G.R. No.
193038, March 11, 2015 Shirley then advised the interested buyers - one of whom
JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B.
NUEGA, Respondent.
DECISION
VILLARAMA, JR., J.:
At bar is a petition for review on certiorari of the
Decision1 dated May 14, 2010 and the Resolution 2 dated
July 21, 2010 of the Court of Appeals (CA) in CA-G.R. CV
No. 70235, which affirmed with modification the assailed
Decision3 dated February 14, 2001 of the Regional Trial
Court (RTC) of Marikina City, Branch 273, in Civil Case
No. 96-274-MK.
The following facts are found by the trial court and
affirmed by the appellate court:
Respondent Shirley B. Nuega (Shirley) was married to
Rogelio A. Nuega (Rogelio) on September 1,
1990.4 Sometime in 1988 when the parties were still
engaged, Shirley was working as a domestic helper in
Israel. Upon the request of Rogelio, Shirley sent him
money5 for the purchase of a residential lot in Marikina
where they had planned to eventually build their home.
Rogelio was then also working abroad as a seaman. The
following year, or on September 13, 1989, Rogelio
purchased the subject house and lot for One Hundred
Two Thousand Pesos (P102,000.00)6 from Rodeanna
Realty Corporation. The subject property has an
aggregate area of one hundred eleven square meters
(111 sq. m.) covered by Transfer Certificate of Title (TCT)
No. N-133844.7 Shirley claims that upon her arrival in the
Philippines sometime in 1989, she settled the balance for
the equity over the subject property with the developer
through SSS8financing. She likewise paid for the
succeeding monthly amortizations. On October 19, 1989,
TCT No. 1719639 over the subject property was issued by
the Registry of Deeds of Marikina, Rizal solely under the
name of Rogelio.
On September 1, 1990, Shirley and Rogelio got married
and lived in the subject property. The following year,
Shirley returned to Israel for work. While overseas, she
received information that Rogelio had brought home
another woman, Monica Escobar, into the family home.
She also learned, and was able to confirm upon her return
to the Philippines in May 1992, that Rogelio had been
introducing Escobar as his wife.
In June 1992, Shirley filed two cases against Rogelio: one
for Concubinage before the Provincial Prosecution Office
of Rizal, and another for Legal Separation and Liquidation
of Property before the RTC of Pasig City. Shirley later
withdrew the complaint for legal separation and liquidation
of property, but re-filed10 the same on January 29, 1993.
In between the filing of these cases, Shirley learned that
Rogelio had the intention of selling the subject property.
was their neighbor and petitioner Josefina V. Nobleza
(petitioner) - of the existence of the cases that she had
filed against Rogelio and cautioned them against buying
the subject property until the cases are closed and
terminated. Nonetheless, under a Deed of Absolute
Sale11 dated December 29, 1992, Rogelio sold the
subject property to petitioner without Shirley's consent in
the amount of Three Hundred Eighty Thousand Pesos
(P380,000.00), including petitioner's undertaking to
assume the existing mortgage on the property with the
National Home Mortgage Finance Corporation and to pay
the real property taxes due thereon.
Meanwhile, in a Decision12 dated May 16, 1994, the RTC
of Pasig City, Branch 70, granted the petition for legal
separation and ordered the dissolution and liquidation of
the regime of absolute community of property between
Shirley and Rogelio, viz.
WHEREFORE, in view of the foregoing, the Court hereby
grants the instant petition for legal separation between the
subject spouses with all its legal effects as provided for in
Art. 63 of the Family Code. Their community property is
consequently dissolved and must be liquidated in
accordance with Art. 102 of the New Family Code. The
respondent is thus hereby enjoined from selling,
encumbering or in any way disposing or alienating any of
their community property including the subject house and
lot before the required liquidation. Moreover, he, being the
guilty spouse, must forfeit the net profits of the community
property in favor of the petitioner who is the innocent
spouse pursuant to Art. 43 of the aforesaid law. Finally, in
the light of the claim of ownership by the present
occupants who have not been impleaded in the instant
case, a separate action must be instituted by the petitioner
against the alleged buyer or buyers thereof to determine
their respective rights thereon.
Let a copy of this decision be furnished the Local Civil
Registrar of Manila, the Register of Deeds of Marikina,
Metro Manila and the National Statistics Office (NSO),
sta. Mesa, Manila.
SO ORDERED.13
Rogelio appealed the above-quoted ruling before the CA
which denied due course and dismissed the petition. It
became final and executory and a writ of execution was
issued in August 1995.14
On August 27, 1996, Shirley instituted a Complaint15 for
Rescission of Sale and Recoveiy of Property against
petitioner and Rogelio before the RTC of Marikina City,
Branch 273. After trial on the merits, the trial court
rendered its decision on February 14, 2001, viz.:
WHEREFORE, foregoing premises considered, judgment
is hereby rendered in favor of plaintiff Shirley Nuega and
against defendant Josefina Nobleza, as follows:
1) the Deed of Absolute Sale dated December 29, 1992
insofar as the 55.05 square meters representing the
 one half (1/2) portion of plaintiff Shirley Nuega is
concerned, is hereby ordered rescinded, the same
being null and void;
2) defendant Josefina Nobleza is ordered to reconvey
said 55.05 square meters to plaintiff Shirley Nuega, or
in the alternative to pay plaintiff Shirley Nuega the
present market value of said 55.05 square meters; and
3) to pay plaintiff Shirley Nuega attorney's fees in the sum
of Twenty Thousand Pesos (P20,000.00).
For lack of merit, defendant's counterclaim is
hereby DENIED.
SO ORDERED.16
Petitioner sought recourse with the CA, while Rogelio did
not appeal the ruling of the trial court. In its assailed
Decision promulgated on May 14, 2010, the appellate
court affirmed with modification the trial court's ruling, viz.:
WHEREFORE, subject to the foregoing disquisition, the
appeal is DENIED. The Decision dated 14 February 2001
of the Regional Trial Court of Marikina City, Branch 273
in Civil Case No. 96-274-
MK is AFFIRMED with MODIFICATION in that the Deed
of Absolute Sale dated 29 December 1992 is hereby
declared null and void in its entirety, and defendant-
appellant Josefina V. Nobleza is ordered to reconvey the
entire subject property to plaintiff-appellee Shirley B.
Nuega and defendant Rogelio Nuega, without prejudice
to said defendant-appellant's right to recover from
defendant Rogelio whatever amount she paid for the
subject property. Costs against defendant-appellant
Nobleza.
SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration. In a Resolution
dated July 21, 2010, the appellate court denied the motion
for lack of merit. Hence, this petition raising the following
assignment of errors:
[I.] THE HONORABLE COURT OF APPEALS ERRED
WHEN IT AFFIRMED THE DECISION OF THE
REGIONAL TRIAL COURT BY SUSTAINING THE
FINDING THAT PETITIONER WAS NOT A
PURCHASER IN GOOD FAITH.
[II.]THE HONORABLE COURT OF APPEALS ERRED
WHEN IT MODIFIED THE DECISION OF THE
REGIONAL TRIAL COURT BY DECLARING AS
NULL AND VOID THE DEED OF ABSOLUTE SALE
DATED 29 DECEMBER 1992 IN ITS ENTIRETY.18
We deny the petition.
Petitioner is not a buyer in good faith.
An innocent purchaser for value is one who buys the
property of another, without notice that some other person
has a right or interest in the property, for which a full and
fair price is paid by the buyer at the time of the purchase
or before receipt of any notice of claims or interest of
some other person in the property.19 It is the party who
claims to be an innocent purchaser for value who has the
burden of proving such assertion, and it is not enough to
invoke the ordinary presumption of good faith.20 To
successfully invoke and be considered as a buyer in good
faith, the presumption is that first and foremost, the "buyer
in good faith" must have shown prudence and due
diligence in the exercise of his/her rights. It presupposes
that the buyer did everything that an ordinary person
would do for the protection and defense of his/her rights
and interests against prejudicial or injurious concerns
when placed in such a situation. The prudence required
of a buyer in good faith is "not that of a person with training
in law, but rather that of an average man who 'weighs
facts and circumstances without resorting to the
calibration of our technical rules of evidence of which his
knowledge is nil.'"21 A buyer in good faith does his
homework and verifies that the particulars are in order
such as the title, the parties, the mode of transfer and the
provisions in the deed/contract of sale, to name a few. To
be more specific, such prudence can be shown by making
an ocular inspection of the property, checking the
title/ownership with the proper Register of Deeds
alongside the payment of taxes therefor, or inquiring into
the minutiae such as the parameters or lot area, the type
of ownership, and the capacity of the seller to dispose of
the property, which capacity necessarily includes an
inquiry into the civil status of the seller to ensure that if
married, marital consent is secured when necessary. In
fine, for a purchaser of a property in the possession of
another to be in good faith, he must exercise due
diligence, conduct an investigation, and weigh the
surrounding facts and circumstances like what any
prudent man in a similar situation would do.22
In the case at bar, petitioner claims that she is a buyer in
good faith of the subject property which is titled under the
name of the seller Rogelio A. Nuega alone as evidenced
by TCT No. 171963 and Tax Declaration Nos. D-012-
04723 and D-012-04724.23 Petitioner argues, among
others, that since she has examined the TCT over the
subject property and found the property to have been
registered under the name of seller Rogelio alone, she is
an innocent purchaser for value and "she is not required
to go beyond the face of the title in verifying the status of
the subject property at the time of the consummation of
the sale and at the date of the sale."24
We disagree with petitioner.
A buyer cannot claim to be an innocent purchaser for
value by merely relying on the TCT of the seller while
ignoring all the other surrounding circumstances relevant
to the sale.
In the case of Spouses Raymundo v. Spouses
Bandong,25 petitioners therein - as does petitioner herein
- were also harping that due to the indefeasibility of a
Torrens title, there was nothing in the TCT of the property
in litigation that should have aroused the buyer's
suspicion as to put her on guard that there was a defect
in the title of therein seller. The Court held in the Spouses
Raymundo case that the buyer therein could not hide
behind the cloak of being an innocent purchaser for value
by merely relying on the TCT which showed that the
registered owner of the land purchased is the seller. The
Court ruled in this case that the buyer was not an innocent
purchaser for value due to the following attendant
circumstances, viz.:
In the present case, we are not convinced by the
petitioners' incessant assertion that Jocelyn is an innocent
purchaser for value. To begin with, she is a grandniece of
Eulalia and resides in the same locality where the latter
lives and conducts her principal business. It is therefore
impossible for her not to acquire knowledge of her grand
aunt's business practice of requiring her biyaheros to
surrender the titles to their properties and to sign the
corresponding deeds of sale over said properties in her
favor, as security. This alone should have put Jocelyn on
guard for any possible abuses that Eulalia may commit
with the titles and the deeds of sale in her possession.26
Similarly, in the case of Arrofo v. Quiño,27 the Court held
that while "the law does not require a person dealing with
registered land to inquire further than what the Torrens
Title on its face indicates," the rule is not absolute.28 Thus,
finding that the buyer therein failed to take the necessary
precaution required of a prudent man, the Court held that
Arrofo was not an innocent purchaser for value, viz.:
In the present case, the records show that Arrofo failed to
act as a prudent buyer. True, she asked her daughter to
verify from the Register of Deeds if the title to the Property
is free from encumbrances. However, Arrofo admitted that
the Property is within the neighborhood and that she
conducted an ocular inspection of the Property. She saw
the house constructed on the Property. Yet, Arrofo did not
even bother to inquire about the occupants of the house.
Arrofo also admitted that at the time of the sale, Myrna
was occupying a room in her house as her lessee. The
fact that Myrna was renting a room from Arrofo yet selling
a land with a house should have put Arrofo on her guard.
She knew that Myrna was not occupying the house.
Hence, someone else must have been occupying the
house.
Thus, Arrofo should have inquired who occupied the
house, and if a lessee, who received the rentals from such
lessee. Such inquiry would have led Arrofo to discover
that the lessee was paying rentals to Quino, not to Renato
and Myrna, who claimed to own the Property.29
An analogous situation obtains in the case at bar.
The TCT of the subject property states that its sole owner
is the seller Rogelio himself who was therein also
described as "single". However, as in the cases
of Spouses Raymundo and Arrofo, there are
circumstances critical to the case at bar which convince
us to affirm the ruling of both the appellate and lower
courts that herein petitioner is not a buyer in good faith.
First, petitioner's sister Hilda Bautista, at the time of the
sale, was residing near Rogelio and Shirley's house - the
subject property - in Ladislao Diwa Village, Marikina City.
Had petitioner been more prudent as a buyer, she could
have easily checked if Rogelio had the capacity to dispose
of the subject property. Had petitioner been more vigilant,
she could have inquired with such facility - considering
that her sister lived in the same Ladislao Diwa Village
where the property is located - if there was any person
other than Rogelio who had any right or interest in the
subject property.
To be sure, respondent even testified that she had warned
their neighbors at Ladislao Diwa Village - including
petitioner's sister - not to engage in any deal with Rogelio
relative to the purchase of the subject property because
of the cases she had filed against Rogelio. Petitioner
denies that respondent had given such warning to her
neighbors, which includes her sister, therefore arguing
that such warning could not be construed as "notice" on
her part that there is a person other than the seller himself
who has any right or interest in the subject property.
Nonetheless, despite petitioner's adamant denial, both
courts a quo gave probative value to the testimony of
respondent, and the instant petition failed to present any
convincing evidence for this Court to reverse such factual
finding. To be sure, it is not within our province to second-
guess the courts a quo, and the re-determination of this
factual issue is beyond the reach of a petition for review
on certiorari where only questions of law may be
reviewed.30
Second, issues surrounding the execution of the Deed of
Absolute Sale also pose question on the claim of
petitioner that she is a buyer in good faith. As correctly
observed by both courts a quo, the Deed of Absolute Sale
was executed and dated on December 29, 1992.
However, the Community Tax Certificates of the
witnesses therein were dated January 2 and 20,
1993.31 While this irregularity is not a direct proof of the
intent of the parties to the sale to make it appear that the
Deed of Absolute Sale was executed on December 29,
1992 - or before Shirley filed the petition for legal
separation on January 29, 1993 - it is circumstantial and
relevant to the claim of herein petitioner as an innocent
purchaser for value.
That is not all.
In the Deed of Absolute Sale dated December 29, 1992,
the civil status of Rogelio as seller was not stated, while
petitioner as buyer was indicated as "single," viz.:
ROGELIO A. NUEGA, of legal age, Filipino citizen and
with postal address at 2-A-2 Ladislao Diwa St.,
Concepcion, Marikina, Metro Manila, hereinafter referred
to as the VENDOR
And
JOSEFINA V. NOBLEZA, of legal age, Filipino citizen,
single and with postal address at No. L-2-A-3 Ladislao
Diwa St., Concepcion, Marikina, Metro Manila, hereinafter
referred to as the VENDEE.32
It puzzles the Court that while petitioner has repeatedly
claimed that Rogelio is "single" under TCT No. 171963
and Tax Declaration Nos. D-012-04723 and D-012-
04724, his civil status as seller was not stated in the Deed
of Absolute Sale - further creating a cloud on the claim of
petitioner that she is an innocent purchaser for value.
As to the second issue, we rule that the appellate court
did not err when it modified the decision of the trial court
and declared that the Deed of Absolute Sale dated
December 29, 1992 is void in its entirety.
The trial court held that while the TCT shows that the
owner of the subject property is Rogelio alone,
respondent was able to prove at the trial court that she
contributed in the payment of the purchase price of the
subject property. This fact was also settled with finality by
the RTC of Pasig City, Branch 70, and affirmed by the CA,
in the case for legal separation and liquidation of property
docketed as JDRC Case No. 2510. The pertinent portion
of the decision reads:
xxx Clearly, the house and lot jointly acquired by the
parties prior to their marriage forms part of their
community property regime, xxx
From the foregoing, Shirley sufficiently proved her
financial contribution for the purchase of the house and lot
covered by TCT 171963. Thus, the present lot which
forms part of their community property should be divided
equally between them upon the grant of the instant
petition for legal separation. Having established by
preponderance of evidence the fact of her husband's guilt
in contracting a subsequent marriage xxx, Shirley alone
should be entitled to the net profits earned by the absolute
community property.33
However, the nullity of the sale made by Rogelio is not
premised on proof of respondent's financial contribution in
the purchase of the subject property. Actual contribution
is not relevant in determining whether a piece of property
is community property for the law itself defines what
constitutes community property.
Article 91 of the Family Code thus provides:
Art. 91. Unless otherwise provided in this Chapter or in
the marriage settlements, the community property shall
consist of all the property owned by the spouses at the
time of the celebration of the marriage or acquired
thereafter.
The only exceptions from the above rule are: (1) those
excluded from the absolute community by the Family
Code; and (2) those excluded by the marriage settlement.
Under the first exception are properties enumerated in
Article 92 of the Family Code, which states:
Art. 92. The following shall be excluded from the
community property:
(1) Property acquired during the marriage by gratuitous
title by either spouse, and the fruits as well as the income
thereof, if any, unless it is expressly provided by the
donor, testator or grantor that they shall form part of the
community property;
(2) Property for personal and exclusive use of either
spouse; however, jewelry shall form part of the community
property;
(3) Property acquired before the marriage by either
spouse who has legitimate descendants by a former
marriage, and the fruits as well as the income, if any, of
such property.
As held in Quiao v. Quiao:34ChanRoblesVirtualawlibrary
When a couple enters into a regime of absolute
community, the husband and the wife becomes joint
owners of all the properties of the marriage. Whatever
property each spouse brings into the marriage, and those
acquired during the marriage (except those excluded
under Article 92 of the Family Code) form the common
mass of the couple's properties. And when the couple's
marriage or community is dissolved, that common mass
is divided between the spouses, or their respective heirs,
equally or in the proportion the parties have established,
irrespective of the value each one may have originally
owned.
Since the subject property does not fall under any of the
exclusions provided in Article 92, it therefore forms part of
the absolute community property of Shirley and Rogelio.
Regardless of their respective contribution to its
acquisition before their marriage, and despite the fact that
only Rogelio's name appears in the TCT as owner, the
property is owned jointly by the spouses Shirley and
Rogelio.
Respondent and Rogelio were married on September 1,
1990. Rogelio, on his own and without the consent of
herein respondent as his spouse, sold the subject
property via a Deed of Absolute Sale dated December 29,
1992 - or during the subsistence of a valid contract of
marriage. Under Article 96 of Executive Order No. 209,
otherwise known as The Family Code of the Philippines,
the said disposition of a communal property is void, viz.:
Art. 96. The administration and enjoyment of the
community property shall belong to both spouses jointly.
In case of disagreement, the husband's decision shall
prevail, subject to recourse to the court by the wife for a
proper remedy, which must be availed of within five years
from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the common
properties, the other spouse may assume sole powers of
administration. These powers do not include the
powers of disposition or encumbrance without the
authority of the court or the written consent of the
other spouse. In the absence of such authority or Costs against petitioner.
consent, the disposition or encumbrance shall be SO ORDERED.
void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and
the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by
either or both offerors.35
It is clear under the foregoing provision of the Family
Code that Rogelio could not sell the subject property
without the written consent of respondent or the authority
of the court. Without such consent or authority, the entire
sale is void. As correctly explained by the appellate court:

In the instant case, defendant Rogelio sold the entire

subject property to defendant-appellant Josefina on 29
December 1992 or during the existence of Rogelio's
marriage to plaintiff-appellee Shirley, without the consent
of the latter. The subject property forms part of Rogelio
and Shirley's absolute community of property. Thus, the
trial court erred in declaring the deed of sale null and void
only insofar as the 55.05 square meters representing the
one-half (1/2) portion of plaintiff-appellee Shirley. In
absolute community of property, if the husband, without
knowledge and consent of the wife, sells (their) property,
such sale is void. The consent of both the husband
Rogelio and the wife Shirley is required and the absence
of the consent of one renders the entire sale null and void
including the portion of the subject property pertaining to
defendant Rogelio who contracted the sale with
defendant-appellant Josefina. Since the Deed of Absolute
Sale x x x entered into by and between defendant-
appellant Josefina and defendant Rogelio dated 29
December 1992, during the subsisting marriage between
plaintiff-appellee Shirley and Rogelio, was without the
written consent of Shirley, the said Deed of Absolute Sale
is void in its entirety. Hence, the trial court erred in
declaring the said Deed of Absolute Sale as void only
insofar as the 1/2 portion pertaining to the share of Shirley
is concerned.36
Finally, consistent with our ruling that Rogelio solely
entered into the contract of sale with petitioner and
acknowledged receiving the entire consideration of the
contract under the Deed of Absolute Sale, Shirley could
not be held accountable to petitioner for the
reimbursement of her payment for the purchase of the
subject property. Under Article 94 of the Family Code, the
absolute community of property shall only be "liable for x
x x [d]ebts and obligations contracted by either spouse
without the consent of the other to the extent that the
family may have been benefited x x x." As correctly stated
by the appellate court, there being no evidence on record
that the amount received by Rogelio redounded to the
benefit of the family, respondent cannot be made to
reimburse any amount to petitioner.37
WHEREFORE, in view of the foregoing, the petition
is DENIED. The assailed Decision and Resolution of the
Court of Appeals dated May 14, 2010 and July 21, 2010,
respectively, in CA-G.R. CV No. 70235 are AFFIRMED.
G.R. No. 156125 August 25, 2010
FRANCISCO MUÑOZ, JR., Petitioner,
vs.
ERLINDA RAMIREZ and ELISEO
CARLOS, Respondents.
DECISION
BRION, J.:
We resolve the present petition for review on
certiorari1 filed by petitioner Francisco Muñoz, Jr.
(petitioner) to challenge the decision2 and the
resolution3 of the Court of Appeals (CA) in CA-G.R. CV
No. 57126.4 The CA decision set aside the decision5 of
the Regional Trial Court (RTC), Branch 166, Pasig City,
in Civil Case No. 63665. The CA resolution denied the
petitioner’s subsequent motion for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are
briefly summarized below.
Subject of the present case is a seventy-seven (77)-
square meter residential house and lot located at 170 A.
Bonifacio Street, Mandaluyong City (subject property),
covered by Transfer Certificate of Title (TCT) No. 7650 of
the Registry of Deeds of Mandaluyong City in the name of
the petitioner.6
The residential lot in the subject property was previously
covered by TCT No. 1427, in the name of Erlinda
Ramirez, married to Eliseo Carlos (respondents).7
On April 6, 1989, Eliseo, a Bureau of Internal Revenue
employee, mortgaged TCT No. 1427, with Erlinda’s
consent, to the Government Service Insurance System
(GSIS) to secure a ₱136,500.00 housing loan, payable
within twenty (20) years, through monthly salary
deductions of ₱1,687.66.8 The respondents then
constructed a thirty-six (36)-square meter, two-story
residential house on the lot.
On July 14, 1993, the title to the subject property was
transferred to the petitioner by virtue of a Deed of
Absolute Sale, dated April 30, 1992, executed by Erlinda,
for herself and as attorney-in-fact of Eliseo, for a stated
consideration of ₱602,000.00.9
On September 24, 1993, the respondents filed a
complaint with the RTC for the nullification of the deed of
absolute sale, claiming that there was no sale but only a
mortgage transaction, and the documents transferring the
title to the petitioner’s name were falsified.
The respondents alleged that in April 1992, the petitioner
granted them a ₱600,000.00 loan, to be secured by a first
mortgage on TCT No. 1427; the petitioner gave Erlinda a
₱200,000.0010 advance to cancel the GSIS mortgage,
and made her sign a document purporting to be the
mortgage contract; the petitioner promised to give the
₱402,000.00 balance when Erlinda surrenders TCT No.
1427 with the GSIS mortgage cancelled, and submits an
affidavit signed by Eliseo stating that he waives all his
rights to the subject property; with the ₱200,000.00
advance, Erlinda paid GSIS ₱176,445.2711 to cancel the
GSIS mortgage on TCT No. 1427;12 in May 1992, Erlinda
surrendered to the petitioner the clean TCT No. 1427, but
returned Eliseo’s affidavit, unsigned; since Eliseo’s
affidavit was unsigned, the petitioner refused to give the
₱402,000.00 balance and to cancel the mortgage, and
demanded that Erlinda return the ₱200,000.00 advance;
since Erlinda could not return the ₱200,000.00 advance
because it had been used to pay the GSIS loan, the
petitioner kept the title; and in 1993, they discovered that
TCT No. 7650 had been issued in the petitioner’s name,
cancelling TCT No.1427 in their name.
The petitioner countered that there was a valid contract of
sale. He alleged that the respondents sold the subject
property to him after he refused their offer to mortgage the
subject property because they lacked paying capacity and
were unwilling to pay the incidental charges; the sale was
with the implied promise to repurchase within one
year,13 during which period (from May 1, 1992 to April 30,
1993), the respondents would lease the subject property
for a monthly rental of ₱500.00;14 when the respondents
failed to repurchase the subject property within the one-
year period despite notice, he caused the transfer of title
in his name on July 14, 1993;15 when the respondents
failed to pay the monthly rentals despite demand, he filed
an ejectment case16 against them with the Metropolitan
Trial Court (MeTC), Branch 60, Mandaluyong City, on
September 8, 1993, or sixteen days before the filing of the
RTC case for annulment of the deed of absolute sale.
During the pendency of the RTC case, or on March 29,
1995, the MeTC decided the ejectment case. It ordered
Erlinda and her family to vacate the subject property, to
surrender its possession to the petitioner, and to pay the
overdue rentals.17
In the RTC, the respondents presented the results of the
scientific examination18 conducted by the National Bureau
of Investigation of Eliseo’s purported signatures in the
Special Power of Attorney19 dated April 29, 1992 and the
Affidavit of waiver of rights dated April 29,
1992,20 showing that they were forgeries.
The petitioner, on the other hand, introduced evidence on
the paraphernal nature of the subject property since it was
registered in Erlinda’s name; the residential lot was part
of a large parcel of land owned by Pedro Ramirez and
Fructuosa Urcla, Erlinda’s parents; it was the subject of
Civil Case No. 50141, a complaint for annulment of sale,
before the RTC, Branch 158, Pasig City, filed by the
surviving heirs of Pedro against another heir, Amado
Ramirez, Erlinda’s brother; and, as a result of a
compromise agreement, Amado agreed to transfer to the
other compulsory heirs of Pedro, including Erlinda, their
rightful shares of the land.21
THE RTC RULING
In a Decision dated January 23, 1997, the RTC dismissed
the complaint. It found that the subject property was
Erlinda’s exclusive paraphernal property that was
inherited from her father. It also upheld the sale to the
petitioner, even without Eliseo’s consent as the deed of
absolute sale bore the genuine signatures of Erlinda and
the petitioner as vendor and vendee, respectively. It
concluded that the NBI finding that Eliseo’s signatures in
the special power of attorney and in the affidavit were
forgeries was immaterial because Eliseo’s consent to the
sale was not necessary.22
The respondents elevated the case to the CA via an
ordinary appeal under Rule 41 of the Revised Rules of
Court.
THE CA RULING
The CA decided the appeal on June 25, 2002. Applying
the second paragraph of Article 15823 of the Civil Code
and Calimlim-Canullas v. Hon. Fortun,24 the CA held that
the subject property, originally Erlinda’s exclusive
paraphernal property, became conjugal property when it
was used as collateral for a housing loan that was paid
through conjugal funds – Eliseo’s monthly salary
deductions; the subject property, therefore, cannot be
validly sold or mortgaged without Eliseo’s consent,
pursuant to Article 12425 of the Family Code. Thus, the CA
declared void the deed of absolute sale, and set aside the
RTC decision.
When the CA denied26 the subsequent motion for
reconsideration,27 the petitioner filed the present petition
for review on certiorari under Rule 45 of the Revised
Rules of Court.
THE PETITION
The petitioner argues that the CA misapplied the second
paragraph of Article 158 of the Civil Code and Calimlim-
Canullas28 because the respondents admitted in the
complaint that it was the petitioner who gave the money
used to cancel the GSIS mortgage on TCT No. 1427;
Article 12029 of the Family Code is the applicable rule, and
since the value of the house is less than the value of the
lot, then Erlinda retained ownership of the subject
property. He also argues that the contract between the
parties was a sale, not a mortgage, because (a) Erlinda
did not deny her signature in the document;30 (b) Erlinda
agreed to sign a contract of lease over the subject
property;31 and, (c) Erlinda executed a letter, dated April
30, 1992, confirming the conversion of the loan
application to a deed of sale.32
THE CASE FOR THE RESPONDENTS
The respondents submit that it is unnecessary to compare
the respective values of the house and of the lot to
determine ownership of the subject property; it was
acquired during their marriage and, therefore, considered
conjugal property. They also submit that the transaction
between the parties was not a sale, but an equitable
mortgage because (a) they remained in possession of the
subject property even after the execution of the deed of
absolute sale, (b) they paid the 1993 real property taxes
due on the subject property, and (c) they received
₱200,000.00 only of the total stated price of ₱602,000.00.
THE ISSUE
The issues in the present case boil down to (1) whether
the subject property is paraphernal or conjugal; and, (2)
whether the contract between the parties was a sale or an
equitable mortgage.
OUR RULING
We deny the present Petition but for reasons other than
those advanced by the CA.
This Court is not a trier of facts. However, if the inference,
drawn by the CA, from the facts is manifestly mistaken, as
in the present case, we can review the evidence to allow
us to arrive at the correct factual conclusions based on
the record.33
First Issue:
Paraphernal or Conjugal?
As a general rule, all property acquired during the
marriage, whether the acquisition appears to have been
made, contracted or registered in the name of one or both
spouses, is presumed to be conjugal unless the contrary
is proved.34
In the present case, clear evidence that Erlinda inherited
the residential lot from her father has sufficiently rebutted
this presumption of conjugal ownership.35 Pursuant to
Articles 9236 and 10937 of the Family Code, properties
acquired by gratuitous title by either spouse, during the
marriage, shall be excluded from the community property
and be the exclusive property of each spouse.38 The
residential lot, therefore, is Erlinda’s exclusive
paraphernal property.
The CA, however, held that the residential lot became
conjugal when the house was built thereon through
conjugal funds, applying the second paragraph of Article
158 of the Civil Code and Calimlim-Canullas.39 Under the
second paragraph of Article 158 of the Civil Code, a land
that originally belonged to one spouse becomes conjugal
upon the construction of improvements thereon at the
expense of the partnership. We applied this provision in
Calimlim-Canullas,40 where we held that when the
conjugal house is constructed on land belonging
exclusively to the husband, the land ipso facto becomes
conjugal, but the husband is entitled to reimbursement of
the value of the land at the liquidation of the conjugal
partnership.
The CA misapplied Article 158 of the
Civil Code and Calimlim-Canullas
We cannot subscribe to the CA’s misplaced reliance on
Article 158 of the Civil Code and Calimlim-Canullas.
As the respondents were married during the effectivity of
the Civil Code, its provisions on conjugal partnership of
gains (Articles 142 to 189) should have governed their
property relations. However, with the enactment of the
Family Code on August 3, 1989, the Civil Code provisions
on conjugal partnership of gains, including Article 158,
have been superseded by those found in the Family Code
(Articles 105 to 133). Article 105 of the Family Code
states:
xxxx
The provisions of this Chapter [on the Conjugal
Partnership of Gains] shall also apply to conjugal
partnerships of gains already established between
spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance
with the Civil Code or other laws, as provided in Article
256.
Thus, in determining the nature of the subject property,
we refer to the provisions of the Family Code, and not the
Civil Code, except with respect to rights then already
vested.
Article 120 of the Family Code, which supersedes Article
158 of the Civil Code, provides the solution in determining
the ownership of the improvements that are made on the
separate property of the spouses, at the expense of the
partnership or through the acts or efforts of either or both
spouses. Under this provision, when the cost of the
improvement and any resulting increase in value are more
than the value of the property at the time of the
improvement, the entire property of one of the spouses
shall belong to the conjugal partnership, subject to
reimbursement of the value of the property of the owner-
spouse at the time of the improvement; otherwise, said
property shall be retained in ownership by the owner-
spouse, likewise subject to reimbursement of the cost of
the improvement.41
In the present case, we find that Eliseo paid a portion only
of the GSIS loan through monthly salary deductions. From
April 6, 198942 to April 30, 1992,43 Eliseo paid about
₱60,755.76,44 not the entire amount of the GSIS housing
loan plus interest, since the petitioner advanced the
₱176,445.2745 paid by Erlinda to cancel the mortgage in
1992. Considering the ₱136,500.00 amount of the GSIS
housing loan, it is fairly reasonable to assume that the
value of the residential lot is considerably more than the
₱60,755.76 amount paid by Eliseo through monthly salary
deductions.
Thus, the subject property remained the exclusive
paraphernal property of Erlinda at the time she contracted
with the petitioner; the written consent of Eliseo to the
transaction was not necessary. The NBI finding that
Eliseo’s signatures in the special power of attorney and
affidavit were forgeries was immaterial.
Nonetheless, the RTC and the CA apparently failed to
consider the real nature of the contract between the
parties.
Second Issue:
Sale or Equitable Mortgage?
Jurisprudence has defined an equitable mortgage "as one
which although lacking in some formality, or form or
words, or other requisites demanded by a statute,
nevertheless reveals the intention of the parties to charge
real property as security for a debt, there being no
impossibility nor anything contrary to law in this intent."46
Article 1602 of the Civil Code enumerates the instances
when a contract, regardless of its nomenclature, may be
presumed to be an equitable mortgage: (a) when the price
of a sale with right to repurchase is unusually inadequate;
(b) when the vendor remains in possession as lessee
or otherwise; (c) when upon or after the expiration of the
right to repurchase another instrument extending the
period of redemption or granting a new period is executed;
(d) when the purchaser retains for himself a part of
the purchase price; (e) when the vendor binds
himself to pay the taxes on the thing sold; and, (f) in
any other case where it may be fairly inferred that the
real intention of the parties is that the transaction
shall secure the payment of a debt or the performance
of any other obligation. These instances apply to a
contract purporting to be an absolute sale.47
For the presumption of an equitable mortgage to arise
under Article 1602 of the Civil Code, two (2) requisites
must concur: (a) that the parties entered into a contract
denominated as a contract of sale; and, (b) that their
intention was to secure an existing debt by way of a
mortgage. Any of the circumstances laid out in Article
1602 of the Civil Code, not the concurrence nor an
overwhelming number of the enumerated circumstances,
is sufficient to support the conclusion that a contract of
sale is in fact an equitable mortgage.48
Contract is an equitable mortgage
In the present case, there are four (4) telling
circumstances pointing to the existence of an equitable
mortgage.
First, the respondents remained in possession as lessees
of the subject property; the parties, in fact, executed a
one-year contract of lease, effective May 1, 1992 to April
30, 1993.49
Second, the petitioner retained part of the "purchase
price," the petitioner gave a ₱200,000.00 advance to
settle the GSIS housing loan, but refused to give the
₱402,000.00 balance when Erlinda failed to submit
Eliseo’s signed affidavit of waiver of rights.
Third, respondents paid the real property taxes on July 8,
1993, despite the alleged sale on April 30,
1992;50payment of real property taxes is a usual burden
attaching to ownership and when, as here, such payment
is coupled with continuous possession of the property, it
constitutes evidence of great weight that the person under
whose name the realty taxes were declared has a valid
and rightful claim over the land.51
1. The Deed of Absolute Sale dated April 30,
1992 is hereby declared an equitable mortgage;
and
2. The petitioner is obligated to RECONVEY to
the respondents the property covered by Transfer
Certificate of Title No. 7650 of the Register of
Deeds of Mandaluyong City, UPON THE
PAYMENT OF ₱200,000.00, with 12% legal
interest from April 30, 1992, by respondents
within NINETY DAYS FROM THE FINALITY OF
THIS DECISION.
Costs against the petitioner.
SO ORDERED.

Fourth, Erlinda secured the payment of the principal debt

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

That the petitioner advanced the sum of ₱200,000.00 to

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

We cannot sustain the ballooned obligation of

₱384,660.00, claimed in the Statement of Account sent
by the petitioner,53 sans any evidence of how this amount
was arrived at. Additionally, a daily interest of ₱641.10 or
₱19,233.00 per month for a ₱200,000.00 loan is patently
unconscionable. While parties are free to stipulate on the
interest to be imposed on monetary obligations, we can
step in to temper the interest rates if they are
unconscionable.54

In Lustan v. CA,55 where we established the reciprocal

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

WHEREFORE, in light of all the foregoing, we

hereby DENY the present petition. The assailed decision
and resolution of the Court of Appeals in CA-G.R. CV No.
57126 are AFFIRMED with the following
MODIFICATIONS:
G.R. No. 118305 February 12, 1998
AYALA INVESTMENT & DEVELOPMENT CORP. and
ABELARDO MAGSAJO, petitioners,
vs.
COURT OF APPEALS and SPOUSES ALFREDO &
ENCARNACION CHING, respondents.
MARTINEZ, J.:
Under Article 161 of the Civil Code, what debts and
obligations contracted by the husband alone are
considered "for the benefit of the conjugal partnership"
which are chargeable against the conjugal partnership? Is
a surety agreement or an accommodation contract
entered into by the husband in favor of his employer within
the contemplation of the said provision?
These are the issues which we will resolve in this petition
for review.
The petitioner assails the decision dated April 14, 1994 of
the respondent Court of Appeals in "Spouses Alfredo and
Encarnacion Ching vs. Ayala Investment and
Development Corporation, et. al.," docketed as CA-G.R.
CV No. 29632,1 upholding the decision of the Regional
Trial Court of Pasig, Branch 168, which ruled that the
conjugal partnership of gains of respondents-spouses
Alfredo and Encarnacion Ching is not liable for the
payment of the debts secured by respondent-husband
Alfredo Ching.
A chronology of the essential antecedent facts is
necessary for a clear understanding of the case at bar.
Philippine Blooming Mills (hereinafter referred to as PBM)
obtained a P50,300,000.00 loan from petitioner Ayala
Investment and Development Corporation (hereinafter
referred to as AIDC). As added security for the credit line
extended to PBM, respondent Alfredo Ching, Executive
Vice President of PBM, executed security agreements on
December 10, 1980 and on March 20, 1981 making
himself jointly and severally answerable with PBM's
indebtedness to AIDC.
PBM failed to pay the loan. Thus, on July 30, 1981, AIDC
filed a case for sum of money against PBM and
respondent-husband Alfredo Ching with the then Court of
First Instance of Rizal (Pasig), Branch VIII, entitled "Ayala
Investment and Development Corporation vs. Philippine
Blooming Mills and Alfredo Ching," docketed as Civil
Case No. 42228.
After trial, the court rendered judgment ordering PBM and
respondent-husband Alfredo Ching to jointly and severally
pay AIDC the principal amount of P50,300,000.00 with
interests.
Pending appeal of the judgment in Civil Case No. 42228,
upon motion of AIDC, the lower court issued a writ of
execution pending appeal. Upon AIDC's putting up of an
P8,000,000.00 bond, a writ of execution dated May 12,
1982 was issued. Thereafter, petitioner Abelardo
Magsajo, Sr., Deputy Sheriff of Rizal and appointed sheriff
in Civil Case No. 42228, caused the issuance and service
upon respondents-spouses of a notice of sheriff sale
dated May 20, 1982 on three (3) of their conjugal
properties. Petitioner Magsajo then scheduled the auction
sale of the properties levied.
On June 9, 1982, private respondents filed a case of
injunction against petitioners with the then Court of First
Instance of Rizal (Pasig), Branch XIII, to enjoin the auction
sale alleging that petitioners cannot enforce the judgment
against the conjugal partnership levied on the ground that,
among others, the subject loan did not redound to the
benefit of the said conjugal partnership. 2 Upon
application of private respondents, the lower court issued
a temporary restraining order to prevent petitioner
Magsajo from proceeding with the enforcement of the writ
of execution and with the sale of the said properties at
public auction.
AIDC filed a petition for certiorari before the Court of
Appeals,3 questioning the order of the lower court
enjoining the sale. Respondent Court of Appeals issued a
Temporary Restraining Order on June 25, 1982, enjoining
the lower court4 from enforcing its Order of June 14, 1982,
thus paving the way for the scheduled auction sale of
respondents-spouses conjugal properties.
On June 25, 1982, the auction sale took place. AIDC
being the only bidder, was issued a Certificate of Sale by
petitioner Magsajo, which was registered on July 2, 1982.
Upon expiration of the redemption period, petitioner
sheriff issued the final deed of sale on August 4, 1982
which was registered on August 9, 1983.
In the meantime, the respondent court, on August 4, 1982,
decided CA-G.R. SP No. 14404, in this manner:
WHEREFORE, the petition for certiorari in this case is
granted and the challenged order of the respondent
Judge dated June 14, 1982 in Civil Case No. 46309 is
hereby set aside and nullified. The same petition insofar
as it seeks to enjoin the respondent Judge from
proceeding with Civil Case No. 46309 is, however,
denied. No pronouncement is here made as to costs. . .
.5
On September 3, 1983, AIDC filed a motion to dismiss the
petition for injunction filed before Branch XIII of the CFI of
Rizal (Pasig) on the ground that the same had become
moot and academic with the consummation of the sale.
Respondents filed their opposition to the motion arguing,
among others, that where a third party who claim is
ownership of the property attached or levied upon, a
different legal situation is presented; and that in this case,
two (2) of the real properties are actually in the name of
Encarnacion Ching, a non-party to Civil Case No. 42228.
The lower court denied the motion to dismiss. Hence, trial
on the merits proceeded. Private respondents presented
several witnesses. On the other hand, petitioners did not
present any evidence.
On September 18, 1991, the trial court promulgated its
decision declaring the sale on execution null and void.
Petitioners appealed to the respondent court, which was
docketed as CA-G.R. CV No. 29632.
On April 14, 1994, the respondent court promulgated the
assailed decision, affirming the decision of the regional
trial court. It held that:
The loan procured from respondent-appellant AIDC was
for the advancement and benefit of Philippine Blooming
Mills and not for the benefit of the conjugal partnership of
petitioners-appellees.
xxx xxx xxx
As to the applicable law, whether it is Article 161 of the
New Civil Code or Article 1211 of the Family Code-suffice
it to say that the two provisions are substantially the same.
Nevertheless, We agree with the trial court that the Family
Code is the applicable law on the matter . . . . . . .
Article 121 of the Family Code provides that "The conjugal
partnership shall be liable for: . . . (2) All debts and
obligations contracted during the marriage by the
designated Administrator-Spouse for the benefit of the
conjugal partnership of gains . . . ." The burden of proof
that the debt was contracted for the benefit of the conjugal
partnership of gains, lies with the creditor-party litigant
claiming as such. In the case at bar, respondent-appellant
AIDC failed to prove that the debt was contracted by
appellee-husband, for the benefit of the conjugal
partnership of gains.
The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is
hereby rendered DISMISSING the appeal. The decision
of the Regional Trial Court is AFFIRMED in toto.6
Petitioner filed a Motion for Reconsideration which was
denied by the respondent court in a Resolution dated
November 28, 1994.7
Hence, this petition for review. Petitioner contends that
the "respondent court erred in ruling that the conjugal
partnership of private respondents is not liable for the
obligation by the respondent-husband."
Specifically, the errors allegedly committed by the
respondent court are as follows:
I. RESPONDENT COURT ERRED IN RULING THAT
THE OBLIGATION INCURRED RESPONDENT
HUSBAND DID NOT REDOUND TO THE BENEFIT OF
THE CONJUGAL PARTNERSHIP OF THE PRIVATE
RESPONDENT.
II. RESPONDENT COURT ERRED IN RULING THAT
THE ACT OF RESPONDENT HUSBAND IN SECURING
THE SUBJECT LOAN IS NOT PART OF HIS INDUSTRY,
BUSINESS OR CAREER FROM WHICH HE SUPPORTS
HIS FAMILY.
Petitioners in their appeal point out that there is no need
to prove that actual benefit redounded to the benefit of the
partnership; all that is necessary, they say, is that the
transaction was entered into for the benefit of the conjugal
partnership. Thus, petitioners aver that:
The wordings of Article 161 of the Civil Code is very clear:
for the partnership to be held liable, the husband must
have contracted the debt "for the benefit of the
partnership, thus:
Art. 161. The conjugal partnership shall be liable for:
1) all debts and obligations contracted by the husband for
the benefit of the conjugal partnership . . . .
There is a difference between the phrases: "redounded to
the benefit of" or "benefited from" (on the one hand) and
"for the benefit of (on the other). The former require that
actual benefit must have been realized; the latter requires
only that the transaction should be one which normally
would produce benefit to the partnership, regardless of
whether or not actual benefit accrued.8
We do not agree with petitioners that there is a difference
between the terms "redounded to the benefit of" or
"benefited from" on the one hand; and "for the benefit of"
on the other. They mean one and the same thing. Article
161 (1) of the Civil Code and Article 121 (2) of the Family
Code are similarly worded, i.e., both use the term "for the
benefit of." On the other hand, Article 122 of the Family
Code provides that "The payment of personal debts by the
husband or the wife before or during the marriage shall
not be charged to the conjugal partnership except insofar
as they redounded to the benefit of the family." As can be
seen, the terms are used interchangeably.
Petitioners further contend that the ruling of the
respondent court runs counter to the pronouncement of
this Court in the case of Cobb-Perez vs. Lantin,9 that the
husband as head of the family and as administrator of the
conjugal partnership is presumed to have contracted
obligations for the benefit of the family or the conjugal
partnership.
Contrary to the contention of the petitioners, the case of
Cobb-Perez is not applicable in the case at bar. This Court
has, on several instances, interpreted the term "for the
benefit of the conjugal partnership."
In the cases of Javier vs. Osmeña, 10 Abella de Diaz
vs. Erlanger & Galinger, Inc., 11 Cobb-Perez
12
vs. Lantin and G-Tractors, Inc. vs. Court of
Appeals, 13 cited by the petitioners, we held that:
The debts contracted by the husband during the marriage
relation, for and in the exercise of the industry or
profession by which he contributes toward the support of
his family, are not his personal and private debts, and the
products or income from the wife's own property, which,
like those of her husband's, are liable for the payment of
the marriage expenses, cannot be excepted from the
payment of such debts. (Javier)
The husband, as the manager of the partnership (Article
1412, Civil Code), has a right to embark the partnership
in an ordinary commercial enterprise for gain, and the fact
that the wife may not approve of a venture does not make
it a private and personal one of the husband. (Abella de
Diaz)
Debts contracted by the husband for and in the exercise
of the industry or profession by which he contributes to
the support of the family, cannot be deemed to be his
exclusive and private debts. (Cobb-Perez).
. . . if he incurs an indebtedness in the legitimate pursuit
of his career or profession or suffers losses in a legitimate
business, the conjugal partnership must equally bear the
indebtedness and the losses, unless he deliberately acted
to the prejudice of his family. (G-Tractors)
However, in the cases of Ansaldo vs. Sheriff of Manila,
Fidelity Insurance & Luzon Insurance Co.,14 Liberty
Insurance Corporation vs. Banuelos, 15 and Luzon Surety
Inc. vs. De Garcia, 16 cited by the respondents, we ruled
that:
The fruits of the paraphernal property which form part of
the assets of the conjugal partnership, are subject to the
payment of the debts and expenses of the spouses, but
not to the payment of the personal obligations (guaranty
agreements) of the husband, unless it be proved that such
obligations were productive of some benefit to the family."
(Ansaldo; parenthetical phrase ours.)
When there is no showing that the execution of an
indemnity agreement by the husband redounded to the
benefit of his family, the undertaking is not a conjugal debt
but an obligation personal to him. (Liberty Insurance)
In the most categorical language, a conjugal partnership
under Article 161 of the new Civil Code is liable only for
such "debts and obligations contracted by the husband for
the benefit of the conjugal partnership." There must be the
requisite showing then of some advantage which clearly
accrued to the welfare of the spouses. Certainly, to make
a conjugal partnership respond for a liability that should
appertain to the husband alone is to defeat and frustrate
the avowed objective of the new Civil Code to show the
utmost concern for the solidarity and well-being of the
family as a unit. The husband, therefore, is denied the
power to assume unnecessary and unwarranted risks to
the financial stability of the conjugal partnership. (Luzon
Surety, Inc.)
From the foregoing jurisprudential rulings of this Court, we
can derive the following conclusions:
(A) If the husband himself is the principal obligor in the
contract, i.e., he directly received the money and services
to be used in or for his own business or his own
profession, that contract falls within the term . . . .
obligations for the benefit of the conjugal partnership."
Here, no actual benefit may be proved. It is enough that
the benefit to the family is apparent at the time of the
signing of the contract. From the very nature of the
contract of loan or services, the family stands to benefit
from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if
in the end, his business or profession fails or does not
succeed. Simply stated, where the husband contracts
obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound
to the benefit of the conjugal partnership.
(B) On the other hand, if the money or services are given
to another person or entity, and the husband acted only
as a surety or guarantor, that contract cannot, by itself,
alone be categorized as falling within the context of
"obligations for the benefit of the conjugal partnership."
The contract of loan or services is clearly for the benefit of
the principal debtor and not for the surety or his family. No
presumption can be inferred that, when a husband enters
into a contract of surety or accommodation agreement, it
is "for the benefit of the conjugal partnership." Proof must
be presented to establish benefit redounding to the
conjugal partnership.
Thus, the distinction between the Cobb-Perez case, and
we add, that of the three other companion cases, on the
one hand, and that of Ansaldo, Liberty Insurance and
Luzon Surety, is that in the former, the husband
contracted the obligation for his own business; while in the
latter, the husband merely acted as a surety for the loan
contracted by another for the latter's business.
The evidence of petitioner indubitably show that co-
respondent Alfredo Ching signed as surety for the P50M
loan contracted on behalf of PBM. petitioner should have
adduced evidence to prove that Alfredo Ching's acting as
surety redounded to the benefit of the conjugal
partnership. The reason for this is as lucidly explained by
the respondent court:
The loan procured from respondent-appellant AIDC was
for the advancement and benefit of Philippine Blooming
Mills and not for the benefit of the conjugal partnership of
petitioners-appellees. Philippine Blooming Mills has a
personality distinct and separate from the family of
petitioners-appellees — this despite the fact that the
members of the said family happened to be stockholders
of said corporate entity.
xxx xxx xxx
. . . . The burden of proof that the debt was contracted for
the benefit of the conjugal partnership of gains, lies with
the creditor-party litigant claiming as such. In the case at
bar, respondent-appellant AIDC failed to prove that the
debt was contracted by appellee-husband, for the benefit
of the conjugal partnership of gains. What is apparent
from the facts of the case is that the judgment debt was
contracted by or in the name of the Corporation Philippine
Blooming Mills and appellee-husband only signed as
surety thereof. The debt is clearly a corporate debt and
respondent-appellant's right of recourse against appellee-
husband as surety is only to the extent of his corporate
stockholdings. It does not extend to the conjugal
partnership of gains of the family of petitioners-appellees.
. . . . . .17
Petitioners contend that no actual benefit need accrue to
the conjugal partnership. To support this contention, they
cite Justice J.B.L. Reyes' authoritative opinion in the
Luzon Surety Company case:
I concur in the result, but would like to make of record that,
in my opinion, the words "all debts and obligations
contracted by the husband for the benefit of the conjugal
partnership" used in Article 161 of the Civil Code of the
Philippines in describing the charges and obligations for
which the conjugal partnership is liable do not require that
actual profit or benefit must accrue to the conjugal
partnership from the husband's transaction; but it suffices
that the transaction should be one that normally would
produce such benefit for the partnership. This is the ratio
behind our ruling in Javier vs. Osmeña, 34 Phil. 336, that
obligations incurred by the husband in the practice of his
profession are collectible from the conjugal partnership.
The aforequoted concurring opinion agreed with the
majority decision that the conjugal partnership should not
be made liable for the surety agreement which was clearly
for the benefit of a third party. Such opinion merely
registered an exception to what may be construed as a
sweeping statement that in all cases actual profit or
benefit must accrue to the conjugal partnership. The
opinion merely made it clear that no actual benefits to the
family need be proved in some cases such as in the Javier
case. There, the husband was the principal obligor
himself. Thus, said transaction was found to be "one that
would normally produce . . . benefit for the partnership."
In the later case of G-Tractors, Inc., the husband was also
the principal obligor — not merely the surety. This latter
case, therefore, did not create any precedent. It did not
also supersede the Luzon Surety Company case, nor any
of the previous accommodation contract cases, where
this Court ruled that they were for the benefit of third
parties.
But it could be argued, as the petitioner suggests, that
even in such kind of contract of accommodation, a benefit
for the family may also result, when the guarantee is in
favor of the husband's employer.
In the case at bar, petitioner claims that the benefits the
respondent family would reasonably anticipate were the
following:
(a) The employment of co-respondent Alfredo Ching
would be prolonged and he would be entitled to his
monthly salary of P20,000.00 for an extended length of
time because of the loan he guaranteed;
(b) The shares of stock of the members of his family would
appreciate if the PBM could be rehabilitated through the
loan obtained;
(c) His prestige in the corporation would be enhanced and
his career would be boosted should PBM survive because
of the loan.
However, these are not the benefits contemplated by
Article 161 of the Civil Code. The benefits must be one
directly resulting from the loan. It cannot merely be a by-
product or a spin-off of the loan itself.
In all our decisions involving accommodation contracts of
the husband, 18 we underscored the requirement that:
"there must be the requisite showing . . . of some
advantage which clearly accrued to the welfare of the
spouses" or "benefits to his family" or "that such
obligations are productive of some benefit to the family."
Unfortunately, the petition did not present any proof to
show: (a) Whether or not the corporate existence of PBM
was prolonged and for how many months or years; and/or
(b) Whether or not the PBM was saved by the loan and its
shares of stock appreciated, if so, how much and how
substantial was the holdings of the Ching family.
Such benefits (prospects of longer employment and
probable increase in the value of stocks) might have been
already apparent or could be anticipated at the time the
accommodation agreement was entered into. But would
those "benefits" qualify the transaction as one of the
"obligations . . . for the benefit of the conjugal
partnership"? Are indirect and remote probable benefits,
the ones referred to in Article 161 of the Civil Code? The
Court of Appeals in denying the motion for
reconsideration, disposed of these questions in the
following manner:
No matter how one looks at it, the debt/credit
respondents-appellants is purely a corporate debt granted
to PBM, with petitioner-appellee-husband merely signing
as surety. While such petitioner-appellee-husband, as
such surety, is solidarily liable with the principal debtor
AIDC, such liability under the Civil Code provisions is
specifically restricted by Article 122 (par. 1) of the Family
Code, so that debts for which the husband is liable may
not be charged against conjugal partnership properties.
Article 122 of the Family Code is explicit — "The payment
of personal debts contracted by the husband or the wife
before or during the marriage shall not be charged to the
conjugal partnership except insofar as they redounded to
the benefit of the family.
Respondents-appellants insist that the corporate debt in
question falls under the exception laid down in said Article
122 (par. one). We do not agree. The loan procured from
respondent-appellant AIDC was for the sole advancement
and benefit of Philippine Blooming Mills and not for the
benefit of the conjugal partnership of petitioners-
appellees.
. . . appellee-husband derives salaries, dividends benefits
from Philippine Blooming Mills (the debtor corporation),
only because said husband is an employee of said PBM.
These salaries and benefits, are not the "benefits"
contemplated by Articles 121 and 122 of the Family Code.
The "benefits" contemplated by the exception in Article
122 (Family Code) is that benefit derived directly from the
use of the loan. In the case at bar, the loan is a corporate
loan extended to PBM and used by PBM itself, not by
petitioner-appellee-husband or his family. The alleged
benefit, if any, continuously harped by respondents-
appellants, are not only incidental but also speculative. 19
We agree with the respondent court. Indeed, considering
the odds involved in guaranteeing a large amount
(P50,000,000.00) of loan, the probable prolongation of
employment in PBM and increase in value of its stocks,
would be too small to qualify the transaction as one "for
the benefit" of the surety's family. Verily, no one could say,
with a degree of certainty, that the said contract is even
"productive of some benefits" to the conjugal partnership.
We likewise agree with the respondent court (and this
view is not contested by the petitioners) that the
provisions of the Family Code is applicable in this case.
These provisions highlight the underlying concern of the
law for the conservation of the conjugal partnership; for
the husband's duty to protect and safeguard, if not
augment, not to dissipate it.
This is the underlying reason why the Family Code
clarifies that the obligations entered into by one of the
spouses must be those that redounded to the benefit of
the family and that the measure of the partnership's
liability is to "the extent that the family is benefited."20
These are all in keeping with the spirit and intent of the
other provisions of the Civil Code which prohibits any of
the spouses to donate or convey gratuitously any part of
the conjugal property. 21 Thus, when co-respondent
Alfredo Ching entered into a surety agreement he, from
then on, definitely put in peril the conjugal property (in this
case, including the family home) and placed it in danger
of being taken gratuitously as in cases of donation.
In the second assignment of error, the petitioner
advances the view that acting as surety is part of the
business or profession of the respondent-husband.
This theory is new as it is novel.
The respondent court correctly observed that:
Signing as a surety is certainly not an exercise of an
industry or profession, hence the cited cases of Cobb-
Perez vs. Lantin; Abella de Diaz vs. Erlanger &
Galinger; G-Tractors, Inc. vs. CAdo not apply in the
instant case. Signing as a surety is not embarking in a
business.22
We are likewise of the view that no matter how often an
executive acted or was persuaded to act, as a surety for
his own employer, this should not be taken to mean that
he had thereby embarked in the business of suretyship or
guaranty.
This is not to say, however, that we are unaware that
executives are often asked to stand as surety for their
company's loan obligations. This is especially true if the
corporate officials have sufficient property of their own;
otherwise, their spouses' signatures are required in order
to bind the conjugal partnerships.
The fact that on several occasions the lending institutions
did not require the signature of the wife and the husband
signed alone does not mean that being a surety became
part of his profession. Neither could he be presumed to
have acted for the conjugal partnership.
Article 121, paragraph 3, of the Family Code is emphatic
that the payment of personal debts contracted by the
husband or the wife before or during the marriage shall
not be charged to the conjugal partnership except to the
extent that they redounded to the benefit of the family.
Here, the property in dispute also involves the family
home. The loan is a corporate loan not a personal one.
Signing as a surety is certainly not an exercise of an
industry or profession nor an act of administration for the
benefit of the family.
On the basis of the facts, the rules, the law and equity, the
assailed decision should be upheld as we now uphold it.
This is, of course, without prejudice to petitioner's right to
enforce the obligation in its favor against the PBM receiver
in accordance with the rehabilitation program and
payment schedule approved or to be approved by the
Securities & Exchange Commission.
WHEREFORE, the petition for review should be, as it is
hereby, DENIED for lack of merit.
SO ORDERED.
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION
CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED
BANKING CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised
Rules of Court, assails the Decision1 of the Court of
Appeals (CA) dated November 27, 1995 in CA-G.R. SP
No. 33585, as well as the Resolution2 on April 2, 1996
denying the petitioners’ motion for reconsideration. The
impugned decision granted the private respondent’s
petition for certiorariand set aside the Orders of the trial
court dated December 15, 1993 3 and February 17,
19944 nullifying the attachment of 100,000 shares of
stocks of the Citycorp Investment Philippines under the
name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills
Company, Inc. (PBMCI) obtained a loan of ₱9,000,000.00
from the Allied Banking Corporation (ABC). By virtue of
this loan, the PBMCI, through its Executive Vice-
President Alfredo Ching, executed a promissory note for
the said amount promising to pay on December 22, 1978
at an interest rate of 14% per annum.5 As added security
for the said loan, on September 28, 1978, Alfredo Ching,
together with Emilio Tañedo and Chung Kiat Hua,
executed a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee the
payment of all the PBMCI obligations owing the ABC to
the extent of ₱38,000,000.00.6 The loan was
subsequently renewed on various dates, the last renewal
having been made on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended
another loan to the PBMCI in the amount of
₱13,000,000.00 payable in eighteen months at 16%
interest per annum. As in the previous loan, the PBMCI,
through Alfredo Ching, executed a promissory note to
evidence the loan maturing on June 29, 1981.8 This was
renewed once for a period of one month.9
The PBMCI defaulted in the payment of all its loans.
Hence, on August 21, 1981, the ABC filed a complaint for
sum of money with prayer for a writ of preliminary
attachment against the PBMCI to collect the
₱12,612,972.88 exclusive of interests, penalties and
other bank charges. Impleaded as co-defendants in the
complaint were Alfredo Ching, Emilio Tañedo and Chung
Kiat Hua in their capacity as sureties of the PBMCI.
The case was docketed as Civil Case No. 142729 in the
Regional Trial Court of Manila, Branch XVIII.10 In its
application for a writ of preliminary attachment, the ABC
averred that the "defendants are guilty of fraud in incurring
the obligations upon which the present action is
brought11 in that they falsely represented themselves to
be in a financial position to pay their obligation upon
maturity thereof."12 Its supporting affidavit stated, inter
alia, that the "[d]efendants have removed or disposed of
their properties, or [are] ABOUT to do so, with intent to
defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial
court issued an Order denying the ABC’s application for a
writ of preliminary attachment. The trial court decreed that
the grounds alleged in the application and that of its
supporting affidavit "are all conclusions of fact and of law"
which do not warrant the issuance of the writ prayed
for.14On motion for reconsideration, however, the trial
court, in an Order dated September 14, 1981,
reconsidered its previous order and granted the ABC’s
application for a writ of preliminary attachment on a bond
of ₱12,700,000. The order, in relevant part, stated:
With respect to the second ground relied upon for the
grant of the writ of preliminary attachment ex-parte, which
is the alleged disposal of properties by the defendants
with intent to defraud creditors as provided in Sec. 1(e) of
Rule 57 of the Rules of Court, the affidavits can only
barely justify the issuance of said writ as against the
defendant Alfredo Ching who has allegedly bound himself
jointly and severally to pay plaintiff the defendant
corporation’s obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue
as against the defendant Alfredo Ching requiring the
sheriff of this Court to attach all the properties of said
Alfredo Ching not exceeding ₱12,612,972.82 in value,
which are within the jurisdiction of this Court and not
exempt from execution upon, the filing by plaintiff of a
bond duly approved by this Court in the sum of Twelve
Million Seven Hundred Thousand Pesos
(₱12,700,000.00) executed in favor of the defendant
Alfredo Ching to secure the payment by plaintiff to him of
all the costs which may be adjudged in his favor and all
damages he may sustain by reason of the attachment if
the court shall finally adjudge that the plaintiff was not
entitled thereto.
SO ORDERED.15
Upon the ABC’s posting of the requisite bond, the trial
court issued a writ of preliminary attachment.
Subsequently, summonses were served on the
defendants,16 save Chung Kiat Hua who could not be
found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo
Ching jointly filed a petition for suspension of payments
with the Securities and Exchange Commission (SEC),
docketed as SEC Case No. 2250, at the same time
seeking the PBMCI’s rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the
PBMCI’s business, including its assets and liabilities,
under rehabilitation receivership, and ordered that "all
actions for claims listed in Schedule "A" of the petition
pending before any court or tribunal are hereby
suspended in whatever stage the same may be until
further orders from the Commission."18 The ABC was
among the PBMCI’s creditors named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and
Alfredo Ching jointly filed a Motion to Dismiss and/or
motion to suspend the proceedings in Civil Case No.
142729 invoking the PBMCI’s pending application for
suspension of payments (which Ching co-signed) and
over which the SEC had already assumed
jurisdiction.19 On February 4, 1983, the ABC filed its
Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of
the trial court levied on attachment the 100,000 common
shares of Citycorp stocks in the name of Alfredo Ching. 21
Thereafter, in an Order dated September 16, 1983, the
trial court partially granted the aforementioned motion by
suspending the proceedings only with respect to the
PBMCI. It denied Ching’s motion to dismiss the
complaint/or suspend the proceedings and pointed out
that P.D. No. 1758 only concerns the activities of
corporations, partnerships and associations and was
never intended to regulate and/or control activities of
individuals. Thus, it directed the individual defendants to
file their answers.22
Instead of filing an answer, Ching filed on January 14,
1984 a Motion to Suspend Proceedings on the same
ground of the pendency of SEC Case No. 2250. This
motion met the opposition from the ABC.23
On January 20, 1984, Tañedo filed his Answer with
counterclaim and cross-claim.24 Ching eventually filed his
Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers,
Ching filed an Omnibus Motion,26 again praying for the
dismissal of the complaint or suspension of the
proceedings on the ground of the July 9, 1982 Injunctive
Order issued in SEC Case No. 2250. He averred that as
a surety of the PBMCI, he must also necessarily benefit
from the defenses of his principal. The ABC opposed
Ching’s omnibus motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus
Motion27 praying for the dismissal of the complaint,
arguing that the ABC had "abandoned and waived" its
right to proceed against the continuing guaranty by its act
of resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce
the amount of his preliminary attachment bond from
₱12,700,000 to ₱6,350,000.28 Alfredo Ching opposed the
motion,29 but on April 2, 1987, the court issued an Order
setting the incident for further hearing on May 28, 1987 at
8:30 a.m. for the parties to adduce evidence on the actual
value of the properties of Alfredo Ching levied on by the
sheriff.30
On March 2, 1988, the trial court issued an Order granting
the motion of the ABC and rendered the attachment bond
of ₱6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted
by her husband Alfredo Ching, filed a Motion to Set Aside
the levy on attachment. She alleged inter alia that the
100,000 shares of stocks levied on by the sheriff were
acquired by her and her husband during their marriage
out of conjugal funds after the Citycorp Investment
Philippines was established in 1974. Furthermore, the
indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by
petitioner Alfredo Ching for the account of PBMCI did not
redound to the benefit of the conjugal partnership. She,
likewise, alleged that being the wife of Alfredo Ching, she
was a third-party claimant entitled to file a motion for the
release of the properties.32 She attached therewith a copy
of her marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash
preliminary attachment and/or motion to expunge records,
contending that:
2.1 The supposed movant, Encarnacion T. Ching,
is not a party to this present case; thus, she has
no personality to file any motion before this
Honorable Court;
2.2 Said supposed movant did not file any Motion
for Intervention pursuant to Section 2, Rule 12 of
the Rules of Court;
2.3 Said Motion cannot even be construed to be
in the nature of a Third-Party Claim conformably
with Sec. 14, Rule 57 of the Rules of Court.
3. Furthermore, assuming in gracia argumenti that the
supposed movant has the required personality, her
Motion cannot be acted upon by this Honorable Court as
the above-entitled case is still in the archives and the
proceedings thereon still remains suspended. And there
is no previous Motion to revive the same.34
The ABC also alleged that the motion was barred by
prescription or by laches because the shares of stocks
were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching
adduced in evidence her marriage contract to Alfredo
Ching to prove that they were married on January 8,
1960;35 the articles of incorporation of Citycorp
Investment Philippines dated May 14, 1979;36 and, the
General Information Sheet of the corporation showing that
petitioner Alfredo Ching was a member of the Board of
Directors of the said corporation and was one of its top
twenty stockholders.
On December 10, 1993, the Spouses Ching filed their
Reply/Opposition to the motion to expunge records.
Acting on the aforementioned motion, the trial court
issued on December 15, 1993 an Order37 lifting the writ of
preliminary attachment on the shares of stocks and
ordering the sheriff to return the said stocks to the
petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary
Attachment, dated November 9, 1993, is hereby granted.
Let the writ of preliminary attachment subject matter of
said motion, be quashed and lifted with respect to the
attached 100,000 common shares of stock of Citycorp
Investment Philippines in the name of the defendant
Alfredo Ching, the said shares of stock to be returned to
him and his movant-spouse by Deputy Sheriff Apolonio A.
Golfo who effected the levy thereon on July 26, 1983, or
by whoever may be presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for
the reconsideration of the order but denied the same on
February 17, 1994. The petitioner bank forthwith filed a
petition for certiorari with the CA, docketed as CA-G.R.
SP No. 33585, for the nullification of the said order of the
court, contending that:
1. The respondent Judge exceeded his authority
thereby acted without jurisdiction in taking
cognizance of, and granting a "Motion" filed by a
complete stranger to the case.
2. The respondent Judge committed a grave
abuse of discretion in lifting the writ of preliminary
attachment without any basis in fact and in law,
and contrary to established jurisprudence on the
matter.39
On November 27, 1995, the CA rendered judgment
granting the petition and setting aside the assailed orders
of the trial court, thus:
WHEREFORE, premises considered, the petition is
GRANTED, hereby setting aside the questioned orders
(dated December 15, 1993 and February 17, 1994) for
being null and void.
SO ORDERED.40
The CA sustained the contention of the private
respondent and set aside the assailed orders. According
to the CA, the RTC deprived the private respondent of its
right to file a bond under Section 14, Rule 57 of the Rules
of Court. The petitioner Encarnacion T. Ching was not a
party in the trial court; hence, she had no right of action to
have the levy annulled with a motion for that purpose. Her
remedy in such case was to file a separate action against
the private respondent to nullify the levy on the 100,000
Citycorp shares of stocks. The court stated that even
assuming that Encarnacion T. Ching had the right to file
the said motion, the same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA
ruled that the presumption in Article 160 of the New Civil
Code shall not apply where, as in this case, the petitioner-
spouses failed to prove the source of the money used to
acquire the shares of stock. It held that the levied shares
of stocks belonged to Alfredo Ching, as evidenced by the
fact that the said shares were registered in the corporate
books of Citycorp solely under his name. Thus, according
to the appellate court, the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction
in issuing the assailed orders. The petitioners’ motion for
reconsideration was denied by the CA in a Resolution
dated April 2, 1996.
The petitioner-spouses filed the instant petition for review
on certiorari, asserting that the RTC did not commit any
grave abuse of discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders in their favor;
hence, the CA erred in reversing the same. They aver that
the source of funds in the acquisition of the levied shares
of stocks is not the controlling factor when invoking the
presumption of the conjugal nature of stocks under Art.
160,42 and that such presumption subsists even if the
property is registered only in the name of one of the
spouses, in this case, petitioner Alfredo
Ching.43 According to the petitioners, the suretyship
obligation was not contracted in the pursuit of the
petitioner-husband’s profession or business.44 And,
contrary to the ruling of the CA, where conjugal assets are
attached in a collection suit on an obligation contracted by
the husband, the wife should exhaust her motion to quash
in the main case and not file a separate
suit.45 Furthermore, the petitioners contend that under Art.
125 of the Family Code, the petitioner-husband’s
gratuitous suretyship is null and void ab initio,46 and that
the share of one of the spouses in the conjugal
partnership remains inchoate until the dissolution and
liquidation of the partnership.47
In its comment on the petition, the private respondent
asserts that the CA correctly granted its petition for
certiorari nullifying the assailed order. It contends that the
CA correctly relied on the ruling of this Court in Wong v.
Intermediate Appellate Court. Citing Cobb-Perez v. Lantin
and G-Tractors, Inc. v. Court of Appeals, the private
respondent alleges that the continuing guaranty and
suretyship executed by petitioner Alfredo Ching in pursuit
of his profession or business. Furthermore, according to
the private respondent, the right of the petitioner-wife to a
share in the conjugal partnership property is merely
inchoate before the dissolution of the partnership; as
such, she had no right to file the said motion to quash the
levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the
petitioner-wife has the right to file the motion to quash the
levy on attachment on the 100,000 shares of stocks in the
Citycorp Investment Philippines; (b) whether or not the
RTC committed a grave abuse of its discretion amounting
to excess or lack of jurisdiction in issuing the assailed
orders.
On the first issue, we agree with the petitioners that the
petitioner-wife had the right to file the said motion,
although she was not a party in Civil Case No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only
those properties of the defendant against whom a writ of
attachment has been issued by the court. When the sheriff
erroneously levies on attachment and seizes the property
of a third person in which the said defendant holds no right
or interest, the superior authority of the court which has
authorized the execution may be invoked by the
aggrieved third person in the same case. Upon
application of the third person, the court shall order a
summary hearing for the purpose of determining whether
the sheriff has acted rightly or wrongly in the performance
of his duties in the execution of the writ of attachment,
more specifically if he has indeed levied on attachment
and taken hold of property not belonging to the plaintiff. If
so, the court may then order the sheriff to release the
property from the erroneous levy and to return the same
to the third person. In resolving the motion of the third
party, the court does not and cannot pass upon the
question of the title to the property with any character of
finality. It can treat the matter only insofar as may be
necessary to decide if the sheriff has acted correctly or
not. If the claimant’s proof does not persuade the court of
the validity of the title, or right of possession thereto, the
claim will be denied by the court. The aggrieved third party
may also avail himself of the remedy of "terceria" by
executing an affidavit of his title or right of possession over
the property levied on attachment and serving the same
to the office making the levy and the adverse party. Such
party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure,
which should be a totally separate and distinct action from
the former case. The above-mentioned remedies are
cumulative and any one of them may be resorted to by
one third-party claimant without availing of the other
remedies.50
In this case, the petitioner-wife filed her motion to set
aside the levy on attachment of the 100,000 shares of
stocks in the name of petitioner-husband claiming that the
said shares of stocks were conjugal in nature; hence, not
liable for the account of her husband under his continuing
guaranty and suretyship agreement with the PBMCI. The
petitioner-wife had the right to file the motion for said
relief.
On the second issue, we find and so hold that the CA
erred in setting aside and reversing the orders of the RTC.
The private respondent, the petitioner in the CA, was
burdened to prove that the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction.
The tribunal acts without jurisdiction if it does not have the
legal purpose to determine the case; there is excess of
jurisdiction where the tribunal, being clothed with the
power to determine the case, oversteps its authority as
determined by law. There is grave abuse of discretion
where the tribunal acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its
judgment and is equivalent to lack of jurisdiction.51
It was incumbent upon the private respondent to adduce
a sufficiently strong demonstration that the RTC acted
whimsically in total disregard of evidence material to, and
even decide of, the controversy before certiorari will lie. A
special civil action for certiorari is a remedy designed for
the correction of errors of jurisdiction and not errors of
judgment. When a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of its
jurisdiction being exercised when the error is committed.52
After a comprehensive review of the records of the RTC
and of the CA, we find and so hold that the RTC did not
commit any grave abuse of its discretion amounting to
excess or lack of jurisdiction in issuing the assailed
orders.
Article 160 of the New Civil Code provides that all the
properties acquired during the marriage are presumed to
belong to the conjugal partnership, unless it be proved
that it pertains exclusively to the husband, or to the wife.
In Tan v. Court of Appeals,53 we held that it is not even
necessary to prove that the properties were acquired with
funds of the partnership. As long as the properties were
acquired by the parties during the marriage, they are
presumed to be conjugal in nature. In fact, even when the
manner in which the properties were acquired does not
appear, the presumption will still apply, and the properties
will still be considered conjugal. The presumption of the
conjugal nature of the properties acquired during the
marriage subsists in the absence of clear, satisfactory and
convincing evidence to overcome the same.54
In this case, the evidence adduced by the petitioners in
the RTC is that the 100,000 shares of stocks in the
Citycorp Investment Philippines were issued to and
registered in its corporate books in the name of the
petitioner-husband when the said corporation was
incorporated on May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-spouses.
The shares of stocks are, thus, presumed to be the
conjugal partnership property of the petitioners. The
private respondent failed to adduce evidence that the
petitioner-husband acquired the stocks with his exclusive
money.55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp
Investment Philippines solely in the name of the
petitioner-husband does not constitute proof that the
petitioner-husband, not the conjugal partnership, owned
the same.56 The private respondent’s reliance on the
rulings of this Court in Maramba v. Lozano57 and
Associated Insurance & Surety Co., Inc. v. Banzon58 is
misplaced. In the Maramba case, we held that where
there is no showing as to when the property was acquired,
the fact that the title is in the wife’s name alone is
determinative of the ownership of the property. The
principle was reiterated in the Associated Insurance case
where the uncontroverted evidence showed that the
shares of stocks were acquired during the marriage of the
petitioners.
Instead of fortifying the contention of the respondents, the
ruling of this Court in Wong v. Intermediate Appellate
Court59 buttresses the case for the petitioners. In that
case, we ruled that he who claims that property acquired
by the spouses during their marriage is not conjugal
partnership property but belongs to one of them as his
personal property is burdened to prove the source of the
money utilized to purchase the same. In this case, the
private respondent claimed that the petitioner-husband
acquired the shares of stocks from the Citycorp
Investment Philippines in his own name as the owner
thereof. It was, thus, the burden of the private respondent
to prove that the source of the money utilized in the
acquisition of the shares of stocks was that of the
petitioner-husband alone. As held by the trial court, the
private respondent failed to adduce evidence to prove this
assertion.
The CA, likewise, erred in holding that by executing a
continuing guaranty and suretyship agreement with the
private respondent for the payment of the PBMCI loans,
the petitioner-husband was in the exercise of his
profession, pursuing a legitimate business. The appellate
court erred in concluding that the conjugal partnership is
liable for the said account of PBMCI under Article 161(1)
of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2
and 3]60 of the Family Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband
for the benefit of the conjugal partnership, and those
contracted by the wife, also for the same purpose, in the
cases where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty
and suretyship agreement as security for the payment of
the loan obtained by the PBMCI from the private
respondent in the amount of ₱38,000,000. In Ayala
Investment and Development Corp. v. Court of
Appeals,61 this Court ruled "that the signing as surety is
certainly not an exercise of an industry or profession. It is
not embarking in a business. No matter how often an
executive acted on or was persuaded to act as surety for
his own employer, this should not be taken to mean that
he thereby embarked in the business of suretyship or
guaranty."
For the conjugal partnership to be liable for a liability that
should appertain to the husband alone, there must be a
showing that some advantages accrued to the spouses.
Certainly, to make a conjugal partnership responsible for
a liability that should appertain alone to one of the
spouses is to frustrate the objective of the New Civil Code
to show the utmost concern for the solidarity and well
being of the family as a unit. The husband, therefore, is
denied the power to assume unnecessary and
unwarranted risks to the financial stability of the conjugal
partnership.62
In this case, the private respondent failed to prove that the
conjugal partnership of the petitioners was benefited by
the petitioner-husband’s act of executing a continuing
guaranty and suretyship agreement with the private
respondent for and in behalf of PBMCI. The contract of
loan was between the private respondent and the PBMCI,
solely for the benefit of the latter. No presumption can be
inferred from the fact that when the petitioner-husband
entered into an accommodation agreement or a contract
of surety, the conjugal partnership would thereby be
benefited. The private respondent was burdened to
establish that such benefit redounded to the conjugal
partnership.63
It could be argued that the petitioner-husband was a
member of the Board of Directors of PBMCI and was one
of its top twenty stockholders, and that the shares of
stocks of the petitioner-husband and his family would
appreciate if the PBMCI could be rehabilitated through the
loans obtained; that the petitioner-husband’s career
would be enhanced should PBMCI survive because of the
infusion of fresh capital. However, these are not the
benefits contemplated by Article 161 of the New Civil
Code. The benefits must be those directly resulting from
the loan. They cannot merely be a by-product or a spin-
off of the loan itself.64
This is different from the situation where the husband
borrows money or receives services to be used for his
own business or profession. In the Ayala case, we ruled
that it is such a contract that is one within the term
"obligation for the benefit of the conjugal partnership."
Thus:
(A) If the husband himself is the principal obligor in the
contract, i.e., he directly received the money and services
to be used in or for his own business or his own
profession, that contract falls within the term "…
obligations for the benefit of the conjugal partnership."
Here, no actual benefit may be proved. It is enough that
the benefit to the family is apparent at the time of the
signing of the contract. From the very nature of the
contract of loan or services, the family stands to benefit
from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if
in the end, his business or profession fails or does not
succeed. Simply stated, where the husband contracts
obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound
to the benefit of the conjugal partnership.65

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

IN LIGHT OF ALL THE FOREGOING, the petition is

GRANTED. The Decision and Resolution of the Court of
Appeals are SET ASIDE AND REVERSED. The assailed
orders of the RTC are AFFIRMED.

SO ORDERED.
[G.R. NO. 177667 : September 17, 2008]
CLEODIA U. FRANCISCO AND CEAMANTHA U.
FRANCISCO, REPRESENTED BY THEIR
GRANDMOTHER DRA. MAIDA G. URIARTE AS THEIR
ATTORNEY-IN-FACT, Petitioners, v. SPOUSES
JORGE C. GONZALES AND PURIFICACION W.
GONZALES, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in the present petition for review
on certiorari under Rule 45 of the Rules of Court is the
Court of Appeals (CA) Decision dated April 30, 2007,
which affirmed the Regional Trial Court (RTC) Orders
dated June 4, 2003 and July 31, 2003, denying
petitioners' motion to stop execution sale.
Petitioners Cleodia U. Francisco and Ceamantha U.
Francisco are the minor children of Cleodualdo M.
Francisco (Cleodualdo) and Michele Uriarte Francisco
(Michele). In a Partial Decision dated November 29, 2000
rendered by the RTC of Makati, Branch 144, in Civil Case
No. 93-2289 for Declaration of Nullity of Marriage, the
Compromise Agreement entered into by the estranged
couple was approved. The Compromise Agreement
contained in part the following provisions:
7. In their desire to manifest their genuine concern
for their children, Cleodia and Ceamantha,
Cleodualdo and Michelle have voluntarily agreed
to herein set forth their obligations, rights and
responsibilities on matters relating to their
children's support, custody, visitation, as well as
to the dissolution of their conjugal partnership of
gains as follows:
(a) Title and ownership of the conjugal property consisting
of a house and lot located in Ayala Alabang, Muntinlupa,
Metro Manila shall be transferred by way of a deed of
donation to Cleodia and Ceamantha, as co-owners, when
they reach nineteen (19) and eighteen (18) years old,
respectively, subject to the following conditions:
x x x1
The property subject of the Compromise Agreement is a
house and lot covered by Transfer Certificate of Title No.
167907 in the name of Cleodualdo M. Francisco, married
to Michele U. Francisco, with an area of 414 square
meters, and located in 410 Taal St., Ayala Alabang
Village, Muntinlupa City.2
Meanwhile, in a case for Unlawful Detainer with
Preliminary Attachment filed by spouses Jorge C.
Gonzales and Purificacion W. Gonzales (respondents)
against George Zoltan Matrai (Matrai) and Michele, the
Metropolitan Trial Court (MeTC) of Muntinlupa City,
Branch 80, rendered a Decision dated May 10, 2001,
ordering Matrai and Michele to vacate the premises
leased to them located in 264 Lanka Drive, Ayala
Alabang Village, Muntinlupa City, and to pay back rentals,
unpaid telephone bills and attorney's fees.3
Pending appeal with the RTC of Muntinlupa, Branch 256,
an order was issued granting respondents' prayer for the
execution of the MeTC Decision.4 A notice of sale by
execution was then issued by the sheriff covering the real
property under Transfer Certificate of Title No. T-167907
in the name of Cleodualdo M. Francisco, married to
Michele U. Francisco.5
When petitioners' grandmother learned of the scheduled
auction, she, as guardian-in-fact of petitioners, filed with
the RTC an Affidavit of Third Party Claim 6 and a Very
Urgent Motion to Stop Sale by Execution7 but this was
denied in the Order dated June 4, 2003.8 Petitioners'
motion for reconsideration was denied per RTC Order
dated July 31, 2003.9
Petitioners then filed a petition for certiorari with the CA.
Pending resolution by the CA, the RTC issued an Order
dated July 8, 2005, granting respondents' petition for the
issuance of a new certificate of title.10 The RTC also
issued an Order on February 13, 2006, granting
respondents' motion for the issuance of a writ of
possession.11
On April 30, 2007, the CA dismissed the petition, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is
hereby DISMISSED. The Order(s), dated June 4, 2003
and July 31, 2003, of the Regional Trial Court of
Muntinlupa City, Br. 256, in Civil Case No. 01-201,
STAND.
Costs against the Petitioners.
SO ORDERED.12
Hence, herein petition. As prayed for, the Court issued a
temporary restraining order on July 11, 2007, enjoining
respondents, the RTC, the Register of Deeds, and the
Sheriff from implementing or enforcing the RTC Order
dated July 8, 2005, canceling TCT No. 167907 and Order
dated February 13, 2006, issuing a writ of possession,
until further orders from the Court.13
Petitioners argue that: (1) they are the rightful owners of
the property as the Partial Decision issued by the RTC of
Makati in Civil Case No. 93-2289 had already become
final; (2) their parents already waived in their favor their
rights over the property; (3) the adjudged obligation of
Michele in the ejectment case did not redound to the
benefit of the family; (4) Michele's obligation is a joint
obligation between her and Matrai, not joint and
solidary.14
The Court finds that it was grave error for the RTC to
proceed with the execution, levy and sale of the subject
property. The power of the court in executing judgments
extends only to properties unquestionably belonging to
the judgment debtor alone, 15 in the present case to
those belonging to Michele and Matrai. One man's goods
shall not be sold for another man's debts.16
To begin with, the RTC should not have ignored that TCT
No. 167907 is in the name of "Cleodualdo M. Francisco,
married to Michele U. Francisco." On its face, the title
shows that the registered owner of the property is not
Matrai and Michele but Cleodualdo, married to Michele.
This describes the civil status of Cleodualdo at the time
the property was acquired.17
Records show that Cleodualdo and Michele were married
on June 12, 1986, prior to the effectivity of the Family
Code on August 3, 1988. As such, their property relations
are governed by the Civil Code on conjugal partnership of
gains.
The CA acknowledged that ownership of the subject
property is conjugal in nature;18 however, it ruled that
since Michele's obligation was not proven to be a personal
debt, it must be inferred that it is conjugal and redounded
to the benefit of the family, and hence, the property may
be held answerable for it.19
The Court does not agree.
A wife may bind the conjugal partnership only when she
purchases things necessary for the support of the family,
or when she borrows money for that purpose upon her
husband's failure to deliver the needed sum; when
administration of the conjugal partnership is transferred to
the wife by the courts or by the husband; or when the wife
gives moderate donations for charity. Failure to establish
any of these circumstances means that the conjugal asset
may not be bound to answer for the wife's personal
obligation.20 Considering that the foregoing
circumstances are evidently not present in this case as
the liability incurred by Michele arose from a judgment
rendered in an unlawful detainer case against her and her
partner Matrai.
Furthermore, even prior to the issuance of the Notice of
Levy on Execution on November 28, 2001,21 there was
already annotated on the title the following inscription.
Entry No. 23341-42/T-167907 - Nullification of Marriage
By order of the Court RTC, NCR, Branch 144, Makati City
dated July 4, 2001, which become final and executory on
October 18, 2001 declaring the Marriage Contract
between Michelle Uriarte and Cleodualdo M. Francisco,
Jr. is null & void ab initio and title of ownership of the
conjugal property consisting of the above-described
property shall be transferred by way of a Deed of Donation
to Cleodia Michaela U. Francisco and Ceamantha Maica
U. Francisco, as co-owners when they reach nineteen
(19) and eighteen (18) yrs. old to the condition that
Cleodualdo, shall retain usufructuary rights over the
property until he reaches the age of 65 yrs. Old.
Date of instrument - Oct 18, 2001
Date of inscription - Oct 22, 2001.22
This annotation should have put the RTC and the sheriff
on guard, and they should not have proceeded with the
execution of the judgment debt of Michele and Matrai.
While the trial court has the competence to identify and to
secure properties and interest therein held by the
judgment debtor for the satisfaction of a money judgment
rendered against him, such exercise of its authority is
premised on one important fact: that the properties levied
upon, or sought to be levied upon, are
properties unquestionably owned by the judgment
debtor and are not exempt by law from execution.23 Also,
a sheriff is not authorized to attach or levy on property not
belonging to the judgment debtor, and even incurs liability
if he wrongfully levies upon the property of a third person.
A sheriff has no authority to attach the property of any
person under execution except that of the judgment
debtor.24
It should be noted that the judgment debt for which the
subject property was being made to answer was incurred
by Michele and her partner,25 Matrai. Respondents allege
that the lease of the property in Lanka Drive redounded to
the benefit of the family.26 By no stretch of one's
imagination can it be concluded that said debt/obligation
was incurred for the benefit of the conjugal partnership or
that some advantage accrued to the welfare of the family.
In BA Finance Corporation v. Court of Appeals,27 the
Court ruled that the petitioner cannot enforce the
obligation contracted by Augusto Yulo against his
conjugal properties with respondent Lily Yulo because it
was not established that the obligation contracted by the
husband redounded to the benefit of the conjugal
partnership under Article 161 of the Civil Code. The Court
stated:
In the present case, the obligation which the petitioner is
seeking to enforce against the conjugal property
managed by the private respondent Lily Yulo was
undoubtedly contracted by Augusto Yulo for his own
benefit because at the time he incurred the obligation he
had already abandoned his family and had left their
conjugal home. Worse, he made it appear that he was
duly authorized by his wife in behalf of A & L Industries,
to procure such loan from the petitioner. Clearly, to make
A & L Industries liable now for the said loan would be
unjust and contrary to the express provision of the Civil
Code. (Emphasis supplied)
Similarly in this case, Michele, who was then already living
separately from Cleodualdo,28 rented the house in Lanka
Drive for her and Matrai's own benefit. In fact, when they
entered into the lease agreement, Michele and Matrai
purported themselves to be husband and
wife.29 Respondents' bare allegation that petitioners lived
with Michele on the leased property is not sufficient to
support the conclusion that the judgment debt against
Michele and Matrai in the ejectment suit redounded to the
benefit of the family of Michele and Cleodualdo and
petitioners. Thus, in Homeowners Savings and Loan
Bank v. Dailo, the Court stated thus:
respectively, subject to the following conditions:
a.1. Cleodualdo shall retain usufructuary rights over the
property until he reaches the age of 65 years old, with the
following rights and responsibilities:
x x x x32 (Emphasis supplied)
From the foregoing, it is clear that both Michele and
Cleodualdo have waived their title to and ownership of the
house and lot in Taal St. in favor of petitioners. The
property should not have been levied and sold at
execution sale, for lack of legal basis.

x x x Ei incumbit probatio qui dicit, non qui negat (he who
asserts, not he who denies, must prove). Petitioner's
sweeping conclusion that the loan obtained by the late
Marcelino Dailo, Jr. to finance the construction of housing
units without a doubt redounded to the benefit of his
family, without adducing adequate proof, does not
persuade this Court. Other than petitioner's bare
allegation, there is nothing from the records of the case to
compel a finding that, indeed, the loan obtained by the
late Marcelino Dailo, Jr. redounded to the benefit of the
family. Consequently, the conjugal partnership cannot be
held liable for the payment of the principal obligation.30
Verily, the CA committed an error in sustaining the RTC
Orders dated June 4, 2003 and July 31, 2003.
WHEREFORE, the petition is GRANTED. The assailed
Court of Appeals Decision dated April 30, 2007, affirming
RTC Orders dated June 4, 2003 and July 31, 2003, are
hereby NULLIFIED and SET ASIDE. The temporary
restraining order issued by the Court per Resolution of
July 11, 2007 is hereby made PERMANENT.
Costs against respondents.
SO ORDERED.

To hold the property in Taal St. liable for the obligations

of Michele and Matrai would be going against the spirit
and avowed objective of the Civil Code to give the utmost
concern for the solidarity and well-being of the family as a
unit.31

In justifying the levy against the property, the RTC went

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

7. In their desire to manifest their genuine concern

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

(a) Title and ownership of the conjugal property

consisting of a house and lot located in Ayala
Alabang, Muntinlupa, Metro Manila shall be
transferred by way of a deed of donation to Cleodia
and Ceamantha, as co-owners, when they reach
nineteen (19) and eighteen (18) years old,
G.R. No. 145222 April 24, 2009
SPOUSES ROBERTO BUADO and VENUS
BUADO, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, Former
Division, and ROMULO NICOL, Respondents.
DECISION
TINGA, J.:
Before this Court is a petition for certiorari assailing the
Decision1 of the Court of Appeals in CA-G.R. CV No.
47029 and its Resolution denying the motion for
reconsideration thereof.
The case stemmed from the following factual backdrop:
On 30 April 1984, Spouses Roberto and Venus Buado
(petitioners) filed a complaint for damages against Erlinda
Nicol (Erlinda) with Branch 19 of the Regional Trial Court
(RTC) of Bacoor, Cavite, docketed as Civil Case No. 84-
33. Said action originated from Erlinda Nicol’s civil liability
arising from the criminal offense of slander filed against
her by petitioners.
On 6 April 1987, the trial court rendered a decision
ordering Erlinda to pay damages. The dispositive portion
reads:
Wherefore, judgment is hereby rendered in favor of the
plaintiff[s] and against defendant ordering the latter to pay
the former the amount of thirty thousand (₱30,000.00)
pesos as moral damages, five thousand (₱5,000.00)
pesos as attorney’s fees and litigation expenses, another
five thousand (₱5,000.00) pesos as exemplary damages
and the cost of suit.2
Said decision was affirmed, successively, by the Court of
Appeals and this Court. It became final and executory on
5 March 1992.
On 14 October 1992, the trial court issued a writ of
execution, a portion of which provides:
Now, therefore, you are commanded that of the goods
and chattels of the defendant Erlinda Nicol, or from her
estates or legal heirs, you cause the sum in the amount
of forty thousand pesos (₱40,000.00), Philippine
Currency, representing the moral damages, attorney’s
fees and litigation expenses and exemplary damages and
the cost of suit of the plaintiff aside from your lawful fees
on this execution and do likewise return this writ into court
within sixty (60) days from date, with your proceedings
endorsed hereon.
But if sufficient personal property cannot be found
whereof to satisfy this execution and lawful fees thereon,
then you are commanded that of the lands and buildings
of said defendant you make the said sum of money in the
manner required by the Rules of Court, and make return
of your proceedings with this writ within sixty (60) days
from date.3
Finding Erlinda Nicol’s personal properties insufficient to
satisfy the judgment, the Deputy Sheriff issued a notice of
levy on real property on execution addressed to the
Register of Deeds of Cavite. The notice of levy was
annotated on the Transfer Certificate of Title No. T-
125322.
On 20 November 1992, a notice of sheriff’s sale was
issued.
Two (2) days before the public auction sale on 28 January
1993, an affidavit of third-party claim from one Arnulfo F.
Fulo was received by the deputy sheriff prompting
petitioners to put up a sheriff’s indemnity bond. The
auction sale proceeded with petitioners as the highest
bidder.
On 4 February 1993, a certificate of sale was issued in
favor of petitioners.
Almost a year later on 2 February 1994, Romulo Nicol
(respondent), the husband of Erlinda Nicol, filed a
complaint for annulment of certificate of sale and
damages with preliminary injunction against petitioners
and the deputy sheriff. Respondent, as plaintiff therein,
alleged that the defendants, now petitioners, connived
and directly levied upon and execute his real property
without exhausting the personal properties of Erlinda
Nicol. Respondent averred that there was no proper
publication and posting of the notice of sale. Furthermore,
respondent claimed that his property which was valued at
₱500,000.00 was only sold at a "very low price" of
₱51,685.00, whereas the judgment obligation of Erlinda
Nicol was only ₱40,000.00. The case was assigned
to Branch 21 of the RTC of Imus, Cavite.
In response, petitioners filed a motion to dismiss on the
grounds of lack of jurisdiction and that they had acted on
the basis of a valid writ of execution. Citing De Leon v.
Salvador,4 petitioners claimed that respondent should
have filed the case with Branch 19 where the judgment
originated and which issued the order of execution, writ of
execution, notice of levy and notice of sheriff’s sale.
In an Order5 dated 18 April 1994, the RTC dismissed
respondent’s complaint and ruled that Branch 19 has
jurisdiction over the case, thus:
As correctly pointed out by the defendants, any flaw in the
implementation of the writ of execution by the
implementing sheriff must be brought before the court
issuing the writ of execution. Besides, there are two (2)
remedies open to the plaintiff, if he feels that the property
being levied on belongs to him and not to the judgment
debtor. The first remedy is to file a third-party claim. If he
fails to do this, a right is reserved to him to vindicate his
claim over the property by any proper action. But certainly,
this is not the proper action reserved to the plaintiff to
vindicate his claim over the property in question to be
ventilated before this court. As earlier stated, this case
should have been addressed to Branch 19, RTC Bacoor
as it was that court which issued the writ of execution. 6
Respondent moved for reconsideration but it was denied
on 26 July 1994.
On appeal, the Court of Appeals reversed the trial court
and held that Branch 21 has jurisdiction to act on the
complaint filed by appellant. The dispositive portion reads:
WHEREFORE, the Orders appealed from are hereby
REVERSED and SET ASIDE. This case is REMANDED
to the Regional Trial Court of Imus, Cavite, Branch 21 for
further proceedings.
SO ORDERED.7
Petitioners’ motion for reconsideration was denied on 23
August 2000. Hence, the instant petition attributing grave
abuse of discretion on the part of the Court of Appeals.
A petition for certiorari is an extraordinary remedy that is
adopted to correct errors of jurisdiction committed by the
lower court or quasi-judicial agency, or when there is
grave abuse of discretion on the part of such court or
agency amounting to lack or excess of jurisdiction. Where
the error is not one of jurisdiction, but of law or fact which
is a mistake of judgment, the proper remedy should be
appeal. In addition, an independent action for certiorari
may be availed of only when there is no appeal or any
plain, speedy and adequate remedy in the ordinary
course of law.8
Nowhere in the petition was it shown that the jurisdiction
of the Court of Appeals was questioned. The issue
devolves on whether the husband of the judgment debtor
may file an independent action to protect the conjugal
property subject to execution. The alleged error therefore
is an error of judgment which is a proper subject of an
appeal.
Nevertheless, even if we were to treat this petition as one
for review, the case should still be dismissed on
substantive grounds.
Petitioners maintain that Branch 19 retained jurisdiction
over its judgment to the exclusion of all other co-ordinate
courts for its execution and all incidents thereof, in line
with De Leon v. Salvador. Petitioners insist that
respondent, who is the husband of the judgment debtor,
is not the "third party" contemplated in Section 17 (now
Section 16), Rule 39 of the Rules of Court, hence a
separate action need not be filed. Furthermore,
petitioners assert that the obligation of the wife redounded
to the benefit of the conjugal partnership and cited
authorities to the effect that the husband is liable for the
tort committed by his wife.
Respondent on the other hand merely avers that the
decision of the Court of Appeals is supported by
substantial evidence and in accord with law and
jurisprudence.9
Verily, the question of jurisdiction could be resolved
through a proper interpretation of Section 16, Rule 39 of
the Rules of Court, which reads:
Sec. 16. Proceedings where property claimed by third
person.
If the property levied on is claimed by any person other
than the judgment obligor or his agent, and such person
makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or
title, and serves the same upon the officer making the levy
and a copy thereof upon the judgment obligee, the officer
shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond
approved by the court to indemnify the third-party
claimant in a sum not less than the value of the property
levied on. In case of disagreement as to such value, the
same shall be determined by the court issuing the writ of
execution. No claim for damages for the taking or keeping
of the property may be enforced against the bond unless
the action therefor is filed within one hundred twenty (120)
days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking
or keeping of the property, to any third-party claimant if
such bond is filed. Nothing herein contained shall prevent
such claimant or any third person from vindicating his
claim to the property in a separate action, or prevent the
judgment obligee from claiming damages in the same or
a separate action against a third-party claimant who filed
a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the
Republic of the Philippines, or any officer duly
representing it, the filing of such bond shall not be
required, and in case the sheriff or levying officer is sued
for damages as a result of the levy, he shall be
represented by the Solicitor General and if held liable
therefor, the actual damages adjudged by the court shall
be paid by the National Treasurer out of such funds as
may be appropriated for the purpose. (Emphasis
Supplied)
Apart from the remedy of terceria available to a third-party
claimant or to a stranger to the foreclosure suit against the
sheriff or officer effecting the writ by serving on him an
affidavit of his title and a copy thereof upon the judgment
creditor, a third-party claimant may also resort to an
independent separate action, the object of which is the
recovery of ownership or possession of the property
seized by the sheriff, as well as damages arising from
wrongful seizure and detention of the property. If a
separate action is the recourse, the third-party claimant
must institute in a forum of competent jurisdiction an
action, distinct and separate from the action in which the
judgment is being enforced, even before or without need
of filing a claim in the court that issued the
writ.101awphi1.zw+
A third-party claim must be filed a person other than the
judgment debtor or his agent. In other words, only a
stranger to the case may file a third-party claim.
This leads us to the question: Is the husband, who was
not a party to the suit but whose conjugal property is being
executed on account of the other spouse being the
judgment obligor, considered a "stranger?"
In determining whether the husband is a stranger to the
suit, the character of the property must be taken into
account. In Mariano v. Court of Appeals,11 which was later
adopted in Spouses Ching v. Court of Appeals, 12 this
Court held that the husband of the judgment debtor
cannot be deemed a "stranger" to the case prosecuted
and adjudged against his wife for an obligation that has
redounded to the benefit of the conjugal partnership.13 On
the other hand, in Naguit v. Court of Appeals 14 and Sy v.
Discaya,15 the Court stated that a spouse is deemed a
stranger to the action wherein the writ of execution was
issued and is therefore justified in bringing an
independent action to vindicate her right of ownership
over his exclusive or paraphernal property.lawphil.net
some advantage or benefit is shown to have accrued to
the conjugal partnership.17
In Guadalupe v. Tronco,18 this Court held that the car
which was claimed by the third party complainant to be
conjugal property was being levied upon to enforce "a
judgment for support" filed by a third person, the third-
party claim of the wife is proper since the obligation which
is personal to the husband is chargeable not on the
conjugal property but on his separate property.
Hence, the filing of a separate action by respondent is
proper and jurisdiction is thus vested on Branch 21.
Petitioners failed to show that the Court of Appeals
committed grave abuse of discretion in remanding the
case to Branch 21 for further proceedings.
WHEREFORE, the petition is DISMISSED. The Decision
of the Court of Appeals is AFFIRMED. Costs against
petitioners.
SO ORDERED.

Pursuant to Mariano however, it must further be settled

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

Petitioners argue that the obligation of the wife arising

from her criminal liability is chargeable to the conjugal
partnership. We do not agree.

There is no dispute that contested property is conjugal in

nature. Article 122 of the Family Code16 explicitly provides
that payment of personal debts contracted by the
husband or the wife before or during the marriage shall
not be charged to the conjugal partnership except insofar
as they redounded to the benefit of the family.

Unlike in the system of absolute community where

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

Parenthetically, by no stretch of imagination can it be

concluded that the civil obligation arising from the crime
of slander committed by Erlinda redounded to the benefit
of the conjugal partnership.

To reiterate, conjugal property cannot be held liable for

the personal obligation contracted by one spouse, unless
G.R. No. 164201 December 10, 2012
EFREN PANA, Petitioner,
vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE,
JR., Respondents.
DECISION
ABAD, J.:
This case is about the propriety of levy and execution on
conjugal properties where one of the spouses has been
found guilty of a crime and ordered to pay civil indemnities
to the victims' heirs.
The Facts and the Case
The prosecution accused petitioner Efren Pana (Efren),
his wife Melecia, and others of murder before the.
Regional Trial Court (RTC) of Surigao City in Criminal
Cases 4232 and 4233.1
On July 9, 1997 the RTC rendered a consolidated
decision2 acquitting Efren of the charge for insufficiency of
evidence but finding Melecia and another person guilty as
charged and sentenced them to the penalty of death. The
RTC ordered those found guilty to pay each of the heirs
of the victims, jointly and severally, P50,000.00 as civil
indemnity, P50,000.00 each as moral damages, and
P150,000.00 actual damages.
On appeal to this Court, it affirmed on May 24, 2001 the
conviction of both accused but modified the penalty
to reclusion perpetua. With respect to the monetary
awards, the Court also affirmed the award of civil
indemnity and moral damages but deleted the award for
actual damages for lack of evidentiary basis. In its place,
however, the Court made an award of P15,000.00 each
by way of temperate damages. In addition, the Court
awarded P50,000.00 exemplary damages per victim to be
paid solidarily by them.3 The decision became final and
executory on October 1, 2001.4
Upon motion for execution by the heirs of the deceased,
on March 12, 2002 the RTC ordered the issuance of the
writ,5 resulting in the levy of real properties registered in
the names of Efren and Melecia.6 Subsequently, a notice
of levy7 and a notice of sale on execution8 were issued.
On April 3, 2002, petitioner Efren and his wife Melecia
filed a motion to quash the writ of execution, claiming that
the levied properties were conjugal assets, not
paraphernal assets of Melecia.9 On September 16, 2002
the RTC denied the motion.10 The spouses moved for
reconsideration but the RTC denied the same on March
6, 2003.11
Claiming that the RTC gravely abused its discretion in
issuing the challenged orders, Efren filed a petition
for certiorari before the Court of Appeals (CA). On
January 29, 2004 the CA dismissed the petition for failure
to sufficiently show that the RTC gravely abused its
discretion in issuing its assailed orders.12 It also denied
Efren’s motion for reconsideration,13 prompting him to file
the present petition for review on certiorari.
The Issue Presented
The sole issue presented in this case is whether or not the
CA erred in holding that the conjugal properties of
spouses Efren and Melecia can be levied and executed
upon for the satisfaction of Melecia’s civil liability in the
murder case.
Ruling of the Court
To determine whether the obligation of the wife arising
from her criminal liability is chargeable against the
properties of the marriage, the Court has first to identify
the spouses’ property relations.
Efren claims that his marriage with Melecia falls under the
regime of conjugal partnership of gains, given that they
were married prior to the enactment of the Family Code
and that they did not execute any prenuptial
agreement.14Although the heirs of the deceased victims
do not dispute that it was the Civil Code, not the Family
Code, which governed the marriage, they insist that it was
the system of absolute community of property that applied
to Efren and Melecia. The reasoning goes:
Admittedly, the spouses were married before the
effectivity of the Family Code. But that fact does not
prevent the application of [A]rt. 94, last paragraph, of the
Family Code because their property regime is precisely
governed by the law on absolute community. This finds
support in Art. 256 of the Family Code which states:
"This code shall have retroactive effect in so far as it does
not prejudice or impair vested or acquired rights in
accordance with the Civil Code or other laws."
None of the spouses is dead. Therefore, no vested rights
have been acquired by each over the properties of the
community. Hence, the liabilities imposed on the
accused-spouse may properly be charged against the
community as heretofore discussed.15
The RTC applied the same reasoning as above.16 Efren
and Melecia’s property relation was admittedly conjugal
under the Civil Code but, since the transitory provision of
the Family Code gave its provisions retroactive effect if no
vested or acquired rights are impaired, that property
relation between the couple was changed when the
Family Code took effect in 1988. The latter code now
prescribes in Article 75 absolute community of property
for all marriages unless the parties entered into a
prenuptial agreement. As it happens, Efren and Melecia
had no prenuptial agreement. The CA agreed with this
position.17
Both the RTC and the CA are in error on this point. While
it is true that the personal stakes of each spouse in their
conjugal assets are inchoate or unclear prior to the
liquidation of the conjugal partnership of gains and,
therefore, none of them can be said to have acquired
vested rights in specific assets, it is evident that Article
256 of the Family Code does not intend to reach back and
automatically convert into absolute community of property
relation all conjugal partnerships of gains that existed
before 1988 excepting only those with prenuptial
agreements.
The Family Code itself provides in Article 76 that marriage
settlements cannot be modified except prior to marriage.
Art. 76. In order that any modification in the marriage
settlements may be valid, it must be made before the
celebration of the marriage, subject to the provisions of
Articles 66, 67, 128, 135 and 136.
Clearly, therefore, the conjugal partnership of gains that
governed the marriage between Efren and Melecia who
were married prior to 1988 cannot be modified except
before the celebration of that marriage.
Post-marriage modification of such settlements can take
place only where: (a) the absolute community or conjugal
partnership was dissolved and liquidated upon a decree
of legal separation;18 (b) the spouses who were legally
separated reconciled and agreed to revive their former
property regime;19 (c) judicial separation of property had
been had on the ground that a spouse abandons the other
without just cause or fails to comply with his obligations to
the family;20 (d) there was judicial separation of property
under Article 135; (e) the spouses jointly filed a petition for
the voluntary dissolution of their absolute community or
conjugal partnership of gains.21 None of these
circumstances exists in the case of Efren and Melecia.
What is more, under the conjugal partnership of gains
established by Article 142 of the Civil Code, the husband
and the wife place only the fruits of their separate property
and incomes from their work or industry in the common
fund. Thus:
Art. 142. By means of the conjugal partnership of gains
the husband and wife place in a common fund the fruits
of their separate property and the income from their work
or industry, and divide equally, upon the dissolution of the
marriage or of the partnership, the net gains or benefits
obtained indiscriminately by either spouse during the
marriage.
This means that they continue under such property
regime to enjoy rights of ownership over their separate
properties. Consequently, to automatically change the
marriage settlements of couples who got married under
the Civil Code into absolute community of property in
1988 when the Family Code took effect would be to impair
their acquired or vested rights to such separate
properties.
The RTC cannot take advantage of the spouses’ loose
admission that absolute community of property governed
their property relation since the record shows that they
had been insistent that their property regime is one of
conjugal partnership of gains.22 No evidence of a
prenuptial agreement between them has been presented.
What is clear is that Efren and Melecia were married when
the Civil Code was still the operative law on marriages.
The presumption, absent any evidence to the contrary, is
that they were married under the regime of the conjugal
partnership of gains. Article 119 of the Civil Code thus
provides:
Art. 119. The future spouses may in the marriage
settlements agree upon absolute or relative community of
property, or upon complete separation of property, or
upon any other regime. In the absence of marriage
settlements, or when the same are void, the system of
relative community or conjugal partnership of gains as
established in this Code, shall govern the property
relations between husband and wife.
Of course, the Family Code contains terms governing
conjugal partnership of gains that supersede the terms of
the conjugal partnership of gains under the Civil Code.
Article 105 of the Family Code states:
"x x x x
The provisions of this Chapter [on the Conjugal
Partnership of Gains] shall also apply to conjugal
partnerships of gains already established between
spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance
with the Civil Code or other laws, as provided in Article
256."23
Consequently, the Court must refer to the Family Code
provisions in deciding whether or not the conjugal
properties of Efren and Melecia may be held to answer for
the civil liabilities imposed on Melecia in the murder case.
Its Article 122 provides:
Art. 122. The payment of personal debts contracted by the
husband or the wife before or during the marriage shall
not be charged to the conjugal properties partnership
except insofar as they redounded to the benefit of the
family.
Neither shall the fines and pecuniary indemnities imposed
upon them be charged to the partnership.
However, the payment of personal debts contracted by
either spouse before the marriage, that of fines and
indemnities imposed upon them, as well as the support of
illegitimate children of either spouse, may be enforced
against the partnership assets after the responsibilities
enumerated in the preceding Article have been covered,
if the spouse who is bound should have no exclusive
property or if it should be insufficient; but at the time of the
liquidation of the partnership, such spouse shall be
charged for what has been paid for the purpose above-
mentioned.
Since Efren does not dispute the RTC’s finding that
Melecia has no exclusive property of her own,24 the above
applies. The civil indemnity that the decision in the murder
case imposed on her may be enforced against their
conjugal assets after the responsibilities enumerated in
Article 121 of the Family Code have been
covered.25 Those responsibilities are as follows:
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and
the legitimate children of either spouse; however, the
support of illegitimate children shall be governed by the
provisions of this Code on Support;
(2) All debts and obligations contracted during the
marriage by the designated administrator-spouse for the
benefit of the conjugal partnership of gains, or by both
spouses or by one of them with the consent of the other;
Melecia, out of the partnership assets even before these
are liquidated. Indeed, it states that such indemnities
"may be enforced against the partnership assets after the
responsibilities enumerated in the preceding article have
been covered."[26] No prior liquidation of those assets is
required. This is not altogether unfair since Article 122
states that "at the time of liquidation of the partnership,
such [offending] spouse shall be charged for what has
been paid for the purposes above-mentioned."
WHEREFORE, the
Court AFFIRMS with MODIFICATION the Resolutions of
the Court of Appeals in CA-G.R. SP 77198 dated January
29, 2004 and May 14, 2004. The Regional Trial Court of
Surigao City, Branch 30, shall first ascertain that, in
enforcing the writ of execution on the conjugal properties
of spouses Efren and Melecia Pana for the satisfaction of
the indemnities imposed by final judgment on the latter
accused in Criminal Cases 4232 and 4233, the
responsibilities enumerated in Article 121 of the Family
Code have been covered.
SO ORDERED.

(3) Debts and obligations contracted by either spouse

without the consent of the other to the extent that the
family may have benefited;

(4) All taxes, liens, charges, and expenses, including

major or minor repairs upon the conjugal partnership
property;

(5) All taxes and expenses for mere preservation made

during the marriage upon the separate property of either
spouse;

(6) Expenses to enable either spouse to commence or

complete a professional, vocational, or other activity for
self-improvement;

(7) Antenuptial debts of either spouse insofar as they have

redounded to the benefit of the family;

(8) The value of what is donated or promised by both

spouses in favor of their common legitimate children for
the exclusive purpose of commencing or completing a
professional or vocational course or other activity for self-
improvement; and

(9) Expenses of litigation between the spouses unless the

suit is found to be groundless.

If the conjugal partnership is insufficient to cover the

foregoing liabilities, the spouses shall be solidarily liable
for the unpaid balance with their separate
properties.1âwphi1

Contrary to Efren’s contention, Article 121 above allows

payment of the criminal indemnities imposed on his wife,

G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO
YULO, LILY YULO (doing business under the name
and style of A & L INDUSTRIES), respondents.
GUTIERREZ, JR., J.:
This is a petition for review seeking to set aside the
decision of the Court of Appeals which affirmed the
decision of the then Court of First Instance of Manila,
dismissing the complaint instituted by the petitioner and
ordering it to pay damages on the basis of the private
respondent's counterclaim.
On July 1, 1975, private respondent Augusto Yulo
secured a loan from the petitioner in the amount of
P591,003.59 as evidenced by a promissory note he
signed in his own behalf and as representative of the A &
L Industries. Respondent Yulo presented an alleged
special power of attorney executed by his wife,
respondent Lily Yulo, who manages A & L Industries and
under whose name the said business is registered,
purportedly authorizing Augusto Yulo to procure the loan
and sign the promissory note. About two months prior to
the loan, however, Augusto Yulo had already left Lily Yulo
and their children and had abandoned their conjugal
home. When the obligation became due and demandable,
Augusto Yulo failed to pay the same.
On October 7, 1975, the petitioner filed its amended
complaint against the spouses Augusto and Lily Yulo on
the basis of the promissory note. It also prayed for the
issuance of a writ of attatchment alleging that the said
spouses were guilty of fraud in contracting the debt upon
which the action was brought and that the fraud consisted
of the spouses' inducing the petitioner to enter into a
contract with them by executing a Deed of Assignment in
favor of the petitioner, assigning all their rights, titles and
interests over a construction contract executed by and
between the spouses and A. Soriano Corporation on June
19, 1974 for a consideration of P615,732.50 when, in
truth, the spouses did not have any intention of remitting
the proceeds of the said construction contract to the
petitioner because despite the provisions in the Deed of
Assignment that the spouses shall, without compensation
or costs, collect and receive in trust for the petitioner all
payments made upon the construction contract and shall
remit to the petitioner all collections therefrom, the said
spouses failed and refuse to remit the collections and
instead, misappropriated the proceeds for their own use
and benefit, without the knowledge or consent of the
petitioner.
The trial court issued the writ of attachment prayed for
thereby enabling the petitioner to attach the properties of
A & L Industries. Apparently not contented with the order,
the petitioner filed another motion for the examination of
attachment debtor, alleging that the properties attached
by the sheriff were not sufficient to secure the satisfaction
of any judgment that may be recovered by it in the case.
This was likewise granted by the court.
Private respondent Lily Yulo filed her answer with
counterclaim, alleging that although Augusta Yulo and
she are husband and wife, the former had abandoned her
and their children five (5) months before the filing of the
complaint; that they were already separated when the
promissory note was executed; that her signature in the
special power of attorney was forged because she had
never authorized Augusto Yulo in any capacity to transact
any business for and in behalf of A & L Industries, which
is owned by her as a single proprietor, that she never got
a single centavo from the proceeds of the loan mentioned
in the promissory note; and that as a result of the illegal
attachment of her properties, which constituted the assets
of the A & L Industries, the latter closed its business and
was taken over by the new owner.
After hearing, the trial court rendered judgment dismissing
the petitioner's complaint against the private respondent
Lily Yulo and A & L Industries and ordering the petitioner
to pay the respondent Lily Yulo P660,000.00 as actual
damages; P500,000.00 as unrealized profits;
P300,000.00 as exemplary damages; P30,000.00 as and
for attorney's fees; and to pay the costs.
The petitioner appealed. The Court of Appeals affirmed
the trial court's decision except for the exemplary
damages which it reduced from P300,000.00 to
P150,000.00 and the attorney's fees which were reduced
from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court
erred in holding that the signature of respondent Lily Yulo
in the special power of attorney was forged, the Court of
Appeals said:
The crucial issue to be determined is whether or not the
signatures of the appellee Lily Yulo in Exhibits B and B-1
are forged. Atty. Crispin Ordoña, the Notary Public,
admitted in open court that the parties in the subject
documents did not sign their signatures in his presence.
The same were already signed by the supposed parties
and their supposed witnesses at the time they were
brought to him for ratification. We quote from the records
the pertinent testimony of Atty. Ordoña, thus:
Q. This document marked as Exhibit B-1, when this was
presented to you by that common friend, June Enriquez,
it was already typewritten, it was already accomplished,
all typewritten.?
A. Yes, sir.
Q And the parties had already affixed their signatures in
this document?
A. Yes, sir.
Q. In this document marked as Exhibit B although it
appears here that this is an acknowledgment, you have
not stated here that the principal actually acknowledged
this document to be her voluntary act and deed?
A This in one of those things that escaped my attention.
Actually I have not gone over the second page. I believed
it was in order I signed it. (TSN pp. 13-14, Hearing of Nov.
26, 1976).
The glaring admission by the Notary Public that he failed
to state in the acknowledgment portion of Exhibit B-1 that
the appellee Lily Yulo acknowledged the said document
to be her own voluntary act and deed, is a very strong and
commanding circumstance to show that she did not
appear personally before the said Notary Public and did
not sign the document.
Additionally, the Notary Public admitted that, while June
Enriquez is admittedly a mutual friend of his and the
defendant Augusta Yulo, and who is also an instrumental
witness in said Exhibit B-1., he could not recognize or tell
which of the two signatures appearing therein, was the
signature of this June Enriquez.
Furthermore, as the issue is one of credibility of a witness,
the findings and conclusions of the trial court before whom
said witness, Atty. Crispin Ordoña, the Notary Public
before whom the questioned document was supposedly
ratified and acknowledged, deserve great respect and are
seldom disturbed on appeal by appellate tribunals, since
it is in the best and peculiar advantage of determining and
observing the conduct, demeanor and deportment of a
particular witness while he is testifying in court, an
opportunity not enjoyed by the appellate courts who
merely have to rely on the recorded proceedings which
transpired in the court below, and the records are bare of
any circumstance of weight, which the trial court had
overlooked and which if duly considered, may radically
affect the outcome of the case.
On the other hand, the appellee Lily Yulo, to back up her
claim of forgery of her signature in Exhibit B-1, presented
in court a handwriting expert witness in the person of
Police Captain Yakal Giron of the Integrated National
Police Training Command, and who is also a Document
Examiner of the same Command's Crime Laboratory at
Fort Bonifacio, Metro Manila. His experience as an
examiner of questioned and disputed documents, in our
mind, is quite impressive. To qualify him as a handwriting
expert, he declared that he underwent extensive and
actual studies and examination of disputed or questioned
document, both at the National Bureau of Investigation
Academy and National Bureau of Investigation
Questioned Document Laboratory, respectively, from July
1964, up to his appointment as Document Examiner in
June, 1975, and, to further his experience along this line,
he attended the 297th Annual Conference of the
American Society of Questioned Docurnent Examiners
held at Seattle, Washington, in August 1971, as a
representative of the Philippines, and likewise conducted
an observation of the present and modern trends of crime
laboratories in the West Coast, U.S.A., in 1971; that he
likewise had conducted actual tests and examination of
about 100,000 documents, as requested by the different
courts, administrative, and governmental agencies of the
Government, substantial portions of which relate to actual
court cases.
In concluding that the signatures of the appellee Lily Yulo,
in the disputed document in question (Exh. B-1), were all
forgeries, and not her genuine signature, the expert
witness categorically recited and specified in open court
what he observed to be about twelve (12) glaring and
material significant differences, in his comparison of the
signatures appearing in the genuine specimen signatures
of the said appellee and with those appearing in the
questioned document (Exhibit B-1). Indeed, we have
likewise seen the supposed notable differences, found in
the standard or genuine signatures of the appellee which
were lifted and obtained in the official files of the
government, such as the Bureau of Internal Revenue on
her income tax returns, as compared to the pretended
signature of the appellee appearing in Exhibits B, B-1. It
is also noteworthy to mention that the appellant did not
even bother to conduct a cross-examination of the
handwriting expert witness, Capt. Giron, neither did the
appellant present another handwriting expert, at least to
counter-act or balance the appellee's handwriting expert.
Prescinding from the foregoing facts, we subscribe fully to
the lower court's observations that the signatures of the
appellee Lily Yulo in the questioned document (Exh. B-1)
were forged. Hence, we find no factual basis to disagree.
(pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature
of Lily Yulo was forged or even if the attached properties
were her exclusive property, the same can be made
answerable to the obligation because the said properties
form part of the conjugal partnership of the spouses Yulo,
the appellate court held that these contentions are without
merit because there is strong preponderant evidence to
show that A & L Industries belongs exclusively to
respondent Lily Yulo, namely: a) The Certificate of
Registration of A & L Industries, issued by the Bureau of
Commerce, showing that said business is a single
proprietorship, and that the registered owner thereof is
only Lily Yulo; b) The Mayor's Permit issued in favor of A
& L Industries, by the Caloocan City Mayor's Office
showing compliance by said single proprietorship
company with the City Ordinance governing business
establishments; and c) The Special Power of Attorney
itself, assuming but without admitting its due execution, is
tangible proof that Augusto Yulo has no interest
whatsoever in the A & L Industries, otherwise, there would
have been no necessity for the Special Power of Attorney
if he is a part owner of said single proprietorship.
With regard to the award of damages, the Court of
Appeals affirmed the findings of the trial court that there
was bad faith on the part of the petitioner as to entitle the
private respondent to damages as shown not only by the
fact that the petitioner did not present the Deed of
Assignment or the construction agreement or any
evidence whatsoever to support its claim of fraud on the
part of the private respondent and to justify the issuance
of a preliminary attachment, but also by the following
findings:
Continuing and elaborating further on the
appellant's mala fide actuations in securing the writ of
attachment, the lower court stated as follows:
Plaintiff not satisfied with the instant case where an order
for attachment has already been issued and enforced, on
the strength of the same Promissory Note (Exhibit"A"),
utilizing the Deed of Chattel Mortgage (Exhibit "4"), filed a
foreclosure proceedings before the Office of the Sheriff of
Caloocan (Exhibit"6") foreclosing the remaining
properties found inside the premises formerly occupied by
the A & L Industries. A minute examination of Exhibit "4"
will show that the contracting parties thereto, as
appearing in par. 1 thereof, are Augusto Yulo, doing
business under the style of A & L Industries (should be A
& L Glass Industries Corporation), as mortgagor and BA
Finance Corporation as mortgagee, thus the enforcement
of the Chattel Mortgage against the property of A & L
Industries exclusively owned by Lily T. Yulo appears to be
without any factual or legal basis whatsoever. The chattel
mortgage, Exhibit "4" and the Promissory Note, Exhibit A,
are based on one and the same obligation. Plaintiff tried
to enforce as it did enforce its claim into two different
modes a single obligation.
Aware that defendant Lily Yulo, filed a Motion to Suspend
Proceedings by virtue of a complaint she filed with the
Court of First Instance of Caloocan, seeking annulment of
the Promissory Note, the very basis of the plaintiff in filing
this complaint, immediately after the day it filed a Motion
for the Issuance of an Alias Writ of Preliminary Attachment
. . .Yet, inspite of the knowledge and the filing of this
Motion to Suspend Proceedings, the Plaintiff still filed a
Motion for the Issuance of a Writ of Attachment dated
February 6, 1976 before this court. To add insult to injury,
plaintiff even filed a Motion for Examination of the
Attachment Debtor, although aware that Lily Yulo had
already denied participation in the execution of Exhibits
"A" and "B". These incidents and actions taken by plaintiff,
to the thinking of the court, are sufficient to prove and
establish the element of bad faith and malice on the part
of plaintiff which may warrant the award of damages in
favor of defendant Lily Yulo. (Ibid., pp. 102-
103).<äre||anº•1àw>
Indeed, the existence of evident bad faith on the
appellant's part in proceeding against the appellee Lily
Yulo in the present case, may likewise be distressed on
the fact that its officer Mr. Abraham Co, did not even
bother to demand the production of at least the duplicate
original of the Special Power of Attorney (Exhibit B) and
merely contended himself with a mere xerox copy thereof,
neither did he require a more specific authority from the A
& L Industries to contract the loan in question, since from
the very content and recitals of the disputed document, no
authority, express or implied, has been delegated or
granted to August Yulo to contract a loan, especially with
the appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled
that the petitioner should have presented evidence to
disprove or rebut the private respondent's claim but it
remained quiet and chose not to disturb the testimony and
the evidence presented by the private respondent to
prove her claim.
In this petition for certiorari, the petitioner raises three
issues. The first issue deals with the appellate court's
affirmance of the trial court's findings that the signature of
the private respondent on the Special Power of Attorney
was forged. According to the petitioner, the Court of
Appeals disregarded the direct mandate of Section 23,
Rule 132 of the Rules of Court which states in part that
evidence of handwriting by comparison may be made
"with writings admitted or treated as genuine by the party
against whom the evidence is offered, or proved to be
genuine to the satisfaction of the judge," and that there is
no evidence on record which proves or tends to prove the
genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as
"standards" for comparison with the alleged signature of
the private respondent in the Special Power of Attorney
were those from the latter's residence certificates in the
years 1973, 1974 and 1975, her income tax returns for the
years 1973 and 1975 and from a document on long bond
paper dated May 18, 1977. Not only were the signatures
in the foregoing documents admitted by the private
respondent as hers but most of the said documents were
used by the private respondent in her transactions with
the government. As was held in the case of Plymouth
Saving & Loan Assn. No. 2 v. Kassing (125 NE 488, 494):
We believe the true rule deduced from the authorities to
be that the genuineness of a "standard" writing may be
established (1) by the admission of the person sought to
be charged with the disputed writing made at or for the
purposes of the trial or by his testimony; (2) by witnesses
who saw the standards written or to whom or in whose
hearing the person sought to be charged acknowledged
the writing thereof; (3) by evidence showing that the
reputed writer of the standard has acquiesced in or
recognized the same, or that it has been adopted and
acted upon by him his business transactions or other
concerns....
Furthermore, the judge found such signatures to be
sufficient as standards. In the case of Taylor-Wharton Iron
& Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:
When a writing is offered as a standard of comparison it
is for the presiding judge to decide whether it is the
handwriting of the party to be charged. Unless his finding
is founded upon error of law, or upon evidence which is,
as matter of law, insufficient to justify the finding, this court
will not revise it upon exceptions." (Costelo v. Crowell,
139 Mass. 588, 590, 2 N.E. 648; Nuñez v. Perry, 113
Mass, 274, 276.)
We cannot find any error on the part of the trial judge in
using the above documents as standards and also in
giving credence to the expert witness presented by the
private respondent whose testimony the petitioner failed
to rebut and whose credibility it likewise failed to impeach.
But more important is the fact that the unrebutted
handwriting expert's testimony noted twelve (12) glaring
and material differences in the alleged signature of the
private respondent in the Special Power of Attorney as
compared with the specimen signatures, something which
the appellate court also took into account. In Cesar v.
Sandiganbayan (134 SCRA 105, 132), we ruled:
Mr. Maniwang pointed to other significant divergences
and distinctive characteristics between the sample
signatures and the signatures on the questioned checks
in his report which the court's Presiding Justice kept
mentioning during Maniwang's testimony.
In the course of his cross-examination, NBI expert
Tabayoyong admitted that he saw the differences
between the exemplars used and the questioned
signatures but he dismissed the differences because he
did not consider them fundamental. We rule that
significant differences are more fundamental than a few
similarities. A forger always strives to master some
similarities.
The second issue raised by the petitioner is that while it is
true that A & L Industries is a single proprietorship and the
registered owner thereof is private respondent Lily Yulo,
the said proprietorship was established during the
marriage and its assets were also acquired during the
same. Therefore, it is presumed that this property forms
part of the conjugal partnership of the spouses Augusto
and Lily Yulo and thus, could be held liable for the
obligations contracted by Augusto Yulo, as administrator
of the partnership.
There is no dispute that A & L Industries was established
during the marriage of Augusta and Lily Yulo and
therefore the same is presumed conjugal and the fact that
it was registered in the name of only one of the spouses
does not destroy its conjugal nature (See Mendoza v.
Reyes, 124 SCRA 161, 165). However, for the said
property to be held liable, the obligation contracted by the
husband must have redounded to the benefit of the
conjugal partnership under Article 161 of the Civil Code.
In the present case, the obligation which the petitioner is
seeking to enforce against the conjugal property
managed by the private respondent Lily Yulo was
undoubtedly contracted by Augusto Yulo for his own
benefit because at the time he incurred the obligation he
had already abandoned his family and had left their
conjugal home. Worse, he made it appear that he was
duly authorized by his wife in behalf of A & L Industries,
to procure such loan from the petitioner. Clearly, to make
A & L Industries liable now for the said loan would be
unjust and contrary to the express provision of the Civil
Code. As we have ruled in Luzon Surety Co., Inc. v. De
Gracia (30 SCRA 111, 115-117):
As explained in the decision now under review: "It is true
that the husband is the administrator of the conjugal
property pursuant to the provisions of Art. 163 of the new
Civil Code. However, as such administrator the only
obligations incurred by the husband that are chargeable
against the conjugal property are those incurred in the
legitimate pursuit of his career, profession or business
with the honest belief that he is doing right for the benefit
of the family. This is not true in the case at bar for we
believe that the husband in acting as guarantor or surety
for another in an indemnity agreement as that involved in
this case did not act for the benefit of the conjugal
partnership. Such inference is more emphatic in this case,
when no proof is presented that Vicente Garcia in acting
as surety or guarantor received consideration therefore,
which may redound to the benefit of the conjugal
partnership.(Ibid, pp. 46-47).
xxx xxx xxx
xxx xxx xxx
In the most categorical language, a conjugal partnership
under that provision is liable only for such "debts and
obligations contracted by the husband for the benefit of
the conjugal partnership." There must be the requisite
showing then of some advantage which clearly accrued to
the welfare of the spouses. There is none in this case.
xxx xxx xxx
Moreover, it would negate the plain object of the additional
requirement in the present Civil Code that a debt
contracted by the husband to bind a conjugal partnership
must redound to its benefit. That is still another provision
indicative of the solicitude and tender regard that the law
manifests for the family as a unit. Its interest is paramount;
its welfare uppermost in the minds of the codifiers and
legislators.
We, therefore, rule that the petitioner cannot enforce the
obligation contracted by Augusto Yulo against his
conjugal properties with respondent Lily Yulo. Thus, it
follows that the writ of attachment cannot issue against
the said properties.
Finally, the third issue assails the award of actual
damages according to the petitioner, both the lower court
and the appellate court overlooked the fact that the
properties referred to are still subject to a levy on
attachment. They are, therefore, still under custodia
legis and thus, the assailed decision should have included
a declaration as to who is entitled to the attached
properties and that assuming arguendo that the
attachment was erroneous, the lower court should have
ordered the sheriff to return to the private respondent the
attached properties instead of condemning the petitioner
to pay the value thereof by way of actual damages.
In the case of Lazatin v. Twaño (2 SCRA 842, 847), we
ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59, does not
prescribed the remedies available to the attachment
defendant in case of a wrongful attachment, but merely
provides an action for recovery upon the bond, based on
the undertaking therein made and not upon the liability
arising from a tortuous act, like the malicious suing out of
an attachment. Under the first, where malice is not
essential, the attachment defendant, is entitled to recover
only the actual damages sustained by him by reason of
the attachment. Under the second, where the attachment
is maliciously sued out, the damages recoverable may
include a compensation for every injury to his credit,
business or feed (Tyler v. Mahoney, 168 NC 237, 84 SE
362; Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE
234). ...
The question before us, therefore, is whether the
attachment of the properties of A & L Industries was
wrongful so as to entitle the petitioner to actual damages
only or whether the said attachment was made in bad faith
and with malice to warrant the award of other kinds of
damages. Moreover, if the private respondent is entitled
only to actual damages, was the court justified in ordering
the petitioner to pay for the value of the attached
properties instead of ordering the return of the said
properties to the private respondent Yulo ?
Both the trial and appellate courts found that there was
bad faith on the part of the petitioner in securing the writ
of attachment. We do not think so. "An attachment may
be said to be wrongful when, for instance, the plaintiff has
no cause of action, or that there is no true ground
therefore, or that the plaintiff has a sufficient security other
than the property attached, which is tantamout to saying
that the plaintiff is not entitled to attachment because the
requirements of entitling him to the writ are wanting. (7
C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco,
Revised Rules of Court).
Although the petitioner failed to prove the ground relied
upon for the issuance of the writ of attachment, this failure
cannot be equated with bad faith or malicious intent. The
steps which were taken by the petitioner to ensure the
security of its claim were premised, on the firm belief that
the properties involved could be made answerable for the
unpaid obligation due it. There is no question that a loan
in the amount of P591,003.59 was borrowed from the
bank.
We, thus, find that the petitioner is liable only for actual
damages and not for exemplary damages and attorney's
fees. Respondent Lily Yulo has manifested before this
Court that she no longer desires the return of the attached
properties since the said attachment caused her to close
down the business. From that time she has become a
mere employee of the new owner of the premises. She
has grave doubts as to the running condition of the
attached machineries and equipments considering that
the attachment was effected way back in 1975. She states
as a matter of fact that the petitioner has already caused
the sale of the machineries for fear that they might be
destroyed due to prolonged litigation. We, therefore,
deem it just and equitable to allow private respondent Lily
Yulo to recover actual damages based on the value of the
attached properties as proven in the trial court, in the
amount of P660,000.00. In turn, if there are any remaining
attached properties, they should be permanently released
to herein petitioner.
We cannot, however, sustain the award of P500,000.00
representing unrealized profits because this amount was
not proved or justified before the trial court. The basis of
the alleged unearned profits is too speculative and
conjectural to show actual damages for a future period.
The private respondent failed to present reports on the
average actual profits earned by her business and other
evidence of profitability which are necessary to prove her
claim for the said amount (See G. A. Machineries, Inc. v.
Yaptinchay, 126 SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the
petitioner liable for P500,000.00 actual damages
representing unrealized profits, P150,000.00 for
exemplary damages and P20,000.00 for attorney's fees.
As stated earlier, the attached properties, should be
released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is
hereby SET ASIDE and the petitioner is ordered to pay
the private respondent Lily Yulo the amount of SIX
HUNDRED SIXTY THOUSAND PESOS (P660,000.00)
as actual damages. The remaining properties subject of
the attachment are ordered released in favor of the
petitioner.
SO ORDERED.
G.R. No. 118784 September 2, 1999
HEIRS OF CHRISTINA AYUSTE, petitioner,
vs.
COURT OF APPEALS and VIENA
MALABONGA, respondents.
GONZAGA-REYES, J.:
Before us is a petition for certiorari under Rule 45, asking this
Court to review the decision of the Court of Appeals dated
January 23, 1995 in CA-G.R. CV No. 38232, 1 which overturned
the decision of the Regional Trial Court of Lucena City in Civil
Case No. 90-33.
At the outset, we note that Christina Ayuste, the plaintiff in the
lower court and the original petitioner herein, died on November
21, 1995. 2 In his Comment dated January 14, 1998 to private
respondent's Manifestation informing the Court of Christina
Ayuste's death, petitioner's counsel re-affirmed such fact of
death and informed the Court of the names of Christina Ayuste's
legal representatives. 3 The claim not having been extinguished
by the death of Christina Ayuste, we ordered the substitution of
her heirs Marlon Ayuste and Arlaine Ayuste-Yu for Christina
Ayuste in our Resolution dated August 11, 1999.
Christina Ayuste married Rafael Ayuste on September 24, 1961.
Although the couple resided in Manila, they operated a machine
shop in Barangay Iyam, Lucena City, which was managed by
Rafael Ayuste. In order to serve as a temporary residence for
Rafael Ayuste while in Lucena, the couple purchased on August
26, 1982 a parcel of land with an area of 180 square meters on
which a residential house was built situated at Yale Street,
University Village, Barrio Ibabang Dupay, Lucena City from
spouses Pedro and Aida David. A deed of sale 4 was executed
and signed by the parties and filed with the Register of Deeds of
Lucena City. On October 23, 1983, the Register of Deeds of
Lucena City issued Transfer Certificate of Title No. T-42972 in
the name of "RAFAEL T. AYUSTE, married to Christina
Ayuste. 5
On February 27, 1987, a deed of absolute sale 6 was executed
by Rafael Ayuste in favor of private respondent whereby the
former sold the abovementioned parcel of land to the latter for
P40,000, which amount Rafael Ayuste acknowledged having
received in the deed. On page 2 of this deed appears the
signature of Christina Ayuste below the phrase "With my
conformity." The deed of sale was registered with the Register
of Deeds of Lucena City on March 5, 1987 and Transfer
Certificate of Title No. T-50046 was issued in the name of private
respondent. 7
After Rafael Ayuste's death on October 13, 1989, Christina
Ayuste discovered, in the course of an inventory of their
properties, that the title to the land in Lucena was missing. She
searched for it in the office of her husband in Lucena City and it
was then that she learned from her employees about the sale of
the house and lot by her husband to private respondent.
On March 2, 1990, Christina Ayuste filed a complaint with the
Regional Trial Court of Lucena City for the annulment of the sale,
cancellation of the title issued in the name of private respondent
and for the payment of moral, exemplary and actual damages.
In her complaint Christina Ayuste alleges that her signature on
the deed of sale was forged and that her husband Rafael Ayuste
sold the property without her knowledge and consent.
The Regional Trial Court rendered its Decision on June 20,
1991, the dispositive portion of which provides as follows —
WHEREFORE, judgment is hereby rendered as follows:
(1) Declaring null and void the Deed of Absolute Sale of House
and Lot (Exhibit "C') executed by defendant and plaintiffs
husband, the deceased Rafael Ayuste, on February 27, 1987;
(2) Ordering defendant Viena Malabonga to return to plaintiff
Christina Ayuste the possession of the house and lot covered by
Transfer Certificate of Title No. T-50045, now in the name of
defendant Viena Malabonga, together with the improvements
thereon;
(3) Directing the Register of Deeds of Lucena City to cancel
Transfer Certificate of Title No. T-50046 and to issue in the name
of plaintiff and her children by the late Rafael Ayuste new
Transfer Certificate of Title in lieu thereof, subject to all/any liens
and encumbrances annotated on the memorandum of the title
to be cancelled;
(4) Ordering plaintiff Christina Ayuste to pay the defendant
Vienna Malabonga the sum of P258,200.00 for the
improvements introduced on the lot and house as well as for
maintenance of the premises; and
(5) Ordering defendant to pay plaintiff the amount of rents
received from the premises starting March, 1990 until such time
that she finally turns-over (sic) the possession of the house and
lot to plaintiff, at the rate of P2,700.00 per month.
With costs against defendant. 8
Both parties appealed the trial court's decision. On January 23,
1995, the Court of Appeals reversed the trial court's ruling by
holding that Christina Ayuste's right to bring an action for the
annulment of the sale is barred by laches because of her failure
to file it during the existence of the marriage in accordance with
article 173 of the Civil Code. Also, it found private respondent to
be entitled to the protection of a buyer in good faith and for value.
The pertinent portion of the public respondent's decision
provides —
Record shows that plaintiff-appellant wife (sic) instituted on
March 2, 1990 her action for annulment of the sale executed by
her husband on February 27, 1987 — long after said vendor-
husband died in 1989. It is thus clear that the action for
annulment of the sale was not instituted "during the marriage"
as required by Article 173, the very provision of law which grants
the wife the privilege/right to have the sale executed by her
husband annulled, in derogation of the suppose (sic) vested
right of the buyer. The two periods provided for in said Article
173 — "during the marriage" and "within 10 years" should
concur.
We find no merit in plaintiff-appellant's claim that she discovered
the sale, only after her husband's death, when she made an
inventory and found out that the pertinent titles to the land
subject of the sale were missing. It is settled in this jurisdiction
that registration with the Register of Deeds is notice to the whole
world. The questioned deed of sale has long been registered
with the Register of Deeds of Lucena City — on March 5, 1987
— and in fact the said property was registered in the name of
defendant-appellant under Transfer Certificate of Title No. T-
50046. Said TCT in the name of defendant-appellant is now
indefeasible.
The peculiar circumstances that militates in favor of defendant-
appellant buyer are as follows: The questioned deed of sale was
not actually without the wife's signature signifying marital
consent, so to speak. Evidently, defendant-appellant was led to
believe by the husband-vendor that plaintiff-appellant gave her
marital consent to the sale, as said husband presented a deed
of sale supposedly pre-signed by his wife, plaintiff-appellant.
Defendant-appellant is therefore undoubtedly a buyer in good
faith and for value, with vested rights equally entitled to the
protection of the law. The questioned deed of sale was duly
registered in the name of defendant-appellant who was issued
a Transfer Certificate of Title.
xxx xxx xxx
Unlike the statute of limitations, laches is not a mere question of
time but is principally a question of the inequity on unfairness of
permitting a stale right to be enforced or asserted. (Marcelino vs.
CA, 210 SCRA 444). For failure of the plaintiff-appellant wife to
institute her action for annulment of sale, while her husband-
vendor was still alive as required by Article 173 of the New Civil
Code, plaintiff-appellant wife's right under Article 166 of the
same Code has become stale and is now barred by laches.
In view of the foregoing findings, We rule that the trial court erred
in giving due course to the action for annulment of sale. With the
foregoing findings and resolution the other issues raised in this
appeal are now moot and academic.
WHEREFORE, in view of all the foregoing, judgment is hereby
rendered giving due course to the appeal of defendant-
appellant, —and— dismissing the appeal of plaintiff-appellant.
The decision dated June 20, 1991 rendered by the Regional
Trial Court is REVERSED and SET ASIDE.
The Deed of Absolute Sale executed on February 27, 1987 by
and between defendant-appellant and plaintiff-appellant's
husband is declared VALID and BINDING upon the plaintiff-
appellant. 9
Both the trial and appellate court decisions have established that
Rafael Ayuste sold conjugal property without the consent of
Christina Ayuste, his wife. This factual finding shall not be
disturbed because only questions of law are reviewed in an
appeal under Rule 45 of the Rules of Court subject to certain
well-defined exceptions none of which are present in the instant
case. The only issue which remains to be resolved is whether
petitioners are entitled to the annulment of the contract of sale
entered into by Rafael Ayuste without the consent of Christina
Ayuste.
Petitioners claim that since the law expressly prohibits the
husband from alienating real property belonging to the conjugal
partnership without his wife's consent, the contract of sale in
question is a nullity pursuant to article 1409 of the Civil Code
which provides that contracts expressly prohibited by law are
inexistent and void from the beginning. It is further averred by
petitioners that the present action is not barred because the
action to declare the nullity of a contract does not prescribe.
Furthermore, Christina Ayuste cannot be faulted for having
brought the action only after the death of her husband, despite
the periods stated in article 173 of the Civil Code, since she had
no knowledge of the sale during his lifetime as he concealed the
same from her. Finally, it is contended that article 166 is the
relevant provision, not article 173. 10
Under the Civil Code, although the husband is the administrator
of the conjugal partnership, 11 he cannot alienate or encumber
any real property of the conjugal partnership without his wife's
consent, 12 subject only to certain exceptions specified in the
law. 13 The remedy available to the wife in case her husband
should dispose of their conjugal property without her consent is
laid down in Article 173 of the Civil Code which states that —
The wife may, during the marriage, and within ten years from the
transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when
such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this right,
she or her heirs, after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the
husband. (emphasis supplied)
There is no ambiguity in the wording of the law. A sale of real
property of the conjugal partnership made by the husband
without the consent of his wife is voidable. 14 The action for
annulment must be brought during the marriage and within ten
years from the questioned transaction by the wife. 15 Where the
law speaks in clear and categorical language, there is no room
for interpretation — there is room only for application. 16
In the present case, the deed of sale was executed on February
27, 1987. Rafael Ayuste died on October 13, 1989. However, it
was only on March 2, 1990 that Christina Ayuste filed her
complaint with the lower court asking for the annulment of the
sale. Although the action was filed within ten years from the
questioned transaction, it was not brought during the existence
of the marriage which was dissolved upon the death of Rafael
Ayuste in 1989. 17 Clearly, the action for annulment filed by
Christina Ayuste was barred for having been filed out of time.
The fact that Christina Ayuste only learned of the sale after the
death of her husband is not material. We affirm public
respondent's ruling that registration of the sale with the Register
of Deeds constitutes a notice to the whole world. 18 Precisely,
the purpose of the legislature in providing a system of
registration is to afford a means of publicity so that persons
dealing with real property may search the records and thereby,
acquire security against instruments the execution of which have
not been revealed to them. 19 Since the deed of sale was
registered on March 5, 1987, Christina Ayuste is presumed to
have constructive notice of the sale from such date.
WHEREFORE, the decision of the Court of Appeals is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 143826 August 28, 2003
HEIRS OF IGNACIA AGUILAR-REYES, Petitioners,
vs.
Spouses CIPRIANO MIJARES and FLORENTINA
MIJARES, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Under the regime of the Civil Code, the alienation or
encumbrance of a conjugal real property requires the
consent of the wife. The absence of such consent renders
the entire transaction1 merely voidable and not void.2 The
wife may, during the marriage and within ten years from
the transaction questioned, bring an action for the
annulment of the contract entered into by her husband
without her consent.3
Assailed in this petition for review on certiorari are the
January 26, 2000 Decision4 and June 19, 2000,
Resolution5 of the Court of Appeals in CA-G.R. No. 28464
which declared respondents as purchasers in good faith
and set aside the May 31, 1990 and June 29, 1990 Orders
of the Regional Trial Court of Quezon City, Branch 101, in
Civil Case No. Q-48018.
The controversy stemmed from a dispute over Lot No.
4349-B-2,6 approximately 396 square meters, previously
covered by Transfer Certificate of Title (TCT) No. 205445,
located in Balintawak, Quezon City and registered in the
name of Spouses Vicente Reyes and Ignacia Aguilar-
Reyes.7 Said lot and the apartments built thereon were
part of the spouses’ conjugal properties having been
purchased using conjugal funds from their garments
business.8
Vicente and Ignacia were married in 1960, but had been
separated de facto since 1974.9 Sometime in 1984,
Ignacia learned that on March 1, 1983, Vicente sold Lot
No. 4349-B-2 to respondent spouses Cipriano and
Florentina Mijares for P40,000.00.10 As a consequence
thereof, TCT No. 205445 was cancelled and TCT No.
306087 was issued on April 19, 1983 in the name of
respondent spouses.11 She likewise found out that
Vicente filed a petition for administration and appointment
of guardian with the Metropolitan Trial Court of Quezon
City, Branch XXI. Vicente misrepresented therein that his
wife, Ignacia, died on March 22, 1982, and that he and
their 5 minor children were her only heirs.12 On September
29, 1983, the court appointed Vicente as the guardian of
their minor children.13Subsequently, in its Order dated
October 14, 1983, the court authorized Vicente to sell the
estate of Ignacia.14
On August 9, 1984, Ignacia, through her counsel, sent a
letter to respondent spouses demanding the return of her
½ share in the lot. Failing to settle the matter amicably,
Ignacia filed on June 4, 1996 a complaint15 for annulment
of sale against respondent spouses. The complaint was
thereafter amended to include Vicente Reyes as one of
the defendants.16
In their answer, respondent spouses claimed that they are
purchasers in good faith and that the sale was valid
because it was duly approved by the court.17 Vicente
Reyes, on the other hand, contended that what he sold to
the spouses was only his share in Lot No. 4349-B-2,
excluding the share of his wife, and that he never
represented that the latter was already dead.18 He
likewise testified that respondent spouses, through the
counsel they provided him, took advantage of his illiteracy
by filing a petition for the issuance of letters of
administration and appointment of guardian without his
knowledge.19
On February 15, 1990, the court a quo rendered a
decision declaring the sale of Lot No. 4349-B-2 void with
respect to the share of Ignacia. It held that the purchase
price of the lot was P110,000.00 and ordered Vicente to
return ½ thereof or P55,000.00 to respondent spouses.
The dispositive portion of the said decision, reads-
WHEREFORE, premises above considered, judgment is
hereby rendered declaring the subject Deed of Absolute
Sale, dated March [1,] 1983 signed by and between
defendants Vicente Reyes and defendant Cipriano
Mijares NULL AND VOID WITH RESPECT TO ONE-
HALF (1/2) OF THE SAID PROPERTY;
The Register of Deeds of Quezon City is hereby ordered
to cancel TCT No. 306083 (sic) in the names of defendant
spouses Cipriano Mijares and Florentina Mijares and to
issue a new TCT in the name of the plaintiff Ignacia
Aguilar-Reyes as owner in fee simple of one-half (1/2) of
said property and the other half in the names of defendant
spouses Cipriano Mijares and Florentin[a] Mijares, upon
payment of the required fees therefore;
Said defendant spouses Mijares are also ordered to allow
plaintiff the use and exercise of rights, as well as
obligations, pertinent to her one-half (1/2) ownership of
the subject property;
Defendant Vicente Reyes is hereby ordered to reimburse
P55,000.00 with legal rate of interest from the execution
of the subject Deed of Absolute Sale on March 1, 1983,
to the defendant spouses Cipriano Mijares and Florentina
Mijares which corresponds to the one-half (1/2) of the
actual purchase price by the said Mijares but is annulled
in this decision (sic);
Defendant Vicente Reyes is hereby further ordered to pay
plaintiff the amount of P50,000.00 by way of moral and
exemplary damages, plus costs of this suit.
SO ORDERED.20
Ignacia filed a motion for modification of the decision
praying that the sale be declared void in its entirety and
that the respondents be ordered to reimburse to her the
rentals they collected on the apartments built on Lot No.
4349-B-2 computed from March 1, 1983.1âwphi1
On May 31, 1990, the trial court modified its decision by
declaring the sale void in its entirety and ordering Vicente
Reyes to reimburse respondent spouses the purchase
price of P110,000, thus –
WHEREFORE, premises considered, judgment is hereby
rendered declaring the subject Deed of Absolute Sale,
dated March 1, 1983 signed by and between defendants
Vicente Reyes and defendant Cipriano Mijares
as null and void ab initio, in view of the absence of the
wife’s conformity to said transaction.
Consequent thereto, the Register of Deeds for Quezon
City is hereby ordered to cancel TCT No. 306083 (sic) in
the name of Cipriano Mijares and Florentin[a] Mijares and
issue a new TCT in the name of the plaintiff and defendant
Ignacia Aguilar-Reyes and Vicente Reyes as owners in
fee simple, upon payment of required fees therefore.
Defendant Vicente Reyes is hereby ordered to pay the
amount of one hundred ten thousand pesos
(P110,000.00) with legal rate of interest at 12% per
annum from the execution of the subject Deed of Absolute
Sale on March 1, 1983.
Further, defendant Vicente Reyes is ordered to pay the
amount of P50,000.00 by way of moral and exemplary
damages, plus costs of this suit.
SO ORDERED.21
On motion22 of Ignacia, the court issued an Order dated
June 29, 1990 amending the dispositive portion of the
May 31, 1990 decision by correcting the Transfer
Certificate of Title of Lot No. 4349-B-2, in the name of
Cipriano Mijares and Florentina Mijares, from TCT No.
306083 to TCT No. 306087; and directing the Register of
Deeds of Quezon City to issue a new title in the name of
Ignacia Aguilar-Reyes and Vicente Reyes. The Order
likewise specified that Vicente Reyes should pay Ignacia
Aguilar-Reyes the amount of P50,000.00 as moral and
exemplary damages.23
Both Ignacia Aguilar-Reyes and respondent spouses
appealed the decision to the Court of Appeals.24 Pending
the appeal, Ignacia died and she was substituted by her
compulsory heirs.25
Petitioners contended that they are entitled to
reimbursement of the rentals collected on the apartment
built on Lot No. 4349-B-2, while respondent spouses
claimed that they are buyers in good faith. On January 26,
2000, the Court of Appeals reversed and set aside the
decision of the trial court. It ruled that notwithstanding the
absence of Ignacia’s consent to the sale, the same must
be held valid in favor of respondents because they were
innocent purchasers for value.26 The decretal potion of the
appellate court’s decision states –
WHEREFORE, premises considered, the Decision
appealed from and the Orders dated May 31, 1990 and
June 29, 1990, are SET ASIDE and in lieu thereof a new
one is rendered –
1. Declaring the Deed of Absolute Sale dated March 1,
1983 executed by Vicente Reyes in favor of spouses
Cipriano and [Florentina] Mijares valid and lawful;
2. Ordering Vicente Reyes to pay spouses Mijares the
amount of P30,000.00 as attorney’s fees and legal
expenses; and
3. Ordering Vicente Reyes to pay spouses Mijares
P50,000.00 as moral damages.
No pronouncement as to costs.
SO ORDERED.27
Undaunted by the denial of their motion for
reconsideration,28 petitioners filed the instant petition
contending that the assailed sale of Lot No. 4392-B-2
should be annulled because respondent spouses were
not purchasers in good faith.
The issues for resolution are as follows: (1) What is the
status of the sale of Lot No. 4349-B-2 to respondent
spouses? (2) Assuming that the sale is annullable, should
it be annulled in its entirety or only with respect to the
share of Ignacia? (3) Are respondent spouses purchasers
in good faith?
Articles 166 and 173 of the Civil Code,29 the governing
laws at the time the assailed sale was contracted, provide:
Art.166. Unless the wife has been declared a non compos
mentis or a spendthrift, or is under civil interdiction or is
confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership
without the wife’s consent. If she refuses unreasonably to
give her consent, the court may compel her to grant the
same…
Art. 173. The wife may, during the marriage and within ten
years from the transaction questioned, ask the courts for
the annulment of any contract of the husband entered into
without her consent, when such consent is required, or
any act or contract of the husband which tends to defraud
her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or
her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by
the husband.
Pursuant to the foregoing provisions, the husband could
not alienate or encumber any conjugal real property
without the consent, express or implied, of the wife
otherwise, the contract is voidable. Indeed, in several
cases30 the Court had ruled that such alienation or
encumbrance by the husband is void. The better view,
however, is to consider the transaction as merely voidable
and not void.31 This is consistent with Article 173 of the
Civil Code pursuant to which the wife could, during the
marriage and within 10 years from the questioned
transaction, seek its annulment.32
In the case of Heirs of Christina Ayuste v. Court of
Appeals,33 it was categorically held that –
There is no ambiguity in the wording of the law. A sale of
real property of the conjugal partnership made by the
husband without the consent of his wife is voidable. The
action for annulment must be brought during the marriage
and within ten years from the questioned transaction by
the wife. Where the law speaks in clear and categorical
language, there is no room for interpretation — there is
room only for application.34
Likewise, in Spouses Guiang v. Court of Appeals,35 the
Court quoted with approval the ruling of the trial court that
under the Civil Code, the encumbrance or alienation of a
conjugal real property by the husband absent the wife’s
consent, is voidable and not void. Thus –
…Under Article 166 of the Civil Code, the husband cannot
generally alienate or encumber any real property of the
conjugal partnership without the wife’s consent. The
alienation or encumbrance if so made however is not null
and void. It is merely voidable. The offended wife may
bring an action to annul the said alienation or
encumbrance. Thus, the provision of Article 173 of the
Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten
years from the transaction questioned, ask the courts for
the annulment of any contract of the husband entered into
without her consent, when such consent is required, or
any act or contract of the husband which tends to defraud
her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or
her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by
the husband.
This particular provision giving the wife ten (10) years x x
x during [the] marriage to annul the alienation or
encumbrance was not carried over to the Family Code. It
is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by
the husband of the conjugal partnership property without
the consent of the wife is null and void…
In the case at bar, there is no dispute that Lot No. 4349-
B-2, is a conjugal property having been purchased using
the conjugal funds of the spouses during the subsistence
of their marriage. It is beyond cavil therefore that the sale
of said lot to respondent spouses without the knowledge
and consent of Ignacia is voidable. Her action to annul the
March 1, 1983 sale which was filed on June 4, 1986,
before her demise is perfectly within the 10 year
prescriptive period under Article 173 of the Civil Code.
Even if we reckon the period from November 25, 1978
which was the date when Vicente and the respondent
spouses entered into a contract concerning Lot No. 4349-
B-2, Ignacia’s action would still be within the prescribed
period.
Anent the second issue, the trial court correctly annulled
the voidable sale of Lot No. 4349-B-2 in its entirety.
In Bucoy v. Paulino,36 a case involving the annulment of
sale with assumption of mortgages executed by the
husband without the consent of the wife, it was held that
the alienation or encumbrance must be annulled in its
entirety and not only insofar as the share of the wife in the
conjugal property is concerned. Although the transaction
in the said case was declared void and not merely
voidable, the rationale for the annulment of the whole
transaction is the same thus –
The plain meaning attached to the plain language of the
law is that the contract, in its entirety, executed by the
husband without the wife's consent, may be annulled by
the wife. Had Congress intended to limit such annulment
in so far as the contract shall "prejudice" the wife, such
limitation should have been spelled out in the statute. It is
not the legitimate concern of this Court to recast the law.
As Mr. Justice Jose B. L. Reyes of this Court and Judge
Ricardo C. Puno of the Court of First Instance correctly
stated, "[t]he rule (in the first sentence of Article 173)
revokes Baello vs. Villanueva, 54 Phil. 213 and Coque vs.
Navas Sioca, 45 Phil. 430," in which cases annulment
was held to refer only to the extent of the one-half interest
of the wife…
The necessity to strike down the contract of July 5, 1963
as a whole, not merely as to the share of the wife, is not
without its basis in the common-sense rule. To be
underscored here is that upon the provisions of Articles
161, 162 and 163 of the Civil Code, the conjugal
partnership is liable for many obligations while the
conjugal partnership exists. Not only that. The conjugal
property is even subject to the payment of debts
contracted by either spouse before the marriage, as those
for the payment of fines and indemnities imposed upon
them after the responsibilities in Article 161 have been
covered (Article 163, par. 3), if it turns out that the spouse
who is bound thereby, "should have no exclusive property
or if it should be insufficient." These are considerations
that go beyond the mere equitable share of the wife in the
property. These are reasons enough for the husband to
be stopped from disposing of the conjugal property
without the consent of the wife. Even more fundamental
is the fact that the nullity is decreed by the Code not on
the basis of prejudice but lack of consent of an
indispensable party to the contract under Article 166.37
With respect to the third issue, the Court finds that
respondent spouses are not purchasers in good faith. A
purchaser in good faith is one who buys property of
another, without notice that some other person has a right
to, or interest in, such property and pays full and fair price
for the same, at the time of such purchase, or before he
has notice of the claim or interest of some other persons
in the property. He buys the property with the belief that
the person from whom he receives the thing was the
owner and could convey title to the property. A purchaser
cannot close his eyes to facts which should put a
reasonable man on his guard and still claim he acted in
good faith.38
In the instant case, there existed circumstances that
should have placed respondent spouses on guard. The
death certificate of Ignacia, shows that she died on March
22, 1982. The same death certificate, however, reveals
that – (1) it was issued by the Office of the Civil Registrar
of Lubao Pampanga on March 10, 1982; (2) the alleged
death of Ignacia was reported to the Office of the Civil
Registrar on March 4, 1982; and (3) her burial or
cremation would be on March 8, 1982.39 These obvious
flaws in the death certificate should have prompted
respondents to investigate further, especially so that
respondent Florentina Mijares admitted on cross
examination that she asked for the death certificate of
Ignacia because she was suspicious that Ignacia was still
alive.40 Moreover, respondent spouses had all the
opportunity to verify the claim of Vicente that he is a
widower because it was their lawyer, Atty. Rodriguito S.
Saet, who represented Vicente in the special proceedings
before the Metropolitan Trial Court.
Neither can respondent spouses rely on the alleged court
approval of the sale. Note that the Order issued by the
Metropolitan Trial Court of Quezon City, Branch XXXI,
appointing Vicente as guardian of his 5 minor children, as
well as the Order authorizing him to sell the estate of
Ignacia were issued only on September 29, 1983 and
October 14, 1983, respectively. On the other hand, the
sale of the entire Lot No. 4349-B-2 to respondent spouses
appears to have been made not on March 1, 1983, but
even as early as November 25, 1978. In the "Agreement"
dated November 25, 1978, Vicente in consideration of the
amount of P110,000.00, sold to Cipriano Mijares Lot No.
4349-B-2 on installment basis, with the first installment
due on or before July 31, 1979.41 This was followed by a
"Memorandum of Understanding" executed on July 30,
1979, by Vicente and Cipriano – (1) acknowledging
Cipriano’s receipt of Vicente’s down payment in the
amount of P50,000.00; and (2) authorizing Florentina
Mijares to collect rentals.42 On July 14, 1981, Vicente and
Cipriano executed another "Memorandum of Agreement,"
stating, among other, that out of the purchase price of
P110,000.00 Vicente had remaining balance of
P19,000.00.43 Clearly therefore, the special proceedings
before the Metropolitan Trial Court of Quezon City,
Branch XXXI, could not have been the basis of
respondent spouses’ claim of good faith because the sale
of Lot No. 4349-B-2 occurred prior thereto.
Respondent spouses cannot deny knowledge that at the
time of the sale in 1978, Vicente was married to Ignacia
and that the latter did not give her conformity to the sale.
This is so because the 1978 "Agreement" described
Vicente as "married" but the conformity of his wife to the
sale did not appear in the deed. Obviously, the execution
of another deed of sale in 1983 over the same Lot No.
4349-B-2, after the alleged death of Ignacia on March 22,
1982, as well as the institution of the special proceedings
were, intended to correct the absence of Ignacia’s
consent to the sale. Even assuming that respondent
spouses believed in good faith that Ignacia really died on
March 22, 1982, after they purchased the lot, the fact
remains that the sale of Lot No. 4349-B-2 prior to Ignacia’s
alleged demise was without her consent and therefore
subject to annulment. The October 14, 1983 order
authorizing the sale of the estate of Ignacia, could not
have validated the sale of Lot No. 4349-B-2 because said
order was issued on the assumption that Ignacia was
already dead and that the sale dated March 1, 1983 was
never categorically approved in the said order.
The fact that the 5 minor children44 of Vicente represented
by the latter, signed the March 1, 1983 deed of sale of Lot
No. 4349-B-2 will not estop them from assailing the
validity thereof. Not only were they too young at that time
to understand the repercussions of the sale, they likewise
had no right to sell the property of their mother who, when
they signed the deed, was very much alive.
If a voidable contract is annulled, the restoration of what
has been given is proper. The relationship between
parties in any contract even if subsequently annulled must
always be characterized and punctuated by good faith
and fair dealing. Hence, for the sake of justice and equity,
and in consonance with the salutary principle of non-
enrichment at another’s expense, the Court sustains the
trial court’s order directing Vicente to refund to respondent
spouses the amount of P110,000.00 which they have paid
as purchase price of Lot No. 4349-B-2.45 The court a
quo correctly found that the subject of the sale was the
entire Lot No. 4349-B-2 and that the consideration thereof
is not P40,000.00 as stated in the March 1, 1983 deed of
sale, but P110,000.00 as evidenced by the – (1)
"Agreement" dated November 25, 1978 as well as the July
30, 1979 "Memorandum of Understanding" and the July
14, 1981 "Memorandum of Agreement" which served as
receipts of the installment payments made by respondent
Cipriano Mijares; and (2) the receipt duly signed by
Vicente Reyes acknowledging receipt of the amount of
P110,000.00 from respondent spouses as payment of the
sale of the controverted lot.46
The trial court, however, erred in imposing 12% interest
per annum on the amount due the respondents.
In Eastern Shipping Lines, Inc. v. Court of Appeals,47 it
was held that interest on obligations not constituting a
loan or forbearance of money is six percent (6%) annually.
If the purchase price could be established with certainty
at the time of the filing of the complaint, the six percent
(6%) interest should be computed from the date the
complaint was filed until finality of the decision. In Lui v.
Loy,48 involving a suit for reconveyance and annulment of
title filed by the first buyer against the seller and the
second buyer, the Court, ruling in favor of the first buyer
and annulling the second sale, ordered the seller to refund
to the second buyer (who was not a purchaser in good
faith) the purchase price of the lots. It was held therein
that the 6% interest should be computed from the date of
the filing of the complaint by the first buyer. After the
judgment becomes final and executory until the obligation
is satisfied, the amount due shall earn interest at 12% per
year, the interim period being deemed equivalent to a
forbearance of credit.49
Accordingly, the amount of P110,000.00 due the
respondent spouses which could be determined with
certainty at the time of the filing of the complaint shall earn
6% interest per annum from June 4, 1986 until the finality
of this decision. If the adjudged principal and the interest
(or any part thereof) remain unpaid thereafter, the interest
rate shall be twelve percent (12%) per annum computed
from the time the judgment becomes final and executory
until it is fully satisfied.
Petitioner’s prayer for payment of rentals should be
denied. Other than the allegation of Ignacia in her
Sinumpaang Salaysay that the apartments could be
rented at P1,000.00 a month, no other evidence was
presented to substantiate her claim. In awarding rentals
which are in the nature of actual damages, the Court
cannot rely on mere assertions, speculations, conjectures
or guesswork but must depend on competent proof and
on the best evidence obtainable regarding the actual
amount of loss.50 None, having been presented in the
case at bar, petitioner’s claim for rentals must be denied.
While as a general rule, a party who has not appealed is
not entitled to affirmative relief other than the ones
granted in the decision of the court below, law and
jurisprudence authorize a tribunal to consider errors,
although unassigned, if they involve (1) errors affecting
the lower court’s jurisdiction over the subject matter, (2)
plain errors not specified, and (3) clerical errors.51 In this
case, though defendant Vicente Reyes did not appeal, the
"plain error" committed by the court a quo as to the award
of moral and exemplary damages must be corrected.
These awards cannot be lumped together as was done by
the trial court.52 Moral and exemplary damages are
different in nature, and require separate determination.
Moral damages are awarded where the claimant
experienced physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury
as a result of the act complained of.53 The award of
exemplary damages, on the other hand, is warranted
when moral, temperate, liquidated, or compensatory
damages were likewise awarded by the court.54
Hence, the trial court’s award of "P50,000.00 by way of
moral and exemplary damages" should be modified.
Vicente Reyes should be ordered to pay the amounts of
P25,000.00 as moral damages and P25,000.00 as
exemplary damages. Since Vicente Reyes was among
the heirs substituted to the late Ignacia Aguilar-Reyes,
payment of moral and exemplary damages must be made
by Vicente to his children, petitioners in this case.
WHEREFORE, in view of all the foregoing, the petition is
PARTIALLY GRANTED. The January 26, 2000 Decision
and June 19, 2002, Resolution of the Court of Appeals in
CA-G.R. No. 28464 are REVERSED and SET ASIDE.
The May 31, 1990 Order of the Regional Trial Court of
Quezon City, Branch 101, in Civil Case No. Q-48018,
which annulled the March 1, 1983 Deed of Absolute Sale
over Lot No. 4349-B-2, and ordered the Register of Deeds
of Quezon City to cancel TCT No. 306087 in the name of
respondent spouses Cipriano Mijares and Florentina
Mijares covering the same property; as well as the June
29, 1990 Order correcting the typographical errors in the
order dated March 1, 1983, are REINSTATED, with the
following modifications –
(1) The Register of Deeds of Quezon City is
ordered to issue a new certificate of title over Lot
No. 4349-B-2, in the name of petitioners as co-
owners thereof;
(2) Vicente Reyes is ordered to reimburse the
respondent spouses the amount of P110,000.00
as purchase price of Lot No. 4349-B-2, with
interest at 6% per annum from June 4, 1986, until
finality of this decision. After this decision
becomes final, interest at the rate of 12% per
annum on the principal and interest (or any part
thereof) shall be imposed until full payment.
(3) Defendant Vicente Reyes is ordered to pay
the heirs of the late Ignacia Aguilar-Reyes, the
amounts of P25,000.00 as moral damages and
P25,000.00 as exemplary damages.
SO ORDERED.
G.R. No. 141323 June 8, 2005
DAVID V. PELAYO and LORENZA* B.
PELAYO, Petitioners,
vs.
MELKI E. PEREZ, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking
the reversal of the Decision1 of the Court of Appeals (CA)
promulgated on April 20, 1999 which reversed the
Decision of the Regional Trial Court (RTC) of Panabo,
Davao, Branch 34, in Civil Case No. 91-46; and the CA
Resolution dated December 17, 1999 denying petitioners’
motion for reconsideration.
The antecedent facts as aptly narrated by the CA are as
follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale
executed on January 11, 1988, conveyed to Melki Perez
(Perez) two parcels of agricultural land (the lots) situated
in Panabo, Davao which are portions of Lot 4192, Cad.
276 covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one
whose signature is illegible witnessed the execution of the
deed.
Loreza, however, signed only on the third page in the
space provided for witnesses on account of which Perez’
application for registration of the deed with the Office of
the Register of Deeds in Tagum, Davao was denied.
Perez thereupon asked Loreza to sign on the first and
second pages of the deed but she refused, hence, he
instituted on August 8, 1991 the instant complaint for
specific performance against her and her husband Pelayo
(defendants).
The defendants moved to dismiss the complaint on the
ground that it stated no cause of action, citing Section 6
of RA 6656 otherwise known as the Comprehensive
Agrarian Reform Law which took effect on June 10, 1988
and which provides that contracts executed prior thereto
shall "be valid only when registered with the Register of
Deeds within a period of three (3) months after the
effectivity of this Act."
The questioned deed having been executed on January
10, 1988, the defendants claimed that Perez had at least
up to September 10, 1988 within which to register the
same, but as they failed to, it is not valid and, therefore,
unenforceable.
The trial court thus dismissed the complaint. On appeal to
this Court, the dismissal was set aside and the case was
remanded to the lower court for further proceedings.
In their Answer, the defendants claimed that as the lots
were occupied illegally by some persons against whom
they filed an ejectment case, they and Perez who is their
friend and known at the time as an activist/leftist, hence
feared by many, just made it appear in the deed that the
lots were sold to him in order to frighten said illegal
occupants, with the intentional omission of Loreza’s
signature so that the deed could not be registered; and
that the deed being simulated and bereft of consideration
is void/inexistent.
Perez countered that the lots were given to him by
defendant Pelayo in consideration of his services as his
attorney-in-fact to make the necessary representation and
negotiation with the illegal occupants-defendants in the
ejectment suit; and that after his relationship with
defendant Pelayo became sour, the latter sent a letter to
the Register of Deeds of Tagum requesting him not to
entertain any transaction concerning the lots title to which
was entrusted to Perez who misplaced and could [not]
locate it.
Defendant Pelayo claimed in any event, in his Pre-trial
brief filed on March 19, 1996, that the deed was without
his wife Loreza’s consent, hence, in light of Art. 166 of the
Civil Code which provides:
Article 166. Unless the wife has been declared a non
compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband
cannot alienate or encumber any real property of the
conjugal partnership without the wife’s consent . . .
it is null and void.
The trial court, finding, among others, that Perez did not
possess, nor pay the taxes on the lots, that defendant
Pelayo was indebted to Perez for services rendered and,
therefore, the deed could only be considered as evidence
of debt, and that in any event, there was no marital
consent to nor actual consideration for the deed, held that
the deed was null and void and accordingly rendered
judgment the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering
and directing the defendants to pay plaintiff Melki Perez
the sum of TEN THOUSAND (₱10,000.00) Pesos as
principal with 12% interest per annum starting from the
date of filing of the complaint on August 1, 1991 until
plaintiff is fully paid.
The defendants shall likewise pay to plaintiff the sum of
THREE THOUSAND (₱3,000.00) as attorney’s fees.
The court further orders that the Deed of Absolute Sale,
(Annex ‘A’) of the complaint and (Annex ‘C’) of the
plaintiff’s Motion for Summary Judgment is declared null
and void and without force and it is likewise removed as a
cloud over defendants’ title and property in suit. . . ."2
The RTC Decision was appealed by herein respondent
Perez to the CA. Petitioners failed to file their appellees’
brief. The CA then promulgated its Decision on April 20,
1999 whereby it ruled that by Lorenza’s signing as witness
to the execution of the deed, she had knowledge of the
transaction and is deemed to have given her consent to
the same; that herein petitioners failed to adduce
sufficient proof to overthrow the presumption that there
was consideration for the deed, and that petitioner David
Pelayo, being a lawyer, is presumed to have acted with
due care and to have signed the deed with full knowledge
of its contents and import. The CA reversed and set aside
the RTC Decision, declaring as valid and enforceable the
questioned deed of sale and ordering herein petitioner
Lorenza Pelayo to affix her signature on all pages of said
document.
Petitioners moved for reconsideration of the decision but
the same was denied per Resolution dated December 17,
1999. The CA found said motion to have been filed out of
time and ruled that even putting aside technicality,
petitioners failed to present any ground bearing on the
merits of the case to justify a reversal or setting aside of
the decision.
Hence, this petition for review on certiorari on the
following grounds:
1. The CA erred in ignoring the specific provision of
Section 6, in relation to Section 4 of R.A. No. 6657
otherwise known as the Comprehensive Agrarian Reform
Law of 1988 which took effect on June 15, 1988 and which
provides that contracts executed prior thereto shall "be
valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of
this Act."
2. The CA erred in holding that the deed of sale was valid
and considering the ₱10,000.00 adjudged by the trial
court as Perez’s remuneration as the consideration for the
deed of sale, instead of declaring the same as null and
void for being fictitious or simulated and on the basis of
Art. 491, Par. 2 of the New Civil Code which prohibits
agents from acquiring by purchase properties from his
principal under his charge.
3. The CA made a novel ruling that there was implied
marital consent of the wife of petitioner David Pelayo.
4. Petitioners should have been allowed to file their
appellees’ brief to ventilate their side, considering the
existence of peculiar circumstances which prevented
petitioners from filing said brief.
On the other hand, respondent points out that the CA, in
resolving the first appeal docketed as CA-G.R. SP No.
387003 brought by respondent assailing the RTC Order
granting herein petitioners’ motion to dismiss, already
ruled that under R.A. No. 6657, the sale or transfer of
private agricultural land is allowed only when the area of
the land being conveyed constitutes or is a part of, the
landowner-seller retained area and when the total
landholding of the purchaser-transferee, including the
property sold, does not exceed five (5) hectares; that in
this case, the land in dispute is only 1.3 hectares and
there is no proof that the transferee’s (herein respondent)
total landholding inclusive of the subject land will exceed
5 hectares, the landholding ceiling prescribed by R.A. No.
6657; that the failure of respondent to register the
instrument was not due to his fault or negligence but can
be attributed to Lorenza’s unjustified refusal to sign two
pages of the deed despite several requests of
respondent; and that therefore, the CA ruled that the deed
of sale subject of this case is valid under R.A. No. 6657.
Respondent further maintains that the CA correctly held
in its assailed Decision that there was consideration for
the contract and that Lorenza is deemed to have given
her consent to the deed of sale.
Respondent likewise opines that the CA was right in
denying petitioners’ motion for reconsideration where they
prayed that they be allowed to file their appellees’ brief as
their counsel failed to file the same on account of said
counsel’s failing health due to cancer of the liver.
Respondent emphasized that in petitioners’ motion for
reconsideration, they did not even cite any errors made
by the CA in its Decision.
The issues boil down to the question of whether or not the
deed of sale was null and void on the following grounds:
(a) for not complying with the provision in R.A. No. 6657
that such document must be registered with the Register
of Deeds within three months after the effectivity of said
law; (b) for lack of marital consent; (c) for being prohibited
under Article 1491 (2) of the Civil Code; and (d) for lack of
consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and
void under R.A. No. 6657, for respondent’s failure to
register said document with the Register of Deeds within
three months after the effectivity of R.A. No. 6657, had
been resolved with finality by the CA in its Decision dated
November 24, 1994 in CA-G.R. SP No. 38700.4 Herein
petitioners no longer elevated said CA Decision to this
Court and the same became final and executory on
January 7, 1995.5
In said decision, the CA interpreted Section 4, in relation
to Section 70 of R.A. No. 6657, to mean thus:
. . . the proper interpretation of both sections is that under
R.A. No. 6657, the sale or transfer of a private agricultural
land is allowed only when said land area constitutes or is
a part of the landowner-seller retained area and only when
the total landholdings of the purchaser-transferee,
including the property sold does not exceed five (5)
hectares.
Aside from declaring that the failure of respondent to
register the deed was not of his own fault or negligence,
the CA ruled that respondent’s failure to register the deed
of sale within three months after effectivity of The
Comprehensive Agrarian Reform Law did not invalidate
the deed of sale as "the transaction over said property is
not proscribed by R.A. No. 6657."
Thus, under the principle of law of the case, said ruling of
the CA is now binding on petitioners.1avvph!1 Such
principle was elucidated in Cucueco vs. Court of
Appeals,6 to wit:
Law of the case has been defined as the opinion delivered
on a former appeal. It is a term applied to an established
rule that when an appellate court passes on a question
and remands the case to the lower court for further
proceedings, the question there settled becomes the law
of the case upon subsequent appeal. It means that
whatever is once irrevocably established as the
controlling legal rule or decision between the same parties
in the same case continues to be the law of the
case, whether correct on general principles or not, so long
as the facts on which such decision was predicated
continue to be the facts of the case before the court.
Petitioners not having questioned the Decision of the CA
dated November 24, 1994 which then attained finality, the
ruling that the deed of sale subject of this case is not
among the transactions deemed as invalid under R.A. No.
6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by
affixing her signature to the Deed of Sale on the space
provided for witnesses, is deemed to have given her
implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere
consent, which may either be express or implied.7 A wife’s
consent to the husband’s disposition of conjugal property
does not always have to be explicit or set forth in any
particular document, so long as it is shown by acts of the
wife that such consent or approval was indeed given. 8 In
the present case, although it appears on the face of the
deed of sale that Lorenza signed only as an instrumental
witness, circumstances leading to the execution of said
document point to the fact that Lorenza was fully aware of
the sale of their conjugal property and consented to the
sale.
In their Pre-Trial Brief,9 petitioners admitted that even
prior to 1988, they have been having serious problems,
including threats to the life of petitioner David Pelayo, due
to conflicts with the illegal occupants of the property in
question, so that respondent, whom many feared for
being a leftist/activist, offered his help in driving out said
illegal occupants.
Human experience tells us that a wife would surely be
aware of serious problems such as threats to her
husband’s life and the reasons for such threats. As they
themselves stated, petitioners’ problems over the subject
property had been going on for quite some time, so it is
highly improbable for Lorenza not to be aware of what her
husband was doing to remedy such problems. Petitioners
do not deny that Lorenza Pelayo was present during the
execution of the deed of sale as her signature appears
thereon. Neither do they claim that Lorenza Pelayo had
no knowledge whatsoever about the contents of the
subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property
between her husband and respondent.
Under the rules of evidence, it is presumed that a person
takes ordinary care of his concerns.10 Petitioners did not
even attempt to overcome the aforementioned
presumption as no evidence was ever presented to show
that Lorenza was in any way lacking in her mental
faculties and, hence, could not have fully understood the
ramifications of signing the deed of sale. Neither did
petitioners present any evidence that Lorenza had been
defrauded, forced, intimidated or threatened either by her
own husband or by respondent into affixing her signature
on the subject document. If Lorenza had any objections
over the conveyance of the disputed property, she could
have totally refrained from having any part in the
execution of the deed of sale. Instead, Lorenza even
affixed her signature thereto.
Moreover, under Article 173, in relation to Article 166, both
of the New Civil Code, which was still in effect on January
11, 1988 when the deed in question was executed, the
lack of marital consent to the disposition of conjugal
property does not make the contract void ab initio but
merely voidable. Said provisions of law provide:
Art. 166. Unless the wife has been declared a non
compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband
cannot alienate or encumber any real property of the
conjugal property without the wife’s consent. If she
refuses unreasonably to give her consent, the court may
compel her to grant the same.
...
Art. 173. The wife may, during the marriage, and within
ten years from the transaction questioned, ask the courts
for the annulment of any contract of the husband entered
into without her consent, when such consent is required,
or any act or contract of the husband which tends to
defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this
right, she or her heirs, after the dissolution of the
marriage, may demand the value of property fraudulently
alienated by the husband.
Hence, it has been held that the contract is valid until the
court annuls the same and only upon an action brought
by the wife whose consent was not obtained.11 In the
present case, despite respondent’s repeated demands for
Lorenza to affix her signature on all the pages of the deed
of sale, showing respondent’s insistence on enforcing
said contract, Lorenza still did not file a case for
annulment of the deed of sale. It was only when
respondent filed a complaint for specific performance on
August 8, 1991 when petitioners brought up Lorenza’s
alleged lack of consent as an affirmative defense. Thus, if
the transaction was indeed entered into without Lorenza’s
consent, we find it quite puzzling why for more than three
and a half years, Lorenza did absolutely nothing to seek
the nullification of the assailed contract.
The foregoing circumstances lead the Court to believe
that Lorenza knew of the full import of the transaction
between respondent and her
husband; and, by affixing her signature on the deed of
sale, she, in effect, signified her consent to the disposition
of their conjugal property.
With regard to petitioners’ asseveration that the deed of
sale is invalid under Article 1491, paragraph 2 of the New
Civil Code, we find such argument unmeritorious. Article
1491 (2) provides:
Art. 1491. The following persons cannot acquire by
purchase, even at a public or judicial auction, either in
person or through the mediation of another:
...
(2) Agents, the property whose administration or sale may
have been entrusted to them, unless the consent of the
principal has been given;
...
In Distajo vs. Court of Appeals,12 a landowner, Iluminada
Abiertas, designated one of her sons as the administrator
of several parcels of her land. The landowner
subsequently executed a Deed of Certification of Sale of
Unregistered Land, conveying some of said land to her
son/administrator. Therein, we held that:
Under paragraph (2) of the above article, the prohibition
against agents purchasing property in their hands for sale
or management is not absolute. It does not apply if the
principal consents to the sale of the property in the hands
of the agent or administrator. In this case, the deeds of
sale signed by Iluminada Abiertas shows that she gave
consent to the sale of the properties in favor of her son,
Rufo, who was the administrator of the properties. Thus,
the consent of the principal Iluminada Abiertas removes
the transaction out of the prohibition contained in Article
1491(2).13
The above-quoted ruling is exactly in point with this case
before us. Petitioners, by signing the Deed of Sale in favor
of respondent, are also deemed to have given their
consent to the sale of the subject property in favor of
respondent, thereby making the transaction an exception
to the general rule that agents are prohibited from
purchasing the property of their principals.
Petitioners also argue that the CA erred in ruling that there
was consideration for the sale. We find no error in said
appellate court’s ruling. The element of consideration for
the sale is indeed present. Petitioners, in adopting the trial
court’s narration of antecedent facts in their
petition,14 thereby admitted that they authorized
respondent to represent them in negotiations with the
"squatters" occupying the disputed property and, in
consideration of respondent’s services, they executed the
subject deed of sale. Aside from such services rendered
by respondent, petitioners also acknowledged in the deed
of sale that they received in full the amount of Ten
Thousand Pesos. Evidently, the consideration for the sale
is respondent’s services plus the aforementioned cash
money.
Petitioners contend that the consideration stated in the
deed of sale is excessively inadequate, indicating that the
deed of sale was merely simulated. We are not
persuaded. Our ruling in Buenaventura vs. Court of
Appeals15 is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal
to the exact value of the subject matter of sale. . . . As we
stated in Vales vs. Villa:
Courts cannot follow one every step of his life and
extricate him from bad bargains, protect him from unwise
investments, relieve him from one-sided contracts, or
annul the effects of foolish acts. Courts cannot constitute
themselves guardians of persons who are not legally
incompetent. Courts operate not because one person has
been defeated or overcome by another, but because he
has been defeated or overcome illegally. Men may do
foolish things, make ridiculous contracts, use miserable
judgment, and lose money by them – indeed, all they have
in the world; but not for that alone can the law intervene
and restore. There must be, in addition, a violation of the
law, the commission of what the law knows as
an actionable wrong, before the courts are authorized to
lay hold of the situation and remedy it.16
Verily, in the present case, petitioners have not presented
proof that there has been fraud, mistake or undue
influence exercised upon them by respondent. It is highly
unlikely and contrary to human experience that a layman
like respondent would be able to defraud, exert undue
influence, or in any way vitiate the consent of a lawyer like
petitioner David Pelayo who is expected to be more
knowledgeable in the ways of drafting contracts and other
legal transactions.
Furthermore, in their Reply to Respondent’s
Memorandum,17 petitioners adopted the CA’s narration of
fact that petitioners stated in a letter they sent to the
Register of Deeds of Tagum that they have entrusted the
titles over subject lots to herein respondent. Such act is a
clear indication that they intended to convey the subject
property to herein respondent and the deed of sale was
not merely simulated or fictitious.
Lastly, petitioners claim that they were not able to fully
ventilate their defense before the CA as their lawyer, who
was then suffering from cancer of the liver, failed to file
their appellees’ brief. Thus, in their motion for
reconsideration of the CA Decision, they prayed that they
be allowed to submit such appellees’ brief. The CA, in its
Resolution dated December 17, 1999, stated thus:
process as any issue that petitioners wanted to raise
could and should have been contained in said motion for
reconsideration.
IN VIEW OF THE FOREGOING, the petition
is DENIED and the Decision of the Court of Appeals
dated April 20, 1999 and its Resolution dated December
17, 1999 are hereby AFFIRMED.
SO ORDERED.

By movant-defendant-appellee’s own information, his

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

Technicality aside, movant has not proffered any ground

bearing on the merits of the case why the decision should
be set aside.1awphi1

Petitioners never denied the CA finding that their motion

for reconsideration was filed beyond the fifteen-day
reglementary period. On that point alone, the CA is correct
in denying due course to said motion. The motion having
been belatedly filed, the CA Decision had then attained
finality. Thus, in Abalos vs. Philex Mining
Corporation,18 we held that:

. . . Nothing is more settled in law than that once a

judgment attains finality it thereby becomes immutable
and unalterable. It may no longer be modified in any
respect, even if the modification is meant to correct what
is perceived to be an erroneous conclusion of fact or law,
and regardless of whether the modification is attempted
to be made by the court rendering it or by the highest court
of the land.

Moreover, it is pointed out by the CA that said motion did

not present any defense or argument on the merits of the
case that could have convinced the CA to reverse or
modify its Decision.

We have consistently held that a petitioner’s right to due

process is not violated where he was able to move for
reconsideration of the order or decision in question.19 In
this case, petitioners had the opportunity to fully expound
on their defenses through a motion for reconsideration.
Petitioners did file such motion but they wasted such
opportunity by failing to present therein whatever errors
they believed the CA had committed in its Decision.
Definitely, therefore, the denial of petitioners’ motion for
reconsideration, praying that they be allowed to file
appellees’ brief, did not infringe petitioners’ right to due
G.R. No. 170166 April 6, 2011
JOE A. ROS and ESTRELLA AGUETE, Petitioners,
vs.
PHILIPPINE NATIONAL BANK - LAOAG
BRANCH, Respondent.
DECISION
CARPIO, J.:
The Case
G.R. No. 170166 is a petition for review1 assailing the
Decision2 promulgated on 17 October 2005 by the Court
of Appeals (appellate court) in CA-G.R. CV No. 76845.
The appellate court granted the appeal filed by the
Philippine National Bank – Laoag Branch (PNB). The
appellate court reversed the 29 June 2001 Decision of
Branch 15 of the Regional Trial Court of Laoag City (trial
court) in Civil Case No. 7803.
The trial court declared the Deed of Real Estate Mortgage
executed by spouses Jose A. Ros3 (Ros) and Estrella
Aguete (Aguete) (collectively, petitioners), as well as the
subsequent foreclosure proceedings, void. Aside from
payment of attorney’s fees, the trial court also ordered
PNB to vacate the subject property to give way to
petitioners’ possession.
The Facts
The appellate court narrated the facts as follows:
On January 13, 1983, spouses Jose A. Ros and Estrella
Aguete filed a complaint for the annulment of the Real
Estate Mortgage and all legal proceedings taken
thereunder against PNB, Laoag Branch before the Court
of First Instance, Ilocos Norte docketed as Civil Case No.
7803.
The complaint was later amended and was raffled to the
Regional Trial Court, Branch 15, Laoag City.
The averments in the complaint disclosed that plaintiff-
appellee Joe A. Ros obtained a loan of ₱115,000.00 from
PNB Laoag Branch on October 14, 1974 and as security
for the loan, plaintiff-appellee Ros executed a real estate
mortgage involving a parcel of land – Lot No. 9161 of the
Cadastral Survey of Laoag, with all the improvements
thereon described under Transfer Certificate of Title No.
T-9646.
Upon maturity, the loan remained outstanding. As a
result, PNB instituted extrajudicial foreclosure
proceedings on the mortgaged property. After the
extrajudicial sale thereof, a Certificate of Sale was issued
in favor of PNB, Laoag as the highest bidder. After the
lapse of one (1) year without the property being
redeemed, the property was consolidated and registered
in the name of PNB, Laoag Branch on August 10, 1978.
Claiming that she (plaintiff-appellee Estrella Aguete) has
no knowledge of the loan obtained by her husband nor
she consented to the mortgage instituted on the conjugal
property – a complaint was filed to annul the proceedings
pertaining to the mortgage, sale and consolidation of the
property – interposing the defense that her signatures
affixed on the documents were forged and that the loan
did not redound to the benefit of the family.1avvphi1
In its answer, PNB prays for the dismissal of the complaint
for lack of cause of action, and insists that it was plaintiffs-
appellees’ own acts [of]
omission/connivance that bar them from recovering the
subject property on the ground of estoppel, laches,
abandonment and prescription.4]
The Trial Court’s Ruling
On 29 June 2001, the trial court rendered its Decision 5 in
favor of petitioners. The trial court declared that Aguete
did not sign the loan documents, did not appear before
the Notary Public to acknowledge the execution of the
loan documents, did not receive the loan proceeds from
PNB, and was not aware of the loan until PNB notified her
in 14 August 1978 that she and her family should vacate
the mortgaged property because of the expiration of the
redemption period. Under the Civil Code, the effective law
at the time of the transaction, Ros could not encumber any
real property of the conjugal partnership without Aguete’s
consent. Aguete may, during their marriage and within ten
years from the transaction questioned, ask the courts for
the annulment of the contract her husband entered into
without her consent, especially in the present case where
her consent is required. The trial court, however, ruled
that its decision is without prejudice to the right of action
of PNB to recover the amount of the loan and its interests
from Ros.
The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby
rendered:
1. DECLARING the Deed of Real Estate Mortgage
(Exhibit "C") and the subsequent foreclosure proceedings
conducted thereon NULL and VOID;
2. ORDERING the Register of Deeds of the City of Laoag
to cancel TCT No. T-15276 in the name of defendant PNB
and revert the same in the name of plaintiffs spouses Joe
Ros and Estrella Aguete;
3. ORDERING defendant to vacate and turnover the
possession of the premises of the property in suit to the
plaintiffs; and
4. ORDERING defendant to pay plaintiffs attorney’s fee
and litigation expenses in the sum of TEN THOUSAND
(₱10,000.00) PESOS.
No pronouncement as to costs.
SO ORDERED.6]
PNB filed its Notice of Appeal7 of the trial court’s decision
on 13 September 2001 and paid the corresponding fees.
Petitioners filed on the same date a motion for execution
pending appeal,8 which PNB opposed.9 In their comment
to the opposition10 filed on 10 October 2001, petitioners
stated that at the hearing of the motion on 3 October 2001,
PNB’s lay representative had no objection to the
execution of judgment pending appeal. Petitioners
claimed that the house on the subject lot is dilapidated, a
danger to life and limb, and should be demolished.
Petitioners added that they obliged themselves to make
the house habitable at a cost of not less ₱50,000.00. The
repair cost would accrue to PNB’s benefit should the
appellate court reverse the trial court. PNB continued to
oppose petitioners’ motion.11
In an Order12 dated 8 May 2002, the trial court found
petitioners’ motion for execution pending appeal improper
because petitioners have made it clear that they were
willing to wait for the appellate court’s decision. However,
as a court of justice and equity, the trial court allowed
petitioners to occupy the subject property with the
condition that petitioners would voluntarily vacate the
premises and waive recovery of improvements introduced
should PNB prevail on appeal.
The Appellate Court’s Ruling
On 17 October 2005, the appellate court rendered its
Decision13 and granted PNB’s appeal. The appellate court
reversed the trial court’s decision, and dismissed
petitioners’ complaint.
The appellate court stated that the trial court concluded
forgery without adequate proof; thus it was improper for
the trial court to rely solely on Aguete’s testimony that her
signatures on the loan documents were forged. The
appellate court declared that Aguete affixed her
signatures on the documents knowingly and with her full
consent.
Assuming arguendo that Aguete did not give her consent
to Ros’ loan, the appellate court ruled that the conjugal
partnership is still liable because the loan proceeds
redounded to the benefit of the family. The records of the
case reveal that the loan was used for the expansion of
the family’s business. Therefore, the debt obtained is
chargeable against the conjugal partnership.
Petitioners filed the present petition for review before this
Court on 9 December 2005.
The Issues
Petitioners assigned the following errors:
I. The Honorable Court of Appeals erred in not giving
weight to the findings and conclusions of the trial court,
and in reversing and setting aside such findings and
conclusions without stating specific contrary evidence;
II. The Honorable Court of Appeals erred in declaring the
real estate mortgage valid;
III. The Honorable Court of Appeals erred in declaring,
without basis, that the loan contracted by husband Joe A.
Ros with respondent Philippine National Bank – Laoag
redounded to the benefit of his family, aside from the fact
that such had not been raised by respondent in its
appeal.14]
The Court’s Ruling
The petition has no merit. We affirm the ruling of the
appellate court.
The Civil Code was the applicable law at the time of the
mortgage. The subject property is thus considered part of
the conjugal partnership of gains. The pertinent articles of
the Civil Code provide:
Art. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the
marriage at the expense of the common fund, whether the
acquisition be for the partnership, or for only one of the
spouses;
(2) That which is obtained by the industry, or work or as
salary of the spouses, or of either of them;
(3) The fruits, rents or interest received or due during the
marriage, coming from the common property or from the
exclusive property of each spouse.
Art. 160. All property of the marriage is presumed to
belong to the conjugal partnership, unless it be proved
that it pertains exclusively to the husband or to the wife.
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband
for the benefit of the conjugal partnership, and those
contracted by the wife, also for the same purpose, in the
cases where she may legally bind the partnership;
(2) Arrears or income due, during the marriage, from
obligations which constitute a charge upon property of
either spouse or of the partnership;
(3) Minor repairs or for mere preservation made during the
marriage upon the separate property of either the
husband or the wife; major repairs shall not be charged to
the partnership;
(4) Major or minor repairs upon the conjugal partnership
property;
(5) The maintenance of the family and the education of
the children of both husband and wife, and of legitimate
children of one of the spouses;
(6) Expenses to permit the spouses to complete a
professional, vocational or other course.
Art. 166. Unless the wife has been declared a non
compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband
cannot alienate or encumber any real property of the
conjugal partnership without the wife’s consent. If she
refuses unreasonably to give her consent, the court may
compel her to grant the same.
Art. 173. The wife may, during the marriage, and within
ten years from the transaction questioned, ask the courts
for the annulment of any contract of the husband entered
into without her consent, when such consent is required,
or any act or contract of the husband which tends to
defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this
right, she or her heirs after the dissolution of the marriage
may demand the value of the property fraudulently
alienated by the husband.
There is no doubt that the subject property was acquired
during Ros and Aguete’s marriage. Ros and Aguete were
married on 16 January 1954, while the subject property
was acquired in 1968.15 There is also no doubt that Ros
encumbered the subject property when he mortgaged it
for P115,000.00 on 23 October 1974.16 PNB Laoag does
not doubt that Aguete, as evidenced by her signature,
consented to Ros’ mortgage to PNB of the subject
property. On the other hand, Aguete denies ever having
consented to the loan and also denies affixing her
signature to the mortgage and loan documents.
The husband cannot alienate or encumber any conjugal
real property without the consent, express or implied, of
the wife. Should the husband do so, then the contract is
voidable.17 Article 173 of the Civil Code allows Aguete to
question Ros’ encumbrance of the subject property.
However, the same article does not guarantee that the
courts will declare the annulment of the contract.
Annulment will be declared only upon a finding that the
wife did not give her consent. In the present case, we
follow the conclusion of the appellate court and rule that
Aguete gave her consent to Ros’ encumbrance of the
subject property.
The documents disavowed by Aguete are acknowledged
before a notary public, hence they are public documents.
Every instrument duly acknowledged and certified as
provided by law may be presented in evidence without
further proof, the certificate of acknowledgment
being prima facie evidence of the execution of the
instrument or document involved.18 The execution of a
document that has been ratified before a notary public
cannot be disproved by the mere denial of the alleged
signer.19 PNB was correct when it stated that petitioners’
omission to present other positive evidence to
substantiate their claim of forgery was fatal to petitioners’
cause.20 Petitioners did not present any corroborating
witness, such as a handwriting expert, who could
authoritatively declare that Aguete’s signatures were
really forged.
A notarized document carries the evidentiary weight
conferred upon it with respect to its due execution, and it
has in its favor the presumption of regularity which may
only be rebutted by evidence so clear, strong and
convincing as to exclude all controversy as to the falsity
of the certificate. Absent such, the presumption must be
upheld. The burden of proof to overcome the presumption
of due execution of a notarial document lies on the one
contesting the same. Furthermore, an allegation of
forgery must be proved by clear and convincing evidence,
and whoever alleges it has the burden of proving the
same.21]
Ros himself cannot bring action against PNB, for no one
can come before the courts with unclean
hands.1avvphi1 In their memorandum before the trial
court, petitioners themselves admitted that Ros forged
Aguete’s signatures.
Joe A. Ros in legal effect admitted in the complaint that
the signatures of his wife in the questioned documents are
forged, incriminating himself to criminal prosecution. If he
were alive today, he would be prosecuted for forgery. This
strengthens the testimony of his wife that her signatures
on the questioned documents are not hers.
In filing the complaint, it must have been a remorse of
conscience for having wronged his family; in forging the
signature of his wife on the questioned documents; in
squandering the P115,000.00 loan from the bank for
himself, resulting in the foreclosure of the conjugal
property; eviction of his family therefrom; and, exposure
to public contempt, embarassment and ridicule.22]
The application for loan shows that the loan would be
used exclusively "for additional working [capital] of buy &
sell of garlic & virginia tobacco."23 In her testimony,
Aguete confirmed that Ros engaged in such business, but
claimed to be unaware whether it prospered. Aguete was
also aware of loans contracted by Ros, but did not know
where he "wasted the money."24 Debts contracted by the
husband for and in the exercise of the industry or
profession by which he contributes to the support of the
family cannot be deemed to be his exclusive and private
debts.25
If the husband himself is the principal obligor in the
contract, i.e., he directly received the money and services
to be used in or for his own business or his own
profession, that contract falls within the term "x x x x
obligations for the benefit of the conjugal partnership."
Here, no actual benefit may be proved. It is enough that
the benefit to the family is apparent at the signing of the
contract. From the very nature of the contract of loan or
services, the family stands to benefit from the loan facility
or services to be rendered to the business or profession
of the husband. It is immaterial, if in the end, his business
or profession fails or does not succeed. Simply stated,
where the husband contracts obligations on behalf of the
family business, the law presumes, and rightly so, that
such obligation will redound to the benefit of the conjugal
partnership.26]

For this reason, we rule that Ros’ loan from PNB

redounded to the benefit of the conjugal partnership.
Hence, the debt is chargeable to the conjugal partnership.

WHEREFORE, we DENY the petition. The Decision of

the Court of Appeals in CA-G.R. CV No. 76845
promulgated on 17 October 2005 is AFFIRMED. Costs
against petitioners.

SO ORDERED.
G.R. No. 146548 December 18, 2009
HEIRS OF DOMINGO HERNANDEZ, SR., namely:
SERGIA V. HERNANDEZ (Surviving Spouse),
DOMINGO V. HERNANDEZ, JR., and MARIA
LEONORA WILMA HERNANDEZ, Petitioners,
vs.
PLARIDEL MINGOA, SR., DOLORES CAMISURA,
MELANIE MINGOA AND QUEZON CITY REGISTER OF
DEEDS,1 Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari of the
Decision2 dated September 7, 2000 and
Resolution3 dated December 29, 2000, both of the Court
of Appeals (CA), in CA-G.R. CV No. 54896. The CA
Decision reversed and set aside the decision of the
Regional Trial Court (RTC) of Quezon City (Branch 92),
which ruled in favor of herein petitioners in the action for
reconveyance filed by the latter in said court against the
respondents. The CA Resolution denied the petitioners’
motion for reconsideration.
The subject matter of the action is a parcel of land with an
area of 520.50 square meters situated in Diliman, Quezon
City, described as Lot 15, Block 89 of the subdivision plan
Psd-68807, covered by Transfer Certificate of Title (TCT)
No. 1075344 issued on May 23, 1966 and registered in the
name of Domingo B. Hernandez, Sr. married to Sergia V.
Hernandez. Later on, said TCT No. 107534 was cancelled
and in lieu thereof, TCT No. 2901215 was issued in favor
of Melanie Mingoa.
These are the factual antecedents of this case:
On February 11, 1994, a complaint6 was filed with the
RTC of Quezon City by herein petitioners, heirs of
Domingo Hernandez, Sr., namely, spouse Sergia
Hernandez and their surviving children Domingo, Jr. and
Maria Leonora Wilma, against the respondents herein,
Dolores Camisura, Melanie Mingoa, Atty. Plaridel Mingoa,
Sr. and all persons claiming rights under the latter, and
the Quezon City Register of Deeds. The case was
docketed as Civil Case No. 094-19276.
In their complaint, the petitioners asked for (a) the
annulment and/or declaration of nullity of TCT No. 290121
including all its derivative titles, the Irrevocable Special
Power of Attorney (SPA) dated February 14, 1963 in favor
of Dolores Camisura,7 the SPA dated May 9, 1964 in favor
of Plaridel Mingoa, Sr.,8 and the Deed of Absolute Sale of
Real Estate9 dated July 9, 1978 executed by Plaridel
Mingoa, Sr. in favor of Melanie Mingoa for being products
of forgery and falsification; and (b) the reconveyance
and/or issuance to them (petitioners) by the Quezon City
Register of Deeds of the certificate of title covering the
subject property.
Respondents filed a Motion to Dismiss10 the complaint
interposing the following grounds: the claim or demand
has been paid, waived, abandoned or otherwise
extinguished; lack of cause of action; lack of jurisdiction
over the person of the defendants or over the subject or
nature of the suit; and prescription. The following were
attached to said motion: a Deed of Transfer of
Rights11 dated February 14, 1963 from Domingo
Hernandez, Sr. to Camisura, the Irrevocable
SPA12 executed by the former in the latter’s favor, and a
Deed of Sale of Right in a Residential Land and
Improvements Therein13 dated May 9, 1964 executed by
Camisura in favor of Plaridel Mingoa, Sr.
In its Order14 dated September 1, 1994, the trial court
denied respondents’ motion to dismiss.
Respondents filed a petition for certiorari and prohibition
with the CA assailing the aforementioned Order of denial
by the RTC. Their initial petition was dismissed for being
insufficient in form. Respondents then re-filed their
petition, which was docketed as CA-G.R. SP No. 36868.
In a decision15 dated May 26, 1995, respondents’ re-filed
petition was denied due course by the CA. Having been
filed beyond the reglementary period, respondents’
subsequent motion for reconsideration was simply noted
by the CA in its Resolution of July 7, 1995. On the basis
of a technicality, this Court, in a Resolution dated
September 27, 1995, dismissed respondents' appeal
which was docketed as G.R. No. 121020. Per Entry of
Judgment,16 said Resolution became final and executory
on January 2, 1996.
Meanwhile, respondents filed their Answer17 in the main
case therein denying the allegations of the complaint and
averring as defenses the same grounds upon which they
anchored their earlier motion to dismiss.
The parties having failed to amicably settle during the
scheduled pre-trial conference, the case proceeded to
trial.
The evidence respectively presented by the parties is
summarized as follows:18
x x x [It] appears that in the early part of 1958, Domingo
Hernandez, Sr. (who was then a Central Bank employee)
and his spouse Sergia V. Hernandez were awarded a
piece of real property by the Philippine Homesite and
Housing Corporation (PHHC) by way of salary deduction.
On October 18, 1963, the [petitioners] then having paid in
full the entire amount of P6,888.96, a Deed of Absolute
Sale of the property was executed by the PHHC in their
favor. TCT No. 107534, covering the property was issued
to the [petitioners] on May 23, 1966. It bears an annotation
of the retention period of the property by the awardee (i.e.,
restriction of any unauthorized sale to third persons within
a certain period). Tax payments due on the property were
religiously paid (until 1955) by the [petitioners] as
evidenced by receipts under the [petitioners’] name.
Hernandez, Sr. died intestate in April 1983 and it was only
after his burial that his heirs found out that TCT No.
107534 was already cancelled a year before (in 1982),
and in lieu thereof, TCT No. 290121 was issued to the
[respondents]. Upon diligent inquiry, [petitioners] came to
know that the cancellation of TCT (No. 107534) in favor of
the [respondents’] xxx TCT (No. 290121) was based upon
three sets of documents, namely, (1) Irrevocable Power
of Attorney; (2) Irrevocable Special Power of Attorney;
and (3) Deed of Absolute Sale.
[Petitioners] also allege that because of financial
difficulties, they were only able to file a complaint on
February 11, 1995 after consulting with several lawyers.
xxxx
[Respondents] xxx on the other hand do not deny that
Hernandez, Sr. was indeed awarded a piece of real
property by the PHHC. According to the [respondents]
xxx, Hernandez, Sr. was awarded by the PHHC the Right
to Purchase the property in question; however, the late
Hernandez, Sr. failed to pay all the installments due on
the said property. Thus, afraid that he would forfeit his
right to purchase the property awarded to him,
Hernandez, Sr. sold to Dolores Camisura his rights for the
sum of P6,500.00 on February 14, 1963, through a deed
of transfer of rights, seemingly a printed form from the
PHHC. Simultaneous to this, Hernandez, Sr. and his
spouse executed an irrevocable special power of
attorney, appointing Dolores Camisura as their attorney-
in-fact with express power to sign, execute and
acknowledge any contract of disposition, alienation and
conveyance of her right over the aforesaid parcel of land.
Apparently, this special power of attorney was executed
for the purpose of securing her right to transfer the
property to a third person considering that there was a
prohibition to dispose of the property by the original
purchaser within one (1) year from full payment. Else wise
stated, the irrevocable power of attorney was necessary
in order to enable the buyer, Dolores Camisura, to sell the
lot to another, Plaridel Mingoa, without the need of
requiring Hernandez, to sign a deed of conveyance.
On May 9, 1964, Dolores Camisura sold her right over the
said property to Plaridel Mingoa for P7,000.00. Camisura
then executed a similar irrevocable power of attorney and
a deed of sale of right in a residential land and
improvements therein in favor of Plaridel Mingoa. Upon
such payment and on the strength of the said irrevocable
power of attorney, Plaridel Mingoa took possession of the
said property and began paying all the installments due
on the property to PHHC. Plaridel Mingoa further secured
TCT No. 107534 (issued in the name of Domingo
Hernandez, Sr.) on May, 1966. On July 9, 1978, Plaridel
Mingoa sold to his eldest child, Melanie Mingoa, the
property in question for P18,000.00. TCT No. 107534 was
thus cancelled and TCT No. 290121 was issued in the
name of Melanie Mingoa. It is further claimed that since
1966 until 1982, Plaridel Mingoa religiously paid all the
taxes due on the said property; and that from 1983 up to
the present, Melanie Mingoa paid all the property taxes
due thereon aside from having actual possession of the
said property. (words in brackets ours)
On May 9, 1996, the RTC rendered a decision19 in favor
of the petitioners, with the following dispositive portion:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs as follows:
1) TCT No. 290121 and all its derivative titles are hereby
declared null and void;
2) Ordering the Register of Deeds of Quezon City to
cancel TCT No. 290121 issued in the name of defendant
Melanie Mingoa and corresponding owner’s duplicate
certificate and all its derivative title[s];
3) Ordering defendant Melanie Mingoa and all derivative
owners to surrender owner’s duplicate copies of transfer
certificate of title to the Register of Deeds of Quezon City
for cancellation upon finality of this decision;
4) Ordering the defendants except the Register of Deeds
of Quezon City to turn over to the plaintiffs the peaceful
possession of the subject property; and
5) Ordering the defendants except the Register of Deeds
of Quezon City to jointly and severally (sic) pay the
plaintiffs the sum of P10,000.00 as attorney’s [fees] and
to pay the costs of suit.
SO ORDERED.
In ruling in favor of petitioners, the trial court reasoned as
follows:20
The two (2) parties in the case at bar gave out conflicting
versions as to who paid for the subject property. The
plaintiffs claim that they were the ones who paid the entire
amount out of the conjugal funds while it is the contention
of the defendant Mingoa that the former were not able to
pay. The defendant alleged that the right to purchase was
sold to him and he was able to pay the whole amount. The
Court is of the opinion that petitioners’ version is more
credible taken together with the presence of the
irrevocable power of attorney which both parties admitted.
In light of the version of the defendants, it is highly
improbable that a Power of Attorney would be constituted
by the plaintiffs authorizing the former to sell the subject
property. This is because for all intents and purposes, the
land is already the defendants’ for if we are to follow their
claim, they paid for the full amount of the same. It can be
safely concluded then that the Power of Attorney was
unnecessary because the defendants, as buyers, can
compel the plaintiff-sellers to execute the transfer of the
said property after the period of prohibition has lapsed.
The defendants, as owners, will have the right to do
whatever they want with the land even without an
Irrevocable Power of Attorney. Since the presence of the
Irrevocable Power of Attorney is established, it is now the
task of this Court to determine the validity of the sale
made by virtue of the said Power of Attorney. As what was
said earlier, the Court subscribes to the points raised by
the plaintiffs. It was proved during trial that the signature
of the wife was falsified. Therefore, it is as if the wife never
authorized the agent to sell her share of the subject land,
it being conjugal property. It follows that the sale of half of
the land is invalid. However, it must be pointed out that
the signature of the deceased husband was never
contested and is therefore deemed admitted. We now
come to the half which belongs to the deceased husband.
The Law on Sales expressly prohibits the agent from
purchasing the property of the principal without the latter’s
consent (Article 1491 of the Civil Code). It was established
from the records that defendant Plaridel Mingoa sold the
subject land to his daughter Melanie. It is now for the
Court to decide whether this transaction is valid. x x x
Considering that the sale took place in July 1978, it follows
from simple mathematical computation that Melanie was
then a minor (20 years of age) when she allegedly bought
the property from her father. Since Melanie’s father is the
sub-agent of the deceased principal, he is prohibited by
law from purchasing the land without the latter’s consent.
This being the case, the sale is invalid for it appears that
Plaridel Mingoa sold the land to himself. It should be noted
that the defendants could have easily presented
Melanie’s birth certificate, it being at their disposal, but
they chose not to. Because of this, this Court is of the
belief that the presumption that evidence willfully
suppressed would be adverse if produced arises.
The trial court denied respondents’ motion for
reconsideration of the aforementioned decision in its
Order21 of August 22, 1996.
Aggrieved, the respondents appealed to the CA, where
their case was docketed as CA-G.R. CV No. 54896.
Holding that the petitioners were barred by prescription
and laches to take any action against the respondents,
the CA, in its herein assailed Decision22 dated September
7, 2000, reversed and set aside the appealed decision,
thereby dismissing the complaint filed by the petitioners
before the trial court. In full, the disposition reads:
WHEREFORE, in view of the foregoing, the Decision of
the RTC Branch 92, Quezon City, in Civil Case No. Q-94-
19276, entitled, "Heirs of Domingo Hernandez, Sr. vs.
Dolores Camisura, et. al.," is hereby REVERSED AND
SET ASIDE. A new one is hereby entered, DISMISSING
the complaint in Civil Case No. Q-94-19276 entitled,
"Heirs of Domingo Hernandez, Sr. vs. Dolores Camisura,
et. al.," filed by the plaintiffs-appellees before the RTC
Branch 92, Quezon City for lack of merit.
SO ORDERED.
Petitioners’ subsequent motion for reconsideration was
denied by the CA in its impugned Resolution23 dated
December 29, 2000.
Hence, petitioners are now before this Court via the
present recourse. The ten (10) assigned errors set forth
in the petition all boil down to the essential issue of
whether the title of the subject property in the name of
respondent Melanie Mingoa may still be reconveyed to
the petitioners. As we see it, the resolution thereof hinges
on these two pivotal questions: (1) whether there was a
valid alienation involving the subject property; and (2)
whether the action impugning the validity of such
alienation has prescribed and/or was barred by laches.
The Court shall deal first with the procedural issues raised
by the respondents in their Comment.24
We held in Vera-Cruz v. Calderon25 that:
As a general rule, only questions of law may be raised in
a petition for review on certiorari to the Supreme Court.
Although it has long been settled that findings of fact are
conclusive upon this Court, there are exceptional
circumstances which would require us to review findings
of fact of the Court of Appeals, to wit:
(1) the conclusion is a finding grounded entirely on
speculation, surmise and conjectures; (2) the inference
made is manifestly mistaken; (3) there is grave abuse of
discretion; (4) the judgment is based on misapprehension
of facts; (5) the findings of fact are conflicting; (6) the
Court of Appeals went beyond the issues of the case and
its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of fact of the
Court of Appeals are contrary to those of the trial court;
(8) said findings of fact are conclusions without citation of
specific evidence on which they are based; (9) the facts
set forth in the decision as well as in the petitioner’s main
and reply briefs are not disputed by the respondents; (10)
the finding of fact of the Court of Appeals is premised on
the supposed absence of evidence and is contradicted by
evidence on record. (emphasis ours)
The petition before us raises factual issues which are not
proper in a petition for review under Rule 45 of the Rules
of Court. However, we find that one of the exceptional
circumstances qualifying a factual review by the Court
exists, that is, the factual findings of the CA are at
variance with those of the trial court. We shall then give
due course to the instant petition and review the factual
findings of the CA.
Even if only petitioner Domingo Hernandez, Jr. executed
the Verification/Certification26 against forum-shopping,
this will not deter us from proceeding with the judicial
determination of the issues in this petition. As we
ratiocinated in Heirs of Olarte v. Office of the President:27
The general rule is that the certificate of non-forum
shopping must be signed by all the plaintiffs in a case and
the signature of only one of them is insufficient. However,
the Court has also stressed that the rules on forum
shopping were designed to promote and facilitate the
orderly administration of justice and thus should not be
interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective. The rule of
substantial compliance may be availed of with respect to
the contents of the certification. This is because the
requirement of strict compliance with the provisions
regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification
cannot be altogether dispensed with or its requirements
completely disregarded. Thus, under justifiable
circumstances, the Court has relaxed the rule requiring
the submission of such certification considering that
although it is obligatory, it is not jurisdictional.
In HLC Construction and Development Corporation v.
Emily Homes Subdivision Homeowners Association, it
was held that the signature of only one of the petitioners
in the certification against forum shopping substantially
complied with rules because all the petitioners share a
common interest and invoke a common cause of action or
defense.
The same leniency was applied by the Court in Cavile v.
Heirs of Cavile, because the lone petitioner who executed
the certification of non-forum shopping was a relative and
co-owner of the other petitioners with whom he shares a
common interest. x x x
xxx
In the instant case, petitioners share a common interest
and defense inasmuch as they collectively claim a right
not to be dispossessed of the subject lot by virtue of their
and their deceased parents’ construction of a family home
and occupation thereof for more than 10 years. The
commonality of their stance to defend their alleged right
over the controverted lot thus gave petitioners xxx
authority to inform the Court of Appeals in behalf of the
other petitioners that they have not commenced any
action or claim involving the same issues in another court
or tribunal, and that there is no other pending action or
claim in another court or tribunal involving the same
issues. x x x
Here, all the petitioners are immediate relatives who
share a common interest in the land sought to be
reconveyed and a common cause of action raising the
same arguments in support thereof. There was sufficient
basis, therefore, for Domingo Hernandez, Jr. to speak for
and in behalf of his co-petitioners when he certified that
they had not filed any action or claim in another court or
tribunal involving the same issues. Thus, the
Verification/Certification that Hernandez, Jr. executed
constitutes substantial compliance under the Rules.
Anent the contention that the petition erroneously
impleaded the CA as respondent in contravention of
Section 4(a)28 of Rule 45 of the 1997 Rules of Civil
Procedure, we shall apply our ruling in Simon v.
Canlas,29 wherein we held that:
x x x [The] Court agrees that the correct procedure, as
mandated by Section 4, Rule 45 of the 1997 Rules of Civil
Procedure, is not to implead the lower court which
rendered the assailed decision. However, impleading the
lower court as respondent in the petition for review on
certiorari does not automatically mean the dismissal of the
appeal but merely authorizes the dismissal of the petition.
Besides, formal defects in petitions are not uncommon.
The Court has encountered previous petitions for review
on certiorari that erroneously impleaded the CA. In those
cases, the Court merely called the petitioners’ attention to
the defects and proceeded to resolve the case on their
merits.
The Court finds no reason why it should not afford the
same liberal treatment in this case. While unquestionably,
the Court has the discretion to dismiss the appeal for
being defective, sound policy dictates that it is far better
to dispose of cases on the merits, rather than on
technicality as the latter approach may result in injustice.
This is in accordance with Section 6, Rule 1 of the 1997
Rules of Civil Procedure which encourages a reading of
the procedural requirements in a manner that will help
secure and not defeat justice.
We now come to the substantive issues.
As correctly found by the appellate court, the following
facts are undisputed:30
1. Domingo Hernandez, Sr. was awarded a piece of real
property in 1958 by the PHHC as part of the government’s
housing program at the time. Title over the said property
was issued in 1966 in the name of Hernandez, Sr., after
full payment for the property was received by the PHHC.
2. Neither [petitioners] nor Hernandez, Sr., took
possession of the said property. On the other hand, the
[respondents] took possession of the said property in
1966 and are in actual and physical possession thereof
up to the present, and have made considerable
improvements thereon, including a residential house
where they presently reside.
3. The Owner’s Duplicate Copy of the title over the
property given by the PHHC to Hernandez, Sr. was in the
possession of Plaridel Mingoa, the latter being able to
facilitate the cancellation of the said title and [the issuance
of] a new TCT xxx in the name of Melanie Mingoa.
4. The realty taxes have been paid by [respondents],
albeit in the name of Hernandez, Sr., but all official
receipts of tax payments are kept by the [respondents].
5. From 1966 (the time when the [respondents] were able
to possess the property) to 1983 (the time when the
[petitioners] had knowledge that the TCT in the name of
Hernandez, Sr. had already been cancelled by the
Registry of Deeds of Quezon City) covers almost a span
of 17 years; and from 1983 to 1995 (the time when the
Heirs filed the original action) is a period of another 12
years.
The SPA31 in favor of Dolores Camisura pertinently states
that the latter is the lawful attorney-in-fact of Domingo B.
Hernandez, Sr., married to Sergia Hernandez, to do and
perform, among others, the following acts and deeds:
1. To sign, execute and acknowledge all such contracts,
deeds or other instruments which may be required by the
People’s Homesite and Housing Corporation with respect
to the purchase of that certain parcel of land known and
designated as Lot No. 15 Block E-89 of the Malaya
Avenue Subdivision, situated in Quezon City and
containing an area of 520 square meters, more or less,
which I have acquired thru the CENTRAL BANK STAFF
HOUSING CORPORATION;
2. To sign, execute and acknowledge all such contracts
or other instruments which may deem necessary or be
required to sign, execute and acknowledge for the
purpose of selling, transferring, conveying, disposing of or
alienating whatever rights I may have over that parcel of
land mentioned above;
x x x.
The Deed of Transfer of Rights,32 also executed by
Hernandez, Sr. in Camisura’s favor, expressly states that
the former, in consideration of the amount of ₱6,500.00,
transfers his rights over the subject property to the latter.
Notably, such deed was simultaneously executed with the
SPA on February 14, 1963.
From the foregoing, the Court cannot but conclude that
the SPA executed by Hernandez, Sr. in respondent
Camisura's favor was, in reality, an alienation involving
the subject property. We particularly note that Hernandez,
Sr., aside from executing said SPA, likewise sold his
rights and interests over the property awarded by the
PHHC to Camisura. The CA committed no error when it
ruled:33
x x x Appreciating the case in its entirety, the purported
SPA appear to be merely a grant of authority to Camisura
(and then to Plaridel Mingoa) to sell and dispose of the
subject property as well as a grant of right to purchase the
said property; but in essence, such SPA are disguised
deeds of sale of the property executed in circumventing
the retention period restriction over the said property.
Verily, the parties knew that the land in question could not
be alienated in favor of any third person within one (1)
year without the approval of the PHHC.
Having ruled that the SPA in favor of Camisura was a
contract of sale, the next question is whether or not such
sale was valid.
To constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2)
object, and (3) consent.
The consent of Domingo Hernandez, Sr. to the contract is
undisputed, thus, the sale of his ½ share in the conjugal
property was valid. With regard to the consent of his wife,
Sergia Hernandez, to the sale involving their conjugal
property, the trial court found that it was lacking because
said wife’s signature on the SPA was falsified. Notably,
even the CA observed that the forgery was so blatant as
to be remarkably noticeable to the naked eye of an
ordinary person. Having compared the questioned
signature on the SPA34 with those of the
documents35 bearing the sample standard signature of
Sergia Hernandez, we affirm both lower courts' findings
regarding the forgery.
However, Sergia’s lack of consent to the sale did not
render the transfer of her share invalid.
Petitioners contend that such lack of consent on the part
of Sergia Hernandez rendered the SPAs and the deed of
sale fictitious, hence null and void in accordance with
Article 140936 of the Civil Code. Petitioners likewise
contend that an action for the declaration of the non-
existence of a contract under Article 141037 does not
prescribe.
We find, after meticulous review of the facts, that Articles
1409 and 1410 are not applicable to the matter now
before us.
It bears stressing that the subject matter herein involves
conjugal property. Said property was awarded to
Domingo Hernandez, Sr. in 1958. The assailed SPAs
were executed in 1963 and 1964. Title in the name of
Domingo Hernandez, Sr. covering the subject property
was issued on May 23, 1966. The sale of the property to
Melanie Mingoa and the issuance of a new title in her
name happened in 1978. Since all these events occurred
before the Family Code took effect in 1988, the provisions
of the New Civil Code govern these transactions. We
quote the applicable provisions, to wit:
Art. 165. The husband is the administrator of the conjugal
partnership.
Art. 166. Unless the wife has been declared a non compos
mentis or a spendthrift, or is under civil interdiction or is
confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership
without the wife’s consent. If she refuses unreasonably to
give her consent, the court may compel her to grant the
same. x x x.
Art. 173. The wife may, during the marriage, and within
ten years from the transaction questioned, ask the
courts for the annulment of any contract of the husband
entered into without her consent, when such consent is
required, or any act or contract of the husband which
tends to defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this
right, she or her heirs, after the dissolution of the
marriage, may demand the value of property fraudulently
alienated by the husband. (Emphasis ours.)
Notwithstanding the foregoing, petitioners argue that the
disposition of conjugal property made by a husband
without the wife’s consent is null and void and the right to
file an action thereon is imprescriptible, in accordance
with Garcia v. CA38 and Bucoy v. Paulino.39 .
Concededly, in the aforementioned cases of Garcia and
Bucoy, the contracts involving the sale of conjugal
property by the husband without the wife's consent were
declared null and void by this Court. But even in Bucoy,
we significantly ruled, in reference to Article 173, that:
The plain meaning attached to the plain language of the
law is that the contract, in its entirety, executed by the
husband without the wife’s consent, may be annulled by
the wife.40 (emphasis ours)
In succeeding cases, we held that alienation and/or
encumbrance of conjugal property by the husband without
the wife’s consent is not null and void but merely voidable.
In Sps. Alfredo v. Sps. Borras,41 we held that:
The Family Code, which took effect on 3 August 1988,
provides that any alienation or encumbrance made by the
husband of the conjugal partnership property without the
consent of the wife is void. However, when the sale is
made before the effectivity of the Family Code, the
applicable law is the Civil Code.
Article 173 of the Civil Code provides that the disposition
of conjugal property without the wife's consent is not void
but merely voidable.
We likewise made the same holding in Pelayo v. Perez :42
xxx [Under] Article 173, in relation to Article 166, both of
the New Civil Code, which was still in effect on January
11, 1988 when the deed in question was executed, the
lack of marital consent to the disposition of conjugal
property does not make the contract void ab initio but
merely voidable.
In Vera-Cruz v. Calderon,43 the Court noted the state of
jurisprudence and elucidated on the matter, thus:
In the recent case of Heirs of Ignacia Aguilar-Reyes v.
Spouses Mijares, we reiterated the rule that the husband
cannot alienate or encumber any conjugal real property
without the consent, express or implied, of the wife,
otherwise, the contract is voidable. To wit:
Indeed, in several cases the Court has ruled that such
alienation or encumbrance by the husband is void. The
better view, however, is to consider the transaction as
merely voidable and not void. This is consistent with
Article 173 of the Civil Code pursuant to which the wife
could, during the marriage and within 10 years from the
questioned transaction, seek its annulment.
xxx
Likewise, in the case of Heirs of Christina Ayuste v. Court
of Appeals, we declared that:
There is no ambiguity in the wording of the law. A sale of
real property of the conjugal partnership made by the
husband without the consent of his wife is voidable. The
action for annulment must be brought during the marriage
and within ten years from the questioned transaction by
the wife. Where the law speaks in clear and categorical
language, there is no room for interpretation – there is
room only for application.
x x x (Emphasis ours.)
Here, the husband’s first act of disposition of the subject
property occurred in 1963 when he executed the SPA and
the Deed of Transfer of Rights in favor of Dolores
Camisura. Thus, the right of action of the petitioners
accrued in 1963, as Article 173 of the Civil Code provides
that the wife may file for annulment of a contract entered
into by the husband without her consent within ten (10)
years from the transaction questioned. Petitioners filed
the action for reconveyance in 1995. Even if we were to
consider that their right of action arose when they learned
of the cancellation of TCT No. 107534 and the issuance
of TCT No. 290121 in Melanie Mingoa’s name in 1993,
still, twelve (12) years have lapsed since such discovery,
and they filed the petition beyond the period allowed by
law. Moreover, when Sergia Hernandez, together with her
children, filed the action for reconveyance, the conjugal
partnership of property with Hernandez, Sr. had already
been terminated by virtue of the latter's death on April 16,
1983. Clearly, therefore, petitioners’ action has
prescribed.
And this is as it should be, for in the same Vera-Cruz case,
we further held that:44
xxx [Under] Article 173 of the New Civil Code, an action
for the annulment of any contract entered into by the
husband without the wife’s consent must be filed (1)
during the marriage; and (2) within ten years from the
transaction questioned. Where any one of these two
conditions is lacking, the action will be considered as
having been filed out of time.
In the case at bar, while respondent filed her complaint for
annulment of the deed of sale on July 8, 1994, i.e., within
the ten-year period counted from the execution of the
deed of sale of the property on June 3, 1986, the marriage
between her and Avelino had already been dissolved by
the death of the latter on November 20, 1993. In other
words, her marriage to Avelino was no longer subsisting
at the time she filed her complaint. Therefore, the civil
case had already been barred by prescription. (Emphasis
ours.)
Thus, the failure of Sergia Hernandez to file with the
courts an action for annulment of the contract during the
marriage and within ten (10) years from the transaction
necessarily barred her from questioning the sale of the
subject property to third persons.
As we held in Vda. De Ramones v. Agbayani:45
In Villaranda v. Villaranda, et al., this Court, through Mr.
Justice Artemio V. Panganiban, ruled that without the
wife’s consent, the husband’s alienation or encumbrance
of conjugal property prior to the effectivity of the Family
Code is not void, but merely voidable. However, the
wife’s failure to file with the courts an action for
annulment of the contract during the marriage and
within ten (10) years from the transaction shall render
the sale valid. x x x (emphasis ours)
More than having merely prescribed, petitioners’ action
has likewise become stale, as it is barred by laches.
In Isabela Colleges v. Heirs of Nieves-Tolentino,46 this
Court held:
Laches means the failure or neglect for an unreasonable
and unexplained length of time to do that which, by
observance of due diligence, could or should have been
done earlier. It is negligence or omission to assert a right
within a reasonable time, warranting the presumption that
the party entitled to assert his right either has abandoned
or declined to assert it. Laches thus operates as a bar in
equity.
xxx
The time-honored rule anchored on public policy is that
relief will be denied to a litigant whose claim or demand
has become "stale," or who has acquiesced for an
unreasonable length of time, or who has not been vigilant
or who has slept on his rights either by negligence, folly
or inattention. In other words, public policy requires, for
peace of society, the discouragement of claims grown
stale for non-assertion; thus laches is an impediment to
the assertion or enforcement of a right which has become,
under the circumstances, inequitable or unfair to permit.
Pertinently, in De la Calzada-Cierras v. CA,47 we ruled
that a complaint to recover the title and possession of the
lot filed 12 years after the registration of the sale is
considered neglect for an unreasonably long time to
assert a right to the property.
Here, petitioners' unreasonably long period of inaction in
asserting their purported rights over the subject property
weighs heavily against them. We quote with approval the
findings of the CA that:48
It was earlier shown that there existed a period of 17 years
during which time Hernandez, Sr. xxx never even
questioned the defendants-appellants possession of the
property; also there was another interval of 12 years after
discovering that the TCT of the property in the name of
Hernandez, Sr. before the Heirs of Hernandez instituted
an action for the reconveyance of the title of the
property.1avvphi1
xxx
The fact that the Mingoa's were able to take actual
possession of the subject property for such a long period
without any form of cognizable protest from Hernandez,
Sr. and the plaintiffs-appellees strongly calls for the
application of the doctrine of laches. It is common practice
in the real estate industry, an ocular inspection of the
premises involved is a safeguard to the cautious and
prudent purchaser usually takes, and should he find out
that the land he intends to buy is occupied by anybody
else other than the seller who is not in actual possession,
it could then be incumbent upon the purchaser to verify
the extent of the occupant's possessory rights. The
plaintiffs-appellees asseverate that the award was made
in favor of Hernandez, Sr. in 1958; full payment made in
1963; and title issued in 1966. It would thus be contrary to
ordinary human conduct (and prudence dictates
otherwise) for any awardee of real property not to visit and
inspect even once, the property awarded to him and find
out if there are any transgressors in his property.
Furthermore, Hernandez, Sr.'s inaction during his lifetime
lends more credence to the defendants-appellants
assertion that the said property was indeed sold by
Hernandez, Sr. by way of the SPAs, albeit without the
consent of his wife. xxx
In addition, the reasons of poverty and poor health
submitted by the plaintiffs-appellees could not justify the
12 years of delay in filing a complaint against the
defendants-appellants. The records are bereft of any
evidence to support the idea that the plaintiffs-appellees
diligently asserted their rights over the said property after
having knowledge of the cancellation of the TCT issued in
Hernandez name. Moreover the Court seriously doubts
the plausibility of this contention since what the plaintiffs-
appellees are trying to impress on this Court's mind is that
they did not know anything at all except only shortly before
the death of Hernandez. To accept that not even the wife
knew of the transactions made by Hernandez, Sr. nor
anything about the actual possession of the defendants-
appellants for such a long period is to Us absurd if not
fantastic.
In sum, the rights and interests of the spouses Hernandez
over the subject property were validly transferred to
respondent Dolores Camisura. Since the sale of the
conjugal property by Hernandez, Sr. was without the
consent of his wife, Sergia, the same is voidable; thus,
binding unless annulled. Considering that Sergia failed to
exercise her right to ask for the annulment of the sale
within the prescribed period, she is now barred from
questioning the validity thereof. And more so, she is
precluded from assailing the validity of the subsequent
transfers from Camisura to Plaridel Mingoa and from the
latter to Melanie Mingoa. Therefore, title to the subject
property cannot anymore be reconveyed to the petitioners
by reason of prescription and laches. The issues of
prescription and laches having been resolved, it is no
longer necessary to discuss the other issues raised in this
petition.

WHEREFORE, the instant petition is DENIED and the

assailed Decision dated September 7, 2000 and
Resolution dated December 29, 2000 of the Court of
Appeals are hereby AFFIRMED.

Costs against the petitioners.

SO ORDERED.

[ GR No. 190995, Aug 09, 2017 ]
BENJAMIN A. KO v. VIRGINIA DY ARAMBURO +
DECISION
TIJAM, J.:
This is a Petition for Review on Certiorari[1] under Rule 45,
assailing the Decision[2]dated September 22, 2009 of the
Court of Appeals (CA) in CA-G.R. CV No. 89611, affirming
the Decision dated February 16, 2006 of the Regional
Trial Court (RTC) of Tabaco City, Branch 15, in Civil Case
No. T-1693.
Factual and Procedural Antecedents
Respondent Virginia Dy Aramburo (Virginia) is Corazon
Aramburo Ko's (Corazon) sister-in-law, the former being
the wife of the latter's brother, Simeon Aramburo
(Simeon). Corazon and Simeon have another sibling,
Augusto Aramburo (Augusto), who predeceased them.
Virginia's co respondents herein are the heirs of Augusto,
while the petitioners in the instant case are the heirs of
Corazon who substituted the latter after she died while the
case was pending before the CA.[3]
On November 26, 1993, Virginia, together with her co-
respondents herein, filed a Complaint for Recovery of
Ownership with Declaration of Nullity and/or Alternatively
Reconveyance and Damages with Preliminary Injunction
against Corazon, docketed as Civil Case No. T-1693.[4]
Subject of this case are seven parcels of land located in
Tabaco City, Albay, to wit: (1) Transfer Certificate of Title
(TCT) No. T-41187 with an area of 176,549 square
meters, more or less; (2) TCT No. T-41183 with an area
of 217,732 sq m, more or less; (3) TCT No. T-41184 with
an area of 39,674 sq m, more or less; (4) TCT No. T-
28161 with an area of 86,585 sq m, more or less; (5) TCT
No. T-41186 with an area of 4,325 sq m, more or less; (6)
TCT No. 49818 with an area of 27,281 sq m, more or less;
and (7) TCT No. 49819 with an area of 35,760 sq m, more
or less (subject properties), now all under the name of
Corazon.[5]
The complaint alleged that Virginia and her husband
Simeon (Spouses Simeon and Virginia), together with
Corazon and her husband Felix (Spouses Felix and
Corazon), acquired the subject properties from Spouses
Eusebio and Epifania Casaul (Spouses Eusebio and
Epifania) through a Deed of Cession dated April 10,
1970.[6]
On April 13, 1970, Spouses Simeon and Virginia and
Spouses Felix and Corazon executed a Deed of Cession
in favor of Augusto's heirs, subject of which is the one-
third pro-indiviso portion of the subject properties.[7]
However, allegedly with the use of falsified documents,
Corazon was able to have the entire subject properties
transferred exclusively to her name, depriving her co-
owners Virginia and Augusto's heirs of their pro-
indiviso share, as well as in the produce of the same.[8]
For her part, Corazon admitted having acquired the
subject properties through cession from their uncle and
auntie, Spouses Eusebio and Epifania. She, however,
intimated that although the said properties were
previously registered under Spouses Eusebio and
Epifania's name, the same were, in truth, owned by their
parents, Spouses Juan and Juliana Aramburo (Spouses
Juan and Juliana). Hence, when her parents died,
Spouses Eusebio and Epifania allegedly merely returned
the said properties to Spouses Juan and Juliana by
ceding the same to their children, Corazon and Simeon.
She further averred that the said properties were ceded
only to her and Simeon, in that, her husband Felix's name
and Virginia's name appearing in the Deed were merely
descriptive of her and Simeon's civil status, being married
to Felix and Virginia, respectively.[9]
Corazon alleged that she and Simeon thought of sharing
a third of the subject properties with the heirs of their
brother Augusto who predeceased them, hence they
executed a Deed of Cession on April 13, 1970 but later on
decided to recall and not implement the same. In fine,
thus, Corazon insisted that only she and Simeon share
one-half portion each of the subject properties. [10]
Corazon further alleged that on December 14, 1974,
Simeon sold and conveyed his entire one-half share in the
co-owned properties in her favor. Hence, Corazon
became the sole owner thereof and consequently, was
able to transfer the titles of the same to her name.
Corazon argued that the subject properties belong to
Simeon's exclusive property, hence, Virginia's conformity
to such sale was not necessary.[11]
Corazon also raised in her Answer to the complaint, that
respondents' action was barred by prescription. [12]
Ruling of the RTC
During trial, it was established that Simeon and Virginia's
marriage had been on bad terms. In fact, since February
4, 1973 Simeon and Virginia had lived separately. Simeon
lived with his sister Corazon in Tabaco City, Albay, while
Virginia and their children lived in Paco, Manila. From
these circumstances, the trial court deduced that it is
highly suspicious that thereafter, Virginia would sign a
deed of sale, consenting to her husband's decision to sell
their conjugal assets to Corazon. Virginia vehemently
disowned the signature appearing in the December 14,
1974 Deed of Absolute Sale. Verily, the National Bureau
of Investigation (NBI) examination report concluded that
the questioned signature and the specimen signatures of
Virginia were not written by one and the same person and
thus, the former is a forgery. [13]
Without the conformity of Virginia, according to the trial
court, Simeon cannot alienate or encumber any real
property of the conjugal partnership.[14]
The trial court concluded, thus, that the December 14,
1974 Deed of Absolute Sale, being falsified, is not a valid
instrument to transfer the one third share of the subject
properties.[15]
The trial court also did not accept Corazon's allegation
that the April 13, 1970 Deed of Cession in favor of
Augusto's heirs as to the other one third portion of the
subject properties, was cancelled and not implemented.
The trial court noted Corazon's testimony during trial that
she was merely administering the said portion for
Augusto's heirs, her nephews and nieces, who were still
minors at that time.[16]
On February 16, 2006, the trial court rendered a Decision
in favor of herein respondents, thus:
WHEREFORE, foregoing premises considered, judgment
is hereby rendered in favor of the plaintiffs:
Declaring the plaintiffs Virginia Dy-Arambulo and Vicky
Aramburo-Lee together with the interested parties the
(1)
owner of ONE-THIRD (1/3) portion of the property
subject mater of this case;
Declaring the co-plaintiffs (heirs of Augusto Aramburo)
(2) likewise the owners of One-third (1/3) portion of the
property subject matter of this case;
Ordering the Cancellation of [TCT] Nos. T-41187,T-
41183, T-41184, T-41185, T-41186, T-48918[4] [sic]
and T-49819 and another ones issued upon proper
steps taken in the names of the plaintiffs and interested
(3)
parties; and the other plaintiffs, Heirs of Augusto
Aramburo, conferring ownership over TWO-THIRDS
(2/3) PORTION of the properties subject matter of this
case;
Ordering the defendant to reimburse the plaintiffs
TWO-THIRDS (2/3) of the produce of the properties,
(4) subject matter of this case from the time she
appropriated it to herself in 1974 until such time as the
2/3 share are duly delivered to them; and
Ordering the defendant to pay plaintiffs by way of
(5) damages the amount of Fifty Thousand (P50,000.00)
as attorney's fees; and
(6) To pay the cost of suit.
SO ORDERED.[17]
Ruling of the CA
On appeal, Corazon maintained that the subject
properties are not part of Spouses Simeon and Virginia's
conjugal properties. This, according to her, is bolstered by
the fact that the subject properties are not included in the
case for dissolution of conjugal partnership docketed as
Special Proceeding No. 67, and in the separation of
properties case docketed as Civil Case No. T-1032
between Simeon and Virginia.[18]
Respondents argued otherwise. Particularly, Virginia
insisted that only a third portion of the subject properties
is owned by Simeon and that the same is conjugally-
owned by her and Simeon since it was acquired during
their marriage. As such, the disposition by Simeon of the
one-half portion of the subject properties in favor of
Corazon is not only void but also fictitious not only
because Simeon does not own the said one-half portion,
but also because Virginia's purported signature in the
December 14, 1974 Deed of Absolute Sale as the
vendor's wife was a forgery as found by the NBI, which
was upheld by the trial court.[19]
In its September 22, 2009 assailed Decision,[20] the CA
affirmed the trial court's findings and conclusion in its
entirety, thus:
WHEREFORE, the present appeal is DISMISSED.
Consequently, the Decision of the [RTC], Branch 15,
Tabaco City, in Civil Case No. T-1693 is
hereby AFFIRMED in toto.
SO ORDERED.[21]
Petitioners then, substituting deceased Corazon, filed a
Motion for Reconsideration,[22] which was likewise denied
by the CA in its Resolution[23] dated January 13, 2010:
WHEREFORE, there being no cogent reason for US to
depart from Our assailed Decision, WE hereby DENY the
Motion for Partial Reconsideration.
SO ORDERED.[24]
Hence, this petition.
Issue
Did the CA correctly sustain the RTC decision, declaring
the parties as co-owners of the subject properties? In the
affirmative, may the subject titles be nullified and
transferred to the parties as to their respective portions?
This Court's Ruling
The petition is partly meritorious.
At the outset, let it be stated that the law which governs
the instant case is the Old Civil Code, not the Family
Code, as the circumstances of this case all occurred
before the effectivity of the Family Code on August 3,
1988.
Proceeding, thus, to the issue of ownership, We find no
reason to depart from the RTC's ruling as affirmed by the
CA.
Augusto's heirs own one-
third pro-indiviso share in
the subject properties
Respondents' (Augusto's heirs) claim concerning one-
third of the subject properties, is anchored upon the April
13, 1970 Deed of Cession executed by Spouses Felix and
Corazon and Spouses Simeon and Virginia in favor of
Augusto's children. Petitioners, however, maintain that
the said deed was never given effect as it was recalled by
the said spouses.
The courts a quo found that the said deed, ceding a third
of the subject properties to Augusto's heirs, was in fact
implemented as evidenced by Corazon's testimony that
she was merely administering the said properties for
Augusto's heirs as her nephews and nieces were still
minors at that time.
We find no cogent reason to depart from the the courts a
quo's findings as to the existence and effectivity of the
April 13, 1970 Deed of Cession giving rights to Augusto's
children over the one-third portion of the subject property.
For one, basic is the rule that factual findings of the trial
court, especially if affirmed by the appellate court, are
binding and conclusive upon this Court absent any clear
showing of abuse, arbitrariness, or capriciousness
committed by the trial court.[25] In addition, We are not
convinced of Corazon's bare assertion that the said
document was cancelled merely because she and her
brother . Simeon decided not to implement it anymore.
Moreover, as can be gleaned from the testimony of
respondent July Aramburo, one of Augusto's heirs, which
was notably quoted by the petitioners in this petition, it is
clear that he, together with his co-heirs, are co-owners of
the subject properties along with Spouses Simeon and
Virginia and Spouses Felix and Corazon, by virtue of the
Deed of Cession executed in their favor. The said
testimony clearly stated that Simeon was also merely
administering the subject properties.[26]
Simeon's heirs, which
include Virginia, also own
one-third pro-indiviso
share in the subject
properties
Respondent Virginia's claim as to the other one-third
portion of the subject properties is ultimately anchored
upon the April 10, 1970 Deed of Cession. Corazon,
however, countered that inasmuch as her husband Felix's
name in the said Deed of Cession was merely descriptive
of her status as being married to the latter, Virginia's name
likewise appeared in the said Deed of Cession merely to
describe Simeon's status as being married to Virginia. In
fine, Corazon argued that the properties subject of the
said Deed were given exclusively to her and Simeon.
Consequently, the one-half portion thereof pertains to
Simeon's exclusive property and does not belong to
Simeon and Virginia's conjugal property. This, according
to Corazon, was bolstered by the fact that Simeon's share
in the subject properties was not included in the petition
for separation of properties between Virginia and Simeon.
Petitioners maintain this argument.
We uphold the courts a quo's conclusion that one-third
portion of the subject properties is indeed part of Simeon
and Virginia's conjugal properties.
It is undisputed that the subject properties were originally
registered in the name of Spouses Eusebio and Epifania.
It is also undisputed that in a Deed of Cession dated April
10, 1970, these parcels of land were ceded to Spouses
Felix and Corazon, and Spouses Simeon and Virginia.
There is likewise no question that the subject properties
were ceded to the said spouses during Spouses Simeon
and Virginia's marriage.
Article 160 of the Old Civil Code, which is the applicable
provision since the property was acquired prior to the
enactment of the Family Code as stated above, provides
that "all property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife."[27] This
presumption in favor of conjugality is rebuttable, but only
with a strong, clear and convincing evidence; there must
be a strict proof of exclusive ownership of one of the
spouses,[28] and the burden of proof rests upon the party
asserting it.[29]
Thus, in this case, the subject properties, having been
acquired during the marriage, are still presumed to belong
to Simeon and Virginia's conjugal properties.
Unfortunately, Corazon, or the petitioners for that matter,
failed to adduce ample evidence that would convince this
Court of the exclusive character of the properties.
Petitioners' argument that Virginia's name was merely
descriptive of Simeon's civil status is untenable. It bears
stressing that if proof obtains on the acquisition of the
property during the existence of the marriage, as in this
case, then the presumption of conjugal ownership
remains unless a strong, clear and convincing proof was
presented to prove otherwise. In fact, even the
registration of a property in the name of one spouse does
not destroy its conjugal nature. What is material is the time
when the property was acquired.[30]
We also give scant consideration on petitioners' bare
allegation that the subject properties were actually from
the estate of Simeon and Corazon's parents, intimating
that the same were inherited by Simeon and Corazon,
hence, considered their exclusive properties. The records
are bereft of any proof that will show that the subject
properties indeed belonged to Simeon and Corazon's
parents. Again, what is established is that the subject
properties were originally registered under Spouses
Eusebio and Epifania's name and thus, ceded by the
latter. Petitioners' bare allegation on the matter is so
inadequate for the Court to reach a conclusion that the
acquisition of the subject properties was in a nature of
inheritance than a cession.
Likewise, the fact that the subject properties were not
included in the cases for separation of properties between
Simeon and Virginia does not, in any way, prove that the
same are not part of Simeon and Virginia's conjugal
properties. Such fact cannot be considered as a strong,
clear and convincing proof that the said properties
exclusively belong to Simeon. Besides, We note
respondents' allegation in their Comment to this petition
that the case for separation of properties between Simeon
and Virginia was not resolved by the trial court on the
merits as Simeon died during the pendency thereof, and
also because there was actually a disagreement as to the
inventory the properties included therein. This could mean
that precisely, other properties may be part of the said
spouses' conjugal properties and were not included in the
said case. Notably, such allegation was not denied by the
petitioners.
At any rate, the question of whether petitioners were able
to adduce proof to overthrow the presumption of
conjugality is a factual issue best addressed by the trial
court. It cannot be over-emphasized that factual
determinations of the trial courts, especially when
confirmed by the appellate court, are accorded great
weight by the Court and, as a rule, will not be disturbed
on appeal, except for the most compelling reasons, which
We do not find in the case at bar.[31]
Simeon could not have
validly sold the one-third
share of Augusto's heirs,
as well as the one-third
portion of his and
Virginia's conjugal share
without the latter's
consent, to Corazon
We now proceed to determine the validity of the
December 14, 1974 Deed of Absolute Sale executed by
Simeon in favor of Corazon, covering one-half of the
subject properties which was his purported share.
As for the one-third portion of the subject properties
pertaining to Augusto's heirs, We are one with the CA in
ruling that the Deed of Absolute Sale is void as the said
portion is owned by Augusto's heirs as above-discussed
and thus, Simeon had no right to sell the same. It is basic
that the object of a valid sales contract must be owned by
the seller.[32] Nemo dat quod non habet, as an ancient
Latin maxim says. One cannot give what one does not
have.[33]
However, as to the one-third portion commonly-owned by
Spouses Simeon and Virginia, Simeon's alienation of the
same through sale without Virginia's conformity is merely
voidable.
Article 166[34] of the Old Civil Code explicitly requires the
consent of the wife before the husband may alienate or
encumber any real property of the conjugal partnership
except when there is a showing that the wife is
incapacitated, under civil interdiction, or in like situations.
In this case, Virginia vehemently denies having
conformed to the December 14, 1974 sale in favor of
Corazon. In fact, during trial, it has already been
satisfactorily proven, through the NBI's findings as upheld
by the trial court, that Virginia's signature appearing on the
said Deed of Absolute Sale is a forgery. Concedingly, a
finding of forgery does not depend entirely on the
testimonies of handwriting experts as even this Court may
conduct an independent examination of the questioned
signature in order to arrive at a reasonable conclusion as
to its authenticity. We, however, do not have any means
to evaluate the questioned signature in this case as even
the questioned Deed of Absolute Sale is not available in
the records before Us. Hence, We are constrained to the
general rule that the factual findings of the RTC as
affirmed by the CA should not be disturbed by this Court
unless there is a compelling reason to deviate therefrom.
In addition, as correctly observed by the courts a quo, We
cannot turn a blind eye on the circumstances surrounding
the execution of the said Deed of Absolute Sale. The CA,
quoting the RTC, held thus:
[T]he dubiety of its execution at a time that [Virginia] and
her husband's marital relationship was already stale is not
to be taken for granted. It is a fact that [Virginia] had lived
separately from bed and board with her husband [Simeon]
as of February 4, 1973. It is, therefore, highly suspicious
that [later on], x x x she would consent to her husband's
decision selling their conjugal assets to [Corazon].
Precisely, her signature appearing in said Deed of
Absolute Sale dated December 14, 1974 x x x is being
disowned by her as being a forgery. Undoubtedly, the NBI
Examination report anent this x x x conducted by Sr.
Document Examiner Rhoda B. Flores gave the conclusion
that the questioned and the standard/sample signatures
of "[Virginia]" was not written by one and the same person.
x x x.[35]
The CA also correctly observed that the forgery, as found
by the RTC, is evident from the admitted fact of strained
marital relationship between Simeon and Virginia and the
fact that at the time the question Deed of Absolute Sale
was executed, Simeon had been living with Corazon in
Tabaco City, Albay, while Virginia and her children were
living in Paco, Manila.[36]
Accordingly, without Virginia's conformity, the Deed of
Absolute Sale executed on December 14, 1974 between
Simeon and Corazon purportedly covering one-half of the
subject properties is voidable.
As for Augusto's heirs, the
action to nullify the sale of
their share, being void is
imprescriptible; as for
Virginia, the action to
nullify the sale of her
share, being merely
voidable, is susceptible to
prescription
At this juncture, We differ from the CA's pronouncement that
since the deed of sale involved is a void contract, the action to
nullify the same is imprescriptible.
We qualify.
For the share of Augusto's heirs sold by Simeon in the
December 14, 1974 Deed of Absolute Sale, the sale of the same
is void as the object of such sale, not being owned by the seller,
did not exist at the time of the transaction.[37] Being a void
contract, thus, the CA correctly ruled that the action to impugn
the sale of the same is imprescriptible pursuant to Article
1410[38] of the New Civil Code (NCC).
As for the share pertaining to Simeon and Virginia, We must
emphasize that the governing law in this case is the Old Civil
Code. Under the said law, while the husband is prohibited from
selling the commonly-owned real property without his wife's
consent, still, such sale is not void but merely voidable.[39] Article
173 thereof gave Virginia the right to have the sale annulled
during the marriage within ten years from the date of the sale.
Failing in that, she or her heirs may demand, after dissolution of
the marriage, only the value of the property that Simeon
erroneously sold.[40] Thus:
Art. 173. The wife may, during the marriage, and within ten years
from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into without
her consent, when such consent is required, or any act or
contract of the husband which tends to defraud her or impair her
interest in the conjugal partnership property. Should the wife fail
to exercise this right, she or her heirs, after the dissolution of the
marriage, may demand the value of property fraudulently
alienated by the husband.
In contrast, the Family Code does not provide a period within
which the wife who gave no consent may assail her husband's
sale of real property. It simply provides that without the other
spouse's written consent or a court order allowing the sale, the
same would be void.[41] Thus, the provisions of the NCC
governing contracts is applied as regards the issue on
prescription. Under the NCC, a void or inexistent contract has
no force and effect from the very beginning, and this rule applies
to contracts that are declared void by positive provision of law
as in the case of a sale of conjugal property without the other
spouse's written consent.[42] Under Article 1410 of the NCC, the
action or defense for the declaration of the inexistence of a
contract does not prescribe.
As this case, as far as Virginia is concerned, falls under the
provisions of the Old Civil Code, the CA erred in ruling that the
subject Deed of Absolute Sale is void for the lack of the wife's
conformity thereto and thus, applying Article 1410 of the NCC
stating that the action to question a void contract is
imprescriptible. Again, Simeon's sale of their conjugal property
without his wife's conformity under the Old Civil Code is merely
voidable not void. The imprescriptibility of an action assailing a
void contract under Article 1410 of the NCC, thus, does not apply
in such case. The 10-year prescriptive period under Article 173
of the Old Civil Code, therefore, should be applied in this case.
Here, the invalid sale was executed on December 14, 1974
while the action questioning the same was filed in 1993, which
is clearly way beyond the 10-year period prescribed under
Article 173 of the Old Civil Code. Virginia's recourse is,
therefore, to demand only the value of the property, i.e., the one-
third portion of the subject properties invalidly sold by Simeon
without Virginia's conformity pursuant to the same provision.
In fine, while We uphold the courts a quo's findings that the
parties herein are co-owners of the subject properties, We
reverse and set aside the said courts' ruling, ordering the
cancellation of titles of the entire subject properties and the
transfer of the two-thirds portion of the same to the respondents.
While Augusto's heirs are entitled to the recovery of their share
in the subject properties, Virginia is only entitled to demand the
value of her share therefrom pursuant to Article 173 of the Old
Civil Code above-cited.
WHEREFORE, premises considered, the petition is PARTLY
GRANTED. The Decision dated September 22, 2009 of the
Court of Appeals in CA-G.R. CV No. 89611, affirming the
Decision dated February 16, 2006 of the Regional Trial Court of
Tabaco City, Branch 15, in Civil Case No. T-1693 is
hereby AFFIRMED in all aspects EXCEPT insofar as it ordered
the cancellation of the titles of the entire subject properties.
Accordingly, petitioners Heirs of Corazon Aramburo Ko,
respondents Virginia Dy Aramburo and all persons claiming
under her, as Heirs of Simeon Aramburo, and respondents Heirs
of Augusto Aramburo are deemed co-owners pro-indiviso of the
subject properties in equal one-third (1/3) share. As such, the
titles over the subject properties are ORDERED cancelled
insofar as the heirs of Augusto Aramburo's share is concerned.
Virginia Dy Aramburo and all persons claiming under her have
the right to demand for the value of their one-third (1/3) share in
a proper case.
SO ORDERED.
G.R. No. 125172 June 26, 1998
Spouses ANTONIO and LUZVIMINDA
GUIANG, petitioners,
vs.
COURT OF APPEALS and GILDA
COPUZ, respondents.
PANGANIBAN, J.:
The sale of a conjugal property requires the consent of
both the husband and the wife. The absence of the
consent of one renders the sale null and void, while the
vitiation thereof makes it merely voidable. Only in the
latter case can ratification cure the defect.
The Case
These were the principles that guided the Court in
deciding this petition for review of the Decision 1 dated
January 30, 1996 and the Resolution 2 dated May 28,
1996, promulgated by the Court of Appeals in CA-GR CV
No. 41758, affirming the Decision of the lower court and
denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed
an Amended Complainant 3 against her husband Judie
Corpuz and Petitioner-Spouses Antonio and Luzviminda
Guiang. The said Complaint sought the declaration of a
certain deed of sale, which involved the conjugal property
of private respondent and her husband, null and void. The
case was raffled to the Regional Trial Court of Koronadal,
South Cotabato, Branch 25. In due course, the trial court
rendered a Decision 4 dated September 9, 1992,
disposing as follow: 5
ACCORDINGLY, judgment is rendered for the plaintiff
and against the defendants,
1. Declaring both the Deed of Transfer of Rights dated
March 1, 1990 (Exh. "A") and the "amicable settlement"
dated March 16, 1990 (Exh. "B") as null void and of no
effect;
2. Recognizing as lawful and valid the ownership and
possession of plaintiff Gilda Corpuz over the remaining
one-half portion of Lot 9, Block 8, (LRC) Psd-165409
which has been the subject of the Deed of Transfer of
Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants
Luzviminda Guiang the amount of NINE THOUSAND
(P9,000.00) PESOS corresponding to the payment made
by defendants Guiangs to Manuel Callejo for the unpaid
balance of the account of plaintiff in favor of Manuel
Callejo, and another sum of P379.62 representing one-
half of the amount of realty taxes paid by defendants
Guiangs on Lot 9, Block 8, (LRC) Psd-165409, both with
legal interests thereon computed from the finality of the
decision.
No pronouncement as to costs in view of the factual
circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the
Court of Appeals. Respondent Court, in its challenged
Decision, ruled as follow: 6
WHEREFORE, the appealed of the lower court in Civil
Case No. 204 is hereby AFFIRMED by this Court. No
costs considering plaintiff-appellee's failure to file her brief
despite notice.
Reconsideration was similarly denied by the same court
in its assailed Resolution: 7
Finding that the issues raised in defendants-appellants
motion for reconsideration of Our decision in this case of
January 30, 1996, to be a mere rehash of the same issues
which we have already passed upon in the said decision,
and there [being] no cogent reason to disturb the same,
this Court RESOLVED to DENY the instant motion for
reconsideration for lack of merit.
The Facts
The facts of this case are simple. Over the objection of
private respondent and while she was in Manila seeking
employment, her husband sold to the petitioners-spouses
one half of their conjugal peoperty, consisting of their
residence and the lot on which it stood. The
circumstances of this sale are set forth in the Decision of
Respondent Court, which quoted from the Decision of the
trial court as follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are
legally married spouses. They were married on December
24, 1968 in Bacolod City, before a judge. This is admitted
by defendants-spouses Antonio and Luzviminda Guiang
in their answer, and also admitted by defendant Judie
Corpuz when he testified in court (tsn. p. 3, June 9, 1992),
although the latter says that they were married in 1967.
The couple have three children, namely: Junie — 18 years
old, Harriet — 17 years of age, and Jodie or Joji, the
youngest, who was 15 years of age in August, 1990 when
her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and
Judie Corpuz, with plaintiff-wife Gilda Corpuz as vendee,
bought a 421 sq. meter lot located in Barangay Gen.
Paulino Santos (Bo. 1), Koronadal, South Cotabato, and
particularly known as Lot 9, Block 8, (LRC) Psd-165409
from Manuel Callejo who signed as vendor through a
conditional deed of sale for a total consideration of
P14,735.00. The consideration was payable in
installment, with right of cancellation in favor of vendor
should vendee fail to pay three successive installments
(Exh. "2", tsn p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie
Corpuz sold one-half portion of their Lot No. 9, Block 8,
(LRC) Psd-165409 to the defendants-spouses Antonio
and Luzviminda Guiang. The latter have since then
occupied the one-half portion [and] built their house
thereon (tsn. p. 4, May 22, 1992). They are thus adjoining
neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June
1989. She was trying to look for work abroad, in [the]
Middle East. Unfortunately, she became a victim of an
unscrupulous illegal recruiter. She was not able to go
abroad. She stayed for sometime in Manila however,
coming back to Koronadal, South Cotabato, . . . on March
11, 1990. Plaintiff's departure for Manila to look for work
in the Middle East was with the consent of her husband
Judie Corpuz (tsn. p. 16, Aug. 12, 1990; p. 10 Sept. 6,
1991).
After his wife's departure for Manila, defendant Judie
Corpuz seldom went home to the conjugal dwelling. He
stayed most of the time at his place of work at Samahang
Nayon Building, a hotel, restaurant, and a cooperative.
Daughter Herriet Corpuz went to school at King's College,
Bo. 1, Koronadal, South Cotabato, but she was at the
same time working as household help of, and staying at,
the house of Mr. Panes. Her brother Junie was not
working. Her younger sister Jodie (Jojie) was going to
school. Her mother sometimes sent them money (tsn. p.
14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned that
her father intended to sell the remaining one-half portion
including their house, of their homelot to defendants
Guiangs. She wrote a letter to her mother informing her.
She [Gilda Corpuz] replied that she was objecting to the
sale. Harriet, however, did not inform her father about this;
but instead gave the letter to Mrs. Luzviminda Guiang so
that she [Guiang] would advise her father (tsn. pp. 16-17,
Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz,
defendant Judie Corpuz pushed through the sale of the
remaining one-half portion of Lot 9, Block 8, (LRC) Psd-
165409. On March 1, 1990, he sold to defendant
Luzviminda Guiang thru a document known as "Deed of
Transfer of Rights" (Exh. "A") the remaining one-half
portion of their lot and the house standing thereon for a
total consideration of P30,000.00 of which P5,000.00 was
to be paid in June, 1990. Transferor Judie Corpuz's
children Junie and Harriet signed the document as
witness.
Four (4) days after March 1, 1990 or on March 5, 1990,
obviously to cure whatever defect in defendant Judie
Corpuz's title over the lot transferred, defendant
Luzviminda Guiang as vendee executed another
agreement over Lot 9, Block 8, (LRC) Psd-165408 (Exh.
"3"), this time with Manuela Jimenez Callejo, a widow of
the original registered owner from whom the couple Judie
and Gilda Corpuz originally bought the lot (Exh. "2"), who
signed as vendor for a consideration of P9,000.00.
Defendant Judie Corpuz signed as a witness to the sale
(Exh. "3-A"). The new sale (Exh. "3") describes the lot sold
as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from
the mass of evidence that the correct lot is Lot 8, Block 9,
(LRC) Psd-165409, the very lot earlier sold to the couple
Gilda and Judie Corpuz.
5. Sometimes on March 11, 1990, plaintiff returned home.
She found her children staying with other households.
Only Junie was staying in their house. Harriet and Joji
were with Mr. Panes. Gilda gathered her children together
and stayed at their house. Her husband was nowhere to
be found. She was informed by her children that their
father had a wife already.
6. For staying in their house sold by her husband, plaintiff
was complained against by defendant Luzviminda Guiang
and her husband Antonio Guiang before the Barangay
authorities of Barangay General Paulino Santos (Bo. 1),
Koronadal, South Cotabato, for trespassing (tsn. p. 34,
Aug. 17, 1990). The case was docketed by the barangay
authorities as Barangay Case No. 38 for "trespassing". On
March 16, 1990, the parties thereat signed a document
known as "amicable settlement". In full, the settlement
provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three
children, namely: Junie, Hariet and Judie to leave
voluntarily the house of Mr. and Mrs. Antonio Guiang,
where they are presently boarding without any charge, on
or before April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the
bargain, plaintiff to the Barangay Captain of Barangay
Paulino Santos to question her signature on the amicable
settlement. She was referred however to the Office-In-
Charge at the time, a certain Mr. de la Cruz. The latter in
turn told her that he could not do anything on the matter
(tsn. p. 31, Aug. 17, 1990).
This particular point not rebutted. The Barangay Captain
who testified did not deny that Mrs. Gilda Corpuz
approached him for the annulment of the settlement. He
merely said he forgot whether Mrs. Corpuz had
approached him (tsn. p. 13, Sept. 26, 1990). We thus
conclude that Mrs. Corpuz really approached the
Barangay Captain for the annulment of the settlement.
Annulment not having been made, plaintiff stayed put in
her house and lot.
7. Defendant-spouses Guiang followed thru the amicable
settlement with a motion for the execution of the amicable
settlement, filing the same with the Municipal Trial Court
of Koronadal, South Cotabato. The proceedings [are] still
pending before the said court, with the filing of the instant
suit.
8. As a consequence of the sale, the spouses Guiang
spent P600.00 for the preparation of the Deed of Transfer
of Rights, Exh. "A", P9,000.00 as the amount they paid to
Mrs. Manuela Callejo, having assumed the remaining
obligation of the Corpuzes to Mrs. Callejo (Exh. "3");
P100.00 for the preparation of Exhibit "3"; a total of
P759.62 basic tax and special education fund on the lot;
P127.50 as the total documentary stamp tax on the
various documents; P535.72 for the capital gains tax;
P22.50 as transfer tax; a standard fee of P17.00;
certification fee of P5.00. These expenses particularly the
taxes and other expenses towards the transfer of the title
to the spouses Guiangs were incurred for the whole Lot 9,
Block 8, (LRC) Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial
court's ruling that any alienation or encumbrance by the
husband of the conjugal propety without the consent of
his wife is null and void as provided under Article 124 of
the Family Code. It also rejected petitioners' contention
that the "amicable sttlement" ratified said
sale, citing Article 1409 of the Code which expressly bars
ratification of the contracts specified therein, particularly
those "prohibited or declared void by law."
Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public
respondent the following errors: 10
I were?
Whether or not the assailed Deed of Transfer of Rights
was validly executed.
II
Whether or not the Cour of Appeals erred in not declairing
as voidable contract under Art. 1390 of the Civil Code the
impugned Deed of Transfer of Rights which was validly
ratified thru the execution of the "amicable settlement" by
the contending parties.
III
Whether or not the Court of Appeals erred in not setting
aside the findings of the Court a quowhich recognized as
lawful and valid the ownership and possession of private
respondent over the remaining one half (1/2) portion of
the properly.
In a nutshell, petitioners-spouses contend that (1) the
contract of sale (Deed of Transfer of Rights) was merely
voidable, and (2) such contract was ratified by private
respondent when she entered into an amicable sttlement
with them.
This Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of
Rights was validly executed by the parties-litigants in
good faith and for valuable consideration. The absence of
private respondent's consent merely rendered the Deed
voidable under Article 1390 of the Civil Code, which
provides:
Art. 1390. The following contracts are voidable or
annullable, even though there may have been no damage
to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by
a proper action in court. They are susceptible of
ratification.(n)
The error in petitioners' contention is evident. Article 1390,
par. 2, refers to contracts visited by vices of consent, i.e.,
contracts which were entered into by a person whose
consent was obtained and vitiated through mistake,
violence, intimidation, undue influence or fraud. In this
instance, private respondent's consent to the contract of
sale of their conjugal property was totally inexistent or
absent. Gilda Corpuz, on direct examination, testified
thus: 11
Q Now, on March 1, 1990, could you still recall where you
A I was still in Manila during that time.
xxx xxx xxx
ATTY. FUENTES:
Q When did you come back to Koronadal, South
Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was there any
problem which arose concerning the ownership of your
residential house at Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem
which arose regarding my residential house and lot
because it was sold by my husband without my
knowledge.
This being the case, said contract properly falls within the
ambit of Article 124 of the Family Code, which was
correctly applied by the teo lower court:
Art. 124. The administration and enjoyment of the
conjugal partnerhip properly shall belong to both spouses
jointly. In case of disgreement, the husband's decision
shall prevail, subject recourse to the court by the wife for
proper remedy, which must be availed of within five years
from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal
properties, the other spouse may assume sole powers of
administration. These powers do not include the powers
of disposition or encumbrance which must have the
authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the
part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both
offerors. (165a) (Emphasis supplied)
Comparing said law with its equivalent provision in the
Civil Code, the trial court adroitly explained the
amendatory effect of the above provision in this wise: 12
The legal provision is clear. The disposition or
encumbrance is void. It becomes still clearer if we
compare the same with the equivalent provision of the
Civil Code of the Philippines. Under Article 166 of the Civil
Code, the husband cannot generally alienate or
encumber any real property of the conjugal partnershit
without the wife's consent. The alienation or encumbrance
if so made however is not null and void. It is merely
voidable. The offended wife may bring an action to annul
the said alienation or encumbrance. Thus the provision of
Article 173 of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten
years from the transaction questioned, ask the courts for
the annulment of any contract of the husband entered into
without her consent, when such consent is required, or
any act or contract of the husband which tends to defraud
her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or
her heirs after the dissolution of the marriage, may
demand the value of property fraudulently alienated by
the husband.(n)
This particular provision giving the wife ten (10) years . . .
during [the] marriage to annul the alienation or
encumbrance was not carried over to the Family Code. It
is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by
the husband of the conjugal partnership property without
the consent of the wife is null and void.
Furthermore, it must be noted that the fraud and the
intimidation referred to by petitioners were perpetrated in
the execution of the document embodying the amicable
settlement. Gilda Corpuz alleged during trial that
barangay authorities made her sign said document
through misrepresentation and
coercion. 13 In any event, its execution does not alter the
void character of the deed of sale between the husband
and the petitioners-spouses, as will be discussed later.
The fact remains that such contract was entered into
without the wife's consent.
In sum, the nullity of the contract of sale is premised on
the absence of private respondent's consent. To
constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2)
object, and (3) consent, 14 the last element being
indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable,
petitioners aver that it was duly ratified by the contending
parties through the "amicable settlement" they executed
on March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate
courts have resolved this issue in favor of the private
respondent. The trial court correctly held: 15
By the specific provision of the law [Art. 1390, Civil Code]
therefore, the Deed to Transfer of Rights (Exh. "A") cannot be
ratified, even by an "amicable settlement". The participation by
some barangay authorities in the "amicable settlement" cannot
otherwise validate an invalid act. Moreover, it cannot be denied
that the "amicable settlement (Exh. "B") entered into by plaintiff
Gilda Corpuz and defendent spouses Guiang is a contract. It is
a direct offshoot of the Deed of Transfer of Rights (Exh. "A"). By
express provision of law, such a contract is also void. Thus, the
legal provision, to wit:
Art. 1422. Acontract which is the direct result of a previous illegal
contract, is also void and inexistent. (Civil Code of the
Philippines).
In summation therefore, both the Deed of transfer of Rights
(Exh. "A") and the "amicable settlement" (Exh. "3") are null and
void.
16
Doctrinally and clearly, a void contract cannot be ratified.
Neither can the "amicable settlement" be considered a
continuing offer that was accepted and perfected by the parties,
following the last sentence of Article 124. The order of the
pertinent events is clear: after the sale, petitioners filed a
complaint for trespassing against private respondent, after
which the barangay authorities secured an "amicable
settlement" and petitioners filed before the MTC a motion for its
execution. The settlement, however, does not mention a
continuing offer to sell the property or an acceptance of such a
continuing offer. Its tenor was to the effect that private
respondent would vacate the property. By no stretch of the
imagination, can the Court interpret this document as the
acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and
AFFIRMS the challenged Decision and Resolution. Costs
against petitioners.
SO ORDERED.
G.R. No. 147978 January 23, 2002
THELMA A. JADER-MANALO, petitioner,
vs.
NORMA FERNANDEZ C. CAMAISA and EDILBERTO
CAMAISA, respondents.
KAPUNAN, J.:
The issue raised in this case is whether or not the
husband may validly dispose of a conjugal property
without the wife's written consent.
The present controversy had its beginning when petitioner
Thelma A. Jader-Manalo allegedly came across an
advertisement placed by respondents, the Spouses
Norma Fernandez C. Camaisa and Edilberto Camaisa, in
the Classified Ads Section of the newspaper BULLETIN
TODAY in its April, 1992 issue, for the sale of their ten-
door apartment in Makati, as well as that in Taytay, Rizal.
As narrated by petitioner in her complaint filed with the
Regional Trial Court of Makati, Metro Manila, she was
interested in buying the two properties so she negotiated
for the purchase through a real estate broker, Mr. Proceso
Ereno, authorized by respondent spouses.1 Petitioner
made a visual inspection of the said lots with the real
estate broker and was shown the tax declarations, real
property tax payment receipts, location plans, and vicinity
maps relating to the properties.2 Thereafter, petitioner met
with the vendors who turned out to be respondent
spouses. She made a definite offer to buy the properties
to respondent Edilberto Camaisa with the knowledge and
conformity of his wife, respondent Norma Camaisa in the
presence of the real estate broker.3 After some
bargaining, petitioner and Edilberto agreed upon the
purchase price of ₱1,500,000.00 for the Taytay property
and ₱2,100,000.00 for the Makati property4 to be paid on
installment basis with downpayments of ₱100,000.00 and
₱200,000.00, respectively, on April 15, 1992. The balance
thereof was to be paid as follows5 :
Taytay Property Makati Property
6th month P200,000.00 P300,000.00
12th month 700,000.00 1,600,000.00
18th month 500,000.00
This agreement was handwritten by petitioner and signed
6
by Edilberto. When petitioner pointed out the conjugal
nature of the properties, Edilberto assured her of his wife's
conformity and consent to the sale. The formal 7
typewritten Contracts to Sell were thereafter prepared by
petitioner. The following day, petitioner, the real estate
broker and Edilberto met in the latter's office for the formal
signing of the typewritten Contracts to Sell. After 8 the pleadings and admission of the parties considering
Edilberto signed the contracts, petitioner delivered to him
two checks, namely, UCPB Check No. 62807 dated April
15, 1992 for ₱200,000.00 and UCPB Check No. 62808
also dated April 15, 1992 for ₱100,000.00 in the presence
of the real estate broker and an employee in Edilberto's
office.9 The contracts were given to Edilberto for the
formal affixing of his wife's signature.
The following day, petitioner received a call from
respondent Norma, requesting a meeting to clarify some
provisions of the contracts.10 To accommodate her
queries, petitioner, accompanied by her lawyer, met with
Edilberto and Norma and the real estate broker at Cafe
Rizal in Makati.11 During the meeting, handwritten
notations were made on the contracts to sell, so they
arranged to incorporate the notations and to meet again
for the formal signing of the contracts.12
When petitioner met again with respondent spouses and
the real estate broker at Edilberto's office for the formal
affixing of Norma's signature, she was surprised when
respondent spouses informed her that they were backing
out of the agreement because they needed "spot cash"
for the full amount of the consideration.13 Petitioner
reminded respondent spouses that the contracts to sell
had already been duly perfected and Norma's refusal to
sign the same would unduly prejudice petitioner. Still,
Norma refused to sign the contracts prompting petitioner
to file a complaint for specific performance and damages
against respondent spouses before the Regional Trial
Court of Makati, Branch 136 on April 29, 1992, to compel
respondent Norma Camaisa to sign the contracts to sell.
A Motion to Dismiss14 was filed by respondents which was
denied by the trial court in its Resolution of July 21,
1992.15
Respondents then filed their Answer with Compulsory
Counter-claim, alleging that it was an agreement between
herein petitioner and respondent Edilberto Camaisa that
the sale of the subject properties was still subject to the
approval and conformity of his wife Norma
Camaisa.16 Thereafter, when Norma refused to give her
consent to the sale, her refusal was duly communicated
by Edilberto to petitioner.17 The checks issued by
petitioner were returned to her by Edilberto and she
accepted the same without any objection.18 Respondent
further claimed that the acceptance of the checks
returned to petitioner signified her assent to the
cancellation of the sale of the subject
properties.19 Respondent Norma denied that she ever
participated in the negotiations for the sale of the subject
properties and that she gave her consent and conformity
to the same.20
On October 20, 1992, respondent Norma F. Camaisa filed
a Motion for Summary Judgment21 asserting that there is
no genuine issue as to any material fact on the basis of
that the wife's written consent was not obtained in the
contract to sell, the subject conjugal properties belonging
to respondents; hence, the contract was null and void.
On April 14, 1993, the trial court rendered a summary
judgment dismissing the complaint on the ground that
under Art. 124 of the Family Code, the court cannot
intervene to authorize the transaction in the absence of
the consent of the wife since said wife who refused to give
consent had not been shown to be incapacitated. The
dispositive portion of the trial court's decision reads:
WHEREFORE, considering these premises, judgment is
hereby rendered:
1. Dismissing the complaint and ordering the cancellation
of the Notice of Lis Pendens by reason of its filing on TCT
Nos. (464860) S-8724 and (464861) S-8725 of the
Registry of Deeds at Makati and on TCT Nos. 295976 and
295971 of the Registry of Rizal.
2. Ordering plaintiff Thelma A. Jader to pay defendant
spouses Norma and Edilberto Camaisa, FIFTY
THOUSAND (₱50,000.00) as Moral Damages and FIFTY
THOUSAND (₱50,000.00) as Attorney's Fees.
Costs against plaintiff.22
Petitioner, thus, elevated the case to the Court of Appeals.
On November 29, 2000, the Court of Appeals affirmed the
dismissal by the trial court but deleted the award of
₱50,000.00 as damages and ₱50,000.00 as attorney's
fees.
The Court of Appeals explained that the properties
subject of the contracts were conjugal properties and as
such, the consent of both spouses is necessary to give
effect to the sale. Since private respondent Norma
Camaisa refused to sign the contracts, the sale was never
perfected. In fact, the downpayment was returned by
respondent spouses and was accepted by petitioner. The
Court of Appeals also stressed that the authority of the
court to allow sale or encumbrance of a conjugal property
without the consent of the other spouse is applicable only
in cases where the said spouse is incapacitated or
otherwise unable to participate in the administration of the
conjugal property.
Hence, the present recourse assigning the following
errors:
THE HONORABLE COURT OF APPEALS
GRIEVIOUSLY ERRED IN RENDERING SUMMARY
JUDGMENT IN DISMISSING THE COMPLAINT
ENTIRELY AND ORDERING THE CANCELLATION OF
NOTICE OF LIS PENDENS ON THE TITLES OF THE
SUBJECT REAL PROPERTIES;
THE HONORABLE COURT OF APPEALS
GRIEVIOUSLY ERRED IN FAILING TO CONSIDER
THAT THE SALE OF REAL PROPERTIES BY
RESPONDENTS TO PETITIONER HAVE ALREADY
BEEN PERFECTED, FOR AFTER THE LATTER PAID
P300,000.00 DOWNPAYMENT, RESPONDENT MRS.
CAMAISA NEVER OBJECTED TO STIPULATIONS
WITH RESPECT TO PRICE, OBJECT AND TERMS OF
PAYMENT IN THE CONTRACT TO SELL ALREADY
SIGNED BY THE PETITIONER, RESPONDENT MR.
CAMAISA AND WITNESSES MARKED AS ANNEX "G"
IN THE COMPLAINT EXCEPT, FOR MINOR
PROVISIONS ALREADY IMPLIED BY LAW, LIKE
EJECTMENT OF TENANTS, SUBDIVISION OF TITLE
AND RESCISSION IN CASE OF NONPAYMENT,
WHICH PETITIONER READILY AGREED AND
ACCEDED TO THEIR INCLUSION;
THE HONORABLE COURT OF APPEALS
GRIEVIOUSLY ERRED WHEN IT FAILED TO
CONSIDER THAT CONTRACT OF SALE IS
CONSENSUAL AND IT IS PERFECTED BY THE MERE
CONSENT OF THE PARTIES AND THE APPLICABLE
PROVISIONS ARE ARTICLES 1157, 1356, 1357, 1358,
1403, 1405 AND 1475 OF THE CIVIL CODE OF THE
PHILIPPINES AND GOVERNED BY THE STATUTE OF
FRAUD.23
The Court does not find error in the decisions of both the
trial court and the Court of Appeals.
Petitioner alleges that the trial court erred when it entered
a summary judgment in favor of respondent spouses
there being a genuine issue of fact. Petitioner maintains
that the issue of whether the contracts to sell between
petitioner and respondent spouses was perfected is a
question of fact necessitating a trial on the merits.
The Court does not agree. A summary judgment is one
granted by the court upon motion by a party for an
expeditious settlement of a case, there appearing from
the pleadings, depositions, admissions and affidavits that
there are no important questions or issues of fact
involved, and that therefore the moving party is entitled to
judgment as a matter of law.24 A perusal of the pleadings
submitted by both parties show that there is no genuine
controversy as to the facts involved therein.
Both parties admit that there were negotiations for the
sale of four parcels of land between petitioner and
respondent spouses; that petitioner and respondent
Edilberto Camaisa came to an agreement as to the price
and the terms of payment, and a downpayment was paid
by petitioner to the latter; and that respondent Norma
refused to sign the contracts to sell. The issue thus posed
for resolution in the trial court was whether or not the
contracts to sell between petitioner and respondent
spouses were already perfected such that the latter could
no longer back out of the agreement.
The law requires that the disposition of a conjugal
property by the husband as administrator in appropriate
cases requires the written consent of the wife, otherwise,
the disposition is void. Thus, Article 124 of the Family
Code provides:
Art. 124. The administration and enjoyment of the
conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husband's
decision shall prevail, subject to recourse to the court by
the wife for a proper remedy, which must be availed of
within five years from the date of the contract
implementing such decision.
Under the foregoing facts, the motion for summary
judgment was proper considering that there was no
genuine issue as to any material fact. The only issue to
be resolved by the trial court was whether the contract to
sell involving conjugal properties was valid without the
written consent of the wife.
WHEREFORE, the petition is hereby DENIED and the
decision of the Court of Appeals dated November 29,
2000 in CA-G.R. CV No. 43421 AFFIRMED.

In the event that one spouse is incapacitated or otherwise SO ORDERED.

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

The properties subject of the contracts in this case were

conjugal; hence, for the contracts to sell to be effective,
the consent of both husband and wife must concur.

Respondent Norma Camaisa admittedly did not give her

written consent to the sale. Even granting that respondent
Norma actively participated in negotiating for the sale of
the subject properties, which she denied, her written
consent to the sale is required by law for its validity.
Significantly, petitioner herself admits that Norma refused
to sign the contracts to sell. Respondent Norma may have
been aware of the negotiations for the sale of their
conjugal properties. However, being merely aware of a
transaction is not consent.25

Finally, petitioner argues that since respondent Norma

unjustly refuses to affix her signatures to the contracts to
sell, court authorization under Article 124 of the Family
Code is warranted.

The argument is bereft of merit. Petitioner is correct

insofar as she alleges that if the written consent of the
other spouse cannot be obtained or is being withheld, the
matter may be brought to court which will give such
authority if the same is warranted by the circumstances.
However, it should be stressed that court authorization
under Art. 124 is only resorted to in cases where the
spouse who does not give consent is incapacitated.26

In this case, petitioner failed to allege and prove that

respondent Norma was incapacitated to give her consent
to the contracts. In the absence of such showing of the
wife's incapacity, court authorization cannot be sought.
G.R. No. 153802. March 11, 2005
HOMEOWNERS SAVINGS & LOAN BANK, Petitioner,
vs.
MIGUELA C. DAILO, Respondents.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of
the Revised Rules of Court, assailing the Decision1 of the
Court of Appeals in CA-G.R. CV No. 59986 rendered on
June 3, 2002, which affirmed with modification the
October 18, 1997 Decision2 of the Regional Trial Court,
Branch 29, San Pablo City, Laguna in Civil Case No. SP-
4748 (97).
The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr.
were married on August 8, 1967. During their marriage,
the spouses purchased a house and lot situated at
Barangay San Francisco, San Pablo City from a certain
Sandra Dalida. The subject property was declared for tax
assessment purposes under Assessment of Real
Property No. 94-051-2802. The Deed of Absolute Sale,
however, was executed only in favor of the late Marcelino
Dailo, Jr. as vendee thereof to the exclusion of his wife. 3
On December 1, 1993, Marcelino Dailo, Jr. executed a
Special Power of Attorney (SPA) in favor of one Lilibeth
Gesmundo, authorizing the latter to obtain a loan from
petitioner Homeowners Savings and Loan Bank to be
secured by the spouses Dailo’s house and lot in San
Pablo City. Pursuant to the SPA, Gesmundo obtained a
loan in the amount of ₱300,000.00 from petitioner. As
security therefor, Gesmundo executed on the same day a
Real Estate Mortgage constituted on the subject property
in favor of petitioner. The abovementioned transactions,
including the execution of the SPA in favor of Gesmundo,
took place without the knowledge and consent of
respondent.4
Upon maturity, the loan remained outstanding. As a
result, petitioner instituted extrajudicial foreclosure
proceedings on the mortgaged property. After the
extrajudicial sale thereof, a Certificate of Sale was issued
in favor of petitioner as the highest bidder. After the lapse
of one year without the property being redeemed,
petitioner, through its vice-president, consolidated the
ownership thereof by executing on June 6, 1996 an
Affidavit of Consolidation of Ownership and a Deed of
Absolute Sale.5
In the meantime, Marcelino Dailo, Jr. died on December
20, 1995. In one of her visits to the subject property,
respondent learned that petitioner had already employed
a certain Roldan Brion to clean its premises and that her
car, a Ford sedan, was razed because Brion allowed a
boy to play with fire within the premises.
Claiming that she had no knowledge of the mortgage
constituted on the subject property, which was conjugal in
nature, respondent instituted with the Regional Trial
Court, Branch 29, San Pablo City, Civil Case No. SP-2222
(97) for Nullity of Real Estate Mortgage and Certificate of
Sale, Affidavit of Consolidation of Ownership, Deed of
Sale, Reconveyance with Prayer for Preliminary
Injunction and Damages against petitioner. In the
latter’s Answer with Counterclaim, petitioner prayed for
the dismissal of the complaint on the ground that the
property in question was the exclusive property of the late
Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered
a Decision on October 18, 1997. The dispositive portion
thereof reads as follows:
WHEREFORE, the plaintiff having proved by the
preponderance of evidence the allegations of the
Complaint, the Court finds for the plaintiff and hereby
orders:
ON THE FIRST CAUSE OF ACTION:
1. The declaration of the following documents as null and
void:
(a) The Deed of Real Estate Mortgage dated December
1, 1993 executed before Notary Public Romulo Urrea and
his notarial register entered as Doc. No. 212; Page No.
44, Book No. XXI, Series of 1993.
(b) The Certificate of Sale executed by Notary Public
Reynaldo Alcantara on April 20, 1995.
(c) The Affidavit of Consolidation of Ownership executed
by the defendant
(c) The Affidavit of Consolidation of Ownership executed
by the defendant over the residential lot located at Brgy.
San Francisco, San Pablo City, covered by ARP No. 95-
091-1236 entered as Doc. No. 406; Page No. 83, Book
No. III, Series of 1996 of Notary Public Octavio M. Zayas.
(d) The assessment of real property No. 95-051-1236.
2. The defendant is ordered to reconvey the property
subject of this complaint to the plaintiff.
ON THE SECOND CAUSE OF ACTION
1. The defendant to pay the plaintiff the sum of
₱40,000.00 representing the value of the car which was
burned.
ON BOTH CAUSES OF ACTION
1. The defendant to pay the plaintiff the sum of
₱25,000.00 as attorney’s fees;
2. The defendant to pay plaintiff ₱25,000.00 as moral
damages;
3. The defendant to pay the plaintiff the sum of
₱10,000.00 as exemplary damages;
4. To pay the cost of the suit.
The counterclaim is dismissed.
SO ORDERED.6
Upon elevation of the case to the Court of Appeals, the
appellate court affirmed the trial court’s finding that the
subject property was conjugal in nature, in the absence of
clear and convincing evidence to rebut the presumption
that the subject property acquired during the marriage of
spouses Dailo belongs to their conjugal partnership.7 The
appellate court declared as void the mortgage on the
subject property because it was constituted without the
knowledge and consent of respondent, in accordance
with Article 124 of the Family Code. Thus, it upheld the
trial court’s order to reconvey the subject property to
respondent.8 With respect to the damage to respondent’s
car, the appellate court found petitioner to be liable
therefor because it is responsible for the consequences of
the acts or omissions of the person it hired to accomplish
the assigned task.9 All told, the appellate court affirmed
the trial court’s Decision, but deleted the award for
damages and attorney’s fees for lack of basis.10
Hence, this petition, raising the following issues for this
Court’s consideration:
1. WHETHER OR NOT THE MORTGAGE
CONSTITUTED BY THE LATE MARCELINO DAILO, JR.
ON THE SUBJECT PROPERTY AS CO-OWNER
THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.
2. WHETHER OR NOT THE CONJUGAL
PARTNERSHIP IS LIABLE FOR THE PAYMENT OF
THE LOAN OBTAINED BY THE LATE MARCELINO
DAILO, JR. THE SAME HAVING REDOUNDED TO THE
BENEFIT OF THE FAMILY.11
First, petitioner takes issue with the legal provision
applicable to the factual milieu of this case. It contends
that Article 124 of the Family Code should be construed
in relation to Article 493 of the Civil Code, which states:
ART. 493. Each co-owner shall have the full ownership of
his part and of the fruits and benefits pertaining thereto,
and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except
when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him
in the division upon the termination of the co-ownership.
Article 124 of the Family Code provides in part:
ART. 124. The administration and enjoyment of the
conjugal partnership property shall belong to both
spouses jointly. . . .
In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal
properties, the other spouse may assume sole powers of
administration. These powers do not include the powers
of disposition or encumbrance which must have the
authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. . . .
Petitioner argues that although Article 124 of the Family
Code requires the consent of the other spouse to the
mortgage of conjugal properties, the framers of the law
could not have intended to curtail the right of a spouse
from exercising full ownership over the portion of the
conjugal property pertaining to him under the concept of
co-ownership.12 Thus, petitioner would have this Court
uphold the validity of the mortgage to the extent of the late
Marcelino Dailo, Jr.’s share in the conjugal partnership.
In Guiang v. Court of Appeals,13 it was held that the sale
of a conjugal property requires the consent of both the
husband and wife.14 In applying Article 124 of the Family
Code, this Court declared that the absence of the consent
of one renders the entire sale null and void, including the
portion of the conjugal property pertaining to the husband
who contracted the sale. The same principle
in Guiang squarely applies to the instant case. As shall be
discussed next, there is no legal basis to construe Article
493 of the Civil Code as an exception to Article 124 of the
Family Code.
Respondent and the late Marcelino Dailo, Jr. were
married on August 8, 1967. In the absence of a marriage
settlement, the system of relative community or conjugal
partnership of gains governed the property relations
between respondent and her late husband.15 With the
effectivity of the Family Code on August 3, 1988, Chapter
4 on Conjugal Partnership of Gains in the Family Code
was made applicable to conjugal partnership of gains
already established before its effectivity unless vested
rights have already been acquired under the Civil Code or
other laws.16
The rules on co-ownership do not even apply to the
property relations of respondent and the late Marcelino
Dailo, Jr. even in a suppletory manner. The regime of
conjugal partnership of gains is a special type of
partnership, where the husband and wife place in a
common fund the proceeds, products, fruits and income
from their separate properties and those acquired by
either or both spouses through their efforts or by
chance.17 Unlike the absolute community of property
wherein the rules on co-ownership apply in a suppletory
manner,18 the conjugal partnership shall be governed by
the rules on contract of partnership in all that is not in
conflict with what is expressly determined in the chapter
(on conjugal partnership of gains) or by the spouses in
their marriage settlements.19 Thus, the property relations
of respondent and her late husband shall be governed,
foremost, by Chapter 4 on Conjugal Partnership of
Gains of the Family Code and, suppletorily, by the rules
on partnership under the Civil Code. In case of conflict,
the former prevails because the Civil Code provisions on
partnership apply only when the Family Code is silent on
the matter.
The basic and established fact is that during his lifetime,
without the knowledge and consent of his wife, Marcelino
Dailo, Jr. constituted a real estate mortgage on the subject
property, which formed part of their conjugal partnership.
By express provision of Article 124 of the Family Code, in
the absence of (court) authority or written consent of the
other spouse, any disposition or encumbrance of the
conjugal property shall be void.
The aforequoted provision does not qualify with respect to
the share of the spouse who makes the disposition or
encumbrance in the same manner that the rule on co-
ownership under Article 493 of the Civil Code does.
Where the law does not distinguish, courts should not
distinguish.20 Thus, both the trial court and the appellate
court are correct in declaring the nullity of the real estate
mortgage on the subject property for lack of respondent’s
consent.
Second, petitioner imposes the liability for the payment of
the principal obligation obtained by the late Marcelino
Dailo, Jr. on the conjugal partnership to the extent that it
redounded to the benefit of the family.21
Jr. redounded to the benefit of the family. Consequently,
the conjugal partnership cannot be held liable for the
payment of the principal obligation.
In addition, a perusal of the records of the case reveals
that during the trial, petitioner vigorously asserted that the
subject property was the exclusive property of the late
Marcelino Dailo, Jr. Nowhere in the answer filed with the
trial court was it alleged that the proceeds of the loan
redounded to the benefit of the family. Even on appeal,
petitioner never claimed that the family benefited from the
proceeds of the loan. When a party adopts a certain
theory in the court below, he will not be permitted to
change his theory on appeal, for to permit him to do so
would not only be unfair to the other party but it would also
be offensive to the basic rules of fair play, justice and due
process.25 A party may change his legal theory on appeal
only when the factual bases thereof would not require
presentation of any further evidence by the adverse party
in order to enable it to properly meet the issue raised in
the new theory.26
WHEREFORE, the petition is DENIED. Costs against
petitioner.
SO ORDERED.

Under Article 121 of the Family Code, "[T]he conjugal

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

The burden of proof that the debt was contracted for the
benefit of the conjugal partnership of gains lies with the
creditor-party litigant claiming as such.23 Ei incumbit
probatio qui dicit, non qui negat (he who asserts, not he
who denies, must prove).24 Petitioner’s sweeping
conclusion that the loan obtained by the late Marcelino
Dailo, Jr. to finance the construction of housing units
without a doubt redounded to the benefit of his family,
without adducing adequate proof, does not persuade this
Court. Other than petitioner’s bare allegation, there is
nothing from the records of the case to compel a finding
that, indeed, the loan obtained by the late Marcelino Dailo,
G.R. No. 190846, February 03, 2016
TOMAS P. TAN, JR., Petitioner, v. JOSE
HOSANA, Respondent.
DECISION
BRION, J.:
Before us is a petition for review on certiorari1 challenging
the August 28, 2009 decision2 and November 17, 2009
resolution3 of the Court of Appeals (CA) in CA-G.R. CV
No. 88645.
The Facts
The respondent Jose G. Hosana (Jose) married Milagros
C. Hosana (Milagros) on January 14, 1979.4During their
marriage, Jose and Milagros bought a house and lot
located at Tinago, Naga City, which lot was covered by
Transfer Certificate of Title (TCT) No. 21229.5
On January 13, 1998, Milagros sold to the petitioner
Tomas P. Tan, Jr. (Tomas) the subject property, as
evidenced by a deed of sale executed by Milagros herself
and as attorney-in-fact of Jose, by virtue of a Special
Power of Attorney (SPA) executed by Jose in her
favor.6 The Deed of Sale stated that the purchase price
for the lot was P200,000.00.7 After the sale, TCT No.
21229 was cancelled and TCT No. 32568 was issued in
the name of Tomas.8
On October 19, 2001, Jose filed a Complaint for
Annulment of Sale/Cancellation of Title/Reconveyance
and Damages against Milagros, Tomas, and the Register
of Deeds of Naga City.9 The complaint was filed before
the Regional Trial Court (RTC), Branch 62, Naga City. In
the complaint, Jose averred that while he was working in
Japan, Milagros, without his consent and knowledge,
conspired with Tomas to execute the SPA by forging
Jose's signature making it appear that Jose had
authorized Milagros to sell the subject property to
Tomas.10
In his Answer, Tomas maintained that he was a buyer in
good faith and for value.11 Before he paid the full
consideration of the sale, Tomas claimed he sought
advice from his lawyer-friend who told him that the title of
the subject lot was authentic and in order.12 Furthermore,
he alleged that the SPA authorizing Milagros to sell the
property was annotated at the back of the title.13
Tomas filed a cross-claim against Milagros and claimed
compensatory and moral damages, attorney's fees, and
expenses, for litigation, in the event that judgment be
rendered in favor of Jose.14
The RTC declared Milagros in default for her failure to file
her answer to Jose's complaint and Tomas' cross-
claim.15 On the other hand, it dismissed Tomas' complaint
against the Register of Deeds since it was only a nominal
party.16
G.
After the pre-trial conference, trial on the merits ensued.17
Jose presented his brother, Bonifacio Hosana (Bonifacio),
as sole witness. Bonifacio testified that he learned of the
sale of the subject property from Milagros' son.18 When
Bonifacio confronted Milagros that Jose would get angry
because of the sale, Milagros retorted that she sold the
property because she needed the money. Bonifacio
immediately informed Jose, who was then in Japan, of the
sale.19
Jose was furious when he learned of the sale and went
back to the Philippines. Jose and Bonifacio verified with
the Register of Deeds and discovered that the title
covering the disputed property had been transferred to
Tomas.20
Bonifacio further testified that Jose's signature in the SPA
was forged.21 Bonifacio presented documents containing
the signature of Jose for comparison: Philippine passport,
complaint-affidavit, duplicate original of SPA dated 16
February 2002, notice of lis pendens, community tax
certificate, voter's affidavit, specimen signatures, and a
handwritten letter.22
On the other hand, Tomas submitted his own account of
events as corroborated by Rosana Robles (Rosana), his
goddaughter. Sometime in December 1997, Tomas
directed Rosana to go to the house of Milagros to confirm
if Jose knew about the sale transaction. Through a phone
call by Milagros to Jose, Rosana was able to talk to Jose
who confirmed that he was aware of the sale and had
given his wife authority to proceed with the sale. Rosana
informed Tomas of Jose's confirmation.23
With the assurance that all the documents were in order,
Tomas made a partial payment of P350,000.00 and
another P350,000.00 upon the execution of the Deed of
Absolute Sale (Deed of Sale). Tomas noticed that the
consideration written by Milagros on the Deed of Sale was
only P200,000.00; he inquired why the written
consideration was lower than the actual consideration
paid. Milagros explained that it was done to save on taxes.
Tomas also learned from Milagros that she needed
money badly and had to sell the house because Jose had
stopped sending her money.24
The RTC Ruling
In its decision dated December 27, 2006, 25 the RTC
decided in favor of Jose and nullified the sale of the
subject property to Tomas. The RTC held that the SPA
dated June 10, 1996, wherein Jose supposedly appointed
Milagros as his attorney-in-fact, was actually null and
void.
Tomas and Milagros were ordered to jointly and severally
indemnify Jose the amount of P20,000.00 as temperate
damages.26
The CA Ruling
Tomas appealed the RTC's ruling to the CA.
In a decision dated August 28, 2009,27 the CA affirmed
the RTC ruling that the deed of sale and the SPA were
void. However, the CA modified the judgment of the
RTC: first, by deleting the award of temperate damages;
and second, by directing Jose and Milagros to reimburse
Tomas the purchase price of P200,000.00, with interest,
under the principle of unjust enrichment. Despite Tomas'
allegation that he paid P700,000.00 for the subject lot, the
CA found that there was no convincing evidence that
established this claim.28
Tomas filed a motion for the reconsideration of the CA
decision on the ground that the amount of P200,000.00
as reimbursement for the purchase price of the house and
lot was insufficient and not supported by the evidence
formally offered before and admitted by the RTC. Tomas
contended that the actual amount he paid as
consideration for the sale was P700,000.00, as supported
by his testimony before the RTC.29
The C A denied the motion for reconsideration for lack of
merit" in a resolution dated November 17, 2009.30
The Petition
Tomas filed the present petition for review on certiorari to
challenge the CA ruling which ordered the reimbursement
of P200,000.00 only, instead of the actual purchase price
he paid in the amount of P700,000.00.31
Tomas argues that, first, all matters contained in the deed
of sale, including the consideration stated, cannot be used
as evidence since it was declared null and void; second,
the deed of sale was not specifically offered to prove the
actual consideration of the sale;32third, his testimony
establishing the actual purchase price of P700,000.00
paid was uncontroverted;33 and, fourth, Jose must return
the full amount actually paid under the principle of solutio
indebiti.34
Jose, on the other hand, argues that first, Jose is
estopped from questioning the purchase price indicated
in the deed of dale for failing to immediately raise this
question; and second, the terms of an agreement reduced
into writing are deemed to include all the terms agreed
upon and no other evidence can be admitted other than
the terms of the agreement itself.35
The Issues
The core issues are (1) whether the deed of sale can be
used as the basis for the amount of consideration paid;
and (2) whether the testimony of Tomas is sufficient to
establish the actual purchase price of the sale.
OUR RULING
We affirm the CA ruling and deny the petition.
Whether Tomas paid the purchase price of P700,000.00
is a question of fact not proper in a petition for review
on certiorari. Appreciation of evidence and inquiry on the
correctness of the appellate court's factual findings are
not the functions of this Court, as we are not a trier of
facts.36
This Court does not address questions of fact which
require us to rule on "the truth or falsehood of alleged
facts,"37 except in the following cases:
(1) when the findings are grounded entirely on
speculations, surmises, or conjectures; (2) when
the inference made is manifestly mistaken,
absurd, or impossible; (3) when there is a grave
abuse of discretion; (4) when the judgment is
based on misappreciation of facts; (5) when the
findings of fact are conflicting; (6) when in
making its findings, the same are contrary to the
admissions of both appellant and appellee; (7)
when the findings are contrary to those of the
trial court; (8) when the findings are conclusions
without citation of specific evidence on which
they are based; (9) when the facts set forth in the
petition as well as in the petitioner's main and
reply briefs are not disputed by the respondent;
and (10) when the findings of fact are premised
on the supposed absence of evidence and
contradicted by the evidence on record.38
The present case does not fall under any of these
exceptions.
Whether Tomas sufficiently proved that he paid
P700,000.00 for the subject property is a factual question
that the CA had already resolved in the negative.39 The
CA found Tomas' claim of paying P700,000.00 for the
subject property to be unsubstantiated as he failed to
tender any convincing evidence to establish his claim.
We uphold the CA's finding.
In civil cases, the basic rule is that the party making
allegations has the burden of proving them by a
preponderance of evidence.40 Moreover, the parties must
rely on the strength of their own evidence, not upon the
weakness of the defense offered by their opponent.41
Preponderance of evidence is the weight, credit, and
value of the aggregate evidence on either side and is
usually considered to be synonymous with the term
"greater weight of the evidence" or "greater weight of the
credible evidence."42 Preponderance of evidence is a
phrase that, in the last analysis, means probability of the
truth. It is evidence that is more convincing to the court as
it is worthier of belief than that which is offered in
opposition thereto.43
We agree with the CA that Tomas' bare allegation that he
paid Milagros the sum of P700,000.00 cannot be
considered as proof of payment, without any other
convincing evidence to establish this claim. Tomas' bare
allegation, while uncontroverted, does not automatically
entitle it to be given weight and credence.
It is settled in jurisprudence that one who pleads payment
has the burden of proving it;44 the burden rests on the
defendant to prove payment, rather than on the plaintiff to
prove non-payment.45 A mere allegation is not
evidence,46 and the person who alleges has the burden of
proving his or her allegation with the requisite quantum of
evidence, which in civil cases is preponderance of
evidence.
The force and effect of a void contract is
distinguished from its admissibility as evidence.
The next question to be resolved is whether the CA
correctly ordered the reimbursement of P200,000.00,
which is the consideration stated in the Deed of Sale,
based on the principle of unjust enrichment.
The petitioner argues that the CA erred in relying on the
consideration stated in the deed of sale as basis for the
reimbursable amount because a null and void document
cannot be used as evidence.
We find no merit in the petitioner's argument.
A void or inexistent contract has no force and effect from
the very beginning.47 This rule applies to contracts that
are declared void by positive provision of law, as in the
case of a sale of conjugal property without the other
spouse's written consent.48 A void contract is equivalent
to nothing and is absolutely wanting in civil effects. 49 It
cannot be validated either by ratification or
prescription.50 When, however, any of the terms of a void
contract have been performed, an action to declare its
inexistence is necessary to allow restitution of what has
been given under it.51
It is basic that if a void contract has already "been
performed, the restoration of what has been given is in
order."52 This principle springs from Article 22 of the New
Civil Code which states that "every person who through
an act of performance by another, or any other means,
acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall
return the same." Hence, the restitution of what each party
has given is a consequence of a void and inexistent
contract.
While the terms and provisions of a void contract cannot
be enforced since it is deemed inexistent, it does not
preclude the admissibility of the contract as evidence to
prove matters that occurred in the course of executing the
contract, i.e., what each party has given in the execution
of the contract.
Evidence is the means of ascertaining in a judicial
proceeding the truth respecting a matter of fact,
sanctioned by the Rules of Court. 53 The purpose of
introducing documentary evidence is to ascertain the
truthfulness of a matter at issue, which can be the entire
content or a specific provision/term in the document.
The deed of sale as documentary evidence may be used
as a means to ascertain the truthfulness of the
consideration stated and its actual payment. The purpose
of introducing the deed of sale as evidence is not to
enforce the terms written in the contract, which is an
obligatory force and effect of a valid contract. The deed of
sale, rather, is used as a means to determine matters that
occurred in the execution of such contract, i.e., the
determination of what each party has given under the void
contract to allow restitution and prevent unjust
enrichment.
Evidence is admissible when it is relevant to the issue and
is not excluded by the law of these rules.54There is no
provision in the Rules of Evidence which excludes the
admissibility of a void document. The Rules only require
that the evidence is relevant and not excluded by the
Rules for its admissibility.55
Hence, a void document is admissible as evidence
because the purpose of introducing it as evidence is to
ascertain the truth respecting a matter of fact, not to
enforce the terms of the document itself.
It is also settled in jurisprudence that with respect to
evidence which appears to be of doubtful relevancy,
incompetency, or admissibility, the safer policy is to be
liberal and not reject them on doubtful or technical
grounds, but admit them unless plainly irrelevant,
immaterial, or incompetent; for the reason that their
rejection places them beyond the consideration of the
court, if they are thereafter found relevant or competent.
On the other hand, their admission, if they turn out later to
be irrelevant or incompetent, can easily be remedied by
completely discarding them or ignoring them.56
In the present case, the deed of sale was declared null
and void by positive provision of the law prohibiting the
sale of conjugal property without the spouse's consent. It
does not, however, preclude the possibility that Tomas
paid the consideration stated therein. The admission of
the deed of sale as evidence is consistent with the liberal
policy of the court to admit the evidence: which appears
to be relevant in resolving an issue before the courts.
An offer to prove the regular execution of the deed of
sale is basis for the court to determine the presence
of the essential elements of the sale, including the
consideration paid.
Tomas argues that the Deed of Sale was not specifically
offered to prove the actual consideration of the sale and,
hence, cannot be considered by the court. Tomas is
incorrect.
The deed of sale in the present case was formally offered
by both parties as evidence.57 Tomas, in fact, formally
offered it for the purpose of proving its execution and the
regularity of the sale.58
The offer of the deed of sale to prove its regularity
necessarily allowed the; lower courts to consider the
terms written therein to determine whether all the
essential elements59 for a valid contract of sale are
present, including the consideration of the sale. The fact
that the sale was declared null and void does not prevent
the court from relying on consideration stated in the deed
of sale to determine the actual amount paid by the
petitioner for the purpose of preventing unjust enrichment.
Hence, the specific offer of the Deed of Sale to prove the
actual consideration of the sale is not necessary since it
is necessarily included in determining the regular
execution of the sale.
The consideration stated in the notarized Deed of Sale
is prima facie evidence of the amount paid by the
petitioner.
The notarized deed of sale is a public document and
is prima facie evidence of the truth of the facts stated
therein.60
Prima facie evidence is defined as evidence good and
sufficient on its face. Such evidence as, in the judgment
of the law, is sufficient to establish a given fact, or the
group or chain of facts constituting the party's claim or
defense and which if not rebutted or contradicted, will
remain sufficient.61
instead of the amount of P200,000.00 stated in the deed
of sale. No documentary or testimonial evidence to prove
payment of the higher amount was presented, apart from
Tomas' sole testimony. Tomas' sole testimony of payment
is self-serving and insufficient to unequivocally prove that
Milagros received P700,000.00 for the subject property.
Hence, the consideration stated in the deed of sale
remains sufficient evidence of the actual amount the
petitioner paid and the same amount which should be
returned under the principle of unjust enrichment.
Unjust enrichment exists "when a person unjustly retains
a benefit at the loss of another, or when a person retains
money or property of another against the fundamental
principles of justice, equity, and good conscience."62 The
prevention of unjust enrichment is a recognized public
policy of the State and is based on Article 22 of the Civil
Code.63
The principle of unjust enrichment requires Jose to return
what he or Milagros received under the void contract
which presumably benefitted their conjugal partnership.
Accordingly, the CA correctly ordered Jose to return the
amount of P200,000.00 since this the consideration
stated in the Deed of Sale and given credence by the
lower court. Indeed, even Jose expressly stated in his
comment that Tomas is entitled to recover the money paid
by him in the amount of P200,000.00 as appearing in the
contract.
WHEREFORE, we hereby DENY the petition for review
on certiorari. The decision dated August 28, 2009 and the
resolution dated November 17, 2009, of the Court of
Appeals in CA-G.R. CV No. 88645 is AFFIRMED. Costs
against the petitioner.
SO ORDERED.

In the present case, the consideration stated in the deed

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

The deed of sale was declared null and void by a positive

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

As earlier discussed, Tomas failed to substantiate his

claim that he paid to Milagros the amount of P700,000.00,
G.R. No. 178902 April 21, 2010
MANUEL O. FUENTES and LETICIA L.
FUENTES, Petitioners,
vs.
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE
MARIE R. CRISTOBAL and PILAR
MALCAMPO,Respondents.
DECISION
ABAD, J.:
This case is about a husband’s sale of conjugal real
property, employing a challenged affidavit of consent from
an estranged wife. The buyers claim valid consent, loss of
right to declare nullity of sale, and prescription.
The Facts and the Case
Sabina Tarroza owned a titled 358-square meter lot in
Canelar, Zamboanga City. On October 11, 1982 she sold
it to her son, Tarciano T. Roca (Tarciano) under a deed of
absolute sale.1 But Tarciano did not for the meantime
have the registered title transferred to his name.
Six years later in 1988, Tarciano offered to sell the lot to
petitioners Manuel and Leticia Fuentes (the Fuentes
spouses). They arranged to meet at the office of Atty.
Romulo D. Plagata whom they asked to prepare the
documents of sale. They later signed an agreement to sell
that Atty. Plagata prepared2 dated April 29, 1988, which
agreement expressly stated that it was to take effect in six
months.
The agreement required the Fuentes spouses to pay
Tarciano a down payment of ₱60,000.00 for the transfer
of the lot’s title to him. And, within six months, Tarciano
was to clear the lot of structures and occupants and
secure the consent of his estranged wife, Rosario Gabriel
Roca (Rosario), to the sale. Upon Tarciano’s compliance
with these conditions, the Fuentes spouses were to take
possession of the lot and pay him an additional
₱140,000.00 or ₱160,000.00, depending on whether or
not he succeeded in demolishing the house standing on
it. If Tarciano was unable to comply with these conditions,
the Fuentes spouses would become owners of the lot
without any further formality and payment.
The parties left their signed agreement with Atty. Plagata
who then worked on the other requirements of the sale.
According to the lawyer, he went to see Rosario in one of
his trips to Manila and had her sign an affidavit of
consent.3 As soon as Tarciano met the other conditions,
Atty. Plagata notarized Rosario’s affidavit in Zamboanga
City. On January 11, 1989 Tarciano executed a deed of
absolute sale4 in favor of the Fuentes spouses. They then
paid him the additional ₱140,000.00 mentioned in their
agreement. A new title was issued in the name of the
spouses5 who immediately constructed a building on the
lot. On January 28, 1990 Tarciano passed away, followed
by his wife Rosario who died nine months afterwards.
Eight years later in 1997, the children of Tarciano and
Rosario, namely, respondents Conrado G. Roca,
Annabelle R. Joson, and Rose Marie R. Cristobal,
together with Tarciano’s sister, Pilar R. Malcampo,
represented by her son, John Paul M. Trinidad
(collectively, the Rocas), filed an action for annulment of
sale and reconveyance of the land against the Fuentes
spouses before the Regional Trial Court (RTC) of
Zamboanga City in Civil Case 4707. The Rocas claimed
that the sale to the spouses was void since Tarciano’s
wife, Rosario, did not give her consent to it. Her signature
on the affidavit of consent had been forged. They thus
prayed that the property be reconveyed to them upon
reimbursement of the price that the Fuentes spouses paid
Tarciano.6
The spouses denied the Rocas’ allegations. They
presented Atty. Plagata who testified that he personally
saw Rosario sign the affidavit at her residence in Paco,
Manila, on September 15, 1988. He admitted, however,
that he notarized the document in Zamboanga City four
months later on January 11, 1989.7 All the same, the
Fuentes spouses pointed out that the claim of forgery was
personal to Rosario and she alone could invoke it.
Besides, the four-year prescriptive period for nullifying the
sale on ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented
handwriting experts at the trial. Comparing Rosario’s
standard signature on the affidavit with those on various
documents she signed, the Rocas’ expert testified that the
signatures were not written by the same person. Making
the same comparison, the spouses’ expert concluded that
they were.8
On February 1, 2005 the RTC rendered judgment,
dismissing the case. It ruled that the action had already
prescribed since the ground cited by the Rocas for
annulling the sale, forgery or fraud, already prescribed
under Article 1391 of the Civil Code four years after its
discovery. In this case, the Rocas may be deemed to have
notice of the fraud from the date the deed of sale was
registered with the Registry of Deeds and the new title
was issued. Here, the Rocas filed their action in 1997,
almost nine years after the title was issued to the Fuentes
spouses on January 18, 1989.9
Moreover, the Rocas failed to present clear and
convincing evidence of the fraud. Mere variance in the
signatures of Rosario was not conclusive proof of
forgery.10 The RTC ruled that, although the Rocas
presented a handwriting expert, the trial court could not
be bound by his opinion since the opposing expert witness
contradicted the same. Atty. Plagata’s testimony
remained technically unrebutted.11
Finally, the RTC noted that Atty. Plagata’s defective
notarization of the affidavit of consent did not invalidate
the sale. The law does not require spousal consent to be
on the deed of sale to be valid. Neither does the
irregularity vitiate Rosario’s consent. She personally
signed the affidavit in the presence of Atty. Plagata.12
On appeal, the Court of Appeals (CA) reversed the RTC
decision. The CA found sufficient evidence of forgery and
did not give credence to Atty. Plagata’s testimony that he
saw Rosario sign the document in Quezon City. Its jurat
said differently. Also, upon comparing the questioned
signature with the specimen signatures, the CA noted
significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since
1958 also reinforced the conclusion that her signature had
been forged.
Since Tarciano and Rosario were married in 1950, the CA
concluded that their property relations were governed by
the Civil Code under which an action for annulment of sale
on the ground of lack of spousal consent may be brought
by the wife during the marriage within 10 years from the
transaction. Consequently, the action that the Rocas, her
heirs, brought in 1997 fell within 10 years of the January
11, 1989 sale.
Considering, however, that the sale between the Fuentes
spouses and Tarciano was merely voidable, the CA held
that its annulment entitled the spouses to reimbursement
of what they paid him plus legal interest computed from
the filing of the complaint until actual payment. Since the
Fuentes spouses were also builders in good faith, they
were entitled under Article 448 of the Civil Code to
payment of the value of the improvements they introduced
on the lot. The CA did not award damages in favor of the
Rocas and deleted the award of attorney’s fees to the
Fuentes spouses.13
Unsatisfied with the CA decision, the Fuentes spouses
came to this court by petition for review.14
The Issues Presented
The case presents the following issues:
1. Whether or not Rosario’s signature on the document of
consent to her husband Tarciano’s sale of their conjugal
land to the Fuentes spouses was forged;
2. Whether or not the Rocas’ action for the declaration of
nullity of that sale to the spouses already prescribed; and
3. Whether or not only Rosario, the wife whose consent
was not had, could bring the action to annul that sale.
The Court’s Rulings
First. The key issue in this case is whether or not
Rosario’s signature on the document of consent had been
forged. For, if the signature were genuine, the fact that
she gave her consent to her husband’s sale of the
conjugal land would render the other issues merely
academic.
The CA found that Rosario’s signature had been forged.
The CA observed a marked difference between her
signature on the affidavit of consent15 and her specimen
signatures.16 The CA gave no weight to Atty. Plagata’s
testimony that he saw Rosario sign the document in
Manila on September 15, 1988 since this clashed with his
declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.
The Court agrees with the CA’s observation that Rosario’s
signature strokes on the affidavit appears heavy,
deliberate, and forced. Her specimen signatures, on the
other hand, are consistently of a lighter stroke and more
fluid. The way the letters "R" and "s" were written is also
remarkably different. The variance is obvious even to the
untrained eye.
Significantly, Rosario’s specimen signatures were made
at about the time that she signed the supposed affidavit
of consent. They were, therefore, reliable standards for
comparison. The Fuentes spouses presented no
evidence that Rosario suffered from any illness or disease
that accounted for the variance in her signature when she
signed the affidavit of consent. Notably, Rosario had been
living separately from Tarciano for 30 years since 1958.
And she resided so far away in Manila. It would have been
quite tempting for Tarciano to just forge her signature and
avoid the risk that she would not give her consent to the
sale or demand a stiff price for it.
What is more, Atty. Plagata admittedly falsified the jurat of
the affidavit of consent. That jurat declared that Rosario
swore to the document and signed it in Zamboanga City
on January 11, 1989 when, as Atty. Plagata testified, she
supposedly signed it about four months earlier at her
residence in Paco, Manila on September 15, 1988. While
a defective notarization will merely strip the document of
its public character and reduce it to a private instrument,
that falsified jurat, taken together with the marks of forgery
in the signature, dooms such document as proof of
Rosario’s consent to the sale of the land. That the Fuentes
spouses honestly relied on the notarized affidavit as proof
of Rosario’s consent does not matter. The sale is still void
without an authentic consent.
Second. Contrary to the ruling of the Court of Appeals, the
law that applies to this case is the Family Code, not the
Civil Code. Although Tarciano and Rosario got married in
1950, Tarciano sold the conjugal property to the Fuentes
spouses on January 11, 1989, a few months after the
Family Code took effect on August 3, 1988.
When Tarciano married Rosario, the Civil Code put in
place the system of conjugal partnership of gains on their
property relations. While its Article 165 made Tarciano the
sole administrator of the conjugal partnership, Article
16617 prohibited him from selling commonly owned real
property without his wife’s consent. Still, if he sold the
same without his wife’s consent, the sale is not void but
merely voidable. Article 173 gave Rosario the right to
have the sale annulled during the marriage within ten
years from the date of the sale. Failing in that, she or her
heirs may demand, after dissolution of the marriage, only
the value of the property that Tarciano fraudulently sold.
Thus:
Art. 173. The wife may, during the marriage, and within
ten years from the transaction questioned, ask the courts
for the annulment of any contract of the husband entered
into without her consent, when such consent is required,
or any act or contract of the husband which tends to
defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this
right, she or her heirs, after the dissolution of the
marriage, may demand the value of property fraudulently
alienated by the husband.
But, as already stated, the Family Code took effect on
August 3, 1988. Its Chapter 4 on Conjugal Partnership of
Gains expressly superseded Title VI, Book I of the Civil
Code on Property Relations Between Husband and
Wife.18Further, the Family Code provisions were also
made to apply to already existing conjugal partnerships
without prejudice to vested rights.19 Thus:
Art. 105. x x x The provisions of this Chapter shall also
apply to conjugal partnerships of gains already
established between spouses before the effectivity of this
Code, without prejudice to vested rights already acquired
in accordance with the Civil Code or other laws, as
provided in Article 256. (n)
Consequently, when Tarciano sold the conjugal lot to the
Fuentes spouses on January 11, 1989, the law that
governed the disposal of that lot was already the Family
Code.
In contrast to Article 173 of the Civil Code, Article 124 of
the Family Code does not provide a period within which
the wife who gave no consent may assail her husband’s
sale of the real property. It simply provides that without
the other spouse’s written consent or a court order
allowing the sale, the same would be void. Article 124 thus
provides:
Art. 124. x x x In the event that one spouse is
incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other
spouse may assume sole powers of administration.
These powers do not include the powers of disposition or
encumbrance which must have the authority of the court
or the written consent of the other spouse. In the absence
of such authority or consent, the disposition or
encumbrance shall be void. x x x
Under the provisions of the Civil Code governing
contracts, a void or inexistent contract has no force and
effect from the very beginning. And this rule applies to
contracts that are declared void by positive provision of
law,20 as in the case of a sale of conjugal property without
the other spouse’s written consent. A void contract is
equivalent to nothing and is absolutely wanting in civil
effects. It cannot be validated either by ratification or
prescription.21
But, although a void contract has no legal effects even if
no action is taken to set it aside, when any of its terms
have been performed, an action to declare its inexistence
is necessary to allow restitution of what has been given
under it.22 This action, according to Article 1410 of the
Civil Code does not prescribe. Thus:
Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.
Here, the Rocas filed an action against the Fuentes
spouses in 1997 for annulment of sale and reconveyance
of the real property that Tarciano sold without their
mother’s (his wife’s) written consent. The passage of time
did not erode the right to bring such an action.
Besides, even assuming that it is the Civil Code that
applies to the transaction as the CA held, Article 173
provides that the wife may bring an action for annulment
of sale on the ground of lack of spousal consent during
the marriage within 10 years from the transaction.
Consequently, the action that the Rocas, her heirs,
brought in 1997 fell within 10 years of the January 11,
1989 sale. It did not yet prescribe.
The Fuentes spouses of course argue that the RTC
nullified the sale to them based on fraud and that,
therefore, the applicable prescriptive period should be
that which applies to fraudulent transactions, namely, four
years from its discovery. Since notice of the sale may be
deemed given to the Rocas when it was registered with
the Registry of Deeds in 1989, their right of action already
prescribed in 1993.
But, if there had been a victim of fraud in this case, it would
be the Fuentes spouses in that they appeared to have
agreed to buy the property upon an honest belief that
Rosario’s written consent to the sale was genuine. They
had four years then from the time they learned that her
signature had been forged within which to file an action to
annul the sale and get back their money plus damages.
They never exercised the right.
If, on the other hand, Rosario had agreed to sign the
document of consent upon a false representation that the
property would go to their children, not to strangers, and
it turned out that this was not the case, then she would
have four years from the time she discovered the fraud
within which to file an action to declare the sale void. But
that is not the case here. Rosario was not a victim of fraud
or misrepresentation. Her consent was simply not
obtained at all. She lost nothing since the sale without her
written consent was void. Ultimately, the Rocas ground for
annulment is not forgery but the lack of written consent of
their mother to the sale. The forgery is merely evidence of
lack of consent.
Third. The Fuentes spouses point out that it was to
Rosario, whose consent was not obtained, that the law
gave the right to bring an action to declare void her
husband’s sale of conjugal land. But here, Rosario died in
1990, the year after the sale. Does this mean that the right
to have the sale declared void is forever lost?
The answer is no. As stated above, that sale was void
from the beginning. Consequently, the land remained the
property of Tarciano and Rosario despite that sale. When
the two died, they passed on the ownership of the
property to their heirs, namely, the Rocas.23 As lawful
owners, the Rocas had the right, under Article 429 of the
Civil Code, to exclude any person from its enjoyment and
disposal.1avvphi1
In fairness to the Fuentes spouses, however, they should
be entitled, among other things, to recover from
Tarciano’s heirs, the Rocas, the ₱200,000.00 that they
paid him, with legal interest until fully paid, chargeable
against his estate.
Further, the Fuentes spouses appear to have acted in
good faith in entering the land and building improvements
on it. Atty. Plagata, whom the parties mutually entrusted
with closing and documenting the transaction,
represented that he got Rosario’s signature on the
affidavit of consent. The Fuentes spouses had no reason
to believe that the lawyer had violated his commission and
his oath. They had no way of knowing that Rosario did not
come to Zamboanga to give her consent. There is no
evidence that they had a premonition that the requirement
of consent presented some difficulty. Indeed, they
willingly made a 30 percent down payment on the selling
price months earlier on the assurance that it was
forthcoming.
Further, the notarized document appears to have
comforted the Fuentes spouses that everything was
already in order when Tarciano executed a deed of
absolute sale in their favor on January 11, 1989. In fact,
they paid the balance due him. And, acting on the
documents submitted to it, the Register of Deeds of
Zamboanga City issued a new title in the names of the
Fuentes spouses. It was only after all these had passed
that the spouses entered the property and built on it. He
is deemed a possessor in good faith, said Article 526 of
the Civil Code, who is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it.
As possessor in good faith, the Fuentes spouses were
under no obligation to pay for their stay on the property
prior to its legal interruption by a final judgment against
them.24 What is more, they are entitled under Article 448
to indemnity for the improvements they introduced into the
property with a right of retention until the reimbursement
is made. Thus:
Art. 448. The owner of the land on which anything has
been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon
the terms of the lease and in case of disagreement, the
court shall fix the terms thereof. (361a)
The Rocas shall of course have the option, pursuant to
Article 546 of the Civil Code,25 of indemnifying the
Fuentes spouses for the costs of the improvements or
paying the increase in value which the property may have
acquired by reason of such improvements.
WHEREFORE, the Court DENIES the petition and AFFIRMS
WITH MODIFICATION the decision of the Court of Appeals in
CA-G.R. CV 00531 dated February 27, 2007 as follows:
1. The deed of sale dated January 11, 1989 that Tarciano T.
Roca executed in favor of Manuel O. Fuentes, married to Leticia
L. Fuentes, as well as the Transfer Certificate of Title T-90,981
that the Register of Deeds of Zamboanga City issued in the
names of the latter spouses pursuant to that deed of sale are
DECLARED void;
2. The Register of Deeds of Zamboanga City is DIRECTED to
reinstate Transfer Certificate of Title 3533 in the name of
Tarciano T. Roca, married to Rosario Gabriel;
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose
Marie R. Cristobal, and Pilar Malcampo are ORDERED to pay
petitioner spouses Manuel and Leticia Fuentes the ₱200,000.00
that the latter paid Tarciano T. Roca, with legal interest from
January 11, 1989 until fully paid, chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose
Marie R. Cristobal, and Pilar Malcampo are further ORDERED,
at their option, to indemnify petitioner spouses Manuel and
Leticia Fuentes with their expenses for introducing useful
improvements on the subject land or pay the increase in value
which it may have acquired by reason of those improvements,
with the spouses entitled to the right of retention of the land until
the indemnity is made; and
5. The RTC of Zamboanga City from which this case originated
is DIRECTED to receive evidence and determine the amount of
indemnity to which petitioner spouses Manuel and Leticia
Fuentes are entitled.
SO ORDERED.
G.R. No. 206114
DOLORES ALEJO, Petitioner
vs.
SPOUSES ERNESTO CORTEZ and PRISCILLA SAN
PEDRO, SPOUSES JORGE LEONARDO and
JACINTA LEONARDO and THE REGISTER OF
DEEDS OF BULACAN, Respondents
DECISION
TIJAM, J.:
Assailed in this Petition for Review1 under Rule 45 are the
Decision2 dated October 3, 2012 and Resolution 3 dated
February 26, 2013 of the Court of Appeals 4 (CA) in CA-
G.R. CV No. 95432, which reversed the Decision5 of the
Regional Trial Court (R TC), 6 Branch 19 in the City of
Malolos, Bulacan. In its assailed Decision and Resolution,
the CA declared void the parties' agreement for the sale
of a conjugal property for lack of written consent of the
husband.
The Facts and Antecedent Proceedings
At the heart of the instant controversy is a parcel of land
measuring 255 square meters located .at Cut-cot, Pulilan,
Bulacan and covered by Transfer Certificate of Title No.
T-118170. The property belonged to the conjugal
property/absolute community of property7 of the
respondent Spouses Jorge and Jacinta Leonardo
(Spouses Leonardo) and upon which their residential
house was built.
It appears that sometime in March 1996, Jorge's father,
Ricardo, approached his sister, herein petitioner Dolores
Alejo (Dolores), to negotiate the sale of the subject
property.8 Accordingly, on March 29, 1996, Jacinta
executed a Kasunduan with Dolores for the sale of the
property. for a purchase price of PhP500,000. Under
the Kasunduan, Dolores was to pay PhP70,000 as down
payment,, while PhP230,000 is to be paid on April 30,
1996 and the remaining balance of PhP200,000 was to
be paid before the end of the year
9
1996. The Kasunduan was signed by Jacinta and
Ricardo as witness. Jorge, however, did not sign the
agreement.
It further appears that the down payment of PhP70,000
and the PhP230,000 were paid by Dolores10 on the dates
agreed upon and thereafter, Dolores was allowed to
possess the property and introduce improvements
thereon. 11
However, 9n July 3, 1996, Jorge wrote a letter to Dolores
denying knowledge and consent to the Kasunduan. Jorge
further informed Dolores that Jacinta was retracting her
consent to the Kasunduan due to Dolores' failure to
comply with her obligations. This was followed by another
letter dated September 29, 1996 from Jorge to Dolores
demanding that the latter pay the balance of PhP200,000
on or before October 5, 1996, otherwise the purchase
price shall be increased to PhP700,000. 12 According to
Dolores, she was being compelled by Jorge to sign the
agreement but that she refused to do so. As a result,
Jorge went to her house, destroyed its water pump and
disconnected the electricity. Before· the officials of the
Barangay, Dolores tendered the balance of PhP200,000
but Jorge refused to accept the same. Instead, Jorge filed
cases for ejectment13 and annulment of sale,
reconveyance and recovery of possession14 against
her. 15 These cases were later on dismissed by the trial
court on technical grounds.
However, during the pendency of said cases, the subject
property was sold by Jorge and Jacinta to respondents
Spouses Ernesto Cortez and Priscilla San Pedro
(Spouses Cortez) under a Deed of Absolute Sale dated
September 4, 1998 for a purchase price of PhP700,000.
A new transfer certificate of title was Issued in the latter's
names. At the time of said sale, Dolores was in
possession of the subject property. 16
Consequently, Dolores filed the case a quo for annulment
of deed of sale and damages against the Spouses Cortez
and the Spouses Leonardo.
The Ruling of the RTC
In its Decision, the RTC noted that while
the Kasunduan patently lacks the written consent of
Jorge, the latter's acts reveal that he later on acquiesced
and accepted the same. In particular, the RTC observed
that Jorge did not s~asonably and ~xpressly repudiate
the Kasunduan but instead demanded from Dolores
compliance therewith and that he allowed Dolores to take
possession of the property. Further, the RTC noted that
the case for annulment of sale, reconveyance and
recovery of possession filed by Jorge. against Dolores
had been dismissed and said dismissal attained finality.
As such, res judicata set in preventing Jorge from further
assailing the Kasunduan. 17
Accordingly, the RTC declared the Kasunduan as a
perfected contract and Dolores as the rightful owner of the
property. It further ordered the cancellation of titles issued
in the names of the Spouses Leonardo and the Spouses
Cortez and the issuance of a new title in the name of
Dolores. Finally, the RTC ordered Dolores to pay the
balance of PhP200,000 and the Spouses Leonardo to pay
moral damages, attorney's fees, litigation expenses and
costs of suit. 18
In disposal, the RTC pronounced:
WHEREFORE, judgment is hereby rendered in favor of
plaintiff Dolores Alejo and against defendants [S]pouses
Leonardo and Cortez, as follows:
1.) Declaring the "Kasunduan" dated March 29, 1996 a
perfected contract, legal, binding and subsisting having
been accepted by defendant Jorge Leonardo;
2.) Declaring the plaintiff the true, legal and rightful owner
of the subject property;
3.) Declaring TCT Nb. 18170 in the names of Spouses
Jorge Leonardo, Jacinta Leonardo cancelled and of no
legal force and effect;
4.) Declaring TCT No. 121491 in the names of Spouses
Ernesto Cortez and Priscilla San Pedro null and void and
therefore should be ordered cancelled and of no legal
force and effect;
5.) In lieu thereof, ordering the Register of Deeds of the
Province of Bulacan to issue a new title in the name of
plaintiff Dolores Alejo;
6.) Ordering plaintiff Dolores Alejo to pay defendants
Spouses Leonardo the sum of Php200,000.00 to
complete her obligation under the "Kasunduan";
7.) Ordering defendants Spouses Leonardo to pay plaintiff
the sum of Phpl00,000.00 as and by way of moral
damages;
8.) Ordering defendants Spouses Leonardo to pay plaintiff
the sum of Php50,000.00, as and by way of attorney's
fees and litigation expenses;
9.) Ordering defendants Spouses Leonardo to pay the
cost of suit.
The claim of Php500,000.00 actual damages as well as
Php 100,000.00 as exemplary damages are denied for
lack of legal as well as factual basis.· All other claims and
counterclaim are denied for lack of merit.
SO ORDERED. 19
The Spouses Leonardo and the Spouses Cortez
seasonably appealed.
The Ruling of the CA
The CA granted the appeal. 20 Contrary to the findings of
the R TC, the CA held that Jorge, by imposing a new
period within which Dolores was to pay the remaining
balance and by increasing the purchase price, only
qualifiedly accepted the Kasunduan. Being a qualified
acceptance, the same partakes of a counter-offer and is
a rejection of the original offer. Consequently, the CA
declared the Kasunduan as void absent Jorge's consent
and acceptance. Nevertheless, the CA found Dolores to
be a possessor in good faith who is entitled to
reimbursement for the useful improvements introduced on
the land or to the increase in the value thereof, at the
option of the Spouses Leonardo.
The CA accordingly disposed:
WHEREFORE, the appeal is hereby GRANTED. The
assailed 14 January 2010 Decision of the Regional Trial
Court, Branch 19 of Malolos City, Bulacan is
her.eby REVERSED and SET
ASIDE. The Kasunduan dated 29 March 1996 is hereby
declared VOID. TCT No. 121491 in the names of
Spouses Cortez and San Pedro is hereby
declared VALID and SUBSISTING. Appellants Spouses
Leonardo are ORDERED to reimburse Dolores Alejo the
amount of Php300,000.00 that the latter paid to Jacinta
Leonardo, with legal interest until fully paid. Appellants
Spouses Leonardo are likewise ORDERED, at their
option, to indemnify Dolores Alejo with her expenses for
introducing useful improvements on the subject land or
pay the increase in value which it may have acquired by
reason of those improvements, with Alejo entitled to the
right of retention of the land until the indemnity is made.
Finally, the Regional Trial Court of Malolos City, Bulacan
from which this case originated is DIRECTED to receive
evidence and determine the amount of indemnity to which
appellee Dolores Alejo is entitled.
SO ORDERED.21
Dolores' motion for reconsideration was denied, hence
the instant petition.
The Issues
Dolores argues that the Spouses Leonardo's and
Spouses Cortez' appeals ought to have been outrightly
dismissed for failure to comply with the requirements of
Section 13, Rule 44. On the substantive issue, Dolores ·
maintains that the Kasunduan is a perfected and binding
contract as it was accepted by Jorge through his overt
acts. She also argues that the dismissal of Jorge's
complaint for annulment of sale constitutes res
judicata thus preventing Jorge from further questioning
the validity of the Kasunduan. Finally, she contends that
the Spouses Cortez were not buyers in good faith as they
knew that the property was being occupied by other
persons.
The Ruling of this Court
The petition is denied.
Dismissal of Appeal Lies within the Sound Discretion of
the Appellate Court
Technically, the CA may dismiss the appeal for failure to
comply with the requirements under Sec. 13, Rule 44.
Thus, Section 1, Rule 50 provides that an appeal may be
dismissed by the Court of Appeals, on its own motion or
on that of the appellee upon the ground, among others, of
absence of specific assignment of errors in the appellant's
brief, or of page references to the record.
Nevertheless, it has been consistently held that such
provision confers a power, not a duty, on the appellate
court.22The dismissal is directory, not mandatory, and as
such, not a ministerial duty of the appellate court.23 In
other words, the CA enjoys ample discretion to dismiss or
not to dismiss the appeal. What is more, the exercise of
such discretion is presumed to have been sound and
regular and it is thus incumbent upon Dolores to offset
such presumption. Yet, the records before this Court do
not satisfactorily show that the CA has gravely abused its
discretion in not dismissing the Spouses Leonardo's and
Spouses Cortez' appeals.
On the contrary, We are of the view that the ends of justice
will be better served if the instant case is determined on
the merits, after full opportunity to ventilate their
respective claims and defenses is afforded to all parties.
After all, it is far better to decide a case on the merits, as
the ultimate end, rather on a technicality.
The key issue in this case is whether the Kasunduan for
the sale of a conjugal real property between Jacinta and
Dolores as a continuing offer has been converted to a
perfected and binding contract. For, if Jorge has not
accepted or consented to the said sale, the Kasunduan is
considered void rendering the other issues raised herein
merely academic.
Sale by one Spouse of Conjugal Real Property is Void
Without the Written Consent of the other Spouse
Any alienation or encumbrance of conjugal property made
during the effectivity of the Family Code is governed by
Article 124 thereof which provides:
Article 124. The administration and enjoyment of the
conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husband's
decision shall prevail, subject to recourse to the court by
the wife for proper remedy, which must be availed of
within five years from the date of the contract
implementing such decision.
In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal
properties, the other spouse may assume sole powers of
administration. These powers do not include disposition
or encumbrance without authority of the court or the
written consent of the other spouse. In the absence of
such authority or consent, the disposition or encumbrance
shall be void. However, the transaction shall be construed
as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by
either or both offerors. (Emphasis supplied.)
The law is therefore unequivocal when it states that the
disposition of conjugal property of one spouse sans the
written consent of the other is void. Here, it is an
established fact that the Kasunduan was entered into
solely by Jacinta and signed by her alone. By plain terms
of the law therefore, the Kasunduan is void.
Nevertheless, We agree with the RTC and the CA when
it held that the void Kasunduan constitutes a continuing
offer from Jacinta and Dolores and that Jorge had the
option of either accepting or rejecting the offer before it
was withdrawn by either, or both, Jacinta and Dolores.
The point of contention is whether Jorge accepted such
continuing offer. If so, then the Kasunduan is perfected as
a binding contract; otherwise, the Kasunduan remains
void .
The RTC opined that Jorge's failure to expressly
repudiate the Kasunduan and his demand that Dolores
comply with her undertakings therein show Jorge's
acceptance of the sale of the conjugal property. On the
other hand, the CA noted that in varying the terms of
the Kasunduan, i.e., in the time of payment and the
purchase price, Jorge is deemed to have only qualifiedly
accepted the same.1âwphi1
We agree with the CA.
It is undisputed that after the execution of
the Kasunduan, Jorge sent two letters to Dolores: one, in
forming her that he did not consent to the sale; and the
other, demanding that' Dolores pay the balance of the
purchase price on or before October 5, 1996 and failing
which, the purchase price shall be increased to
PhP700,000.
Clearly, Jorge's first letter was an outright and express
repudiation of the Kasunduan. The second letter, while
ostensibly a demand for compliance with Dolores'
obligation under the Kasunduan, varied its terms on
material points, i.e., the date of payment of the balance
and the purchase price. Consequently, such counter-offer
cannot be construed as evidencing Jorge's consent to or
acceptance of the Kasunduan for it is settled that where
the other spouse's putative consent to the sale of the
conjugal property appears in a separate document which
does not contain the same terms and conditions as in the
first document signed by the other spouse, a valid
transaction could not have arisen.24
Neither can Jorge's subsequent letters to Dolores be
treated as a ratification of the Kasunduan for the basic
reason that a void contract is not susceptible to
ratification. Nor can Jorge's alleged participation in the
negotiation for the sale of the property or his
acquiescence to Dolores' transfer to and possession of
the subject property be treated as converting· such
continuing offer into a binding contract as the law distinctly
requires nothing less than a written consent to the sale for
its validity. Suffice to say that participation in or awareness
of the negotiations is not consent. 25
As above intimated, a determination that
the Kasunduan is void renders the other issues raised by
Dolores academic, i.e., whether the doctrine of res
judicata applies and whether the Spouses Cortez are
buyers in bad faith; hence they merit no further discussion
.

The CA Correctly Ruled that Dolores is a Possessor in

Good Faith

While the Kasunduan was void from the beginning,

Dolores is, in all fairness, entitled to recover from the
Spouses Leonardo the amount of PhP300,000 with legal
Interest until fully paid.

Moreover, the CA correctly appreciated Dolores' standing

as a possessor in good faith. It appears that Dolores acted
in good faith in entering the subject property and building
improvements on it. Ricardo represented that "Jacinta
and Jorge wanted to sell the subject property. Dolores had
no reason to believe that Ricardo and Jacinta were lying.
Indeed, upon her own brother's prodding, Dolores willingly
parted with her money and paid the down payment on the
selling price and later, a portion of the remaining balance.
The signatures of Jacinta and of Ricardo (as witness) as
well as her successful entry to the property appear to have
comforted Dolores that everything was in order. Article
526 of the Civil Code provides that she is deemed a
possessor in good faith, who is not aware that there exists
in her title or mode of acquisition any flaw that invalidates
it.

Likewise, as correctly held by the CA, Dolores, as

possessor in good faith, is under no obligation to pay for
her stay on the property prior to its legal interruption by a
final judgment. She is further entitled under Article 448 to
indemnity for the improvements introduced on the
property with a right of retention until reimbursement is
made. The Spouses Leonardo have the option under
Article 546 of the Civil Code of indemnifying Dolores for
the cost of the improvements or paying the increase in
value which the property may have acquired by reason of
such improvements. 26

WHEREFORE, the petition is DENIED. The Decision

dated October 3, 2012 and Resolution dated February 26,
2013 of the Court of Appeals in CA G.R. CV No. 95432
which (1) declared void the Kasunduan dated 29 March
1996; (2) declared valid the title issued in the names of
Spouses Cortez and San Pedro; (3) ordered the
reimbursement of PhP300,000 with legal interest to
Dolores Alejo; (3) ordered the Spouses

Leonardo, at their option, to indemnify Dolores Alejo of her

expenses on the useful improvements or pay the increase
in value on the subject property, with retention rights until
indemnity is made; and (4) remanded the case to the RTC
for purposes of receiving evidence and determining the
amount of said indemnity are AFFIRMED in toto.

SO ORDERED.
G.R. No. 166496 November 9, 2006
JOSEFA BAUTISTA FERRER, Petitioner,
vs.
SPS. MANUEL M. FERRER & VIRGINIA FERRER and
SPS. ISMAEL M. FERRER and FLORA
FERRER,Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is an Appeal by Certiorari which assails
the Decision1 of the Court of Appeals dated 16 August
2004 in CA-G.R. SP No. 78525, reversing and setting
aside the Order2 dated 16 December 2002 of the
Regional Trial Court (RTC), Mandaluyong City, Branch
212 in Civil Case No. MC02-1780. The Court of Appeals
ordered the dismissal of the Complaint3 filed by petitioner
Josefa Bautista Ferrer against respondents Sps. Manuel
M. Ferrer and Virginia Ferrer, and Sps. Ismael M. Ferrer
and Flora Ferrer in the aforesaid Civil Case No. MC02-
1780.
In her Complaint for payment of conjugal improvements,
sum of money, and accounting with prayer for injunction
and damages, petitioner alleged that she is the widow of
Alfredo Ferrer (Alfredo), a half-brother of respondents
Manuel M. Ferrer (Manuel) and Ismael M. Ferrer (Ismael).
Before her marriage to Alfredo, the latter acquired a piece
of lot, covered by Transfer Certificate of Title (TCT) No.
67927.4 He applied for a loan with the Social Security
System (SSS) to build improvements thereon, including a
residential house and a two-door apartment building.
However, it was during their marriage that payment of the
loan was made using the couple’s conjugal funds. From
their conjugal funds, petitioner posited, they constructed
a warehouse on the lot. Moreover, petitioner averred that
respondent Manuel occupied one door of the apartment
building, as well as the warehouse; however, in
September 1991, he stopped paying rentals thereon,
alleging that he had acquired ownership over the property
by virtue of a Deed of Sale executed by Alfredo in favor of
respondents, Manuel and Ismael and their spouses. TCT
No. 67927 was cancelled, and TCT. No. 2728 was issued
and registered in the names of respondents.
It is petitioner’s contention that on 2 October 1989, when
her husband was already bedridden, respondents Ismael
and Flora Ferrer made him sign a document, purported to
be his last will and testament. The document, however,
was a Deed of Sale covering Alfredo’s lot and the
improvements thereon. Learning of this development,
Alfredo filed with the RTC of Pasig, a Complaint for
Annulment of the said sale against respondents, docketed
as Civil Case No. 61327.5 On 22 June 1993, the RTC
dismissed the same.6 The RTC found that the terms and
conditions of the Deed of Sale are not contrary to law,
morals, good customs, and public policy, and should be
complied with by the parties in good faith, there being no
compelling reason
under the law to do otherwise. The dismissal was affirmed
by the Court of Appeals. Subsequently, on 7 November
1994, this Court, in G.R. No. L-117067, finding no
reversible error committed by the appellate court in
affirming the dismissal of the RTC, affirmed the Decision
of the Court of Appeals.7
Further, in support of her Complaint, petitioner alluded to
a portion of the Decision dated 22 June 1993 of the RTC
in Civil Case No. 61327, which stated, to wit:
In determining which property is the principal and which is
the accessory, the property of greater value shall be
considered the principal. In this case, the lot is the
principal and the improvements the accessories. Since
Article 120 of the Family Code provides the rule that the
ownership of accessory follows the ownership of the
principal, then the subject lot with all its improvements
became an exclusive and capital property of Alfredo with
an obligation to reimburse the conjugal partnership of the
cost of improvements at the time of liquidation of [the]
conjugal partnership. Clearly, Alfredo has all the rights to
sell the subject property by himself without need of
Josefa’s consent.8
According to petitioner, the ruling of the RTC shows that,
when Alfredo died on 29 September 1999, or at the time
of the liquidation of the conjugal partnership, she had the
right to be reimbursed for the cost of the improvements on
Alfredo’s lot. She alleged that the cost of the
improvements amounted to ₱500,000.00; hence, one-half
thereof should be reimbursed and paid by respondents as
they are now the registered owners of Alfredo’s lot. She
averred that respondents cannot claim lack of knowledge
about the fact that the improvements were constructed
using conjugal funds as they had occupied one of the
apartment buildings on Alfredo’s lot, and even paid rentals
to petitioner. In addition, petitioner prayed that
respondents be ordered to render an accounting from
September, 1991, on the income of the boarding house
constructed thereon which they had appropriated for
themselves, and to remit one-half thereof as her share.
Finally, petitioner sought from respondents moral and
exemplary damages, litigation and incidental expenses.
For their part, respondents filed a Motion to
Dismiss,9 contending that petitioner had no cause of
action against them, and that the cause of action was
barred by prior judgment.
On 16 December 2002, the RTC rendered an
Order,10 denying the Motion to Dismiss. According to the
RTC, no pronouncement as to the improvements
constructed on Alfredo’s lot has been made in Civil Case
No. 61327, and the payment of petitioner’s share in the
conjugal partnership constitutes a separate cause of
action. A subsequent Order11 dated 17 January 2003 was
issued by the RTC, denying respondents’ Motion for
Reconsideration.
Aggrieved, respondents elevated the case to the Court of
Appeals by way of a Petition for Certiorari, alleging grave
abuse of discretion amounting to lack or excess of
jurisdiction on the RTC in denying the dismissal.
On 16 August 2004, the Court of Appeals rendered a
Decision granting the Petition. It held that petitioner’s
Complaint failed to state a cause of action. The appellate
court rationalized as follows:
[W]e believe that the instant complaint is not the proper
action for the respondent to enforce her right of
reimbursement of the cost of the improvement[s] on the
subject property. As correctly pointed out by the
petitioners, the same should be made and directed in the
settlement of estate of her deceased husband Alfredo
Ferrer pursuant to Article 12912 of the Family Code. Such
being the case, it appears that the complaint herein fails
to state a cause of action against the petitioners, the latter
not being the proper parties against whom the subject
action for reimbursement must be directed to. A complaint
states a cause of action where it contains three essential
elements of a cause of action, namely: (1) the legal right
of the plaintiff; (2) the correlative obligation of the
defendant, and (3) the act or omission of the defendant in
violation of said legal right. If these elements are absent,
the complaint becomes vulnerable to a motion to dismiss
on the ground of failure to state a cause of action. Albeit
the respondent herein has the legal right to be reimbursed
of the cost of the improvements of the subject property, it
is not the petitioners but the estate of her deceased
husband which has the obligation to pay the same. The
complaint herein is therefore dismissible for failure to
state a cause of action against the petitioners. Needless
to say, the respondent is not without any further recourse
as she may file her claim against the estate of her
deceased husband.
In light of the foregoing, we find that the public respondent
committed grave abuse of discretion in denying the
petitioners’ motion to dismiss for failure to state a cause
of action.13
Aggrieved, petitioner filed a Motion for Reconsideration
thereon. However, on 17 December 2004, the Court of
Appeals rendered a Resolution14 denying the motion.
Hence, the present recourse.
Petitioner submits the following grounds for the allowance
of the instant Petition, to wit:
A. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT PETITIONER’S COMPLAINT FAILS TO
STATE A CAUSE OF ACTION AGAINST THE
RESPONDENTS, THE LATTER NOT BEING THE
PROPER PARTIES AGAINST WHOM THE SUBJECT
ACTION FOR REIMBURSEMENT MUST BE DIRECTED
TO.
B. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE PUBLIC RESPONDENT, HON.
RIZALINA T. CAPCO-UMALI, COMMITTED GRAVE
ABUSE OF DISCRETION IN DENYING THE
[RESPONDENTS’] MOTION TO DISMISS FOR
FAILURE TO STATE A CAUSE OF ACTION.15
Both arguments raise the sole issue of whether the Court
of Appeals erred in dismissing petitioner’s Complaint for
failure to state a cause of action.
Section 1(g) Rule 1616 of the 1997 Rules of Civil
Procedure makes it clear that failure to make a sufficient
allegation of a cause of action in the complaint warrants
the dismissal thereof. Section 2, Rule 2 of the 1997 Rules
of Civil Procedure defines a cause of action as the act or
omission by which a party violates the right of another. It
is the delict or the wrongful act or omission committed by
the defendant in violation of the primary right of the
plaintiff.17
A cause of action has the following essential elements,
viz:
(1) A right in favor of the plaintiff by whatever means and
under whatever law it arises or is created;
(2) An obligation on the part of the named defendant to
respect or not to violate such right; and
(3) Act or omission on the part of such defendant in
violation of the right of the plaintiff or constituting a breach
of the obligation of the defendant to the plaintiff for which
the latter may maintain an action for recovery of damages
or other appropriate relief.18
A complaint states a cause of action only when it has the
three indispensable elements.19
In the determination of the presence of these elements,
inquiry is confined to the four corners of the complaint.
Only the statements in the Complaint may be properly
considered.20 The absence of any of these elements
makes a complaint vulnerable to a Motion to Dismiss on
the ground of a failure to state a cause of action.21
After a reading of the allegations contained in petitioner’s
Complaint, we are convinced that the same failed to state
a cause of action.
In the case at bar, petitioner asserts a legal right in her
favor by relying on the Decision of the RTC in Civil Case
No. 61327. It can be recalled that the aforesaid case is an
action for Annulment filed by Alfredo and petitioner
against the respondents to seek annulment of the Deed
of Sale, executed by Alfredo in respondents’ favor and
covering the herein subject premises. The Complaint was
dismissed by the RTC, and subsequently affirmed by the
Court of Appeals and by this Court in G.R. No. L-117067.
According to petitioner, while the RTC in Civil Case No.
61327 recognized that the improvements constructed on
Alfredo’s lots were deemed as Alfredo’s exclusive and
capital property, the court also held that petitioner, as
Alfredo’s spouse, has the right to claim reimbursement
from the estate of Alfredo. It is argued by petitioner that
her husband had no other property, and his only property
had been sold to the respondents; hence, she has the
legal right to claim for reimbursement from the
respondents who are now the owners of the lot and the
improvements thereon. In fine, petitioner asseverates that
the Complaint cannot be dismissed on the ground of
failure to state a cause of action because the respondents
have the correlative obligation to pay the value of the
improvements.
Petitioner was not able to show that there is an obligation
on the part of the respondents to respect or not to violate
her right. While we could concede that Civil Case No.
61327 made a reference to the right of the spouse as
contemplated in Article 12022 of the Family Code to be
reimbursed for the cost of the improvements, the
obligation to reimburse rests on the spouse upon whom
ownership of the entire property is vested. There is no
obligation on the part of the purchaser of the property, in
case the property is sold by the owner-spouse.
Civil Case No. 61327 had been laid to rest. This is
because the validity of the Deed of Sale had already been
determined and upheld with finality. The same had been
similarly admitted by petitioner in her Complaint. It can be
said, thus, that respondents’ act of acquiring the subject
property by sale was not in violation of petitioner’s rights.
The same can also be said of the respondents’ objection
to reimburse petitioner. Simply, no correlative obligation
exists on the part of the respondents to reimburse the
petitioner. Corollary thereto, neither can it be said that
their refusal to reimburse constituted a violation of
petitioner’s rights. As has been shown in the foregoing, no
obligation by the respondents under the law exists.
Petitioner’s Complaint failed to state a cause of action
against the respondents, and for this reason, the Court of
Appeals was not in error in dismissing the same.
WHEREFORE, the Petition is DENIED. The Decision
dated 16 August 2004 and the Resolution dated 17
December 2004 of the Court of Appeals in CA G.R. SP.
No. 78525 are AFFIRMED. Costs de oficio.
SO ORDERED.

Indeed, Article 120 provides the solution in determining

the ownership of the improvements that are made on the
separate property of the spouses at the expense of the
partnership or through the acts or efforts of either or both
spouses. Thus, when the cost of the improvement and
any resulting increase in value are more than the value of
the property at the time of the improvement, the entire
property of one of the spouses shall belong to the conjugal
partnership, subject to reimbursement of the value of the
property of the owner-spouse at the time of the
improvement; otherwise, said property shall be retained
in ownership by the owner-spouse, likewise subject to
reimbursement of the cost of the improvement. The
subject property was precisely declared as the exclusive
property of Alfredo on the basis of Article 120 of the
Family Code.

What is incontrovertible is that the respondents, despite

the allegations contained in the Complaint that they are
the buyers of the subject premises, are not petitioner’s
spouse nor can they ever be deemed as the owner-
spouse upon whom the obligation to reimburse petitioner
for her costs rested. It is the owner-spouse who has the
obligation to reimburse the conjugal partnership or the
spouse who expended the acts or efforts, as the case may
be. Otherwise stated, respondents do not have the
obligation to respect petitioner’s right to be reimbursed.

On this matter, we do not find an act or omission on the

part of respondents in violation of petitioner’s rights. The
right of the respondents to acquire as buyers the subject
premises from Alfredo under the assailed Deed of Sale in
G.R. No. 149615 August 29, 2006
IN RE: PETITION FOR SEPARATION OF PROPERTY
ELENA BUENAVENTURA MULLER, Petitioner,
vs.
HELMUT MULLER, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari 1 assails the February
26, 2001 Decision 2 of the Court of Appeals in CA-G.R.
CV No. 59321 affirming with modification the August 12,
1996 Decision 3 of the Regional Trial Court of Quezon
City, Branch 86 in Civil Case No. Q-94-21862, which
terminated the regime of absolute community of property
between petitioner and respondent, as well as the
Resolution 4 dated August 13, 2001 denying the motion
for reconsideration.
The facts are as follows:
Petitioner Elena Buenaventura Muller and respondent
Helmut Muller were married in Hamburg, Germany on
September 22, 1989. The couple resided in Germany at a
house owned by respondent’s parents but decided to
move and reside permanently in the Philippines in 1992.
By this time, respondent had inherited the house in
Germany from his parents which he sold and used the
proceeds for the purchase of a parcel of land in Antipolo,
Rizal at the cost of P528,000.00 and the construction of a
house amounting to P2,300,000.00. The Antipolo
property was registered in the name of petitioner under
Transfer Certificate of Title No. 219438 5 of the Register
of Deeds of Marikina, Metro Manila.
Due to incompatibilities and respondent’s alleged
womanizing, drinking, and maltreatment, the spouses
eventually separated. On September 26, 1994,
respondent filed a petition 6 for separation of properties
before the Regional Trial Court of Quezon City.
On August 12, 1996, the trial court rendered a decision
which terminated the regime of absolute community of
property between the petitioner and respondent. It also
decreed the separation of properties between them and
ordered the equal partition of personal properties located
within the country, excluding those acquired by gratuitous
title during the marriage. With regard to the Antipolo
property, the court held that it was acquired using
paraphernal funds of the respondent. However, it ruled
that respondent cannot recover his funds because the
property was purchased in violation of Section 7, Article
XII of the Constitution. Thus –
However, pursuant to Article 92 of the Family Code,
properties acquired by gratuitous title by either spouse
during the marriage shall be excluded from the community
property. The real property, therefore, inherited by
petitioner in Germany is excluded from the absolute
community of property of the herein spouses.
Necessarily, the proceeds of the sale of said real property
as well as the personal properties purchased thereby,
belong exclusively to the petitioner. However, the part of
that inheritance used by the petitioner for acquiring the
house and lot in this country cannot be recovered by the
petitioner, its acquisition being a violation of Section 7,
Article XII of the Constitution which provides that "save in
cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals,
corporations or associations qualified to acquire or hold
lands of the public domain." The law will leave the parties
in the situation where they are in without prejudice to a
voluntary partition by the parties of the said real property.
xxx
xxxx
As regards the property covered by Transfer Certificate of
Title No. 219438 of the Registry of Deeds of Marikina,
Metro Manila, situated in Antipolo, Rizal and the
improvements thereon, the Court shall not make any
pronouncement on constitutional grounds. 7
Respondent appealed to the Court of Appeals which
rendered the assailed decision modifying the trial court’s
Decision. It held that respondent merely prayed for
reimbursement for the purchase of the Antipolo property,
and not acquisition or transfer of ownership to him. It also
considered petitioner’s ownership over the property in
trust for the respondent. As regards the house, the Court
of Appeals ruled that there is nothing in the Constitution
which prohibits respondent from acquiring the same. The
dispositive portion of the assailed decision reads:
WHEREFORE, in view of the foregoing, the Decision of
the lower court dated August 12, 1996 is hereby
MODIFIED. Respondent Elena Buenaventura Muller is
hereby ordered to REIMBURSE the petitioner the amount
of P528,000.00 for the acquisition of the land and the
amount of P2,300,000.00 for the construction of the
house situated in Atnipolo, Rizal, deducting therefrom the
amount respondent spent for the preservation,
maintenance and development of the aforesaid real
property including the depreciation cost of the house or in
the alternative to SELL the house and lot in the event
respondent does not have the means to reimburse the
petitioner out of her own money and from the proceeds
thereof, reimburse the petitioner of the cost of the land
and the house deducting the expenses for its
maintenance and preservation spent by the respondent.
Should there be profit, the same shall be divided in
proportion to the equity each has over the property. The
case is REMANDED to the lower court for reception of
evidence as to the amount claimed by the respondents for
the preservation and maintenance of the property.
SO ORDERED. 8
Hence, the instant petition for review raising the following
issues:
I Under section 1 of Article XIII of the Constitution, "natural
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE RESPONDENT
HEREIN IS ENTITLED TO REIMBURSEMENT OF THE
AMOUNT USED TO PURCHASE THE LAND AS WELL
AS THE COSTS FOR THE CONSTRUCTION OF THE
HOUSE, FOR IN SO RULING, IT INDIRECTLY
ALLOWED AN ACT DONE WHICH OTHERWISE
COULD NOT BE DIRECTLY x x x DONE, WITHOUT
DOING VIOLENCE TO THE CONSTITUTIONAL
PROSCRIPTION THAT AN ALIEN IS PROHIBITED
FROM ACQUIRING OWNERSHIP OF REAL
PROPERTIES LOCATED IN THE PHILIPPINES.
II
THE COURT OF APPEALS GRAVELY ERRED IN
SUSTAINING RESPONDENT’S CAUSE OF ACTION
WHICH IS ACTUALLY A DESPERATE ATTEMPT TO
OBTAIN OWNERSHIP OVER THE LOT IN QUESTION,
CLOTHED UNDER THE GUISE OF CLAIMING
REIMBURSEMENT.
Petitioner contends that respondent, being an alien, is
disqualified to own private lands in the Philippines; that
respondent was aware of the constitutional prohibition but
circumvented the same; and that respondent’s purpose
for filing an action for separation of property is to obtain
exclusive possession, control and disposition of the
Antipolo property.
Respondent claims that he is not praying for transfer of
ownership of the Antipolo property but merely
reimbursement; that the funds paid by him for the said
property were in consideration of his marriage to
petitioner; that the funds were given to petitioner in trust;
and that equity demands that respondent should be
reimbursed of his personal funds.
The issue for resolution is whether respondent is entitled
to reimbursement of the funds used for the acquisition of
the Antipolo property.
The petition has merit.
Section 7, Article XII of the 1987 Constitution states:
Save in cases of hereditary succession, no private lands
shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold
lands of the public domain.
Aliens, whether individuals or corporations, are
disqualified from acquiring lands of the public domain.
Hence, they are also disqualified from acquiring private
lands. 9 The primary purpose of the constitutional
provision is the conservation of the national patrimony. In
the case of Krivenko v. Register of Deeds, 10 the Court
held:
resources, with the exception of public agricultural land,
shall not be alienated," and with respect to public
agricultural lands, their alienation is limited to Filipino
citizens. But this constitutional purpose conserving
agricultural resources in the hands of Filipino citizens may
easily be defeated by the Filipino citizens themselves who
may alienate their agricultural lands in favor of aliens. It is
partly to prevent this result that section 5 is included in
Article XIII, and it reads as follows:
"Sec. 5. Save in cases of hereditary succession, no
private agricultural land will be transferred or assigned
except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain in
the Philippines."
This constitutional provision closes the only remaining
avenue through which agricultural resources may leak
into aliens’ hands. It would certainly be futile to prohibit
the alienation of public agricultural lands to aliens if, after
all, they may be freely so alienated upon their becoming
private agricultural lands in the hands of Filipino citizens.
xxx
xxxx
If the term "private agricultural lands" is to be construed
as not including residential lots or lands not strictly
agricultural, the result would be that "aliens may freely
acquire and possess not only residential lots and houses
for themselves but entire subdivisions, and whole towns
and cities," and that "they may validly buy and hold in their
names lands of any area for building homes, factories,
industrial plants, fisheries, hatcheries, schools, health and
vacation resorts, markets, golf courses, playgrounds,
airfields, and a host of other uses and purposes that are
not, in appellant’s words, strictly agricultural." (Solicitor
General’s Brief, p. 6.) That this is obnoxious to the
conservative spirit of the Constitution is beyond question.
Respondent was aware of the constitutional prohibition
and expressly admitted his knowledge thereof to this
Court.11 He declared that he had the Antipolo property
titled in the name of petitioner because of the said
prohibition. 12His attempt at subsequently asserting or
claiming a right on the said property cannot be sustained.
The Court of Appeals erred in holding that an implied trust
was created and resulted by operation of law in view of
petitioner’s marriage to respondent. Save for the
exception provided in cases of hereditary succession,
respondent’s disqualification from owning lands in the
Philippines is absolute. Not even an ownership in trust is
allowed. Besides, where the purchase is made in violation
of an existing statute and in evasion of its express
provision, no trust can result in favor of the party who is
guilty of the fraud. 13 To hold otherwise would allow overturned. But even if it were a fact that said wife had
circumvention of the constitutional prohibition. used conjugal funds to make the acquisition, the
considerations just set out to militate, on high
Invoking the principle that a court is not only a court of law constitutional grounds, against his recovering and holding
but also a court of equity, is likewise misplaced. It has the property so acquired, or any part thereof. And whether
been held that equity as a rule will follow the law and will in such an event, he may recover from his wife any share
not permit that to be done indirectly which, because of of the money used for the purchase or charge her with
public policy, cannot be done directly. 14 He who seeks unauthorized disposition or expenditure of conjugal funds
equity must do equity, and he who comes into equity must is not now inquired into; that would be, in the premises, a
come with clean hands. The latter is a frequently stated purely academic exercise. (Emphasis added)
maxim which is also expressed in the principle that he
who has done inequity shall not have equity. It signifies WHEREFORE, in view of the foregoing, the instant
that a litigant may be denied relief by a court of equity on petition is GRANTED. The Decision dated February 26,
the ground that his conduct has been inequitable, unfair 2001 of the Court of Appeals in CA-G.R. CV No. 59321
and dishonest, or fraudulent, or deceitful as to the ordering petitioner Elena Buenaventura Muller to
controversy in issue. 15 reimburse respondent Helmut Muller the amount of
P528,000 for the acquisition of the land and the amount
Thus, in the instant case, respondent cannot seek of P2,300,000 for the construction of the house in Antipolo
reimbursement on the ground of equity where it is clear City, and the Resolution dated August 13, 2001 denying
that he willingly and knowingly bought the property reconsideration thereof, are REVERSED and SET
despite the constitutional prohibition. ASIDE. The August 12, 1996 Decision of the Regional
Further, the distinction made between transfer of Trial Court of Quezon City, Branch 86 in Civil Case No.
ownership as opposed to recovery of funds is a futile Q-94-21862 terminating the regime of absolute
exercise on respondent’s part. To allow reimbursement community between the petitioner and respondent,
would in effect permit respondent to enjoy the fruits of a decreeing a separation of property between them and
property which he is not allowed to own. Thus, it is ordering the partition of the personal properties located in
likewise proscribed by law. As expressly held in the Philippines equally, is REINSTATED.
Cheesman v. Intermediate Appellate Court: 16 SO ORDERED.
Finally, the fundamental law prohibits the sale to aliens of
residential land. Section 14, Article XIV of the 1973
Constitution ordains that, "Save in cases of hereditary
succession, no private land shall be transferred or
conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public
domain." Petitioner Thomas Cheesman was, of course,
charged with knowledge of this prohibition. Thus,
assuming that it was his intention that the lot in question
be purchased by him and his wife, he acquired no right
whatever over the property by virtue of that purchase; and
in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the
Constitution; the sale as to him was null and void. In any
event, he had and has no capacity or personality to
question the subsequent sale of the same property by his
wife on the theory that in so doing he is merely exercising
the prerogative of a husband in respect of conjugal
property. To sustain such a theory would permit indirect
controversion of the constitutional prohibition. If the
property were to be declared conjugal, this would accord
to the alien husband a not insubstantial interest and right
over land, as he would then have a decisive vote as to its
transfer or disposition. This is a right that the Constitution
does not permit him to have.

As already observed, the finding that his wife had used

her own money to purchase the property cannot, and will
not, at this stage of the proceedings be reviewed and