BA Finance Corp vs CA BA Finance Corp vs.

CA GR 61464, May 28 1988 FACTS: Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and as a representative of A&L Industries. Augusto presented an alleged special power of attorney executed by his wife, Lily Yulo, who managed the business and under whose name the said business was registered, purportedly authorized the husband to procure the loan and sign the promissory note. 2months prior the procurement of the loan, Augusto left Lily and their children which in turn abandoned their conjugal home. When the obligation became due and demandable, Augusto failed to pay the same. The petitioner prayed for the issuance of a writ of attachment alleging that said spouses were guilty of fraud consisting of the execution of Deed of Assignment assigning the rights, titles and interests over a construction contract executed by and between the spouses and A. Soriano Corporation. The writ hereby prayed for was issued by the trial court and not contented with the order, petitioner filed a motion for the examination of attachment debtor alleging that the properties attached by the sheriff were not sufficient to secure the satisfaction of any judgment which was likewise granted by the court. ISSUE: WON A&L Industries can be held liable for the obligations contracted by the husband. HELD: A&L Industries is a single proprietorship, whose registered owner is Lily Yulo. The said proprietorship was established during the marriage and assets were also acquired during the same. Hence, it is presumed that the property forms part of the conjugal partnership of the spouses and be held liable for the obligations contracted by the husband. However, for the property to be liable, the obligation contracted by the husband must have redounded to the benefit of the conjugal partnership. The obligation was contracted by Augusto for his own benefit because at the time he incurred such obligation, he had already abandoned his family and left their conjugal home. He likewise made it appear that he was duly authorized by his wife in behalf of the company to procure such loan from the petitioner. Clearly, there must be the requisite showing that some advantage accrued to the welfare of the spouses. Thus, the Court ruled that petitioner cannot enforce the obligation contracted by Augusto against his conjugal properties with Lily. Furthermore, the writ of attachment cannot be issued against the said properties and that the petitioner is ordered to pay Lily actual damages amouting to P660,000.00.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 79734 December 8, 1988 MARMONT RESORT HOTEL ENTERPRISES, petitioner, vs. FEDERICO GUIANG, AURORA GUIANG, and COURT OF APPEALS, respondents. Isagani M. Jungco for petitioner. FELICIANO, J.: The present Petition for Review seeks to set aside the Decision dated 9 December 1986 of the Court of Appeals in CA-G.R. CV 03299. The appellate court affirmed a Decision dated 31 May 1983 of Branch 83 of the Regional Trial Court of Olongapo City dismissing the complaint in Civil Case No. 2896-C filed by petitioner company against private respondent spouses.

On 2 May 1975, a Memorandum of Agreement was executed between Maris Trading and petitioner Marmont Resort Hotel Enterprises, Inc. ("Marmont"), a corporation engaged in the hotel and resort business with office and establishment at Olongapo City. Under the agreement, Maris Trading undertook to drill for water and to provide all equipment necessary to install and complete a water supply facility to service the Marmont Resort Hotel in Olongapo, for a stipulated fee of P40,000.00. In fulfillment of its contract, Maris Trading drilled a well and installed a water pump on a portion of a parcel of land situated in Olongapo City, then occupied by respondent spouses Federico and Aurora Guiang. Five (5) months later, a second Memorandum of Agreement was executed between Maris Trading and Aurora Guiang, with Federico Guiang signing as witness. This second agreement in essential part read: That the First Party [Maris Trading] has dug, drilled and tapped water source for Marmont Resort, located at Bo. Barretto, Olongapo City in accordance with their agreement executed on May 2, 1975 and notarized before Isagani M. Jungco, Notary Public and entered as Doc. No. 166; Page No. 135; Book No. XV; Series of 1975. That the First Party has erected, built and drilled for the water source of Marmont Resort on the land owned by the Second Party [Aurora Guiang] at the corner of J. Montelibano Street and Maquinaya Drive (Provincial Road) with the latter's permission. That for and in consideration of the sum of P1,500.00 the Second Party hereby Sell, Transfer and Cede all possessory rights, interest and claims over that portion of the lot wherein the water source of Marmont Resort is located unto and in favor of Maris Trading. After some time, the water supply of the Marmont Resort Hotel became inadequate to meet the hotel's water requirements. Petitioner Marmont secured the services of another contractor (the name of which was not disclosed), which suggested that in addition to the existing water pump, a submersible pump be installed to increase the pressure and improve the flow of water to the hotel. Accordingly, Juan Montelibano, Jr., manager of the Marmont Resort Hotel, sought permission from the Guiang spouses to inspect the water pump which had been installed on the portion of the land previously occupied by the spouses and to make the necessary additional installations thereon. No such permission, however, was granted. On 13 May 1980, petitioner Marmont filed a Complaint 2 against the Guiang spouses for damages resulting from their refusal to allow representatives of petitioner and the second contractor firm entry into the water facility site. The claimed damages were broken down as follows: (a) P10,000.00 representing the amount advanced in payment to the second contractor; (b) P40,000.00 representing the total project cost of the installation made by Maris Trading: (c) P50,000.00 representing additional expenses incurred and incidental losses resulting from failure of the original pump to cope with the water requirements of the Marmont Resort Hotel; and (d) P10,000.00 for Attorney's fees. In their Answer, 3 the Guiang spouses (defendants below) denied having had any previous knowledge of the first Memorandum of Agreement and asserted that the second Memorandum of Agreement was invalid for not having been executed in accordance with law. The spouses added a counterclaim for damages in the amount of P200,000.00. On 2 October 1980, at the pre-trial conference, the parties agreed on the following stipulation of facts and issues embodied in a Pre-Trial Order: 4 III In addition to the admission made elsewhere in their respective pleadings, the parties entered into the following stipulation of facts: 1. Plaintiff is a corporation duly organized and existing under the laws of the Philippines with office at Montelibano Street, Barrio Barretto, Olongapo City; 2. The contract referred to in paragraph 2 of the complaint between the plaintiff and Maris Trading is contained in a document captioned

Memorandum Agreement executed on May 2, 1975, a xerox copy of which is Annex 'A' of plaintiffs complaint; 3. On October 7, 1975, the Maris Trading represented by Ceferino Cabral and defendant Aurora Guiang entered into a memorandum agreement; 4. The portion sold under Annex 'A' is still a part of the public domain. IV The plaintiff marked the following exhibits in evidence: Exhibit 'A'-Memorandum Agreement dated May 2, 1975 Exhibit 'B-Memorandum Agreement dated October 7, 1975 V The issues left to be ventilated during the trial are the following: 1. Whether defendants has actually prohibited the plaintiff [from) making repairs, [on] the pump constructed by Maris Trading for the plaintiff under the agreement Exhibit 'A,' if so; 2. Whether defendants [have] the right to prohibit the Maris Trading from performing the repairs and if not 3. Whether defendants are liable for damages under the human relations provision of the Civil Code. On I January 1980, the Guiang spouses moved to dismiss the Complaint. 5 The spouses there assailed the validity of the second Memorandum of Agreement, alleging that the subject matter thereof involved conjugal property alienated by Aurora Guiang without the marital consent of her husband, Federico Guiang. Further, it was alleged that the land upon which the hotel's water supply facility was installed-and which the Guiang spouses occupied-formed part of the public domain and was then still the subject of a Miscellaneous Sales Application submitted by Federico Guiang. The Motion to Dismiss, however, was denied by the trial court. No evidence having been adduced by the Guiang spouses on their behalf, the case was submitted for derision. On 31 May 1983, the trial court rendered a decision, 6 dismissing the complaint. The trial court found that Aurora Guiang had validly alienated her rights over the disputed portion of land to Maris Trading, but held that the evidence failed to show that Maris Trading, in turn, had transferred such rights to petitioner Marmont. Petitioner Marmont appealed to the Court of Appeals which affirmed the decision of the trial court and dismissed the appeal for lack of merit. 7 The appellate court, citing Section 55, Rule 132 of the Revised Rules of Court, held that the first and second Memoranda of Agreement could not legally be considered by the court as included in the body of evidence of the case, as neither document had been formally offered in evidence by either party. It also held that, in any event, neither document showed that Marmont had in fact acquired from Maris Trading whatever rights the latter had over the land in dispute. In the instant Petition for Review, petitioner assigns the following errors: 8 1. The Court of Appeals erred in not considering the Memorandum of Agreement of May 2, 1975 and 7 October 1975 as the same were already admitted in the pre-trial order; and

2. The Court of Appeals erred in deciding that ownership belongs to Maris Trading hence, private respondent Guiang can prohibit Marmont Resort from entering the land. We find for the petitioner. Both the trial and appellate courts held that the first and second Memoranda of Agreement are not properly considered as forming part of the record of this case, because neither had been formally presented and offered in evidence at the trial of Civil Case No. 2896-C. The record shows, however, as noted earlier, that at the pre-trial conference held on 2 October 1980, both petitioner Marmont and respondent spouses had agreed upon a stipulation of facts and issues recognizing the existence of those same two (2) agreements. Such stipulation of facts constitutes a judicial admission, the veracity of which requires no further proof and which may be controverted only upon a clear showing that such stipulation had been entered into through "palpable mistake." On this point, Section 2, Rule 129 of the Revised Rules of Court provides: Section 2. Judicial Admissions.--Admission made by the parties in the pleadings, or in the course of the trial or other proceedings do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistake. (emphasis supplied) There has been no showing and respondent spouses do not claim that "palpable mistake" had intervened here, in respect of the formulation of the facts stipulated by the parties at the pre-trial conference. Absent any such showing, that stipulation of facts is incontrovertible, 9 and may be relied upon by the courts. 10 Respondent spouses are estopped from raising as an issue in this case the existence and admissibility in evidence of both the first and second Memoranda of Agreement which, having been marked as exhibits during pre-trial, properly form part of the record of this case, even though not formally offered in evidence after trial. 11 We consider briefly respondent spouses' argument that the second Memorandum of Agreement was invalid for having been executed by Aurora Guiang without the marital consent of Federico, contrary to Articles 165 and 172 of the Civil Code. Article 165 and 172 state the general principle under our civil law, that the wife may not validly bind the conjugal partnership without the consent of the husband, who is legally the administrator of the conjugal partnership. In this particular case, however, as noted earlier, the second Memorandum of Agreement, although ostensibly contracted solely by Aurora Guiang with Maris Trading, was also signed by her husband Federico, as one of the witnesses thereto. This circumstance indicates not only that Federico was present during the execution of the agreement but also that he had, in fact, given his consent to the execution thereof by his wife Aurora. Otherwise, he should not have appended his signature to the document as witness. Respondent spouses cannot now disown the second Memorandum of Agreement as their effective consent thereto is sufficiently manifested in the document itself. That the land in dispute was, at the time of execution of the second Memorandum of Agreement, public land, is of no consequence here. Pending approval of Federico's Miscellaneous Sales Application over said land, respondent spouses enjoyed possessory and other rights over the same which could validly be assigned or transferred in favor of third persons. In this case, respondent spouses chose to transfer such rights (over the portion upon which the water pump was installed) to Maris Trading, as evidenced by the fourth paragraph of the second Memorandum of Agreement, quoted earlier. Furthermore, assuming (though only for the sake of argument) that the alienation to Maris Trading was legally objectionable, respondent spouses are not the proper parties to raise the issue of invalidity, they and Maris Trading being in pari delicto. Only the government may raise that issue. Finally, respondent spouses allege that dismissal of the complaint by the trial court was not improper as petitioner Marmont was not privy to the second Memorandum of Agreement, and that accordingly, petitioner had no valid cause of action against respondents. A closer scrutiny of the second and third paragraphs of the second Memorandum of Agreement discloses that the first Memorandum of Agreement, including the obligations imposed thereunder upon Maris Trading, had been acknowledged therein:

That the First Party (i.e., Maris Trading) has dug, drilled and tapped water source for Marmont Resort, located at Bo. Barretto, Olongapo City in accordance with their agreement executed on May 2, 1975 and notarized before Isagani M. Jungco, Notary Public and entered as Doc. No. 166; Page No. 135; Book No. XV; Series of 1975. That the First Party has erected, built and drilled for the water source of Marmont Resort on the land owned by the Second Party [respondent spouses] at the corner of J. Montelibano Street and Maquinaya Drive (Provincial Road) with the latter's permission;... (Emphasis supplied) The above paragraphs establish, among other things, that construction work had been performed by Maris Trading on the land occupied by respondent spouses; that such construction work had been performed in accordance with terms and conditions stipulated in the first Memorandum of Agreement and that the purpose of the work was to build a water supply facility for petitioner Marmont. The same excerpts also show that the work so performed was with the knowledge and consent of the Guiang spouses, who were then occupying the land. It is clear from the foregoing stipulations that petitioner Marmont was to benefit from the second Memorandum of Agreement. In fact, said stipulations appear to have been designed precisely to benefit petitioner and, thus, partake of the nature of stipulations pour autrui, contemplated in Article 1311 of the Civil Code. A stipulation pour autrui is a stipulation in favor of a third person conferring a clear and deliberate favor upon him, which stipulation is found in a contract entered into by parties neither of whom acted as agent of the beneficiary. 12 We believe and so hold that the purpose and intent of the stipulating parties (Maris Trading and respondent spouses) to benefit the third person (petitioner Marmont) is sufficiently clear in the second Memorandum of Agreement. Marmont was not of course a party to that second Agreement but, as correctly pointed out by the trial court and the appellate court, the respondent spouses could not have prevented Maris Trading from entering the property possessory rights over which had thus been acquired by Maris Trading. That respondent t spouses remained in physical possession of that particular bit of land, is of no moment; they did so simply upon the sufferance of Maris Trading. Had Maris Trading, and not the respondent spouses, been in physical possession, we believe that Marmont would have been similarly entitled to compel Maris Trading to give it (Marmont) access to the site involved. The two (2) courts below failed to take adequate account of the fact that the sole purpose of Maris Trading in acquiring possessory rights over that specific portion of the land where well and pump and piping had been installed, was to supply the water requirements of petitioner's hotel. That said purpose was known by respondent spouses, is made explicit by the second Memorandum of Agreement. Maris Trading itself had no need for a water supply facility; neither did the respondent spouses. The water facility was intended solely for Marmont Resort Hotel. The interest of Marmont cannot therefore be regarded as merely "incidental ." 13 Finally, even if it be assumed (for purposes of argument merely) that the second Memorandum of Agreement did not constitute a stipulation pour autrui, still respondent spouses, in the circumstances of this case, must be regarded as having acted contrary to the principles of honesty, good faith and fair dealing embodied in Articles 19 and 21 of the Civil Code when they refused petitioner Marmont access to the water facility to inspect and repair the same and to increase its capacity and thereby to benefit from it. In so doing, respondent spouses forced petitioner Marmont to locate an alternative source of water for its hotel which of course involved expenditure of money and perhaps loss of hotel revenues. We believe they should respond in damages. The evidence on record, however, appears insufficient for determination of the amount of damages for which respondent spouses should be liable. For this reason, the Court is compelled to remand this case to the trial court for determination of such damages in appropriate further proceedings. WHEREFORE, the Petition for Review on certiorari is hereby GRANTED. The Decision dated 9 December 1986 of the Court of Appeals in C.A. G.R. CV No. 03299, as well as the Decision dated 31 May 1983 of the Regional Trial Court of Olongapo City in Civil Case No. 2896-C, are REVERSED. This case is REMANDED to the trial court for determination, in further proceedings consistent with this decision, of the amount of petitioner is entitled to receive from respondent spouses. No pronouncement as to costs. SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur

Ayala Investments vs CA Ayala Investments vs CA GR No. 118305, February 12, 1998 FACTS: Philippine Blooming Mills (PBM) obtained P50,300,000.00 loan from petitioner Ayala Investment and Development Corporation (AIDC). Respondent Alfredo Ching, EVP of PBM, executed security agreements on December 1980 and March 1981 making him jointly and severally answerable with PBMs indebtedness to AIDC. PBM failed to pay the loan hence filing of complaint against PBM and Ching. The RTC rendered judgment ordering PBM and Ching to jointly and severally pay AIDC the principal amount with interests. Pending the appeal of the judgment, RTC issued writ of execution. Thereafter, Magsajo, appointed deputy sheriff, caused the issuance and service upon respondent spouses of the notice of sheriff sale on 3 of their conjugal properties on May 1982. Respondent spouses filed injunction against petitioners on the ground that subject loan did not redound to the benefit of the said conjugal partnership. CA issued a TRP enjoining lower court from enforcing its order paving way for the scheduled auction sale of respondent spouses conjugal properties. A certificate of sale was issued to AIDC, being the only bidder and was registered on July 1982. ISSUE: Whether or not the debts and obligations contracted by the husband alone is considered for the benefit of the conjugal partnership and is it chargeable. HELD: The loan procured from AIDC was for the advancement and benefit of PBM and not for the benefit of the conjugal partnership of Ching. Furthermore, AIDC failed to prove that Ching contracted the debt for the benefit of the conjugal partnership of gains. PBM has a personality distinct and separate from the family of Ching despite the fact that they happened to be stockholders of said corporate entity. Clearly, the debt was a corporate debt and right of recourse to Ching as surety is only to the extent of his corporate stockholdings. Based from the foregoing jurisprudential rulings of the court, 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. Ching only signed as a surety for the loan contracted with AIDC in behalf of PBM. Signing as a surety is certainly not an exercise of an industry or profession, it is not embarking in a business. Hence, the conjugal partnership should not be made liable for the surety agreement which was clearly for the benefit of PBM. The court did not support the contention of the petitioner that a benefit for the family may have resulted when the guarantee was in favor of Chings employment (prolonged tenure, appreciation of shares of stocks, prestige enhanced) since the benefits contemplated in Art. 161 of the Civil Code must be one directly resulting from the loan. It must not be a mere by product or a spin off of the loan itself.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 143382 November 29, 2006 SECURITY BANK and TRUST COMPANY, Petitioner, vs. MAR TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL J. LACSON and RICARDO A. LOPA, Respondents.

DECISION CORONA, J.: May the conjugal partnership be held liable for an indemnity agreement entered into by the husband to accommodate a third party? This issue confronts us in this petition for review on certiorari assailing the November 9, 1999 decision the Court of Appeals (CA) in CA-G.R. CV No. 48107.
1

of

On May 7, 1980, respondent Mar Tierra Corporation, through its president, Wilfrido C. Martinez, applied for a P12,000,000 credit accommodation with petitioner Security Bank and Trust Company. Petitioner approved the application and entered into a credit line agreement with respondent corporation. It was secured by an indemnity agreement executed by individual respondents Wilfrido C. Martinez, Miguel J. Lacson and Ricardo A. Lopa who bound themselves jointly and severally with respondent corporation for the payment of the loan. On July 2, 1980, the credit line agreement was amended and increased to P14,000,000. Individual respondents correspondingly executed a new indemnity agreement in favor of the bank to secure the increased credit line. On September 25, 1981, respondent corporation availed of its credit line and received the sum of P9,952,000 which it undertook to pay on or before November 30, 1981. It was able to pay P4,648,000 for the principal loan and P2,729,195.56 for the interest and other charges. However, respondent corporation was not able to pay the balance as it suffered business reversals, eventually ceasing operations in 1984. Unable to collect the balance of the loan, petitioner filed a complaint for a sum of money with a prayer for preliminary attachment against respondent corporation and individual respondents in the Regional Trial Court (RTC) of Makati, Branch 66. It was docketed as Civil Case No. 3947. Subsequently, however, petitioner had the case dismissed with respect to individual respondents Lacson and Lopa, 2 leaving Martinez as the remaining individual respondent. On August 10, 1982, the RTC issued a writ of attachment on all real and personal properties of respondent corporation and individual respondent Martinez. As a consequence, the conjugal house and lot of the spouses Wilfrido and Josefina Martinez in Barrio Calaanan, Caloocan City covered by Transfer Certificate of Title (TCT) No. 49158 was levied on. The RTC rendered its decision 3 on June 20, 1994. It held respondent corporation and individual respondent Martinez jointly and severally liable to petitioner for P5,304,000 plus 12% interest per annum and 5% penalty commencing on June 21, 1982 until fully paid, plus P10,000 as attorneys fees. It, however, found that the obligation contracted by individual respondent Martinez did not redound to the benefit of his family, hence, it ordered the lifting of the attachment on the conjugal house and lot of the spouses Martinez. Dissatisfied with the RTC decision, petitioner appealed to the CA but the appellate court affirmed the trial courts decision in toto. Petitioner sought reconsideration but it was denied. Hence, this petition. Petitioner makes two basic assertions: (1) the RTC and CA erred in finding that respondent corporation availed of P9,952,000 only from its credit line and not the entire P14,000,000 and (2) the RTC and CA were wrong in ruling that the conjugal partnership of the Martinez spouses could not be held liable for the obligation incurred by individual respondent Martinez. We uphold the CA. Factual findings of the CA, affirming those of the trial court, will not be disturbed on appeal but must be accorded great weight. 4 These findings are conclusive not only on the parties but on this Court as well. 5

The CA affirmed the finding of the RTC that the amount availed of by respondent corporation from its credit line with petitioner was only P9,952,000. Both courts correctly pointed out that petitioner itself admitted this amount when it alleged in paragraph seven of its complaint that respondent corporation "borrowed and received the principal sum of P9,952,000." 6 Petitioner was therefore bound by the factual finding of the appellate and trial courts, as well as by its own judicial admission, on this particular point. At any rate, the issue of the amount actually availed of by respondent corporation is factual. It is not within the ambit of this Courts discretionary power of judicial review under Rule 45 of the Rules of Court which is concerned solely with questions of law. 7 We now move on to the principal issue in this case. Under Article 161(1) of the Civil Code, 8 the conjugal partnership is liable for "all debts and obligations contracted by the husband for the benefit of the conjugal partnership." But when are debts and obligations contracted by the husband alone considered for the benefit of and therefore chargeable against the conjugal partnership? Is a surety agreement or an accommodation contract entered into by the husband in favor of his employer within the contemplation of the said provision? We ruled as early as 1969 in Luzon Surety Co., Inc. v. de Garcia 9 that, in acting as a guarantor or surety for another, the husband does not act for the benefit of the conjugal partnership as the benefit is clearly intended for a third party. In Ayala Investment and Development Corporation v. Court of Appeals , 10 we ruled that, if the husband himself is the principal obligor in the contract, i.e., the direct recipient of the money and services to be used in or for his own business or profession, the transaction falls within the term "obligations for the benefit of the conjugal partnership." In other words, where the husband contracts an obligation on behalf of the family business, there is a legal presumption that such obligation redounds to the benefit of the conjugal partnership. 11 On the other hand, if the money or services are given to another person or entity and the husband acted only as a surety or guarantor, the transaction cannot by itself be deemed an obligation for the benefit of the conjugal partnership. 12 It is for the benefit of the principal debtor and not for the surety or his family. No presumption is raised that, when a husband enters into a contract of surety or accommodation agreement, it is for the benefit of the conjugal partnership. Proof must be presented to establish the benefit redounding to the conjugal partnership. 13 In the absence of any showing of benefit received by it, the conjugal partnership cannot be held liable on an indemnity agreement executed by the husband to accommodate a third party. 14 In this case, the principal contract, the credit line agreement between petitioner and respondent corporation, was solely for the benefit of the latter. The accessory contract (the indemnity agreement) under which individual respondent Martinez assumed the obligation of a surety for respondent corporation was similarly for the latters benefit. Petitioner had the burden of proving that the conjugal partnership of the spouses Martinez benefited from the transaction. It failed to discharge that burden. To hold the conjugal partnership liable for an obligation pertaining to the husband alone defeats the objective of the Civil Code to protect the solidarity and well being of the family as a unit.
16 15

The underlying

concern of the law is the conservation of the conjugal partnership. Hence, it limits the liability of the conjugal partnership only to debts and obligations contracted by the husband for the benefit of the conjugal partnership. WHEREFORE, the petition is hereby DENIED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 124642 February 23, 2004

ALFREDO CHING and ENCARNACION CHING, petitioners vs. THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents. DECISION CALLEJO, SR., J.: This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision 1 of the Court of Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution 2 on April 2, 1996 denying the petitioners motion for reconsideration. The impugned decision granted the private respondents petition for certiorari and set aside the Orders of the trial court dated December 15, 1993 3 and February 17, 19944 nullifying the attachment of 100,000 shares of stocks of the Citycorp Investment Philippines under the name of petitioner Alfredo Ching. The following facts are undisputed: On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of P9,000,000.00 from the Allied Banking Corporation (ABC). By virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo Ching, executed a promissory note for the said amount promising to pay on December 22, 1978 at an interest rate of 14% per annum.5 As added security for the said loan, on September 28, 1978, Alfredo Ching, together with Emilio Taedo and Chung Kiat Hua, executed a continuing guaranty with the ABC binding themselves to jointly and severally guarantee the payment of all the PBMCI obligations owing the ABC to the extent of P38,000,000.00.6 The loan was subsequently renewed on various dates, the last renewal having been made on December 4, 1980. 7 Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount of P13,000,000.00 payable in eighteen months at 16% interest per annum. As in the previous loan, the PBMCI, through Alfredo Ching, executed a promissory note to evidence the loan maturing on June 29, 1981.8 This was renewed once for a period of one month. 9 The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC filed a complaint for sum of money with prayer for a writ of preliminary attachment against the PBMCI to collect the P12,612,972.88 exclusive of interests, penalties and other bank charges. Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio Taedo and Chung Kiat Hua in their capacity as sureties of the PBMCI. The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila, Branch XVIII. 10 In its application for a writ of preliminary attachment, the ABC averred that the "defendants are guilty of fraud in incurring the obligations upon which the present action is brought 11 in that they falsely represented themselves to be in a financial position to pay their obligation upon maturity thereof." 12 Its supporting affidavit stated, inter alia, that the "[d]efendants have removed or disposed of their properties, or [are] ABOUT to do so, with intent to defraud their creditors." 13 On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the ABCs application for a writ of preliminary attachment. The trial court decreed that the grounds alleged in the application and that of its supporting affidavit "are all conclusions of fact and of law" which do not warrant the issuance of the writ prayed for.14 On motion for reconsideration, however, the trial court, in an Order dated September 14, 1981, reconsidered its previous order and granted the ABCs application for a writ of preliminary attachment on a bond of P12,700,000. The order, in relevant part, stated: With respect to the second ground relied upon for the grant of the writ of preliminary attachment exparte, which is the alleged disposal of properties by the defendants with intent to defraud creditors as provided in Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits can only barely justify the issuance of said writ as against the defendant Alfredo Ching who has allegedly bound himself jointly and severally to pay plaintiff the defendant corporations obligation to the plaintiff as a surety thereof. WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo Ching requiring the sheriff of this Court to attach all the properties of said Alfredo Ching not exceeding P12,612,972.82 in value, which are within the jurisdiction of this Court and not exempt from execution upon, the filing by plaintiff of a bond duly approved by this Court in the sum of Twelve Million Seven Hundred Thousand

Pesos (P12,700,000.00) executed in favor of the defendant Alfredo Ching to secure the payment by plaintiff to him of all the costs which may be adjudged in his favor and all damages he may sustain by reason of the attachment if the court shall finally adjudge that the plaintiff was not entitled thereto. SO ORDERED.15 Upon the ABCs posting of the requisite bond, the trial court issued a writ of preliminary attachment. Subsequently, summonses were served on the defendants, 16 save Chung Kiat Hua who could not be found. Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for suspension of payments with the Securities and Exchange Commission (SEC), docketed as SEC Case No. 2250, at the same time seeking the PBMCIs rehabilitation. 17 On July 9, 1982, the SEC issued an Order placing the PBMCIs business, including its assets and liabilities, under rehabilitation receivership, and ordered that "all actions for claims listed in Schedule "A" of the petition pending before any court or tribunal are hereby suspended in whatever stage the same may be until further orders from the Commission."18 The ABC was among the PBMCIs creditors named in the said schedule. Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to Dismiss and/or motion to suspend the proceedings in Civil Case No. 142729 invoking the PBMCIs pending application for suspension of payments (which Ching co-signed) and over which the SEC had already assumed jurisdiction.19 On February 4, 1983, the ABC filed its Opposition thereto.20 In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment the 100,000 common shares of Citycorp stocks in the name of Alfredo Ching.21 Thereafter, in an Order dated September 16, 1983, the trial court partially granted the aforementioned motion by suspending the proceedings only with respect to the PBMCI. It denied Chings motion to dismiss the complaint/or suspend the proceedings and pointed out that P.D. No. 1758 only concerns the activities of corporations, partnerships and associations and was never intended to regulate and/or control activities of individuals. Thus, it directed the individual defendants to file their answers. 22 Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend Proceedings on the same ground of the pendency of SEC Case No. 2250. This motion met the opposition from the ABC. 23 On January 20, 1984, Taedo filed his Answer with counterclaim and cross-claim. 24 Ching eventually filed his Answer on July 12, 1984.25 On October 25, 1984, long after submitting their answers, Ching filed an Omnibus Motion, 26 again praying for the dismissal of the complaint or suspension of the proceedings on the ground of the July 9, 1982 Injunctive Order issued in SEC Case No. 2250. He averred that as a surety of the PBMCI, he must also necessarily benefit from the defenses of his principal. The ABC opposed Chings omnibus motion. Emilio Y. Taedo, thereafter, filed his own Omnibus Motion 27 praying for the dismissal of the complaint, arguing that the ABC had "abandoned and waived" its right to proceed against the continuing guaranty by its act of resorting to preliminary attachment. On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment bond from P12,700,000 to P6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2, 1987, the court issued an Order setting the incident for further hearing on May 28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual value of the properties of Alfredo Ching levied on by the sheriff. 30 On March 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the attachment bond of P6,350,000.31 On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to Set Aside the levy on attachment. She alleged inter alia that the 100,000 shares of stocks levied on by the sheriff were acquired by her and her husband during their marriage out of conjugal funds after the

Citycorp Investment Philippines was established in 1974. Furthermore, the indebtedness covered by the continuing guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the account of PBMCI did not redound to the benefit of the conjugal partnership. She, likewise, alleged that being the wife of Alfredo Ching, she was a third-party claimant entitled to file a motion for the release of the properties.32 She attached therewith a copy of her marriage contract with Alfredo Ching. 33 The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge records, contending that: 2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has no personality to file any motion before this Honorable Court; 2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule 12 of the Rules of Court; 2.3 Said Motion cannot even be construed to be in the nature of a Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules of Court. 3. Furthermore, assuming in gracia argumenti that the supposed movant has the required personality, her Motion cannot be acted upon by this Honorable Court as the above-entitled case is still in the archives and the proceedings thereon still remains suspended. And there is no previous Motion to revive the same. 34 The ABC also alleged that the motion was barred by prescription or by laches because the shares of stocks were in custodia legis. During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage contract to Alfredo Ching to prove that they were married on January 8, 1960;35 the articles of incorporation of Citycorp Investment Philippines dated May 14, 1979; 36 and, the General Information Sheet of the corporation showing that petitioner Alfredo Ching was a member of the Board of Directors of the said corporation and was one of its top twenty stockholders. On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to expunge records. Acting on the aforementioned motion, the trial court issued on December 15, 1993 an Order 37 lifting the writ of preliminary attachment on the shares of stocks and ordering the sheriff to return the said stocks to the petitioners. The dispositive portion reads: WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9, 1993, is hereby granted. Let the writ of preliminary attachment subject matter of said motion, be quashed and lifted with respect to the attached 100,000 common shares of stock of Citycorp Investment Philippines in the name of the defendant Alfredo Ching, the said shares of stock to be returned to him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo who effected the levy thereon on July 26, 1983, or by whoever may be presently in possession thereof. SO ORDERED.38 The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but denied the same on February 17, 1994. The petitioner bank forthwith filed a petition for certiorari with the CA, docketed as CA-G.R. SP No. 33585, for the nullification of the said order of the court, contending that: 1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking cognizance of, and granting a "Motion" filed by a complete stranger to the case. 2. The respondent Judge committed a grave abuse of discretion in lifting the writ of preliminary attachment without any basis in fact and in law, and contrary to established jurisprudence on the matter.39 On November 27, 1995, the CA rendered judgment granting the petition and setting aside the assailed orders of the trial court, thus:

WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the questioned orders (dated December 15, 1993 and February 17, 1994) for being null and void. SO ORDERED.40 The CA sustained the contention of the private respondent and set aside the assailed orders. According to the CA, the RTC deprived the private respondent of its right to file a bond under Section 14, Rule 57 of the Rules of Court. The petitioner Encarnacion T. Ching was not a party in the trial court; hence, she had no right of action to have the levy annulled with a motion for that purpose. Her remedy in such case was to file a separate action against the private respondent to nullify the levy on the 100,000 Citycorp shares of stocks. The court stated that even assuming that Encarnacion T. Ching had the right to file the said motion, the same was barred by laches. Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the presumption in Article 160 of the New Civil Code shall not apply where, as in this case, the petitioner-spouses failed to prove the source of the money used to acquire the shares of stock. It held that the levied shares of stocks belonged to Alfredo Ching, as evidenced by the fact that the said shares were registered in the corporate books of Citycorp solely under his name. Thus, according to the appellate court, the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. The petitioners motion for reconsideration was denied by the CA in a Resolution dated April 2, 1996. The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC did not commit any grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the assailed orders in their favor; hence, the CA erred in reversing the same. They aver that the source of funds in the acquisition of the levied shares of stocks is not the controlling factor when invoking the presumption of the conjugal nature of stocks under Art. 160,42 and that such presumption subsists even if the property is registered only in the name of one of the spouses, in this case, petitioner Alfredo Ching. 43 According to the petitioners, the suretyship obligation was not contracted in the pursuit of the petitioner-husbands profession or business.44 And, contrary to the ruling of the CA, where conjugal assets are attached in a collection suit on an obligation contracted by the husband, the wife should exhaust her motion to quash in the main case and not file a separate suit.45 Furthermore, the petitioners contend that under Art. 125 of the Family Code, the petitioner-husbands gratuitous suretyship is null and void ab initio, 46 and that the share of one of the spouses in the conjugal partnership remains inchoate until the dissolution and liquidation of the partnership.47 In its comment on the petition, the private respondent asserts that the CA correctly granted its petition for certiorari nullifying the assailed order. It contends that the CA correctly relied on the ruling of this Court in Wong v. Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals, the private respondent alleges that the continuing guaranty and suretyship executed by petitioner Alfredo Ching in pursuit of his profession or business. Furthermore, according to the private respondent, the right of the petitioner-wife to a share in the conjugal partnership property is merely inchoate before the dissolution of the partnership; as such, she had no right to file the said motion to quash the levy on attachment of the shares of stocks. The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the motion to quash the levy on attachment on the 100,000 shares of stocks in the Citycorp Investment Philippines; (b) whether or not the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the said motion, although she was not a party in Civil Case No. 142729. 48 In Ong v. Tating,49 we held that the sheriff may attach only those properties of the defendant against whom a writ of attachment has been issued by the court. When the sheriff erroneously levies on attachment and seizes the property of a third person in which the said defendant holds no right or interest, the superior authority of the court which has authorized the execution may be invoked by the aggrieved third person in the same case. Upon application of the third person, the court shall order a summary hearing for the purpose of determining whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of the writ of attachment, more specifically if he has indeed levied on attachment and taken hold of property not belonging to the plaintiff. If so, the court may then order the sheriff to release the property from the erroneous levy and to return the same to the third person. In resolving the motion of the third party, the court does not and cannot pass upon the question

of the title to the property with any character of finality. It can treat the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. If the claimants proof does not persuade the court of the validity of the title, or right of possession thereto, the claim will be denied by the court. The aggrieved third party may also avail himself of the remedy of "terceria" by executing an affidavit of his title or right of possession over the property levied on attachment and serving the same to the office making the levy and the adverse party. Such party may also file an action to nullify the levy with damages resulting from the unlawful levy and seizure, which should be a totally separate and distinct action from the former case. The above-mentioned remedies are cumulative and any one of them may be resorted to by one third-party claimant without availing of the other remedies. 50 In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the 100,000 shares of stocks in the name of petitioner-husband claiming that the said shares of stocks were conjugal in nature; hence, not liable for the account of her husband under his continuing guaranty and suretyship agreement with the PBMCI. The petitioner-wife had the right to file the motion for said relief. On the second issue, we find and so hold that the CA erred in setting aside and reversing the orders of the RTC. The private respondent, the petitioner in the CA, was burdened to prove that the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction. The tribunal acts without jurisdiction if it does not have the legal purpose to determine the case; there is excess of jurisdiction where the tribunal, being clothed with the power to determine the case, oversteps its authority as determined by law. There is grave abuse of discretion where the tribunal acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of its judgment and is equivalent to lack of jurisdiction. 51 It was incumbent upon the private respondent to adduce a sufficiently strong demonstration that the RTC acted whimsically in total disregard of evidence material to, and even decide of, the controversy before certiorari will lie. A special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of its jurisdiction being exercised when the error is committed. 52 After a comprehensive review of the records of the RTC and of the CA, we find and so hold that the RTC did not commit any grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. Article 160 of the New Civil Code provides that all the properties acquired during the marriage are presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband, or to the wife. In Tan v. Court of Appeals,53 we held that it is not even necessary to prove that the properties were acquired with funds of the partnership. As long as the properties were acquired by the parties during the marriage, they are presumed to be conjugal in nature. In fact, even when the manner in which the properties were acquired does not appear, the presumption will still apply, and the properties will still be considered conjugal. The presumption of the conjugal nature of the properties acquired during the marriage subsists in the absence of clear, satisfactory and convincing evidence to overcome the same.54 In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in the Citycorp Investment Philippines were issued to and registered in its corporate books in the name of the petitioner-husband when the said corporation was incorporated on May 14, 1979. This was done during the subsistence of the marriage of the petitioner-spouses. The shares of stocks are, thus, presumed to be the conjugal partnership property of the petitioners. The private respondent failed to adduce evidence that the petitioner-husband acquired the stocks with his exclusive money. 55 The barefaced fact that the shares of stocks were registered in the corporate books of Citycorp Investment Philippines solely in the name of the petitioner-husband does not constitute proof that the petitionerhusband, not the conjugal partnership, owned the same.56 The private respondents reliance on the rulings of this Court in Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v. Banzon 58 is misplaced. In the Maramba case, we held that where there is no showing as to when the property was acquired, the fact that the title is in the wifes name alone is determinative of the ownership of the property. The principle was reiterated in the Associated Insurance case where the uncontroverted evidence showed that the shares of stocks were acquired during the marriage of the petitioners. Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v. Intermediate Appellate Court59 buttresses the case for the petitioners. In that case, we ruled that he who claims that property acquired by the spouses during their marriage is not conjugal partnership property but belongs to one of them as his personal property is burdened to prove the source of the money utilized to purchase the same. In this case, the private respondent claimed that the petitioner-husband acquired the shares of

stocks from the Citycorp Investment Philippines in his own name as the owner thereof. It was, thus, the burden of the private respondent to prove that the source of the money utilized in the acquisition of the shares of stocks was that of the petitioner-husband alone. As held by the trial court, the private respondent failed to adduce evidence to prove this assertion. The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship agreement with the private respondent for the payment of the PBMCI loans, the petitioner-husband was in the exercise of his profession, pursuing a legitimate business. The appellate court erred in concluding that the conjugal partnership is liable for the said account of PBMCI under Article 161(1) of the New Civil Code. Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family Code of the Philippines) provides: Art. 161. The conjugal partnership shall be liable for: (1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership. The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the payment of the loan obtained by the PBMCI from the private respondent in the amount of P38,000,000. In Ayala Investment and Development Corp. v. Court of Appeals,61 this Court ruled "that the signing as surety is certainly not an exercise of an industry or profession. It is not embarking in a business. No matter how often an executive acted on or was persuaded to act as surety for his own employer, this should not be taken to mean that he thereby embarked in the business of suretyship or guaranty." For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must be a showing that some advantages accrued to the spouses. Certainly, to make a conjugal partnership responsible for a liability that should appertain alone to one of the spouses is to frustrate the objective of the New Civil Code to show the utmost concern for the solidarity and well being of the family as a unit. The husband, therefore, is denied the power to assume unnecessary and unwarranted risks to the financial stability of the conjugal partnership.62 In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was benefited by the petitioner-husbands act of executing a continuing guaranty and suretyship agreement with the private respondent for and in behalf of PBMCI. The contract of loan was between the private respondent and the PBMCI, solely for the benefit of the latter. No presumption can be inferred from the fact that when the petitioner-husband entered into an accommodation agreement or a contract of surety, the conjugal partnership would thereby be benefited. The private respondent was burdened to establish that such benefit redounded to the conjugal partnership. 63 It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and was one of its top twenty stockholders, and that the shares of stocks of the petitioner-husband and his family would appreciate if the PBMCI could be rehabilitated through the loans obtained; that the petitionerhusbands career would be enhanced should PBMCI survive because of the infusion of fresh capital. However, these are not the benefits contemplated by Article 161 of the New Civil Code. The benefits must be those directly resulting from the loan. They cannot merely be a by-product or a spin-off of the loan itself.64 This is different from the situation where the husband borrows money or receives services to be used for his own business or profession. In the Ayala case, we ruled that it is such a contract that is one within the term "obligation for the benefit of the conjugal partnership." Thus: (A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his own profession, that contract falls within the term " obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.65

The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not controlling because the husband, in those cases, contracted the obligation for his own business. In this case, the petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the private respondent. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of Appeals are SET ASIDE AND REVERSED. The assailed orders of the RTC are AFFIRMED. SO ORDERED. Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur. Docena vs Lapesura Docena vs. Lapesura GR No. 140153, March 28, 2001 FACTS: Casiano Hombria, private respondent, filed a complaint for the recovery of a parcel of land against his lessees, petitioner-spouses, Antonio and Alfreda Docena. The spouses claimed ownership of the land based on the occupation since time immemorial. The petitioners filed a petition for certiorari and prohibition with CA alleging grave abuse of discretion on the part of the trial judge in issuing orders and that of the sheriff in issuing the writ of demolition. CA dismissed the petition on the ground that the petition was filed beyond the 60-day period provided in the Revised Rules of Civil Procedure and that the certification of non-forum shopping attached thereto was signed by only one of the petitioners. ISSUE: WON it is sufficient that the certification of non-forum shopping was signed by only one of the petitioners. HELD: In view of the property involved which 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 point out was in the province of 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. In the previous court rulings, certificate of non-forum shopping should be sign by all the petitioners in a case. However, in the case at bar, such certificate signed by Antonio Docena alone should be deemed to constitute substantial compliance with the rules. The two petitioners in this case are husband and wife and their residence is the subject property alleged to be a conjugal property. Under the Family Code, the administration of the conjugal property belongs to the husband and wife jointly. 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. Hence, petition is granted and the case is remanded to CA for further proceedings. T H I R D D I V I S I O N G.R. No. 137808 Present: PANGANIBAN, J., Chairman, SANDOVAL-GUTIERREZ, CORONA, CARPIO MORALES, and GARCIA, JJ.

ALDEGONDA VDA. DE RAMONES, BEATRIZ and MARGARITA, BOTH SURNAMED RAMONES, Petitioners, versus

AURORA P. AGBAYANI, ASSISTED BY HER HUSBAND FILEMON AGBAYANI, Respondent.

Promulgated:

September 30, 2005 x---------------------------------------------------------------------------------x

D E C I S I O N SANDOVAL-GUTIERREZ, J.:

Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] dated May 8, 1998 and the Resolution dated February 16, 1999 of the Court of Appeals in CA-G.R. CV No. 49807, entitled AURORA AGBAYANI, assisted by her husband, FILEMON AGBAYANI versus ALDEGONDA VDA. DE RAMONES, BEATRIZ AND MARGARITA, both surname RAMONES.

Spouses Santos and Aldegonda Ramones are the registered owners of a 358-square meter lot located at Calamagui, Ilagan, Isabela, covered by Transfer Certificate of Title (TCT) 43468 of the Registry of Deeds, same province. No. T-

On May 23, 1979, Santos Ramones, without the knowledge of his wife, Aldegonda, sold to Aurora P. Agbayani a 100-square meter portion of the lot for P5,000.00. Register of Deeds as Entry No. 90 at the back of TCT No. T-43468. The Deed of Sale was annotated by the

On March 7, 1980, Santos Ramones died.

Subsequently, Aldegonda and her daughters Beatriz

and Margarita, herein petitioners, had a restroom and a concrete septic tank built on the area sold by Santos Ramones to respondent without the latters knowledge. This prompted respondent to bring the

matter to the barangay authorities but no settlement was reached by the parties.

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

In their amended answer, petitioners averred that the

100-square meter lot subject of the Deed Even if Santos,

of Sale is the conjugal property of spouses Santos and petitioner Aldegonda Ramones.

during his lifetime, sold the property to respondent, the sale is void since it was executed without the consent of his wife, Aldegonda Ramones.

On October 11, 1995, the trial court rendered a Decision

[2]

in favor of petitioners and against

respondent, holding that the Deed of Sale is void because it was executed without the consent of his wife Aldegonda.On appeal, the Court of Appeals rendered its Decision reversing that of the trial court, thus:

WHEREFORE, IN VIEW OF THE FOREGOING, the decision of the lower court dated October 11, 1995 is REVERSED, and a new judgment is rendered in favor of plaintiff-appellant Aurora P. Agbayani, confirming the Deed of Sale executed by Santos P. Ramones in her favor and declaring plaintiffs as absolute owners of the lot sold to them by the aforenamed vendor. No pronouncement as to costs. SO ORDERED.
[3]

Petitioners motion for reconsideration was denied.

In ruling that the Deed of Sale between Santos Ramones and herein respondent is valid, the Appellate Court held: Article 166 of the Civil Code prohibits alienation or encumbrance of real the wife. This provision should be read the

property by the husband without the consent of with Article 173

of the same Code providing that the wife may, during

marriage and within ten (10) years from the questioned transaction, ask the courts for annulment of any contract of the husband entered into without her consent. In other words, the lack

of consent by the wife will not make the void. It is merely voidable.

alienation of the conjugal property by the husband

In the instant case, however, petitioner Aldegonda Ramones, for the annulment of the Deed of Sale involving a portion Thus, the sale is valid.

wife of Santos, did not ask the courts

of their conjugal property within ten (10) years from the transaction.

The only issue in this case is whether the sale of real property belonging to the conjugal partnership by the husband without his wifes consent is void.

In Villaranda v. Villaranda, et al.,[4] this Court, through

Mr. Justice Artemio V. Panganiban,

ruled that without the wifes consent, the husbands alienation or encumbrance of conjugal property prior to the effectivity of the Family Code is not void, but merely voidable. However, the wifes failure to file

with the courts an action for annulment of the contract during the marriage and within ten (10) years from the transaction shall render the sale valid. executed by Santos Ramones on May 23, 1979. [5] August 3, 1988. In the present case, the Deed of Absolute Sale was The Family Code took effect much later, or only on

Laws should be applied prospectively, unless a legislative intent to give them retroactive This exception is not

effect is expressly declared or is necessarily implied from the language used. [6] present here.

Therefore, the provisions of the Civil Code, not the Family Code, apply to the present case.

There is no dispute that the lot sold is the conjugal property of spouses Ramones. connection, Article 166 of the Civil Code, provides:

In this

Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wifes consent. x x x

Clearly, Article 166 is categorical that the husband cannot alienate or encumber any real property of the conjugal partnership without the wifes consent. This provision, however, must be interpreted in

conjunction with Article 173 of the same Code, quoted as follows:

Article 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of the property fraudulently alienated the husband.

The above provision states that an action to annul an alienation or encumbrance by the husband may be instituted by the wife during the marriage and within ten years from the transaction questioned. Consequently, the lack of consent on her part will not make the husbands alienation or encumbrance of real property of the conjugal partnership void, but merely voidable.[7]

Here, there is no proof that petitioner Aldegonda Ramones filed any complaint to annul the Deed of Sale entered into by her husband. As held by this Court in Villaranda,
[8]

her right to bring an action

to invalidate the contract has thus prescribed.

Hence, the assailed Deed is still valid and enforceable.

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. Costs against petitioners.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 160708 October 16, 2009

PATROCINIA RAVINA AND WILFREDO RAVINA, Petitioners, vs. MARY ANN P. VILLA ABRILLE, for herself and in behalf of INGRID D'LYN P. VILLA ABRILLE, INGREMARK D'WIGHT VILLA ABRILLE, INGRESOLL DIELS VILLA ABRILLE AND INGRELYN DYAN VILLA ABRILLE, Respondents. DECISION QUISUMBING, Acting C.J.: For review are the Decision1 dated February 21, 2002 and the Resolution2 dated October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560. The appellate court modified the Decision 3 dated September 26, 1995 of the Regional Trial Court (RTC) of Davao City, Branch 15. Simply stated, the facts as found by the Court of Appeals 4 are as follows: Respondent Mary Ann Pasaol Villa Abrille and Pedro Villa Abrille are husband and wife. They have four children, who are also parties to the instant case and are represented by their mother, Mary Ann. In 1982, the spouses acquired a 555-square meter parcel of land denominated as Lot 7, located at Kamuning Street, Juna Subdivision, Matina, Davao City, and covered by Transfer Certificate of Title (TCT) No. T-88674 in their names. Said lot is adjacent to a parcel of land which Pedro acquired when he was still single and which is registered solely in his name under TCT No. T-26471. Through their joint efforts and the proceeds of a loan from the Development Bank of the Philippines (DBP), the spouses built a house on Lot 7 and Pedros lot. The house was finished in the early 1980s but the spouses continuously made improvements, including a poultry house and an annex. In 1991, Pedro got a mistress and began to neglect his family. Mary Ann was forced to sell or mortgage their movables to support the family and the studies of her children. By himself, Pedro offered to sell the house and the two lots to herein petitioners, Patrocinia and Wilfredo Ravina. Mary Ann objected and notified the petitioners of her objections, but Pedro nonetheless sold the house and the two lots without Mary Anns consent, as evidenced by a Deed of Sale5 dated June 21, 1991. It appears on the said deed that Mary Ann did not sign on top of her name. On July 5, 1991 while Mary Ann was outside the house and the four children were in school, Pedro together with armed members of the Civilian Armed Forces Geographical Unit (CAFGU) and acting in connivance with petitioners6 began transferring all their belongings from the house to an apartment.

When Mary Ann and her daughter Ingrid Villa Abrille came home, they were stopped from entering it. They waited outside the gate until evening under the rain. They sought help from the Talomo Police Station, but police authorities refused to intervene, saying that it was a family matter. Mary Ann alleged that the incident caused stress, tension and anxiety to her children, so much so that one flunked at school. Thus, respondents Mary Ann and her children filed a complaint for Annulment of Sale, Specific Performance, Damages and Attorneys Fees with Preliminary Mandatory Injunction 7 against Pedro and herein petitioners (the Ravinas) in the RTC of Davao City. During the trial, Pedro declared that the house was built with his own money. Petitioner Patrocinia Ravina testified that they bought the house and lot from Pedro, and that her husband, petitioner Wilfredo Ravina, examined the titles when they bought the property. On September 26, 1995, the trial court ruled in favor of herein respondent Mary Ann P. Villa Abrille as follows: WHEREFORE, judgment is rendered as follows: 1. The sale of lot 8 covered by TCT No. 26471 by defendant Pedro Abrille appearing in the Deed of Sale marked as Exh. "E" is void as to one half or 277.5 square meters representing the share of plaintiff Mary Villa Abrille. 2. That sale of Lot 7 covered by TCT No. [88674] by defendant Pedro Villa Abrille in the Deed of Sale (Exh. "A") is valid as to one half or 277.5 square meters of the 555 square meters as one half belongs to defendant Pedro Abrille but it is void as to the other half or 277.5 square meters as it belongs to plaintiff Mary Abrille who did not sell her share nor give her consent to the sale. 3. That sale of the house mentioned in the Deed of Sale (Exh. "A") is valid as far as the one half of the house representing the share of defendant Pedro Abrille is concerned but void as to the other half which is the share of plaintiff Mary Abrille because she did not give her consent/sign the said sale. 4. The defendants shall jointly pay the plaintiffs. 4. A. Seventeen Thousand Pesos (P17,000.00) representing the value of the movables and belonging[s] that were lost when unknown men unceremoniously and without their knowledge and consent removed their movables from their house and brought them to an apartment. 4. B. One Hundred Thousand Pesos (P 100,000.00) to plaintiff Mary Abrille as moral damages. 4. C. Fifty Thousand Pesos (P50,000.00) to each of the four children as moral damages, namely: a) Ingrid Villa Abrille Fifty Thousand Pesos (P50,000.00), b) Ingremark Villa Abrille Fifty Thousand Pesos (P50,000.00), c) Ingresoll Villa Abrille Fifty Thousand Pesos (P50,000.00) and d) Ingrelyn Villa Abrille Fifty Thousand Pesos (P50,000.00). 5. Ten Thousand Pesos (P10,000.00) as exemplary damages by way of example and correction for the public good. 6. The costs of suit.8 On appeal, the Court of Appeals modified the decision, thus: WHEREFORE, the appealed judgment is hereby MODIFIED as follows: 1. The sale of lot covered by TCT No. 26471 in favor of defendants spouses Wilfredo and Patrocinia Ravina is declared valid.

2. The sale of lot covered by TCT No. 88674 in favor of said defendants spouses Ravina, together with the house thereon, is declared null and void. 3. Defendant Pedro Abrille is ordered to return the value of the consideration for the lot covered by TCT No. 88674 and the house thereon to co-defendants spouses Ravina. 4. Defendants spouses Ravina [a]re ordered to reconvey the lot and house covered by TCT No. 88674 in favor of spouses Pedro and Mary Villa Abrille and to deliver possession to them. 5. Plaintiffs are given the option to exercise their rights under Article [450] of the New Civil Code with respect to the improvements introduced by defendant spouses Ravina. 6. Defendants Pedro Villa Abrille and spouses Ravina are ordered to pay jointly and severally the plaintiffs as follows: a) One Hundred Thousand Pesos (P100,000.00) to plaintiff Mary Villa Abrille as moral damages. b) Fifty Thousand Pesos (P50,000.00) as moral damages to each of the four children, namely: Ingrid Villa Abrille, Ingremark Villa Abrille, Ingresoll Villa Abrille and Ingrelyn Villa Abrille. c) Ten Thousand (P10,000.00) as exemplary damages by way of example and correction for the public good. SO ORDERED.9 Their Motion for Reconsideration having been denied, petitioners filed this petition. Petitioners argue that: I. THE COURT OF APPEALS ERRED WHEN IT DECLARED x x x THE SALE OF LOT COVERED BY TCT NO. 88674 IN FAVOR OF SPOUSES RAVINA, TOGETHER WITH THE HOUSE THEREON, AS NULL AND VOID SINCE IT IS CLEARLY CONTRARY TO LAW AND EVIDENCE. II. THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE NOT INNOCENT PURCHASERS FOR VALUE, THE SAME BEING CONTRARY TO LAW AND EVIDENCE. III. THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE LIABLE FOR DAMAGES, THE SAME BEING CONTRARY TO LAW AND EVIDENCE. 10 In essence, petitioners assail the appellate courts declaration that the sale to them by Pedro of the lot covered by TCT No. T-88674 is null and void. However, in addressing this issue, it is imperative to determine: (1) whether the subject property covered by TCT No. T-88674 is an exclusive property of Pedro or conjugal property, and (2) whether its sale by Pedro was valid considering the absence of Mary Anns consent. Petitioners assert that the subject lot covered by TCT No. T-88674 was the exclusive property of Pedro having been acquired by him through barter or exchange.11 They allege that the subject lot was acquired by Pedro with the proceeds of the sale of one of his exclusive properties. Allegedly, Pedro and his sister Carmelita initially agreed to exchange their exclusive lots covered by TCT No. T-26479 and TCT No. T26472, respectively. Later, however, Pedro sold the lot covered by TCT No. T-26472 to one Francisca Teh Ting and purchased the property of Carmelita using the proceeds of the sale. A new title, TCT No. T-

88674, was issued thereafter. Thus, petitioners insist that the subject lot remains to be an exclusive property of Pedro as it was acquired or purchased through the exclusive funds or money of the latter. We are not persuaded. Article 160 of the New Civil Code provides, "All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." There is no issue with regard to the lot covered by TCT No. T-26471, which was an exclusive property of Pedro, having been acquired by him before his marriage to Mary Ann. However, the lot covered by TCT No. T-88674 was acquired in 1982 during the marriage of Pedro and Mary Ann. No evidence was adduced to show that the subject property was acquired through exchange or barter. The presumption of the conjugal nature of the property subsists in the absence of clear, satisfactory and convincing evidence to overcome said presumption or to prove that the subject property is exclusively owned by Pedro. 12 Petitioners bare assertion would not suffice to overcome the presumption that TCT No. T-88674, acquired during the marriage of Pedro and Mary Ann, is conjugal. Likewise, the house built thereon is conjugal property, having been constructed through the joint efforts of the spouses, who had even obtained a loan from DBP to construct the house.1avvphi1 Significantly, a sale or encumbrance of conjugal property concluded after the effectivity of the Family Code on August 3, 1988, is governed by Article 124 of the same Code that now treats such a disposition to be void if done (a) without the consent of both the husband and the wife, or (b) in case of one spouses inability, the authority of the court. Article 124 of the Family Code, the governing law at the time the assailed sale was contracted, is explicit: ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (Emphasis supplied.) The particular provision in the New Civil Code giving the wife ten (10) years to annul the alienation or encumbrance was not carried over to the Family Code. It is thus clear that alienation or encumbrance of the conjugal partnership property by the husband without the consent of the wife is null and void. Hence, just like the rule in absolute community of property, if the husband, without knowledge and consent of the wife, sells conjugal property, such sale is void. If the sale was with the knowledge but without the approval of the wife, thereby resulting in a disagreement, such sale is annullable at the instance of the wife who is given five (5) years from the date the contract implementing the decision of the husband to institute the case.13 Here, respondent Mary Ann timely filed the action for annulment of sale within five (5) years from the date of sale and execution of the deed. However, her action to annul the sale pertains only to the conjugal house and lot and does not include the lot covered by TCT No. T-26471, a property exclusively belonging to Pedro and which he can dispose of freely without Mary Anns consent. On the second assignment of error, petitioners contend that they are buyers in good faith. 14 Accordingly, they need not inquire whether the lot was purchased by money exclusively belonging to Pedro or of the common fund of the spouses and may rely on the certificates of title. The contention is bereft of merit. As correctly held by the Court of Appeals, a purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of the claim or interest of some other person in the property. 15 To establish his status as a buyer for value in good faith, a person dealing with land registered in the name of and occupied by the seller need

only show that he relied on the face of the sellers certificate of title. But for a person dealing with land registered in the name of and occupied by the seller whose capacity to sell is restricted, such as by Articles 166 and 173 of the Civil Code or Article 124 of the Family Code, he must show that he inquired into the latters capacity to sell in order to establish himself as a buyer for value in good faith. 161avvphi1 In the present case, the property is registered in the name of Pedro and his wife, Mary Ann. Petitioners cannot deny knowledge that during the time of the sale in 1991, Pedro was married to Mary Ann. However, Mary Anns conformity did not appear in the deed. Even assuming that petitioners believed in good faith that the subject property is the exclusive property of Pedro, they were apprised by Mary Anns lawyer of her objection to the sale and yet they still proceeded to purchase the property without Mary Anns written consent. Moreover, the respondents were the ones in actual, visible and public possession of the property at the time the transaction was being made. Thus, at the time of sale, petitioners knew that Mary Ann has a right to or interest in the subject properties and yet they failed to obtain her conformity to the deed of sale. Hence, petitioners cannot now invoke the protection accorded to purchasers in good faith. Now, if a voidable contract is annulled, the restoration of what has been given is proper. The relationship between the parties in any contract even if subsequently annulled must always be characterized and punctuated by good faith and fair dealing.17 Hence, in consonance with justice and equity and the salutary principle of non-enrichment at anothers expense, we sustain the appellate courts order directing Pedro to return to petitioner spouses the value of the consideration for the lot covered by TCT No. T-88674 and the house thereon. However, this court rules that petitioners cannot claim reimbursements for improvements they introduced after their good faith had ceased. As correctly found by the Court of Appeals, petitioner Patrocinia Ravina made improvements and renovations on the house and lot at the time when the complaint against them was filed. Ravina continued introducing improvements during the pendency of the action. 18 Thus, Article 449 of the New Civil Code is applicable. It provides that, "(h)e who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity." 19 On the last issue, petitioners claim that the decision awarding damages to respondents is not supported by the evidence on record.20 The claim is erroneous to say the least. The manner by which respondent and her children were removed from the family home deserves our condemnation. On July 5, 1991, while respondent was out and her children were in school, Pedro Villa Abrille acting in connivance with the petitioners 21 surreptitiously transferred all their personal belongings to another place. The respondents then were not allowed to enter their rightful home or family abode despite their impassioned pleas. Firmly established in our civil law is the doctrine that: "Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith."22 When a right is exercised in a manner that does not conform with such norms and results in damages to another, a legal wrong is thereby committed for which the wrong doer must be held responsible. Similarly, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damages caused. 23 It is patent in this case that petitioners alleged acts fall short of these established civil law standards. WHEREFORE, we deny the instant petition for lack of merit. The Decision dated February 21, 2002 and the Resolution dated October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560 are AFFIRMED. Uy vs CA Uy vs. CA GR No. 109557, November 29, 2000 FACTS: Dr. Ernesto Jardelaza suffered stroke that rendered him comatose. Gilda, wife of the latter, filed a petition in RTC Iloilo to be allowed as sole administrator of their conjugal property and be authorized to sell the same as her husband is physically incapacitated to discharge his functions. She further contest that such illness of the husband necessitated expenses that would require her to sell their property in Lot 4291 and its improvement to meet such necessities. RTC ruled in favor of Gilda contending that such decision is

pursuant to Article 124 of FC and that the proceedings thereon are governed by the rules on summary proceedings. The son of the spouses, Teodoro, filed a motion for reconsideration contending that the petition made by her mother was essentially a petition for guardianship of the person and properties of his father. As such it cannot be prosecuted in accordance with the provisions on summary proceedings instead it should follows the ruled governing special proceedings in the Revised Rules of Court requiring procedural due process particularly the need for notice and a hearing on the merits. He further reiterated that Chapter 2 of the FC comes under the heading on Separation in Fact Between Husband and Wife contemplating a situation where both spouses are of disposing mind. Hence, he argued that this should not be applied in their case. During the pendency of the motion, Gilda sold the property to her daughter and son in law. Upon the appeal by Teodoro, CA reversed the decision of the lower court. ISSUE: WON Gilda as the wife of a husband who suffered stroke, a cerebrovascular accident rendering him comatose, without motor and mental faculties, may assume sole powers of administration of the conjugal property and dispose a parcel of land with improvements. HELD: SC ruled in favor of Teodoro. The rule on summary proceedings does not apply to cases where the nonconsenting spouse is incapacitated or incompetent to give consent. In this case, trial court found that subject spouse was incompetent who was in a comatose condition and with a diagnosis of brain stem infract. Hence, the proper remedy is a judicial guardianship proceeding under the Revised Rules of Court. The law provides that wife who assumes sole powers of administration has the same powers and duties as a guardian. Consequently, a spouse who desires to sell real property as administrator of the conjugal property, must observe the procedure for the sale of the wards estate required of judicial guardians, and not the summary judicial proceedings under FC. SC further held that such incapacity of the trial court to provide for an opportunity to be heard is null and void on the ground of lack of due process.

G. R. No. 155043: Arturo Abalos vs Dr. Galicano Macatangay Jr 30 September 2004, 439 scra 649 Sales Option Earnest Money Arturo and Esther Abalos are husband and wife. They own a parcel of land in Makati. On June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and Memorandum of Agreement in favor of Galicano in which Arturo acknowledged he received a P5k check from Galicano as earnest money to be deducted from the purchase price and that Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase price agreed upon was P1.3 M. The P5k check was dishonored due to insufficiency. Apparently, Esther and Arturo have a rocky relationship. Esther executed a SPA in favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged that that the RMOA is not valid for Esthers signature was not affixed thereto. And that Esther never executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered to him. But the spouses failed to deliver the land. Galicano sued the spouses. ISSUE: Whether or not there was a contract of sale between Arturo and Galicano. Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured the defect of the earlier contract between Arturo and Galicano. HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that the parties considered the P5k as an earnest money to be deducted from the purchase price.

Taking arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed to render a payment of legal tender. A check is not a legal tender. Taking arguendo that the P5k was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for Esthers signature was not affixed. The property is conjugal and under the Family Code, the spouses consents are required. Further, the earnest money here is not actually the earnest money contemplated under Article 1482 under the Civil Code. The subsequent agreement between Esther and Galicano did not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified. Valdes vs RTC Valdes vs. RTC 260 SCRA 221 FACTS: Antonio Valdez and Consuelo Gomez were married in 1971 and begotten 5 children. Valdez filed a petition in 1992 for a declaration of nullity of their marriage pursuant to Article 36 of the Family Code, which was granted hence, marriage is null and void on the ground of their mutual psychological incapacity. Stella and Joaquin are placed under the custody of their mother while the other 3 siblings are free to choose which they prefer. Gomez sought a clarification of that portion in the decision regarding the procedure for the liquidation of common property in unions without marriage. During the hearing on the motion, the children filed a joint affidavit expressing desire to stay with their father. ISSUE: Whether or not the property regime should be based on co-ownership. HELD: The Supreme Court ruled that in a void marriage, regardless of the cause thereof, the property relations of the parties are governed by the rules on 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 partys efforts consisted in the care and maintenance of the family

FIRST DIVISION

[G.R. No. 132529. February 2, 2001]

SUSAN NICDAO CARIO, petitioner, vs. SUSAN YEE CARIO, respondent. DECISION YNARES-SANTIAGO, J.: The issue for resolution in the case at bar hinges on the validity of the two marriages contracted by the deceased SPO4 Santiago S. Cario, whose death benefits is now the subject of the controversy between the two Susans whom he married. Before this Court is a petition for review on certiorari seeking to set aside the decision i[1] of the Court of Appeals in CA-G.R. CV No. 51263, which affirmed in toto the decisionii[2] of the Regional Trial Court of Quezon City, Branch 87, in Civil Case No. Q-93-18632. During the lifetime of the late SPO4 Santiago S. Cario, he contracted two marriages, the first was

on June 20, 1969, with petitioner Susan Nicdao Cario (hereafter referred to as Susan Nicdao), with whom he had two offsprings, namely, Sahlee and Sandee Cario; and the second was on November 10, 1992, with respondent Susan Yee Cario (hereafter referred to as Susan Yee), with whom he had no children in their almost ten year cohabitation starting way back in 1982. In 1988, SPO4 Santiago S. Cario became ill and bedridden due to diabetes complicated by pulmonary tuberculosis. He passed away on November 23, 1992, under the care of Susan Yee, who spent for his medical and burial expenses. Both petitioner and respondent filed claims for monetary benefits and financial assistance pertaining to the deceased from various government agencies. Petitioner Susan Nicdao was able to collect a total of P146,000.00 from MBAI, PCCUI, Commutation, NAPOLCOM, [and] Pag-ibig,iii[3] while respondent Susan Yee received a total of P21,000.00 from GSIS Life, Burial (GSIS) and burial (SSS).iv[4] On December 14, 1993, respondent Susan Yee filed the instant case for collection of sum of money against petitioner Susan Nicdao praying, inter alia, that petitioner be ordered to return to her at least onehalf of the one hundred forty-six thousand pesos (P146,000.00) collectively denominated as death benefits which she (petitioner) received from MBAI, PCCUI, Commutation, NAPOLCOM, [and] Pag-ibig. Despite service of summons, petitioner failed to file her answer, prompting the trial court to declare her in default. Respondent Susan Yee admitted that her marriage to the deceased took place during the subsistence of, and without first obtaining a judicial declaration of nullity of, the marriage between petitioner and the deceased. She, however, claimed that she had no knowledge of the previous marriage and that she became aware of it only at the funeral of the deceased, where she met petitioner who introduced herself as the wife of the deceased. To bolster her action for collection of sum of money, respondent contended that the marriage of petitioner and the deceased is void ab initio because the same was solemnized without the required marriage license. In support thereof, respondent presented: 1) the marriage certificate of the deceased and the petitioner which bears no marriage license number; v[5] and 2) a certification dated March 9, 1994, from the Local Civil Registrar of San Juan, Metro Manila, which reads This is to certify that this Office has no record of marriage license of the spouses SANTIAGO CARINO (sic) and SUSAN NICDAO, who are married in this municipality on June 20, 1969. Hence, we cannot issue as requested a true copy or transcription of Marriage License number from the records of this archives. This certification is issued upon the request of Mrs. Susan Yee Cario for whatever legal purpose it may serve.vi[6] On August 28, 1995, the trial court ruled in favor of respondent, Susan Yee, holding as follows: WHEREFORE, the defendant is hereby ordered to pay the plaintiff the sum of P73,000.00, half of the amount which was paid to her in the form of death benefits arising from the death of SPO4 Santiago S. Cario, plus attorneys fees in the amount of P5,000.00, and costs of suit. IT IS SO ORDERED.vii[7] On appeal by petitioner to the Court of Appeals, the latter affirmed in toto the decision of the trial court. Hence, the instant petition, contending that: I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE FINDINGS OF THE LOWER COURT THAT VDA. DE CONSUEGRA VS. GSIS IS APPLICABLE TO THE CASE AT BAR. II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPLYING EQUITY IN THE INSTANT CASE INSTEAD OF THE CLEAR AND UNEQUIVOCAL MANDATE OF THE FAMILY CODE. III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THE CASE OF VDA. DE CONSUEGRA VS GSIS TO HAVE BEEN MODIFIED, AMENDED AND EVEN ABANDONED BY THE ENACTMENT OF THE FAMILY CODE.viii[8] Under Article 40 of the Family Code, the absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring such previous marriage void. Meaning, where the absolute nullity of a previous marriage is sought to be invoked for purposes of contracting a second marriage, the sole basis acceptable in law, for said projected marriage to be free from legal infirmity, is a final judgment declaring the previous marriage void. ix[9] However, for purposes other than remarriage, no judicial action is necessary to declare a marriage an absolute nullity. For other

purposes, such as but not limited to the determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime, or a criminal case for that matter, the court may pass upon the validity of marriage even after the death of the parties thereto, and even in a suit not directly instituted to question the validity of said marriage, so long as it is essential to the determination of the case.x[10] In such instances, evidence must be adduced, testimonial or documentary, to prove the existence of grounds rendering such a previous marriage an absolute nullity. These need not be limited solely to an earlier final judgment of a court declaring such previous marriage void. xi[11] It is clear therefore that the Court is clothed with sufficient authority to pass upon the validity of the two marriages in this case, as the same is essential to the determination of who is rightfully entitled to the subject death benefits of the deceased. Under the Civil Code, which was the law in force when the marriage of petitioner Susan Nicdao and the deceased was solemnized in 1969, a valid marriage license is a requisite of marriage, xii[12] and the absence thereof, subject to certain exceptions,xiii[13] renders the marriage void ab initio.xiv[14] In the case at bar, there is no question that the marriage of petitioner and the deceased does not fall within the marriages exempt from the license requirement. A marriage license, therefore, was indispensable to the validity of their marriage. This notwithstanding, the records reveal that the marriage contract of petitioner and the deceased bears no marriage license number and, as certified by the Local Civil Registrar of San Juan, Metro Manila, their office has no record of such marriage license. In Republic v. Court of Appeals,xv[15] the Court held that such a certification is adequate to prove the non-issuance of a marriage license. Absent any circumstance of suspicion, as in the present case, the certification issued by the local civil registrar enjoys probative value, he being the officer charged under the law to keep a record of all data relative to the issuance of a marriage license. Such being the case, the presumed validity of the marriage of petitioner and the deceased has been sufficiently overcome. It then became the burden of petitioner to prove that their marriage is valid and that they secured the required marriage license. Although she was declared in default before the trial court, petitioner could have squarely met the issue and explained the absence of a marriage license in her pleadings before the Court of Appeals and this Court. But petitioner conveniently avoided the issue and chose to refrain from pursuing an argument that will put her case in jeopardy. Hence, the presumed validity of their marriage cannot stand. It is beyond cavil, therefore, that the marriage between petitioner Susan Nicdao and the deceased, having been solemnized without the necessary marriage license, and not being one of the marriages exempt from the marriage license requirement, is undoubtedly void ab initio. It does not follow from the foregoing disquisition, however, that since the marriage of petitioner and the deceased is declared void ab initio, the death benefits under scrutiny would now be awarded to respondent Susan Yee. To reiterate, under Article 40 of the Family Code, for purposes of remarriage, there must first be a prior judicial declaration of the nullity of a previous marriage, though void, before a party can enter into a second marriage, otherwise, the second marriage would also be void. Accordingly, the declaration in the instant case of nullity of the previous marriage of the deceased and petitioner Susan Nicdao does not validate the second marriage of the deceased with respondent Susan Yee. The fact remains that their marriage was solemnized without first obtaining a judicial decree declaring the marriage of petitioner Susan Nicdao and the deceased void. Hence, the marriage of respondent Susan Yee and the deceased is, likewise, void ab initio. One of the effects of the declaration of nullity of marriage is the separation of the property of the spouses according to the applicable property regime. xvi[16] Considering that the two marriages are void ab initio, the applicable property regime would not be absolute community or conjugal partnership of property, but rather, be governed by the provisions of Articles 147 and 148 of the Family Code on Property Regime of Unions Without Marriage. Under Article 148 of the Family Code, which refers to the property regime of bigamous marriages, adulterous relationships, relationships in a state of concubine, relationships where both man and woman are married to other persons, multiple alliances of the same married man, xvii[17] ... [O]nly 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 this property regime, the properties acquired by the parties through their actual joint contribution shall belong to the co-ownership. Wages and salaries earned by each party belong to him or her exclusively. Then too, contributions in the form of care of the home, children and household, or spiritual or moral inspiration, are excluded in this regime.xviii[18]

Considering that the marriage of respondent Susan Yee and the deceased is a bigamous marriage, having been solemnized during the subsistence of a previous marriage then presumed to be valid (between petitioner and the deceased), the application of Article 148 is therefore in order. The disputed P146,000.00 from MBAI [AFP Mutual Benefit Association, Inc.], NAPOLCOM, Commutation, Pag-ibig, and PCCUI, are clearly renumerations, incentives and benefits from governmental agencies earned by the deceased as a police officer. Unless respondent Susan Yee presents proof to the contrary, it could not be said that she contributed money, property or industry in the acquisition of these monetary benefits. Hence, they are not owned in common by respondent and the deceased, but belong to the deceased alone and respondent has no right whatsoever to claim the same. By intestate succession, the said death benefits of the deceased shall pass to his legal heirs. And, respondent, not being the legal wife of the deceased is not one of them. As to the property regime of petitioner Susan Nicdao and the deceased, Article 147 of the Family Code governs. This article applies to unions of parties who are legally capacitated and not barred by any impediment to contract marriage, but whose marriage is nonetheless void for other reasons, like the absence of a marriage license. Article 147 of the Family Code reads 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 if the formers efforts consisted in the care and maintenance of the family and of the household. xxx xxx xxx

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. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation. In contrast to Article 148, under the foregoing article, wages and salaries earned by either party during the cohabitation shall be owned by the parties in equal shares and will be divided equally between them, even if only one party earned the wages and the other did not contribute thereto. xix[19] Conformably, even if the disputed death benefits were earned by the deceased alone as a government employee, Article 147 creates a co-ownership in respect thereto, entitling the petitioner to share one-half thereof. As there is no allegation of bad faith in the present case, both parties of the first marriage are presumed to be in good faith. Thus, one-half of the subject death benefits under scrutiny shall go to the petitioner as her share in the property regime, and the other half pertaining to the deceased shall pass by, intestate succession, to his legal heirs, namely, his children with Susan Nicdao. In affirming the decision of the trial court, the Court of Appeals relied on the case of Vda. de Consuegra v. Government Service Insurance System,xx[20] where the Court awarded one-half of the retirement benefits of the deceased to the first wife and the other half, to the second wife, holding that: ... [S]ince the defendants first marriage has not been dissolved or declared void the conjugal partnership established by that marriage has not ceased. Nor has the first wife lost or relinquished her status as putative heir of her husband under the new Civil Code, entitled to share in his estate upon his death should she survive him. Consequently, whether as conjugal partner in a still subsisting marriage or as such putative heir she has an interest in the husbands share in the property here in dispute.... And with respect to the right of the second wife, this Court observed that although the second marriage can be presumed to be void ab initio as it was celebrated while the first marriage was still subsisting, still there is need for judicial declaration of such nullity. And inasmuch as the conjugal partnership formed by the second marriage was dissolved before judicial declaration of its nullity, [t]he only just and equitable solution in this case would be to recognize the right of the second wife to her share of one-half in the property acquired by her and her husband, and consider the other half as pertaining to the conjugal partnership of the first marriage.xxi[21] It should be stressed, however, that the aforecited decision is premised on the rule which requires a prior and separate judicial declaration of nullity of marriage. This is the reason why in the said case, the Court determined the rights of the parties in accordance with their existing property regime. In Domingo v. Court of Appeals,xxii[22] however, the Court, construing Article 40 of the Family Code,

clarified that a prior and separate declaration of nullity of a marriage is an all important condition precedent only for purposes of remarriage. That is, if a party who is previously married wishes to contract a second marriage, he or she has to obtain first a judicial decree declaring the first marriage void, before he or she could contract said second marriage, otherwise the second marriage would be void. The same rule applies even if the first marriage is patently void because the parties are not free to determine for themselves the validity or invalidity or their marriage. However, for purposes other than to remarry, like for filing a case for collection of sum of money anchored on a marriage claimed to be valid, no prior and separate judicial declaration of nullity is necessary. All that a party has to do is to present evidence, testimonial or documentary, that would prove that the marriage from which his or her rights flow is in fact valid. Thereupon, the court, if material to the determination of the issues before it, will rule on the status of the marriage involved and proceed to determine the rights of the parties in accordance with the applicable laws and jurisprudence. Thus, in Nial v. Bayadog,xxiii[23] the Court explained: [T]he court may pass upon the validity of marriage even in a suit not directly instituted to question the same so long as it is essential to the determination of the case. This is without prejudice to any issue that may arise in the case. When such need arises, a final judgment of declaration of nullity is necessary even if the purpose is other than to remarry. The clause on the basis of a final judgment declaring such previous marriage void in Article 40 of the Family Code connoted that such final judgment need not be obtained only for purpose of remarriage. WHEREFORE, the petition is GRANTED, and the decision of the Court of Appeals in CA-G.R. CV No. 51263 which affirmed the decision of the Regional Trial Court of Quezon City ordering petitioner to pay respondent the sum of P73,000.00 plus attorneys fees in the amount of P5,000.00, is REVERSED and SET ASIDE. The complaint in Civil Case No. Q-93-18632, is hereby DISMISSED. No pronouncement as to costs. SO ORDERED. Davide, Jr., C.J. (Chairman), Kapunan, and Pardo, JJ., concur. Puno J., on official leave.

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