 March 2009 the CAs Second Division
rendered the herein assailed decision, reversing the RTCs appealed
decision, upon the following findings and conclusions: (a) the property was
paraphernal in nature for failure of the Dela Peas to prove that the same was
acquired during Antonias marriage to Antegono; (b) having misled Gemma
into believing that the property was exclusively hers, Antonia is barred from
seeking the annulment of the 4 November 1997 Deed of Absolute Sale; (c)
Antonias claim that her signature was forged is belied by her admission in
the pleadings that she was misled by Gemma into executing said Deed of
Absolute Sale and by NBI Questioned Document Report No. 482-802; and,
(d) FEBTC-BPI is a mortgagee in good faith and for value since Gemmas 26
November 1997 execution of the real estate mortgage in its favor predated
18
Antonias 3 March 1998 Affidavit of Adverse Claim and the 10 December
1999 annotation of a Notice of Lis Pendens on TCT No. 337834.[28]
The Issues
The Dela Peas seek the reversal of the assailed 31 March 2009 CA decision
upon the affirmative of following issues, to wit:
1) Whether or not the CA erred in reversing the RTC holding the house
and lot covered by TCT No. N-32315 conjugal property of the spouses
Antegono and Antonia Dela Pea;
2) Whether or not the CA erred in reversing the RTC declaring null and
void the Deed of Absolute Sale executed by Antonia to (Gemma); and
3. Whether or not the CA erred in reversing the RTC holding (FEBTC-
BPI) a mortgagee/purchaser in bad faith.[29]
The Courts Ruling
The petition is bereft of merit.
Pursuant to Article 160 of the Civil Code of the Philippines, 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. Although it is
not necessary to prove that the property was acquired with funds of the
partnership,[30] proof of acquisition during the marriage is an essential
condition for the operation of the presumption in favor of the conjugal
partnership.[31] In the case of Francisco vs. Court of Appeals,[32] this Court
categorically ruled as follows:
Article 160 of the New Civil Code provides that "all property of the marriage is
presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife." However, the party who
invokes this presumption must first prove that the property in controversy
was acquired during the marriage. Proof of acquisition during the coverture is
a condition sine qua non for the operation of the presumption in favor of the
conjugal partnership. The party who asserts this presumption must first prove
said time element. Needless to say, the presumption refers only to the
property acquired during the marriage and does not operate when there is no
showing as to when property alleged to be conjugal was acquired. Moreover,
this presumption in favor of conjugality is rebuttable, but only with strong,
clear and convincing evidence; there must be a strict proof of exclusive
ownership of one of the spouses.[33]
As the parties invoking the presumption of conjugality under Article 160 of
the Civil Code, the Dela Peas did not even come close to proving that the
subject property was acquired during the marriage between Antonia and
Antegono. Beyond Antonias bare and uncorroborated assertion that the
property was purchased when she was already married,[34] the record is
bereft of any evidence from which the actual date of acquisition of the realty
can be ascertained. When queried about the matter during his cross-
examination, even Alvin admitted that his sole basis for saying that the
property was owned by his parents was Antonias unilateral pronouncement
to the effect.[35] Considering that the presumption of conjugality does not
operate if there is no showing of when the property alleged to be conjugal
was acquired,[36] we find that the CA cannot be faulted for ruling that the
realty in litigation was Antonias exclusive property.
Not having established the time of acquisition of the property, the Dela Peas
insist that the registration thereof in the name of Antonia R. Dela Pea, of
legal age, Filipino, married to Antegono A. Dela Pea should have already
19
sufficiently established its conjugal nature. Confronted with the same issue in
the case Ruiz vs. Court of Appeals,[37] this Court ruled, however, that the
phrase married to is merely descriptive of the civil status of the wife and
cannot be interpreted to mean that the husband is also a registered
owner. Because it is likewise possible that the property was acquired by the
wife while she was still single and registered only after her marriage, neither
would registration thereof in said manner constitute proof that the same was
acquired during the marriage and, for said reason, to be presumed conjugal
in nature. Since there is no showing as to when the property in question was
acquired, the fact that the title is in the name of the wife alone is
determinative of its nature as paraphernal, i.e., belonging exclusively to said
spouse.[38]
Viewed in light of the paraphernal nature of the property, the CA correctly
ruled that the RTC reversibly erred in nullifying Antonias 4 November 1997
sale thereof in favor of Gemma, for lack of the liquidation required under
Article 130 of the Family Code.[39] That Antonia treated the realty as her own
exclusive property may, in fact, be readily gleaned from her utilization thereof
as security for the payment of the P250,000.00 loan she borrowed from
Aguila.[40] Despite Gemmas forfeiture of the right to present evidence on her
behalf, her alleged alteration of the 7 May 1996 Deed of Real Estate
Mortgage to shorten the maturity of the loan secured thereby was also
properly brushed aside by the CA. The double lie inherent in Antonias
assertion that the same deed was altered by Gemma to shorten the maturity
of the loan to 1997 instead of 1998 is instantly evident from paragraph 1 of
the documentwhich, consistent with 7 July 1996 maturity date provided in
the Promissory Noteshe executed,[41] specifically stated that (t)his contract is
for a period of Three (3) months from the date of this instrument.[42]
Antonias evident lack of credibility also impels us to uphold the CAs rejection
of her version of the circumstances surrounding the execution of the 4
November 1997 Deed of Absolute Sale in favor of Gemma. In disavowing
authorship of the signature appearing on said deed,[43] Antonia contradicted
the allegation in the Dela Peas complaint that she was misled by Gemma
into signing the same document.[44] The rule is well-settled that judicial
admissions like those made in the pleadings are binding and cannot be
contradicted, absent any showing that the same was made thru palpable
mistake.[45] Alongside that appearing on the Deed of Real Estate
Mortgage she admitted executing in favor of Aguila, Antonias signature on
the Deed of Absolute Sale was, moreover, found to have been written by one
and the same person in Questioned Document Report No. 482-802 prepared
by Zenaida Torres, the NBI Document Examiner to whom said specimen
signatures were submitted for analysis.[46] Parenthetically, this conclusion is
borne out by our comparison of the same signatures.
For all of Antonias denial of her receipt of any consideration for the sale of
the property in favor of Gemma,[47] the evidence on record also lend
credence to Gemmas version of the circumstances surrounding the
execution of the assailed 4 November 1997 Deed of Absolute
Sale. Consistent with Gemmas claim that said deed was executed to
facilitate the loans she obtained from FEBTC-BPI which were agreed to be
used as payment of the sums she expended to settle the outstanding
obligation to Aguila and the P50,000.00 she loaned Antonia,[48] the latter
admitted during her direct examination that she did not pay the loan she
obtained from Aguila.[49] Presented as witness of the Dela Peas, Alessandro
Almoden also admitted that Gemma had extended a loan in the sum
of P50,000.00 in favor of Antonia. Notably, Alessandro Almodens claim that
the title to the property had been delivered to Gemma as a consequence of
the transaction[50] is at odds with Antonias claim that she presented said
document to the Registry of Deeds when she verified the status of the
property prior to the filing of the complaint from which the instant suit
originated.[51]
With the material contradictions in the Dela Peas evidence, the CA cannot be
faulted for upholding the validity of the impugned 4 November 1997 Deed of
Absolute Sale.Having been duly notarized, said deed is a public
document which carries the evidentiary weight conferred upon it with respect
to its due execution.[52] Regarded as evidence of the facts therein expressed
in a clear, unequivocal manner,[53] public documents enjoy a presumption of
regularity which may only be rebutted by evidence so clear, strong and
convincing as to exclude all controversy as to falsity.[54] The burden of proof
to overcome said presumptions lies with the party contesting the notarial
document[55] like the Dela Peas who, unfortunately, failed to discharge said
onus. Absent clear and convincing evidence to contradict the same, we find
20
that the CA correctly pronounced the Deed of Absolute Sale was valid and
binding between Antonia and Gemma.
Since foreclosure of the mortgage is but the necessary consequence of non-
payment of the mortgage debt,[56] FEBTC-BPI was, likewise, acting well
within its rights as mortgagee when it foreclosed the real estate mortgage on
the property upon Gemmas failure to pay the loans secured
thereby. Executed on 26 November 1997, the mortgage predated Antonias
filing of an Affidavit of Adverse Claim with the Register of Deeds of Marikina
on 3 March 1998 and the annotation of a Notice of Lis Pendens on TCT No.
337834 on 10 December 1999. The mortgage directly and immediately
subjects the property upon which it is imposed, whoever the possessor may
be, to the fulfilment of the obligation for whose security it was
constituted.[57]When the principal obligation is not paid when due, the
mortgagee consequently has the right to foreclose the mortgage, sell the
property, and apply the proceeds of the sale to the satisfaction of the unpaid
loan.[58]
Finally, the resolution of this case cannot be affected by the principles that
banks like FEBTC-BPI are expected to exercise more care and prudence
than private individuals in that their dealings because their business is
impressed with public interest[59] and their standard practice is to conduct an
ocular inspection of the property offered to be mortgaged and verify the
genuineness of the title to determine the real owner or owners thereof,
hence, the inapplicability of the general rule that a mortgagee need not look
beyond the title does not apply to them.[60] The validity of the Deed of
Absolute Sale executed by Antonia in favor of Gemma having been upheld,
FEBTC-BPIs supposed failure to ascertain the ownership of the property has
been rendered immaterial for the purpose of determining the validity of the
mortgage executed in its favor as well as the subsequent extrajudicial
foreclosure thereof.
WHEREFORE, premises considered, the petition is DENIED for lack of merit
and the assailed CA Decision dated 31 March 2009 is,
accordingly, AFFIRMED in toto.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
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
21
petitioner to enter into a contract with them by executing a Deed of P300,000.00 to P150,000.00 and the attorney's fees which were reduced
Assignment in favor of the petitioner, assigning all their rights, titles and from P30,000.00 to P20,000.00.
interests over a construction contract executed by and between the spouses
and A. Soriano Corporation on June 19, 1974 for a consideration of In resolving the question of whether or not the trial court erred in holding that
P615,732.50 when, in truth, the spouses did not have any intention of the signature of respondent Lily Yulo in the special power of attorney was
remitting the proceeds of the said construction contract to the petitioner forged, the Court of Appeals said:
because despite the provisions in the Deed of Assignment that the spouses
The crucial issue to be determined is whether or not the signatures of the
shall, without compensation or costs, collect and receive in trust for the
appellee Lily Yulo in Exhibits B and B-1 are forged. Atty. Crispin Ordoña, the
petitioner all payments made upon the construction contract and shall remit
Notary Public, admitted in open court that the parties in the subject
to the petitioner all collections therefrom, the said spouses failed and refuse
documents did not sign their signatures in his presence. The same were
to remit the collections and instead, misappropriated the proceeds for their
already signed by the supposed parties and their supposed witnesses at the
own use and benefit, without the knowledge or consent of the petitioner.
time they were brought to him for ratification. We quote from the records the
The trial court issued the writ of attachment prayed for thereby enabling the pertinent testimony of Atty. Ordoña, thus:
petitioner to attach the properties of A & L Industries. Apparently not
Q. This document marked as Exhibit B-1, when this was presented to you by
contented with the order, the petitioner filed another motion for the
that common friend, June Enriquez, it was already typewritten, it was already
examination of attachment debtor, alleging that the properties attached by
accomplished, all typewritten.?
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. A. Yes, sir.
Private respondent Lily Yulo filed her answer with counterclaim, alleging that Q And the parties had already affixed their signatures in this document?
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 A. Yes, sir.
complaint; that they were already separated when the promissory note was
executed; that her signature in the special power of attorney was forged Q. In this document marked as Exhibit B although it appears here that this is
because she had never authorized Augusto Yulo in any capacity to transact an acknowledgment, you have not stated here that the principal actually
any business for and in behalf of A & L Industries, which is owned by her as acknowledged this document to be her voluntary act and deed?
a single proprietor, that she never got a single centavo from the proceeds of
A This in one of those things that escaped my attention. Actually I have not
the loan mentioned in the promissory note; and that as a result of the illegal
gone over the second page. I believed it was in order I signed it. (TSN pp.
attachment of her properties, which constituted the assets of the A & L
13-14, Hearing of Nov. 26, 1976).
Industries, the latter closed its business and was taken over by the new
owner. 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
After hearing, the trial court rendered judgment dismissing the petitioner's
acknowledged the said document to be her own voluntary act and deed, is a
complaint against the private respondent Lily Yulo and A & L Industries and
very strong and commanding circumstance to show that she did not appear
ordering the petitioner to pay the respondent Lily Yulo P660,000.00 as actual
personally before the said Notary Public and did not sign the document.
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. Additionally, the Notary Public admitted that, while June Enriquez is
admittedly a mutual friend of his and the defendant Augusta Yulo, and who is
The petitioner appealed. The Court of Appeals affirmed the trial court's
also an instrumental witness in said Exhibit B-1., he could not recognize or
decision except for the exemplary damages which it reduced from

22
tell which of the two signatures appearing therein, was the signature of this
June Enriquez.
Furthermore, as the issue is one of credibility of a witness, the findings and
conclusions of the trial court before whom said witness, Atty. Crispin Ordoña,
the Notary Public before whom the questioned document was supposedly
ratified and acknowledged, deserve great respect and are seldom disturbed
on appeal by appellate tribunals, since it is in the best and peculiar
advantage of determining and observing the conduct, demeanor and
deportment of a particular witness while he is testifying in court, an
opportunity not enjoyed by the appellate courts who merely have to rely on
the recorded proceedings which transpired in the court below, and the
records are bare of any circumstance of weight, which the trial court had
overlooked and which if duly considered, may radically affect the outcome of
the case.
On the other hand, the appellee Lily Yulo, to back up her claim of forgery of
her signature in Exhibit B-1, presented in court a handwriting expert witness
in the person of Police Captain Yakal Giron of the Integrated National Police
Training Command, and who is also a Document Examiner of the same
Command's Crime Laboratory at Fort Bonifacio, Metro Manila. His
experience as an examiner of questioned and disputed documents, in our
mind, is quite impressive. To qualify him as a handwriting expert, he declared
that he underwent extensive and actual studies and examination of disputed
or questioned document, both at the National Bureau of Investigation
Academy and National Bureau of Investigation Questioned Document
Laboratory, respectively, from July 1964, up to his appointment as Document
Examiner in June, 1975, and, to further his experience along this line, he
attended the 297th Annual Conference of the American Society of
Questioned Docurnent Examiners held at Seattle, Washington, in August
1971, as a representative of the Philippines, and likewise conducted an
observation of the present and modern trends of crime laboratories in the
West Coast, U.S.A., in 1971; that he likewise had conducted actual tests and
examination of about 100,000 documents, as requested by the different
courts, administrative, and governmental agencies of the Government,
substantial portions of which relate to actual court cases.
In concluding that the signatures of the appellee Lily Yulo, in the disputed
document in question (Exh. B-1), were all forgeries, and not her genuine
signature, the expert witness categorically recited and specified in open court
what he observed to be about twelve (12) glaring and material significant
differences, in his comparison of the signatures appearing in the genuine
specimen signatures of the said appellee and with those appearing in the
questioned document (Exhibit B-1). Indeed, we have likewise seen the
supposed notable differences, found in the standard or genuine signatures of
the appellee which were lifted and obtained in the official files of the
government, such as the Bureau of Internal Revenue on her income tax
returns, as compared to the pretended signature of the appellee appearing in
Exhibits B, B-1. It is also noteworthy to mention that the appellant did not
even bother to conduct a cross-examination of the handwriting expert
witness, Capt. Giron, neither did the appellant present another handwriting
expert, at least to counter-act or balance the appellee's handwriting expert.
Prescinding from the foregoing facts, we subscribe fully to the lower court's
observations that the signatures of the appellee Lily Yulo in the questioned
document (Exh. B-1) were forged. Hence, we find no factual basis to
disagree. (pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily Yulo was
forged or even if the attached properties were her exclusive property, the
same can be made answerable to the obligation because the said properties
form part of the conjugal partnership of the spouses Yulo, the appellate court
held that these contentions are without merit because there is strong
preponderant evidence to show that A & L Industries belongs exclusively to
respondent Lily Yulo, namely: a) The Certificate of Registration of A & L
Industries, issued by the Bureau of Commerce, showing that said business is
a single proprietorship, and that the registered owner thereof is only Lily
Yulo; b) The Mayor's Permit issued in favor of A & L Industries, by the
Caloocan City Mayor's Office showing compliance by said single
proprietorship company with the City Ordinance governing business
establishments; and c) The Special Power of Attorney itself, assuming but
without admitting its due execution, is tangible proof that Augusto Yulo has
no interest whatsoever in the A & L Industries, otherwise, there would have
been no necessity for the Special Power of Attorney if he is a part owner of
said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed the
findings of the trial court that there was bad faith on the part of the petitioner
as to entitle the private respondent to damages as shown not only by the fact
that the petitioner did not present the Deed of Assignment or the construction
agreement or any evidence whatsoever to support its claim of fraud on the
23
part of the private respondent and to justify the issuance of a preliminary
attachment, but also by the following findings:
Continuing and elaborating further on the appellant's mala fide actuations in
securing the writ of attachment, the lower court stated as follows:
Plaintiff not satisfied with the instant case where an order for attachment has
already been issued and enforced, on the strength of the same Promissory
Note (Exhibit"A"), utilizing the Deed of Chattel Mortgage (Exhibit "4"), filed a
foreclosure proceedings before the Office of the Sheriff of Caloocan
(Exhibit"6") foreclosing the remaining properties found inside the premises
formerly occupied by the A & L Industries. A minute examination of Exhibit
"4" will show that the contracting parties thereto, as appearing in par. 1
thereof, are Augusto Yulo, doing business under the style of A & L Industries
(should be A & L Glass Industries Corporation), as mortgagor and BA
Finance Corporation as mortgagee, thus the enforcement of the Chattel
Mortgage against the property of A & L Industries exclusively owned by Lily
T. Yulo appears to be without any factual or legal basis whatsoever. The
chattel mortgage, Exhibit "4" and the Promissory Note, Exhibit A, are based
on one and the same obligation. Plaintiff tried to enforce as it did enforce its
claim into two different modes a single obligation.
Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by
virtue of a complaint she filed with the Court of First Instance of Caloocan,
seeking annulment of the Promissory Note, the very basis of the plaintiff in
filing this complaint, immediately after the day it filed a Motion for the
Issuance of an Alias Writ of Preliminary Attachment . . .Yet, inspite of the
knowledge and the filing of this Motion to Suspend Proceedings, the Plaintiff
still filed a Motion for the Issuance of a Writ of Attachment dated February 6,
1976 before this court. To add insult to injury, plaintiff even filed a Motion for
Examination of the Attachment Debtor, although aware that Lily Yulo had
already denied participation in the execution of Exhibits "A" and "B". These
incidents and actions taken by plaintiff, to the thinking of the court, are
sufficient to prove and establish the element of bad faith and malice on the
part of plaintiff which may warrant the award of damages in favor of
defendant Lily Yulo. (Ibid., pp. 102-103).<äre||anº•1àw>
Indeed, the existence of evident bad faith on the appellant's part in
proceeding against the appellee Lily Yulo in the present case, may likewise
be distressed on the fact that its officer Mr. Abraham Co, did not even bother
to demand the production of at least the duplicate original of the Special
Power of Attorney (Exhibit B) and merely contended himself with a mere
xerox copy thereof, neither did he require a more specific authority from the
A & L Industries to contract the loan in question, since from the very content
and recitals of the disputed document, no authority, express or implied, has
been delegated or granted to August Yulo to contract a loan, especially with
the appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the petitioner
should have presented evidence to disprove or rebut the private respondent's
claim but it remained quiet and chose not to disturb the testimony and the
evidence presented by the private respondent to prove her claim.
In this petition for certiorari, the petitioner raises three issues. The first issue
deals with the appellate court's affirmance of the trial court's findings that the
signature of the private respondent on the Special Power of Attorney was
forged. According to the petitioner, the Court of Appeals disregarded the
direct mandate of Section 23, Rule 132 of the Rules of Court which states in
part that evidence of handwriting by comparison may be made "with writings
admitted or treated as genuine by the party against whom the evidence is
offered, or proved to be genuine to the satisfaction of the judge," and that
there is no evidence on record which proves or tends to prove the
genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as "standards" for
comparison with the alleged signature of the private respondent in the
Special Power of Attorney were those from the latter's residence certificates
in the years 1973, 1974 and 1975, her income tax returns for the years 1973
and 1975 and from a document on long bond paper dated May 18, 1977. Not
only were the signatures in the foregoing documents admitted by the private
respondent as hers but most of the said documents were used by the private
respondent in her transactions with the government. As was held in the case
of Plymouth Saving & Loan Assn. No. 2 v. Kassing (125 NE 488, 494):
We believe the true rule deduced from the authorities to be that the
genuineness of a "standard" writing may be established (1) by the admission
of the person sought to be charged with the disputed writing made at or for
the purposes of the trial or by his testimony; (2) by witnesses who saw the
standards written or to whom or in whose hearing the person sought to be
charged acknowledged the writing thereof; (3) by evidence showing that the
reputed writer of the standard has acquiesced in or recognized the same, or
24
that it has been adopted and acted upon by him his business transactions or
other concerns....
Furthermore, the judge found such signatures to be sufficient as standards.
In the case of Taylor-Wharton Iron & Steel Co. v. Earnshaw (156 N.E. 855,
856), it was held:
When a writing is offered as a standard of comparison it is for the presiding
judge to decide whether it is the handwriting of the party to be charged.
Unless his finding is founded upon error of law, or upon evidence which is, as
matter of law, insufficient to justify the finding, this court will not revise it upon
exceptions." (Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuñez v.
Perry, 113 Mass, 274, 276.)
We cannot find any error on the part of the trial judge in using the above
documents as standards and also in giving credence to the expert witness
presented by the private respondent whose testimony the petitioner failed to
rebut and whose credibility it likewise failed to impeach. But more important
is the fact that the unrebutted handwriting expert's testimony noted twelve
(12) glaring and material differences in the alleged signature of the private
respondent in the Special Power of Attorney as compared with the specimen
signatures, something which the appellate court also took into account.
In Cesar v. Sandiganbayan (134 SCRA 105, 132), we ruled:
Mr. Maniwang pointed to other significant divergences and distinctive
characteristics between the sample signatures and the signatures on the
questioned checks in his report which the court's Presiding Justice kept
mentioning during Maniwang's testimony.
In the course of his cross-examination, NBI expert Tabayoyong admitted that
he saw the differences between the exemplars used and the questioned
signatures but he dismissed the differences because he did not consider
them fundamental. We rule that significant differences are more fundamental
than a few similarities. A forger always strives to master some similarities.
The second issue raised by the petitioner is that while it is true that A & L
Industries is a single proprietorship and the registered owner thereof is
private respondent Lily Yulo, the said proprietorship was established during
the marriage and its assets were also acquired during the same. Therefore, it
is presumed that this property forms part of the conjugal partnership of the
spouses Augusto and Lily Yulo and thus, could be held liable for the
obligations contracted by Augusto Yulo, as administrator of the partnership.
There is no dispute that A & L Industries was established during the marriage
of Augusta and Lily Yulo and therefore the same is presumed conjugal and
the fact that it was registered in the name of only one of the spouses does
not destroy its conjugal nature (See Mendoza v. Reyes, 124 SCRA 161,
165). However, for the said property to be held liable, the obligation
contracted by the husband must have redounded to the benefit of the
conjugal partnership under Article 161 of the Civil Code. In the present case,
the obligation which the petitioner is seeking to enforce against the conjugal
property managed by the private respondent Lily Yulo was undoubtedly
contracted by Augusto Yulo for his own benefit because at the time he
incurred the obligation he had already abandoned his family and had left their
conjugal home. Worse, he made it appear that he was duly authorized by his
wife in behalf of A & L Industries, to procure such loan from the petitioner.
Clearly, to make A & L Industries liable now for the said loan would be unjust
and contrary to the express provision of the Civil Code. As we have ruled
in Luzon Surety Co., Inc. v. De Gracia (30 SCRA 111, 115-117):
As explained in the decision now under review: "It is true that the husband is
the administrator of the conjugal property pursuant to the provisions of Art.
163 of the new Civil Code. However, as such administrator the only
obligations incurred by the husband that are chargeable against the conjugal
property are those incurred in the legitimate pursuit of his career, profession
or business with the honest belief that he is doing right for the benefit of the
family. This is not true in the case at bar for we believe that the husband in
acting as guarantor or surety for another in an indemnity agreement as that
involved in this case did not act for the benefit of the conjugal partnership.
Such inference is more emphatic in this case, when no proof is presented
that Vicente Garcia in acting as surety or guarantor received consideration
therefore, which may redound to the benefit of the conjugal partnership.(Ibid,
pp. 46-47).
xxx xxx xxx
xxx xxx xxx
In the most categorical language, a conjugal partnership under that provision
is liable only for such "debts and obligations contracted by the husband for
the benefit of the conjugal partnership." There must be the requisite showing
then of some advantage which clearly accrued to the welfare of the spouses.
There is none in this case.
xxx xxx xxx
25
Moreover, it would negate the plain object of the additional requirement in the
present Civil Code that a debt contracted by the husband to bind a conjugal
partnership must redound to its benefit. That is still another provision
indicative of the solicitude and tender regard that the law manifests for the
family as a unit. Its interest is paramount; its welfare uppermost in the minds
of the codifiers and legislators.
We, therefore, rule that the petitioner cannot enforce the obligation
contracted by Augusto Yulo against his conjugal properties with respondent
Lily Yulo. Thus, it follows that the writ of attachment cannot issue against the
said properties.
Finally, the third issue assails the award of actual damages according to the
petitioner, both the lower court and the appellate court overlooked the fact
that the properties referred to are still subject to a levy on attachment. They
are, therefore, still under custodia legis and thus, the assailed decision
should have included a declaration as to who is entitled to the attached
properties and that assuming arguendo that the attachment was erroneous,
the lower court should have ordered the sheriff to return to the private
respondent the attached properties instead of condemning the petitioner to
pay the value thereof by way of actual damages.
In the case of Lazatin v. Twaño (2 SCRA 842, 847), we ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59, does not prescribed the
remedies available to the attachment defendant in case of a wrongful
attachment, but merely provides an action for recovery upon the bond, based
on the undertaking therein made and not upon the liability arising from a
tortuous act, like the malicious suing out of an attachment. Under the first,
where malice is not essential, the attachment defendant, is entitled to recover
only the actual damages sustained by him by reason of the attachment.
Under the second, where the attachment is maliciously sued out, the
damages recoverable may include a compensation for every injury to his
credit, business or feed (Tyler v. Mahoney, 168 NC 237, 84 SE 362;
Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE 234). ...
The question before us, therefore, is whether the attachment of the
properties of A & L Industries was wrongful so as to entitle the petitioner to
actual damages only or whether the said attachment was made in bad faith
and with malice to warrant the award of other kinds of damages. Moreover, if
the private respondent is entitled only to actual damages, was the court
justified in ordering the petitioner to pay for the value of the attached
properties instead of ordering the return of the said properties to the private
respondent Yulo ?
Both the trial and appellate courts found that there was bad faith on the part
of the petitioner in securing the writ of attachment. We do not think so. "An
attachment may be said to be wrongful when, for instance, the plaintiff has
no cause of action, or that there is no true ground therefore, or that the
plaintiff has a sufficient security other than the property attached, which is
tantamout to saying that the plaintiff is not entitled to attachment because the
requirements of entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48,
Section 4, Rule 57, Francisco, Revised Rules of Court).
Although the petitioner failed to prove the ground relied upon for the issuance
of the writ of attachment, this failure cannot be equated with bad faith or
malicious intent. The steps which were taken by the petitioner to ensure the
security of its claim were premised, on the firm belief that the properties
involved could be made answerable for the unpaid obligation due it. There is
no question that a loan in the amount of P591,003.59 was borrowed from the
bank.
We, thus, find that the petitioner is liable only for actual damages and not for
exemplary damages and attorney's fees. Respondent Lily Yulo has
manifested before this Court that she no longer desires the return of the
attached properties since the said attachment caused her to close down the
business. From that time she has become a mere employee of the new
owner of the premises. She has grave doubts as to the running condition of
the attached machineries and equipments considering that the attachment
was effected way back in 1975. She states as a matter of fact that the
petitioner has already caused the sale of the machineries for fear that they
might be destroyed due to prolonged litigation. We, therefore, deem it just
and equitable to allow private respondent Lily Yulo to recover actual
damages based on the value of the attached properties as proven in the trial
court, in the amount of P660,000.00. In turn, if there are any remaining
attached properties, they should be permanently released to herein
petitioner.
We cannot, however, sustain the award of P500,000.00 representing
unrealized profits because this amount was not proved or justified before the
trial court. The basis of the alleged unearned profits is too speculative and
26
conjectural to show actual damages for a future period. The private
respondent failed to present reports on the average actual profits earned by
her business and other evidence of profitability which are necessary to prove
her claim for the said amount (See G. A. Machineries, Inc. v. Yaptinchay, 126
SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the petitioner liable for
P500,000.00 actual damages representing unrealized profits, P150,000.00
for exemplary damages and P20,000.00 for attorney's fees. As stated earlier,
the attached properties, should be released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE
and the petitioner is ordered to pay the private respondent Lily Yulo the
amount of SIX HUNDRED SIXTY THOUSAND PESOS (P660,000.00) as
actual damages. The remaining properties subject of the attachment are
ordered released in favor of the petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 79734 December 8, 1988
MARMONT RESORT HOTEL ENTERPRISES, petitioner,
vs.
FEDERICO GUIANG, AURORA GUIANG, and COURT OF
APPEALS, respondents.
Isagani M. Jungco for petitioner.
FELICIANO, J.:
The present Petition for Review seeks to set aside the Decision dated 9
December 1986 of the Court of Appeals in CA-G.R. CV 03299. The appellate
court affirmed a Decision dated 31 May 1983 of Branch 83 of the Regional
Trial Court of Olongapo City dismissing the complaint in Civil Case No. 2896-
C filed by petitioner company against private respondent spouses.
On 2 May 1975, a Memorandum of Agreement was executed between Maris
Trading and petitioner Marmont Resort Hotel Enterprises, Inc. ("Marmont"), a
corporation engaged in the hotel and resort business with office and
establishment at Olongapo City. Under the agreement, Maris Trading
undertook to drill for water and to provide all equipment necessary to install
and complete a water supply facility to service the Marmont Resort Hotel in
Olongapo, for a stipulated fee of P40,000.00. In fulfillment of its contract,
Maris Trading drilled a well and installed a water pump on a portion of a
parcel of land situated in Olongapo City, then occupied by respondent
spouses Federico and Aurora Guiang.
Five (5) months later, a second Memorandum of Agreement was executed
between Maris Trading and Aurora Guiang, with Federico Guiang signing as
witness. This second agreement in essential part read: 1
That the First Party [Maris Trading] has dug, drilled and tapped water source
for Marmont Resort, located at Bo. Barretto, Olongapo City in accordance
with their agreement executed on May 2, 1975 and notarized before Isagani
M. Jungco, Notary Public and entered as Doc. No. 166; Page No. 135; Book
No. XV; Series of 1975.
That the First Party has erected, built and drilled for the water source of
Marmont Resort on the land owned by the Second Party [Aurora Guiang] at
the corner of J. Montelibano Street and Maquinaya Drive (Provincial Road)
with the latter's permission.
That for and in consideration of the sum of P1,500.00 the Second Party
hereby Sell, Transfer and Cede all possessory rights, interest and claims
over that portion of the lot wherein the water source of Marmont Resort is
located unto and in favor of Maris Trading.
After some time, the water supply of the Marmont Resort Hotel became
inadequate to meet the hotel's water requirements. Petitioner Marmont
secured the services of another contractor (the name of which was not
disclosed), which suggested that in addition to the existing water pump, a
submersible pump be installed to increase the pressure and improve the flow
of water to the hotel. Accordingly, Juan Montelibano, Jr., manager of the
Marmont Resort Hotel, sought permission from the Guiang spouses to
inspect the water pump which had been installed on the portion of the land
previously occupied by the spouses and to make the necessary additional
installations thereon. No such permission, however, was granted.
27
On 13 May 1980, petitioner Marmont filed a Complaint 2 against the Guiang
spouses for damages resulting from their refusal to allow representatives of
petitioner and the second contractor firm entry into the water facility site. The
claimed damages were broken down as follows: (a) P10,000.00 representing
the amount advanced in payment to the second contractor; (b) P40,000.00
representing the total project cost of the installation made by Maris Trading:
(c) P50,000.00 representing additional expenses incurred and incidental
losses resulting from failure of the original pump to cope with the water
requirements of the Marmont Resort Hotel; and (d) P10,000.00 for Attorney's
fees.
In their Answer, 3 the Guiang spouses (defendants below) denied having had
any previous knowledge of the first Memorandum of Agreement and asserted
that the second Memorandum of Agreement was invalid for not having been
executed in accordance with law. The spouses added a counterclaim for
damages in the amount of P200,000.00.
On 2 October 1980, at the pre-trial conference, the parties agreed on the
following stipulation of facts and issues embodied in a Pre-Trial Order:4
III
In addition to the admission made elsewhere in their respective pleadings,
the parties entered into the following stipulation of facts:
1. Plaintiff is a corporation duly organized and existing under the laws of the
Philippines with office at Montelibano Street, Barrio Barretto, Olongapo City;
2. The contract referred to in paragraph 2 of the complaint between the
plaintiff and Maris Trading is contained in a document captioned
Memorandum Agreement executed on May 2, 1975, a xerox copy of which is
Annex 'A' of plaintiffs complaint;
3. On October 7, 1975, the Maris Trading represented by Ceferino Cabral
and defendant Aurora Guiang entered into a memorandum agreement;
4. The portion sold under Annex 'A' is still a part of the public domain.
IV
The plaintiff marked the following exhibits in evidence:
Exhibit 'A'-Memorandum Agreement dated May 2, 1975
Exhibit 'B-Memorandum Agreement dated October 7, 1975
V
The issues left to be ventilated during the trial are the following:
1. Whether defendants has actually prohibited the plaintiff [from) making
repairs, [on] the pump constructed by Maris Trading for the plaintiff under the
agreement Exhibit 'A,' if so;
2. Whether defendants [have] the right to prohibit the Maris Trading from
performing the repairs and if not
3. Whether defendants are liable for damages under the human relations
provision of the Civil Code.
On I January 1980, the Guiang spouses moved to dismiss the
Complaint.5 The spouses there assailed the validity of the second
Memorandum of Agreement, alleging that the subject matter thereof involved
conjugal property alienated by Aurora Guiang without the marital consent of
her husband, Federico Guiang. Further, it was alleged that the land upon
which the hotel's water supply facility was installed-and which the Guiang
spouses occupied-formed part of the public domain and was then still the
subject of a Miscellaneous Sales Application submitted by Federico Guiang.
The Motion to Dismiss, however, was denied by the trial court.
No evidence having been adduced by the Guiang spouses on their behalf,
the case was submitted for derision. On 31 May 1983, the trial court
rendered a decision, 6 dismissing the complaint. The trial court found that
Aurora Guiang had validly alienated her rights over the disputed portion of
land to Maris Trading, but held that the evidence failed to show that Maris
Trading, in turn, had transferred such rights to petitioner Marmont.
Petitioner Marmont appealed to the Court of Appeals which affirmed the
decision of the trial court and dismissed the appeal for lack of merit. 7 The
appellate court, citing Section 55, Rule 132 of the Revised Rules of Court,
held that the first and second Memoranda of Agreement could not legally be
considered by the court as included in the body of evidence of the case, as
neither document had been formally offered in evidence by either party. It
also held that, in any event, neither document showed that Marmont had in
fact acquired from Maris Trading whatever rights the latter had over the land
in dispute.
28
In the instant Petition for Review, petitioner assigns the following errors:8
1. The Court of Appeals erred in not considering the Memorandum of
Agreement of May 2, 1975 and 7 October 1975 as the same were already
admitted in the pre-trial order; and
2. The Court of Appeals erred in deciding that ownership belongs to Maris
Trading hence, private respondent Guiang can prohibit Marmont Resort from
entering the land.
We find for the petitioner.
Both the trial and appellate courts held that the first and second Memoranda
of Agreement are not properly considered as forming part of the record of
this case, because neither had been formally presented and offered in
evidence at the trial of Civil Case No. 2896-C. The record shows, however,
as noted earlier, that at the pre-trial conference held on 2 October 1980, both
petitioner Marmont and respondent spouses had agreed upon a stipulation of
facts and issues recognizing the existence of those same two (2)
agreements. Such stipulation of facts constitutes a judicial admission, the
veracity of which requires no further proof and which may be controverted
only upon a clear showing that such stipulation had been entered into
through "palpable mistake." On this point, Section 2, Rule 129 of the Revised
Rules of Court provides:
Section 2. Judicial Admissions.--Admission made by the parties in the
pleadings, or in the course of the trial or other proceedings do not require
proof and cannot be contradicted unless previously shown to have been
made through palpable mistake. (emphasis supplied)
There has been no showing and respondent spouses do not claim that
"palpable mistake" had intervened here, in respect of the formulation of the
facts stipulated by the parties at the pre-trial conference. Absent any such
showing, that stipulation of facts is incontrovertible, 9 and may be relied upon
by the courts. 10 Respondent spouses are estopped from raising as an issue
in this case the existence and admissibility in evidence of both the first and
second Memoranda of Agreement which, having been marked as exhibits
during pre-trial, properly form part of the record of this case, even though not
formally offered in evidence after trial. 11
We consider briefly respondent spouses' argument that the second
Memorandum of Agreement was invalid for having been executed by Aurora
Guiang without the marital consent of Federico, contrary to Articles 165 and
172 of the Civil Code.
Article 165 and 172 state the general principle under our civil law, that the
wife may not validly bind the conjugal partnership without the consent of the
husband, who is legally the administrator of the conjugal partnership. In this
particular case, however, as noted earlier, the second Memorandum of
Agreement, although ostensibly contracted solely by Aurora Guiang with
Maris Trading, was also signed by her husband Federico, as one of the
witnesses thereto. This circumstance indicates not only that Federico was
present during the execution of the agreement but also that he had, in fact,
given his consent to the execution thereof by his wife Aurora. Otherwise, he
should not have appended his signature to the document as witness.
Respondent spouses cannot now disown the second Memorandum of
Agreement as their effective consent thereto is sufficiently manifested in the
document itself.
That the land in dispute was, at the time of execution of the second
Memorandum of Agreement, public land, is of no consequence here.
Pending approval of Federico's Miscellaneous Sales Application over said
land, respondent spouses enjoyed possessory and other rights over the
same which could validly be assigned or transferred in favor of third persons.
In this case, respondent spouses chose to transfer such rights (over the
portion upon which the water pump was installed) to Maris Trading, as
evidenced by the fourth paragraph of the second Memorandum of
Agreement, quoted earlier. Furthermore, assuming (though only for the sake
of argument) that the alienation to Maris Trading was legally objectionable,
respondent spouses are not the proper parties to raise the issue of invalidity,
they and Maris Trading being in pari delicto. Only the government may raise
that issue.
Finally, respondent spouses allege that dismissal of the complaint by the trial
court was not improper as petitioner Marmont was not privy to the second
Memorandum of Agreement, and that accordingly, petitioner had no valid
cause of action against respondents.
A closer scrutiny of the second and third paragraphs of the second
Memorandum of Agreement discloses that the first Memorandum of
Agreement, including the obligations imposed thereunder upon Maris
Trading, had been acknowledged therein:
29
That the First Party (i.e., Maris Trading) has dug, drilled and tapped water
source for Marmont Resort, located at Bo. Barretto, Olongapo City in
accordance with their agreement executed on May 2, 1975and notarized
before Isagani M. Jungco, Notary Public and entered as Doc. No. 166; Page
No. 135; Book No. XV; Series of 1975.
That the First Party has erected, built and drilled for the water source of
Marmont Resort on the land owned by the Second Party [respondent
spouses] at the corner of J. Montelibano Street and Maquinaya Drive
(Provincial Road) with the latter's permission;... (Emphasis supplied)
The above paragraphs establish, among other things, that construction work
had been performed by Maris Trading on the land occupied by respondent
spouses; that such construction work had been performed in accordance
with terms and conditions stipulated in the first Memorandum of Agreement
and that the purpose of the work was to build a water supply facility for
petitioner Marmont. The same excerpts also show that the work so
performed was with the knowledge and consent of the Guiang spouses, who
were then occupying the land.
It is clear from the foregoing stipulations that petitioner Marmont was to
benefit from the second Memorandum of Agreement. In fact, said stipulations
appear to have been designed precisely to benefit petitioner and, thus,
partake of the nature of stipulations pour autrui, contemplated in Article 1311
of the Civil Code.
A stipulation pour autrui is a stipulation in favor of a third person conferring a
clear and deliberate favor upon him, which stipulation is found in a contract
entered into by parties neither of whom acted as agent of the
beneficiary. 12We believe and so hold that the purpose and intent of the
stipulating parties (Maris Trading and respondent spouses) to benefit the
third person (petitioner Marmont) is sufficiently clear in the second
Memorandum of Agreement. Marmont was not of course a party to that
second Agreement but, as correctly pointed out by the trial court and the
appellate court, the respondent spouses could not have prevented Maris
Trading from entering the property possessory rights over which had thus
been acquired by Maris Trading. That respondent t spouses remained in
physical possession of that particular bit of land, is of no moment; they did so
simply upon the sufferance of Maris Trading. Had Maris Trading, and not the
respondent spouses, been in physical possession, we believe that Marmont
would have been similarly entitled to compel Maris Trading to give it
(Marmont) access to the site involved. The two (2) courts below failed to take
adequate account of the fact that the sole purpose of Maris Trading in
acquiring possessory rights over that specific portion of the land where well
and pump and piping had been installed, was to supply the water
requirements of petitioner's hotel. That said purpose was known by
respondent spouses, is made explicit by the second Memorandum of
Agreement. Maris Trading itself had no need for a water supply facility;
neither did the respondent spouses. The water facility was intended solely for
Marmont Resort Hotel. The interest of Marmont cannot therefore be regarded
as merely "incidental ." 13 Finally, even if it be assumed (for purposes of
argument merely) that the second Memorandum of Agreement did not
constitute a stipulation pour autrui, still respondent spouses, in the
circumstances of this case, must be regarded as having acted contrary to the
principles of honesty, good faith and fair dealing embodied in Articles 19 and
21 of the Civil Code when they refused petitioner Marmont access to the
water facility to inspect and repair the same and to increase its capacity and
thereby to benefit from it. In so doing, respondent spouses forced petitioner
Marmont to locate an alternative source of water for its hotel which of course
involved expenditure of money and perhaps loss of hotel revenues. We
believe they should respond in damages.
The evidence on record, however, appears insufficient for determination of
the amount of damages for which respondent spouses should be liable. For
this reason, the Court is compelled to remand this case to the trial court for
determination of such damages in appropriate further proceedings.
WHEREFORE, the Petition for Review on certiorari is hereby GRANTED.
The Decision dated 9 December 1986 of the Court of Appeals in C.A. —
G.R. CV No. 03299, as well as the Decision dated 31 May 1983 of the
Regional Trial Court of Olongapo City in Civil Case No. 2896-C, are
REVERSED. This case is REMANDED to the trial court for determination, in
further proceedings consistent with this decision, of the amount of petitioner
is entitled to receive from respondent spouses.
No pronouncement as to costs.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 143382 : November 29, 2006]
30
 SECURITY BANK and TRUST COMPANY, Petitioner, v. MAR
TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL
J. LACSON and RICARDO A. LOPA, Respondents.
DECISION
CORONA, J.:
May the conjugal partnership be held liable for an indemnity
agreement entered into by the husband to accommodate a third
party?cralawlib rary
This issue confronts us in this Petition for Review
on Certiorari assailing the November 9, 1999 decision1of the
Court of Appeals (CA) in CA-G.R. CV No. 48107.
On May 7, 1980, respondent Mar Tierra Corporation, through its
president, Wilfrido C. Martinez, applied for a P12,000,000 credit
accommodation with petitioner Security Bank and Trust
Company. Petitioner approved the application and entered into
a credit line agreement with respondent corporation. It was
secured by an indemnity agreement executed by individual
respondents Wilfrido C. Martinez, Miguel J. Lacson and Ricardo
A. Lopa who bound themselves jointly and severally with
respondent corporation for the payment of the loan.
On July 2, 1980, the credit line agreement was amended and
increased to P14,000,000. Individual respondents
correspondingly executed a new indemnity agreement in favor
of the bank to secure the increased credit line.
On September 25, 1981, respondent corporation availed of its
credit line and received the sum of P9,952,000 which it
undertook to pay on or before November 30, 1981. It was able
to pay P4,648,000 for the principal loan and P2,729,195.56 for
the interest and other charges. However, respondent
corporation was not able to pay the balance as it suffered
business reversals, eventually ceasing operations in 1984.
Unable to collect the balance of the loan, petitioner filed a
complaint for a sum of money with a prayer for preliminary
attachment against respondent corporation and individual
respondents in the Regional Trial Court (RTC) of Makati, Branch
66. It was docketed as Civil Case No. 3947.
Subsequently, however, petitioner had the case dismissed with
respect to individual respondents Lacson and Lopa,2 leaving
Martinez as the remaining individual respondent.
On August 10, 1982, the RTC issued a writ of attachment on all
real and personal properties of respondent corporation and
individual respondent Martinez. As a consequence, the conjugal
house and lot of the spouses Wilfrido and Josefina Martinez in
Barrio Calaanan, Caloocan City covered by Transfer Certificate
of Title (TCT) No. 49158 was levied on.
The RTC rendered its decision3 on June 20, 1994. It held
respondent corporation and individual respondent Martinez
jointly and severally liable to petitioner for P5,304,000 plus
12% interest per annum and 5% penalty commencing on June
21, 1982 until fully paid, plus P10,000 as attorney's fees. It,
however, found that the obligation contracted by individual
respondent Martinez did not redound to the benefit of his
family, hence, it ordered the lifting of the attachment on the
conjugal house and lot of the spouses Martinez.
Dissatisfied with the RTC decision, petitioner appealed to the CA
but the appellate court affirmed the trial court's decision in toto.
Petitioner sought reconsideration but it was denied. Hence, this
petition.
Petitioner makes two basic assertions: (1) the RTC and CA erred
in finding that respondent corporation availed of P9,952,000
only from its credit line and not the entire P14,000,000 and (2)
the RTC and CA were wrong in ruling that the conjugal
partnership of the Martinez spouses could not be held liable for
the obligation incurred by individual respondent Martinez.
We uphold the CA.
Factual findings of the CA, affirming those of the trial court, will
not be disturbed on appeal but must be accorded great
31
weight.4 These findings are conclusive not only on the parties
but on this Court as well.5
The CA affirmed the finding of the RTC that the amount availed
of by respondent corporation from its credit line with petitioner
was only P9,952,000. Both courts correctly pointed out that
petitioner itself admitted this amount when it alleged in
paragraph seven of its complaint that respondent corporation
"borrowed and received the principal sum
of P9,952,000."6 Petitioner was therefore bound by the factual
finding of the appellate and trial courts, as well as by its own
judicial admission, on this particular point.
At any rate, the issue of the amount actually availed of by
respondent corporation is factual. It is not within the ambit of
this Court's discretionary power of judicial review under Rule 45
of the Rules of Court which is concerned solely with questions of
law.7
We now move on to the principal issue in this case.
Under Article 161(1) of the Civil Code,8 the conjugal partnership
is liable for "all debts and obligations contracted by the husband
for the benefit of the conjugal partnership." But when are debts
and obligations contracted by the husband alone considered for
the benefit of and therefore chargeable against the conjugal
partnership? Is a surety agreement or an accommodation
contract entered into by the husband in favor of his employer
within the contemplation of the said provision? cralawlibra ry
We ruled as early as 1969 in Luzon Surety Co., Inc. v. de
Garcia9 that, in acting as a guarantor or surety for another, the
husband does not act for the benefit of the conjugal partnership
as the benefit is clearly intended for a third party.
In Ayala Investment and Development Corporation v. Court of
Appeals,10 we ruled that, if the husband himself is the principal
obligor in the contract, i.e., the direct recipient of the money
and services to be used in or for his own business or profession,
the transaction falls within the term "obligations for the benefit
of the conjugal partnership." In other words, where the husband
contracts an obligation on behalf of the family business, there is
a legal presumption that such obligation redounds to the benefit
of the conjugal partnership.11
On the other hand, if the money or services are given to
another person or entity and the husband acted only as a surety
or guarantor, the transaction cannot by itself be deemed an
obligation for the benefit of the conjugal partnership.12 It is for
the benefit of the principal debtor and not for the surety or his
family. No presumption is raised that, when a husband enters
into a contract of surety or accommodation agreement, it is for
the benefit of the conjugal partnership. Proof must be presented
to establish the benefit redounding to the conjugal
partnership.13 In the absence of any showing of benefit received
by it, the conjugal partnership cannot be held liable on an
indemnity agreement executed by the husband to accommodate
a third party.14
In this case, the principal contract, the credit line agreement
between petitioner and respondent corporation, was solely for
the benefit of the latter. The accessory contract (the indemnity
agreement) under which individual respondent Martinez
assumed the obligation of a surety for respondent corporation
was similarly for the latter's benefit. Petitioner had the burden
of proving that the conjugal partnership of the spouses Martinez
benefited from the transaction. It failed to discharge that
burden.
To hold the conjugal partnership liable for an obligation
pertaining to the husband alone defeats the objective of the
Civil Code to protect the solidarity and well being of the family
as a unit.15 The underlying concern of the law is the
conservation of the conjugal partnership.16 Hence, it limits the
liability of the conjugal partnership only to debts and obligations
contracted by the husband for the benefit of the conjugal
partnership.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
32
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22320 July 29, 1968
MERCEDES RUTH COBB-PEREZ and DAMASO P. PEREZ, petitioners,
vs.
HON. GREGORIO LANTIN, Judge of the Court of First Instance of
Manila,
RICARDO P. HERMOSO and the CITY SHERIFF OF
MANILA, respondents.
Crispin D. Baizas and Associates for petitioners.
Isidro T. Almeda for respondents.
CASTRO, J.:
This is a motion for partial reconsideration of this Court's decision of May 22,
1968, specifically directed against the following observation therein made:
We feel compelled to observe that during the protracted litigation below, the
petitioners resorted to a series of actions and petitions, at some stages
alternatingly, abetted by their counsel, for the sole purpose of thwarting the
execution of a simple money judgment which has long become final and
executory. Some of the actions were filed, only to be abandoned or
withdrawn. The petitioners and their counsel, far from viewing courts as
sanctuaries for those who seek justice, have tried to use them to subvert the
very ends of justice.
Corollarily, this Court assessed treble costs against the petitioners, to "be
paid by their counsel.".
The herein movants, Attys. Crispin D. Baizas and A. N. Bolinas, counsels for
the petitioners, while submitting to the judgment on the merits, seek
reconsideration of the decision in so far as it reflects adversely upon their
"professional conduct" and condemns them to pay the treble costs adjudged
against their clients.
At first blush, the motion for reconsideration presents a semblance of merit.
After mature deliberation and patient reprobing into the records of the case,
however, we are of the firmer conviction that the protracted litigation, alluded
to in the above-quoted portion of our decision, was designed to cause delay,
and the active participation of the petitioners' counsels in this adventure is
patent.
After November 15, 1962 when the Court of Appeals rendered judgment
sustaining Damaso Perez' position with respect to the extent of the levy, the
subsequent proceedings interposed alternatingly by the petitioner spouses
were obviously quixotic maneuvers expected to be overthrown by the courts
but calculated to delay an execution long overdue.
Had the petitioners and their counsels seriously believed that the levied
shares of stock were conjugal property, why did they not adopt this position
from the very start, or, at the latest, in CA-G.R. 29962-R, wherein Damaso
Perez challenged the legality of the levy's coverage, in order to end the
litigation with reasonable dispatch? They chose, however, to attack the
execution in a piecemeal fashion, causing the postponement of the projected
execution sale six times. More than eight years after the finality of the
judgment have passed, and the same has yet to be satisfied.
In a determined effort to prolong the litigation, the Perez spouses, as
represented by their counsels, sought the issuance of preliminary injunctions
to restrain the execution of the final judgment in civil case 39407 from courts
which did not have jurisdiction and which would, as expected, initially or
ultimately deny their prayer. For instance, after Damaso Perez bowed out
temporarily from the scene following the rendition of the aforementioned
Court of Appeals decision, his wife, Mercedez, Ruth Cobb-Perez, intruded
into the controversy and asked for an ex parte writ of preliminary injunction
from the Court of First Instance of Rizal in connection with civil case 7532
which she filed with the said court, knowing fully well that the basic civil case
39407 was decided by the Court of First Instance of Manila (Branch VII
presided by the respondent Judge Lantin), which latter court was the proper
forum for any action relative to the execution. Judge Eulogio Mencias of the
Court of First Instance of Rizal, looking to Acosta vs. Alvendia (L-14598,
October 31, 1960), which held that courts of first instance have no power to
restrain acts outside their territorial jurisdictions, lifted on October 4, 1963 the
ex parte writ which he previously issued enjoining the respondent sheriff from
carrying out the execution sale. It is clear, however, that Mrs. Perez and her
counsels, the movants, knew or ought to have known beforehand that the
Court of First Instance of Rizal did not have jurisdiction to issue the writ
which Mrs. Perez herself sought, and, anticipating the recall of the writ
33
improvidently issued, on September 3, 1963, a month before the said writ
was actually lifted, filed in the basic civil case 39407 an urgent motion to lift
the writ of execution issued on August 15, 1961, alleging as justification the
conjugal nature of the levied shares of stock and the personal nature of
Damaso Perez' judgment debt, the very same reasons advanced in civil case
7532 which was then still pending in the Court of First Instance of Rizal.
Incidentally, Mrs. Perez failed to adduce any evidence in support of her
aforesaid urgent motion, as in fact neither she nor her counsels appeared
during the scheduled hearing, prompting the respondent judge to issue the
following order:
When the urgent motion to recall or lift writ of execution was called this
morning for hearing, counsel for the movant did not appear despite the fact
that he had been duly notified of the motion for hearing. In view thereof the
court assumes that he is waiving his right to present evidence in support of
his urgent motion to recall or lift writ of execution. Said urgent motion is
therefore deemed submitted for resolution.
Despite the recall of the aforementioned writ of injunction by Judge Mencias
on a disclaimer of jurisdiction (since the execution sought to be enjoined was
ordered by another tribunal), Mrs. Perez, now assisted by her husband who
had staged a comeback, prayed for the issuance of another injunction, this
time from Branch XXII of the Court of First Instance of Manila (not the same
Branch which issued the controverted writ of execution), in connection with
civil case 7532, then still pending in the Court of First Instance of Rizal. As
most probably anticipated anew by the Perez spouses and their counsels,
Judge Alikpala, presiding judge of Branch XXII, on November 8, 1963 denied
the preliminary injunction sought, on the ground, among others, that he had
no power to interfere by injunction with the judgment or decree of a court of
concurrent or coordinate jurisdiction. On the very day the injunction was
denied, Damaso Perez, as if expecting the reversal from Judge Alikpala, was
already prepared with another "remedy," as in fact on that day, November 8,
1963, he filed in the basic civil case 39407 an "Urgent Motion for
Reconsideration" of the order of October 19, 1963, which denied his wife's
above-mentioned motion to recall the controverted writ of execution.
The foregoing motion, far from seriously seeking the reconsideration of the
order of October 19, 1963, which in the first place Damaso Perez could not
legally do for he was not even a party to the denied "Urgent Motion to Recall
Writ of Execution" (filed by his wife alone), was merely an offer to replace the
levied stocks with supposed cash dividends due to the Perez spouses as
stockholders in the Republic Bank.1 As a matter of fact, when the motion was
set for hearing on December 21, 1963, the counsels for Damaso Perez
promised to produce the said cash dividends within five days, but the
promise was never fulfilled.2 Consequently, the respondent Judge on
January 4, 1964, denied the said motion for reconsideration.
The above exposition of the circumstances relative to the protracted litigation
clearly negates the avowal of the movants that "in none of the various
incidents in the case at bar has any particular counsel of petitioners acted
with deliberate aforethought to delay the enforcement of the judgment in Civil
Case No. 39407." From the chronology of antecedent events, the fact
becomes inescapable that the Perez spouses, coached by their counsels,
had sallied forth on a strategem of "remedies" projected to foil the lawful
execution of a simple money judgment. It is equally obvious that they
foreshadowed their own reversals in the "remedies" they ventured to adopt,
such that even before, one remedy had been exhausted, they interposed
another until the case reached this Court for the second time. 3 Meanwhile,
justice was delayed, and more than one member of this Court are persuaded
that justice was practically waylaid.
The movants also contend that even this Court sanctions the aforesaid civil
cases 7532 and 55292 as the "proper remedy" when we said that.
In reality, what they attacked is not the writ of execution, the validity and
regularity of which are unchallenged, but the levy made by the respondent
Sheriff. In this regard, the remedy is not the recall of the writ, but an
independent action to enjoin the Sheriff from proceeding with the projected
sale, in which action the conjugal nature of the levied stocks should be
established as a basis for the subsequent issuance of a permanent
injunction, in the event of a successful claim. Incidentally, in the course of the
protracted litigation, the petitioners had already availed of this remedy in civil
cases 7532 and 55292, only to abandon it as they incessantly sought other,
and often simultaneous, devices of thwarting satisfaction of the judgment
debt. (Emphasis supplied) .
And because of this statement, they now counter that the said cases could
not be branded as having been instituted for delay.
The reference we made to civil cases 7532 and 55292 in the above-quoted
statement must not be considered out of context. We said that the
petitioners incidentally had already availed of the suggested remedy only in
the sense that said civil cases 7532 and 55292 were apparently instituted to
34
prove the conjugal nature of the levied shares of stocks in question. We used
the word incidentally advisedly to show that in their incessant search for
devices to thwart the controverted execution, they accidentally stumbled on
the suggested remedy. But the said civil cases were definitely not the "proper
remedy" in so far as they sought the issuance of writs of preliminary
injunction from the Court of First Instance of Rizal and the Court of First
Instance of Manila (Branch XXII) where civil cases 7532 and 55292 were
filed respectively, for the said courts did not have jurisdiction to restrain the
enforcement of the writ of execution issued by the Court of First Instance of
Manila (Branch VII) under the settled doctrines that Courts are without power
to restrain acts outside of their territorial jurisdiction 4 or interfere with the
judgment or decree of a court of concurrent or coordinate jurisdiction. 5
However, the recall and the denial of the writs of preliminary injunction in civil
cases 7532 and 55292 did not amount to the termination or dismissal of the
principal action in each case. Had the Perez spouses desired in earnest to
continue with the said cases they could have done so. But the fact is that
Mrs. Perez practically abandoned civil case 7532 when she instituted the
above mentioned urgent motion to recall writ of execution in the basic civil
case 39407, anchored on the same grounds which she advanced in the
former case, until the said civil case 7532 was dismissed on November 9,
1963, upon her own motion. Anent civil case 55292, the Perez spouses
virtually deserted the same when they instituted the herein petition
for certiorari with urgent writ of preliminary injunction based on the same
grounds proffered in the said civil case — until the latter was also dismissed
on March 20, 1964, with the consent of the parties because of the pendency
then of the aforesaid petition for certiorari.
The movants further contend that "If there was delay, it was because
petitioners' counsel happened to be more assertive ... a quality of the lawyers
(which) is not to be condemned."
A counsel's assertiveness in espousing with candour and honesty his client's
cause must be encouraged and is to be commended; what we do not and
cannot countenance is a lawyer's insistence despite the patent futility of his
client's position, as in the case at bar.
It is the duty of a counsel to advise his client, ordinarily a layman to the
intricacies and vagaries of the law, on the merit or lack of merit of his case. If
he finds that his client's cause is defenseless, then it is his bounden duty to
advise the latter to acquiesce and submit, rather than traverse the
incontrovertible. A lawyer must resist the whims and caprices of his client,
and temper his client's propensity to litigate. A lawyer's oath to uphold the
cause of justice is superior to his duty to his client; its primacy is indisputable.
The movants finally state that the "Petitioners have several counsel in this
case but the participation of each counsel was rather limited implying that the
decision of this Court ordering that "treble costs are assessed against the
petitioners, which shall be paid by their counsel" is not clear. The word
"counsel" may be either singular or plural in construction, so that when we
said "counsel" we meant the counsels on record of the petitioners who were
responsible for the inordinate delay in the execution of the final judgment in
the basic civil case 39407, after the Court of Appeals had rendered its
aforementioned decision of November 15, 1962. And it is on record that the
movants are such counsels. Atty. Bolinas, upon his own admission, "entered
his appearance in the case at bar about the time the Court of First Instance
of Manila dismissed the petitioners' Petition for Relief in Civil Case No.
39407," or about August 3, 1961 and even prior to the Court of Appeals
decision above-mentioned. Atty. Baizas claims that he "became petitioners'
counsel only in October, 1963 when he filed, with Atty. A.N. Bolinao, Jr. Civil
Case No. 55292 before the Court of First Instance of Manila presided by the
Hon. Judge Alikpala although it appears on record that the urgent motion to
recall writ of execution filed by Mrs. Perez in the basic civil case 39407 on
September 3, 1963, was over the signature of one Ruby Zaida of the law firm
of "Crispin Baizas & Associates" as counsel for Mrs. Perez. It is to be
recalled that the said urgent motion is the same motion discussed above,
which, curiously enough, antedated by at least one month the lifting of the
writ of preliminary injunction issued in civil case 7532.
ACCORDINGLY, the motion for partial reconsideration is denied. Our
decision of May 22, 1968 is hereby modified in the sense that Attys. Crispin
D. Baizas and A.N. Bolinao, Jr. shall pay jointly and severally the treble costs
assessed against the petitioners.
SECOND DIVISION
DAVID V. PELAYO and LORENZA* B. G.R. No. 141323
PELAYO,
35
Petitioners, Present: Branch 34, in Civil Case No. 91-46; and the CA Resolution dated December
17, 1999 denying petitioners motion for reconsideration.

PUNO, Chairman,**
The antecedent facts as aptly narrated by the CA are as follows:
AUSTRIA-MARTINEZ,***

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

Promulgated:
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is
MELKI E. PEREZ, illegible witnessed the execution of the deed.

Respondent. June 8, 2005

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
x------------------------------------------------------- with the Office of the Register of Deeds in Tagum, Davao was denied.
----x

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
DECISION (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
AUSTRIA-MARTINEZ, J.:
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.

This resolves the petition for review on certiorari seeking the reversal of the
Decision[1] of the Court of Appeals (CA) promulgated on April 20, 1999 which
reversed the Decision of the Regional Trial Court (RTC) of Panabo, Davao,
36
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
(P10,000.00) 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
(P3,000.00) 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,
37
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 P10,000.00 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. 38700[3] 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
38
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. 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.
39

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.
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.

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
Hence, it has been held that the contract is valid until the court annuls the
that Lorenza was in any way lacking in her mental faculties and, hence, could
same and only upon an action brought by the wife whose consent was not
not have fully understood the ramifications of signing the deed of sale.
obtained.[11] In the present case, despite respondents repeated demands for
Neither did petitioners present any evidence that Lorenza had been
Lorenza to affix her signature on all the pages of the deed of sale, showing
defrauded, forced, intimidated or threatened either by her own husband or by
respondents insistence on enforcing said contract, Lorenza still did not file a
respondent into affixing her signature on the subject document. If Lorenza
case for annulment of the deed of sale. It was only when respondent filed a
had any objections over the conveyance of the disputed property, she could
complaint for specific performance on August 8, 1991 when petitioners
have totally refrained from having any part in the execution of the deed of
brought up Lorenzas alleged lack of consent as an affirmative defense. Thus,
sale. Instead, Lorenza even affixed her signature thereto.
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.
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
40
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
Appeals[15] is pertinent, to wit:
41
. . . Indeed, there is no requirement that the price be equal to the exact value reconsideration of the CA Decision, they prayed that they be allowed to
of the subject matter of sale. . . . As we stated in Vales vs. Villa: submit such appellees brief. The CA, in its Resolution dated December 17,
1999, stated thus:

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 violationof the law, the
commission of what the law knows as an actionablewrong, before the courts
are authorized to lay hold of the situation and remedy it.[16]
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.

Verily, in the present case, petitioners have not presented proof that there
Petitioners never denied the CA finding that their motion for reconsideration
has been fraud, mistake or undue influence exercised upon them by
was filed beyond the fifteen-day reglementary period. On that point alone, the
respondent. It is highly unlikely and contrary to human experience that a
CA is correct in denying due course to said motion. The motion having been
layman like respondent would be able to defraud, exert undue influence, or in
belatedly filed, the CA Decision had then attained finality. Thus, in Abalos vs.
any way vitiate the consent of a lawyer like petitioner David Pelayo who is
Philex Mining Corporation,[18] we held that:
expected to be more knowledgeable in the ways of drafting contracts and
other legal transactions.

. . . 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
Furthermore, in their Reply to Respondents Memorandum,[17] petitioners
any respect, even if the modification is meant to correct what is perceived to
adopted the CAs narration of fact that petitioners stated in a letter they sent
be an erroneous conclusion of fact or law, and regardless of whether the
to the Register of Deeds of Tagum that they have entrusted the titles over
modification is attempted to be made by the court rendering it or by the
subject lots to herein respondent. Such act is a clear indication that they
highest court of the land.
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
42
Moreover, it is pointed out by the CA that said motion did not present any CARPIO, J., Chairperson,
defense or argument on the merits of the case that could have convinced the
CA to reverse or modify its Decision. PERALTA,

- versus - ABAD,

We have consistently held that a petitioners right to due process is not MENDOZA, and
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 SERENO,* JJ.
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.
PHILIPPINE Promulgated:
Definitely, therefore, the denial of petitioners motion for reconsideration,
NATIONAL
praying that they be allowed to file appellees brief, did not infringe petitioners
BANK -
right to due process as any issue that petitioners wanted to raise could and
should have been contained in said motion for reconsideration. LAOAG April 6, 2011
BRANCH,

Respondent.
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
x--------------------------------------------------x
December 17, 1999 are hereby AFFIRMED.

SO ORDERED.
DECISION
SECOND DIVISION

CARPIO, J.:

JOE A. ROS and G.R. No. 170166

ESTRELLA The Case
AGUETE,

Petitioners,
G.R. No. 170166 is a petition for review1 assailing the Decision2 promulgated
Present: on 17 October 2005 by the Court of Appeals (appellate court) in CA-G.R. CV
No. 76845. The appellate court granted the appeal filed by the Philippine
National Bank LaoagBranch (PNB). The appellate court reversed the 29

43
June 2001 Decision of Branch 15 of the Regional Trial Court of Laoag City
(trial court) in Civil Case No. 7803.
The trial court declared the Deed of Real Estate Mortgage executed by
spouses Jose A. Ros3 (Ros) and Estrella Aguete (Aguete) (collectively,
petitioners), as well as the subsequent foreclosure proceedings, void. Aside
from payment of attorneys fees, the trial court also ordered PNB to vacate
the subject property to give way to petitioners possession.
The Facts
The appellate court narrated the facts as follows:
On January 13, 1983, spouses Jose A. Ros and Estrella Aguete filed a
complaint for the annulment of the Real Estate Mortgage and all legal
proceedings taken thereunderagainst PNB, Laoag Branch before the Court
of First Instance, Ilocos Norte docketed as Civil Case No. 7803.
The complaint was later amended and was raffled to the Regional Trial
Court, Branch 15, Laoag City.
The averments in the complaint disclosed that plaintiff-appellee Joe
A. Ros obtained a loan of P115,000.00 from PNB Laoag Branch on October
14, 1974 and as security for the loan, plaintiff-appellee Ros executed a real
estate mortgage involving a parcel of land Lot No. 9161 of the Cadastral
Survey of Laoag, with all the improvements thereon described under
Transfer Certificate of Title No. T-9646.
Upon maturity, the loan remained outstanding. As a result, PNB instituted
extrajudicial foreclosure proceedings on the mortgaged property. After the
extrajudicial sale thereof, a Certificate of Sale was issued in favor of
PNB, Laoag as the highest bidder. After the lapse of one (1) year without the
property being redeemed, the property was consolidated and registered in
the name of PNB, LaoagBranch on August 10, 1978.
Claiming that she (plaintiff-appellee Estrella Aguete) has no knowledge of the
loan obtained by her husband nor she consented to the mortgage instituted
on the conjugal property a complaint was filed to annul the proceedings
pertaining to the mortgage, sale and consolidation of the property interposing
the defense that her signatures affixed on the documents were forged and
that the loan did not redound to the benefit of the family.
In its answer, PNB prays for the dismissal of the complaint for lack of cause
of action, and insists that it was plaintiffs-appellees own acts [of]
omission/connivance that bar them from recovering the subject property on
the ground of estoppel, laches, abandonment and prescription. 4
The Trial Courts Ruling
On 29 June 2001, the trial court rendered its Decision5 in favor of petitioners.
The trial court declared that Aguete did not sign the loan documents, did not
appear before the Notary Public to acknowledge the execution of the loan
documents, did not receive the loan proceeds from PNB, and was not aware
of the loan until PNB notified her in 14 August 1978 that she and her family
should vacate the mortgaged property because of the expiration of the
redemption period. Under the Civil Code, the effective law at the time of the
transaction, Ros could not encumber any real property of the conjugal
partnership without Aguetes consent. Aguete may, during their marriage and
within ten years from the transaction questioned, ask the courts for the
44
annulment of the contract her husband entered into without her consent,
especially in the present case where her consent is required. The trial court,
however, ruled that its decision is without prejudice to the right of action of
PNB to recover the amount of the loan and its interests from Ros.
The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. DECLARING the Deed of Real Estate Mortgage (Exhibit C) and the
subsequent foreclosure proceedings conducted thereon NULL and VOID;
2. ORDERING the Register of Deeds of the City of Laoag to cancel TCT No.
T-15276 in the name of defendant PNB and revert the same in the name of
plaintiffs spouses Joe Ros and Estrella Aguete;
3. ORDERING defendant to vacate and turnover the possession of the
premises of the property in suit to the plaintiffs; and
4. ORDERING defendant to pay plaintiffs attorneys fee and litigation
expenses in the sum of TEN THOUSAND (P10,000.00) PESOS.
No pronouncement as to costs.
SO ORDERED.6
PNB filed its Notice of Appeal7 of the trial courts decision on 13 September
2001 and paid the corresponding fees. Petitioners filed on the same date a
motion for execution pending appeal,8 which PNB opposed.9 In their
comment to the opposition10 filed on 10 October 2001, petitioners stated that
at the hearing of the motion on 3 October 2001, PNBs lay representative had
no objection to the execution of judgment pending appeal. Petitioners
claimed that the house on the subject lot is dilapidated, a danger to life and
limb, and should be demolished. Petitioners added that they obliged
themselves to make the house habitable at a cost of not less P50,000.00.
The repair cost would accrue to PNBs benefit should the appellate court
reverse the trial court. PNB continued to oppose petitioners motion.11
In an Order12 dated 8 May 2002, the trial court found petitioners motion for
execution pending appeal improper because petitioners have made it clear
that they were willing to wait for the appellate courts decision. However, as a
court of justice and equity, the trial court allowed petitioners to occupy the
subject property with the condition that petitioners would voluntarily vacate
the premises and waive recovery of improvements introduced should PNB
prevail on appeal.
The Appellate Courts Ruling
On 17 October 2005, the appellate court rendered its Decision13 and granted
PNBs appeal. The appellate court reversed the trial courts decision, and
dismissed petitioners complaint.
The appellate court stated that the trial court concluded forgery without
adequate proof; thus it was improper for the trial court to rely solely
on Aguetes testimony that her signatures on the loan documents were
forged. The appellate court declared that Aguete affixed her signatures on
the documents knowingly and with her full consent.
Assuming arguendo that Aguete did not give her consent to Ros loan, the
appellate court ruled that the conjugal partnership is still liable because the
loan proceeds redounded to the benefit of the family. The records of the case
45
reveal that the loan was used for the expansion of the familys business. The petition has no merit. We affirm the ruling of the appellate court.
Therefore, the debt obtained is chargeable against the conjugal partnership.

The Civil Code was the applicable law at the time of the mortgage. The
Petitioners filed the present petition for review before this Court on 9 subject property is thus considered part of the conjugal partnership of gains.
December 2005. The pertinent articles of the Civil Code provide:

The Issues Art. 153. The following are conjugal partnership property:

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

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

(3) The fruits, rents or interest received or due during the marriage, coming
I. The Honorable Court of Appeals erred in not giving weight to the findings
from the common property or from the exclusive property of each spouse.
and conclusions of the trial court, and in reversing and setting aside such
findings and conclusions without stating specific contrary evidence;

Art. 160. All property of the marriage is presumed to belong to the

conjugal partnership, unless it be proved that it pertains exclusively to the
II. The Honorable Court of Appeals erred in declaring the real estate
husband or to the wife.
mortgage valid;

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

III. The Honorable Court of Appeals erred in declaring, without basis, that the
loan contracted by husband Joe A. Ros with respondent Philippine National (1) All debts and obligations contracted by the husband for the benefit of the
Bank Laoagredounded to the benefit of his family, aside from the fact that conjugal partnership, and those contracted by the wife, also for the same
such had not been raised by respondent in its appeal.14 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
The Courts Ruling charged to the partnership;

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

46
(5) The maintenance of the family and the education of the children of both
husband and wife, and of legitimate children of one of the spouses;
(6) Expenses to permit the spouses to complete a professional, vocational or
other course.
Art. 166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is confined in a leprosarium, the
husband cannot alienate or encumber any real property of the conjugal
partnership without the 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 the property fraudulently alienated by the husband.
There is no doubt that the subject property was acquired
during Ros and Aguetesmarriage. Ros and Aguete were married on 16
January 1954, while the subject property was acquired in 1968. 15 There is
also no doubt that Ros encumbered the subject property when he mortgaged
it for P115,000.00 on 23 October 1974.16 PNB Laoag does not doubt
that Aguete, as evidenced by her signature, consented to Ros mortgage to
PNB of the subject property. On the other hand, Aguete denies ever having
consented to the loan and also denies affixing her signature to the mortgage
and loan documents.
The husband cannot alienate or encumber any conjugal real property without
the consent, express or implied, of the wife. Should the husband do so, then
the contract is voidable.17 Article 173 of the Civil Code allows Aguete to
question Ros encumbrance of the subject property. However, the same
article does not guarantee that the courts will declare the annulment of the
contract. Annulment will be declared only upon a finding that the wife did not
give her consent. In the present case, we follow the conclusion of the
appellate court and rule that Aguete gave her consent to Rosencumbrance of
the subject property.
The documents disavowed by Aguete are acknowledged before a notary
public, hence they are public documents. Every instrument duly
acknowledged and certified as provided by law may be presented in
evidence without further proof, the certificate of acknowledgment being prima
facie evidence of the execution of the instrument or document
involved.18 The execution of a document that has been ratified before a
notary public cannot be disproved by the mere denial of the alleged
signer.19 PNB was correct when it stated that petitioners omission to present
other positive evidence to substantiate their claim of forgery was fatal to
petitioners cause.20 Petitioners did not present any corroborating witness,
such as a handwriting expert, who could authoritatively declare
that Aguetes signatures were really forged.
A notarized document carries the evidentiary weight conferred upon it with
respect to its due execution, and it has in its favor the presumption of
regularity which may only be rebutted by evidence so clear, strong and
convincing as to exclude all controversy as to the falsity of the certificate.
Absent such, the presumption must be upheld. The burden of proof to
overcome the presumption of due execution of a notarial document lies on
the one contesting the same. Furthermore, an allegation of forgery must be
proved by clear and convincing evidence, and whoever alleges it has the
burden of proving the same.21
47
Ros himself cannot bring action against PNB, for no one can come before
the courts with unclean hands. In their memorandum before the trial court,
petitioners themselves admitted that Ros forged Aguetes signatures.
Joe A. Ros in legal effect admitted in the complaint that the signatures of his
wife in the questioned documents are forged, incriminating himself to criminal
prosecution. If he were alive today, he would be prosecuted for forgery. This
strengthens the testimony of his wife that her signatures on the questioned
documents are not hers.
In filing the complaint, it must have been a remorse of conscience for having
wronged his family; in forging the signature of his wife on the questioned
documents; in squandering the P115,000.00 loan from the bank for himself,
resulting in the foreclosure of the conjugal property; eviction of his
family therefrom; and, exposure to public contempt, embarassment and
ridicule.22
The application for loan shows that the loan would be used exclusively for
additional working [capital] of buy & sell of garlic & virginia tobacco.23 In her
testimony, Agueteconfirmed that Ros engaged in such business, but claimed
to be unaware whether it prospered. Aguete was also aware of loans
contracted by Ros, but did not know where he wasted the money.24 Debts
contracted by the husband for and in the exercise of the industry or
profession by which he contributes to the support of the family cannot be
deemed to be his exclusive and private debts.25
If the husband himself is the principal obligor in the contract, i.e., he directly
received the money and services to be used in or for his own business or his
own profession, that contract falls within the term x x x x obligations for the
benefit of the conjugal partnership. Here, no actual benefit may be proved. It
is enough that the benefit to the family is apparent at the signing of the
contract. From the very nature of the contract of loan or services, the family
stands to benefit from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated, where the
husband contracts obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound to the benefit of
the conjugal partnership.26
For this reason, we rule that Ros loan from PNB redounded to the benefit of
the conjugal partnership. Hence, the debt is chargeable to the conjugal
partnership.
WHEREFORE, we DENY the petition. The Decision of the Court of Appeals
in CA-G.R. CV No. 76845 promulgated on 17 October 2005
is AFFIRMED. Costs against petitioners.
SO ORDERED.
SECOND DIVISION
G.R. No. 212483, October 05, 2016
PHILIPPINE NATIONAL BANK, Petitioner, v. VENANCIO C. REYES,
JR., Respondent.
DECISION
LEONEN, J.:
A spouse's consent is indispensable for the disposition or encumbrance of
conjugal properties.
This resolves a dispute between petitioner Philippine National Bank and
respondent Venancio C. Reyes, Jr. (Venancio). Philippine National Bank filed
a Petition for Review on Certiorari1 assailing the Decision2dated August 22,
2013 and the Resolution3 dated May 5, 2014 of the Court of Appeals. The
assailed Court of Appeals Decision affirmed the Decision and Order of
Branch 81 of the Regional Trial Court of Malolos, Bulacan, which annulled
48
the real estate mortgage and the certificate of sale issued under the
extrajudicial foreclosure conducted, and ordered Lilia Reyes (Lilia) to
reimburse to Philippine National Bank the total loan amount she borrowed
from the bank.4chanrobleslaw
Venancio is married to Lilia since 1973. During their union, they acquired
three (3) parcels of land in Malolos, Bulacan. Transfer Certificates of Title
(TCT) Nos. T-52812 and T-52813 were registered under "Felicidad Pascual
and Lilia C. Reyes, married to Venancio Reyes[,]"5 while TCT No. 53994 was
registered under "Lilia C. Reyes, married to Venancio Reyes."6chanrobleslaw
The properties were mortgaged to Philippine National Bank on August 25,
1994 to secure a loan worth P1,100,000.00,7 which on October 6, 1994 was
increased to P3,000,000.00.8 According to Philippine National Bank, the
Reyes Spouses contracted and duly consented to the loan.9chanrobleslaw
When the Reyes Spouses failed to pay the loan obligations, Philippine
National Bank foreclosed the mortgaged real properties.10 The auction sale
was held on September 19, 1997. Philippine National Bank emerged as the
highest bidder, and a certificate of sale was issued in its
favor.11chanrobleslaw
On September 22, 1998, Venancio filed before the Regional Trial Court a
Complaint (or Annulment of Certificate of Sale and Real Estate Mortgage
against Philippine National Bank.12 Upon order of the trial court, Venancio
amended his Complaint to include Lilia and the Provincial Sheriff ofBulacan
as defendants.13chanrobleslaw
In assailing the validity of the real estate mortgage, Venancio claimed that his
wife undertook the loan and the mortgage without his consent and his
signature was falsified on the promissory notes and the
mortgage.14chanrobleslaw
Since the three (3) lots involved were conjugal properties, he argued that the
mortgage constituted over them was void.15chanrobleslaw
On May 27, 2009, Branch 81 of the Regional Trial Court of Malolos, Bulacan
ordered the annulment of the real estate mortgage and directed Lilia to
reimburse Philippine National Bank the loan amount with interest.16 The
dispositive portion reads:
chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered:
chanRoblesvirtualLawlibrary1. Annulling in its entirety the Real Estate
Mortgage Contract and the Amendment thereto, the Certificate of Sale
issued pursuant to the extra judicial foreclosure and the foreclosure
proceedings on the subject properties covered by Transfer Certificates of
Title Nos. T-53994, T-
52812 and T-52813 of the Registry of Deeds of Bulacan for want of consent
on the part of the plaintiff;
2. Making the writ of preliminary injunction permanent and perpetual
conditioned on plaintiffs posting within an inextendible period of five (5) days
from receipt thereof of the injunctive bond in the amount Eight Hundred
Thousand (P800,000.00) pesos as contained in the Order dated November
3, 1998;
3. Ordering defendant Lilia C. Reyes to reimburse the defendant Philippine
National Bank the total loan account of P3,324,771.18 with interest at 6% per
annum from the date of the foreclosure sale until finality of this decision. After
this decision has attained finality interest at the rate of 12% per annum on the
principal and interest (or any part thereof) shall be imposed until full payment.
SO ORDERED.17
Aggrieved, Philippine National Bank appealed to the Court of Appeals. On
August 22, 2013, the Court of Appeals denied the appeal18 and affirmed the
ruling of the Regional Trial Court. The dispositive portion of the Court of
Appeals Decision reads:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the present appeal is DENIED. The
challenged Decision and Order of the Regional Trial Court of Malolos,
Bulacan, Branch 81 dated May 27, 2009 and August 4, 2009, respectively,
are hereby AFFIRMED.19 (Emphasis in the original)
49

Philippine National Bank moved for reconsideration, but the Motion was
denied in the Resolution20 dated May 5, 2014.
Petitioner Philippine National Bank insists that the Court of Appeals erred in
affirming the ruling of the trial court. It argues that the real estate mortgage is
valid, that the conjugal partnership should be held liable for the loan, and that
respondent Venancio C. Reyes, Jr.'s cause of action should be deemed
barred by laches.21chanrobleslaw
Petitioner claims that respondent and his wife both duly consented to the
loan and the mortgage.22 It points to respondent's testimony during cross
examination where he admitted that he had actual knowledge of the loan as
early as 1996, but only filed the Complaint in 1998.23 Petitioner further claims
that it is impossible for respondent to have no knowledge of the transaction
since the ·Reyes Spouses live together in the same house where the notices
and demand letters were sent.24 It contends that the Court of Appeals should
not have relied heavily on the testimony of the handwriting expert since
jurisprudence show these experts are not indispensable in determining a
forgery.25cralawredchanrobleslaw
Respondent, in his Comment,26 alleges that his wife hid the transaction from
him. Even if they lived under the same roof, he was not aware of everything
happening in their home because as a practicing lawyer, he was always
away at work from 8 a.m. to 7 p.m.27 He likewise points out that since both
the Regional Trial Court and the Court of Appeals made a factual finding of
forgery, this Court should respect this finding.28 Respondent contends that
the conjugal partnership cannot be held liable because a void contract has
no legal existence from which an obligation may stem.29chanrobleslaw
The issues for resolution are:
chanRoblesvirtualLawlibraryFirst, whether the Court of Appeals erred in
declaring the real estate mortgage void;
Second, whether the conjugal partnership can be held liable for the loan
contracted unilaterally by Lilia C. Reyes; and cralawlawlibrary
Lastly, whether respondent is guilty of laches and whether his claim is now
barred by estoppel.
I
The real estate mortgage over a conjugal property is void if the non-
contracting spouse did not give consent.
The Court of Appeals committed no reversible error in affirming the ruling of
the Regional Trial Court. The real estate mortgage over the conjugal
properties is void for want of consent from respondent. The Family Code is
clear: the written consent of the spouse who did not encumber the property is
necessary before any disposition or encumbrance of a conjugal property can
be valid.30chanrobleslaw
It is not disputed that the Reyes Spouses were married in 1973,31 before the
Family Code took effect. Under the Family Code, their property regime is
Conjugal Partnership of Gains; thus, Article 124 is the applicable provision
regarding te administration of their conjugal property. It states:
chanRoblesvirtualLawlibrary
Art. 124. The administration and enjoyment of the conjugal partnership shall
belong to both spouses jointly. In case of disagreement, the husband's
decision shall prevail, subject to recourse to the court by the wife for proper
remedy, which must be availed of within five years from the date of the
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include
disposition or encumbrance without authority of the court or the written
consent of the other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the transaction shall be
construed as a continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer
is withdrawn by either or both offerors.
Any disposition or encumbrance of a conjugal property by one spouse must
be consented to by the other; otherwise, it is void.32chanrobleslaw
50
Petitioner points to respondent's signature on the Promissory Notes and
Deed of Mortgage to prove that he consented to the transactions.33 For his
part, respondent alleges that his signature was forged and offers testimony
from a handwriting expert to prove that his signature on the bank documents
were falsified.34 The Regional Trial Court and the Court of Appeals both
agreed that respondent presented clear and convincing evidence that his
signature, as it appeared on the mortgage contract, was forged.
Respondent offered the expert testimony of Efren B. Flores (Flores) of the
Questioned Document Section of the National Bureau of Investigation.
Flores, a handwriting expert, compared the signature on the loan documents
with the standard signatures of respondent.35 He concluded that they were
not written by the same person through the following observations:
chanRoblesvirtualLawlibraryFirst, the signatures on the loan documents were
executed in a slowly drawn motion of a pen. This can be observed in the
hidden portion of the signature because the changes in pen pressure were
abrupt.36chanrobleslaw
Second, respondent's standard signature is written with free and well-
coordinated strokes.37chanrobleslaw
Lastly, there were discrepancies in the structural pattern of letter formation of
the two (2) sets of signatures. With the signatures in the loan documents,
both the upper and lower loops were elongated. On the standard signatures,
the upper loop was shorter while the lower loop was bigger.38chanrobleslaw
Flores was convinced that the variations he noted is "due to the operation of
a different personality and not merely an expected and inevitable variation
found in genuine handwriting of the same writer."39chanrobleslaw
Likewise telling was petitioner's inability to prove that respondent took part in
the transactions. Efren Agustin (Agustin), Loan and Discount Division Chief
of Philippine National Bank, admitted that he merely relied on the documents
presented to him,40 and that he never actually saw respondent sign the
documents, follow up, or inquire about the loan's status or the mortgage.
Agustin only testified to seeing Lilia, but not respondent, within the bank's
premises.41chanrobleslaw
This Court is not a trier of facts. In Manotok Realty, Inc. v CLT Realty
Development Corp.,42 "[w]here ... the findings of fact of the trial courts are
affirmed by the Court of Appeals, the same are accorded the highest degree
of respect and, generally, will not be disturbed on appeal. Such findings are
binding and conclusive on this Court."43chanrobleslaw
We see no compelling reason to overturn the lower couris' factual findings
that the forgery was proven with clear and convincing evidence. Having
established that his signature was forged, respondent proved that he did not
consent to the real estate mortgage. The mortgage unilaterally made by his
wife over their conjugal property is void and legally inexistent.
II
The lower courts may have declared the mortgage void, but the principal
obligation is not affected. It remains valid.
Petitioner contends that the conjugal partnership should be made liable to
the extent that it redounded to the benefit of the family under Article 122 of
the Family Code.
Petitioner's reliance on Article 122 to support the validity of the mortgage is
misplaced.
Article 122 provides:
chanRoblesvirtualLawlibrary
ARTICLE 122. The payment of personal debts contracted by the husband or
the wife before or during the marriage shall not be charged to the conjugal
partnership except insofar as they redounded to the benefit of the family.
Neither shall the fines and pecuniary indemnities imposed upon them be
charged to the partnership.
However, the payment of personal debts contracted by either spouse before
the marriage, that of fines and indemnities imposed upon them, as well as
the support of illegitimate children of either spouse, may be enforced against
the partnership assets after the responsibilities enumerated in the preceding
Article have been covered, if the spouse who is bound should have no
exclusive property or if it should be insufficient; but at the time of the
51
liquidation of the partnership, such spouse shall be charged for what has
been paid for the purposes above-mentioned.
Article 122 applies to debts that were contracted by a spouse and redounded
to the benefit of the family. It applies specifically to the loan that respondent's
wife Lilia contracted, but not to the mortgage.
To be clear, nowhere in the Decision did the Court of Appeals state that the
principal obligation secured by the mortgage was void. The Court of Appeals
affirmed the May 27, 2009 Decision of the Regional Trial Court ordering,
respondent's wife to reimburse the petitioner the total loan amount 44 "of
P3,324,771.18 with interest at 6% per annum from the date of the foreclosure
sale until finality of this decision."45 The Regional Trial Court further imposed
interest at 12% per annum on the principal and interest, or any part thereof,
after the decision had attained finality and until full payment.46chanrobleslaw
Ayala Investment & Development Corp. v. Court of Appeals 47 has explained
how Article 121 should be applied:
chanRoblesvirtualLawlibrary
From the foregoing jurisprudential rulings of this Court, we can derive the
following conclusions:
chanRoblesvirtualLawlibrary(A) If the husband himself is the principal obligor
in the contract, i.e., he directly received the money and services to be used in
or for his own business or his own profession, that contract falls within the
term "x x x obligations for the benefit of the conjugal partnership. " Here, no
actual benefit may be proved. It is enough that the benefit to the family is
apparent at the time of the signing of the contract. From the very nature of
the contract of loan or services, the family stands to benefit from the loan
facility or services to be rendered to the business or profession of the
husband. It is immaterial, if in the end, his business or profession fails or
does not succeed. Simply stated, where the husband contracts obligations
on behalf of the family business, the law presumes, and rightly so, that such
obligation will redound to the benefit of the conjugal partnership.
(B) On the other hand, if the money or services are given to another person
or entity, and the husband acted only as a surety or guarantor, that contract
cannot, by itself, alone be categorized as falling within the context of
"obligations for the benefit of the conjugal partnership." The contract of loan
or services is clearly for the benefit of the principal debtor and not for the
surety or his family. No presumption can be inferred that, when a husband
enters into a contract of surety or accommodation agreement, it is "for the
benefit of the conjugal partnership." Proof must be presented to establish
benefit redounding to the conjugal partnership.48 (Emphasis supplied)
There are two scenarios considered: one is when the husband, or in this
case, the wife, contracts a loan to be used for the family business and the
other is when she acts as a surety or guarantor. If she is a mere surety or
guarantor, evidence that the family benefited from the loan need to be
presented before the conjugal partnership can be held liable. On the other
hand, if the loan was taken out to be used for the family business, there is no
need to prove actual benefit. The law presumes the family benefited from the
loan and the conjugal partnership is held liable.
According to petitioner, the Regional Trial Court found49 that the loan was
used as additional working capital for respondent's printing business. As held
in Ayala Investment, since the loaned money is used in the husband's
business, there is a presumption that it redounded to the benefit of the family;
hence, the conjugal partnership may be held liable for the loan
amount.50 Since there is a legal presumption to this effect, there is no need to
prove actual benefit to the family.
What the lower courts declared void was the real estate mortgage attached
to the conjugal property of the Reyes Spouses. Since the real estate
mortgage was an encumbrance attached to a conjugal property without the
consent of the other spouse, it is void and legally inexistent. Although
petitioner cannot foreclose the mortgage over the conjugal property in
question, it can still recover the loan amount from the conjugal partnership.
In Philippine National Bank v. Banatao,51 "a mortgage is merely an accessory
agreement and does not affect the principal contract of loan. The mortgages,
while void, can still be considered as instruments evidencing the
indebtedness[.]"52chanrobleslaw
III
Laches does not apply where the delay is within the period prescribed by
52
law.
Petitioner contends that respondent's action to annul the Deed of Real Estate
Mortgage is already barred by latches.53 This is erroneous.
As found by the trial court, records show that upon learning about the
mortgage, respondent immediately informed the bank about his forged
signature.54 He filed the Complaint for Annulment of Certificate of Sale and
Real Estate Mortgage against petitioner on September 22, 1998, which was
still within the prescribed period to redeem a mortgaged
property.55chanrobleslaw
In Torbela v. Rosario:56chanrobleslaw
Laches means the failure or neglect, for an unreasonable and unexplained
length of time, to do that which by exercising due diligence could or should
have been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it. As the Court explained in the
preceding paragraphs, the Torbela siblings instituted Civil Case No. U-4359
five years after Dr. Rosario's repudiation of the express trust, still within the
10-year prescriptive period for enforcement of such trusts. This does not
constitute an unreasonable delay in asserting one's right. A delay within the
prescriptive period is sanctioned by law and is not considered to be a delay
that would bar relief Laches apply only in the absence of a statutory
prescriptive period.57 (Emphasis supplied)
Since respondent filed the Complaint for Annulment of Certificate of Sale and
Real Estate Mortgage within the period of redemption prescribed by law,
petitioner fails to convince that respondent slept on his right.
The mortgage over the conjugal property is void and cannot be foreclosed.
However, petitioner can still hold the conjugal partnership liable for the
principal obligation since the loan is presumed to have redounded to the
benefit of the family. If the conjugal partnership is insufficient to cover the
liability, the husband is solidarity liable with the wife for the unpaid
balance.58chanrobleslaw
The last paragraph of Article 121 of the Family Code is instructive:
chanRoblesvirtualLawlibrary
Art. 121. The conjugal partnership shall be liable for:
chanRoblesvirtualLawlibrary
(1) The support of the spouse, their common children, and the legitimate
children of either spouse; however, the support of illegitimate children
shall be governed by the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the
designated administrator-spouse for the benefit of the conjugal
partnership of gains, or by both spouses or by one of them with the
consent of the other;
(3) Debts and obligations contracted by either spouse without the consent
of the other to the extent that the family may have benefited;
(4) All taxes, liens, charges, and expenses, including major or minor repairs
upon the conjugal partnership property;
(5) All taxes and expenses for mere preservation made during the marriage
upon the separate property of either spouse;
(6) Expenses to enable either spouse to commence or complete a
professional, vocational, or other activity for self-improvement;
(7) Ante-nuptial debts of either spouse insofar as they have redounded to
the benefit of the family;
(8) The value of what is donated or promised by both spouses in favor of
their common legitimate children for the exclusive purpose of
commencing or completing a professional or vocational course or other
activity for self-improvement; and
53

(9) Expenses of litigation between the spouses unless the suit is found to
groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the
spouses shall be solidarily liable for the unpaid balance with their
separaie properties. (Emphasis supplied)
The last paragraph points to the "subsidiary but solidary liability of the
separate properties"59 of the spouses for liabilities enumerated in the Article.
This Article, similar to Article 94 of the Family Code governing the Absolute
Community of Property regime, explicitly holds the spouses solidarity liable
with each other if the conjugal properties are not enough to answer for the
liabilities. In this case, if the conjugal properties of the Reyes Spouses are
not enough to answer for the loan, petitioner can recover the remaining
unpaid balance from the separate properties of either respondent or his wife
Lilia.
WHEREFORE, the Petition is DENIED for failure to show the Court of
Appeals committed a reversible error in the assailed Decision. The Decision
of the Court of Appeals dated August 22, 2013 in CA-G.R. CV No. 94018
is AFFIRMED with MODIFICATION, in that Spouses Venancio C. Reyes, Jr.
and Lilia Reyes are declared jointly and solidarity liable with each other with
their separate properties if their conjugal partnership is insufficient to fully pay
for the loan.
SO ORDERED.chanRoblesvirtualLawlibrary
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164201 December 10, 2012
EFREN PANA, Petitioner,
vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE, JR., Respondents.
DECISION
ABAD, J.:
This case is about the propriety of levy and execution on conjugal properties
where one of the spouses has been found guilty of a crime and ordered to
pay civil indemnities to the victims' heirs.
The Facts and the Case
The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and
others of murder before the. Regional Trial Court (RTC) of Surigao City in
Criminal Cases 4232 and 4233.1
On July 9, 1997 the RTC rendered a consolidated decision2 acquitting Efren
of the charge for insufficiency of evidence but finding Melecia and another
person guilty as charged and sentenced them to the penalty of death. The
RTC ordered those found guilty to pay each of the heirs of the victims, jointly
and severally, P50,000.00 as civil indemnity, P50,000.00 each as moral
damages, and P150,000.00 actual damages.
On appeal to this Court, it affirmed on May 24, 2001 the conviction of both
accused but modified the penalty to reclusion perpetua. With respect to the
monetary awards, the Court also affirmed the award of civil indemnity and
moral damages but deleted the award for actual damages for lack of
evidentiary basis. In its place, however, the Court made an award of
P15,000.00 each by way of temperate damages. In addition, the Court
awarded P50,000.00 exemplary damages per victim to be paid solidarily by
them.3 The decision became final and executory on October 1, 2001.4
Upon motion for execution by the heirs of the deceased, on March 12, 2002
the RTC ordered the issuance of the writ,5 resulting in the levy of real
properties registered in the names of Efren and Melecia.6 Subsequently, a
notice of levy7 and a notice of sale on execution8 were issued.
On April 3, 2002, petitioner Efren and his wife Melecia filed a motion to quash
the writ of execution, claiming that the levied properties were conjugal
assets, not paraphernal assets of Melecia.9 On September 16, 2002 the RTC
denied the motion.10 The spouses moved for reconsideration but the RTC
denied the same on March 6, 2003.11
Claiming that the RTC gravely abused its discretion in issuing the challenged
orders, Efren filed a petition for certiorari before the Court of Appeals (CA).
54
On January 29, 2004 the CA dismissed the petition for failure to sufficiently
show that the RTC gravely abused its discretion in issuing its assailed
orders.12 It also denied Efren’s motion for reconsideration,13 prompting him to
file the present petition for review on certiorari.
The Issue Presented
The sole issue presented in this case is whether or not the CA erred in
holding that the conjugal properties of spouses Efren and Melecia can be
levied and executed upon for the satisfaction of Melecia’s civil liability in the
murder case.
Ruling of the Court
To determine whether the obligation of the wife arising from her criminal
liability is chargeable against the properties of the marriage, the Court has
first to identify the spouses’ property relations.
Efren claims that his marriage with Melecia falls under the regime of conjugal
partnership of gains, given that they were married prior to the enactment of
the Family Code and that they did not execute any prenuptial
agreement.14Although the heirs of the deceased victims do not dispute that it
was the Civil Code, not the Family Code, which governed the marriage, they
insist that it was the system of absolute community of property that applied to
Efren and Melecia. The reasoning goes:
Admittedly, the spouses were married before the effectivity of the Family
Code. But that fact does not prevent the application of [A]rt. 94, last
paragraph, of the Family Code because their property regime is precisely
governed by the law on absolute community. This finds support in Art. 256 of
the Family Code which states:
"This code shall have retroactive effect in so far as it does not prejudice or
impair vested or acquired rights in accordance with the Civil Code or other
laws."
None of the spouses is dead. Therefore, no vested rights have been
acquired by each over the properties of the community. Hence, the liabilities
imposed on the accused-spouse may properly be charged against the
community as heretofore discussed.15
The RTC applied the same reasoning as above.16 Efren
and Melecia’s
property relation was admittedly conjugal under the Civil Code but, since the
transitory provision of the Family Code gave its provisions retroactive effect if
no vested or acquired rights are impaired, that property relation between the
couple was changed when the Family Code took effect in 1988. The latter
code now prescribes in Article 75 absolute community of property for all
marriages unless the parties entered into a prenuptial agreement. As it
happens, Efren and Melecia had no prenuptial agreement. The CA agreed
with this position.17
Both the RTC and the CA are in error on this point. While it is true that the
personal stakes of each spouse in their conjugal assets are inchoate or
unclear prior to the liquidation of the conjugal partnership of gains and,
therefore, none of them can be said to have acquired vested rights in specific
assets, it is evident that Article 256 of the Family Code does not intend to
reach back and automatically convert into absolute community of property
relation all conjugal partnerships of gains that existed before 1988 excepting
only those with prenuptial agreements.
The Family Code itself provides in Article 76 that marriage settlements
cannot be modified except prior to marriage.
Art. 76. In order that any modification in the marriage settlements may be
valid, it must be made before the celebration of the marriage, subject to the
provisions of Articles 66, 67, 128, 135 and 136.
Clearly, therefore, the conjugal partnership of gains that governed the
marriage between Efren and Melecia who were married prior to 1988 cannot
be modified except before the celebration of that marriage.
Post-marriage modification of such settlements can take place only where:
(a) the absolute community or conjugal partnership was dissolved and
liquidated upon a decree of legal separation;18 (b) the spouses who were
legally separated reconciled and agreed to revive their former property
regime;19 (c) judicial separation of property had been had on the ground that
a spouse abandons the other without just cause or fails to comply with his
obligations to the family;20 (d) there was judicial separation of property under
Article 135; (e) the spouses jointly filed a petition for the voluntary dissolution
of their absolute community or conjugal partnership of gains.21 None of these
circumstances exists in the case of Efren and Melecia.
What is more, under the conjugal partnership of gains established by Article
142 of the Civil Code, the husband and the wife place only the fruits of their
55
separate property and incomes from their work or industry in the common
fund. Thus:
Art. 142. By means of the conjugal partnership of gains the husband and wife
place in a common fund the fruits of their separate property and the income
from their work or industry, and divide equally, upon the dissolution of the
marriage or of the partnership, the net gains or benefits obtained
indiscriminately by either spouse during the marriage.
This means that they continue under such property regime to enjoy rights of
ownership over their separate properties. Consequently, to automatically
change the marriage settlements of couples who got married under the Civil
Code into absolute community of property in 1988 when the Family Code
took effect would be to impair their acquired or vested rights to such separate
properties.
The RTC cannot take advantage of the spouses’ loose admission that
absolute community of property governed their property relation since the
record shows that they had been insistent that their property regime is one of
conjugal partnership of gains.22 No evidence of a prenuptial agreement
between them has been presented.
What is clear is that Efren and Melecia were married when the Civil Code
was still the operative law on marriages. The presumption, absent any
evidence to the contrary, is that they were married under the regime of the
conjugal partnership of gains. Article 119 of the Civil Code thus provides:
Art. 119. The future spouses may in the marriage settlements agree upon
absolute or relative community of property, or upon complete separation of
property, or upon any other regime. In the absence of marriage settlements,
or when the same are void, the system of relative community or conjugal
partnership of gains as established in this Code, shall govern the property
relations between husband and wife.
Of course, the Family Code contains terms governing conjugal partnership of
gains that supersede the terms of the conjugal partnership of gains under the
Civil Code. Article 105 of the Family Code states:
"x x x x
The provisions of this Chapter [on the Conjugal Partnership of Gains] shall
also apply to conjugal partnerships of gains already established between
spouses before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as provided
in Article 256."23
Consequently, the Court must refer to the Family Code provisions in deciding
whether or not the conjugal properties of Efren and Melecia may be held to
answer for the civil liabilities imposed on Melecia in the murder case. Its
Article 122 provides:
Art. 122. The payment of personal debts contracted by the husband or the
wife before or during the marriage shall not be charged to the conjugal
properties partnership except insofar as they redounded to the benefit of the
family.
Neither shall the fines and pecuniary indemnities imposed upon them be
charged to the partnership.
However, the payment of personal debts contracted by either spouse before
the marriage, that of fines and indemnities imposed upon them, as well as
the support of illegitimate children of either spouse, may be enforced against
the partnership assets after the responsibilities enumerated in the preceding
Article have been covered, if the spouse who is bound should have no
exclusive property or if it should be insufficient; but at the time of the
liquidation of the partnership, such spouse shall be charged for what has
been paid for the purpose above-mentioned.
Since Efren does not dispute the RTC’s finding that Melecia has no exclusive
property of her own,24 the above applies. The civil indemnity that the decision
in the murder case imposed on her may be enforced against their conjugal
assets after the responsibilities enumerated in Article 121 of the Family Code
have been covered.25 Those responsibilities are as follows:
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and the legitimate
children of either spouse; however, the support of illegitimate children shall
be governed by the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the
designated administrator-spouse for the benefit of the conjugal partnership of
gains, or by both spouses or by one of them with the consent of the other;
56
(3) Debts and obligations contracted by either spouse without the consent of
the other to the extent that the family may have benefited;
(4) All taxes, liens, charges, and expenses, including major or minor repairs
upon the conjugal partnership property;
(5) All taxes and expenses for mere preservation made during the marriage
upon the separate property of either spouse;
(6) Expenses to enable either spouse to commence or complete a
professional, vocational, or other activity for self-improvement;
(7) Antenuptial debts of either spouse insofar as they have redounded to the
benefit of the family;
(8) The value of what is donated or promised by both spouses in favor of
their common legitimate children for the exclusive purpose of commencing or
completing a professional or vocational course or other activity for self-
improvement; and
(9) Expenses of litigation between the spouses unless the suit is found to be
groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the
spouses shall be solidarily liable for the unpaid balance with their separate
properties.1âwphi1
Contrary to Efren’s contention, Article 121 above allows payment of the
criminal indemnities imposed on his wife, Melecia, out of the partnership
assets even before these are liquidated. Indeed, it states that such
indemnities "may be enforced against the partnership assets after the
responsibilities enumerated in the preceding article have been
covered."[26] No prior liquidation of those assets is required. This is not
altogether unfair since Article 122 states that "at the time of liquidation of the
partnership, such [offending] spouse shall be charged for what has been paid
for the purposes above-mentioned."
WHEREFORE, the Court AFFIRMS with MODIFICATION the Resolutions of
the Court of Appeals in CA-G.R. SP 77198 dated January 29, 2004 and May
14, 2004. The Regional Trial Court of Surigao City, Branch 30, shall first
ascertain that, in enforcing the writ of execution on the conjugal properties of
spouses Efren and Melecia Pana for the satisfaction of the indemnities
imposed by final judgment on the latter accused in Criminal Cases 4232 and
4233, the responsibilities enumerated in Article 121 of the Family Code have
been covered.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19346 May 31, 1965
SOLEDAD L. LACSON, ET AL., plaintiffs-appellees,
vs.
ABELARDO G. DIAZ, defendant-appellant.
Agustin Locsin for plaintiffs-appellees.
Abelardo G. Diaz in his own behalf as defendant-appellant.
BARRERA, J.:
The facts of this case are not disputed:
In connection with a final decision rendered by the Court of First Instance of
Negros Occidental in Civil Case No. 5790 (Soledad L. Lacson, et al. v.
Abelardo G. Diaz), sentencing therein defendant to pay the plaintiffs the sum
of P97,532.93 with legal interest thereon from July 1, 1960 until fully paid,
plus a sum equivalent to 25% of the total amount as attorney's fees, the court
issued a writ of execution on August 1, 1961. On August 7, 1961, the
Provincial Sheriff of Negros Occidental sent to the manager of Talisay-Silay
Milling Company, wherein defendant Diaz was employed, a notice to garnish
one-third of his monthly salary and of any other personal properties
belonging to said defendant, to cover the total amount of P132,718.30.
Diaz filed with the court a motion to quash the writ of execution and to lift the
notice of garnishment (of his salary), on the ground that the same are not
enforceable against his present family. It was claimed that since the money-
judgment arose out of a contract entered into by him during his first marriage
said judgment cannot be enforced against his salaries which form part of the
conjugal properties of the second marriage. Plaintiffs opposed this motion,
for the reason that re-marriage is not a cause for extinction of obligations. As
57
his aforesaid motion after hearing was denied by the court for lack of merit,
the defendant instituted the present appeal.1äwphï1.ñët
Appellant does not dispute the existence of the money-judgment against him
in the amount abovestated, which decision was rendered in 1947 and
affirmed by the appellate court in 1950. It appears, however, that appellant,
who became a widower in 1951, remarried in 1960. The writ of execution and
notice of garnishment in this case were issued and implemented in 1961. It is
now contended that, as the conjugal partnership resulting of the second
marriage is different from that of the first marriage, during which existence
the obligation arose, such obligation, as far as the second conjugal
partnership is concerned, is personal to the husband and cannot be charged
against the properties of the second union. And, since his salaries form part
of the conjugal asset the same cannot be garnished to satisfy his personal
obligations. In support of this proposition, appellant cites Article 163 of the
new Civil Code and the ruling of this Court that the right of the husband to
one-half of the assets of the conjugal partnership does not vest until the
dissolution of the marriage.1
Article 163 of the new Civil Code relied upon by the appellant provides:
ART. 163. The payment of debts contracted by the husband or the wife
before the marriage shall not be charged to the conjugal partnership.
Neither shall the fines and pecuniary indemnities imposed upon them be
charged to the partnership.
However, the payment of debts contracted by the husband or the wife before
the marriage, and that of fines and indemnities imposed upon them, may be
enforced against the partnership assets after the responsibilities enumerated
in article 161 have been covered, if the spouse who is bound should have no
exclusive property or if it should be insufficient; but at the time of the
liquidation of the partnership such spouse shall be charged for what has
been paid for the purpose above-mentioned.
As a general rule, therefore, debts contracted by the husband or the wife
before the marriage, 2 as well as fines and pecuniary indemnities imposed
thereon, are not chargeable to the conjugal partnership. However, such
obligations may be enforced against the conjugal assets if the responsibilities
enumerated in Article 161 3 of the new Civil Code have already been
covered, and that the obligor has no exclusive property or the same is
insufficient. Considering that the enforceability of the personal obligations of
the husband or wife, against the conjugal assets, forms the exception to the
general rule, it is incumbent upon the one who invokes this provision or the
creditor to show that the requisites for its applicability are obtaining.
In the instant case, although it is not controverted that there is due and owing
the plaintiffs-appellees a certain sum of money from the appellant-debtor — a
personal obligation yet, it has not been established that the latter does not
have properties of his own or that the same are not adequate to satisfy
appellees' claim. Furthermore, there is no showing that the responsibilities
named in Article 161 of the new Civil Code have already been covered in
order that the personal obligation of the husband may be made chargeable
against the properties of the second marriage.
IN VIEW OF THE FOREGOING CONSIDERATIONS, this case is hereby
remanded to the court of origin for further proceedings, in accordance with
the aforestated observation. No costs. So ordered.
SECOND DIVISION
SPOUSES ROBERTO BUADO G.R. No. 145222
and VENUS BUADO,
Petitioners, Present:
CARPIO MORALES, J.,*
Acting Chairperson,
- versus - TINGA,
VELASCO, JR.,
LEONARDO DE CASTRO,**and
BRION, JJ.
THE HONORABLE COURT OF
58
APPEALS, Former Division, and Promulgated: 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
ROMULO NICOL, thousand (P30,000.00) pesos as moral damages, five thousand (P5,000.00)
pesos as attorneys fees and litigation expenses, another five thousand
Respondents. April 24, 2009
(P5,000.00) pesos as exemplary damages and the cost of suit.[2]

x----------------------------------------------------------------------------------x
Said decision was affirmed, successively, by the Court of Appeals and this
Court. It became final and executory on 5 March 1992.

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

TINGA, J.:

Before this Court is a petition for certiorari assailing the Decision[1] of the
Court of Appeals in CA-G.R. CV No. 47029 and its Resolution denying the
motion for reconsideration thereof.

The case stemmed from the following factual backdrop:

On 30 April 1984, Spouses Roberto and Venus Buado (petitioners) filed a

complaint for damages against Erlinda Nicol (Erlinda) with Branch 19 of the
Regional Trial Court (RTC) of Bacoor, Cavite, docketed as Civil Case No. 84-
33.Said action originated from Erlinda 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:
Now, therefore, you are commanded that of the goods and chattels of the
defendant Erlinda Nicol, or from her estates or legal heirs, you cause the
sum in the amount of forty thousand pesos (P40,000.00), Philippine
Currency, representing the moral damages, 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.

59
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 P500,000.00 was only sold at a very low price of P51,685.00, whereas the
judgment obligation of Erlinda Nicol was only P40,000.00. The case was
assigned to Branch 21 of the RTC of Imus, Cavite.
In response, petitioners filed a motion to dismiss on the grounds of lack of
jurisdiction and that they had acted on the basis of a valid writ of
execution. Citing De Leon v. Salvador,[4] petitioners claimed that respondent
should have filed the case with Branch 19 where the judgment originated
and which issued the order of execution, writ of execution, notice of levy and
notice of sheriffs sale.
In an Order[5] 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.
60
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,
61
unless such judgment obligee, on demand of the officer, files a bond
approved by the court to indemnify the third-party claimant in a sum not less
than the value of the property levied on. In case of disagreement as to such
value, the same shall be determined by the court issuing the writ of
execution. No claim for damages for the taking or keeping of the property
may be enforced against the bond unless the action therefor is filed within
one hundred twenty (120) days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the
property, to any third-party claimant if such bond is filed. Nothing herein
contained shall prevent such claimant or any third person from
vindicating his claim to the property in a separate action, or prevent the
judgment obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or plainly
spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond shall not
be required, and in case the sheriff or levying officer is sued for damages as
a result of the levy, he shall be represented by the Solicitor General and if
held liable therefor, the actual damages adjudged by the court shall be paid
by the National Treasurer out of such funds as may be appropriated for the
purpose. (Emphasis Supplied)
Apart from the remedy of terceria available to a third-party claimant or to a
stranger to the foreclosure suit against the sheriff or officer effecting the writ
by serving on him an affidavit of his title and a copy thereof upon the
judgment creditor, a third-party claimant may also resort to an independent
separate action, the object of which is the recovery of ownership or
possession of the property seized by the sheriff, as well as damages arising
from wrongful seizure and detention of the property. If a separate action is
the recourse, the third-party claimant must institute in a forum of competent
jurisdiction an action, distinct and separate from the action in which the
judgment is being enforced, even before or without need of filing a claim in
the court that issued the writ.[10]
A third-party claim must be filed a person other than the judgment debtor or
his agent. In other words, only a stranger to the case may file a third-party
claim.
This leads us to the question: Is the husband, who was not a party to the suit
but whose conjugal property is being executed on account of the other
spouse being the judgment obligor, considered a "stranger?"
In determining whether the husband is a stranger to the suit, the character of
the property must be taken into account. In Mariano v. Court of
Appeals,[11] which was later adopted in Spouses Ching v. Court of
Appeals,[12] this Court held that the husband of the judgment debtor cannot
be deemed a stranger to the case prosecuted and adjudged against his wife
for an obligation that has redounded to the benefit of the conjugal
partnership.[13] On the other hand, in Naguit v. Court of Appeals[14]and Sy v.
Discaya,[15] the Court stated that a spouse is deemed a stranger to the action
wherein the writ of execution was issued and is therefore justified in bringing
an independent action to vindicate her right of ownership over his exclusive
or paraphernal property.
Pursuant to Mariano however, it must further be settled whether the
obligation of the judgment debtor redounded to the benefit of the conjugal
partnership or not.
Petitioners argue that the obligation of the wife arising from her criminal
liability is chargeable to the conjugal partnership. We do not agree.
62
There is no dispute that contested property is conjugal in nature. Article 122
of the Family Code[16] explicitly provides that payment of personal debts
contracted by the husband or the wife before or during the marriage shall not
be charged to the conjugal partnership except insofar as they redounded to
the benefit of the family.
Unlike in the system of absolute community where liabilities incurred by
either spouse by reason of a crime or quasi-delict is chargeable to the
absolute community of property, in the absence or insufficiency of the
exclusive property of the debtor-spouse, the same advantage is not accorded
in the system of conjugal partnership of gains. The conjugal partnership of
gains has no duty to make advance payments for the liability of the debtor-
spouse.
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.
THIRD DIVISION
[G.R. No. 140153. March 28, 2001]
ANTONIO DOCENA and ALFREDA DOCENA, petitioners, vs. HON.
RICARDO P. LAPESURA, in his capacity as Presiding Judge of the RTC,
Branch III, Guian, Eastern Samar; RUFINO M. GARADO, Sheriff IV; and
CASIANO HOMBRIA, respondents.
DECISION
GONZAGA-REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking the nullification of the Court of Appeals[1] Resolutions dated June 18,
1999 and September 9, 1999 which dismissed the Petition for Certiorari and
Prohibition[2] under Rule 65 and denied the corresponding motion for
reconsideration, respectively.
The antecedent facts are as follows:
On June 1, 1977, private respondent Casiano Hombria filed a Complaint for
the recovery of a parcel of land against his lessees, petitioner-spouses
Antonio and Alfreda Docena.[3] The petitioners claimed ownership of the land
based on occupation since time immemorial.[4] A certain Guillermo Abuda
intervened in the case. In a Decision dated November 24, 1989, the trial
court ruled in favor of the petitioners and the intervenor Abuda.[5] On appeal,
the Court of Appeals reversed the judgment of the trial court and ordered the
petitioners to vacate the land they have leased from the plaintiff-appellant
[private respondent Casiano Hombria], excluding the portion which the
petitioners reclaimed from the sea and forms part of the shore, as shown in
the Commissioners Report, and to pay the plaintiff-appellant the agreed
63
rental of P1.00 per year from the date of the filing of the Complaint until they
shall have actually vacated the premises.[6] The Complaint in Intervention of
Abuda was dismissed.[7]
On May 22, 1995, private respondent Hombria filed a Motion for Execution of
the above decision which has already become final and executory.[8] The
motion was granted by the public respondent judge, and a Writ of Execution
was issued therefor. However, the public respondent sheriff subsequently
filed a Manifestation requesting that he be clarified in the determination of
that particular portion which is sought to be excluded prior to the delivery of
the land adjudged in favor of plaintiff Casiano Hombria in view of the defects
in the Commissioners Report and the Sketches attached thereto. [9] After
requiring the parties to file their Comment on the sheriffs Manifestation, the
public respondent judge, in a Resolution dated August 30, 1996, held that
xxx no attempt should be made to alter or modify the decision of the Court of
Appeals. What should be delivered therefore to the plaintiff xxx is that portion
leased by the defendant-appellees from the plaintiff-appellant excluding the
portion that the defendant-appellee have reclaimed from the seaand forms
part of the shore as shown in the commissioners report xxx.[10] Pursuant to
the Resolution, the public respondent sheriff issued an alias Writ of
Demolition. The petitioners filed a Motion to Set Aside or Defer the
Implementation of Writ of Demolition. This motion was denied by the public
respondent judge in an Order dated November 18, 1998, a copy of which
was received by the petitioners on December 29, 1998.[11] Also on December
29, 1998, the public respondent judge, in open court, granted the petitioners
until January 13, 1999 to file a Motion for Reconsideration.[12] On January 13,
1999, petitioners moved for an extension of the period to file a motion for
reconsideration until January 28, 1999.[13] The motion was finally filed by the
petitioners on January 27, 1999, but was denied by the trial court in an Order
dated March 17, 1999.[14] A copy of the Order was received by the petitioners
on May 4, 1999.[15]
A Petition for Certiorari and Prohibition was filed by the petitioners with the
Court of Appeals, alleging grave abuse of discretion on the part of the trial
court judge in issuing the Orders dated November 18, 1998 and March 17,
1999, and of the sheriff in issuing the alias Writ of Demolition. In a Resolution
dated June 18, 1999, the Court of Appeals dismissed the petition on the
grounds that the petition was filed beyond the 60-day period provided under
Section 4 of Rule 65 of the 1997 Revised Rules of Civil Procedure as
amended by Bar Matter No. 803 effective September 1, 1998, and that the
certification of non-forum shopping attached thereto was signed by only one
of the petitioners.[16] The Motion for Reconsideration filed by the petitioners
was denied by the Court of Appeals in a Resolution dated September 9,
1999.[17]
Hence this petition.
The sole issue in this case is whether or not the Court of Appeals erred in
dismissing the Petition for Certiorari and Prohibition.
The petition is meritorious.
The Court of Appeals dismissed the Petition for Certiorari upon the following
grounds, viz: (1) the petition was filed beyond the 60-day period provided
under Sec. 4, Rule 65 of the 1997 Revised Rules of Civil Procedure as
amended by Bar Matter No. 803 effective September 1, 1998; and (2) the
certification of non-forum shopping was signed by only one of the petitioners.
Upon the first ground, the Court of Appeals stated in its Resolution dated
June 18, 1999 that:
xxx the 60-day period is counted not from the receipt of the Order denying
their Motion for Reconsideration but from the date of receipt of the Order of
November 18, 1998 which was on December 29, 1998, interrupted by the
filing of the Motion for Reconsideration on January 27, 1999. The Motion for
Reconsideration was denied in an Order dated March 17, 1999 received by
the petitioners on May 4, 1999. Counting the remaining period, this petition
should have been filed on June 4, 1999 but it was filed only on June 14, 1999
or ten (10) days beyond the 60-day period computed in accordance with Bar
Matter No. 803.
xxx xxx xxx[18]
The petitioners agree that the counting of the 60-day period should
commence on December 29, 1998, the date of the receipt by the petitioners
of the assailed trial court order, interrupted by the filing of a motion for
reconsideration on January 27, 1999, and resume upon receipt by the
petitioners of the denial of the motion by the trial court on May 4, 1999;
however, the petitioners contend that from December 29, 1998 up to January
27, 1999, only the 15-day period allowed for the filing of a motion for
reconsideration[19] should be deemed to have elapsed considering the grant
by the trial court of an extension of the period to file the motion until January
13, 1999.Hence, on May 4, 1999, the petitioners still had 45 days to file a
64
petition for certiorari and/or prohibition, and the filing made on June 14, 1999
was timely.
We hold that the Petition for Certiorari and Prohibition has been timely filed.
A.M. No. 00-2-03-SC, which took effect on September 1, 2000, amended
Section 4 of Rule 65 of the 1997 Revised Rules of Civil Procedure [20] to
provide thus:
SEC. 4. When and where petition filed.-- The petition shall be filed not later
than sixty (60) days from notice of the judgment, order or resolution. In case
a motion for reconsideration or new trial is timely filed, whether such motion
is required or not, the sixty (60) day period shall be counted from notice of
the denial of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or
omissions of a lower court or of a corporation, board, officer or person, in the
Regional Trial Court exercising jurisdiction over the territorial area as defined
by the Supreme Court. It may also be filed in the Court of Appeals whether or
not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it
is in aid of its appellate jurisdiction. If it involves the acts or omissions of a
quasi-judicial agency, unless otherwise provided by law or these rules, the
petition shall be filed in and cognizable only by the Court of Appeals.
No extension of time to file the petition shall be granted except for compelling
reason and in no case exceeding fifteen (15) days. [Emphasis ours]
In the case of Systems Factors Corporation versus NLRC,[21] we held that the
abovequoted Resolution, being procedural in nature, is applicable to actions
pending and undetermined at the time of their passage. The retroactive
application of procedural laws such as this Resolution is not violative of any
right of a person who may feel adversely affected thereby, as no vested right
may attach to nor arise from procedural laws.[22] The ruling in the Systems
Factors case was reiterated in the recent case of Unity Fishing Development
Corporation, et. al. vs. Court of Appeals, et. al.[23] Applying the Resolution to
the case at bar, the 60-day period for the filing of a petition for certiorari and
prohibition should be reckoned from the date of receipt of the order denying
the motion for reconsideration, i.e., May 4, 1999, and thus, the filing made on
June 14, 1999 was well within the 60-day reglementary period.
Anent the ground that the certification of non-forum shopping was signed by
only one of the petitioners, it is the contention of the petitioners that the same
is sufficient compliance with the requirements of Sections 1 and 2 of Rule 65
(Petition for Certiorari and Prohibition) in relation to Section 3 of Rule
46 (Original Cases Filed in the Court of Appeals). The petitioners argue that
since they are spouses with joint or indivisible interest over the alleged
conjugal property subject of the original action which gave rise to the petition
for certiorari and prohibition, the signing of the certificate of non-forum
shopping by only one of them would suffice, especially considering the long
distance they had to travel just to sign the said certificate.[24] Moreover, there
is substantial compliance with the Rules of Court where the certification was
signed by the husband who is the statutory administrator of the conjugal
property.[25]
It has been our previous ruling that the certificate of non-forum shopping
should be signed by all the petitioners or plaintiffs in a case, and that the
signing by only one of them is insufficient. In the case of Efren Loquias, et. al.
vs. Office of the Ombudsman, et. al.,[26] we held that the signing of the
Verification and the Certification on Non-Forum Shopping by only one of the
petitioners constitutes a defect in the petition.[27] The attestation contained in
the certification on non-forum shopping requires personal knowledge by the
party executing the same,[28] and the lone signing petitioner cannot be
presumed to have personal knowledge of the filing or non-filing by his co-
petitioners of any action or claim the same as or similar to the current
petition. To merit the Courts consideration, petitioners must show reasonable
cause for failure to personally sign the certification.
In the case at bar, however, we hold that the subject Certificate of Non-
Forum Shopping signed by the petitioner Antonio Docena alone should be
deemed to constitute substantial compliance with the rules.[29] There are only
two petitioners in this case and they are husband and wife. Their residence is
the subject property alleged to be conjugal in the instant verified petition.The
Verification/Certification on Non-Forum Shopping[30] attached to the Petition
for Certiorari and Prohibition was signed only by the husband who
certified, inter alia, that he and his wife have not commenced any other
action or proceeding involving the same issues raised in the petition in any
court, tribunal or quasi-judicial agency; that to the best of their knowledge no
such action is pending therein; and that he and his wife undertake to inform
the Court within five (5) days from notice of any similar action or proceeding
which may have been filed.
The property subject of the original action for recovery is conjugal. Whether it
is conjugal under the New Civil Code or the Family Code, a fact that cannot
65
be determined from the records before us, it is believed that the certificate on
non-forum shopping filed in the Court of Appeals constitutes sufficient
compliance with the rules on forum-shopping.
Under the New Civil Code, the husband is the administrator of the conjugal
partnership.[31] In fact, he is the sole administrator, and the wife is not entitled
as a matter of right to join him in this endeavor.[32] The husband may defend
the conjugal partnership in a suit or action without being joined by the
wife.[33] Corollarily, the husband alone may execute the necessary certificate
of non-forum shopping to accompany the pleading. The husband as the
statutory administrator of the conjugal property could have filed the petition
for certiorari and prohibition[34] alone, without the concurrence of the wife. If
suits to defend an interest in the conjugal properties may be filed by the
husband alone, with more reason, he may sign the certificate of non-forum
shopping to be attached to the petition.
Under the Family Code, the administration of the conjugal property belongs
to the husband and the wife jointly.[35] However, unlike an act of alienation or
encumbrance where the consent of both spouses is required, joint
management or administration does not require that the husband and wife
always act together. Each spouse may validly exercise full power of
management alone, subject to the intervention of the court in proper cases
as provided under Article 124 of the Family Code.[36] It is believed that even
under the provisions of the Family Code, the husband alone could have filed
the petition for certiorari and prohibition to contest the writs of demolition
issued against the conjugal property with the Court of Appeals without being
joined by his wife. The signing of the attached certificate of non-forum
shopping only by the husband is not a fatal defect.
More important, the signing petitioner here made the certification in his behalf
and that of his wife. The husband may reasonably be presumed to have
personal knowledge of the filing or non-filing by his wife of any action or claim
similar to the petition for certiorari and prohibition given the notices and legal
processes involved in a legal proceeding involving real property. We also see
no justifiable reason why he may not lawfully undertake together with his wife
to inform the court of any similar action or proceeding which may be filed. If
anybody may repudiate the certification or undertaking for having been
incorrectly made, it is the wife who may conceivably do so.
In view of the circumstances of this case, namely, the property involved is a
conjugal property, the petition questioning the writ of demolition thereof
originated from an action for recovery brought against the spouses, and is
clearly intended for the benefit of the conjugal partnership, and the wife, as
pointed out in the Motion for Reconsideration in respondent court, was in the
province of Guian, Samar, whereas the petition was prepared in Metro
Manila, a rigid application of the rules on forum shopping that would
disauthorize a husbands signing the certification in his behalf and that of his
wife is too harsh and is clearly uncalled for.
It bears stressing that the rules on forum shopping, which were designed to
promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and
legitimate objective.[37]
The petitioners motion for the issuance of a temporary restraining order to
put on hold the demolition of the subject property is principally anchored on
their alleged right to the nullification of the assailed orders and writs issued
by the public respondents.[38] As the existence of the right being asserted by
the petitioners is a factual issue proper for determination by the Court of
Appeals, the motion based thereon should likewise be addressed to the latter
court.
WHEREFORE, premises considered, the petition is hereby GRANTED. The
Court of Appeals Resolutions dated June 18, 1999 and September 9, 1999
are hereby SET ASIDE and the case is REMANDED to the Court of Appeals
for further proceedings.
SO ORDERED.
THIRD DIVISION
ALDEGONDA VDA. DE G.R. No. 137808
RAMONES, BEATRIZ and
MARGARITA, BOTH SURNAMED
RAMONES,
Present:
Petitioners,
PANGANIBAN, J., Chairman,
66
 SANDOVAL-GUTIERREZ, Spouses Santos and Aldegonda Ramones are the registered owners of a
358-square meter lot located at Calamagui, Ilagan, Isabela, covered by
versus CORONA, Transfer Certificate of Title (TCT) No. T-43468 of the Registry of Deeds,
same province.
CARPIO MORALES, and
On May 23, 1979, Santos Ramones, without the knowledge of his wife,
GARCIA, JJ.
Aldegonda, sold to Aurora P. Agbayani a 100-square meter portion of the lot
for P5,000.00. The Deed of Sale was annotated by the Register of Deeds as
Entry No. 90 at the back of TCT No. T-43468.
AURORA P. AGBAYANI,
ASSISTED BY HER HUSBAND On March 7, 1980, Santos Ramones died. Subsequently, Aldegonda and her
FILEMON AGBAYANI, daughters Beatriz and Margarita, herein petitioners, had a restroom and a
concrete septic tank built on the area sold by Santos Ramones to respondent
Respondent. Promulgated: without the latters knowledge. This prompted respondent to bring the matter
to the barangay authorities but no settlement was reached by the parties.

On June 27, 1983, respondent filed with the Regional Trial Court of Isabela,
Branch 17, a complaint for quieting of title and recovery of possession
September 30, 2005 against petitioners on the basis of the Deed of Sale executed by Santos
Ramones.

x---------------------------------------------------------------------------------x
DECISION
In their amended answer, petitioners averred that the 100-square meter lot
subject of the Deed of Sale is the conjugal property of spouses Santos and
petitioner Aldegonda Ramones. Even if Santos, during his lifetime, sold the
property to respondent, the sale is void since it was executed without the
consent of his wife, Aldegonda Ramones.
On October 11, 1995, the trial court rendered a Decision[2] in favor of
petitioners and against respondent, holding that the Deed of Sale is void
because it was executed without the consent of his wife Aldegonda.

SANDOVAL-GUTIERREZ, J.: On appeal, the Court of Appeals rendered its Decision reversing that of the
trial court, thus:

WHEREFORE, IN VIEW OF THE FOREGOING, the decision of the lower

Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1] dated May 8, 1998 and the
Resolution dated February 16, 1999 of the Court of Appeals in CA-G.R. CV
No. 49807, entitled AURORA AGBAYANI, assisted by her husband,
FILEMON AGBAYANI versus ALDEGONDA VDA. DE RAMONES, BEATRIZ
AND MARGARITA, both surname RAMONES.
court dated October 11, 1995 is REVERSED, and a new judgment is
rendered in favor of plaintiff-appellant Aurora P. Agbayani, confirming the
Deed of Sale executed by Santos P. Ramones in her favor and declaring
plaintiffs as absolute owners of the lot sold to them by the aforenamed
vendor. No pronouncement as to costs.

67
SO ORDERED.[3]
Petitioners motion for reconsideration was denied.
In ruling that the Deed of Sale between Santos Ramones and herein
respondent is valid, the Appellate Court held: Article 166 of the Civil Code
prohibits alienation or encumbrance of real property by the husband without
the consent of the wife. This provision should be read with Article 173 of the
same Code providing that the wife may, during the marriage and within ten
(10) years from the questioned transaction, ask the courts for annulment of
any contract of the husband entered into without her consent. In other words,
the lack of consent by the wife will not make the alienation of the conjugal
property by the husband void. It is merely voidable. In the instant case,
however, petitioner Aldegonda Ramones, wife of Santos, did not ask the
courts for the annulment of the Deed of Sale involving a portion of their
conjugal property within ten (10) years from the transaction. Thus, the sale is
valid.
The only issue in this case is whether the sale of real property belonging to
the conjugal partnership by the husband without his wifes consent is void.
In Villaranda v. Villaranda, et al.,[4] this Court, through Mr. Justice Artemio V.
Panganiban, ruled that without the wifes consent, the husbands alienation or
encumbrance of conjugal property prior to the effectivity of the Family Code
is not void, but merely voidable. However, the wifes failure to file with the
courts an action for annulment of the contract during the marriage and within
ten (10) years from the transaction shall render the sale valid. In the present
case, the Deed of Absolute Sale was executed by Santos Ramones on May
23, 1979.[5] The Family Code took effect much later, or only on August 3,
1988. Laws should be applied prospectively, unless a legislative intent to
give them retroactive effect is expressly declared or is necessarily implied
from the language used.[6] This exception is not present here. Therefore, the
provisions of the Civil Code, not the Family Code, apply to the present case.
There is no dispute that the lot sold is the conjugal property of spouses
Ramones. In this connection, Article 166 of the Civil Code, provides:
Article 166. Unless the wife has been declared a non compos mentisor 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. x x x
Clearly, Article 166 is categorical that the husband cannot alienate or
encumber any real property of the conjugal partnership without the wifes
consent. This provision, however, must be interpreted in conjunction with
Article 173 of the same Code, quoted as follows:
Article 173. The wife may, during the marriage, and within ten years from the
transaction questioned, ask the courts for the annulment of any contract of
the husband entered into without her consent, when such consent is
required, or any act or contract of the husband which tends to defraud her or
impair her interest in the conjugal partnership property. Should the wife fail to
exercise this right, she or her heirs, after the dissolution of the marriage, may
demand the value of the property fraudulently alienated the husband.
The above provision states that an action to annul an alienation or
encumbrance by the husband may be instituted by the wife during the
marriage and within ten years from the transaction questioned.
Consequently, the lack of consent on her part will not make the husbands
alienation or encumbrance of real property of the conjugal partnership void,
but merely voidable.[7]
Here, there is no proof that petitioner Aldegonda Ramones filed any
complaint to annul the Deed of Sale entered into by her husband. As held by
this Court in Villaranda,[8] her right to bring an action to invalidate the contract
has thus prescribed. Hence, the assailed Deed is still valid and enforceable.
WHEREFORE, the petition is DENIED and the assailed Decision of the Court
of Appeals is AFFIRMED. Costs against petitioners.
SO ORDERED.
68
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-57757 August 31, 1987
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PRAGMACIO VITUG AND
MAXIMO VITUG, respondents.
GANCAYCO, J.:
Does the presumption of conjugality of properties acquired by the spouses
during coverture provided for in Article 160 of the Civil Code apply to property
covered by a Torrens certificate of title in the name of the widow? This is the
issue posed in this petition to review on certiorari of the decision of the Court
of Appeals in CA-G.R. No. 60903 which is an action for reconveyance and
damages. *
On November 28, 1952, Donata Montemayor, through her son, Salvador M.
Vitug, mortgaged to the Philippine National Bank (PNB) several parcels of
land covered by Transfer Certificate of Title (TCT) No. 2289 — Pampanga to
guarantee the loan granted by the PNB to Salvador Jaramilla and Pedro
Bacani in the amount of P40,900.00 which was duly registered in the Office
of the Register of Deeds of Pampanga. 1
On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB
certain properties covered by TCT Nos. 2887 and 2888-Pampanga to
guarantee the payment of the loan account of her son Salvador Vitug in the
amount of P35,200.00, which mortgage was duly registered in the Register of
Deeds of Pampanga. 2
The above-mentioned Transfer Certificates of Titles covering said properties
were all in the name of Donata Montemayor, of legal age, Filipino, widow and
a resident of Lubao, Pampanga at the time they were mortgaged to
PNB 3 and were free from all hens and encumbrances. 4
Salvador Vitug failed to pay his account so the bank foreclosed the
mortgaged properties covered by TCT Nos. 2887 and 2888. They were sold
at public auction on May 20, 1968 in which the PNB was the highest bidder.
The titles thereto were thereafter consolidated in the name of PNB.
Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their accounts
with the PNB so the latter foreclosed the properties covered by TCT No.
2889 which were sold at public auction and likewise PNB was the buyer
thereof. On August 30, 1968, a certificate of sale was issued by the Register
of Deeds covering said properties in favor of the PNB. When the title of the
PNB was consolidated a new title was issued in its name. 5
On September 2, 1969, the PNB sold the properties covered by TCT Nos.
2887 and 2888 — Pampanga to Jesus M. Vitug, Anunciacion V. de Guzman,
Prudencia V. Fajardo, Salvador Vitug and Aurora V. Gutierrez in those
names the corresponding titles were issued. 6
During the lifetime of Clodualdo Vitug he married two times. His first wife was
Gervacia Flores with whom he had 3 children, namely, Victor, Lucina and
Julio all surnamed Vitug. Victor now dead is survived by his 5 children:
Leonardo, Juan, Candida Francisco and Donaciano, an surnamed Vitug.
Juan Vitug is also dead and is survived by his only daughter Florencia Vitug.
The second wife of Clodualdo Vitug was Donata Montemayor with whom he
had 8 children, namely, Pragmacio, Maximo, Jesus, Salvador, Prudencio and
Anunciacion, all surnamed Vitug, the late Enrique Vitug represented by his
wife Natalia Laquian, and the late Francisco Vitug who is survived by 11
children, namely, Antonio, Francisco, Aurora, Pedro, Honorio, Corazon,
Anselmo, Benigno, Eligio Jesus and Luz.
Clodualdo Vitug died intestate on May 20, 1929 so his estate was settled and
distributed in Special Proceeding No. 422 in the Court of First Instance of
Pampanga wherein Donata Montemayor was the Administratrix. 7
Meanwhile, on May 12,1958, Donata Montemayor executed a contract of
lease of Lot No. 24, which is covered by TCT No. 2887-R in favor of her
children Pragmacio and Maximo both surnamed Vitug. This lease was
extended on August 31, 1963. By virtue of a general power of attorney
executed by Donata Montemayor on Sept. 19, 1966 in favor of Pragmacio
Vitug, the latter executed a contract of lease on Sept. 19, 1967 of the said lot
in favor of Maximo Vitug. 8
69
On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for
partition and reconveyance with damages in the Court of First Instance of
Pampanga against Marcelo Mendiola, special administrator of the intestate
estate of Donata Montemayor who died earlier, Jesus Vitug, Sr., Salvador,
Natalia, Prudencia, Anunciacion, all surnamed Vitug, Antonio, Francisco,
Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz,
all surnamed Fajardo and the PNB.
The subject of the action is 30 parcels of land which they claim to be the
conjugal property of the spouses Donata Montemayor and Clodualdo Vitug of
which they claim a share of 2/11 of 1/2 thereof. They assailed the mortgage
to the PNB and the public auction of the properties as null and void. They
invoked the case of Vitug vs. Montemayor, L-5297 decided by this Court on
Oct. 20, 1953 which is an action for partition and liquidation of the said 30
parcels of land wherein the properties were found to be conjugal in nature.
In a decision of Sept. 15, 1975, the lower court dismissed the complaint with
costs against the plaintiffs and ordered them to pay attorney's fees of
P5,000.00 to the defendant's counsel. Plaintiffs then interposed an appeal to
the Court of Appeals, wherein in due course a decision was rendered on May
20, 1981, the dispositive part of which reads as follows:
WHEREFORE, in the light of the foregoing, the decision appealed from is
hereby reversed and set aside, and another one entered in accordance with
the tenor of the prayer of appellant's complaint with the modification that the
sale at public auction of the 22 parcels be considered valid with respect to
the 1/2 thereof. No costs.
Hence the herein petition for certiorari filed by the PNB raising the following
assignments of error:
I When the subject properties were mortgaged to the PNB they were
THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING TO THE
CASE AT BAR THE RULING OF THIS HONORABLE SUPREME COURT IN
FLORENCIA VITUG VS. DONATA MONTEMAYOR, ET AL., 91 PHIL. 286
(1953) BECAUSE:
A. BETWEEN A PROVISION OF A SPECIAL LAW AND THE JUDICIAL
INTERPRETATION AND/OR APPLICATION OF A PROVISION OF A
GENERAL LAW, THE FORMER PREVAILS.
B. THE DOCTRINE OF STARE DECISIS IS NOT A MECHANICAL
FORMULA OF ADHERENCE.
C. PNB WAS NOT A PARTY, AND HAD NO KNOWLEDGE OF THE
ABOVECITED CASE.
D. SIMILARLY, PRAGMACIO VITUG AND MAXIMO VITUG WERE NOT
PARTIES IN SAID CASE.
II
THE RESPONDENT COURT OF APPEALS ERRED IN NOT
RECOGNIZING THE CONCLUSIVENESS OF THE CERTIFICATE, OF
TITLE, AS PROVIDED IN ACT 496, AS AMENDED (THE LAND
REGISTRATION).
III
THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING THE
CONCLUSIVENESS OF OWNERSHIP OF DONATA MONTEMAYOR OVER
THE PROPERTIES WHICH WERE REGISTERED EXCLUSIVELY IN HER
NAME WHEN PRIVATE RESPONDENTS (PRAGMACIO VITUG AND
MAXIMO VITUG), AS LESSEES, ENTERED INTO A CONTRACT OF
LEASE WITH DONATA MONTEMAYOR AS THE OWNER-LESSOR.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING
THAT PNB WAS A MORTGAGEE IN BAD FAITH.
The petition is impressed with merit.
registered in the name of Donata Montemayor, widow. Relying on the torrens
certificate of title covering said properties the mortgage loan applications of
Donata were granted by the PNB and the mortgages were duly constituted
and registered in the office of the Register of Deeds.
In processing the loan applications of Donata Montemayor, the PNB had the
right to rely on what appears in the certificates of title and no more. On its
face the properties are owned by Donata Montemayor, a widow. The PNB
had no reason to doubt nor question the status of said registered owner and
70
her ownership thereof. Indeed, there are no liens and encumbrances
covering the same.
The well-known rule in this jurisdiction is that a person dealing with a
registered land has a right to rely upon the face of the torrens certificate of
title and to dispense with the need of inquiring further, except when the party
concerned has actual knowledge of facts and circumstances that would impel
a reasonably cautious man make such inquiry. 9
A torrens title concludes all controversy over ownership of the land covered
by a final degree of registration. 10 Once the title is registered the owner may
rest assured without the necessity of stepping into the portals of the court or
sitting in the mirador de su casa to avoid the possibility of losing his land. 11
Article 160 of the Civil Code provides as follows:
Art. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or
to the wife.
The presumption applies to property acquired during the lifetime of the
husband and wife. In this case, it appears on the face of the title that the
properties were acquired by Donata Montemayor when she was already a
widow. When the property is registered in the name of a spouse only and
there is no showing as to when the property was acquired by said spouse,
this is an indication that the property belongs exclusively to said
spouse. 12 And this presumption under Article 160 of the Civil Code cannot
prevail when the title is in the name of only one spouse and the rights of
innocent third parties are involved. 13
The PNB had a reason to rely on what appears on the certificates of title of
the properties mortgaged. For all legal purposes, the PNB is a mortgagee in
goodfaith for at the time the mortgages covering said properties were
constituted the PNB was not aware to any flaw of the title of the
mortgagor. 14
True it is that in the earlier cases decided by this Court, namely Vitug VS.
Montemayor decided on May 15, 1952, which is an action for recovery of
possession of a share in said parcels of land, 15 and in the subsequent
action for partition between the same parties decided on Oct. 20,
1953, 16 this court found the 30 parcels of land in question to be conjugal in
nature and awarded the corresponding share to the property of Florencia
Vitug, an heir of the late Clodualdo Vitug from the first marriage. In said
cases this Court affirmed the decision of the lower court. In the dispositive
part of the decision of the trial court it made the observation that "but from the
conduct of Clodualdo Vitug and Donata Montemayor during the existence of
their marital life, the inference is clear that Clodualdo had the unequivocal
intention of transmitting the full ownership of the 30 parcels of land to his wife
Donata Montemayor, thus considering the 1/2 of the funds of the conjugal
property so advanced for the purchase of said parcels of land as reimbursible
to the estate of Clodualdo Vitug on his death. 17 That must be the reason
why the property was registered in the name of Donata Montemayor as
widow after the death of Clodualdo Vitug. 18
At any rate, although actions for recovery of real property and for partition are
real actions, however, they are actions in personam that bind only the
particular individuals who are parties thereto. 19 The PNB not being a party
in said cases is not bound by the said decisions. Nor does it appear that the
PNB was aware of the said decisions when it extended the above describe
mortgage loans. Indeed, if the PNB knew of the conjugal nature of said
properties it would not have approved the mortgage applications covering
said properties of Donata Montemayor without requiring the consent of all the
other heirs or co-owners thereof. Moreover, when said properties were sold
at public auction, the PNB was a purchaser for value in good faith. So its
right thereto is beyond question. 20
Pragmacio and Maximo Vitug are now estopped from questioning the title of
Donata Montemayor to the said properties. They never raised the conjugal
nature of the property nor took issue as to the ownership of their mother,
Donata Montemayor, over the same. Indeed private respondents were
among the defendants in said two cases wherein in their answers to the
complaint they asserted that the properties in question are paraphernal
properties belonging exclusively to Donata Montemayor and are not conjugal
in nature. 21 Thus they leased the properties from their mother Donata
Montemayor for many years knowing her to be the owner. They were in
possession of the property for a long time and they knew that the same were
mortgaged by their mother to the PNB and thereafter were sold at public
auction, but they did not do anything. 22 It is only after 17 years that they
remembered to assert their rights. Certainly, they are guilty of laches. 23
Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug
as occupants and lessees of the property in question cannot now dispute the
ownership of their mother over the same who was their lessor. 24
71
WHEREFORE, the subject decision of the respondent Court of Appeals is DECISION
hereby REVERSED and set aside and another decision is hereby rendered
DISMISSING the complaint and ordering private respondents to pay
attomey's fees and expenses of litigation to petitioner PNB in the amount of
QUISUMBING, Acting C.J.:
P20,000.00 and the costs of the suit.
For review are the Decision[1] dated February 21, 2002 and the
SO ORDERED.
Resolution[2]dated October 7, 2003 of the Court of Appeals in CA-G.R. CV
No. 54560. The appellate court modified the Decision[3] dated September 26,
1995 of the Regional Trial Court (RTC) of Davao City, Branch 15.
SECOND DIVISION
Simply stated, the facts as found by the Court of Appeals [4] are as follows:

Respondent Mary Ann Pasaol Villa Abrille and Pedro Villa Abrille are
PATROCINIA RAVINA AND WILFREDO RAVINA, G.R. No. 160708 husband and wife. They have four children, who are also parties to the
instant case and are represented by their mother, Mary Ann.
Petitioners,
In 1982, the spouses acquired a 555-square meter parcel of land
Present: denominated as Lot 7, located at Kamuning Street, Juna Subdivision,
Matina, Davao City, and covered by Transfer Certificate of Title (TCT) No. T-
88674 in their names. Said lot is adjacent to a parcel of land which Pedro
- versus - acquired when he was still single and which is registered solely in his name
QUISUMBING, Acting C.J., Chairperson,
under TCT No. T-26471.
CARPIO MORALES,
Through their joint efforts and the proceeds of a loan from the Development
BRION, and Bank of the Philippines (DBP), the spouses built a house on Lot 7 and
Pedros lot.The house was finished in the early 1980s but the spouses
MARY ANN P. VILLA ABRILLE, for herself and BERSAMIN,* continuously made improvements, including a poultry house and an annex.
in behalf of INGRID DLYN P. VILLA ABRILLE,
INGREMARK DWIGHT VILLA ABRILLE, ABAD, JJ. In 1991, Pedro got a mistress and began to neglect his family. Mary Ann was
INGRESOLL DIELS VILLA ABRILLE AND forced to sell or mortgage their movables to support the family and the
INGRELYN DYAN VILLA ABRILLE, studies of her children. By himself, Pedro offered to sell the house and the
two lots to herein petitioners, Patrocinia and Wilfredo Ravina. Mary Ann
Respondents. objected and notified the petitioners of her objections, but Pedro nonetheless
sold the house and the two lots without Mary Anns consent, as evidenced by
a Deed of Sale[5] dated June 21, 1991.It appears on the said deed that Mary
Ann did not sign on top of her name.

Promulgated:
October 16, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
On July 5, 1991 while Mary Ann was outside the house and the four children
were in school, Pedro together with armed members of the Civilian Armed
Forces Geographical Unit (CAFGU) and acting in connivance with
petitioners[6] began transferring all their belongings from the house to an
apartment.
72
When Mary Ann and her daughter Ingrid Villa Abrille came home, they were 4. A. Seventeen Thousand Pesos (P17,000.00) representing the value of the
stopped from entering it. They waited outside the gate until evening under movables and belonging[s] that were lost when unknown men
the rain.They sought help from the Talomo Police Station, but police unceremoniously and without their knowledge and consent removed their
authorities refused to intervene, saying that it was a family matter. Mary Ann movables from their house and brought them to an apartment.
alleged that the incident caused stress, tension and anxiety to her children,
so much so that one flunked at school. Thus, respondents Mary Ann and her
children filed a complaint for Annulment of Sale, Specific Performance,
4. B. One Hundred Thousand Pesos (P 100,000.00) to plaintiff Mary Abrille
Damages and Attorneys Fees with Preliminary Mandatory
as moral damages.
Injunction[7] against Pedro and herein petitioners (the Ravinas) in the RTC of
Davao City.

During the trial, Pedro declared that the house was built with his own 4. C. Fifty Thousand Pesos (P50,000.00) to each of the four children as
money.Petitioner Patrocinia Ravina testified that they bought the house and moral damages, namely:
lot from Pedro, and that her husband, petitioner Wilfredo Ravina, examined
the titles when they bought the property.

On September 26, 1995, the trial court ruled in favor of herein respondent
Mary Ann P. Villa Abrille as follows:
WHEREFORE, judgment is rendered as follows:
1. The sale of lot 8 covered by TCT No. 26471 by defendant
Pedro Abrille appearing in the Deed of Sale marked as Exh. E is void as to
one half or 277.5 square meters representing the share of plaintiff Mary Villa
Abrille.
a) Ingrid Villa Abrille Fifty Thousand Pesos (P50,000.00), b) Ingremark Villa
Abrille Fifty Thousand Pesos (P50,000.00), c) Ingresoll Villa Abrille Fifty
Thousand Pesos (P50,000.00) and d) Ingrelyn Villa Abrille Fifty Thousand
Pesos (P50,000.00).
5. Ten Thousand Pesos (P10,000.00) as exemplary damages by way of
example and correction for the public good.

2. That sale of Lot 7 covered by TCT No. [88674] by defendant

Pedro Villa Abrille in the Deed of Sale (Exh. A) is valid as to one half or 277.5
square meters of the 555 square meters as one half belongs to defendant 6. The costs of suit.[8]
Pedro Abrille but it is void as to the other half or 277.5 square meters as it
On appeal, the Court of Appeals modified the decision, thus:
belongs to plaintiff Mary Abrille who did not sell her share nor give her
consent to the sale. WHEREFORE, the appealed judgment is hereby MODIFIED as follows:
3. That sale of the house mentioned in the Deed of Sale (Exh. A)
is valid as far as the one half of the house representing the share of
defendant Pedro Abrille is concerned but void as to the other half which is 1. The sale of lot covered by TCT No. 26471 in favor of
the share of plaintiff Mary Abrille because she did not give her consent/sign defendants spouses Wilfredo and Patrocinia Ravina is declared valid.
the said sale.

4. The defendants shall jointly pay the plaintiffs.

73
2. The sale of lot covered by TCT No. 88674 in favor of said
defendants spouses Ravina, together with the house thereon, is
declared null and void.
3. Defendant Pedro Abrille is ordered
to return the value of the consideration for the lot covered by TCT No. 88674
and the house thereon to co-defendants spouses Ravina.
4. Defendants spouses Ravina [a]re ordered to reconvey the lot and house
covered by TCT No. 88674 in favor of spouses Pedro and Mary Villa Abrille
and to deliver possession to them.
5. Plaintiffs are given the option to exercise their rights under
Article [450] of the New Civil Code with respect to the improvements
introduced by defendant spouses Ravina.
6. Defendants Pedro Villa Abrille and spouses Ravina are ordered
to pay jointly and severally the plaintiffs as follows:
a) One Hundred Thousand Pesos (P100,000.00) to plaintiff Mary Villa Abrille
as moral damages.
b) Fifty Thousand Pesos (P50,000.00) as moral damages to each of the four
children, namely: Ingrid Villa Abrille, Ingremark Villa Abrille, Ingresoll Villa
Abrille and Ingrelyn Villa Abrille.
c) Ten Thousand (P10,000.00) as exemplary damages by way of
example and correction for the public good.
SO ORDERED.[9]
Their Motion for Reconsideration having been denied, petitioners filed this
petition. Petitioners argue that:
I.
THE COURT OF APPEALS ERRED WHEN IT DECLARED x x x
THE SALEOF LOT COVERED BY TCT NO. 88674 IN FAVOR OF
SPOUSES RAVINA, TOGETHER WITH THE HOUSE THEREON, AS NULL
AND VOID SINCE IT IS CLEARLY CONTRARY TO LAW AND EVIDENCE.
II.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS
PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE NOT INNOCENT
PURCHASERS FOR VALUE, THE SAME BEING CONTRARY TO LAW
AND EVIDENCE.
III.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS
PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE LIABLE FOR
DAMAGES, THE SAME BEING CONTRARY TO LAW AND EVIDENCE.[10]
In essence, petitioners assail the appellate courts declaration that the sale to
them by Pedro of the lot covered by TCT No. T-88674 is null and
void. However, in addressing this issue, it is imperative to determine: (1)
whether the subject property covered by TCT No. T-88674 is an exclusive
property of Pedro or conjugal property, and (2) whether its sale by Pedro was
valid considering the absence of Mary Anns consent.
Petitioners assert that the subject lot covered by TCT No. T-88674 was the
exclusive property of Pedro having been acquired by him through barter or
exchange.[11] They allege that the subject lot was acquired by Pedro with the
proceeds of the sale of one of his exclusive properties. Allegedly, Pedro and
his sister Carmelita initially agreed to exchange their exclusive lots covered
by TCT No. T-26479 and TCT No. T-26472, respectively. Later, however,
Pedro sold the lot covered by TCT No. T-26472 to one Francisca Teh Ting
and purchased the property of Carmelita using the proceeds of the sale. A
new title, TCT No. T-88674, was issued thereafter. Thus, petitioners insist
that the subject lot remains to be an exclusive property of Pedro as it was
acquired or purchased through the exclusive funds or money of the latter.
74
We are not persuaded. Article 160 of the New Civil Code provides, All
property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife.
There is no issue with regard to the lot covered by TCT No. T-26471, which
was an exclusive property of Pedro, having been acquired by him before his
marriage to Mary Ann. However, the lot covered by TCT No. T-88674 was
acquired in 1982 during the marriage of Pedro and Mary Ann. No evidence
was adduced to show that the subject property was acquired through
exchange or barter. The presumption of the conjugal nature of the property
subsists in the absence of clear, satisfactory and convincing evidence to
overcome said presumption or to prove that the subject property is
exclusively owned by Pedro.[12] Petitioners bare assertion would not suffice to
overcome the presumption that TCT No. T-88674, acquired during the
marriage of Pedro and Mary Ann, is conjugal. Likewise, the house built
thereon is conjugal property, having been constructed through the joint
efforts of the spouses, who had even obtained a loan from DBP to construct
the house.
Significantly, a sale or encumbrance of conjugal property concluded after the
effectivity of the Family Code on August 3, 1988, is governed by Article 124
of the same Code that now treats such a disposition to be void if done (a)
without the consent of both the husband and the wife, or (b) in case of one
spouses inability, the authority of the court. Article 124 of the Family Code,
the governing law at the time the assailed sale was contracted, is explicit:
ART. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husbands decision shall prevail, subject to recourse to the court by the wife
for proper remedy which must be availed of within five years from the date of
the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the
court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be
void. However, the transaction shall be construed as a continuing offer on
the part of the consenting spouse and the third person, and may be perfected
as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both
offerors. (Emphasis supplied.)
The particular provision in the New Civil Code giving the wife ten (10) years
to annul the alienation or encumbrance was not carried over to the Family
Code. It is thus clear that alienation or encumbrance of the conjugal
partnership property by the husband without the consent of the wife is null
and void.
Hence, just like the rule in absolute community of property, if the husband,
without knowledge and consent of the wife, sells conjugal property, such sale
is void. If the sale was with the knowledge but without the approval of the
wife, thereby resulting in a disagreement, such sale is annullable at the
instance of the wife who is given five (5) years from the date the contract
implementing the decision of the husband to institute the case.[13]
Here, respondent Mary Ann timely filed the action for annulment of sale
within five (5) years from the date of sale and execution of the
deed. However, her action to annul the sale pertains only to the conjugal
house and lot and does not include the lot covered by TCT No. T-26471, a
property exclusively belonging to Pedro and which he can dispose of freely
without Mary Anns consent.
On the second assignment of error, petitioners contend that they are buyers
in good faith.[14] Accordingly, they need not inquire whether the lot was
purchased by money exclusively belonging to Pedro or of the common fund
of the spouses and may rely on the certificates of title.
The contention is bereft of merit. As correctly held by the Court of Appeals, a
purchaser in good faith is one who buys the property of another without
notice that some other person has a right to, or interest in, such property and
pays a full and fair price for the same at the time of such purchase, or before
he has notice of the claim or interest of some other person in the
property.[15] To establish his status as a buyer for value in good faith, a
person dealing with land registered in the name of and occupied by the seller
need only show that he relied on the face of the sellers certificate of title. But
for a person dealing with land registered in the name of and occupied by the
seller whose capacity to sell is restricted, such as by Articles 166 and 173 of
the Civil Code or Article 124 of the Family Code, he must show that he
inquired into the latters capacity to sell in order to establish himself as a
buyer for value in good faith.[16]
75
In the present case, the property is registered in the name of Pedro and his
wife, Mary Ann. Petitioners cannot deny knowledge that during the time of
the sale in 1991, Pedro was married to Mary Ann. However, Mary Anns
conformity did not appear in the deed. Even assuming that petitioners
believed in good faith that the subject property is the exclusive property of
Pedro, they were apprised by Mary Anns lawyer of her objection to the sale
and yet they still proceeded to purchase the property without Mary Anns
written consent. Moreover, the respondents were the ones in actual, visible
and public possession of the property at the time the transaction was being
made. Thus, at the time of sale, petitioners knew that Mary Ann has a right to
or interest in the subject properties and yet they failed to obtain her
conformity to the deed of sale. Hence, petitioners cannot now invoke the
protection accorded to purchasers in good faith.
Now, if a voidable contract is annulled, the restoration of what has been
given is proper. The relationship between the parties in any contract even if
subsequently annulled must always be characterized and punctuated by
good faith and fair dealing.[17] Hence, in consonance with justice and equity
and the salutary principle of non-enrichment at anothers expense, we sustain
the appellate courts order directing Pedro to return to petitioner spouses the
value of the consideration for the lot covered by TCT No. T-88674 and the
house thereon.
However, this court rules that petitioners cannot claim reimbursements for
improvements they introduced after their good faith had ceased. As correctly
found by the Court of Appeals, petitioner Patrocinia Ravina made
improvements and renovations on the house and lot at the time when the
complaint against them was filed. Ravina continued introducing
improvements during the pendency of the action.[18]
Thus, Article 449 of the New Civil Code is applicable. It provides that, (h)e
who builds, plants or sows in bad faith on the land of another, loses what is
built, planted or sown without right to indemnity.[19]
On the last issue, petitioners claim that the decision awarding damages to
respondents is not supported by the evidence on record.[20]
The claim is erroneous to say the least. The manner by which respondent
and her children were removed from the family home deserves our
condemnation. On July 5, 1991, while respondent was out and her children
were in school, Pedro Villa Abrille acting in connivance with the
petitioners[21] surreptitiously transferred all their personal belongings to
another place. The respondents then were not allowed to enter their rightful
home or family abode despite their impassioned pleas.
Firmly established in our civil law is the doctrine that: Every person must, in
the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.[22] When
a right is exercised in a manner that does not conform with such norms and
results in damages to another, a legal wrong is thereby committed for which
the wrong doer must be held responsible. Similarly, any person who willfully
causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damages
caused.[23] It is patent in this case that petitioners alleged acts fall short of
these established civil law standards.
WHEREFORE, we deny the instant petition for lack of merit. The Decision
dated February 21, 2002 and the Resolution dated October 7, 2003 of the
Court of Appeals in CA-G.R. CV No. 54560 are AFFIRMED.
Costs against petitioners.
SO ORDERED.
FIRST DIVISION
[G.R. No. 109557. November 29, 2000]
JOSE UY and his Spouse GLENDA J. UY and GILDA L.
JARDELEZA, petitioners, vs. COURT OF APPEALS and TEODORO L.
JARDELEZA, respondents.
DECISION
PARDO, J.:
The case is an appeal via certiorari from the decision[1] of the Court of
Appeals and its resolution denying reconsideration[2] reversing that of the
Regional Trial Court, Iloilo, Branch 32[3] and declaring void the special
proceedings instituted therein by petitioners to authorize petitioner Gilda L.
Jardeleza, in view of the comatose condition of her husband, Ernesto
Jardeleza, Sr., with the approval of the court, to dispose of their conjugal
property in favor of co-petitioners, their daughter and son in law, for the
ostensible purpose of financial need in the personal, business and medical
expenses of her incapacitated husband.
76
The facts, as found by the Court of Appeals, are as follows:
This case is a dispute between Teodoro L. Jardeleza (herein respondent) on
the one hand, against his mother Gilda L. Jardeleza, and sister and brother-
in-law, the spouses Jose Uy and Glenda Jardeleza (herein petitioners) on the
other hand. The controversy came about as a result of Dr. Ernesto
Jardeleza, Sr.s suffering of a stroke on March 25, 1991, which left him
comatose and bereft of any motor or mental faculties. Said Ernesto
Jardeleza, Sr. is the father of herein respondent Teodoro Jardeleza and
husband of herein private respondent Gilda Jardeleza.
Upon learning that one piece of real property belonging to the senior
Jardeleza spouses was about to be sold, petitioner Teodoro Jardeleza, on
June 6, 1991, filed a petition (Annex A) before the R.T.C. of Iloilo City,
Branch 25, where it was docketed as Special Proceeding No. 4689, in the
matter of the guardianship of Dr. Ernesto Jardeleza, Sr. The petitioner
averred therein that the present physical and mental incapacity of Dr.
Ernesto Jardeleza, Sr. prevent him from competently administering his
properties, and in order to prevent the loss and dissipation of the Jardelezas
real and personal assets, there was a need for a court-appointed guardian to
administer said properties. It was prayed therein that Letters of Guardianship
be issued in favor of herein private respondent Gilda Ledesma Jardeleza,
wife of Dr. Ernesto Jardeleza, Sr. It was further prayed that in the meantime,
no property of Dr. Ernesto Jardeleza, Sr. be negotiated, mortgaged or
otherwise alienated to third persons, particularly Lot No. 4291 and all the
improvements thereon, located along Bonifacio Drive, Iloilo City, and covered
by T.C.T. No. 47337.
A few days later, or on June 13, 1991, respondent Gilda L. Jardeleza herself
filed a petition docketed as Special Proceeding NO. 4691, before Branch 32
of the R.T.C. of Iloilo City, regarding the declaration of incapacity of Ernesto
Jardeleza, Sr., assumption of sole powers of administration of conjugal
properties, and authorization to sell the same (Annex B). Therein, the
petitioner Gilda L. Jardeleza averred the physical and mental incapacity of
her husband, who was then confined for intensive medical care and
treatment at the Iloilo Doctors Hospital. She signified to the court her desire
to assume sole powers of administration of their conjugal properties. She
also alleged that her husbands medical treatment and hospitalization
expenses were piling up, accumulating to several hundred thousands of
pesos already. For this, she urgently needed to sell one piece of real
property, specifically Lot No. 4291 and its improvements. Thus, she prayed
for authorization from the court to sell said property.
The following day, June 14, 1991, Branch 32 of the R.T.C. of Iloilo City
issued an Order (Annex C) finding the petition in Spec. Proc. No. 4691 to be
sufficient in form and substance, and setting the hearing thereof for June 20,
1991. The scheduled hearing of the petition proceeded, attended by therein
petitioner Gilda Jardeleza, her counsel, her two children, namely Ernesto
Jardeleza, Jr., and Glenda Jardeleza Uy, and Dr. Rolando Padilla, one of
Ernesto Jardeleza, Sr.s attending physicians.
On that same day, June 20, 1991, Branch 32 of the RTC of Iloilo City
rendered its Decision (Annex D), finding that it was convinced that Ernesto
Jardeleza, Sr. was truly incapacitated to participate in the administration of
the conjugal properties, and that the sale of Lot No. 4291 and the
improvements thereon was necessary to defray the mounting expenses for
treatment and Hospitalization. The said court also made the pronouncement
that the petition filed by Gilda L. Jardeleza was pursuant to Article 124 of the
Family Code, and that the proceedings thereon are governed by the rules on
summary proceedings sanctioned under Article 253 of the same Code x x x.
The said court then disposed as follows:
WHEREFORE, there being factual and legal bases to the petition dated June
13, 1991, the Court hereby renders judgment as follows:
1) declaring Ernesto Jardeleza, Sr., petitioners husband, to be incapacitated
and unable to participate in the administration of conjugal properties;
2) authorizing petitioner Gilda L. Jardeleza to assume sole powers of
administration of their conjugal properties; and
3) authorizing aforesaid petitioner to sell Lot No. 4291 of the Cadastral
Survey of Iloilo, situated in Iloilo City and covered by TCT No. 47337 issued
in the names of Ernesto Jardeleza, Sr. and Gilda L. Jardeleza and the
buildings standing thereof.
SO ORDERED.
On June 24, 1991, herein petitioner Teodoro Jardeleza filed his Opposition to
the proceedings before Branch 32 in Spec. Proc. Case No. 4691, said
petitioner being unaware and not knowing that a decision has already been
rendered on the case by public respondent.
77
On July 3, 1991, herein petitioner Teodoro Jardeleza filed a motion for
reconsideration of the judgment in Spec. Proc. No. 4691 and a motion for
consolidation of the two cases (Annex F). He propounded the argument that
the petition for declaration of incapacity, assumption of sole powers of
administration, and authority to sell the conjugal properties was essentially a
petition for guardianship of the person and properties of Ernesto Jardeleza,
Sr. As such, it cannot be prosecuted in accordance with the provisions on
summary proceedings set out in Article 253 of the Family Code. It should
follow the rules governing special proceedings in the Revised Rules of Court
which require procedural due process, particularly the need for notice and a
hearing on the merits. On the other hand, even if Gilda Jardelezas petition
can be prosecuted by summary proceedings, there was still a failure to
comply with the basic requirements thereof, making the decision in Spec.
Proc. No. 4691 a defective one. He further alleged that under the New Civil
Code, Ernesto Jardeleza, Sr. had acquired vested rights as a conjugal
partner, and that these rights cannot be impaired or prejudiced without his
consent. Neither can he be deprived of his share in the conjugal properties
through mere summary proceedings. He then restated his position that Spec.
Proc. No. 4691 should be consolidated with Spec. Proc. No. 4689 which was
filed earlier and pending before Branch 25.
Teodoro Jardeleza also questioned the propriety of the sale of Lot No. 4291
and the improvements thereon supposedly to pay the accumulated financial
obligations arising from Ernesto Jardeleza, Sr.s hospitalization. He alleged
that the market value of the property would be around Twelve to Fifteen
Million Pesos, but that he had been informed that it would be sold for much
less. He also pointed out that the building thereon which houses the
Jardeleza Clinic is a monument to Ernesto Jardeleza Sr.s industry, labor and
service to his fellowmen. Hence, the said property has a lot of sentimental
value to his family. Besides, argued Teodoro Jardeleza, then conjugal
partnership had other liquid assets to pay off all financial obligations. He
mentioned that apart from sufficient cash, Jardeleza, Sr. owned stocks of
Iloilo Doctors Hospital which can be off-set against the cost of medical and
hospital bills. Furthermore, Ernesto Jardeleza, Sr. enjoys certain privileges at
the said hospital which allows him to pay on installment basis. Moreover, two
of Ernesto Jardeleza Sr.s attending physicians are his own sons who do not
charge anything for their professional services.
On July 4, 1991, Teodoro Jardeleza filed in Spec. Proc. No. 4691 a
supplement to his motion for reconsideration (Annex G). He reiterated his
contention that summary proceedings was irregularly applied. He also noted
that the provisions on summary proceedings found in Chapter 2 of the Family
Code comes under the heading on Separation in Fact Between Husband and
Wife which contemplates of a situation where both spouses are of disposing
mind. Thus, he argued that were one spouse is comatose without motor and
mental faculties, the said provisions cannot be made to apply.
While the motion for reconsideration was pending, Gilda Jardeleza disposed
by absolute sale Lot No. 4291 and all its improvements to her daughter, Ma.
Glenda Jardeleza Uy, for Eight Million Pesos (P8,000,000.00), as evidenced
by a Deed Absolute Sale dated July 8, 1991 executed between them (p. 111,
Rollo). Under date of July 23, 1991, Gilda Jardeleza filed an urgent ex-parte
motion for approval of the deed of absolute sale.
On August 12, 1991 Teodoro Jardeleza filed his Opposition to the motion for
approval of the deed of sale on the grounds that: (1) the motion was
prematurely filed and should be held in abeyance until the final resolution of
the petition; (2) the motion does not allege nor prove the justifications for the
sale; and (3) the motion does not allege that had Ernesto Jardeleza, Sr. been
competent, he would have given his consent to the sale.
Judge Amelita K. del Rosario-Benedicto of Branch 32 of the respondent
Court, who had penned the decision in Spec. Proc. No. 4691 had in the
meantime formally inhibited herself from further acting in this case (Annex
I). The case was then reraffled to Branch 28 of the said court.
On December 19, 1991, the said court issued an Order (Annex M) denying
herein petitioners motion for reconsideration and approving respondent
Jardelezas motion for approval of the deed of absolute sale. The said court
ruled that:
After a careful and thorough perusal of the decision, dated June 20, 1991,
the Motion for Reconsideration, as well as its supplements filed by oppositor,
Teodoro L. Jardeleza, through counsel, and the opposition to the Motion for
Reconsideration, including its supplements, filed by petitioner, through
counsel, this Court is of the opinion and so holds, that her Honor, Amelita K.
del Rosario-Benedicto, Presiding Judge of Branch 32, of this Court, has
properly observed the procedure embodied under Article 253, in relation to
Article 124, of the Family Code, in rendering her decision dated June 20,
1991.
Also, as correctly stated by petitioner, through counsel, that oppositor Teodor
L. Jardeleza does not have the personality to oppose the instant petition
78
considering that the property or properties, subject of the petition, belongs to
the conjugal partnership of the spouses Ernesto and Gilda Jardeleza, who
are both still alive.
In view thereof, the Motion for Reconsideration of oppositor Teodoro L.
Jardeleza, is hereby denied for lack of merit.
Considering the validity of the decision dated June 20, 1991, which among
others, authorized Gilda L. Jardeleza to sell Lot No. 4291 of the Cadastral
Survey of Iloilo, covered by Transfer Certificate of Title No. 47337 issued in
the names of Ernesto Jardeleza, Sr., and Gilda L. Jardeleza and the building
standing thereon, the Urgent Ex-Parte Motion for Approval of Deed of
Absolute Sale dated July 23, 1991, filed by petitioner, through counsel, is
hereby granted and the deed of absolute sale, executed and notarized on
July 8, 1991, by and between Gilda L. Jardeleza, as vendor, and Ma. Glenda
Jardeleza, as vendee, is hereby approved, and the Register of Deeds of Iloilo
City, is directed to register the sale and issue the corresponding transfer
certificate of title to the vendee.
SO ORDERED.[4]
On December 9, 1992, the Court of Appeals promulgated its decision
reversing the appealed decision and ordering the trial court to dismiss the
special proceedings to approve the deed of sale, which was also declared
void.[5]
On December 29, 1992, petitioners filed a motion for
reconsideration,[6] however, on March 29, 1993, the Court of Appeals denied
the motion, finding no cogent and compelling reason to disturb the decision.[7]
Hence, this appeal.[8]
The issue raised is whether petitioner Gilda L. Jardeleza as the wife of
Ernesto Jardeleza, Sr. who suffered a stroke, a cerebrovascular accident,
rendering him comatose, without motor and mental faculties, and could not
manage their conjugal partnership property may assume sole powers of
administration of the conjugal property under Article 124 of the Family Code
and dispose of a parcel of land with its improvements, worth more than
twelve million pesos, with the approval of the court in a summary
proceedings, to her co-petitioners, her own daughter and son-in-law, for the
amount of eight million pesos.
The Court of Appeals ruled that in the condition of Dr. Ernesto Jardeleza, Sr.,
the procedural rules on summary proceedings in relation to Article 124 of the
Family Code are not applicable. Because Dr. Jardeleza, Sr. was unable to
take care of himself and manage the conjugal property due to illness that had
rendered him comatose, the proper remedy was the appointment of a judicial
guardian of the person or estate or both of such incompetent, under Rule 93,
Section 1, 1964 Revised Rules of Court. Indeed, petitioner earlier had filed
such a petition for judicial guardianship.
Article 124 of the Family Code provides as follows:
ART. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husbands decision shall prevail, subject to recourse to the court by the wife
for a proper remedy which must be availed of within five years from the date
of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the
court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void.However,
the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors. (165a).
In regular manner, the rules on summary judicial proceedings under the
Family Code govern the proceedings under Article 124 of the Family
Code. The situation contemplated is one where the spouse is absent, or
separated in fact or has abandoned the other or consent is withheld or
cannot be obtained. Such rules do not apply to cases where the non-
consenting spouse is incapacitated or incompetent to give consent. In this
case, the trial court found that the subject spouse "is an incompetent" who
was in comatose or semi-comatose condition, a victim of stroke,
cerebrovascular accident, without motor and mental faculties, and with a
diagnosis of brain stem infarct.[9] In such case, the proper remedy is a judicial
guardianship proceedings under Rule 93 of the 1964 Revised Rules of Court.
Even assuming that the rules of summary judicial proceedings under the
Family Code may apply to the wife's administration of the conjugal property,
79
the law provides that the wife who assumes sole powers of administration Republic of the Philippines
has the same powers and duties as a guardian under the Rules of Court.[10]
Supreme Court
Consequently, a spouse who desires to sell real property as such
administrator of the conjugal property must observe the procedure for the Baguio City
sale of the wards estate required of judicial guardians under Rule 95, 1964
THIRD DIVISION
Revised Rules of Court, not the summary judicial proceedings under the
Family Code. SPOUSES ONESIFORO and G.R. No. 158040
In the case at bar, the trial court did not comply with the procedure under the ROSARIO ALINAS,
Revised Rules of Court. Indeed, the trial court did not even observe the
requirements of the summary judicial proceedings under the Family Code. Petitioners, Present:
Thus, the trial court did not serve notice of the petition to the incapacitated
spouse; it did not require him to show cause why the petition should not be YNARES-SANTIAGO, J.
granted.
Chairperson,
Hence, we agree with the Court of Appeals that absent an opportunity to be
- versus - AUSTRIA-MARTINEZ,
heard, the decision rendered by the trial court is void for lack of due process.
The doctrine consistently adhered to by this Court is that a denial of due CHICO-NAZARIO,
process suffices to cast on the official act taken by whatever branch of the
government the impress of nullity.[11] A decision rendered without due NACHURA, and
process is void ab initio and may be attacked directly or collaterally.[12] A
decision is void for lack of due process if, as a result, a party is deprived of REYES, JJ.
the opportunity of being heard.[13] A void decision may be assailed or
SPOUSES VICTOR and ELENA
impugned at anytime either directly or collaterally, by means of a separate
action, or by resisting such decision in any action or proceeding where it is ALINAS, Promulgated:
invoked.[14]
Respondents. April 14, 2008
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals in
CA-G. R. SP No. 26936, in toto. DECISION

Costs against petitioners. AUSTRIA-MARTINEZ, J.:

SO ORDERED. This resolves the Petition for Review on Certiorari under Rule 45 of the Rules
of Court, praying that the Decision[1] of the Court of Appeals (CA) dated
September 25, 2002, and the CA Resolution[2] dated March 31, 2003,
denying petitioners' motion for reconsideration, be reversed and set aside.

The factual antecedents of the case are as follows.

Spouses Onesiforo and Rosario Alinas (petitioners) separated sometime in

1982, with Rosario moving to Pagadian City and Onesiforo moving

80
to Manila. They left behind two lots identified as Lot 896-B-9-A with a bodega
standing on it and Lot 896-B-9-B with petitioners' house. These two lots are
the subject of the present petition.
Petitioner Onesiforo Alinas (Onesiforo) and respondent Victor Alinas (Victor)
are brothers.Petitioners allege that they entrusted their properties to Victor
and Elena Alinas (respondent spouses) with the agreement that any income
from rentals of the properties should be remitted to the Social Security
System (SSS) and to the Rural Bank of Oroquieta City (RBO), as such
rentals were believed sufficient to pay off petitioners' loans with said
institutions. Lot 896-B-9-A with the bodega was mortgaged as security for the
loan obtained from the RBO, while Lot 896-B-9-B with the house was
mortgaged to the SSS. Onesiforoalleges that he left blank papers with his
signature on them to facilitate the administration of said properties.
Sometime in 1993, petitioners discovered that their two lots were already
titled in the name of respondent spouses.
Records show that after Lot 896-B-9-A was extra-judicially foreclosed,
Transfer Certificate of Title (TCT) No. T-11853[3] covering said property was
issued in the name of mortgagee RBO on November 13, 1987. On May 2,
1988, the duly authorized representative of RBO executed a Deed of
Installment Sale of Bank's Acquired Assets[4] conveying Lot 896-B-9-A to
respondent spouses. RBO's TCT over Lot 896-B-9-A was then cancelled and
on February 22, 1989, TCT No. T-12664[5] covering said lot was issued in the
name of respondent spouses.
Lot 896-B-9-B was also foreclosed by the SSS and on November 17, 1986,
the Ex-OficioCity Sheriff of Ozamis City issued a Certificate of Sale[6] over
said property in favor of the SSS. However, pursuant to a Special Power of
Attorney[7] signed by Onesiforo in favor of Victor, dated March 10, 1989, the
latter was able to redeem, on the same date, Lot 896-B-9-B from the SSS for
the sum of P111,110.09. On June 19, 1989, a Certificate of
Redemption[8] was issued by the SSS.
Onesiforo's signature also appears in an Absolute Deed of Sale[9] likewise
dated March 10, 1989, selling Lot 896-B-9-B to respondent spouses. The
records also show a notarized document dated March 10, 1989 and
captioned Agreement[10] whereby petitioner Onesiforo acknowledged that his
brother Victor used his own money to redeem Lot 896-B-9-B from the SSS
and, thus, Victor became the owner of said lot. In the same Agreeement,
petitioner Onesiforo waived whatever rights, claims, and interests he or his
heirs, successors and assigns have or may have over the subject
property. On March 15, 1993, by virtue of said documents, TCT No.
17394[11] covering Lot 896-B-9-B was issued in the name of respondent
spouses.
On June 25, 1993, petitioners filed with the Regional Trial Court (RTC)
of Ozamis City a complaint for recovery of possession and ownership of their
conjugal properties with damages against respondent spouses.
After trial, the RTC rendered its Decision dated November 13, 1995, finding
that:
1. Plaintiffs have not proven that they entrusted defendant spouses with the
care and administration of their properties. It was Valeria Alinas, their mother,
whom plaintiff Onesiforo requested/directed to take care of everything and
sell everything and TeresitaNuez, his elder sister, to whom he left a verbal
authority to administer his properties.
2. Plaintiffs have not proven their allegation that defendant spouses agreed
to pay rent of P1,500.00 a month for the occupancy of plaintiffs' house, which
rent was to be remitted to the SSS and Rural Bank of Oroquieta to pay off
plaintiffs' loan and to keep for plaintiffs the rest of the rent after the loans
would have been paid in full.
3. Plaintiff Onesiforo's allegation that defendants concocted deeds of
conveyances (Exh. M, N & O) with the use of his signatures in blank is not
worthy of credence. Why his family would conspire to rob him at a time when
life had struck him with a cruel blow in the form of a failed marriage that sent
him plummeting to the depths of despair is not explained and likewise defies
comprehension. That his signatures appear exactly on the spot where they
ought to be in Exhs. M, N & O belies his pretension that he affixed them on
blank paper only for the purpose of facilitating his sister Terry's acts of
administration.
This Court, therefore, does not find that defendant spouses had schemed to
obtain title to plaintiffs' properties or enriched themselves at the expense of
plaintiffs.[12]
with the following dispositive portion:
WHEREFORE, this Court renders judgment:
81
1. declaring [respondents] Victor Jr. and Elena Alinas owners of
Lot 896-B-9-A with the building (bodega) standing thereon and affirming the
validity of their acquisition thereof from the Rural Bank of Oroquieta, Inc.;
2. declaring [petitioners] Onesiforo and Rosario Alinas owners of Lot
896-B-9-B with the house standing thereon, plaintiff Onesiforo's sale thereof
to defendants spouses without the consent of his wife being null and void
and defendant spouses' redemption thereof from the SSS not having
conferred its ownership to them;
3. ordering [petitioners] to reimburse [respondents] Victor Jr. and
Elena Alinasthe redemption sum of P111,100.09, paid by them to the SSS
(without interest as it shall be compensated with the rental value of the house
they occupy) within sixty days from the finality of this judgment;
4. ordering [respondents] to vacate the subject house within thirty
days from receiving the reimbursement mentioned in No. 3 above; and
5. reinstating TCT No. T-7248 in the name of [petitioners]
and cancelling TCT No. T-17394 in the name of [respondents].
No costs.
SO ORDERED.[13]
Only respondent spouses appealed to the CA assailing the RTC's ruling that
they acquired Lot 896-B-9-B from the SSS by mere redemption and not by
purchase. They likewise question the reimbursement by petitioners of the
redemption price without interest.
On September 25, 2002, the CA promulgated herein assailed Decision,
the dispositiveportion of which reads:
WHEREFORE, in view of the foregoing disquisitions, the first paragraph of
the dispositiveportion of the assailed decision is AFFIRMED and the rest
MODIFIED as follows:
1. declaring [respondents] Victor Jr. and Elena Alinas owners
of Lot 896-B-9-A with the building (bodega) standing thereon and affirming
the validity of their acquisition thereof from the Rural Bank of Oroquieta, Inc.;
2. declaring Onesiforo's sale of Lot 896-B-9-B together with the
house standing thereon to [respondents] in so far as Rosario Alinas, his
wife's share of one half thereof is concerned, of no force and effect;
3. ordering [petitioners] Rosario Alinas to reimburse [respondents]
the redemption amount of P55,550.00 with interest of 12% per annum from
the time of redemption until fully paid.
4. ordering the [respondents] to convey and transfer one half portion
of Lot 896-B-9-B unto Rosario Alinas, which comprises her share on the
property simultaneous to the tender of the above redemption price, both to
be accomplished within sixty (60) days from finality of this judgment.
5. in the event of failure of [respondents] to execute the acts as
specified above, [petitioner] Rosario Alinas may proceed against them under
Section 10, Rule 39 of the 1997 Rules of Civil Procedure.
6. on the other hand, failure of [petitioner] Rosario Alinas to
reimburse the redemption price within sixty (60) days from the finality of this
decision will render the conveyance and sale of her share by her husband to
[respondents], of full force and effect.
No costs.
SO ORDERED.[14]
Petitioners moved for reconsideration but the CA denied said motion
per herein assailed Resolution dated March 31, 2003.
Hence, the present petition on the following grounds:
The Honorable Court of Appeals abuse [sic] its discretion in disregarding the
testimony of the Register of Deeds, Atty. Nerio Nuez, who swore that the
signatures appearing on various TCTs were not his own;
The Honorable Court of Appeals manifestly abuse [sic] its discretion in
declaring the respondents to be the owners of Lot 896-B-9-A with the
building (bodega) standing thereon when they merely redeemed the property
and are therefore mere trustees of the real owners of the property;
82
It was pure speculation and conjecture and surmise for the Honorable Court
of Appeals to impose an obligation to reimburse upon petitioners without
ordering respondents to account for the rentals of the properties from the
time they occupied the same up to the present time and thereafter credit one
against the other whichever is higher.[15]
The first issue raised by petitioners deserves scant consideration. By
assailing the authenticity of the Registrar of Deeds' signature on the
certificates of title, they are, in effect,questioning the validity
of the certificates.
Section 48 of Presidential Decree No. 1529 provides, thus:
Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall
not be subject to collateral attack. It cannot be altered, modified, or cancelled
except in a direct proceeding in accordance with law.
Pursuant to said provision, the Court ruled in De Pedro
v. Romasan Development Corporation[16] that:
It has been held that a certificate of title, once registered, should not
thereafter be impugned, altered, changed, modified, enlarged or diminished
except in a direct proceeding permitted by law. x x x
The action of the petitioners against the respondents, based on the
material allegations of the complaint, is one for recovery of possession of
the subject property and damages.However, such action is not a direct,
but a collateral attack of TCT No. 236044.[17](Emphasis supplied)
As in De Pedro, the complaint filed by herein petitioners with the RTC is also
one for recovery of possession and ownership. Verily, the present case is
merely a collateral attack on TCT No. T-17394, which is not allowed by law
and jurisprudence.
With regard to the second issue, petitioners claim that it was the CA which
declared respondent spouses owners of Lot 896-B-9-A (with bodega) is
misleading. It was the RTC which ruled that respondent spouses are the
owners of Lot 896-B-9-A and, therefore, since only the respondent spouses
appealed to the CA, the issue of ownership over Lot 896-B-9-A is not raised
before the appellate court. Necessarily, the CA merely reiterated in
the dispositive portion of its decision the RTC's ruling on respondent
spouses' ownership of Lot896-B-9-A.
It is a basic principle that no modification of judgment or affirmative relief can
be granted to a party who did not appeal.[18] Hence, not having appealed
from the RTC Decision, petitioners can no longer seek the reversal or
modification of the trial court's ruling that respondent spouses had acquired
ownership of Lot 896-B-9-A by virtue of the sale of the lot to them by RBO.
Furthermore, the CA did not commit any reversible error in affirming the trial
court's factual findings as the records are indeed bereft of proof to support
the petitioners allegations that they left the care and administration of their
properties to respondent spouses; and that there is an agreement between
petitioners and respondent spouses regarding remittance to the SSS and the
RBO of rental income from their properties. Thus, respondent spouses may
not be held responsible for the non-payment of the loan with RBO and the
eventual foreclosure of petitioners' Lot 896-B-9-A.
Petitioners do not assail the validity of the foreclosure of said lot but argues
that respondent spouses merely redeemed the property from RBO. This is,
however, belied by evidence on record which shows that ownership over the
lot had duly passed on to the RBO, as shown by TCT No. T-11853 registered
in its name; and subsequently, RBO sold the lot with its improvements to
respondent spouses. Needless to stress, the sale was made after the
redemption period had lapsed. The trial court, therefore, correctly held that
respondent spouses acquired their title over the lot from RBO and definitely
not from petitioners.
However, with regard to Lot 896-B-9-B (with house), the Court finds it
patently erroneous for the CA to have applied the principle of equity in
sustaining the validity of the sale of Onesiforos one-half share in the subject
property to respondent spouses.
Although petitioners were married before the enactment of the Family Code
on August 3, 1988, the sale in question occurred in 1989. Thus, their
property relations are governed by Chapter IV on Conjugal Partnership of
Gains of the Family Code.
The CA ruling completely deviated from the clear dictate of Article 124 of the
Family Code which provides:
Art. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. x x x
83
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the
court or the written consent of the other spouse. In the absence of such
authority or consent the disposition or encumbrance shall be
void. x xx (Underscoring and emphasis supplied)
In Homeowners Savings & Loan Bank v. Dailo,[19] the Court categorically
stated us:
In Guiang v. Court of Appeals, it was held that the sale of a conjugal property
requires the consent of both the husband and wife. In applying Article 124 of
the Family Code, this Court declared that the absence of the consent of
one renders the entire sale null and void, including the portion of the
conjugal property pertaining to the husband who contracted the
sale. x x x
x x x By express provision of Article 124 of the Family Code, in the absence
of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void. [20]
Thus, pursuant to Article 124 of the Family Code and jurisprudence, the sale
of petitioners' conjugal property made by petitioner Onesiforo alone is void in
its entirety.
It is true that in a number of cases, this Court abstained from applying the
literal import of a particular provision of law if doing so would lead to unjust,
unfair and absurd results.[21]
In the present case, the Court does not see how applying Article 124 of the
Family Code would lead to injustice or absurdity. It should be noted that
respondent spouses were well aware that Lot 896-B-9-B is a conjugal
property of petitioners. They also knew that the disposition being made
by Onesiforo is without the consent of his wife, as they knew that petitioners
had separated, and, the sale documents do not bear the signature of
petitioner Rosario. The fact that Onesiforo had to execute two documents,
namely: the Absolute Deed of Sale dated March 10, 1989 and a notarized
Agreement likewise dated March 10, 1989, reveals that they had full
knowledge of the severe infirmities of the sale. As held in Heirs of Aguilar-
Reyes v. Spouses Mijares,[22] a purchaser cannot close his eyes to facts
which should put a reasonable man on his guard and still claim he acted in
good faith.[23] Such being the case, no injustice is being foisted on
respondent spouses as they risked transacting with Onesiforo alone despite
their knowledge that the subject property is a conjugal property.
Verily, the sale of Lot 896-B-9-B to respondent spouses is entirely null and
void.
However, in consonance with the salutary principle of non-enrichment at
anothers expense, the Court agrees with the CA that petitioners should
reimburse respondent spouses the redemption price paid for Lot 896-B-9-B
in the amount of P111,110.09 with legal interest from the time of filing of the
complaint.
In Heirs of Aguilar-Reyes, the husband's sale of conjugal property without the
consent of the wife was annulled but the spouses were ordered to refund the
purchase price to the buyers, it was ruled that an interest of 12% per
annum on the purchase price to be refunded is not proper. The Court
elucidated as follows:
The trial court, however, erred in imposing 12% interest per annum on the
amount due the respondents. In Eastern Shipping Lines, Inc. v. Court of
Appeals, it was held that interest on obligations not constituting a loan or
forbearance of money is six percent (6%) annually. If the purchase price
could be established with certainty at the time of the filing of the complaint,
the six percent (6%) interest should be computed from the date the complaint
was filed until finality of the decision. In Lui vs. Loy, involving a suit
for reconveyance and annulment of title filed by the first buyer against the
seller and the second buyer, the Court, ruling in favor of the first buyer and
annulling the second sale, ordered the seller to refund to the second buyer
(who was not a purchaser in good faith) the purchase price of the lots. It was
held therein that the 6% interest should be computed from the date of the
filing of the complaint by the first buyer. After the judgment becomes final
and executory until the obligation is satisfied, the amount due shall earn
interest at 12% per year, the interim period being deemed equivalent to a
forbearance of credit.
Accordingly, the amount of P110,000.00 due the respondent spouses
which could be determined with certainty at the time of the filing of the
complaint shall earn 6% interest per annum from June 4, 1986 until the
finality of this decision. If the adjudged principal and the interest (or
any part thereof) remain unpaid thereafter, the interest rate shall be
84
twelve percent (12%) per annum computed from the time the judgment
becomes final and executory until it is fully satisfied.[24]
Thus, herein petitioners should reimburse respondent spouses the
redemption price plus interest at the rate of 6% per annum from the date of
filing of the complaint, and after the judgment becomes final
and executory, the amount due shall earn 12% interest per annumuntil the
obligation is satisfied.
Petitioners pray that said redemption price and interest be offset or
compensated against the rentals for the house and bodega.
The records show that the testimonial evidence for rentals was only with
regard to the bodega.[25] However, the Court has affirmed the ruling of
the RTC that Lot 896-B-9-A with the bodega had been validly purchased by
respondent spouses from the RBO and a TCT over said property was issued
in the name of respondent spouses on February 22, 1989.Testimonial
evidence shows that the bodega was leased out by respondent spouses only
beginning January of 1990 when ownership had been transferred to
them.[26] Hence, any rentals earned from the lease of said bodega rightfully
belongs to respondent spouses and cannot be offset against petitioners'
obligation to respondent spouses.
As to rentals for Lot 896-B-9-B and the house thereon, respondent Victor
testified that they never agreed to rent the house and when they finally took
over the same, it was practically inhabitable and so they even incurred
expenses to repair the house.[27] There is absolutely no proof of the rental
value for the house, considering the condition it was in; as well as for the lot
respondent spouses are occupying.
Respondent spouses, having knowledge of the flaw in their mode of
acquisition, are deemed to be possessors in bad faith under Article 526[28] of
the Civil Code. However, they have a right to be refunded for necessary
expenses on the property as provided under Article 546[29] of the same
Code. Unfortunately, there is no credible proof to support
respondentspouses' allegation that they spent more than P400,000.00 to
repair and make the house habitable.
Set-off or compensation is governed by Article 1279 of the Civil
Code which provides, thus:
Article 1279. In order that compensation may be proper, it is necessary:
1. That each one of the obligors be bound principally, and that he be
at the time a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
Therefore, under paragraph 4 of the foregoing provision, compensation or
set-off is allowed only if the debts of both parties against each other is
already liquidated and demandable. To liquidate means to make the amount
of indebtedness or an obligation clear and settled in the form of money. [30] In
the present case, no definite amounts for rentals nor for expenses for repairs
on subject house has been determined. Thus, in the absence of evidence
upon which to base the amount of rentals, no compensation or set-off can
take place between petitioners and respondent spouses.
While the courts are empowered to set an amount as
reasonable compensation to the owners for the use of their property, this
Court cannot set such amount based on mere surmises and conjecture
WHEREFORE, the petition is PARTLY GRANTED. The Decision of the
Court of Appeals dated September 25, 2002 is MODIFIED to read as follows:
1. declaring respondent spouses Victor Jr. and Elena Alinas owners of Lot
896-B-9-A with the building (bodega) standing thereon and affirming the
validity of their acquisition thereof from the Rural Bank of Oroquieta, Inc.;
2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house
standing thereon to respondent spouses null and void ab initio;
3. ordering petitioners to jointly and severally reimburse respondent spouses
the redemption amount of P111,110.09 with interest at 6% per annum from
the date of filing of the complaint, until finality of this decision. After
this decision becomes final, interest at the rate of 12% per annum on
the principal and interest (or any part thereof) shall be imposed until full
payment;
85
4. ordering the respondent spouses to convey and transfer Lot 896-B-9-B to
petitioners and vacate said premises within fifteen (15) days from finality of
this Decision; a
5. in the event of failure of respondent spouses to execute the acts as
specified above, petitioners may proceed against them under Section 10,
Rule 39 of the 1997 Rules of Civil Procedure.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 109172 August 19, 1994
TRANS-PACIFIC INDUSTRIAL SUPPLIES, INC., petitioner,
vs.
The COURT OF APPEALS and ASSOCIATED BANK, respondents.
Gancayco Law Offices for petitioners.
Jose A. Soluta, Jr. & Associates for private respondent.
BIDIN, J.:
In this petition for review on certiorari, petitioner Trans-Pacific Industrial
Supplies, Inc. seeks the reversal of the decision of respondent court, the
decretal portion of which reads:
WHEREFORE, the decision of June 11, 1991 is SET ASIDE
and NULLIFIED; the complaint is dismissed, and on the
counterclaim, Transpacific is ordered to pay Associated
attorney's fees of P15,000.00.
Costs against Transpacific.
SO ORDERED. (Rollo, p. 47)
Sometime in 1979, petitioner applied for and was granted several financial
accommodations amounting to P1,300,000.00 by respondent Associated
Bank. The loans were evidenced and secured by four (4) promissory notes, a
real estate mortgage covering three parcels of land and a chattel mortgage
over petitioner's stock and inventories.
Unable to settle its obligation in full, petitioner requested for, and was granted
by respondent bank, a restructuring of the remaining indebtedness which
then amounted to P1,057,500.00, as all the previous payments made were
applied to penalties and interests.
To secure the re-structured loan of P1,213,400.00, three new promissory
notes were executed by Trans-Pacific as follows: (1) Promissory Note No.
TL-9077-82 for the amount of P1,050,000.00 denominated as working
capital; (2) Promissory Note No. TL-9078-82 for the amount of P121,166.00
denominated as restructured interest; (3) Promissory Note No. TL-9079-82
for the amount of P42,234.00 denominated similarly as restructured interest
(Rollo. pp. 113-115).
The mortgaged parcels of land were substituted by another mortgage
covering two other parcels of land and a chattel mortgage on petitioner's
stock inventory. The released parcels of land were then sold and the
proceeds amounting to P1,386,614.20, according to petitioner, were turned
over to the bank and applied to Trans-Pacific's restructured loan.
Subsequently, respondent bank returned the duplicate original copies of the
three promissory notes to Trans-Pacific with the word "PAID" stamped
thereon.
Despite the return of the notes, or on December 12, 1985, Associated Bank
demanded from Trans-Pacific payment of the amount of P492,100.00
representing accrued interest on PN No. TL-9077-82. According to the bank,
the promissory notes were erroneously released.
Initially, Trans-Pacific expressed its willingness to pay the amount demanded
by respondent bank. Later, it had a change of heart and instead initiated an
action before the Regional Trial Court of Makati, Br. 146, for specific
performance and damages. There it prayed that the mortgage over the two
parcels of land be released and its stock inventory be lifted and that its
obligation to the bank be declared as having been fully paid.
After trial, the court a quo rendered judgment in favor of Trans-Pacific, to wit:
86
 WHEREFORE, premises considered and upon a clear
preponderance of evidence in support of the stated causes
of action, the Court finds for the plaintiffs and against
defendant, and
(a) declares plaintiff's obligations to
defendant to have been already fully paid;
(b) orders defendant to execute and deliver
to plaintiffs a release on the i September 11,
1981 mortgage over TCT (50858)
S-10086 and TCT (50859) S-109087,
and ii December 20, 1983 chattel mortgage,
within fifteen (15) days from the finality
hereof;
(c) orders defendant to pay plaintiffs Romeo
Javier and Romana Bataclan-Javier the sum
of P50,000.00 as and for moral damages;
and
(d) orders defendant to pay plaintiffs the
sum of P30,000.00 as attorney's fees, plus
expenses of the suit.
Defendant's counterclaims are dismissed for lack of merit.
With costs against defendant.
SO ORDERED. (Rollo, p. 101)
Respondent bank elevated the case to the appellate court which, as
aforesaid, reversed the decision of the trial court. In this appeal, petitioner
raises four errors allegedly committed by the respondent court, namely:
I the petitioner does not merit the application of Article 1271 (1st par.) of the
RESPONDENT APPELLATE COURT ERRED IN HOLDING
THAT THE ACCRUED INTEREST IN THE AMOUNT OF
492,100.00 HAS NOT BEEN PAID WHEN ARTICLE 1176
OF THE CIVIL CODE PROVIDES THAT SUCH CLAIM FOR
INTEREST UPON RECEIPT OF PAYMENT OF THE
PRINCIPAL MUST BE RESERVED OTHERWISE IT IS
DEEMED PAID.
II
RESPONDENT APPELLATE COURT ERRED IN HOLDING
THAT WITH THE DELIVERY OF THE DOCUMENTS
EVIDENCING THE PRINCIPAL OBLIGATION, THE
ANCILLARY OBLIGATION OF PAYING INTEREST WAS
NOT RENOUNCED CONTRARY TO THE PROVISIONS OF
ART. 1273 OF THE CIVIL CODE AND THE UNDISPUTED
EVIDENCE ON RECORD.
III
RESPONDENT APPELLATE COURT ERRED IN NOT
HOLDING THAT PETITIONER HAS FULLY PAID ITS
OBLIGATION CONFORMABLY WITH ARTICLE 1234 OF
THE CIVIL CODE.
IV
RESPONDENT APPELLATE COURT ERRED IN
AWARDING ATTORNEY'S FEES IN FAVOR OF
ASSOCIATED BANK (Rollo, p. 15).
The first three assigned errors will be treated jointly since their resolution
border on the common issue, i.e., whether or not petitioner has indeed paid
in full its obligation to respondent bank.
Applying the legal presumption provided by Art. 1271 of the Civil Code, the
trial court ruled that petitioner has fully discharged its obligation by virtue of
its possession of the documents (stamped "PAID") evidencing its
indebtedness. Respondent court disagreed and held, among others, that the
documents found in possession of Trans-Pacific are mere duplicates and
cannot be the basis of petitioner's claim that its obligation has been fully paid.
Accordingly, since the promissory notes submitted by petitioner were
duplicates and not the originals, the delivery thereof by respondent bank to
Civil Code which reads:
Art. 1271. The delivery of a private document evidencing a
credit, made voluntarily by the creditor to the debtor, implies
the renunciation of the action which the former had against
the latter.
87
Respondent court is of the view that the above provision must be construed
to mean the original copy of the document evidencing the credit and not its
duplicate, thus:
. . . [W]hen the law speaks of the delivery of the private
document evidencing a credit, it must be construed as
referring to the original. In this case, appellees (Trans-
Pacific) presented, not the originals but the duplicates of the
three promissory notes." (Rollo, p. 42)
The above pronouncement of respondent court is manifestly groundless. It is
undisputed that the documents presented were duplicate originals and are
therefore admissible as evidence. Further, it must be noted that respondent
bank itself did not bother to challenge the authenticity of the duplicate copies
submitted by petitioner. In People vs. Tan, (105 Phil. 1242 [1959]), we said:
When carbon sheets are inserted between two or more
sheets of writing paper so that the writing of a contract upon
the outside sheet, including the signature of the party to be
charged thereby, produces a facsimile upon the sheets
beneath, such signature being thus reproduced by the same
stroke of pen which made the surface or exposed
impression, all of the sheets so written on are regarded as
duplicate originals and either of them may be introduced in
evidence as such without accounting for the nonproduction
of the others.
A duplicate copy of the original may be admitted in evidence when the
original is in the possession of the party against whom the evidence is
offered, and the latter fails to produce it after reasonable notice (Sec. 2[b],
Rule 130), as in the case of respondent bank.
This notwithstanding, we find no reversible error committed by the
respondent court in disposing of the appealed decision. As gleaned from the
decision of the court a quo, judgment was rendered in favor of petitioner on
the basis of presumptions, to wit:
The surrender and return to plaintiffs of the promissory notes
evidencing the consolidated obligation as restructured,
produces a legal presumption that Associated had thereby
renounced its actionable claim against plaintiffs (Art. 1271,
NCC). The presumption is fortified by a showing that said
promissory notes all bear the stamp "PAID", and has not
been otherwise overcome. Upon a clear perception that
Associated's record keeping has been less than exemplary .
. ., a proffer of bank copies of the promissory notes without
the "PAID" stamps thereon does not impress the Court as
sufficient to overcome presumed remission of the
obligation vis-a-vis the return of said promissory notes.
Indeed, applicable law is supportive of a finding that in
interest bearing obligations-as is the case here, payment of
principal (sic) shall not be deemed to have been made until
the interests have been covered (Art. 1253, NCC).
Conversely, competent showing that the principal has been
paid, militates against postured entitlement to unpaid
interests.
In fine. the Court is satisfied that plaintiffs must be found to
have settled their obligations in full.
As corollary, a finding is accordingly compelled that plaintiffs
(sic) accessory obligations under the real estate mortgage
over two (2) substituted lots as well as the chattel mortgage,
have been extinguished by the renunciation of the principal
debt (Art. 1273, NCC), following the time-honored axiom that
the accessory follows the principal. There is, therefore,
compelling warrant (sic) to find in favor of plaintiffs insofar as
specific performance for the release of the mortgages on the
substituted lots and chattel is concerned. (Rollo, p. 100)
premised by:
Records show that Associated's Salvador M. Mesina is on
record as having testified that all three (3) December 8, 1990
promissory notes for the consolidated principal obligation,
interest and penalties had been fully paid (TSN, July 18,
1990, p. 18). It is, moreover, admitted that said promissory
notes were accordingly returned to Romeo Javier. (Ibid.)
The above disquisition finds no factual support, however, per review of the
records. The presumption created by the Art. 1271 of the Civil Code is not
conclusive but merely prima facie. If there be no evidence to the contrary, the
presumption stands. Conversely, the presumption loses its legal efficacy in
the face of proof or evidence to the contrary. In the case before us, we find
sufficient justification to overthrow the presumption of payment generated by
the delivery of the documents evidencing petitioners indebtedness.
It may not be amiss to add that Article 1271 of the Civil Code raises a
presumption, not of payment, but of the renunciation of the credit where more
convincing evidence would be required than what normally would be called
88
for to prove payment. The rationale for allowing the presumption of A Yes, the principal, yes, sir.
renunciation in the delivery of a private instrument is that, unlike that of a
public instrument, there could be just one copy of the evidence of credit. Q Fully settled?
Where several originals are made out of a private document, the intendment
of the law would thus be to refer to the delivery only of the
A Fully settled, but the interest of that
original original rather than to the original duplicate of which the debtor would
promissory note has not been paid, Your
normally retain a copy. It would thus be absurd if Article 1271 were to be
Honor.
applied differently.
Q In other words, you are saying, fully
While it has been consistently held that findings of facts are not reviewable
settled but not truly fully settled?
by this Court, this rule does not find application where both the trial and the
appellate courts differ thereon (Asia Brewery, Inc. v. CA, 224 SCRA 437
[1993]). A The interest was not paid.

Petitioner maintains that the findings of the trial court should be sustained Q Not fully settled?
because of its advantage in observing the demeanor of the witnesses while
testifying (citing Crisostomo v. Court of Appeals, 197 SCRA 833) more so A The interest was not paid, but the principal
where it is supported by the records (Roman Catholic Bishop of Malolos v. obligation was removed from our books,
Court of Appeals, 192 SCRA 169). Your Honor.

This case, however, does not concern itself with the demeanor of witnesses.
As for the records, there is actually none submitted by petitioner to prove that
the contested amount, i.e., the interest, has been paid in full. In civil cases,
the party that alleges a fact has the burden of proving it (Imperial Victory
Shipping Agency v. NLRC 200 SCRA 178 [1991]). Petitioner could have
easily adduced the receipts corresponding to the amounts paid inclusive of
the interest to prove that it has fully discharged its obligation but it did not.
There is likewise nothing on the records relied upon by the trial court to
support its claim, by empirical evidence, that the amount corresponding to
the interest has indeed been paid. The trial court totally relied on a disputable
presumption that the obligation of petitioner as regards interest has been fully
liquidated by the respondent's act of delivering the instrument evidencing the
principal obligation. Rebuttable as they are, the court a quo chose to ignore
an earlier testimony of Mr. Mesina anent the outstanding balance pertaining
to interest, as follows:
Court:
Q Notwithstanding, let us go now specifically
to promissory note No. 9077-82 in the
amount of consolidated principal of
P1,050,000.00. Does the Court get it
correctly that this consolidated balance has
been fully paid?
Q And you returned the promissory note?
A We returned the promissory note. (TSN,
July 18, 1990, p. 22)
That petitioner has not fully liquidated its financial obligation to the
Associated Bank finds more than ample confirmation and self-defeating
posture in its letter dated December 16, 1985, addressed to respondent
bank, viz.:
. . . that because of the prevailing unhealthy economic
conditions, the business is unable to generate sufficient
resources for debt servicing.
Fundamentally on account of this, we propose that you
permit us to fully liquidate the remaining obligations to you of
P492,100 through a payment in kind (dacion en pago)
arrangement by way of the equipments (sic) and spare parts
under chattel mortgage to you to the extent of their latest
appraised values." (Rollo, pp. 153-154; Emphasis supplied)
Followed by its August 20, 1986 letter which reads:

89
 We have had a series of communications with your bank
regarding our proposal for the eventual settlement of our
remaining obligations . . .
As you may be able to glean from these letters and from
your credit files, we have always been conscious of our
obligation to you which had not been faithfully serviced on
account of unfortunate business reverses. Notwithstanding
these however, total payments thus far remitted to you
already exceede (sic) the original principal amount of our
obligation. But because of interest and other charges, we
find ourselves still obligated to you by P492,100.00. . . .
. . . We continue to find ourselves in a very fluid (sic)
situation in as much as the overall outlook of the industry has
not substantially improved. Principally for this reason, we
had proposed to settle our remaining obligations to you by
way of dacion en pago of the equipments (sic) and spare
parts mortgaged to you to (the) extent of their applicable loan
values. (Rollo, p. 155; Emphasis supplied)
Petitioner claims that the above offer of settlement or compromise is not an
admission that anything is due and is inadmissible against the party making
the offer (Sec. 24, Rule 130, Rules of Court). Unfortunately, this is not an
iron-clad rule.
To determine the admissibility or non-admissibility of an offer to compromise,
the circumstances of the case and the intent of the party making the offer
should be considered. Thus, if a party denies the existence of a debt but
offers to pay the same for the purpose of buying peace and avoiding
litigation, the offer of settlement is inadmissible. If in the course thereof, the
party making the offer admits the existence of an indebtedness combined
with a proposal to settle the claim amicably, then, the admission is
admissible to prove such indebtedness (Moran, Comments on the Rules of
Court, Vol. 5, p. 233 [1980 ed.); Francisco, Rules of Court, Vol. VII, p. 325
[1973 ed.] citing McNiel v. Holbrook, 12 Pac. (US) 84, 9 L.ed. 1009). Indeed,
an offer of settlement is an effective admission of a borrower's loan balance
(L.M. Handicraft Manufacturing Corp. v. Court of Appeals, 186 SCRA 640
[1990]). Exactly, this is what petitioner did in the case before us for review.
Finally, respondent court is faulted in awarding attorney's fees in favor of
Associated Bank. True, attorney's fees may be awarded in a case of clearly
unfounded civil action (Art. 2208 [4], CC). However, petitioner claims that it
was compelled to file the suit for damages in the honest belief that it has fully
discharged its obligations in favor of respondent bank and therefore not
unfounded.
We believe otherwise. As petitioner would rather vehemently deny,
undisputed is the fact of its admission regarding the unpaid balance of
P492,100.00 representing interests. It cannot also be denied that petitioner
opted to sue for specific performance and damages after consultation with a
lawyer (Rollo, p. 99) who advised that not even the claim for interests could
be recovered; hence, petitioner's attempt to seek refuge under Art. 1271
(CC). As previously discussed, the presumption generated by Art. 1271 is not
conclusive and was successfully rebutted by private respondent. Under the
circumstances, i.e., outright and honest letters of admission vis-a-
vis counsel-induced recalcitrance, there could hardly be honest belief. In this
regard, we quote with approval respondent court's observation:
The countervailing evidence against the claim of full payment
emanated from Transpacific itself. It cannot profess
ignorance of the existence of the two letters, Exhs. 3 & 4, or
of the import of what they contain. Notwithstanding the
letters, Transpacific opted to file suit and insist(ed) that its
liabilities had already been paid. There was thus an
ill-advised attempt on the part of Transpacific to capitalize on
the delivery of the duplicates of the promissory notes, in
complete disregard of what its own records show. In the
circumstances, Art. 2208 (4) and (11) justify the award of
attorney's fees. The sum of P15,000.00 is fair and equitable.
(Rollo, pp. 46-47)
WHEREFORE, the petition is DENIED for lack of merit. Costs against
petitioner.
SO ORDERED.
FIRST DIVISION
[G.R. No. 109557. November 29, 2000]
JOSE UY and his Spouse GLENDA J. UY and GILDA L.
JARDELEZA, petitioners, vs. COURT OF APPEALS and
TEODORO L. JARDELEZA, respondents.
90
 DECISION
PARDO, J.:
The case is an appeal via certiorari from the decision[1] of the Court of
Appeals and its resolution denying reconsideration [2] reversing that of the
Regional Trial Court, Iloilo, Branch 32[3] and declaring void the special
proceedings instituted therein by petitioners to authorize petitioner Gilda L.
Jardeleza, in view of the comatose condition of her husband, Ernesto
Jardeleza, Sr., with the approval of the court, to dispose of their conjugal
property in favor of co-petitioners, their daughter and son in law, for the
ostensible purpose of financial need in the personal, business and medical
expenses of her incapacitated husband.
The facts, as found by the Court of Appeals, are as follows:
This case is a dispute between Teodoro L. Jardeleza (herein respondent) on
the one hand, against his mother Gilda L. Jardeleza, and sister and brother-
in-law, the spouses Jose Uy and Glenda Jardeleza (herein petitioners) on the
other hand. The controversy came about as a result of Dr. Ernesto
Jardeleza, Sr.s suffering of a stroke on March 25, 1991, which left him
comatose and bereft of any motor or mental faculties. Said Ernesto
Jardeleza, Sr. is the father of herein respondent Teodoro Jardeleza and
husband of herein private respondent Gilda Jardeleza.
Upon learning that one piece of real property belonging to the senior
Jardeleza spouses was about to be sold, petitioner Teodoro Jardeleza, on
June 6, 1991, filed a petition (Annex A) before the R.T.C. of Iloilo City,
Branch 25, where it was docketed as Special Proceeding No. 4689, in the
matter of the guardianship of Dr. Ernesto Jardeleza, Sr. The petitioner
averred therein that the present physical and mental incapacity of Dr.
Ernesto Jardeleza, Sr. prevent him from competently administering his
properties, and in order to prevent the loss and dissipation of the Jardelezas
real and personal assets, there was a need for a court-appointed guardian to
administer said properties. It was prayed therein that Letters of Guardianship
be issued in favor of herein private respondent Gilda Ledesma Jardeleza,
wife of Dr. Ernesto Jardeleza, Sr. It was further prayed that in the meantime,
no property of Dr. Ernesto Jardeleza, Sr. be negotiated, mortgaged or
otherwise alienated to third persons, particularly Lot No. 4291 and all the
improvements thereon, located along Bonifacio Drive, Iloilo City, and covered
by T.C.T. No. 47337.
A few days later, or on June 13, 1991, respondent Gilda L. Jardeleza herself
filed a petition docketed as Special Proceeding NO. 4691, before Branch 32
of the R.T.C. of Iloilo City, regarding the declaration of incapacity of Ernesto
Jardeleza, Sr., assumption of sole powers of administration of conjugal
properties, and authorization to sell the same (Annex B). Therein, the
petitioner Gilda L. Jardeleza averred the physical and mental incapacity of
her husband, who was then confined for intensive medical care and
treatment at the Iloilo Doctors Hospital. She signified to the court her desire
to assume sole powers of administration of their conjugal properties. She
also alleged that her husbands medical treatment and hospitalization
expenses were piling up, accumulating to several hundred thousands of
pesos already. For this, she urgently needed to sell one piece of real
property, specifically Lot No. 4291 and its improvements. Thus, she prayed
for authorization from the court to sell said property.
The following day, June 14, 1991, Branch 32 of the R.T.C. of Iloilo City
issued an Order (Annex C) finding the petition in Spec. Proc. No. 4691 to be
sufficient in form and substance, and setting the hearing thereof for June 20,
1991. The scheduled hearing of the petition proceeded, attended by therein
petitioner Gilda Jardeleza, her counsel, her two children, namely Ernesto
Jardeleza, Jr., and Glenda Jardeleza Uy, and Dr. Rolando Padilla, one of
Ernesto Jardeleza, Sr.s attending physicians.
On that same day, June 20, 1991, Branch 32 of the RTC of Iloilo City
rendered its Decision (Annex D), finding that it was convinced that Ernesto
Jardeleza, Sr. was truly incapacitated to participate in the administration of
the conjugal properties, and that the sale of Lot No. 4291 and the
improvements thereon was necessary to defray the mounting expenses for
treatment and Hospitalization. The said court also made the pronouncement
that the petition filed by Gilda L. Jardeleza was pursuant to Article 124 of the
Family Code, and that the proceedings thereon are governed by the rules on
summary proceedings sanctioned under Article 253 of the same Code x x x.
The said court then disposed as follows:
WHEREFORE, there being factual and legal bases to the petition dated June
13, 1991, the Court hereby renders judgment as follows:
1) declaring Ernesto Jardeleza, Sr., petitioners husband, to be incapacitated
and unable to participate in the administration of conjugal properties;
2) authorizing petitioner Gilda L. Jardeleza to assume sole powers of
administration of their conjugal properties; and
3) authorizing aforesaid petitioner to sell Lot No. 4291 of the Cadastral
Survey of Iloilo, situated in Iloilo City and covered by TCT No. 47337 issued
in the names of Ernesto Jardeleza, Sr. and Gilda L. Jardeleza and the
buildings standing thereof.
91
SO ORDERED.
On June 24, 1991, herein petitioner Teodoro Jardeleza filed his Opposition to
the proceedings before Branch 32 in Spec. Proc. Case No. 4691, said
petitioner being unaware and not knowing that a decision has already been
rendered on the case by public respondent.
On July 3, 1991, herein petitioner Teodoro Jardeleza filed a motion for
reconsideration of the judgment in Spec. Proc. No. 4691 and a motion for
consolidation of the two cases (Annex F). He propounded the argument that
the petition for declaration of incapacity, assumption of sole powers of
administration, and authority to sell the conjugal properties was essentially a
petition for guardianship of the person and properties of Ernesto Jardeleza,
Sr. As such, it cannot be prosecuted in accordance with the provisions on
summary proceedings set out in Article 253 of the Family Code. It should
follow the rules governing special proceedings in the Revised Rules of Court
which require procedural due process, particularly the need for notice and a
hearing on the merits. On the other hand, even if Gilda Jardelezas petition
can be prosecuted by summary proceedings, there was still a failure to
comply with the basic requirements thereof, making the decision in Spec.
Proc. No. 4691 a defective one. He further alleged that under the New Civil
Code, Ernesto Jardeleza, Sr. had acquired vested rights as a conjugal
partner, and that these rights cannot be impaired or prejudiced without his
consent. Neither can he be deprived of his share in the conjugal properties
through mere summary proceedings. He then restated his position that Spec.
Proc. No. 4691 should be consolidated with Spec. Proc. No. 4689 which was
filed earlier and pending before Branch 25.
Teodoro Jardeleza also questioned the propriety of the sale of Lot No. 4291
and the improvements thereon supposedly to pay the accumulated financial
obligations arising from Ernesto Jardeleza, Sr.s hospitalization. He alleged
that the market value of the property would be around Twelve to Fifteen
Million Pesos, but that he had been informed that it would be sold for much
less. He also pointed out that the building thereon which houses the
Jardeleza Clinic is a monument to Ernesto Jardeleza Sr.s industry, labor and
service to his fellowmen. Hence, the said property has a lot of sentimental
value to his family. Besides, argued Teodoro Jardeleza, then conjugal
partnership had other liquid assets to pay off all financial obligations. He
mentioned that apart from sufficient cash, Jardeleza, Sr. owned stocks of
Iloilo Doctors Hospital which can be off-set against the cost of medical and
hospital bills. Furthermore, Ernesto Jardeleza, Sr. enjoys certain privileges at
the said hospital which allows him to pay on installment basis. Moreover, two
of Ernesto Jardeleza Sr.s attending physicians are his own sons who do not
charge anything for their professional services.
On July 4, 1991, Teodoro Jardeleza filed in Spec. Proc. No. 4691 a
supplement to his motion for reconsideration (Annex G). He reiterated his
contention that summary proceedings was irregularly applied. He also noted
that the provisions on summary proceedings found in Chapter 2 of the Family
Code comes under the heading on Separation in Fact Between Husband and
Wife which contemplates of a situation where both spouses are of disposing
mind. Thus, he argued that were one spouse is comatose without motor and
mental faculties, the said provisions cannot be made to apply.
While the motion for reconsideration was pending, Gilda Jardeleza disposed
by absolute sale Lot No. 4291 and all its improvements to her daughter, Ma.
Glenda Jardeleza Uy, for Eight Million Pesos (P8,000,000.00), as evidenced
by a Deed Absolute Sale dated July 8, 1991 executed between them (p. 111,
Rollo). Under date of July 23, 1991, Gilda Jardeleza filed an urgent ex-parte
motion for approval of the deed of absolute sale.
On August 12, 1991 Teodoro Jardeleza filed his Opposition to the motion for
approval of the deed of sale on the grounds that: (1) the motion was
prematurely filed and should be held in abeyance until the final resolution of
the petition; (2) the motion does not allege nor prove the justifications for the
sale; and (3) the motion does not allege that had Ernesto Jardeleza, Sr. been
competent, he would have given his consent to the sale.
Judge Amelita K. del Rosario-Benedicto of Branch 32 of the respondent
Court, who had penned the decision in Spec. Proc. No. 4691 had in the
meantime formally inhibited herself from further acting in this case (Annex
I). The case was then reraffled to Branch 28 of the said court.
On December 19, 1991, the said court issued an Order (Annex M) denying
herein petitioners motion for reconsideration and approving respondent
Jardelezas motion for approval of the deed of absolute sale. The said court
ruled that:
After a careful and thorough perusal of the decision, dated June 20, 1991,
the Motion for Reconsideration, as well as its supplements filed by oppositor,
Teodoro L. Jardeleza, through counsel, and the opposition to the Motion for
Reconsideration, including its supplements, filed by petitioner, through
counsel, this Court is of the opinion and so holds, that her Honor, Amelita K.
del Rosario-Benedicto, Presiding Judge of Branch 32, of this Court, has
properly observed the procedure embodied under Article 253, in relation to
Article 124, of the Family Code, in rendering her decision dated June 20,
1991.
Also, as correctly stated by petitioner, through counsel, that oppositor Teodor
L. Jardeleza does not have the personality to oppose the instant petition
92
considering that the property or properties, subject of the petition, belongs to
the conjugal partnership of the spouses Ernesto and Gilda Jardeleza, who
are both still alive.
In view thereof, the Motion for Reconsideration of oppositor Teodoro L.
Jardeleza, is hereby denied for lack of merit.
Considering the validity of the decision dated June 20, 1991, which among
others, authorized Gilda L. Jardeleza to sell Lot No. 4291 of the Cadastral
Survey of Iloilo, covered by Transfer Certificate of Title No. 47337 issued in
the names of Ernesto Jardeleza, Sr., and Gilda L. Jardeleza and the building
standing thereon, the Urgent Ex-Parte Motion for Approval of Deed of
Absolute Sale dated July 23, 1991, filed by petitioner, through counsel, is
hereby granted and the deed of absolute sale, executed and notarized on
July 8, 1991, by and between Gilda L. Jardeleza, as vendor, and Ma. Glenda
Jardeleza, as vendee, is hereby approved, and the Register of Deeds of Iloilo
City, is directed to register the sale and issue the corresponding transfer
certificate of title to the vendee.
SO ORDERED.[4]
On December 9, 1992, the Court of Appeals promulgated its decision
reversing the appealed decision and ordering the trial court to dismiss the
special proceedings to approve the deed of sale, which was also declared
void.[5]
On December 29, 1992, petitioners filed a motion for
reconsideration,[6] however, on March 29, 1993, the Court of Appeals denied
the motion, finding no cogent and compelling reason to disturb the decision.[7]
Hence, this appeal.[8]
The issue raised is whether petitioner Gilda L. Jardeleza as the wife of
Ernesto Jardeleza, Sr. who suffered a stroke, a cerebrovascular accident,
rendering him comatose, without motor and mental faculties, and could not
manage their conjugal partnership property may assume sole powers of
administration of the conjugal property under Article 124 of the Family Code
and dispose of a parcel of land with its improvements, worth more than
twelve million pesos, with the approval of the court in a summary
proceedings, to her co-petitioners, her own daughter and son-in-law, for the
amount of eight million pesos.
The Court of Appeals ruled that in the condition of Dr. Ernesto
Jardeleza, Sr., the procedural rules on summary proceedings in relation to
Article 124 of the Family Code are not applicable. Because Dr. Jardeleza, Sr.
was unable to take care of himself and manage the conjugal property due to
illness that had rendered him comatose, the proper remedy was the
appointment of a judicial guardian of the person or estate or both of such
incompetent, under Rule 93, Section 1, 1964 Revised Rules of
Court. Indeed, petitioner earlier had filed such a petition for judicial
guardianship.
Article 124 of the Family Code provides as follows:
ART. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husbands decision shall prevail, subject to recourse to the court by the wife
for a proper remedy which must be availed of within five years from the date
of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the
court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void.However,
the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors. (165a).
In regular manner, the rules on summary judicial proceedings under the
Family Code govern the proceedings under Article 124 of the Family
Code. The situation contemplated is one where the spouse is absent, or
separated in fact or has abandoned the other or consent is withheld or
cannot be obtained. Such rules do not apply to cases where the non-
consenting spouse is incapacitated or incompetent to give consent. In this
case, the trial court found that the subject spouse "is an incompetent" who
was in comatose or semi-comatose condition, a victim of stroke,
cerebrovascular accident, without motor and mental faculties, and with a
diagnosis of brain stem infarct.[9] In such case, the proper remedy is a judicial
guardianship proceedings under Rule 93 of the 1964 Revised Rules of Court.
Even assuming that the rules of summary judicial proceedings under the
Family Code may apply to the wife's administration of the conjugal property,
the law provides that the wife who assumes sole powers of administration
has the same powers and duties as a guardian under the Rules of Court.[10]
Consequently, a spouse who desires to sell real property as such
administrator of the conjugal property must observe the procedure for the
sale of the wards estate required of judicial guardians under Rule 95, 1964
Revised Rules of Court, not the summary judicial proceedings under the
Family Code.
93
 In the case at bar, the trial court did not comply with the procedure PERALTA,
under the Revised Rules of Court. Indeed, the trial court did not even
observe the requirements of the summary judicial proceedings under the ABAD, and
Family Code. Thus, the trial court did not serve notice of the petition to the
incapacitated spouse; it did not require him to show cause why the petition MENDOZA, JJ.
should not be granted.
Hence, we agree with the Court of Appeals that absent an opportunity to
be heard, the decision rendered by the trial court is void for lack of due
process. The doctrine consistently adhered to by this Court is that a denial of SPOUSES ENRICO L. LINDO, JR. Promulgated:
due process suffices to cast on the official act taken by whatever branch of
the government the impress of nullity.[11] A decision rendered without due
and EDNA C. LINDO,
process is void ab initio and may be attacked directly or collaterally.[12] A
decision is void for lack of due process if, as a result, a party is deprived of
the opportunity of being heard.[13] A void decision may be assailed or Respondents. April 13, 2011
impugned at anytime either directly or collaterally, by means of a separate
action, or by resisting such decision in any action or proceeding where it is x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
invoked.[14]
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals
in CA-G. R. SP No. 26936, in toto.
Costs against petitioners.
SO ORDERED. DECISION

SECOND DIVISION

CARPIO, J.:

The Case

ARTURO SARTE FLORES, G.R. No. 183984

Petitioner, Before the Court is a petition for review1 assailing the 30 May 2008
Decision2 and the 4 August 2008 Resolution3 of the Court of Appeals in CA-
G.R. SP No. 94003.
Present:

CARPIO, J.,
Chairperson,

- versus - NACHURA,
94
 The Antecedent Facts
The facts, as gleaned from the Court of Appeals Decision, are as follows:
On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores
(petitioner) amounting to P400,000 payable on 1 December 1995 with 3%
compounded monthly interest and 3% surcharge in case of late payment. To
secure the loan, Edna executed a Deed of Real Estate Mortgage4 (the Deed)
covering a property in the name of Edna and her
husband Enrico (Enrico) Lindo, Jr. (collectively, respondents). Edna also
signed a Promissory Note5 and the Deed for herself and for Enrico as his
attorney-in-fact.
Edna issued three checks as partial payments for the loan. All checks were
dishonored for insufficiency of funds, prompting petitioner to file a Complaint
for Foreclosure of Mortgage with Damages against respondents. The case
was raffled to the Regional Trial Court of Manila, Branch 33 (RTC, Branch
33) and docketed as Civil Case No. 00-97942.
In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner
was not entitled to judicial foreclosure of the mortgage. The RTC, Branch 33
found that the Deed was executed by Edna without the consent and authority
of Enrico. The RTC, Branch 33 noted that the Deed was executed on 31
October 1995 while the Special Power of Attorney (SPA) executed
by Enrico was only dated 4 November 1995.
The RTC, Branch 33 further ruled that petitioner was not precluded from
recovering the loan from Edna as he could file a personal action against her.
However, the RTC, Branch 33 ruled that it had no jurisdiction over the
personal action which should be filed in the place where the plaintiff or the
defendant resides in accordance with Section 2, Rule 4 of the Revised Rules
on Civil Procedure.
Petitioner filed a motion for reconsideration. In its Order 7 dated 8 January
2004, the RTC, Branch 33 denied the motion for lack of merit.
On 8 September 2004, petitioner filed a Complaint for Sum of Money with
Damages against respondents. It was raffled to Branch 42 (RTC, Branch 42)
of the Regional Trial Court of Manila, and docketed as Civil Case No. 04-
110858.
Respondents filed their Answer with Affirmative Defenses and Counterclaims
where they admitted the loan but stated that it only amounted to P340,000.
Respondents further alleged that Enrico was not a party to the loan because
it was contracted by Edna without Enricos signature. Respondents prayed for
the dismissal of the case on the grounds of improper venue, res judicata and
forum-shopping, invoking the Decision of the RTC, Branch 33. On 7 March
2005, respondents also filed a Motion to Dismiss on the grounds of
res judicata and lack of cause of action.
The Decision of the Trial Court
On 22 July 2005, the RTC, Branch 42 issued an Order 8 denying the motion
to dismiss. The RTC, Branch 42 ruled that res judicata will not apply to rights,
claims or demands which, although growing out of the same subject matter,
constitute separate or distinct causes of action and were not put in issue in
the former action. Respondents filed a motion for reconsideration. In its
Order9 dated 8 February 2006, the RTC, Branch 42 denied respondents
motion. The RTC, Branch 42 ruled that the RTC, Branch 33 expressly stated
that its decision did not mean that petitioner could no longer recover the loan
petitioner extended to Edna.
Respondents filed a Petition for Certiorari and Mandamus with Prayer for a
Writ of Preliminary Injunction and/or Temporary Restraining Order before the
Court of Appeals.
95
 The Decision of the Court of Appeals The Issue

In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 The sole issue in this case is whether the Court of Appeals committed a
and 8 February 2006 Orders of the RTC, Branch 42 for having been issued reversible error in dismissing the complaint for collection of sum of money on
with grave abuse of discretion. the ground of multiplicity of suits.

The Court of Appeals ruled that while the general rule is that a motion to The Ruling of this Court
dismiss is interlocutory and not appealable, the rule admits of exceptions.
The Court of Appeals ruled that the RTC, Branch 42 acted with grave abuse
of discretion in denying respondents motion to dismiss.
The petition has merit.

The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of
Civil Procedure, a party may not institute more than one suit for a single
The rule is that a mortgage-creditor has a single cause of action against a
cause of action. If two or more suits are instituted on the basis of the same
mortgagor-debtor, that is, to recover the debt.10 The mortgage-creditor has
cause of action, the filing of one on a judgment upon the merits in any one is
the option of either filing a personal action for collection of sum of money or
available ground for the dismissal of the others. The Court of Appeals ruled
instituting a real action to foreclose on the mortgage security.11 An election of
that on a nonpayment of a note secured by a mortgage, the creditor has a the first bars recourse to the second, otherwise there would be multiplicity of
single cause of action against the debtor, that is recovery of the credit with suits in which the debtor would be tossed from one venue to another
execution of the suit. Thus, the creditor may institute two alternative
depending on the location of the mortgaged properties and the residence of
remedies: either a personal action for the collection of debt or a real action to
the parties.12
foreclose the mortgage, but not both. The Court of Appeals ruled that
petitioner had only one cause of action against Edna for her failure to pay her
obligation and he could not split the single cause of action by filing separately
a foreclosure proceeding and a collection case. By filing a petition for
foreclosure of the real estate mortgage, the Court of Appeals held that The two remedies are alternative and each remedy is complete by itself.13 If
petitioner had already waived his personal action to recover the amount the mortgagee opts to foreclose the real estate mortgage, he waives the
covered by the promissory note. action for the collection of the debt, and vice versa.14 The Court explained:

x x x in the absence of express statutory provisions, a mortgage

creditor may institute against the mortgage debtor either a personal
Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, action for debt or a real action to foreclose the mortgage. In other
the Court of Appeals denied the motion. words, he may pursue either of the two remedies, but not both. By
such election, his cause of action can by no means be impaired, for
each of the two remedies is complete in itself. Thus, an election to
bring a personal action will leave open to him all the properties of the
debtor for attachment and execution, even including the mortgaged
Hence, the petition before this Court. property itself. And, if he waives such personal action and pursues
96
 his remedy against the mortgaged property, an unsatisfied judgment
thereon would still give him the right to sue for deficiency judgment,
in which case, all the properties of the defendant, other than the
mortgaged property, are again open to him for the satisfaction of the
deficiency. In either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit of one or
the other remedy are purely accidental and are all under his right of
election. On the other hand, a rule that would authorize the plaintiff to
bring a personal action against the debtor and simultaneously or
successively another action against the mortgaged property, would
result not only in multiplicity of suits so offensive to justice (Soriano
v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v.
San Agustin, 25 Phil. 404), but also in subjecting the defendant to
the vexation of being sued in the place of his residence or of the
residence of the plaintiff, and then again in the place where the
property lies.15
Accordingly, since the Deed of Real Estate Mortgage was executed
by defendant Edna Lindo lacks the consent or authority of her
husband Enrico Lindo, the Deed of Real Estate Mortgage is void
pursuant to Article 96 of the Family Code.
This does not mean, however, that the plaintiff cannot recover
the P400,000 loan plus interest which he extended to defendant
Edna Lindo. He can institute a personal action against the defendant
for the amount due which should be filed in the place where the
plaintiff resides, or where the defendant or any of the principal
defendants resides at the election of the plaintiff in accordance with
Section 2, Rule 4 of the Revised Rules on Civil Procedure. This
Court has no jurisdiction to try such personal action.17

The Court has ruled that if a creditor is allowed to file his separate complaints
simultaneously or successively, one to recover his credit and another to
foreclose his mortgage, he will, in effect, be authorized plural redress for a Edna did not deny before the RTC, Branch 33 that she obtained the loan.
single breach of contract at so much costs to the court and with so much She claimed, however, that her husband did not give his consent and that he
vexation and oppressiveness to the debtor.16 was not aware of the transaction.18 Hence, the RTC, Branch 33 held that
petitioner could still recover the amount due from Edna through a personal
action over which it had no jurisdiction.
In this case, however, there are circumstances that the Court takes into
consideration.

Edna also filed an action for declaratory relief before the RTC, Branch 93 of
San Pedro Laguna (RTC, Branch 93), which ruled:
Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33
ruled that petitioner was not entitled to judicial foreclosure because the Deed
of Real Estate Mortgage was executed without Enricos consent. The RTC,
Branch 33 stated:
At issue in this case is the validity of the promissory note and the
Real Estate Mortgage executed by Edna Lindo without the consent
of her husband.
All these circumstances certainly conspired against the plaintiff who
has the burden of proving his cause of action. On the other hand,
said circumstances tend to support the claim of defendant
Edna Lindo that her husband did not consent to the mortgage of their The real estate mortgage executed by petition Edna Lindo over their
conjugal property and that the loan application was her personal conjugal property is undoubtedly an act of strict dominion and must
decision. be consented to by her husband to be effective. In the instant case,
the real estate mortgage, absent the authority or consent of the
husband, is necessarily void. Indeed, the real estate mortgage is this
97
 case was executed on October 31, 1995 and the subsequent special
power of attorney dated November 4, 1995 cannot be made to
retroact to October 31, 1995 to validate the mortgage previously
made by petitioner.
The liability of Edna Lindo on the principal contract of the loan
however subsists notwithstanding the illegality of the mortgage.
Indeed, where a mortgage is not valid, the principal obligation which
it guarantees is not thereby rendered null and void. That obligation
matures and becomes demandable in accordance with the
stipulation pertaining to it. Under the foregoing circumstances, what
is lost is merely the right to foreclose the mortgage as a special
remedy for satisfying or settling the indebtedness which is the
principal obligation. In case of nullity, the mortgage deed remains as
evidence or proof of a personal obligation of the debtor and the
amount due to the creditor may be enforced in an ordinary action.
In view of the foregoing, judgment is hereby rendered declaring the
deed of real estate mortgage as void in the absence of the authority
or consent of petitioners spouse therein. The liability of petitioner on
the principal contract of loan however subsists notwithstanding the
illegality of the real estate mortgage.19
The RTC, Branch 93 also ruled that Ednas liability is not affected by the
illegality of the real estate mortgage.
Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal
partnership property shall belong to both spouses jointly. In case of
disagreement, the husbands decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be
availed of within five years from the date of contract implementing
such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers do
not include disposition or encumbrance without authority of the court
or the written consent of the other spouse. In the absence of such
authority or consent the disposition or encumbrance shall be
void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or
both offerors. (Emphasis supplied)
Article 124 of the Family Code of which applies to conjugal partnership
property, is a reproduction of Article 96 of the Family Code which applies to
community property.
Both Article 96 and Article 127 of the Family Code provide that the powers do
not include disposition or encumbrance without the written consent of the
other spouse. Any disposition or encumbrance without the written consent
shall be void. However, both provisions also state that the transaction shall
be construed as a continuing offer on the part of the consenting spouse and
the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse x x x before the offer is withdrawn by
either or both offerors.
In this case, the Promissory Note and the Deed of Real Estate Mortgage
were executed on 31 October 1995. The Special Power of Attorney was
executed on 4 November 1995. The execution of the SPA is the
acceptance by the other spouse that perfected the continuing offer as a
98
binding contract between the parties, making the Deed of Real Estate
Mortgage a valid contract.
However, as the Court of Appeals noted, petitioner allowed the decisions of
the RTC, Branch 33 and the RTC, Branch 93 to become final
and executory without asking the courts for an alternative relief. The Court of
Appeals stated that petitioner merely relied on the declarations of these
courts that he could file a separate personal action and thus failed to observe
the rules and settled jurisprudence on multiplicity of suits, closing petitioners
avenue for recovery of the loan.
Nevertheless, petitioner still has a remedy under the law.
In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute
against the mortgage-debtor either a personal action for debt or a real action
to foreclose the mortgage. The Court ruled that the remedies are alternative
and not cumulative and held that the filing of a criminal action for violation
of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for the
recovery of the mortgage-debt.21 In that case, however, this
Court pro hac vice, ruled that respondents could still be held liable for the
balance of the loan, applying the principle that no person may unjustly enrich
himself at the expense of another.22
The principle of unjust enrichment is provided under Article 22 of the Civil
Code which provides:
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.
There is unjust enrichment when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good
conscience.23 The principle of unjust enrichment requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that
such benefit is derived at the expense of another.24
The main objective of the principle against unjust enrichment is to prevent
one from enriching himself at the expense of another without just cause or
consideration.25 The principle is applicable in this case considering that Edna
admitted obtaining a loan from petitioners, and the same has not been fully
paid without just cause. The Deed was declared void erroneously at the
instance of Edna, first when she raised it as a defense before the RTC,
Branch 33 and second, when she filed an action for declaratory relief before
the RTC, Branch 93. Petitioner could not be expected to ask the RTC,
Branch 33 for an alternative remedy, as what the Court of Appeals ruled that
he should have done, because the RTC, Branch 33 already stated that it had
no jurisdiction over any personal action that petitioner might have against
Edna.
Considering the circumstances of this case, the principle against unjust
enrichment, being a substantive law, should prevail over the procedural rule
on multiplicity of suits. The Court of Appeals, in the assailed decision, found
that Edna admitted the loan, except that she claimed it only amounted
to P340,000. Edna should not be allowed to unjustly enrich herself because
of the erroneous decisions of the two trial courts when she questioned the
validity of the Deed. Moreover, Edna still has an opportunity to submit her
defenses before the RTC, Branch 42 on her claim as to the amount of her
indebtedness.
WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution
of the Court of Appeals in CA-G.R. SP No. 94003 are SET ASIDE. The
Regional Trial Court of Manila, Branch 42 is directed to proceed with the trial
of Civil Case No. 04-110858.
SO ORDERED.
99
THIRD DIVISION
[G.R. No. 137675. December 5, 2000]
NOVERNIA P. NAGUIT, petitioner, vs. THE COURT OF APPEALS,
OSLER U. PADUA and NORBERTO B. MAGSAJO, respondents.
DECISION
GONZAGA-REYES, J.:
In a decision rendered on 15 October 1991, the Regional Trial Court (RTC)
of Makati, Branch 133, found Rolando Naguit liable for violation of Batas
Pambansa Blg. 22, and ordered him to idemnify private respondent Osler U.
Padua in the amount of P260,000.00 and to pay the costs of the action
(Criminal Case No. 90-2645). A writ of execution was issued by said court on
23 June 1992 and pursuant thereto, respondent Sheriff Norberto B. Magsajo
levied upon a condominium unit covered by Condominium Certificate of Title
No. 7362 of the Registry of Deeds for the City of Makati, which notice of levy
was annotated at the back of the title. Consequently, the property was sold at
a public auction for P318,050.00 in favor of private respondent, as the
highest bidder. The certificate of sale was issued in the name of private
respondent and registered with the Registry of Deeds on 25 August 1994.
On 8 August 1995, petitioner filed a complaint with the RTC of Makati against
private respondent Padua and respondent Sheriff Magsajo for the annulment
of sale and for damages, with a prayer for the issuance of a writ of
preliminary injunction in order to enjoin the final conveyance of title over the
condominium unit to private respondent (Civil Case No. 95-1182). Petitioner
claimed that the debt contracted by her husband did not redound to the
benefit of the family, nor was it made with her consent, and therefore, should
not be charged to the conjugal partnership of gains or to her exclusive
property; that the condominium unit levied upon and sold to private
respondent is her exclusive property, not the judgment obligors; and that
consequently, the levy and sale of the condominium unit are void. [1]
On 20 September 1995, Branch 136 of the RTC of Makati denied
petitioners prayer for the issuance of preliminary injunction, explaining that
The perceived anomaly in the auction sale of the property subject of this
case, which [is] claimed to be owned by the petitioner is a matter within the
competence of the Court which authorized the levy on execution of judgment,
of property of plaintiff in this case.
If plaintiff believes that there were irregularities in the auction sale of the
property subject of this case which [is] claimed to be owned by the petitioner,
the problems should have been threshed out before [the] RTC Makati,
Branch 133, which court authorized the levy on execution of judgment of
property of plaintiff in this case. Besides, the petitioner should have elevated
the matter to the higher tribunal, and seek proper injunctive relief, and not to
refer to this Court which does not exercise an appellate authority over the
court that issued the aforesaid writ of execution.
The Court agrees with the argument of the defendant that the present action
of the plaintiff in seeking relief with this Court is legally misplaced.
It is an elementary rule of procedure, which is too well settled to be ignored,
that trial courts have no power to interfere by injunction and are enjoined
from intervening with the proceedings of a co-equal, concurrent and
coordinate court of the same jurisdiction.[2]
On 5 July 1996, the trial court issued an order denying petitioners motion for
reconsideration and dismissing the case on the ground of lack of
jurisdiction.[3] The Court of Appeals upheld the trial courts decision to dismiss
the case. In its decision promulgated on 18 November 1998, the appellate
court explained that since petitioner is the spouse of the judgment debtor she
cannot be considered a stranger to the case wherein the writ of execution
was issued and thus, she should have presented her third-party claim
therein. In the event that her claim is denied, only then should petitioner bring
the matter before the appellate court.[4] Petitioner filed a motion for
reconsideration, which was denied by the Court of Appeals on 9 February
1999.
Hence, the present petition, wherein petitioner asks that the 18 November
1998 Decision and 9 February 1999 Resolution of the Court of Appeals be
set aside and that the action for annulment of sale be tried on the merits.[5]
The petition is imbued with merit. A third-party claimants right to bring an
independent action to assert his claim of ownership over the properties
seized is sanctioned by Section 17 of Rule 39 of the old Rules of Civil
Procedure, which provides that
100
Proceedings where property claimed by third person. - If property levied on
be claimed by any other person than the judgment debtor or his agent, and
such person make an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serve the same upon
the officer making the levy, and copy thereof upon the judgment creditor, the
officer shall not be bound to keep the property, unless such judgment creditor
or his agent, on demand of the officer, indemnify the officer against such
claim by a bond in a sum not greater than the value of the property levied
on. In case of disagreement as to the value, the same shall be determined by
the court issuing the writ of execution.
The officer is not liable for damages, for the taking or keeping of the property,
to any third party claimant unless a claim is made by the latter and unless an
action for damages is brought by him against the officer within one hundred
twenty (120) days from the date ofthe filing of the bond. But nothing herein
contained shall prevent such claimant or any third person from vindicating his
claims to the property by any proper action. [emphasis supplied][6]
xxx xxx xxx
The proper action mentioned in Section 17 would have for its object the
recovery of ownership or possession of the property seized by the sheriff, as
well as damages resulting from the allegedly wrongful seizure and detention
thereof despite the third party claim and it may be brought against the sheriff
and such other parties as may be alleged to have colluded with him in the
supposedly wrongful execution proceedings, such as the judgment creditor
himself. If instituted by a stranger to the suit in which execution has issued,
such proper action should be a totally separate and distinct action from the
former suit.[7]
In addition to the filing of a proper action, the third-party claimant may also
avail of the remedy known as terceria, by executing an affidavit of his title or
right of possession over the property seized and serving the same upon the
officer making the levy and the judgment creditor. Thereafter, the officer shall
not be bound to keep the property, unless the judgment creditor or his agent
indemnifies the officer against such claim by a bond in a sum not greater
than the value of the property levied on. An action for damages may be
brought against the officer within one hundred twenty (120) days from the
date of the filing of the bond.
These abovementioned remedies are cumulative and any one of them may
be resorted to by a third-party claimant without availing of the others. Thus,
the availment of the remedy of terceria is not a condition sine qua non to the
filing of a proper action. An independent action may be resorted to even
before or without need of filing a claim in the court which issued the writ. [8]
In the case at bar, petitioner filed an independent action for the annulment of
the certificate of sale issued in favor of private respondent, contending that
the property levied upon and sold to private respondent by virtue of the writ
of execution issued in Criminal Case No. 90-2645 was her exclusive
property, not that of the judgment obligor.Pursuant to our ruling in Sy v.
Discaya,[9] petitioner 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 the subject property.
Contrary to the stand taken by the trial court, the filing of such an
independent action cannot be considered an encroachment upon the
jurisdiction of a co-equal and coordinate court. The court issuing the writ of
execution may enforce its authority only over properties of the judgment
debtor; thus, the sheriff acts properly only when he subjects to execution
property undeniably belonging to the judgment debtor. If the sheriff levies
upon the assets of a third person in which the judgment debtor has no
interest, then he is acting beyond the limits of his authority and is amenable
to control and correction by a court of competent jurisdiction in a separate
and independent action.[10]This is in consonance with the well-established
principle that no man shall be affected by any proceeding to which he is a
stranger. Execution of a judgment can only be issued against a party to the
action, and not against one who has not yet had his day in court. [11]
WHEREFORE, the petition is GRANTED. The assailed decision and
resolution of the Court of Appeals, promulgated on 18 November 1998 and 9
February 1999, respectively, are hereby SET ASIDE. This case is remanded
to the trial court for further proceedings.
SO ORDERED.
101