SUSANA DE LA CRUZ, ESCOLASTICO DE LA CRUZ, AND PROCESA DE LA The issue thus formed was duly submitted to the lower
bmitted to the lower court, and after
CRUZ, defendants-appellees.
Chicote and Miranda, for appellant.
Leoncio Imperial and Carlos Imperial, for appellees.
JOHNSON, J.:
On the 21st day of August, 1905, the plaintiff, through her attorneys, filed
an amended complaint in the Court of First Instance of the Province of
Albay for the purpose of recovering from the defendant certain pieces or
parcels of land described in the complaint, alleging: That she was the owner
of the said lands; that she had acquired said lands during her first marriage
from her deceased father, Alejo Rodriguez; that Hilarion de la Cruz was her
second husband and that she had permission from him to commence this
action in her own name against the said defendant; that she had been in
possession of said lands and enjoyed the fruits of the same, from the month
of May, 1882, until the month of February, 1905; that the said Hilarion de la
Cruz had no interest or right in said property; that on or about the 20th of
February 1905, the defendants in the cause commenced an action in the
Court of First Instance of the Province of Albay against the said Hilarion de
la Cruz for the partition of the lands described in the present cause; that on
the 29th day of March, 1905, the judge of the said court adjudged in favor
of the defendant Susana de la Cruz in this action the ownership and
possession of the lands described under letter "B" in the complaint in this
cause adjudging and decreeing the ownership and possession of lands
described in letter "A" in this complaint to Escolastico de la Cruz; that the
plaintiff in this cause was not made a party in the action for partition
between the present defendants and the said Hilarion de la Cruz.
To this petition the defendants filed a special denial, denying certain parts
of the facts set out in the complaint and admitting certain other of the facts
alleged in said complaint. As a special defense the defendants set up the
judgment of the Court of First Instance of the Province of Albay of the 29th
of March, 1905.
hearing the evidence the lower court rendered a judgment in favor of the
defendants and against the plaintiff, dismissing the said cause with costs to
the plaintiff. The lower court found as a fact from the evidence adduced
during the trial that the lands described in the complaint were acquired by
Hilarion de la Cruz, the father of the present defendants, "during his
married life with his first wife, Andrea de Leon," and that said lands were
not inherited by the present defendant from her father, Alejo Rodriguez.
From this decision the plaintiff appealed to this court, alleging that the
lower court committed errors, in substance as follows:
1. That the lower court erred in considering the fact that the said Matea E.
Rodriguez did not intervene in said action for partition between the said
Hilarion de la Cruz and his children of the first marriage as sufficient to show
that she had no interest in the lands in question.
2. That the court erred in declaring that the said Hilarion de la Cruz was the
owner of the lands in question, for simple fact that he had been
administering said lands during the entire period of his marriage with the
present plaintiff.
3. That the court erred in finding from the evidence that the said Hilarion de
la Cruz has acquired said lands during the existence of his marriage relation
with the said Andrea de Leon, his first wife, and that said lands were not
inherited by the present plaintiff from her deceased father.
With reference to the first assignment of error above noted, we are of the
opinion, and so hold, that for the reason that the said Matea E. Rodriguez
had not been made a party in the action for partition between the present
defendants and the said Hilarion de la Cruz, her interest in said lands was in
no way prejudiced by the decision of the court in that cause.
Section 277 of the Code of Civil Procedure in Civil Actions provides, among
other things, that proceedings in a cause against one person can not affect
the rights of another.
It is admitted by the parties in the present action that the said Matea E. judgment be entered declaring that the said plaintiffs, Matea E. Rodriguez,
Rodriguez was not made a party in the former action for the partition is the owner and is entitled to the possession, as against the said
between the present defendants and the said Hilarion de la Cruz, neither is defendants, of the lands described i the amended complaint presented in
it shown that she had any knowledge or information concerning the this cause.
existence or pendency of said action.,
Without any finding as to costs, it is so ordered.
With reference of the second assignment of error above noted, it is
admitted that soon after the marriage of the said Hilarion de la Cruz with Arellano, C.J., Torres, Willard, and Tracey, JJ., concur.
the present plaintiff he commenced to administer the property in question.
There is no provision in the Civil Code which prohibits a husband from
administering the property of his wife, as her representative, and certainly
it can not be concluded that the property which he administers for his wife
is his for the mere reason that he has administered the same for a long
time.

Article 1382 of the Civil Code provides that the wife shall retain the
ownership of her property which she brings to the marriage relation. It is
true that article 1384 prescribes that she shall have the management of the
property, unless she was delivered the same to her husband by means of a
public document, providing that he may administer said property; but it can
not be claimed; from the mere fact that she has permitted her husband to
administer her property without having his authority to do so evidenced by
a public document, that she has thereby lost her property and that the
same has become the property of her husband. No such claim was made in
the court below on behalf of the defendants. Their claim was that the said
Hilarion de la Cruz had acquired said property during the existence of his
marriage with his first wife, Andrea de Leon.

With reference to the third assignment of error above noted, we are of the
PEOPLE'S BANK AND TRUST COMPANY, plaintiff-appellee,
opinion, and so hold, after an examination of the evidence adduced during
vs.
the trial of said cause, that the said lands in question were acquired by
SYVEL'S INCORPORATED, ANTONIO Y. SYYAP and ANGEL Y
Matea E. Rodriguez by inheritance during the existence of her first
SYYAP, defendants-appellants.
marriage, from her deceased father, Alejo Rodriguez.

Araneta, Mendoza & Papa for plaintiff-appellee.

Therefore, from all the foregoing facts, we are of the opinion that the
judgment of the lower court should be reversed, and it is hereby ordered
that the said cause be remanded to the lower court with direction that a Quasha, Asperilia, Zafra, Tayag & Ancheta for defendants-appellants.

PARAS, J.:
This is an appeal from the decision dated May 16, 1968 rendered by the
Court of First Instance of Manila, Branch XII in Civil Case No. 68095, the
decretal portion of which states:
IN VIEW OF THE FOREGOING, judgment is rendered
sentencing all the defendants to pay the plaintiff jointly
and severally the sum of P601,633.01 with interest
thereon at the rate of 11% per annum from June 17,
1967, until the whole amount is paid, plus 10% of the
total amount due for attorney's fees and the costs of suit.
Should the defendants fail to pay the same to the
plaintiff, then it is ordered that all the effects, materials
and stocks covered by the chattel mortgages be sold at
public auction in conformity with the Provisions of Sec. 14
of the Chattel Mortgage Law, and the proceeds thereof
applied to satisfy the judgment herein rendered. The
counterclaim of the defendants, upon the evidence
presented and in the light of the authorities above cited,
is dismissed for lack of merit.
SO ORDERED
(pp. 89-90, Record on Appeal; p. 15, Rollo)
The facts of the case based on the statement of facts, made by the trial
court in its decision as cited in the briefs of both parties are as follows:
This is an action for foreclosure of chattel mortgage
executed in favor of the plaintiff by the defendant Syvel's
Incorporated on its stocks of goods, personal properties
and other materials owned by it and located at its stores
or warehouses at No. 406, Escolta, Manila; Nos. 764-766
Rizal Avenue, Manila; Nos. 10-11 Cartimar Avenue, Pasay
City; No. 886 Nicanor Reyes, Sr. (formerly Morayta),
Manila; as evidenced by Annex"A."The chattel mortgage
was duly registered in the corresponding registry of deeds
of Manila and Pasay City. The chattel mortgage was in
connection with a credit commercial line in the amount of
P900,000.00 granted the said defendant corporation, the
expiry date of which was May 20, 1966. On May 20, 1965,
defendants Antonio V. Syyap and Angel Y. Syyap executed
an undertaking in favor of the plaintiff whereby they both
agreed to guarantee absolutely and unconditionally and
without the benefit of excussion the full and prompt
payment of any indebtedness to be incurred on account
of the said credit line. Against the credit line granted the
defendant Syvel's Incorporated the latter drew advances
in the form of promissory notes which are attached to the
complaint as Annexes "C" to "l." In view of the failure of
the defendant corporation to make payment in
accordance with the terms and conditions agreed upon in
the Commercial Credit Agreement the plaintiff started to
foreclose extrajudicially the chattel mortgage. However,
because of an attempt to have the matter settled, the
extra-judicial foreclosure was not pushed thru. As no
payment had been paid, this case was even tually filed in
this Court.
On petition of the plaintiff based on the affidavits
executed by Mr. Leopoldo R. Rivera, Assistant Vice
President of the plaintiff bank and Atty. Eduardo J.
Berenguer on January 12, 1967, to the effect, among
others, that the defendants are disposing of their
properties with intent to defraud their creditors,
particularly the plaintiff herein, a preliminary writ of
attachment was issued. As a consequence of the issuance
of the writ of attachment, the defendants, in their answer
to the complaint set up a compulsory counterclaim for
damages.
After the filing of this case in this court and during its Syyap in the deed of real estate mortgage executed by
pendency defendant Antonio v. Syyap proposed to have him. No part of the amount has been paid by either of the
the case settled amicably and to that end a conference defendants. Hence their liabilities cannot be questioned.
was held in which Mr. Antonio de las Alas, Jr., Vice (pp. 3-6, Brief for Appellee; p. 26, Rollo)
President of the Bank, plaintiff, defendant Antonio V.
Syyap and Atty. Mendoza were present. Mr. Syyap In their brief, appellants assign the following errors:
requested that the plaintiff dismiss this case because he
did not want to have the goodwill of Syvel's Incorporated I
impaired, and offered to execute a real estate mortgage
on his real property located in Bacoor, Cavite. Mr. De las
The lower court erred in not holding that the obligation
Alas consented, and so the Real Estate Mortgage, marked
secured by the Chattel Mortgage sought to be foreclosed
as Exhibit A, was executed by the defendant Antonio V.
in the above-entitled case was novated by the subsequent
Syyap and his wife Margarita Bengco Syyap on June 22,
execution between appellee and appellant Antonio V,
1967. In that deed of mortgage, defendant Syyap
Syyap of a real estate mortgage as additional collateral to
admitted that as of June 16, 1967, the indebtedness of
the obligation secured by said chattel mortgage.
Syvel's Incorporated was P601,633.01, the breakdown of
which is as follows: P568,577.76 as principal and
II
P33,055.25 as interest. Complying with the promise of the
plaintiff thru its Vice President to ask for the dismissal of
this case, a motion to dismiss this case without prejudice The lower court erred in not dismissing the above-entitled
was prepared, Exhibit C, but the defendants did not want case and in finding appellants liable under the complaint.
to agree if the dismissal would mean also the dismissal of
their counterclaim Against the plaintiff. Hence, trial III
proceeded.
The lower court erred in not holding that the writ of
As regards the liabilities of the defendants, there is no preliminary attachment is devoid of any legal and factual
dispute that a credit line to the maximum amount of basis whatsoever.
P900,000.00 was granted to the defendant corporation
on the guaranty of the merchandise or stocks in goods of IV
the said corporation which were covered by chattel
mortgage duly registered as required by law. There is The lower court erred in dismissing
likewise no dispute that the defendants Syyap guaranteed appellants'counterclaim and in not holding appellee liable
absolutely and unconditionally and without the benefit of to appellants for the consequent damages arising out of a
excussion the full and prompt payment of any wrongful attachment. (pp. 1-2, Brief for the Appellants, p.
indebtedness incurred by the defendant corporation 25, Rollo)
under the credit line granted it by the plaintiff. As of June
16, 1967, its indebtedness was in the total amount of
P601,633.01. This was admitted by defendant Antonio V.
Appellants admit that they are indebted to the appellee bank in the amount
of P601,633.01, breakdown of which is as follows: P568,577.76 as principal
and P33,055.25 as interest. After the filing of the case and during its
pendency, defendant Antonio V. Syyap proposed to have the case amicably
settled and for that purpose a conference was held in which Mr. Antonio de
las Alas, Jr., Vice President of plaintiff People's Bank and Trust Company,
defendant Antonio V. Syyap and Atty. Mendoza were present. Mr. Syyap
requested that the plaintiff dismiss this case as he did not want to have the
goodwill of Syvel's Incorporated impaired, and offered to execute a real
estate mortgage on his real property located in Bacoor, Cavite. Mr. de las
Alas consented, and so the Real Estate Mortgage (Exhibit "A") was executed
by defendant Antonio Syyap and his wife Margarita Bengco Syyap on June
22, 1967. Defendants did not agree with plaintiffs motion to dismiss which
included the dismissal of their counterclaim and filed instead their own
motion to dismiss (Record on Appeal, pp. 68-72) on the ground that by the
execution of said real estate mortgage, the obligation secured by the
chattel mortgage subject of this case was novated, and therefore,
appellee's cause of action thereon was extinguished.
In an Order dated September 23, 1967, the motion was denied for not
being well founded (record on Appeal, p. 78).
Appellants contention is without merit.
Novation takes place when the object or principal condition of an obligation
is changed or altered. It is elementary that novation is never presumed; it
must be explicitly stated or there must be manifest incompatibility between
the old and the new obligations in every aspect (Goni v. CA, 144 SCRA 223
[1986]; National Power Corp. v. Dayrit, 125 SCRA 849 [1983]).
In the case at bar, there is nothing in the Real Estate Mortgage which
supports appellants'submission. The contract on its face does not show the
existence of an explicit novation nor incompatibility on every point between
the "old and the "new" agreements as the second contract evidently
indicates that the same was executed as new additional security to the
chattel mortgage previously entered into by the parties.
Moreover, records show that in the real estate mortgage, appellants agreed
that the chattel mortgage "shall remain in full force and shall not be
impaired by this (real estate) mortgage."
The pertinent provision of the contract is quoted as follows:
That the chattel mortgage executed by Syvel's Inc. (Doc.
No. 439, Book No. I, Series of 1965, Notary Public Jose C.
Merris, Manila); real estate mortgage executed by Angel
V. Syyap and Rita V. Syyap (Doc. No. 441, Page No. 90,
Book No. I, Series of 1965, Notary Public Jose C. Merris,
Manila) shall remain in full force and shall not be impaired
by this mortgage (par. 5, Exhibit"A," Emphasis ours).
It is clear, therefore, that a novation was not intended. The real estate
mortgage was evidently taken as additional security for the performance of
the contract (Bank of P.I. v. Herrige, 47 Phil. 57).
In the determination of the legality of the writ of attachment by the Court
of First Instance of Manila, it is a well established rule that the grant or
denial of a writ of attachment rests upon the sound discretion of the court.
Records are bereft of any evidence that grave abuse of discretion was
committed by respondent judge in the issuance of the writ of attachment.
Appellants contend that the affidavits of Messrs. Rivera and Berenguer on
which the lower court based the issuance of the writ of preliminary
attachment relied on the reports of credit investigators sent to the field and
not on the personal knowledge of the affiants. Such contention deserves
scant consideration. Evidence adduced during the trial strongly shows that
the witnesses have personal knowledge of the facts stated in their affidavits
in support of the application for the writ. They testified that Syvel's Inc. had
disposed of all the articles covered by the chattel mortgage but had not
remitted the proceeds to appellee bank; that the Syvel's Stores at the
Escolta, Rizal Avenue and Morayta Street were no longer operated by
appellants and that the latter were disposing of their properties to defraud
appellee bank. Such testimonies and circumstances were given full credit by
the trial court in its decision (Brief for Appellee, p. 14). Hence, the
attachment sought on the ground of actual removal of property is justified SO ORDERED.
where there is physical removal thereof by the debtor, as shown by the
records (McTaggert v. Putnam Corset Co., 8 N.Y. S 800 cited in Moran, Melencio-Herrera, (Chairperson) and Sarmiento, JJ., concur.
Comments on the Rules of Court, 1970 Ed., Vol. 3, p. 7).
Padilla, J., took no part.
Besides, the actuations of appellants were clearly seen by the witnesses
who "saw a Fiat Bantam Car-Fiat Car, a small car and about three or four
persons hurrying; they were carrying goods coming from the back portion
of this store of Syvels at the Escolta, between 5:30 and 6:00 o'clock in the
evening." (Record on Appeal, pp. 45-46). Therefore, "the act of debtor
(appellant) in taking his stock of goods from the rear of his store at night, is
sufficient to support an attachment upon the ground of the fraudulent
concealment of property for the purpose of delaying and defrauding
creditors." (4 Am. Jur., 841 cited in Francisco, Revised Rules of Court,
Second Edition, 1985, p. 24).

In any case, intent to defraud may be and usually is inferred from the facts
and circumstances of the case; it can rarely be proved by direct evidence. It
may be gleaned also from the statements and conduct of the debtor, and in
this connection, the principle may be applied that every person is presumed
to intend the natural consequences of his acts (Francisco, Revised Rules of
Court, supra, pp. 24-25), In fact the trial court is impressed "that not only
has the plaintiff acted in perfect good faith but also on facts sufficient in
themselves to convince an ordinary man that the defendants were
obviously trying to spirit away a port;.on of the stocks of Syvel's
Incorporated in order to render ineffectual at least partially anyjudgment
that may be rendered in favor of the plaintiff." (Decision; Civil Case No.
68095; Record on Appeal, pp. 88-89).

Appellants having failed to adduce evidence of bad faith or malice on the

part of appellee in the procurement of the writ of preliminary attachment,
the claim of the former for damages is evidently negated. In fact, the
allegations in the appellee's complaint more than justify the issuance of the
writ of attachment.

PREMISES CONSIDERED, this appeal is DISMISSED for lack of merit and the
judgment appealed from is AFFIRMED.
THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., LTD., INC., plaintiff-
appellee,
vs.
JUAN M. POIZAT, ET AL., defendants.
GABRIELA ANDREA DE COSTER, appellant.
Antonio M. Opisso for appellant.
Eusebio Orense and Fisher, DeWitt, Perkins & Brady for appellee.
STATEMENT
August 25, 1905, the appellant, with his consent executed to and in favor of
her husband, Juan M. Poizat, a general power of attorney, which among
other things, authorized him to do in her name, place and stead, and
making use of her rights and actions, the following things:
To loan or borrow any amount in cash or fungible conditions he
may deem convenient collecting or paying the principal or interest,
for the time, and under the principal of the interest, when they
respectively should or private documents, and making there
transactions with or without mortgage, pledge or personal
securities.
November 2, 1912, Juan M. Poizat applied for and obtained from the
plaintiff a credit for the sum of 10,000 Pounds Sterling to be drawn on the"
Banco Espanol del Rio de la Plata" in London not later than January, 1913.
Later, to secure the payment of the loan, he executed a mortgage upon the
real property of his wife, the material portions of which are as follows:
This indenture entered into the City of Manila, P.I., by and
between Juan M. Poizat, merchant, of legal age, married and
residing in the City of Manila, in his own behalf and in his capacity
also as attorney in fact of his wife Dona Gabriela Andrea de Coster
by virtue of the authority vested in him by the power of attorney
duly executed and acknowledge in this City of Manila, etc.
First. That in the name of Dona Gabriela Andrea de Coster, wife of
Don Juan M. Poizat, there is registered on page 89 (back) of Book
3, Urban Property consisting of a house and six adjacent
warehouse, all of strong material and constructed upon her own
land, said property being Nos. 5, 3, and 1 of Calle Urbiztondo, and
No. 13 of Calle Barraca in the District of Binondo in the City of
Manila, etc.
Second. That the marriage of Don Juan M. Poizat and Dona
Gabriela Andrea de Coster being subsisting and undissolved, and
with the object of constructing a new building over the land
hereinabove described, the aforesaid house with the six
warehouse thereon constructed were demolished and in their
stead a building was erected, by permission of the Department of
Engineering and Public Works of this City issued November 10,
1902, said building being of strong material which, together with
the land, now forms only one piece of real estate, etc; which
property must be the subject of a new description in which it must
appear that the land belongs in fee simple and in full ownership as
paraphernal property to the said Dona Gabriela Andrea de Coster
and the new building thereon constructed to the conjugal
partnership of Don Juan M. Poizat and the said Dona Gabriela
Andrea de Coster, etc.
Third. That the Philippine Sugar Estates Development Company,
Ltd., having granted to Don Juan M. Poizat a credit of Ten
Thousand Pounds Sterling with a mortgage upon the real property
above described, etc.
(a) That the Philippine sugar Estated Development Company, Ltd.
hereby grants Don Juan M. Poizat a credit in the amount of Ten
Thousand Pounds sterling which the said Mr. Poizat may use within
the entire month of January of the coming year, 1913, upon the
bank established in the City of London, England, known as 'Banco
Espanol del Rio de la Plata, which shall be duly advised, so as to
place upon the credit of Mr. Poizat the said amount of Ten
Thousand Pounds Sterling, after executing the necessary receipts In witness whereof, we have signed these presents in Manila, this
therefore. November 2, 1912.

(c) That Don Juan M. Poizat personally binds himself and also binds (Sgd.) JUAN M. POIZAT
his principal Dona Gabriela Andrea de Coster to pay the Philippine THE PHILIPPINE SUGAR ESTATES
Sugar Estates Development Company, Ltd., for the said amount of DEVELOPMENT COMPANY, LTD.
Ten Thousand Pounds Sterling at the yearly interest of 9 per cent The President
which shall be paid at the end of each quarter, etc. BUENAVENTURA CAMPA

(d) Don Juan M. Poizat also binds himself personally and his Signed in the presence of:
principal Dona Gabriela Andrea de Coster to return to the
Philippine Sugar Estates Development Company, Ltd., the amount (Sgd.) MANUEL SAPSANO
of Ten Thousand Pounds Sterling within four years from the date JOSE SANTOS
that the said Mr. Poizat shall receive the aforesaid sum as
evidenced by the receipt that he shall issue to the 'BAnco Espanol UNITED STATES OF AMERICA
del Rio de la Plata.' PHILIPPINE ISLANDS
CITY OF MANILA
(e) As security for the payment of the said credit, in the case Mr.
Poizat should receive the money, together with its interest hereby In the City of Manila P.I., this November 2, 1912, before me
constitutes a voluntary especial mortgage upon the Philippine Enrique Barrera y Caldes, a Notary Public for said city, personally
Sugar Estates Development Company, Ltd., f the urban property appeared before me Don Juan M. Poizat and Don Buenaventura
above described, etc. Campa, whom i know to be the persons who executed the
foregoing document and acknowledged same before me as an act
(f) Don Juan M. Poizat in the capacity above mentioned binds of their free will and deed; the first exhibited to me his certificate
himself, should he receive the amount of the credit, and while he of registry No. 14237, issued in Manila, February 6, 1912, the
may not return the said amount of Ten thousand Pounds Sterling second did not exhibit any cedula, being over sixty years old; this
to the Philippine Sugar Estates Development Company, Ltd., to document bears No. 495, entered on page 80 of my Notarial
insure against fire the mortgaged property in an amount not less registry.
than One hundred Thousand Pesos, etc.
Before me:
Fourth. Don Buenaventura Campa in the capacity that he holds (Sgd.) Dr. ENRIQUE BARRERA Y CALDES
hereby accepts this indenture in the form, manner, and condition [NOTARIAL SEAL]
executed by Don Juan M. Poizat by himself personally and in
representation of his wife Dona Gabriela Andrea de Coster, in favor Notary Public
of the Philippine Sugar Estates Development Company, Ltd., Up to the 31st of December , 1912
For failure to pay the loan, on November 12, 1923, the plaintiff brought an
action against the defendants to foreclose the mortgage. In this action, the
summons was served upon the defendant Juan M. Poizat only, who
employed the services of Antonio A. Sanz to represent the defendants. The
attorneys filed a general appearance for all of them, and later an answer in
the nature of a general denial.
February 18, 1924, when the case was called for trial, Jose Galan y Blanco in
open court admitted all of the allegations made in the compliant, and
consented that judgment should be rendered as prayed for . Later, Juan M.
Poizat personally, for himself and his codefendants, file an exception to the
judgment and moved for a new trial, which was denied March 31, 1924.
August 22, 1924, execution was issued directing the sale of the mortgaged
property to satisfy the judgment.itc@alf
September 18, 1924, the property, which had an assessed value of
P342,685, was sold to the plaintiff for the sum of P100,000.
September 23, 1924, and for the first time, the appellant personally
appeared by her present attorney, and objected to the confirmation of the
sale, among other things, upon illegally executed, and is null and void,
because the agent of this defendant was not authorized to execute it. That
there was no consideration. That the plaintiff, with full knowledge that J. M.
Poizat was acting beyond the scope of his authority, filed this action to
subject the property of this defendant to the payment of the debt which, as
to appellant, was not a valid contract. That the judgment was rendered by
confession when the plaintiff and J. M. Poizat knew that Poizat was not
authorized to confess judgment, and that the proceeding was a
constructive fraud. That at the time the action was filed and the judgment
rendered, this defendant was absent from the Philippine Islands, and had
no knowledge of the execution of the mortgage. That after the judgment of
foreclosure became final and order of the sale of the property was made,
that this defendant for the first time learned that he mortgage contract was
tainted with fraud, and that she first knew and learned of such things on the
11th of September, 1924. That J. M. Poizat was not authorized to bind her
property to secure the payment of his personal debts. That the plaintiff
knew that the agent of the defendant was not authorized to bind her or her
property. That the mortgage was executed to secure a loan of 10,000
Pounds which was not made to this defendant or for her benefit, but was
made to him personally and for the personal use and benefit of J. M. Poizat.
Among other things, the mortgage in question, marked Exhibit B, was
introduced in evidence, and made a part of the record.
All of such objections to the confirmation of the sale were overruled, from
which Gabriela Andrea de Coster appealed and assigns the following errors:
I. The lower court erred in finding that Juan M. Poizat was, under
the power of attorney which he had from Gabriela Andrea de
Coster, authorized to mortgage her paraphernal property as
security for a loan made to him personally by the Philippine Sugar
Estates Development Company, Ltd., to him;
II. The lower court erred in not finding that under the power of
attorney, Juan M. Poizat had no authority to make Gabriela Andrea
de Coster jointly liable with him for a loan of 10,000 pound made
by the Philippine Sugar Estates Development Co., Ltd., to him;
III. The lower court erred in not finding that the Philippine Sugar
Estates Development Company, Ltd., had knowledge and notice of
the lack of authority of Don Juan M. Poizat to execute the
mortgage deed Exhibit A of the plaintiff;
IV. The lower court erred in holding that Gabriela Andrea de Coster
was duly summoned in this case; and in holding that Attorney Jose
Galan y Blanco could lawfully represent her or could, without proof
of express authority, confess judgment against Gabriela Andrea de
Coster;
V. The court erred in holding that the judgment in this case has
become final and res judicata;
 VI. The court erred in approving the judicial sale made by the
sheriff at an inadequate price;
VII. The lower court erred in not declaring these proceedings, the
judgment and the sale null and void.
JOHNS, J.:
For the reasons stated in the decision of this court in the Bank of the
Philippine Islands vs. De Coster, the alleged service of the summons in the
foreclosure suit upon the appellant was null and void. In fact, it was made
on J. M. Poizat only, and there is no claim or pretense that any service of
summons was ever made upon her. After service was made upon him, the
attorneys in question entered their appearance for all of the defendants in
the action, including the appellant upon whom no service was ever made,
and file an answer for them. Later, in open court, it was agreed that
judgment should be entered for the plaintiff as prayed for in its complaint.
The appellant contends that the appearance made by the attorneys for her
was collusive and fraudulent, and that it was made without her authority,
and there maybe some truth in that contention. It is very apparent that t
the attorneys made no effort to protect or defend her legal rights, but
under our view of the case, that question is not material to this decision.
The storm center of this case is the legal force and effect of the real
mortgage in question , by whom and for whom it was executed, and upon
whom is it binding, and whether or not it is null and void as to the appellant.
It is admitted that the appellant gave her husband, J. M. Poizat, the power
of attorney in question, and that it is in writing and speaks for itself. If the
mortgage was legally executed by her attorney in fact for her and in her
name as her act and deed, it would be legal and binding upon her and her
property. If not so executed, it is null and void.
It appears upon the face of the instrument that J. M. Poizat as the husband
of the wife, was personally a party to the mortgage, and that he was the
only persona who signed the mortgage. and the he was the only person
who signed the mortgage. It does not appear from his signature that he
signed it for his wife or as her agent or attorney in fact, and there is nothing
in his signature that would indicate that in the signing of it by him, he
intended that his signature should bind his wife. It also appears from the
acknowledgment of the instrument that he executed it as his personal act
and deed only, and there is nothing to show that he acknowledge it as the
agent or attorney in fact of his wife, or as her act and deed.
The mortgage recites that it was entered into by and between Juan M.
Poizat in his own behalf and as attorney in fact of his wife. That the record
title of the mortgaged property is registered in the name of his wife, Dona
Gabriela Andrea de Coster. That they were legally married, and that the
marriage between them has never been dissolved. That with the object of
constructing a new building on the land. the six warehouses thereon were
demolished, and that a new building was erected. That the property is the
subject of a new registration in which it must be made to appear that the
land belongs in fee simple and in full ownership as the paraphernal property
of the wife, and that the new building thereon is the property of the
conjugal partnership. "That the Philippine Sugar Estates Development
Company, Ltd., having granted to Don Juan M. Poizat a credit of 10,000
Pounds Sterling with the mortgage upon the real property above
described," that the Development Company "hereby grants Don Juan M.
Poizat a credit in the amount of 10,000 Pounds Sterling which the said Mr.
Poizat may use, etc." That should he personally or on behalf of his wife use
the credit he acknowledges, that he and his principal are indebted to the
Development Company in the sum of 10,000 Pounds Sterling which "they
deem to have received as a loan from the said commercial entity." That he
binds himself and his wife to pay that amount with a yearly interest of 9 per
cent, payable quarterly. That as security for the payment of said credit in
the case Mr. Poizat should receive the money at any time, with its interest,
"the said Mr. Poizat in the dual capacity that above mentioned binds
himself, should he receive the amount of the credit."
It thus appears that at the time the power of attorney and the mortgage
were executed, Don Juan M. Poizat and Gabriela Andrea de Coster were
husband and wife, and that the real property upon which the mortgage was
her sole property before her marriage, and that it was her paraphernal
property at the time the mortgage was executed, and that the new building
constructed on the land was the property of the conjugal partnership.
The instrument further recites that the Development Company "hereby
grants Don Juan M. Poizat a credit in the amount of 10,000 Pounds Sterling
which the said Mr. Poizat may use within the entire month of January of the
coming year, 1913." In other words, it appears upon the face of the
mortgage that the loan was made to the husband with authority to use the
money for his sole use and benefit. With or without a power of attorney,
the signature of the husband would be necessary to make the instrument a
valid mortgage upon the property of the wife, even though she personally
signed the mortgage.
It is contended that the instrument upon its face shows that its purpose and
intent was to bind the wife. But it also shows upon its face that the credit
was granted to Don Juan M. Poizat which he might use within the "entire
month of January."
Any authority which he had to bind his wife should be confined and limited
to his power of attorney.
Giving to it the very broadest construction, he would not have any authority
to mortgage her property, unless the mortgage was executed for her "and
in her name, place or stead," and as her act and deed. The mortgage in
question was not so executed. it was signed by Don Juan M. Poizat in his
own name, his own proper person, and by him only, and it was
acknowledge by him in his personal capacity, and there is nothing in either
the signature or acknowledgment which shows or tends to show that it was
executed for or on behalf of his wife or "in her name, place or stead."
It is contended that the instrument shows upon its face that it was intended
to make the wife liable for his debt, and to mortgage her property to secure
its payment, and that his personal signature should legally be construed as
the joined or dual signature of both the husband and that of the wife as her
agent. That is to say, construing the recitals in the mortgage and the
instrument as a whole, his lone personal signature should be construed in a
double capacity and binding equally and alike both upon the husband and
the wife. No authority has been cited, and none will ever be found to
sustain such a construction.
As the husband of the wife, his signature was necessary to make the
mortgage valid. In other words, to make it valid, it should have been signed
by the husband in his own proper person and by him as attorney in fact for
his wife, and it should have been executed by both husband and wife, and
should have been so acknowledged.
There is no principle of law by which a person can become liable on a real
mortgage which she never executed either in person or by attorney in fact.
It should be noted that this is a mortgage upon real property, the title to
which cannot be divested except by sale on execution or the formalities of a
will or deed. For such reasons, the law requires that a power of attorney to
mortgage or sell real property should be executed with all of the formalities
required in a deed. For the same reason that the personal signature of
Poizat, standing alone, would not convey the title of his wife in her own real
property, such a signature would not bind her as a mortgagor in real
property, the title to which was in her name.
We make this broad assertion that upon the facts shown in the record, no
authority will ever be found to hold the wife liable on a mortgage of her real
property which was executed in the form and manner in which the
mortgage in question was executed. The real question involved is fully
discussed in Mechem on Agency, volume 1, page 784, in which the author
says:
It is to be observed that the question here is not how but how such
an authority is to be executed. it is assumed that the agent was
authorized to bind his principal, but the question is, has he done
so.
That is the question here.
Upon that point, there is a full discussion in the following sections, and
numerous authorities are cited:
SEC. 1093. Deed by agent must purport to be made and sealed in
the name of the principal. — It is a general rule in the law of
agency that in order to bind the principal by a deed executed by an
agent, the deed must upon its grace purport to be made, signed
and sealed in the name of the principal. If, on the contrary, though
the agent describes name, the words of grant, covenant and the
like, purport upon the face of the instrument to be his, and the
seal purports to be his seal, the deed will bind the agent if any one
and not the principal.
SEC. 1101. Whose deed is a given deed. — How question
determined. — In determining whether a given deed is the deed of
the principal, regard may be had First, to the party named as
grantor. Is the deed stated to be made by the principal or by some
other person? Secondly, to the granting clause. Is the principal or
the agent the person who purports to make the grant? Thirdly, to
the covenants, if any. Are these the covenants of the
principal? Fourthly, to the testimonium clause. Who is it who is to
set his name and seal in testimony of the grant? Is it the principal
or the agent? And Fifthly, to the signature and seal. Whose
signature and seal are these? Are they those of the principal or of
the agent?
If upon such an analysis the deed does not upon its face purport to
be the deed of the principal, made, signed, sealed and delivered in
his name and his deed, it cannot take effect as such.
SEC. 1102. Not enough to make deed the principal's that the agent
is described as such. — It is not enough merely that not acted in
the name of the principal. Nor is it ordinarily sufficient that he
describes himself in the deed as acting by virtue of a power of
attorney or otherwise, or for or in behalf, or as attorney, of the
principal, or as a committee, or as trustee of a corporation, etc.;
for these expressions are usually but descriptio personae, and if, in
fact, he has acted of action thereon accrue to and against him
personally and not to or against the principal, despite these recital.
SEC. 1103. Not principal's deed where agent appears as grantor
and signer. — Neither can the deed ordinarily be deemed to be the
deed of the principal where the agent is the one who is named as
the grantor or maker, and he is also the one who signs and seals it.
...
SEC. 1108. . . . But however clearly the body of the deed may show
an intent that it shall be the act of he principal, yet unless its
executed by his attorney for him, it is not his deed, but the deed of
the attorney or of no one. The most usual and approved form of
executing a deed by attorney is by his writing the name of the
principal and adding by A B his attorney or by his attorney A B.'
That is good law. Applying it to the facts, under his power of attorney, Juan
M. Poizat may have had authority to borrow money and mortgage the real
property of his wife, but the law specifies how and in what manner it must
be done, and the stubborn fact remains that, as to the transaction in
question, that power was never exercised. The mortgage in question was
executed by him and him only, and for such reason, it is not binding upon
the wife, and as to her, it is null and void.
It follows that the whole decree against her and her paraphernal property
and the sale of that property to satisfy the mortgage are null and void, and
that any title she may have had in or to her paraphernal property remains
and is now vested in the wife as fully and as absolutely as if the mortgage
had never been executed, the decree rendered or the property sold. As to
Don Juan M. Poizat, the decree is valid and binding, and remains in full force
and effect.
It is an undisputed fact, which appears in the mortgage itself, that the land
in question was the paraphernal property of the wife, but after the
marriage the old buildings on the property were torn down and a new
building constructed and, in the absence of evidence to the contrary, it
must be presumed that the new building is conjugal property of the
husband and wife. As such, it is subject of the debts of the conjugal
partnership for the payment or security of which the husband has the
power to mortgage or otherwise encumber the property .
It is very probable that his particular question was not fully presented to or
considered by the lower court.
The mortgage as to the paraphernal property of the wife is declared null
and void ab initio, and as to her personally, the decree is declared null and
void, and as to her paraphernal property, the sale is set aside and vacated,
and held for naught, leaving it free and clear from the mortgage, decree
and sale, and in the same condition as if the mortgage had never been
executed, with costs in favor of the appellant. So ordered.
Johnson, Malcolm, Ostrand, and Romualdez, JJ., concur.
Separate Opinions
STREET, J., with whom concur AVANCEÑA, C.J., VILLAMOR, and VILLA- REAL,
JJ., dissenting:
In the year 1913 the plaintiff, the Philippine Sugar Estates Development
Company, Ltd., let J. M. Poizat have nearly P100,000 of money on the
supposed security of a mortgage on property belonging to his wife, Gabriela
Andrea de Coster, executed by Poizat under a power of attorney from her.
The plaintiff has now to learn that the security on which it relied is
worthless and that it did not even so much as have Gabriela Andrea de
Coster in court in the foreclosure proceeding. In the decision so holding the
undersigned are unable to concur.
To dispose first of the point as to the jurisdiction of the court over the
person and property of Gabriela Andrea de Coster, it is only necessary to
the third paragraph from the end of the power of attorney (Exhibit A to the
opposition of Gabriela Andrea de Coster) under which Poizat acted. To
express in a few words the substance of this paragraph in the part relevant
to the present discussion, Poizat is given full authority to represent his wife
in all judicial proceedings in Philippine courts, including among other things,
the making of appearances, submission of answers, receiving of service of
process, and to take in her behalf any procedural steps and measures
required by law of procedure in order to make effective and bring to
termination the matters in which he, as attorney in fact, may be concerned.
If this power is not sufficient to authorize Poizat to accept the service and
employ a lawyer to appear in court for the principal, as was done in this
case their ingenuity in the attempt to draft such authority.
But the disastrous feature of the decision is found in the pronouncement
that the mortgage on which the plaintiff's money was obtained is a nullity;
and upon this point the court holds that Gabriela Andrea de Coster was not
bound because the contract signed "Juan M. Poizat." But the documents
expressly recites in its preamble that it is executed by Juan M. Poizat, acting
both in representation of himself and in the character of attorney in fact of
his wife, Gabriela Andrea de Coster, in virtue of the authority conferred
upon him in the power of attorney already mentioned. Furthermore,
throughout the body of the document the idea is repeatedly expressed that
J. M. Poizat obligates both himself and his wife. We submit that under the
doctrine informing the Civil Code — which should control in this jurisdiction
— the mortgage instrument was lawfully executed and in a form sufficient
to bind the principal as well as the agent. Certainly it would never occur to a
civilian lawyer that the documents in question is informally executed; and
the circumstance that a learned Spanish notary (Don Enrique Barrera y
Caldes) intervened in the execution of this instrument would alone suffice
to show that it is done in conformity with approved Spanish models — a
fact otherwise apparent.
Even in the United States and Great Britain, where strict doctrines might be
expected to prevail in such matters, owing to the technical ruled involving
the real property in those countries, ample authority is found to the effect
that the principal will be bound by a contract signed by the agent only,
when it appears from the face of the instrument that he is acting in the
character of agent. (2 C. L., 672.)
From the portentous way in which the opinion of the courts refers to the
question of the sufficiency of the signature to the mortgage as the "storm
center of the case," one would suppose that this question had been the
subject of discussion in the lower court as well as in the briefs of the
attorneys here. Nothing of the sort is true, for this capital point, on which
the case is made principally to turn, has been jumped up exclusively in this
court; and the voluminous briefs will be searched in vain for the slightest
reference to the subject. In fact both parties appear to have assumed that
the mortgage was executed with all proper formality. Apart from the fact
that the question was not raised in the lower court, no assignment of error
in this court calls in question the sufficiency of the mode of execution of the
instrument. Under these circumstances this court should have confined
itself to the matters put in issue by the litigants; and it should not have gone
out of its way to take up a point not discussed by the parties, and upon
which in fact the losing party has never been heard. It is a good rule of
practice--sometimes respected by us--that an appellate court will not
permit an appellant to raise a point upon appeal which was not put in issue
in the court below and upon which no assignment of error has been made.
In our opinion the order appealed from should be affirmed.
DECISION UPON PETITION FOR REHEARING
February 15, 1926
JOHNS, J.:
The plaintiff has filed a very able, vigorous and exhaustive petition for
rehearing, which we have given the careful consideration which the
importance of the questions deserve.
The first proposition advanced is that the mortgage in question is valid not
only as to the buildings, but also as to the land on which they are
constructed. The previous decision of this court is to the effect that, the
buildings being conjugal property, the mortgage is valid, which is the
paraphernal property of the wife.
Plaintiff contends that the land is conjugal property under the provisions of
article 1404 of the Civil Code. That article does not apply to the instant case.
It does not appear that the buildings are of the nature therein specified.
The commentator Manresa, cited in the motion for reconsideration, rightly
distinguishes those buildings which, by reason of their importance, convert
the land on which, on account of their small relative value, continue to
remain as accessories to the land on which they are constructed, and for
such reason partake of the land.
The word building is a generic term for all architectural work with
roof built for the purpose used as man's dwelling, or for offices,
clubs, theaters, etc. When the structure does not constitute a
building, then the rule must be followed. The article cannot but be
interpreted strictly. An inclosure for cattle or a 'tinada,' a stone
barn, etc., follow the soil as accessories thereto. (9 Manresa, 626,
1919 ed.)
It appears from the mortgaged that the buildings in question to be
constructed are warehouses, and as the circumstances and details do not
appear in the record, such warehouses could not be construed as the class
of buildings mentioned in article 1404. Hence, the facts are not sufficient to
justify the court in holding that the exceptional provision applies to this case
in the sense of considering the soil as an accessory to the building, contrary
to the general rule contained in the Civil Code (arts. 358-364 and 1368). But
conceding that article 1404 does apply, yet under the provisions of that
article, the owner of the land is entitled to an indemnity for its value. Since,
according to the spirit of the law contained in article 349 of the Civil Code,
no one can be deprived of his property without previous indemnity, and it
not appearing in the instant case that such indemnity was never paid, the
land in question cannot now be considered as conjugal property. But it
further appears that the mortgage upon which plaintiff relies contains the
following recitals:
. . . which property must be the subject of a new registration
wherein it must be stated that the lot forming apart thereof
pertains to said Dona Gabriela Andrea de Coster in full ownership
and fee simple as paraphernal property, and the building newly
erected thereon to the conjugal; partnership between Don Juan M.
Poizat and his wife, the aforesaid Dona Gabriela Andrea de Coster .
. . (Emphasis ours.)
The plaintiff, having taken and accepted the mortgage is bound by those
recitals. It further appears that this property is registered under the Torrens
System, and that the title to the land is vested in the wife, and is not
conjugal property, and that the wife is at least the owner of the land.
In a supplemental plea filed January 21, 1926, petitioner cites and relies on
the case of the National Bank vs. Quintos and Ansaldo (46 Phil., 370), in
which article 1408 of the Civil Code was construed and applied. It must be
conceded that this article applies only to those cases wherein there is a
presumption that the debt contracted by the husband is for the common
benefit of both spouses, but this presumption may be overcome by
evidence to the contrary.
All debts and obligations contracted during the marriage by the
husband, the legal representative of the partnership in the normal
condition thereof, are deemed contracted by the partnership. The
law presumes that they are contracted for the common benefit of
both. However, this presumption may be overthrown by evidence
to the contrary, as we shall see when we take up article 1413. (9
Manresa, 648.)
For this reason, where, as in the instant case, it appears that the loan
obtained by the husband was not only not obtained for the common
benefit of the conjugal partnership, but was obtained to the damage of the
wife, there is no such presumption, and that article does not apply. It is
further contended that the mortgage was executed with all of the legal
necessary formalities, and in accord with the established practice and
custom in the Philippine Islands, from which plaintiff's counsel contends
that it is not required that the attorney in fact, who executes a document in
his own name and that of his principal, must show in his signature his
double capacity by writing first his own signature and then the name of his
principal, and say "by" and thereafter his own signature as attorney in fact.
The Act should be construed with reference to section 81 of Act No. 136,
which says:
After the enactment of a new system of registration of land titles,
the notarial law of the Philippine Islands of February fifth, eighteen
hundred and eighty-nine, its regulations of April eleventh, eighteen
hundred and ninety, and the general instructions for drafting
instruments subject to record in the Philippine Islands, of October
third, eighteen hundred and eighty-nine, and the modifications
thereof, by General Order Number Forty, issued from the office of
the United States Military Governor, on September twenty-third,
eighteen hundred and ninety-nine, and by General Order Number
Twenty, issued from the office of the Military Governor on
February third, nineteen hundred, shall be repealed and shall be of
no effect after the date of such enactment, and thereafter
appointments of notaries public and the performance of official
duties by them shall be regulated by the subsequent provisions of
this Act.
The old Spanish notarial law and system of conveyances was repealed in the
Philippines, and another and a different notarial law and system became
the law of the land with the enactment of Act No. 496. One of the
fundamental differences between the two systems consists in this. Under
the Spanish system, the documents were executed in the form of minutes,
wherein the notary was the one who spoke, and under Act No. 496, the
notary is not the one who speaks, and there is no record kept of the
minutes, and the intervention of a notary is limited to the acknowledgment
only of the document. Under the Spanish System, to determine the capacity
in which a person executed a document, it was sufficient to look at the text
of the document, because its whole text was attended with the solemnity of
the notary authorizing its execution. Under the present system, it is
necessary to resort to the form in which the parties sign an instrument,
because it is the signature rather than the text which bears the stamp of
authenticity.
Neither does section 127 of Act No. 496 bear the construction for which the
plaintiff contends. It provides in legal effect that were one or more persons
executed a conveyance, the instrument must be executed by all of the
parties to the conveyance, and that if there are two or more persons, the
instrument must not only be signed by all of the parties to the conveyance,
but it must be acknowledged by all of them. That clearly appears from the
certificate of acknowledgment in which it is recited:
. . . personally appeared ________________________ known to
me to be the same person (or persons) who executed the
foregoing instrument, and acknowledge that the same in his (or
their) free act and deed.
The construction for which plaintiff contends would nullify the words " or
persons" and the words "or their." The fact that those words are used in the
manner in which they are used in section 127, must mean that where two
or more persons give a deed or mortgage on real property, that all of them
should not only sign the mortgage, but that all of them should acknowledge
it as "their free act and deed.
Again, in the instant case, the power of attorney was given by the wife to
the husband, and the husband himself was a party to the mortgage, and the
money was paid to him for and on his personal account, and his signature
was necessary to bind any interest which he had in the land as the husband
of the wife, and the signature of the wife in some form was necessary to
bind her interest in the land. Here, you have the signature upon the face of
it which shows that in the signing of it, the husband ever intended to bind
his wife. If Poizat had not been the husband of his wife, and if he himself
was not a party to the instrument and did not have any interest in the land
mortgaged, another and a very different question would be presented, and
his lone signature might then bind the property of the wife.
With all due respect to the learned counsel, no law, either Spanish or
American, has been cited or will ever be found which, upon the facts shown
in the record, will construe the lone unqualified signature of the husband as
the joint and dual signing of both the husband and the wife, so as to make it
binding upon the paraphernal property of the wife.
Although not cited in the petition during the discussion of this case in
conference, attention was called to article 1717 of the Civil Code which
provides as follows:
When an agent acts in his own name, the principal shall have no
right of action against the persons with whom the agent has
contracted, or such persons against the principal.
In such case, the agent is directly liable to the person with whom
he has contracted, as if the transactions were his own. Cases
involving things belonging to the principal are excepted.
The provisions of this article shall be understood to be without
prejudice to actions between principal and agent.
In the instant case, this section should be construed with article 1713,
which among other things provides that:
In order to compromise, alienate, mortgage, or to execute any
other act of strict ownership, an express power is required.
The mortgage in question was upon real property, and it was not a "simple
contract, " and where an agency is created by an express power, it must be
executed with the formalities of an express power.
Again, although the wife was a party to the body of the mortgage, Poizat
himself had an interest in the real property, and was a party to the
instrument, and his personal signature was necessary to the mortgage to
bind his own personal interest, and the interest of the conjugal partnership.
The power of attorney from the wife gave her husband the express power
defined in article 1713, and that power should have been exercised, and the
mortgage should have been executed "in the name, place, and stead of the
wife." That was not done.
The authorities cited in the petition for a rehearing and in the majority
opinion are based upon, and refer to, the execution by the agent of a
"simple contract," and for such reason are not in point. There is a very
marked legal distinction between the authority of an agent to make a
"simple contract," and his authority to convey or mortgage real property
and the manner in which the power should be executed.
It may be true that the decision of this court is based upon questions that
are not as fully discussed in the appellant's brief, as they should have been,
but the fact remains that they were pointed out, and attention was called to
them in the argument in the brief, and that they are expressly covered by
the assignments of error.
Although ably presented, we are clearly of the opinion that the petition for
a rehearing must be denied. So ordered.
Johnson, Malcolm, Ostrand, and Romualdez, JJ., concur.
AVANCEÑA, C.J., STREET, VILLAMOR, and VILLA-REAL, JJ., dissenting:
We insist in our dissenting opinion and reference is hereby made to what
we briefly said in our separate opinion. We wish, however, to emphasize
our point of view on the merits of the case with regard to appellant's
liability.
The theory of the majority is contained in the following paragraph of its
decision upon the motion for reconsideration:
. . . If Poizat had not been the husband of his wife, and if he himself
was not a party to the instrument and did not have any interest in
the land mortgaged, another and a very different question would
be presented, and his lone signature might then bind the property
of the wife.
It follows from this point that the power given by the appellant to her
husband Juan M. Poizat is held sufficient to mortgage the land in question,
that the contract entered into by him with the plaintiff, mortgaging this
land, is within the scope of this power, and that the contract thus signed by
Poizat might be sufficient to bind the appellant. But it is said that it is not,
by reason of the fact that Poizat was also a party to the contract and has an
interest in the property mortgaged. We do not see the importance of this
fact. If Poizat were not a party to the contract and had no interest in the
property mortgaged, the document would, as it stands, — signed by him
alone, — be sufficient to bind the appellant, not by what his signature says,
since it says nothing, but because the document shows that he was acting
on behalf of the appellant. This being the case, we see no reason why the
document should not have full effect and that of the appellant. The most
that can be said is that it was necessary that Poizat should have signed
twice, but again we do not see the necessity of this duplicity. The signature
serves only to authenticate the document, — and for this purpose one is
enough, — and not to express the nature and extent of the obligation,
which must be determined by the document itself.
But whether this be the effect of the majority opinion, or that it is
necessary, in order to bind the appellant, that Poizat should have signed the
document twice, the first time on his own behalf, and the second on that of
the appellant, or should have signed it only once, stating that he did so in
his own behalf and that of the appellant, with all due respect to the
majority, we believe that the decision rendered is erroneous.
The doctrine laid down by the majority is openly repugnant to the
spiritualistic conception which informs article 1278 of the Civil Code,
according to which contracts shall be binding whatever may be the form in
which they may have been entered into, provided that the essential
requisites for their validity are present.
In some contracts, a public document is required as a special form for
convenience of evidence (art. 1280, Civil Code), but not as an essential
requisite for its validity, but only for its efficaciousness (art. 1279, Civil
Code). in very few cases does the Civil Code require a certain form for
special reasons, as a requisite to the validity of the contract as for instance
in the donation, in which a public document is required (art. 633, Civil
Code), and in the mortgage, which must be registered (art. 1875, Civil
Code). But except in these cases, and even in these cases, once the required
special form is complied with, the question as to form in the former, or the
question as to other formalities in the latter, falls under the broad rule
established in article 1278, and losses all its influence on the effects of the
contract, it being enough that the contract be proven. In this connection,
we are not unmindful of the amendments introduced by the Code of Civil
Procedure to the Civil Code as to the form of contracts for their
efficaciousness, but nevertheless we believe that the rule provided by
article 1278 of the Civil Code subsists.

In the instant case, the power given by the appellant to Poizat, as well as
the mortgage executed by the latter in his own behalf and that of the
appellant with the plaintiff was executed in the form required by the law,
that is, in a public document registered in the registry of property. Under
such circumstances, it is not proper to destroy the effects of these contracts
and ignore the rights and obligations which the parties thereby desired to
acquire and assume, merely by reason of a formality which no law requires,
and does not seem to answer any purpose. The theory of agency, according
to the Civil Code, is based on representation and its characteristic is the
subrogation of the agent in the place of his principal whom he substitutes,
in matters constituting the subject-matter of the agency. Thus, once it is
stated in the document that the agent acts by virtue of the agency, he
absorbs the personality of the principal, and by a legal fiction, he appears as
the principal himself, and whatever he does within the agency is considered
as done by the principal.

At any rate, even supposing that Poizat acted in his own name in executing
the contract with the plaintiff, as he acted within the limits of the agency or
power granted him by the appellant and the contract relates to things
belonging to her, the plaintiff has an action against the appellant under
article 1717 of the Civil Code.
SPOUSES VIRGILIO and MICHELLE CASTRO, MOISES B. MIAT and ALEXANDER
V. MIAT, petitioners, vs. ROMEO V. MIAT, respondent.
DECISION
PUNO, J.:
This is a petition for review on certiorari of the decision rendered by the
Court of Appeals in CA-G.R. CV No. 43053, entitled Romeo V. Miat vs.
Spouses Virgilio and Michelle Castro, Moises B. Miat and Alexander V. Miat,
dated November 29, 1999.1cräläwvirtualibräry
The evidence shows that the spouses Moises and Concordia Miat bought
two (2) parcels of land during their coverture. The first is located at Wawa
La Huerta, Airport Village, Paraaque, Metro Manila2 and covered by TCT No.
S-33535.3 The second is located at Paco, Manila,4 and covered by TCT No.
163863.5 Concordia died on April 30, 1978. They had two (2) children:
Romeo and Alexander.
While at Dubai, United Arab Emirates, Moises agreed that the Paraaque and
Paco properties would be given to Romeo and Alexander.6 However, when
Moises returned in 1984, he renegotiated the agreement with Romeo and
Alexander. He wanted the Paraaque property for himself but would leave
the Paco property to his two (2) sons. They agreed.7cräläwvirtualibräry
It appears that Moises and Concordia bought the Paco property on
installment basis on May 17, 1977.8 However, it was only on December 14,
1984 that Moises was able to pay its balance.9 He secured the title over the
property in his name as a widower.10 According to Romeo, Moises violated
the agreement that their (Romeos and Alexanders) names would be
registered in the title once the balance was paid.11 Upon demand, Moises
gave the owners duplicate of the Paco property title to Romeo.
Romeo and Alexander lived on the Paco property. They paid its realty taxes
and fire insurance premiums.12 In early August 1985, Alexander and his first
wife left the house for personal reasons. In April 1988, Alexander agreed to
sell to Romeo his share in the Paco property for P42,750.00.13He received a
partial payment of P6,000.00 from Romeo.14 Nonetheless, he never
executed a deed of assignment in favor of Romeo, as he had lots of work to
do and had no time and x x x there [wa]s nothing to worry [as] the title
[wa]s in [Romeos] possession.15cräläwvirtualibräry
In February 1988, Romeo learned from his godmother in his wedding, Mrs.
Rosalina Castro, mother of petitioner Virgilio Castro, that she had given
Moises P30,000.00 as downpayment for the sale by Moises of the Paco
property to her son Virgilio.16cräläwvirtualibräry
On December 1, 1988, Romeo was brought by petitioner Virgilio Castro to
the chambers of Judge Anunciacion of the Metropolitan Trial Court of
Manila where the status of the Paco property was discussed.17 On
December 16, 1988, he received a letter from petitioner Castros lawyer
asking for a conference. Romeo was informed that the Paco property had
been sold to Castro by Moises by virtue of a deed of sale dated December 5,
198818 for ninety-five thousand (P95,000.00) pesos.19cräläwvirtualibräry
Ceferino Miat, brother of petitioner Moises,20 testified that even before the
death of Concordia21 there was already an agreement that the Paco
property would go to Romeo and Alexander.22 This was reiterated at the
deathbed of Concordia.23 When Moises returned to Manila for good, the
agreement was reiterated24 in front of the extended Miat family
members.25 Initially, Romeo and Alexander orally26 divided the Paco
property between themselves.27 Later, however, Alexander sold his share to
Romeo.28 Alexander was given P6,000.00 as downpayment. This was
corroborated by Pedro Miranda and Virgilio Miat. Miranda worked with
Moises at the Bayview Hotel and the Hotel Filipinas.29 His wife is the cousin
of Romeo and Alexander.30 Virgilio is the brother of Moises.
Moises confirmed that he and his wife Concordia bought the Paco property
on installment from the Fraval Realty, Inc. There was still a balance
of P12,000.00 on the lot at the time of his wifes death.31 He paid P3,500.00
in 198132 and P8,500.00 in 1984.33 He registered the title in his name.
Romeo then borrowed the title as he was going to mortgage it to his friend
Lorenzo.34cräläwvirtualibräry
Later, Moises ran into financial difficulties and he mortgaged for P30,000.00
the Paco property to the parents of petitioner Virgilio Castro.35He informed
Romeo and Alexander that he would be forced to sell the Paco property if
they would not redeem the mortgage. He accompanied his children to the
Manila City Hall to discuss its sale with a judge and a lawyer. Also present in
the meeting were petitioner Virgilio Castro and his parents. After the
conference, he proceeded to sell the property to the petitioners-spouses
Castro.36cräläwvirtualibräry
Alexander testified that after the sale, his father got one-third (1/3) of the
proceeds while he received two-thirds (2/3). Romeo did not get a single
centavo but was given the right to till their Nueva Ecija property.37 From his
share of the proceeds, Alexander intended to return to Romeo
the P6,000.00 given him earlier by the latter. He considered the money to
be a personal debt due Romeo, not Romeos downpayment of his share in
the Paco property.38cräläwvirtualibräry
The buyer of the property, petitioner Virgilio P. Castro, testified that he
informed Romeo that his father Moises was selling the Paco property.
Romeo replied: Bahala siya.39 The second time he informed Romeo about
the pending sale was when he brought Romeo, Alexander and Moises to
Judge Anunciacion to consult him [as to] who has [the] right over the [Paco]
property.40 He further declared that he went to the Metropolitan Trial Court
because [he] wanted to be sure whether [he] could buy the
property.41 During the meeting, he was told by Romeo that the Paco
property was already given to him (Romeo) by Moises. He admitted
knowing that the title to the Paco property was in the possession of
Romeo.42 However, he proceeded with the sale. Moises assured him that he
would be able to get the title from Romeo.43cräläwvirtualibräry
These events precipitated the case at bar. Romeo filed an action to nullify
the sale between Moises and the Castro spouses; to compel Moises and
Alexander to execute a deed of conveyance or assignment of the Paco
property to him upon payment of the balance of its agreed price; and to
make them pay damages.44cräläwvirtualibräry
After trial, the Regional Trial Court rendered its decision, 45 which in its
dispositive portion states as follows:
WHEREFORE, in view of the foregoing, the Court hereby orders the
following: 1) Defendant Alexander V. Miat to execute a deed of sale of his
share in the property upon payment by plaintiff Romeo of the balance of
the purchase price in the sum of P36,750.00; 2) Plaintiff Romeo V. Miat to
recognize as valid the sale of defendant Moises share in the house and lot
located at No. 1495-C Fabie Estate, Paco, Manila; 3) the dismissal of
defendants counter-claim; and 4) defendants to pay the costs of suit.
Both parties appealed to Court of Appeals. On November 29, 1999, the
appellate Court modified the Decision as follows:46cräläwvirtualibräry
WHEREFORE, the appealed decision is MODIFIED as follows:
(1) The deed of sale entered into between defendants-appellants Moises
Miat and spouses Virgilio and Michelle Castro is hereby NULLIFIED.
(2) Defendant-appellants Moises Miat and Alexander Miat are ordered to
execute a deed of conveyance over the Paco property with TCT No. 16383
(sic) in favor of plaintiff-appellant Romeo Miat, upon payment by Romeo
Miat of the balance of the purchase price in the sum of P36,750.00.
(3) Defendants-appellants are ordered, jointly and severally, to pay plaintiff-
appellant attorneys fees in the amount of P30,000.00 and to pay the costs
of suit.
Reconsideration was denied on May 17, 2000.
Hence, this petition where the petitioners assign the following errors:
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED AND DID
PETITIONERS AN INJUSTICE IN MODIFYING OR REVERSING THE DECISION OF
THE TRIAL COURT DATED MARCH 17, 1993 WHICH ORDERED RESPONDENT
ROMEO MIAT TO RECOGNIZE AS VALID THE DEED OF SALE ENTERED INTO
BETWEEN PETITIONERS MOISES MIAT AND SPS. VIRGILIO AND MICHELLE
CASTRO PERTAINING TO PETITIONER MOISES MIATS SHARE IN THE HOUSE
AND LOT LOCATED IN PACO, MANILA, WHEN IT DECLARED SAID DEED OF
SALE NULLIFIED.
THE RESPONDENT COURT OF APPEALS PATENTLY ERRED IN AFFIRMING OR
UPHOLDING THE TRIAL COURTS DECISION ORDERING ALEXANDER MIAT
AND INCLUDING MOISES MIAT TO EXECUTE A DEED OF CONVEYANCE OVER
THE PACO PROPERTY WITH TCT NO. 16383 IN FAVOR OF ROMEO MIAT
UPON PAYMENT BY THE LATTER OF THE BALANCE OF THE PURCHASE PRICE
IN THE SUM OF P36,750.00.
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN FURTHER
ORDERING PETITIONERS TO PAY RESPONDENT, JOINTLY AND SEVERALLY,
ATTORNEYS FEES IN THE AMOUNT OF P30,000.00 AND AFFIRMING THE
COURT A QUOS ORDER FOR THE PETITIONERS TO PAY THE COST OF
SUIT.[47cräläwvirtualibräry
The issues can be simplified thus:
1. Whether the Paco property is conjugal or capital;
2. Whether there was a valid oral partition covering the said property; and
3. Whether the spouses Castro were buyers in good faith.
I When she married Manuel Lorenzo she continued to pay the installments in
The petitioners contend that the Paco property is the capital property of
Moises. They allege that the spouses Moises and Concordia purchased the
property on installment basis in 1977 but stress that it was Moises who paid
the balance of twelve thousand (P12,000.00) pesos in 1984. At that time,
Concordia had long been dead. She died in 1978.
We disagree.
Since Moises and Concordia were married before the effectivity of the
Family Code, the provisions of the New Civil Code apply.
Article 153(1) of the New Civil Code48 provides as follows:
The following are conjugal partnership property:
(1) Those 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; x x x.
The records show that the Paco property was acquired by onerous title
during the marriage out of the common fund. It is clearly conjugal property.
Petitioners also overlook Article 160 of the New Civil Code. It 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. This article does not require proof that the property was
acquired with funds of the partnership. The presumption applies even when
the manner in which the property was acquired does not
appear.49cräläwvirtualibräry
Petitioners reliance on Lorenzo vs. Nicolas50 is misplaced. That case involved
two (2) parcels of land that Magdalena Clemente purchased on installment
and started paying for when she was not yet married to Manuel Lorenzo.
her own name. Upon completion of payment, the deed of final conveyance
was executed in her sole favor and the land was registered in the exclusive
name of Magdalena Clemente. The Court ruled that the two (2) parcels of
land were the paraphernal properties of Magdalena Clemente, thus:
x x x the fact that all receipts for installments paid even during the lifetime
of the late husband Manuel Lorenzo were issued in the name of Magdalena
Clemente and that the deed of sale or conveyance of parcel no. 6 was made
in her name in spite of the fact that Manuel Lorenzo was still alive shows
that the two parcels of land belonged to Magdalena Clemente.51 (emphasis
supplied)
In the case at bar, Moises and Concordia bought the Paco property during Ceferino Miat, brother of Moises, testified that before Concordia died,
their marriage Moises did not bring it into their marriage, hence it has to be there was an agreement that the Paraaque property would go to Moises
considered as conjugal. while the Paco property would go to Romeo and Alexander. This was
reiterated at the deathbed of Concordia. When Moises returned to Manila
Likewise, Jovellanos vs. Court of Appeals52 cited by the petitioners for good, the agreement was affirmed in front of the extended Miat family
is inapropos. In said case, Daniel Jovellanos, while he was still married to his members. Initially, Romeo and Alexander orally divided the Paco property
first wife, Leonor Dizon, entered into a contract of lease and conditional between them. Later, Alexander sold his share to Romeo.
sale with Philamlife. He continued paying the rental after the death of his
first wife and during the subsistence of his marriage with his second wife, This agreement was attested to by the extended Miat Family members in a
Anette Jovellanos. He completed the payment during the existence of his document marked as Exhibit D, which reads as follows:57cräläwvirtualibräry
second marriage. The Court ruled that the property belonged to the
conjugal partnership with the second wife as Daniel Jovellanos acquired Pebrero 18, 1989
ownership thereof only upon full payment of the said amount hence,
although he had been in possession of the premises since September 2, SINUMPAANG SALAYSAY
1955, it was only on January 8, 1975 that the Philamlife executed the deed
of absolute sale thereof in his favor. x x x Since as early as 1967, he was
SA MGA KINAUUKULAN,
already married to Annette H. Jovellanos, this property necessarily
belonged to his conjugal partnership with his second wife.53 In the case at
Kami, na nakalagda sa ibaba, ay nanunumpa sa harapan ng Punong
bar, Moises and Concordia executed a Deed of Sale with Mortgage. The
Barangay, na si G. REYNALDO P. WONG:
contract is one of sale the title passed to them upon delivery of the Paco
property.54 In fine, title was gained during the conjugal partnership.
Na kami ay mga saksi sa kasunduan nina G. MOISES B. MIAT, asawa ng
yumao na, na si Gng. CONCORDIA VALENZUELA MIAT, at mga anak nitong
II
sina G. ROMEO V. MIAT at G. ALEXANDER V. MIAT:
The next issue is whether the oral partition between Moises and his sons,
Na ang kasunduan ay ang mga sumusunod:
Romeo and Alexander, involving the said property is valid. In ruling in favor
of its validity which we affirm, the appellate court relied on a portion of
Moises letter to Romeo, which reads as follows:55cräläwvirtualibräry 1. Na ang pag-aaring lupa (132 sq. m.) ng mag-asawa (MOISES at
CONCORDIA) sa Airport Village sa Paraaque, Metro Manila ay mapupunta
kay G. MOISES B. MIAT;
KAYA PAG-USAPAN LANG NINYONG MABUTI ANG ANONG BALAK AT GUSTO
NINYONG PAGHATI SA BAHAY, AT YAN AY PAGPAPASIYAHAN KO KONG (sic)
MAKAKABUTI SA INYONG DALAWA. AT WALA AKONG HIGIT NA PAPABURAN 2. Na ang pag-aaring lupa at bahay (70 sq. m.) ng mag-asawa ring nabanggit
SA INYONG DALAWA PAREHO KAYONG MAHAL SA AKIN, HINDI AKO TULAD ay sa magkapatid na ROMEO at ALEXANDER mapupunta at ito ay nasa
SA IBANG MAGULANG NA HINDI PAREHO ANG PAGTINGIN SA MGA ANAK. address na 1495-C FABIE, PACO, MANILA.
ANG BAHAY56 AY PARA SA INYONG DALAWA, LALO NA NGAYONG MAY
ASAWA NA KAYONG PAREHO. x x x [All caps in the original] MGA SUMUMPA:58cräläwvirtualibräry
(Sgd.) (Sgd.) Sta. Maria, Licab, N.E.(emphasis supplied)

1) Ceferino B. Miat 6) Lorenzo C. Valenzuela The consideration for the grant to Romeo and Alexander of the Paco
property was best expressed by Moises himself in his letter to Romeo,
(kapatid ni Moises) (kapatid ni Concordia) which reads as follows:

(Sgd.) (Sgd.)
2) Avelina J. Miat 7) Patricio C. Valenzuela
(asawa ni Ceferino) (kapatid ni Concordia)
(Sgd.) (Sgd.)
3) Virgilio Miat 8) Victor C. Valenzuela
(kapatid ni Moises) (kapatid ni Concordia)
Labis akong nagpapasalamat at nauunawaan ninyo ang mga pagkakamali ko
at mga kasalanan kong nagawa sa inyong mag-iina, huwag kayong mag-alala
at lahat nang naipundar namin nang (sic) inyong nanay ay sa inyong
dalawang magkapatid mapupunta.59cräläwvirtualibräry
We also hold that the oral partition between Romeo and Alexander is not
covered by the Statute of Frauds. It is enforceable for two reasons. Firstly,
Alexander accepted the six thousand (P6,000.00) pesos given by Romeo as
downpayment for the purchase of his share in the Paco property. Secondly,
Romeo and his witnesses, Ceferino Miat and Pedro Miranda, who testified
regarding the sale of Alexanders share to Romeo, were intensely
questioned by petitioners counsel.60cräläwvirtualibräry

(Sgd.) (Sgd.) In the recent case of Pada-Kilario vs. Court of Appeals, we

held:61cräläwvirtualibräry
4) Aurea Miat-Joson 9) Elsa P. Miranda
[N]o law requires partition among heirs to be in writing and be registered in
(kapatid ni Moises) order to be valid. The requirement in Sec. 1, Rule 74 of the Revised Rules of
Court that a partition be put in a public document and registered, has for its
(Sgd.) purpose the protection of creditors and the heirs themselves against tardy
claims. The object of registration is to serve as constructive notice to others.
5) Jose A. Joson It follows then that the intrinsic validity of partition not executed with the
prescribed formalities is not undermined when no creditors are involved.
(asawa ni Aurea) Without creditors to take into consideration, it is competent for the heirs of
an estate to enter into an agreement for distribution thereof in a manner
and upon a plan different from those provided by the rules from which, in
(Sgd.)
the first place, nothing can be inferred that a writing or other formality is
essential for the partition to be valid. The partition of inherited property
REYNALDO P. WONG need not be embodied in a public document so as to be effective as regards
Kapitan ng Barangay the heirs that participated therein. The requirement of Article 1358 of the
Civil Code that acts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property,
must appear in a public instrument, is only for convenience, non-
compliance with which does not affect the validity or enforceability of the
acts of the parties as among themselves. And neither does the Statute of
Frauds under Article 1403 of the New Civil Code apply because partition
among heirs is not legally deemed a conveyance of real property,
considering that it involves not a transfer of property from one to the other
but rather, a confirmation or ratification of title or right of property that an
heir is renouncing in favor of another heir who accepts and receives the
inheritance. x x x.
III
knew Romeo was in possession of the title and Romeo then insisted that he
is the owner of the property.
xxx
Virgilio Castro is further aware that plaintiff is in possession of the property,
they being neighbors. A purchaser who was fully aware of another persons
possession of the lot he purchased cannot successfully pretend to be an
innocent purchaser for value.63cräläwvirtualibräry
It is abundantly clear that the petitioners-spouses Castro did not buy the
Paco property in good faith. They have no right to the property.

The appellate court also correctly held that the petitioners-spouses Castro WHEREFORE, the decision of the appellate court in CA-G.R. CV No. 43053 is
were not buyers in good faith. A purchaser in good faith is one who buys affirmed. Costs against petitioners.
property and pays a full and fair price for it at the time of the purchase or
before any notice of some other persons claim on or interest in it. The rule
SO ORDERED.
is settled that a buyer of real property, which is in the possession of persons
other than the seller, must be wary and should investigate the rights of
Panganiban, Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.
those in possession. Otherwise, without such inquiry, the buyer can hardly
be regarded as buyer in good faith.62cräläwvirtualibräry

This finding of the appellate court that the Castro spouses were not buyers
in good faith is supported by evidence. Petitioner Virgilio Castro admitted in
his testimony that Romeo told him that Moises had given the Paco property
to them. In fact, they consulted Judge Anunciacion on who had the right to
the property Moises or Romeo. As well pointed out by the appellate court:

In the case at bench, the said spouses have actual knowledge of the adverse
claim of plaintiff-appellant. The most protuberant index that they are not
buyers in good faith is that before the sale, Virgilio Castro talked with
Romeo Miat on the supposed sale. Virgilio testified that together with
Romeo, Alexander and Moses Miat, they went to Judge Anunciacion of
Manila in order to find out if Romeo has a right over the property. Romeo
told Virgilio in that meeting that Romeo has a right over the Paco property
by virtue of an oral partition and assignment. Virgilio even admitted that he
MOISES JOCSON, petitioner,
vs.
HON. COURT OF APPEALS, AGUSTINA JOCSON-VASQUEZ, ERNESTO
VASQUEZ, respondents.
Dolorfino and Dominguez Law Officers for petitioner.
Gabriel G. Mascardo for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
of the decision of the Court of Appeals in CA- G.R. No. 63474, promulgated
on April 30, 1980, entitled "MOISES JOCSON, plaintiff-appellee, versus
AGUSTINA JOCSON-VASQUEZ and ERNESTO VASQUEZ, defendant-
appellants," upholding the validity of three (3) documents questioned by
Moises Jocson, in total reversal of the decision of the then Court of First
Instance of Cavite, Branch I, which declared them as null and void; and of its
resolution, dated September 30, 1980, denying therein appellee's motion
for reconsideration.
Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the
only surviving offsprings of the spouses Emilio Jocson and Alejandra
Poblete, while respondent Ernesto Vasquez is the husband of Agustina.
Alejandra Poblete predeceased her husband without her intestate estate
being settled. Subsequently, Emilio Jocson also died intestate on April 1,
1972.
As adverted to above, the present controversy concerns the validity of
three (3) documents executed by Emilio Jocson during his lifetime. These
documents purportedly conveyed, by sale, to Agustina Jocson-Vasquez
what apparently covers almost all of his properties, including his one-third
(1/3) share in the estate of his wife. Petitioner Moises Jocson assails these
documents and prays that they be declared null and void and the properties
subject matter therein be partitioned between him and Agustina as the only
heirs of their deceased parents.
The documents, which were presented as evidence not by Moises Jocson,
as the party assailing its validity, but rather by herein respondents, are the
following:
1) "Kasulatan ng Bilihan ng Lupa," marked as Exhibit 3
(pp. 12-13, Records) for the defendant in the court a quo,
dated July 27, 1968. By this document Emilio Jocson sold
to Agustina Jocson-Vasquez six (6) parcels of land, all
located at Naic, Cavite, for the sum of ten thousand
P10,000.00 pesos. On the same document Emilio Jocson
acknowledged receipt of the purchase price, thus:
Na ngayon, alang-alang sa halagang SAMPUNG LIBONG
PISO (P10,000) salaping Pilipino na aking tinanggap ng
buong kasiyahan loob at ang pagkakatanggap ay aking
hayagang inaamin sa pamamagitan ng kasulatang ito, sa
aking anak na si Agustina Jocson, na may sapat na gulang,
mamamayang Pilipino, asawa ni Ernesto Vasquez, at
naninirahan sa Poblacion, Naic, Cavite, ay aking ipinagbile
ng lubusan at kagyat at walang ano mang pasubali ang
nabanggit na anim na pirasong lupa na nasa unang dahon
ng dokumentong ito, sa nabanggit na Agustina Jocson, at
sa kaniyang tagapagmana o makakahalili at gayon din nais
kong banggitin na kahit na may kamurahan ang ginawa
kong pagbibile ay dahilan sa ang nakabile ay aking anak
na sa akin at mapaglingkod, madamayin at ma-
alalahanin, na tulad din ng isa ko pang anak na lalaki. Ang
kuartang tinanggap ko na P10,000.00, ay gagamitin ko sa
aking katandaan at mga huling araw at sa aking mga ibang
mahahalagang pangangailangan. [Emphasis supplied]
Na nais ko ring banggitin na ang ginawa kong ito ay hindi
labag sa ano mang batas o kautusan, sapagkat ang aking
pinagbile ay akin at nasa aking pangalan. Ang mga lupang
nasa pangalan ng aking nasirang asawa ay hindi ko
ginagalaw ni pinakikialaman at iyon ay dapat na hatiin ng
dalawa kong anak alinsunod sa umiiral na batas (p. 13,
Records.)
2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968,
marked as Exhibit 4 (p. 14, Records). On the face of this
document, Emilio Jocson purportedly sold to Agustina
Jocson-Vasquez, for the sum of FIVE THOUSAND
(P5,000.00) PESOS, two rice mills and a camarin (camalig)
located at Naic, Cavite. As in the first document, Moises
Jocson acknowledged receipt of the purchase price:
'Na alang-alang sa halagang LIMANG LIBONG PISO
(P5,000.00) salaping Pilipino na aking tinanggap ng buong
kasiyahan loob sa aking anak na Agustina Jocson .... Na
ang halagang ibinayad sa akin ay may kamurahan ng
kaunti ngunit dahil sa malaking pagtingin ko sa kaniya ...
kaya at pinagbile ko sa kaniya ang mga nabanggit na
pagaari kahit na hindi malaking halaga ... (p. 14, Records).
3) Lastly, the "Deed of Extrajudicial Partition and
Adjudication with Sale, "dated March 9, 1969, marked as
Exhibit 2 (p. 10-11, Records), whereby Emilio Jocson and
Agustina Jocson-Vasquez, without the participation and
intervention of Moises Jocson, extrajudicially partitioned
the unsettled estate of Alejandra Poblete, dividing the
same into three parts, one-third (1/3) each for the heirs
of Alejandra Poblete, namely: Emilio Jocson, Agustina
Jocson-Vasquez and Moises Jocson. By the same
instrument, Emilio sold his one- third (1/3) share to
Agustin for the sum of EIGHT THOUSAND (P8,000.00)
PESOS. As in the preceding documents, Emilio Jocson
acknowledged receipt of the purchase price:
Now for and in consideration of the sum of only eight
thousand (P8,000.00) pesos, which I, the herein Emilio
Jocson had received from my daughter Agustina Jocson,
do hereby sell, cede, convey and transfer, unto the said
Agustina Jocson, her heirs and assigns, administrators and
successors in interests, in the nature of absolute and
irrevocable sale, all my rights, interest, shares and
participation, which is equivalent to one third (1/3) share
in the properties herein mentioned and described the one
third being adjudicated unto Agustina Jocson and the
other third (1/3) portion being the share of Moises
Jocson. (p. 11, Records).
These documents were executed before a notary public. Exhibits 3 and 4
were registered with the Office of the Register of Deeds of Cavite on July
29, 1968 and the transfer certificates of title covering the properties therein
in the name of Emilio Jocson, married to Alejandra Poblete," were cancelled
and new certificates of title were issued in the name of Agustina Jocson-
Vasquez. Exhibit 2 was not registered with the Office of the Register of
Deeds.
Herein petitioner filed his original complaint (Record on Appeal, p. 27,
Rollo) on June 20,1973 with the then Court of First Instance of Naic, Cavite
(docketed as Civil Case No. TM- 531), and which was twice amended. In his
Second Amended Complaint (pp. 47-58, Record on Appeal), herein
petitioner assailed the above documents, as aforementioned, for being null
and void.
It is necessary to partly quote the allegation of petitioner in his complaint
for the reason that the nature of his causes of action is at issue, thus:
8. [With regard the first document, that] the defendants,
through fraud, deceit, undue pressure and influence and
other illegal machinations, were able to induce, led, and
procured their father ... to sign [the] contract of sale ...,
for the simulated price of P10,000.00, which is a
consideration that is shocking to the conscience of
ordinary man and despite the fact that said defendants
have no work or livelihood of their own ...; that the sale is
null and void, also, because it is fictitious, simulated and
 fabricated contract x x x (pp. 52-53, Record on Appeal).
[Emphasis supplied]
xxx xxx xxx
12. [With regards the second and third document, that
they] are null and void because the consent of the father,
Emilio Jocson, was obtained with fraud, deceit, undue
pressure, misrepresentation and unlawful machinations
and trickeries committed by the defendant on him; and
that the said contracts are simulated, fabricated and
fictitious, having been made deliberately to exclude the
plaintiff from participating and with the dishonest and
selfish motive on the part of the defendants to defraud
him of his legitimate share on said properties [subject
matter thereof]; and that without any other business or
employment or any other source of income, defendants
who were just employed in the management and
administration of the business of their parents, would not
have the sufficient and ample means to purchase the said
properties except by getting the earnings of the business
or by simulated consideration ... (pp. 54-55, Record on
Appeal). [Emphasis supplied]
Petitioner explained that there could be no real sale between a father and
daughter who are living under the same roof, especially so when the father
has no need of money as the properties supposedly sold were all income-
producing. Further, petitioner claimed that the properties mentioned in
Exhibits 3 and 4 are the unliquidated conjugal properties of Emilio Jocson
and Alejandra Poblete which the former, therefore, cannot validly sell (pp.
53, 57, Record on Appeal). As far as Exhibit 2 is concerned, petitioner
questions not the extrajudicial partition but only the sale by his father to
Agustina of the former's 1/3 share (p. 13, Rollo).
The trial court sustained the foregoing contentions of petitioner (pp. 59-81,
Record on Appeal). It declared that the considerations mentioned in the
documents were merely simulated and fictitious because: 1) there was no
showing that Agustina Jocson-Vasquez paid for the properties; 2) the prices
were grossly inadequate which is tantamount to lack of consideration at all;
and 3) the improbability of the sale between Emilio Jocson and Agustina
Jocson-Vasquez, taking into consideration the circumstances obtaining
between the parties; and that the real intention of the parties were
donations designed to exclude Moises Jocson from participating in the
estate of his parents. It further declared the properties mentioned in
Exhibits 3 and 4 as conjugal properties of Emilio Jocson and Alejandra
Poblete, because they were registered in the name of "Emilio Jocson,
married to Alejandra Poblete" and ordered that the properties subject
matter of all the documents be registered in the name of herein petitioners
and private respondents.
On appeal, the Court of Appeals in CA-G.R. No. 63474-R rendered a decision
(pp. 29-42, Rollo) and reversed that of the trial court's and ruled that:
1. That insofar as Exhibits 3 and 4 are concerned the
appellee's complaint for annulment, which is indisputably
based on fraud, and undue influence, is now barred by
prescription, pursuant to the settled rule that an action
for annulment of a contract based on fraud must be filed
within four (4) years, from the discovery of the fraud, ...
which in legal contemplation is deemed to be the date of
the registration of said document with the Register of
Deeds ... and the records admittedly show that both
Exhibits 3 and 4, were all registered on July 29, 1968,
while on the other hand, the appellee's complaint was
filed on June 20, 1973, clearly beyond the aforesaid four-
year prescriptive period provided by law;
2. That the aforesaid contracts, Exhibits 2, 3, and 4, are
decisively not simulated or fictitious contracts, since
Emilio Jocson actually and really intended them to be
effective and binding against him, as to divest him of the
full dominion and ownership over the properties subject
of said assailed contracts, as in fact all his titles over the
 same were all cancelled and new ones issued to appellant
Agustina Jocson-Vasquez ...;
3. That in regard to Exhibit 2, the same is valid and
subsisting, and the partition with sale therein made by
and between Emilio Jocson and Agustina Jocson-Vasquez,
affecting the 2/3 portion of the subject properties
described therein have all been made in accordance with
Article 996 of the New Civil Code on intestate succession,
and the appellee's (herein petitioner) remaining 1/3 has
not been prejudiced (pp. 41-42, Rollo).
In this petition for review, Moises Jocson raised the following assignments
of errors:
1. HAS THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT THE SUIT FOR THE ANNULMENT OF
CONTRACTS FILED BY PETITIONERS WITH THE TRIAL
COURT IS "BASED ON FRAUD" AND NOT ON ITS
INEXISTENCE AND NULLITY BECAUSE OF IT'S BEING
SIMULATED OR FICTITIOUS OR WHOSE CAUSE IS
CONTRARY TO LAW, MORALS AND GOOD CUSTOMS?
II. HAS THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT THE COMPLAINT FILED BY
PETITIONER IN THE TRIAL COURT IS BARRED BY
PRESCRIPTION?
III. HAS THE RESPONDENT COURT OF APPEALS ERRED IN
NOT DECLARING AS INEXISTENT AND NULL AND VOID THE
CONTRACTS IN QUESTION AND IN REVERSING THE
DECLARING DECISION OF THE TRIAL COURT? (p. 2, Rollo)
I.
The first and second assignments of errors are related and shall be jointly
discussed.
According to the Court of Appeals, herein petitioner's causes of action were
based on fraud. Under Article 1330 of the Civil Code, a contract tainted by
vitiated consent, as when consent was obtained through fraud, is voidable;
and the action for annulment must be brought within four years from the
time of the discovery of the fraud (Article 1391, par. 4, Civil Code),
otherwise the contract may no longer be contested. Under present
jurisprudence, discovery of fraud is deemed to have taken place at the time
the convenant was registered with the Register of Deeds (Gerona vs. De
Guzman, No. L-19060, May 29,1964, 11 SCRA 153). Since Exhibits 3 and 4
were registered on July 29, 1968 but Moises Jocson filed his complaint only
on June 20, 1973, the Court of Appeals ruled that insofar as these
documents were concerned, petitioner's "annulment suit" had prescribed.
If fraud were the only ground relied upon by Moises Jocson in assailing the
questioned documents, We would have sustained the above
pronouncement. But it is not so. As pointed out by petitioner, he further
assailed the deeds of conveyance on the ground that they were without
consideration since the amounts appearing thereon as paid were in fact
merely simulated.
According to Article 1352 of the Civil Code, contracts without cause
produce no effect whatsoever. A contract of sale with a simulated price is
void (Article 1471; also Article 1409 [3]]), and an action for the declaration
of its nullity does not prescribe (Article 1410, Civil Code; See also, Castillo v.
Galvan, No. L-27841, October 20, l978, 85 SCRA 526). Moises Jocsons
saction, therefore, being for the judicial declaration of nullity of Exhibits 3
and 4 on the ground of simulated price, is imprescriptible.
II.
For petitioner, however, the above discussion may be purely academic. The
burden of proof in showing that contracts lack consideration rests on he
who alleged it. The degree of proof becomes more stringent where the
documents themselves show that the vendor acknowledged receipt of the
price, and more so where the documents were notarized, as in the case at
bar. Upon consideration of the records of this case, We are of the opinion
that petitioner has not sufficiently proven that the questioned documents
are without consideration.
Firstly, Moises Jocson's claim that Agustina Jocson-Vasquez had no other
source of income other than what she derives from helping in the
management of the family business (ricefields and ricemills), and which was
insufficient to pay for the purchase price, was contradicted by his own
witness, Isaac Bagnas, who testified that Agustina and her husband were
engaged in the buy and sell of palay and rice (p. 10, t.s.n., January 14,
1975). Amazingly, petitioner himself and his wife testified that they did not
know whether or not Agustina was involved in some other business (p. 40,
t.s.n., July 30, 1974; p. 36, t.s.n., May 24, 1974).
On the other hand, Agustina testified that she was engaged in the business
of buying and selling palay and rice even before her marriage to Ernesto
Vasquez sometime in 1948 and continued doing so thereafter (p. 4, t.s.n.,
March 15, 1976). Considering the foregoing and the presumption that a
contract is with a consideration (Article 1354, Civil Code), it is clear that
petitioner miserably failed to prove his allegation.
Secondly, neither may the contract be declared void because of alleged
inadequacy of price. To begin with, there was no showing that the prices
were grossly inadequate. In fact, the total purchase price paid by Agustina
Jocson-Vasquez is above the total assessed value of the properties alleged
by petitioner. In his Second Amended Complaint, petitioner alleged that the
total assessed value of the properties mentioned in Exhibit 3 was P8,920;
Exhibit 4, P3,500; and Exhibit 2, P 24,840, while the purchase price paid was
P10,000, P5,000, and P8,000, respectively, the latter for the 1/3 share of
Emilio Jocson from the paraphernal properties of his wife, Alejandra
Poblete. And any difference between the market value and the purchase
price, which as admitted by Emilio Jocson was only slight, may not be so
shocking considering that the sales were effected by a father to her
daughter in which case filial love must be taken into consideration (Alsua-
Betts vs. Court of Appeals, No. L-46430-31, April 30, 1979, 92 SCRA 332).
Further, gross inadequacy of price alone does not affect a contract of sale,
except that it may indicate a defect in the consent, or that the parties really
intended a donation or some other act or contract (Article 1470, Civil Code)
and there is nothing in the records at all to indicate any defect in Emilio
Jocson's consent.
Thirdly, any discussion as to the improbability of a sale between a father
and his daughter is purely speculative which has no relevance to a contract
where all the essential requisites of consent, object and cause are clearly
present.
There is another ground relied upon by petitioner in assailing Exhibits 3 and
4, that the properties subject matter therein are conjugal properties of
Emilio Jocson and Alejandra Poblete. It is the position of petitioner that
since the properties sold to Agustina Jocson-Vasquez under Exhibit 3 were
registered in the name of "Emilio Jocson, married to Alejandra Poblete," the
certificates of title he presented as evidence (Exhibits "E', to "J', pp. 4-9,
Records) were enough proof to show that the properties covered therein
were acquired during the marriage of their parents, and, therefore, under
Article 160 of the Civil Code, presumed to be conjugal properties.
Article 160 of the Civil Code provides that:
All property of the marriage is presumed to belong to the
conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife.
In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23
SCRA 637, 644, We held that:
Anent their claim that the shares in question are conjugal
assets, the spouses Perez adduced not a modicum of
evidence, although they repeatedly invoked article 160 of
the New Civil Code which provides that ... . As interpreted
by this Court, the party who invokes this presumption
must first prove that the property in controversy was
acquired during the marriage. In other words, proof of
acquisition during the coverture is a condition sine
qua non for the operation of the presumption in favor of
 conjugal ownership. Thus in Camia de Reyes vs. Reyes de
Ilano [62 Phil. 629, 639], it was held that "according to law
and jurisprudence, it is sufficient to prove that the
Property was acquired during the marriage in order that
the same may be deemed conjugal property." In the
recent case of Maramba vs. Lozano, et. al. [L-21533, June
29, 1967, 20 SCRA 474], this Court, thru Mr. Justice
Makalintal, reiterated that "the presumption under Article
160 of the Civil Code refers to property acquired during
the marriage," and then concluded that since "there is no
showing as to when the property in question was
acquired...the fact that the title is in the wife's name
alone is determinative." Similarly, in the case at bar, since
there is no evidence as to when the shares of stock were
acquired, the fact that they are registered in the name of
the husband alone is an indication that the shares belong
exclusively to said spouse.'
This pronouncement was reiterated in the case of Ponce de Leon vs.
Rehabilitation Finance Corporation, No. L-24571, December 18, 1970, 36
SCRA 289, and later in Torela vs. Torela, No. 1,27843, October 11, 1979, 93
SCRA 391.
It is thus clear that before Moises Jocson may validly invoke the
presumption under Article 160 he must first present proof that the disputed
properties were acquired during the marriage of Emilio Jocson and
Alejandra Poblete. The certificates of title, however, upon which petitioner
rests his claim is insufficient. The fact that the properties were registered in
the name of "Emilio Jocson, married to Alejandra Poblete" is no proof that
the properties were acquired during the spouses' coverture. Acquisition of
title and registration thereof are two different acts. It is well settled that
registration does not confer title but merely confirms one already existing
(See Torela vs. Torela, supra). It may be that the properties under dispute
were acquired by Emilio Jocson when he was still a bachelor but were
registered only after his marriage to Alejandra Poblete, which explains why
he was described in the certificates of title as married to the latter.
Contrary to petitioner's position, the certificates of title show, on their face,
that the properties were exclusively Emilio Jocson's, the registered owner.
This is so because the words "married to' preceding "Alejandra Poblete' are
merely descriptive of the civil status of Emilio Jocson Litam v. Rivera, 100
Phil. 354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143;
Magallon v. Montejo, G.R. No. L-73733, December 16, 1986, 146 SCRA 282).
In other words, the import from the certificates of title is that Emilio Jocson
is the owner of the properties, the same having been registered in his name
alone, and that he is married to Alejandra Poblete.
We are not unmindful that in numerous cases We consistently held that
registration of the property in the name of only one spouse does not negate
the possibility of it being conjugal (See Bucoy vs. Paulino, No. L-25775, April
26, 1968, 23 SCRA 248). But this ruling is not inconsistent with the above
pronouncement for in those cases there was proof that the properties,
though registered in the name of only one spouse, were indeed conjugal
properties, or that they have been acquired during the marriage of the
spouses, and therefore, presumed conjugal, without the adverse party
having presented proof to rebut the presumption (See Mendoza vs- Reyes,
No. L-31618, August 17, 1983, 124 SCRA 154).
In the instant case, had petitioner, Moises Jocson, presented sufficient
proof to show that the disputed properties were acquired during his
parents' coverture. We would have ruled that the properties, though
registered in the name of Emilio Jocson alone, are conjugal properties in
view of the presumption under Article 160. There being no such proof, the
condition sine qua non for the application of the presumption does not
exist. Necessarily, We rule that the properties under Exhibit 3 are the
exclusive properties of Emilio Jocson.
There being no showing also that the camarin and the two ricemills, which
are the subject of Exhibit 4, were conjugal properties of the spouses Emilio
Jocson and Alejandra Poblete, they should be considered, likewise, as the
exclusive properties of Emilio Jocson, the burden of proof being on
petitioner.
ACCORDINGLY, the petition is DISMISSED and the decision of the Court of
Appeals is AFFIRMED.

SO ORDERED.

Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.


CRISANTO L. FRANCISCO, petitioners,
vs.
THE COURT OF APPEALS and REGINO B. RELOVA, JR., respondents.
YNARES-SANTIAGO, J.:
Before us is a petition for review of the decision1 dated June 11, 1997 of the
Court of Appeals in CA-G.R. CV No. 50104, affirming the decision2 dated
January 25, 1995 of the Regional Trial Court of Antipolo, Rizal, Branch 73, in
Land Registration Case No. 91-1016, LRA Record No. N-62367.
On October 2, 1991, respondent Regino G. Relova filed a petition3 with the
trial court for the registration of two parcels of land described as Lots Nos.
1834 and 1832, Cad-688-D of the Cainta-Taytay Cadastre, situated in
Barangay San Juan, Taytay, Rizal. He alleged that he has been in open,
continuous, exclusive and notorious possession of the said parcels of land
since 1958 and, therefore, has acquired the same by prescription.
The Republic of the Philippines, through the Office of the Solicitor General,
registered its written opposition to the petition.4
At the initial hearing of the petition on February 28, 1992, nobody appeared
to oppose the petition. After respondent Relova presented evidence to
establish the jurisdictional facts, the trial court ordered that a general
default be entered against the whole world except the Republic of the
Philippines. The trial court designated a hearing commissioner to receive
evidence ex-parte in support of the petition.5
During the course of the proceedings, the Land Registration Authority (LRA)
submitted its report6 stating that discrepancies were found after plotting
the plans pertaining to the land applied for. Thus, the LRA recommended
that the appropriate government agencies be ordered to submit their
reports to determine whether the land or any portion thereof are covered
by land patents are within the forest zone.
After the reception of evidence before the trial commissioner, and based on
its report,7 the trial court rendered its decision, the dispositive portion of
which reads:
WHEREFORE, premises considered, the Court hereby confirms the
title of herein petitioner Regino B. Relova, Jr. to the parcels Lot No.
1834 Cad-688-D covered by Plan Ap-04-006273 and Lot No. 1832
Cad-688-D covered by Plan Ap-006183 situated in Barangay San
Juan, Municipality of Taytay, Province of Rizal containing an area of
three hundred thirty nine (339) square meters and seventeen
thousand four hundred nine (17,409) square meters respectively
and orders their registration in the name of herein applicant
Regino B. Relova, Jr. who is married to Lourdes S. Guino with all
the rights and privileges appertaining thereto.
Let an order for issuance of a Decree be issued upon finality of this
decision and payment of taxes and fees due on the subject parcels
of land.
SO ORDERED.8
Subsequently, the LRA filed with the trial court a Supplementary Report,
submitting the corrected technical boundaries of the technical descriptions
for Lots 1832 and 1834. The report further states:
WHEREFORE, the foregoing report is respectfully submitted to the
Honorable Court for its information and guidance with the
recommendation that (a) the corrected technical description of lot
1832, Cad 688-D, Cainta-Taytay Cadastre (Annex J) be approved
and (b) the applicant be ordered to publish in the Official Gazette
the corrected technical description of Lot 1834, Cad 688-D, Cainta-
Taytay Cadastre (Annex K), and thereafter, an order be issued
approving the said technical description to be utilized in the
issuance of the corresponding decree of registration pursuant to
the decision dated January 25, 1993 and Order for the issuance of
the Decree dated April 1, 1993.9
On October 28, 1993, the trial court issued the following Order:
Considering the Report of the Land Registration Authority (LRA)
dated September 20, 1993 as well as the "Urgent Ex-Parte Motion"
of the applicant through counsel, the court hereby approves the
corrected technical description of Lot 1832, Cad-688-D, Cainta
Taytay Cadastre. Moreover, the recommendation that the
corrected technical description of lot 1834, Cad-688-D Cainta-
Taytay Cadastre be published in the Official Gazette is hereby
DENIED for the reason that the correction (amendment) does not
appear to be substantial inasmuch as the boundaries affected are
both owned by the applicant in the above-entitled
case.1âwphi1.nêt
SO ORDERED.10
Upon motion of respondent Relova, the trial court ordered the issuance of a
writ of possession on December 7, 1993.11
On January 14, 1994, petitioner Crisanto L. Francisco entered his
appearance as oppositor and filed a Motion to Quash Writ of
Possession.12 He alleged that he has been in actual possession of Lot 1832;
that no notice of the motion for writ of possession was furnished to him;
and that the land registration court has no authority to issue a writ of
possession.
Subsequently, petitioner filed a Petition for Reopening and Review13 of the
decree of registration pursuant to Article 32 of P.D. 1529 and a
Supplemental Petition and Reply.14 He reiterated the grounds alleged in his
motion to quash the writ of possession and further alleged that respondent
failed to republish the notice of initial hearing containing the corrections in
the technical description of Lot 1832 made by the Bureau of Land
Management; that respondent falsely and fraudulently testified that the
disputed lot was part of the land purchased by his predecessor, Francisco
Santana, from Maximo Cruz; that it is not true that respondent’s possession
was undisturbed; that respondent declared the land for taxation purposes
only in March 1991; that petitioner’s claim of ownership over the disputed
land was annotated on the said tax declaration; and that even respondent’s
predecessor-in-interest and other adjacent lot owners recognized petitioner
as the owner of the dispute land.
In its order dated February 27, 1995, the trial court ruled as follows:
It appears that the Decree of Registration in the above-entitled
case with No. N-205474 was issued on February 28, 1994 while
oppositor’s "Petition for Reopening and Review" and
"Supplemental Petition" were filed on March 2, 1994 and on
August 9, 1994, respectively. It appears also, that the applicant has
not yet transferred the subject land to an innocent purchaser for
value, hence the court is of the considered view that the oppositor
may avail himself of the remedy provided under article 32 of PD
1529 otherwise known as the Property Registration Decree which
grants to "any person, including the government and the branches
thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual fraud,
to file in the proper Regional Trial Court a petition for reopening
and review of the decree of registration not later than one year
from and after the date of entry of such decree of registration, but
in no case shall such petition be entertained by the court where an
innocent purchaser for value has acquired the land or an interest
thereon, whose rights may be prejudiced…"
The allegations of the oppositor as to the actual fraud allegedly
committed by the applicant in the latter’s application for
registration of title of lot 1832 necessarily requires proof which can
only be adduced in a proper hearing or trial. Corollary, thereto, is
the requirement of the law for the oppositor, to prove his real or
dominical right over the lot in question.
In view thereof, the Motion for Leave to File and Admission of
Supplemental Petition is hereby GRANTED.
The above-entitled case is therefore, re-opened insofar as Lot
1832 is concerned.
 In the meantime, the execution of the writ of possession issued in Whether a court can refuse to receive evidence on allegations of
the above-entitled case is hereby held in abeyance insofar as lot fraud, in a petition for review of an application for registration,
1832 is concerned, pending resolution of the petition for review of committed by the applicant in his application and in the
herein oppositor. proceedings, legally sufficient to nullify and set aside such decision
approving registration and the decree and certificate of title
Let this case be set for reception of evidence for oppositor subsequently issued, and then reiterate its original decision and
Crisanto Francisco on April 6, 1995 at 9:00 A.M. decree without trying and resolving if the alleged frauds were
committed or not?
SO ORDERED.15
Whether such refusal to hear and receive evidence on the petition
16
Upon a motion for reconsideration of respondent, the trial court reversed for review is a denial of due process that renders the court’s
its previous order, to wit: orders, decisions and proceedings void and annullable for lack,
excess, or abuse of jurisdiction?
Wherefore, premises considered, the court therefore reconsiders
its order of February 27, 1995 and hereby reiterates its decision in Whether an appellate court that affirms such void decision and
this case for the registration of lots applied for by the applicants. orders of the trial court and refuse to remand below the appealed
case for trial on the merits, equally commits a violation of due
process and acts without, in excess or with abuse of jurisdiction?
The court also approves the motion for issuance of the writ of
possession as prayed for by the applicants and hereby orders the
issuance of said writ. Whether lack of jurisdiction on the part of the trial court for
applicant’s failure to prove jurisdictional requirement of
publication in a newspaper of general circulation of the application
SO ORDERED.17
and date of initial hearing, because the evidence or affidavit of
publication presented as proof thereof is a falsified one and,
Petitioner filed a motion for reconsideration,18 arguing that he was denied
therefore, null and void, can be raised in any stage of the
due process of law when he was deprived the opportunity to prove the
proceedings, and cause the dismissal of the application or the
allegation of fraud committed by the applicant in securing a decree of
nullification or setting aside of the decision granting registration
registration on the land in dispute. The motion for reconsideration was,
for lack of jurisdiction?
however, denied.19
The core issue in this appeal is whether or not petitioner was denied due
Petitioner appealed to the Court of Appeals, where the same was docketed
process when the trial court denied the petition for the reopening and
as CA-G.R. CV No. 50104. On June 11, 1997, the Court of Appeals affirmed
review of the decree of registration, thereby depriving petitioner of the
the order of the trial court denying the petition for reopening and review of
opportunity to substantiate the allegations of fraud.
the decree of registration.20 Petitioner’s motion for reconsideration was
denied on September 16, 1997.21
In reversing its earlier order granting the petition to reopen, the trial court
ruled:
Hence, this petition raising the following issues:
The issue to be resolved in the instant motion for reconsideration
is whether or not there was fraud committed by the applicant in
this case. To the mind of the court there is no fraud committed. It
should be noted that the Report of the LRA that was submitted to
the court states that there are some corrections in the technical
descriptions of the property but the area of the property has
remained the same as applied for. That is why this court in its
order dated October 28, 1993 granted the motion of counsel for
the applicant to approve the technical corrections for the reason
that the correction without need for the republication amendment
does not appear to be substantial. It should be noted also that the
order of the Land Registration Authority recommended the
corrected technical description of Lot 1832 Cad-688-D Cainta-
Taytay Cadastre be approved and the applicant be ordered to
publish in the Official Gazette the corrected technical description
of Lot 1834 Cad-688-D Cainta-Taytay Cadastre. Thereafter, an
order be issued approving the said technical description to be
utilized in the issuance of the corresponding decree of registration.
So it is clear that with respect to Lot 1832, which is the subject
matter of the opposition in this case, the LRA merely stated that
the corrected technical description of Lot 1832 be approved. This
court approved the said corrected technical description of Lot
1832 as recommended by LRA. There is therefore no fraud upon a
review by the court of the motion for reconsideration and the
opposition thereto as well as taking into account the oral
arguments of both counsels for the applicant and the oppositor on
the matter of a legal fraud committed in this case. The court
merely complied with the recommendation of the LRA for the
approval of the corrected technical description of Lot 1832. The
court did not order to republish in the Official Gazette the
corrected technical description therein as it is not substantial for
the area of the land still remains the same.
Wherefore, premises considered, the court therefore reconsiders
its order of February 27, 1995 and hereby reiterates its decision in
this case for the registration of lots applied for by the applicants.
The court also approves the motion for issuance of the writ of
possession as prayed for by the applicants and hereby orders the
issuance of said writ.22
A careful scrutiny of the assailed order reveals that the trial court did not
entirely consider the allegations of fraud or falsity in the petition to reopen
and review the decree of registration. The trial court only resolved the issue
of republication of the corrected technical description of Lot 1832 and
found that the area of the property was the same as that applied for. It
summarily dismissed the petition to review the decree of registration.
In the petition to reopen and review the decree of registration, petitioner
alleged that the first publication of the hearing of respondent’s application
contained an erroneous technical description of Lot 1832, which was later
corrected; that application with the corrected technical description was not
republished; that respondent falsely represented that Lot 1832 was part of
the land which his predecessors-in-interest, Francisco Santana, purchased
from Maximo Cruz, but the same was omitted in the original registration
proceeding in LRC Case No. N-2710 of the Court of First Instance of Pasig,
Rizal, Branch VI; and that it is petitioner, by himself and through his
predecessors-in-interest, who has been in actual possession and use of said
Lot 1832 as owner, openly, continuously and exclusively, for more than fifty
years before the filing of respondent’s application. Furthermore, petitioner
alleged that respondent is guilty of fraud in making it appear in Tax
Declaration No. 04-13781, which was obtained only in March 1991, that he
paid the arrears for the past ten years. Petitioner also argues that the
notation "Ownership of this property is also claimed by CRISANTO L.
FRANCISCO," is inscribed on the tax declaration. Thus, respondent
undeniably had notice of petitioner’s claim of ownership and possession of
said Lot 1832 long before he actually declared it for taxation and applied for
registration. Other documents also prove petitioner’s prior right and
possession, namely, the tax receipts for 1936 and 1937 both in the name of
Miguel Francisco, petitioner’s grandfather and predecessor-in-interest, Tax
Declaration No. 13296 (1945-1974), Tax Declaration No. 03-2348 (1980-
1984), and Tax Declaration No. 03-3127 (1985 to date), all of which indicate
petitioner’s possession of Lot 1832 as owner thereof.23
The foregoing are serious allegations which should have necessitated a SO ORDERED.
reopening of the application if only to ensure that the claims of respondent
of acquisitive prescription were valid. This was done by the trial court in its Davide, Jr., CJ., and Kapunan, J., concur.
order dated February 27, 1995 granting the reopening of the case, wherein Puno, J., on official leave.
it stated that "the allegations of the oppositor as to the actual fraud
allegedly committed by the applicant in the latter’s application for
registration of title of lot 1832 necessarily requires proof which can only be
adduced in a proper hearing or trial."24Subsequently, however, it reversed
its order and denied the petition to reopen and review the decree of
registration, thereby depriving petitioner the opportunity to substantiate
his allegations and protect his claims over the property. In this regard, the
trial court’s act was reversible error and an unwarranted deviation from
both substantive and procedural norms. In the early case of Minlay v.
Sandoval,25 we held:

Perhaps the trial judge had reasons to doubt the veracity of the
supposed fraudulent acts, attributed to respondents. This doubt,
however, should not have been made the basis of dismissal,
because if a court doubts the veracity of the allegations in the
petition, the best thing it could do would have been to deny the
motion to dismiss and proceed with hearing on the merits, of the
petition.

A person deprived of land or any estate or interest therein by adjudication

or confirmation of title obtained by actual fraud may seek the reopening
and review of a decree of registration. The Torrens System is intended to
guarantee the integrity and conclusiveness of the certificate of registration
but it cannot be used for the perpetuation of fraud against the real owner
of the registered land.26

WHEREFORE, in view of the foregoing, the petition is GRANTED. The

decision of the Court of Appeals dated June 11, 1997 is REVERSED and SET
ASIDE. The Regional Trial Court of Antipolo, Rizal, Branch 73 is ordered to
reopen Land Registration Case No. 91-1016 and afford petitioner and
respondent full opportunity to substantiate their respective
claims.1âwphi1.nêt

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
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 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 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 consideration paid by the
former, not merely to transport them to Manila, but, also, to do so with
"extraordinary diligence" or "utmost diligence."9 The responsibility of the
common carrier, under said contract, as regards the passenger's safety, is of
such a nature, affecting as it does public interest, that it "cannot
be dispensed with" or even "lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise." 10 In the present case, the
defendant did not only fail to comply with its obligation to transport Mr.
Zulueta to Manila, but, also, acted in a manner calculated to humiliate him,
to chastise him, to make him suffer, to cause to him the greatest possible
inconvenience, by leaving him in a desolate island, in the expectation that
he would be stranded there for a "minimum of one week" and, in addition
thereto, charged therefor $13.30 a day.
It is urged by the defendant that exemplary damages are not recoverable in
quasi-delicts, pursuant to Article 2231 of our Civil Code, except when the
defendant has acted with "gross negligence," and that there is no specific
finding that it had so acted. It is obvious, however, that in off-loading
plaintiff at Wake Island, under the circumstances heretofore adverted to,
defendant's agents had acted with malice aforethought and evident bad
faith. If "gross negligence" warrants the award of exemplary damages, with
more reason is its imposition justified when the act performed is deliberate,
malicious and tainted with bad faith. Thus, in Lopez v. PANAM, 11 We held:
The rationale behind exemplary or corrective damages is,
as the name implies, to provide an example or correction
for public good. Defendant having breached its contracts
in bad faith, the court, as stated earlier, may award
exemplary damages in addition to moral damages
(Articles 2229, 2232, New Civil Code.)
Similarly, in NWA v. Cuenca, 12 this Court declared that an award for
exemplary damages was justified by the fact that the airline's "agent had
acted in a wanton, reckless and oppressive manner" in compelling Cuenca,
upon arrival at Okinawa, to transfer, over his objection, from the first class,
where he was accommodated from Manila to Okinawa, to the tourist class,
in his trip to Japan, "under threat of 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 before Mr. Zulueta had shown up.
But the fact is that he was ready, willing and able to board the plane about
two hours before it actually took off, and that he was deliberately and
maliciously off-loaded on account of his altercation with Capt. Zentner. It
should, also, be noted that, although Mr. Zulueta was delayed some 20 to
30 minutes, the arrival or departure of planes is often delayed for much
longer periods of time. Followed to its logical conclusion, the argument
adduced by the defense suggests that airlines should be held liable for
damages due to the inconvenience and anxiety, aside from actual damages,
suffered by many passengers either in their haste to arrive at the airport on
scheduled time just to find that their plane will not take off until later, or by
reason of the late arrival of the aircraft at its destination.
PANAM impugns the award of attorney's fees upon the ground that no
penalty should be imposed upon the right to litigate; that, by law, it may be
awarded only in exceptional cases; that the claim for attorney's fees has not
been proven; and that said defendant was justified in resisting plaintiff's
claim "because it was patently exorbitant."
Nothing, however, can be farther from the truth. Indeed apart from
plaintiff's claim for actual damages, the amount of which is not contested,
plaintiffs did not ask any specific sum by way of exemplary and moral
damages, as well as attorney's fees, and left the amount thereof to the
"sound discretion" of the lower court. This, precisely, is the reason why
PANAM, now, alleges — without justification that the lower court had no
jurisdiction over the subject matter of the present case.
Moreover, Article 2208 of our Civil Code expressly authorizes the award of
attorney's fees "when exemplary damages are awarded," — as they are in
this case —as well as "in any other case where the court deems it just and
equitable that attorney's fees ... be recovered," and We so deem it just and
equitable in the present case, considering the "exceptional" circumstances
obtaining therein, particularly the bad faith with which defendant's agent
had acted, the place where and the conditions under which Rafael Zulueta
was left at Wake Island, the absolute refusal of defendant's manager in
Manila to take any step whatsoever to alleviate Mr. Zulueta's predicament
at Wake and have him brought to Manila — which, under their contract of
carriage, was defendant's obligation to discharge with "extra-ordinary" or
"utmost" diligence — and, the "racial" factor that had, likewise, tainted the
decision of defendant's agent, Capt. Zentner, to off-load him at Wake
Island.
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 acquired during the marriage, is presumed to belong to the conjugal
defendant to pay the P700,000 due to the plaintiffs and to direct Mrs. partnership, unless there is competent proof to the contrary. 23
Zulueta to return said P50,000 to the defendant.
PANAM maintains that the damages involved in the case at bar are not
In this connection, it is noteworthy that, for obvious reasons of public among those forming part of the conjugal partnership pursuant to Article
policy, she is not allowed by law to waive her share in the conjugal 153 of the Civil Code, reading:
partnership, before the dissolution thereof. 17 She cannot even acquire any
property by gratuitous title, without the husband's consent, except from ART. 153. The following are conjugal partnership
her ascendants, descendants, parents-in-law, and collateral relatives within property:
the fourth degree. 18
(1) That which is acquired by onerous title during the
It is true that the law favors and encourages the settlement of litigations by marriage at the expense of the common fund, whether
compromise agreement between the contending parties, but, it certainly the acquisition be for the partnership, or for only one of
does not favor a settlement with one of the spouses, both of whom are the spouses;
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 (2) That which is obtained by the industry, or work, or as
compromise is to jeopardize "the solidarity of the family" — which the salary of the spouses, or of either of them;
law 19 seeks to protect — by creating an additional cause for the
misunderstanding that had arisen between such spouses during the
(3) The fruits, rents or interests received or due during
litigation, and thus rendering more difficult a reconciliation between them.
the marriage, coming from the common property or from
the exclusive property of each spouse.
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
Considering that the damages in question have arisen from, inter alia, a
plane tickets came from the conjugal funds and that the award to Mrs.
breach of plaintiffs' contract of carriage with the defendant, for which
Zulueta was for her personal suffering or injuries. There was, however, no
plaintiffs paid their fare with funds presumably belonging to the conjugal
individual or specific award in favor of Mrs. Zulueta or any of the plaintiffs.
partnership, We hold that said damages fall under paragraph (1) of said
The award was made in their favor collectively. Again, in the absence of said
Article 153, the right thereto having been "acquired by onerous title during
proof, the presumption is that the purpose of the trip was for the common
the marriage ... ." This conclusion is bolstered up by Article 148 of our Civil
benefit of the plaintiffs and that the money had come from the conjugal
Code, according to which:
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
ART. 148. The following shall be the exclusive property of
habits of life." 20 In fact Manresa maintains 21 that they are deemed
each spouse:
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 (1) That which is brought to the marriage as his or her
system, in the name of one of the spouses, or in that of the wife only, if 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," 24belong 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, 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, Makalintal, Zaldivar, Fernando, Makasiar, Antonio and Esguerra, JJ., concur.
the French law and jurisprudence — to which the comments of Planiol and
Ripert, likewise, refer — are inapposite to the question under consideration, Castro and Teehankee, JJ., took no part.
because they differ basically from the Spanish law in the treatment of the
property relations between husband and wife. Indeed, our Civil Code, like Barredo, J., voted to modify the judgment by reducing the amount of the
the Spanish Civil Code, favors the system of conjugal partnership of gains. awarded damages and individualizing the same, and now reserves the filing
Accordingly, the former provides that, "(i)n the absence of marriage of a separate concurring and dissenting opinion in support of his vote.
settlements, or when the same are void, the system of relative community
or conjugal partnership of gains ... shall govern the property relations
between" the spouses. 30 Hence, "(a)ll property of the marriage is presumed
to belong to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife." 31

No similar rules are found in the French Civil Code. What is more, under the
provisions thereof, the conjugal partnership exists only when so stipulated
in the "capitulaciones matrimoniales" or by way of exception. In the
language of Manresa —

Prescindimos de los preceptos de los Condigos de Francia,

Italia, Holanda, Portugal, Alemania y Suiza, porsue solo
excepcionalmente, o cuando asi se pacta en las
capitulaciones, admiten el sistema de gananciales. 32

Again, Colin y Capitant, as well as the Lilius case, refer to damages

recovered for physical injuries suffered by the wife. In the case at bar, the
party mainly injured, although not physically, is the husband.

Accordingly, the other Philippine cases 33 and those from Louisiana —

whose civil law is based upon the French Civil Code — cited by the
defendant, which similarly refer to moral damages due to physical injuries
suffered by the wife, are, likewise, inapplicable to the case at bar.

We find, therefore, no plausible reason to disturb the views expressed in

Our decision promulgated on February 29, 1972.

WHEREFORE, the motions for reconsideration above-referred to should be,

as they are hereby denied.

EFREN R. MENDOZA and INOCENCIA R. DE MENDOZA, petitioner,
vs.
PONCIANO S. REYES and THE COURT OF APPEALS, respondents.
G.R. No. L-31625 August 17, 1983
JULIA R. DE REYES, petitioner,
vs.
PONCIANO S. REYES and COURT OF APPEALS, respondents.
Conrado B. Enriquez and Elpidio G. Navarro for petitioners.
Pacifico M. Castro for respondents.
GUTIERREZ, JR., J.:
Questioned in these consolidated petitions for review on certiorari is the
decision of the Court of Appeals, now Intermediate Appellate Court,
reversing the decision of the Court of First Instance of Rizal, Quezon City
Branch. The dispositive portion of the appellate decision reads:
WHEREFORE, (a) the judgment appealed from is hereby
reversed; (b) the deed of sale executed by appellee Julia
de Reyes on March 3, 1961 in favor of appellees Efren V.
Mendoza and Inocencia R. Mendoza, covering lots 5 and
6, Block No. 132 of Subdivision Plan Psd. 14841, situated
at Retiro Street, Quezon City, is hereby declared null and
void with respect to one- half share of appellant therein;
(c) the Register of Deeds of Quezon City is hereby
directed to cancel TCT Nos. 5611 0 and 56111, now
covering said lots, and to issue, in lieu thereof, certificates
of title in favor of appellant Ponciano S. Reyes for one-half
(1/2) pro-indiviso and the spouses Efren V. Mendoza and
Inocencia Mendoza for one-half (1/2) also pro-indiviso; (d)
the appellees Mendozas are hereby ordered to pay unto
the appellant the accrued rentals of style properties in
litigation due to the share corresponding to said
appellant, at the rate of P350.00 a month from March 3,
1961 until the finality of this decision, with legal interest
thereon; and (e) said appellees are likewise ordered to
pay unto the appellant the amount of THREE THOUSAND
(P3,000.00) PESOS as attorney's fees, plus the costs in
both instances.
This case originated with the filing of a complaint by Ponciano S. Reyes with
the Court of First Instance of Rizal docketed as Civil Case No. Q-6905, for
the annulment of a deed of sale of two parcels of land with their
improvements, executed by his wife, Julia R. De Reyes as vendor and the
spouses Efren V. Mendoza and Inocencia R. De Mendoza, as vendees.
Ponciano S. Reyes averred that said properties were conjugal properties of
himself and his wife and that she had sold them to petitioners "all by
herself" and without his knowledge or consent.
Petitioners Efren V. Mendoza and Inocencia R. De Mendoza alleged in their
answer that the properties were paraphernal properties of Julia R. de Reyes
and that they had purchased the same in good faith and for adequate
consideration. In a separate answer, petitioner Julia R. De Reyes, supported
the spouses Mendozas' contentions.
In its decision, the Court of First Instance of Rizal dismissed the complaint
and declared the properties in question exclusive and paraphernal
properties of petitioner Julia R. De Reyes. It ruled that she could validly
dispose of the same without the consent of her husband and that the
Mendozas are innocent purchasers.
As earlier stated, the Court of Appeals reversed the decision of the court a
quo.
The petitioners filed separate petitions for review on certiorari. Efren V.
Mendoza and Inocencia R. De Mendoza raised the following assignments of
errors:
I THE PETITIONER HEREIN.
THE COURT OF APPEALS ERRED NOT MERELY IN GIVING
CREDENCE, BUT IN FACT IN CONSIDERING AT ALL, PROOF
OF THE ALLEGED CONJUGAL CHARACTER OF THE
PROPERTIES l-, QUESTION, AND IN NOT INVOKING THE
DOCTRINE -E OF ESTOPPEL TO RULE OUT ANY AND ALL
SUCH PROOF ALTOGETHER.
II
THE COURT OF APPEALS ERRED IN FINDING PETITIONERS
GUILTY OF BAD FAITH IN PURCHASING THE PROPERTIES
LITIGATED FOR WITHOUT EVIDENCE OF SUCH FACT BEING
PRESENTED AND, ON THE STRENGTH MERELY OF A
SIMPLE PRESUMPTION UNWARRANTEDLY DRAWN FROM
ONE OF ITS OWN OBSCURE AND HARDLY AUTHORITATIVE
RULINGS, AND AGAINST ABUNDANT, POSITIVE AND
UNCONTRADICTED PROOF OF GOOD FAITH.
III
THE COURT OF APPEALS ERRED UPON EQUITABLE
GROUNDS IN, IN EFFECT, GIVING JUDICIAL FLAT To THE
UNJUST ENRICHMENT OR BENEFIT OF ONE PERSON AT
THE EXPENSE OF ANOTHER OR OTHERS.
On the other hand, Julia R. De Reyes made the following assignments of
errors in her petition for review.
THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PROPERTIES IN QUESTION ARE THE CONJUGAL
PROPERTIES OF THE RESPONDENT PONCIANO S. REYES
AND THE PETITIONER IN SPITE OF THE CATEGORICAL
JUDICIAL DECLARATION AND ADMISSION BY SAID
RESPONDENT THAT THE SAID PROPERTIES ARE THE
EXCLUSIVE AND PARAPHERNAL PROPERTIES OF HIS WIFE,
THE COURT OF APPEALS ERRED IN HAVING DECIDED THE
CASE NOT IN ACCORDANCE WITH LAW AND THE
APPLICABLE DECISIONS ON THE MATTER IN THE SENSE,
PARTICULARLY, THAT THE ACT AND DECLARATION OF A
PARTY AGAINST HIS INTERESTS CAN NOT BE
CONTRADICTED BY HIM, AND IN SO DOING THE DECISION
AMOUNTED TO SANCTIONING A PERJURED TESTIMONY.
On the first issue regarding the alleged paraphernal character of the
disputed properties, we find that the records sustain the findings of the
Court of Appeals
The fact are:
xxx xxx xxx
... Ponciano Reyes and Julia de Reyes-to be herein
referred to as Ponciano and Julia alone for brevity-were
married in 1915. The properties in question consisting of
Lots 5 and 6, Block No. 132, situated at Retiro Street,
Quezon City-plus the buildings erected thereon, were
bought from J. M. Tuason & Co., represented by Gregorio
Araneta, Inc. to be herein mentioned as "Araneta"-
February, 1947 on installment basis. (Testimony of Julia,
t.s.n., p. 74, February 15, 1963). The first installment on
Lot No. 5 was P69.96 and on Lot No. 6 was P102.00 (Exh.
'H' and uncontradicted testimony of Ponciano, t.s.n., p. 4,
July 20, 1964).
The spouses were always in arrears in the payment of the
installments to Araneta due to lack of money (t.s.n., pp. 5-
7, July 20, 1964) so they had to borrow money from the
Rehabilitation Finance Corporation-herein after referred
to as RFC for short. Thus, on November 26, 1948, they
jointly obtained a loan of P12,000.00 from the RFC for the
following exclusive purposes only: 'to complete the
construction of one-storey residential building on 9th
Street, La Loma Quezon City; and to pay the balance of
the price of the lot offered as security' which is Lot 5,
(Deed of Mortgage, Exh. 'A') l'). Out of this loan, the
amount of P5,292.00 was paid to Araneta as price of Lot
5. The corresponding deed of absolute sale thereof was
executed by Araneta on November 27, 1948 (Exh. 'A'). On
October 2, 1952, the spouses secured an additional loan
of P8,000.00 from the RFC 'to pay the balance of the lot
herein offered (Lot No. 6) as additional security, and to
defray the expenses incurred in the repairs of the
building' as the deed of mortgage so recites (Exh. 'B- l').
From the amount of this loan, the sum of P7,719.60, as
price of Lot No. 6, was paid and the deed of absolute sale
was forthwith executed by Araneta (Exh. 'B'). In the deed
of sale, the vendee named is 'Julia de Reyes'. Her
signatures appear over the caption vendee and those of
Ponciano under the phrase: 'with my marital consent.
As a result of these sales, Transfer Certificates of Title
Nos. 8550 (Exh. 'F') and 19998 (Exh. 'G') were issued for
Lots 5 and 6, respectively, by the Register of Deeds of
Quezon City, in the name of "JULIA REYES married to
PONCIANO REYES." The mortgage contracts (Exhs. 'A-1'
and 'B-1') executed by the spouses in favor of the RFC
were duly registered and annotated on the said transfer
Certificates of Title (Exhs. 'F' and 'G').
As promised to the RFC, the spouses built a house and
later a camarin on the two lots. The camarin was leased
as a school building to the Quezon City Elementary School
of La Loma for the period of two years (1950-51) at
P500.00 a month. When the school was transferred to
another place, the camarin was leased on December 10,
1952 to Mr. and Mrs. Mendoza, appellees, for ten years
at P600.00 a month for the first year and P700.00 for the
remaining nine years. The contract of lease was signed by
Julia as lessor, with the marital consent of Ponciano. The
camarin was converted into a movie house and used as
such by the lessees. (Exh. 'G').
In spite of the good rentals they had been receiving for
the building, the spouses failed to pay seasonably their
obligations to the RFC so, as late as November 28, 1958,
they had to ask for an extension of 5 years from the
Development Bank of the Philippines or DBP, as successor
of the RFC, for the payment of an outstanding balance of
P7,876.13 (Exh. 'D').
On March 3, 1961, while Ponciano was absent attending
his farm in Arayat, Pampanga, Julia sold absolutely the
lots in question, together with their improvements to
appellees Mendozas for the sum of P80,000.00 without
the knowledge and consent of Ponciano (Exh. 'I'-
Mendoza). At the same time the spouses were living
separately and were not in speaking terms. By virtue of
such sale, Transfer Certificates of Title Nos. 561 10 and
56111 were subsequently issued in the name of the
Mendozas.
The applicable provision of law is Article 153 of the Civil Code which
provides:
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;
 xxx xxx xxx
The presumption found in Article 160 of the Civil Code must also be
overcome by one who contends that the disputed property is paraphernal
Article 160 provides:
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 is a strong one. As stated in Camia de Reyes v. Reyes de
Ilano (63 Phil. 629, 639), "it is sufficient to prove that the property was
acquired during the marriage in order that the same may be deemed
conjugal property." And in Laluan v. Malpaya (65 SCRA 494, 504) we stated,
"proof of acquisition of the property in dispute during the marriage suffices
to render the statutory presumption operative."
There is no question that the disputed property was acquired by onerous
title during the marriage. But were the funds used to buy the lot and build
the improvements at the expense of the common fund?
The records show that the funds came from loans obtained by the spouses
from the Rehabilitation Finance Corporation. Under Article 161 of the Civil
Code, all debts and obligations contracted by the husband and the wife for
the benefit of the conjugal partnership are liabilities of the partnership.
As stated in Castillo, Jr. vs. Pasco (1 1 SCRA 102, 107):
... The position thus taken by appellants is meritorous, for
the reason that the deeds show the loans to have been
made by Dr. Nicanor Jacinto and by Gabriel and
Purificacion Gonzales, to both spouses Marcelo Castillo
and Macaria Pasco, as joint borrowers. The loans thus
became obligations of the conjugal partnership of both
debtor spouses and the money loaned is logically conjugal
property.
Citing Palanca v. Smith Bell & Co. (9 Phil. 13 1) interpreting Par. 3, Article
1401 of the old Civil Code, the Court in Castillo v. Pasco stated:
If money borrowed by the husband alone on the security
of his wife's property is conjugal in character, a
fortiori should it be conjugal when borrowed by both
spouses. The reason obviously is that the loan becomes
an obligation of the conjugal partnership which is the one
primarily bound for its repayment.
To rebut the presumption and the evidence of the conjugal character of the
property, the petitioners have only the testimony of Julia de Reyes to offer.
Mrs. Reyes testified that she bought the two parcels of land on installment
basis and that the first payment of a little less than P2,000.00 came from
her personal funds: The receipt issued by Araneta, however, shows that the
first installment on one lot was only P69.96 and on the other lot, P102.00.
Mrs. Reyes also testified that she paid the entire purchase price and the
construction of the buildings from her personal funds and money borrowed
from the Philippine National Bank. The mortgage contracts, however, show
that the properties were paid out of the loan from RFC.
As a matter of fact, Mrs. Reyes' testimony about a loan from Mrs. Rosa
Borja, the sale of a lot in Cabiao, Nueva Ecija given by her mother, and the
loan from PNB only emphasize the conjugal nature of the disputed
properties because she stated that these sums were also used to put up
their gravel and sand business, a poultry farm, and a banana plantation plus
a jeepney transportation line although according to her, every business
venture handled by her husband failed. The two were establishing
businesses and buying properties together as husband and wife, in happier
times.
The Court of Appeals ruled upon the testimony of Julia De Reyes as follows:
Julia's testimony that she had sold her Cabiao property to
Rosa Borja is not supported by the deed of sale (Exh. 'I')
which shows that the property was sold to Encarnacion
 Goco and Mariano Robles. Again, her claim that said
Cabiao property was donated to her by her mother is
negated by the deeds of sale (Exhs. 'J' and 'K') which show
that said property was donated to her and her two
brothers, Pablo and Jose del Rosario, who afterwards sold
their participation thereof to the spouses, Ponciano and
Julia.
Her claim of exclusive ownership is further belied by the
Income Tax Returns (Exhs. 'N' to 'N'- 3') which she herself
prepared and filed in behalf of the conjugal partnership
wherein she made the statement that the rentals paid by
her co-appellees were income of the conjugal
partnership; and by the Income Tax Returns (Exhs. 'O' to
'0-4') also filed by her for the conjugal partnership, were
she made to appear the properties in question as capital
assets of the conjugal partnership. It should be noted that
Julia did not care to deny the truth of said statements.
Neither did she endeavor to offer any explanation for
such damaging averments.
Petitioners also raised the issue of estoppel in their assignments of errors.
They alleged:
Even so, petitioners would have small legal cause to
dispute the respondent Court's giving credence to the
husband's pretensions did there not also exist in the
record plain and indisputable evidence that he had on a
former occasion both solemnly confirmed the
paraphernal character of the very properties now in
question and disclaimed the existence of any conjugal
partnership funds or properties of himself and his wife.
(Petitioner's Brief, L-31616, p. 7).
It turns out that in 1948, Ponciano Reyes was sued in the then Municipal
Court of Manila for ejectment from a leased hotel that he was then
operating. Judgment was rendered against Reyes in favor of the lessors, the
brothers named Gocheco Having failed in a bid to garnish the rentals of the
disputed buildings because the municipal court stated that it had no
jurisdiction to decide the paraphernal or conjugal nature of the properties,
the Gocheco brothers filed Civil Case No. 24772 for revival of judgment with
the Court of First Instance of Manila.
It was in this latter case where Mr. Reyes stated in his special defenses that
he and his wife never had any kind of fund which could be called conjugal
partnership funds, that they acted independently from one another
whenever either one engaged in any business, and-
That the herein plaintiff has not limited his action in the
present case against defendant Ponciano S. Reyes as he
did in the original case above-mentioned, that is, Civil
Case No. 7524 of the Manila Municipal Court which the
instant case derived from, but has included the
defendant's wife Julia Reyes, with the only intended
purpose and design of going over and against the
paraphernal properties of said Julia Reyes. (par. 4, Special
Defenses, Answer, Exh. II; Petitioner's Brief, L-31618, pp.
9-10).
Article 1437 of the Civil Code on estoppel involving immovable property
provides:
Art. 1437. When in a contract between third persons
concerning immovable property, one of them is misled by
a person with respect to the ownership or real right over
the real estate, the latter is precluded from asserting his
legal title or interest therein, provided all these requisites
are present:
(1) There must be fraudulent representation or wrongful
concealment of facts known to the party estopped;
(2) The party precluded must intend that the other should
act upon the facts as misrepresented;
 (3) The party misled must have been unaware of the true
facts; and
(4) The party defrauded must have acted in accordance
with the representation.
The principle of estoppel rests on the rule that whenever a party has, by his
declaration, act or omission, intentionally and deliberately led the other to
believe a particular thing true and to act, upon such belief he cannot, in any
litigation arising out of such declaration, act or omission, be permitted to
falsify it. (Sotto v. Teves, 86 SCRA 154.)
Estoppel can only be invoked between the person making the
misrepresentation and the person to whom it was addressed. It is essential
that the latter shag have relied upon the misrepresentation and had been
influenced and misled thereby.
There is no showing that the respondent had intentionally and deliberately
led the petitioners Mendozas to believe what was contained in the
pleading, "Exh. 11", and to make them act upon it. As observed by the
respondent, they were not even a party in the case where the said pleadin
was filed. Neither is there any assertion by the Mendozas that the said
pleading was shown to them or that they happened to see it or to have any
knowledge about it before they purchased the properties in question. The
alleged representation was never addressed to the petitioners, much less
made with the intention that they would act upon it. Moreover, there is no
specific and clear reference to the disputed lots as paraphernal in the cited
answer. The petitioners cannot invoke estoppel in these petitions.
May the Mendoza spouses be considered buyers in good faith?
The proof that the petitioners in L-31618 are purchasers in good faith
comes from the testimony of Mrs. Inocencia Mendoza herself. Mrs.
Mendoza testified that Mrs. Julia R. De Reyes assured her that the
properties were paraphernal that her lawyer verified the titles being in the
name of Mrs. Julia R. De Reyes, and that she never dealt with Mr. Ponciano
Reyes when she and her husband were still renting the properties they later
purchased. On cross-examination, Mrs. Mendoza admitted that she learned
of the RFC mortgage when the lots were about to be purchased.
Property acquired during a marriage is presumed to be conjugal and the
fact that the land is later registered in the name of only one of the spouses
does not destroy its conjugal nature. (Bucoy v. Paulino, 23 SCRA 249).
Section 46 of P.D. 1529, the Property Registration Decree, reiterates the
proviso in Section 70 of the former Land Registration Act that registration
cannot be construed to relieve registered land or the owners thereof from
any rights incident to the relation of husband and wife. (See also: Marigsa v.
Macabuntoc 17 Phil. 107, 109; Romero de Pratts v. Menzi & Co., Inc., 53
Phil. 51, 54; Padilla v. Padilla, 74 Phil. 377, 382-384; Vitug v. Montemayor,
91 Phil. 286, 290, 291, citing Guinguing v. Abuton, 48 Phil. 144; Sideco v.
Aznar, 92 Phil. 952, 961-962, citing Flores v. Flores, 48 Phil. 288; Guinoo v.
Court of Appeals, 97 Phil. 235, 238; Silos v. Ramos, 97 Phil. 263,
270, citing Commonwealth v. Sandiko 72 Phil. 258, 260; and Alvarez v.
Espiritu, 14 SCRA 893).
If the fact that property acquired during marriage was registered in the
name of the husband alone does not affect its conjugal nature, neither does
registration in the name of the wife. Any person who buys land registered in
the married name of the wife is put on notice about its conjugal nature.
The mortgage contracts (Exhs. "A-1 " and "B-1 ") executed by the spouses
Ponciano S. Reyes and Julia Reyes in favor of RFC were duly registered in the
Registry of Deeds of Quezon City and seasonably annotated on transfer
certificates of title Nos. 8550 (Exh. "F") and 19998 (Exh. "G"), which were
issued in the name of Julia Reyes "married to Ponciano Reyes". Their dates
of inscription were November 29, 1948 and October 11, 1952, respectively.
On December 10, 1952, the lots and the building were leased by Julia, with
the marital consent of Ponciano to the petitioners Mendozas The contract
of lease was registered in the Registry of Deeds and was annotated in the
transfer certificates of title on May 5, 1952. At that time, the RFC mortgages
were already noted at the back of the transfer certificates of title. The
petitioners, therefore, are unquestionably charged with notice of the
existence and contents of said mortgages, their joint execution by the
spouses Ponciano Reyes and Julia Reyes and the application of the loans to
the payment to Araneta of the purchase price of the lots in question.

Furthermore, the consent of the Ponciano Reyes to the mere lease of the
properties was demanded by the Mendozas allegedly for their own
protection, yet when it came to the deed of sale which entailed a greater
transfer of rights such consent was not required.

The final argument refers to the alleged unjust enrichment by Ponciano

Reyes if the deed of sale is nullified This petitioners admit that the benefit
including that represented by one-half of the purchase price, accrued not to
the respondent but to his wife. Since Mr. Reyes did not receive any part of
the proceeds of the sale and his wife has been aligning herself with the
Mendoza couple, there could be no unjust enrichment as alleged. The
assignments of errors have no merit.

WHEREFORE, the petitions for review on certiorari are hereby DENIED for
lack of merit. The judgment of the Court of Appeals is affirmed.

SO ORDERED.

Teehankee, Actg. C.J., Melencio-Herrera, Plana, Vasquez and Relova, JJ.,

concur.