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G.R. No.

122134

October 3, 2003

ROMANA LOCQUIAO VALENCIA and CONSTANCIA L. VALENCIA, petitioners,


vs.
BENITO A. LOCQUIAO, now deceased and substituted by JIMMY LOCQUIAO,
TOMASA MARA and the REGISTRAR OF DEEDS OF PANGASINAN, respondents.

Meanwhile, respondents Benito and Tomasa registered the Inventario Ti Sagut with the Office
of the Register of Deeds of Pangasinan on May 15, 1970. 14 In due course, the original title was
cancelled and in lieu thereof Transfer Certificate of Title No. 8489715 was issued in the name of
the respondents Benito and Tomasa.

x----------------------------x
CONSTANCIA
vs.
BENITO A. LOCQUIAO,
LOCQUIAO, respondent.

Anastacia, and petitioner Romana, all surnamed Locquiao 11. With the permission of
respondents Benito and Tomasa, petitioner Romana Valencia (hereinafter, Romana) took
possession and cultivated the subject land. 12 When respondent Romanas husband got sick
sometime in 1977, her daughter petitioner Constancia Valencia (hereafter, petitioner
Constancia) took over, and since then, has been in possession of the land. 13

L.
now

deceased

VALENCIA, petitioner,
and

substituted

by

JIMMY

DECISION
TINGA, J.:
The Old Civil Code1 and the Old Code of Civil Procedure,2 repealed laws that they both are
notwithstanding, have not abruptly become mere quiescent items of legal history since their
relevance do not wear off for a long time. Verily, the old statutes proved to be decisive in the
adjudication of the case at bar.
Before us is a petition for review seeking to annul and set aside the joint Decision3 dated
November 24, 1994, as well as the Resolution4 dated September 8, 1995, of the former Tenth
Division5 of the Court of Appeals in two consolidated cases involving an action for annulment
of title6 and an action for ejectment.7
Both cases involve a parcel of land consisting of 4,876 square meters situated in Urdaneta,
Pangasinan. This land was originally owned by the spouses Herminigildo and Raymunda
Locquiao, as evidenced by Original Certificate of Title No. 183838 issued on October 3, 1917 by
the Register of Deeds of Pangasinan.
On May 22, 1944, Herminigildo and Raymunda Locquiao executed a deed of donation propter
nuptias which was written in the Ilocano dialect, denominated as Inventario Ti Sagut9 in favor
of their son, respondent Benito Locquiao (hereafter, respondent Benito) and his prospective
bride, respondent Tomasa Mara (hereafter, respondent Tomasa). By the terms of the deed, the
donees were gifted with four (4) parcels of land, including the land in question, as well as a
male cow and one-third (1/3) portion of the conjugal house of the donor parents, in
consideration of the impending marriage of the donees.
The donees took their marriage vows on June 4, 1944 and the fact of their marriage was
inscribed at the back of O.C.T. No. 18383.10
Herminigildo and Raymunda died on December 15, 1962 and January 9, 1968, respectively,
leaving as heirs their six (6) children, namely: respondent Benito, Marciano, Lucio, Emeteria,

On March 18, 1973, the heirs of the Locquiao spouses, including respondent Benito and
petitioner Romana, executed a Deed of Partition with Recognition of Rights,16 wherein they
distributed among only three (3) of them, the twelve (12) parcels of land left by their common
progenitors, excluding the land in question and other lots disposed of by the Locquiao spouses
earlier. Contained in the deed is a statement that respondent Benito and Marciano Locquiao,
along with the heirs of Lucio Locquiao, "have already received our shares in the estates of our
parents, by virtue of previous donations and conveyances," and that for that reason the heirs of
Lucio Locquaio were not made parties to the deed. All the living children of the Locquaio
spouses at the time, including petitioner Romana, confirmed the previous dispositions and
waived their rights to whomsoever the properties covered by the deed of partition were
adjudicated.17
Later on, disagreements among five (5) heirs or groups of heirs, including petitioner Romana,
concerning the distribution of two (2) of the lots covered by the deed of partition which are
Lots No. 2467 and 5567 of the Urdaneta Cadastral Survey surfaced. As their differences were
settled, the heirs concerned executed a Deed of Compromise Agreement18 on June 12, 1976,
which provided for the re-distribution of the two (2) lots. Although not directly involved in the
discord, Benito signed the compromise agreement together with his feuding siblings, nephews
and nieces. Significantly, all the signatories to the compromise agreement, including petitioner
Romana, confirmed all the other stipulations and provisions of the deed of partition. 19
Sometime in 1983, the apparent calm pervading among the heirs was disturbed when
petitioner Constancia filed an action for annulment of title against the respondents before the
Regional Trial Court of Pangasinan. 20 The record shows that the case was dismissed by the trial
court but it does not indicate the reason for the dismissal. 21
On December 13, 1983, respondent Benito filed with the Municipal Trial Court of Urdaneta,
Pangasinan aComplaint22 seeking the ejectment of petitioner Constancia from the subject
property.
On November 25, 1985, the Municipal Trial Court rendered a Decision,23 ordering the
defendant in the case, petitioner Constancia, to vacate the land in question.
Petitioners Romana and Constancia countered with a Complaint24 for the annulment
of Transfer Certificate of TitleNo. 84897 against respondents Benito and Tomasa 25 which they
filed with the Regional Trial Court of Pangasinan on December 23, 1985. Petitioners alleged
that the issuance of the transfer certificate of title was fraudulent; that theInventario Ti

Sagut is spurious; that the notary public who notarized the document had no authority to do
so, and; that the donation did not observe the form required by law as there was no written
acceptance on the document itself or in a separate public instrument.1a\^/phi1.net
Meanwhile, the decision in the ejectment case was appealed to the same RTC where the case
for annulment of title was also pending. Finding that the question of ownership was the central
issue in both cases, the court issued anOrder26 suspending the proceedings in the ejectment
case until it shall have decided the ownership issue in the title annulment case.
After trial, the RTC rendered a Decision27 dated January 30, 1989 dismissing the complaint for
annulment of title on the grounds of prescription and laches. It likewise ruled that
the Inventario Ti Sagut is a valid public document which transmitted ownership over the
subject land to the respondents. With the dismissal of the complaint and the confirmation of
the respondents title over the subject property, the RTC affirmed in toto the decision of the
MTC in the ejectment case28.
Dissatisfied, petitioners elevated the two (2) decisions to the respondent Court of Appeals.
Since they involve the same parties and the same property, the appealed cases were
consolidated by the appellate court.
On November 24, 1994, the Court of Appeals rendered the assailed Decision affirming the
appealed RTC decisions. The appellate court upheld the RTCs conclusion that the petitioners
cause of action had already prescribed, considering that the complaint for annulment of title
was filed more than fifteen (15) years after the issuance of the title, or beyond the ten (10) - year
prescriptive period for actions for reconveyance. It likewise rejected the petitioners assertion
that the donation propter nuptias is null and void for want of acceptance by the donee, positing
that the implied acceptance flowing from the very fact of marriage between the respondents,
coupled with the registration of the fact of marriage at the back of OCT No. 18383, constitutes
substantial compliance with the requirements of the law.
The petitioners filed a Motion for Reconsideration29 but it was denied by the appellate court in
its Resolution30dated September 8, 1995. Hence, this petition.
We find the petition entirely devoid of merit.
Concerning the annulment case, the issues to be threshed out are: (1) whether the
donation propter nuptias is authentic; (2) whether acceptance of the donation by the donees is
required; (3) if so, in what form should the acceptance appear, and; (4) whether the action is
barred by prescription and laches.
The Inventario Ti Sagut which contains the donation propter nuptias was executed and
notarized on May 22, 1944. It was presented to the Register of Deeds of Pangasinan for
registration on May 15, 1970. The photocopy of the document presented in evidence as Exhibit
"8" was reproduced from the original kept in the Registry of Deeds of Pangasinan. 31
The petitioners have launched a two-pronged attack against the validity of the
donation propter nuptias, to wit: first, the Inventario Ti Sagut is not authentic; and second,
even assuming that it is authentic, it is void for the donees failure to accept the donation in a
public instrument.

To buttress their claim that the document was falsified, the petitioners rely mainly on
the Certification32 dated July 9, 1984 of the Records Management and Archives Office that
there was no notarial record for the year 1944 of Cipriano V. Abenojar who notarized the
document on May 22, 1944 and that therefore a copy of the document was not available.
The certification is not sufficient to prove the alleged inexistence or spuriousness of the
challenged document. The appellate court is correct in pointing out that the mere absence of
the notarial record does not prove that the notary public does not have a valid notarial
commission and neither does the absence of a file copy of the document with the archives effect
evidence of the falsification of the document. 33 This Court ruled that the failure of the
notary public to furnish a copy of the deed to the appropriate office is a ground
for disciplining him, but certainly not for invalidating the document or for setting
aside the transaction therein involved.34
Moreover, the heirs of the Locquaio spouses, including petitioner Romana, made reference in
the deed of partition and the compromise agreement to the previous donations made by the
spouses in favor of some of the heirs. As pointed out by the RTC, 35 respondent Benito was not
allotted any share in the deed of partition precisely because he received his share by virtue of
previous donations. His name was mentioned in the deed of partition only with respect to the
middle portion of Lot No. 2638 which is the eleventh (11th) parcel in the deed but that is the
same one-third (1/3) portion of Lot No. 2638 covered by O.C.T. No. 18259 included in the
donation propter nuptias.1awphi1.ntSimilarly, Marciano Locquiao and the heirs of Lucio
Locquiao were not allocated any more share in the deed of partition since they received theirs
by virtue of prior donations or conveyances.
The pertinent provisions of the deed of partition read:

That the heirs of Lucio Locquiao are not included in this Partition by reason of the fact that in
the same manner as we, BENITO and MARCIANO LOCQUIAO are concerned, we have
already received our shares in the estate of our parents by virtue of previous
donations and conveyances, and that we hereby confirm said dispositions, waiving
our rights to whomsoever will these properties will now be adjudicated;

That we, the Parties herein, do hereby waive and renounce as against each other any claim
or claims that we may have against one or some of us, and that we recognize the rights of
ownership of our co-heirs with respect to those parcels already distributed and
adjudicated and that in the event that one of us is cultivating or in possession of any one of
the parcels of land already adjudicated in favor of another heir or has been conveyed,donated
or disposed of previously, in favor of another heir, we do hereby renounce and waive
our right of possession in favor of the heir in whose favor the donation or conveyance was
made previously.36 (Emphasis supplied)
The exclusion of the subject property in the deed of partition dispels any doubt as to the
authenticity of the earlierInventario Ti Sagut.

This brings us to the admissibility of the Deed of Partition with Recognition of Rights, marked
as Exhibit "2", and theDeed of Compromise Agreement, marked as Exhibit "3".

The pivotal question, therefore, is which formal requirements should be applied with respect to
the donation propter nuptias at hand. Those under the Old Civil Code or the New Civil Code?

The petitioners fault the RTC for admitting in evidence the deed of partition and the
compromise agreement on the pretext that the documents "were not properly submitted in
evidence", pointing out that "when presented to respondent Tomasa Mara for identification,
she simply stated that she knew about the documents but she did not actually identify them." 37

It is settled that only laws existing at the time of the execution of a contract are applicable
thereto and not later statutes, unless the latter are specifically intended to have retroactive
effect.46 Consequently, it is the Old Civil Code which applies in this case since the
donation propter nuptias was executed in 1944 and the New Civil Code took effect only on
August 30, 1950.47 The fact that in 1944 the Philippines was still under Japanese occupation is
of no consequence. It is a well-known rule of the Law of Nations that municipal laws, as contradistinguished from laws of political nature, are not abrogated by a change of sovereignty. 48 This
Court specifically held that during the Japanese occupation period, the Old Civil Code was in
force.49 As a consequence, applying Article 1330 of the Old Civil Code in the determination of
the validity of the questioned donation, it does not matter whether or not the donees had
accepted the donation. The validity of the donation is unaffected in either case.

The argument is not tenable. Firstly, objection to the documentary evidence must be made at
the time it is formally offered. 38 Since the petitioners did not even bother to object to the
documents at the time they were offered in evidence, 39 it is now too late in the day for them to
question their admissibility. Secondly, the documents were identified during the Pre-Trial,
marked as Exhibits "2" and "3" and testified on by respondent Tomasa. 40 Thirdly, the
questioned deeds, being public documents as they were duly notarized, are admissible in
evidence without further proof of their due execution and are conclusive as to the truthfulness
of their contents, in the absence of clear and convincing evidence to the contrary. 41 A public
document executed and attested through the intervention of the notary public is evidence of the
facts therein expressed in clear, unequivocal manner.42
Concerning the issue of form, petitioners insist that based on a provision 43 of the Civil Code of
Spain (Old Civil Code), the acceptance by the donees should be made in a public instrument.
This argument was rejected by the RTC and the appellate court on the theory that the implied
acceptance of the donation had flowed from the celebration of the marriage between the
respondents, followed by the registration of the fact of marriage at the back of OCT No. 18383.
The petitioners, the appellate court and the trial court all erred in applying the requirements on
ordinary donations to the present case instead of the rules on donation propter nuptias.
Underlying the blunder is their failure to take into account the fundamental dichotomy
between the two kinds of donations.
Unlike ordinary donations, donations propter nuptias or donations by reason of marriage are
those "made before its celebration, in consideration of the same and in favor of one or both of
the future spouses."44 The distinction is crucial because the two classes of donations are not
governed by exactly the same rules, especially as regards the formal essential requisites.
Under the Old Civil Code, donations propter nuptias must be made in a public instrument in
which the property donated must be specifically described. 45 However, Article 1330 of the same
Code provides that "acceptance is not necessary to the validity of such gifts". In
other words, the celebration of the marriage between the beneficiary couple, in tandem with
compliance with the prescribed form, was enough to effectuate the donation propter nuptias
under the Old Civil Code.
Under the New Civil Code, the rules are different. Article 127 thereof provides that the form of
donations propter nuptias are regulated by the Statute of Frauds. Article 1403, paragraph 2,
which contains the Statute of Frauds requires that the contracts mentioned thereunder need be
in writing only to be enforceable. However, as provided in Article 129, express acceptance
"is not necessary for the validity of these donations." Thus, implied acceptance is
sufficient.

Even the petitioners agree that the Old Civil Code should be applied. However, they invoked
the wrong provisions50thereof.
Even if the provisions of the New Civil Code were to be applied, the case of the petitioners
would collapse just the same. As earlier shown, even implied acceptance of a donation propter
nuptias suffices under the New Civil Code.51
With the genuineness of the donation propter nuptias and compliance with the applicable
mandatory form requirements fully established, petitioners hypothesis that their action is
imprescriptible cannot take off.
Viewing petitioners action for reconveyance from whatever feasible legal angle, it is definitely
barred by prescription. Petitioners right to file an action for the reconveyance of the land
accrued in 1944, when the Inventario Ti Sagut was executed. It must be remembered that
before the effectivity of the New Civil Code in 1950, the Old Code of Civil Procedure (Act No.
190) governed prescription. 52 Under the Old Code of Civil Procedure, an action for recovery of
the title to, or possession of, real property, or an interest therein, can only be brought within
ten years after the cause of such action accrues. 53 Thus, petitioners action, which was filed on
December 23, 1985, or more than forty (40) years from the execution of the deed of donation
on May 22, 1944, was clearly time-barred.
Even following petitioners theory that the prescriptive period should commence from the time
of discovery of the alleged fraud, the conclusion would still be the same. As early as May 15,
1970, when the deed of donation was registered and the transfer certificate of title was issued,
petitioners were considered to have constructive knowledge of the alleged fraud, following the
jurisprudential rule that registration of a deed in the public real estate registry is constructive
notice to the whole world of its contents, as well as all interests, legal and equitable, included
therein.54 As it is now settled that the prescriptive period for the reconveyance of property
allegedly registered through fraud is ten (10) years, reckoned from the date of the issuance of
the certificate of title,55 the action filed on December 23, 1985 has clearly prescribed.
In any event, independent of prescription, petitioners action is dismissible on the ground of
laches. The elements of laches are present in this case, viz:

(1) conduct on the part of the defendant, or one under whom he claims, giving rise to
the situation that led to the complaint and for which the complainant seeks a
remedy;
(2) delay in asserting the complainants rights, having had knowledge or notice of
defendants conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit, and
(4) injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held barred.56
Of the facts which support the finding of laches, stress should be made of the following: (a) the
petitioners Romana unquestionably gained actual knowledge of the donation propter
nuptias when the deed of partition was executed in 1973 and the information must have
surfaced again when the compromise agreement was forged in 1976, and; (b) as petitioner
Romana was a party-signatory to the two documents, she definitely had the opportunity to
question the donation propter nuptias on both occasions, and she should have done so if she
were of the mindset, given the fact that she was still in possession of the land in dispute at the
time. But she did not make any move. She tarried for eleven (11) more years from the execution
of the deed of partition until she, together with petitioner Constancia, filed the annulment case
in 1985.
Anent the ejectment case, we find the issues raised by the petitioners to be factual and,
therefore, beyond this Courts power of review. Not being a trier of facts, the Court is not tasked
to go over the proofs presented by the parties and analyze, assess, and weigh them to ascertain
if the trial court and the appellate court were correct in according them superior credit in this
or that piece of evidence of one party or the other. 57 In any event, implicit in the affirmance of
the Court of Appeals is the existence of substantial evidence supporting the decisions of the
courts below.
WHEREFORE, finding no reversible error in the assailed decision, the same is hereby
AFFIRMED.
Costs against petitioners.
SO ORDERED.

G.R. No. 122749 July 31, 1996


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

VITUG, J.:p
The petition for new bewails, purely on the question of law, an alleged error committed by the
Regional Trial Court in Civil Case No. Q-92-12539. Petitioner avers that the court a quo has
failed to apply the correct law that should govern the disposition of a family dwelling in a
situation where a marriage is declared void ab initio because of psychological incapacity on the
part of either or both parties in the contract.
The pertinent facts giving rise to this incident are, by large, not in dispute.
Antonio Valdez and Consuelo Gomez were married on 05 January 1971. Begotten during the
marriage were five children. In a petition, dated 22 June 1992, Valdez sought the declaration of
nullity of the marriage pursuant to Article 36 of the Family code (docketed Civil Case No. Q-9212539, Regional Trial Court of Quezon City, Branch 102). After the hearing the parties
following the joinder of issues, the trial court, 1 in its decision of 29 July 1994, granted the
petition, viz:
WHEREFORE, judgment is hereby rendered as follows:
(1) The marriage of petitioner Antonio Valdez and respondent Consuelo GomezValdez is hereby declared null and void under Article 36 of the Family Code on the
ground of their mutual psychological incapacity to comply with their essential
marital obligations;
(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela Rosario
shall choose which parent they would want to stay with.
Stella Eloisa and Joaquin Pedro shall be placed in the custody of their mother, herein
respondent Consuelo Gomez-Valdes.
The petitioner and respondent shall have visitation rights over the children who are
in the custody of the other.
(3) The petitioner and the respondent are directed to start proceedings on the
liquidation of their common properties as defined by Article 147 of the Family Code,
and to comply with the provisions of Articles 50, 51, and 52 of the same code, within
thirty (30) days from notice of this decision.
Let a copy of this decision be furnished the Local Civil Registrar of Mandaluyong,
Metro Manila, for proper recording in the registry of marriages. 2 (Emphasis ours.)
Consuelo Gomez sought a clarification of that portion of the decision directing compliance with
Articles 50, 51 and 52 of the Family Code. She asserted that the Family Code contained no
provisions on the procedure for the liquidation of common property in "unions without

marriage." Parenthetically, during the hearing of the motion, the children filed a joint affidavit
expressing their desire to remain with their father, Antonio Valdez, herein petitioner.

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

In an order, dated 05 May 1995, the trial court made the following clarification:
IV
Consequently, considering that Article 147 of the Family Code explicitly provides that
the property acquired by both parties during their union, in the absence of proof to
the contrary, are presumed to have been obtained through the joint efforts of the
parties and will be owned by them in equal shares, plaintiff and defendant willown
their "family home" and all their properties for that matter in equal shares.
In the liquidation and partition of properties owned in common by the plaintiff and
defendant, the provisions on ownership found in the Civil Code shall
apply. 3 (Emphasis supplied.)
In addressing specifically the issue regarding the disposition of the family dwelling, the trial
court said:
Considering that this Court has already declared the marriage between petitioner
and respondent as null and void ab initio, pursuant to Art. 147, the property regime
of petitioner and respondent shall be governed by therules on ownership.
The provisions of Articles 102 and 129 of the Family Code finds no application since
Article 102 refers to the procedure for the liquidation of the conjugal partnership
property and Article 129 refers to the procedure for the liquidation of the absolute
community of property. 4
Petitioner moved for a reconsideration of the order. The motion was denied on 30 October
1995.
In his recourse to this Court, petitioner submits that Articles 50, 51 and 52 of the Family Code
should be held controlling: he argues that:
I
Article 147 of the Family Code does not apply to cases where the parties are
psychologically incapacitated.
II
Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code govern
the disposition of the family dwelling in cases where a marriage is declared void ab
initio, including a marriage declared void by reason of the psychological incapacity of
the spouses.
III

It is necessary to determine the parent with whom majority of the children wish to
stay. 5
The trial court correctly applied the law. In a void marriage, regardless of the cause thereof,
the property relations of the parties during the period of cohabitation is governed by the
provisions of Article 147 or Article 148, such as the case may be, of the Family Code. Article 147
is a remake of Article 144 of the Civil Code as interpreted and so applied in previous cases; 6 it
provides:
Art. 147. When a man and a woman who are capacitated to marry each other, live
exclusively with each other as husband and wife without the benefit of marriage or
under a void marriage, their wages and salaries shall be owned by them in equal
shares and the property acquired by both of them through their work or industry
shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they lived together
shall be presumed to have been obtained by their joint efforts, work or industry, and
shall be owned by them in equal shares. For purposes of this Article, a party who did
not participate in the acquisition by the other party of any property shall be deemed
to have contributed jointly in the acquisition thereof in the former's efforts consisted
in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the
property acquired during cohabitation and owned in common, without the consent
of the other, until after the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the
party in bad faith in the ownership shall be forfeited in favor of their common
children. In case of default of or waiver by any or all of the common children or their
descendants, each vacant share shall belong to the innocent party. In all cases, the
forfeiture shall take place upon the termination of the cohabitation.
This particular kind of co-ownership applies when a man and a woman, suffering no illegal
impediment to marry each other, so exclusively live together as husband and wife under a void
marriage or without the benefit of marriage. The term "capacitated" in the provision (in the
first paragraph of the law) refers to the legal capacity of a party to contract marriage, i.e., any
"male or female of the age of eighteen years or upwards not under any of the impediments
mentioned in Articles 37 and 38" 7 of the Code.
Under this property regime, property acquired by both spouses through their work and
industry shall be governed by the rules on equal co-ownership. Any property acquired during
the union is prima facie presumed to have been obtained through their joint efforts. A party
who did not participate in the acquisition of the property shall be considered as having

contributed thereto jointly if said party's "efforts consisted in the care and maintenance of the
family household." 8 Unlike the conjugal partnership of gains, the fruits of the couple's separate
property are not included in the co-ownership.
Article 147 of the Family Code, in the substance and to the above extent, has clarified Article
144 of the Civil Code; in addition, the law now expressly provides that
(a) Neither party can dispose or encumber by act intervivos his or her share in co-ownership
property, without consent of the other, during the period of cohabitation; and
(b) In the case of a void marriage, any party in bad faith shall forfeit his or her share in the coownership in favor of their common children; in default thereof or waiver by any or all of the
common children, each vacant share shall belong to the respective surviving descendants, or
still in default thereof, to the innocent party. The forfeiture shall take place upon the
termination of the cohabitation 9 or declaration of nullity of the marriage. 10
When the common-law spouses suffer from a legal impediment to marry or when they do not
live exclusively with each other (as husband and wife), only the property acquired by both of
them through their actual joint contribution of money, property or industry shall be owned in
common and in proportion to their respective contributions. Such contributions and
corresponding shares, however, are prima facie presumed to be equal. The share of any party
who is married to another shall accrue to the absolute community or conjugal partnership, as
the case may be, if so existing under a valid marriage. If the party who has acted in bad faith is
not validly married to another, his or her share shall be forfeited in the manner already
heretofore expressed. 11
In deciding to take further cognizance of the issue on the settlement of the parties' common
property, the trial court acted neither imprudently nor precipitately; a court which has
jurisdiction to declare the marriage a nullity must be deemed likewise clothed in authority to
resolve incidental and consequential matters. Nor did it commit a reversible error in ruling that
petitioner and private respondent own the "family home" and all their common property
in equal shares, as well as in concluding that, in the liquidation and partition of the property
owned in common by them, the provisions on co-ownership under the Civil Code, not Articles
50, 51 and 52, in relation to Articles 102 and 129, 12 of the Family Code, should aptly prevail.
The rules set up to govern the liquidation of either the absolute community or the conjugal
partnership of gains, the property regimes recognized for valid and voidable marriages (in the
latter case until the contract is annulled), are irrelevant to the liquidation of the co-ownership
that exists between common-law spouses. The first paragraph of Articles 50 of the Family
Code, applying paragraphs (2), (3), (4) and 95) of Article 43, 13 relates only, by its explicit
terms, to voidable marriages and, exceptionally, to void marriages under Article 40 14 of the
Code, i.e., the declaration of nullity of a subsequent marriage contracted by a spouse of a prior
void marriage before the latter is judicially declared void. The latter is a special rule that
somehow recognizes the philosophy and an old doctrine that void marriages are inexistent
from the very beginning and no judicial decree is necessary to establish their nullity. In now
requiring forpurposes of remarriage, the declaration of nullity by final judgment of the
previously contracted void marriage, the present law aims to do away with any continuing
uncertainty on the status of the second marriage. It is not then illogical for the provisions of
Article 43, in relation to Articles 41 15 and 42, 16 of the Family Code, on the effects of the
termination of a subsequent marriage contracted during the subsistence of a previous marriage
to be made applicable pro hac vice. In all other cases, it is not to be assumed that the law has
also meant to have coincident property relations, on the one hand, between spouses in valid

and voidable marriages (before annulment) and, on the other, between common-law spouses
or spouses of void marriages, leaving to ordain, on the latter case, the ordinary rules on coownership subject to the provisions of the Family Code on the "family home," i.e., the
provisions found in Title V, Chapter 2, of the Family Code, remain in force and effect regardless
of the property regime of the spouses.
WHEREFORE, the questioned orders, dated 05 May 1995 and 30 October 1995, of the trial
court are AFFIRMED. No costs.

G.R. No. L-22383

October 6, 1924

THE
PHILIPPINE
NATIONAL
BANK, plaintiff-appellee,
vs.
MARGARITA QUINTOS E YPARRAGUIRRE and ANGEL A. ANSALSO, defendantsappellants.
Angel
A.
Roman J. Lacson for appellee.

Ansaldo

for

appellants.

VILLAMOR, J.:
The appellants pray for the dismissal of the complaint with costs against the plaintiff, alleging
that the judgment appealed from is erroneous: (1) Because it holds that the document Exhibit A
does not contain anything that makes the plaintiff agent of the defendants; (2) because it finds
without any ground that the defendant were husband and wife when they executed said
document; (3) because upon this finding, it considers unnecessary to discuss whether or not
the obligation evidence by said document is solidary between the defendants (4) because to
maintain such opinion amounts to compelling the defendants to comply with said obligation in
a manner distinct from that stipulated in the contract; and (5) because it sanctions an arbitrary,
unjust and illegal procedure.
The Honorable Pedro Concepcion, judge, who tried this case, rendered decision in the
following terms:
The plaintiff seeks to recover of the defendants the sum of P31,785.96, the amount of
an alleged overdraft against them and in favor of the plaintiff bank, with interest
thereon at 8 per cent per annum from October 1, 1922.
It appears from the evidence that in a document dated June 20, 1918, the Philippine
National Bank granted the defendants a credit to the amount of P31,284, and to
secure the payment thereof, as well as the interest and costs, the defendants
mortgaged and pledged to the bank certain certificates of one hundred fifty-eight
shares of stock of the Bank of the Philippine Islands of the nominal value of P200
each. Later on, a certificate of fifty shares and another of forty were substituted by

others of 10 and 30 shares, respectively. Besides these shares, the defendants


delivered to the bank, as additional securities, fifty shares of stock of the "Compaia
Naviera" of the nominal value of P100 each; eighty shares of stock of the Davao
Agriculture and Commercial Company of P100 each, and 10 second liberty bonds.
These bonds were sold by the plaintiff bank on or before August 19, 1922, having
realized the sum of P2,360 from the sale thereof. (Exhibit 3.)
On August 21, 1920, the herein defendant, Mr. Angel Ansaldo, in his answer to a
letter of the bank addressed to him or to his wife, his codefendant Margarita Q. de
Ansaldo, stated, as may be seen in Exhibit B, that the balance in his current account
in favor of said bank in the sum of P33,558.445 on July 31, 1920, had been examined
by him and found correct. This balance with the interest due from the said date up to
September 30, 1922, amounted to P41,212.05 and after deducting the credit and
deposits from August 1, 1920, to September 30, 1922, which amount to P9,426.09,
there remains a balance of P31,785.96, payment of which is claimed in the complaint.
And the complaint was filed because between April 2, 1921, and July 22, 192, the date
of the letter Exhibit 6, the defendant Mr. Ansaldo was several times required to pay
his debt, the securities given having been found to be insufficient to secure the
payment of his obligations, but the defendants failed to give the new additional
securities demanded.
The defendants discuss in the first place the nature of the obligation sued on,
maintaining that the same is not of a solidary nature because, say they, there is
nothing in it that expressly determines said character, and therefore it binds only
those who have contacted the same to the extent of their share in said obligation; and
in connection with this point it was attempted to prove that the defendant Margarita
Q. de Ansaldo, making use of the credit granted, has received from the bank only the
sum of P10,000 (Exhibit 5). As an answer to the question raised the attorney for the
bank calls attention to Exhibit A where it appears that the defendant Angel A.
Ansaldo "and or" Margarita A. de Ansaldo, both or either of them indiscriminately,
could sign checks against the bank in their current account.
The court is of the opinion that it is not necessary to discuss whether the obligation
in question is solidary or joint, because in either case this debt is in the last analysis
chargeable to the conjugal partnership of the defendant spouses. According to article
1408 of the Civil Code, all the debts and obligations contracted during the marriage
by the husband, as well as those incurred by the wife in those cases in which she may
legally bind the partnership, are chargeable to the conjugal partnership. In the
instant case, the defendant Margarita Q. de Ansaldo joined her husband in the
execution of the document, evidencing the obligation in question, on June 20, 1918,
Exhibit A. (See Joaquin vs. Avellana, 11 Phil., 249; Fulgencio vs. Gatchalian, 21 Phil.,
252; Falcon vs. Manzano, 15 Phil., 441.)
Another question raised, although indirectly, by the defendants is that, this being, as
it is, a case of a loan for an indefinite period of time they were not asked to pay in
accordance with law, articles 313 and 316 of the Code of Commerce. This contention
is untenable. Under the provision of section 33 of Act No. 2938, amending the
charter of the Philippine National Bank, if, from any cause whatsoever, any of the
securities specified for the loans provided for therein, or accepted by said bank as
security for loans should decline or depreciate in market value wholly or in part, said

bank may demand additional securities or may forthwith declare such obligation due
and payable; and it is a fact admitted by the defendants themselves that the securities
given by them have suffered a considerable depreciation and it is a fact proven that
they were required to give additional securities but failed to do so.
If the securities were found to have depreciated in value, say the defendants, "the
plaintiff bank's remedy was the one provided in the document executed by the
defendants in its favor and in accordance with its own charter." According to the
contract, it may hold or sell the securities above mentioned although as an agent
(articles 1710, 1713, 1714, 1718, 1719, and 1796 of the Civil Code); and in accordance
with its charter (section 42, Act No. 2612), said sale may be ordered 15 days after a
demand in writing is made upon the debtor to increase the amount thereof, if in the
meantime said debtor should have failed to comply with this requirement . . . "The
plaintiff, say they, cannot be considered authorized to be negligent, as soon as it shall
have learned that the securities had begun to depreciate, as compared with the value
they had when they were delivered; for then it neither would comply with the agency
stipulated in the document in its favor, which would render it liable, nor could in
justice claim from the debtor what by its own negligence it may have failed to
receive." As an answer to this, it may be said that:
". . . it must be borne in mind that it is a recognized doctrine in the matter
of suretyship that with respect to the surety, the creditor is under no
obligation to display any diligence in the enforcement of his rights as a
creditor. His mere inaction, indulgence, passiveness, or delay in
proceeding against the principal debtor, or the fact that he did not enforce
the guaranty or apply to the payment of such funds as were available,
constitute no defense at all for the surety, unless the contract expressly
requires diligence and promptness on the part of the creditor, which is not
in the case in the present action." (Clark vs.Sellner, 42 Phil., 384.
Furthermore, there is nothing in the document evidencing the contract which makes
the plaintiff, as the defendants believe, their agent with the obligation to sell the
securities to the document, has a right, not an obligation, to elect to enforce the
securities in the manner it now does by bringing this action.
As to the amount of the obligation, the defendants argue that the acknowledgment of
the debit balance on July 31, 1920, in the amount of P33,548.55, (Exhibit B), is not
any evidence that may legally bind the defendant Margarita Q. de Ansaldo, who has
not accepted it as correct. The truth, however, is that the defendant Mr. Ansaldo who
gave his conformity with the aforesaid balance is the husband of the other defendant
and the legal manager of the property of the conjugal partnership which is liable for
the payment of this debt.
The interest computed was likewise discussed in this case, the defendants claiming
that the same was not fixed with their consent, nor does there exist, say they, any
proof that it was ever fixed by the Board of Directors of the bank. It appears,
however, from the evidence of the plaintiff that the National Bank had authorized
various officers thereof to fix certain rate of interest on certain occasions; as for
instance, the rate of interest for the months of August to September, 1920, was raised
from 12 to 8 per cent. At all events, we believe that the defendants have no right to

raise this question because they have paid interest at the rate of 9 per cent per
annum, as appears from the document marked Exhibit I.
For all of the foregoing, judgment is rendered sentencing the defendants to pay the
plaintiff bank the sum of thirty-one thousand seven hundred eighty-five pesos and
ninety-six centavos (P31,785.96), with interest thereon at the rate of 8 per cent per
annum from October 1, 1922, until full payment, with the costs; in case of failure to
pay, let the certificates of shares described in Exhibit A be sold, and if the proceeds of
the sale of said shares are not sufficient to cover the whole amount of the debt, let an
execution issue against any property of the conjugal partnership of the defendants
and, in default thereof, against the private property of each of them, sufficient to
cover the whole amount of the balance that may be remaining unpaid.

VILLAMOR, J.:
In view of the juridical importance of the question raised in this motion, wherein it is
maintained that the obligation of the defendants is chargeable to the conjugal partnership, and
not to the private property of the spouses, and much less to the private property of Margarita
Quintos de Ansaldo, we deem it well to enlarge upon our decision published October 6, 1924.
It will be remembered that the defendants signed a document of pledge in favor of the plaintiff
Philippine National Bank to secure the payment of a loan in current account to the amount of
P31,284. In said document it does not clearly appear that the signers were husband and wife,
although there is proof in the record tending to show their civil status as husband and wife. Nor
does its appear in the said document that the signers have bound themselves solidarily to pay
the debt owing to plaintiff.

So ordered.
Manila, P. I., February 5, 1924.
(Sgd.)
Judge

PEDRO

CONCEPCION

As the transcript of the testimony of the witnesses was not forwarded to this court, we cannot,
according to the constant jurisprudence of this court, review the evidence and so we have to
abide by the findings of fact set forth in the judgment of the trial court.
We agree with the appellants that, according to the contract of pledge Exhibit A, attached to the
complaint, the defendants authorized the plaintiff to act as their agent with full power and
authority to dispose of the effects pledged in the manner stipulated in said contract; but it
appears that the plaintiff had also an option, not an obligation precisely, to enforce the
securities given.
The question whether or not appellants executed the aforesaid document Exhibit A as husband
and wife was decided by the trial court in the sense that the defendant appellant Mr. Ansaldo is
the husband of the other defendant Doa Margarita Q. e Iparraugirre. For the reason above
given we cannot alter this finding of the trial court and consequently if the defendants are
husband and wife, it is immaterial whether the debt was contracted by one or the other, for in
either case as the debt was contracted during the marriage of the defendants it must be paid for
the account of the conjugal partnership in accordance with article 1408 of the Civil
Code. 1awph!l.net
After a thorough study of the judgment appealed from, we do not find therein any substantial
error that justifies the reversal thereof and therefore the same must be, as is hereby, affirmed
with costs against the appellants. So ordered.
Johnson, Street, Malcolm, Avancea, Ostrand and Romualdez, JJ., concur.
DECISION UPON MOTION FOR RECONSIDERATION
December 10, 1924.

The judgment appealed from, affirmed by this court in a decision published October 6, 1924,
sentences the defendants to pay the plaintiff bank the sum of thirty-one thousand seven
hundred eighty-five pesos and ninety-six centavos (P31,785.96) with interest thereon at 8 per
cent per annum from October 1, 1922, until full payment, with the costs; providing that, in
default of payment, the certificates of shares described in Exhibit A must be sold, and in case
the proceeds of the sale were not sufficient to cover the whole amount of the debt, an execution
shall issue against the property of the conjugal partnership of the defendants, and, if no such
property was found, then against any private property of each of them sufficient to cover the
whole amount of the balance remaining unpaid.
There can be no doubt that the property pledged being insufficient, the property of the conjugal
partnership is liable for this obligation in accordance with article 1408 of the Civil Code,
because the same was contracted by the spouses during the marriage; but in default of property
of the conjugal partnership (Article 1401), what is the liability of the spouses as to the private
property (article 1396) of each of them?
In this jurisdiction we do not believe that a similar question was heretofore ever raised and
decided, and so far as the research of the write hereof discloses, it finds no precedent in the
Spanish jurisprudence.
By express provision of the Civil Code, the conjugal partnership begins to exist at the
celebration of the marriage, and the separation of the properties between the spouses shall take
place (article 1432) only when it is expressly stipulated in the marriage settlement, or is
judicially decreed, or in the case provided in article 50 of the Code. This conjugal partnership
however, is confined to the properties mentioned in article 1401 of the Civil Code, to wit: ( a)
Those acquired by onerous title during the marriage at the expense of the common property
whether the acquisition is made for the community or for only one of them; (b) those obtained
by the industry, salary or labor of the spouses or any of them; (c) the fruits, rents or interest
received or accruing during the marriage, from the common or the private property of each of
the spouses. The partnership does not produce the merger of the properties of each spouse.
Each of them, notwithstanding the existence of the partnership, continues to be the owner of
what he or she had before contracting marriage, as well as of what he or she may have acquired
later by lucrative title, by right of redemption, or by exchange with his or her property, or by
purchase with his or her money.

The ganancial partnership, to use the expression of Mr. Manresa, is the same conjugal
partnership constituted, in its economical aspect, under the system established by the law as
suppletory. It is, therefore, formed by the husband and the wife, each with his or her own
property and with his or her own debts. The legislator does not intend to effect a mixture or
merger of those debts of properties between the spouses. The partnership maintains the
separation of the properties brought by each spouse from those that he or she may substitute
for them, or privately acquire afterwards by lucrative title.
Under the provisions of the Code it appears evident that the conjugal partnership does not
produce the merger of properties, nor does it cause the personality of the wife to disappear; on
the contrary, the law established absolute separation of capitals a complete independence of
the capital account from the account of benefits pertaining to the conjugal partnership, all of
which constitutes a unsurmountable obstacle to the presumption of solidarity between spouses.

.R. No. 163712

November 30, 2006

METROPOLITAN BANK AND TRUST COMPANY and ROGELIO T. UY, Petitioners,


vs.
JOSE B. TAN and ELIZA GO TAN, Respondents.
DECISION
CARPIO MORALES, J.:

The question submitted to our consideration presupposes the insolvency of the conjugal
partnership, and as there is no presumption of solidarity of property between the spouses, the
question may be asked, What liability do the partners have with respect to the debts of the
partnership? The legal provisions about conjugal partnership, contained in chapter 5, title 3,
book 4, of the Civil Code, do not give an adequate answer to this question; so that we have to
resort to other sources for a solution thereof. Mr. Manresa already indicates in his
commentaries on article 1395 that in view of the provisions of the Code regarding conjugal
partnership, "the cases will be rare wherein there would be any need to resort to the suppletory
rule of the contract of partnership; but the law, which does not in any manner pretend having
provided for all the questions that may present themselves in the practice, points out new
sources of law to which resort must be made in order to solve doubtful cases, situations or
circumstances not provided in articles 1392 to 1431." The case now before us is one of them,
which requires, in order to be solved, a resort to the rule on the contract of partnership,
prescribed in article 1698, which provides that the partners are not solidarily liable with respect
to the debt of the partnership, and none can bind the others by a personal act, if they have not
given him any power therefor.

On the application for extra-judicial foreclosure of mortgage filed by herein petitioners


Metropolitan Bank and Trust Company (Metrobank) and its Vice President Rogelio T. Uy (Uy),
the Office of the Provincial Sheriff of Misamis Oriental issued a "Sheriffs Notice of
Sale"1 setting on April 17, 1998 the sale at public auction of four mortgaged parcels of land
including that covered by Transfer Certificate of Title No. T-53267 (the title in question)
registered in the name of herein respondent Jose B. Tan who was referred to in the title as
"JOSE B. TAN, of legal age, Filipino, married to Eliza Go Tan. . . ." 2

The aforecited provision negativating solidarity in the liability of the partners is a consequence
of the conclusive rule of article 1137, of general application to all kinds of obligation, to the
effect that in obligations created by the will of the parties, solidarity will exist only when it is
expressly determined in the title thereof, giving them such a character. Therefore if solidarity
exists only by stipulation, or by law, it is evident that the partner cannot be solidarity liable for
the debts of the partnership, because, as Manresa says, there is no legal provision imposing
such burden upon him, and because the same is not only not authorized by the contract of
partnership, but is contrary to the nature thereof, for gain being the consideration of the
obligation, the latter cannot be extended beyond the interest that the partner may have therein
which is proportional to his share.

1. Respondent Eliza Go Tan never gave her consent or conformity to encumber the
title in question;

Taking into account that the contract of pledge signed by the defendants does not show that
they have contracted a solidary obligation, it is our opinion, and so decide, that the properties
given as pledge being insufficient, the properties of the conjugal partnership of the defendants
are liable for the debt to the plaintiff, and in default thereof, they are jointly liable for the
payment thereof.
It being understood that the judgment appealed from is modified in the sense above stated, the
motion of the appellants is denied. So ordered.

A day before the scheduled public auction of the mortgaged properties or on April 16, 1998,
respondent spouses Jose B. Tan and Eliza Go Tan filed a complaint 3 against petitioners, along
with Albano L. Cuarto, Sheriff IV of the Office of the Provincial Sheriff of Misamis Oriental, for
removal of cloud on the title in question and injunction before the Regional Trial Court of
Misamis Oriental. The complaint was docketed as Civil Case No. 98-225.
Respondents cited the following grounds-bases of their complaint:

2. The real estate mortgages, annotated as Entries No. 142475, 146789, 174644,
213699, 247803, and 246959 at the back of TCT No. 52367 covering the questioned
land are null and void because respondent Jose B. Tan had already fully paid the
obligations secured by the mortgages annotated as Entries No. 14275, 146789, and
174644; while the mortgages registered as Entry No. 213699 (amendment of
mortgage, amending a previous loan of P15,000,000 to P25,000,000) and Entry No.
246959 (amendment of mortgage amending a previous loan of P25,000,000
to P40,000,000), as well as any mortgage prior to that registered as Entry No.
213699 was not executed and signed by [respondent Jose B. Tan]. (Underscoring
supplied)
As scheduled, the public auction of the foreclosed properties took place on April 17, 1998
following which the Office of the Provincial Sheriff of Misamis Oriental issued a Sheriffs
Certificate of Sale4 in the name of petitioner Metrobank, the highest bidder.
In their Answer5 to the Complaint, petitioners alleged that:

Plaintiffs [herein respondents], together with their two sons, Ariel and Rey
John, obtained a credit line from the defendant bank from which they made availments
from time to time. In time and always upon their plea, the line was gradually increased until it
reached P40 million. There was no separate or distinct loan to speak of; all availments
or releases were taken from one and the same line.

d) Making permanent the writ of preliminary injunction against the defendant


sheriff, and the Office of the Provincial Sheriff of Misamis Oriental enjoining and
restraining them, their agents, and representatives from issuing a final certificate of
sale in favor of defendant Metrobank covering the parcel of land covered by TCT No.
T-53267;

In the same token, the mortgage constituted on the four lots, TCT No. T-53267 included, was
for the entire credit line and not for any particular availment or for a determinate portion of the
credit. As such, the mortgage will be discharged and the four lots released only upon the
termination of the line, which means full payment of the entire loan which plaintiffs never
did.6 (Emphasis and underscoring supplied)

e) Ordering the removal of the cloud on the title, TCT No. T-53267, of the Registry of
Deeds for Cagayan de Oro, and the cancellation of all the entries of the real estate
mortgages and amendment of mortgages annotated at the back of TCT No. T-53267,
of the Registry of Deeds for Cagayan de Oro City;

Petitioners further alleged that the deeds of real estate mortgage, 7 promissory notes,8 and credit
line agreements9bore the signature of respondent Jose B. Tan either for himself or as attorneyin-fact of his son Ariel Tan and, in one of them, his wife-co-respondent Eliza Go Tans signature
appeared.
By way of Counterclaim, petitioners prayed for the award of attorneys fees, compensatory
and/or moral damages, exemplary damages, and other reliefs. 10
Crediting the testimony of respondent Jose B. Tan denying having 1) executed and signed the
two amendments of the mortgage, 2) received the amount of P40,000,000, and 3) appeared
before Notary Public Joel Pearanda who notarized11 the mortgage for P40,000.00, and
likewise crediting the testimony of respondent Eliza Go Tan denying that the signature
appearing on the real estate mortgage dated November 5, 1992 was hers, 12 and finding that
. . . the existing loans covered by real estate mortgages annotated at the back of subject TCT No.
T-53267 of the Registry of Deeds for Cagayan de Oro, had been fully paid as of July 1, 1997,
defendant Metrobank had no basis to be paid again through the extra-judicial
foreclosure proceedings13 (underscoring supplied)[,]
Branch 38 of the Misamis Oriental RTC, by Decision of March 5, 2001, rendered judgment in
favor of respondents, disposing as follows:
WHEREFORE, premises considered, this Court hereby renders judgment in favor of the
plaintiffs spouses Jose B. Tan and Eliza G. Tan and against the defendants, as follows:
a) Declaring that, because of the fact that the plaintiff Eliza G. Tan did not give her
consent to all the real estate mortgages annotated at the back of her title, TCT No. T53267, of the Registry of Deeds for Cagayan de Oro, all said mortgages
are null and void ab initio;
b) Declaring that, because plaintiff Jose B. Tan did not execute the real estate
mortgages annotated at the back of his title, TCT No. T-53267, of the Registry of
Deeds for Cagayan de Oro, all said mortgages are nulland void ab initio;
c) Declaring the extra-judicial foreclosure proceedings taken by the defendant
sheriff , including the sheriffs certificate of sale as null and void;

f) Absolving the plaintiffs spouses from financial liability from the null and
void real estate mortgages;
g) Declaring the principal obligations obtained by Rey John Tan through
the annulled real estate mortgages as FULLY PAID by him;
h) Ordering defendant Metrobank to pay attorneys fee and expenses of litigation in
the amount of P100,000 and the costs.
SO ORDERED.14 (Emphasis and underscoring supplied)
Petitioners appealed the trial courts decision before the Court of Appeals.
By Decision of November 21, 2003, 15 the Court of Appeals affirmed the trial courts decision
and accordingly dismissed petitioners appeal. And it denied petitioners Motion for
Reconsideration.16
Hence, the present Petition for Review on Certiorari filed on July 7, 2004. 17
The petition is impressed with merit.
Petitioners assail, in the main, the appellate courts affirmance of the trial courts decision
absolving respondents from liability for the principal obligation obtained by their son Rey John
Tan which was secured by real estate mortgages, including that covered by the title in question,
and declaring such principal obligation of Rey John Tan, who is not a party to the case, to have
been fully paid by him as of July 1, 1997, before the questioned extra-judicial foreclosure and
public auction sale conducted on April 17, 1998.18
Respondent Jose B. Tan19 insisted that he was not a party to the documents bearing on the
grant of the credit line, he pointing to the absence of his signature above his typewritten name
on the Credit Line Agreements, promissory notes, disclosure statements, and an Amendment
of Real Estate Mortgage. Respondents presented in evidence Promissory Notes Exhibits "B2" and "B-4" dated July 1, 1997 and June 24, 1997, respectively; three Credit Line Agreements
Exhibits "B-6," "B-7," and "B-8," 20 dated May 2, 1997; and the Agreement amending the real
estate mortgage Exhibit "B-9,"21 all dated May 2, 1997.

Petitioners, on the other hand, presented six Promissory Notes dated February 26, 1996, May
8, 1996, August 27, 1996, October 8, 1996, October 25, 1996, and November 18, 1996; 22 five
Credit Line Agreements dated September 9, 1991, September 24, 1992, September 2, 1993,
November 3, 1994, and April 25, 1996; 23 an Amendment of Real Estate Mortgage
from P15,000,000 to P25,000,000; and October 29, 199624 Amendment of Real Estate
Mortgage from P25,000,000 to P40,000,000.
All document-exhibits of petitioners which are original copies bear the signature of respondent
Jose B. Tan, however, as solidary co-debtor of his sons Rey John Tan and Ariel Tan.25 And
these documents were annotated at the back of the title in question. 26
In the absence of proof, nay allegation, that the signatures of respondent Jose B. Tan on the
abovementioned documents were forged, this Court is constrained to uphold their
genuineness.27
As for the claim that respondent Eliza Go Tan did not give her consent to the mortgage of the
title in question, the same is belied by her signature 28 on Exhibit "18"-Real Estate Mortgage
which is annotated as Entry No. 174644 at the back of the title. Her bare denial that the
signature was forged, without more, does not lie.
In any event, lack of respondent Eliza Go Tans consent to the mortgage covering the title in
question would not render the encumbrance void under the second paragraph of Article 124 of
the Family Code.29 For proof is wanting that the property covered by the title is conjugal that
it was acquired during respondents marriage which is what would give rise to the presumption
that it is conjugal property. 30 The statement in the title that the property is "registered in
accordance with the provisions of Section 103 of the Property Registration Decree in the name
ofJOSE B. TAN, of legal age, married to Eliza Go Tan"31 does not prove or indicate that
the property is conjugal. SoRuiz v. Court of Appeals32 instructs:
The property subject of the mortgage is registered in the name of "Corazon G. Ruiz, of legal
age, married toRogelio Ruiz, Filipinos." Thus, title is registered in the name of Corazon alone
because the phrase "married to Rogelio Ruiz" is merely descriptive of the civil status of
Corazon and should not be construed to mean that her husband is also a registered owner.
Furthermore, registration of the property in the name of "Corazon G. Ruiz, of legal age,
married to Rogelio Ruiz" is not proof that such property was acquired during the
marriage, and thus, is presumed to be conjugal. The property could have been acquired by
Corazon while she was still single, and registered only after her marriage to Rogelio
Ruiz. Acquisition of title and registration thereof are two different acts. The presumption under
Article 116 of the Family Code that properties acquired during the marriage are presumed to be
conjugal cannot apply in the instant case. Before such presumption can apply, it must first be
established that the property was in fact acquired during the marriage. In other words, proof of
acquisition during the marriage is a condition sine qua non for the operation of the
presumption in favor of conjugal ownership. No such proof was offered nor presented in the
case at bar.33 (Emphasis and underscoring supplied)
On respondents claim of payment, they presented debit memo-Exhibits "G" to "G-11" (of
which only Exhibits "G-6" to "G-11" 35 are relevant to the issues) and certifications-Exhibits "H"
and "H-1"36 issued by an accountant, one Glenn Cabading.

Rebutting Exhibits "G" to "G-11" inclusive, petitioners presented credit memos 37 which, to
them, cancelled respondents debit memos. From a comparison of the credit and debit memos
with the bank ledgers38 and especially considering the unquestioned explanation of petitioner
Uy on the reason behind the issuance of these memos, viz:
ATTY. DEL CASTILLO:
Q You said, when a loan is renewed you credit a certain amount. Can you expound that a little
bit?
A Actually, the Banco Central punish[es] if the loan cannot be renewed for several
years without payment. Just to circumvent that policy, we do the credit first and the debit
just for the renewal.
Q Why is that?
A To show that amount is fully paid and we avail.
Q How is that done?
A We credit first the renewed amount and we debit the old promissory note.
Q When you credit, there were other papers accomplished?
A Yes.
Q What are these papers called?
A Credit Memos on loan release.
Q Where do you credit this?
A It is credited on their accounts.
Q On the existing accounts?
A Yes, deposit account.
Q And what is debit memos?

34

A Debit memos are ones that liquidate the loan so that the whole promissory note will be
distinguished [sic].39(Emphasis and underscoring supplied),

this Court is persuaded by petitioners claim that the debit memos represented "payment" only
in the banks book entries but did not actually involve payment/settlement of the original
obligation.1wphi1
In fine, the extra-judicial foreclosure and subsequent sale of the mortgaged property covered by
the title in question was valid.
WHEREFORE, the petition is GRANTED. The assailed decision of the appellate court
is SET ASIDE. Civil Case No. 98-225, "Jose B. Tan and Eliza Go Tan v. Metropolitan Bank
and Trust Company, et al.," filed before and raffled to Branch 38 of the Regional Trial Court of
Misamis Oriental, is DISMISSED.
SO ORDERED.

G.R. No. L-57757 August 31, 1987


PHILIPPINE
NATIONAL
BANK, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PRAGMACIO VITUG AND MAXIMO
VITUG, respondents.

GANCAYCO, J.:
Does the presumption of conjugality of properties acquired by the spouses during coverture
provided for in Article 160 of the Civil Code apply to property covered by a Torrens certificate
of title in the name of the widow? This is the issue posed in this petition to review on certiorari
of the decision of the Court of Appeals in CA-G.R. No. 60903 which is an action for
reconveyance and damages. *
On November 28, 1952, Donata Montemayor, through her son, Salvador M. Vitug, mortgaged
to the Philippine National Bank (PNB) several parcels of land covered by Transfer Certificate of
Title (TCT) No. 2289 Pampanga to guarantee the loan granted by the PNB to Salvador
Jaramilla and Pedro Bacani in the amount of P40,900.00 which was duly registered in the
Office of the Register of Deeds of Pampanga. 1
On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB certain properties
covered by TCT Nos. 2887 and 2888-Pampanga to guarantee the payment of the loan account
of her son Salvador Vitug in the amount of P35,200.00, which mortgage was duly registered in
the Register of Deeds of Pampanga. 2
The above-mentioned Transfer Certificates of Titles covering said properties were all in the
name of Donata Montemayor, of legal age, Filipino, widow and a resident of Lubao, Pampanga
at the time they were mortgaged to PNB 3 and were free from all hens and encumbrances. 4

Salvador Vitug failed to pay his account so the bank foreclosed the mortgaged properties
covered by TCT Nos. 2887 and 2888. They were sold at public auction on May 20, 1968 in
which the PNB was the highest bidder. The titles thereto were thereafter consolidated in the
name of PNB.
Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their accounts with the PNB so
the latter foreclosed the properties covered by TCT No. 2889 which were sold at public auction
and likewise PNB was the buyer thereof. On August 30, 1968, a certificate of sale was issued by
the Register of Deeds covering said properties in favor of the PNB. When the title of the PNB
was consolidated a new title was issued in its name. 5
On September 2, 1969, the PNB sold the properties covered by TCT Nos. 2887 and 2888
Pampanga to Jesus M. Vitug, Anunciacion V. de Guzman, Prudencia V. Fajardo, Salvador Vitug
and Aurora V. Gutierrez in those names the corresponding titles were issued. 6
During the lifetime of Clodualdo Vitug he married two times. His first wife was Gervacia Flores
with whom he had 3 children, namely, Victor, Lucina and Julio all surnamed Vitug. Victor now
dead is survived by his 5 children: Leonardo, Juan, Candida Francisco and Donaciano, an
surnamed Vitug. Juan Vitug is also dead and is survived by his only daughter Florencia Vitug.
The second wife of Clodualdo Vitug was Donata Montemayor with whom he had 8 children,
namely, Pragmacio, Maximo, Jesus, Salvador, Prudencio and Anunciacion, all surnamed Vitug,
the late Enrique Vitug represented by his wife Natalia Laquian, and the late Francisco Vitug
who is survived by 11 children, namely, Antonio, Francisco, Aurora, Pedro, Honorio, Corazon,
Anselmo, Benigno, Eligio Jesus and Luz.
Clodualdo Vitug died intestate on May 20, 1929 so his estate was settled and distributed in
Special Proceeding No. 422 in the Court of First Instance of Pampanga wherein Donata
Montemayor was the Administratrix. 7
Meanwhile, on May 12,1958, Donata Montemayor executed a contract of lease of Lot No. 24,
which is covered by TCT No. 2887-R in favor of her children Pragmacio and Maximo both
surnamed Vitug. This lease was extended on August 31, 1963. By virtue of a general power of
attorney executed by Donata Montemayor on Sept. 19, 1966 in favor of Pragmacio Vitug, the
latter executed a contract of lease on Sept. 19, 1967 of the said lot in favor of Maximo Vitug. 8
On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for partition and
reconveyance with damages in the Court of First Instance of Pampanga against Marcelo
Mendiola, special administrator of the intestate estate of Donata Montemayor who died earlier,
Jesus Vitug, Sr., Salvador, Natalia, Prudencia, Anunciacion, all surnamed Vitug, Antonio,
Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz, all
surnamed Fajardo and the PNB.
The subject of the action is 30 parcels of land which they claim to be the conjugal property of
the spouses Donata Montemayor and Clodualdo Vitug of which they claim a share of 2/11 of
1/2 thereof. They assailed the mortgage to the PNB and the public auction of the properties as
null and void. They invoked the case of Vitug vs. Montemayor, L-5297 decided by this Court on
Oct. 20, 1953 which is an action for partition and liquidation of the said 30 parcels of land
wherein the properties were found to be conjugal in nature.

In a decision of Sept. 15, 1975, the lower court dismissed the complaint with costs against the
plaintiffs and ordered them to pay attorney's fees of P5,000.00 to the defendant's counsel.
Plaintiffs then interposed an appeal to the Court of Appeals, wherein in due course a decision
was rendered on May 20, 1981, the dispositive part of which reads as follows:

IN HER NAME WHEN PRIVATE RESPONDENTS (PRAGMACIO VITUG


AND MAXIMO VITUG), AS LESSEES, ENTERED INTO A CONTRACT OF
LEASE WITH DONATA MONTEMAYOR AS THE OWNER-LESSOR.
IV

WHEREFORE, in the light of the foregoing, the decision appealed from is


hereby reversed and set aside, and another one entered in accordance with
the tenor of the prayer of appellant's complaint with the modification that
the sale at public auction of the 22 parcels be considered valid with respect
to the 1/2 thereof. No costs.

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING


THAT PNB WAS A MORTGAGEE IN BAD FAITH.
The petition is impressed with merit.

Hence the herein petition for certiorari filed by the PNB raising the following assignments of
error:
I
THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING TO
THE CASE AT BAR THE RULING OF THIS HONORABLE SUPREME
COURT IN FLORENCIA VITUG VS. DONATA MONTEMAYOR, ET AL.,
91 PHIL. 286 (1953) BECAUSE:
A. BETWEEN A PROVISION OF A SPECIAL LAW
AND THE JUDICIAL INTERPRETATION AND/OR
APPLICATION OF A PROVISION OF A GENERAL
LAW, THE FORMER PREVAILS.
B. THE DOCTRINE OF STARE DECISIS IS NOT A
MECHANICAL FORMULA OF ADHERENCE.
C. PNB WAS NOT A PARTY, AND HAD NO
KNOWLEDGE OF THE ABOVECITED CASE.
D. SIMILARLY, PRAGMACIO VITUG AND MAXIMO
VITUG WERE NOT PARTIES IN SAID CASE.
II
THE RESPONDENT COURT OF APPEALS ERRED IN NOT
RECOGNIZING THE CONCLUSIVENESS OF THE CERTIFICATE, OF
TITLE, AS PROVIDED IN ACT 496, AS AMENDED (THE LAND
REGISTRATION).
III
THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING THE
CONCLUSIVENESS OF OWNERSHIP OF DONATA MONTEMAYOR
OVER THE PROPERTIES WHICH WERE REGISTERED EXCLUSIVELY

When the subject properties were mortgaged to the PNB they were registered in the name of
Donata Montemayor, widow. Relying on the torrens certificate of title covering said properties
the mortgage loan applications of Donata were granted by the PNB and the mortgages were
duly constituted and registered in the office of the Register of Deeds.
In processing the loan applications of Donata Montemayor, the PNB had the right to rely on
what appears in the certificates of title and no more. On its face the properties are owned by
Donata Montemayor, a widow. The PNB had no reason to doubt nor question the status of said
registered owner and her ownership thereof. Indeed, there are no liens and encumbrances
covering the same.
The well-known rule in this jurisdiction is that a person dealing with a registered land has a
right to rely upon the face of the torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man make such inquiry. 9
A torrens title concludes all controversy over ownership of the land covered by a final degree of
registration. 10 Once the title is registered the owner may rest assured without the necessity of
stepping into the portals of the court or sitting in the mirador de su casa to avoid the
possibility of losing his land. 11
Article 160 of the Civil Code provides as follows:
Art. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband
or to the wife.
The presumption applies to property acquired during the lifetime of the husband and wife. In
this case, it appears on the face of the title that the properties were acquired by Donata
Montemayor when she was already a widow. When the property is registered in the name of a
spouse only and there is no showing as to when the property was acquired by said spouse, this
is an indication that the property belongs exclusively to said spouse. 12 And this presumption
under Article 160 of the Civil Code cannot prevail when the title is in the name of only one
spouse and the rights of innocent third parties are involved. 13
The PNB had a reason to rely on what appears on the certificates of title of the properties
mortgaged. For all legal purposes, the PNB is a mortgagee in goodfaith for at the time the

mortgages covering said properties were constituted the PNB was not aware to any flaw of the
title of the mortgagor. 14
True it is that in the earlier cases decided by this Court, namely Vitug VS. Montemayor decided
on May 15, 1952, which is an action for recovery of possession of a share in said parcels of
land, 15 and in the subsequent action for partition between the same parties decided on Oct.
20, 1953, 16 this court found the 30 parcels of land in question to be conjugal in nature and
awarded the corresponding share to the property of Florencia Vitug, an heir of the late
Clodualdo Vitug from the first marriage. In said cases this Court affirmed the decision of the
lower court. In the dispositive part of the decision of the trial court it made the observation that
"but from the conduct of Clodualdo Vitug and Donata Montemayor during the existence of
their marital life, the inference is clear that Clodualdo had the unequivocal intention of
transmitting the full ownership of the 30 parcels of land to his wife Donata Montemayor, thus
considering the 1/2 of the funds of the conjugal property so advanced for the purchase of said
parcels of land as reimbursible to the estate of Clodualdo Vitug on his death. 17 That must be
the reason why the property was registered in the name of Donata Montemayor as widow after
the death of Clodualdo Vitug. 18
At any rate, although actions for recovery of real property and for partition are real actions,
however, they are actions in personam that bind only the particular individuals who are parties
thereto. 19 The PNB not being a party in said cases is not bound by the said decisions. Nor does
it appear that the PNB was aware of the said decisions when it extended the above describe
mortgage loans. Indeed, if the PNB knew of the conjugal nature of said properties it would not
have approved the mortgage applications covering said properties of Donata Montemayor
without requiring the consent of all the other heirs or co-owners thereof. Moreover, when said
properties were sold at public auction, the PNB was a purchaser for value in good faith. So its
right thereto is beyond question. 20
Pragmacio and Maximo Vitug are now estopped from questioning the title of Donata
Montemayor to the said properties. They never raised the conjugal nature of the property nor
took issue as to the ownership of their mother, Donata Montemayor, over the same. Indeed
private respondents were among the defendants in said two cases wherein in their answers to
the complaint they asserted that the properties in question are paraphernal properties
belonging exclusively to Donata Montemayor and are not conjugal in nature. 21 Thus they
leased the properties from their mother Donata Montemayor for many years knowing her to be
the owner. They were in possession of the property for a long time and they knew that the same
were mortgaged by their mother to the PNB and thereafter were sold at public auction, but they
did not do anything. 22 It is only after 17 years that they remembered to assert their rights.
Certainly, they are guilty of laches. 23
Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug as occupants and
lessees of the property in question cannot now dispute the ownership of their mother over the
same who was their lessor. 24
WHEREFORE, the subject decision of the respondent Court of Appeals is hereby REVERSED
and set aside and another decision is hereby rendered DISMISSING the complaint and
ordering private respondents to pay attomey's fees and expenses of litigation to petitioner PNB
in the amount of P20,000.00 and the costs of the suit.
SO ORDERED.

G.R. No. 72321 December 8, 1988


DIOSDIDIT, BALDOMERO, FILOMENO,
CUENCA, petitioners,
vs.
RESTITUTO
CUENCA,
MELADORA
APPEALS, respondents.

ELPIDIO,

AIDA,

CUENCA

and

all

surnamed

COURT

OF

De Castro & Cagampang Law Offices for petitioners.


Cipriano C. Alvizo, Sr. for respondents.

GUTIERREZ, JR., J.:


This petition for review on certiorari seeks the reversal of the resolutions of the then
Intermediate Appellate Court, now Court of Appeals, denying the petitioners' motion for new
trial on the ground of newly discovered evidence.
Private respondents Restituto Cuenca and Meladora Cuenca filed a complaint for recovery of
real property and damages against the petitioners before the then Court of First Instance of
Davao del Norte. The case was docketed as Civil Case No. 1240.
After trial, the lower court rendered a decision in favor of the petitioners. The lower court
dismissed the complaint.
The private respondents appealed the decision to the then Intermediate Appellate Court.
On November 26, 1984, the appellate court reversed and set aside the decision of the lower
court. It rendered a decision in favor of the private respondents the dispositive portion of which
reads:
WHEREFORE, the decision appealed from is hereby set aside and another
one entered declaring plaintiff Restituto Cuenca the absolute and exclusive
owner of that parcel of land known as Lot 3063 Pls-22 of the Cadastral
Survey of the Municipality of Butuan, Province of Agusan located at Bo.
Pinamangculan containing an area of six (6) hectares, more or less,
declared in the name of Restituto Cuenca; ordering the defendants to
restore to said plaintiff Restituto Cuenca the possession of said parcel of
land; declaring the parcel of land described as Lot 3060 Pls-22 of the
Cadastral Survey of the Municipality of Butuan, Province of Agusan,
located at Barrio Pinamangculan Butuan, Agusan, containing an area of 17
hectares, 732 centares, more or less, declared in the name of Restituto
Cuenca as conjugal partnership property of deceased spouses Agripino
Cuenca and Maria Bangahon in effect declaring one half portion of said
parcel of conjugal partnership property the share of the deceased Maria
Bangahon to be divided exclusively share and share alike between the

plaintiffs Restituto Cuenca and Meladora Cuenca as the heirs of Maria


Bangahon; declaring the other half portion of said parcel as the share of
the late Agripino Cuenca also with plaintiffs as the only surviving heirs of
the said Agripino Cuenca entitled to divide exclusively between themselves
share and share alike the said one half portion of Agripino Cuenca, and the
other one half of the share of Agripino Cuenca to be divided among the
plaintiffs Restituto Cuenca and Meladora Cuenca and defendant Engracia
Basadre in equal shares under Article 892 of the New Civil Code. The other
claim of the plaintiffs for damages and accounting of the value of the
produce corresponding to their shares is not granted for lack of evidence.
The counterclaim of defendants is likewise dismissed for lack of merit.
(Rollo, pp. 37-38)
On December 3, 1984, the petitioners received a copy of the appellate court's decision.
On December 14, 1984, the petitioners filed a motion for reconsideration of the decision.
On February 22, 1985, the petitioners filed a Supplemental Motion for Reconsideration and/or
Motion for New Trial on the ground of newly discovered evidence.
In a Resolution dated August 6, 1985, the appellate court denied the motion for reconsideration
for lack of merit and the supplemental motion for reconsideration and/or new trial for having
been filed out of time. The court ruled that under section 1, Rule 37 of the Revised Rules of
Court, a motion for new trial on the ground of newly discovered evidence must be filed only
within thirty (30) days after notice of the decision is received.
The petitioners filed a motion for reconsideration of the August 6, 1985 resolution insofar as
the same held that the motion for new trial was filed out of time. The motion was denied for
lack of merit and legal basis.

b) Newly discovered evidence, which he could not, with reasonable


diligence have discovered, and produced at the trial and which if presented
would probably alter the result; (emphasis supplied)
xxx xxx xxx
while section 1, Rule 53 states:
SECTION 1. Petition before a final order or judgment rendered by the
Court of Appeals becomes executory, a motion for new trial may be filed on
the ground of newly discovered evidence which could not have been
discovered prior to the trial in the court below by the exercise of due
diligence and which is of such a character as would probably change the
result. The motion shall be accompanied by affidavits showing the facts
constituting the grounds therefor and the newly discovered evidence.
(Emphasis supplied)
The rules are clear and leave no room for interpretation, Rule 37 speaks of a trial court while
Rule 53 speaks of the Court of Appeals. Undoubtedly, the appellate court erred in denying the
petitioners' motion for new trial on the ground that it was filed out of time pursuant to Rule 37.
The applicable law is Rule 53 and since the motion for new trial was filed before the appellate
court's judgment could become final and executory, the motion was filed within the
reglementary period.
With these findings, the usual procedure would be to remand the case to the appellate court.
Nevertheless, since all the relevant facts needed to resolve the issue as to whether or not the
petitioners' motion for new trial is meritorious are before us, we find no need to refer the case
back to the appellate court. (See Tejones v. Gironella, et al., G.R. No. L-35506 March 21,
1988; Alger Electric, Inc. v. Court of Appeals (135 SCRA 37 [1985]), and Beautifont, Inc., et al.
v. Court of Appeals, et al. (G.R. No. 50141, January 29, 1988).

Hence, this petition.


In a resolution dated September 14, 1987, we gave due course to the petition.
The sole issue raised in the instant petition pertains to the period when a party may file a
motion for new trial before the appellate court.
The Rules of Court under Rule 37 and Rule 53 provide two (2) instances when a party may file a
motion for new trial on the ground of newly discovered evidence. Rule 37, Section 1 states:

Civil Case No. 1240 had for its subject matter parcels of land which were claimed by- two sets of
families. Private respondents Restituto Cuenca and Meladora Cuenca claimed ownership over
the subject parcels of land on the ground that they are the legitimate children of Agripino
Cuenca and Maria Bangahon, both deceased, owners of the subject parcels of land. They
alleged that some of the parcels are paraphernal property of Maria while all the others are
conjugal properties of Maria and Agripino They also alleged that Agripino Cuenca and Engracia
Basadre were not legally married because at the time they lived together Agripino was married
to a certain Jesusa Pagar.

SECTION 1. Grounds of and period for filing motion for new trial within
the period for perfecting appeal, the aggrieved party may move the trial
court to set aside the judgment and giant a new trial for one or more of the
following causes materially affecting the substantial rights of said party.

On the other hand, the petitioners (defendants below) Diosdidit, Baldomero, Filomeno Elpidio,
Aida, Anita and Engracia Vda. de Cuenca denied the legitimacy of the marriage between
Agripino Cuenca and Maria Bangahon as well as the legitimacy of the plaintiffs as children of
the couple. They claimed that Agripino Cuenca and their mother Engracia Basadre were legally
married and that they are the legitimate children of the couple. They contend that the subject
parcels of lands are conjugal properties of Agripino and Engracia.

xxx xxx xxx

The appellate court stated its findings as follows:

The records show that defendant Bartolome Sanchez upon manifestation


of his counsel is no longer a necessary party as Engracia Basadre-Cuenca
has repurchased that portion of the land in question sold to Bartolome
Sanchez making plaintiffs' claim against defendant Bartolome Sanchez
moot and academic.
Our review of the evidence shows that Agripino Cuenca in his lifetime
expressed in the extrajudicial settlement of the estate of Maria Bangahon
executed on June 13, 1950 before Notary Public Francisco Ro. Cupin (Exh.
"C") that:
Parcel of agricultural land situated in Pinamangculan Butuan, Agusan,
planted to coconut, under the present possession of the heirs of Maria
Bangahon, bounded on the North, Lot No. 3062, Lucio Plaza, Lot No.
4319, A. Cuenca, portion of Lot No. 3063, in the possession of A. Cuenca,
on the south Road, on the West by Lot No. 3057, S. Dumanon 3058, B.
Adormio, 3059, A. Cuenca and east portion of Lot No. 3063, containing an
area of six (6) hectares, more or less (This is a portion of Lot No. 3063, Pls22 of Cad. of Municipality of Butuan which parcel of land belongs
exclusively to Maria Bangahon during her lifetime and which property is
separate from the conjugal property of the marriage of said Maria
Bangahon and Agripino Cuenca.
That parcel of land situated in Rendon, Butuan, Agusan, planted to rice with irrigation under
the present possession of the heirs, bounded on the North by Mariano Agagdang on the East by
Clerencia Tagonsod on the South by Suatan River and on the West by Mariano Agagdang
containing an area of 1.2500 hectares, more or less, under Tax Dec. 3055, assessed at P250.00
by the property records of Agusan.
That parcel of land situated in Rendon, Butuan, Agusan, planted to coconut, under the present
possession of the heirs, bounded on the North by Maximo Bangahon, on the East, by Sergio
Pagar, on the South, by Macaria Agagdang on the West, by Folgencio Buyan, containing an area
of 1.1722 hectares, more or less, assessed at P670.00 by Tax Dec. No. 4026 of Agusan."
belong to Maria Bangahon as her inheritance from her parents. This declaration against
interest is further reiterated by Agripino Cuenca in that judicial settlement and sale executed by
him on October 19, 1950. These two documents, as rightly contended by the plaintiffs, are
ample proofs that the properties in question described in par. 2 of the complaint, belong
exclusively to Maria Bangahon as her paraphernal property, a fact declared by no less than the
husband himself in a declaration against his interest. It was error for the trial court to
unceremoniously brush aside the importance of the declaration of Agripino Cuenca in the
extrajudicial settlement of the estate of Maria Bangahon. These public documents carry
sufficient evidentiary weight to prove the origin of the properties in question and the nature of
their ownership as properties brought into the marriage by Maria Bangahon to Agripino
Cuenca as against the bare testimony of the defendants and their witnesses, More importantly,
Juan Buyan and former Judge Francisco Ro. Cupin parties who participated in the execution of
the two documents the first as an instrumental witness to the documents and the other the
intervening Notary Public testified to the due execution of the said documents. These witnesses
likewise proved the genuineness of Exhibits C and D.

The ownership of Maria Bangahon of the three parcels of land was testified to further by Adel
Ras who declared unrebutted that Maria Bangahon was the daughter of Isidro Bangahon, the at
cousin of his father; that the three parcels of land in question were inherited by Maria
Bangahon from her parents; that Maria Bangahon later married Agripino Cuenca bringing into
their marriage the properties which she inherited from her father, Isidro Bangahon. These
pieces of evidence established the fact that the plaintiffs are the forced heirs of Maria Bangahon
and Agripino Cuenca, who by law should succeed to the possession and ownership of the
properties in question. On the other hand, defendants' evidence consist only of the oral
testimonies of Marta Legaspi, Engracia Basadre-Cuenca, Baldomero Cuenca and Diosdidit
Cuenca which proved nothing concrete as they merely are inferences and deductions
conveniently tailored to support their claim that Agripino Cuenca married Engracia BasadreCuenca; that the properties in question were acquired during their marriage without, however,
presenting any document to prop up their pretense; that they are the legitimate children of
Agripino Cuenca and Engracia Basadre-Cuenca who succeeded to the properties in litigation.
We find no evidentiary value in the extrajudicial settlement of the estate of Agripino Cuenca
executed by the defendants of Engracia Basadre-Cuenca and her children. It is self-serving and
proves nothing.
In passing, We note that the defendants presented tax declaration (Exhibits 3-17-A), pieces of
evidence which have been ruled in a long line of decisions by our Supreme Court to be not real
evidence at all sufficient to prove ownership or possession.
After considering the evidence of both parties, in sum, We find convincing evidence to show
that Agripino Cuenca and Maria Bangahon were legally married with Restituto Cuenca and
Meladora Cuenca as their issues; that Maria Bangahon brought properties into her marriage;
that the couple acquired properties during the marriage; that by virtue of the extrajudicial
settlement executed by Agripino Cuenca and his children, Restituto is the absolute owner of the
parcels of land described in paragraph 2(a) (b) and (c) of the complaint; that one half of the
land described in par. 6 of the complaint belongs to Agripino Cuenca and the other half to
Maria Bangahon the same having been acquired by Agripino Cuenca and Maria Bangahon
during their marriage-conjugal partnership property. Therefore, upon the dissolution of the
conjugal relationship by the death of spouses Agripino Cuenca and Maria Bangahon, one half
goes to Agripino Cuenca which portion after the death of Agripino Cuenca goes to his alleged
third wife, Engracia Basadre-Cuenca together with the plaintiffs as forced heirs of Agripino
Cuenca (Arts. 185 & 189, New Civil Code).
From the evidence of the plaintiffs, We find the present appeal impressed with merit." (Rollo,
pp. 33-37)
In their motion for new trial the petitioners alleged:
1. There are newly discovered evidence consisting of ancient, authentic
records which establish beyond reasonable doubt, the status of
defendants-appellees as legitimate children of the deceased Agripino
Cuenca whose estate is the subject matter of this case.
2. There is documentary proof beyond doubt that Agripino Cuenca was
never married to Jesusa Pagar.

3. The totality of defendants-appellees' evidence prove that Engracia A.


Basadre was married legally to Agripino Cuenca in 1920 and that
defendant-appellees are legitimate children of Agripino Cuenca and
legitimate half-brother/half-sisters of plaintiffs- appellants who are
entitled to equal shares of their father's estate.
4. There is sufficient documentary evidence to prove that the lands in
question were conjugal properties of Agripino Cuenca and Engracia A.
Basadre acquired during their marriage. (Rollo, p. 60)
The petitioners wanted to prove that Engracia Basadre was legally married to their father
Agripino Cuenca and that all the other petitioners were the legitimate children of the couple. In
this connection, the petitioners attached to their motion an alleged newly discovered evidence
consisting of a certified true copy of the Register of Birth of petitioner Diosdidit Cuenca, first
child of Agripino Cuenca and petitioner Engracia Basadre issued by the National Archives or
Bureau of Records Management which discloses that Diosdidit is a legitimate child of the
couple and a notarized public document dated August 13,1948 which discloses that Jesusa
Pagar was married to Santiago Barkowel disproving the respondents' evidence that Jesusa
Pagar was married to Agripino Cuenca
The issue as to whether or not petitioner Engracia Basadre was legally married to Agripino
Cuenca was settled by the appellate court in this wise:
After considering the evidence of both parties, in sum, We find convincing
evidence to show that Agripino Cuenca and Maria Bangahon were legally
married with Restituto Cuenca and Meladora Cuenca as their issues; that
Maria Bangahon brought properties into her marriage; that the couple
acquired properties during the marriage; that by virtue of the extrajudicial
settlement executed by Agripino Cuenca and his children, Restituto is the
absolute owner of the parcels of land described in paragraph 2(a) (b) and
(c) of the complaint; that one half of the land described in par. 6 of the
complaint belongs to Agripino Cuenca and the other half to Maria
Bangahon the same having been acquired by Agripino Cuenca and Maria
Bangahon during their marriage-conjugal partnership property. Therefore,
upon the dissolution of the conjugal relationship by the death of spouses
Agripino Cuenca and Maria Bangahon, one half goes to Agripino Cuenca
which portion after the death of Agripino Cuenca goes to his alleged third
wife, Engracia Basadre-Cuenca together with the plaintiffs as forced heirs
of agripino Cuenca (Arts. 185 & 189, New Civil Code). (Rollo, pp. 36-37)
(Emphasis supplied)
The dispositive portion of the decision states that petitioner Engracia Basadre was entitled to
inherit from Agripino Cuenca together with the latter's legitimate children by Maria Bangahon,
the private respondents herein in accordance with Article 892 of the New Civil Code.

The petitioners also alleged the finding of newly discovered evidence to prove that the subject
parcels of land were conjugal properties of Agripino Cuenca and petitioner Engracia Basadre.
These consist of eight (8) sketch maps obtained on December 27, 1984 from the Regional Office
of the Bureau of Lands in Cagayan de Oro City "after extensive research." The petitioners
alleged that these parcels were surveyed for Agripino Cuenca and approved when Agripino
Cuenca was already married to Engracia as indicated in the documents, hence, there is the
presumption that these are conjugal properties and therefore petitioners have hereditary rights
over these properties.
Article 160 of the New Civil Code provides that "All property of the marriage is presumed to
belong to the conjugal partnership, unless it be proved that it pertains exclusively to the
husband or to the wife," In the cases of Philippine National Bank v. Court of Appeals, (153
SCRA 435 [August 31, 1987); Magallon v. Montejo (146 SCRA 282 [December 16, 1986])
and Maramba v. Lozano (20 SCRA 474 [June 29, 1967]) this Court ruled that the presumption
refers only to the property acquired during marriage and does not operate when there is no
showing as to when property alleged to be conjugal was acquired.
In the case at bar, the documents sought to be presented as newly discovered evidence do not
show that the claims to the subject parcels consisting of homestead lands were perfected during
the marriage of Agripino Cuenca and petitioner Engracia Basadre. The perfection of the
homestead claims is considered the time of acquisition of the properties. (See Magallon v.
Montejo, supra) The fact that these parcels were surveyed for Agripino Cuenca and approved
during the marriage of Agripino Cuenca and petitioner Engracia Basadre is not determinative
of the issue as to whether or not the parcels were the conjugal properties of Agripino and
Engracia. Moreover, the documents show that 5 of the 8 parcels covered by the documents are
titled in the name of either respondent Meladora Cuenca or respondent Restituto Cuenca. The
presumption cannot prevail "when the title is in the name of only one spouse and the rights of
innocent third parties are involved. (Philippine National Bank v. Court of Appeals, supra citing
Nable Jose v. Nable Jose, 41 Phil. 713) Under the circumstances of this case, the nonapplicablility of the presumption should also be upheld.
In the light of these findings a new trial would only be an unnecessary exercise and ineffective.
The documents sought to be presented during a new trial would not in any way change the
result. The motion for new trial was correctly denied although not for the reason given by the
respondent court.
WHEREFORE, the instant petition is DISMISSED. The questioned resolutions of the appellate
court are AFFIRMED. For non-compliance with this Court's Resolution dated March 2, 1988,
ordering him to show cause for his failure to file a memorandum within the period given to
him, Atty. Cipriano C. Alvizo, Sr. is fined Five Hundred (P500.00) Pesos. If he fails to pay the
fine within ten (10) days from notice of this decision, he shall be imprisoned for five (5) days.
SO ORDERED.
G.R. No. L-28589 January 8, 1973

Accordingly, the appellate court declared Engracia Basadre as surviving spouse. There was,
therefore no need to prove the legality of marriage between petitioners Engracia Basadre and
Agripino Cuenca much less to prove the legitimacy of the other petitioners who are
undoubtedly the children of Agripino and Engracia.

RAFAEL
ZULUETA,
ET
AL., plaintiffs-appellees,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.

Alfredo L. Benipayo for plaintiffs-appellee Rafael Zulueta and Carolina Zulueta.


Justo L. Albert for plaintiff-appellee Telly Albert Zulueta.
V.E. del Rosario and Associates and Salcedo, Del Rosario, Bito, Misa and Lozada for
defendant-appellant.
RESOLUTION

CONCEPCION, C.J.:
Both parties in this case have moved for the reconsideration of the decision of this Court
promulgated on February 29, 1972. Plaintiffs maintain that the decision appealed from should
be affirmed in toto. The defendant, in turn, prays that the decision of this Court be "set aside ...
with or without a new trial, ... and that the complaint be dismissed, with costs; or, in the
alternative, that the amount of the award embodied therein be considerably reduced." .
Subsequently to the filing of its motion for reconsideration, the defendant filed a "petition to
annul proceedings and/or to order the dismissal of plaintiffs-appellees' complaint" upon the
ground that "appellees' complaint actually seeks the recovery of only P5,502.85 as actual
damages, because, for the purpose of determining the jurisdiction of the lower court, the
unspecified sums representing items of alleged damages, may not be considered, under the
settled doctrines of this Honorable Court," and "the jurisdiction of courts of first instance when
the complaint in the present case was filed on Sept. 30, 1965" was limited to cases "in which the
demand, exclusive of interest, or the value of the property in controversy amounts to more than
ten thousand pesos" and "the mere fact that the complaint also prays for unspecified moral
damages and attorney's fees, does not bring the action within the jurisdiction of the lower
court."
We find no merit in this contention. To begin with, it is not true that "the unspecified sums
representing items or other alleged damages, may not be considered" for the purpose of
determining the jurisdiction of the court "under the settled doctrines of this Honorable
Court." In fact, not a single case has been cited in support of this allegation.
Secondly, it has been held that a clam for moral damages is one not susceptible of pecuniary
estimation. 1 In fact, Article 2217 of the Civil Code of the Philippines explicitly provides that
"(t)hough incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act or omission." Hence, "(n)o proof pecuniary
loss necessary" pursuant to Article 2216 of the same Code "in order that moral ... damages
may be adjudicated." And "(t)he assessment of such damages ... is left to the discretion of the
court" - said article adds - "according to the circumstances of each case." Appellees' complaint
is, therefore, within the original jurisdiction of courts of first instance, which includes "all civil
actions in which the subject of the litigation is not capable of pecuniary estimation." 2

Thirdly, in its answer to plaintiffs' original and amended complainants, defendant had set up a
counterclaim in the aggregate sum of P12,000, which is, also, within the original jurisdiction of
said courts, thereby curing the alleged defect if any, in plaintiffs' complaint. 3
We need not consider the jurisdictional controversy as to the amount the
appellant sues to recover because the counterclaim interposed establishes
the jurisdiction of the District Court. Merchants' Heat & Light Co. v.
James B. Clow & Sons, 204 U.S. 286, 27 S. Ct. 285, 51 L. Ed. 488; O. J.
Lewis Mercantile Co. v. Klepner, 176 F. 343 (C.C.A. 2), certiorari denied
216 U.S. 620, 30 S Ct. 575, 54 L. Ed. 641. ... . 4
... courts have said that "when the jurisdictional amount is in question, the
tendering of a counterclaim in an amount which in itself, or added to the
amount claimed in the petition, makes up a sum equal to the amount
necessary to the jurisdiction of this court, jurisdiction is established,
whatever may be the state of the plaintiff's complaint." American Sheet &
Tin Plate Co. v. Winzeler (D.C.) 227 F. 321, 324. 5
Thus, in Ago v. Buslon, 6 We held:
... . Then, too, petitioner's counterclaim for P37,000.00 was, also, within
the exclusive original jurisdiction of the latter courts, and there are ample
precedents to the effect that "although the original claim involves less
than the jurisdictional amount, ... jurisdiction can be sustained if the
counterclaim (of the compulsory type)" such as the one set up by
petitioner herein, based upon the damages allegedly suffered by him in
consequence of the filing of said complaint "exceeds the jurisdictional
amount." (Moore Federal Practice, 2nd ed. [1948], Vol. 3, p. 41; Ginsburg
vs. Pacific Mutual Life Ins. Co. of California, 69 Fed. [2d] 97; Home Life
Ins. Co. vs. Sipp., 11 Fed. [2d]474; American Sheet & Tin Plate Co. vs.
Winzeler [D.C.], 227 Fed. 321, 324; Brix vs. People's Mutual Life Ins. Co.,
41 P. 2d. 537, 2 Cal. 2d. 446; Emery vs. Pacific Employees Ins. Co., 67 P.
2d. 1046, 8 Cal. 2d. 663).
Needless to say, having not only failed to question the jurisdiction of the trial court either in
that court or in this Court, before the rendition of the latter's decision, and even subsequently
thereto, by filing the aforementioned motion for reconsideration and seeking the reliefs therein
prayed for but, also, urged both courts to exercise jurisdiction over the merits of the case,
defendant is now estopped from impugning said jurisdiction. 7
Before taking up the specific questions raised in defendant's motion for reconsideration, it
should be noted that the same is mainly predicated upon the premise that plaintiffs' version is
inherently incredible, and that this Court should accept the theory of the defense to the effect
that petitioner was off-loaded because of a bomb-scare allegedly arising from his delay in
boarding the aircraft and subsequent refusal to open his bags for inspection. We need not
repeat here the reasons given in Our decision for rejecting defendant's contention and not
disturbing the findings of fact of His Honor, the Trial Judge, who had the decided advantage
denied to Us of observing the behaviour of the witnesses in the course of the trial and found
those of the plaintiffs worthy of credence, not the evidence for the defense.

It may not be amiss however, to stress the fact that, in his written report, made in transit from
Wake to Manila orimmediately after the occurrence and before the legal implications or
consequences thereof could have been the object of mature deliberation, so that it could, in a
way, be considered as part of the res gestae Capt. Zentner stated that Zulueta had been offloaded "due to drinking" and "belligerent attitude," thereby belying the story of the defense
about said alleged bomb-scare, and confirming the view that said agent of the defendant had
acted out of resentment because his ego had been hurt by Mr. Zulueta's adamant refusal to be
bullied by him. Indeed, had there been an iota of truth in said story of the defense, Capt.
Zentner would have caused every one of the passengers to be frisked or searched and the
luggage of all of them examined as it is done now before resuming the flight from Wake
Island. His failure to do so merely makes the artificious nature of defendant's version more
manifest. Indeed, the fact that Mrs. Zulueta and Miss Zulueta were on board the plane shows
beyond doubt that Mr. Zulueta could not possibly have intended to blow it up.

As a consequence, there immediately ensued an altercation in the course of which each


apparently tried to show that he could not be cowed by the other. Then came the order of Capt.
Zentner to off-load all of the Zuluetas, including Mrs. Zulueta and the minor Miss Zulueta, as
well as their luggage, their overcoats and other effects handcarried by them; but, Mr. Zulueta
requested that the ladies be allowed to continue the trip. Meanwhile, it had taken time to locate
his four (4) pieces of luggage. As a matter of fact, only three (3) of them were found, and the
fourth eventually remained in the plane. In short, the issue between Capt. Zentner and Mr.
Zulueta had been limited to determining whether the latter would allow himself to be
browbeaten by the former. In the heat of the altercation, nobody had inquired about the cause
of Mr. Zulueta's delay in returning to the plane, apart from the fact that it was rather
embarrassing for him to explain, in the presence and within the hearing of the passengers and
the crew, then assembled around them, why he had gone to the beach and why it had taken him
some time to answer there a call of nature, instead of doing so in the terminal building.

The defense tries to explain its failure to introduce any evidence to contradict the testimony of
Mr. Zulueta as to why he had gone to the beach and what he did there, alleging that, in the very
nature of things, nobody else could have witnessed it. Moreover, the defense insists, inter alia,
that the testimony of Mr. Zulueta is inherently incredible because he had no idea as to how
many toilets the plane had; it could not have taken him an hour to relieve himself in the beach;
there were eight (8) commodes at the terminal toilet for men ; if he felt the need of relieving
himself, he would have seen to it that the soldiers did not beat him to the terminal toilets; he
did not tell anybody about the reason for going to the beach, until after the plane had taken off
from Wake.

Defendant's motion for reconsideration assails: (1) the amount of damages awarded as
excessive; (2) the propriety of accepting as credible plaintiffs' theory; (3) plaintiffs' right to
recover either moral or exemplary damages; (4) plaintiffs' right to recover attorney's fees; and
(5) the non-enforcement of the compromise agreement between the defendant and plaintiff's
wife, Mrs. Zulueta. Upon the other hand, plaintiffs' motion for reconsideration contests the
decision of this Court reducing the amount of damages awarded by the trial court to
approximately one-half thereof, upon the ground, not only that, contrary to the findings of this
Court, in said decision, plaintiff had not contributed to the aggravation of his altercation or
incident with Capt. Zentner by reacting to his provocation with extreme belligerency thereby
allowing himself to be dragged down to the level on which said agent of the defendant had
placed himself, but, also, because the purchasing power of our local currency is now much
lower than when the trial court rendered its appealed decision, over five (5) years ago, on July
5, 1967, which is an undeniable and undisputed fact. Precisely, for this reason, defendant's
characterization as exorbitant of the aggregate award of over P700,000 by way of damages,
apart from attorney's fees in the sum of P75,000, is untenable. Indeed, said award is now
barely equivalent to around 100,000 U. S. dollars.

We find this pretense devoid of merit. Although Mr. Zulueta had to look for a secluded place in
the beach to relieve himself, beyond the view of others, defendant's airport manager, whom Mr.
Zulueta informed about it, soon after the departure of the plane, could have forthwith
checked the veracity of Mr. Zulueta's statement by asking him to indicate the specific place
where he had been in the beach and then proceeding thereto for purposes of verification.
Then, again, the passenger of a plane seldom knows how many toilets it has. As a general rule,
his knowledge is limited to the toilets for the class first class or tourist class in which he is.
Then, too, it takes several minutes for the passengers of big aircrafts, like those flying from the
U.S. to the Philippines, to deplane. Besides, the speed with which a given passenger may do so
depends, largely, upon the location of his seat in relation to the exit door. He cannot go over the
heads of those nearer than he thereto. Again, Mr. Zulueta may have stayed in the toilet
terminal for some time, expecting one of the commodes therein to be vacated soon enough,
before deciding to go elsewhere to look for a place suitable to his purpose. But he had to walk,
first, from the plane to the terminal building and, then, after vainly waiting therein for a while,
cover a distance of about 400 yards therefrom to the beach, and seek there a place not visible
by the people in the plane and in the terminal, inasmuch as the terrain at Wake Island is flat.
What is more, he must have had to takeoff part, at least, of his clothing, because, without the
facilities of a toilet, he had to wash himself and, then, dry himself up before he could be
properly attired and walk back the 400 yards that separated him from the terminal building
and/or the plane. Considering, in addition to the foregoing, the fact that he was not feeling
well, at that time, We are not prepared to hold that it could not have taken him around an hour
to perform the acts narrated by him.
But, why asks the defendant did he not reveal the same before the plane took off? The
record shows that, even before Mr. Zulueta had reached the ramp leading to the plane, Capt.
Zentner was already demonstrating at him in an intemperate and arrogant tone and attitude
("What do you think you are?), thereby impelling Mr. Zulueta to answer back in the same vein.

It further support of its contention, defendant cites the damages awarded in previous cases to
passengers of airlines, 8 as well as in several criminal cases, and some cases for libel and
slander. None of these cases is, however, in point. Said cases against airlines referred to
passengers who were merely constrained to take a tourist class accommodation, despite the
fact that they had first class tickets, and that although, in one of such cases, there was proof
that the airline involved had acted as it did to give preference to a "white" passenger, this
motive was not disclosed until the trial in court. In the case at bar, plaintiff Rafael Zulueta was
"off-loaded" at Wake Island, for having dared to retort to defendant's agent in a tone and
manner matching, if not befitting his intemperate language and arrogant attitude. As a
consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta had boomeranged against
him (Zentner), in the presence of the other passengers and the crew. It was, also, in their
presence that defendant's agent had referred to the plaintiffs as "monkeys," a racial insult not
made openly and publicly in the abovementioned previous cases against airlines.
In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft and its
passengers, but to retaliate and punish him for the embarrassment and loss of face thus
suffered by defendant's agent. This vindictive motive is made more manifest by the note
delivered to Mr. Zulueta by defendant's airport manager at Wake Island, Mr. Sitton, stating
that the former's stay therein would be "for a minimum of one week," during which he would
be charged $13.30 per day. This reference to a "minimum of one week" revealed the intention
to keep him there stranded that long, for no other plane, headed for Manila, was expected

within said period of time, although Mr. Zulueta managed to board, days later, a plane that
brought him to Hawaii, whence he flew back to the Philippines, via Japan.
Neither may criminal cases, nor the cases for libel and slander cited in the defendant's motion
for reconsideration, be equated with the present case. Indeed, in ordinary criminal cases, the
award for damages is, in actual practice, of purely academic value, for the convicts generally
belong to the poorest class of society. There is, moreover, a fundamental difference between
said cases and the one at bar. The Zuluetas had a contract of carriage with the defendant, as a
common carrier, pursuant to which the latter was bound, for a substantial monetary
considerationpaid by the former, not merely to transport them to Manila, but, also, to do so
with "extraordinary diligence" or "utmost diligence." 9 The responsibility of the common
carrier, under said contract, as regards the passenger's safety, is of such a nature, affecting as it
does public interest, that it "cannot be dispensed with" or even "lessened by stipulation, by the
posting of notices, by statements on tickets, or otherwise." 10 In the present case, the defendant
did not only fail to comply with its obligation to transport Mr. Zulueta to Manila, but, also,
acted in a manner calculated to humiliate him, to chastise him, to make him suffer, to cause to
him the greatest possible inconvenience, by leaving him in a desolate island, in the expectation
that he would be stranded there for a "minimum of one week" and, in addition thereto, charged
therefor $13.30 a day.
It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts,
pursuant to Article 2231 of our Civil Code, except when the defendant has acted with "gross
negligence," and that there is no specific finding that it had so acted. It is obvious, however,
that in off-loading plaintiff at Wake Island, under the circumstances heretofore adverted to,
defendant's agents had acted with malice aforethought and evident bad faith. If "gross
negligence" warrants the award of exemplary damages, with more reason is its imposition
justified when the act performed is deliberate, malicious and tainted with bad faith. Thus,
in Lopez v. PANAM, 11 We held:
The rationale behind exemplary or corrective damages is, as the name
implies, to provide an example or correction for public good. Defendant
having breached its contracts in bad faith, the court, as stated earlier, may
award exemplary damages in addition to moral damages (Articles 2229,
2232, New Civil Code.)
Similarly, in NWA v. Cuenca, 12 this Court declared that an award for exemplary damages was
justified by the fact that the airline's "agent had acted in a wanton, reckless and oppressive
manner" in compelling Cuenca, upon arrival at Okinawa, to transfer, over his objection, from
the first class, where he was accommodated from Manila to Okinawa, to the tourist class, in his
trip to Japan, "under threat of otherwise leaving him in Okinawa," despite the fact that he had
paid in full the first class fare and was issued in Manila a first class ticket.
Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not liable for
exemplary damages owing to acts of his agent unless the former has participated in said acts or
ratified the same. Said case involved, however, the subsidiary civil liability of an employer
arising from criminal acts of his employee, and "exemplary damages ... may be imposed when
the crime was committed with one or more aggravating circumstances." 14 Accordingly, the
Rotea case is not in point, for the case at bar involves a breach of contract, as well as a quasidelict.

Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be equated with the
case at bar. The Palisoc case dealt with the liability of school officials for damages arising from
the death of a student (Palisoc) due to fist blows given by another student (Daffon), in the
course of a quarrel between them, while in a laboratory room of the Manila Technical Institute.
In an action for damages, the head thereof and the teacher in charge of said laboratory were
held jointly and severally liable with the student who caused said death, for failure of the school
to provide "adequate supervision over the activities of the students in the school premises," to
protect them "from harm, whether at the hands of fellow students or other parties." Such
liability was predicated upon Article 2180 of our Civil Code, the pertinent part of which reads:
ART. 2180. The obligation imposed by Article 2176 is demandable not only
for one's own acts or omissions, but also for those of persons for whom one
is responsible.
xxx xxx xxx
Lastly, teachers or heads of establishments of arts and trades shall be
liable for damages caused by their pupils and students or apprentices, so
long as they remain in their custody.
xxx xxx xxx
Obviously, the amount of damages warded in the Palisoc case is not and cannot serve as the
measure of the damages recoverable in the present case, the latter having been
caused directly and intentionally by an employee or agent of the defendant, whereas the
student who killed the young Palisoc was in no wise an agent of the school. Moreover, upon her
arrival in the Philippines, Mrs. Zulueta reported her husband's predicament to defendant's
local manager and asked him to forthwith have him (Mr. Zulueta) brought to Manila, which
defendant's aforementioned manager refused to do, thereby impliedly ratifying the off-loading
of Mr. Zulueta at Wake Island.
It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta was bound
to be present at the time scheduled for the departure of defendant's plane and that he had,
consequently, violated said contract when he did not show up at such time. This argument
might have had some weight had defendant's plane taken off beforeMr. Zulueta had shown up.
But the fact is that he was ready, willing and able to board the plane about two hoursbefore it
actually took off, and that he was deliberately and maliciously off-loaded on account of his
altercation with Capt. Zentner. It should, also, be noted that, although Mr. Zulueta was delayed
some 20 to 30 minutes, the arrival or departure of planes is often delayed for much longer
periods of time. Followed to its logical conclusion, the argument adduced by the defense
suggests that airlines should be held liable for damages due to the inconvenience and anxiety,
aside from actual damages, suffered by many passengers either in their haste to arrive at the
airport on scheduled time just to find that their plane will not take off until later, or by reason
of the late arrival of the aircraft at its destination.
PANAM impugns the award of attorney's fees upon the ground that no penalty should be
imposed upon the right to litigate; that, by law, it may be awarded only in exceptional cases;
that the claim for attorney's fees has not been proven; and that said defendant was justified in
resisting plaintiff's claim "because it was patently exorbitant."

Nothing, however, can be farther from the truth. Indeed apart from plaintiff's claim for actual
damages, the amount of which is not contested, plaintiffs did not ask any specific sum by way
of exemplary and moral damages, as well as attorney's fees, and left the amount thereof to the
"sound discretion" of the lower court. This, precisely, is the reason why PANAM, now, alleges
without justification that the lower court had no jurisdiction over the subject matter of the
present case.
Moreover, Article 2208 of our Civil Code expressly authorizes the award of attorney's fees
"when exemplary damages are awarded," as they are in this case as well as "in any other
case where the court deems it just and equitable that attorney's fees ... be recovered," and We
so deem it just and equitable in the present case, considering the "exceptional" circumstances
obtaining therein, particularly the bad faith with which defendant's agent had acted, the place
where and the conditions under which Rafael Zulueta was left at Wake Island, the absolute
refusal of defendant's manager in Manila to take any step whatsoever to alleviate Mr. Zulueta's
predicament at Wake and have him brought to Manila which, under their contract of
carriage, was defendant's obligation to discharge with "extra-ordinary" or "utmost" diligence
and, the "racial" factor that had, likewise, tainted the decision of defendant's agent, Capt.
Zentner, to off-load him at Wake Island.
As regards the evidence necessary to justify the sum of P75,000 awarded as attorney's fees in
this case, suffice it to say that the quantity and quality of the services rendered by plaintiffs'
counsel appearing on record, apart from the nature of the case and the amount involved
therein, as well as his prestige as one of the most distinguished members of the legal profession
in the Philippines, of which judicial cognizance may be taken, amply justify said award, which
is a little over 10% of the damages (P700,000) collectible by plaintiffs herein. Indeed, the
attorney's fees in this case is proportionally much less than that adjudged in Lopez v.
PANAM 16 in which the judgment rendered for attorney's fees (P50,000) was almost 20% of the
damages (P275,000) recovered by the plaintiffs therein.
The defense assails the last part of the decision sought to be reconsidered, in which relying
upon Article 172 of our Civil Code, which provides that "(t)he wife cannot bind the conjugal
partnership without the husband's consent, except in cases provided by law," and it is not
claimed that this is one of such cases We denied a motion, filed by Mrs. Zulueta, for the
dismissal of this case, insofar as she is concerned - she having settled all her differences with
the defendant, which appears to have paid her the sum of P50,000 therefor - "without
prejudice to this sum being deducted from the award made in said decision." Defendant now
alleges that this is tantamount to holding that said compromise agreement is both effective and
ineffective.
This, of course, is not true. The payment is effective, insofar as it is deductible from the award,
and, because it is due (or part of the amount due) from the defendant, with or without its
compromise agreement with Mrs. Zulueta. What is ineffective is the compromise agreement,
insofar as the conjugal partnership is concerned. Mrs. Zulueta's motion was for the dismissal of
the case insofar as she was concerned, and the defense cited in support thereof Article 113 of
said Code, pursuant to which "(t)he husband must be joined in all suits by or against the wife
except: ... (2) If they have in fact been separated for at least one year." This provision, We held,
however, refers to suits in which the wife is the principal or real party in interest, not to the
case at bar, "in which the husband is the main party in interest, both as the person principally
aggrieved and as administrator of the conjugal partnership ... he having acted in this capacity in
entering into the contract of carriage with PANAM and paid the amount due to the latter,
under the contract, with funds of the conjugal partnership," to which the amounts recoverable
for breach of said contract, accordingly, belong. The damages suffered by Mrs. Zulueta were

mainly an in accident of the humiliation to which her husband had been subjected. The Court
ordered that said sum of P50,00 paid by PANAM to Mrs. Zulueta be deducted from the
aggregate award in favor of the plaintiffs herein for the simple reason that upon liquidation of
the conjugal partnership, as provided by law, said amount would have to be reckoned with,
either as part of her share in the partnership, or as part of the support which might have been
or may be due to her as wife of Rafael Zulueta. It would surely be inane to sentence the
defendant to pay the P700,000 due to the plaintiffs and to direct Mrs. Zulueta to return said
P50,000 to the defendant.
In this connection, it is noteworthy that, for obvious reasons of public policy, she is not allowed
by law to waive her share in the conjugal partnership, before the dissolution thereof. 17 She
cannot even acquire any property by gratuitous title, without the husband's consent, except
from her ascendants, descendants, parents-in-law, and collateral relatives within the fourth
degree. 18
It is true that the law favors and encourages the settlement of litigations by compromise
agreement between the contending parties, but, it certainly does not favor a settlement
with one of the spouses, both of whom are plaintiffs or defendants in a common cause, such as
the defense of the rights of the conjugal partnership, when the effect, even if indirect, of the
compromise is to jeopardize "the solidarity of the family" which the
law 19 seeks to protect by creating an additional cause for the misunderstanding that had
arisen between such spouses during the litigation, and thus rendering more difficult a
reconciliation between them.
It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that neither is
there any evidence that the money used to pay the plane tickets came from the conjugal funds
and that the award to Mrs. Zulueta was for her personal suffering or injuries. There was,
however, no individual or specific award in favor of Mrs. Zulueta or any of the plaintiffs. The
award was made in their favor collectively. Again, in the absence of said proof, the presumption
is that the purpose of the trip was for the common benefit of the plaintiffs and that the money
had come from the conjugal funds, for, unless there is proof to the contrary, it is presumed
"(t)hat things have happened according to the ordinary course of nature and the ordinary
habits of life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when the source
of the money used therefor is not established, even if the purchase had been made by the
wife. 22And this is the rule obtaining in the Philippines. Even property registered, under the
Torrens system, in the name of one of the spouses, or in that of the wife only, if acquired during
the marriage, is presumed to belong to the conjugal partnership, unless there is competent
proof to the contrary. 23
PANAM maintains that the damages involved in the case at bar are not among those forming
part of the conjugal partnership pursuant to Article 153 of the Civil Code, reading:
ART. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at the
expense of the common fund, whether the acquisition be for the
partnership, or for only one of the spouses;
(2) That which is obtained by the industry, or work, or as salary of the
spouses, or of either of them;

(3) The fruits, rents or interests received or due during the marriage,
coming from the common property or from the exclusive property of each
spouse.
Considering that the damages in question have arisen from, inter alia, a breach of plaintiffs'
contract of carriage with the defendant, for which plaintiffs paid their fare with funds
presumably belonging to the conjugal partnership, We hold that said damages fall under
paragraph (1) of said Article 153, the right thereto having been "acquired byonerous title during
the marriage ... ." This conclusion is bolstered up by Article 148 of our Civil Code, according to
which:
ART. 148. The following shall be the exclusive property of each spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires, during the marriage, by lucrative title;
(3) That which is acquired by right of redemption or by exchange with
other property belonging to only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of the
husband.
The damages involved in the case at bar do not come under any of these provisions or of the
other provisions forming part of Chapter 3, Title VI, of Book I of the Civil Code, which chapter
is entitled "Paraphernal Property." What is more, if "(t)hat which is acquired by right of
redemption or by exchange with other property belonging to only one of the spouses," and
"(t)hat which is purchased with exclusive money of the wife or of the husband," 24 belong
exclusively to such wife or husband, it follows necessarily that that which is acquired with
money of the conjugal partnership belongs thereto or forms part thereof. The rulings
in Maramba v. Lozano 25 and Perez v. Lantin, 26 cited in defendant's motion for
reconsideration, are, in effect, adverse thereto. In both cases, it was merely held that the
presumption under Article 160 of our Civil Code to the effect that all property of the
marriage belong to the conjugal partnership does not apply unless it is shown that it was
acquired during marriage. In the present case, the contract of carriage was concededly entered
into, and the damages claimed by the plaintiffs were incurred, during marriage. Hence, the
rights accruing from said contract, including those resulting from breach thereof by the
defendant, are presumed to belong to the conjugal partnership of Mr. and Mrs. Zulueta. The
fact that such breach of contract was coupled, also, with a quasi-delict constitutes an
aggravating circumstance and can not possibly have the effect of depriving the conjugal
partnership of such property rights.
Defendant insists that the use of conjugal funds to redeem property does not make the property
redeemed conjugalif the right of redemption pertained to the wife. In the absence, however,
of proof that such right of redemption pertains to the wife and there is no proof that the
contract of carriage with PANAM or the money paid therefor belongs to Mrs. Zulueta the
property involved, or the rights arising therefrom, must be presumed, therefore, to form part of
the conjugal partnership.

It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and moral
damages" awarded to a young and beautiful woman by reason of a scar in consequence of an
injury resulting from an automobile accident which disfigured her face and fractured her left
leg, as well as caused a permanent deformity, are her paraphernal property. Defendant cites,
also, in support of its contention the following passage from Colin y Capitant:
No esta resuelta expresamente en la legislacion espaola la cuestion de si
las indemnizaciones debidas por accidentes del trabaho tienen la
consideracion de gananciales, o son bienes particulares de los conyuges.
Inclinan a la solucion de que estas indemnizaciones deben ser
consideradas como gananciales, el hecho de que la sociedad pierde la
capacidad de trabajocon el accidente, que a ella le pertenece, puesto que
de la sociedad son losfrutos de ese trabajo; en cambio, la consideracion de
que igual manera que losbienes que sustituyen a los que cada conyuge lleva
al matrimonio como propiostienen el caracter de propios, hace pensar que
las indemnizaciones que vengana suplir la capacidad de trabajo aportada
por cada conyuge a la sociedad, debenser juridicamente reputadas como
bienes propios del conyuge que haya sufrido elaccidente. Asi se llega a la
misma solucion aportada por la jurisprudencia francesca. 28
This opinion is, however, undecisive, to say the least. It should be noted that Colin y Capitant
were commenting on the French Civil Code; that their comment referred to indemnities due in
consequence of "accidentes del trabajo "resulting in physical injuries sustained by one of the
spouses (which Mrs. Zulueta has not suffered); and that said commentators admit that the
question whether or not said damages are paraphernal property or belong to the conjugal
partnership is not settled under the Spanish law. 29 Besides, the French law and jurisprudence
to which the comments of Planiol and Ripert, likewise, refer are inapposite to the question
under consideration, because they differ basically from the Spanish law in the treatment of the
property relations between husband and wife. Indeed, our Civil Code, like the Spanish Civil
Code, favors the system of conjugal partnership of gains. Accordingly, the former provides that,
"(i)n the absence of marriage settlements, or when the same are void, the system of relative
community or conjugal partnership of gains ... shall govern the property relations between" the
spouses. 30 Hence, "(a)ll property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to the wife." 31
No similar rules are found in the French Civil Code. What is more, under the provisions
thereof, the conjugal partnership exists only when so stipulated in the "capitulaciones
matrimoniales" or by way of exception. In the language of Manresa
Prescindimos de los preceptos de los Condigos de Francia, Italia, Holanda,
Portugal, Alemania y Suiza, porsue solo excepcionalmente, o cuando asi se
pacta en las capitulaciones, admiten el sistema de gananciales. 32
Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered
for physical injuries suffered by the wife. In the case at bar, the party mainly injured, although
not physically, is the husband.

Accordingly, the other Philippine cases 33 and those from Louisiana whose civil law is based
upon the French Civil Code cited by the defendant, which similarly refer to moral damages
due to physical injuries suffered by the wife, are, likewise, inapplicable to the case at bar.

accrued rentals of style properties in litigation due to the share


corresponding to said appellant, at the rate of P350.00 a month from
March 3, 1961 until the finality of this decision, with legal interest thereon;
and (e) said appellees are likewise ordered to pay unto the appellant the
amount of THREE THOUSAND (P3,000.00) PESOS as attorney's fees,
plus the costs in both instances.

We find, therefore, no plausible reason to disturb the views expressed in Our decision
promulgated on February 29, 1972.
WHEREFORE, the motions for reconsideration above-referred to should be, as they are hereby
denied.
FIRST DIVISION
G.R. No. L-31618 August 17, 1983
EFREN R. MENDOZA and INOCENCIA R. DE MENDOZA, petitioner,
vs.
PONCIANO S. REYES and THE COURT OF APPEALS, respondents.
G.R. No. L-31625 August 17, 1983
JULIA
R.
DE
vs.
PONCIANO S. REYES and COURT OF APPEALS, respondents.

REYES, petitioner,

Conrado B. Enriquez and Elpidio G. Navarro for petitioners.

This case originated with the filing of a complaint by Ponciano S. Reyes with the Court of First
Instance of Rizal docketed as Civil Case No. Q-6905, for the annulment of a deed of sale of two
parcels of land with their improvements, executed by his wife, Julia R. De Reyes as vendor and
the spouses Efren V. Mendoza and Inocencia R. De Mendoza, as vendees. Ponciano S. Reyes
averred that said properties were conjugal properties of himself and his wife and that she had
sold them to petitioners "all by herself" and without his knowledge or consent.
Petitioners Efren V. Mendoza and Inocencia R. De Mendoza alleged in their answer that the
properties were paraphernal properties of Julia R. de Reyes and that they had purchased the
same in good faith and for adequate consideration. In a separate answer, petitioner Julia R. De
Reyes, supported the spouses Mendozas' contentions.
In its decision, the Court of First Instance of Rizal dismissed the complaint and declared the
properties in question exclusive and paraphernal properties of petitioner Julia R. De Reyes. It
ruled that she could validly dispose of the same without the consent of her husband and that
the Mendozas are innocent purchasers.
As earlier stated, the Court of Appeals reversed the decision of the court a quo.
The petitioners filed separate petitions for review on certiorari. Efren V. Mendoza and
Inocencia R. De Mendoza raised the following assignments of errors:

Pacifico M. Castro for respondents.


I
THE COURT OF APPEALS ERRED NOT MERELY IN GIVING
CREDENCE, BUT IN FACT IN CONSIDERING AT ALL, PROOF OF THE
ALLEGED CONJUGAL CHARACTER OF THE PROPERTIES l-,
QUESTION, AND IN NOT INVOKING THE DOCTRINE -E OF ESTOPPEL
TO RULE OUT ANY AND ALL SUCH PROOF ALTOGETHER.

GUTIERREZ, JR., J.:


Questioned in these consolidated petitions for review on certiorari is the decision of the Court
of Appeals, now Intermediate Appellate Court, reversing the decision of the Court of First
Instance of Rizal, Quezon City Branch. The dispositive portion of the appellate decision reads:
WHEREFORE, (a) the judgment appealed from is hereby reversed; (b) the
deed of sale executed by appellee Julia de Reyes on March 3, 1961 in favor
of appellees Efren V. Mendoza and Inocencia R. Mendoza, covering lots 5
and 6, Block No. 132 of Subdivision Plan Psd. 14841, situated at Retiro
Street, Quezon City, is hereby declared null and void with respect to onehalf share of appellant therein; (c) the Register of Deeds of Quezon City is
hereby directed to cancel TCT Nos. 5611 0 and 56111, now covering said
lots, and to issue, in lieu thereof, certificates of title in favor of appellant
Ponciano S. Reyes for one-half (1/2) pro-indiviso and the spouses Efren V.
Mendoza and Inocencia Mendoza for one-half (1/2) also pro-indiviso; (d)
the appellees Mendozas are hereby ordered to pay unto the appellant the

II
THE COURT OF APPEALS ERRED IN FINDING PETITIONERS GUILTY
OF BAD FAITH IN PURCHASING THE PROPERTIES LITIGATED FOR
WITHOUT EVIDENCE OF SUCH FACT BEING PRESENTED AND, ON
THE STRENGTH MERELY OF A SIMPLE PRESUMPTION
UNWARRANTEDLY DRAWN FROM ONE OF ITS OWN OBSCURE AND
HARDLY AUTHORITATIVE RULINGS, AND AGAINST ABUNDANT,
POSITIVE AND UNCONTRADICTED PROOF OF GOOD FAITH.
III

THE COURT OF APPEALS ERRED UPON EQUITABLE GROUNDS IN,


IN EFFECT, GIVING JUDICIAL FLAT To THE UNJUST ENRICHMENT
OR BENEFIT OF ONE PERSON AT THE EXPENSE OF ANOTHER OR
OTHERS.
On the other hand, Julia R. De Reyes made the following assignments of errors in her petition
for review.
THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PROPERTIES IN QUESTION ARE THE CONJUGAL PROPERTIES OF
THE RESPONDENT PONCIANO S. REYES AND THE PETITIONER IN
SPITE OF THE CATEGORICAL JUDICIAL DECLARATION AND
ADMISSION BY SAID RESPONDENT THAT THE SAID PROPERTIES
ARE THE EXCLUSIVE AND PARAPHERNAL PROPERTIES OF HIS
WIFE, THE PETITIONER HEREIN.
THE COURT OF APPEALS ERRED IN HAVING DECIDED THE CASE
NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS
ON THE MATTER IN THE SENSE, PARTICULARLY, THAT THE ACT
AND DECLARATION OF A PARTY AGAINST HIS INTERESTS CAN NOT
BE CONTRADICTED BY HIM, AND IN SO DOING THE DECISION
AMOUNTED TO SANCTIONING A PERJURED TESTIMONY.
On the first issue regarding the alleged paraphernal character of the disputed properties, we
find that the records sustain the findings of the Court of Appeals
The fact are:
xxx xxx xxx
... Ponciano Reyes and Julia de Reyes-to be herein referred to as Ponciano
and Julia alone for brevity-were married in 1915. The properties in
question consisting of Lots 5 and 6, Block No. 132, situated at Retiro
Street, Quezon City-plus the buildings erected thereon, were bought from
J. M. Tuason & Co., represented by Gregorio Araneta, Inc. to be herein
mentioned as "Araneta"-February, 1947 on installment basis. (Testimony
of Julia, t.s.n., p. 74, February 15, 1963). The first installment on Lot No. 5
was P69.96 and on Lot No. 6 was P102.00 (Exh. 'H' and uncontradicted
testimony of Ponciano, t.s.n., p. 4, July 20, 1964).
The spouses were always in arrears in the payment of the installments to
Araneta due to lack of money (t.s.n., pp. 5-7, July 20, 1964) so they had to
borrow money from the Rehabilitation Finance Corporation-herein after
referred to as RFC for short. Thus, on November 26, 1948, they jointly
obtained a loan of P12,000.00 from the RFC for the following exclusive
purposes only: 'to complete the construction of one-storey residential
building on 9th Street, La Loma Quezon City; and to pay the balance of the
price of the lot offered as security' which is Lot 5, (Deed of Mortgage, Exh.
'A') l'). Out of this loan, the amount of P5,292.00 was paid to Araneta as

price of Lot 5. The corresponding deed of absolute sale thereof was


executed by Araneta on November 27, 1948 (Exh. 'A'). On October 2, 1952,
the spouses secured an additional loan of P8,000.00 from the RFC 'to pay
the balance of the lot herein offered (Lot No. 6) as additional security, and
to defray the expenses incurred in the repairs of the building' as the deed
of mortgage so recites (Exh. 'B- l'). From the amount of this loan, the sum
of P7,719.60, as price of Lot No. 6, was paid and the deed of absolute sale
was forthwith executed by Araneta (Exh. 'B'). In the deed of sale, the
vendee named is 'Julia de Reyes'. Her signatures appear over the caption
vendee and those of Ponciano under the phrase: 'with my marital consent.
As a result of these sales, Transfer Certificates of Title Nos. 8550 (Exh. 'F')
and 19998 (Exh. 'G') were issued for Lots 5 and 6, respectively, by the
Register of Deeds of Quezon City, in the name of "JULIA REYES married
to PONCIANO REYES." The mortgage contracts (Exhs. 'A-1' and 'B-1')
executed by the spouses in favor of the RFC were duly registered and
annotated on the said transfer Certificates of Title (Exhs. 'F' and 'G').
As promised to the RFC, the spouses built a house and later a camarin on
the two lots. The camarin was leased as a school building to the Quezon
City Elementary School of La Loma for the period of two years (1950-51) at
P500.00 a month. When the school was transferred to another place, the
camarin was leased on December 10, 1952 to Mr. and Mrs. Mendoza,
appellees, for ten years at P600.00 a month for the first year and P700.00
for the remaining nine years. The contract of lease was signed by Julia as
lessor, with the marital consent of Ponciano. The camarin was converted
into a movie house and used as such by the lessees. (Exh. 'G').
In spite of the good rentals they had been receiving for the building, the
spouses failed to pay seasonably their obligations to the RFC so, as late as
November 28, 1958, they had to ask for an extension of 5 years from the
Development Bank of the Philippines or DBP, as successor of the RFC, for
the payment of an outstanding balance of P7,876.13 (Exh. 'D').
On March 3, 1961, while Ponciano was absent attending his farm in Arayat,
Pampanga, Julia sold absolutely the lots in question, together with their
improvements to appellees Mendozas for the sum of P80,000.00 without
the knowledge and consent of Ponciano (Exh. 'I'-Mendoza). At the same
time the spouses were living separately and were not in speaking terms. By
virtue of such sale, Transfer Certificates of Title Nos. 561 10 and 56111 were
subsequently issued in the name of the Mendozas.
The applicable provision of law is Article 153 of the Civil Code which provides:
ART. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at the
expense of the common fund, whether the acquisition be for the
partnership, or for only one of the spouses;

xxx xxx xxx


The presumption found in Article 160 of the Civil Code must also be overcome by one who
contends that the disputed property is paraphernal Article 160 provides:
ART. 160. All property of the marriage is presumed to belong to the
conjugal partnership, unless it be proved that it pertains exclusively to the
husband or to the wife.
The presumption is a strong one. As stated in Camia de Reyes v. Reyes de Ilano (63 Phil. 629,
639), "it is sufficient to prove that the property was acquired during the marriage in order that
the same may be deemed conjugal property." And in Laluan v. Malpaya (65 SCRA 494, 504)
we stated, "proof of acquisition of the property in dispute during the marriage suffices to
render the statutory presumption operative."
There is no question that the disputed property was acquired by onerous title during the
marriage. But were the funds used to buy the lot and build the improvements at the expense of
the common fund?
The records show that the funds came from loans obtained by the spouses from the
Rehabilitation Finance Corporation. Under Article 161 of the Civil Code, all debts and
obligations contracted by the husband and the wife for the benefit of the conjugal partnership
are liabilities of the partnership.
As stated in Castillo, Jr. vs. Pasco (1 1 SCRA 102, 107):
... The position thus taken by appellants is meritorous, for the reason that
the deeds show the loans to have been made by Dr. Nicanor Jacinto and by
Gabriel and Purificacion Gonzales, to both spouses Marcelo Castillo and
Macaria Pasco, as joint borrowers. The loans thus became obligations of
the conjugal partnership of both debtor spouses and the money loaned is
logically conjugal property.
Citing Palanca v. Smith Bell & Co. (9 Phil. 13 1) interpreting Par. 3, Article 1401 of the old Civil
Code, the Court inCastillo v. Pasco stated:
If money borrowed by the husband alone on the security of his wife's
property is conjugal in character,a fortiori should it be conjugal when
borrowed by both spouses. The reason obviously is that the loan becomes
an obligation of the conjugal partnership which is the one primarily bound
for its repayment.
To rebut the presumption and the evidence of the conjugal character of the property, the
petitioners have only the testimony of Julia de Reyes to offer.
Mrs. Reyes testified that she bought the two parcels of land on installment basis and that the
first payment of a little less than P2,000.00 came from her personal funds: The receipt issued
by Araneta, however, shows that the first installment on one lot was only P69.96 and on the

other lot, P102.00. Mrs. Reyes also testified that she paid the entire purchase price and the
construction of the buildings from her personal funds and money borrowed from the
Philippine National Bank. The mortgage contracts, however, show that the properties were
paid out of the loan from RFC.
As a matter of fact, Mrs. Reyes' testimony about a loan from Mrs. Rosa Borja, the sale of a lot in
Cabiao, Nueva Ecija given by her mother, and the loan from PNB only emphasize the conjugal
nature of the disputed properties because she stated that these sums were also used to put up
their gravel and sand business, a poultry farm, and a banana plantation plus a jeepney
transportation line although according to her, every business venture handled by her husband
failed. The two were establishing businesses and buying properties together as husband and
wife, in happier times.
The Court of Appeals ruled upon the testimony of Julia De Reyes as follows:
Julia's testimony that she had sold her Cabiao property to Rosa Borja is
not supported by the deed of sale (Exh. 'I') which shows that the property
was sold to Encarnacion Goco and Mariano Robles. Again, her claim that
said Cabiao property was donated to her by her mother is negated by the
deeds of sale (Exhs. 'J' and 'K') which show that said property was donated
to her and her two brothers, Pablo and Jose del Rosario, who afterwards
sold their participation thereof to the spouses, Ponciano and Julia.
Her claim of exclusive ownership is further belied by the Income Tax
Returns (Exhs. 'N' to 'N'- 3') which she herself prepared and filed in behalf
of the conjugal partnership wherein she made the statement that the
rentals paid by her co-appellees were income of the conjugal partnership;
and by the Income Tax Returns (Exhs. 'O' to '0-4') also filed by her for the
conjugal partnership, were she made to appear the properties in question
as capital assets of the conjugal partnership. It should be noted that Julia
did not care to deny the truth of said statements. Neither did she endeavor
to offer any explanation for such damaging averments.
Petitioners also raised the issue of estoppel in their assignments of errors. They alleged:
Even so, petitioners would have small legal cause to dispute the
respondent Court's giving credence to the husband's pretensions did there
not also exist in the record plain and indisputable evidence that he had on
a former occasion both solemnly confirmed the paraphernal character of
the very properties now in question and disclaimed the existence of any
conjugal partnership funds or properties of himself and his wife.
(Petitioner's Brief, L-31616, p. 7).
It turns out that in 1948, Ponciano Reyes was sued in the then Municipal Court of Manila for
ejectment from a leased hotel that he was then operating. Judgment was rendered against
Reyes in favor of the lessors, the brothers named Gocheco Having failed in a bid to garnish the
rentals of the disputed buildings because the municipal court stated that it had no jurisdiction
to decide the paraphernal or conjugal nature of the properties, the Gocheco brothers filed Civil
Case No. 24772 for revival of judgment with the Court of First Instance of Manila.

It was in this latter case where Mr. Reyes stated in his special defenses that he and his wife
never had any kind of fund which could be called conjugal partnership funds, that they acted
independently from one another whenever either one engaged in any business, and-

and clear reference to the disputed lots as paraphernal in the cited answer. The petitioners
cannot invoke estoppel in these petitions.
May the Mendoza spouses be considered buyers in good faith?

That the herein plaintiff has not limited his action in the present case
against defendant Ponciano S. Reyes as he did in the original case abovementioned, that is, Civil Case No. 7524 of the Manila Municipal Court
which the instant case derived from, but has included the defendant's wife
Julia Reyes, with the only intended purpose and design of going over and
against the paraphernal properties of said Julia Reyes. (par. 4, Special
Defenses, Answer, Exh. II; Petitioner's Brief, L-31618, pp. 9-10).

The proof that the petitioners in L-31618 are purchasers in good faith comes from the
testimony of Mrs. Inocencia Mendoza herself. Mrs. Mendoza testified that Mrs. Julia R. De
Reyes assured her that the properties were paraphernal that her lawyer verified the titles being
in the name of Mrs. Julia R. De Reyes, and that she never dealt with Mr. Ponciano Reyes when
she and her husband were still renting the properties they later purchased. On crossexamination, Mrs. Mendoza admitted that she learned of the RFC mortgage when the lots were
about to be purchased.

Article 1437 of the Civil Code on estoppel involving immovable property provides:
Art. 1437. When in a contract between third persons concerning
immovable property, one of them is misled by a person with respect to the
ownership or real right over the real estate, the latter is precluded from
asserting his legal title or interest therein, provided all these requisites are
present:
(1) There must be fraudulent representation or wrongful concealment of
facts known to the party estopped;
(2) The party precluded must intend that the other should act upon the
facts as misrepresented;
(3) The party misled must have been unaware of the true facts; and
(4) The party defrauded must have acted in accordance with the
representation.
The principle of estoppel rests on the rule that whenever a party has, by his declaration, act or
omission, intentionally and deliberately led the other to believe a particular thing true and to
act, upon such belief he cannot, in any litigation arising out of such declaration, act or
omission, be permitted to falsify it. (Sotto v. Teves, 86 SCRA 154.)
Estoppel can only be invoked between the person making the misrepresentation and the person
to whom it was addressed. It is essential that the latter shag have relied upon the
misrepresentation and had been influenced and misled thereby.
There is no showing that the respondent had intentionally and deliberately led the petitioners
Mendozas to believe what was contained in the pleading, "Exh. 11", and to make them act upon
it. As observed by the respondent, they were not even a party in the case where the said pleadin
was filed. Neither is there any assertion by the Mendozas that the said pleading was shown to
them or that they happened to see it or to have any knowledge about it before they purchased
the properties in question. The alleged representation was never addressed to the petitioners,
much less made with the intention that they would act upon it. Moreover, there is no specific

Property acquired during a marriage is presumed to be conjugal and the fact that the land is
later registered in the name of only one of the spouses does not destroy its conjugal nature.
(Bucoy v. Paulino, 23 SCRA 249). Section 46 of P.D. 1529, the Property Registration Decree,
reiterates the proviso in Section 70 of the former Land Registration Act that registration cannot
be construed to relieve registered land or the owners thereof from any rights incident to the
relation of husband and wife. (See also: Marigsa v. Macabuntoc 17 Phil. 107, 109; Romero de
Pratts v. Menzi & Co., Inc., 53 Phil. 51, 54; Padilla v. Padilla, 74 Phil. 377, 382-384; Vitug v.
Montemayor, 91 Phil. 286, 290, 291, citing Guinguing v. Abuton, 48 Phil. 144; Sideco v. Aznar,
92 Phil. 952, 961-962, citing Flores v. Flores, 48 Phil. 288; Guinoo v. Court of Appeals, 97 Phil.
235, 238; Silos v. Ramos, 97 Phil. 263, 270, citing Commonwealth v. Sandiko 72 Phil. 258, 260;
and Alvarez v. Espiritu, 14 SCRA 893).
If the fact that property acquired during marriage was registered in the name of the husband
alone does not affect its conjugal nature, neither does registration in the name of the wife. Any
person who buys land registered in the married name of the wife is put on notice about its
conjugal nature.
The mortgage contracts (Exhs. "A-1 " and "B-1 ") executed by the spouses Ponciano S. Reyes
and Julia Reyes in favor of RFC were duly registered in the Registry of Deeds of Quezon City
and seasonably annotated on transfer certificates of title Nos. 8550 (Exh. "F") and 19998 (Exh.
"G"), which were issued in the name of Julia Reyes "married to Ponciano Reyes". Their dates of
inscription were November 29, 1948 and October 11, 1952, respectively. On December 10, 1952,
the lots and the building were leased by Julia, with the marital consent of Ponciano to the
petitioners Mendozas The contract of lease was registered in the Registry of Deeds and was
annotated in the transfer certificates of title on May 5, 1952. At that time, the RFC mortgages
were already noted at the back of the transfer certificates of title. The petitioners, therefore, are
unquestionably charged with notice of the existence and contents of said mortgages, their joint
execution by the spouses Ponciano Reyes and Julia Reyes and the application of the loans to
the payment to Araneta of the purchase price of the lots in question.
Furthermore, the consent of the Ponciano Reyes to the mere lease of the properties was
demanded by the Mendozas allegedly for their own protection, yet when it came to the deed of
sale which entailed a greater transfer of rights such consent was not required.
The final argument refers to the alleged unjust enrichment by Ponciano Reyes if the deed of
sale is nullified This petitioners admit that the benefit including that represented by one-half of
the purchase price, accrued not to the respondent but to his wife. Since Mr. Reyes did not

receive any part of the proceeds of the sale and his wife has been aligning herself with the
Mendoza couple, there could be no unjust enrichment as alleged. The assignments of errors
have no merit.
WHEREFORE, the petitions for review on certiorari are hereby DENIED for lack of merit. The
judgment of the Court of Appeals is affirmed.
SO ORDERED.

G.R. No. 89667 October 20, 1993


JOSEPHINE
B.
BELCODERO, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, et al., respondents.
Jaime I. Infante and Joanes G. Caacbay for petitioners.
Lamberto C. Nanquil & Associates Law Office for private respondents.

VITUG, J.:
This case involves the question of ownership over a piece of land acquired by a
husband while living with a paramour and after having deserted his lawful wife and children.
The property had been bought by the husband on installment basis prior to the effectivity of the
Civil Code of 1950 but the final deed, as well as the questioned conveyance by him to his
common law spouse, has ensued during the latter Code's regime. Now, of course, we have to
likewise take note of the new Family Code which took effect on 03 August 1988.
Let us begin by paraphrasing the factual findings of the appellate court below.
The husband, Alayo D. Bosing, married Juliana Oday on 27 July 1927, with whom he had three
children, namely, Flora, Teresita, and Gaido. In 1946, he left the conjugal home, and he
forthwith started to live instead with Josefa Rivera with whom he later begot one child, named
Josephine Bosing, now Josephine Balcobero.
On 23 August 1949, Alayo purchased a parcel of land on installment basis from the Magdalena
Estate, Inc. In the deed, he indicated his civil status as, "married to Josefa R. Bosing," the
common-law wife. In a letter, dated 06 October 1959, which he addressed to Magdalena Estate,
Inc., he authorized the latter to transfer the lot in the name of his "wife Josefa R. Bosing." The
final deed of sale was executed by Magdalena Estate, Inc., on 24 October 1959. A few days later,
or on 09 November 1959, Transfer Certificate of Title No. 48790 was issued in the name of
"Josefa R. Bosing, . . . married to Alayo Bosing, . . ."

On 06 June 1958, Alayo married Josefa even while his prior marriage with Juliana was still
subsisting. Alayo died on 11 march 1967. About three years later, or on 17 September 1970,
Josefa and Josephine executed a document of extrajudicial partition and sale of the lot in
question, which was there described as "conjugal property" of Josefa and deceased Alayo. In
this deed, Josefa's supposed one-half (1/2) interest as surviving spouse of Alayo, as well as her
one-fourth (1/4) interest as heir, was conveyed to Josephine for a P10,000.00 consideration,
thereby completing for herself, along with her one-fourth (1/4) interest as the surviving child of
Alayo, a full "ownership" of the property. The notice of extrajudicial partition was published on
04, 05 and 06 November 1970 in the Evening Post; the inheritance and estate taxes were paid;
and a new Transfer Certificate of Title No. 198840 was issued on 06 June 1974 in the name of
Josephine.
On 30 October 1980, Juliana (deceased Alayo's real widow) and her three legitimate children
filed with the court a quo an action for reconveyance of the property. On the basis of he above
facts, the trial court ruled in favor of the plaintiffs, and it ordered that
. . . Josephine Bosing executed a deed of reconveyance of the property in
question to the legal heirs of the deceased Alayo D. Bosing, and that both
defendants pay, jointly and severally, actual damages by way of attorney's
fees and expenses in litigation, TEN THOUSAND (P10,000.00) PESOS as
moral damages, pus TEN THOUSAND (P10,000.00) PESOS exemplary
damages to prevent future frauds.
The defendants went to the Court of Appeals which affirmed the trial court's order for
reconveyance but reversed the decision on the award for damages, thus
WHEREFORE, the judgment appealed from is hereby AFFIRMED insofar
as defendant Josephine Bosing is ordered to execute a deed of
reconveyance of the property granting the same to the legal heirs of the
deceased Alayo D. Bosing, and REVERSED insofar as it awards actual,
moral and exemplary damages. 1
Hence, the instant petition for review 2 submitting that
1. THE RESPONDENT COURT ERRED IN NOT HOLDING THAT THE
ACTION FOR RECONVEYANCE HAD LONG PRESCRIBED.
2. THE RESPONDENT COURT ERRED IN FINDING THAT, THE
ACTION FOR RECONVEYANCE IS BASED UPON AN IMPLIED OR
CONSTRUCTIVE TRUST.
3. THE RESPONDENT COURT ERRED IN NOT HOLDING THAT, THE
PROPERTY IN QUESTION BELONGS EXCLUSIVELY TO THE
PETITIONERS.
4. THE RESPONDENT COURT ERRED IN NOT GRANTING
PETITIONER'S MOTION FOR NEW TRIAL BASED ON NEWLY
DISCOVERED EVIDENCE, AND LIKEWISE ERRED IN HOLDING THAT

EVEN IF A NEW TRIAL IS GRANTED THE SAME WOULD NOT SERVE


A USEFUL PURPOSE.
We rule for affirmance.
The first three issues are interrelated, and the same will thus be jointly discussed.
Whether the property in question was acquired by Alayo in 1949 when an agreement for its
purchase on installment basis was entered into between him and Magdalena Estate, Inc., or in
1959 when a deed of sale was finally executed by Magdalena Estate, Inc., the legal results would
be the same. The property remained as belonging to the conjugal partnership of Alayo and his
legitimate wife Juliana. Under both the new Civil Code (Article 160) and the old Civil Code
(Article 1407), "all property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife." This presumption
has not been convincingly rebutted.
It cannot be seriously contended that, simply because the property was titled in the name of
Josefa at Alayo's request, she should thereby be deemed to be its owner. The property
unquestionably was acquired by Alayo. Alayo's letter, dated 06 October 1959, to Magdalena
Estate, Inc., merely authorized the latter to have title to the property transferred to her name.
More importantly, she implicitly recognized Alayo's ownership when, three years after the
death of Alayo, she and Josephine executed the deed of extrajudicial partition and sale in which
she asserted a one-half (1/2) interest in the property in what may be described as her share in
the "conjugal partnership" with Alayo, plus another one-fourth (1/4) interest as "surviving
widow," the last one-fourth (1/4) going to Josephine as the issue of the deceased. Observe that
the above adjudication would have exactly conformed with a partition in intestacy had they
been the sole and legitimate heirs of the decedent.
The appellate court below, given the above circumstances, certainly cannot be said to have been
without valid basis in concluding that the property really belonged to the lawful conjugal
partnership between Alayo and his true spouse Juliana.
As regards the property relation between common-law spouses, Article 144 of the Civil Code
merely codified the law established through judicial precedents under the old code (Margaret
Maxey vs. Court of Appeals, G.R. No. L-45870, 11 May 1984). In both regimes, the coownership rule had more than once been repudiated when either or both spouses suffered from
an impediment to marry (Jeroniza vs. Jose, 89 SCRA 306). The present provisions under
Article 147 and Article 148 of the Family Code did not much deviate from the old rules; in any
case, its provisions cannot apply to this case without interdicting prior vested rights (Article
256, Family Code).
It was at the time that 'the adjudication of ownership was made following Alayo's demise (not
when Alayo merely allowed the property to be titled in Josefa's name which clearly was not
intended to be adversarial to Alayo's interest), that a constructive trust was deemed to have
been created by operation of law under the provisions of Article 1456 of the Civil Code.
Article 1456. If the property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an implied
trust for the benefit of the person from whom the property comes.

The applicable prescriptive period for an action seeking a reconveyance of the property by the
beneficiaries thereof is ten (10) years (Article 1144, Civil Code). Ordinarily, that period starts
from the establishment of the implied trust being the day when the cause of action would be
considered to have accrued (Article 1150, Civil Code). Unfortunately for Josefa and Josephine,
however, the property involved in this case is a realty titled under the Torrens System. The
prescriptive period is thus to be counted from the time the transaction affecting the property is
registered with the corresponding issuance of a new certificate of title. 3 Between the time
Transfer of Certificate of Title No. 198840 was issued on 06 June 1974, and the filing of the
action for the reconveyance of the property with the court a quo on 30 October 1980, barely a
period of six (6) years and four (4) months had elapsed. The case has accordingly been initiated
seasonably.
The four-year prescriptive period, mentioned in passing by the petitioners, would have had
some value and relevance had the private respondents or their predecessor in interest been
parties to the extrajudicial partition and sale. In that event, the latter's action could only then
be predicated on a vitiation of consent 4 where the applicable statutory limitation would be four
years. 5
The last issue raises the supposed error in the rejection of a new trial on the basis of newly
discovered evidence. We concur with the resolution of the appellate court below (on appellants'
[petitioners herein] motion for reconsideration thereat), thus
Appellants' prayer for a new trial based upon what they claim is newly
discovered evidence deserves scant consideration.
Appellant proposes to prove (1) that Josefa Bosing sold certain property
for P8,000.00 in 1948 and was therefore in a financial position to make
the payments to Magdalena Estate Inc. and (2) that appellee Juliana
Bosing got married in 1961 to one Burayos Ballit, and thus, "forfeited" her
right to the conjugal partnership.
The first ground is not meritorious. It is not newly discovered evidence. As
described in appellants' Motion the documents were "not discovered or
considered as necessary evidence during the trial of the case below" by the
former counsel; it is therefore more properly considered as forgotten
evidence, which the appellant knew or should have known during the trial
(Tesoro vs. Court of Appeals, 54 SCRA 296; Republic vs. Vda. de Castelvi,
58 SCRA 336). Moreover, assuming the sale is proven, it does not follow
that the proceeds were used to pay the lot in question; the payments were
made in installments, not in one lump sum.
Neither is the second ground deserving of merit. Assuming that the
marriage to Ballit in 1961 is duly proven, and that this provided a cause for
legal separation and consequent disqualification of the guilty spouse to
succeed to the husband's intestate estate under Article 1002 of the Civil
Code, the fact remains that no action for legal separation was brought by
the husband during his lifetime and within the period provided by law. It is
too late to raise the issue at this time.

Accordingly, assuming that the Motion for New Trial complies with the
formal requisites for such motion (See Minister of Natural Resources vs.
Heirs of Orval Hughes, et al., G.R. No. 62662, prom. November 12, 1987),
a question We don't find necessary to decide, a new trial would not serve a
useful purpose in altering the result of the questioned decision.
WHEREFORE, the decision appealed from in the instant petition for review on certiorari is
AFFIRMED.
SO ORDERED.
G.R. No. 51457 June 27, 1994
LUCIA
EMBRADO
and
ORESTE
TORREGIANI, petitioners,
vs.
COURT OF APPEALS, PACIFICO CIMAFRANCA, MARCOS SALIMBAGAT, EDA
JIMENEZ and SANTIAGO JIMENEZ, respondents.
Alerio P. Acosta for petitioner.
Roseller L. Barinaga & Venancio M. Carpio for respondents Santiago and Eda Jimenez.

Torregiani." The Torregianis then made their conjugal abode on the lot and in 1958 constructed
a residential/commercial building thereon.4
As appearing from a document entitled Absolute Deed of Sale dated 1 May 1971 5, Lucia
Embrado Torregiani sold Lot No. 564, described as her "own paraphernal property," to her
adopted daughter, herein private respondent Eda Jimenez, for the sum of P1,000.00. Transfer
Certificate of Title No. T-99 was canceled to give way to TCT No. T-17103 6 in the name of Eda
Jimenez, married to Santiago Jimenez.
On 6 March 1972, Eda Jimenez sold sixty-five (65) square meters of Lot 564 to Marcos
Salimbagat for P6,500.00, and on 1 August 1972, conveyed 301 square meters of the same lot to
Pacifico Cimafranca 8 for P30,000. Both sales were duly annotated on TCT No. T-17103.
On 25 September 1972, the Torregianis instituted in the Court of First Instance, now Regional
Trial Court, of Zamboanga del Norte an action for declaration of nullity of contract, annulment
of sales, reconveyance and damages 9 against the spouses Santiago and Eda Jimenez, Marcos
Salimbagat and Pacifico Cimafranca alleging that the sale of Lot 564 by Lucia Embrado to Eda
Jimenez was void not only for lack of consideration but also because Oreste Torregiani did not
consent to the sale, which consent was necessary because Lot 564 was conjugal property. In
addition, the petitioners claim that Lucia was misled into signing the deed of sale marked as
Exh. "D" on the belief that Lot 564 was merely intended as security for a loan that the Jimenez
spouses were then negotiating with the First Insular Bank of Cebu. Since the Jimenez spouses
did not acquire valid title to the land, the subsequent sales in favor of Salimbagat and
Cimafranca were without legal effect.

Pacifico Cimafranca for and in his own behalf.

BELLOSILLO, J.:
LUCIA EMBRADO and ORESTE TORREGIANI, spouses, filed this petition for review
on certiorari from the decision of respondent Court of Appeals 1 upholding the validity of the
Deed of Sale over Lot No. 564 executed by petitioner Lucia Embrado in favor of private
respondent Eda Jimenez.
Lot No. 564 is a 366-square meter lot situated in Dipolog City originally owned by Juan, Pastor
and Matias Carpitanos. On 2 July 1946, a Venta Definitiva, a notarized document written
entirely in Spanish, was executed by the Carpitanos whereby they sold Lot No. 564 to "Srta.
LUCIA C. EMBRADO . . . soltera, con residencia y direccion postal Municipio de Dipolog,
Provincia de Zamboanga." 2 The document provided that even though the deed was prepared
and signed on 2 July 1946, the effects of the document would retroact to the 15th day of April
1941, the date the lot and its improvements were actually sold to Lucia C. Embrado.
The sale was registered and Transfer Certificate of Title No. T-99 3 was issued on 13 February
1948 in the name of Lucia Embrado alone, who was by then already married to petitioner
Oreste Torregiani since 1943. However, by virtue of a court order in Misc. Sp. Proc. No. 2330 of
the then Court of First Instance of Zamboanga del Norte, the word "single" appearing in TCT
No. T-99 was canceled and replaced on 19 October 1970 by the phrase "married to Oreste

The Torregianis were sustained by the CFI of Zamboanga del Norte 10 which held that the sale
of Lot 564 to Eda Jimenez and its subsequent transfers to Marcos Salimbagat and Pacifico
Cimafranca, who were declared buyers in bad faith, were void and of no effect. More
specifically, the judgment (a) declared Exhs. "D," "G" and "H" as well as TCT No. 17103 null
and void and of no force and effect; (b) ordered defendants jointly and severally to pay
plaintiffs the sum of P2,000.00 as actual damages and P1,500.00 for attorneys fees; (c)
ordered the Register of Deeds of Dipolog City to cancel TCT No. 17103 in the name of Eda
Jimenez and issue another one in favor of plaintiff Lucia Embrado, married to Oreste
Torregiani, and to cancel all the annotations thereon emanating from the void transfers in favor
of Marcos Salimbagat and Pacifico Cimafranca; (d) ordered defendants Eda and Santiago
Jimenez to return to defendant Pacifico Cimafranca the sum of P30,000.00 paid by him for the
301 square meters and the house in question, and to defendant Marcos Salimbagat the
P6,500.00 paid by him for the 65 square meters occupied by Comendador Clinic with legal
interest of six percent (6%) until fully paid; and, (e) ordered defendant Cimafranca to pay
plaintiffs all the rents he has been collecting from the lessees of the first floor of the house with
legal interest thereon from the time he started collecting them until fully paid, with costs
against defendants. 11
The foregoing judgment was reversed by the Court of Appeals which held that since Lucia
Embrado actually agreed with Juan, Pastor and Matias Carpitanos, the original owners, to the
purchase of Lot 564 on 15 April 1941 12 when she was not yet married, then the lot was her
paraphernal property since a sale is considered perfected the moment the parties agree on the
object and cause of the contract. In addition, the respondent court declared Salimbagat and
Cimafranca buyers in good faith since the contrary was not proved. Consequently, the
complaint in the trial court was ordered dismissed by respondent Court of Appeals.

Three (3) issues are herein involved: (a) whether Lot 564 was paraphernal property of Lucia
Embrado or conjugal with her husband Oreste Torregiani; (b) whether the sale in favor of Eda
Jimenez was valid; and, (c) whether vendees Marcos Salimbagat and Pacifico Cimafranca were
buyers in good faith so that the sale to them was valid, hence, would bar reconveyance.
We sustain petitioners. While we agree with respondent court that Lot 564 was originally the
paraphernal property of Lucia, we cannot adopt its conclusion that because Lucia and the
original owners agreed in 1941 for its purchase and sale, ownership was already acquired by
Lucia at that moment. Under Art. 1496 of the Civil Code, "ownership of the thing sold is
acquired by the vendee from the moment it is delivered to him in any of the ways specified in
articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee," and under Art. 1498, "(w)hen the sale is made
through a public instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred."
In the case at bar, the Venta Definitiva over Lot 564 in favor of Lucia Embrado was executed by
the Carpitanoses on 2 July 1946 when her marriage to petitioner Oreste Torregiani was already
subsisting. Although ownership was acquired during the marriage and hence presumed
conjugal, the presumption of conjugality 13 was successfully overcome by the terms of
the Venta Definitiva which contains a positive assertion of exclusive ownership, which was
duly supported by the testimony of Matias Carpitanos, one of the original sellers of the lot. 14
However, a decisive fact appears which prevents us from ultimately affirming the validity of her
sale of Lot 564 to private respondent Eda Jimenez. The trial court found as a fact the
construction in 1958 of a residential/commercial building 15 on said lot a part of which was
leased to third persons and another part serving as the Torregianis conjugal dwelling.
Although no evidence was presented on the source of funds used in the construction to
determine whether the same was conjugal or paraphernal, other than the testimony of
Torregiani, 16 petitioners nevertheless enjoy in their favor the presumption that the funds used
were conjugal. 17
The second paragraph of Art. 158 of the Civil Code provides that "[b]uildings constructed, at
the expense of the partnership, during the marriage on land belonging to one of the spouses,
also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who
owns the same." Under this article, the land becomes conjugal upon the construction of the
building without awaiting reimbursement before or at the liquidation of the partnership upon
the concurrence of two conditions, to wit: (a) the construction of the building at the expense of
the partnership; and, (b) the ownership of the land by one of the spouses. 18 The conditions
have been fully met in the case at bench. Thus, even if Lot 564 was originally the paraphernal
property of Lucia as evident from the "Venta Definitiva", the same became conjugal upon the
construction of the residential/commercial building in 1958.
Lucia claims that she was misled by her daughter and son-in-law into signing a deed of
absolute sale in their favor thinking that she would be helping them obtain a loan from a bank
if they could mortgage the property as security for their loan; that although she signed the deed
of sale, she did not consent to the sale nor did she intend to convey or transfer her title to Eda
Jimenez; and, that she never received the alleged amount of P1,000.00 as consideration for the
sale of the property.

While it is true that a notarized document is admissible in evidence without proof of its due
execution and is conclusive as to the truthfulness of its contents, this rule is not absolute and
may be rebutted by evidence to the contrary. 19 In this case, it was clearly shown that Eda and
Santiago Jimenez had no sufficient means of livelihood and that they were totally dependent on
their mother Lucia for the support of their family. This fact strengthens the claim of Lucia that
the price of the property was fictitious and that Eda Jimenez could not have paid the price of
the property as she was financially incapable to do so. In fact, Eda Jimenez did not prove as to
how she obtained the money to pay for the property she supposedly bought from Lucia. When
the source of the purchase price is "intriguing" and is not convincingly shown to have been
given by the "buyer" to the "seller," the claim of the latter that she signed the deed of sale
without her consent may be upheld. 20
Even assuming in gratia argumenti that Lucia signed the document knowing that it was a deed
of sale of the property, the sale thereof by Lucia to Eda Jimenez without her husbands
conformity should be considered void ab initio being contrary to law. 21 Since "(t)he wife
cannot bind the conjugal partnership without the husbands consent, except in cases provided
by law," 22 it follows that Lucia Embrado Torregiani could not, by herself, validly dispose of Lot
564 without her husbands consent. Consequently, Eda Jimenez likewise could not have
acquired ownership over the land. The issuance of a certificate of title in favor of Eda Jimenez
did not vest upon her ownership over the property. Neither did it validate the alleged purchase
thereof which is null and void. Registration does not vest title. It is merely evidence of such
title. Our land registration laws do not give the holder any better title than what he actually
has. 23 Being null and void, the sale to Eda Jimenez and the transfer of the property she made
to Salimbagat and Cimafranca produced no legal effects whatsoever.Quod nullum est, nullum
producit effectum. There being no valid title to the land that Eda Jimenez acquired from Lucia,
it follows that no title to the same land could be conveyed by the former to Salimbagat and
Cimafranca. 24
It is worthy to note that Salimbagat and Cimafranca, as buyers of Eda Jimenez, have not
proved their status as purchasers in good faith and for value of the land which, in the first
place, Eda Jimenez had no right to sell. The burden of proving the status of a purchaser in good
faith and for value lies upon him who asserts that status. In discharging the burden, it is not
enough to invoke the ordinary presumption of good faith, i.e., that everyone is presumed to act
in good faith. The good faith that is here essential is integral with the very status which must be
proved. 25
We agree with the trial court when it found that Salimbagat and Cimafranca purchased the
disputed lot from Eda and Santiago Jimenez with knowledge of facts and circumstances which
should have put them upon such inquiry and investigation as might be necessary to acquaint
them with the defects in the title of their vendor. A purchaser cannot close his eyes to facts
which should put a reasonable man on his guard and then claim that he acted in good faith
under the belief that there was no defect in the title of the vendor. His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the possibility of the existence of a
defect in the vendors title will not make him an innocent purchaser for value if afterwards it
develops that the title is in fact defective, and it appears that he had such notice of the defect as
would have led to its discovery had he acted with the measure of precaution which may
reasonably be required of a prudent man in like situation. 26
Cimafranca is a close relative of Santiago Jimenez and at the same time godfather to one of his
children. As such, there can be no doubt that Cimafranca was aware of the personal
circumstances and financial standing of the Jimenez spouses, including their financial ability to
acquire any property. It would be impossible for Cimafranca not to know that Santiago Jimenez

was only twenty-two years old, a working student earning six pesos per day 27 with a wife and
three children to support. 28 With these facts, there is every reason for him to inquire further as
to how Eda Jimenez came up with the sum of P1,000.00 to buy the property. When there is a
clear showing that Eda Jimenez, being the transferee of a registered property, is not gainfully
employed or did not have an independent source of income or is financially incapable of paying
the price of the property she bought, this is sufficient to engender doubt as to whether Eda
validly bought the property from Lucia. 29

Lot 564 is now registered in the name of Eda Jimenez "married to Santiago Jimenez" under
Transfer Certificate of Title No. T-17103 which was issued pursuant to the "Absolute Deed of
Sale" executed in her favor by petitioner Lucia Embrado. We have already declared said deed of
sale as null and void since its object, Lot 564, is conjugal property which was sold by Lucia
Embrado without her husbands conformity. The present vendees, Marcos Salimbagat and
Pacifico Cimafranca, who bought the property from Eda Jimenez have failed to persuade us
that they acquired the property in good faith.

On the part of Salimbagat, he has been a resident of Dipolog for about thirty (30) years. He has
a daughter renting a portion of the building with her husband for more than a year prior to the
sale by Eda Jimenez to Salimbagat on 6 March 1972. 30 This means that the lease of the
building by Salimbagats daughter already commenced while Lucia Torregiani was still the
registered owner and this was prior to the alleged sale by Lucia Torregiani of the property to
Eda Jimenez on 1 May 1971. There can be no doubt that Salimbagats daughter was aware of the
factual background of the property and the personal circumstances of the owners thereof
especially that they are all occupying the same building. During the time that Salimbagat was
already interested in buying the property, it would have been usual and part of ordinary human
nature for him to inquire about the property from his daughter who was living very near the
supposed owners. Considering that the Torregiani and Jimenez families are not total strangers
to Salimbagat, it is safe to conclude that Salimbagat had some knowledge of the financial status
of the supposed vendors which should have put him on guard before buying the property.
Moreover, the records show that this would not have escaped the notice of Salimbagat and
Cimafranca that at the time of the sale to them petitioners were in actual possession of the
property with Salimbagats daughter renting a portion thereof. For that matter, at the time of
the sale to Salimbagat and Cimafranca, petitioners had already been in continuous possession
of the property for fourteen (14) years, or since 1958. Santiago Jimenez admitted that after his
marriage he and his wife Eda lived and stayed with her parents, herein petitioners, and
dependent on them for support. 31

WHEREFORE, the decision of respondent Court of Appeals dated 26 April 1979 is REVERSED
and SET ASIDE and the Decision of the then Court of First Instance (now Regional Trial Court)
of Zamboanga del Norte dated 14 June 1976 is REINSTATED and ADOPTED herein as the
decision in this case.

Before buying the property, Salimbagat and Cimafranca allegedly inquired from the office of
the Register of Deeds concerning the genuineness of the certificate of title of Eda Jimenez, and
from the Clerk of Court of the Court of First Instance of Dipolog City as to whether the property
was involved in any litigation. 32 However, they failed to inquire from petitioners as to why they
were the ones in actual possession of the property.
The rule is settled that a buyer of real property which is in the possession of persons other than
the seller must be wary and should investigate the rights of those in possession. Otherwise,
without such inquiry, the buyer can hardly be regarded as a buyer in good faith. 33 When a man
proposes to buy or deal with realty, his first duty is to read the public manuscript, i.e., to look
and see who is there upon it, and what are his rights. A want of caution and diligence which an
honest man of ordinary prudence is accustomed to exercise in making purchases is, in
contemplation of law, a want of good faith. The buyer who has failed to know or discover that
the land sold to him is in the adverse possession of another, is a buyer in bad faith. 34
The fact that Lucia Embrado resides in the premises, coupled with the relatively young age and
meager financial standing of the Jimenez spouses, should have been sufficient for Cimafranca
to hesitate accepting Edas transfer certificate of title at its face value. Cimafranca, after
deliberately closing his eyes to such a vital information, is now claiming good faith. For obvious
reasons, we cannot accept his contention. We thus declare him, together with Marcos
Salimbagat, to be purchasers in bad faith hence not entitled to protection under the Torrens
system of registration.

SO ORDERED.
G.R. No. L-57499 June 22, 1984
MERCEDES
CALIMLIMCANULLAS, petitioner,
vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch
I, and CORAZON DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.

MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the
Resolution on the Motion for Reconsideration, dated November 27, 1980, of the then Court of
First Instance of Pangasinan, Branch I, in Civil Case No. 15620 entitled "Corazon DAGUINES
vs. MERCEDES Calimlim-Canullas," upholding the sale of a parcel of land in favor of
DAGUINES but not of the conjugal house thereon'
The background facts may be summarized as follows: Petitioner MERCEDES CalimlimCanullas and FERNANDO Canullas were married on December 19, 1962. They begot five
children. They lived in a small house on the residential land in question with an area of
approximately 891 square meters, located at Bacabac, Bugallon, Pangasinan. After
FERNANDO's father died in 1965, FERNANDO inherited the land.
In 1978, FERNANDO abandoned his family and was living with private respondent Corazon
DAGUINES. During the pendency of this appeal, they were convicted of concubinage in a
judgment rendered on October 27, 1981 by the then Court of First Instance of Pangasinan,
Branch II, which judgment has become final.

On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES
for the sum of P2,000.00. In the document of sale, FERNANDO described the house as "also
inherited by me from my deceased parents."
Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19,
1980 for quieting of title and damages against MERCEDES. The latter resisted and claimed
that the house in dispute where she and her children were residing, including the coconut trees
on the land, were built and planted with conjugal funds and through her industry; that the sale
of the land together with the house and improvements to DAGUINES was null and void
because they are conjugal properties and she had not given her consent to the sale,
In its original judgment, respondent Court principally declared DAGUINES "as the lawful
owner of the land in question as well as the one-half () of the house erected on said land." Upon
reconsideration prayed for by MERCEDES, however, respondent Court resolved:
WHEREFORE, the dispositive portion of the Decision of this Court,
promulgated on October 6, 1980, is hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful owner of the land in question
and the 10 coconut trees;
(2) Declaring as null and void the sale of the conjugal house to plaintiff on
April 15, 1980 (Exhibit A) including the 3 coconut trees and other crops
planted during the conjugal relation between Fernando Canullas (vendor)
and his legitimate wife, herein defendant Mercedes Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not the construction of a conjugal house on
the exclusive property of the husband ipso facto gave the land the character of conjugal
property; and (2) whether or not the sale of the lot together with the house and improvements
thereon was valid under the circumstances surrounding the transaction.
The determination of the first issue revolves around the interpretation to be given to the second
paragraph of Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the partnership during the
marriage on land belonging to one of the spouses also pertain to the
partnership, but the value of the land shall be reimbursed to the spouse
who owns the same.
We hold that pursuant to the foregoing provision both the land and the building belong to the
conjugal partnership but the conjugal partnership is indebted to the husband for the value of
the land. The spouse owning the lot becomes a creditor of the conjugal partnership for the
value of the lot, 1 which value would be reimbursed at the liquidation of the conjugal
partnership. 2

In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404),
Manresa stated:
El articulo cambia la doctrine; los edificios construidos durante el
matrimonio en suelo propio de uno de los conjuges son gananciales,
abonandose el valor del suelo al conj uge a quien pertenezca.
It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge, it was
held that the land belonging to one of the spouses, upon which the spouses have built a house,
becomes conjugal property only when the conjugal partnership is liquidated and indemnity
paid to the owner of the land. We believe that the better rule is that enunciated by Mr. Justice
J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following was
explained:
As to the above properties, their conversion from paraphernal to conjugal
assets should be deemed to retroact to the time the conjugal buildings
were first constructed thereon or at the very latest, to the time immediately
before the death of Narciso A. Padilla that ended the conjugal partnership.
They can not be considered to have become conjugal property only as of
the time their values were paid to the estate of the widow Concepcion
Paterno because by that time the conjugal partnership no longer existed
and it could not acquire the ownership of said properties. The acquisition
by the partnership of these properties was, under the 1943 decision,
subject to the suspensive condition that their values would be reimbursed
to the widow at the liquidation of the conjugal partnership; once paid, the
effects of the fulfillment of the condition should be deemed to retroact to
the date the obligation was constituted (Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have alienated the
house and lot to DAGUINES since MERCEDES had not given her consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor of a concubine after he had
abandoned his family and left the conjugal home where his wife and children lived and from
whence they derived their support. That sale was subversive of the stability of the family, a
basic social institution which public policy cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is
contrary to law, morals, good customs, public order, or public policy are void and inexistent
from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no
effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public
order, or public policy."
Additionally, the law emphatically prohibits the spouses from selling property to each other
subject to certain exceptions. 6 Similarly, donations between spouses during marriage are
prohibited. 7 And this is so because if transfers or con conveyances between spouses were
allowed during marriage, that would destroy the system of conjugal partnership, a basic policy

in civil law. It was also designed to prevent the exercise of undue influence by one spouse over
the other, 8 as well as to protect the institution of marriage, which is the cornerstone of family
law. The prohibitions apply to a couple living as husband and wife without benefit of marriage,
otherwise, "the condition of those who incurred guilt would turn out to be better than those in
legal union." Those provisions are dictated by public interest and their criterion must be
imposed upon the wig of the parties. That was the ruling in Buenaventura vs. Bautista, also
penned by Justice JBL Reyes (CA) 50 O.G. 3679, and cited in Matabuena vs. Cervantes. 9 We
quote hereunder the pertinent dissertation on this point:
We reach a different conclusion. While Art. 133 of the Civil Code considers
as void a donation between the spouses during the marriage, policy
considerations of the most exigent character as wen as the dictates
of morality require that the same prohibition should apply to a commonlaw relationship.
As announced in the outset of this opinion, a 1954 Court of Appeals
decision, Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar
provision of the old Civil Code speaks unequivocally. If the policy of the
law is, in the language of the opinion of the then Justice J.B.L. Reyes of
that Court, 'to prohibit donations in favor of the other consort and his
descendants because of fear of undue influence and improper
pressure upon the donor, a prejudice deeply rooted in our ancient law, ...,
then there is every reason to apply the same prohibitive policy to persons
living together as husband and wife without benefit of nuptials. For it is
not to be doubted that assent to such irregular connection for thirty years
bespeaks greater influence of one party over the other, so that the danger
that the law seeks to avoid is correspondingly increased'. Moreover, as
pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1), "It would not be just
that such donations should subsist, lest the conditions of those who
incurred guilt should turn out to be better." So long as marriage remains
the cornerstone of our family law, reason and morality alike demand that
the disabilities attached to marriage should likewise attach
toconcubinage (Emphasis supplied),
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of
November 27, 1980 on petitioner's Motion for Reconsideration, are hereby set aside and the
sale of the lot, house and improvements in question, is hereby declared null and void. No costs.
SO ORDERED.
G.R. No. 97347 July 6, 1999
JAIME
G.
ONG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, SPOUSES MIGUEL K. ROBLES and
ALEJANDRO M. ROBLES,respondents.

YNARES-SANTIAGO, J.:
Before us is a petition for review on certiorari from the judgment rendered by the Court of
Appeals which, except as to the award of exemplary damages, affirmed the decision of the
Regional Trial Court of Lucena City, Branch 60, setting aside the "Agreement of Purchase and
Sale" entered into by herein petitioner and private respondent spouses in Civil Case No. 8585.1wphi1.nt
On May 10, 1983, petitioner Jaime Ong, on the one hand, and respondent spouses Miguel K.
Robles and Alejandra Robles, on the other hand, executed an "Agreement of Purchase and
Sale" respecting two parcels of land situated at Barrio Puri, San Antonio, Quezon. The terms
and conditions of the contract read:"
1. That for and in consideration of the agreed purchase price of TWO
MILLION PESOS (P2,000,000.00), Philippine currency, the mode and
manner of payment is as follows:
A. The initial payment of SIX HUNDRED
THOUSAND PESOS (P600,000.00) as verbally
agreed by the parties, shall be broken down as follows:
1. P103,499.91 shall be paid, and
as already paid by the BUYER to
theSELLERS on March 22, 1983,
as
stipulated
under
the Certification
of
undertaking dated March 22,
1983 and covered by a check of
even date.
2. That the sum of P496,500.09
shall be paid directly by
the BUYER to the Bank of
Philippine Islands to answer for
the loan of the SELLERS which as
of March 15, 1983 amounted to
P537,310.10, and for the interest
that may accrued (sic) from
March 15, 1983, up to the time
said
obligation
of
theSELLERS with the said bank
has been settled, provided
however that the amount in
excess of P496,500.09, shall be
chargeable from the time deposit
of
the SELLERS with
the
aforesaid bank.
B. That the balance of ONE MILLION FOUR
HUNDRED THOUSAND (P1,400,000.00) PESOS

shall be paid by the BUYER to the SELLERS in four


(4) equal quarterly installments of THREE
HUNDRED
FIFTY
THOUSAND
PESOS
(P350,000.00), the first to be due and payable on
June 15, 1983, and every quarter thereafter, until the
whole amount is fully paid, by these presents promise
to sell to said BUYER the two (2) parcels of
agricultural land including the rice mill and the
piggery which are the most notable improvements
thereon, situated at Barangay Puri, San Antonio
Quezon, . . .
2. That upon the payment of the total purchase price by
the BUYER the SELLERS bind themselves to deliver to the former a good
and sufficient deed of sale and conveyance for the described two (2)
parcels of land, free and clear from all liens and encumbrances.
3. That immediately upon the execution of this document,
the SELLERS shall deliver, surrender and transfer possession of the said
parcels of land including all the improvements that may be found thereon,
to the BUYER, and the latter shall take over from the SELLER the
possession, operation, control and management of the RICEMILL and
PIGGERY found on the aforesaid parcels of land.

return, voluntarily gave the spouses authority to operate the rice mill. 9He, however, continued
to be in possession of the two parcels of land while private respondents were forced to use the
rice mill for residential purposes.
On August 2, 1985, respondent spouses, through counsel, sent petitioner a demand letter
asking for the return of the properties. Their demand was left unheeded, so, on September 2,
1985, they filed with the Regional Trial Court of Lucena City, Branch 60, a complaint for
rescission of contract and recovery of properties with damages. Later, while the case was still
pending with the trial court, petitioner introduced major improvements on the subject
properties by constructing a complete fence made of hollow blocks and expanding the piggery.
These prompted the respondent spouses to ask for a writ of preliminary injunction. 10 The trial
court granted the application and enjoined petitioner from introducing improvements on the
properties except for repairs. 11
On June 1, 1989 the trial court rendered a decision, the dispositive portion of which reads as
follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
a) Ordering that the contract entered into by plaintiff spouses Miguel K.
Robles and Alejandra M. Robles and the defendant, Jaime Ong captioned
"Agreement of Purchase and Sale," marked as Exhibit "A" set aside;

4. That all payments due and payable under this contract shall be effected
in the residence of theSELLERS located at Barangay Puri, San Antonio,
Quezon unless another place shall have been subsequently designated by
both parties in writing.

b) Ordering defendant, Jaime Ong to deliver the two (2) parcels of land
which are the subject matter of Exhibit "A" together with the
improvements thereon to the spouses Miguel K. Robles and Alejandro M.
Robles;

xxx xxx xxx 1

c) Ordering plaintiff spouses, Miguel Robles and Alejandra Robles to


return to Jaime Ong the sum of P497,179.51;

On May 15, 1983, petitioner Ong took possession of the subject parcels of land together with
the piggery, building, ricemill, residential house and other improvements thereon.
Pursuant to the contract they executed, petitioner paid respondent spouses the sum of
P103,499.91 2 by depositing it with the United Coconut Planters Bank. Subsequently, petitioner
deposited sums of money with the Bank of Philippine Islands (BPI), 3 in accordance with their
stipulation that petitioner pay the loan of respondents with BPI.
To answer for his balance of P1,400,000.00 petitioner issued four (4) post-dated Metro Bank
checks payable to respondent spouses in the amount of P350,0000.00 each, namely: Check
No. 157708 dated June 15, 1983, 4 Check No. 157709 dated September 15, 1983, 5 Check No.
157710 dated December 15, 1983 6 and Check No. 157711 dated March 15, 1984. 7 When
presented for payment, however, the checks were dishonored due to insufficient funds.
Petitioner promised to replace the checks but failed to do so. To make matters worse, out of the
P496,500.00 loan of respondent spouses with the Bank of the Philippine Islands, which
petitioner, as per agreement, should have paid, petitioner only managed to dole out no more
than P393,679.60. When the bank threatened to foreclose the respondent spouses' mortgage,
they sold three transformers of the rice mill worth P51,411.00 to pay off their outstanding
obligation with said bank, with the knowledge and conformity of petitioner. 8 Petitioner, in

d) Ordering defendant Jaime Ong to pay the plaintiffs the sum of


P100,000.00 as exemplary damages; and
e) Ordering defendant Jaime Ong to pay the plaintiffs spouses Miguel K.
Robles and Alejandra Robles the sum of P20,000.00 as attorney's fees and
litigation expenses.
The motion of the plaintiff spouses Miguel K. Roles and Alejandra Robles
for the appointment of receivership is rendered moot and academic.
SO ORDERED. 12
From this decision, petitioner appealed to the Court of Appeals, which affirmed the decision of
the Regional Trial Court but deleted the award of exemplary damages. In affirming the decision
of the trial court, the Court of Appeals noted that the failure of petitioner to completely pay the
purchase price is a substantial breach of his obligation which entitles the private respondents to
rescind their contract under Article 1191 of the New Civil Code. Hence, the instant petition.

At the outset, it must be stated that the issues raised by the petitioner are generally factual in
nature and were already passed upon by the Court of Appeals and the trial court. Time and
again, we have stated that it is not the function of the Supreme Court to assess and evaluate all
over again the evidence, testimonial and documentary, adduced by the parties to an appeal,
particularly where, such as in the case at bench, the findings of both the trial court and the
appellate court on the matter coincide. There is no cogent reason shown that would justify the
court to discard the factual findings of the two courts below and to superimpose its own. 13
The only pertinent legal issues raised which are worthy of discussion are (1) whether the
contract entered into by the parties may be validly rescinded under Article 1191 of the New Civil
Code; and (2) whether the parties had novated their original contract as to the time and
manner of payment.
Petitioner contends that Article 1191 of the New Civil Code is not applicable since he has
already paid respondent spouses a considerable sum and has therefore substantially complied
with his obligation. He cites Article 1383 instead, to the effect that where specific performance
is available as a remedy, rescission may not be resorted to.
A discussion of the aforesaid articles is in order.
Rescission, as contemplated in Articles 1380, et seq., of the New Civil Code, is a remedy granted
by law to the contracting parties and even to third persons, to secure the reparation of damages
caused to them by a contract, even if this should be valid, by restoration of things to their
condition at the moment prior to the celebration of the contract. 14 It implies a contract, which
even if initially valid, produces a lesion or a pecuniary damage to someone. 15
On the other hand, Article 1191 of the New Civil Code refers to rescission applicable to
reciprocal obligations. Reciprocal obligations are those which arise from the same cause, and in
which each party is a debtor and a creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. 16 They are to be performed simultaneously such
that the performance of one is conditioned upon the simultaneous fulfillment of the other.
Rescission of reciprocal obligations under Article 1191 of the New Civil Code should be
distinguished from rescission of contracts under Article 1383. Although both presuppose
contracts validly entered into and subsisting and both require mutual restitution when proper,
they are not entirely identical.
While Article 1191 uses the term "rescission," the original term which was used in the old Civil
Code, from which the article was based, was "resolution. 17" Resolution is a principal action
which is based on breach of a party, while rescission under Article 1383 is a subsidiary action
limited to cases of rescission for lesion under Article 1381 of the New Civil Code, which
expressly enumerates the following rescissible contracts:
1. Those which are entered into by guardians
whenever the wards whom they represent suffer lesion
by more than one fourth of the value of the things
which are the object thereof;

2. Those agreed upon in representation of absentees, if


the latter suffer the lesion stated in the preceding
number;
3. Those undertaken in fraud of creditors when the
latter cannot in any manner collect the claims due
them;
4. Those which refer to things under litigation if they
have been entered into by the defendant without the
knowledge and approval of the litigants or of
competent judicial authority;
5. All other contracts specially declared by law to be
subject to rescission.
Obviously, the contract entered into by the parties in the case at bar does
not fall under any of those mentioned by Article 1381. Consequently,
Article 1383 is inapplicable.
May the contract entered into between the parties, however, be rescinded
based on Article 1191?
A careful reading of the parties' "Agreement of Purchase and Sale" shows
that it is in the nature of a contract to sell, as distinguished from a contract
of sale. In a contract of sale, the title to the property passes to the vendee
upon the delivery of the thing sold; while in a contract to sell, ownership is,
by agreement, reserved in the vendor and is not to pass to the vendee until
full payment of the purchase price. 18 In a contract to sell, the payment of
the purchase price is a positive suspensive condition, the failure of which is
not a breach, casual or serious, but a situation that prevents the obligation
of the vendor to convey title from acquiring an obligatory force. 19
Respondents in the case at bar bound themselves to deliver a deed of
absolute sale and clean title covering the two parcels of land upon full
payment by the buyer of the purchase price of P2,000,000.00. This
promise to sell was subject to the fulfillment of the suspensive condition of
full payment of the purchase price by the petitioner. Petitioner, however,
failed to complete payment of the purchase price. The non-fulfillment of
the condition of full payment rendered the contract to sell ineffective and
without force and effect. It must be stressed that the breach contemplated
in Article 1191 of the New Civil Code is the obligor's failure to comply with
an obligation. 20 Failure to pay, in this instance, is not even a breach but
merely an event which prevents the vendor's obligation to convey title
from acquiring binding force. 21 Hence, the agreement of the parties in the
case at bench may be set aside, but not because of a breach on the part of
petitioner for failure to complete payment of the purchase price. Rather,
his failure to do so brought about a situation which prevented the
obligation of respondent spouses to convey title from acquiring an
obligatory force.

Petitioner insists, however, that the contract was novated as to the manner
and time of payment.
We are not persuaded. Article 1292 of the New Civil Code states that, "In
order that an obligation may be extinguished by another which substitutes
the same, it is imperative that it be so declared in unequivocal terms, or
that the old and the new obligations be on every point incompatible with
each other."
Novation is never presumed, it must be proven as a fact either by express
stipulation of the parties or by implication derived from an irreconcilable
incompatibility between the old and the new obligation. 22Petitioner cites
the following instances as proof that the contract was novated: the
retrieval of the transformers from petitioner's custody and their sale by the
respondents to MERALCO on the condition that the proceeds thereof be
accounted for by the respondents and deducted from the price of the
contract; the take-over by the respondents of the custody and operation of
the rice mill; and the continuous and regular withdrawals by respondent
Miguel Robles of installment sums per vouchers (Exhs. "8" to "47") on the
condition that these installments be credited to petitioner's account and
deducted from the balance of the purchase price.
Contrary to petitioner's claim, records show that the parties never even
intended to novate their previous agreement. It is true that petitioner paid
respondents small sums of money amounting to P48,680.00, in
contravention of the manner of payment stipulated in their contract. These
installments were, however, objected to by respondent spouses, and
petitioner replied that these represented the interest of the principal
amount which he owed them. 23 Records further show that petitioner
agreed to the sale of MERALCO transformers by private respondents to
pay for the balance of their subsisting loan with the Bank of Philippine
Islands. Petitioner's letter of authorization reads:
xxx xxx xxx
Under this authority, it is mutually understood that whatever payment
received from MERALCO as payment to the transfromers will be
considered as partial payment of the undersigned's obligation to Mr. and
Mrs. Miguel K. Robles.
The same will be utilized as partial payment to existing loan with the Bank
of Philippine Islands.
It is also mutually understood that this payment to the Bank of Philippine
Islands will be reimbursed to Mr. and Mrs. Miguel K. Robles by the
undersigned. [Emphasis supplied] 24
It should be noted that while it was. agreed that part of the purchase price
in the sum of P496,500.00 would be directly deposited by petitioner to the

Bank of Philippine Islands to answer for the loan of respondent spouses,


petitioner only managed to deposit P393,679.60. When the bank
threatened to foreclose the properties, petitioner apparently could not
even raise the sum needed to forestall any action on the part of the bank.
Consequently, he authorized respondent spouses to sell the three (3)
transformers. However, although the parties agreed to credit the proceeds
from the sale of the transformers to petitioner's obligation, he was
supposed to reimburse the same later to respondent spouses. This can only
mean that there was never an intention on the part of either of the parties
to novate petitioner's manner of payment.
Petitioner contends that the parties verbally agreed to novate the manner
of payment when respondent spouses proposed to operate the rice mill on
the condition that they will account for its earnings. We find that this is
unsubstantiated by the evidenced on the record. The tenor of his letter
dated August 12, 1984 to respondent spouses, in fact, shows that petitioner
had a "little misunderstanding" with respondent spouses whom he was
evidently trying to appease by authorizing them to continue temporarily
with the operation of the rice mill. Clearly, while petitioner might have
wanted to novate the original agreement as to his manner of payment, the
records are bereft of evidence that respondent spouses willingly agreed to
modify their previous arrangement.
In order for novation to take place, the concurrence of the following
requisites is indispensable: (1) there must be a previous valid obligation;
(2) there must be an agreement of the parties concerned to a new contract;
(3) there must be the extinguishment of the old contract; and (4) there
must be the validity of the new contract. 25 The aforesaid requisites are not
found in the case at bench. The subsequent acts of the parties hardly
demonstrate their intent to dissolve the old obligation as a consideration
for the emergence of the new one. We repeat to the point of triteness,
novation is never presumed, there must be an express intention to novate.
As regards the improvements introduced by petitioner to the premises and
for which he claims reimbursement, we see no reason to depart from the
ruling of the trial court and the appellate court that petitioner is a builder
in bad faith. He introduced the improvements on the premises knowing
fully well that he has not paid the consideration of the contract in full and
over the vigorous objections of respondent spouses. Moreover, petitioner
introduced major improvements on the premises even while the case
against him was pending before the trial court.
The award of exemplary damages was correctly deleted by the Court of
Appeals in as much as no moral, temperate, liquidated or compensatory
damages in addition to exemplary damages were awarded.
WHEREFORE, the decision rendered by the Court of Appeals is hereby
AFFIRMED with the MODIFICATION that respondent spouses are
ordered to return to petitioner the sum of P48,680.00 in addition to the
amounts already awarded. Costs against petitioner.1wphi1.nt

SO ORDERED.
G.R. No. L-16951

February 28, 1962

ROBERTO LAPERAL, JR. and PURIFICACION M. LAPERAL, plaintiffs-appellees,


vs.
RAMON
L.
KATIGBAK,
ET
AL., defendants,
EVELINA KALAW-KATIGBAK, defendant-appellant.
William
H.
Quasha
and
Associates
Bausa, Ampil and Suarez for defendant-appellant.

for

plaintiffs-appellees.

LABRADOR, J.:
Appeal from an order of the Court of First Instance of Manila, the Hon. Magno Gatmaitan
presiding, holding that the decision rendered by this Court in G.R. No. L-4299, promulgated
January 31, 1952, dismissing the action instituted by Roberto Laperal, Jr. and Purificacion M.
Laperal against Ramon L. Katigbak and Evelina Kalaw-Katigbak, Civil Case No. 11767 of the
Court of First Instance of Manila, insofar as Evelina Kalaw-Katigbak was concerned does not
bar the present action, Civil Case No. 25235, and finally deciding this latter case, and
sentencing Evelina Kalaw-Katigbak to pay unto plaintiffs one-half of the sum of P14,000, with
legal interest and one-half of P97,500, also with legal interest.
A review of the facts and circumstances involved, as well as the proceedings had in the case at
bar and in the G.R. No. L-4299, is necessary for an understanding of the issues involved. G.R.
No. L-4299, Laperal, et al., vs. Katigbak, et al., was filed in the Court of First Instance of
Manila as Civil Case No. 11767, to collect the sum of P14,000, with interest, and another sum of
P97,500, also with interest, against the defendants spouses Ramon L. Katigbak and Evelina
Kalaw-Katigbak. The complaint alleges as causes of action that defendants are husband and
wife; that from March 1, 1950 to May 31, 1950, the husband Ramon L. Katigbak borrowed and
received various sums of money from plaintiffs amounting to P14,000; that on the same dates
defendant Ramon L. Katigbak received from plaintiffs jewelry valued at P97,500; that
notwithstanding demands made upon them they have failed to pay the same. The promissory
notes constituting the first amount of P14,000 was signed by Ramon L. Katigbak alone; he also
signed a receipt for a jewelry the value of which totals P97,500, alone. Defendant Evelina
Kalaw-Katigbak thereupon filed a motion to dismiss on the ground that since the receipts for
the amount borrowed, as well as for the jewelry received, were signed by Ramon L. Katigbak
alone and without the concurrence of his wife, the latter is not liable for the reason that she is
not bound by obligations contracted by her husband nor answerable in a suit for the
enforcement thereof. The court trying the case granted the motion to dismiss on the ground
that since the wife did not take part in the execution of the documents sued upon, she is not
responsible therefor. The above resolution of the lower court was appealed to this Court, which
on January 31, 1952, affirmed the order of dismissal of the action against Evelina KalawKatigbak. We held, as to the first cause of action that as the notes were not signed by Evelina,
the latter is personally liable, as the husband was not her agent; as to the second cause of
action, that as it is not alleged that the obligation contracted redounded to the benefit of the
family, the same rule applies, because the receipts for jewelry were not also signed by Evelina.
On February 10, 1955, plaintiffs filed another action, Civil Case No. 25235, against the same
spouses, alleging that in the previous case, No. 11767, defendant Ramon L. Katigbak confessed

judgment, as a result of which said defendant was ordered to pay P14,000, with interest, and
P97,500, also with interest until full payment. The other principal allegations of the complaint
are: that defendants were married since September 11, 1938; that they did not execute any
ante-nuptial contract before the celebration of their marriage, so that they entered the marriage
under the system of conjugal partnership; that on December 18, 1950, Evelina Kalaw-Katigbak
filed an action for judicial separation of property and separate administration by the wife; that
on September 25, 1951, the defendants submitted an agreement of facts wherein the parties to
the action agreed to dissolve the conjugal partnership; that all the proceedings and steps
leading to the dissolution of the conjugal partnership were made without notice to the creditors
of the conjugal partnership and especially the plaintiffs herein and that said agreement was
made to defraud creditors and, therefore, void; that a certain real property on Evangelista
Street, City of Manila, described under Certificate of Title No. 57626, although in the name of
Evelina Kalaw-Katigbak, is in truth and at least the fruits thereof are conjugal partnership
property, that a theatre known as Center Theatre on Quezon Boulevard, registered in the name
of Teodoro Kalaw, Jr. is Evelina Kalaw's property, the fruits of which are also conjugal
partnership property; that of the amount of the judgment plus 6% interest totalling
P141.047.50, only P20,000 has been paid, leaving a balance of P121,047.50 still unpaid.
As second cause of action it is alleged that the fruits of the conjugal partnership properties, as
well as the fruits of the paraphernal property of Evelina Kalaw-Katigbak belonged to the
conjugal partnership; that plaintiff's cause of action arose before the effectivity of the new Civil
Code and, therefore, their liability as above described is chargeable against the conjugal
partnership of Katigbak and Kalaw, including the fruits of the paraphernal property of the wife;
that demand was made by plaintiffs upon the defendant Katigbak as well as on defendant
Evelina Kalaw-Katigbak, on the fruits of the properties mentioned hereinbefore, but neither
one nor the other paid the same.
In the prayer it is demanded that the proceedings for the judicial separation of the properties of
the spouses be declared null and void or inefficacious against the plaintiffs; that Evelina KalawKatigbak be sentenced to render an accounting and turn over to plaintiffs the net fruits of the
Center Theatre, the property covered by TCT No. 57626 and all other properties, as well as the
fruits of the paraphernal properties of Evelina Kalaw-Katigbak, until the full amount of the
judgment be paid. The last prayer is that the property covered by TCT No. 57626 and
improvements thereon, be declared conjugal partnership property subject to the indebtedness
in favor of the plaintiffs.
Evelina Kalaw-Katigbak answered the complaint denying the allegations as to the existence of
conjugal partnership properties alleged in the complaint and the imputation to her that her
properties were fraudulently registered in the name of others. As special defenses, she alleged
"that as a matter of fact, the answering defendant in this case who was impleaded as one of the
defendants in Civil Case No. 11767 of the Court of First Instance of Manila was absolved from
said complaint which was dismissed insofar as it concerns her; said dismissal having been
confirmed by the Supreme Court;" that she does not have in her possession property belonging
to the conjugal partnership nor fruits thereof derived from any paraphernal property, which
may be considered as conjugal; and that the fruits of any of her own properties belonged to her,
and neither her husband nor creditors have any interest therein. As a counterclaim it is alleged
that plaintiffs have registered a notice of lis pendens in the office of the register of deeds of
Manila on TCT No. 25626, thus causing her damage to the extent of P10,000. She prays for a
dismissal of the complaint and that the plaintiffs be sentenced to pay the amount of her
counterclaim. On August 31, 1956, the Court of First Instance of Manila rendered a decision on
the issues presented by the answer of the defendants in the following language:

One of the points in debate is whether plaintiffs have the right to insist that
notwithstanding the decree of judicial separation in Civil Case No. 12860 they can
secure a pronouncement from this Court to the effect that the conjugal properties of
the spouses Ramon Katigbak and Evelina Kalaw should answer for the judgment
secured by plaintiff against Ramon Katigbak; and in that eventuality what properties
should be made to answer therefor. Defendant Evelina Kalaw contends that the
decision of the Supreme Court absolving her of liability in Civil Case No. 11767 would
be enough to bar the present action as against her; the Court does not concur; for
what was decided in that case was whether on the promissory notes signed by Ramon
Katigbak, Evelina Kalaw could be personally liable with her paraphernal properties
and the Supreme Court said that she could not; it was not there decided whether the
conjugal property, this would include the fruits of the paraphernal, could not be
liable; in fact a reading of the decision of the Supreme Court would show that
theratio decidendi there was that her husband alone was liable with his private funds
and at most the assets of the conjugal partnership, ....
The court further held that for the reason that no proof was submitted to show that the
obligations contracted by Ramon Katigbak redounded to the benefit of the family, the
obligation subject to the complaint could not be enforced upon the paraphernal properties or
the fruits thereof, although they could be enforced upon the conjugal partnership property; that
since the Civil Code has been amended and "the exemption from liability for personal
obligations of the husband is a right given to the conjugal partnership for the first time by the
amendment in the new Code, it should be operative at once, unless it should impair a right
vested under the old legislation (Art. 2253), New Civil Code. But the right of the Laperals so far
as the judgment against Ramon Katigbak is concerned is one thing and their right to proceed
against the conjugal properties of Ramon and Evelina is another, the first one was a property
right vested under the Old Code; the second was a right also under that but one that had not yet
vested before the New Code came into being. All vested rights are property but not all rights
are; the Legislature can come in and destroy rights not yet vested without impairment of due
process. Perhaps the case can be illustrated by analogy to Article 2261 of the New Civil Code;
that legislator there has decreed that exemptions from liability under Article 302 were
operative at once; and as this is a case analogous it should under Article 2269, be solved in the
same manner. The result will be a "dismissal." Hence the court dismissed the action, without
costs.
The above decision of the court was appealed to Us in G.R. No. L-11418. In this Court, the
plaintiffs Roberto Laperal, Jr. and Purificacion M. Laperal assigned the following errors: .
THE COURT BELOW ERRED IN HOLDING THAT THE OBLIGATIONS
INCURRED BY KATIGBAK DID NOT REDOUND TO THE BENEFIT OF THE
FAMILY OF KATIGBAK AND KALAW.
THE COURT BELOW ERRED IN HOLDING THAT THE OBLIGATIONS
INCURRED BY KATIGBAK CANNOT BE ENFORCED AGAINST THE FRUITS OF
THE PARAPHERNAL PROPERTY OF KALAW.
THE COURT BELOW ERRED IN NOT REQUIRING KALAW TO ACCOUNT AND
PAY TO THE LAPERALS THE NET FRUITS OF THE CENTER THEATRE
BUILDING ON QUEZON BOULEVARD, MANILA AND OF OTHER
PARAPHERNAL PROPERTY OF KALAW IN SATISFACTION OF DECISION IN
FAVOR OF THE LAPERALS. (G.R. No. L-11418, R.O.A., pp. 11-12.)

The defendants Ramon L. Katigbak and Evelina Kalaw-Katigbak did not appeal from the
decision of the lower court, evidently because the case against them was dismissed by the lower
court. In the decision rendered by Us in the appealed case, the matters considered are those
raised in the briefs of the plaintiffs-appellants. After considering those points we held: .
The question is whether or not any vested or acquired right is involved in the instant
case. The answer, in our opinion, is in the affirmative. When the Laperals granted the
loans and delivered the jewelry to Katigbak to be paid and accounted for by him, the
law then in force (Article 1408, Old Civil Code) made the conjugal partnership liable
for the obligation. In other words, in giving the loan and delivering the jewelry to
Katigbak, the Laperals, for purposes of security and assurances, presumably or
undoubtedly looked to the conjugal properties as security to answer for the
obligation, should Katigbak fail to make good his undertaking. Stated differently, the
Laperals acquired a sort of lien on said conjugal properties. ... The right of the
Laperals vested at the very moment the obligation was contracted, under the
provisions of the Old Civil Code. For this reason, the provisions of Article 161 of the
New Civil Code cannot apply, and the trial court erred in applying the same.
However, our holding does not write a finis to the case. Because the trial court held
that the conjugal partnership was not liable, it naturally saw no reason or necessity
for ruling upon the other issues involved, such as the legality of the proceedings in
Civil Case No. 12860 for the dissolution of the conjugal partnership, and whether or
not the property covered by Transfer Certificate of Title 27626 belongs to the
conjugal partnership.
In conclusion, we hold that while the fruits of the paraphernal property of Kalaw are
not liable for the enforcement of the obligation contracts by Katigbak, nevertheless,
the conjugal properties are." (G.R. No. L-11418, pp. 16-18, Decision.) .
When the case was returned to the trial court for determination of the issues of facts pointed
out by Us in our decision, the judge, after trial, rendered the judgment appealed from in this
case, which is as follows: .
With the finding that this property is paraphernal, what only remains is to apply as
plaintiffs desire, the rule inNational Bank v. Quintos, 46 Phil. 370 under that, it was
held that the spouses are subsidiarily liable with their private properties in the event
of insolvency of the conjugal assets; there is no showing why that rule should not
apply here; we should therefore apply it since the insolvency is clear; the result will
be a judgment against Evelina for one-half (1/2) of the credit already settled in the
decision. 1wph1.t
IN VIEW WHEREOF, judgment is rendered condemning Evelina Kalaw to pay unto
plaintiffs the sum of one-half (1/2) of P14,000.00 with legal interest from August 8,
1950 until fully paid, plus another one-half (1/2) of P97,500.00 also with legal
interest from August 8, 1950 until full payment. (G.R. No. L-16951, R.O.A. pp. 9596.)
Upon the appeal to Us the defendant-appellant assigned the following errors:

I
THE COURT A QUO ERRED IN CONDEMNING KALAW TO PAY ONE-HALF OF THE
CLAIMS OF THE LAPERALS, IT HAVING BEEN FINALLY AND CONCLUSIVELY DECIDED
BY THE SUPREME COURT IN DECISION 1-B (G.R. NO. L-4299, January 31, 1952), AND
DECISION III-A (G.R. No. L-11418, December 27, 1958) THAT KALAW, NOR HER
PARAPHERNAL PROPERTY OR ITS FRUITS, lS NOT LIABLE FOR KATIGBAK'S PERSONAL
OBLIGATION IN FAVOR OF THE LAPERALS.

Section 45. That only is deemed to have been adjudged in a former judgment
which appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto.
The distinction between the first rule, which is the rule of bar by former judgment, and the
second one which is the rule of conclusiveness of judgment, has been set forth by Mr. Justice
Carson in Pealosa vs. Tuason, 22 Phil. 303 thus
xxx

xxx

xxx

II
THAT THE COURT A QUO ERRED IN APPLYING TO THIS CASE THE DOCTRINE OF
NATIONAL BANK VERSUS QUINTOS, 46 PHIL. 370, THE FACTS AND THE LAW
INVOLVED IN SAID CASE BEING ABSOLUTELY DIFFERENT FROM THOSE IN THIS CASE.
III
THE COURT A QUO ERRED IN SENTENCING KALAW TO PAY ONE-HALF OF THE
LAPERALS, SAID PRONOUNCEMENT BEING NOT INCLUDED WITHIN THE DIRECTIVE
OF THE SUPREME COURT IN DECISION III-A REMANDING THE CASE TO THE LOWER
COURT FOR FURTHER PROCEEDINGS.
IV
THE LOWER COURT ERRED IN SENTENCING KALAW TO PAY ONE-HALF OF THE
CLAIMS OF THE LAPERALS FOR THE REASON THAT SAID REMEDY IS NOT SOUGHT IN
THIS ACTION NOR COVERED BY THE ALLEGATIONS OF COMPLAINT.
V
THE COURT A QUO ERRED IN DECLARING THE DECISION IN CASE II AS "NOT
EFFECTIVE" INSOFAR AS THE LAPERALS ARE CONCERNED.
VI
THE COURT A QUO ERRED IN NOT ALLOWING KALAW TO ESTABLISH THAT THE
"AGREEMENT OF FACTS" IN CASE II WAS PROMPTED, NOT BY THE DESIRE OF THE
PARTIES, BUT BY THE SUCCESSION OF THE PRESIDING JUDGE OF THE COURT. (Brief
of Defendant-Appellant, pp. 1-2.) .
It will be seen that the first error assigned is the ruling of the trial court in its first decision,
which is that the present action, which is the second one, is barred by the judgment rendered
by Us in G.R. No. L-2499, entitled Roberto Laperal, Jr. and Purificacion M. Laperal, plaintiffsappellants versus Ramon L. Katigbak and Evelina Katigbak, defendants-appellees. The legal
provision involved in this supposed error is known as the bar by former judgment or estoppel
by former judgment, as set forth in Section 44, Rule 39 of the Rules of Court. This section
should be distinguished from Section 45 of the same Rule, which is as follows: .

The subject of res judicata or estoppel by judgment as known to Anglo-American


jurisprudence is governed by two main rules uniformly recognized by the authorities,
which are very distinctly laid down and defined by Mr. Justice Field in the following
citation from his opinion in the case of Cromwell vs. Sac County (94 U.S. 351): .
In considering the operation of this judgment, it should be borne in mind, as stated
by counsel, that there is a difference between the effect of a judgment as a bar or
estoppel against the prosecution of a second action upon the same claim or demand,
and its effect as an estoppel in another action between the same parties upon a
different claim or cause of action. In the former case, the judgment, if rendered upon
the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the
claim or demand in controversy, concluding parties and those in privity with them,
not only as to every matter which was offered and received to sustain or defeat the
claim or demand, but as to any other admissible matter which might have been
offered for that purpose. Thus for example; a judgment rendered upon a promissory
note is conclusive as to the validity of the instrument and the amount due upon it,
although it be subsequently alleged that perfect defenses actually existed, of which no
proof was offered, such as forgery, want of consideration, or payment. If such
defenses were not presented in the action, and established by competent evidence,
the subsequent allegation of their existence is of no legal consequence. The judgment
is as conclusive, so far as future proceedings at law are concerned, as though the
defenses never existed. The language, therefore, which is so often used, that a
judgment estops not only as to every ground of recovery or defense actually
presented in the action, but also as to every ground which might have been
presented, is strictly accurate, when applied to the demand or claim in controversy.
Such demand or claim, having passed into judgment, cannot again be brought into
litigation between the parties in proceedings at law upon any ground whatever.
But where the second action between the same parties is upon a different claim or
demand, the judgment in the prior action operates as an estoppel only as to those
matters in issue or points controverted upon the determination of which the findings
or verdict was rendered. In all cases, therefore, where it is sought to apply the
estoppel of a judgment rendered upon one cause of action to matters arising in a suit
upon a different cause of action, the inquiry must always be as to the point or
question actually litigated and determined in the original action; not what might
have been thus litigated and determined. Only upon such matters is the judgment
conclusive in another action.
The rules thus referred to in the opinion of Mr. Justice Field may be summarily
stated as follows: .

1. A judgment rendered by a court of competent jurisdiction on the merits is a bar to


any future suit between the same parties or their privies upon the same cause of
action so long as it remains unreversed.
2. A point which was actually and directly in issue in a former suit and was there
judicially passed upon and determined by a domestic court of competent jurisdiction
cannot be again drawn in question in any future action between the same parties or
their privies, even when the causes of action in the two suits are wholly different.
These two main rules mark a sharp distinction between the principles governing the
two typical cases in which a judgment may operate as evidence. No intelligent
discussion of the subject of res judicata or of the multitude of authorities and varying
statutes touching the subject can be maintained without keeping clearly in mind the
distinction between the principles governing these two typical cases. Indeed, in
speaking of these cases the term 'bar by former judgment' is uniformly employed to
indicate the case governed by the first general rule above laid down; and the phrases
'conclusiveness of the judgment' in referring to the second. (Pealosa vs. Tuason, 22
Phil. 303, 311-313.) .
As stated in the above-quoted decision the issue depends upon the following question: Is the
claim or demand made in the second action, Civil Case No. 25235, the same as the demand
made in the original case, Civil Case No. 11767. The trial court held that the second cause of
action is a different demand or claim, because what was decided in the different case No. 11767
is whether or not Evelina Kalaw-Katigbak could be held responsible with her paraphernal
properties for the promissory notes and the other obligation signed by Ramon Katigbak. We
hold that the trial court committed error in this respect; for the original claim or demand made
upon the spouses Katigbak and Kalaw was to hold them liable for the said promissory notes
and obligation. The prayer in the complaint of the original case No. 11767 demands that a writ
of attachment issue against the properties of the defendants, or of any of them, and for any
other relief is may be legal and equitable. In this previous case, No. 11767, the claim or demand
was to make Evelina Kalaw-Katigbak liable in any capacity whatsoever, whether personally or
with her conjugal properties, or with the fruits of her paraphernal property. If Evelina KalawKatigbak was not responsible in any manner under the cause of action, there is no cause or
reason why she could still be made responsible for the supposed fruits of her paraphernal
property. As indicated in the above quoted decision of ours in the case of Pealosa vs.
Tuason, supra, the previous case No. 11767, is final not only as to Evelina Kalaw-Katigbak's
person liability for the obligations sought to be enforced, but as to the liability of the properties
of the conjugal partnership or of the fruits of Evelina Kalaw-Katigbak's paraphernal properties.
In the language of that decision, the judgment in the previous case No. 11767 "estops not only
as to every ground of recovery or defense actually presented in the action, but also as to every
ground which might have been presented." The reason for the rule is because the demand or
claim on the obligations having passed into judgment, the said claim or demand "cannot again
be brought into litigation between the parties in proceedings at law upon any ground
whatever.".
The trial court seems to have believed that the original action is limited to making Evelina
Kalaw-Katigbak person responsible for the obligations, and that the subsequent suit, which is
to make the conjugal properties or the fruits of the paraphernal property responsible, is of a
different nature. This view is incorrect. The demand or claim has always been against both
spouses, not only personally but also to make their properties or the fruits thereof responsible.
The prayer of the complaint is to make all their properties liable. An action to make a wife
personally responsible is not different from one to make the paraphernal property of the wife

subject to the same obligation. But assuming that there is some difference, section 3 of Rule 2
of the Rules of Court, prohibits multiplicity of suits, and any party is prohibited from dividing
the causes of action that he has upon the same claim or demand, or pursuing the remedies to
which he is entitled by virtue of the demand in one suit after another. The first action was to
make Evelina Kalaw-Katigbak and her properties responsible, and the second, was to make the
fruits of her paraphernal property responsible. Both actions are against Evelina KalawKatigbak on the same claim and demand. The rule prohibiting multiplicity of suits prohibits
Evelina Kalaw from being sued personally in one suit then and making the fruits of her
paraphernal property responsible subsequently in another.
It is argued on behalf of the plaintiffs-appellees that our decision in G.R. No. L-11418, to the
effect that the conjugal properties of Evelina Kalaw and her husband are responsible
In conclusion, we hold that while the fruits of the paraphernal property of Kalaw are
not liable for the enforcement of the obligation contracted by Katigbak, nevertheless,
the conjugal properties are. (Record, p. 91; emphasis ours; p. 4, Brief for PlaintiffsAppellees.)
is the ratio decidendi of the case, evidently meaning, that the question of bar by former
judgment was passed upon by Us unfavorably. It is true that the court did not consider the
question of bar by former judgment raised by defendant Kalaw in the case, but the reason why
we did not pass upon the same was because there was no occasion, no such question being
raised on appeal; Evelina Kalaw having won the suit in the court below, there was no necessity
for her to raise that question in the brief. Besides, our decision, by declaring that the conjugal
partnership of the spouses are responsible, decided the main issue raised in the appeal by the
spouses Laperals. We could not have passed upon the issue of bar by former judgment because
that was not the issue on appeal and we did not have to decide it any way, because there was no
need to do so, as the case was being returned to the lower court for determination of certain
facts arising from questions raised on the appeal, which questions refer to those raised by the
appellants Laperal in that case.
Furthermore, our decision in said case, G.R. No. L-11418, can not be considered in deciding the
question of bar by former judgment because, according to the rule of conclusiveness of
judgment, that which can be considered as decided is what was actually decided in the case, in
accordance with Section 45 of Rule 39, Rules of Court. In other words, nothing having been
stated by Us in our decision in L-11418 on the matter of bar by former judgment, said decision
can not be considered as having ruled upon said rule adversely in the appeal of Evelina Kalaw
in the present case.
In view of our resolution on the defense of bar by former judgment against the action, it is
unnecessary to consider the other questions involved in the appeal.
FOR THE FOREGOING CONSIDERATIONS the order appealed from is hereby set aside and
defendant Evelina Kalaw-Katigbak, absolved from the action. Without costs. So ordered.
G.R. No. L-8715

October 24, 1914

MARIANO
VELOSO, plaintiff-appellant,
vs.
LUCIA MARTINEZ, personally and as administratrix of the estate of Domingo
Franco, deceased-appellee.
Martin
M.
Pantaleon E. del Rosario for appellee.

Levering

for

appellant.

JOHNSON, J.:
On the 1st day of July, 1911, the plaintiff commenced an action in the Court of First Instance of
the Province of Cebu to recover of the defendant, personally and as administratrix of the estate
of Domingo Franco, deceased, the possession of a certain parcel of land particularly described
in the second paragraph of the complaint, together with the sum of P125 per month, from the
1st day of June, 1911.
The defendant presented a demurrer to said complaint, which was overruled. No exception was
taken to the ruling of the court upon the demurrer. Later the defendant answered, setting up a
general denial and a special defense. The special defense consisted
First. Of a counterclaim in the sum of P18,500, as attorney's fees for services rendered by the
deceased, Domingo Franco, to the plaintiff; and, second, for the recovery of certain jewelry, of
the value of P6,000, particularly described in the answer of the defendant, alleged to be in the
possession of the plaintiff.
The first special defense, relating to attorney's fees, was later withdrawn by the defendant. The
only questions left for litigation were: .
First. Whether the plaintiff was entitled to the recovery of the parcel of land in question; and,
second, whether the defendant was entitled to recover from the plaintiff the jewelry described
in her answer.
After hearing the evidence, the Honorable Adoph Wislizenus, judge, in a carefully prepared
opinion, found that the plaintiff was entitled to recover the possession of the land in question,
together with the sum of P100 for each month from the month of June, 1911, until the
possession of the land was returned to him.
The lower court further found that the defendant was entitled to the possession of said jewelry,
and ordered the plaintiff to return the same to her and in case of the plaintiff's failure to return
said jewelry to the defendant, then and in that case, he shall pay to the defendant, for such
failure, the sum of P6,000.
From the judgment of the lower court, each of the parties, plaintiff and defendant, appealed to
this court. Later the defendant withdrew her appeal, thereby allowing that part of the judgment
relating to the plaintiff's right to the possession of the land in question, together with damages,
to become final. The only question remaining, therefore, for this court to decide is as to the

ownership and right of possession of said jewels. It is admitted that the jewels in question,
before the possession of the same was given to the plaintiff, belonged to the defendant
personally and that she had inherited the same from her mother. The defendant, Lucia
Martinez, is the widow of Domingo Franco, and after the death of her husband she was
appointed administratrix of his estate. The record further shows (Exhibit C) that a short time
before the death of Domingo Franco he borrowed from the plaintiff the sum of P4,500 and gave
as security for the payment of said sum the jewelry described in the complaint. The money was
borrowed on the 7th day of April, 1911, under promise to repay the same, with 12 per cent
interest, on the 7th day of May, 1911. It is not clear whether or not the jewelry, at the time of the
execution of said document (Exhibit C), was in fact delivered to the plaintiff. Said exhibit states
that the jewelry was contained "dentro de una caja que queda cerrada despues de
demonstradas las alhajas a D. Mariano Veloso" (in a box which remains closed after the jewels
were shown to Mariano Veloso). The document further admits the "la llava quedara en poder
de D. Domingo Franco" (the key shall remain in possession of Domingo Franco). After the
death of Domingo Franco it appears that said jewelry was found in the same "caja" and that the
key was in the possession of the defendant. It is very doubtful, indeed, under the facts, whether
the plaintiff ever obtained the actual possession of the jewelry. His possession, however, seems
to be admitted by the defendant in the present action. So far as the record shows the jewelry
was in the same box where it was found at the time of the execution and delivery of said Exhibit
C and that the defendant still has the key to said box.
During the trial of the cause the plaintiff attempted to show that the jewels in question were
pawned to him by Domingo Franco, with the full knowledge and consent of the defendant. And
not only that, the plaintiff further attempts to show that after the death of Domingo Franco, the
defendant promised to pay the amount for which the said jewels were pawned. The defendant
positively denies that she knew that her husband had pawned her jewels or that she promised
to redeem the same by paying the amount due. No explanation is contained in the record why
the jewels were placed in said box (presumably a money safe). In view of the fact, however, that
the record shows that the jewels were the sole and separate property of the wife, acquired from
her mother, and in the absence of further proof, we must presume that they constituted a part
of her paraphernal property. As such paraphernal property she exercised dominion over the
same. (Article 1382, Civil Code.) She had the exclusive control and management of the same,
until and unless she had delivered it to her husband, before a notary public, with the intent that
the husband might administer it properly. (Article 1384, Civil Code.) There is no proof in the
record that she had ever delivered the same to her husband, in any manner, or for any purpose.
That being true, she could not be deprived of the same by any act of her husband, without her
consent, and without compliance with the provisions of the Civil Code above cited.1awphil.net
For the foregoing reasons, we find that the defendant is entitled to the possession of said
jewels, or to their value, amounting to P6,000.
The judgment of the lower court is therefore affirmed, with costs.
EN BANC
G.R. No. L-20825

December 28, 1964

AMALIA
PLATA, petitioner,
vs.
HON. NICASIO YATCO, Judge, Court of First Instance of Rizal, Branch V; BENITO

MACROHON, Sheriff of Quezon City and The Spouses CESAREA E. VILLANUEVA


and GREGORIO LEAO respondents.
Rosales
&
Montesa
Venida & Demonteverda Law Offices for respondents.

for

petitioner.

REYES J.B.L., J.:


Amalia Plata resorts to this Supreme Court for a writ of certiorari against the Court of First
Instance of Rizal, Branch V, Quezon City, to annul and set aside its order of 4 January 1963,
issued in its Civil Case No. Q-6250 (Cesarea Villanueva, et al. vs. Gaudencio Begosa) finding
petitioner Plata in contempt of court for refusing to vacate certain property, and sentencing her
to pay a fine of P100, with subsidiary imprisonment in case of insolvency, with a warning of
more drastic action should she persist in disobeying the writ issued by said court.
At petitioner's instance, a writ of preliminary injunction was issued to stay enforcement of the
order complained of, and respondents required to answer.
The pleadings and other papers on record disclose that Amalia Plata, in 1954, had purchased a
parcel of land (Lot. 23, Block 4-M, of Subdivision plan PSD-59) in Caloocan, Rizal, for which
the Provincial Register of Deeds issued Torrens Certificate of Title (Transfer) No. 25855 in the
name of Amalia Plata, single, Filipino citizen. On 13 February 1958, she sold the property to
one Celso Saldaa who obtained TCT No. 40459 therefor; but seven months afterwards, on 24
September 1958, Saldaa resold the same property to Amalia Plata, married to Gaudencio
Begosa," (Ans. Exh. 3) and a new certificate of Title No. 43520 was issued to the vendee,
Amalia Plata (Exh. 3a).
On the same date, 24 September 1958, "Amalia Plata of legal age, Filipino, married to
Gaudencio Begosa," in consideration of a loan of P3,000, mortgaged to Cesarea Villanueva
married to Gregorio Leao, the identical property and its improvements "of which the
mortgagor declares to be hers as the absolute owner thereof." The mortgage was also signed by
Gaudencio Begosa, as co-mortgagor (Exh. 4).
For failure to pay the mortgage, the same was extrajudicially foreclosed under Act 3135, and
sold on 12 April 1960 to the mortgagee as the highest bidder; on 13 May 1961, the Sheriff issued
a final deed of sale on the strength of which the Register of Deeds issued the buyer TCT, No.
55949 (Exhs. 5, 6, 7). Subsequently, the respondent, Villanueva, sued Gaudencio Begosa alone
for illegal detainer (Annex C. Petition) in Case No. Q-6250, and obtained judgment against him
in the court of first instance, that became final (Annex D, Petition). A writ of execution was duly
issued, but Amalia Plata resisted all efforts to eject her from the property, and she filed a third
party claim, averring ownership of the property (Annex E). Upon motion of the judgment
creditors, the court below cited both Begosa and Plata for contempt (Annex H), and, finding
her explanation (Annex I) unsatisfactory, found her guilty and sentenced her, as stated at the
beginning of this decision.
The issue here is whether the petitioner, Amalia Plata, is bound by the detainer judgment
against Gaudencio Begosa in Civil Case No. Q-6250. Petitioner denies it, claiming that she was
never lawfully married to Begosa, and that she had acquired the property while still single, and
was in possession thereof when the Sheriff of Rizal attempted to enforce the writ of ejectment.

Respondent Villanueva and her husband maintain, on the other hand, that Plata had
repeatedly acknowledged being married to Begosa; that she had lived with him openly as his
wife, and their marriage is presumed; that, therefore, she is to be deemed as holding under
Begosa, and is bound by the judgment against the latter.
We are constrained to uphold as meritorious the petitioner's stand. Granting that the evidence
before us against the marriage of petitioner Amalia Plata to Gaudencio Begosa is weak,
considering the admissions of married status in public documents (Answer, Exhs. 3 and 4); the
well known presumption that persons openly living together as husband and wife are legally
married to each other, and that the prior marriage of Begosa to someone else does not
necessarily exclude the possibility of a valid subsequent marriage to herein petitioner; still the
respondents Villanueva could not ignore the paraphernal character of the property in question,
which had been unquestionably acquired by Plata while still single, as shown by Transfer
Certificate of Title No. 25855 of Rizal (Art. 148 of the New Civil Code). The subsequent
conveyance thereof to Celso Saldaa, and the reconveyance of her several months afterward of
the same property, did not transform it from paraphernal to conjugal property, there being no
proof that the money paid to Saldaa came from common or conjugal funds (Civ. Code, Art
153). The deed of mortgage in favor of respondents Villanueva actually recites that the
petitioner was the owner of the tenement in question and so does the conveyance of it by
Saldaa to her (Ans., Exhs. 3 and 4).
It is true that Gaudencio Begosa signed the mortgage (Exh. 4) as a co-mortgagor; but by itself
alone that circumstance would not suffice to convert the land into conjugal property,
considering that it was paraphernal in origin. This is particularly the case where the addition of
Begosa as co-mortgagor was clearly an after thought, the text of the deed showing that Plata
was the sole mortgagor.
Since the property was paraphernal, and the creditors and purchasers were aware of it, the fact
being clearly spread on the land records, it is plain that Plata's possession, therefore, was not
derived from Gaudencio Begosa. The illegal detainer judgment against the husband alone
cannot bind nor affect the wife's possession of her paraphernal, which by law she holds and
administers independently, and which she may even encumber or alienate without his
knowledge or consent (Civ. Code, Arts. 136. 137, 140). Hence, as she was not made party
defendant in the eviction suit, the petitioner-wife could validly ignore the judgment of eviction
against her husband, and it was no contempt of court for her to do so, because the writ of
execution was not lawful against her (Chanco vs. Madrilejos, 9 Phil. 356; A. Jose Realty vs.
Galao, et al., 76 Phil. 201; Segarro vs. Maronilla, L-14428, July 26, 1960; Weigall vs. Shuster, 11
Phil. 340).
We need not decide here whether the property was validly conveyed to respondents Villanueva,
since that issue is the subject of an independent proceeding in the Court of First Instance of
Quezon City, Civil. Case No. Q6510 (Petition, Annex F).
The writ of certiorari prayed for is granted, and the order of the lower court, dated 4 January
1963, is annulled and set aside. The preliminary injunction is made permanent, with costs
against private respondents Villanueva.

[G.R. No. 154645. July 13, 2004]

MILAGROS JOAQUINO a.k.a. MILAGROS J. REYES, petitioner, vs. LOURDES


REYES, MERCEDES, MANUEL, MIRIAM and RODOLFO JR. -- all
surnamed REYES, respondents.
DECISION
PANGANIBAN, J.:
Though registered in the paramours name, property acquired with the salaries and
earnings of a husband belongs to his conjugal partnership with the legal spouse.The filiation of
the paramours children must be settled in a probate or special proceeding instituted for the
purpose, not in an action for recovery of property.
The Case
Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to
nullify the February 4, 2002 Decision[2] and the August 14, 2002 Resolution[3] of the Court of
Appeals (CA) in CA-GR CV No. 45883. The CA disposed as follows:
WHEREFORE, premises considered, the appeal is hereby partially DENIED and
the Decision dated May 30, 1994, of the Regional Trial Court of Pasay City, Branch 111 in
Civil Case No. 9722-P is MODIFIED to read, as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant as
follows:
a. Declaring the house and lot registered under Transfer Certificate of Title No. 90293 (26627A) of the Registry of Deeds of Metro Manila, District IV as conjugal partnership property of the
late Spouses Rodolfo and Lourdes Reyes;
b. Ordering the [petitioner] to surrender possession of said subject property, pursuant to the
applicable law on succession, to the respective estates of the late Rodolfo Reyes and Lourdes
Reyes and to pay a reasonable rental of P10,000.00 a month, to the same juridical entities,
upon their failure to do so until possession of the property is delivered; and
c. To pay [respondents] attorneys fees in the sum of P20,000.00 and to pay the costs.[4]
The questioned Resolution, on the other hand, denied petitioners Motion for
Reconsideration.
The Facts
The CA narrated the facts as follows:
[Respondents] filed a Complaint for reconveyance and damages, dated January 23, 1982,
before the Court of First Instance of Rizal, containing the following allegations:

x x x The complaint alleges that [respondent] Lourdes P. Reyes is the widow of Rodolfo A.
Reyes who died on September 12, 1981; that [respondents] Mercedes, Manuel, Miriam and
Rodolfo, Jr. are the legitimate children of [respondent] Lourdes P. Reyes and the deceased
Rodolfo A. Reyes; that for years before his death, Rodolfo A. Reyes had illicit relations with
[petitioner] Milagros B. Joaquino; that before his death, x x x Rodolfo A. Reyes was Vice
President and Comptroller of Warner Barnes and Company with an income of P15,000.00 a
month and, after retirement on September 30, 1980, received from said company benefits and
emoluments in the amount of P315,0[1]1.79; that [respondent] wife was not the recipient of any
portion of the said amount.
The complaint further alleges that on July 12, 1979, a [D]eed of [S]ale of a property consisting
of a house and lot at BF Homes, Paraaque, Metro Manila was executed by the spouses Ramiro
Golez and Corazon Golez in favor of [petitioner] Milagros B. Joaquino for which Transfer
Certificate of Title No. 90293 of the Register of Deeds of Metro Manila, District IV was issued
in the name of [petitioner] Milagros B. Joaquino; that the funds used to purchase this property
were conjugal funds and earnings of the deceased Rodolfo A. Reyes as executive of Warner
Barnes and Company as [petitioner] Joaquino was without the means to pay for the same; that
[petitioner] executed a Special Power of Attorney in favor of Rodolfo A. Reyes to mortgage the
property to Commonwealth Insurance Corporation in order to pay the balance of the purchase
price; that said Rodolfo A. Reyes executed a mortgage in favor of Commonwealth Insurance
Corporation for P140,000.00 and to guaranty payment thereof, he secured a life insurance
[policy] with Philam Life Insurance Corporation for the said amount, assigning the proceeds
thereof to Commonwealth Insurance Corporation; that the monthly amortizations of the
mortgage were paid by said Rodolfo A. Reyes before his death and at the time of his death, the
outstanding balance of P110,000.00 was to be paid out of his Philam Life Insurance [p]olicy.
The complaint finally alleges that the deceased had two cars in [petitioners] possession and
that the real and personal properties in [petitioners] possession are conjugal partnership
propert[ies] of the spouses Lourdes P. Reyes and Rodolfo A. Reyes and one-half belongs
exclusively to [respondent] Lourdes P. Reyes and the other half to the estate of Rodolfo A.
Reyes to be apportioned among the [other respondents] as his forced heirs. [Respondents]
therefore, pray that the property covered by T.C.T. No. 90293 be declared conjugal property of
the spouses Lourdes P. Reyes and Rodolfo A. Reyes and that [petitioner] be ordered to
reconvey the property in [respondents] favor; that the two cars in [petitioners] possession be
delivered to [respondents] and that [petitioner] be made to pay actual, compensatory and
moral damages to [respondents] as well as attorneys fees.
xxxxxxxxx
[Petitioner] eventually filed her Answer, dated August 1, 1982, the allegations of which have
been summarized by the trial court in the following manner:
In her Answer, [petitioner] Milagros B. Joaquino alleges that she purchased the real property
in question with her own exclusive funds and it was only for convenience that the late Rodolfo
Reyes facilitated the mortgage over the same; that although the late Rodolfo Reyes paid the
monthly amortization of the mortgage as attorney-in-fact of [petitioner], the money came
exclusively from [her].
[Petitioner] further alleges in her answer, by way of special and affirmative defenses, that
during all the nineteen (19) years that [she] lived with Rodolfo Reyes from 1962 continuously
up to September 12, 1981 when the latter died, [petitioner] never had knowledge whatsoever

that he was married to someone else, much less to [respondent] Lourdes P. Reyes; that
[petitioner] was never the beneficiary of the emoluments or other pecuniary benefits of the late
Rodolfo Reyes during his lifetime or after his death because [she] had the financial capacity to
support herself and her children begotten with the late Rodolfo Reyes. [Petitioner] prays for a
judgment dismissing [respondents] complaint and for the latter to pay unto [petitioner] moral
and exemplary damages in such amounts as may be determined during the trial, including
atto[r]neys fees and the costs of the suit. x x x.
xxxxxxxxx
On February 2, 1993, [respondent] Lourdes Reyes died.
Subsequently, the trial court granted the complaint based on the following factual findings:
Lourdes Reyes was legally married to Rodolfo Reyes on January 3, 1947 in Manila. They have
four children, namely: Mercedes, Manuel, Miriam and Rodolfo Jr., all surnamed Reyes and co[respondents] in this case. Rodolfo Reyes died on September 12, 1981. At the time of his death,
Rodolfo Reyes was living with his common-law wife, Milagros Joaquino, x x x with whom she
begot three (3) children namely: Jose Romillo, Imelda May and Charina, all surnamed Reyes.

Ruling of the Court of Appeals


Affirming the RTC, the CA held that the property had been paid out of the conjugal funds
of Rodolfo and Lourdes because the monthly amortizations for the loan, as well as the
premiums for the life insurance policy that paid for the balance thereof, came from his salaries
and earnings. Like the trial court, it found no sufficient proof that petitioner was financially
capable of buying the disputed property, or that she had actually contributed her own exclusive
funds to pay for it. Hence, it ordered her to surrender possession of the property to the
respective estates of the spouses.
The appellate court, however, held that the trial court should not have resolved the issue
of the filiation and the successional rights of petitioners children. Such issues, it said, were not
properly cognizable in an ordinary civil action for reconveyance and damages and were better
ventilated in a probate or special proceeding instituted for the purpose.
Hence, this Petition.[6]
Issues
Petitioner submits the following issues for the Courts consideration:

During his lifetime, Rodolfo Reyes worked with Marsman and Company and later transferred
to Warner Barnes & Co., where he assumed the position of Vice-President [Comptroller] until
he retired on September 30, 1980. His monthly salary at Warner Barnes & Co. was P15,000.00
x x x and upon his separation or retirement from said company, Rodolfo Reyes received a lump
sum of P315,011.79 in full payment and settlement of his separation and retirement benefits.
During the common-law relationship of Rodolfo Reyes and [petitioner] Milagros Joaquino and
while living together, they decided to buy the house and lot situated at No. 12 Baghdad Street,
Phase 3, BF Homes, Paraaque, Metro Manila. A Deed of Absolute Sale dated July 12, 1979 was
executed in favor of [petitioner] Milagros Joaquino and Transfer Certificate of Title No. S90293 covering the said property was issued in the name of [petitioner only] on July 20, 1979.
To secure the finances with which to pay the purchase price of the property in the amount
of P140,000.00, [petitioner] executed on July 20, 1979, a Special Power of Attorney in favor of
Rodolfo A. Reyes for the latter, as attorney-in-fact, to secure a loan from the Commonwealth
Insurance Company. An application for mortgage loan was filed by Rodolfo Reyes with the
Commonwealth Insurance Company and a Real Estate Mortgage Contract was executed as
collateral to the mortgage loan. The loan was payable in ten (10) years with a monthly
amortization of P1,166.67. The monthly amortizations were paid by Rodolfo Reyes and after his
death, the balance of P109,797.64 was paid in full to the Commonwealth Insurance by the
Philam Life Insurance Co. as insurer of the deceased Rodolfo A. Reyes. [5]
On appeal to the CA, petitioner questioned the following findings of the trial court: 1)
that the house and lot had been paid in full from the proceeds of the loan that Rodolfo Reyes
obtained from the Commonwealth Insurance Company; 2) that his salaries and earnings,
which were his and Lourdes conjugal funds, paid for the loan and, hence, the disputed property
was conjugal; and 3) that petitioners illegitimate children, not having been recognized or
acknowledged by him in any of the ways provided by law, acquired no successional rights to his
estate.

I.
Whether or not it has been indubitably established in a court of law and trier of facts, the
Regional Trial Court, that petitioners three [3] illegitimate children are x x x indeed the
children of the late Rodolfo Reyes.
II.
Whether or not it is legally permissible for [respondents] to make a mockery of the law by
denying [the] filiations of their [two] 2 illegitimate sisters and one [1] illegitimate brother when
in fact the very complaint filed by their mother, the lawful wife, Lourdes[,] shows that her
husband Rodolfo had illicit relations with the petitioner Milagros and had lived with her in a
house and lot at Baghdad Street.
III.
Whether or not the fact that the Court of Appeals made a finding that the house and lot at
Baghdad Street are conjugal property of lawfully wedded Rodolfo and Lourdes including the
insurance proceeds which was used to pay the final bill for the house and lot, this will prevail
over Articles 19 and 21 of the Civil Code.
IV.
Whether or not the Supreme Court should enforce the rule that the parties to a lawsuit should
only tell the truth at the trial and in [their] pleadings x x x.

V.
Whether or not the legitimate children of the late Rodolfo Reyes should respect their fathers
desire that his illegitimate children should have a home or a roof over their heads in
consonance with his duty to love, care and provide for his children even after his death. [7]
The issues boil down to the following: 1) the nature of the house and lot on Baghdad
Street (BF Homes Paraaque, Metro Manila); and 2) the propriety of ruling on the filiation and
the successional rights of petitioners children.

The law places the burden of proof [13] on the plaintiffs (respondents herein) to establish
their claim by a preponderance of evidence [14] -- evidence that has greater weight or is more
convincing than that which is offered to oppose it. [15]
On the other hand, Article 144[16] of the Civil Code mandates a co-ownership between a
man and a woman who are living together but are not legally married.Prevailing jurisprudence
holds, though, that for Article 144 to apply, the couple must not be incapacitated to contract
marriage.[17] It has been held that the Article is inapplicable to common-law relations
amounting to adultery or concubinage, as in this case. The reason therefor is the absurdity of
creating a co-ownership in cases in which there exists a prior conjugal partnership between the
man and his lawful wife.[18]

The Courts Ruling


The Petition is devoid of merit.
First Issue:
The Conjugal Nature of the Disputed Property
Before tackling the merits, we must first point out some undisputed facts and guiding
principles.
As to the facts, it is undisputed that the deceased Rodolfo Reyes was legally married to
Respondent Lourdes Reyes on January 3, 1947.[8] It is also admitted that for 19 years or so, and
while their marriage was subsisting, he was actually living with petitioner. It was during this
time, in 1979, that the disputed house and lot was purchased and registered in petitioners
name.

In default of Article 144 of the Civil Code, Article 148 of the Family Code has been
applied.[19] The latter Article provides:
Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties
acquired by both of the parties through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their respective contributions. In
the absence of proof to the contrary, their contributions and corresponding shares are
presumed to be equal. The same rule and presumption shall apply to joint deposits of money
and evidence of credit.
If one of the parties is validly married to another, his or her share in the co-ownership shall
accrue to the absolute community or conjugal partnership existing in such valid marriage. If
the party which acted in bad faith is not validly married to another, his or her share shall be
forfeited in the manner provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

Plainly, therefore, the applicable law is the Civil Code of the Philippines. Under Article
145 thereof, a conjugal partnership of gains (CPG) is created upon marriage [9]and lasts until the
legal union is dissolved by death, annulment, legal separation or judicial separation of
property.[10] Conjugal properties are by law owned in common by the husband and wife. [11] As to
what constitutes such properties are laid out in Article 153 of the Code, which we quote:

Thus, when a common-law couple have a legal impediment to marriage, only the
property acquired by them -- through their actual joint contribution of money, property or
industry -- shall be owned by them in common and in proportion to their respective
contributions.

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

issue.

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

The present controversy hinges on the source of the funds paid for the house and lot in
question. Upon the resolution of this issue depends the determination of whether the property
is conjugal (owned by Rodolfo and Lourdes) or exclusive (owned by Milagros) or co-owned by
Rodolfo and Milagros.

(3) The fruits, rents or interests received or due during the marriage, coming from the common
property or from the exclusive property of each spouse.
Moreover, under Article 160 of the Code, all properties of the marriage, unless proven to
pertain to the husband or the wife exclusively, are presumed to belong to the CPG. For the
rebuttable presumption to arise, however, the properties must first be proven to have been
acquired during the existence of the marriage.[12]

With these facts and principles firmly settled, we now proceed to the merits of the first

The above issue, which is clearly factual, has been passed upon by both the trial and the
appellate courts, with similar results in favor of respondents. Such finding is generally
conclusive; it is not the function of this Court to review questions of fact. [20]

Moreover, it is well-settled that only errors of law and not of facts are reviewable by this
Court in cases brought to it from the Court of Appeals or under Rule 45 of the Rules of Court.
[21]
This principle applies with greater force herein, because the CA came up with the same
factual findings as those of the RTC.

Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the
spouses during the marriage shall be void, except moderate gifts which the spouses may give
each other on the occasion of any family rejoicing. The prohibition shall also apply to persons
living together as husband and wife without a valid marriage. (Italics supplied)

Even then, heeding petitioners plea, we have gone through the pleadings and the
evidence presented by the parties to find out if there is any circumstance that might warrant a
reversal of the factual findings. Unfortunately for petitioner, we have found none.

Regarding the registration of the property in petitioners name, it is enough to stress that
a certificate of title under the Torrens system aims to protect dominion; it cannot be used as an
instrument for the deprivation of ownership. [37] It has been held that property is conjugal if
acquired in a common-law relationship during the subsistence of a preexisting legal marriage,
even if it is titled in the name of the common-law wife. [38] In this case, a constructive trust is
deemed created under Article 1456 of the Civil Code, which we quote:

Indeed, a preponderance of evidence has duly established that the disputed house and lot
was paid by Rodolfo Reyes, using his salaries and earnings. By substantial evidence,
respondents showed the following facts: 1) that Rodolfo was gainfully employed as comptroller
at Warner, Barnes and Co., Inc. until his retirement on September 30, 1980, upon which he
received a sizeable retirement package;[22] 2) that at exactly the same time the property was
allegedly purchased,[23] he applied for a mortgage loan[24] -- intended for housing[25] -- from the
Commonwealth Insurance Company; 3) that he secured the loan with a real estate
mortgage[26] over the same property; 4) that he paid the monthly amortizations for the
loan[27] as well as the semi-annual premiums [28] for a Philam Life insurance policy, which he was
required to take as additional security; and 5) that with the proceeds of his life insurance
policy, the balance of the loan was paid to Commonwealth by Philam Life Insurance Company.
[29]

All told, respondents have shown that the property was bought during the marriage of
Rodolfo and Lourdes, a fact that gives rise to the presumption that it is conjugal. More
important, they have established that the proceeds of the loan obtained by Rodolfo were used
to pay for the property; and that the loan was, in turn, paid from his salaries and earnings,
which were conjugal funds under the Civil Code.
In contrast, petitioner has failed to substantiate either of her claims -- that she was
financially capable of buying the house and lot, or that she actually contributed to the payments
therefor.
Indeed, it does not appear that she was gainfully employed at any time after 1961 [30] when
the property was purchased. Hearsay are the Affidavits[31] and the undated Certification[32] she
had presented to prove that she borrowed money from her siblings and had earnings from a
jewelry business. Respondents had not been given any opportunity to cross-examine the
affiants, who had not testified on these matters. Based on the rules of evidence, the Affidavits
and the Certification have to be rejected. In fact, they have no probative value. [33] The CA was
also correct in disregarding petitioners allegation that part of the purchase money had come
from the sale of a drugstore[34] four years earlier.
Under the circumstances, therefore, the purchase and the subsequent registration of the
realty in petitioners name was tantamount to a donation by Rodolfo to Milagros. By express
provision of Article 739(1) of the Civil Code, such donation was void, because it was made
between persons who were guilty of adultery or concubinage at the time of the donation.
The prohibition against donations between spouses [35] must likewise apply to donations
between persons living together in illicit relations; otherwise, the latter would be better situated
than the former.[36] Article 87 of the Family Code now expressly provides thus:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force
of law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.
The registration of the property in petitioners name was clearly designed to deprive
Rodolfos legal spouse and compulsory heirs of ownership. By operation of law, petitioner is
deemed to hold the property in trust for them. Therefore, she cannot rely on the registration in
repudiation of the trust, for this case is a well-known exception to the principle of
conclusiveness of a certificate of title.[39]
Second Issue:
Ruling on Illegitimate Filiation
Not Proper
It is petitioners alternative submission that her children are entitled to a share in the
disputed property, because they were voluntarily acknowledged by Rodolfo as his
children. Claiming that the issue of her childrens illegitimate filiation was duly established in
the trial court, she faults the CA for ruling that the issue was improper in the instant case.
Her position is untenable.
Indeed, it has been ruled that matters relating to the rights of filiation and heirship must
be ventilated in the proper probate court in a special proceeding instituted precisely for the
purpose of determining such rights.[40] Sustaining the appellate court in Agapay v. Palang,
[41]
this Court held that the status of an illegitimate child who claimed to be an heir to a
decedents estate could not be adjudicated in an ordinary civil action which, as in this case, was
for the recovery of property.
Considerations of due process should have likewise deterred the RTC from ruling on the
status of petitioners children. It is evident from the pleadings of the parties that this issue was
not presented in either the original [42] or the Supplemental Complaint [43] for reconveyance of
property and damages; that it was not pleaded and specifically prayed for by petitioner in her
Answers[44] thereto; and that it was not traversed by respondents Reply to the Supplemental
Complaint.[45] Neither did petitioners Memorandum,[46] which was submitted to the trial court,

raise and discuss this issue. In view thereof, the illegitimate filiation of her children could not
have been duly established by the proceedings as required by Article 887 of the Civil Code. [47]

to show that respondents -- in violation of the provisions of Article 21 of the Civil Code -- had
acted in a manner contrary to morals, good customs or public policy.

In view of the foregoing reasons, the CA cannot be faulted for tackling the propriety of
the RTCs ruling on the status of the children of petitioner, though she did not assign this
matter as an error. The general rule -- that only errors assigned may be passed upon by an
appellate court admits of exceptions. Even unassigned errors may be taken up by such court if
the consideration of those errors would be necessary for arriving at a just decision or for
serving the interest of justice.[48]

Moreover, we note that the issue concerning the applicability of Articles 19 and 21 was
not raised by petitioner in the trial court or even in the CA. Hence, she should not be permitted
to raise it now. Basic is the rule that parties may not bring up on appeal issues that have not
been raised on trial.[52]

The invocation by petitioner of Articles 19 [49] and 21[50] of the Civil Code is also
unmeritorious. Clearly, the illegitimate filiation of her children was not the subject of inquiry
and was in fact not duly established in this case. Thus, she could not have shown that
respondents had acted in bad faith or with intent to prejudice her children.These are conditions
necessary to show that an act constitutes an abuse of rights under Article 19. [51] She also failed

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and
Resolution of the Court of Appeals AFFIRMED. Costs against petitioner.
SO ORDERED.