PROPERTY RELATIONS

G.R. No. L-55322 February 16, 1989

MOISES JOCSON, petitioner, vs.HON. COURT OF APPEALS, AGUSTINA JOCSON-VASQUEZ, ERNESTO VASQUEZ, respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court of the decision of the Court of Appeals in CA- G.R. No. 63474, promulgated on April 30, 1980, entitled "MOISES JOCSON, plaintiff-appellee, versus AGUSTINA JOCSON-VASQUEZ and ERNESTO VASQUEZ, defendant-appellants," upholding the validity of three (3) documents questioned by Moises Jocson, in total reversal of the decision of the then Court of First Instance of Cavite, Branch I, which declared them as null and void; and of its resolution, dated September 30, 1980, denying therein appellee's motion for reconsideration.

Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the only surviving offsprings of the spouses Emilio Jocson and Alejandra Poblete, while respondent Ernesto Vasquez is the husband of Agustina. Alejandra Poblete predeceased her husband without her intestate estate being settled. Subsequently, Emilio Jocson also died intestate on April 1, 1972.

As adverted to above, the present controversy concerns the validity of three (3) documents executed by Emilio Jocson during his lifetime. These documents purportedly conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers almost all of his properties, including his one-third (1/3) share in the estate of his wife. Petitioner Moises Jocson assails these documents and prays that they be declared null and void and the properties subject matter therein be partitioned between him and Agustina as the only heirs of their deceased parents.

The documents, which were presented as evidence not by Moises Jocson, as the party assailing its validity, but rather by herein respondents, are the following:

1) "Kasulatan ng Bilihan ng Lupa," marked as Exhibit 3 (pp. 12-13, Records) for the defendant in the court a quo, dated July 27, 1968. By this document Emilio Jocson sold to Agustina Jocson-Vasquez six (6) parcels of land, all located at Naic, Cavite, for the sum of ten thousand P10,000.00 pesos. On the same document Emilio Jocson acknowledged receipt of the purchase price, thus:

Na ngayon, alang-alang sa halagang SAMPUNG LIBONG PISO (P10,000) salaping Pilipino na aking tinanggap ng buong kasiyahan loob at ang pagkakatanggap ay aking hayagang inaamin sa pamamagitan ng kasulatang ito, sa aking anak na si Agustina Jocson, na may sapat na gulang, mamamayang Pilipino, asawa ni Ernesto Vasquez, at naninirahan sa Poblacion, Naic, Cavite, ay aking ipinagbile ng lubusan at kagyat at walang ano mang pasubali ang nabanggit na anim na pirasong lupa na nasa unang dahon ng dokumentong ito, sa nabanggit na Agustina Jocson, at sa kaniyang tagapagmana o makakahalili at gayon din nais kong banggitin na kahit na may kamurahan ang ginawa kong pagbibile ay dahilan sa ang nakabile ay aking anak na sa akin at mapaglingkod, madamayin at ma-alalahanin, na tulad din ng isa ko pang anak na lalaki. Ang kuartang tinanggap ko na P10,000.00, ay gagamitin ko sa aking katandaan at mga huling araw at sa aking mga ibang mahahalagang pangangailangan. [Emphasis supplied]

Na nais ko ring banggitin na ang ginawa kong ito ay hindi labag sa ano mang batas o kautusan, sapagkat ang aking pinagbile ay akin at nasa aking pangalan. Ang mga lupang nasa pangalan ng aking nasirang asawa ay hindi ko ginagalaw ni pinakikialaman at iyon ay dapat na hatiin ng dalawa kong anak alinsunod sa umiiral na batas (p. 13, Records.)

2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968, marked as Exhibit 4 (p. 14, Records). On the face of this document, Emilio Jocson purportedly sold to Agustina Jocson-Vasquez, for the sum of FIVE THOUSAND (P5,000.00) PESOS, two rice mills and a camarin (camalig) located at Naic, Cavite. As in the first document, Moises Jocson acknowledged receipt of the purchase price:

'Na alang-alang sa halagang LIMANG LIBONG PISO (P5,000.00) salaping Pilipino na aking tinanggap ng buong kasiyahan loob sa aking anak na Agustina Jocson .... Na ang halagang ibinayad sa akin ay may kamurahan ng kaunti ngunit dahil sa malaking pagtingin ko sa kaniya ... kaya at pinagbile ko sa kaniya ang mga nabanggit na pagaari kahit na hindi malaking halaga ... (p. 14, Records).

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

Now for and in consideration of the sum of only eight thousand (P8,000.00) pesos, which I, the herein Emilio Jocson had received from my daughter Agustina Jocson, do hereby sell, cede, convey and transfer, unto the said Agustina Jocson, her heirs and assigns, administrators and successors in interests, in the nature of absolute and irrevocable sale, all my rights, interest, shares and participation, which is equivalent to one third (1/3) share in the properties herein mentioned and described the one third being adjudicated unto Agustina Jocson and the other third (1/3) portion being the share of Moises Jocson. (p. 11, Records).

These documents were executed before a notary public. Exhibits 3 and 4 were registered with the Office of the Register of Deeds of Cavite on July 29, 1968 and the transfer certificates of title covering the properties therein in the name of Emilio Jocson, married to Alejandra Poblete," were cancelled and new certificates of title were issued in the name of Agustina Jocson-Vasquez. Exhibit 2 was not registered with the Office of the Register of Deeds.

Herein petitioner filed his original complaint (Record on Appeal, p. 27, Rollo) on June 20,1973 with the then Court of First Instance of Naic, Cavite (docketed as Civil Case No. TM- 531), and which was twice amended. In his Second Amended Complaint (pp. 47-58, Record on Appeal), herein petitioner assailed the above documents, as aforementioned, for being null and void.

It is necessary to partly quote the allegation of petitioner in his complaint for the reason that the nature of his causes of action is at issue, thus:

8. [With regard the first document, that] the defendants, through fraud, deceit, undue pressure and influence and other illegal machinations, were able to induce, led, and procured their father ...

to sign [the] contract of sale ..., for the simulated price of P10,000.00, which is a consideration that is shocking to the conscience of ordinary man and despite the fact that said defendants have no work or livelihood of their own ...; that the sale is null and void, also, because it is fictitious, simulated and fabricated contract x x x (pp. 52-53, Record on Appeal). [Emphasis supplied]

xxx xxx xxx

12. [With regards the second and third document, that they] are null and void because the consent of the father, Emilio Jocson, was obtained with fraud, deceit, undue pressure, misrepresentation and unlawful machinations and trickeries committed by the defendant on him; and that the said contracts are simulated, fabricated and fictitious, having been made deliberately to exclude the plaintiff from participating and with the dishonest and selfish motive on the part of the defendants to defraud him of his legitimate share on said properties [subject matter thereof]; and that without any other business or employment or any other source of income, defendants who were just employed in the management and administration of the business of their parents, would not have the sufficient and ample means to purchase the said properties except by getting the earnings of the business or by simulated consideration ... (pp. 54-55, Record on Appeal). [Emphasis supplied]

Petitioner explained that there could be no real sale between a father and daughter who are living under the same roof, especially so when the father has no need of money as the properties supposedly sold were all income-producing. Further, petitioner claimed that the properties mentioned in Exhibits 3 and 4 are the unliquidated conjugal properties of Emilio Jocson and Alejandra Poblete which the former, therefore, cannot validly sell (pp. 53, 57, Record on Appeal). As far as Exhibit 2 is concerned, petitioner questions not the extrajudicial partition but only the sale by his father to Agustina of the former's 1/3 share (p. 13, Rollo).

The trial court sustained the foregoing contentions of petitioner (pp. 59-81, Record on Appeal). It declared that the considerations mentioned in the documents were merely simulated and fictitious because: 1) there was no showing that Agustina Jocson-Vasquez paid for the properties; 2) the prices were grossly inadequate which is tantamount to lack of consideration at all; and 3) the improbability of the sale between Emilio Jocson and Agustina Jocson-Vasquez, taking into consideration the circumstances obtaining between the

parties; and that the real intention of the parties were donations designed to exclude Moises Jocson from participating in the estate of his parents. It further declared the properties mentioned in Exhibits 3 and 4 as conjugal properties of Emilio Jocson and Alejandra Poblete, because they were registered in the name of "Emilio Jocson, married to Alejandra Poblete" and ordered that the properties subject matter of all the documents be registered in the name of herein petitioners and private respondents.

On appeal, the Court of Appeals in CA-G.R. No. 63474-R rendered a decision (pp. 29-42, Rollo) and reversed that of the trial court's and ruled that:

1. That insofar as Exhibits 3 and 4 are concerned the appellee's complaint for annulment, which is indisputably based on fraud, and undue influence, is now barred by prescription, pursuant to the settled rule that an action for annulment of a contract based on fraud must be filed within four (4) years, from the discovery of the fraud, ... which in legal contemplation is deemed to be the date of the registration of said document with the Register of Deeds ... and the records admittedly show that both Exhibits 3 and 4, were all registered on July 29, 1968, while on the other hand, the appellee's complaint was filed on June 20, 1973, clearly beyond the aforesaid four-year prescriptive period provided by law;

2. That the aforesaid contracts, Exhibits 2, 3, and 4, are decisively not simulated or fictitious contracts, since Emilio Jocson actually and really intended them to be effective and binding against him, as to divest him of the full dominion and ownership over the properties subject of said assailed contracts, as in fact all his titles over the same were all cancelled and new ones issued to appellant Agustina Jocson-Vasquez ...;

3. That in regard to Exhibit 2, the same is valid and subsisting, and the partition with sale therein made by and between Emilio Jocson and Agustina Jocson-Vasquez, affecting the 2/3 portion of the subject properties described therein have all been made in accordance with Article 996 of the New Civil Code on intestate succession, and the appellee's (herein petitioner) remaining 1/3 has not been prejudiced (pp. 41-42, Rollo).

In this petition for review, Moises Jocson raised the following assignments of errors:

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

II. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE COMPLAINT FILED BY PETITIONER IN THE TRIAL COURT IS BARRED BY PRESCRIPTION?

III. HAS THE RESPONDENT COURT OF APPEALS ERRED IN NOT DECLARING AS INEXISTENT AND NULL AND VOID THE CONTRACTS IN QUESTION AND IN REVERSING THE DECLARING DECISION OF THE TRIAL COURT? (p. 2, Rollo)

I. The first and second assignments of errors are related and shall be jointly discussed.

According to the Court of Appeals, herein petitioner's causes of action were based on fraud. Under Article 1330 of the Civil Code, a contract tainted by vitiated consent, as when consent was obtained through fraud, is voidable; and the action for annulment must be brought within four years from the time of the discovery of the fraud (Article 1391, par. 4, Civil Code), otherwise the contract may no longer be contested. Under present jurisprudence, discovery of fraud is deemed to have taken place at the time the convenant was registered with the Register of Deeds (Gerona vs. De Guzman, No. L-19060, May 29,1964, 11 SCRA 153). Since Exhibits 3 and 4 were registered on July 29, 1968 but Moises Jocson filed his complaint only on June 20, 1973, the Court of Appeals ruled that insofar as these documents were concerned, petitioner's "annulment suit" had prescribed.

If fraud were the only ground relied upon by Moises Jocson in assailing the questioned documents, We would have sustained the above pronouncement. But it is not so. As pointed out by petitioner, he further assailed the deeds of conveyance on the ground that they

were without consideration since the amounts appearing thereon as paid were in fact merely simulated.

According to Article 1352 of the Civil Code, contracts without cause produce no effect whatsoever. A contract of sale with a simulated price is void (Article 1471; also Article 1409 [3]]), and an action for the declaration of its nullity does not prescribe (Article 1410, Civil Code; See also, Castillo v. Galvan, No. L-27841, October 20, l978, 85 SCRA 526). Moises Jocsons saction, therefore, being for the judicial declaration of nullity of Exhibits 3 and 4 on the ground of simulated price, is imprescriptible.

II. For petitioner, however, the above discussion may be purely academic. The burden of proof in showing that contracts lack consideration rests on he who alleged it. The degree of proof becomes more stringent where the documents themselves show that the vendor acknowledged receipt of the price, and more so where the documents were notarized, as in the case at bar. Upon consideration of the records of this case, We are of the opinion that petitioner has not sufficiently proven that the questioned documents are without consideration.

Firstly, Moises Jocson's claim that Agustina Jocson-Vasquez had no other source of income other than what she derives from helping in the management of the family business (ricefields and ricemills), and which was insufficient to pay for the purchase price, was contradicted by his own witness, Isaac Bagnas, who testified that Agustina and her husband were engaged in the buy and sell of palay and rice (p. 10, t.s.n., January 14, 1975). Amazingly, petitioner himself and his wife testified that they did not know whether or not Agustina was involved in some other business (p. 40, t.s.n., July 30, 1974; p. 36, t.s.n., May 24, 1974).

On the other hand, Agustina testified that she was engaged in the business of buying and selling palay and rice even before her marriage to Ernesto Vasquez sometime in 1948 and continued doing so thereafter (p. 4, t.s.n., March 15, 1976). Considering the foregoing and the presumption that a contract is with a consideration (Article 1354, Civil Code), it is clear that petitioner miserably failed to prove his allegation.

Secondly, neither may the contract be declared void because of alleged inadequacy of price. To begin with, there was no showing that the prices were grossly inadequate. In fact, the total purchase price paid by Agustina Jocson-Vasquez is above the total assessed value of the properties alleged by petitioner. In his Second Amended Complaint, petitioner alleged that the total assessed value of the properties mentioned in Exhibit 3 was P8,920; Exhibit 4, P3,500; and Exhibit 2, P 24,840, while the purchase price paid was P10,000, P5,000, and P8,000, respectively, the latter for the 1/3 share of Emilio Jocson from the paraphernal properties of his wife, Alejandra Poblete. And any difference between the market value and the purchase price, which as admitted by Emilio Jocson was only slight, may not be so shocking considering that the sales were effected by a father to her daughter in which case filial love must be taken into consideration (Alsua-Betts vs. Court of Appeals, No. L-46430-31, April 30, 1979, 92 SCRA 332).

Further, gross inadequacy of price alone does not affect a contract of sale, except that it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract (Article 1470, Civil Code) and there is nothing in the records at all to indicate any defect in Emilio Jocson's consent.

Thirdly, any discussion as to the improbability of a sale between a father and his daughter is purely speculative which has no relevance to a contract where all the essential requisites of consent, object and cause are clearly present.

There is another ground relied upon by petitioner in assailing Exhibits 3 and 4, that the properties subject matter therein are conjugal properties of Emilio Jocson and Alejandra Poblete. It is the position of petitioner that since the properties sold to Agustina Jocson-Vasquez under Exhibit 3 were registered in the name of "Emilio Jocson, married to Alejandra Poblete," the certificates of title he presented as evidence (Exhibits "E', to "J', pp. 4-9, Records) were enough proof to show that the properties covered therein were acquired during the marriage of their parents, and, therefore, under Article 160 of the Civil Code, presumed to be conjugal properties.

Article 160 of the Civil Code provides that:

All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.

In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23 SCRA 637, 644, We held that:

Anent their claim that the shares in question are conjugal assets, the spouses Perez adduced not a modicum of evidence, although they repeatedly invoked article 160 of the New Civil Code which provides that ... . As interpreted by this Court, the party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. In other words, proof of acquisition during the coverture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. Thus in Camia de Reyes vs. Reyes de Ilano [62 Phil. 629, 639], it was held that "according to law and jurisprudence, it is sufficient to prove that the Property was acquired during the marriage in order that the same may be deemed conjugal property." In the recent case of Maramba vs. Lozano, et. al. [L-21533, June 29, 1967, 20 SCRA 474], this Court, thru Mr. Justice Makalintal, reiterated that "the presumption under Article 160 of the Civil Code refers to property acquired during the marriage," and then concluded that since "there is no showing as to when the property in question was acquired...the fact that the title is in the wife's name alone is determinative." Similarly, in the case at bar, since there is no evidence as to when the shares of stock were acquired, the fact that they are registered in the name of the husband alone is an indication that the shares belong exclusively to said spouse.'

This pronouncement was reiterated in the case of Ponce de Leon vs. Rehabilitation Finance Corporation, No. L-24571, December 18, 1970, 36 SCRA 289, and later in Torela vs. Torela, No. 1,27843, October 11, 1979, 93 SCRA 391.

It is thus clear that before Moises Jocson may validly invoke the presumption under Article 160 he must first present proof that the disputed properties were acquired during the marriage of Emilio Jocson and Alejandra Poblete. The certificates of title, however, upon which petitioner rests his claim is insufficient. The fact that the properties were registered in the name of "Emilio Jocson, married to Alejandra Poblete" is no proof that the properties were acquired during the spouses' coverture. Acquisition of title and registration thereof are two different acts. It is well settled that registration does not confer title but merely confirms one already existing (See Torela

vs. Torela, supra). It may be that the properties under dispute were acquired by Emilio Jocson when he was still a bachelor but were registered only after his marriage to Alejandra Poblete, which explains why he was described in the certificates of title as married to the latter.

Contrary to petitioner's position, the certificates of title show, on their face, that the properties were exclusively Emilio Jocson's, the registered owner. This is so because the words "married to' preceding "Alejandra Poblete' are merely descriptive of the civil status of Emilio Jocson Litam v. Rivera, 100 Phil. 354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143; Magallon v. Montejo, G.R. No. L-73733, December 16, 1986, 146 SCRA 282). In other words, the import from the certificates of title is that Emilio Jocson is the owner of the properties, the same having been registered in his name alone, and that he is married to Alejandra Poblete.

We are not unmindful that in numerous cases We consistently held that registration of the property in the name of only one spouse does not negate the possibility of it being conjugal (See Bucoy vs. Paulino, No. L-25775, April 26, 1968, 23 SCRA 248). But this ruling is not inconsistent with the above pronouncement for in those cases there was proof that the properties, though registered in the name of only one spouse, were indeed conjugal properties, or that they have been acquired during the marriage of the spouses, and therefore, presumed conjugal, without the adverse party having presented proof to rebut the presumption (See Mendoza vs- Reyes, No. L-31618, August 17, 1983, 124 SCRA 154).

In the instant case, had petitioner, Moises Jocson, presented sufficient proof to show that the disputed properties were acquired during his parents' coverture. We would have ruled that the properties, though registered in the name of Emilio Jocson alone, are conjugal properties in view of the presumption under Article 160. There being no such proof, the condition sine qua non for the application of the presumption does not exist. Necessarily, We rule that the properties under Exhibit 3 are the exclusive properties of Emilio Jocson.

There being no showing also that the camarin and the two ricemills, which are the subject of Exhibit 4, were conjugal properties of the

spouses Emilio Jocson and Alejandra Poblete, they should be considered, likewise, as the exclusive properties of Emilio Jocson, the burden of proof being on petitioner.

ACCORDINGLY, the petition is DISMISSED and the decision of the Court of Appeals is AFFIRMED. SO ORDERED.

G.R. Nos. 78583-4 March 26, 1990

BENIGNO TODA, JR., petitioner, vs.COURT OF APPEALS and ROSE MARIE TUASON-TODA, respondents.

G.R. Nos.78696-7 March 26,1990

ROSE MARIE TUASON-TODA, petitioner, vs.BENIGNO TODA, JR., respondent.

REGALADO, J.:

These consolidated cases seek a review of the decision of the Court of Appeals promulgated on January 29,1987 1 in CA-G.R. CV Nos. 06675 and 07936, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Ordering the payment of the cash dividends declared on July 1, 1981 amounting to P2,191.62 and those declared on July 25, 1981 amounting to P40,196.12 to Rose Marie Toda as her separate property. The cash dividends declared on April 25, 1981 amounting to P37,196.30 (sic) are hereby adjudicated to Benigno Toda, Jr. as his share in the conjugal partnership assets; the portion of the order dated November 2, 1981 with respect to the payment of the amount of P360,095.12 to Rose Marie T. Toda is set aside;

2. Ordering the payment of the amount of P4,1623,982.24 to Rose Marie Toda representing the balance of P15, 749,135.32 obligated to be paid as estate taxes by Benigno Toda, Jr.;

3. Setting aside the order of the lower court dated June 2, 1982 directing Benigno Toda, Jr. to pay interest and non-payment penalty of 18% and 5%, respectively; and

4. Setting aside the order of the lower court directing the annotation of lien on the property of Benigno Toda, Jr.

SO ORDERED.

Benigno Toda, Jr. (Benigno for brevity) and Rose Marie Tuason-Toda (Rose Marie for brevity) were married on June 9, 1951 and were blessed with two children. Individual differences and the alleged infidelity of Benigno, however, marred the conjugal union thereby prompting Rose Marie to file on December 18, 1979 in the former Court of First Instance of Rizal, 2 as Civil Case No. 35566, a petition for termination of conjugal partnership for alleged mismanagement and dissipation of conjugal funds against Benigno.

After hearings were held, the parties in order to avoid further "disagreeable proceedings," filed on April 1, 1981 a joint petition forjudicial approval of dissolution of conjugal partnership under Article 191 of the Civil Code, docketed as Special Proceeding No. 9478, 3 which was consolidated with the aforesaid civil case. This petition which was signed by the parties on March 30, 1981, embodied a compromise agreement allocating to the spouses their respective shares in the conjugal partnership assets and dismissing with prejudice the said Civil Case No. 35566, CA-G.R. No. 11123-SP of the Court of Appeals and G.R. No. 56121 of this Court. The said petition and the compromise agreement therein were approved by the trial court in its order of June 9, 1981. 4

Thereafter, several orders were issued by the lower court pertaining to the interpretation and implementation of the compromise agreement, as follows:

1. Order, dated November 20, 1981, ordering Benigno, inter alia, to pay Rose Marie the cash dividends on the shares declared on April 25, 1981 amounting to P37,126.30; that declared on July 25, 1981 amounting to P40,196.12; that declared on July 1, 1981, given on

September 25, 1981 amounting to P2,191.62; and the payment of P360,095.12 to Rose Marie which is the balance of P2 million paid on April 4, 1981; 5

2. Order, dated June 2, 1982, ordering Benigno to pay Rose Marie interest at 18% per annum on the amounts required to be paid in the order of November 20,1981, as well as 5% non-payment penalty should the said order of November 20,1981 be sustained on appeal; 6

3. Order, dated December 9, 1982, denying Benigno's motion to inhibit Judge Rizalina Bonifacio Vera from hearing the case; 7

4. Order, dated March 1, 1983, ordering the annotation of a lien on certain properties of Benigno as security for any and all amounts that he may finally be ordered to pay to Rose Marie under the compromise agreement; 8 and

5. Order, dated March 14, 1983, ordering Benigno to pay Rose Marie the amount of P4,623,929.24, with interest and penalties thereon

at the rates stipulated in the compromise agreement from date of at the rates stipulated in the compromise agreement from date of demand by Rose Marie. 9

The compromise agreement which, as earlier stated, was incorporated in the petition for dissolution of the conjugal partnership and was approved by the court below, contains the following stipulaitons:

xxx xxx xxx

4. For the best interest of each of them, petitioners have agreed to dissolve their conjugal partnership and to partition the assets thereof, under the following terms and conditions — this document, a pleading, being intended by them to embody and evidence their agreement;

(a) Petitioners as the parties hereto agree upon the dissolution of their conjugal partnership during the marriage and further agree to obtain judicial approval of their said agreement as provided by Article 191 of the Civil Code.

(b) The following shall be adjudicated to petitioner Rose Marie Tuason-Toda:

(1) Forty Million Peson (P40,000,000.00) to be paid as follows:

(a) Petitioner Benigno Toda, Jr. shall assume the payment of the estate taxes, interest and penalties thereon, pertaining to the estate of petitioner Rose Marie Tuason Toda's late brother Manuel Tuason, Jr. in the sum of P15,749,135.32 as of March 31, 1981 — all interest and penalty charges after March 31, 1981 to be the responsibility of petitioner Benigno Toda, Jr.

(b) P2,000,000.00 to be paid within 30 days after signing of this agreement.

(c) The balance shall be paid within six (6) months after date of signing of this agreement. If not paid when due, the balance shall bear interest at 18% per annum until paid and there shall be a 5% non-payment penalty. The proceeds from any sale of or loss with respect to, Rubicon's shares in Philippine Air Lines, Inc., shares of Cibeles Insurance Corporation or Hermana Mayor shall be applied when received against the aforesaid balance, except to the extent such proceeds are used to satisfy any other obligation under this agreement.

(2) All shares of stock in San Nguel Corporation registered solely in the name of petitioner Rose Marie Tuason Toda whether stock dividends or stocks acquired on pre-emptive rights including those acquired in the names of both petitioners Benigno Toda, Jr. and Rose Marie Tuason Toda (whetherjointly or alternately 'and/or'), free from all liens and encumbrances.

(3) All shares of stock in San Miguel Corporation acquired whether as stock dividends of or on pre-emptive zighta pertaining to the shares of stock in said corporation of petitioner Rose Marie Tuason Toda's brother the late Manuel Tuason, Jr. (of course, the original shares of the latter pertain to petitioner Rose Marie Tuason Toda also), free from all liens and encumbrances except for the estate tax lien. Petitioner Rose Marie Tuason Toda hereby grants petitioner Benigno Toda, Jr. an irrevocable proxy, for three years through the 1983 stockholders' meeting whether annual or special to elect directors for all shares of stock she owns directly or indirectly including those from the late Manuel Tuason, Jr. in San Miguel Corporation.

(4) The Banaba Forbes Park conjugal dwelling and its contents free from all liens and encumbrances except that petitioner Benigno Toda, Jr. shall remove therefrom his personal effects including furniture and appliances in his study room and T.V. room and, from the family rooin, all antiques, rugs, paintings of Old Fort Manila, books and mementos. Petitioner Benigno Toda, Jr. commits that no servant now living in the Tolentino street apartments shall be evicted.

(5) The San Francisco apartment at Apartment 905, No. 1750 Taylor Street, San Francisco, California, U.SA., and its contents, free from all liens and encumbrances, except that petitioner Benigno Toda, Jr. shall remove therefrom his personal effects.

(6) The artifacts already removed by petitioner Rose Marie Tuason Toda from the Madrid Apartment at No. 4 San Pedro de Valdivia. She shall return to it its silver ware, china ware, paintings and etchings. She may retain the three fans encased in glass and may remove her clothes, perfumes and toiletries, the Sansa painting ofa shell dedicated to her, the painting of the Madonna and tapestry hanging in her bedroom, 5 Persian rugs, 1 writing desk and chair and the 2 lamps thereon and 1 lamp on the night table, and the statuette given her by Hagedorn.

(7) Jewelry.

(8) Motor vehicles registered in her name.

(9) Within forty-five (45) days from signing of this agreement, One Million Pesos (Pl,000,000.00) as attorneys' fees — petitioner Rose Marie Tuason Toda agreeing to hold petitioner Benigno Toda, Jr. harmless from any claim fo attorneys' fees and expenses that may be filed against the conjugal partnership or herself for services rendered to her in the prosecution of her claims against said conjugal partnership or against petitioner Benigno Toda, Jr. or to secure her paraphernal estate.

(10) Two shares with two lots in Valley Golf & Country Club.

(11) One share in Club Puerta de Hierro in Madrid, Spain if there is one registered in petitioner Rose Marie Tuason Toda's name.

(12) Share in Montemar Beach Club in Bagac, Bataan — petitioner Rose Marie Tuason Toda agreeing to assume the balance of the acquisition cost thereof.

(c) All other properties of the conjugal partnership of whatever and wherever located shall be adjudicated to petitioner Benigno Toda, Jr. even though acquired in the name of petitioner Rose Marie Tuason Toda or both of them — she undertaking to execute the corresponding deeds of conveyances.

(d) Petitioner Benigno Toda, Jr. shall assume the payment of all conjugal obligations, petitioner Rose Marie Tuason Toda representing and warranting that she has no pending obligation or incurred no obligation chargeable to the conjugal partnership except those listed in Annex 'A' hereof.

If the Rosaria Apartment is subject to a mortgage loan and such loan is a conjugal debt, petitioner Benigno Toda, Jr. shall assume such loan and shall obtain the discharge of the mortgage.

(e) After the signing of this document:

(1) Each of them shall own, dispose of, possess, administer and enjoy his or her separate estate, present and future, without the consent of the other;

(2) All earnings from any profession business or industry shall likewise belong to each of them respectively;

(3) All expenses and obligations incurred by each of them shall be their respective and separate responsibilities.

(f) With the signing of this document, Civil Case No. 35566 of this same Court, CA-G.R. No. 11123-SP and SC-G.R. No. L-56121 shall be deemed dismissed with prejudice as between the parties hereto. 10

The parties then prayed that judgment be rendered:

(a) Approving the agreement for voluntary dissolution and partition of the conjugal partnership;

(b) declaring the conjugal partnership of petitioners dissolved and adjudicating to each of them his or her share in the properties and assets of said conjugal partnership in accordance with the agreement embodied in paragraph 4 hereof; and

(c) enjoining the parties to comply with the terms and conditions of the aforesaid agreement. 11

Ironically, the said agreement failed to fully subserve the intended amicable settlement of all the disputes of the spouses. Instead, as lamented by the counsel of one of them, the compromise agreement which was designed to terminate a litigation spawned two new petitions, with each party initiating one against the other. Thus, illustrative of the saying that a solution which creates another problem is no solution, the contradictory interpretations placed by the parties on some provisions of the agreement resulted in appeals to respondent court and, eventually, the present recourse to us.

Benigno appealed from the aforestated orders of the trial court of November 20, 1981, June 2, 1982, December 9, 1982, March 1, 1983 and March 14, 1983 containing the directives hereinbefore respectively set out. The same were disposed of by the Court of Appeals as explained at the start of this decision.

Rose Marie now submits that the Court of Appeals erred:

1. In holding that the compromise agreement of the parties herein became effective only after its judicial approval on June 9, 1981 and not upon its execution on March 30,1981;

2. In setting aside the order of the lower court dated June 2, 1981 directing Benigno to pay interest of eighteen percent and non-payment penalty of five percent; and

3. In setting aside the order of the lower court directing the annotation of Rose Marie's lien on Benigno's property. 12

On the other hand, Benigno contends in his present petition before us that:

1. The Court of Appeals erred on a question of law when it affirmed the lower court's award of P4,623,929.24 without trial and

evidence-taking and overruled petitioner's claim of violation of his due process right;

2. The Court of Appeals erred on a question of law and due process when it upheld the lower court's denial of petitioner's motion for her inhibition/disqualification;

3. Since the document (the parties' compromise agreement) explicitly provided for assumption of liability rather than agency to pay and since there was no evidence-taking, the Court of Appeals finding of an agency to pay is reviewable as a question of law; and

4. The Court of Appeals on a question of law involving the parol evidence rule. 13

The award of cash dividends basically depends on the date of effectivity of the compromise agreement as this will determine whether the same is conjugal property or separate property of the spouses.

We are in agreement with the holding of the Court of Appeals that the compromise agreement became effective only on June 9, 1981, the date when it was approved by the trial court, and not on March 30,1981 when it was signed by the parties. Under Article 190 of the Civil Code, 14 "(i)n the absence of an express declaration in the marriage settlements, the separation of property between spouses during the marriage shall not take place save in virtue of a judicial order." Hence, the separation of property is not effected by the mere execution of the contract or agreement of the parties, but by the decree of the court approving the same. It, therefore, becomes effective on y upon judicial approval, without which it is void. 15 Furthermore, Article 192 of said Code explicitly provides that the conjugal partnership is dissolved only upon the issuance of a decree of separation of property.

Consequently, the conjugal partnership of Benigno and Rose Marie should be considered dissolved only on June 9, 1981 when the trial court approved their joint petition for voluntary dissolution of their conjugal partnership. Conformably thereto, the cash dividends declared on July 1, 1981 and July 25,1981 in the amount of P2,191.62 and P40,196.12, respectively, should pertain to Rose Marie; and that declared on April 2,5, 1981 in the amount of P37,126.30 ought to be paid to Benigno, pursuant to Paragraph 4 (c)

of the compromise agreement which awards to Benigno the conjugal assets not otherwise specifically assigned to Rose Marie.

With respect to the amount of P360,095.12 which Benigrio deducted from the P2 million supposed to be paid to Rose Marie, it is not clear from the records where said amount came from. The Court of Appeals, in holding that it is conjugal and therefore belongs to Benigno, presumed it to be in the nature of cash dividends declared prior to the approval of the compromise agreement by reason of the fact that the amount was deducted by Benigno from the P2 million which he paid on April 14,1981. While no sufficient proof was adduced to conclusively explain such deduction, there exists the legal presumption that all property of the marriage belongs to the conjugal partnership absent any proof that it is the exclusive property of either spouse. 16 Since Rose Marie failed to prove that the amount forms part of her paraphernal property, it is presumed to be conjugal property. Consequently, Benigno is entitled to the said amount of P360,095.12, hence he rightfully deducted the same from the amount due to Rose Marie.

The issue regarding the annotation of the lien on Benigno's properties has been mooted by our resolution dated Aprjl 3, 1989 wherein, at his instance, we ordered the cancellation thereof upon his posting of the corresponding bond. In our resolution of February 26, 1990, we noted Benigno's comphance, approved the bond he filed, and ordered the cancellation of the hens annotated on the certificates of title of the propertiesinvolved.

Likewise, the order denying the motion to inhibit Judge Rizalina Bonifacio Vera has become academic considering that she no longer presides over the court where the case was filed. Besides, as correctly explained by respondent court, the groundfor inhibition raised by Benigno is not valid it being merely on the basis of the judge having acquired knowledge of the facts surrounding the agreement of the parties, hence she would be a material witness to the issue of the true agreement which is contested by the parties. However, those facts came to the knowledge of the judge in the course of her efforts to effect a compromise between parties and are also known to the parties.This is not a ground for disqualification; on the contrary, said, acts of the judge were in accord with the rule encouraging compromises in litigations, especially between members of the same family.

Anent the tax savings of P4,623,982.24 obtained by Benigno, we hold that this forms part of the P40 million allocated to Rose Marie under paragraph 4 (b) (1) of the compromise agreement.We give credit to the ratiocination thereon of the trial court as quoted with approval by respondent court:

The records show that petitioner Benigno Toda, Jr. paid only Pl,125,152.48 in estate taxes, although the amount stated in the m Compromise Agreement was P15,749,135.32. The balance of P4,623,929.24 is now being claimed by both parties as aforestated. In the opinion of this court, the pertinent terms of the Agreement as quoted, are clear and do not require any interpretation. In brief, under, the Agreement, petitioner Rose Marie T. Toda is adjudicated the fixed sum of P40 million, to be paid as follows: (a) Payment by petitioner Benigno Toda, Jr. of the estate taxes, interests and penalties thereon, pertaining to the estate of the late Manuel Tuason, Jr. in the amount of Pl5,749,135.32 as of March 31, 1982; (b) P2 million within 30 days after signing of the Agreement; (c) the balance within six months after date of signing of the Agreement. This Court notes that the amount of taxes, interests and penalties is fixed at P15,749,135.32 and this figure was provided by Benigno Toda, Jr. There is no provision as contended by petitioner Benigno Toda, Jr. that the amount was only an assumed liability and that he could attempt to reduce it by suit or compromise. It is clear that if the amount of P4,623,929.24 is to be credited to Benigno Toda, Jr. then the P40 million which petitioner Rose Marie T. Toda is to receive would be short by that amount. This Court is also of the opinion that under the Agreement, petitioner Benigno Toda, Jr. was constituted as agent to pay to the government the liability of the estate of the late Manuel Tuason, Jr. in the fixed amount of P15,749,135.32 and if he was able to secure a reduction thereof, then he should deliver to his principal such reduction... 17

We do not believe that Benigno was denied due process when the trial court resolved the motion of Rose Marie for the payment of P4,623,982.24 without the benefit of a hearing. The records disclose that the hearing thereon was postponed twice at the instance of Benigno, which prompted the court to thereafter consider the motion submitted for resolution on the basis of the allegations therein and

the answer filed by counsel for both parties. Benigno cannot now be heard to claim that he was deprived of his day in court. Furthermore, respondent court correctly held that the issue involved was more of a question of interpretation of a contract rather than a determination of facts. Benigno failed to make a plausible showing that the supposed evidence he had intended to present, if any, would not be merely collateral matters.

Considering that the amount of P4,623,982.24 actually forms an integral part of the P40 million (minus the lawful and authorized deductions that may be made therefrom) which Benigno categorically undertook to pay to Rose Marie, the same must earn interest at the rate of 18% per annum and 5% non-payment penalty, the same being included in and within the contemplation of Paragraph 4 (b) (1) (c) of the compromise agreement. Said provision of the agrdement provides for the payment of the interest and penalty upon non-payment of the balance of the P40 million after the specific authorized deductions therefrom. Since the amount of P4,623,982.24 was not to be lawfully deducted by Benigno, as hereinbefore explained, it constitutes part of the contemplated contingent balance which might tum out to be due to Rose Marie and, therefore, subject to the imposition of said increments on Benigno's liability.

WHEREFORE, the judgment appealed from is hereby AFFIRMED, with the modification that Benigno Toda, Jr. is hereby ordered to pay Rose Marie Tuason Toda interest at the rate of a 18% per annum and 5% non-payment penalty on the tax savings of P4,623,982.24 from date of formal demand until the same is fully paid. SO ORDERED.

 G.R. No. 70082 August 19, 1991

SPOUSES RICKY WONG and ANITA CHAN, LEONARDO JOSON, JUANITO SANTOS, EMERITO SICAT and CONRADO LAGMAN, petitioners, vs.HON. INTERMEDIATE APPELLATE COURT and ROMARICO HENSON, respondents.

FERNAN, C.J.:p

Submitted for adjudication in the instant petition for review on certiorari is the issue of whether or not the execution of a decision in an action for collection of a sum of money may be nullified on the ground that the real properties levied upon and sold at public auction are the alleged exclusive properties of a husband who did not participate in his wife's business transaction from which said action stemmed.

Private respondent Romarico Henson married Katrina Pineda on January 6, 1964. 1 They

have three children but even during the early years of their marriage, Romarico and Katrina had been most of the time living separately. The former stayed in Angeles City while the latter lived in Manila. During the marriage or on January 6, 1971, Romarico bought a 1,787 square-meter parcel of land in Angeles City for P11,492 from his father, Dr. Celestino L. Henson 2 with money borrowed from an officemate. His father need the amount for investments in Angeles City and Palawan. 3

Meanwhile, in Hongkong sometime in June 1972, Katrina entered into an agreement with Anita Chan whereby the latter consigned to Katrina pieces of jewelry for sale valued at 199,895 Hongkong dollars or P321,830.95. 4 When Katrina failed to return the pieces of jewelry within the 20-day period agreed upon, Anita Chan demanded payment of their value.

On September 18, 1972, Katrina issued in favor of Anita Chan a check for P55,000 which, however, was dishonored for lack of funds. Hence, Katrina was charged with estafa before the then Court of First Instance of Pampanga and Angeles City, Branch IV. 5 After trial, the lower court rendered a decision dismissing the case on the ground that Katrina's liability was not criminal but civil in nature as no estafa was committed by the issuance of the check in payment of a pre-existing obligation. 6

In view of said decision, Anita Chan and her husband Ricky Wong filed against Katrina and her husband Romarico Henson, an action for collection of a sum of money also in the same branch of the aforesaid court. 7 The records of the case show that Atty. Gregorio Albino, Jr. filed an answer with counterclaim but only in behalf of Katrina. When the case was called for pre-trial, Atty. Albino once again appeared as counsel for Katrina only. While it is true that during subsequent hearings, Atty. Expedite Yumul, who collaborated

with Atty. Albino, appeared for the defendants, it is not shown on record that said counsel also represented Romarico. In fact, a power of attorney which Atty. Albino produced during the trial, showed that the same was executed solely by Katrina. 8

After trial, the court promulgated a decisions 9 in favor of the Wongs. It ordered Katrina and Romarico Henson to pay the Wongs HK$199,895.00 or P321,830.95 with legal interest from May 27, 1975, the date of filing of the complaint, until fully paid; P20,000 as expenses for litigation; P15,000 as attorney's fees, and the costs of the suit.

A writ of execution was thereafter issued. Levied upon were four lots in Angeles City covered by Transfer Certificates of Title Nos. 30950, 30951, 30952 and 30953 all in the name of Romarico Henson ... married to Katrina Henson. 10

The public auction sale was first set for October 30, 1977 but since said date was declared a public holiday, Deputy Sheriff Emerito Sicat reset the sale to November 11, 1977. On said date, the following properties registered in the name of Romarico Henson "married to Katrina Henson" were sold at public auction: (a) two parcels of land covered by Transfer Certificates of Title Nos. 30950 and 30951 with respective areas of 293 and 289 square meters at P145,000 each to Juanito L. Santos, 11 and (b) two parcels of land covered by Transfer Certificates of Title Nos. 30952 and 30953 with respective areas of 289 and 916 square meters in the amount of P119,000.00 to Leonardo B. Joson. 12

After the inscription on Transfer Certificate of Title No. 30951 of the levy on execution of the judgment in Civil Case No. 2224, the property covered by said title was extrajudicially foreclosed by the Rural Bank of Porac, Pampanga on account of the mortgage loan of P8,000 which Romarico and Katrina had obtained from said bank. The property was sold by the sheriff to the highest bidder for P57,000 on September 9, 1977. On September 14, 1978, Juanito Santos, who had earlier bought the same property at public auction on November 11, 1977, redeemed it by paying the sum of P57,000 plus the legal interest of P6,840.00 or a total amount of P63,840.00. 13

About a month before such redemption or on August 8, 1 978, Romarico filed an action for the annulment of the decision in Civil

Case No. 2224 as well as the writ of execution, levy on execution and the auction sale therein in the same Court of First Instance. 14 Romarico alleged that he was "not given his day in court" because he was not represented by counsel as Attys. Albino and Yumul appeared solely for Katrina; that although he did not file an answer to the complaint, he was not declared in default in the case; that while Atty. Albino received a copy of the decision, he and his wife were never personally served a copy thereof; that he had nothing to do with the business transactions of Katrina as he did not authorize her to enter into such transactions; and that the properties levied on execution and sold at public auction by the sheriff were his capital properties and therefore, as to him, all the proceedings had in the case were null and void.

On November 10, 1978, the lower court issued an order restraining the Register of Deeds of Angeles City from issuing the final bill of sale of Transfer Certificates of Title Nos. 30950 and 30951 in favor of Juanito Santos and Transfer Certificates of Title Nos. 30952 and 30953 in favor of Leonardo Joson until further orders of the court. 15 On January 22, 1979, upon motion of Romarico, the court issued a writ of preliminary injunction enjoining the sheriff from approving the final bill of sale of the land covered by the aforementioned certificates of title and the Register of Deeds of Angeles City from registering said certificates of title in the names of Santos and Joson until the final outcome of the case subject to Romarico's posting of a bond in the amount of P321,831.00. 16

After trial on the merits, the lower court 17 rendered a decision holding that Romarico was indeed not given his day in court as he was not represented by counsel nor was he notified of the hearings therein although he was never declared in default. Noting that the complaint in Civil Case No. 2224 as well as the testimonial and documentary evidence adduced at the trial in said case do not show that Romarico had anything to do with the transactions between Katrina and Anita Chan, the court ruled that the judgment in Civil Case No. 2224 "is devoid of legal or factual basis which is not even supported by a finding of fact or ratio decidendi in the body of the decision, and may be declared null and void ... pursuant to a doctrine laid down by the Supreme Court to the effect that the Court of First Instance or a branch thereof, has authority and jurisdiction to try and decide an action for annulment of a final and executory judgment or order rendered by another court of first instance or of a branch thereof (Gianan vs. Imperial, 55 SCRA 755)." 18

On whether or not the properties lenied upon and sold at public auction may be reconveyed to Romarico, the court, finding that there was no basis for holding the conjugal partnership liable for the personal indebtedness of Katrina, ruled in favor of reconveyance in view of the jurisprudence that the interest of the wife in the conjugal partnership property being inchoate and therefore merely an expectancy, the same may not be sold or disposed of for value until after the liquidation and settlement of the community assets. The dispositive portion of the decision reads:

WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against all the defendants, as follows:

(a) The Decision of the Court of First Instance of Pampanga and Angeles City, Branch IV, rendered in Civil Case No. 2224, entitled "RICKY WONG, ET AL. vs. KATRINA PINEDA HENSON and ROMARICO HENSON", is hereby declared null and void, only as far as it affects plaintiff herein Romarico Henson;

(b) The Writ of Execution, levy in execution and auction sale of the conjugal property of the spouses Romarico Henson and Katrina Pineda Henson which were sold at public auction on November 11, 1977, without notice to plaintiff herein, by Deputy Sheriff Emerito Sicat, are likewise declared null and void and of no force and effect;

(c) Defendants Emerito Sicat and Conrado Lagman, in their official capacity as Sheriff and Register of Deeds, respectively, are enjoined permanently from issuing and/or registering the corresponding deeds of sale affecting the property;

(d) The aforementioned buyers are directed to reconvey the property they have thus purchased at public auction to plaintiff Romarico Henson;

(e) As far as the claim for reimbursement filed by Juanito Santos concerning the redemption of the property covered by Transfer Certificate of Title No. 30951 from the Rural Bank of Porac, which foreclosed the same extrajudicially, is concerned, plaintiff Romarico Henson may redeem the same within the period and in the manner prescribed by law, after the corresponding deed of redemption shall have been registered in the Office of the Registry of Deeds for Angeles City;

(f) Defendants Spouses Ricky Wong and Anita Chan are, with the exception of the defendants Juanito Santos, Leonardo Joson, Sheriff and Register of Deeds, are ordered jointly and severally, to pay the plaintiff Romarico Henson the sum of P10,000.00, corresponding to the expenses of litigation,

with legal interest thereon from the time this suit was filed up to the time the same shall have been paid, plus P5,000.00 for and as attorney's fees, and the costs of suit; and

(g) The counterclaims respectively filed on behalf of all the defendants in the above-entitled case are hereby DISMISSED.

SO ORDERED.

The defendants appealed to the then Intermediate Appellate Court. In its decision of January 22, 1985 19 the said court affirmed in toto the decision of the lower court. It added that as to Romarico, the judgment in Civil Case No. 2224 had not attained finality as the decision therein was not served on him and that he was not represented by counsel. Therefore, estoppel may not be applied against him as, not having been served with the decision, Romarico did not know anything about it. Corollarily, there can be no valid writ of execution inasmuch as the decision had not become final as far as Romarico is concerned.

On whether the properties may be levied upon as conjugal properties, the appellate court ruled in the negative. It noted that the properties are Romarico' s exclusive capital having been bought by him with his own funds. But granting that the properties are conjugal, they cannot answer for Katrina's obligations as the latter were exclusively hers because they were incurred without the consent of her husband, they were not for the daily expenses of the family and they did not redound to the benefit of the family. The court underscored the fact that no evidence has been submitted that the administration of the conjugal partnership had been transferred to Katrina either by Romarico or by the court before said obligations were incurred.

The appellants filed a motion for reconsideration of the decision of the appellate court but the same was denied for lack of merit on February 6, 1985. 20

Hence, the instant petition for review on certiorari. Petitioners contend that, inasmuch as the Henson spouses were duly represented by Atty. Albino as shown by their affidavit of August 25, 1977 wherein they admitted that they were represented by said counsel until Atty. Yumul took over the actual management and conduct of the case and that Atty. Albino had not withdrawn as their

counsel, the lower court "did not commit an error" in serving a copy of the decision in Civil Case No. 2224 only on Atty. Albino. Moreover, during the 2-year period between the filing of the complaint in Civil Case No. 2224 and the public auction sale on November 11, 1977, Romarico remained silent thereby making him in estoppel and guilty of laches.

Petitioners further aver that there being sufficient evidence that the auction sale was conducted in accordance with law, the acts of the sheriffs concerned are presumed to be regular and valid. But granting that an irregularity consisting of the non-notification of Romarico attended the conduct of the auction sale, the rights of Santos and Joson who were "mere strangers who participated as the highest bidders" therein, may not be prejudiced. Santos and Joson bought the properties sincerely believing that the sheriff was regularly performing his duties and no evidence was presented to the effect that they acted with fraud or that they connived with the sheriff. However, should the auction sale be nullified, petitioners assert that Romarico should not be unduly enriched at the expense of Santos and Joson.

The petitioners' theory is that Romarico Henson was guilty of laches and may not now belatedly assert his rights over the properties because he and Katrina were represented by counsel in Civil Case No. 2224. Said theory is allegedly founded on the perception that the Hensons were like any other ordinary couple wherein a spouse knows or should know the transactions of the other spouse which necessarily must be in interest of the family. The factual background of this case, however, takes it out of said ideal situation.

Romarico and Katrina had in fact been separated when Katrina entered into a business deal with Anita Wong. Thus, when that business transaction eventually resulted in the filing of Civil Case No. 2224, Romarico acted, or, as charged by petitioners, failed to act, in the belief that he was not involved in the personal dealings of his estranged wife. That belief was buttressed by the fact that the complaint itself did not mention or implicate him other than as the husband of Katrina. On whether Romarico was also represented by Atty. Albino, Katrina's counsel, the courts below found that:

... Atty. Albino filed an Answer with Counterclaims dated July 25, 1975 solely on behalf of defendant Katrina Henson. The salutary statement in that Answer categorically reads: ... COMES NOW THE DEFENDANT KATRINA

HENSON by and through undersigned counsel, in answer to plaintiffs' complaint respectfully alleges: ... .

That Answer was signed by GREGORIO ALBINO, JR., over the phrase COUNSEL FOR DEFENDANT KATRINA HENSON.

Again, when Civil Case No. 2224 was called for pre-trial on November 27, 1975, before then Presiding Judge Bienvenido Ejercito, it is clearly stated on page 2 of the day's stenographic notes, under "APPEARANCES that Atty. Albino, Jr. appeared as COUNSEL FOR DEFENDANT KATRINA HENSON". And when the case was called, Atty. Jose Baltazar, Sr. appeared for the plaintiffs while Atty. Albino categorically appeared "FOR DEFENDANT KATRINA HENSON".

It might be true that in subsequent hearings, Atty. Expedito Yumul 'appeared as counsel for the defendants,' but the whole trouble is that he never expressly manifested to the Court that he was likewise actually representing defendant "ROMARICO HENSON", for it cannot be disputed that Atty. Yumul only entered his appearance in collaboration with Atty. Albino (see p. 2 tsn, January 26, 1976, Espinosa), who in turn entered his initial appearance during the pre- trial, and through the filing of an Answer, for defendant KATRINA HENSON. As a matter of fact, the Power of Attorney which Atty. Albino produced during the pre-trial was executed solely by defendant KATRINA HENSON. Accordingly, as collaborating counsel, Atty. Yumul cannot, by any stretch of the imagination, be considered as duly authorized to formally appear likewise on behalf of defendant ROMARICO HENSON for whom principal counsel of record Atty. Gregorio Albino, Jr. never made any formal appearance. On this score, it is not amiss to state that "A spring cannot rise higher than its source:.

Now, what about that statement in the aforementioned joint affidavit of the spouses KATRINA HENSON and ROMARICO HENSON, to the effect that our first lawyer in said case was Atty. Gregorio Albino, Jr., and sometime later Atty. Expedito B. Yumul took over ...

That statement which plaintiff ROMARICO HENSON was made to sign by Atty. Yumul on August 25,1977, after the filing of this case, allegedly for the purpose of dissolving the writ of execution, as claimed in paragraph XIV of the complaint herein, and is satisfactorily explained by both plaintiff herein and his wife, while on cross-examination by Atty. Baltazar, Sr., and We quote:

Q So, the summons directed your filing of your Answer for both of you, your wife and your good self?

A Yes, sir but may I add, I received the summons but I did not file an answer because my wife took a lawyer and that lawyer I think will protect her interest and my interest being so I did not have nothing to do in the transaction which is attached to the complaint.' (TSN, Jan. 14, 1980, pp. 52-53).

That plaintiff never appeared in Civil Case No. 2224, nor was he therein represented by counsel was impliedly admitted by defendants' counsel of records thru a question he propounded on cross, and the answer given by Katrina Pineda, to wit:

Q How about your husband, do you remember if he physically appeared in that Civil Case No. 2224, will you tell us if he was represented by counsel as a party defendant?

A No, sir, hdid not appear.

Q You are husband and wife, please tell us the reason why you have your own counsel in that case whereas Romarico Henson did not appear nor a counsel did not appear in that proceedings (TSN, Feb. 25,1980, pp. 6-7).

A Because that case is my exclusive and personal case, he has nothing to do with that, sir. (TSN, Feb. 25, 1980, p. 9). (Rollo, pp. 17-20)

Hence, laches may not be charged against Romarico because, aside from the fact that he had no knowledge of the transactions of his estranged wife, he was also not afforded an opportunity to defend himself in Civil Case No. 2224. 21 There is no laches or even finality of decision to speak of with respect to Romarico since the decision in Civil Case No. 2224 is null and void for having been rendered without jurisdiction for failure to observe the notice requirements prescribed by law. 22 Failure to notify Romarico may not be attributed to the fact that the plaintiffs in Civil Case No. 2224 acted on the presumption that the Hensons were still happily married because the complaint itself shows that they did not consider Romarico as a party to the transaction which Katrina undertook with Anita Wong. In all likelihood, the plaintiffs merely impleaded Romarico as a nominal party in the case pursuant to the provisions of Rule 3, Section 4 of the Rules of Court.

Consequently, the writ of execution cannot be issued against Romarico as he has not yet had his day in court 23 and, necessarily, the public auction sale is null and void. 24 Moreover, the power of the

court in the execution of judgments extends only over properties unquestionably belonging to the judgment debtor. 25

On the matter of ownership of the properties involved, however, the Court disagrees with the appellate court that the said properties are exclusively owned by Romarico. Having been acquired during the marriage, they are still presumed to belong to the conjugal partnership 26 even though Romarico and Katrina had been living separately. 27

The presumption of the conjugal nature of the properties subsists in the absence of clear, satisfactory and convincing evidence to overcome said presumption or to prove that the properties are exclusively owned by Romarico. 28 While there is proof that Romarico acquired the properties with money he had borrowed from an officemate, it is unclear where he obtained the money to repay the loan. If he paid it out of his salaries, then the money is part of the conjugal assets 29 and not exclusively his. Proof on this matter is of paramount importance considering that in the determination of the nature of a property acquired by a person during covertrue, the controlling factor is the source of the money utilized in the purchase.

The conjugal nature of the properties notwithstanding, Katrina's indebtedness may not be paid for with them her obligation not having been shown by the petitioners to be one of the charges against the conjugal partnership. 30 In addition to the fact that her rights over the properties are merely inchoate prior to the liquidation of the conjugal partnership, the consent of her husband and her authority to incur such indebtedness had not been alleged in the complaint and proven at the trial. 31

Furthermore, under the Civil Code (before the effectivity of the Family Code on August 3, 1988), 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 the purpose of purchasing things necessary for the support of the family if the husband fails to deliver the proper sum; 32 when the administration of the conjugal partnership is transferred to the wife by the courts 33 or by the husband 34 and when the wife gives moderate donations for charity. 35 Having failed to establish that any of these circumstances occurred, the Wongs may not bind the conjugal assets to answer for Katrina's personal obligation to them.

Petitioners' contention that the rights of Santos and Joson as innocent buyers at the public auction sale may not be prejudiced, is, to a certain extent, valid. After all, in the absence of proof that irregularities attended the sale, the same must be presumed to have been conducted in accordance with law. There is, however, a peculiar factual circumstance that goes against the grain of that general presumption the properties levied upon and sold at the public auction do not exclusively belong to the judgment debtor. Thus, the guiding jurisprudence is as follows:

The rule in execution sales is that an execution creditor acquires no higher or better right than what the execution debtor has in the property levied upon. The purchaser of property on sale under execution and levy takes as assignee, only as the judicial seller possesses no title other than that which would pass by an assignment by the owner. "An execution purchaser generally acquires such estate or interest as was vested in the execution debtor at the time of the seizure on execution, and only such interest, taking merely a quit-claim of the execution debtor's title, without warranty on the part of either the execution officer or of the parties, whether the property is realty or personalty. This rule prevails even if a larger interest in the property was intended to be sold. Accordingly, if the judgment debtor had no interest in the property, the execution purchaser acquires no interest therein." (Pacheco vs. Court of Appeals, L-48689, August 31, 1987, 153 SCRA 382, 388-389 quoting Laureano vs. Stevenson, 45 Phil. 252; Cabuhat vs. Ansery, 42 Phil. 170; Fore v. Manove, 18 Cal. 436 and 21 Am. Jur., 140-141. Emphasis supplied.)

Applying this jurisprudence, execution purchasers Santos and Joson possess no rights which may rise above judgment debtor Katrina's inchoate proprietary rights over the properties sold at public auction. After all, a person can sell only what he owns or is authorized to sell and the buyer can, as a consequence, acquire no more that what the seller can legally transfer. 36 But, inasmuch as the decision in Civil Case No. 2224 is void only as far as Romarico and the conjugal properties are concerned, the same may still be executed by the Spouses Wong against Katrina Henson personally and exclusively. The Spouses Wong must return to Juanito Santos and Leonardo Joson the purchase prices of P145,000 and P119,000 respectively, received by said spouse from the public auction sale.

The redemption made by Santos in the foreclosure proceeding against Romarico and Katrina Henson filed by the Rural Bank of Porac, should, however, be respected unless Romarico exercises his

right of redemption over the property covered by Transfer Certificate of Title No. 30951 in accordance with law.

WHEREFORE, the decisions of the appellate court and the lower court in Civil Case No. 28-09 are hereby AFFIRMED subject to the modifications above stated. No costs. SO ORDERED.

G.R. No. 122749 July 31, 1996

ANTONIO A. S. VALDEZ, petitioner, vs.REGIONAL TRIAL COURT, BRANCH 102, QUEZON CITY, and CONSUELO M. GOMEZ-VALDEZ, respondents.

 VITUG, J.:p

The petition for new bewails, purely on the question of law, an alleged error committed by the Regional Trial Court in Civil Case No. Q-92-12539. Petitioner avers that the court a quo has failed to apply the correct law that should govern the disposition of a family dwelling in a situation where a marriage is declared void ab initio because of psychological incapacity on the part of either or both parties in the contract.

The pertinent facts giving rise to this incident are, by large, not in dispute.

Antonio Valdez and Consuelo Gomez were married on 05 January 1971. Begotten during the marriage were five children. In a petition, dated 22 June 1992, Valdez sought the declaration of nullity of the marriage pursuant to Article 36 of the Family code (docketed Civil Case No. Q-92-12539, Regional Trial Court of Quezon City, Branch 102). After the hearing the parties following the joinder of issues, the trial court, 1 in its decision of 29 July 1994, granted the petition, viz:

WHEREFORE, judgment is hereby rendered as follows:

(1) The marriage of petitioner Antonio Valdez and respondent Consuelo Gomez-Valdez is hereby declared null and void under Article 36 of the Family Code on the ground of their mutual psychological incapacity to comply with their essential marital obligations;

(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela Rosario shall choose which parent they would want to stay with.

Stella Eloisa and Joaquin Pedro shall be placed in the custody of their mother, herein respondent Consuelo Gomez-Valdes.

The petitioner and respondent shall have visitation rights over the children who are in the custody of the other.

(3) The petitioner and the respondent are directed to start proceedings on the liquidation of their common properties as defined by Article 147 of the Family Code, and to comply with the provisions of Articles 50, 51, and 52 of the same code, within thirty (30) days from notice of this decision.

Let a copy of this decision be furnished the Local Civil Registrar of Mandaluyong, Metro Manila, for proper recording in the registry of marriages. 2 (Emphasis ours.)

Consuelo Gomez sought a clarification of that portion of the decision directing compliance with Articles 50, 51 and 52 of the Family Code. She asserted that the Family Code contained no provisions on the procedure for the liquidation of common property in "unions without marriage." Parenthetically, during the hearing of the motion, the children filed a joint affidavit expressing their desire to remain with their father, Antonio Valdez, herein petitioner.

In an order, dated 05 May 1995, the trial court made the following clarification:

Consequently, considering that Article 147 of the Family Code explicitly provides that the property acquired by both parties during their union, in the absence of proof to the contrary, are presumed to have been obtained through the joint efforts of the parties and will be owned by them in equal shares, plaintiff and defendant willown their "family home" and all their properties for that matter in equal shares.

In the liquidation and partition of properties owned in common by the plaintiff and defendant, the provisions on ownership found in the Civil Code shall apply. 3 (Emphasis supplied.)

In addressing specifically the issue regarding the disposition of the family dwelling, the trial court said:

Considering that this Court has already declared the marriage between petitioner and respondent as null and void ab initio, pursuant to Art. 147, the property regime of petitioner and respondent shall be governed by therules on ownership.

The provisions of Articles 102 and 129 of the Family Code finds no application since Article 102 refers to the procedure for the liquidation of the conjugal partnership property and Article 129 refers to the procedure for the liquidation of the absolute community of property. 4

Petitioner moved for a reconsideration of the order. The motion was denied on 30 October 1995.

In his recourse to this Court, petitioner submits that Articles 50, 51 and 52 of the Family Code should be held controlling: he argues that:

I. Article 147 of the Family Code does not apply to cases where the parties are psychologically incapacitated.

II. Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code govern the disposition of the family dwelling in cases where a marriage is declared void ab initio, including a marriage declared void by reason of the psychological incapacity of the spouses.

III. Assuming arguendo that Article 147 applies to marriages declared void ab initio on the ground of the psychological incapacity of a spouse, the same may be read consistently with Article 129.

IV. It is necessary to determine the parent with whom majority of the children wish to stay. 5

The trial court correctly applied the law. In a void marriage, regardless of the cause thereof, the property relations of the parties during the period of cohabitation is governed by the provisions of Article 147 or Article 148, such as the case may be, of the Family Code. Article 147 is a remake of Article 144 of the Civil Code as interpreted and so applied in previous cases; 6 it provides:

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof in the former's efforts consisted in the care and maintenance of the family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the innocent party. In all cases, the forfeiture shall take place upon the termination of the cohabitation.

This particular kind of co-ownership applies when a man and a woman, suffering no illegal impediment to marry each other, so exclusively live together as husband and wife under a void marriage or without the benefit of marriage. The term "capacitated" in the provision (in the first paragraph of the law) refers to the legal capacity of a party to contract marriage, i.e., any "male or female of the age of eighteen years or upwards not under any of the impediments mentioned in Articles 37 and 38" 7 of the Code.

Under this property regime, property acquired by both spouses through their work and industry shall be governed by the rules on equal co-ownership. Any property acquired during the union is prima facie presumed to have been obtained through their joint efforts. A party who did not participate in the acquisition of the property shall be considered as having contributed thereto jointly if said party's "efforts consisted in the care and maintenance of the family

household." 8 Unlike the conjugal partnership of gains, the fruits of the couple's separate property are not included in the co-ownership.

Article 147 of the Family Code, in the substance and to the above extent, has clarified Article 144 of the Civil Code; in addition, the law now expressly provides that —

(a) Neither party can dispose or encumber by act intervivos his or her share in co-ownership property, without consent of the other, during the period of cohabitation; and

(b) In the case of a void marriage, any party in bad faith shall forfeit his or her share in the co-ownership in favor of their common children; in default thereof or waiver by any or all of the common children, each vacant share shall belong to the respective surviving descendants, or still in default thereof, to the innocent party. The forfeiture shall take place upon the termination of the cohabitation 9 or declaration of nullity of the marriage. 10

When the common-law spouses suffer from a legal impediment to marry or when they do not live exclusively with each other (as husband and wife), only the property acquired by both of them through their actual joint contribution of money, property or industry shall be owned in common and in proportion to their respective contributions. Such contributions and corresponding shares, however, are prima facie presumed to be equal. The share of any party who is married to another shall accrue to the absolute community or conjugal partnership, as the case may be, if so existing under a valid marriage. If the party who has acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner already heretofore expressed. 11

In deciding to take further cognizance of the issue on the settlement of the parties' common property, the trial court acted neither imprudently nor precipitately; a court which has jurisdiction to declare the marriage a nullity must be deemed likewise clothed in authority to resolve incidental and consequential matters. Nor did it commit a reversible error in ruling that petitioner and private respondent own the "family home" and all their common property in equal shares, as well as in concluding that, in the liquidation and partition of the property owned in common by them, the provisions on co-ownership under the Civil Code, not Articles 50, 51 and 52, in relation to Articles

102 and 129, 12 of the Family Code, should aptly prevail. The rules set up to govern the liquidation of either the absolute community or the conjugal partnership of gains, the property regimes recognized for valid and voidable marriages (in the latter case until the contract is annulled), are irrelevant to the liquidation of the co-ownership that exists between common-law spouses. The first paragraph of Articles 50 of the Family Code, applying paragraphs (2), (3), (4) and 95) of Article 43, 13 relates only, by its explicit terms, to voidable marriages and, exceptionally, to void marriages under Article 40 14 of the Code, i.e., the declaration of nullity of a subsequent marriage contracted by a spouse of a prior void marriage before the latter is judicially declared void. The latter is a special rule that somehow recognizes the philosophy and an old doctrine that void marriages are inexistent from the very beginning and no judicial decree is necessary to establish their nullity. In now requiring forpurposes of remarriage, the declaration of nullity by final judgment of the previously contracted void marriage, the present law aims to do away with any continuing uncertainty on the status of the second marriage. It is not then illogical for the provisions of Article 43, in relation to Articles 41 15 and 42, 16 of the Family Code, on the effects of the termination of a subsequent marriage contracted during the subsistence of a previous marriage to be made applicable pro hac vice. In all other cases, it is not to be assumed that the law has also meant to have coincident property relations, on the one hand, between spouses in valid and voidable marriages (before annulment) and, on the other, between common-law spouses or spouses of void marriages, leaving to ordain, on the latter case, the ordinary rules on co-ownership subject to the provisions of the Family Code on the "family home," i.e., the provisions found in Title V, Chapter 2, of the Family Code, remain in force and effect regardless of the property regime of the spouses.

WHEREFORE, the questioned orders, dated 05 May 1995 and 30 October 1995, of the trial court are AFFIRMED. No costs.

G.R. No. 111547 January 27, 1997

SPS. TRINIDAD S. ESTONINA and PAULINO ESTONINA, petitioners, vs.

COURT OF APPEALS SPS. CELSO ATAYAN and NILDA HICBAN and CONSUELO VDA. DE GARCIA, REMEDIOS, ELVIRA, OFELIA, VIRGILIO, MARILOU, and LOLITA all surnamed GARCIA, and HEIRS OF CASTOR GARCIA and of SANTIAGO GARCIA, JR., respondents.

R E S O L U T I O N

 

FRANCISCO, J.:

The instant controversy involves Lot C of the amended plan Psu-22983 Amd., situated in Barrio Santisima Cruz, Sta. Cruz, Laguna with an area of 273 square meters. The said parcel of land was covered by Transfer Certificate of Title No. T-19175 issued in the name of Santiago Garcia who died on October 2, 1967. Some six years after Santiago Garcia's death, or on March 10, 1973, the then Court of First Instance of Manila issued an order granting Trinidad Estonina's application for a writ of preliminary attachment in Civil Case No. 88430 entitled "Trinidad Estonina et al., plaintiffs -versus-Consuelo Garcia et al., defendants". Consequently, a notice of attachment was inscribed as a memorandum of encumbrance at the back of TCT No. T-19175 in favor of Trinidad Estonina covering all the rights, title, interest, and participation that Consuelo Garcia, the widow of Santiago Garcia, may have in and to the parcel of land covered by the said title.

As a result of a prior sale made by Santiago Garcia to Anselmo Balasoto of a sixty square meter portion of the said parcel of land, TCT. No. T-19175 was cancelled and in lieu thereof, TCT No. 77215 was issued on July 25, 1975 in the name of Santiago Garcia covering the remaining 213 square meters. TCT No. 77215 was in turn cancelled on June 27, 1977 because of another sale purportedly made during his lifetime by Santiago Garcia to his wife's niece, Ofelia Garcia, and TCT No. 82229 was issued in the name of the latter.

On August 14, 1977, the children of Santiago Garcia with his first wife, Adela Isoreta, namely Ofelia, Remedios, Elvira and Castor, all surnamed Garcia, executed a deed selling, transferring and conveying unto the spouses Celso Atayan and Nilda Hicban (hereinafter referred to as the spouses Atayan for brevity) their "title,

rights, interest and participation which is four tenths (4/10) pro indiviso share" in the said parcel of land covered by TCT No. T-82229. About a year after, Santiago Garcia's second wife and widow, Consuelo Garcia and their children, Virgilio, Marilou and Lolita, all surnamed Garcia, followed suit and also sold to the spouses Atayan, their four-tenths (4/10) pro indidviso share in the same parcel of land. On February 22, 1980, Estrella R. Garcia, the widow of Santiago Garcia, Jr. (Santiago Garcia's son from his first marriage), and their children, Roderick, Elizabeth, Dorothy and Erlinda, likewise sold to the spouses Atayan, their one-tenth (1/10) pro indiviso share in the parcel of land covered by TCT No. T-82229. 1

Subsequent to a favorable decision obtained by Trinidad Estonina in Civil Case No. 88430 against Consuelo Garcia, execution pending appeal was made on the parcel of land formerly covered by TCT No. T-19175 (now covered by TCT No. T-82229) on July 20, 1979. The said parcel of land was sold at a public auction where Trinidad Estonina was the highest bidder. Consuelo Garcia appealed the decision in Civil Case No. 88430 before the then Intermediate Appellate Court which, however, ruled in favor of Trinidad Estonina. Thus, on February 29, 1984, the Intermediate Appellate Court rendered a decision declaring "owner's copy of Certificate of Title No. T-82229 a NULLITY and/or CANCELLED". Upon the finality of the said decision, TCT No. T-82229 was cancelled by the Register of Deeds of Laguna and in lieu thereof, TCT No. T-99961 was issued in favor of "Trinidad Estonina married to Paulino Estonina". 2

On July 25, 1985, the spouses Atayan filed a complaint for annulment of sheriff's sale and transfer certificate of title with damages before Branch 28 of the Regional Trial Court (RTC) of Santa Cruz, Laguna, impleading as defendants therein the spouses Trinidad and Paulino Estonina (hereinafter referred to as the spouses Estonina for brevity), Nicanor E. Silvano, Reynaldo G. Javier, Edmund R. Solidum, the Register of Deeds of Laguna, and the heirs of Santiago Garcia who sold to the spouses Atayan their pro indiviso shares in the parcel of land covered by TCT No. T-82229. The complaint prayed:

that the sale at public auction of the parcel of land covered by TCT No. 77215 . . . and the Sheriff's final deed . . . be declared null and void; that the Register of Deeds be ordered to cancel TCT No. T-99961 in the name of Trinidad S. Estonina married to Paulino Estonina . . . ; that the plaintiffs be declared owners of nine-tenths

(9/10) pro indiviso interests, shares and participation in the parcel of land covered by TCT No.T-77215, . . . , and the Register of Deeds ordered to issue a new certificate of title corresponding thereto; and that the defendants Nicanor E. Silvano, Reynaldo G. Javier and Edmund R. Solidum be ordered to pay, jointly and severally, the plaintiffs spouses and (sic) amount of P30,000 for attorney's fees, P15,000 for litigation expenses incurred, P20,000 for moral damages and P15,000 for exemplary damages . . . 3

In their amended answer to the plaintiff's complaint, the spouses Estonina claimed that:

the plaintiffs (spouses Atayan) had acted in bad faith in allegedly purchasing the parcel of land, they being aware that it was the subject of a lawful and valid attachment; that there was no valid extrajudicial settlement of agreement executed by the heirs of Santiago Garcia by which their rights could have been adjusted and settled before doing anything with his property; that the deeds of sale executed by his heirs were anomalous, fictitious and simulated intended to defeat the adverse judgment rendered by the Court against them and the writ of attachment issued pursuant thereto as they were derived from a falsified deed of sale purportedly executed by Santiago Garcia on June 23, 1967; that the property in question is presumed to be conjugal answerable for obligations and liabilities of the conjugal partnership incurred during the existence of the partnership; and that the plaintiffs were guilty of laches (pp. 90-99, rec.). 4

After trial, the RTC rendered a decision dismissing the complaint for lack of merit. It found, among others, that the property covered by TCT No. T-19175 and now covered by TCT No. T-82229, was acquired during the marriage of Santiago Garcia and Consuelo Gaza, and is presumed to be conjugal in nature. Upon the death of Santiago Garcia on October 2, 1967, his conjugal share of one-half (l/2) of the said parcel of land was transmitted to his heirs by intestate succession. By the law on intestate succession, his nine children, five by his first wife and four out of the subsequent marriage, and Consuelo Garcia, his second wife and widow, inherited the same at one-tenth (1/10) each pro indiviso. The remaining one-half (1/2) pertained to the conjugal share of Consuelo Garcia. Thus, inasmuch as Consuelo Garcia inherited one-tenth (1/10) of her husband's conjugal share in the said property and is the owner of one-half (1/2) thereof as her conjugal share, she owns a total of 55% (or 1/10 plus 1/2) of the said parcel of land.5 Finding as

such, the RTC held that what could be attached by the spouses Estonina and later levied on execution and sold at public auction was only Consuelo Garcia's rights and interests which is fifty five per cent (55%) of the property. Thus, the RTC ordered the Register of Deeds of the Province of Laguna, to cancel Transfer Certificate of Title No. T-99961 in the name of TRINIDAD S. ESTONINA, married to Paulino Estonina, and issue another one, also in her name, married to the same person, stating therein that said person is the owner of the property therein covered to the extent of 55% pro indiviso, and the remaining 45% belongs to the heirs of Santiago Garcia pro indiviso. 6

Both the spouses Atayan and the heirs of Santiago Garcia appealed to the herein public respondent Court of Appeals. After a thorough review of the evidence on record, the Court of Appeals concluded that contrary to the finding of the RTC, the parcel of land in question was not the conjugal property of Santiago and Consuelo Garcia, but was the former's exclusive property. It was therefore the entire property that formed part of Santiago Garcia's estate upon his death. When Santiago Garcia died, his nine children and Consuelo Garcia inherited the said property each to the extent of one-tenth (1/10) pro indiviso share. Hence, it was only Consuelo Garcia's one-tenth(l/l0) pro indiviso share in the parcel of land in question which could be validly attached, levied and sold in execution to satisfy the judgment against her and in favor of Trinidad Estonina in Civil Case No. 88430. On August 12, 1993, the Court of Appeals rendered a decision, the dispositive portion of which reads as follows:

WHEREFORE, the judgment appealed from is REVERSED and SET ASIDE. Accordingly, Transfer Certificate of Title No. T-99961, covering Lot 2-C (LRC) Psd 223486, situated in Sta. Cruz, Laguna issued in the name of Trinidad S. Estonina, married to Paulino Estonina . . . , is hereby ordered cancelled and nullified and the Register of Deeds of Laguna ordered to issue another in lieu thereof covering the same parcel of land in the name of Trinidad S. Estonina, widow, one-tenth (1/10) pro indiviso share, and spouses Celso Atayan and Nilda Hicban, nine-tenths (9/10) pro indiviso share. 7

Aggrieved, the spouses Estonina filed this petition and raised the following issues:

I. The Court of Appeals, in declaring the property in question as exclusive property of Santiago Garcia, DISREGARDED the long established doctrine that the trial court's findings especially as to the credibility of the witnesses should be respected.

II. The Court of Appeals, in issuing the questioned decision, solely centered on the nature of the property in question, and conveniently brushed aside the following legal issues raised on appeal (thereby leading to an erroneous judgment), to wit:

(a) That the plaintiffs-appellant (Sps. Atayan and now private respondents) have no cause of action and/or lack cause of action against Estoninas (now petitioners). Assuming, arguendo that they have, the same is now barred by laches. The same is true with the appellants Garcias (now also private respondents). Hence, the title of Estonina should have been declared valid.

(b) That the plaintiffs-appellants (Sps. Atayan and now private respondents) are not parties to Civil Case No. 88430 where the writ of attachment was issued and which resulted in the execution pending appeal. Hence, they cannot attack the validity of the execution in this proceedings especially so when judgment therein had already attained finality.

III. Consequently, by virtue of the foregoing errors, the Court of Appeals erred in not granting herein petitioners' prayer that the trial court's findings be modified by upholding Estonina's title to the property under TCT No. T-99961, and affirming in all other respect the order of the trial court. 8

The settled rule is that the factual findings of the appellate court are deemed conclusive. 9 Thus, the jurisdiction of this Court in cases brought to it from the Court of Appeals is generally limited to the review and revision of errors of law allegedly committed by the appellate court. As such, this Court is generally not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below. 10 This is, however, subject to several exceptions, one of which is when there is a conflict between the factual findings of the Court of Appeals and the trial court, as in this case, warranting a review by this Court of such factual findings. 11

In concluding that the parcel of land in question was the conjugal property of Santiago and Consuelo Garcia, the trial court relied solely

on the fact that when TCT No. T-19175 covering the said land was issued, Santiago Garcia was already married to Consuelo Garcia, thus giving rise to the presumption that the same was indeed conjugal. It found the testimony of Consuelo Garcia that the said property was inherited by Santiago Garcia from his deceased mother to be self-serving and completely disregarded the said testimony. And as regards the inscription at the back of the TCT No. T-19175 that:

[t]he property described in this title is subject to the claims of the heirs of the deceased Eugenia Clemente, within two (2) years from January 27, 1961, in accordance with the provision of Section 4, Rule 74 of the Rules of Court, 12

the trial court held that "there is no showing at all from said inscription that said property came from the parents of Santiago Garcia." 13

On the other hand, the Court of Appeals in taking the stance that the said land was the exclusive property of Santiago Garcia, gave credence to the unrebutted testimony of Consuelo Garcia that the said parcel of land was inherited by Santiago Garcia from his deceased mother Eugenia Clemente and that it used to be part of a big tract of land which was divided among Santiago and his sisters.

The evidence on record as well as established jurisprudence on the matter, lead us to concur with the finding of the Court of Appeals that the property involved in this dispute is indeed the exclusive property of the deceased Santiago Garcia. It has been repeatedly held by this Court that the presumption under Article 160 of the Civil Code that all property of the marriage belong to the conjugal partnership applies only when there is proof that the property was acquired during the marriage. Otherwise stated, proof of acquisition during the marriage is a condition sine qua nonfor the operation of the presumption in favor of the conjugal partnership. 14 In the case at bench, the petitioners have been unable to present any proof that the property in question was acquired during the marriage of Santiago and Consuelo. They anchor their claim solely on the fact that when the title over the land in question was issued, Santiago was already married to Consuelo as evidenced by the registration in the name of "Santiago Garcia married to Consuelo Gaza". This, according to the spouses Estonina, suffices to establish the conjugal nature of the

property. The foregoing contention has no merit. In the case of Jocson v. Court of Appeals 15 we held that:

The certificates of title, however, upon which petitioner rests his claim in insufficient. The fact that the properties were registered in the name of "Emilio Jocson, married to Alejandra Poblete" is no proof that the properties were acquired during the spouses' coverture. Acquisition of title and registration thereof are two different acts. It is well settled that registration does not confer title but merely confirms one already erdsting . . . . It may be that the properties under dispute were acquired by Emilio Jocson when he was still a bachelor but were registered only after his marriage to Alejandra Poblete, which explains why he was described in the certificates of title as married to the latter.

Contrary to petitioner's position, the certificates of title show, on their face, that the properties were exclusively Emilio Jocson's, the registered owner. This is so because the words "married to" preceding "Alejandra Poblete" are merely descriptive of the civil status of Emilio Jocson . . . . In other words, the import from the certificates of title is that Emilio Jocson is the owner of the properties, the same having been registered in his name alone, and that he is married to AlejandraPoblete. 16

Being the exclusive property of Santiago Garcia, it was the entire parcel of land in question that formed part of his estate and which passed to his ten heirs by compulsory succession upon his death. And as correctly held by the Court of Appeals, what could therefore be attached and sold at public auction in Civil Case No. 88430 was only the one-tenth (1/10) pro indiviso share of Consuelo Garcia in the said parcel of land. The sale at public auction of the disputed property in its entirety by the Sheriff in favor of Trinidad Estonina over and above the one-tenth (1/10) share of Consuelo Garcia is null and void, belonging as it does to the other heirs of Santiago Garcia and later to the spouses Atayan. Worth reiterating is the basic precept that the power of the court in the execution of judgments extends only over properties uncluestionably belonging to the judgment debtor. The levy by the sheriff of a property by virtue of a writ of attachment may be considered as made under the authority of the court only when the property levied upon belongs to the defendant. 17 For, as the saying goes, one man's goods shall not be sold for another man's debts. 18

The right of a third-party claimant to file an independent action to vindicate his claim of ownership over the properties seized is reserved by Section 17, Rule 39 of the Rules of Court:

Sec. 17. Proceedings where property claimed by third person. — If property levied on be claimed by any other person than the judgment debtor or his agent, and such person make an affidavit of his title thereto or his right to the possession thereof, stating the grounds of his right or title, and serve the same upon the officer making the levy, and a copy thereof upon the judgment creditor, the officer shall not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution.

The officer is not liable for damages, for the taking or the keeping of the property, to any third-party claimant unless a claim is made by the latter and unless an action for damages is brought by him against the officer within one hundred twenty (120) days from the date of the filing of the bond. But nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property by any other proper action. xxx xxx xxx (Emphasis supplied.)

As stated in the case of Sy v. Discaya, 19 this "proper action" would have for its object the recovery of ownership or possession of the property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and detention thereof despite the third party claim and it may be brought against the sheriff and such other parties as may be alleged to have colluded with him in the supposedly wrongful execution proceedings, such as the judgment creditor himself. Such "proper action", as above pointed out, is and should be an entirely separate and distinct action from that in which execution has issued, if instituted by a stranger to the latter suit. 20

In the case at bench, the filing by the spouses Atayan of an independent action with the court other than the one which issued the writ of execution is proper as they were strangers to Civil Case No. 88430. Such an independent action cannot be considered as an encroachment upon the jurisdiction of a co-equal and coordinate court. 21 While it is true that property in custody of the law may not be interfered with, without the permission of the proper court, this rule is

confined to cases where the property belongs to the defendant or one in which the defendant has proprietary interests. But when the Sheriff, acting beyond the bounds of his office seizes a stranger's property, the rule does not apply and interference with his custody is not interference with another court's custody. 22

The foregoing puts to rest any and all questions raised regarding the propriety of the course of action taken by the spouses Atayan in vindication of their claim over the land in question. Anent the contention that the spouses Atayan are guilty of laches, suffice it to state that this residual argument deserves scant consideration. Being strangers to Civil Case No. 88430 where the writ of execution over the land in question was issued, they cannot be faulted for filing the "proper action" only in 1985 or six (6) years after the levy on execution. Besides, it was only in 1984 that the Court of Appeals rendered a decision finally cancelling the title of their predecessors-in-interest and issuing another one in favor of Trinidad Estonina. The action filed by the spouses Atayan seeking the annulment of the sheriffs sale and the transfer certificate of title with damages immediately thereafter or on July 25, 1985 cannot be considered as undue delay nor does it imply a lack of interest to enforce their claim over the disputed property.

WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals is affirmed in toto. SO ORDERED.

[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.

D E C I S I O N

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 PBMs 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 AIDCs putting up of an P8,000,000.00 bond, a writ of execution dated May 12, 1982 was issued. Thereafter, petitioner Abelardo Magsajo, Sr., Deputy Sheriff of Rizal and appointed sheriff in Civil Case No. 42228, caused the issuance and service upon respondents-spouses of a notice of sheriff sale dated May 20, 1982

on three (3) of their conjugal properties. Petitioner Magsajo then scheduled the auction sale of the properties levied.

On June 9, 1982, private respondents filed a case of injunction against petitioners with the then Court of First Instance of Rizal (Pasig), Branch XIII, to enjoin the auction sale alleging that petitioners cannot enforce the judgment against the conjugal partnership levied on the ground that, among others, the subject loan did not redound to the benefit of the said conjugal partnership.[2] Upon application of private respondents, the lower court issued a temporary restraining order to prevent petitioner Magsajo from proceeding with the enforcement of the writ of execution and with the sale of the said properties at public auction.

AIDC filed a petition for certiorari before the Court of Appeals,[3] questioning the order of the lower court enjoining the sale. Respondent Court of Appeals issued a Temporary Restraining Order on June 25, 1982, enjoining the lower court[4] from enforcing its Order of June 14, 1982, thus paving the way for the scheduled auction sale of respondents-spouses conjugal properties.

On June 25, 1982, the auction sale took place. AIDC being the only bidder, was issued a Certificate of Sale by petitioner Magsajo, which was registered on July 2, 1982. Upon expiration of the redemption period, petitioner sheriff issued the final deed of sale on August 4, 1982 which was registered on August 9, 1983.

In the meantime, the respondent court, on August 4, 1982, decided CA-G.R. SP No. 14404, in this manner:

WHEREFORE, the petition for certiorari in this case is granted and the challenged order of the respondent Judge dated June 14, 1982 in 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. x x x x.[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 claims ownership of the property attached or levied upon, a different legal situation is presented; and that in this case, two (2)

of the real properties are actually in the name of Encarnacion Ching, a non-party to Civil Case No. 42228.

The lower court denied the motion to dismiss. Hence, trial on the merits proceeded. Private respondents presented several witnesses. On the other hand, petitioners did not present any evidence.

On September 18, 1991, the trial court promulgated its decision declaring the sale on execution null and void. Petitioners appealed to the respondent court, which was docketed as CA-G.R. CV No. 29632.

On April 14, 1994, the respondent court promulgated the assailed decision, affirming the decision of the regional trial court. It held that:

The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming Mills and not for the benefit of the conjugal partnership of petitioners-appellees.

x x x x x x x x x

As to the applicable law, whether it is Article 161 of the New Civil Code or Article 1211 of the Family Code-suffice it to say that the two provisions are substantially the same. Nevertheless, We agree with the trial court that the Family Code is the applicable law on the matter x x x x x x.

Article 121 of the Family Code provides that The conjugal partnership shall be liable for: x x x (2) All debts and obligations contracted during the marriage by the designated Administrator-Spouse for the benefit of the conjugal partnership of gains x x x. 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 BY 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 x x x.

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-Perezvs. 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. Osmea,[10] Abella de Diaz vs. Erlanger & Galinger, Inc.,[11] Cobb-Perez vs. Lantin[12] and G-Tractors, Inc. vs. Court of Appeals,[13] cited by the petitioners, we held that:

The debts contracted by the husband during the marriage relation, for and in the exercise of the industry or profession by which he contributes toward the support of his family, are not his personal and private debts, and the products or income from the wifes own property, which, like those of her husbands, 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)

x x x 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 x x x x obligations for the benefit of the conjugal partnership. Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that

such obligation will redound to the benefit of the conjugal partnership.

(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 latters 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 Chings acting as surety redounded to the benefit of the conjugal partnership. The reason for this is as lucidly explained by the respondent court:

The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming Mills and not for the benefit of the conjugal partnership of petitioners-appellees. Philippine Blooming Mills has a personality distinct and separate from the family of petitioners-appellees - this despite the fact that the members of the said family happened to be stockholders of said corporate entity.

x x x x x x x x x

x x x. 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-appellants 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. x x x x x x. [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 husbands 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. Osmea, 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 x x x 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 husbands 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 x x x 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 x x x 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 extended by 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.

x x x 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 suretys 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 husbands 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 partnerships liability is to the extent that the family is benefited.[20]

These are all in keeping with the spirit and intent of the other provisions of the Civil Code which prohibits any of the spouses to donate or convey gratuitously any part of the conjugal property.[21] Thus, when co-respondent Alfredo Ching entered into a surety agreement he, from then on, definitely put in peril the conjugal property (in this case, including the family home) and placed it in danger of being taken gratuitously as in cases of donation.

In the second assignment of error, the petitioner advances the view that acting as surety is part of the business or profession of the respondent-husband.

This theory is new as it is novel.

The respondent court correctly observed that:

Signing as a surety is certainly not an exercise of an industry or profession, hence the cited cases of Cobb-Perez vs. Lantin; Abella de Diaz vs. Erlanger & Galinger; G-Tractors, Inc. vs. CA do not apply in the instant case. Signing as a surety is not embarking in a business.[22]

We are likewise of the view that no matter how often an executive acted or was persuaded to act, as a surety for his own employer, this should not be taken to mean that he had thereby embarked in the business of suretyship or guaranty.

This is not to say, however, that we are unaware that executives are often asked to stand as surety for their companys 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 petitioners 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. 125172. June 26, 1998]Spouses ANTONIO and LUZVIMINDA

GUIANG, petitioners, vs. COURT OF APPEALS and GILDA CORPUZ, respondents.

D E C I S I O N

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 Complaint[3] against her husband Judie Corpuz and Petitioners-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 follows:[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 and 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 and Antonio 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 follows:[6]

WHEREFORE, the appealed decision of the lower court in Civil Case No. 204 is hereby AFFIRMED by this Court. No costs considering plaintiff-appellees 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 RESOLVES 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 property, 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, x x x on March 11, 1990. Plaintiffs 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 wifes 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 Harriet Corpuz went to school at Kings 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 (Joji) 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 ofP30,000.00 of which P5,000.00 was to be paid in June , 1990. Transferor Judie Corpuzs children Junie and Harriet signed the document as witnesses.

Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever defect in defendant Judie Corpuzs 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. Sometime 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 went to the Barangay Captain of Barangay Paulino Santos to question her signature on the amicable settlement. She was referred however to the Officer-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 was 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 educational 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 courts ruling that any alienation or encumbrance by the husband of the conjugal property 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 settlement 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. Whether or not the assailed Deed of Transfer of Rights was validly executed.

II. Whether or not the Court of Appeals erred in not declaring 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 quo which recognized as lawful and valid the ownership and possession of private respondent over the remaining one half (1/2) portion of the subject property.

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 settlement 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 respondents 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:

x x x x x x x x x

(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 respondents 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 were?

A I was still in Manila during that time.

x x x x x x x x x

ATTY. FUENTES:

Q When did you come back to Koronadal, South Cotabato?

A That was on March 11, 1990, Maam.

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 two lower courts:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.(165a) (Italics 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 partnership without the wifes 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 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.

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 wifes consent.

In sum, the nullity of the contract of sale is premised on the absence of private respondents 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 of 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 defendant 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. A contract 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.

Doctrinally and clearly, a void contract cannot be ratified.[16]

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.

FIRST DIVISION  

JOSEFA BAUTISTA FERRER, Petitioner,- versus - SPS. MANUEL M. FERRER& VIRGINIA FERRER andSPS. ISMAEL M. FERRER andFLORA FERRER, Respondents.

  G.R. No. 166496 

  

CHICO-NAZARIO, J.:

 Before this Court is an Appeal by Certiorari which assails the Decision[1] of the Court of Appeals dated 16 August 2004 in CA-G.R. SP No. 78525, reversing and setting aside the Order[2] 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 Complaint[3] 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 couples 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 petitioners 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 Alfredos 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 reasonunder 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 Josefas 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 Alfredos lot. She alleged that the cost of the improvements amounted to P500,000.00; hence, one-half thereof should be reimbursed and paid by respondents as they are now the registered owners of Alfredos 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 Alfredos 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 Alfredos lot has been made in Civil Case No. 61327, and the payment of petitioners share in the conjugal partnership constitutes a separate cause of action. A subsequent Order[11] 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 petitioners 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 129[12] 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 Resolution[14] 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 PETITIONERS 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 petitioners Complaint for failure to state a cause of action.

 Section 1(g) Rule 16[16] 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 petitioners

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 Alfredos lots were deemed as Alfredos exclusive and capital property, the court also held that petitioner, as Alfredos 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 120[22] 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.

 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 petitioners 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 petitioners right to be reimbursed. On this matter, we do not find an act or omission on the part of respondents in violation of petitioners rights. The right of the respondents to acquire as buyers the subject premises from Alfredo under the assailed Deed of Sale in 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 petitioners 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 petitioners rights. As has been shown in the foregoing, no obligation by the respondents under the law exists. Petitioners 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.

 [G.R. No. 140153. March 28, 2001]ANTONIO DOCENA and ALFREDA DOCENA, petitioners, vs. HON. RICARDO P. LAPESURA, in his capacity as Presiding

Judge of the RTC, Branch III, Guian, Eastern Samar; RUFINO M. GARADO, Sheriff IV; and CASIANO HOMBRIA,respondents.

D E C I S I O N

GONZAGA-REYES, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the nullification of the Court of Appeals[1] Resolutions dated June 18, 1999 and September 9, 1999 which dismissed the Petition for Certiorari and Prohibition[2] under Rule 65 and denied the corresponding motion for reconsideration, respectively.

The antecedent facts are as follows:

On June 1, 1977, private respondent Casiano Hombria filed a Complaint for the recovery of a parcel of land against his lessees, petitioner-spouses Antonio and Alfreda Docena.[3] The petitioners claimed ownership of the land based on occupation since time immemorial.[4] A certain Guillermo Abuda intervened in the case. In a Decision dated November 24, 1989, the trial court ruled in favor of the petitioners and the intervenor Abuda.[5] On appeal, the Court of Appeals reversed the judgment of the trial court and ordered the petitioners to vacate the land they have leased from the plaintiff-appellant [private respondent Casiano Hombria], excluding the portion which the petitioners reclaimed from the sea and forms part of the shore, as shown in the Commissioners Report, and to pay the plaintiff-appellant the agreed rental of P1.00 per year from the date of the filing of the Complaint until they shall have actually vacated the premises.[6] The Complaint in Intervention of Abuda was dismissed.[7]

On May 22, 1995, private respondent Hombria filed a Motion for Execution of the above decision which has already become final and executory.[8] The motion was granted by the public respondent judge, and a Writ of Execution was issued therefor. However, the public respondent sheriff subsequently filed a Manifestation requesting that he be clarified in the determination of that particular portion which is sought to be excluded prior to the delivery of the land adjudged in

favor of plaintiff Casiano Hombria in view of the defects in the Commissioners Report and the Sketches attached thereto.[9] After requiring the parties to file their Comment on the sheriffs Manifestation, the public respondent judge, in a Resolution dated August 30, 1996, held that xxx no attempt should be made to alter or modify the decision of the Court of Appeals. What should be delivered therefore to the plaintiff xxx is that portion leased by the defendant-appellees from the plaintiff-appellant excluding the portion that the defendant-appellee have reclaimed from the sea and forms part of the shore as shown in the commissioners report xxx.[10] Pursuant to the Resolution, the public respondent sheriff issued an alias Writ of Demolition. The petitioners filed a Motion to Set Aside or Defer the Implementation of Writ of Demolition. This motion was denied by the public respondent judge in an Order dated November 18, 1998, a copy of which was received by the petitioners on December 29, 1998.[11] Also on December 29, 1998, the public respondent judge, in open court, granted the petitioners until January 13, 1999 to file a Motion for Reconsideration.[12] On January 13, 1999, petitioners moved for an extension of the period to file a motion for reconsideration until January 28, 1999.[13] The motion was finally filed by the petitioners on January 27, 1999, but was denied by the trial court in an Order dated March 17, 1999.[14] A copy of the Order was received by the petitioners on May 4, 1999.[15]

A Petition for Certiorari and Prohibition was filed by the petitioners with the Court of Appeals, alleging grave abuse of discretion on the part of the trial court judge in issuing the Orders dated November 18, 1998 and March 17, 1999, and of the sheriff in issuing the alias Writ of Demolition. In a Resolution dated June 18, 1999, the Court of Appeals dismissed the petition on the grounds that the petition was filed beyond the 60-day period provided under Section 4 of Rule 65 of the 1997 Revised Rules of Civil Procedure as amended by Bar Matter No. 803 effective September 1, 1998, and that the certification of non-forum shopping attached thereto was signed by only one of the petitioners.[16] The Motion for Reconsideration filed by the petitioners was denied by the Court of Appeals in a Resolution dated September 9, 1999.[17]

Hence this petition.

The sole issue in this case is whether or not the Court of Appeals erred in dismissing the Petition for Certiorari and Prohibition.

The petition is meritorious.

The Court of Appeals dismissed the Petition for Certiorari upon the following grounds, viz: (1) the petition was filed beyond the 60-day period provided under Sec. 4, Rule 65 of the 1997 Revised Rules of Civil Procedure as amended by Bar Matter No. 803 effective September 1, 1998; and (2) the certification of non-forum shopping was signed by only one of the petitioners.

Upon the first ground, the Court of Appeals stated in its Resolution dated June 18, 1999 that:

xxx the 60-day period is counted not from the receipt of the Order denying their Motion for Reconsideration but from the date of receipt of the Order of November 18, 1998 which was on December 29, 1998, interrupted by the filing of the Motion for Reconsideration on January 27, 1999. The Motion for Reconsideration was denied in an Order dated March 17, 1999 received by the petitioners on May 4, 1999. Counting the remaining period, this petition should have been filed on June 4, 1999 but it was filed only on June 14, 1999 or ten (10) days beyond the 60-day period computed in accordance with Bar Matter No. 803. xxx xxx xxx[18]

The petitioners agree that the counting of the 60-day period should commence on December 29, 1998, the date of the receipt by the petitioners of the assailed trial court order, interrupted by the filing of a motion for reconsideration on January 27, 1999, and resume upon receipt by the petitioners of the denial of the motion by the trial court on May 4, 1999; however, the petitioners contend that from December 29, 1998 up to January 27, 1999, only the 15-day period allowed for the filing of a motion for reconsideration[19] should be deemed to have elapsed considering the grant by the trial court of an extension of the period to file the motion until January 13, 1999. Hence, on May 4, 1999, the petitioners still had 45 days to file a petition for certiorari and/or prohibition, and the filing made on June 14, 1999 was timely.

We hold that the Petition for Certiorari and Prohibition has been timely filed.

A.M. No. 00-2-03-SC, which took effect on September 1, 2000, amended Section 4 of Rule 65 of the 1997 Revised Rules of Civil Procedure[20] to provide thus:

SEC. 4. When and where petition filed.-- The petition shall be filed not later than sixty (60) days from notice of the judgment, order or

resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no case exceeding fifteen (15) days. [Emphasis ours]

In the case of Systems Factors Corporation versus NLRC,[21] we held that the abovequoted Resolution, being procedural in nature, is applicable to actions pending and undetermined at the time of their passage. The retroactive application of procedural laws such as this Resolution is not violative of any right of a person who may feel adversely affected thereby, as no vested right may attach to nor arise from procedural laws.[22] The ruling in the Systems Factors case was reiterated in the recent case of Unity Fishing Development Corporation, et. al. vs. Court of Appeals, et. al.[23] Applying the Resolution to the case at bar, the 60-day period for the filing of a petition for certiorari and prohibition should be reckoned from the date of receipt of the order denying the motion for reconsideration, i.e., May 4, 1999, and thus, the filing made on June 14, 1999 was well within the 60-day reglementary period.

Anent the ground that the certification of non-forum shopping was signed by only one of the petitioners, it is the contention of the petitioners that the same is sufficient compliance with the requirements of Sections 1 and 2 of Rule 65 (Petition for Certiorari and Prohibition) in relation to Section 3 of Rule 46(Original Cases Filed in the Court of Appeals). The petitioners argue that since they are spouses with joint or indivisible interest over the alleged conjugal property subject of the original action which gave rise to the petition for certiorari and prohibition, the signing of the certificate of non-forum shopping by only one of them would suffice, especially

considering the long distance they had to travel just to sign the said certificate.[24] Moreover, there is substantial compliance with the Rules of Court where the certification was signed by the husband who is the statutory administrator of the conjugal property.[25]

It has been our previous ruling that the certificate of non-forum shopping should be signed by all the petitioners or plaintiffs in a case, and that the signing by only one of them is insufficient. In the case of Efren Loquias, et. al. vs. Office of the Ombudsman, et. al.,[26] we held that the signing of the Verification and the Certification on Non-Forum Shopping by only one of the petitioners constitutes a defect in the petition.[27] The attestation contained in the certification on non-forum shopping requires personal knowledge by the party executing the same,[28] and the lone signing petitioner cannot be presumed to have personal knowledge of the filing or non-filing by his co-petitioners of any action or claim the same as or similar to the current petition. To merit the Courts consideration, petitioners must show reasonable cause for failure to personally sign the certification.

In the case at bar, however, we hold that the subject Certificate of Non-Forum Shopping signed by the petitioner Antonio Docena alone should be deemed to constitute substantial compliance with the rules.[29] There are only two petitioners in this case and they are husband and wife. Their residence is the subject property alleged to be conjugal in the instant verified petition. The Verification/Certification on Non-Forum Shopping[30] attached to the Petition for Certiorari and Prohibition was signed only by the husband who certified, inter alia, that he and his wife have not commenced any other action or proceeding involving the same issues raised in the petition in any court, tribunal or quasi-judicial agency; that to the best of their knowledge no such action is pending therein; and that he and his wife undertake to inform the Court within five (5) days from notice of any similar action or proceeding which may have been filed.

The property subject of the original action for recovery is conjugal. Whether it is conjugal under the New Civil Code or the Family Code, a fact that cannot be determined from the records before us, it is believed that the certificate on non-forum shopping filed in the Court of Appeals constitutes sufficient compliance with the rules on forum-shopping.

Under the New Civil Code, the husband is the administrator of the conjugal partnership.[31] In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join him in this

endeavor.[32] The husband may defend the conjugal partnership in a suit or action without being joined by the wife.[33]Corollarily, the husband alone may execute the necessary certificate of non-forum shopping to accompany the pleading. The husband as the statutory administrator of the conjugal property could have filed the petition for certiorari and prohibition[34] alone, without the concurrence of the wife. If suits to defend an interest in the conjugal properties may be filed by the husband alone, with more reason, he may sign the certificate of non-forum shopping to be attached to the petition.

Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly.[35] However, unlike an act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act together. Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article 124 of the Family Code.[36] It is believed that even under the provisions of the Family Code, the husband alone could have filed the petition for certiorari and prohibition to contest the writs of demolition issued against the conjugal property with the Court of Appeals without being joined by his wife. The signing of the attached certificate of non-forum shopping only by the husband is not a fatal defect.

More important, the signing petitioner here made the certification in his behalf and that of his wife. The husband may reasonably be presumed to have personal knowledge of the filing or non-filing by his wife of any action or claim similar to the petition for certiorari and prohibition given the notices and legal processes involved in a legal proceeding involving real property. We also see no justifiable reason why he may not lawfully undertake together with his wife to inform the court of any similar action or proceeding which may be filed. If anybody may repudiate the certification or undertaking for having been incorrectly made, it is the wife who may conceivably do so.

In view of the circumstances of this case, namely, the property involved is a conjugal property, the petition questioning the writ of demolition thereof originated from an action for recovery brought against the spouses, and is clearly intended for the benefit of the conjugal partnership, and the wife, as pointed out in the Motion for Reconsideration in respondent court, was in the province of Guian, Samar, whereas the petition was prepared in Metro Manila, a rigid

application of the rules on forum shopping that would disauthorize a husbands signing the certification in his behalf and that of his wife is too harsh and is clearly uncalled for.

It bears stressing that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective.[37]

The petitioners motion for the issuance of a temporary restraining order to put on hold the demolition of the subject property is principally anchored on their alleged right to the nullification of the assailed orders and writs issued by the public respondents.[38] As the existence of the right being asserted by the petitioners is a factual issue proper for determination by the Court of Appeals, the motion based thereon should likewise be addressed to the latter court.

WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of Appeals Resolutions dated June 18, 1999 and September 9, 1999 are hereby SET ASIDE and the case is REMANDED to the Court of Appeals for further proceedings. SO ORDERED.

[G.R. No. 147978. January 23, 2002]zTHELMA A. JADER-MANALO, petitioner, vs. NORMA

FERNANDEZ C. CAMAISA and EDILBERTO CAMAISA,respondents.

D E C I S I O N

KAPUNAN, J.:

The issue raised in this case is whether or not the husband may validly dispose of a conjugal property without the wifes 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 P1,500,000.00 for the Taytay property and P2,100,000.00 for the Makati property[4] to be paid on installment basis withdownpayments of P100,000.00 and P200,000.00, respectively, on April 15, 1992. The balance thereof was to be paid as follows[5]:

Taytay Property Makati Property

6th month P200,000.00 P300,000.0012th month 700,000.00 1,600,000.00

18th month 500,000.00

This agreement was handwritten by petitioner and signed by Edilberto.[6] When petitioner pointed out the conjugal nature of the properties,Edilberto assured her of his wifes conformity and consent to the sale.[7] The formal typewritten Contracts to Sell were thereafter prepared by petitioner. The following day, petitioner, the real estate broker and Edilberto met in the latters office for the formal signing of the typewritten Contracts to Sell.[8] After Edilberto signed the contracts, petitioner delivered to him two checks, namely, UCPB Check No. 62807 dated April 15, 1992 for P200,000.00 and UCPB Check No. 62808 also dated April 15, 1992 for P100,000.00 in the presence of the real estate broker and an employee in Edilbertos office.[9] The contracts were given to Edilberto for the formal affixing of his wifes 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 inMakati.[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 Edilbertos office for the formal affixing of Normas 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 Normas 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 Dismiss[14] 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 theacceptance 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 Judgment[21] asserting that there is no genuine issue as to any material fact on the basis of the pleadings and admission of the parties considering that the wifes 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 courts 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 (P50,000.00) as Moral Damages and FIFTY THOUSAND (P50,000.00) as Attorneys 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 P50,000.00 as damages and P50,000.00 as attorneys 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 consentof 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 husbands decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

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

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. 43421AFFIRMED. SO ORDERED.

 [G.R. No. 146504. April 9, 2002]HONORIO L. CARLOS, petitioner, vs. MANUEL T.

ABELARDO, respondent.

KAPUNAN, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is the decision of the Court of Appeals dated November 10, 2000 in CA-G.R. CV No. 54464 which reversed and set aside the decision of the Regional Trial Court of Valenzuela,

Branch 172, and dismissed for insufficiency of evidence the complaint for a sum of money and damages filed by herein petitioner Honorio Carlos against respondent Manuel Abelardo, his son-in-law, and the latters wife, Maria Theresa Carlos-Abelardo.

Petitioner averred in his complaint filed on October 13, 1994 that in October 1989, respondent and his wife Maria Theresa Carlos-Abelardo approached him and requested him to advance the amount of US$25,000.00 for the purchase of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila. To enable and assist the spouses conduct their married life independently and on their own, petitioner, in October 31, 1989, issued a check in the name of a certain Pura Vallejo, seller of the property, who acknowledged receipt thereof.[1]

When petitioner inquired from the spouses in July 1991 as to the status of the amount he loaned to them, the latter acknowledged their obligation but pleaded that they were not yet in a position to make a definite settlement of the same.[2] Thereafter, respondent expressed violent resistance to petitioners inquiries on the amount to the extent of making various death threats against petitioner.[3]

On August 24, 1994, petitioner made a formal demand for the payment of the amount of US$25,000.00 but the spouses failed to comply with their obligation.[4] Thus, on October 13, 1994, petitioner filed a complaint for collection of a sum of money and damages against respondent and his wife before the Regional Trial Court of Valenzuela, Branch 172, docketed as Civil Case No. 4490-V-94. In the complaint, petitioner asked for the payment of the US$25,000.00 or P625,000.00, its equivalent in Philippine currency plus legal interest from date of extra-judicial demand.[5] Petitioner likewise claimed moral and exemplary damages, attorneys fees and costs of suit from respondent.[6]

As they were separated in fact for more than a year prior to the filing of the complaint, respondent and his wife filed separate answers. Maria Theresa Carlos-Abelardo admitted securing a loan together with her husband, from petitioner.[7] She claimed, however, that said loan was payable on a staggered basis so she was surprised when petitioner demanded immediate payment of the full amount.[8]

In his separate Answer, respondent admitted receiving the amount of US$25,000.00 but claimed that:

xxx

a. Defendant (respondent) xxx revived that otherwise dormant construction firm H.L. CARLOS CONSTRUCTION of herein plaintiff which suffered tremendous setback after the assassination of Senator Benigno Aquino;

b. Working day and night and almost beyond human endurance, defendant devoted all his efforts and skill, used all his business and personal connection to be able to revive the construction business of plaintiff;

c. Little-by-little, starting with small construction business, defendant was able to obtain various construction jobs using the name H.L. CARLOS CONSTRUCTION and the income derived therefrom were deposited in the name of such firm of plaintiff,

d. Defendant xxx was made to believe that the earnings derived from such construction will be for him and his family since he was the one working to secure the contract and its completion, he was allowed to use the facilities of the plaintiff;

e. The plaintiff seeing the progress brought about by defendant xxx to his company proposed a profit sharing scheme to the effect that all projects amounting to more than P10 million shall be for the account of plaintiff; lower amount shall be for defendants account but still using H.L. CARLOS CONSTRUCTION.

f. But, to clear account on previous construction contracts that brought income to H.L.CARLOS CONSTRUCTION, out of which defendant derived his income, plaintiff gave the amount of US$25,000.00 to defendant to square off account and to start the arrangement in paragraph (e) supra;

g. That, the said US$25,000.00 was never intended as loan of defendant. It was his share of income on contracts obtained by defendant; xxx [9]

Respondent denied having made death threats to petitioner and by way of compulsory counterclaim, he asked for moral damages from petitioner for causing the alienation of his wifes love and affection, attorneys fees and costs of suit. [10]

On June 26, 1996, the Regional Trial Court rendered a decision in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Ordering the defendants to pay plaintiff the amount of US$25,000.00 or its equivalent in Philippine Currency at the time of its payment, plus legal interest thereon from August 24, 1994 until fully paid;

2. Ordering the defendant Manuel T.Abelardo to pay the plaintiff the amount of P500,000.00 representing moral damages and the further amount of P50,000.00 as exemplary damages; and

3. Ordering the defendants to pay the plaintiff the amount of P100,000.00 as attorneys fees, plus the costs of suit.

SO ORDERED. [11]

Respondent appealed the decision of the trial court to the Court of Appeals. On November 10, 2000, the Court of Appeals reversed and set aside the trial courts decision and dismissed the complaint for insufficiency of evidence to show that the subject amount was indeed loaned by petitioner to respondent and his wife. The Court of Appeals found that the amount of US$25,000.00 was respondents share in the profits of H.L. Carlos Construction. The dispositive portion of the Court of Appeals decision states:

WHEREFORE, premises considered, the Decision of the Regional Trial Court of Valenzuela, Branch 172 in Civil Case No. 4490-V-94 is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the Complaint for insufficiency of evidence.

The claim for damages by defendant-appellant is likewise DISMISSED, also for insufficiency of evidence, because of his failure to present substantial evidence to prove that plaintiff-appellee caused the defendant-spouses separation.

Costs against the plaintiff-appellee.

SO ORDERED. [12]

A motion for reconsideration of the above decision having been denied on, petitioner brought this appeal assigning the following errors:

THE COURT OF APPEALS ERRED IN FINDING INSUFFICIENT EVIDENCE TO PROVE THAT THE AMOUNT OF US$25,000.00

WAS A LOAN OBTAINED BY PRIVATE RESPONDENT AND HIS WIFE FROM PETITIONER.

THE COURT OF APPEALS ERRED IN HOLDING THAT THE US$25,000.00 WAS GIVEN AS PRIVATE RESPONDENTS SHARE IN THE PROFITS OF H.L. CARLOS CONSTRUCTION, INC. AND THAT THE FILING OF THE COMPLAINT IS A HOAX.

THE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF DAMAGES FOR LACK OF PROOF THEREOF.

We find merit in the petition.

As gleaned from the records, the following facts are undisputed: (1) there was a check in the amount of US$25,000.00 issued by petitioner; (2) this amount was received by respondent and his wife and given to a certain Pura Vallejo for the full payment of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila; (3) this house and lot became the conjugal dwelling of respondent and his wife; and (4) respondents wife executed an instrument acknowledging the loan but which respondent did not sign.

To prove his claim that the amount was in the nature of a loan or an advance he extended to respondent and his wife, petitioner presented Bankers Trust Check No. 337 in the amount of US$25,000.00 he issued on October 31, 1989 to Pura Vallejo. [13] He also introduced in evidence an instrument executed by respondents wife on July 31, 1991 acknowledging her and her husbands accountability to petitioner for the said amount which was advanced in payment of a house and lot located at #19952 Chestnut Street, Executive Heights Subdivision, Paranaque. [14] A formal demand letter by counsel for petitioner dated August 24, 1994 sent to and received by respondent was also on record. [15]

All these pieces of evidence, taken together with respondents admission that he and his wife received the subject amount and used the same to purchase their house and lot, sufficiently prove by a preponderance of evidence petitioners claim that the amount of US$25,000.00 was really in the nature of a loan.

Respondent tried to rebut petitioners evidence by claiming that the US$25,000.00 was not a loan but his share in the profits of H.L. Carlos Construction. He alleged that he received money from

petitioner amounting to almost P3 million as his share in the profits of the corporation. To prove this, he presented ten (10) Bank of the Philippine Islands (BPI) checks allegedly given to him by petitioner.[16] He argued that if indeed, he and his wife were indebted to petitioner, the latter could have easily deducted the amount of the said loan from his share of the profits.

Respondent fails to convince this Court.

All the checks presented by respondent, which he claims to be his share in the profits of petitioners company, were all in the account of H.L. Carlos Construction.[17] On the other hand, the Bankers Trust Check in the amount of US$25,000.00 was drawn from the personal account of petitioner.[18] Assuming to be true that the checks presented by respondent were his profits from the corporation, then all the more does this prove that the amount of US$25,000.00 was not part of such profits because it was issued by petitioner from his own account. Indeed, if such amount was respondents share of the profits, then the same should have been issued under the account of H.L. Carlos Construction.

Moreover, respondent failed to substantiate his claim that he is entitled to the profits and income of the corporation. There was no showing that respondent was a stockholder of H.L. Carlos Construction. His name does not appear in the Articles of Incorporation as well as the Organizational Profile of said company either as stockholder or officer.[19] Not being a stockholder, he cannot be entitled to the profits or income of said corporation. Neither did respondent prove that he was an employee or an agent so as to be entitled to salaries or commissions from the corporation.

We quote with favor the disquisition of the trial court on this point:

Early in time, it must be noted that payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family. The defendants never denied that the check of US$25,000.00 was used to purchase the subject house and lot. They do not deny that the same served as their conjugal home, thus benefiting the family. On the same principle, acknowledgment of the loan made by the defendant-wife binds the conjugal partnership since its proceeds redounded to the benefit of the family. Hence, defendant-husband and defendant-wife are jointly and severally liable in the payment of the loan.

Defendant-husband cannot allege as a defense that the amount of US $25,000.00 was received as his share in the income or profits of the corporation and not as a loan. Firstly, defendant-husband does not appear to be a stockholder nor an employee nor an agent of the corporation, H. L. Carlos Construction, Inc. Since he is not a stockholder, he has no right to participate in the income or profits thereof. In the same manner that as he is not an employee nor an agent of H. L. Carlos Construction, Inc., he has no right to receive any salary or commission therefrom. Secondly, the amount advanced for the purchase of the house and lot came from the personal account of the plaintiff. If, indeed, it was to be construed as defendant-husbands share in the profits of the corporation, the checks should come from the corporations account and not from the plaintiffs personal account, considering that the corporation has a personality separate and distinct from that of its stockholders and officers.

Even granting that the checks amount to US $3,000.000.00 given by the plaintiff to the defendant-spouses was their share in the profits of the corporation, still there is no sufficient evidence to establish that the US $25,000.00 is to be treated similarly. Defendant-husband in invoking the defense of compensation argued that if indeed they were indebted to the plaintiff, the latter could have applied their share in the proceeds or income of the corporation to the concurrent amount of the alleged loan, instead of giving the amount of P3,000,000.00 to them. This argument is untenable. Article 1278 of the Civil Code provides that compensation shall take place when two persons, in their own right, are debtors and creditors of each other. As its indicates, compensation is a sort of balancing between two obligations. In the instant case, the plaintiff and the defendant-husband are not debtors and creditors of each other. Even granting that the defendant-husbands claim to the profits of the corporation is justified, still compensation cannot extinguish his loan obligation to the plaintiff because under such assumption, the defendant is dealing with the corporation and not with the plaintiff in his personal capacity. Hence, compensation cannot take place.

The Court of Appeals, thus, erred in finding that respondents liability was not proved by preponderance of evidence. On the contrary, the evidence adduced by petitioner sufficiently established his claim that the US$25,000.00 he advanced to respondent and his wife was a loan.

The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family Code:

Article 121. The conjugal partnership shall be liable for: xxx

(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other;

(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited;

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties. xxx

While respondent did not and refused to sign the acknowledgment executed and signed by his wife, undoubtedly, the loan redounded to the benefit of the family because it was used to purchase the house and lot which became the conjugal home of respondent and his family. Hence, notwithstanding the alleged lack of consent of respondent, under Art. 21 of the Family Code, he shall be solidarily liable for such loan together with his wife.

We also find sufficient basis for the award of damages to petitioner, contrary to the findings of the Court of Appeals that petitioner is not entitled thereto.

Petitioners allegations of verbal and written threats directed against him by respondent is duly supported by evidence on record. He presented two witnesses, Irineo Pajarin and Randy Rosal, who testified on separate incidents where threats were made by respondent against petitioner.

Randy Rosal, driver of petitioner, declared that around three o clock in the afternoon of September 15, 1991, he was sent by respondents wife on an errand to deliver the acknowledgment letter to respondent for him to sign. Respondent did not sign the acknowledgment and instead, wrote a letter addressed to petitioner threatening him. He narrated what took place thereafter: xxx

Q When you were requested by Ma. Theresa C. Abelardo to bring a letter to herein defendant Manuel Abelardo for him to sign the same, do you know whether that letter was actually signed by Manuel Abelardo?

A No, sir. XxxQ And what happened when Manuel Abelardo refused to sign that letter coming from the other defendant?A He made me wait and he prepared a letter to Mr. Honorio Carlos, sir. XxxQ Where were you at the time when this defendant Manuel Abelardo prepared this letter?A In his house, sir.Q And where did he actually prepare that letter?A At the dining table, sir.Q How far were you from Manuel Abelardo from the dining table at the time when he was preparing a letter.A Around 1 meter, sir.Q And do you know where in, what particular paper did Mr. Abelardo prepare or write this letter?A He wrote it in a Manila envelope, sir. XxxQ What happened after Manuel Abelardo prepared this letter in a Manila envelope?A He got a small envelope and placed there the name of Mr. Carlos as the addressee, sir. XxxQ After preparing this letter on a Manila envelope and then getting another envelope and writing on it the address of herein plaintiff, what did the defendant Manuel Abelardo do, if any?A He instructed me to mail the letter which he prepared, sir. XxxQ And did you actually accede to the request of herein defendant Manuel Abelardo for you to mail that letter to Engr. Carlos?A I got the envelope but I did not mail it, sir. XxxQ May we know from you the reason why you did not mail said letter?A Because Engr. Carlos might become frightened, sir.Q What did you do with that letter, although you did not mail it?A I kept it, sir. XxxQ And what did you do next after keeping the letter for several days?A I gave the letter personally to Engr. Carlos, sir.Q What prompted you to give that letter to Engr. Carlos instead of mailing it?A So that Engr. Carlos can prepare, sir. xxx [20]

This incident was duly entered and recorded in the Police Blotter on October 7, 1991 by a certain Sgt. Casile of the Valenzuela Police Station. [21] A photocopy of this written threat was also attached to the Police Report and presented in evidence. [22]

Another witness, Irineo Pajarin, recounted an incident which occurred in the afternoon of May 25, 1994, to wit: xxx

Q Now Mr. Witness, on May 25, 1994 at around 2:30 in the afternoon do you recall where you were on that particular date and time?A I was at B.F. Homes, Paranaque, sir.Q What were you doing at that time?A I was waiting for Sargie Cornista, sir. XxxQ Will you please narrate to this Honorable Court that unusual incident?A Manuel Abelardo passed by and when he saw me he called me. I approached him while he was then on board his car and asked me who was my companion, sir.Q And what was your answer to him?A I told him it was Sargie, sir.Q And what was his reply if any?A He again asked me if I have in my company one of his children, sir.Q What was your reply?A I answered none, sir.Q Incidentally Mr. Witness, where or in what particular place did this conversation between you and Manuel T. Abelardo take place?A Parking Area of Academy I, Gov. Santos corner Aguirre St., sir.Q Now, what else happened after you talk[ed] with this Manuel T. Abelardo?A He said I may be fooling him because he said I once fooled him when I ran away with his children which he is going to take back, sir.Q And what was your reply to that?A I answered I did not do that and he said that once he discovered that I did it he would box me, sir.Q What else if any did he tell you at that time?A He asked me who instructed me, sir.Q Instructed you about what?A To run away with the children, sir.Q And what was your reply?A None, he was the one who said was it your Ate Puppet? But I did not answer, sir.Q What happened next when you failed to answer?A Or my father in law?Q And when he said his father in law to whom was he referring at that time?A Mr. Honorio Carlos, sir.Q After mentioning the name of his father-in-law Mr. Honorio Carlos what happened next?A He told me Sabihin mo sa biyenan ko babarilin ko siya pag nakita ko siya.Q Where was Manuel Abelardo at that particular time when he told this threatening remark against Honorio Carlos?A He was inside his car in Aguirre St., sir.Q How about you where were you approximately at that particular time when he narrated that message to you threatening the herein plaintiff?A I was outside looking in his vehicle at Aguirre St., sir. XxxQ And what was your reply or reaction when he made this threatening remarks?A None, because he left. I was left behind, sir. [23]

This testimony was in part corroborated by an entry dated May 28, 1994 in the Police Blotter of the Paranaque Police Station narrating the aforementioned incident. [24]

The testimonies of these witnesses on the two separate incidents of threat are positive, direct and straightforward. Petitioner also declared on the witness stand that on several occasions, he received telephone calls from respondent cursing and threatening him. [25] These incidents of threat were also evidenced by a letter written by respondents wife and addressed to her father-in-law (father of respondent).[26] The letter recounted the instances when threats were made by her husband against petitioner, particularly, the incident reported by Pajarin and the threats made by respondent through the telephone. [27]

All these circumstances sufficiently establish that threats were directed by respondent against petitioner justifying the award of moral damages in favor of petitioner. However, the Court finds the amount of P500,000.00 as moral damages too exorbitant under the circumstances and the same is reduced toP50,000.00. The exemplary damages and attorneys fees are likewise reduced to P20,000.00 and P50,000.00, respectively.

WHEREFORE, the petition is hereby GRANTED and the decision of the Court of Appeals in CA GR-CV No. 54464 is MODIFIED in that respondent is ordered to pay petitioner the amounts of (1) US$25,000 or its equivalent in Philippine currency at the time of payment, plus legal interest from August 4, 1994, until fully paid; (2) P50,000.00 as moral damages; (3) P20,000.00 as exemplary damages; and (4) P50,000.00 as attorneys fees. SO ORDERED.

[G.R. No. 138497. January 16, 2002]IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA

LOPEZ, respondent.PARDO, J.:

The Case

The case is a petition for review on certiorari[1] seeking to set aside the decision[2] of the Court of Appeals that denied a petition

for certiorariassailing the trial courts order denying petitioners motion to dismiss the case against her inclusion as party defendant therein.

The Facts

The facts, as found by the Court of Appeals, are as follows:

On September 15, 1993, herein private respondent Angelina Mejia Lopez (plaintiff below) filed a petition for APPOINTMENT AS SOLE ADMINISTRATRIX OF CONJUGAL PARTNERSHIP OF PROPERTIES, FORFEITURE, ETC., against defendant Alberto Lopez and petitioner Imelda Relucio, docketed as Spec. Proc. M-3630, in the Regional Trial Court of Makati, Branch 141. In the petition, private-respondent alleged that sometime in 1968, defendant Lopez, who is legally married to the private respondent, abandoned the latter and their four legitimate children; that he arrogated unto himself full and exclusive control and administration of the conjugal properties, spending and using the same for his sole gain and benefit to the total exclusion of the private respondent and their four children; that defendant Lopez, after abandoning his family, maintained an illicit relationship and cohabited with herein petitioner since 1976.

It was further alleged that defendant Lopez and petitioner Relucio, during their period of cohabitation since 1976, have amassed a fortune consisting mainly of stockholdings in Lopez-owned or controlled corporations, residential, agricultural, commercial lots, houses, apartments and buildings, cars and other motor vehicles, bank accounts and jewelry. These properties, which are in the names of defendant Lopez and petitioner Relucio singly or jointly or their dummies and proxies, have been acquired principally if not solely through the actual contribution of money, property and industry of defendant Lopez with minimal, if not nil, actual contribution from petitioner Relucio.

In order to avoid defendant Lopez obligations as a father and husband, he excluded the private respondent and their four children from sharing or benefiting from the conjugal properties and the income or fruits there from. As such, defendant Lopez either did not place them in his name or otherwise removed, transferred, stashed

away or concealed them from the private-respondent. He placed substantial portions of these conjugal properties in the name of petitioner Relucio.

It was also averred that in the past twenty five years since defendant Lopez abandoned the private-respondent, he has sold, disposed of, alienated, transferred, assigned, canceled, removed or stashed away properties, assets and income belonging to the conjugal partnership with the private-respondent and either spent the proceeds thereof for his sole benefit and that of petitioner Relucio and their two illegitimate children or permanently and fraudulently placed them beyond the reach of the private-respondent and their four children.

On December 8, 1993, a Motion to Dismiss the Petition was filed by herein petitioner on the ground that private respondent has no cause of action against her.

An Order dated February 10, 1994 was issued by herein respondent Judge denying petitioner Relucios Motion to Dismiss on the ground that she is impleaded as a necessary or indispensable party because some of the subject properties are registered in her name and defendant Lopez, or solely in her name.

Subsequently thereafter, petitioner Relucio filed a Motion for Reconsideration to the Order of the respondent Judge dated February 10, 1994 but the same was likewise denied in the Order dated May 31, 1994.[3]

On June 21, 1994, petitioner filed with the Court of Appeals a petition for certiorari assailing the trial courts denial of her motion to dismiss.[4]

On May 31, 1996, the Court of Appeals promulgated a decision denying the petition.[5] On June 26, 1996, petitioner filed a motion for reconsideration.[6] However, on April 6, 1999, the Court of Appeals denied petitioners motion for reconsideration.[7]

Hence, this appeal.[8]

The Issues

1. Whether respondents petition for appointment as sole administratrix of the conjugal property, accounting, etc. against her husband Alberto J. Lopez established a cause of action against petitioner.

2. Whether petitioners inclusion as party defendant is essential in the proceedings for a complete adjudication of the controversy.[9]

The Courts Ruling

We grant the petition. We resolve the issues in seriatim.

First issue: whether a cause of action exists against petitioner in the proceedings below. A cause of action is an act or omission of one party the defendant in violation of the legal right of the other.[10] The elements of a cause of action are:

(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) an 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.[11]

A cause of action is sufficient if a valid judgment may be rendered thereon if the alleged facts were admitted or proved.[12]

In order to sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been merely defectively stated or is ambiguous, indefinite or uncertain.[13]

Hence, to determine the sufficiency of the cause of action alleged in Special Proceedings M-3630, we assay its allegations.

In Part Two on the Nature of [the] Complaint, respondent Angelina Mejia Lopez summarized the causes of action alleged in the complaint below.

The complaint is by an aggrieved wife against her husband.

Nowhere in the allegations does it appear that relief is sought against petitioner. Respondents causes of action were all against her husband.

The first cause of action is for judicial appointment of respondent as administratrix of the conjugal partnership or absolute community property arising from her marriage to Alberto J. Lopez. Petitioner is a complete stranger to this cause of action. Article 128 of the Family Code refers only to spouses, to wit:

If a spouse without just cause abandons the other or fails to comply with his or her obligations to the family, the aggrieved spouse may petition the court for receivership, for judicial separation of property, or for authority to be the sole administrator of the conjugal partnership property xxx

The administration of the property of the marriage is entirely between them, to the exclusion of all other persons. Respondent alleges that Alberto J. Lopez is her husband. Therefore, her first cause of action is against Alberto J. Lopez. There is no right-duty relation between petitioner and respondent that can possibly support a cause of action. In fact, none of the three elements of a cause of action exists.

The second cause of action is for an accounting by respondent husband.[14] The accounting of conjugal partnership arises from or is an incident of marriage.

Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez. Hence, no cause of action can exist against petitioner on this ground.

Respondents alternative cause of action is for forfeiture of Alberto J. Lopez share in the co-owned property acquired during his illicit relationship and cohabitation with [petitioner][15] and for the dissolution of the conjugal partnership of gains between him [Alberto J. Lopez] and the [respondent].

The third cause of action is essentially for forfeiture of Alberto J. Lopez share in property co-owned by him and petitioner. It does not involve the issue of validity of the co-ownership between Alberto J. Lopez and petitioner. The issue is whether there is basis in law to forfeit Alberto J. Lopez share, if any there be, in property co-owned by him with petitioner.

Respondents asserted right to forfeit extends to Alberto J. Lopez share alone. Failure of Alberto J. Lopez to surrender such share, assuming the trial court finds in respondents favor, results in a breach of an obligation to respondent and gives rise to a cause of action.[16] Such cause of action, however, pertains to Alberto J. Lopez, not petitioner.

The respondent also sought support. Support cannot be compelled from a stranger.

The action in Special Proceedings M-3630 is, to use respondent Angelina M. Lopez own words, one by an aggrieved wife against her husband.[17] References to petitioner in the common and specific allegations of fact in the complaint are merely incidental, to set forth facts and circumstances that prove the causes of action alleged against Alberto J. Lopez.

Finally, as to the moral damages, respondents claim for moral damages is against Alberto J. Lopez, not petitioner.

To sustain a cause of action for moral damages, the complaint must have the character of an action for interference with marital or family relations under the Civil Code.

A real party in interest is one who stands to be benefited or injured by the judgment of the suit.[18] In this case, petitioner would not be affected by any judgment in Special Proceedings M-3630.

If petitioner is not a real party in interest, she cannot be an indispensable party. An indispensable party is one without whom there can be no final determination of an action.[19] Petitioners participation in Special Proceedings M-3630 is not indispensable. Certainly, the trial court can issue a judgment ordering Alberto J. Lopez to make an accounting of his conjugal partnership with respondent, and give support to respondent and their children, and dissolve Alberto J. Lopez conjugal partnership with respondent, and forfeit Alberto J. Lopez share in property co-owned by him and petitioner. Such judgment would be perfectly valid and enforceable against Alberto J. Lopez.

Nor can petitioner be a necessary party in Special Proceedings M-3630. A necessary party as one who is not indispensable but who ought to be joined as party if complete relief is to be accorded those already parties, or for a complete determination or settlement of the claim subject of the action.[20] In the context of her petition in the lower court, respondent would be accorded complete relief if Alberto

J. Lopez were ordered to account for his alleged conjugal partnership property with respondent, give support to respondent and her children, turn over his share in the co-ownership with petitioner and dissolve his conjugal partnership or absolute community property with respondent.

The Judgment

WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the Court of Appeals.[21] The Court DISMISSES Special Proceedings M-3630 of the Regional Trial Court, Makati, Branch 141 as against petitioner. No costs. SO ORDERED.

[G.R. No. 153802. March 11, 2005]HOMEOWNERS SAVINGS & LOAN BANK, petitioner, vs.

MIGUELA C. DAILO, respondent.

TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, assailing the Decision[1] 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 Decision[2] 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 Dailos house and lot in San Pablo City. Pursuant to the SPA, Gesmundo obtained a loan in the amount of P300,000.00 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 latters 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 P40,000.00 representing the value of the car which was burned.

ON BOTH CAUSES OF ACTION

1. The defendant to pay the plaintiff the sum of P25,000.00 as attorneys fees;2. The defendant to pay plaintiff P25,000.00 as moral damages;3. The defendant to pay the plaintiff the sum of P10,000.00 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 courts 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 courts order to reconvey the subject property to respondent.[8] With respect to the damage to respondents 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 courts Decision, but deleted the award for damages and attorneys fees for lack of basis.[10]

Hence, this petition, raising the following issues for this Courts 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 respondents 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]

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] Petitioners 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 petitioners 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.

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.

 G.R. No. 149615 August 29, 2006

IN RE: PETITION FOR SEPARATION OF PROPERTY ELENA BUENAVENTURA MULLER, Petitioner,vs.HELMUT MULLER, Respondent.

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. x x x

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 rais. ing the following issues:

I. 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:

Under section 1 of Article XIII of the Constitution, "natural resources, with the exception of public agricultural land, shall not be alienated," and with respect to public agricultural lands, their alienation is limited to Filipino citizens. But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens. It is partly to prevent this result that section 5 is included in Article XIII, and it reads as follows:

"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. x x x

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 circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a court of equity, is likewise misplaced. It has been held that equity as a rule will follow the law and will not permit that to be done indirectly which, because of public policy, cannot be done directly. 14 He who seeks equity must do equity, and he who comes into equity must come with clean hands. The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity. It signifies that a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue. 15

Thus, in the instant case, respondent cannot seek reimbursement on the ground of equity where it is clear that he willingly and knowingly bought the property despite the constitutional prohibition.

Further, the distinction made between transfer of ownership as opposed to recovery of funds is a futile exercise on respondent’s part. To allow reimbursement would in effect permit respondent to enjoy the fruits of a property which he is not allowed to own. Thus, it is likewise proscribed by law. As expressly held in Cheesman v. Intermediate Appellate Court: 16

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 overturned. But even if it were a fact that said wife had used conjugal funds to make the acquisition, the considerations just set out to militate, on high constitutional grounds, against his recovering and holding the property so acquired, or any part thereof. And whether in such an event, he may recover from his wife any share of the money used for the purchase or charge her with unauthorized disposition or expenditure of conjugal funds is not now inquired into; that would be, in the premises, a purely academic exercise. (Emphasis added)

WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The Decision dated February 26, 2001 of the Court of Appeals in CA-G.R. CV No. 59321 ordering petitioner Elena Buenaventura Muller to reimburse respondent Helmut Muller the amount of P528,000 for the acquisition of the land and the amount of P2,300,000 for the construction of the house in Antipolo City, and the Resolution dated August 13, 2001 denying reconsideration thereof, are REVERSED and SET ASIDE. The August 12, 1996 Decision of the Regional Trial Court of Quezon City, Branch 86 in Civil Case No. Q-94-21862 terminating the regime of absolute community between the petitioner and respondent, decreeing a separation of property between them and ordering the partition of the personal properties located in the Philippines equally, is REINSTATED. SO ORDERED.

[G.R. No. 116668. July 28, 1997]ERLINDA A. AGAPAY, petitioner, vs. CARLINA (CORNELIA) V.

PALANG and HERMINIA P. DELA CRUZ,respondents.

D E C I S I O N

ROMERO, J.:

Before us is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 24199 entitled Erlinda Agapay v. Carlina (Cornelia) Palang and Herminia P. Dela Cruz dated June 22, 1994 involving the ownership of two parcels of land acquired during the cohabitation of petitioner and private respondents legitimate spouse.

Miguel Palang contracted his first marriage on July 16, 1949 when he took private respondent Carlina (or Cornelia) Vallesterol as a wife at the Pozorrubio Roman Catholic Church in Pangasinan. A few months after the wedding, in October 1949, he left to work in Hawaii. Miguel and Carlinas only child, Herminia Palang, was born on May 12, 1950.

Miguel returned in 1954 for a year. His next visit to the Philippines was in 1964 and during the entire duration of his year-long sojourn he stayed in Zambales with his brother, not in Pangasinan with his wife and child. The trial court found evidence that as early as 1957, Miguel had attempted to divorce Carlina in Hawaii.[1] When he returned for good in 1972, he refused to live with private respondents, but stayed alone in a house in Pozorrubio, Pangasinan.

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

A house and lot in Binalonan, Pangasinan was likewise purchased on September 23, 1975, allegedly by Erlinda as the sole vendee. TCT No. 143120 covering said property was later issued in her name.

On October 30, 1975, Miguel and Cornelia Palang executed a Deed of Donation as a form of compromise agreement to settle and end a case filed by the latter.[3] The parties therein agreed to donate their conjugal property consisting of six parcels of land to their only child, Herminia Palang.[4]

Miguel and Erlindas cohabitation produced a son, Kristopher A. Palang, born on December 6, 1977. In 1979, Miguel and Erlinda were convicted of Concubinage upon Carlinas complaint.[5] Two years later, on February 15, 1981, Miguel died.

On July 11, 1981, Carlina Palang and her daughter Herminia Palang de la Cruz, herein private respondents, instituted the case at bar, an action for recovery of ownership and possession with damages against petitioner before the Regional Trial Court in Urdaneta, Pangasinan (Civil Case No. U-4265). Private respondents sought to get back the riceland and the house and lot both located at Binalonan, Pangasinan allegedly purchased by Miguel during his cohabitation with petitioner.

Petitioner, as defendant below, contended that while the riceland covered by TCT No. 101736 is registered in their names (Miguel and Erlinda), she had already given her half of the property to their son Kristopher Palang. She added that the house and lot covered by TCT No. 143120 is her sole property, having bought the same with her own money. Erlinda added that Carlina is precluded from claiming aforesaid properties since the latter had already donated their conjugal estate to Herminia.

After trial on the merits, the lower court rendered its decision on June 30, 1989 dismissing the complaint after declaring that there was little evidence to prove that the subject properties pertained to the conjugal property of Carlina and Miguel Palang. The lower court went on to provide for the intestate shares of the parties, particularly of Kristopher Palang, Miguels illegitimate son. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered-

1) Dismissing the complaint, with costs against plaintiffs;2) Confirming the ownership of defendant Erlinda Agapay of the residential lot located at Poblacion, Binalonan, Pangasinan, as evidenced by TCT No. 143120, Lot 290-B including the old house standing therein;3) Confirming the ownership of one-half (1/2) portion of that piece of agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan,

consisting of 10,080 square meters and as evidenced by TCT No. 101736, Lot 1123-A to Erlinda Agapay;4) Adjudicating to Kristopher Palang as his inheritance from his deceased father, Miguel Palang, the one-half (1/2) of the agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan, under TCT No. 101736 in the name of Miguel Palang, provided that the former (Kristopher) executes, within 15 days after this decision becomes final and executory, a quit-claim forever renouncing any claims to annul/reduce the donation to Herminia Palang de la Cruz of all conjugal properties of her parents, Miguel Palang and Carlina Vallesterol Palang, dated October 30, 1975, otherwise, the estate of deceased Miguel Palang will have to be settled in another separate action;5) No pronouncement as to damages and attorneys fees.

SO ORDERED.[6]

On appeal, respondent court reversed the trial courts decision. The Court of Appeals rendered its decision on July 22, 1994 with the following dispositive portion:

WHEREFORE, PREMISES CONSIDERED, the appealed decision is hereby REVERSED and another one entered:

1. Declaring plaintiffs-appellants the owners of the properties in question;2. Ordering defendant-appellee to vacate and deliver the properties in question to herein plaintiffs-appellants;3. Ordering the Register of Deeds of Pangasinan to cancel Transfer Certificate of Title Nos. 143120 and 101736 and to issue in lieu thereof another certificate of title in the name of plaintiffs-appellants.

No pronouncement as to costs.[7]

Hence, this petition.

Petitioner claims that the Court of Appeals erred in not sustaining the validity of two deeds of absolute sale covering the riceland and the house and lot, the first in favor of Miguel Palang and Erlinda Agapay and the second, in favor of Erlinda Agapay alone. Second, petitioner contends that respondent appellate court erred in not declaring Kristopher A. Palang as Miguel Palangs illegitimate son and thus entitled to inherit from Miguels estate. Third, respondent court erred, according to petitioner, in not finding that there is sufficient pleading and evidence that Kristoffer A. Palang or Christopher A. Palang should be considered as party-defendant in Civil Case No. U-4625 before the trial court and in CA-G.R. No. 24199.[8]

After studying the merits of the instant case, as well as the pertinent provisions of law and jurisprudence, the Court denies the petition and affirms the questioned decision of the Court of Appeals.

The first and principal issue is the ownership of the two pieces of property subject of this action. Petitioner assails the validity of the deeds of conveyance over the same parcels of land. There is no dispute that the transfers of ownership from the original owners of the riceland and the house and lot, Corazon Ilomin and the spouses Cespedes, respectively, were valid.

The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda. The provision of law applicable here is Article 148 of the Family Code providing for cases of cohabitation when a man and a woman who are not capacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage. While Miguel and Erlinda contracted marriage on July 15, 1973, said union was patently void because the earlier marriage of Miguel and Carlina was still susbsisting and unaffected by the latters de facto separation.

Under Article 148, only the properties acquired by both of the parties through their actual joint contribution of money, property or industry shall be owned by them in common in proportion to their respective contributions. It must be stressed that actual contribution is required by this provision, in contrast to Article 147 which states that efforts in the care and maintenance of the family and household, are regarded as contributions to the acquisition of common property by one who has no salary or income or work or industry. If the actual contribution of the party is not proved, there will be no co-ownership and no presumption of equal shares.[9]

In the case at bar, Erlinda tried to establish by her testimony that she is engaged in the business of buy and sell and had a sari-sari store[10]but failed to persuade us that she actually contributed money to buy the subject riceland. Worth noting is the fact that on the date of conveyance, May 17, 1973, petitioner was only around twenty years of age and Miguel Palang was already sixty-four and a pensioner of the U.S. Government.Considering her youthfulness, it is unrealistic to conclude that in 1973 she contributed P3,750.00 as her share in the purchase price of subject property,[11] there being no proof of the same.

Petitioner now claims that the riceland was bought two months before Miguel and Erlinda actually cohabited. In the nature of an

afterthought, said added assertion was intended to exclude their case from the operation of Article 148 of the Family Code. Proof of the precise date when they commenced their adulterous cohabitation not having been adduced, we cannot state definitively that the riceland was purchased even before they started living together. In any case, even assuming that the subject property was bought before cohabitation, the rules of co-ownership would still apply and proof of actual contribution would still be essential.

Since petitioner failed to prove that she contributed money to the purchase price of the riceland in Binalonan, Pangasinan, we find no basis to justify her co-ownership with Miguel over the same. Consequently, the riceland should, as correctly held by the Court of Appeals, revert to the conjugal partnership property of the deceased Miguel and private respondent Carlina Palang.

Furthermore, it is immaterial that Miguel and Carlina previously agreed to donate their conjugal property in favor of their daughter Herminia in 1975. The trial court erred in holding that the decision adopting their compromise agreement in effect partakes the nature of judicial confirmation of the separation of property between spouses and the termination of the conjugal partnership.[12] Separation of property between spouses during the marriage shall not take place except by judicial order or without judicial conferment when there is an express stipulation in the marriage settlements.[13] The judgment which resulted from the parties compromise was not specifically and expressly for separation of property and should not be so inferred.

With respect to the house and lot, Erlinda allegedly bought the same for P20,000.00 on September 23, 1975 when she was only 22 years old. The testimony of the notary public who prepared the deed of conveyance for the property reveals the falsehood of this claim. Atty. Constantino Sagun testified that Miguel Palang provided the money for the purchase price and directed that Erlindas name alone be placed as the vendee.[14]

The transaction was properly a donation made by Miguel to Erlinda, but one which was clearly void and inexistent by express provision of law because it was made between persons guilty of adultery or concubinage at the time of the donation, under Article 739 of the Civil Code.Moreover, Article 87 of the Family Code expressly provides that the prohibition against donations between spouses now applies to donations between persons living together as husband and wife without a valid marriage,[15] for otherwise, the condition of those who incurred guilt would turn out to be better than those in legal union.[16]

The second issue concerning Kristopher Palangs status and claim as an illegitimate son and heir to Miguels estate is here resolved in favor of respondent courts correct assessment that the trial court erred in making pronouncements regarding Kristophers heirship and filiation inasmuch as questions as to who are the heirs of the decedent, proof of filiation of illegitimate children and the determination of the estate of the latter and claims thereto should be ventilated in the proper probate court or in a special proceeding instituted for the purpose and cannot be adjudicated in the instant ordinary civil action which is for recovery of ownership and possession.[17]

As regards the third issue, petitioner contends that Kristopher Palang should be considered as party-defendant in the case at bar following the trial courts decision which expressly found that Kristopher had not been impleaded as party defendant but theorized that he had submitted to the courts jurisdiction through his mother/guardian ad litem.[18] The trial court erred gravely. Kristopher, not having been impleaded, was, therefore, not a party to the case at bar. His mother, Erlinda, cannot be called his guardian ad litem for he was not involved in the case at bar.Petitioner adds that there is no need for Kristopher to file another action to prove that he is the illegitimate son of Miguel, in order to avoid multiplicity of suits.[19] Petitioners grave error has been discussed in the preceeding paragraph where the need for probate proceedings to resolve the settlement of Miguels estate and Kristophers successional rights has been pointed out.

WHEREFORE, the instant petition is hereby DENIED. The questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED.

[G.R. No. 137650. April 12, 2000]

GUILLERMA TUMLOS, petitioner, vs. SPOUSES MARIO FERNANDEZ and LOURDES FERNANDEZ, respondents.

D E C I S I O N

PANGANIBAN, J.:

Under Article 148 of the Family Code, a man and a woman who are not legally capacitated to marry each other, but who nonetheless live

together conjugally, may be deemed co-owners of a property acquired during the cohabitation only upon proof that each made an actual contribution to its acquisition. Hence, mere cohabitation without proof of contribution will not result in a co-ownership.

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the November 19, 1998 Decision of the Court of Appeals[1] (CA), which reversed the October 7, 1997 Order of the Regional Trial Court (RTC).[2] The dispositive part of the CA Decision reads: Jur-is

"WHEREFORE, the instant petition is GRANTED, and the questioned orders of the court a quo dated October 7, 1997 and November 11, 1997, are hereby REVERSED and SET ASIDE. The judgment of the court a quo dated June 5, 1997 is hereby REINSTATED. Costs against the private respondents."[3]

The assailed Order of the RTC disposed as follows: Supr-ema

"Wherefore, the decision of this Court rendered on June 5, 1997 affirming in toto the appealed judgment of the [MTC] is hereby reconsidered and a new one is entered reversing said decision of the [MTC] and dismissing the complaint in the above-entitled case."[4]

Petitioner also assails the February 14, 1999 CA Resolution denying the Motion for Reconsideration.

The Facts

The Court of Appeals narrates the facts as follows:

"[Herein respondents] were the plaintiffs in Civil Case No. 6756, an action for ejectment filed before Branch 82 of the MTC of Valenzuela, Metro Manila against [herein Petitioner] Guillerma Tumlos, Toto Tumlos, and Gina Tumlos. In their complaint dated July 5, 1996, the said spouses alleged that they are the absolute owners of an apartment building located at ARTE SUBDIVISION III, Lawang Bato, Valenzuela, Metro Manila; that through tolerance they had allowed the defendants-private respondents to occupy the apartment building for the last seven (7) years, since 1989, without

the payment of any rent; that it was agreed upon that after a few months, defendant Guillerma Tumlos will pay P1,600.00 a month while the other defendants promised to pay P1,000.00 a month, both as rental, which agreement was not complied with by the said defendants; that they have demanded several times [that] the defendants x x x vacate the premises, as they are in need of the property for the construction of a new building; and that they have also demanded payment of P84,000.00 from Toto and Gina Tumlos representing rentals for seven (7) years and payment of P143,600.00 from Guillerma Tumlos as unpaid rentals for seven (7) years, but the said demands went unheeded. They then prayed that the defendants be ordered to vacate the property in question and to pay the stated unpaid rentals, as well as to jointly pay P30,000.00 in attorneys fees.

"[Petitioner] Guillerma Tumlos was the only one who filed an answer to the complaint. She averred therein that the Fernandez spouses had no cause of action against her, since she is a co-owner of the subject premises as evidenced by a Contract to Sell wherein it was stated that she is a co-vendee of the property in question together with [Respondent] Mario Fernandez. She then asked for the dismissal of the complaint.

"After an unfruitful preliminary conference on November 15, 1996, the MTC required the parties to submit their affidavits and other evidence on the factual issues defined in their pleadings within ten (10) days from receipt of such order, pursuant to section 9 of the Revised Rule on Summary Procedure. [Petitioner] Guillerma Tumlos submitted her affidavit/position paper on November 29, 1996, while the [respondents] filed their position paper on December 5, 1996, attaching thereto their marriage contract, letters of demand to the defendants, and the Contract to Sell over the disputed property. The MTC thereafter promulgated its judgment on January 22, 1997[.] x x x x x x x x x

"Upon appeal to the [RTC], [petitioner and the two other] defendants alleged in their memorandum on appeal that [Respondent] Mario Fernandez and [Petitioner] Guillerma had an amorous relationship, and that they acquired the property in question as their love nest. It was further alleged that they lived together in the said apartment building with their two (2) children for around ten(10) years, and that Guillerma administered the property by collecting rentals from the lessees of the other apartments, until she discovered that [Respondent Mario] deceived her as to the annulment of his marriage. It was also during the early part of 1996 when [Respondent Mario] accused her of being unfaithful and demonstrated his baseless [jealousy].

"In the same memorandum, [petitioner and the two other] defendants further averred that it was only recently that Toto Tumlos was temporarily accommodated in one of the rooms of the subject premises while Gina Tumlos acted as a nanny for the children. In short, their presence there [was] only transient and they [were] not tenants of the Fernandez spouses.

"On June 5, 1997, the [RTC] rendered a decision affirming in toto the judgment of the MTC. 

"The [petitioner and the two other defendants] seasonably filed a motion for reconsideration on July 3, 1997, alleging that the decision of affirmance by the RTC was constitutionally flawed for failing to point out distinctly and clearly the findings of facts and law on which it was based vis--vis the statements of issues they have raised in their memorandum on appeal. They also averred that the Contract to Sell presented by the plaintiffs which named the buyer as Mario P. Fernandez, of legal age, married to Lourdes P. Fernandez, should not be given credence as it was falsified to appear that way. According to them, the Contract to Sell originally named Guillerma Fernandez as the spouse of [Respondent Mario]. As found by the [RTC] in its judgment, a new Contract to Sell was issued by the sellers naming the [respondents] as the buyers after the latter presented their marriage contract and requested a change in the name of the vendee-wife. Such facts necessitate the conclusion that Guillerma was really a co-owner thereof, and that the [respondents] manipulated the evidence in order to deprive her of her rights to enjoy and use the property as recognized by law. x x x x x x x x x

"The [RTC], in determining the question of ownership in order to resolve the issue of possession, ruled therein that the Contract to Sell submitted by the Fernandez spouses appeared not to be authentic, as there was an alteration in the name of the wife of [Respondent] Mario Fernandez. Hence, the contract presented by the [respondents] cannot be given any weight. The court further ruled that Guillerma and [Respondent Mario] acquired the property during their cohabitation as husband and wife, although without the benefit of marriage. From such findings, the court concluded that [Petitioner] Guillerma Tumlos was a co-owner of the subject property and could not be ejected therefrom.

"The [respondents] then filed a motion for reconsideration of the order of reversal, but the same was denied by the [RTC]."[5]

As earlier stated, the CA reversed the RTC. Hence, this Petition filed by Guillerma Tumlos only.[6]

Ruling of the Court of Appeals

The CA rejected petitioners claim that she and Respondent Mario Fernandez were co-owners of the disputed property. The CA ruled: 

"From the inception of the instant case, the only defense presented by private respondent Guillerma is her right as a co-owner of the subject property[.] x x x x x x x x x

This claim of co-ownership was not satisfactorily proven by Guillerma, as correctly held by the trial court. No other evidence was presented to validate such claim, except for the said affidavit/position paper. As previously stated, it was only on appeal that Guillerma alleged that she cohabited with the petitioner-husband without the benefit of marriage, and that she bore him two (2) children. Attached to her memorandum on appeal are the birth certificates of the said children. Such contentions and documents should not have been considered by the x x x (RTC), as they were not presented in her affidavit/position paper before the trial court (MTC). x x x x x x x x x

"However, even if the said allegations and documents could be considered, the claim of co-ownership must still fail. As [herein Respondent] Mario Fernandez is validly married to [Respondent] Lourdes Fernandez (as per Marriage Contract dated April 27, 1968, p. 45, Original Record), Guillerma and Mario are not capacitated to marry each other. Thus, the property relations governing their supposed cohabitation is that found in Article 148 of Executive Order No. 209, as amended, otherwise known as the Family Code of the Philippines[.] x x x x x x x x x

"It is clear that actual contribution is required by this provision, in contrast to Article 147 of the Family Code which states that efforts in the care and maintenance of the family and household are regarded as contributions to the acquisition of common property by one who has no salary or income or work or industry (Agapay v. Palang, 276 SCRA 340). The care given by one party [to] the home, children, and household, or spiritual or moral inspiration provided to the other, is not included in Article 148 (Handbook on the Family Code of the Philippines by Alicia V. Sempio-Diy, 1988 ed., p. 209). Hence, if actual contribution of the party is not proved, there will be no co-ownership and no presumption of equal shares (Agapay, supra at p. 348, citing Commentaries and Jurisprudence on the

Civil Code of the Philippines Volume I by Arturo M. Tolentino, 1990 ed., p. 500).

"In the instant case, no proof of actual contribution by Guillerma Tumlos in the purchase of the subject property was presented. Her only evidence was her being named in the Contract to Sell as the wife of [Respondent] Mario Fernandez. Since she failed to prove that she contributed money to the purchase price of the subject apartment building, We find no basis to justify her co-ownership with [Respondent Mario]. The said property is thus presumed to belong to the conjugal partnership property of Mario and Lourdes Fernandez, it being acquired during the subsistence of their marriage and there being no other proof to the contrary (please see Article 116 of the Family Code).

"The court a quo (RTC) also found that [Respondent Mario] has two (2) children with Guillerma who are in her custody, and that to eject them from the apartment building would be to run counter with the obligation of the former to give support to his minor illegitimate children, which indispensably includes dwelling. As previously discussed, such finding has no leg to stand on, it being based on evidence presented for the first time on appeal. x x x x x x x x x

"Even assuming arguendo that the said evidence was validly presented, the RTC failed to consider that the need for support cannot be presumed. Article 203 of the Family Code expressly provides that the obligation to give support shall be demandable from the time the person who has a right to receive the same needs it for maintenance, but it shall not be paid except from the date of judicial or extrajudicial demand. x x x. Nc-m

"In contrast to the clear pronouncement of the Supreme Court, the RTC instead presumed that Guillerma and her children needed support from [Respondent Mario]. Worse, it relied on evidence not properly presented before the trial court (MTC).

"With regard to the other [defendants], Gina and Toto Tumlos, a close perusal of the records shows that they did not file any responsive pleading. Hence, judgment may be rendered against them as may be warranted by the facts alleged in the complaint and limited to what is prayed for therein, as provided for in Section 6 of the Revised Rules on Summary Procedure. There was no basis for the public respondent to dismiss the complaint against them."[7] (emphasis in the original) 

The Issues

In her Memorandum, petitioner submits the following issues for the consideration of the Court:

"I. The Court of Appeals gravely erred and abused its discretion in not outrightly dismissing the petition for review filed by respondents.

"II. The Court of Appeals erred in finding that petitioner is not the co-owner of the property in litis.

"III. Corollary thereto, the Court of Appeals erred in applying Art. 148 of the Family Code in the case at bar. Man-ikan

"IV. The Court of Appeals erred in disregarding the substantive right of support vis--vis the remedy of ejectment resorted to by respondents."[8]

In resolving this case, we shall answer two questions: (a) Is the petitioner a co-owner of the property? (b) Can the claim for support bar this ejectment suit? We shall also discuss these preliminary matters: (a) whether the CA was biased in favor of respondents and (b) whether the MTC had jurisdiction over the ejectment suit. Manik-s

The Courts Ruling

The Petition has no merit.

Preliminary Matters

Petitioner submits that the CA exhibited partiality in favor of herein respondents. This bias, she argues, is manifest in the following: 

1. The CA considered the respondents Petition for Review[9] despite their failure to attach several pleadings as well as the explanation for the proof of service, despite the clear mandate of Section 11[10] of Rule 13 of the Revised Rules of Court and despite the ruling in Solar Team Entertainment, Inc. v. Ricafort.[11]

2. It allowed respondents to submit the pleadings that were not attached.

3. It considered respondents Reply dated May 20, 1998, which had allegedly been filed out of time. Ne-xold

4. It declared that the case was submitted for decision without first determining whether to give due course to the Petition, pursuant to Section 6, Rule 42 of the Rules of Court.[12]

The CA, for its part, succinctly dismissed these arguments in this wise: Mi-so

"It is too late in the day now to question the alleged procedural error after we have rendered the decision. More importantly, when the private respondent filed their comment to the petition on April 26, 1998, they failed to question such alleged procedural error. Neither have they questioned all the resolutions issued by the Court after their filing of such comment. They should, therefore, be now considered in estoppel to question the same."[13]

We agree with the appellate court. Petitioner never raised these matters before the CA. She cannot be allowed now to challenge its Decision on grounds of alleged technicalities being belatedly raised as an afterthought. In this light, she cannot invoke Solar[14] because she never raised this issue before the CA. Spp-edjo

More important, we find it quite sanctimonious indeed on petitioners part to rely, on the one hand, on these procedural technicalities to overcome the appealed Decision and, on the other hand, assert that the RTC may consider the new evidence she presented for the first time on appeal. Such posturing only betrays the futility of petitioners assertion, if not its absence of merit.

One other preliminary matter. Petitioner implies that the court of origin, the Municipal Trial Court (MTC), did not have jurisdiction over the "nature of the case," alleging that the real question involved is one of ownership. Since the issue of possession cannot be settled without passing upon that of ownership, she maintains that the MTC should have dismissed the case. Josp-ped

This contention is erroneous. The issue of ownership may be passed upon by the MTC to settle the issue of possession.[15] Such disposition, however, is not final insofar as the issue of ownership is concerned,[16] which may be the subject of another proceeding brought specifically to settle that question.

Having resolved these preliminary matters, we now move on to petitioners substantive contentions. Spped

First Issue:   Petitioner as Co-owner

Petitioners central theory and main defense against respondents action for ejectment is her claim of co-ownership over the property with Respondent Mario Fernandez. At the first instance before the MTC, she presented a Contract to Sell indicating that she was his spouse. The MTC found this document insufficient to support her claim. The RTC, however, after considering her allegation that she had been cohabiting with Mario Fernandez as shown by evidence presented before it,[17] ruled in her favor. 

On the other hand, the CA held that the pieces of evidence adduced before the RTC could no longer be considered because they had not been submitted before the MTC. Hence, the appellate court concluded that "[t]he claim of co-ownership was not satisfactorily proven x x x."[18]

We agree with the petitioner that the RTC did not err in considering the evidence presented before it. Nonetheless, we reject her claim that she was a co-owner of the disputed property. 

Evidence Presented on Appeal Before the RTC

In ruling that the RTC erred in considering on appeal the evidence presented by petitioner, the CA relied on the doctrine that issues not raised during trial could not be considered for the first time during appeal.[19]

We disagree. In the first place, there were no new matters or issues belatedly raised during the appeal before the RTC. The defense invoked by petitioner at the very start was that she was a co-owner. To support her claim, she presented a Contract to Sell dated November 14, 1986, which stated that Mario Fernandez was legally married to her. The allegation that she was cohabiting with him was a mere elaboration of her initial theory.

In the second place, procedural rules are generally premised on considerations of fair play. Respondents never objected when the assailed evidence was presented before the RTC. Thus, they cannot claim unfair surprise or prejudice. 

Petitioner Not a Co-Owner Under Article 144 of the Civil Code

Even considering the evidence presented before the MTC and the RTC, we cannot accept petitioners submission that she is a co-owner of the disputed property pursuant to Article 144 of the Civil Code.[20] As correctly held by the CA, the applicable law is not Article 144 of the Civil Code, but Article 148 of the Family Code which provides:

"Art. 148. In cases of cohabitation not falling under the preceding Article,[21] only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit.

"If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding Article.

"The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith." Sc

Article 144 of the Civil Code applies only to a relationship between a man and a woman who are not incapacitated to marry each other,[22] or to one in which the marriage of the parties is void[23] from the beginning.[24] It does not apply to a cohabitation that amounts to adultery or concubinage, for it would be absurd to create a co-ownership where there exists a prior conjugal partnership or absolute community between the man and his lawful wife.[25]

Based on evidence presented by respondents, as well as those submitted by petitioner herself before the RTC, it is clear that Mario Fernandez was incapacitated to marry petitioner because he was

legally married to Lourdes Fernandez. It is also clear that, as readily admitted by petitioner, she cohabited with Mario in a state of concubinage. Therefore, Article 144 of the Civil Code is inapplicable.

As stated above, the relationship between petitioner and Respondent Mario Fernandez is governed by Article 148 of the Family Code. Justice Alicia V. Sempio-Diy points out[26] that "[t]he Family Code has filled the hiatus in Article 144 of the Civil Code by expressly regulating in its Article 148 the property relations of couples living in a state of adultery or concubinage." 

Hence, petitioners argument -- that the Family Code is inapplicable because the cohabitation and the acquisition of the property occurred before its effectivity -- deserves scant consideration. Suffice it to say that the law itself states that it can be applied retroactively if it does not prejudice vested or acquired rights.[27] In this case, petitioner failed to show any vested right over the property in question. Moreover, to resolve similar issues, we have applied Article 148 of the Family Code retroactively.[28]

No Evidence of Actual Joint Contribution

Another consideration militates against petitioners claim that she is a co-owner of the property. In Agapay,[29] the Court ruled:

"Under Article 148, only the properties acquired by both of the parties through their actual joint contribution of money, property or industry shall be owned by them in common in proportion to their respective contributions. It must be stressed that the actual contribution is required by this provision, in contrast to Article 147 which states that efforts in the care and maintenance of the family and household, are regarded as contributions to the acquisition of common property by one who has no salary or income or work or industry. If the actual contribution of the party is not proved, there will be no co-ownership and no presumption of equal shares." (emphasis ours) xl-aw

In this case, petitioner fails to present any evidence that she had made an actual contribution to purchase the subject property. Indeed, she anchors her claim of co-ownership merely on her cohabitation with Respondent Mario Fernandez.

Likewise, her claim of having administered the property during the cohabitation is unsubstantiated. In any event, this fact by itself does not justify her claim, for nothing in Article 148 of the Family Code provides that the administration of the property amounts to a contribution in its acquisition.

Clearly, there is no basis for petitioners claim of co-ownership. The property in question belongs to the conjugal partnership of respondents. Hence, the MTC and the CA were correct in ordering the ejectment of petitioner from the premises. Sc-lex

Second Issue:   Support versus Ejectment

Petitioner contends that since Respondent Mario Fernandez failed to repudiate her claim regarding the filiation of his alleged sons, Mark Gil and Michael Fernandez, his silence on the matter amounts to an admission. Arguing that Mario is liable for support, she advances the theory that the childrens right to support, which necessarily includes shelter, prevails over the right of respondents to eject her.

We disagree. It should be emphasized that this is an ejectment suit whereby respondents seek to exercise their possessory right over their property. It is summary in character and deals solely with the issue of possession of the property in dispute. Here, it has been shown that they have a better right to possess it than does the petitioner, whose right to possess is based merely on their tolerance. Scl-aw

Moreover, Respondent Mario Fernandez alleged failure to repudiate petitioners claim of filiation is not relevant to the present case. Indeed, it would be highly improper for us to rule on such issue. Besides, it was not properly taken up below.[30] In any event, Article 298[31] of the Civil Code requires that there should be an extrajudicial demand.[32] None was made here. The CA was correct when it said:

"Even assuming arguendo that the said evidence was validly presented, the RTC failed to consider that the need for support cannot be presumed. Article [298] of the [New Civil Code] expressly provides that the obligation to give support shall be demandable from the time the person who has a right to receive the same need it for maintenance, but it shall not be paid except from the date of judicial and extrajudicial demand."[33]

WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against petitioner. 

SO ORDERED.

[G.R. No. 136803. June 16, 2000]

EUSTAQUIO MALLILIN, JR., petitioner, vs. MA. ELVIRA CASTILLO, respondent.

D E C I S I O N

MENDOZA, J.:

This is a petition for review of the amended decision[1] of the Court of Appeals dated May 7, 1998 in CA G.R. CV No. 48443 granting respondents motion for reconsideration of its decision dated November 7, 1996, and of the resolution dated December 21, 1998 denying petitioners motion for reconsideration.

The factual and procedural antecedents are as follows:

On February 24, 1993, petitioner Eustaquio Mallilin, Jr. filed a complaint[2] for "Partition and/or Payment of Co-Ownership Share, Accounting and Damages" against respondent Ma. Elvira Castillo. The complaint, docketed as Civil Case No. 93-656 at the Regional Trial Court in Makati City, alleged that petitioner and respondent, both married and with children, but separated from their respective spouses, cohabited after a brief courtship sometime in 1979 while their respective marriages still subsisted. During their union, they set up the Superfreight Customs Brokerage Corporation, with petitioner as president and chairman of the board of directors, and respondent as vice-president and treasurer. The business flourished and petitioner and respondent acquired real and personal properties which were registered solely in respondents name. In 1992, due to irreconcilable differences, the couple separated. Petitioner demanded from respondent his share in the subject properties, but respondent refused alleging that said properties had been registered solely in her name.

In her Amended Answer,[3] respondent admitted that she engaged in the customs brokerage business with petitioner but alleged that the Superfreight Customs Brokerage Corporation was organized with other individuals and duly registered with the Securities and Exchange Commission in 1987. She denied that she and petitioner lived as husband and wife because the fact was that they were still legally married to their respective spouses. She claimed to be the exclusive owner of all real and personal properties involved in petitioners action for partition on the ground that they were acquired entirely out of her own money and registered solely in her name.

On November 25, 1994, respondent filed a Motion for Summary Judgment,[4] in accordance with Rule 34 of the Rules of Court.[5] She contended that summary judgment was proper, because the issues raised in the pleadings were sham and not genuine, to wit: CODES

A. The main issue is -- Can plaintiff validly claim the partition and/or payment of co-ownership share, accounting and damages, considering that plaintiff and defendant are admittedly both married to their respective spouses under still valid and subsisting marriages, even assuming as claimed by plaintiff, that they lived together as husband and wife without benefit of marriage? In other words, can the parties be considered as co-owners of the properties, under the law, considering the present status of the parties as both married and incapable of marrying each other, even assuming that they lived together as husband and wife (?)

B. As a collateral issue, can the plaintiff be considered as an unregistered co-owner of the real properties under the Transfer Certificates of Title duly registered solely in the name of defendant Ma. Elvira Castillo? This issue is also true as far as the motor vehicles in question are concerned which are also registered in the name of defendant.[6]

On the first point, respondent contended that even if she and petitioner actually cohabited, petitioner could not validly claim a part of the subject real and personal properties because Art. 144 of the Civil Code, which provides that the rules on co-ownership shall govern the properties acquired by a man and a woman living together as husband and wife but not married, or under a marriage which is void ab initio, applies only if the parties are not in any way incapacitated to contract marriage.[7] In the parties case, their union suffered the legal impediment of a prior subsisting marriage. Thus,

the question of fact being raised by petitioner, i.e., whether they lived together as husband and wife, was irrelevant as no co-ownership could exist between them.

As to the second issue, respondent maintained that petitioner can not be considered an unregistered co-owner of the subject properties on the ground that, since titles to the land are solely in her name, to grant petitioners prayer would be to allow a collateral attack on the validity of such titles.

Petitioner opposed respondents Motion for Summary Judgment.[8] He contended that the case presented genuine factual issues and that Art. 144 of the Civil Code had been repealed by the Family Code which now allows, under Art. 148, a limited co-ownership even though a man and a woman living together are not capacitated to marry each other. Petitioner also asserted that an implied trust was constituted when he and respondent agreed to register the properties solely in the latters name although the same were acquired out of the profits made from their brokerage business. Petitioner invoked the following provisions of the Civil Code: yacats

Art. 1452. If two or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each.

Art. 1453. When the property is conveyed to a person in reliance upon his declared intention to hold it for, or transfer it to another grantor, there is an implied trust in favor of the person whose benefit is contemplated.

On January 30, 1995, the trial court rendered its decision[9] granting respondents motion for summary judgment. It ruled that an examination of the pleadings shows that the issues involved were purely legal. The trial court also sustained respondents contention that petitioners action for partition amounted to a collateral attack on the validity of the certificates of title covering the subject properties. It held that even if the parties really had cohabited, the action for partition could not be allowed because an action for partition among co-owners ceases to be so and becomes one for title if the defendant, as in the present case, alleges exclusive ownership of the properties in question. For these reasons, the trial court dismissed Civil Case No. 93-656.

On appeal, the Court of Appeals on November 7, 1996, ordered the case remanded to the court of origin for trial on the merits. It cited the decision in Roque v. Intermediate Appellate Court[10] to the effect that an action for partition is at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of the properties involved. If the defendant asserts exclusive title over the property, the action for partition should not be dismissed. Rather, the court should resolve the case and if the plaintiff is unable to sustain his claimed status as a co-owner, the court should dismiss the action, not because the wrong remedy was availed of, but because no basis exists for requiring the defendant to submit to partition. Resolving the issue whether petitioners action for partition was a collateral attack on the validity of the certificates of title, the Court of Appeals held that since petitioner sought to compel respondent to execute documents necessary to effect transfer of what he claimed was his share, petitioner was not actually attacking the validity of the titles but in fact, recognized their validity. Finally, the appellate court upheld petitioners position that Art. 144 of the Civil Code had been repealed by Art. 148 of the Family Code. haideem

Respondent moved for reconsideration of the decision of the Court of Appeals. On May 7, 1998, nearly two years after its first decision, the Court of Appeals granted respondents motion and reconsidered its prior decision. In its decision now challenged in the present petition, it held

Prefatorily, and to better clarify the controversy on whether this suit is a collateral attack on the titles in issue, it must be underscored that plaintiff-appellant alleged in his complaint that all the nine (9) titles are registered in the name of defendant-appellee, Ma. Elvira T. Castillo, except one which appears in the name of Eloisa Castillo   (see par. 9, Complaint). However, a verification of the annexes of such initiatory pleading shows some discrepancies, to wit:

1. TCT No. 149046 (Annex A) =.Elvira T. Castillo, single2. TCT No. 168208 ( Annex B)=..........-do-3. TCT No. 37046 (Annex C)=..........-do-4. TCT No. 37047 (Annex D)= ..... ...-do-5. TCT No. 37048 (Annex E)=..........-do-6. TCT No. 30368 (Annex F)=.Steelhaus Realty & Dev. Corp.7. TCT No. 30369 (Annex G)=..........-do-

8. TCT No. 30371 (Annex F)=..........-do- 9.TCT No. (92323) 67881 (Annex I)= Eloisa Castillo

In this action, plaintiff-appellant seeks to be declared as 1/2 co-owner of the real properties covered by the above listed titles and eventually for their partition [par. (a), Prayer; p. 4 Records]. Notably, in order to achieve such prayer for a joint co-ownership declaration, it is unavoidable that the individual titles involved be altered, changed, canceled or modified to include therein the name of the appellee as a registered 1/2 co-owner. Yet, no cause of action or even a prayer is contained in the complaint filed. Manifestly, absent any cause or prayer for the alteration, cancellation, modification or changing of the titles involved, the desired declaration of co-ownership and eventual partition will utterly be an indirect or collateral attack on the subject titles in this suit.

It is here that We fell into error, such that, if not rectified will surely lead to a procedural lapse and a possible injustice. Well settled is the rule that a certificate of title cannot be altered, modified or canceled except in a direct proceeding in accordance with law. Jksm

In this jurisdiction, the remedy of the landowner whose property has been wrongfully or erroneously registered in another name is, after one year from the date of the decree, not to set aside the decree, but respecting it as incontrovertible and no longer open to review, to bring an action for reconveyance or, if the property had passed into the hands of an innocent purchaser for value, for damages. Verily, plaintiff-appellant should have first pursued such remedy or any other relief directly attacking the subject titles before instituting the present partition suit. Apropos, the case at bench appears to have been prematurely filed.

Lastly, to grant the partition prayed for by the appellant will in effect rule and decide against the properties registered in the names of Steelhouse Realty and Development Corporation and Eloisa Castillo, who are not parties in the case. To allow this to happen will surely result to injustice and denial of due process of law. . . .[11]

Petitioner moved for reconsideration but his motion was denied by the Court of Appeals in its resolution dated December 21, 1998. Hence this petition.

Petitioner contends that: (1) the Court of Appeals, in its first decision of November 7, 1996, was correct in applying the Roque ruling and in rejecting respondents claim that she was the sole owner of the subject properties and that the partition suit was a collateral attack on the titles; (2) the Court of Appeals correctly ruled in its first decision that Art. 148 of the Family Code governs the co-ownership between the parties, hence, the complaint for partition is proper; (3) with respect to the properties registered in the name of Steelhouse Realty, respondent admitted ownership thereof and, at the very least, these properties could simply be excluded and the partition limited to the remaining real and personal properties; and (4) the Court of Appeals erred in not holding that under the Civil Code, there is an implied trust in his favor.[12]

The issue in this case is really whether summary judgment, in accordance with Rule 35 of the Rules of Court, is proper. We rule in the negative.

First. Rule 35, 3 of the Rules of Court provides that summary judgment is proper only when, based on the pleadings, depositions, and admissions on file, and after summary hearing, it is shown that except as to the amount of damages, there is no veritable issue regarding any material fact in the action and the movant is entitled to judgment as a matter of law.[13] Conversely, where the pleadings tender a genuine issue,i.e., an issue of fact the resolution of which calls for the presentation of evidence, as distinguished from an issue which is sham, fictitious, contrived, set-up in bad faith, or patently unsubstantial, summary judgment is not proper.[14] Chiefx

In the present case, we are convinced that genuine issues exist. Petitioner anchors his claim of co-ownership on two factual grounds: first, that said properties were acquired by him and respondent during their union from 1979 to 1992 from profits derived from their brokerage business; and second, that said properties were registered solely in respondents name only because they agreed to that arrangement, thereby giving rise to an implied trust in accordance with Art. 1452 and Art. 1453 of the Civil Code. These allegations are denied by respondent. She denies that she and

petitioner lived together as husband and wife. She also claims that the properties in question were acquired solely by her with her own money and resources. With such conflicting positions, the only way to ascertain the truth is obviously through the presentation of evidence by the parties.

The trial court ruled that it is immaterial whether the parties actually lived together as husband and wife because Art. 144 of the Civil Code can not be made to apply to them as they were both incapacitated to marry each other. Hence, it was impossible for a co-ownership to exist between them.

We disagree.

Art. 144 of the Civil Code provides:

When a man and a woman live together as husband and wife, but they are not married, or their marriage is void from the beginning, the property acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership.

This provision of the Civil Code, applies only to cases in which a man and a woman live together as husband and wife without the benefit of marriage provided they are not incapacitated or are without impediment to marry each other,[15] or in which the marriage is void ab initio, provided it is not bigamous. Art. 144, therefore, does not cover parties living in an adulterous relationship. However, Art. 148 of the Family Code now provides for a limited co-ownership in cases where the parties in union are incapacitated to marry each other. It states:

In cases of cohabitation not falling under the preceding article,[16] only the properties acquired by both of the parties through their actual joint contribution of money, property or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credits. HTML

If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or

conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding article.

The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

It was error for the trial court to rule that, because the parties in this case were not capacitated to marry each other at the time that they were alleged to have been living together, they could not have owned properties in common. The Family Code, in addition to providing that a co-ownership exists between a man and a woman who live together as husband and wife without the benefit of marriage, likewise provides that, if the parties are incapacitated to marry each other, properties acquired by them through their joint contribution of money, property or industry shall be owned by them in common in proportion to their contributions which, in the absence of proof to the contrary, is presumed to be equal. There is thus co-ownership eventhough the couple are not capacitated to marry each other.

In this case, there may be a co-ownership between the parties herein. Consequently, whether petitioner and respondent cohabited and whether the properties involved in the case are part of the alleged co-ownership are genuine and material. All but one of the properties involved were alleged to have been acquired after the Family Code took effect on August 3, 1988. With respect to the property acquired before the Family Code took effect if it is shown that it was really acquired under the regime of the Civil Code, then it should be excluded.

Petitioner also alleged in paragraph 7 of his complaint that:

Due to the effective management, hardwork and enterprise of plaintiff assisted by defendant, their customs brokerage business grew and out of the profits therefrom, the parties acquired real and personal properties which were, upon agreement of the parties, listed and registered in defendants name with plaintiff as the unregistered co-owner of all said properties.[17] Esmsc

On the basis of this, he contends that an implied trust existed pursuant to Art. 1452 of the Civil Code which provides that "(I)f two

or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each." We do not think this is correct. The legal relation of the parties is already specifically covered by Art. 148 of the Family Code under which all the properties acquired by the parties out of their actual joint contributions of money, property or industry shall constitute a co-ownership. Co-ownership is a form of trust and every co-owner is a trustee for the other.[18] The provisions of Art. 1452 and Art. 1453 of the Civil Code, then are no longer material since a trust relation already inheres in a co-ownership which is governed under Title III, Book II of the Civil Code.

Second. The trial court likewise dismissed petitioners action on the ground that the same amounted to a collateral attack on the certificates of title involved. As already noted, at first, the Court of Appeals ruled that petitioners action does not challenge the validity of respondents titles. However, on reconsideration, it reversed itself and affirmed the trial court. It noted that petitioners complaint failed to include a prayer for the alteration, cancellation, modification, or changing of the titles involved. Absent such prayer, the appellate court ruled that a declaration of co-ownership and eventual partition would involve an indirect or collateral attack on the titles. We disagree.

A torrens title, as a rule, is conclusive and indefeasible. Proceeding from this, P.D. No. 1529,[19] 48 provides that a certificate of title shall not be subject to collateral attack and can not be altered, modified, or canceled except in a direct proceeding. When is an action an attack on a title? It is when the object of the action or proceeding is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of an action or proceeding is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.[20]

In his complaint for partition, consistent with our ruling in Roque regarding the nature of an action for partition, petitioner seeks first, a declaration that he is a co-owner of the subject properties; and second, the conveyance of his lawful shares. He does not attack respondents titles. Petitioner alleges no fraud, mistake, or any other irregularity that would justify a review of the

registration decree in respondents favor. His theory is that although the subject properties were registered solely in respondents name, but since by agreement between them as well as under the Family Code, he is co-owner of these properties and as such is entitled to the conveyance of his shares. On the premise that he is a co-owner, he can validly seek the partition of the properties in co-ownership and the conveyance to him of his share. Esmmis

Thus, in Guevara v. Guevara,[21] in which a parcel of land bequeathed in a last will and testament was registered in the name of only one of the heirs, with the understanding that he would deliver to the others their shares after the debts of the original owner had been paid, this Court ruled that notwithstanding the registration of the land in the name of only one of the heirs, the other heirs can claim their shares in "such action, judicial or extrajudicial, as may be necessary to partition the estate of the testator."[22]

Third. The Court of Appeals also reversed its first decision on the ground that to order partition will, in effect, rule and decide against Steelhouse Realty Development Corporation and Eloisa Castillo, both strangers to the present case, as to the properties registered in their names. This reasoning, however, ignores the fact that the majority of the properties involved in the present case are registered in respondents name, over which petitioner claims rights as a co-owner. Besides, other than the real properties, petitioner also seeks partition of a substantial amount of personal properties consisting of motor vehicles and several pieces of jewelry. By dismissing petitioners complaint for partition on grounds of due process and equity, the appellate court unwittingly denied petitioner his right to prove ownership over the claimed real and personal properties. The dismissal of petitioners complaint is unjustified since both ends may be amply served by simply excluding from the action for partition the properties registered in the name of Steelhouse Realty and Eloisa Castillo.

WHEREFORE, the amended decision of the Court of Appeals, dated May 7, 1998, is REVERSED and the case is REMANDED to the Regional Trial Court, Branch 59, Makati City for further proceedings on the merits. SO ORDERED.

[G.R. No. 152716. October 23, 2003]ELNA MERCADO-FEHR, petitioner, vs. BRUNO

FEHR, respondent.

PUNO, J.:

This case arose from a petition for declaration of nullity of marriage on the ground of psychological incapacity to comply with the essential marital obligations under Article 36 of the Family Code filed by petitioner Elna Mercado-Fehr against respondent Bruno Fehr before the Regional Trial Court of Makati in March 1997.[1]

After due proceedings, the trial court declared the marriage between petitioner and respondent void ab initio under Article 36 of the Family Code and ordered the dissolution of their conjugal partnership of property.[2] The dispositive portion of the Decision dated January 30, 1998 states:

WHEREFORE, in the light of the foregoing, the marriage between Elna D. Mercado and Bruno F. Fehr on March 14, 1985 is hereby declared null and void on the ground of psychological incapacity on the part of respondent to perform the essential obligations of marriage under Article 36 of the Family Code.

Accordingly, the conjugal partnership of property existing between the parties is dissolved and in lieu thereof, a regime of complete separation of property between the said spouses is established in accordance with the pertinent provisions of the Family Code, without prejudice to the rights previously acquired by creditors.

Custody over the two minor children, MICHAEL BRUNO MERCADO FEHR and PATRICK FRANZ FEHR, is hereby awarded to petitioner, she being the innocent spouse.

Let a copy of this Decision be duly recorded in the proper civil and property registries in accordance with Article 52 of the Family Code.

SO ORDERED.[3]

On August 24, 1999, the trial court issued an Order resolving the various motions[4] filed by respondent after the case had been

decided. The Order pertained to the properties held by the parties, thus: x x x x x x x x x

After a careful scrutiny of the inventory of properties submitted by both parties, the Court finds the following properties to be excluded from the conjugal properties, namely:

a) the Bacolod property covered by Transfer Certificate of Title No. T-137232, considering that the same is owned by petitioners parents, Herminio Mercado and Catalina D. Mercado xxx and

b) Suite 204 of the LCG Condominium covered by Condominium Certificate of Title No. 14735, considering that the same was purchased on installment basis by respondent with his exclusive funds prior to his marriage, as evidenced by a Contract to Sell dated July 26, 1983. xxx

Accordingly, the conjugal properties of the petitioner and respondent shall be distributed in the following manner:

TO PETITIONER ELNA MERCADO:

a. Ground Floor, LCG Condominium, with an area of 671.84 sq. m., covered by Condominium Certificate of Title No. 14734; and

b. Tamaraw FX (1995 model)

TO RESPONDENT BRUNO FRANZ FEHR:

a. Upper Basement, LCG Condominium, with an area of 180.81 sq. m. and covered by Condominium Certificate of Title No. 14733; and

b. Nissan Sentra with Plate No. FDJ-533 (1994 model)

Furthermore, Suite 204, LCG Condominium with an area of 113.54 sq. m. and covered by Condominium Certificate of Title NO. 14735 is hereby declared the EXCLUSIVE PROPERTY of respondent, BRUNO FRANZ FEHR. Accordingly, petitioner is hereby directed to transfer ownership of Suite 204 in the name of respondent, covered by Condominium Certificate of Title No. 14735, being respondents exclusive property, acquired prior to his marriage.

Anent the monthly rentals prior to the issuance of this Order of the subject properties, namely the Ground Floor Front (Fridays Club),

Ground Floor Rear Apartment and Upper Basement at LGC Condominium, all leased by Bar 4 Corporation, the same shall be shared by the parties in common, in proportion to one-half each or share and share alike, after deducting all expenses for Income Taxes, Business Permits, Realty Taxes, Municipal License fees, clearances, etc.Accordingly, petitioner is hereby directed to deliver to respondent the following: a) the balance of his share of the monthly rentals from February 1998 to May 1998; and b) his one-half share (1/2) of the monthly rentals of the aforesaid properties from June 1998 up to this date. Thereafter, the parties shall own and enjoy their respective share of the monthly rentals derived from the properties adjudicated to them as stated above.

The Petitioner and Respondent are further enjoined to jointly support their minor children, Michael and Patrick Fehr, for their education, uniforms, food and medical expenses.[5]

Petitioner filed a motion for reconsideration of said Order with respect to the adjudication of Suite 204, LCG Condominium and the support of the children. Petitioner alleged that Suite 204 was purchased on installment basis at the time when petitioner and respondent were living exclusively with each other as husband and wife without the benefit of marriage, hence the rules on co-ownership should apply in accordance with Article 147 of the Family Code. Petitioner further claimed that it would not be in the best interests of the children if she would be made to demand periodically from respondent his share in the support of the children. She instead proposed that the Upper Basement and the Lower Ground Floor of the LCG Condominium be adjudicated to her so that she could use the income from the lease of said premises for the support of the children.[6]

Resolving said motion, the trial court held in an Order dated October 5, 2000 that since the marriage between petitioner and respondent was declared void ab intio, the rules on co-ownership should apply in the liquidation and partition of the properties they own in common pursuant to Article 147 of the Family Code. The court, however, noted that the parties have already agreed in principle to divide the properties and/or proceeds from the sale thereof proportionately among them and their children as follows: 1/3 for petitioner, 1/3 for respondent and 1/3 for the children. It also affirmed its previous ruling that Suite 204 of LCG

Condominium was acquired prior to the couples cohabitation and therefore pertained solely to respondent.[7]

On November 28, 2000, petitioner filed a notice of appeal questioning the October 5, 2000 Order of the trial court.[8] Respondent filed an Opposition to the Notice of Appeal.[9] On January 12, 2001, petitioner withdrew the notice of appeal[10] and instead filed on the following day a special civil action for certiorari and prohibition with the Court of Appeals, questioning the findings of the trial court in its Order dated October 5, 2000.[11]

The Court of Appeals, in its Decision dated October 26, 2001, dismissed the petition for certiorari for lack of merit. The appellate court stated that petitioner has not shown any reason to warrant the issuance of a writ of certiorari as the errors she raised were mere errors of judgment which were the proper subject of an ordinary appeal, not a petition for certiorari.[12]

Petitioner filed a motion for reconsideration of said Decision, which was also denied by the appellate court.[13]

Hence this petition. Petitioner raises the following arguments:

1) Petitioner correctly filed a petition for certiorari and prohibition against the Regional Trial Court of Makati, Branch 149 in the Court of Appeals in view of the fact that the questioned orders were issued with grave abuse of discretion amounting to excess of or lack of jurisdiction.

2) The Court of Appeals erred in ruling that the questioned orders were errors of judgment and not of jurisdiction.[14]

We shall first address the procedural issue, whether the Court of Appeals erred in dismissing the special civil action for certiorari filed by petitioner.

Petitioner argues that the filing of a petition for certiorari with the Court of Appeals was proper because the trial court committed grave abuse of discretion in the issuance of its Order dated October 5, 2000, and there were no other speedy and adequate remedies available. She asserts that the trial court committed grave abuse of discretion when it held that Suite 204 of the LCG Condominium was the exclusive property of respondent, although it was established that they lived together as husband and wife beginning March 1983, before the execution of the Contract to Sell on July 26, 1983. Furthermore, the trial courts ruling dividing their properties into

three, instead of two as provided under Article 147 of the Family Code, or four, as allegedly agreed by the parties during a conference with the trial court judge on May 3, 2000, also constituted grave abuse of discretion.[15]

Respondent, on the other hand, contends that petitioner may no longer avail of any remedy, whether an appeal or a petition for certiorari, as she had lost all the right to appeal from the time the Decision of January 30, 1998 became final and executory. He argues that the Order of the trial court dated October 5, 2000 is no longer assailable because it was merely issued to execute the final and executory Decision of January 30, 1998. He also submits that the division of the properties into three and the distribution of 1/3 share each to the petitioner, the respondent, and their children was proper, in accordance with Articles 50, 51, 147 and 148 of the Family Code mandating the delivery of the presumptive legitime of the common children upon dissolution of the property regime. Respondent further claims Suite 204 of LCG Condominium to be his exclusive property as it was acquired on July 26, 1983, prior to their marriage on March 14, 1985.[16]

A petition for certiorari is the proper remedy when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, nor any plain speedy, and adequate remedy at law. Grave abuse of discretion is defined as the capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. As a general rule, a petition for certiorari will not lie if an appeal is the proper remedy such as when an error of judgment or procedure is involved. As long as a court acts within its jurisdiction and does not gravely abuse its discretion in the exercise thereof, any supposed error committed by it will amount to nothing more than an error of judgment reviewable by a timely appeal and not assailable by a special civil action of certiorari. However, in certain exceptional cases, where the rigid application of such rule will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed. Certiorari has been deemed to be justified, for instance, in order to prevent irreparable damage and injury to a party where the trial judge has capriciously and whimsically exercised his judgment, or where there may be danger of clear failure of justice, or where an ordinary appeal would simply be inadequate to relieve a party from the injurious effects of the judgment complained of.[17]

The exception applies to the case at bar. We reject respondents submission that all the appellate remedies of petitioner have been foreclosed when the Decision dated January 30, 1998 became final and executory. What is being questioned in this petition is not the January 30, 1998 Decision of the trial court declaring the marriage between petitioner and respondent void ab initio on the ground of psychological incapacity, but the Order of the trial court dated October 5, 2000 dividing the common properties of petitioner and respondent into three1/3 to petitioner, 1/3 to respondent and 1/3 to their children, and affirming its previous ruling that Suite 204 of LCG Condominium is the exclusive property of respondent. The issue on the validity of the marriage of petitioner and respondent has long been settled in the main Decision and may no longer be the subject of review. There were, however, incidental matters that had to be addressed regarding the dissolution of the property relations of the parties as a result of the declaration of nullity of their marriage. The questioned Order pertained to the division and distribution of the common properties of petitioner and respondent, pursuant to the courts directive in its main decision to dissolve the conjugal partnership. Said Order is a final Order as it finally disposes of the issues concerning the partition of the common properties of petitioner and respondent, and as such it may be appealed by the aggrieved party to the Court of Appeals via ordinary appeal. However, considering the merits of the case, the Court believes that a blind adherence to the general rule will result in miscarriage of justice as it will divest the petitioner of her just share in their common property, and thus, deprive her of a significant source of income to support their children whom the court had entrusted to her care. We have held that where a rigid application of the rule that certiorari cannot be a substitute for appeal will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed.[18]

We now go to the substantive issues. The crux of the petition is the ownership of Suite 204 of LCG Condominium and how the properties acquired by petitioner and respondent should be partitioned.

It appears from the facts, as found by the trial court, that in March 1983, after two years of long-distance courtship, petitioner left Cebu City and moved in with respondent in the latters residence in Metro Manila. Their relations bore fruit and their first child, Michael Bruno Fehr, was born on December 3, 1983. The couple got married on March 14, 1985. In the meantime, they purchased on installment

a condominium unit, Suite204, at LCG Condominium, as evidenced by a Contract to Sell dated July 26, 1983 executed by respondent as the buyer and J.V. Santos Commercial Corporation as the seller. Petitioner also signed the contract as witness, using the name Elna Mercado Fehr. Upon completion of payment, the title to the condominium unit was issued in the name of petitioner.[19]

In light of these facts, we give more credence to petitioners submission that Suite 204 was acquired during the parties cohabitation.Accordingly, under Article 147 of the Family Code, said property should be governed by the rules on co-ownership. The Family Code provides:

Article 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly to the acquisition thereof if the formers efforts consisted in the care and maintenance of their family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. (emphasis supplied)

Article 147 applies to unions of parties who are legally capacitated and not barred by any impediment to contract marriage, but whose marriage is nonetheless void,[20] as in the case at bar. This provision creates a co-ownership with respect to the properties they acquire during their cohabitation.

We held in Valdes vs. Regional Trial Court, Br. 102, Quezon City:[21]

This peculiar kind of co-ownership applies when a man and a woman, suffering no legal impediment to marry each other, so exclusively live together as husband and wife under a void marriage or without the benefit of marriage. The term capacitated in the provision (in the first paragraph of the law) refers to the legal capacity of a party to contract marriage, i.e., any male or female of the age of eighteen years or upwards not under any of the impediments mentioned in Article 37 and 38 of the Code.

Under this property regime, property acquired by both spouses through their work and industry shall be governed by the rules on equal co-ownership. Any property acquired during the union is prima facie presumed to have been obtained through their joint efforts. A party who did not participate in the acquisition of the property shall still be considered as having contributed thereto jointly if said partys efforts consisted in the care and maintenance of the family household.

Thus, for Article 147 to operate, the man and the woman: (1) must be capacitated to marry each other; (2) live exclusively with each other as husband and wife; and (3) their union is without the benefit of marriage or their marriage is void. All these elements are present in the case at bar.It has not been shown that petitioner and respondent suffered any impediment to marry each other. They lived exclusively with each other as husband and wife when petitioner moved in with respondent in his residence and were later united in marriage. Their marriage, however, was found to be void under Article 36 of the Family Code because of respondents psychological incapacity to comply with essential marital obligations.

The disputed property, Suite 204 of LCG Condominium, was purchased on installment basis on July 26, 1983, at the time when petitioner and respondent were already living together. Hence, it

should be considered as common property of petitioner and respondent.

As regards the settlement of the common properties of petitioner and respondent, we hold that the Civil Code provisions on co-ownership should apply. There is nothing in the records that support the pronouncement of the trial court that the parties have agreed to divide the properties into three1/3 share each to the petitioner, the respondent and their children. Petitioner, in fact, alleges in her petition before this Court that the parties have agreed on a four-way division of the properties1/4 share each to the petitioner and the respondent, and 1/4 share each to their two children. Moreover, respondents argument that the three-way partition is in accordance with Articles 50 and 51 of the Family Code does not hold water as said provisions relate only to voidable marriages and exceptionally to void marriages under Article 40 of the Family Code, i.e., the declaration of nullity of a subsequent marriage contracted by a spouse of a prior void marriage before the latter is judicially declared void.[22]

In sum, we rule in favor of the petitioner. We hold that Suite 204 of LCG Condominium is a common property of petitioner and respondent and the property regime of the parties should be divided in accordance with the law on co-ownership.

IN VIEW WHEREOF, the petition is GRANTED. The case is hereby REMANDED to the Regional Trial Court of Makati, Branch 149 for liquidation of the properties of petitioner and respondent in accordance with this Courts ruling. SO ORDERED.

[G.R. No. 150611. June 10, 2003]JACINTO SAGUID, petitioner, vs. HON. COURT OF

APPEALS, THE REGIONAL TRIAL COURT, BRANCH 94, BOAC, MARINDUQUE and GINA S. REY, respondents.

YNARES-SANTIAGO, J.:

The regime of limited co-ownership of property governing the union of parties who are not legally capacitated to marry each other, but who nonetheless live together as husband and wife, applies to

properties acquired during said cohabitation in proportion to their respective contributions. Co-ownership will only be up to the extent of the proven actual contribution of money, property or industry. Absent proof of the extent thereof, their contributions and corresponding shares shall be presumed to be equal.[1]

Seventeen-year old Gina S. Rey was married,[2] but separated de facto from her husband, when she met petitioner Jacinto Saguid in Marinduque, sometime in July 1987.[3] After a brief courtship, the two decided to cohabit as husband and wife in a house built on a lot owned by Jacintos father.[4] Their cohabitation was not blessed with any children. Jacinto made a living as the patron of their fishing vessel Saguid Brothers.[5] Gina, on the other hand, worked as a fish dealer, but decided to work as an entertainer in Japan from 1992 to 1994 when her relationship with Jacintos relatives turned sour. Her periodic absence, however, did not ebb away the conflict with petitioners relatives. In 1996, the couple decided to separate and end up their 9-year cohabitation.[6]

On January 9, 1997, private respondent filed a complaint for Partition and Recovery of Personal Property with Receivership against the petitioner with the Regional Trial Court of Boac, Marinduque. She alleged that from her salary of $1,500.00 a month as entertainer in Japan, she was able to contribute P70,000.00 in the completion of their unfinished house. Also, from her own earnings as an entertainer and fish dealer, she was able to acquire and accumulate appliances, pieces of furniture and household effects, with a total value of P111,375.00. She prayed that she be declared the sole owner of these personal properties and that the amount of P70,000.00, representing her contribution to the construction of their house, be reimbursed to her.

Private respondent testified that she deposited part of her earnings in her savings account with First Allied Development Bank.[7] Her Pass Book shows that as of May 23, 1995, she had a balance of P21,046.08.[8] She further stated that she had a total of P35,465.00[9] share in the joint account deposit which she and the petitioner maintained with the same bank.[10] Gina declared that said deposits were spent for the purchase of construction materials, appliances and other personal properties.[11]

In his answer[12] to the complaint, petitioner claimed that the expenses for the construction of their house were defrayed solely from his income as a captain of their fishing vessel. He averred that private respondents meager income as fish dealer rendered her

unable to contribute in the construction of said house. Besides, selling fish was a mere pastime to her; as such, she was contented with the small quantity of fish allotted to her from his fishing trips. Petitioner further contended that Gina did not work continuously in Japan from 1992 to 1994, but only for a 6-month duration each year. When their house was repaired and improved sometime in 1995-1996, private respondent did not share in the expenses because her earnings as entertainer were spent on the daily needs and business of her parents. From his income in the fishing business, he claimed to have saved a total of P130,000.00, P75,000.00 of which was placed in a joint account deposit with private respondent.This savings, according to petitioner was spent in purchasing the disputed personal properties.

On May 21, 1997, the trial court declared the petitioner as in default for failure to file a pre-trial brief as required by Supreme Court Circular No. 1-89.[13]

On May 26, 1997, petitioner filed a motion for reconsideration[14] of the May 21, 1997 order, which was denied on June 2, 1997, and private respondent was allowed to present evidence ex parte.[15] Petitioner filed another motion for reconsideration but the same was also denied on October 8, 1997.

On July 15, 1998, a decision[16] was rendered in favor of private respondent, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the plaintiff Gina S. Rey against defendant Jacinto Saguid:

a) Ordering the partition of the house identified as plaintiffs Exhibit C and D and directing the defendant to return and/or reimburse to the plaintiff the amount of seventy thousand pesos (P70,000,00) which the latter actually contributed to its construction and completion;

b) Declaring the plaintiff as the exclusive owner of the personal properties listed on Exhibit M;

c) Ordering the defendant, and/or anyone in possession of the aforesaid personal properties, to return and/or deliver the same to the plaintiff; and

d) Ordering the defendant to pay the plaintiff moral damages in the sum of fifty thousand pesos (P50,000.00) plus the costs of suit.

SO ORDERED.[17]

On appeal, said decision was affirmed by the Court of Appeals; however, the award of P50,000.00 as moral damages was deleted for lack of basis.[18] The appellate court ruled that the propriety of the order which declared the petitioner as in default became moot and academic in view of the effectivity of the 1997 Rules of Civil Procedure. It explained that the new rules now require the filing of a pre-trial brief and the defendants non-compliance therewith entitles the plaintiff to present evidence ex parte.

Both parties filed motions for reconsideration which were denied; hence, petitioner filed the instant petition based on the following assigned errors:

A. THE HONORABLE COURT OF APPEALS COMMIT[TED] A REVERSIBLE ERROR IN APPLYING RETROACTIVELY THE 1997 RULES OF CIVIL PROCEDURE IN THE PRESENT CASE AND HOLDING THE FIRST ASSIGNED ERROR THEREIN MOOT AND ACADEMIC THUS, FAILED TO RULE ON THE PROPRIETY OF THE TRIAL COURTS REFUSAL TO SET ASIDE THE ORDER OF DEFAULT DUE TO MISTAKE AND/OR EXCUSABLE NEGLIGENCE COMMITTED BY PETITIONER.

B. THE HONORABLE COURT OF APPEALS COMMIT[TED] A REVERSIBLE ERROR IN RELYING ON THE FACTUAL FINDINGS OF THE TRIAL COURT WHICH RECEIVED THE EVIDENCE OF HEREIN RESPONDENT ONLY EX PARTE.[19]

The issues for resolution are: (1) whether or not the trial court erred in allowing private respondent to present evidence ex parte; and (2) whether or not the trial courts decision is supported by evidence.

Under Section 6, Rule 18 of the 1997 Rules of Civil Procedure, the failure of the defendant to file a pre-trial brief shall have the same effect as failure to appear at the pre-trial, i.e., the plaintiff may present his evidence ex parte and the court shall render judgment on the basis thereof.[20]The remedy of the defendant is to file a motion for reconsideration[21] showing that his failure to file a pre-trial brief was due to fraud, accident, mistake or excusable neglect.[22] The motion need not really stress the fact that the defendant has a valid and meritorious defense because his answer which contains his defenses is already on record.[23]

In the case at bar, petitioner insists that his failure to file a pre-trial brief is justified because he was not represented by counsel. This justification is not, however, sufficient to set aside the order directing private respondent to present evidence ex parte, inasmuch as the petitioner chose at his own risk not to be represented by counsel. Even without the assistance of a lawyer, petitioner was able to file a motion for extension to file answer,[24] the required answer stating therein the special and affirmative defenses,[25] and several other motions.[26] If it were true that petitioner did not understand the import of the April 23, 1997 order directing him to file a pre-trial brief, he could have inquired from the court or filed a motion for extension of time to file the brief. Instead, he waited until May 26, 1997, or 14 days from his alleged receipt of the April 23, 1997 order before he filed a motion asking the court to excuse his failure to file a brief. Pre-trial rules are not to be belittled or dismissed because their non-observance may result in prejudice to a partys substantive rights. Like all rules, they should be followed except only for the most persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.[27]

In the instant case, the fact that petitioner was not assisted by a lawyer is not a persuasive reason to relax the application of the rules. There is nothing in the Constitution which mandates that a party in a non-criminal proceeding be represented by counsel and that the absence of such representation amounts to a denial of due process. The assistance of lawyers, while desirable, is not indispensable. The legal profession is not engrafted in the due process clause such that without the participation of its members the safeguard is deemed ignored or violated.[28]

However, the Court of Appeals erred in ruling that the effectivity of the 1997 Rules of Civil Procedure, specifically, Section 6, Rule 18 thereof, rendered moot and academic the issue of whether or not the plaintiff may be allowed to present evidence ex parte for failure of the defendant to file a pre-trial brief. While the rules may indeed be applied retroactively, the same is not called for in the case at bar. Even before the 1997 Rules of Civil Procedure took effect on July 1, 1997, the filing of a pre-trial brief was required under Circular No. 1-89 which became effective on February 1, 1989. Pursuant to the said circular, [f]ailure to file pre-trial briefs may be given the same effect as the failure to appear at the pre-trial, that is, the party may be declared non-suited or considered as in default.[29]

Coming now to the substantive issue, it is not disputed that Gina and Jacinto were not capacitated to marry each other because the former was validly married to another man at the time of her cohabitation with the latter. Their property regime therefore is governed by Article 148[30] of the Family Code, which applies to bigamous marriages, adulterous relationships, relationships in a state of concubinage, relationships where both man and woman are married to other persons, and multiple alliances of the same married man. Under this regime, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions ...[31] Proof of actual contribution is required.[32]

In the case at bar, although the adulterous cohabitation of the parties commenced in 1987, which is before the date of the effectivity of the Family Code on August 3, 1998, Article 148 thereof applies because this provision was intended precisely to fill up the hiatus in Article 144 of the Civil Code.[33] Before Article 148 of the Family Code was enacted, there was no provision governing property relations of couples living in a state of adultery or concubinage. Hence, even if the cohabitation or the acquisition of the property occurred before the Family Code took effect, Article 148 governs.[34]

In the cases of Agapay v. Palang,[35] and Tumlos v. Fernandez,[36] which involved the issue of co-ownership of properties acquired by the parties to a bigamous marriage and an adulterous relationship, respectively, we ruled that proof of actual contribution in the acquisition of the property is essential. The claim of co-ownership of the petitioners therein who were parties to the bigamous and adulterous union is without basis because they failed to substantiate their allegation that they contributed money in the purchase of the disputed properties. Also in Adriano v. Court of Appeals,[37] we ruled that the fact that the controverted property was titled in the name of the parties to an adulterous relationship is not sufficient proof of co-ownership absent evidence of actual contribution in the acquisition of the property.

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence and reliance must be had on the strength of the partys own evidence and not upon the weakness of the opponents defense.[38] This applies with more vigor where, as in the instant

case, the plaintiff was allowed to present evidence ex parte. The plaintiff is not automatically entitled to the relief prayed for. The law gives the defendant some measure of protection as the plaintiff must still prove the allegations in the complaint. Favorable relief can be granted only after the court is convinced that the facts proven by the plaintiff warrant such relief.[39] Indeed, the party alleging a fact has the burden of proving it and a mere allegation is not evidence.[40]

In the case at bar, the controversy centers on the house and personal properties of the parties. Private respondent alleged in her complaint that she contributed P70,000.00 for the completion of their house. However, nowhere in her testimony did she specify the extent of her contribution. What appears in the record are receipts[41] in her name for the purchase of construction materials on November 17, 1995 and December 23, 1995, in the total amount of P11,413.00.

On the other hand, both parties claim that the money used to purchase the disputed personal properties came partly from their joint account with First Allied Development Bank. While there is no question that both parties contributed in their joint account deposit, there is, however, no sufficient proof of the exact amount of their respective shares therein. Pursuant to Article 148 of the Family Code, in the absence of proof of extent of the parties respective contribution, their share shall be presumed to be equal. Here, the disputed personal properties were valued at P111,375.00, the existence and value of which were not questioned by the petitioner. Hence, their share therein is equivalent to one-half, i.e., P55,687.50 each.

The Court of Appeals thus erred in affirming the decision of the trial court which granted the reliefs prayed for by private respondent. On the basis of the evidence established, the extent of private respondents co-ownership over the disputed house is only up to the amount of P11,413.00, her proven contribution in the construction thereof. Anent the personal properties, her participation therein should be limited only to the amount of P55,687.50.

As regards the trial courts award of P50,000.00 as moral damages, the Court of Appeals correctly deleted the same for lack of basis.

WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in CA-G.R. CV No. 64166 is AFFIRMED with MODIFICATION. Private respondent Gina S. Rey is declared co-owner of petitioner Jacinto Saguid in the controverted house to the

extent of P11,413.00 and personal properties to the extent of P55,687.50. Petitioner is ordered to reimburse the amount of P67,100.50 to private respondent, failing which the house shall be sold at public auction to satisfy private respondents claim.

SO ORDERED.