Persons 3rd Exam - Nobleza To Muller

Persons & Family Relations 3rd Exam | 1
G.R. No. 193038, March 11, 2015
JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B. NUEGA, Respondent.
DECISION
VILLARAMA, JR., J.:
At bar is a petition for review on certiorari of the Decision1 dated May 14, 2010 and the Resolution2 dated July
21, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 70235, which affirmed with modification the assailed
Decision3 dated February 14, 2001 of the Regional Trial Court (RTC) of Marikina City, Branch 273, in Civil Case No.
96-274-MK.
The following facts are found by the trial court and affirmed by the appellate court:
Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on September 1, 1990.4
Sometime in 1988 when the parties were still engaged, Shirley was working as a domestic helper in Israel. Upon
the request of Rogelio, Shirley sent him money5 for the purchase of a residential lot in Marikina where they had
planned to eventually build their home. Rogelio was then also working abroad as a seaman. The following year,
or on September 13, 1989, Rogelio purchased the subject house and lot for One Hundred Two Thousand Pesos
(P102,000.00)6 from Rodeanna Realty Corporation. The subject property has an aggregate area of one hundred
eleven square meters (111 sq. m.) covered by Transfer Certificate of Title (TCT) No. N-133844.7 Shirley claims
that upon her arrival in the Philippines sometime in 1989, she settled the balance for the equity over the subject
property with the developer through SSS8 financing. She likewise paid for the succeeding monthly amortizations.
On October 19, 1989, TCT No. 1719639 over the subject property was issued by the Registry of Deeds of
Marikina, Rizal solely under the name of Rogelio.
On September 1, 1990, Shirley and Rogelio got married and lived in the subject property. The following year,
Shirley returned to Israel for work. While overseas, she received information that Rogelio had brought home
another woman, Monica Escobar, into the family home. She also learned, and was able to confirm upon her
return to the Philippines in May 1992, that Rogelio had been introducing Escobar as his wife.
In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the Provincial Prosecution
Office of Rizal, and another for Legal Separation and Liquidation of Property before the RTC of Pasig City. Shirley
later withdrew the complaint for legal separation and liquidation of property, but re-filed10 the same on January
29, 1993. In between the filing of these cases, Shirley learned that Rogelio had the intention of selling the subject
property. Shirley then advised the interested buyers - one of whom was their neighbor and petitioner Josefina V.
Nobleza (petitioner) - of the existence of the cases that she had filed against Rogelio and cautioned them against
buying the subject property until the cases are closed and terminated. Nonetheless, under a Deed of Absolute
Sale11 dated December 29, 1992, Rogelio sold the subject property to petitioner without Shirley's consent in the
amount of Three Hundred Eighty Thousand Pesos (P380,000.00), including petitioner's undertaking to assume
the existing mortgage on the property with the National Home Mortgage Finance Corporation and to pay the
real property taxes due thereon.
Meanwhile, in a Decision12 dated May 16, 1994, the RTC of Pasig City, Branch 70, granted the petition for legal
separation and ordered the dissolution and liquidation of the regime of absolute community of property
between Shirley and Rogelio, viz.:chanroblesvirtuallawlibrary
WHEREFORE, in view of the foregoing, the Court hereby grants the instant petition for legal separation between
the subject spouses with all its legal effects as provided for in Art. 63 of the Family Code. Their community
property is consequently dissolved and must be liquidated in accordance with Art. 102 of the New Family Code.
The respondent is thus hereby enjoined from selling, encumbering or in any way disposing or alienating any of
their community property including the subject house and lot before the required liquidation. Moreover, he,
being the guilty spouse, must forfeit the net profits of the community property in favor of the petitioner who is
the innocent spouse pursuant to Art. 43 of the aforesaid law. Finally, in the light of the claim of ownership by the
present occupants who have not been impleaded in the instant case, a separate action must be instituted by the
petitioner against the alleged buyer or buyers thereof to determine their respective rights thereon.
Let a copy of this decision be furnished the Local Civil Registrar of Manila, the Register of Deeds of Marikina,
Metro Manila and the National Statistics Office (NSO), sta. Mesa, Manila.
SO ORDERED.13cralawlawlibrary
Rogelio appealed the above-quoted ruling before the CA which denied due course and dismissed the petition. It
became final and executory and a writ of execution was issued in August 1995.14
On August 27, 1996, Shirley instituted a Complaint15 for Rescission of Sale and Recoveiy of Property against
petitioner and Rogelio before the RTC of Marikina City, Branch 273. After trial on the merits, the trial court
rendered its decision on February 14, 2001, viz.:chanroblesvirtuallawlibrary
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of plaintiff Shirley Nuega and
against defendant Josefina Nobleza, as follows:
1)
the Deed of Absolute Sale dated December 29, 1992 insofar as the 55.05 square meters representing the one
half (1/2) portion of plaintiff Shirley Nuega is concerned, is hereby ordered rescinded, the same being null and
void;
2)
defendant Josefina Nobleza is ordered to reconvey said 55.05 square meters to plaintiff Shirley Nuega, or in the
alternative to pay plaintiff Shirley Nuega the present market value of said 55.05 square meters; and
3)
to pay plaintiff Shirley Nuega attorney's fees in the sum of Twenty Thousand Pesos (P20,000.00).
For lack of merit, defendant's counterclaim is hereby DENIED.
SO ORDERED.16
Petitioner sought recourse with the CA, while Rogelio did not appeal the ruling of the trial court. In its assailed
Decision promulgated on May 14, 2010, the appellate court affirmed with modification the trial court's ruling,
viz.:chanroblesvirtuallawlibrary
WHEREFORE, subject to the foregoing disquisition, the appeal is DENIED. The Decision dated 14 February 2001 of
the Regional Trial Court of Marikina City, Branch 273 in Civil Case No. 96-274-MK is AFFIRMED with
MODIFICATION in that the Deed of Absolute Sale dated 29 December 1992 is hereby declared null and void in its
entirety, and defendant-appellant Josefina V. Nobleza is ordered to reconvey the entire subject property to
plaintiff-appellee Shirley B. Nuega and defendant Rogelio Nuega, without prejudice to said defendant-appellant's
right to recover from defendant Rogelio whatever amount she paid for the subject property. Costs against
defendant-appellant Nobleza.
SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration. In a Resolution dated July 21, 2010, the appellate court denied the motion
for lack of merit. Hence, this petition raising the following assignment of errors:chanroblesvirtuallawlibrary
[I.]
THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT
BY SUSTAINING THE FINDING THAT PETITIONER WAS NOT A PURCHASER IN GOOD FAITH.
[II.]
THE HONORABLE COURT OF APPEALS ERRED WHEN IT MODIFIED THE DECISION OF THE REGIONAL TRIAL COURT
BY DECLARING AS NULL AND VOID THE DEED OF ABSOLUTE SALE DATED 29 DECEMBER 1992 IN ITS ENTIRETY.18
We deny the petition.
Petitioner is not a buyer in good faith.
An innocent purchaser for value is one who buys the property of another, without notice that some other person
has a right or interest in the property, for which a full and fair price is paid by the buyer at the time of the
purchase or before receipt of any notice of claims or interest of some other person in the property.19 It is the
party who claims to be an innocent purchaser for value who has the burden of proving such assertion, and it is
not enough to invoke the ordinary presumption of good faith.20 To successfully invoke and be considered as a
buyer in good faith, the presumption is that first and foremost, the "buyer in good faith" must have shown
prudence and due diligence in the exercise of his/her rights. It presupposes that the buyer did everything that an
ordinary person would do for the protection and defense of his/her rights and interests against prejudicial or
injurious concerns when placed in such a situation. The prudence required of a buyer in good faith is "not that of
a person with training in law, but rather that of an average man who 'weighs facts and circumstances without
resorting to the calibration of our technical rules of evidence of which his knowledge is nil.'"21 A buyer in good
faith does his homework and verifies that the particulars are in order such as the title, the parties, the mode of
transfer and the provisions in the deed/contract of sale, to name a few. To be more specific, such prudence can
be shown by making an ocular inspection of the property, checking the title/ownership with the proper Register
of Deeds alongside the payment of taxes therefor, or inquiring into the minutiae such as the parameters or lot
area, the type of ownership, and the capacity of the seller to dispose of the property, which capacity necessarily
includes an inquiry into the civil status of the seller to ensure that if married, marital consent is secured when
necessary. In fine, for a purchaser of a property in the possession of another to be in good faith, he must exercise
due diligence, conduct an investigation, and weigh the surrounding facts and circumstances like what any
prudent man in a similar situation would do.22
In the case at bar, petitioner claims that she is a buyer in good faith of the subject property which is titled under
the name of the seller Rogelio A. Nuega alone as evidenced by TCT No. 171963 and Tax Declaration Nos. D-012-
04723 and D-012-04724.23 Petitioner argues, among others, that since she has examined the TCT over the
subject property and found the property to have been registered under the name of seller Rogelio alone, she is
an innocent purchaser for value and "she is not required to go beyond the face of the title in verifying the status
of the subject property at the time of the consummation of the sale and at the date of the sale."24
We disagree with petitioner.
A buyer cannot claim to be an innocent purchaser for value by merely relying on the TCT of the seller while
ignoring all the other surrounding circumstances relevant to the sale.
In the case of Spouses Raymundo v. Spouses Bandong,25 petitioners therein - as does petitioner herein - were
also harping that due to the indefeasibility of a Torrens title, there was nothing in the TCT of the property in
litigation that should have aroused the buyer's suspicion as to put her on guard that there was a defect in the
title of therein seller. The Court held in the Spouses Raymundo case that the buyer therein could not hide behind
the cloak of being an innocent purchaser for value by merely relying on the TCT which showed that the
registered owner of the land purchased is the seller. The Court ruled in this case that the buyer was not an
innocent purchaser for value due to the following attendant circumstances, viz.:chanroblesvirtuallawlibrary
In the present case, we are not convinced by the petitioners' incessant assertion that Jocelyn is an innocent
purchaser for value. To begin with, she is a grandniece of Eulalia and resides in the same locality where the latter
lives and conducts her principal business. It is therefore impossible for her not to acquire knowledge of her grand
aunt's business practice of requiring her biyaheros to surrender the titles to their properties and to sign the
corresponding deeds of sale over said properties in her favor, as security. This alone should have put Jocelyn on
guard for any possible abuses that Eulalia may commit with the titles and the deeds of sale in her
possession.26cralawlawlibrary
Similarly, in the case of Arrofo v. Quiño,27 the Court held that while "the law does not require a person dealing
with registered land to inquire further than what the Torrens Title on its face indicates," the rule is not
absolute.28 Thus, finding that the buyer therein failed to take the necessary precaution required of a prudent
man, the Court held that Arrofo was not an innocent purchaser for value, viz.:chanroblesvirtuallawlibrary
In the present case, the records show that Arrofo failed to act as a prudent buyer. True, she asked her daughter
to verify from the Register of Deeds if the title to the Property is free from encumbrances. However, Arrofo
admitted that the Property is within the neighborhood and that she conducted an ocular inspection of the
Property. She saw the house constructed on the Property. Yet, Arrofo did not even bother to inquire about the
occupants of the house. Arrofo also admitted that at the time of the sale, Myrna was occupying a room in her
house as her lessee. The fact that Myrna was renting a room from Arrofo yet selling a land with a house should
have put Arrofo on her guard. She knew that Myrna was not occupying the house. Hence, someone else must
have been occupying the house.
Thus, Arrofo should have inquired who occupied the house, and if a lessee, who received the rentals from such
lessee. Such inquiry would have led Arrofo to discover that the lessee was paying rentals to Quino, not to Renato
and Myrna, who claimed to own the Property.29cralawlawlibrary
An analogous situation obtains in the case at bar.
The TCT of the subject property states that its sole owner is the seller Rogelio himself who was therein also
described as "single". However, as in the cases of Spouses Raymundo and Arrofo, there are circumstances critical
to the case at bar which convince us to affirm the ruling of both the appellate and lower courts that herein
petitioner is not a buyer in good faith.
First, petitioner's sister Hilda Bautista, at the time of the sale, was residing near Rogelio and Shirley's house - the
subject property - in Ladislao Diwa Village, Marikina City. Had petitioner been more prudent as a buyer, she could
have easily checked if Rogelio had the capacity to dispose of the subject property. Had petitioner been more
vigilant, she could have inquired with such facility - considering that her sister lived in the same Ladislao Diwa
Village where the property is located - if there was any person other than Rogelio who had any right or interest
in the subject property.
To be sure, respondent even testified that she had warned their neighbors at Ladislao Diwa Village - including
petitioner's sister - not to engage in any deal with Rogelio relative to the purchase of the subject property
because of the cases she had filed against Rogelio. Petitioner denies that respondent had given such warning to
her neighbors, which includes her sister, therefore arguing that such warning could not be construed as "notice"
on her part that there is a person other than the seller himself who has any right or interest in the subject
property. Nonetheless, despite petitioner's adamant denial, both courts a quo gave probative value to the
testimony of respondent, and the instant petition failed to present any convincing evidence for this Court to
reverse such factual finding. To be sure, it is not within our province to second-guess the courts a quo, and the
re-determination of this factual issue is beyond the reach of a petition for review on certiorari where only
questions of law may be reviewed.30
Second, issues surrounding the execution of the Deed of Absolute Sale also pose question on the claim of
petitioner that she is a buyer in good faith. As correctly observed by both courts a quo, the Deed of Absolute Sale
was executed and dated on December 29, 1992. However, the Community Tax Certificates of the witnesses
therein were dated January 2 and 20, 1993.31 While this irregularity is not a direct proof of the intent of the
parties to the sale to make it appear that the Deed of Absolute Sale was executed on December 29, 1992 - or
before Shirley filed the petition for legal separation on January 29, 1993 - it is circumstantial and relevant to the
claim of herein petitioner as an innocent purchaser for value.
That is not all.
In the Deed of Absolute Sale dated December 29, 1992, the civil status of Rogelio as seller was not stated, while
petitioner as buyer was indicated as "single," viz.:chanroblesvirtuallawlibrary
ROGELIO A. NUEGA, of legal age, Filipino citizen and with postal address at 2-A-2 Ladislao Diwa St., Concepcion,
Marikina, Metro Manila, hereinafter referred to as the VENDOR
And
JOSEFINA V. NOBLEZA, of legal age, Filipino citizen, single and with postal address at No. L-2-A-3 Ladislao Diwa
St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the VENDEE.32cralawlawlibrary
It puzzles the Court that while petitioner has repeatedly claimed that Rogelio is "single" under TCT No. 171963
and Tax Declaration Nos. D-012-04723 and D-012-04724, his civil status as seller was not stated in the Deed of
Absolute Sale - further creating a cloud on the claim of petitioner that she is an innocent purchaser for value.
As to the second issue, we rule that the appellate court did not err when it modified the decision of the trial
court and declared that the Deed of Absolute Sale dated December 29, 1992 is void in its entirety.
The trial court held that while the TCT shows that the owner of the subject property is Rogelio alone, respondent
was able to prove at the trial court that she contributed in the payment of the purchase price of the subject
property. This fact was also settled with finality by the RTC of Pasig City, Branch 70, and affirmed by the CA, in the
case for legal separation and liquidation of property docketed as JDRC Case No. 2510. The pertinent portion of
the decision reads:chanroblesvirtuallawlibrary
xxx Clearly, the house and lot jointly acquired by the parties prior to their marriage forms part of their
community property regime, xxx
From the foregoing, Shirley sufficiently proved her financial contribution for the purchase of the house and lot
covered by TCT 171963. Thus, the present lot which forms part of their community property should be divided
equally between them upon the grant of the instant petition for legal separation. Having established by
preponderance of evidence the fact of her husband's guilt in contracting a subsequent marriage xxx, Shirley
alone should be entitled to the net profits earned by the absolute community property.33cralawlawlibrary
However, the nullity of the sale made by Rogelio is not premised on proof of respondent's financial contribution
in the purchase of the subject property. Actual contribution is not relevant in determining whether a piece of
property is community property for the law itself defines what constitutes community property.
Article 91 of the Family Code thus provides:chanroblesvirtuallawlibrary

Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the community property shall
consist of all the property owned by the spouses at the time of the celebration of the marriage or acquired
thereafter.
The only exceptions from the above rule are: (1) those excluded from the absolute community by the Family
Code; and (2) those excluded by the marriage settlement.
Under the first exception are properties enumerated in Article 92 of the Family Code, which
states:chanroblesvirtuallawlibrary
Art. 92. The following shall be excluded from the community property:
(1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the
income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of
the community property;
(2) Property for personal and exclusive use of either spouse; however, jewelry shall form part of the community
property;
(3) Property acquired before the marriage by either spouse who has legitimate descendants by a former
marriage, and the fruits as well as the income, if any, of such property.
As held in Quiao v. Quiao:34ChanRoblesVirtualawlibrary
When a couple enters into a regime of absolute community, the husband and the wife becomes joint owners of
all the properties of the marriage. Whatever property each spouse brings into the marriage, and those acquired
during the marriage (except those excluded under Article 92 of the Family Code) form the common mass of the
couple's properties. And when the couple's marriage or community is dissolved, that common mass is divided
between the spouses, or their respective heirs, equally or in the proportion the parties have established,
irrespective of the value each one may have originally owned.
Since the subject property does not fall under any of the exclusions provided in Article 92, it therefore forms part
of the absolute community property of Shirley and Rogelio. Regardless of their respective contribution to its
acquisition before their marriage, and despite the fact that only Rogelio's name appears in the TCT as owner, the
property is owned jointly by the spouses Shirley and Rogelio.
Respondent and Rogelio were married on September 1, 1990. Rogelio, on his own and without the consent of
herein respondent as his spouse, sold the subject property via a Deed of Absolute Sale dated December 29, 1992
- or during the subsistence of a valid contract of marriage. Under Article 96 of Executive Order No. 209,
otherwise known as The Family Code of the Philippines, the said disposition of a communal property is void,
viz.:chanroblesvirtuallawlibrary
Art. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In
case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a
proper remedy, which must be availed of within five years from the date of the contract implementing such
decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the
common properties, the other spouse may assume sole powers of administration. These powers do not include
the powers of disposition or encumbrance without the authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person,
and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors.35cralawlawlibrary
It is clear under the foregoing provision of the Family Code that Rogelio could not sell the subject property
without the written consent of respondent or the authority of the court. Without such consent or authority, the
entire sale is void. As correctly explained by the appellate court:chanroblesvirtuallawlibrary
In the instant case, defendant Rogelio sold the entire subject property to defendant-appellant Josefina on 29
December 1992 or during the existence of Rogelio's marriage to plaintiff-appellee Shirley, without the consent of
the latter. The subject property forms part of Rogelio and Shirley's absolute community of property. Thus, the
trial court erred in declaring the deed of sale null and void only insofar as the 55.05 square meters representing
the one-half (1/2) portion of plaintiff-appellee Shirley. In absolute community of property, if the husband,
without knowledge and consent of the wife, sells (their) property, such sale is void. The consent of both the
husband Rogelio and the wife Shirley is required and the absence of the consent of one renders the entire sale
null and void including the portion of the subject property pertaining to defendant Rogelio who contracted the
sale with defendant-appellant Josefina. Since the Deed of Absolute Sale x x x entered into by and between
defendant-appellant Josefina and defendant Rogelio dated 29 December 1992, during the subsisting marriage
between plaintiff-appellee Shirley and Rogelio, was without the written consent of Shirley, the said Deed of
Absolute Sale is void in its entirety. Hence, the trial court erred in declaring the said Deed of Absolute Sale as
void only insofar as the 1/2 portion pertaining to the share of Shirley is concerned.36cralawlawlibrary
Finally, consistent with our ruling that Rogelio solely entered into the contract of sale with petitioner and
acknowledged receiving the entire consideration of the contract under the Deed of Absolute Sale, Shirley could
not be held accountable to petitioner for the reimbursement of her payment for the purchase of the subject
property. Under Article 94 of the Family Code, the absolute community of property shall only be "liable for x x x
[d]ebts and obligations contracted by either spouse without the consent of the other to the extent that the
family may have been benefited x x x." As correctly stated by the appellate court, there being no evidence on
record that the amount received by Rogelio redounded to the benefit of the family, respondent cannot be made
to reimburse any amount to petitioner.37
WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed Decision and Resolution of the Court
of Appeals dated May 14, 2010 and July 21, 2010, respectively, in CA-G.R. CV No. 70235 are AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 156125 August 25, 2010
FRANCISCO MUÑOZ, JR., Petitioner,

vs.
ERLINDA RAMIREZ and ELISEO CARLOS, Respondents.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 filed by petitioner Francisco Muñoz, Jr. (petitioner) to
challenge the decision2 and the resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 57126.4 The CA
decision set aside the decision5 of the Regional Trial Court (RTC), Branch 166, Pasig City, in Civil Case No. 63665.
The CA resolution denied the petitioner’s subsequent motion for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly summarized below.
Subject of the present case is a seventy-seven (77)-square meter residential house and lot located at 170 A.
Bonifacio Street, Mandaluyong City (subject property), covered by Transfer Certificate of Title (TCT) No. 7650 of
the Registry of Deeds of Mandaluyong City in the name of the petitioner.6
The residential lot in the subject property was previously covered by TCT No. 1427, in the name of Erlinda
Ramirez, married to Eliseo Carlos (respondents).7
On April 6, 1989, Eliseo, a Bureau of Internal Revenue employee, mortgaged TCT No. 1427, with Erlinda’s
consent, to the Government Service Insurance System (GSIS) to secure a ₱136,500.00 housing loan, payable
within twenty (20) years, through monthly salary deductions of ₱1,687.66.8 The respondents then constructed a
thirty-six (36)-square meter, two-story residential house on the lot.
On July 14, 1993, the title to the subject property was transferred to the petitioner by virtue of a Deed of
Absolute Sale, dated April 30, 1992, executed by Erlinda, for herself and as attorney-in-fact of Eliseo, for a stated
consideration of ₱602,000.00.9
On September 24, 1993, the respondents filed a complaint with the RTC for the nullification of the deed of
absolute sale, claiming that there was no sale but only a mortgage transaction, and the documents transferring
the title to the petitioner’s name were falsified.
The respondents alleged that in April 1992, the petitioner granted them a ₱600,000.00 loan, to be secured by a
first mortgage on TCT No. 1427; the petitioner gave Erlinda a ₱200,000.0010 advance to cancel the GSIS
mortgage, and made her sign a document purporting to be the mortgage contract; the petitioner promised to
give the ₱402,000.00 balance when Erlinda surrenders TCT No. 1427 with the GSIS mortgage cancelled, and
submits an affidavit signed by Eliseo stating that he waives all his rights to the subject property; with the
₱200,000.00 advance, Erlinda paid GSIS ₱176,445.2711 to cancel the GSIS mortgage on TCT No. 1427;12 in May
1992, Erlinda surrendered to the petitioner the clean TCT No. 1427, but returned Eliseo’s affidavit, unsigned;
since Eliseo’s affidavit was unsigned, the petitioner refused to give the ₱402,000.00 balance and to cancel the
mortgage, and demanded that Erlinda return the ₱200,000.00 advance; since Erlinda could not return the
₱200,000.00 advance because it had been used to pay the GSIS loan, the petitioner kept the title; and in 1993,
they discovered that TCT No. 7650 had been issued in the petitioner’s name, cancelling TCT No.1427 in their
name.
The petitioner countered that there was a valid contract of sale. He alleged that the respondents sold the subject
property to him after he refused their offer to mortgage the subject property because they lacked paying
capacity and were unwilling to pay the incidental charges; the sale was with the implied promise to repurchase
within one year,13 during which period (from May 1, 1992 to April 30, 1993), the respondents would lease the
subject property for a monthly rental of ₱500.00;14 when the respondents failed to repurchase the subject
property within the one-year period despite notice, he caused the transfer of title in his name on July 14,
1993;15 when the respondents failed to pay the monthly rentals despite demand, he filed an ejectment case16
against them with the Metropolitan Trial Court (MeTC), Branch 60, Mandaluyong City, on September 8, 1993, or
sixteen days before the filing of the RTC case for annulment of the deed of absolute sale.
During the pendency of the RTC case, or on March 29, 1995, the MeTC decided the ejectment case. It ordered
Erlinda and her family to vacate the subject property, to surrender its possession to the petitioner, and to pay the
overdue rentals.17
In the RTC, the respondents presented the results of the scientific examination18 conducted by the National
Bureau of Investigation of Eliseo’s purported signatures in the Special Power of Attorney19 dated April 29, 1992
and the Affidavit of waiver of rights dated April 29, 1992,20 showing that they were forgeries.
The petitioner, on the other hand, introduced evidence on the paraphernal nature of the subject property since
it was registered in Erlinda’s name; the residential lot was part of a large parcel of land owned by Pedro Ramirez
and Fructuosa Urcla, Erlinda’s parents; it was the subject of Civil Case No. 50141, a complaint for annulment of
sale, before the RTC, Branch 158, Pasig City, filed by the surviving heirs of Pedro against another heir, Amado
Ramirez, Erlinda’s brother; and, as a result of a compromise agreement, Amado agreed to transfer to the other
compulsory heirs of Pedro, including Erlinda, their rightful shares of the land.21
THE RTC RULING
In a Decision dated January 23, 1997, the RTC dismissed the complaint. It found that the subject property was
Erlinda’s exclusive paraphernal property that was inherited from her father. It also upheld the sale to the
petitioner, even without Eliseo’s consent as the deed of absolute sale bore the genuine signatures of Erlinda and
the petitioner as vendor and vendee, respectively. It concluded that the NBI finding that Eliseo’s signatures in the
special power of attorney and in the affidavit were forgeries was immaterial because Eliseo’s consent to the sale
was not necessary.22
The respondents elevated the case to the CA via an ordinary appeal under Rule 41 of the Revised Rules of Court.
THE CA RULING
The CA decided the appeal on June 25, 2002. Applying the second paragraph of Article 15823 of the Civil Code
and Calimlim-Canullas v. Hon. Fortun,24 the CA held that the subject property, originally Erlinda’s exclusive
paraphernal property, became conjugal property when it was used as collateral for a housing loan that was paid
through conjugal funds – Eliseo’s monthly salary deductions; the subject property, therefore, cannot be validly
sold or mortgaged without Eliseo’s consent, pursuant to Article 12425 of the Family Code. Thus, the CA declared
void the deed of absolute sale, and set aside the RTC decision.
When the CA denied26 the subsequent motion for reconsideration,27 the petitioner filed the present petition
for review on certiorari under Rule 45 of the Revised Rules of Court.
THE PETITION
The petitioner argues that the CA misapplied the second paragraph of Article 158 of the Civil Code and Calimlim-
Canullas28 because the respondents admitted in the complaint that it was the petitioner who gave the money
used to cancel the GSIS mortgage on TCT No. 1427; Article 12029 of the Family Code is the applicable rule, and
since the value of the house is less than the value of the lot, then Erlinda retained ownership of the subject
property. He also argues that the contract between the parties was a sale, not a mortgage, because (a) Erlinda
did not deny her signature in the document;30 (b) Erlinda agreed to sign a contract of lease over the subject
property;31 and, (c) Erlinda executed a letter, dated April 30, 1992, confirming the conversion of the loan
application to a deed of sale.32
THE CASE FOR THE RESPONDENTS
The respondents submit that it is unnecessary to compare the respective values of the house and of the lot to
determine ownership of the subject property; it was acquired during their marriage and, therefore, considered
conjugal property. They also submit that the transaction between the parties was not a sale, but an equitable
mortgage because (a) they remained in possession of the subject property even after the execution of the deed
of absolute sale, (b) they paid the 1993 real property taxes due on the subject property, and (c) they received
₱200,000.00 only of the total stated price of ₱602,000.00.
THE ISSUE
The issues in the present case boil down to (1) whether the subject property is paraphernal or conjugal; and, (2)
whether the contract between the parties was a sale or an equitable mortgage.
OUR RULING
We deny the present Petition but for reasons other than those advanced by the CA.
This Court is not a trier of facts. However, if the inference, drawn by the CA, from the facts is manifestly
mistaken, as in the present case, we can review the evidence to allow us to arrive at the correct factual
conclusions based on the record.33
First Issue:
Paraphernal or Conjugal?
As a general rule, all property acquired during the marriage, whether the acquisition appears to have been
made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the
contrary is proved.34
In the present case, clear evidence that Erlinda inherited the residential lot from her father has sufficiently
rebutted this presumption of conjugal ownership.35 Pursuant to Articles 9236 and 10937 of the Family Code,
properties acquired by gratuitous title by either spouse, during the marriage, shall be excluded from the
community property and be the exclusive property of each spouse.38 The residential lot, therefore, is Erlinda’s
exclusive paraphernal property.
The CA, however, held that the residential lot became conjugal when the house was built thereon through
conjugal funds, applying the second paragraph of Article 158 of the Civil Code and Calimlim-Canullas.39 Under
the second paragraph of Article 158 of the Civil Code, a land that originally belonged to one spouse becomes
conjugal upon the construction of improvements thereon at the expense of the partnership. We applied this
provision in Calimlim-Canullas,40 where we held that when the conjugal house is constructed on land belonging
exclusively to the husband, the land ipso facto becomes conjugal, but the husband is entitled to reimbursement
of the value of the land at the liquidation of the conjugal partnership.
The CA misapplied Article 158 of the

Civil Code and Calimlim-Canullas
We cannot subscribe to the CA’s misplaced reliance on Article 158 of the Civil Code and Calimlim-Canullas.
As the respondents were married during the effectivity of the Civil Code, its provisions on conjugal partnership of
gains (Articles 142 to 189) should have governed their property relations. However, with the enactment of the
Family Code on August 3, 1989, the Civil Code provisions on conjugal partnership of gains, including Article 158,
have been superseded by those found in the Family Code (Articles 105 to 133). Article 105 of the Family Code
states:
xxxx
The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to conjugal partnerships of
gains already established between spouses before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as provided in Article 256.
Thus, in determining the nature of the subject property, we refer to the provisions of the Family Code, and not
the Civil Code, except with respect to rights then already vested.
Article 120 of the Family Code, which supersedes Article 158 of the Civil Code, provides the solution in
determining the ownership of the improvements that are made on the separate property of the spouses, at the
expense of the partnership or through the acts or efforts of either or both spouses. Under this provision, when
the cost of the improvement and any resulting increase in value are more than the value of the property at the
time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership,
subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement;
otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement
of the cost of the improvement.41
In the present case, we find that Eliseo paid a portion only of the GSIS loan through monthly salary deductions.
From April 6, 198942 to April 30, 1992,43 Eliseo paid about ₱60,755.76,44 not the entire amount of the GSIS
housing loan plus interest, since the petitioner advanced the ₱176,445.2745 paid by Erlinda to cancel the
mortgage in 1992. Considering the ₱136,500.00 amount of the GSIS housing loan, it is fairly reasonable to
assume that the value of the residential lot is considerably more than the ₱60,755.76 amount paid by Eliseo
through monthly salary deductions.
Thus, the subject property remained the exclusive paraphernal property of Erlinda at the time she contracted
with the petitioner; the written consent of Eliseo to the transaction was not necessary. The NBI finding that
Eliseo’s signatures in the special power of attorney and affidavit were forgeries was immaterial.
Nonetheless, the RTC and the CA apparently failed to consider the real nature of the contract between the
parties.
Second Issue:
Sale or Equitable Mortgage?
Jurisprudence has defined an equitable mortgage "as one which although lacking in some formality, or form or
words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real
property as security for a debt, there being no impossibility nor anything contrary to law in this intent."46
Article 1602 of the Civil Code enumerates the instances when a contract, regardless of its nomenclature, may be
presumed to be an equitable mortgage: (a) when the price of a sale with right to repurchase is unusually
inadequate; (b) when the vendor remains in possession as lessee or otherwise; (c) when upon or after the
expiration of the right to repurchase another instrument extending the period of redemption or granting a new
period is executed; (d) when the purchaser retains for himself a part of the purchase price; (e) when the vendor
binds himself to pay the taxes on the thing sold; and, (f) in any other case where it may be fairly inferred that the
real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any
other obligation. These instances apply to a contract purporting to be an absolute sale.47
For the presumption of an equitable mortgage to arise under Article 1602 of the Civil Code, two (2) requisites
must concur: (a) that the parties entered into a contract denominated as a contract of sale; and, (b) that their
intention was to secure an existing debt by way of a mortgage. Any of the circumstances laid out in Article 1602
of the Civil Code, not the concurrence nor an overwhelming number of the enumerated circumstances, is
sufficient to support the conclusion that a contract of sale is in fact an equitable mortgage.48
Contract is an equitable mortgage
In the present case, there are four (4) telling circumstances pointing to the existence of an equitable mortgage.
First, the respondents remained in possession as lessees of the subject property; the parties, in fact, executed a
one-year contract of lease, effective May 1, 1992 to April 30, 1993.49
Second, the petitioner retained part of the "purchase price," the petitioner gave a ₱200,000.00 advance to settle
the GSIS housing loan, but refused to give the ₱402,000.00 balance when Erlinda failed to submit Eliseo’s signed
affidavit of waiver of rights.
Third, respondents paid the real property taxes on July 8, 1993, despite the alleged sale on April 30, 1992;50
payment of real property taxes is a usual burden attaching to ownership and when, as here, such payment is
coupled with continuous possession of the property, it constitutes evidence of great weight that the person
under whose name the realty taxes were declared has a valid and rightful claim over the land.51
Fourth, Erlinda secured the payment of the principal debt owed to the petitioner with the subject property. The
records show that the petitioner, in fact, sent Erlinda a Statement of Account showing that as of February 20,
1993, she owed ₱384,660.00, and the daily interest, starting February 21, 1993, was ₱641.10.52 Thus, the
parties clearly intended an equitable mortgage and not a contract of sale.
That the petitioner advanced the sum of ₱200,000.00 to Erlinda is undisputed. This advance, in fact, prompted
the latter to transfer the subject property to the petitioner. Thus, before the respondents can recover the subject
property, they must first return the amount of ₱200,000.00 to the petitioner, plus legal interest of 12% per
annum, computed from April 30, 1992.
We cannot sustain the ballooned obligation of ₱384,660.00, claimed in the Statement of Account sent by the
petitioner,53 sans any evidence of how this amount was arrived at. Additionally, a daily interest of ₱641.10 or
₱19,233.00 per month for a ₱200,000.00 loan is patently unconscionable. While parties are free to stipulate on
the interest to be imposed on monetary obligations, we can step in to temper the interest rates if they are
unconscionable.54
In Lustan v. CA,55 where we established the reciprocal obligations of the parties under an equitable mortgage,
we ordered the reconveyance of the property to the rightful owner therein upon the payment of the loan within
ninety (90) days from the finality of the decision.56
WHEREFORE, in light of all the foregoing, we hereby DENY the present petition. The assailed decision and
resolution of the Court of Appeals in CA-G.R. CV No. 57126 are AFFIRMED with the following MODIFICATIONS:
1. The Deed of Absolute Sale dated April 30, 1992 is hereby declared an equitable mortgage; and
2. The petitioner is obligated to RECONVEY to the respondents the property covered by Transfer Certificate of
Title No. 7650 of the Register of Deeds of Mandaluyong City, UPON THE PAYMENT OF ₱200,000.00, with 12%
legal interest from April 30, 1992, by respondents within NINETY DAYS FROM THE FINALITY OF THIS DECISION.
Costs against the petitioner.
SO ORDERED.
G.R. No. 118305 February 12, 1998
AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO, petitioners,

vs.
COURT OF APPEALS and SPOUSES ALFREDO & ENCARNACION CHING, respondents.
MARTINEZ, J.:
Under Article 161 of the Civil Code, what debts and obligations contracted by the husband alone are considered
"for the benefit of the conjugal partnership" which are chargeable against the conjugal partnership? Is a surety
agreement or an accommodation contract entered into by the husband in favor of his employer within the
contemplation of the said provision?
These are the issues which we will resolve in this petition for review.
The petitioner assails the decision dated April 14, 1994 of the respondent Court of Appeals in "Spouses Alfredo
and Encarnacion Ching vs. Ayala Investment and Development Corporation, et. al.," docketed as CA-G.R. CV No.
29632,1 upholding the decision of the Regional Trial Court of Pasig, Branch 168, which ruled that the conjugal
partnership of gains of respondents-spouses Alfredo and Encarnacion Ching is not liable for the payment of the
debts secured by respondent-husband Alfredo Ching.
A chronology of the essential antecedent facts is necessary for a clear understanding of the case at bar.
Philippine Blooming Mills (hereinafter referred to as PBM) obtained a P50,300,000.00 loan from petitioner Ayala
Investment and Development Corporation (hereinafter referred to as AIDC). As added security for the credit line
extended to PBM, respondent Alfredo Ching, Executive Vice President of PBM, executed security agreements on
December 10, 1980 and on March 20, 1981 making himself jointly and severally answerable with PBM's
indebtedness to AIDC.
PBM failed to pay the loan. Thus, on July 30, 1981, AIDC filed a case for sum of money against PBM and
respondent-husband Alfredo Ching with the then Court of First Instance of Rizal (Pasig), Branch VIII, entitled
"Ayala Investment and Development Corporation vs. Philippine Blooming Mills and Alfredo Ching," docketed as
Civil Case No. 42228.
After trial, the court rendered judgment ordering PBM and respondent-husband Alfredo Ching to jointly and
severally pay AIDC the principal amount of P50,300,000.00 with interests.
Pending appeal of the judgment in Civil Case No. 42228, upon motion of AIDC, the lower court issued a writ of
execution pending appeal. Upon AIDC's putting up of an P8,000,000.00 bond, a writ of execution dated May 12,
1982 was issued. Thereafter, petitioner Abelardo Magsajo, Sr., Deputy Sheriff of Rizal and appointed sheriff in
Civil Case No. 42228, caused the issuance and service upon respondents-spouses of a notice of sheriff sale dated
May 20, 1982 on three (3) of their conjugal properties. Petitioner Magsajo then scheduled the auction sale of the
properties levied.
On June 9, 1982, private respondents filed a case of injunction against petitioners with the then Court of First
Instance of Rizal (Pasig), Branch XIII, to enjoin the auction sale alleging that petitioners cannot enforce the
judgment against the conjugal partnership levied on the ground that, among others, the subject loan did not
redound to the benefit of the said conjugal partnership. 2 Upon application of private respondents, the lower
court issued a temporary restraining order to prevent petitioner Magsajo from proceeding with the enforcement
of the writ of execution and with the sale of the said properties at public auction.
AIDC filed a petition for certiorari before the Court of Appeals,3 questioning the order of the lower court
enjoining the sale. Respondent Court of Appeals issued a Temporary Restraining Order on June 25, 1982,
enjoining the lower court4 from enforcing its Order of June 14, 1982, thus paving the way for the scheduled
auction sale of respondents-spouses conjugal properties.
On June 25, 1982, the auction sale took place. AIDC being the only bidder, was issued a Certificate of Sale by
petitioner Magsajo, which was registered on July 2, 1982. Upon expiration of the redemption period, petitioner
sheriff issued the final deed of sale on August 4, 1982 which was registered on August 9, 1983.
In the meantime, the respondent court, on August 4, 1982, decided CA-G.R. SP No. 14404, in this manner:
WHEREFORE, the petition for certiorari in this case is granted and the challenged order of the respondent Judge
dated June 14, 1982 in Civil Case No. 46309 is hereby set aside and nullified. The same petition insofar as it seeks
to enjoin the respondent Judge from proceeding with Civil Case No. 46309 is, however, denied. No
pronouncement is here made as to costs. . . . 5
On September 3, 1983, AIDC filed a motion to dismiss the petition for injunction filed before Branch XIII of the
CFI of Rizal (Pasig) on the ground that the same had become moot and academic with the consummation of the
sale. Respondents filed their opposition to the motion arguing, among others, that where a third party who
claim is ownership of the property attached or levied upon, a different legal situation is presented; and that in
this case, two (2) of the real properties are actually in the name of Encarnacion Ching, a non-party to Civil Case
No. 42228.
The lower court denied the motion to dismiss. Hence, trial on the merits proceeded. Private respondents
presented several witnesses. On the other hand, petitioners did not present any evidence.
On September 18, 1991, the trial court promulgated its decision declaring the sale on execution null and void.
Petitioners appealed to the respondent court, which was docketed as CA-G.R. CV No. 29632.
On April 14, 1994, the respondent court promulgated the assailed decision, affirming the decision of the regional
trial court. It held that:
The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming
Mills and not for the benefit of the conjugal partnership of petitioners-appellees.
xxx xxx xxx
As to the applicable law, whether it is Article 161 of the New Civil Code or Article 1211 of the Family Code-suffice
it to say that the two provisions are substantially the same. Nevertheless, We agree with the trial court that the
Family Code is the applicable law on the matter . . . . . . .
Article 121 of the Family Code provides that "The conjugal partnership shall be liable for: . . . (2) All debts and
obligations contracted during the marriage by the designated Administrator-Spouse for the benefit of the
conjugal partnership of gains . . . ." The burden of proof that the debt was contracted for the benefit of the
conjugal partnership of gains, lies with the creditor-party litigant claiming as such. In the case at bar, respondent-
appellant AIDC failed to prove that the debt was contracted by appellee-husband, for the benefit of the conjugal
partnership of gains.
The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered DISMISSING the appeal. The decision of
the Regional Trial Court is AFFIRMED in toto.6
Petitioner filed a Motion for Reconsideration which was denied by the respondent court in a Resolution dated
November 28, 1994.7
Hence, this petition for review. Petitioner contends that the "respondent court erred in ruling that the conjugal
partnership of private respondents is not liable for the obligation by the respondent-husband."
Specifically, the errors allegedly committed by the respondent court are as follows:
I. RESPONDENT COURT ERRED IN RULING THAT THE OBLIGATION INCURRED RESPONDENT HUSBAND DID
NOT REDOUND TO THE BENEFIT OF THE CONJUGAL PARTNERSHIP OF THE PRIVATE RESPONDENT.
II. RESPONDENT COURT ERRED IN RULING THAT THE ACT OF RESPONDENT HUSBAND IN SECURING THE
SUBJECT LOAN IS NOT PART OF HIS INDUSTRY, BUSINESS OR CAREER FROM WHICH HE SUPPORTS HIS FAMILY.
Petitioners in their appeal point out that there is no need to prove that actual benefit redounded to the benefit
of the partnership; all that is necessary, they say, is that the transaction was entered into for the benefit of the
conjugal partnership. Thus, petitioners aver that:
The wordings of Article 161 of the Civil Code is very clear: for the partnership to be held liable, the husband must
have contracted the debt "for the benefit of the partnership, thus:
Art. 161. The conjugal partnership shall be liable for:
1) all debts and obligations contracted by the husband for the benefit of the conjugal partnership . . . .
There is a difference between the phrases: "redounded to the benefit of" or "benefited from" (on the one hand)
and "for the benefit of (on the other). The former require that actual benefit must have been realized; the latter
requires only that the transaction should be one which normally would produce benefit to the partnership,
regardless of whether or not actual benefit accrued.8
We do not agree with petitioners that there is a difference between the terms "redounded to the benefit of" or
"benefited from" on the one hand; and "for the benefit of" on the other. They mean one and the same thing.
Article 161 (1) of the Civil Code and Article 121 (2) of the Family Code are similarly worded, i.e., both use the
term "for the benefit of." On the other hand, Article 122 of the Family Code provides that "The payment of
personal debts by the husband or the wife before or during the marriage shall not be charged to the conjugal
partnership except insofar as they redounded to the benefit of the family." As can be seen, the terms are used
interchangeably.
Petitioners further contend that the ruling of the respondent court runs counter to the pronouncement of this
Court in the case of Cobb-Perez vs. Lantin,9 that the husband as head of the family and as administrator of the
conjugal partnership is presumed to have contracted obligations for the benefit of the family or the conjugal
partnership.
Contrary to the contention of the petitioners, the case of Cobb-Perez is not applicable in the case at bar. This
Court has, on several instances, interpreted the term "for the benefit of the conjugal partnership."
In the cases of Javier vs. Osmeña, 10 Abella de Diaz vs. Erlanger & Galinger, Inc., 11 Cobb-Perez vs. Lantin 12 and
G-Tractors, Inc. vs. Court of Appeals, 13 cited by the petitioners, we held that:
The debts contracted by the husband during the marriage relation, for and in the exercise of the industry or
profession by which he contributes toward the support of his family, are not his personal and private debts, and
the products or income from the wife's own property, which, like those of her husband's, are liable for the
payment of the marriage expenses, cannot be excepted from the payment of such debts. (Javier)
The husband, as the manager of the partnership (Article 1412, Civil Code), has a right to embark the partnership
in an ordinary commercial enterprise for gain, and the fact that the wife may not approve of a venture does not
make it a private and personal one of the husband. (Abella de Diaz)
Debts contracted by the husband for and in the exercise of the industry or profession by which he contributes to
the support of the family, cannot be deemed to be his exclusive and private debts. (Cobb-Perez).
. . . if he incurs an indebtedness in the legitimate pursuit of his career or profession or suffers losses in a
legitimate business, the conjugal partnership must equally bear the indebtedness and the losses, unless he
deliberately acted to the prejudice of his family. (G-Tractors)
However, in the cases of Ansaldo vs. Sheriff of Manila, Fidelity Insurance & Luzon Insurance Co.,14 Liberty
Insurance Corporation vs. Banuelos, 15 and Luzon Surety Inc. vs. De Garcia, 16 cited by the respondents, we
ruled that:
The fruits of the paraphernal property which form part of the assets of the conjugal partnership, are subject to
the payment of the debts and expenses of the spouses, but not to the payment of the personal obligations
(guaranty agreements) of the husband, unless it be proved that such obligations were productive of some
benefit to the family." (Ansaldo; parenthetical phrase ours.)
When there is no showing that the execution of an indemnity agreement by the husband redounded to the
benefit of his family, the undertaking is not a conjugal debt but an obligation personal to him. (Liberty Insurance)
In the most categorical language, a conjugal partnership under Article 161 of the new Civil Code is liable only for
such "debts and obligations contracted by the husband for the benefit of the conjugal partnership." There must
be the requisite showing then of some advantage which clearly accrued to the welfare of the spouses. Certainly,
to make a conjugal partnership respond for a liability that should appertain to the husband alone is to defeat and
frustrate the avowed objective of the new Civil Code to show the utmost concern for the solidarity and well-
being of the family as a unit. The husband, therefore, is denied the power to assume unnecessary and
unwarranted risks to the financial stability of the conjugal partnership. (Luzon Surety, Inc.)
From the foregoing jurisprudential rulings of this Court, we can derive the following conclusions:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and
services to be used in or for his own business or his own profession, that contract falls within the term . . . .
obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that
the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the
contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not
succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.
(B) On the other hand, if the money or services are given to another person or entity, and the husband
acted only as a surety or guarantor, that contract cannot, by itself, alone be categorized as falling within the
context of "obligations for the benefit of the conjugal partnership." The contract of loan or services is clearly for
the benefit of the principal debtor and not for the surety or his family. No presumption can be inferred that,
when a husband enters into a contract of surety or accommodation agreement, it is "for the benefit of the
conjugal partnership." Proof must be presented to establish benefit redounding to the conjugal partnership.
Thus, the distinction between the Cobb-Perez case, and we add, that of the three other companion cases, on the
one hand, and that of Ansaldo, Liberty Insurance and Luzon Surety, is that in the former, the husband contracted
the obligation for his own business; while in the latter, the husband merely acted as a surety for the loan
contracted by another for the latter's business.
The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed as surety for the P50M
loan contracted on behalf of PBM. petitioner should have adduced evidence to prove that Alfredo Ching's acting
as surety redounded to the benefit of the conjugal partnership. The reason for this is as lucidly explained by the
respondent court:
The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming
Mills and not for the benefit of the conjugal partnership of petitioners-appellees. Philippine Blooming Mills has a
personality distinct and separate from the family of petitioners-appellees — this despite the fact that the
members of the said family happened to be stockholders of said corporate entity.
xxx xxx xxx
. . . . The burden of proof that the debt was contracted for the benefit of the conjugal partnership of gains, lies
with the creditor-party litigant claiming as such. In the case at bar, respondent-appellant AIDC failed to prove
that the debt was contracted by appellee-husband, for the benefit of the conjugal partnership of gains. What is
apparent from the facts of the case is that the judgment debt was contracted by or in the name of the
Corporation Philippine Blooming Mills and appellee-husband only signed as surety thereof. The debt is clearly a
corporate debt and respondent-appellant's right of recourse against appellee-husband as surety is only to the
extent of his corporate stockholdings. It does not extend to the conjugal partnership of gains of the family of
petitioners-appellees. . . . . . .17
Petitioners contend that no actual benefit need accrue to the conjugal partnership. To support this contention,
they cite Justice J.B.L. Reyes' authoritative opinion in the Luzon Surety Company case:
I concur in the result, but would like to make of record that, in my opinion, the words "all debts and obligations
contracted by the husband for the benefit of the conjugal partnership" used in Article 161 of the Civil Code of
the Philippines in describing the charges and obligations for which the conjugal partnership is liable do not
require that actual profit or benefit must accrue to the conjugal partnership from the husband's transaction; but
it suffices that the transaction should be one that normally would produce such benefit for the partnership. This
is the ratio behind our ruling in Javier vs. Osmeña, 34 Phil. 336, that obligations incurred by the husband in the
practice of his profession are collectible from the conjugal partnership.
The aforequoted concurring opinion agreed with the majority decision that the conjugal partnership should not
be made liable for the surety agreement which was clearly for the benefit of a third party. Such opinion merely
registered an exception to what may be construed as a sweeping statement that in all cases actual profit or
benefit must accrue to the conjugal partnership. The opinion merely made it clear that no actual benefits to the
family need be proved in some cases such as in the Javier case. There, the husband was the principal obligor
himself. Thus, said transaction was found to be "one that would normally produce . . . benefit for the
partnership." In the later case of G-Tractors, Inc., the husband was also the principal obligor — not merely the
surety. This latter case, therefore, did not create any precedent. It did not also supersede the Luzon Surety
Company case, nor any of the previous accommodation contract cases, where this Court ruled that they were for
the benefit of third parties.
But it could be argued, as the petitioner suggests, that even in such kind of contract of accommodation, a benefit
for the family may also result, when the guarantee is in favor of the husband's employer.
In the case at bar, petitioner claims that the benefits the respondent family would reasonably anticipate were
the following:
(a) The employment of co-respondent Alfredo Ching would be prolonged and he would be entitled to his
monthly salary of P20,000.00 for an extended length of time because of the loan he guaranteed;
(b) The shares of stock of the members of his family would appreciate if the PBM could be rehabilitated
through the loan obtained;
(c) His prestige in the corporation would be enhanced and his career would be boosted should PBM survive
because of the loan.
However, these are not the benefits contemplated by Article 161 of the Civil Code. The benefits must be one
directly resulting from the loan. It cannot merely be a by-product or a spin-off of the loan itself.
In all our decisions involving accommodation contracts of the husband, 18 we underscored the requirement that:
"there must be the requisite showing . . . of some advantage which clearly accrued to the welfare of the
spouses" or "benefits to his family" or "that such obligations are productive of some benefit to the family."
Unfortunately, the petition did not present any proof to show: (a) Whether or not the corporate existence of
PBM was prolonged and for how many months or years; and/or (b) Whether or not the PBM was saved by the
loan and its shares of stock appreciated, if so, how much and how substantial was the holdings of the Ching
family.
Such benefits (prospects of longer employment and probable increase in the value of stocks) might have been
already apparent or could be anticipated at the time the accommodation agreement was entered into. But
would those "benefits" qualify the transaction as one of the "obligations . . . for the benefit of the conjugal
partnership"? Are indirect and remote probable benefits, the ones referred to in Article 161 of the Civil Code?
The Court of Appeals in denying the motion for reconsideration, disposed of these questions in the following
manner:
No matter how one looks at it, the debt/credit respondents-appellants is purely a corporate debt granted to
PBM, with petitioner-appellee-husband merely signing as surety. While such petitioner-appellee-husband, as
such surety, is solidarily liable with the principal debtor AIDC, such liability under the Civil Code provisions is
specifically restricted by Article 122 (par. 1) of the Family Code, so that debts for which the husband is liable may
not be charged against conjugal partnership properties. Article 122 of the Family Code is explicit — "The
payment of personal debts contracted by the husband or the wife before or during the marriage shall not be
charged to the conjugal partnership except insofar as they redounded to the benefit of the family.
Respondents-appellants insist that the corporate debt in question falls under the exception laid down in said
Article 122 (par. one). We do not agree. The loan procured from respondent-appellant AIDC was for the sole
advancement and benefit of Philippine Blooming Mills and not for the benefit of the conjugal partnership of
petitioners-appellees.
. . . appellee-husband derives salaries, dividends benefits from Philippine Blooming Mills (the debtor
corporation), only because said husband is an employee of said PBM. These salaries and benefits, are not the
"benefits" contemplated by Articles 121 and 122 of the Family Code. The "benefits" contemplated by the
exception in Article 122 (Family Code) is that benefit derived directly from the use of the loan. In the case at bar,
the loan is a corporate loan extended to PBM and used by PBM itself, not by petitioner-appellee-husband or his
family. The alleged benefit, if any, continuously harped by respondents-appellants, are not only incidental but
also speculative. 19
We agree with the respondent court. Indeed, considering the odds involved in guaranteeing a large amount
(P50,000,000.00) of loan, the probable prolongation of employment in PBM and increase in value of its stocks,
would be too small to qualify the transaction as one "for the benefit" of the surety's family. Verily, no one could
say, with a degree of certainty, that the said contract is even "productive of some benefits" to the conjugal
partnership.
We likewise agree with the respondent court (and this view is not contested by the petitioners) that the
provisions of the Family Code is applicable in this case. These provisions highlight the underlying concern of the
law for the conservation of the conjugal partnership; for the husband's duty to protect and safeguard, if not
augment, not to dissipate it.
This is the underlying reason why the Family Code clarifies that the obligations entered into by one of the
spouses must be those that redounded to the benefit of the family and that the measure of the partnership's
liability is to "the extent that the family is benefited."20
These are all in keeping with the spirit and intent of the other provisions of the Civil Code which prohibits any of
the spouses to donate or convey gratuitously any part of the conjugal property. 21 Thus, when co-respondent
Alfredo Ching entered into a surety agreement he, from then on, definitely put in peril the conjugal property (in
this case, including the family home) and placed it in danger of being taken gratuitously as in cases of donation.
In the second assignment of error, the petitioner advances the view that acting as surety is part of the business
or profession of the respondent-husband.
This theory is new as it is novel.

The respondent court correctly observed that:
Signing as a surety is certainly not an exercise of an industry or profession, hence the cited cases of Cobb-Perez
vs. Lantin; Abella de Diaz vs. Erlanger & Galinger; G-Tractors, Inc. vs. CA do not apply in the instant case. Signing
as a surety is not embarking in a business.22
We are likewise of the view that no matter how often an executive acted or was persuaded to act, as a surety for
his own employer, this should not be taken to mean that he had thereby embarked in the business of suretyship
or guaranty.
This is not to say, however, that we are unaware that executives are often asked to stand as surety for their
company's loan obligations. This is especially true if the corporate officials have sufficient property of their own;
otherwise, their spouses' signatures are required in order to bind the conjugal partnerships.
The fact that on several occasions the lending institutions did not require the signature of the wife and the
husband signed alone does not mean that being a surety became part of his profession. Neither could he be
presumed to have acted for the conjugal partnership.
Article 121, paragraph 3, of the Family Code is emphatic that the payment of personal debts contracted by the
husband or the wife before or during the marriage shall not be charged to the conjugal partnership except to the
extent that they redounded to the benefit of the family.
Here, the property in dispute also involves the family home. The loan is a corporate loan not a personal one.
Signing as a surety is certainly not an exercise of an industry or profession nor an act of administration for the
benefit of the family.
On the basis of the facts, the rules, the law and equity, the assailed decision should be upheld as we now uphold
it. This is, of course, without prejudice to petitioner's right to enforce the obligation in its favor against the PBM
receiver in accordance with the rehabilitation program and payment schedule approved or to be approved by
the Securities & Exchange Commission.
WHEREFORE, the petition for review should be, as it is hereby, DENIED for lack of merit.
SO ORDERED.
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION CHING, petitioners

vs.
THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision1 of the Court of
Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April 2, 1996
denying the petitioners’ motion for reconsideration. The impugned decision granted the private respondent’s
petition for certiorari and set aside the Orders of the trial court dated December 15, 19933 and February 17,
19944 nullifying the attachment of 100,000 shares of stocks of the Citycorp Investment Philippines under the
name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of ₱9,000,000.00
from the Allied Banking Corporation (ABC). By virtue of this loan, the PBMCI, through its Executive Vice-President
Alfredo Ching, executed a promissory note for the said amount promising to pay on December 22, 1978 at an
interest rate of 14% per annum.5 As added security for the said loan, on September 28, 1978, Alfredo Ching,
together with Emilio Tañedo and Chung Kiat Hua, executed a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee the payment of all the PBMCI obligations owing the ABC to the
extent of ₱38,000,000.00.6 The loan was subsequently renewed on various dates, the last renewal having been
made on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount of ₱13,000,000.00
payable in eighteen months at 16% interest per annum. As in the previous loan, the PBMCI, through Alfredo
Ching, executed a promissory note to evidence the loan maturing on June 29, 1981.8 This was renewed once for
a period of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC filed a complaint for
sum of money with prayer for a writ of preliminary attachment against the PBMCI to collect the ₱12,612,972.88
exclusive of interests, penalties and other bank charges. Impleaded as co-defendants in the complaint were
Alfredo Ching, Emilio Tañedo and Chung Kiat Hua in their capacity as sureties of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila, Branch XVIII.10 In its
application for a writ of preliminary attachment, the ABC averred that the "defendants are guilty of fraud in
incurring the obligations upon which the present action is brought11 in that they falsely represented themselves
to be in a financial position to pay their obligation upon maturity thereof."12 Its supporting affidavit stated, inter
alia, that the "[d]efendants have removed or disposed of their properties, or [are] ABOUT to do so, with intent to
defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the ABC’s application for a
writ of preliminary attachment. The trial court decreed that the grounds alleged in the application and that of its
supporting affidavit "are all conclusions of fact and of law" which do not warrant the issuance of the writ prayed
for.14 On motion for reconsideration, however, the trial court, in an Order dated September 14, 1981,
reconsidered its previous order and granted the ABC’s application for a writ of preliminary attachment on a bond
of ₱12,700,000. The order, in relevant part, stated:
With respect to the second ground relied upon for the grant of the writ of preliminary attachment ex-parte,
which is the alleged disposal of properties by the defendants with intent to defraud creditors as provided in Sec.
1(e) of Rule 57 of the Rules of Court, the affidavits can only barely justify the issuance of said writ as against the
defendant Alfredo Ching who has allegedly bound himself jointly and severally to pay plaintiff the defendant
corporation’s obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo Ching requiring the
sheriff of this Court to attach all the properties of said Alfredo Ching not exceeding ₱12,612,972.82 in value,
which are within the jurisdiction of this Court and not exempt from execution upon, the filing by plaintiff of a
bond duly approved by this Court in the sum of Twelve Million Seven Hundred Thousand Pesos (₱12,700,000.00)
executed in favor of the defendant Alfredo Ching to secure the payment by plaintiff to him of all the costs which
may be adjudged in his favor and all damages he may sustain by reason of the attachment if the court shall
finally adjudge that the plaintiff was not entitled thereto.
SO ORDERED.15
Upon the ABC’s posting of the requisite bond, the trial court issued a writ of preliminary attachment.
Subsequently, summonses were served on the defendants,16 save Chung Kiat Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for suspension of payments
with the Securities and Exchange Commission (SEC), docketed as SEC Case No. 2250, at the same time seeking
the PBMCI’s rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, including its assets and liabilities, under
rehabilitation receivership, and ordered that "all actions for claims listed in Schedule "A" of the petition pending
before any court or tribunal are hereby suspended in whatever stage the same may be until further orders from
the Commission."18 The ABC was among the PBMCI’s creditors named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to Dismiss and/or motion
to suspend the proceedings in Civil Case No. 142729 invoking the PBMCI’s pending application for suspension of
payments (which Ching co-signed) and over which the SEC had already assumed jurisdiction.19 On February 4,
1983, the ABC filed its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment the 100,000
common shares of Citycorp stocks in the name of Alfredo Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court partially granted the aforementioned motion
by suspending the proceedings only with respect to the PBMCI. It denied Ching’s motion to dismiss the
complaint/or suspend the proceedings and pointed out that P.D. No. 1758 only concerns the activities of
corporations, partnerships and associations and was never intended to regulate and/or control activities of
individuals. Thus, it directed the individual defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend Proceedings on the same
ground of the pendency of SEC Case No. 2250. This motion met the opposition from the ABC.23
On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-claim.24 Ching eventually filed his
Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed an Omnibus Motion,26 again praying for
the dismissal of the complaint or suspension of the proceedings on the ground of the July 9, 1982 Injunctive
Order issued in SEC Case No. 2250. He averred that as a surety of the PBMCI, he must also necessarily benefit
from the defenses of his principal. The ABC opposed Ching’s omnibus motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion27 praying for the dismissal of the complaint, arguing
that the ABC had "abandoned and waived" its right to proceed against the continuing guaranty by its act of
resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment bond from
₱12,700,000 to ₱6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2, 1987, the court issued an
Order setting the incident for further hearing on May 28, 1987 at 8:30 a.m. for the parties to adduce evidence on
the actual value of the properties of Alfredo Ching levied on by the sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the attachment
bond of ₱6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to Set Aside
the levy on attachment. She alleged inter alia that the 100,000 shares of stocks levied on by the sheriff were
acquired by her and her husband during their marriage out of conjugal funds after the Citycorp Investment
Philippines was established in 1974. Furthermore, the indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the account of PBMCI did
not redound to the benefit of the conjugal partnership. She, likewise, alleged that being the wife of Alfredo
Ching, she was a third-party claimant entitled to file a motion for the release of the properties.32 She attached
therewith a copy of her marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge records,
contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has no personality
to file any motion before this Honorable Court;
2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule 12 of the Rules of
Court;
2.3 Said Motion cannot even be construed to be in the nature of a Third-Party Claim conformably with Sec. 14,
Rule 57 of the Rules of Court.
3. Furthermore, assuming in gracia argumenti that the supposed movant has the required personality, her
Motion cannot be acted upon by this Honorable Court as the above-entitled case is still in the archives and the
proceedings thereon still remains suspended. And there is no previous Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by laches because the shares of stocks were
in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage contract to Alfredo
Ching to prove that they were married on January 8, 1960;35 the articles of incorporation of Citycorp Investment
Philippines dated May 14, 1979;36 and, the General Information Sheet of the corporation showing that
petitioner Alfredo Ching was a member of the Board of Directors of the said corporation and was one of its top
twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to expunge records.
Acting on the aforementioned motion, the trial court issued on December 15, 1993 an Order37 lifting the writ of
preliminary attachment on the shares of stocks and ordering the sheriff to return the said stocks to the
petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9, 1993, is hereby granted.
Let the writ of preliminary attachment subject matter of said motion, be quashed and lifted with respect to the
attached 100,000 common shares of stock of Citycorp Investment Philippines in the name of the defendant
Alfredo Ching, the said shares of stock to be returned to him and his movant-spouse by Deputy Sheriff Apolonio
A. Golfo who effected the levy thereon on July 26, 1983, or by whoever may be presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but denied the same
on February 17, 1994. The petitioner bank forthwith filed a petition for certiorari with the CA, docketed as CA-
G.R. SP No. 33585, for the nullification of the said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking cognizance of, and
granting a "Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave abuse of discretion in lifting the writ of preliminary attachment
without any basis in fact and in law, and contrary to established jurisprudence on the matter.39
On November 27, 1995, the CA rendered judgment granting the petition and setting aside the assailed orders of
the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the questioned orders (dated
December 15, 1993 and February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set aside the assailed orders. According to the
CA, the RTC deprived the private respondent of its right to file a bond under Section 14, Rule 57 of the Rules of
Court. The petitioner Encarnacion T. Ching was not a party in the trial court; hence, she had no right of action to
have the levy annulled with a motion for that purpose. Her remedy in such case was to file a separate action
against the private respondent to nullify the levy on the 100,000 Citycorp shares of stocks. The court stated that
even assuming that Encarnacion T. Ching had the right to file the said motion, the same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the presumption in Article 160 of the New Civil
Code shall not apply where, as in this case, the petitioner-spouses failed to prove the source of the money used
to acquire the shares of stock. It held that the levied shares of stocks belonged to Alfredo Ching, as evidenced by
the fact that the said shares were registered in the corporate books of Citycorp solely under his name. Thus,
according to the appellate court, the RTC committed a grave abuse of its discretion amounting to excess or lack
of jurisdiction in issuing the assailed orders. The petitioners’ motion for reconsideration was denied by the CA in
a Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC did not commit
any grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the assailed orders in their
favor; hence, the CA erred in reversing the same. They aver that the source of funds in the acquisition of the
levied shares of stocks is not the controlling factor when invoking the presumption of the conjugal nature of
stocks under Art. 160,42 and that such presumption subsists even if the property is registered only in the name
of one of the spouses, in this case, petitioner Alfredo Ching.43 According to the petitioners, the suretyship
obligation was not contracted in the pursuit of the petitioner-husband’s profession or business.44 And, contrary
to the ruling of the CA, where conjugal assets are attached in a collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to quash in the main case and not file a separate suit.45
Furthermore, the petitioners contend that under Art. 125 of the Family Code, the petitioner-husband’s
gratuitous suretyship is null and void ab initio,46 and that the share of one of the spouses in the conjugal
partnership remains inchoate until the dissolution and liquidation of the partnership.47
In its comment on the petition, the private respondent asserts that the CA correctly granted its petition for
certiorari nullifying the assailed order. It contends that the CA correctly relied on the ruling of this Court in Wong
v. Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals, the private
respondent alleges that the continuing guaranty and suretyship executed by petitioner Alfredo Ching in pursuit
of his profession or business. Furthermore, according to the private respondent, the right of the petitioner-wife
to a share in the conjugal partnership property is merely inchoate before the dissolution of the partnership; as
such, she had no right to file the said motion to quash the levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the motion to quash
the levy on attachment on the 100,000 shares of stocks in the Citycorp Investment Philippines; (b) whether or
not the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the said motion,
although she was not a party in Civil Case No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those properties of the defendant against whom a
writ of attachment has been issued by the court. When the sheriff erroneously levies on attachment and seizes
the property of a third person in which the said defendant holds no right or interest, the superior authority of
the court which has authorized the execution may be invoked by the aggrieved third person in the same case.
Upon application of the third person, the court shall order a summary hearing for the purpose of determining
whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of the writ of
attachment, more specifically if he has indeed levied on attachment and taken hold of property not belonging to
the plaintiff. If so, the court may then order the sheriff to release the property from the erroneous levy and to
return the same to the third person. In resolving the motion of the third party, the court does not and cannot
pass upon the question of the title to the property with any character of finality. It can treat the matter only
insofar as may be necessary to decide if the sheriff has acted correctly or not. If the claimant’s proof does not
persuade the court of the validity of the title, or right of possession thereto, the claim will be denied by the
court. The aggrieved third party may also avail himself of the remedy of "terceria" by executing an affidavit of his
title or right of possession over the property levied on attachment and serving the same to the office making the
levy and the adverse party. Such party may also file an action to nullify the levy with damages resulting from the
unlawful levy and seizure, which should be a totally separate and distinct action from the former case. The
above-mentioned remedies are cumulative and any one of them may be resorted to by one third-party claimant
without availing of the other remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the 100,000 shares of
stocks in the name of petitioner-husband claiming that the said shares of stocks were conjugal in nature; hence,
not liable for the account of her husband under his continuing guaranty and suretyship agreement with the
PBMCI. The petitioner-wife had the right to file the motion for said relief.
On the second issue, we find and so hold that the CA erred in setting aside and reversing the orders of the RTC.
The private respondent, the petitioner in the CA, was burdened to prove that the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction. The tribunal acts without jurisdiction if it does not
have the legal purpose to determine the case; there is excess of jurisdiction where the tribunal, being clothed
with the power to determine the case, oversteps its authority as determined by law. There is grave abuse of
discretion where the tribunal acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of its
judgment and is equivalent to lack of jurisdiction.51
It was incumbent upon the private respondent to adduce a sufficiently strong demonstration that the RTC acted
whimsically in total disregard of evidence material to, and even decide of, the controversy before certiorari will
lie. A special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and not
errors of judgment. When a court exercises its jurisdiction, an error committed while so engaged does not
deprive it of its jurisdiction being exercised when the error is committed.52
After a comprehensive review of the records of the RTC and of the CA, we find and so hold that the RTC did not
commit any grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders.
Article 160 of the New Civil Code provides that all the properties acquired during the marriage are presumed to
belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband, or to the wife.
In Tan v. Court of Appeals,53 we held that it is not even necessary to prove that the properties were acquired
with funds of the partnership. As long as the properties were acquired by the parties during the marriage, they
are presumed to be conjugal in nature. In fact, even when the manner in which the properties were acquired
does not appear, the presumption will still apply, and the properties will still be considered conjugal. The
presumption of the conjugal nature of the properties acquired during the marriage subsists in the absence of
clear, satisfactory and convincing evidence to overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in the
Citycorp Investment Philippines were issued to and registered in its corporate books in the name of the
petitioner-husband when the said corporation was incorporated on May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-spouses. The shares of stocks are, thus, presumed to be the
conjugal partnership property of the petitioners. The private respondent failed to adduce evidence that the
petitioner-husband acquired the stocks with his exclusive money.55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment Philippines solely in the name of the petitioner-
husband does not constitute proof that the petitioner-husband, not the conjugal partnership, owned the
same.56 The private respondent’s reliance on the rulings of this Court in Maramba v. Lozano57 and Associated
Insurance & Surety Co., Inc. v. Banzon58 is misplaced. In the Maramba case, we held that where there is no
showing as to when the property was acquired, the fact that the title is in the wife’s name alone is determinative
of the ownership of the property. The principle was reiterated in the Associated Insurance case where the
uncontroverted evidence showed that the shares of stocks were acquired during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v. Intermediate Appellate
Court59 buttresses the case for the petitioners. In that case, we ruled that he who claims that property acquired
by the spouses during their marriage is not conjugal partnership property but belongs to one of them as his
personal property is burdened to prove the source of the money utilized to purchase the same. In this case, the
private respondent claimed that the petitioner-husband acquired the shares of stocks from the Citycorp
Investment Philippines in his own name as the owner thereof. It was, thus, the burden of the private respondent
to prove that the source of the money utilized in the acquisition of the shares of stocks was that of the
petitioner-husband alone. As held by the trial court, the private respondent failed to adduce evidence to prove
this assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship agreement with the
private respondent for the payment of the PBMCI loans, the petitioner-husband was in the exercise of his
profession, pursuing a legitimate business. The appellate court erred in concluding that the conjugal partnership
is liable for the said account of PBMCI under Article 161(1) of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family Code of the Philippines) provides:
(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those
contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the payment of
the loan obtained by the PBMCI from the private respondent in the amount of ₱38,000,000. In Ayala Investment
and Development Corp. v. Court of Appeals,61 this Court ruled "that the signing as surety is certainly not an
exercise of an industry or profession. It is not embarking in a business. No matter how often an executive acted
on or was persuaded to act as surety for his own employer, this should not be taken to mean that he thereby
embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must be
a showing that some advantages accrued to the spouses. Certainly, to make a conjugal partnership responsible
for a liability that should appertain alone to one of the spouses is to frustrate the objective of the New Civil Code
to show the utmost concern for the solidarity and well being of the family as a unit. The husband, therefore, is
denied the power to assume unnecessary and unwarranted risks to the financial stability of the conjugal
partnership.62
In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was benefited
by the petitioner-husband’s act of executing a continuing guaranty and suretyship agreement with the private
respondent for and in behalf of PBMCI. The contract of loan was between the private respondent and the
PBMCI, solely for the benefit of the latter. No presumption can be inferred from the fact that when the
petitioner-husband entered into an accommodation agreement or a contract of surety, the conjugal partnership
would thereby be benefited. The private respondent was burdened to establish that such benefit redounded to
the conjugal partnership.63
It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and was one of
its top twenty stockholders, and that the shares of stocks of the petitioner-husband and his family would
appreciate if the PBMCI could be rehabilitated through the loans obtained; that the petitioner-husband’s career
would be enhanced should PBMCI survive because of the infusion of fresh capital. However, these are not the
benefits contemplated by Article 161 of the New Civil Code. The benefits must be those directly resulting from
the loan. They cannot merely be a by-product or a spin-off of the loan itself.64
This is different from the situation where the husband borrows money or receives services to be used for his own
business or profession. In the Ayala case, we ruled that it is such a contract that is one within the term
"obligation for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and
services to be used in or for his own business or his own profession, that contract falls within the term "…
obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that
the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the
contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not
succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.65
The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not
controlling because the husband, in those cases, contracted the obligation for his own business. In this case, the
petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of Appeals
are SET ASIDE AND REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.
G.R. No. 168338 February 15, 2008
FRANCISCO CHAVEZ, petitioner,

vs.
RAUL M. GONZALES, in his capacity as the Secretary of the Department of Justice; and NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC), respondents.
DECISION
PUNO, C.J.:
A. Precis
In this jurisdiction, it is established that freedom of the press is crucial and so inextricably woven into the right to
free speech and free expression, that any attempt to restrict it must be met with an examination so critical that
only a danger that is clear and present would be allowed to curtail it.
Indeed, we have not wavered in the duty to uphold this cherished freedom. We have struck down laws and
issuances meant to curtail this right, as in Adiong v. COMELEC,1 Burgos v. Chief of Staff,2 Social Weather Stations
v. COMELEC,3 and Bayan v. Executive Secretary Ermita.4 When on its face, it is clear that a governmental act is
nothing more than a naked means to prevent the free exercise of speech, it must be nullified.
B. The Facts
1. The case originates from events that occurred a year after the 2004 national and local elections. On June 5,
2005, Press Secretary Ignacio Bunye told reporters that the opposition was planning to destabilize the
administration by releasing an audiotape of a mobile phone conversation allegedly between the President of the
Philippines, Gloria Macapagal Arroyo, and a high-ranking official of the Commission on Elections (COMELEC). The
conversation was audiotaped allegedly through wire-tapping.5 Later, in a Malacañang press briefing, Secretary
Bunye produced two versions of the tape, one supposedly the complete version, and the other, a spliced,
"doctored" or altered version, which would suggest that the President had instructed the COMELEC official to
manipulate the election results in the President’s favor. 6 It seems that Secretary Bunye admitted that the voice
was that of President Arroyo, but subsequently made a retraction. 7
2. On June 7, 2005, former counsel of deposed President Joseph Estrada, Atty. Alan Paguia, subsequently
released an alleged authentic tape recording of the wiretap. Included in the tapes were purported conversations
of the President, the First Gentleman Jose Miguel Arroyo, COMELEC Commissioner Garcillano, and the late
Senator Barbers.8
3. On June 8, 2005, respondent Department of Justice (DOJ) Secretary Raul Gonzales warned reporters that
those who had copies of the compact disc (CD) and those broadcasting or publishing its contents could be held
liable under the Anti-Wiretapping Act. These persons included Secretary Bunye and Atty. Paguia. He also stated
that persons possessing or airing said tapes were committing a continuing offense, subject to arrest by anybody
who had personal knowledge if the crime was committed or was being committed in their presence.9
4. On June 9, 2005, in another press briefing, Secretary Gonzales ordered the National Bureau of Investigation
(NBI) to go after media organizations "found to have caused the spread, the playing and the printing of the
contents of a tape" of an alleged wiretapped conversation involving the President about fixing votes in the 2004
national elections. Gonzales said that he was going to start with Inq7.net, a joint venture between the Philippine
Daily Inquirer and GMA7 television network, because by the very nature of the Internet medium, it was able to
disseminate the contents of the tape more widely. He then expressed his intention of inviting the editors and
managers of Inq7.net and GMA7 to a probe, and supposedly declared, "I [have] asked the NBI to conduct a
tactical interrogation of all concerned." 10
5. On June 11, 2005, the NTC issued this press release: 11
NTC GIVES FAIR WARNING TO RADIO AND TELEVISION OWNERS/OPERATORS TO OBSERVE ANTI-WIRETAPPING
LAW AND PERTINENT CIRCULARS ON PROGRAM STANDARDS
xxx xxx xxx
Taking into consideration the country’s unusual situation, and in order not to unnecessarily aggravate the same,
the NTC warns all radio stations and television network owners/operators that the conditions of the
authorization and permits issued to them by Government like the Provisional Authority and/or Certificate of
Authority explicitly provides that said companies shall not use [their] stations for the broadcasting or telecasting
of false information or willful misrepresentation. Relative thereto, it has come to the attention of the [NTC] that
certain personalities are in possession of alleged taped conversations which they claim involve the President of
the Philippines and a Commissioner of the COMELEC regarding supposed violation of election laws.
These personalities have admitted that the taped conversations are products of illegal wiretapping operations.
Considering that these taped conversations have not been duly authenticated nor could it be said at this time
that the tapes contain an accurate or truthful representation of what was recorded therein, it is the position of
the [NTC] that the continuous airing or broadcast of the said taped conversations by radio and television stations
is a continuing violation of the Anti-Wiretapping Law and the conditions of the Provisional Authority and/or
Certificate of Authority issued to these radio and television stations. It has been subsequently established that
the said tapes are false and/or fraudulent after a prosecution or appropriate investigation, the concerned radio
and television companies are hereby warned that their broadcast/airing of such false information and/or willful
misrepresentation shall be just cause for the suspension, revocation and/or cancellation of the licenses or
authorizations issued to the said companies.
In addition to the above, the [NTC] reiterates the pertinent NTC circulars on program standards to be observed
by radio and television stations. NTC Memorandum Circular 111-12-85 explicitly states, among others, that "all
radio broadcasting and television stations shall, during any broadcast or telecast, cut off from the air the speech,
play, act or scene or other matters being broadcast or telecast the tendency thereof is to disseminate false
information or such other willful misrepresentation, or to propose and/or incite treason, rebellion or sedition."
The foregoing directive had been reiterated by NTC Memorandum Circular No. 22-89, which, in addition thereto,
prohibited radio, broadcasting and television stations from using their stations to broadcast or telecast any
speech, language or scene disseminating false information or willful misrepresentation, or inciting, encouraging
or assisting in subversive or treasonable acts.
The [NTC] will not hesitate, after observing the requirements of due process, to apply with full force the
provisions of said Circulars and their accompanying sanctions on erring radio and television stations and their
owners/operators.
6. On June 14, 2005, NTC held a dialogue with the Board of Directors of the Kapisanan ng mga Brodkaster sa
Pilipinas (KBP). NTC allegedly assured the KBP that the press release did not violate the constitutional freedom of
speech, of expression, and of the press, and the right to information. Accordingly, NTC and KBP issued a Joint
Press Statement which states, among others, that: 12
NTC respects and will not hinder freedom of the press and the right to information on matters of public concern.
KBP & its members have always been committed to the exercise of press freedom with high sense of
responsibility and discerning judgment of fairness and honesty.
NTC did not issue any MC [Memorandum Circular] or Order constituting a restraint of press freedom or
censorship. The NTC further denies and does not intend to limit or restrict the interview of members of the
opposition or free expression of views.
What is being asked by NTC is that the exercise of press freedom [be] done responsibly.
KBP has program standards that KBP members will observe in the treatment of news and public affairs programs.
These include verification of sources, non-airing of materials that would constitute inciting to sedition and/or
rebellion.
The KBP Codes also require that no false statement or willful misrepresentation is made in the treatment of news
or commentaries.
The supposed wiretapped tapes should be treated with sensitivity and handled responsibly giving due
consideration to the process being undertaken to verify and validate the authenticity and actual content of the
same."
C. The Petition
Petitioner Chavez filed a petition under Rule 65 of the Rules of Court against respondents Secretary Gonzales and
the NTC, "praying for the issuance of the writs of certiorari and prohibition, as extraordinary legal remedies, to
annul void proceedings, and to prevent the unlawful, unconstitutional and oppressive exercise of authority by
the respondents."13
Alleging that the acts of respondents are violations of the freedom on expression and of the press, and the right
of the people to information on matters of public concern,14 petitioner specifically asked this Court:
[F]or [the] nullification of acts, issuances, and orders of respondents committed or made since June 6, 2005 until
the present that curtail the public’s rights to freedom of expression and of the press, and to information on
matters of public concern specifically in relation to information regarding the controversial taped conversion of
President Arroyo and for prohibition of the further commission of such acts, and making of such issuances, and
orders by respondents. 15
Respondents16 denied that the acts transgress the Constitution, and questioned petitioner’s legal standing to
file the petition. Among the arguments they raised as to the validity of the "fair warning" issued by respondent
NTC, is that broadcast media enjoy lesser constitutional guarantees compared to print media, and the warning
was issued pursuant to the NTC’s mandate to regulate the telecommunications industry. 17 It was also stressed
that "most of the [television] and radio stations continue, even to this date, to air the tapes, but of late within
the parameters agreed upon between the NTC and KBP." 18
D. The Procedural Threshold: Legal Standing
To be sure, the circumstances of this case make the constitutional challenge peculiar. Petitioner, who is not a
member of the broadcast media, prays that we strike down the acts and statements made by respondents as
violations of the right to free speech, free expression and a free press. For another, the recipients of the press
statements have not come forward—neither intervening nor joining petitioner in this action. Indeed, as a group,
they issued a joint statement with respondent NTC that does not complain about restraints on freedom of the
press.
It would seem, then, that petitioner has not met the requisite legal standing, having failed to allege "such a
personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the Court so largely depends for illumination of difficult constitutional
questions." 19
But as early as half a century ago, we have already held that where serious constitutional questions are involved,
"the transcendental importance to the public of these cases demands that they be settled promptly and
definitely, brushing aside if we must, technicalities of procedure." 20 Subsequently, this Court has repeatedly and
consistently refused to wield procedural barriers as impediments to its addressing and resolving serious legal
questions that greatly impact on public interest,21 in keeping with the Court's duty under the 1987 Constitution
to determine whether or not other branches of government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the discretion given to them.
Thus, in line with the liberal policy of this Court on locus standi when a case involves an issue of overarching
significance to our society,22 we therefore brush aside technicalities of procedure and take cognizance of this
petition,23 seeing as it involves a challenge to the most exalted of all the civil rights, the freedom of expression.
The petition raises other issues like the extent of the right to information of the public. It is fundamental,
however, that we need not address all issues but only the most decisive one which in the case at bar is whether
the acts of the respondents abridge freedom of speech and of the press.
But aside from the primordial issue of determining whether free speech and freedom of the press have been
infringed, the case at bar also gives this Court the opportunity: (1) to distill the essence of freedom of speech
and of the press now beclouded by the vagaries of motherhood statements; (2) to clarify the types of speeches
and their differing restraints allowed by law; (3) to discuss the core concepts of prior restraint, content-neutral
and content-based regulations and their constitutional standard of review; (4) to examine the historical
difference in the treatment of restraints between print and broadcast media and stress the standard of review
governing both; and (5) to call attention to the ongoing blurring of the lines of distinction between print and
broadcast media.
E. Re-examining The law on freedom of speech,

of expression and of the press
No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people
peaceably to assemble and petition the government for redress of grievances.24
Freedom of expression has gained recognition as a fundamental principle of every democratic government, and
given a preferred right that stands on a higher level than substantive economic freedom or other liberties. The
cognate rights codified by Article III, Section 4 of the Constitution, copied almost verbatim from the First
Amendment of the U.S. Bill of Rights,25 were considered the necessary consequence of republican institutions
and the complement of free speech.26 This preferred status of free speech has also been codified at the
international level, its recognition now enshrined in international law as a customary norm that binds all
nations.27
In the Philippines, the primacy and high esteem accorded freedom of expression is a fundamental postulate of
our constitutional system. 28 This right was elevated to constitutional status in the 1935, the 1973 and the 1987
Constitutions, reflecting our own lesson of history, both political and legal, that freedom of speech is an
indispensable condition for nearly every other form of freedom.29 Moreover, our history shows that the struggle
to protect the freedom of speech, expression and the press was, at bottom, the struggle for the indispensable
preconditions for the exercise of other freedoms.30 For it is only when the people have unbridled access to
information and the press that they will be capable of rendering enlightened judgments. In the oft-quoted words
of Thomas Jefferson, we cannot both be free and ignorant.
E.1. Abstraction of Free Speech
Surrounding the freedom of speech clause are various concepts that we have adopted as part and parcel of our
own Bill of Rights provision on this basic freedom.31 What is embraced under this provision was discussed
exhaustively by the Court in Gonzales v. Commission on Elections, 32 in which it was held:
…At the very least, free speech and free press may be identified with the liberty to discuss publicly and truthfully
any matter of public interest without censorship and punishment. There is to be no previous restraint on the
communication of views or subsequent liability whether in libel suits, prosecution for sedition, or action for
damages, or contempt proceedings unless there be a clear and present danger of substantive evil that Congress
has a right to prevent. 33
Gonzales further explained that the vital need of a constitutional democracy for freedom of expression is
undeniable, whether as a means of assuring individual self-fulfillment; of attaining the truth; of assuring
participation by the people in social, including political, decision-making; and of maintaining the balance
between stability and change.34 As early as the 1920s, the trend as reflected in Philippine and American
decisions was to recognize the broadest scope and assure the widest latitude for this constitutional guarantee.
The trend represents a profound commitment to the principle that debate on public issue should be uninhibited,
robust, and wide-open. 35
Freedom of speech and of the press means something more than the right to approve existing political beliefs or
economic arrangements, to lend support to official measures, and to take refuge in the existing climate of
opinion on any matter of public consequence.36 When atrophied, the right becomes meaningless.37 The right
belongs as well -- if not more – to those who question, who do not conform, who differ.38 The ideas that may be
expressed under this freedom are confined not only to those that are conventional or acceptable to the majority.
To be truly meaningful, freedom of speech and of the press should allow and even encourage the articulation of
the unorthodox view, though it be hostile to or derided by others; or though such view "induces a condition of
unrest, creates dissatisfaction with conditions as they are, or even stirs people to anger."39 To paraphrase Justice
Holmes, it is freedom for the thought that we hate, no less than for the thought that agrees with us. 40
The scope of freedom of expression is so broad that it extends protection to nearly all forms of communication.
It protects speech, print and assembly regarding secular as well as political causes, and is not confined to any
particular field of human interest. The protection covers myriad matters of public interest or concern embracing
all issues, about which information is needed or appropriate, so as to enable members of society to cope with
the exigencies of their period. The constitutional protection assures the broadest possible exercise of free speech
and free press for religious, political, economic, scientific, news, or informational ends, inasmuch as the
Constitution's basic guarantee of freedom to advocate ideas is not confined to the expression of ideas that are
conventional or shared by a majority.
The constitutional protection is not limited to the exposition of ideas. The protection afforded free speech
extends to speech or publications that are entertaining as well as instructive or informative. Specifically, in
Eastern Broadcasting Corporation (DYRE) v. Dans,41 this Court stated that all forms of media, whether print or
broadcast, are entitled to the broad protection of the clause on freedom of speech and of expression.
While all forms of communication are entitled to the broad protection of freedom of expression clause, the
freedom of film, television and radio broadcasting is somewhat lesser in scope than the freedom accorded to
newspapers and other print media, as will be subsequently discussed.
E.2. Differentiation: The Limits & Restraints of Free Speech
From the language of the specific constitutional provision, it would appear that the right to free speech and a
free press is not susceptible of any limitation. But the realities of life in a complex society preclude a literal
interpretation of the provision prohibiting the passage of a law that would abridge such freedom. For freedom of
expression is not an absolute, 42 nor is it an "unbridled license that gives immunity for every possible use of
language and prevents the punishment of those who abuse this freedom."
Thus, all speech are not treated the same. Some types of speech may be subjected to some regulation by the
State under its pervasive police power, in order that it may not be injurious to the equal right of others or those
of the community or society.43 The difference in treatment is expected because the relevant interests of one
type of speech, e.g., political speech, may vary from those of another, e.g., obscene speech. Distinctions have
therefore been made in the treatment, analysis, and evaluation of the permissible scope of restrictions on
various categories of speech. 44 We have ruled, for example, that in our jurisdiction slander or libel, lewd and
obscene speech, as well as "fighting words" are not entitled to constitutional protection and may be penalized.45
Moreover, the techniques of reviewing alleged restrictions on speech (overbreadth, vagueness, and so on) have
been applied differently to each category, either consciously or unconsciously. 46 A study of free speech
jurisprudence—whether here or abroad—will reveal that courts have developed different tests as to specific
types or categories of speech in concrete situations; i.e., subversive speech; obscene speech; the speech of the
broadcast media and of the traditional print media; libelous speech; speech affecting associational rights; speech
before hostile audiences; symbolic speech; speech that affects the right to a fair trial; and speech associated with
rights of assembly and petition. 47
Generally, restraints on freedom of speech and expression are evaluated by either or a combination of three
tests, i.e., (a) the dangerous tendency doctrine which permits limitations on speech once a rational connection
has been established between the speech restrained and the danger contemplated; 48 (b) the balancing of
interests tests, used as a standard when courts need to balance conflicting social values and individual interests,
and requires a conscious and detailed consideration of the interplay of interests observable in a given situation
of type of situation; 49 and (c) the clear and present danger rule which rests on the premise that speech may be
restrained because there is substantial danger that the speech will likely lead to an evil the government has a
right to prevent. This rule requires that the evil consequences sought to be prevented must be substantive,
"extremely serious and the degree of imminence extremely high." 50
As articulated in our jurisprudence, we have applied either the dangerous tendency doctrine or clear and
present danger test to resolve free speech challenges. More recently, we have concluded that we have generally
adhered to the clear and present danger test. 51
E.3. In Focus: Freedom of the Press

Much has been written on the philosophical basis of press freedom as part of the larger right of free discussion
and expression. Its practical importance, though, is more easily grasped. It is the chief source of information on
current affairs. It is the most pervasive and perhaps most powerful vehicle of opinion on public questions. It is
the instrument by which citizens keep their government informed of their needs, their aspirations and their
grievances. It is the sharpest weapon in the fight to keep government responsible and efficient. Without a
vigilant press, the mistakes of every administration would go uncorrected and its abuses unexposed. As Justice
Malcolm wrote in United States v. Bustos:52
The interest of society and the maintenance of good government demand a full discussion of public affairs.
Complete liberty to comment on the conduct of public men is a scalpel in the case of free speech. The sharp
incision of its probe relieves the abscesses of officialdom. Men in public life may suffer under a hostile and unjust
accusation; the wound can be assuaged with the balm of clear conscience.
Its contribution to the public weal makes freedom of the press deserving of extra protection. Indeed, the press
benefits from certain ancillary rights. The productions of writers are classified as intellectual and proprietary.
Persons who interfere or defeat the freedom to write for the press or to maintain a periodical publication are
liable for damages, be they private individuals or public officials.
E.4. Anatomy of Restrictions: Prior Restraint, Content-Neutral and Content-Based Regulations
Philippine jurisprudence, even as early as the period under the 1935 Constitution, has recognized four aspects of
freedom of the press. These are (1) freedom from prior restraint; (2) freedom from punishment subsequent to
publication; 53 (3) freedom of access to information; 54 and (4) freedom of circulation.55
Considering that petitioner has argued that respondents’ press statement constitutes a form of impermissible
prior restraint, a closer scrutiny of this principle is in order, as well as its sub-specie of content-based (as
distinguished from content-neutral) regulations.
At this point, it should be noted that respondents in this case deny that their acts constitute prior restraints. This
presents a unique tinge to the present challenge, considering that the cases in our jurisdiction involving prior
restrictions on speech never had any issue of whether the governmental act or issuance actually constituted
prior restraint. Rather, the determinations were always about whether the restraint was justified by the
Constitution.
Be that as it may, the determination in every case of whether there is an impermissible restraint on the freedom
of speech has always been based on the circumstances of each case, including the nature of the restraint. And in
its application in our jurisdiction, the parameters of this principle have been etched on a case-to-case basis,
always tested by scrutinizing the governmental issuance or act against the circumstances in which they operate,
and then determining the appropriate test with which to evaluate.
Prior restraint refers to official governmental restrictions on the press or other forms of expression in advance of
actual publication or dissemination.56 Freedom from prior restraint is largely freedom from government
censorship of publications, whatever the form of censorship, and regardless of whether it is wielded by the
executive, legislative or judicial branch of the government. Thus, it precludes governmental acts that required
approval of a proposal to publish; licensing or permits as prerequisites to publication including the payment of
license taxes for the privilege to publish; and even injunctions against publication. Even the closure of the
business and printing offices of certain newspapers, resulting in the discontinuation of their printing and
publication, are deemed as previous restraint or censorship. 57 Any law or official that requires some form of
permission to be had before publication can be made, commits an infringement of the constitutional right, and
remedy can be had at the courts.
Given that deeply ensconced in our fundamental law is the hostility against all prior restraints on speech, and
any act that restrains speech is presumed invalid,58 and "any act that restrains speech is hobbled by the
presumption of invalidity and should be greeted with furrowed brows," 59 it is important to stress not all prior
restraints on speech are invalid. Certain previous restraints may be permitted by the Constitution, but
determined only upon a careful evaluation of the challenged act as against the appropriate test by which it
should be measured against.
Hence, it is not enough to determine whether the challenged act constitutes some form of restraint on freedom
of speech. A distinction has to be made whether the restraint is (1) a content-neutral regulation, i.e., merely
concerned with the incidents of the speech, or one that merely controls the time, place or manner, and under
well defined standards;60 or (2) a content-based restraint or censorship, i.e., the restriction is based on the
subject matter of the utterance or speech. 61 The cast of the restriction determines the test by which the
challenged act is assayed with.
When the speech restraints take the form of a content-neutral regulation, only a substantial governmental
interest is required for its validity.62 Because regulations of this type are not designed to suppress any particular
message, they are not subject to the strictest form of judicial scrutiny but an intermediate approach—
somewhere between the mere rationality that is required of any other law and the compelling interest standard
applied to content-based restrictions.63 The test is called intermediate because the Court will not merely
rubberstamp the validity of a law but also require that the restrictions be narrowly-tailored to promote an
important or significant governmental interest that is unrelated to the suppression of expression. The
intermediate approach has been formulated in this manner:
A governmental regulation is sufficiently justified if it is within the constitutional power of the Government, if it
furthers an important or substantial governmental interest; if the governmental interest is unrelated to the
suppression of free expression; and if the incident restriction on alleged [freedom of speech & expression] is no
greater than is essential to the furtherance of that interest. 64
On the other hand, a governmental action that restricts freedom of speech or of the press based on content is
given the strictest scrutiny in light of its inherent and invasive impact. Only when the challenged act has
overcome the clear and present danger rule will it pass constitutional muster,65 with the government having the
burden of overcoming the presumed unconstitutionality.
Unless the government can overthrow this presumption, the content-based restraint will be struck down.66
With respect to content-based restrictions, the government must also show the type of harm the speech sought
to be restrained would bring about— especially the gravity and the imminence of the threatened harm –
otherwise the prior restraint will be invalid. Prior restraint on speech based on its content cannot be justified by
hypothetical fears, "but only by showing a substantive and imminent evil that has taken the life of a reality
already on ground."67 As formulated, "the question in every case is whether the words used are used in such
circumstances and are of such a nature as to create a clear and present danger that they will bring about the
substantive evils that Congress has a right to prevent. It is a question of proximity and degree."68
The regulation which restricts the speech content must also serve an important or substantial government
interest, which is unrelated to the suppression of free expression. 69
Also, the incidental restriction on speech must be no greater than what is essential to the furtherance of that
interest. 70 A restriction that is so broad that it encompasses more than what is required to satisfy the
governmental interest will be invalidated. 71 The regulation, therefore, must be reasonable and narrowly drawn
to fit the regulatory purpose, with the least restrictive means undertaken. 72
Thus, when the prior restraint partakes of a content-neutral regulation, it is subjected to an intermediate review.
A content-based regulation,73 however, bears a heavy presumption of invalidity and is measured against the
clear and present danger rule. The latter will pass constitutional muster only if justified by a compelling reason,
and the restrictions imposed are neither overbroad nor vague. 74
Applying the foregoing, it is clear that the challenged acts in the case at bar need to be subjected to the clear
and present danger rule, as they are content-based restrictions. The acts of respondents focused solely on but
one object—a specific content— fixed as these were on the alleged taped conversations between the President
and a COMELEC official. Undoubtedly these did not merely provide regulations as to the time, place or manner
of the dissemination of speech or expression.
E.5. Dichotomy of Free Press: Print v. Broadcast Media
Finally, comes respondents’ argument that the challenged act is valid on the ground that broadcast media enjoys
free speech rights that are lesser in scope to that of print media. We next explore and test the validity of this
argument, insofar as it has been invoked to validate a content-based restriction on broadcast media.
The regimes presently in place for each type of media differ from one other. Contrasted with the regime in
respect of books, newspapers, magazines and traditional printed matter, broadcasting, film and video have been
subjected to regulatory schemes.
The dichotomy between print and broadcast media traces its origins in the United States. There, broadcast radio
and television have been held to have limited First Amendment protection,75 and U.S. Courts have excluded
broadcast media from the application of the "strict scrutiny" standard that they would otherwise apply to
content-based restrictions.76 According to U.S. Courts, the three major reasons why broadcast media stands
apart from print media are: (a) the scarcity of the frequencies by which the medium operates [i.e., airwaves are
physically limited while print medium may be limitless]; 77 (b) its "pervasiveness" as a medium; and (c) its
unique accessibility to children.78 Because cases involving broadcast media need not follow "precisely the same
approach that [U.S. courts] have applied to other media," nor go "so far as to demand that such regulations
serve ‘compelling’ government interests,"79 they are decided on whether the "governmental restriction" is
narrowly tailored to further a substantial governmental interest,"80 or the intermediate test.
As pointed out by respondents, Philippine jurisprudence has also echoed a differentiation in treatment between
broadcast and print media. Nevertheless, a review of Philippine case law on broadcast media will show that—as
we have deviated with the American conception of the Bill of Rights81— we likewise did not adopt en masse the
U.S. conception of free speech as it relates to broadcast media, particularly as to which test would govern
content-based prior restraints.
Our cases show two distinct features of this dichotomy. First, the difference in treatment, in the main, is in the
regulatory scheme applied to broadcast media that is not imposed on traditional print media, and narrowly
confined to unprotected speech (e.g., obscenity, pornography, seditious and inciting speech), or is based on a
compelling government interest that also has constitutional protection, such as national security or the electoral
process.
Second, regardless of the regulatory schemes that broadcast media is subjected to, the Court has consistently
held that the clear and present danger test applies to content-based restrictions on media, without making a
distinction as to traditional print or broadcast media.
The distinction between broadcast and traditional print media was first enunciated in Eastern Broadcasting
Corporation (DYRE) v. Dans,82 wherein it was held that "[a]ll forms of media, whether print or broadcast, are
entitled to the broad protection of the freedom of speech and expression clause. The test for limitations on
freedom of expression continues to be the clear and present danger rule…"83
Dans was a case filed to compel the reopening of a radio station which had been summarily closed on grounds of
national security. Although the issue had become moot and academic because the owners were no longer
interested to reopen, the Court still proceeded to do an analysis of the case and made formulations to serve as
guidelines for all inferior courts and bodies exercising quasi-judicial functions. Particularly, the Court made a
detailed exposition as to what needs be considered in cases involving broadcast media. Thus:84
xxx xxx xxx
(3) All forms of media, whether print or broadcast, are entitled to the broad protection of the freedom of speech
and expression clause. The test for limitations on freedom of expression continues to be the clear and present
danger rule, that words are used in such circumstances and are of such a nature as to create a clear and present
danger that they will bring about the substantive evils that the lawmaker has a right to prevent, In his
Constitution of the Philippines (2nd Edition, pp. 569-570) Chief Justice Enrique M. Fernando cites at least nine of
our decisions which apply the test. More recently, the clear and present danger test was applied in J.B.L. Reyes in
behalf of the Anti-Bases Coalition v. Bagatsing. (4) The clear and present danger test, however, does not lend
itself to a simplistic and all embracing interpretation applicable to all utterances in all forums.
Broadcasting has to be licensed. Airwave frequencies have to be allocated among qualified users. A broadcast
corporation cannot simply appropriate a certain frequency without regard for government regulation or for the
rights of others.
All forms of communication are entitled to the broad protection of the freedom of expression clause.
Necessarily, however, the freedom of television and radio broadcasting is somewhat lesser in scope than the
freedom accorded to newspaper and print media.
The American Court in Federal Communications Commission v. Pacifica Foundation (438 U.S. 726), confronted
with a patently offensive and indecent regular radio program, explained why radio broadcasting, more than
other forms of communications, receives the most limited protection from the free expression clause. First,
broadcast media have established a uniquely pervasive presence in the lives of all citizens, Material presented
over the airwaves confronts the citizen, not only in public, but in the privacy of his home. Second, broadcasting is
uniquely accessible to children. Bookstores and motion picture theaters may be prohibited from making certain
material available to children, but the same selectivity cannot be done in radio or television, where the listener
or viewer is constantly tuning in and out.
Similar considerations apply in the area of national security.

The broadcast media have also established a uniquely pervasive presence in the lives of all Filipinos. Newspapers
and current books are found only in metropolitan areas and in the poblaciones of municipalities accessible to
fast and regular transportation. Even here, there are low income masses who find the cost of books, newspapers,
and magazines beyond their humble means. Basic needs like food and shelter perforce enjoy high priorities.
On the other hand, the transistor radio is found everywhere. The television set is also becoming universal. Their
message may be simultaneously received by a national or regional audience of listeners including the indifferent
or unwilling who happen to be within reach of a blaring radio or television set. The materials broadcast over the
airwaves reach every person of every age, persons of varying susceptibilities to persuasion, persons of different
I.Q.s and mental capabilities, persons whose reactions to inflammatory or offensive speech would be difficult to
monitor or predict. The impact of the vibrant speech is forceful and immediate. Unlike readers of the printed
work, the radio audience has lesser opportunity to cogitate analyze, and reject the utterance.
(5) The clear and present danger test, therefore, must take the particular circumstances of broadcast media into
account. The supervision of radio stations-whether by government or through self-regulation by the industry
itself calls for thoughtful, intelligent and sophisticated handling.
The government has a right to be protected against broadcasts which incite the listeners to violently overthrow
it. Radio and television may not be used to organize a rebellion or to signal the start of widespread uprising. At
the same time, the people have a right to be informed. Radio and television would have little reason for
existence if broadcasts are limited to bland, obsequious, or pleasantly entertaining utterances. Since they are the
most convenient and popular means of disseminating varying views on public issues, they also deserve special
protection.
(6) The freedom to comment on public affairs is essential to the vitality of a representative democracy. In the
1918 case of United States v. Bustos (37 Phil. 731) this Court was already stressing that.
The interest of society and the maintenance of good government demand a full discussion of public affairs.
Complete liberty to comment on the conduct of public men is a scalpel in the case of free speech. The sharp
incision of its probe relieves the abscesses of officialdom. Men in public life may suffer under a hostile and an
unjust accusation; the wound can be assuaged with the balm of a clear conscience. A public officer must not be
too thin-skinned with reference to comment upon his official acts. Only thus can the intelligence and dignity of
the individual be exalted.
(7) Broadcast stations deserve the special protection given to all forms of media by the due process and freedom
of expression clauses of the Constitution. [Citations omitted]
It is interesting to note that the Court in Dans adopted the arguments found in U.S. jurisprudence to justify
differentiation of treatment (i.e., the scarcity, pervasiveness and accessibility to children), but only after
categorically declaring that "the test for limitations on freedom of expression continues to be the clear and
present danger rule," for all forms of media, whether print or broadcast. Indeed, a close reading of the above-
quoted provisions would show that the differentiation that the Court in Dans referred to was narrowly restricted
to what is otherwise deemed as "unprotected speech" (e.g., obscenity, national security, seditious and inciting
speech), or to validate a licensing or regulatory scheme necessary to allocate the limited broadcast frequencies,
which is absent in print media. Thus, when this Court declared in Dans that the freedom given to broadcast
media was "somewhat lesser in scope than the freedom accorded to newspaper and print media," it was not as
to what test should be applied, but the context by which requirements of licensing, allocation of airwaves, and
application of norms to unprotected speech. 85
In the same year that the Dans case was decided, it was reiterated in Gonzales v. Katigbak,86 that the test to
determine free expression challenges was the clear and present danger, again without distinguishing the
media.87 Katigbak, strictly speaking, does not treat of broadcast media but motion pictures. Although the issue
involved obscenity standards as applied to movies,88 the Court concluded its decision with the following obiter
dictum that a less liberal approach would be used to resolve obscenity issues in television as opposed to motion
pictures:
All that remains to be said is that the ruling is to be limited to the concept of obscenity applicable to motion
pictures. It is the consensus of this Court that where television is concerned, a less liberal approach calls for
observance. This is so because unlike motion pictures where the patrons have to pay their way, television
reaches every home where there is a set. Children then will likely be among the avid viewers of the programs
therein shown…..It cannot be denied though that the State as parens patriae is called upon to manifest an
attitude of caring for the welfare of the young.
More recently, in resolving a case involving the conduct of exit polls and dissemination of the results by a
broadcast company, we reiterated that the clear and present danger rule is the test we unquestionably adhere to
issues that involve freedoms of speech and of the press.89
This is not to suggest, however, that the clear and present danger rule has been applied to all cases that involve
the broadcast media. The rule applies to all media, including broadcast, but only when the challenged act is a
content-based regulation that infringes on free speech, expression and the press. Indeed, in Osmena v.
COMELEC,90 which also involved broadcast media, the Court refused to apply the clear and present danger rule
to a COMELEC regulation of time and manner of advertising of political advertisements because the challenged
restriction was content-neutral.91 And in a case involving due process and equal protection issues, the Court in
Telecommunications and Broadcast Attorneys of the Philippines v. COMELEC92 treated a restriction imposed on a
broadcast media as a reasonable condition for the grant of the media’s franchise, without going into which test
would apply.
That broadcast media is subject to a regulatory regime absent in print media is observed also in other
jurisdictions, where the statutory regimes in place over broadcast media include elements of licensing,
regulation by administrative bodies, and censorship. As explained by a British author:
The reasons behind treating broadcast and films differently from the print media differ in a number of respects,
but have a common historical basis. The stricter system of controls seems to have been adopted in answer to the
view that owing to their particular impact on audiences, films, videos and broadcasting require a system of prior
restraints, whereas it is now accepted that books and other printed media do not. These media are viewed as
beneficial to the public in a number of respects, but are also seen as possible sources of harm.93
Parenthetically, these justifications are now the subject of debate. Historically, the scarcity of frequencies was
thought to provide a rationale. However, cable and satellite television have enormously increased the number of
actual and potential channels. Digital technology will further increase the number of channels available. But still,
the argument persists that broadcasting is the most influential means of communication, since it comes into the
home, and so much time is spent watching television. Since it has a unique impact on people and affects children
in a way that the print media normally does not, that regulation is said to be necessary in order to preserve
pluralism. It has been argued further that a significant main threat to free expression—in terms of diversity—
comes not from government, but from private corporate bodies. These developments show a need for a
reexamination of the traditional notions of the scope and extent of broadcast media regulation. 94
The emergence of digital technology -- which has led to the convergence of broadcasting, telecommunications
and the computer industry -- has likewise led to the question of whether the regulatory model for broadcasting
will continue to be appropriate in the converged environment.95 Internet, for example, remains largely
unregulated, yet the Internet and the broadcast media share similarities, 96 and the rationales used to support
broadcast regulation apply equally to the Internet.97 Thus, it has been argued that courts, legislative bodies and
the government agencies regulating media must agree to regulate both, regulate neither or develop a new
regulatory framework and rationale to justify the differential treatment. 98
F. The Case At Bar
Having settled the applicable standard to content-based restrictions on broadcast media, let us go to its
application to the case at bar. To recapitulate, a governmental action that restricts freedom of speech or of the
press based on content is given the strictest scrutiny, with the government having the burden of overcoming the
presumed unconstitutionality by the clear and present danger rule. This rule applies equally to all kinds of media,
including broadcast media.
This outlines the procedural map to follow in cases like the one at bar as it spells out the following: (a) the test;
(b) the presumption; (c) the burden of proof; (d) the party to discharge the burden; and (e) the quantum of
evidence necessary. On the basis of the records of the case at bar, respondents who have the burden to show
that these acts do not abridge freedom of speech and of the press failed to hurdle the clear and present danger
test. It appears that the great evil which government wants to prevent is the airing of a tape recording in alleged
violation of the anti-wiretapping law. The records of the case at bar, however, are confused and confusing, and
respondents’ evidence falls short of satisfying the clear and present danger test. Firstly, the various statements of
the Press Secretary obfuscate the identity of the voices in the tape recording. Secondly, the integrity of the taped
conversation is also suspect. The Press Secretary showed to the public two versions, one supposed to be a
"complete" version and the other, an "altered" version. Thirdly, the evidence of the respondents on the who’s
and the how’s of the wiretapping act is ambivalent, especially considering the tape’s different versions. The
identity of the wire-tappers, the manner of its commission and other related and relevant proofs are some of the
invisibles of this case. Fourthly, given all these unsettled facets of the tape, it is even arguable whether its airing
would violate the anti-wiretapping law.
We rule that not every violation of a law will justify straitjacketing the exercise of freedom of speech and of the
press. Our laws are of different kinds and doubtless, some of them provide norms of conduct which even if
violated have only an adverse effect on a person’s private comfort but does not endanger national security. There
are laws of great significance but their violation, by itself and without more, cannot support suppression of free
speech and free press. In fine, violation of law is just a factor, a vital one to be sure, which should be weighed in
adjudging whether to restrain freedom of speech and of the press. The totality of the injurious effects of the
violation to private and public interest must be calibrated in light of the preferred status accorded by the
Constitution and by related international covenants protecting freedom of speech and of the press. In calling for
a careful and calibrated measurement of the circumference of all these factors to determine compliance with the
clear and present danger test, the Court should not be misinterpreted as devaluing violations of law. By all
means, violations of law should be vigorously prosecuted by the State for they breed their own evil
consequence. But to repeat, the need to prevent their violation cannot per se trump the exercise of free speech
and free press, a preferred right whose breach can lead to greater evils. For this failure of the respondents alone
to offer proof to satisfy the clear and present danger test, the Court has no option but to uphold the exercise of
free speech and free press. There is no showing that the feared violation of the anti-wiretapping law clearly
endangers the national security of the State.
This is not all the faultline in the stance of the respondents. We slide to the issue of whether the mere press
statements of the Secretary of Justice and of the NTC in question constitute a form of content-based prior
restraint that has transgressed the Constitution. In resolving this issue, we hold that it is not decisive that the
press statements made by respondents were not reduced in or followed up with formal orders or circulars. It is
sufficient that the press statements were made by respondents while in the exercise of their official functions.
Undoubtedly, respondent Gonzales made his statements as Secretary of Justice, while the NTC issued its
statement as the regulatory body of media. Any act done, such as a speech uttered, for and on behalf of the
government in an official capacity is covered by the rule on prior restraint. The concept of an "act" does not limit
itself to acts already converted to a formal order or official circular. Otherwise, the non formalization of an act
into an official order or circular will result in the easy circumvention of the prohibition on prior restraint. The
press statements at bar are acts that should be struck down as they constitute impermissible forms of prior
restraints on the right to free speech and press.
There is enough evidence of chilling effect of the complained acts on record. The warnings given to media came
from no less the NTC, a regulatory agency that can cancel the Certificate of Authority of the radio and broadcast
media. They also came from the Secretary of Justice, the alter ego of the Executive, who wields the awesome
power to prosecute those perceived to be violating the laws of the land. After the warnings, the KBP inexplicably
joined the NTC in issuing an ambivalent Joint Press Statement. After the warnings, petitioner Chavez was left
alone to fight this battle for freedom of speech and of the press. This silence on the sidelines on the part of some
media practitioners is too deafening to be the subject of misinterpretation.
The constitutional imperative for us to strike down unconstitutional acts should always be exercised with care
and in light of the distinct facts of each case. For there are no hard and fast rules when it comes to slippery
constitutional questions, and the limits and construct of relative freedoms are never set in stone. Issues revolving
on their construct must be decided on a case to case basis, always based on the peculiar shapes and shadows of
each case. But in cases where the challenged acts are patent invasions of a constitutionally protected right, we
should be swift in striking them down as nullities per se. A blow too soon struck for freedom is preferred than a
blow too late.
In VIEW WHEREOF, the petition is GRANTED. The writs of certiorari and prohibition are hereby issued, nullifying
the official statements made by respondents on June 8, and 11, 2005 warning the media on airing the alleged
wiretapped conversation between the President and other personalities, for constituting unconstitutional prior
restraint on the exercise of freedom of speech and of the press
SO ORDERED.
G.R. No. 145222 April 24, 2009
SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners,

vs.
THE HONORABLE COURT OF APPEALS, Former Division, and ROMULO NICOL, Respondents.
DECISION
TINGA, J.:
Before this Court is a petition for certiorari assailing the Decision1 of the Court of Appeals in CA-G.R. CV No.
47029 and its Resolution denying the motion for reconsideration thereof.
The case stemmed from the following factual backdrop:
On 30 April 1984, Spouses Roberto and Venus Buado (petitioners) filed a complaint for damages against Erlinda
Nicol (Erlinda) with Branch 19 of the Regional Trial Court (RTC) of Bacoor, Cavite, docketed as Civil Case No. 84-
33. Said action originated from Erlinda Nicol’s civil liability arising from the criminal offense of slander filed
against her by petitioners.
On 6 April 1987, the trial court rendered a decision ordering Erlinda to pay damages. The dispositive portion
reads:
Wherefore, judgment is hereby rendered in favor of the plaintiff[s] and against defendant ordering the latter to
pay the former the amount of thirty thousand (₱30,000.00) pesos as moral damages, five thousand (₱5,000.00)
pesos as attorney’s fees and litigation expenses, another five thousand (₱5,000.00) pesos as exemplary damages
and the cost of suit.2
Said decision was affirmed, successively, by the Court of Appeals and this Court. It became final and executory on
5 March 1992.
On 14 October 1992, the trial court issued a writ of execution, a portion of which provides:
Now, therefore, you are commanded that of the goods and chattels of the defendant Erlinda Nicol, or from her
estates or legal heirs, you cause the sum in the amount of forty thousand pesos (₱40,000.00), Philippine
Currency, representing the moral damages, attorney’s fees and litigation expenses and exemplary damages and
the cost of suit of the plaintiff aside from your lawful fees on this execution and do likewise return this writ into
court within sixty (60) days from date, with your proceedings endorsed hereon.
But if sufficient personal property cannot be found whereof to satisfy this execution and lawful fees thereon,
then you are commanded that of the lands and buildings of said defendant you make the said sum of money in
the manner required by the Rules of Court, and make return of your proceedings with this writ within sixty (60)
days from date.3
Finding Erlinda Nicol’s personal properties insufficient to satisfy the judgment, the Deputy Sheriff issued a notice
of levy on real property on execution addressed to the Register of Deeds of Cavite. The notice of levy was
annotated on the Transfer Certificate of Title No. T-125322.
On 20 November 1992, a notice of sheriff’s sale was issued.
Two (2) days before the public auction sale on 28 January 1993, an affidavit of third-party claim from one Arnulfo
F. Fulo was received by the deputy sheriff prompting petitioners to put up a sheriff’s indemnity bond. The
auction sale proceeded with petitioners as the highest bidder.
On 4 February 1993, a certificate of sale was issued in favor of petitioners.
Almost a year later on 2 February 1994, Romulo Nicol (respondent), the husband of Erlinda Nicol, filed a
complaint for annulment of certificate of sale and damages with preliminary injunction against petitioners and
the deputy sheriff. Respondent, as plaintiff therein, alleged that the defendants, now petitioners, connived and
directly levied upon and execute his real property without exhausting the personal properties of Erlinda Nicol.
Respondent averred that there was no proper publication and posting of the notice of sale. Furthermore,
respondent claimed that his property which was valued at ₱500,000.00 was only sold at a "very low price" of
₱51,685.00, whereas the judgment obligation of Erlinda Nicol was only ₱40,000.00. The case was assigned to
Branch 21 of the RTC of Imus, Cavite.
In response, petitioners filed a motion to dismiss on the grounds of lack of jurisdiction and that they had acted
on the basis of a valid writ of execution. Citing De Leon v. Salvador,4 petitioners claimed that respondent should
have filed the case with Branch 19 where the judgment originated and which issued the order of execution, writ
of execution, notice of levy and notice of sheriff’s sale.
In an Order5 dated 18 April 1994, the RTC dismissed respondent’s complaint and ruled that Branch 19 has
jurisdiction over the case, thus:
As correctly pointed out by the defendants, any flaw in the implementation of the writ of execution by the
implementing sheriff must be brought before the court issuing the writ of execution. Besides, there are two (2)
remedies open to the plaintiff, if he feels that the property being levied on belongs to him and not to the
judgment debtor. The first remedy is to file a third-party claim. If he fails to do this, a right is reserved to him to
vindicate his claim over the property by any proper action. But certainly, this is not the proper action reserved to
the plaintiff to vindicate his claim over the property in question to be ventilated before this court. As earlier
stated, this case should have been addressed to Branch 19, RTC Bacoor as it was that court which issued the writ
of execution.6
Respondent moved for reconsideration but it was denied on 26 July 1994.
On appeal, the Court of Appeals reversed the trial court and held that Branch 21 has jurisdiction to act on the
complaint filed by appellant. The dispositive portion reads:
WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. This case is REMANDED to the
Regional Trial Court of Imus, Cavite, Branch 21 for further proceedings.
SO ORDERED.7
Petitioners’ motion for reconsideration was denied on 23 August 2000. Hence, the instant petition attributing
grave abuse of discretion on the part of the Court of Appeals.
A petition for certiorari is an extraordinary remedy that is adopted to correct errors of jurisdiction committed by
the lower court or quasi-judicial agency, or when there is grave abuse of discretion on the part of such court or
agency amounting to lack or excess of jurisdiction. Where the error is not one of jurisdiction, but of law or fact
which is a mistake of judgment, the proper remedy should be appeal. In addition, an independent action for
certiorari may be availed of only when there is no appeal or any plain, speedy and adequate remedy in the
ordinary course of law.8
Nowhere in the petition was it shown that the jurisdiction of the Court of Appeals was questioned. The issue
devolves on whether the husband of the judgment debtor may file an independent action to protect the
conjugal property subject to execution. The alleged error therefore is an error of judgment which is a proper
subject of an appeal.
Nevertheless, even if we were to treat this petition as one for review, the case should still be dismissed on
substantive grounds.
Petitioners maintain that Branch 19 retained jurisdiction over its judgment to the exclusion of all other co-
ordinate courts for its execution and all incidents thereof, in line with De Leon v. Salvador. Petitioners insist that
respondent, who is the husband of the judgment debtor, is not the "third party" contemplated in Section 17
(now Section 16), Rule 39 of the Rules of Court, hence a separate action need not be filed. Furthermore,
petitioners assert that the obligation of the wife redounded to the benefit of the conjugal partnership and cited
authorities to the effect that the husband is liable for the tort committed by his wife.
Respondent on the other hand merely avers that the decision of the Court of Appeals is supported by substantial
evidence and in accord with law and jurisprudence.9
Verily, the question of jurisdiction could be resolved through a proper interpretation of Section 16, Rule 39 of the
Rules of Court, which reads:
Sec. 16. Proceedings where property claimed by third person.
If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person
makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title,
and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer
shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond
approved by the court to indemnify the third-party claimant in a sum not less than the value of the property
levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of
execution. No claim for damages for the taking or keeping of the property may be enforced against the bond
unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if
such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his
claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same
or a separate action against a third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing
it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a
result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the
purpose. (Emphasis Supplied)
Apart from the remedy of terceria available to a third-party claimant or to a stranger to the foreclosure suit
against the sheriff or officer effecting the writ by serving on him an affidavit of his title and a copy thereof upon
the judgment creditor, a third-party claimant may also resort to an independent separate action, the object of
which is the recovery of ownership or possession of the property seized by the sheriff, as well as damages arising
from wrongful seizure and detention of the property. If a separate action is the recourse, the third-party claimant
must institute in a forum of competent jurisdiction an action, distinct and separate from the action in which the
judgment is being enforced, even before or without need of filing a claim in the court that issued the
writ.101awphi1.zw+
A third-party claim must be filed a person other than the judgment debtor or his agent. In other words, only a
stranger to the case may file a third-party claim.
This leads us to the question: Is the husband, who was not a party to the suit but whose conjugal property is
being executed on account of the other spouse being the judgment obligor, considered a "stranger?"
In determining whether the husband is a stranger to the suit, the character of the property must be taken into
account. In Mariano v. Court of Appeals,11 which was later adopted in Spouses Ching v. Court of Appeals,12 this
Court held that the husband of the judgment debtor cannot be deemed a "stranger" to the case prosecuted and
adjudged against his wife for an obligation that has redounded to the benefit of the conjugal partnership.13 On
the other hand, in Naguit v. Court of Appeals14 and Sy v. Discaya,15 the Court stated that a spouse is deemed a
stranger to the action wherein the writ of execution was issued and is therefore justified in bringing an
independent action to vindicate her right of ownership over his exclusive or paraphernal property.lawphil.net
Pursuant to Mariano however, it must further be settled whether the obligation of the judgment debtor
redounded to the benefit of the conjugal partnership or not.
Petitioners argue that the obligation of the wife arising from her criminal liability is chargeable to the conjugal
partnership. We do not agree.
There is no dispute that contested property is conjugal in nature. Article 122 of the Family Code16 explicitly
provides that payment of personal debts contracted by the husband or the wife before or during the marriage
shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family.
Unlike in the system of absolute community where liabilities incurred by either spouse by reason of a crime or
quasi-delict is chargeable to the absolute community of property, in the absence or insufficiency of the exclusive
property of the debtor-spouse, the same advantage is not accorded in the system of conjugal partnership of
gains. The conjugal partnership of gains has no duty to make advance payments for the liability of the debtor-
spouse.
Parenthetically, by no stretch of imagination can it be concluded that the civil obligation arising from the crime of
slander committed by Erlinda redounded to the benefit of the conjugal partnership.
To reiterate, conjugal property cannot be held liable for the personal obligation contracted by one spouse, unless
some advantage or benefit is shown to have accrued to the conjugal partnership.17
In Guadalupe v. Tronco,18 this Court held that the car which was claimed by the third party complainant to be
conjugal property was being levied upon to enforce "a judgment for support" filed by a third person, the third-
party claim of the wife is proper since the obligation which is personal to the husband is chargeable not on the
conjugal property but on his separate property.
Hence, the filing of a separate action by respondent is proper and jurisdiction is thus vested on Branch 21.
Petitioners failed to show that the Court of Appeals committed grave abuse of discretion in remanding the case
to Branch 21 for further proceedings.
WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals is AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. 164201 December 10, 2012
EFREN PANA, Petitioner,

vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE, JR., Respondents.
DECISION
ABAD, J.:
This case is about the propriety of levy and execution on conjugal properties where one of the spouses has been
found guilty of a crime and ordered to pay civil indemnities to the victims' heirs.
The Facts and the Case
The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and others of murder before the.
Regional Trial Court (RTC) of Surigao City in Criminal Cases 4232 and 4233.1
On July 9, 1997 the RTC rendered a consolidated decision2 acquitting Efren of the charge for insufficiency of
evidence but finding Melecia and another person guilty as charged and sentenced them to the penalty of death.
The RTC ordered those found guilty to pay each of the heirs of the victims, jointly and severally, P50,000.00 as
civil indemnity, P50,000.00 each as moral damages, and P150,000.00 actual damages.
On appeal to this Court, it affirmed on May 24, 2001 the conviction of both accused but modified the penalty to
reclusion perpetua. With respect to the monetary awards, the Court also affirmed the award of civil indemnity
and moral damages but deleted the award for actual damages for lack of evidentiary basis. In its place, however,
the Court made an award of P15,000.00 each by way of temperate damages. In addition, the Court awarded
P50,000.00 exemplary damages per victim to be paid solidarily by them.3 The decision became final and
executory on October 1, 2001.4
Upon motion for execution by the heirs of the deceased, on March 12, 2002 the RTC ordered the issuance of the
writ,5 resulting in the levy of real properties registered in the names of Efren and Melecia.6 Subsequently, a
notice of levy7 and a notice of sale on execution8 were issued.
On April 3, 2002, petitioner Efren and his wife Melecia filed a motion to quash the writ of execution, claiming
that the levied properties were conjugal assets, not paraphernal assets of Melecia.9 On September 16, 2002 the
RTC denied the motion.10 The spouses moved for reconsideration but the RTC denied the same on March 6,
2003.11
Claiming that the RTC gravely abused its discretion in issuing the challenged orders, Efren filed a petition for
certiorari before the Court of Appeals (CA). On January 29, 2004 the CA dismissed the petition for failure to
sufficiently show that the RTC gravely abused its discretion in issuing its assailed orders.12 It also denied Efren’s
motion for reconsideration,13 prompting him to file the present petition for review on certiorari.
The Issue Presented

The sole issue presented in this case is whether or not the CA erred in holding that the conjugal properties of
spouses Efren and Melecia can be levied and executed upon for the satisfaction of Melecia’s civil liability in the
murder case.
Ruling of the Court
To determine whether the obligation of the wife arising from her criminal liability is chargeable against the
properties of the marriage, the Court has first to identify the spouses’ property relations.
Efren claims that his marriage with Melecia falls under the regime of conjugal partnership of gains, given that
they were married prior to the enactment of the Family Code and that they did not execute any prenuptial
agreement.14 Although the heirs of the deceased victims do not dispute that it was the Civil Code, not the
Family Code, which governed the marriage, they insist that it was the system of absolute community of property
that applied to Efren and Melecia. The reasoning goes:
Admittedly, the spouses were married before the effectivity of the Family Code. But that fact does not prevent
the application of [A]rt. 94, last paragraph, of the Family Code because their property regime is precisely
governed by the law on absolute community. This finds support in Art. 256 of the Family Code which states:
"This code shall have retroactive effect in so far as it does not prejudice or impair vested or acquired rights in
accordance with the Civil Code or other laws."
None of the spouses is dead. Therefore, no vested rights have been acquired by each over the properties of the
community. Hence, the liabilities imposed on the accused-spouse may properly be charged against the
community as heretofore discussed.15
The RTC applied the same reasoning as above.16 Efren and Melecia’s property relation was admittedly conjugal
under the Civil Code but, since the transitory provision of the Family Code gave its provisions retroactive effect if
no vested or acquired rights are impaired, that property relation between the couple was changed when the
Family Code took effect in 1988. The latter code now prescribes in Article 75 absolute community of property for
all marriages unless the parties entered into a prenuptial agreement. As it happens, Efren and Melecia had no
prenuptial agreement. The CA agreed with this position.17
Both the RTC and the CA are in error on this point. While it is true that the personal stakes of each spouse in
their conjugal assets are inchoate or unclear prior to the liquidation of the conjugal partnership of gains and,
therefore, none of them can be said to have acquired vested rights in specific assets, it is evident that Article 256
of the Family Code does not intend to reach back and automatically convert into absolute community of
property relation all conjugal partnerships of gains that existed before 1988 excepting only those with prenuptial
agreements.
The Family Code itself provides in Article 76 that marriage settlements cannot be modified except prior to
marriage.
Art. 76. In order that any modification in the marriage settlements may be valid, it must be made before the
celebration of the marriage, subject to the provisions of Articles 66, 67, 128, 135 and 136.
Clearly, therefore, the conjugal partnership of gains that governed the marriage between Efren and Melecia who
were married prior to 1988 cannot be modified except before the celebration of that marriage.
Post-marriage modification of such settlements can take place only where: (a) the absolute community or
conjugal partnership was dissolved and liquidated upon a decree of legal separation;18 (b) the spouses who
were legally separated reconciled and agreed to revive their former property regime;19 (c) judicial separation of
property had been had on the ground that a spouse abandons the other without just cause or fails to comply
with his obligations to the family;20 (d) there was judicial separation of property under Article 135; (e) the
spouses jointly filed a petition for the voluntary dissolution of their absolute community or conjugal partnership
of gains.21 None of these circumstances exists in the case of Efren and Melecia.
What is more, under the conjugal partnership of gains established by Article 142 of the Civil Code, the husband
and the wife place only the fruits of their separate property and incomes from their work or industry in the
common fund. Thus:
Art. 142. By means of the conjugal partnership of gains the husband and wife place in a common fund the fruits
of their separate property and the income from their work or industry, and divide equally, upon the dissolution
of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by either spouse during
the marriage.
This means that they continue under such property regime to enjoy rights of ownership over their separate
properties. Consequently, to automatically change the marriage settlements of couples who got married under
the Civil Code into absolute community of property in 1988 when the Family Code took effect would be to impair
their acquired or vested rights to such separate properties.
The RTC cannot take advantage of the spouses’ loose admission that absolute community of property governed
their property relation since the record shows that they had been insistent that their property regime is one of
conjugal partnership of gains.22 No evidence of a prenuptial agreement between them has been presented.
What is clear is that Efren and Melecia were married when the Civil Code was still the operative law on
marriages. The presumption, absent any evidence to the contrary, is that they were married under the regime of
the conjugal partnership of gains. Article 119 of the Civil Code thus provides:
Art. 119. The future spouses may in the marriage settlements agree upon absolute or relative community of
property, or upon complete separation of property, or upon any other regime. In the absence of marriage
settlements, or when the same are void, the system of relative community or conjugal partnership of gains as
established in this Code, shall govern the property relations between husband and wife.
Of course, the Family Code contains terms governing conjugal partnership of gains that supersede the terms of
the conjugal partnership of gains under the Civil Code. Article 105 of the Family Code states:
"x x x x
The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to conjugal partnerships of
gains already established between spouses before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as provided in Article 256."23
Consequently, the Court must refer to the Family Code provisions in deciding whether or not the conjugal
properties of Efren and Melecia may be held to answer for the civil liabilities imposed on Melecia in the murder
case. Its Article 122 provides:
Art. 122. The payment of personal debts contracted by the husband or the wife before or during the marriage
shall not be charged to the conjugal properties partnership except insofar as they redounded to the benefit of
the family.
Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.
However, the payment of personal debts contracted by either spouse before the marriage, that of fines and
indemnities imposed upon them, as well as the support of illegitimate children of either spouse, may be
enforced against the partnership assets after the responsibilities enumerated in the preceding Article have been
covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the
time of the liquidation of the partnership, such spouse shall be charged for what has been paid for the purpose
above-mentioned.
Since Efren does not dispute the RTC’s finding that Melecia has no exclusive property of her own,24 the above
applies. The civil indemnity that the decision in the murder case imposed on her may be enforced against their
conjugal assets after the responsibilities enumerated in Article 121 of the Family Code have been covered.25
Those responsibilities are as follows:
(1) The support of the spouse, their common children, and the legitimate children of either spouse; however, the
support of illegitimate children shall be governed by the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the
benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the
family may have benefited;
(4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal partnership
property;
(5) All taxes and expenses for mere preservation made during the marriage upon the separate property of either
spouse;
(6) Expenses to enable either spouse to commence or complete a professional, vocational, or other activity for
self-improvement;
(7) Antenuptial debts of either spouse insofar as they have redounded to the benefit of the family;
(8) The value of what is donated or promised by both spouses in favor of their common legitimate children for
the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-
improvement; and
(9) Expenses of litigation between the spouses unless the suit is found to be groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for
the unpaid balance with their separate properties.1âwphi1
Contrary to Efren’s contention, Article 121 above allows payment of the criminal indemnities imposed on his
wife, Melecia, out of the partnership assets even before these are liquidated. Indeed, it states that such
indemnities "may be enforced against the partnership assets after the responsibilities enumerated in the
preceding article have been covered."[26] No prior liquidation of those assets is required. This is not altogether
unfair since Article 122 states that "at the time of liquidation of the partnership, such [offending] spouse shall be
charged for what has been paid for the purposes above-mentioned."
WHEREFORE, the Court AFFIRMS with MODIFICATION the Resolutions of the Court of Appeals in CA-G.R. SP
77198 dated January 29, 2004 and May 14, 2004. The Regional Trial Court of Surigao City, Branch 30, shall first
ascertain that, in enforcing the writ of execution on the conjugal properties of spouses Efren and Melecia Pana
for the satisfaction of the indemnities imposed by final judgment on the latter accused in Criminal Cases 4232
and 4233, the responsibilities enumerated in Article 121 of the Family Code have been covered.
SO ORDERED.
G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing business under the name and style of
A & L INDUSTRIES), respondents.
GUTIERREZ, JR., J.:
This is a petition for review seeking to set aside the decision of the Court of Appeals which affirmed the decision
of the then Court of First Instance of Manila, dismissing the complaint instituted by the petitioner and ordering it
to pay damages on the basis of the private respondent's counterclaim.
On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the amount of
P591,003.59 as evidenced by a promissory note he signed in his own behalf and as representative of the A & L
Industries. Respondent Yulo presented an alleged special power of attorney executed by his wife, respondent Lily
Yulo, who manages A & L Industries and under whose name the said business is registered, purportedly
authorizing Augusto Yulo to procure the loan and sign the promissory note. About two months prior to the loan,
however, Augusto Yulo had already left Lily Yulo and their children and had abandoned their conjugal home.
When the obligation became due and demandable, Augusto Yulo failed to pay the same.
On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto and Lily Yulo on the
basis of the promissory note. It also prayed for the issuance of a writ of attatchment alleging that the said
spouses were guilty of fraud in contracting the debt upon which the action was brought and that the fraud
consisted of the spouses' inducing the petitioner to enter into a contract with them by executing a Deed of
Assignment in favor of the petitioner, assigning all their rights, titles and interests over a construction contract
executed by and between the spouses and A. Soriano Corporation on June 19, 1974 for a consideration of
P615,732.50 when, in truth, the spouses did not have any intention of remitting the proceeds of the said
construction contract to the petitioner because despite the provisions in the Deed of Assignment that the
spouses shall, without compensation or costs, collect and receive in trust for the petitioner all payments made
upon the construction contract and shall remit to the petitioner all collections therefrom, the said spouses failed
and refuse to remit the collections and instead, misappropriated the proceeds for their own use and benefit,
without the knowledge or consent of the petitioner.
The trial court issued the writ of attachment prayed for thereby enabling the petitioner to attach the properties
of A & L Industries. Apparently not contented with the order, the petitioner filed another motion for the
examination of attachment debtor, alleging that the properties attached by the sheriff were not sufficient to
secure the satisfaction of any judgment that may be recovered by it in the case. This was likewise granted by the
court.
Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusta Yulo and she are
husband and wife, the former had abandoned her and their children five (5) months before the filing of the
complaint; that they were already separated when the promissory note was executed; that her signature in the
special power of attorney was forged because she had never authorized Augusto Yulo in any capacity to transact
any business for and in behalf of A & L Industries, which is owned by her as a single proprietor, that she never got
a single centavo from the proceeds of the loan mentioned in the promissory note; and that as a result of the
illegal attachment of her properties, which constituted the assets of the A & L Industries, the latter closed its
business and was taken over by the new owner.
After hearing, the trial court rendered judgment dismissing the petitioner's complaint against the private
respondent Lily Yulo and A & L Industries and ordering the petitioner to pay the respondent Lily Yulo
P660,000.00 as actual damages; P500,000.00 as unrealized profits; P300,000.00 as exemplary damages;
P30,000.00 as and for attorney's fees; and to pay the costs.
The petitioner appealed. The Court of Appeals affirmed the trial court's decision except for the exemplary
damages which it reduced from P300,000.00 to P150,000.00 and the attorney's fees which were reduced from
P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in holding that the signature of respondent Lily
Yulo in the special power of attorney was forged, the Court of Appeals said:
The crucial issue to be determined is whether or not the signatures of the appellee Lily Yulo in Exhibits B and B-1
are forged. Atty. Crispin Ordoña, the Notary Public, admitted in open court that the parties in the subject
documents did not sign their signatures in his presence. The same were already signed by the supposed parties
and their supposed witnesses at the time they were brought to him for ratification. We quote from the records
the pertinent testimony of Atty. Ordoña, thus:
Q. This document marked as Exhibit B-1, when this was presented to you by that common friend, June
Enriquez, it was already typewritten, it was already accomplished, all typewritten.?
A. Yes, sir.
Q And the parties had already affixed their signatures in this document?
A. Yes, sir.
Q. In this document marked as Exhibit B although it appears here that this is an acknowledgment, you have
not stated here that the principal actually acknowledged this document to be her voluntary act and deed?
A This in one of those things that escaped my attention. Actually I have not gone over the second page. I
believed it was in order I signed it. (TSN pp. 13-14, Hearing of Nov. 26, 1976).
The glaring admission by the Notary Public that he failed to state in the acknowledgment portion of Exhibit B-1
that the appellee Lily Yulo acknowledged the said document to be her own voluntary act and deed, is a very
strong and commanding circumstance to show that she did not appear personally before the said Notary Public
and did not sign the document.
Additionally, the Notary Public admitted that, while June Enriquez is admittedly a mutual friend of his and the
defendant Augusta Yulo, and who is also an instrumental witness in said Exhibit B-1., he could not recognize or
tell which of the two signatures appearing therein, was the signature of this June Enriquez.
Furthermore, as the issue is one of credibility of a witness, the findings and conclusions of the trial court before
whom said witness, Atty. Crispin Ordoña, the Notary Public before whom the questioned document was
supposedly ratified and acknowledged, deserve great respect and are seldom disturbed on appeal by appellate
tribunals, since it is in the best and peculiar advantage of determining and observing the conduct, demeanor and
deportment of a particular witness while he is testifying in court, an opportunity not enjoyed by the appellate
courts who merely have to rely on the recorded proceedings which transpired in the court below, and the
records are bare of any circumstance of weight, which the trial court had overlooked and which if duly
considered, may radically affect the outcome of the case.
On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her signature in Exhibit B-1,
presented in court a handwriting expert witness in the person of Police Captain Yakal Giron of the Integrated
National Police Training Command, and who is also a Document Examiner of the same Command's Crime
Laboratory at Fort Bonifacio, Metro Manila. His experience as an examiner of questioned and disputed
documents, in our mind, is quite impressive. To qualify him as a handwriting expert, he declared that he
underwent extensive and actual studies and examination of disputed or questioned document, both at the
National Bureau of Investigation Academy and National Bureau of Investigation Questioned Document
Laboratory, respectively, from July 1964, up to his appointment as Document Examiner in June, 1975, and, to
further his experience along this line, he attended the 297th Annual Conference of the American Society of
Questioned Docurnent Examiners held at Seattle, Washington, in August 1971, as a representative of the
Philippines, and likewise conducted an observation of the present and modern trends of crime laboratories in
the West Coast, U.S.A., in 1971; that he likewise had conducted actual tests and examination of about 100,000
documents, as requested by the different courts, administrative, and governmental agencies of the Government,
substantial portions of which relate to actual court cases.
In concluding that the signatures of the appellee Lily Yulo, in the disputed document in question (Exh. B-1), were
all forgeries, and not her genuine signature, the expert witness categorically recited and specified in open court
what he observed to be about twelve (12) glaring and material significant differences, in his comparison of the
signatures appearing in the genuine specimen signatures of the said appellee and with those appearing in the
questioned document (Exhibit B-1). Indeed, we have likewise seen the supposed notable differences, found in
the standard or genuine signatures of the appellee which were lifted and obtained in the official files of the
government, such as the Bureau of Internal Revenue on her income tax returns, as compared to the pretended
signature of the appellee appearing in Exhibits B, B-1. It is also noteworthy to mention that the appellant did not
even bother to conduct a cross-examination of the handwriting expert witness, Capt. Giron, neither did the
appellant present another handwriting expert, at least to counter-act or balance the appellee's handwriting
expert.
Prescinding from the foregoing facts, we subscribe fully to the lower court's observations that the signatures of
the appellee Lily Yulo in the questioned document (Exh. B-1) were forged. Hence, we find no factual basis to
disagree. (pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily Yulo was forged or even if the attached
properties were her exclusive property, the same can be made answerable to the obligation because the said
properties form part of the conjugal partnership of the spouses Yulo, the appellate court held that these
contentions are without merit because there is strong preponderant evidence to show that A & L Industries
belongs exclusively to respondent Lily Yulo, namely: a) The Certificate of Registration of A & L Industries, issued
by the Bureau of Commerce, showing that said business is a single proprietorship, and that the registered owner
thereof is only Lily Yulo; b) The Mayor's Permit issued in favor of A & L Industries, by the Caloocan City Mayor's
Office showing compliance by said single proprietorship company with the City Ordinance governing business
establishments; and c) The Special Power of Attorney itself, assuming but without admitting its due execution, is
tangible proof that Augusto Yulo has no interest whatsoever in the A & L Industries, otherwise, there would have
been no necessity for the Special Power of Attorney if he is a part owner of said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed the findings of the trial court that there was
bad faith on the part of the petitioner as to entitle the private respondent to damages as shown not only by the
fact that the petitioner did not present the Deed of Assignment or the construction agreement or any evidence
whatsoever to support its claim of fraud on the part of the private respondent and to justify the issuance of a
preliminary attachment, but also by the following findings:
Continuing and elaborating further on the appellant's mala fide actuations in securing the writ of attachment,
the lower court stated as follows:
Plaintiff not satisfied with the instant case where an order for attachment has already been issued and enforced,
on the strength of the same Promissory Note (Exhibit"A"), utilizing the Deed of Chattel Mortgage (Exhibit "4"),
filed a foreclosure proceedings before the Office of the Sheriff of Caloocan (Exhibit"6") foreclosing the remaining
properties found inside the premises formerly occupied by the A & L Industries. A minute examination of Exhibit
"4" will show that the contracting parties thereto, as appearing in par. 1 thereof, are Augusto Yulo, doing
business under the style of A & L Industries (should be A & L Glass Industries Corporation), as mortgagor and BA
Finance Corporation as mortgagee, thus the enforcement of the Chattel Mortgage against the property of A & L
Industries exclusively owned by Lily T. Yulo appears to be without any factual or legal basis whatsoever. The
chattel mortgage, Exhibit "4" and the Promissory Note, Exhibit A, are based on one and the same obligation.
Plaintiff tried to enforce as it did enforce its claim into two different modes a single obligation.
Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by virtue of a complaint she filed with the
Court of First Instance of Caloocan, seeking annulment of the Promissory Note, the very basis of the plaintiff in
filing this complaint, immediately after the day it filed a Motion for the Issuance of an Alias Writ of Preliminary
Attachment . . .Yet, inspite of the knowledge and the filing of this Motion to Suspend Proceedings, the Plaintiff
still filed a Motion for the Issuance of a Writ of Attachment dated February 6, 1976 before this court. To add
insult to injury, plaintiff even filed a Motion for Examination of the Attachment Debtor, although aware that Lily
Yulo had already denied participation in the execution of Exhibits "A" and "B". These incidents and actions taken
by plaintiff, to the thinking of the court, are sufficient to prove and establish the element of bad faith and malice
on the part of plaintiff which may warrant the award of damages in favor of defendant Lily Yulo. (Ibid., pp. 102-
103).<äre||anº•1àw>
Indeed, the existence of evident bad faith on the appellant's part in proceeding against the appellee Lily Yulo in
the present case, may likewise be distressed on the fact that its officer Mr. Abraham Co, did not even bother to
demand the production of at least the duplicate original of the Special Power of Attorney (Exhibit B) and merely
contended himself with a mere xerox copy thereof, neither did he require a more specific authority from the A &
L Industries to contract the loan in question, since from the very content and recitals of the disputed document,
no authority, express or implied, has been delegated or granted to August Yulo to contract a loan, especially with
the appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the petitioner should have presented evidence to
disprove or rebut the private respondent's claim but it remained quiet and chose not to disturb the testimony
and the evidence presented by the private respondent to prove her claim.
In this petition for certiorari, the petitioner raises three issues. The first issue deals with the appellate court's
affirmance of the trial court's findings that the signature of the private respondent on the Special Power of
Attorney was forged. According to the petitioner, the Court of Appeals disregarded the direct mandate of Section
23, Rule 132 of the Rules of Court which states in part that evidence of handwriting by comparison may be made
"with writings admitted or treated as genuine by the party against whom the evidence is offered, or proved to be
genuine to the satisfaction of the judge," and that there is no evidence on record which proves or tends to prove
the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as "standards" for comparison with the alleged signature
of the private respondent in the Special Power of Attorney were those from the latter's residence certificates in
the years 1973, 1974 and 1975, her income tax returns for the years 1973 and 1975 and from a document on
long bond paper dated May 18, 1977. Not only were the signatures in the foregoing documents admitted by the
private respondent as hers but most of the said documents were used by the private respondent in her
transactions with the government. As was held in the case of Plymouth Saving & Loan Assn. No. 2 v. Kassing (125
NE 488, 494):
We believe the true rule deduced from the authorities to be that the genuineness of a "standard" writing may be
established (1) by the admission of the person sought to be charged with the disputed writing made at or for the
purposes of the trial or by his testimony; (2) by witnesses who saw the standards written or to whom or in
whose hearing the person sought to be charged acknowledged the writing thereof; (3) by evidence showing that
the reputed writer of the standard has acquiesced in or recognized the same, or that it has been adopted and
acted upon by him his business transactions or other concerns....
Furthermore, the judge found such signatures to be sufficient as standards. In the case of Taylor-Wharton Iron &
Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:
When a writing is offered as a standard of comparison it is for the presiding judge to decide whether it is the
handwriting of the party to be charged. Unless his finding is founded upon error of law, or upon evidence which
is, as matter of law, insufficient to justify the finding, this court will not revise it upon exceptions." (Costelo v.
Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuñez v. Perry, 113 Mass, 274, 276.)
We cannot find any error on the part of the trial judge in using the above documents as standards and also in
giving credence to the expert witness presented by the private respondent whose testimony the petitioner failed
to rebut and whose credibility it likewise failed to impeach. But more important is the fact that the unrebutted
handwriting expert's testimony noted twelve (12) glaring and material differences in the alleged signature of the
private respondent in the Special Power of Attorney as compared with the specimen signatures, something
which the appellate court also took into account. In Cesar v. Sandiganbayan (134 SCRA 105, 132), we ruled:
Mr. Maniwang pointed to other significant divergences and distinctive characteristics between the sample
signatures and the signatures on the questioned checks in his report which the court's Presiding Justice kept
mentioning during Maniwang's testimony.
In the course of his cross-examination, NBI expert Tabayoyong admitted that he saw the differences between the
exemplars used and the questioned signatures but he dismissed the differences because he did not consider
them fundamental. We rule that significant differences are more fundamental than a few similarities. A forger
always strives to master some similarities.
The second issue raised by the petitioner is that while it is true that A & L Industries is a single proprietorship and
the registered owner thereof is private respondent Lily Yulo, the said proprietorship was established during the
marriage and its assets were also acquired during the same. Therefore, it is presumed that this property forms
part of the conjugal partnership of the spouses Augusto and Lily Yulo and thus, could be held liable for the
obligations contracted by Augusto Yulo, as administrator of the partnership.
There is no dispute that A & L Industries was established during the marriage of Augusta and Lily Yulo and
therefore the same is presumed conjugal and the fact that it was registered in the name of only one of the
spouses does not destroy its conjugal nature (See Mendoza v. Reyes, 124 SCRA 161, 165). However, for the said
property to be held liable, the obligation contracted by the husband must have redounded to the benefit of the
conjugal partnership under Article 161 of the Civil Code. In the present case, the obligation which the petitioner
is seeking to enforce against the conjugal property managed by the private respondent Lily Yulo was
undoubtedly contracted by Augusto Yulo for his own benefit because at the time he incurred the obligation he
had already abandoned his family and had left their conjugal home. Worse, he made it appear that he was duly
authorized by his wife in behalf of A & L Industries, to procure such loan from the petitioner. Clearly, to make A &
L Industries liable now for the said loan would be unjust and contrary to the express provision of the Civil Code.
As we have ruled in Luzon Surety Co., Inc. v. De Gracia (30 SCRA 111, 115-117):
As explained in the decision now under review: "It is true that the husband is the administrator of the conjugal
property pursuant to the provisions of Art. 163 of the new Civil Code. However, as such administrator the only
obligations incurred by the husband that are chargeable against the conjugal property are those incurred in the
legitimate pursuit of his career, profession or business with the honest belief that he is doing right for the benefit
of the family. This is not true in the case at bar for we believe that the husband in acting as guarantor or surety
for another in an indemnity agreement as that involved in this case did not act for the benefit of the conjugal
partnership. Such inference is more emphatic in this case, when no proof is presented that Vicente Garcia in
acting as surety or guarantor received consideration therefore, which may redound to the benefit of the conjugal
partnership.(Ibid, pp. 46-47).
xxx xxx xxx
xxx xxx xxx
In the most categorical language, a conjugal partnership under that provision is liable only for such "debts and
obligations contracted by the husband for the benefit of the conjugal partnership." There must be the requisite
showing then of some advantage which clearly accrued to the welfare of the spouses. There is none in this case.
xxx xxx xxx
Moreover, it would negate the plain object of the additional requirement in the present Civil Code that a debt
contracted by the husband to bind a conjugal partnership must redound to its benefit. That is still another
provision indicative of the solicitude and tender regard that the law manifests for the family as a unit. Its interest
is paramount; its welfare uppermost in the minds of the codifiers and legislators.
We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto Yulo against his
conjugal properties with respondent Lily Yulo. Thus, it follows that the writ of attachment cannot issue against
the said properties.
Finally, the third issue assails the award of actual damages according to the petitioner, both the lower court and
the appellate court overlooked the fact that the properties referred to are still subject to a levy on attachment.
They are, therefore, still under custodia legis and thus, the assailed decision should have included a declaration
as to who is entitled to the attached properties and that assuming arguendo that the attachment was erroneous,
the lower court should have ordered the sheriff to return to the private respondent the attached properties
instead of condemning the petitioner to pay the value thereof by way of actual damages.
In the case of Lazatin v. Twaño (2 SCRA 842, 847), we ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59, does not prescribed the remedies available to the attachment
defendant in case of a wrongful attachment, but merely provides an action for recovery upon the bond, based on
the undertaking therein made and not upon the liability arising from a tortuous act, like the malicious suing out
of an attachment. Under the first, where malice is not essential, the attachment defendant, is entitled to recover
only the actual damages sustained by him by reason of the attachment. Under the second, where the
attachment is maliciously sued out, the damages recoverable may include a compensation for every injury to his
credit, business or feed (Tyler v. Mahoney, 168 NC 237, 84 SE 362; Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47
SE 234). ...
The question before us, therefore, is whether the attachment of the properties of A & L Industries was wrongful
so as to entitle the petitioner to actual damages only or whether the said attachment was made in bad faith and
with malice to warrant the award of other kinds of damages. Moreover, if the private respondent is entitled only
to actual damages, was the court justified in ordering the petitioner to pay for the value of the attached
properties instead of ordering the return of the said properties to the private respondent Yulo ?
Both the trial and appellate courts found that there was bad faith on the part of the petitioner in securing the
writ of attachment. We do not think so. "An attachment may be said to be wrongful when, for instance, the
plaintiff has no cause of action, or that there is no true ground therefore, or that the plaintiff has a sufficient
security other than the property attached, which is tantamout to saying that the plaintiff is not entitled to
attachment because the requirements of entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section 4,
Rule 57, Francisco, Revised Rules of Court).
Although the petitioner failed to prove the ground relied upon for the issuance of the writ of attachment, this
failure cannot be equated with bad faith or malicious intent. The steps which were taken by the petitioner to
ensure the security of its claim were premised, on the firm belief that the properties involved could be made
answerable for the unpaid obligation due it. There is no question that a loan in the amount of P591,003.59 was
borrowed from the bank.
We, thus, find that the petitioner is liable only for actual damages and not for exemplary damages and attorney's
fees. Respondent Lily Yulo has manifested before this Court that she no longer desires the return of the attached
properties since the said attachment caused her to close down the business. From that time she has become a
mere employee of the new owner of the premises. She has grave doubts as to the running condition of the
attached machineries and equipments considering that the attachment was effected way back in 1975. She
states as a matter of fact that the petitioner has already caused the sale of the machineries for fear that they
might be destroyed due to prolonged litigation. We, therefore, deem it just and equitable to allow private
respondent Lily Yulo to recover actual damages based on the value of the attached properties as proven in the
trial court, in the amount of P660,000.00. In turn, if there are any remaining attached properties, they should be
permanently released to herein petitioner.
We cannot, however, sustain the award of P500,000.00 representing unrealized profits because this amount was
not proved or justified before the trial court. The basis of the alleged unearned profits is too speculative and
conjectural to show actual damages for a future period. The private respondent failed to present reports on the
average actual profits earned by her business and other evidence of profitability which are necessary to prove
her claim for the said amount (See G. A. Machineries, Inc. v. Yaptinchay, 126 SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00 actual damages
representing unrealized profits, P150,000.00 for exemplary damages and P20,000.00 for attorney's fees. As
stated earlier, the attached properties, should be released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner is ordered to pay the
private respondent Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS (P660,000.00) as actual
damages. The remaining properties subject of the attachment are ordered released in favor of the petitioner.
SO ORDERED.
G.R. No. 118784 September 2, 1999
HEIRS OF CHRISTINA AYUSTE, petitioner,

vs.
COURT OF APPEALS and VIENA MALABONGA, respondents.
GONZAGA-REYES, J.:
Before us is a petition for certiorari under Rule 45, asking this Court to review the decision of the Court of
Appeals dated January 23, 1995 in CA-G.R. CV No. 38232, 1 which overturned the decision of the Regional Trial
Court of Lucena City in Civil Case No. 90-33.
At the outset, we note that Christina Ayuste, the plaintiff in the lower court and the original petitioner herein,
died on November 21, 1995. 2 In his Comment dated January 14, 1998 to private respondent's Manifestation
informing the Court of Christina Ayuste's death, petitioner's counsel re-affirmed such fact of death and informed
the Court of the names of Christina Ayuste's legal representatives. 3 The claim not having been extinguished by
the death of Christina Ayuste, we ordered the substitution of her heirs Marlon Ayuste and Arlaine Ayuste-Yu for
Christina Ayuste in our Resolution dated August 11, 1999.
Christina Ayuste married Rafael Ayuste on September 24, 1961. Although the couple resided in Manila, they
operated a machine shop in Barangay Iyam, Lucena City, which was managed by Rafael Ayuste. In order to serve
as a temporary residence for Rafael Ayuste while in Lucena, the couple purchased on August 26, 1982 a parcel of
land with an area of 180 square meters on which a residential house was built situated at Yale Street, University
Village, Barrio Ibabang Dupay, Lucena City from spouses Pedro and Aida David. A deed of sale 4 was executed
and signed by the parties and filed with the Register of Deeds of Lucena City. On October 23, 1983, the Register
of Deeds of Lucena City issued Transfer Certificate of Title No. T-42972 in the name of "RAFAEL T. AYUSTE,
married to Christina Ayuste. 5
On February 27, 1987, a deed of absolute sale 6 was executed by Rafael Ayuste in favor of private respondent
whereby the former sold the abovementioned parcel of land to the latter for P40,000, which amount Rafael
Ayuste acknowledged having received in the deed. On page 2 of this deed appears the signature of Christina
Ayuste below the phrase "With my conformity." The deed of sale was registered with the Register of Deeds of
Lucena City on March 5, 1987 and Transfer Certificate of Title No. T-50046 was issued in the name of private
respondent. 7
After Rafael Ayuste's death on October 13, 1989, Christina Ayuste discovered, in the course of an inventory of
their properties, that the title to the land in Lucena was missing. She searched for it in the office of her husband
in Lucena City and it was then that she learned from her employees about the sale of the house and lot by her
husband to private respondent.
On March 2, 1990, Christina Ayuste filed a complaint with the Regional Trial Court of Lucena City for the
annulment of the sale, cancellation of the title issued in the name of private respondent and for the payment of
moral, exemplary and actual damages. In her complaint Christina Ayuste alleges that her signature on the deed
of sale was forged and that her husband Rafael Ayuste sold the property without her knowledge and consent.
The Regional Trial Court rendered its Decision on June 20, 1991, the dispositive portion of which provides as
follows —
WHEREFORE, judgment is hereby rendered as follows:
(1) Declaring null and void the Deed of Absolute Sale of House and Lot (Exhibit "C') executed by defendant
and plaintiffs husband, the deceased Rafael Ayuste, on February 27, 1987;
(2) Ordering defendant Viena Malabonga to return to plaintiff Christina Ayuste the possession of the house
and lot covered by Transfer Certificate of Title No. T-50045, now in the name of defendant Viena Malabonga,
together with the improvements thereon;
(3) Directing the Register of Deeds of Lucena City to cancel Transfer Certificate of Title No. T-50046 and to
issue in the name of plaintiff and her children by the late Rafael Ayuste new Transfer Certificate of Title in lieu
thereof, subject to all/any liens and encumbrances annotated on the memorandum of the title to be cancelled;
(4) Ordering plaintiff Christina Ayuste to pay the defendant Vienna Malabonga the sum of P258,200.00 for
the improvements introduced on the lot and house as well as for maintenance of the premises; and
(5) Ordering defendant to pay plaintiff the amount of rents received from the premises starting March, 1990
until such time that she finally turns-over (sic) the possession of the house and lot to plaintiff, at the rate of
P2,700.00 per month.
With costs against defendant. 8
Both parties appealed the trial court's decision. On January 23, 1995, the Court of Appeals reversed the trial
court's ruling by holding that Christina Ayuste's right to bring an action for the annulment of the sale is barred by
laches because of her failure to file it during the existence of the marriage in accordance with article 173 of the
Civil Code. Also, it found private respondent to be entitled to the protection of a buyer in good faith and for
value. The pertinent portion of the public respondent's decision provides —
Record shows that plaintiff-appellant wife (sic) instituted on March 2, 1990 her action for annulment of the sale
executed by her husband on February 27, 1987 — long after said vendor-husband died in 1989. It is thus clear
that the action for annulment of the sale was not instituted "during the marriage" as required by Article 173, the
very provision of law which grants the wife the privilege/right to have the sale executed by her husband
annulled, in derogation of the suppose (sic) vested right of the buyer. The two periods provided for in said Article
173 — "during the marriage" and "within 10 years" should concur.
We find no merit in plaintiff-appellant's claim that she discovered the sale, only after her husband's death, when
she made an inventory and found out that the pertinent titles to the land subject of the sale were missing. It is
settled in this jurisdiction that registration with the Register of Deeds is notice to the whole world. The
questioned deed of sale has long been registered with the Register of Deeds of Lucena City — on March 5, 1987
— and in fact the said property was registered in the name of defendant-appellant under Transfer Certificate of
Title No. T-50046. Said TCT in the name of defendant-appellant is now indefeasible.
The peculiar circumstances that militates in favor of defendant-appellant buyer are as follows: The questioned
deed of sale was not actually without the wife's signature signifying marital consent, so to speak. Evidently,
defendant-appellant was led to believe by the husband-vendor that plaintiff-appellant gave her marital consent
to the sale, as said husband presented a deed of sale supposedly pre-signed by his wife, plaintiff-appellant.
Defendant-appellant is therefore undoubtedly a buyer in good faith and for value, with vested rights equally
entitled to the protection of the law. The questioned deed of sale was duly registered in the name of defendant-
appellant who was issued a Transfer Certificate of Title.
xxx xxx xxx
Unlike the statute of limitations, laches is not a mere question of time but is principally a question of the inequity
on unfairness of permitting a stale right to be enforced or asserted. (Marcelino vs. CA, 210 SCRA 444). For failure
of the plaintiff-appellant wife to institute her action for annulment of sale, while her husband-vendor was still
alive as required by Article 173 of the New Civil Code, plaintiff-appellant wife's right under Article 166 of the
same Code has become stale and is now barred by laches.
In view of the foregoing findings, We rule that the trial court erred in giving due course to the action for
annulment of sale. With the foregoing findings and resolution the other issues raised in this appeal are now
moot and academic.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered giving due course to the appeal of
defendant-appellant, —and— dismissing the appeal of plaintiff-appellant.
The decision dated June 20, 1991 rendered by the Regional Trial Court is REVERSED and SET ASIDE.
The Deed of Absolute Sale executed on February 27, 1987 by and between defendant-appellant and plaintiff-
appellant's husband is declared VALID and BINDING upon the plaintiff-appellant. 9
Both the trial and appellate court decisions have established that Rafael Ayuste sold conjugal property without
the consent of Christina Ayuste, his wife. This factual finding shall not be disturbed because only questions of law
are reviewed in an appeal under Rule 45 of the Rules of Court subject to certain well-defined exceptions none of
which are present in the instant case. The only issue which remains to be resolved is whether petitioners are
entitled to the annulment of the contract of sale entered into by Rafael Ayuste without the consent of Christina
Ayuste.
Petitioners claim that since the law expressly prohibits the husband from alienating real property belonging to
the conjugal partnership without his wife's consent, the contract of sale in question is a nullity pursuant to article
1409 of the Civil Code which provides that contracts expressly prohibited by law are inexistent and void from the
beginning. It is further averred by petitioners that the present action is not barred because the action to declare
the nullity of a contract does not prescribe. Furthermore, Christina Ayuste cannot be faulted for having brought
the action only after the death of her husband, despite the periods stated in article 173 of the Civil Code, since
she had no knowledge of the sale during his lifetime as he concealed the same from her. Finally, it is contended
that article 166 is the relevant provision, not article 173. 10
Under the Civil Code, although the husband is the administrator of the conjugal partnership, 11 he cannot
alienate or encumber any real property of the conjugal partnership without his wife's consent, 12 subject only to
certain exceptions specified in the law. 13 The remedy available to the wife in case her husband should dispose
of their conjugal property without her consent is laid down in Article 173 of the Civil Code which states that —
The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into without her consent, when such consent is required, or
any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband. (emphasis supplied)
There is no ambiguity in the wording of the law. A sale of real property of the conjugal partnership made by the
husband without the consent of his wife is voidable. 14 The action for annulment must be brought during the
marriage and within ten years from the questioned transaction by the wife. 15 Where the law speaks in clear and
categorical language, there is no room for interpretation — there is room only for application. 16
In the present case, the deed of sale was executed on February 27, 1987. Rafael Ayuste died on October 13,
1989. However, it was only on March 2, 1990 that Christina Ayuste filed her complaint with the lower court
asking for the annulment of the sale. Although the action was filed within ten years from the questioned
transaction, it was not brought during the existence of the marriage which was dissolved upon the death of
Rafael Ayuste in 1989. 17 Clearly, the action for annulment filed by Christina Ayuste was barred for having been
filed out of time.
The fact that Christina Ayuste only learned of the sale after the death of her husband is not material. We affirm
public respondent's ruling that registration of the sale with the Register of Deeds constitutes a notice to the
whole world. 18 Precisely, the purpose of the legislature in providing a system of registration is to afford a means
of publicity so that persons dealing with real property may search the records and thereby, acquire security
against instruments the execution of which have not been revealed to them. 19 Since the deed of sale was
registered on March 5, 1987, Christina Ayuste is presumed to have constructive notice of the sale from such
date.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 143826 August 28, 2003
HEIRS OF IGNACIA AGUILAR-REYES, Petitioners,

vs.
Spouses CIPRIANO MIJARES and FLORENTINA MIJARES, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Under the regime of the Civil Code, the alienation or encumbrance of a conjugal real property requires the
consent of the wife. The absence of such consent renders the entire transaction1 merely voidable and not void.2
The wife may, during the marriage and within ten years from the transaction questioned, bring an action for the
annulment of the contract entered into by her husband without her consent.3
Assailed in this petition for review on certiorari are the January 26, 2000 Decision4 and June 19, 2000,
Resolution5 of the Court of Appeals in CA-G.R. No. 28464 which declared respondents as purchasers in good
faith and set aside the May 31, 1990 and June 29, 1990 Orders of the Regional Trial Court of Quezon City, Branch
101, in Civil Case No. Q-48018.
The controversy stemmed from a dispute over Lot No. 4349-B-2,6 approximately 396 square meters, previously
covered by Transfer Certificate of Title (TCT) No. 205445, located in Balintawak, Quezon City and registered in the
name of Spouses Vicente Reyes and Ignacia Aguilar-Reyes.7 Said lot and the apartments built thereon were part
of the spouses’ conjugal properties having been purchased using conjugal funds from their garments business.8
Vicente and Ignacia were married in 1960, but had been separated de facto since 1974.9 Sometime in 1984,
Ignacia learned that on March 1, 1983, Vicente sold Lot No. 4349-B-2 to respondent spouses Cipriano and
Florentina Mijares for P40,000.00.10 As a consequence thereof, TCT No. 205445 was cancelled and TCT No.
306087 was issued on April 19, 1983 in the name of respondent spouses.11 She likewise found out that Vicente
filed a petition for administration and appointment of guardian with the Metropolitan Trial Court of Quezon City,
Branch XXI. Vicente misrepresented therein that his wife, Ignacia, died on March 22, 1982, and that he and their
5 minor children were her only heirs.12 On September 29, 1983, the court appointed Vicente as the guardian of
their minor children.13 Subsequently, in its Order dated October 14, 1983, the court authorized Vicente to sell
the estate of Ignacia.14
On August 9, 1984, Ignacia, through her counsel, sent a letter to respondent spouses demanding the return of
her ½ share in the lot. Failing to settle the matter amicably, Ignacia filed on June 4, 1996 a complaint15 for
annulment of sale against respondent spouses. The complaint was thereafter amended to include Vicente Reyes
as one of the defendants.16
In their answer, respondent spouses claimed that they are purchasers in good faith and that the sale was valid
because it was duly approved by the court.17 Vicente Reyes, on the other hand, contended that what he sold to
the spouses was only his share in Lot No. 4349-B-2, excluding the share of his wife, and that he never
represented that the latter was already dead.18 He likewise testified that respondent spouses, through the
counsel they provided him, took advantage of his illiteracy by filing a petition for the issuance of letters of
administration and appointment of guardian without his knowledge.19
On February 15, 1990, the court a quo rendered a decision declaring the sale of Lot No. 4349-B-2 void with
respect to the share of Ignacia. It held that the purchase price of the lot was P110,000.00 and ordered Vicente to
return ½ thereof or P55,000.00 to respondent spouses. The dispositive portion of the said decision, reads-
WHEREFORE, premises above considered, judgment is hereby rendered declaring the subject Deed of Absolute
Sale, dated March [1,] 1983 signed by and between defendants Vicente Reyes and defendant Cipriano Mijares
NULL AND VOID WITH RESPECT TO ONE-HALF (1/2) OF THE SAID PROPERTY;
The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in the names of defendant
spouses Cipriano Mijares and Florentina Mijares and to issue a new TCT in the name of the plaintiff Ignacia
Aguilar-Reyes as owner in fee simple of one-half (1/2) of said property and the other half in the names of
defendant spouses Cipriano Mijares and Florentin[a] Mijares, upon payment of the required fees therefore;
Said defendant spouses Mijares are also ordered to allow plaintiff the use and exercise of rights, as well as
obligations, pertinent to her one-half (1/2) ownership of the subject property;
Defendant Vicente Reyes is hereby ordered to reimburse P55,000.00 with legal rate of interest from the
execution of the subject Deed of Absolute Sale on March 1, 1983, to the defendant spouses Cipriano Mijares and
Florentina Mijares which corresponds to the one-half (1/2) of the actual purchase price by the said Mijares but is
annulled in this decision (sic);
Defendant Vicente Reyes is hereby further ordered to pay plaintiff the amount of P50,000.00 by way of moral
and exemplary damages, plus costs of this suit.
SO ORDERED.20
Ignacia filed a motion for modification of the decision praying that the sale be declared void in its entirety and
that the respondents be ordered to reimburse to her the rentals they collected on the apartments built on Lot
No. 4349-B-2 computed from March 1, 1983.1âwphi1
On May 31, 1990, the trial court modified its decision by declaring the sale void in its entirety and ordering
Vicente Reyes to reimburse respondent spouses the purchase price of P110,000, thus –
WHEREFORE, premises considered, judgment is hereby rendered declaring the subject Deed of Absolute Sale,
dated March 1, 1983 signed by and between defendants Vicente Reyes and defendant Cipriano Mijares as null
and void ab initio, in view of the absence of the wife’s conformity to said transaction.
Consequent thereto, the Register of Deeds for Quezon City is hereby ordered to cancel TCT No. 306083 (sic) in
the name of Cipriano Mijares and Florentin[a] Mijares and issue a new TCT in the name of the plaintiff and
defendant Ignacia Aguilar-Reyes and Vicente Reyes as owners in fee simple, upon payment of required fees
therefore.
Defendant Vicente Reyes is hereby ordered to pay the amount of one hundred ten thousand pesos
(P110,000.00) with legal rate of interest at 12% per annum from the execution of the subject Deed of Absolute
Sale on March 1, 1983.
Further, defendant Vicente Reyes is ordered to pay the amount of P50,000.00 by way of moral and exemplary
damages, plus costs of this suit.
SO ORDERED.21
On motion22 of Ignacia, the court issued an Order dated June 29, 1990 amending the dispositive portion of the
May 31, 1990 decision by correcting the Transfer Certificate of Title of Lot No. 4349-B-2, in the name of Cipriano
Mijares and Florentina Mijares, from TCT No. 306083 to TCT No. 306087; and directing the Register of Deeds of
Quezon City to issue a new title in the name of Ignacia Aguilar-Reyes and Vicente Reyes. The Order likewise
specified that Vicente Reyes should pay Ignacia Aguilar-Reyes the amount of P50,000.00 as moral and exemplary
damages.23
Both Ignacia Aguilar-Reyes and respondent spouses appealed the decision to the Court of Appeals.24 Pending
the appeal, Ignacia died and she was substituted by her compulsory heirs.25
Petitioners contended that they are entitled to reimbursement of the rentals collected on the apartment built on
Lot No. 4349-B-2, while respondent spouses claimed that they are buyers in good faith. On January 26, 2000, the
Court of Appeals reversed and set aside the decision of the trial court. It ruled that notwithstanding the absence
of Ignacia’s consent to the sale, the same must be held valid in favor of respondents because they were innocent
purchasers for value.26 The decretal potion of the appellate court’s decision states –
WHEREFORE, premises considered, the Decision appealed from and the Orders dated May 31, 1990 and June 29,
1990, are SET ASIDE and in lieu thereof a new one is rendered –
1. Declaring the Deed of Absolute Sale dated March 1, 1983 executed by Vicente Reyes in favor of spouses
Cipriano and [Florentina] Mijares valid and lawful;
2. Ordering Vicente Reyes to pay spouses Mijares the amount of P30,000.00 as attorney’s fees and legal
expenses; and
3. Ordering Vicente Reyes to pay spouses Mijares P50,000.00 as moral damages.
No pronouncement as to costs.
SO ORDERED.27
Undaunted by the denial of their motion for reconsideration,28 petitioners filed the instant petition contending
that the assailed sale of Lot No. 4392-B-2 should be annulled because respondent spouses were not purchasers
in good faith.
The issues for resolution are as follows: (1) What is the status of the sale of Lot No. 4349-B-2 to respondent
spouses? (2) Assuming that the sale is annullable, should it be annulled in its entirety or only with respect to the
share of Ignacia? (3) Are respondent spouses purchasers in good faith?
Articles 166 and 173 of the Civil Code,29 the governing laws at the time the assailed sale was contracted,
provide:
Art.166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or
is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal
partnership without the wife’s consent. If she refuses unreasonably to give her consent, the court may compel
her to grant the same…
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts
for the annulment of any contract of the husband entered into without her consent, when such consent is
required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the
marriage, may demand the value of property fraudulently alienated by the husband.
Pursuant to the foregoing provisions, the husband could not alienate or encumber any conjugal real property
without the consent, express or implied, of the wife otherwise, the contract is voidable. Indeed, in several
cases30 the Court had ruled that such alienation or encumbrance by the husband is void. The better view,
however, is to consider the transaction as merely voidable and not void.31 This is consistent with Article 173 of
the Civil Code pursuant to which the wife could, during the marriage and within 10 years from the questioned
transaction, seek its annulment.32
In the case of Heirs of Christina Ayuste v. Court of Appeals,33 it was categorically held that –
husband without the consent of his wife is voidable. The action for annulment must be brought during the
marriage and within ten years from the questioned transaction by the wife. Where the law speaks in clear and
categorical language, there is no room for interpretation — there is room only for application.34
Likewise, in Spouses Guiang v. Court of Appeals,35 the Court quoted with approval the ruling of the trial court
that under the Civil Code, the encumbrance or alienation of a conjugal real property by the husband absent the
wife’s consent, is voidable and not void. Thus –
…Under Article 166 of the Civil Code, the husband cannot generally alienate or encumber any real property of
the conjugal partnership without the wife’s consent. The alienation or encumbrance if so made however is not
null and void. It is merely voidable. The offended wife may bring an action to annul the said alienation or
encumbrance. Thus, the provision of Article 173 of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts
for the annulment of any contract of the husband entered into without her consent, when such consent is
This particular provision giving the wife ten (10) years x x x during [the] marriage to annul the alienation or
encumbrance was not carried over to the Family Code. It is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by the husband of the conjugal partnership property
without the consent of the wife is null and void…
In the case at bar, there is no dispute that Lot No. 4349-B-2, is a conjugal property having been purchased using
the conjugal funds of the spouses during the subsistence of their marriage. It is beyond cavil therefore that the
sale of said lot to respondent spouses without the knowledge and consent of Ignacia is voidable. Her action to
annul the March 1, 1983 sale which was filed on June 4, 1986, before her demise is perfectly within the 10 year
prescriptive period under Article 173 of the Civil Code. Even if we reckon the period from November 25, 1978
which was the date when Vicente and the respondent spouses entered into a contract concerning Lot No. 4349-
B-2, Ignacia’s action would still be within the prescribed period.
Anent the second issue, the trial court correctly annulled the voidable sale of Lot No. 4349-B-2 in its entirety. In
Bucoy v. Paulino,36 a case involving the annulment of sale with assumption of mortgages executed by the
husband without the consent of the wife, it was held that the alienation or encumbrance must be annulled in its
entirety and not only insofar as the share of the wife in the conjugal property is concerned. Although the
transaction in the said case was declared void and not merely voidable, the rationale for the annulment of the
whole transaction is the same thus –
The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the
husband without the wife's consent, may be annulled by the wife. Had Congress intended to limit such
annulment in so far as the contract shall "prejudice" the wife, such limitation should have been spelled out in the
statute. It is not the legitimate concern of this Court to recast the law. As Mr. Justice Jose B. L. Reyes of this Court
and Judge Ricardo C. Puno of the Court of First Instance correctly stated, "[t]he rule (in the first sentence of
Article 173) revokes Baello vs. Villanueva, 54 Phil. 213 and Coque vs. Navas Sioca, 45 Phil. 430," in which cases
annulment was held to refer only to the extent of the one-half interest of the wife…
The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the share of the wife, is not
without its basis in the common-sense rule. To be underscored here is that upon the provisions of Articles 161,
162 and 163 of the Civil Code, the conjugal partnership is liable for many obligations while the conjugal
partnership exists. Not only that. The conjugal property is even subject to the payment of debts contracted by
either spouse before the marriage, as those for the payment of fines and indemnities imposed upon them after
the responsibilities in Article 161 have been covered (Article 163, par. 3), if it turns out that the spouse who is
bound thereby, "should have no exclusive property or if it should be insufficient." These are considerations that
go beyond the mere equitable share of the wife in the property. These are reasons enough for the husband to be
stopped from disposing of the conjugal property without the consent of the wife. Even more fundamental is the
fact that the nullity is decreed by the Code not on the basis of prejudice but lack of consent of an indispensable
party to the contract under Article 166.37
With respect to the third issue, the Court finds that respondent spouses are not purchasers in good faith. A
purchaser in good faith is one who buys property of another, without notice that some other person has a right
to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before
he has notice of the claim or interest of some other persons in the property. He buys the property with the belief
that the person from whom he receives the thing was the owner and could convey title to the property. A
purchaser cannot close his eyes to facts which should put a reasonable man on his guard and still claim he acted
in good faith.38
In the instant case, there existed circumstances that should have placed respondent spouses on guard. The death
certificate of Ignacia, shows that she died on March 22, 1982. The same death certificate, however, reveals that –
(1) it was issued by the Office of the Civil Registrar of Lubao Pampanga on March 10, 1982; (2) the alleged death
of Ignacia was reported to the Office of the Civil Registrar on March 4, 1982; and (3) her burial or cremation
would be on March 8, 1982.39 These obvious flaws in the death certificate should have prompted respondents
to investigate further, especially so that respondent Florentina Mijares admitted on cross examination that she
asked for the death certificate of Ignacia because she was suspicious that Ignacia was still alive.40 Moreover,
respondent spouses had all the opportunity to verify the claim of Vicente that he is a widower because it was
their lawyer, Atty. Rodriguito S. Saet, who represented Vicente in the special proceedings before the
Metropolitan Trial Court.
Neither can respondent spouses rely on the alleged court approval of the sale. Note that the Order issued by the
Metropolitan Trial Court of Quezon City, Branch XXXI, appointing Vicente as guardian of his 5 minor children, as
well as the Order authorizing him to sell the estate of Ignacia were issued only on September 29, 1983 and
October 14, 1983, respectively. On the other hand, the sale of the entire Lot No. 4349-B-2 to respondent spouses
appears to have been made not on March 1, 1983, but even as early as November 25, 1978. In the "Agreement"
dated November 25, 1978, Vicente in consideration of the amount of P110,000.00, sold to Cipriano Mijares Lot
No. 4349-B-2 on installment basis, with the first installment due on or before July 31, 1979.41 This was followed
by a "Memorandum of Understanding" executed on July 30, 1979, by Vicente and Cipriano – (1) acknowledging
Cipriano’s receipt of Vicente’s down payment in the amount of P50,000.00; and (2) authorizing Florentina
Mijares to collect rentals.42 On July 14, 1981, Vicente and Cipriano executed another "Memorandum of
Agreement," stating, among other, that out of the purchase price of P110,000.00 Vicente had remaining balance
of P19,000.00.43 Clearly therefore, the special proceedings before the Metropolitan Trial Court of Quezon City,
Branch XXXI, could not have been the basis of respondent spouses’ claim of good faith because the sale of Lot
No. 4349-B-2 occurred prior thereto.
Respondent spouses cannot deny knowledge that at the time of the sale in 1978, Vicente was married to Ignacia
and that the latter did not give her conformity to the sale. This is so because the 1978 "Agreement" described
Vicente as "married" but the conformity of his wife to the sale did not appear in the deed. Obviously, the
execution of another deed of sale in 1983 over the same Lot No. 4349-B-2, after the alleged death of Ignacia on
March 22, 1982, as well as the institution of the special proceedings were, intended to correct the absence of
Ignacia’s consent to the sale. Even assuming that respondent spouses believed in good faith that Ignacia really
died on March 22, 1982, after they purchased the lot, the fact remains that the sale of Lot No. 4349-B-2 prior to
Ignacia’s alleged demise was without her consent and therefore subject to annulment. The October 14, 1983
order authorizing the sale of the estate of Ignacia, could not have validated the sale of Lot No. 4349-B-2 because
said order was issued on the assumption that Ignacia was already dead and that the sale dated March 1, 1983
was never categorically approved in the said order.
The fact that the 5 minor children44 of Vicente represented by the latter, signed the March 1, 1983 deed of sale
of Lot No. 4349-B-2 will not estop them from assailing the validity thereof. Not only were they too young at that
time to understand the repercussions of the sale, they likewise had no right to sell the property of their mother
who, when they signed the deed, was very much alive.
If a voidable contract is annulled, the restoration of what has been given is proper. The relationship between
parties in any contract even if subsequently annulled must always be characterized and punctuated by good faith
and fair dealing. Hence, for the sake of justice and equity, and in consonance with the salutary principle of non-
enrichment at another’s expense, the Court sustains the trial court’s order directing Vicente to refund to
respondent spouses the amount of P110,000.00 which they have paid as purchase price of Lot No. 4349-B-2.45
The court a quo correctly found that the subject of the sale was the entire Lot No. 4349-B-2 and that the
consideration thereof is not P40,000.00 as stated in the March 1, 1983 deed of sale, but P110,000.00 as
evidenced by the – (1) "Agreement" dated November 25, 1978 as well as the July 30, 1979 "Memorandum of
Understanding" and the July 14, 1981 "Memorandum of Agreement" which served as receipts of the installment
payments made by respondent Cipriano Mijares; and (2) the receipt duly signed by Vicente Reyes acknowledging
receipt of the amount of P110,000.00 from respondent spouses as payment of the sale of the controverted
lot.46
The trial court, however, erred in imposing 12% interest per annum on the amount due the respondents. In
Eastern Shipping Lines, Inc. v. Court of Appeals,47 it was held that interest on obligations not constituting a loan
or forbearance of money is six percent (6%) annually. If the purchase price could be established with certainty at
the time of the filing of the complaint, the six percent (6%) interest should be computed from the date the
complaint was filed until finality of the decision. In Lui v. Loy,48 involving a suit for reconveyance and annulment
of title filed by the first buyer against the seller and the second buyer, the Court, ruling in favor of the first buyer
and annulling the second sale, ordered the seller to refund to the second buyer (who was not a purchaser in
good faith) the purchase price of the lots. It was held therein that the 6% interest should be computed from the
date of the filing of the complaint by the first buyer. After the judgment becomes final and executory until the
obligation is satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed
equivalent to a forbearance of credit.49
Accordingly, the amount of P110,000.00 due the respondent spouses which could be determined with certainty
at the time of the filing of the complaint shall earn 6% interest per annum from June 4, 1986 until the finality of
this decision. If the adjudged principal and the interest (or any part thereof) remain unpaid thereafter, the
interest rate shall be twelve percent (12%) per annum computed from the time the judgment becomes final and
executory until it is fully satisfied.
Petitioner’s prayer for payment of rentals should be denied. Other than the allegation of Ignacia in her
Sinumpaang Salaysay that the apartments could be rented at P1,000.00 a month, no other evidence was
presented to substantiate her claim. In awarding rentals which are in the nature of actual damages, the Court
cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof
and on the best evidence obtainable regarding the actual amount of loss.50 None, having been presented in the
case at bar, petitioner’s claim for rentals must be denied.
While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones
granted in the decision of the court below, law and jurisprudence authorize a tribunal to consider errors,
although unassigned, if they involve (1) errors affecting the lower court’s jurisdiction over the subject matter, (2)
plain errors not specified, and (3) clerical errors.51 In this case, though defendant Vicente Reyes did not appeal,
the "plain error" committed by the court a quo as to the award of moral and exemplary damages must be
corrected. These awards cannot be lumped together as was done by the trial court.52 Moral and exemplary
damages are different in nature, and require separate determination. Moral damages are awarded where the
claimant experienced physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury as a result of the act complained of.53 The award of
exemplary damages, on the other hand, is warranted when moral, temperate, liquidated, or compensatory
damages were likewise awarded by the court.54
Hence, the trial court’s award of "P50,000.00 by way of moral and exemplary damages" should be modified.
Vicente Reyes should be ordered to pay the amounts of P25,000.00 as moral damages and P25,000.00 as
exemplary damages. Since Vicente Reyes was among the heirs substituted to the late Ignacia Aguilar-Reyes,
payment of moral and exemplary damages must be made by Vicente to his children, petitioners in this case.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The January 26, 2000 Decision and
June 19, 2002, Resolution of the Court of Appeals in CA-G.R. No. 28464 are REVERSED and SET ASIDE. The May
31, 1990 Order of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-48018, which annulled
the March 1, 1983 Deed of Absolute Sale over Lot No. 4349-B-2, and ordered the Register of Deeds of Quezon
City to cancel TCT No. 306087 in the name of respondent spouses Cipriano Mijares and Florentina Mijares
covering the same property; as well as the June 29, 1990 Order correcting the typographical errors in the order
dated March 1, 1983, are REINSTATED, with the following modifications –
(1) The Register of Deeds of Quezon City is ordered to issue a new certificate of title over Lot No. 4349-B-2, in the
name of petitioners as co-owners thereof;
(2) Vicente Reyes is ordered to reimburse the respondent spouses the amount of P110,000.00 as purchase price
of Lot No. 4349-B-2, with interest at 6% per annum from June 4, 1986, until finality of this decision. After this
decision becomes final, interest at the rate of 12% per annum on the principal and interest (or any part thereof)
shall be imposed until full payment.
(3) Defendant Vicente Reyes is ordered to pay the heirs of the late Ignacia Aguilar-Reyes, the amounts of
P25,000.00 as moral damages and P25,000.00 as exemplary damages.
SO ORDERED.
G.R. No. 141323 June 8, 2005
DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners,

vs.
MELKI E. PEREZ, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the reversal of the Decision1 of the Court of Appeals
(CA) promulgated on April 20, 1999 which reversed the Decision of the Regional Trial Court (RTC) of Panabo,
Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution dated December 17, 1999 denying petitioners’
motion for reconsideration.
The antecedent facts as aptly narrated by the CA are as follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11, 1988, conveyed to Melki Perez (Perez)
two parcels of agricultural land (the lots) situated in Panabo, Davao which are portions of Lot 4192, Cad. 276
covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible witnessed the execution of
the deed.
Loreza, however, signed only on the third page in the space provided for witnesses on account of which Perez’
application for registration of the deed with the Office of the Register of Deeds in Tagum, Davao was denied.
Perez thereupon asked Loreza to sign on the first and second pages of the deed but she refused, hence, he
instituted on August 8, 1991 the instant complaint for specific performance against her and her husband Pelayo
(defendants).
The defendants moved to dismiss the complaint on the ground that it stated no cause of action, citing Section 6
of RA 6656 otherwise known as the Comprehensive Agrarian Reform Law which took effect on June 10, 1988 and
which provides that contracts executed prior thereto shall "be valid only when registered with the Register of
Deeds within a period of three (3) months after the effectivity of this Act."
The questioned deed having been executed on January 10, 1988, the defendants claimed that Perez had at least
up to September 10, 1988 within which to register the same, but as they failed to, it is not valid and, therefore,
unenforceable.
The trial court thus dismissed the complaint. On appeal to this Court, the dismissal was set aside and the case
was remanded to the lower court for further proceedings.
In their Answer, the defendants claimed that as the lots were occupied illegally by some persons against whom
they filed an ejectment case, they and Perez who is their friend and known at the time as an activist/leftist,
hence feared by many, just made it appear in the deed that the lots were sold to him in order to frighten said
illegal occupants, with the intentional omission of Loreza’s signature so that the deed could not be registered;
and that the deed being simulated and bereft of consideration is void/inexistent.
Perez countered that the lots were given to him by defendant Pelayo in consideration of his services as his
attorney-in-fact to make the necessary representation and negotiation with the illegal occupants-defendants in
the ejectment suit; and that after his relationship with defendant Pelayo became sour, the latter sent a letter to
the Register of Deeds of Tagum requesting him not to entertain any transaction concerning the lots title to which
was entrusted to Perez who misplaced and could [not] locate it.
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19, 1996, that the deed was without
his wife Loreza’s consent, hence, in light of Art. 166 of the Civil Code which provides:
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction
or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal
partnership without the wife’s consent . . .
it is null and void.
The trial court, finding, among others, that Perez did not possess, nor pay the taxes on the lots, that defendant
Pelayo was indebted to Perez for services rendered and, therefore, the deed could only be considered as
evidence of debt, and that in any event, there was no marital consent to nor actual consideration for the deed,
held that the deed was null and void and accordingly rendered judgment the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering and directing the defendants to pay plaintiff Melki Perez the
sum of TEN THOUSAND (₱10,000.00) Pesos as principal with 12% interest per annum starting from the date of
filing of the complaint on August 1, 1991 until plaintiff is fully paid.
The defendants shall likewise pay to plaintiff the sum of THREE THOUSAND (₱3,000.00) as attorney’s fees.
The court further orders that the Deed of Absolute Sale, (Annex ‘A’) of the complaint and (Annex ‘C’) of the
plaintiff’s Motion for Summary Judgment is declared null and void and without force and it is likewise removed
as a cloud over defendants’ title and property in suit. . . ."2
The RTC Decision was appealed by herein respondent Perez to the CA. Petitioners failed to file their appellees’
brief. The CA then promulgated its Decision on April 20, 1999 whereby it ruled that by Lorenza’s signing as
witness to the execution of the deed, she had knowledge of the transaction and is deemed to have given her
consent to the same; that herein petitioners failed to adduce sufficient proof to overthrow the presumption that
there was consideration for the deed, and that petitioner David Pelayo, being a lawyer, is presumed to have
acted with due care and to have signed the deed with full knowledge of its contents and import. The CA reversed
and set aside the RTC Decision, declaring as valid and enforceable the questioned deed of sale and ordering
herein petitioner Lorenza Pelayo to affix her signature on all pages of said document.
Petitioners moved for reconsideration of the decision but the same was denied per Resolution dated December
17, 1999. The CA found said motion to have been filed out of time and ruled that even putting aside technicality,
petitioners failed to present any ground bearing on the merits of the case to justify a reversal or setting aside of
the decision.
Hence, this petition for review on certiorari on the following grounds:
1. The CA erred in ignoring the specific provision of Section 6, in relation to Section 4 of R.A. No. 6657 otherwise
known as the Comprehensive Agrarian Reform Law of 1988 which took effect on June 15, 1988 and which
provides that contracts executed prior thereto shall "be valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of this Act."
2. The CA erred in holding that the deed of sale was valid and considering the ₱10,000.00 adjudged by the trial
court as Perez’s remuneration as the consideration for the deed of sale, instead of declaring the same as null and
void for being fictitious or simulated and on the basis of Art. 491, Par. 2 of the New Civil Code which prohibits
agents from acquiring by purchase properties from his principal under his charge.
3. The CA made a novel ruling that there was implied marital consent of the wife of petitioner David Pelayo.
4. Petitioners should have been allowed to file their appellees’ brief to ventilate their side, considering the
existence of peculiar circumstances which prevented petitioners from filing said brief.
On the other hand, respondent points out that the CA, in resolving the first appeal docketed as CA-G.R. SP No.
387003 brought by respondent assailing the RTC Order granting herein petitioners’ motion to dismiss, already
ruled that under R.A. No. 6657, the sale or transfer of private agricultural land is allowed only when the area of
the land being conveyed constitutes or is a part of, the landowner-seller retained area and when the total
landholding of the purchaser-transferee, including the property sold, does not exceed five (5) hectares; that in
this case, the land in dispute is only 1.3 hectares and there is no proof that the transferee’s (herein respondent)
total landholding inclusive of the subject land will exceed 5 hectares, the landholding ceiling prescribed by R.A.
No. 6657; that the failure of respondent to register the instrument was not due to his fault or negligence but can
be attributed to Lorenza’s unjustified refusal to sign two pages of the deed despite several requests of
respondent; and that therefore, the CA ruled that the deed of sale subject of this case is valid under R.A. No.
6657.
Respondent further maintains that the CA correctly held in its assailed Decision that there was consideration for
the contract and that Lorenza is deemed to have given her consent to the deed of sale.
Respondent likewise opines that the CA was right in denying petitioners’ motion for reconsideration where they
prayed that they be allowed to file their appellees’ brief as their counsel failed to file the same on account of said
counsel’s failing health due to cancer of the liver. Respondent emphasized that in petitioners’ motion for
reconsideration, they did not even cite any errors made by the CA in its Decision.
The issues boil down to the question of whether or not the deed of sale was null and void on the following
grounds: (a) for not complying with the provision in R.A. No. 6657 that such document must be registered with
the Register of Deeds within three months after the effectivity of said law; (b) for lack of marital consent; (c) for
being prohibited under Article 1491 (2) of the Civil Code; and (d) for lack of consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and void under R.A. No. 6657, for respondent’s failure to
register said document with the Register of Deeds within three months after the effectivity of R.A. No. 6657, had
been resolved with finality by the CA in its Decision dated November 24, 1994 in CA-G.R. SP No. 38700.4 Herein
petitioners no longer elevated said CA Decision to this Court and the same became final and executory on
January 7, 1995.5
In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A. No. 6657, to mean thus:
. . . the proper interpretation of both sections is that under R.A. No. 6657, the sale or transfer of a private
agricultural land is allowed only when said land area constitutes or is a part of the landowner-seller retained area
and only when the total landholdings of the purchaser-transferee, including the property sold does not exceed
five (5) hectares.
Aside from declaring that the failure of respondent to register the deed was not of his own fault or negligence,
the CA ruled that respondent’s failure to register the deed of sale within three months after effectivity of The
Comprehensive Agrarian Reform Law did not invalidate the deed of sale as "the transaction over said property is
not proscribed by R.A. No. 6657."
Thus, under the principle of law of the case, said ruling of the CA is now binding on petitioners.1avvph!1 Such
principle was elucidated in Cucueco vs. Court of Appeals,6 to wit:
Law of the case has been defined as the opinion delivered on a former appeal. It is a term applied to an
established rule that when an appellate court passes on a question and remands the case to the lower court for
further proceedings, the question there settled becomes the law of the case upon subsequent appeal. It means
that whatever is once irrevocably established as the controlling legal rule or decision between the same parties
in the same case continues to be the law of the case, whether correct on general principles or not, so long as the
facts on which such decision was predicated continue to be the facts of the case before the court.
Petitioners not having questioned the Decision of the CA dated November 24, 1994 which then attained finality,
the ruling that the deed of sale subject of this case is not among the transactions deemed as invalid under R.A.
No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the Deed of Sale on the space
provided for witnesses, is deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent, which may either be express or implied.7 A
wife’s consent to the husband’s disposition of conjugal property does not always have to be explicit or set forth
in any particular document, so long as it is shown by acts of the wife that such consent or approval was indeed
given.8 In the present case, although it appears on the face of the deed of sale that Lorenza signed only as an
instrumental witness, circumstances leading to the execution of said document point to the fact that Lorenza
was fully aware of the sale of their conjugal property and consented to the sale.
In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they have been having serious problems,
including threats to the life of petitioner David Pelayo, due to conflicts with the illegal occupants of the property
in question, so that respondent, whom many feared for being a leftist/activist, offered his help in driving out said
illegal occupants.
Human experience tells us that a wife would surely be aware of serious problems such as threats to her
husband’s life and the reasons for such threats. As they themselves stated, petitioners’ problems over the
subject property had been going on for quite some time, so it is highly improbable for Lorenza not to be aware of
what her husband was doing to remedy such problems. Petitioners do not deny that Lorenza Pelayo was present
during the execution of the deed of sale as her signature appears thereon. Neither do they claim that Lorenza
Pelayo had no knowledge whatsoever about the contents of the subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between her husband and respondent.
Under the rules of evidence, it is presumed that a person takes ordinary care of his concerns.10 Petitioners did
not even attempt to overcome the aforementioned presumption as no evidence was ever presented to show
that Lorenza was in any way lacking in her mental faculties and, hence, could not have fully understood the
ramifications of signing the deed of sale. Neither did petitioners present any evidence that Lorenza had been
defrauded, forced, intimidated or threatened either by her own husband or by respondent into affixing her
signature on the subject document. If Lorenza had any objections over the conveyance of the disputed property,
she could have totally refrained from having any part in the execution of the deed of sale. Instead, Lorenza even
affixed her signature thereto.
Moreover, under Article 173, in relation to Article 166, both of the New Civil Code, which was still in effect on
January 11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of
conjugal property does not make the contract void ab initio but merely voidable. Said provisions of law provide:
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or
property without the wife’s consent. If she refuses unreasonably to give her consent, the court may compel her
to grant the same.
...
Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the
courts for the annulment of any contract of the husband entered into without her consent, when such consent is
partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the
Hence, it has been held that the contract is valid until the court annuls the same and only upon an action
brought by the wife whose consent was not obtained.11 In the present case, despite respondent’s repeated
demands for Lorenza to affix her signature on all the pages of the deed of sale, showing respondent’s insistence
on enforcing said contract, Lorenza still did not file a case for annulment of the deed of sale. It was only when
respondent filed a complaint for specific performance on August 8, 1991 when petitioners brought up Lorenza’s
alleged lack of consent as an affirmative defense. Thus, if the transaction was indeed entered into without
Lorenza’s consent, we find it quite puzzling why for more than three and a half years, Lorenza did absolutely
nothing to seek the nullification of the assailed contract.
The foregoing circumstances lead the Court to believe that Lorenza knew of the full import of the transaction
between respondent and her
husband; and, by affixing her signature on the deed of sale, she, in effect, signified her consent to the disposition
of their conjugal property.
With regard to petitioners’ asseveration that the deed of sale is invalid under Article 1491, paragraph 2 of the
New Civil Code, we find such argument unmeritorious. Article 1491 (2) provides:
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person
or through the mediation of another:
...
(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of
the principal has been given;
...
In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas, designated one of her sons as the
administrator of several parcels of her land. The landowner subsequently executed a Deed of Certification of Sale
of Unregistered Land, conveying some of said land to her son/administrator. Therein, we held that:
Under paragraph (2) of the above article, the prohibition against agents purchasing property in their hands for
sale or management is not absolute. It does not apply if the principal consents to the sale of the property in the
hands of the agent or administrator. In this case, the deeds of sale signed by Iluminada Abiertas shows that she
gave consent to the sale of the properties in favor of her son, Rufo, who was the administrator of the properties.
Thus, the consent of the principal Iluminada Abiertas removes the transaction out of the prohibition contained in
Article 1491(2).13
The above-quoted ruling is exactly in point with this case before us. Petitioners, by signing the Deed of Sale in
favor of respondent, are also deemed to have given their consent to the sale of the subject property in favor of
respondent, thereby making the transaction an exception to the general rule that agents are prohibited from
purchasing the property of their principals.
Petitioners also argue that the CA erred in ruling that there was consideration for the sale. We find no error in
said appellate court’s ruling. The element of consideration for the sale is indeed present. Petitioners, in adopting
the trial court’s narration of antecedent facts in their petition,14 thereby admitted that they authorized
respondent to represent them in negotiations with the "squatters" occupying the disputed property and, in
consideration of respondent’s services, they executed the subject deed of sale. Aside from such services
rendered by respondent, petitioners also acknowledged in the deed of sale that they received in full the amount
of Ten Thousand Pesos. Evidently, the consideration for the sale is respondent’s services plus the aforementioned
cash money.
Petitioners contend that the consideration stated in the deed of sale is excessively inadequate, indicating that
the deed of sale was merely simulated. We are not persuaded. Our ruling in Buenaventura vs. Court of
Appeals15 is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. . . . As
we stated in Vales vs. Villa:
Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise
investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute
themselves guardians of persons who are not legally incompetent. Courts operate not because one person has
been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do
foolish things, make ridiculous contracts, use miserable judgment, and lose money by them – indeed, all they
have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a
violation of the law, the commission of what the law knows as an actionable wrong, before the courts are
authorized to lay hold of the situation and remedy it.16
Verily, in the present case, petitioners have not presented proof that there has been fraud, mistake or undue
influence exercised upon them by respondent. It is highly unlikely and contrary to human experience that a
layman like respondent would be able to defraud, exert undue influence, or in any way vitiate the consent of a
lawyer like petitioner David Pelayo who is expected to be more knowledgeable in the ways of drafting contracts
and other legal transactions.
Furthermore, in their Reply to Respondent’s Memorandum,17 petitioners adopted the CA’s narration of fact that
petitioners stated in a letter they sent to the Register of Deeds of Tagum that they have entrusted the titles over
subject lots to herein respondent. Such act is a clear indication that they intended to convey the subject property
to herein respondent and the deed of sale was not merely simulated or fictitious.
Lastly, petitioners claim that they were not able to fully ventilate their defense before the CA as their lawyer, who
was then suffering from cancer of the liver, failed to file their appellees’ brief. Thus, in their motion for
reconsideration of the CA Decision, they prayed that they be allowed to submit such appellees’ brief. The CA, in
its Resolution dated December 17, 1999, stated thus:
By movant-defendant-appellee’s own information, his counsel received a copy of the decision on May 5, 1999.
He, therefore, had fifteen (15) days from said date or up to May 20, 1999 to file the motion. The motion,
however, was sent through a private courier and, therefore, considered to have been filed on the date of actual
receipt on June 17, 1999 by the addressee – Court of Appeals, was filed beyond the reglementary period.
Technicality aside, movant has not proffered any ground bearing on the merits of the case why the decision
should be set aside.1awphi1
Petitioners never denied the CA finding that their motion for reconsideration was filed beyond the fifteen-day
reglementary period. On that point alone, the CA is correct in denying due course to said motion. The motion
having been belatedly filed, the CA Decision had then attained finality. Thus, in Abalos vs. Philex Mining
Corporation,18 we held that:
. . . Nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable and
unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted
to be made by the court rendering it or by the highest court of the land.
Moreover, it is pointed out by the CA that said motion did not present any defense or argument on the merits of
the case that could have convinced the CA to reverse or modify its Decision.
We have consistently held that a petitioner’s right to due process is not violated where he was able to move for
reconsideration of the order or decision in question.19 In this case, petitioners had the opportunity to fully
expound on their defenses through a motion for reconsideration. Petitioners did file such motion but they
wasted such opportunity by failing to present therein whatever errors they believed the CA had committed in its
Decision. Definitely, therefore, the denial of petitioners’ motion for reconsideration, praying that they be allowed
to file appellees’ brief, did not infringe petitioners’ right to due process as any issue that petitioners wanted to
raise could and should have been contained in said motion for reconsideration.
IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the Court of Appeals dated April 20,
1999 and its Resolution dated December 17, 1999 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 170166 April 6, 2011
JOE A. ROS and ESTRELLA AGUETE, Petitioners,

vs.
PHILIPPINE NATIONAL BANK - LAOAG BRANCH, Respondent.
DECISION
CARPIO, J.:
The Case
G.R. No. 170166 is a petition for review1 assailing the Decision2 promulgated on 17 October 2005 by the Court
of Appeals (appellate court) in CA-G.R. CV No. 76845. The appellate court granted the appeal filed by the
Philippine National Bank – Laoag Branch (PNB). The appellate court reversed the 29 June 2001 Decision of
Branch 15 of the Regional Trial Court of Laoag City (trial court) in Civil Case No. 7803.
The trial court declared the Deed of Real Estate Mortgage executed by spouses Jose A. Ros3 (Ros) and Estrella
Aguete (Aguete) (collectively, petitioners), as well as the subsequent foreclosure proceedings, void. Aside from
payment of attorney’s fees, the trial court also ordered PNB to vacate the subject property to give way to
petitioners’ possession.
The Facts
The appellate court narrated the facts as follows:
On January 13, 1983, spouses Jose A. Ros and Estrella Aguete filed a complaint for the annulment of the Real
Estate Mortgage and all legal proceedings taken thereunder against PNB, Laoag Branch before the Court of First
Instance, Ilocos Norte docketed as Civil Case No. 7803.
The complaint was later amended and was raffled to the Regional Trial Court, Branch 15, Laoag City.
The averments in the complaint disclosed that plaintiff-appellee Joe A. Ros obtained a loan of ₱115,000.00 from
PNB Laoag Branch on October 14, 1974 and as security for the loan, plaintiff-appellee Ros executed a real estate
mortgage involving a parcel of land – Lot No. 9161 of the Cadastral Survey of Laoag, with all the improvements
thereon described under Transfer Certificate of Title No. T-9646.
Upon maturity, the loan remained outstanding. As a result, PNB instituted extrajudicial foreclosure proceedings
on the mortgaged property. After the extrajudicial sale thereof, a Certificate of Sale was issued in favor of PNB,
Laoag as the highest bidder. After the lapse of one (1) year without the property being redeemed, the property
was consolidated and registered in the name of PNB, Laoag Branch on August 10, 1978.
Claiming that she (plaintiff-appellee Estrella Aguete) has no knowledge of the loan obtained by her husband nor
she consented to the mortgage instituted on the conjugal property – a complaint was filed to annul the
proceedings pertaining to the mortgage, sale and consolidation of the property – interposing the defense that
her signatures affixed on the documents were forged and that the loan did not redound to the benefit of the
family.1avvphi1
In its answer, PNB prays for the dismissal of the complaint for lack of cause of action, and insists that it was
plaintiffs-appellees’ own acts [of]
omission/connivance that bar them from recovering the subject property on the ground of estoppel, laches,
abandonment and prescription.4]
The Trial Court’s Ruling
On 29 June 2001, the trial court rendered its Decision5 in favor of petitioners. The trial court declared that
Aguete did not sign the loan documents, did not appear before the Notary Public to acknowledge the execution
of the loan documents, did not receive the loan proceeds from PNB, and was not aware of the loan until PNB
notified her in 14 August 1978 that she and her family should vacate the mortgaged property because of the
expiration of the redemption period. Under the Civil Code, the effective law at the time of the transaction, Ros
could not encumber any real property of the conjugal partnership without Aguete’s consent. Aguete may, during
their marriage and within ten years from the transaction questioned, ask the courts for the annulment of the
contract her husband entered into without her consent, especially in the present case where her consent is
required. The trial court, however, ruled that its decision is without prejudice to the right of action of PNB to
recover the amount of the loan and its interests from Ros.
The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. DECLARING the Deed of Real Estate Mortgage (Exhibit "C") and the subsequent foreclosure proceedings
conducted thereon NULL and VOID;
2. ORDERING the Register of Deeds of the City of Laoag to cancel TCT No. T-15276 in the name of defendant PNB
and revert the same in the name of plaintiffs spouses Joe Ros and Estrella Aguete;
3. ORDERING defendant to vacate and turnover the possession of the premises of the property in suit to the
plaintiffs; and
4. ORDERING defendant to pay plaintiffs attorney’s fee and litigation expenses in the sum of TEN THOUSAND
(₱10,000.00) PESOS.
No pronouncement as to costs.
SO ORDERED.6]
PNB filed its Notice of Appeal7 of the trial court’s decision on 13 September 2001 and paid the corresponding
fees. Petitioners filed on the same date a motion for execution pending appeal,8 which PNB opposed.9 In their
comment to the opposition10 filed on 10 October 2001, petitioners stated that at the hearing of the motion on 3
October 2001, PNB’s lay representative had no objection to the execution of judgment pending appeal.
Petitioners claimed that the house on the subject lot is dilapidated, a danger to life and limb, and should be
demolished. Petitioners added that they obliged themselves to make the house habitable at a cost of not less
₱50,000.00. The repair cost would accrue to PNB’s benefit should the appellate court reverse the trial court. PNB
continued to oppose petitioners’ motion.11
In an Order12 dated 8 May 2002, the trial court found petitioners’ motion for execution pending appeal
improper because petitioners have made it clear that they were willing to wait for the appellate court’s decision.
However, as a court of justice and equity, the trial court allowed petitioners to occupy the subject property with
the condition that petitioners would voluntarily vacate the premises and waive recovery of improvements
introduced should PNB prevail on appeal.
The Appellate Court’s Ruling
On 17 October 2005, the appellate court rendered its Decision13 and granted PNB’s appeal. The appellate court
reversed the trial court’s decision, and dismissed petitioners’ complaint.
The appellate court stated that the trial court concluded forgery without adequate proof; thus it was improper
for the trial court to rely solely on Aguete’s testimony that her signatures on the loan documents were forged.
The appellate court declared that Aguete affixed her signatures on the documents knowingly and with her full
consent.
Assuming arguendo that Aguete did not give her consent to Ros’ loan, the appellate court ruled that the conjugal
partnership is still liable because the loan proceeds redounded to the benefit of the family. The records of the
case reveal that the loan was used for the expansion of the family’s business. Therefore, the debt obtained is
chargeable against the conjugal partnership.
Petitioners filed the present petition for review before this Court on 9 December 2005.
The Issues
Petitioners assigned the following errors:
I. The Honorable Court of Appeals erred in not giving weight to the findings and conclusions of the trial court,
and in reversing and setting aside such findings and conclusions without stating specific contrary evidence;
II. The Honorable Court of Appeals erred in declaring the real estate mortgage valid;
III. The Honorable Court of Appeals erred in declaring, without basis, that the loan contracted by husband Joe A.
Ros with respondent Philippine National Bank – Laoag redounded to the benefit of his family, aside from the fact
that such had not been raised by respondent in its appeal.14]
The Court’s Ruling
The petition has no merit. We affirm the ruling of the appellate court.
The Civil Code was the applicable law at the time of the mortgage. The subject property is thus considered part
of the conjugal partnership of gains. The pertinent articles of the Civil Code provide:
Art. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at the expense of the common fund, whether the
acquisition be for the partnership, or for only one of the spouses;
(2) That which is obtained by the industry, or work or as salary of the spouses, or of either of them;
(3) The fruits, rents or interest received or due during the marriage, coming from the common property or from
the exclusive property of each spouse.
Art. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that
it pertains exclusively to the husband or to the wife.
(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those
contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership;
(2) Arrears or income due, during the marriage, from obligations which constitute a charge upon property of
either spouse or of the partnership;
(3) Minor repairs or for mere preservation made during the marriage upon the separate property of either the
husband or the wife; major repairs shall not be charged to the partnership;
(4) Major or minor repairs upon the conjugal partnership property;
(5) The maintenance of the family and the education of the children of both husband and wife, and of legitimate
children of one of the spouses;
(6) Expenses to permit the spouses to complete a professional, vocational or other course.
her to grant the same.
marriage may demand the value of the property fraudulently alienated by the husband.
There is no doubt that the subject property was acquired during Ros and Aguete’s marriage. Ros and Aguete
were married on 16 January 1954, while the subject property was acquired in 1968.15 There is also no doubt
that Ros encumbered the subject property when he mortgaged it for P115,000.00 on 23 October 1974.16 PNB
Laoag does not doubt that Aguete, as evidenced by her signature, consented to Ros’ mortgage to PNB of the
subject property. On the other hand, Aguete denies ever having consented to the loan and also denies affixing
her signature to the mortgage and loan documents.
The husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of
the wife. Should the husband do so, then the contract is voidable.17 Article 173 of the Civil Code allows Aguete
to question Ros’ encumbrance of the subject property. However, the same article does not guarantee that the
courts will declare the annulment of the contract. Annulment will be declared only upon a finding that the wife
did not give her consent. In the present case, we follow the conclusion of the appellate court and rule that
Aguete gave her consent to Ros’ encumbrance of the subject property.
The documents disavowed by Aguete are acknowledged before a notary public, hence they are public
documents. Every instrument duly acknowledged and certified as provided by law may be presented in evidence
without further proof, the certificate of acknowledgment being prima facie evidence of the execution of the
instrument or document involved.18 The execution of a document that has been ratified before a notary public
cannot be disproved by the mere denial of the alleged signer.19 PNB was correct when it stated that petitioners’
omission to present other positive evidence to substantiate their claim of forgery was fatal to petitioners’
cause.20 Petitioners did not present any corroborating witness, such as a handwriting expert, who could
authoritatively declare that Aguete’s signatures were really forged.
A notarized document carries the evidentiary weight conferred upon it with respect to its due execution, and it
has in its favor the presumption of regularity which may only be rebutted by evidence so clear, strong and
convincing as to exclude all controversy as to the falsity of the certificate. Absent such, the presumption must be
upheld. The burden of proof to overcome the presumption of due execution of a notarial document lies on the
one contesting the same. Furthermore, an allegation of forgery must be proved by clear and convincing
evidence, and whoever alleges it has the burden of proving the same.21]
Ros himself cannot bring action against PNB, for no one can come before the courts with unclean
hands.1avvphi1 In their memorandum before the trial court, petitioners themselves admitted that Ros forged
Aguete’s signatures.
Joe A. Ros in legal effect admitted in the complaint that the signatures of his wife in the questioned documents
are forged, incriminating himself to criminal prosecution. If he were alive today, he would be prosecuted for
forgery. This strengthens the testimony of his wife that her signatures on the questioned documents are not
hers.
In filing the complaint, it must have been a remorse of conscience for having wronged his family; in forging the
signature of his wife on the questioned documents; in squandering the P115,000.00 loan from the bank for
himself, resulting in the foreclosure of the conjugal property; eviction of his family therefrom; and, exposure to
public contempt, embarassment and ridicule.22]
The application for loan shows that the loan would be used exclusively "for additional working [capital] of buy &
sell of garlic & virginia tobacco."23 In her testimony, Aguete confirmed that Ros engaged in such business, but
claimed to be unaware whether it prospered. Aguete was also aware of loans contracted by Ros, but did not
know where he "wasted the money."24 Debts contracted by the husband for and in the exercise of the industry
or profession by which he contributes to the support of the family cannot be deemed to be his exclusive and
private debts.25
If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to
be used in or for his own business or his own profession, that contract falls within the term "x x x x obligations
for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit
to the family is apparent at the signing of the contract. From the very nature of the contract of loan or services,
the family stands to benefit from the loan facility or services to be rendered to the business or profession of the
husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where
the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such
obligation will redound to the benefit of the conjugal partnership.26]
For this reason, we rule that Ros’ loan from PNB redounded to the benefit of the conjugal partnership. Hence,
the debt is chargeable to the conjugal partnership.
WHEREFORE, we DENY the petition. The Decision of the Court of Appeals in CA-G.R. CV No. 76845 promulgated
on 17 October 2005 is AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 146548 December 18, 2009
HEIRS OF DOMINGO HERNANDEZ, SR., namely: SERGIA V. HERNANDEZ (Surviving Spouse), DOMINGO V.
HERNANDEZ, JR., and MARIA LEONORA WILMA HERNANDEZ, Petitioners,
vs.
PLARIDEL MINGOA, SR., DOLORES CAMISURA, MELANIE MINGOA AND QUEZON CITY REGISTER OF DEEDS,1
Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari of the Decision2 dated September 7, 2000 and Resolution3 dated
December 29, 2000, both of the Court of Appeals (CA), in CA-G.R. CV No. 54896. The CA Decision reversed and
set aside the decision of the Regional Trial Court (RTC) of Quezon City (Branch 92), which ruled in favor of herein
petitioners in the action for reconveyance filed by the latter in said court against the respondents. The CA
Resolution denied the petitioners’ motion for reconsideration.
The subject matter of the action is a parcel of land with an area of 520.50 square meters situated in Diliman,
Quezon City, described as Lot 15, Block 89 of the subdivision plan Psd-68807, covered by Transfer Certificate of
Title (TCT) No. 1075344 issued on May 23, 1966 and registered in the name of Domingo B. Hernandez, Sr.
married to Sergia V. Hernandez. Later on, said TCT No. 107534 was cancelled and in lieu thereof, TCT No.
2901215 was issued in favor of Melanie Mingoa.
These are the factual antecedents of this case:
On February 11, 1994, a complaint6 was filed with the RTC of Quezon City by herein petitioners, heirs of
Domingo Hernandez, Sr., namely, spouse Sergia Hernandez and their surviving children Domingo, Jr. and Maria
Leonora Wilma, against the respondents herein, Dolores Camisura, Melanie Mingoa, Atty. Plaridel Mingoa, Sr.
and all persons claiming rights under the latter, and the Quezon City Register of Deeds. The case was docketed as
Civil Case No. 094-19276.
In their complaint, the petitioners asked for (a) the annulment and/or declaration of nullity of TCT No. 290121
including all its derivative titles, the Irrevocable Special Power of Attorney (SPA) dated February 14, 1963 in favor
of Dolores Camisura,7 the SPA dated May 9, 1964 in favor of Plaridel Mingoa, Sr.,8 and the Deed of Absolute Sale
of Real Estate9 dated July 9, 1978 executed by Plaridel Mingoa, Sr. in favor of Melanie Mingoa for being products
of forgery and falsification; and (b) the reconveyance and/or issuance to them (petitioners) by the Quezon City
Register of Deeds of the certificate of title covering the subject property.
Respondents filed a Motion to Dismiss10 the complaint interposing the following grounds: the claim or demand
has been paid, waived, abandoned or otherwise extinguished; lack of cause of action; lack of jurisdiction over
the person of the defendants or over the subject or nature of the suit; and prescription. The following were
attached to said motion: a Deed of Transfer of Rights11 dated February 14, 1963 from Domingo Hernandez, Sr. to
Camisura, the Irrevocable SPA12 executed by the former in the latter’s favor, and a Deed of Sale of Right in a
Residential Land and Improvements Therein13 dated May 9, 1964 executed by Camisura in favor of Plaridel
Mingoa, Sr.
In its Order14 dated September 1, 1994, the trial court denied respondents’ motion to dismiss.
Respondents filed a petition for certiorari and prohibition with the CA assailing the aforementioned Order of
denial by the RTC. Their initial petition was dismissed for being insufficient in form. Respondents then re-filed
their petition, which was docketed as CA-G.R. SP No. 36868. In a decision15 dated May 26, 1995, respondents’
re-filed petition was denied due course by the CA. Having been filed beyond the reglementary period,
respondents’ subsequent motion for reconsideration was simply noted by the CA in its Resolution of July 7, 1995.
On the basis of a technicality, this Court, in a Resolution dated September 27, 1995, dismissed respondents'
appeal which was docketed as G.R. No. 121020. Per Entry of Judgment,16 said Resolution became final and
executory on January 2, 1996.
Meanwhile, respondents filed their Answer17 in the main case therein denying the allegations of the complaint
and averring as defenses the same grounds upon which they anchored their earlier motion to dismiss.
The parties having failed to amicably settle during the scheduled pre-trial conference, the case proceeded to
trial.
The evidence respectively presented by the parties is summarized as follows:18
x x x [It] appears that in the early part of 1958, Domingo Hernandez, Sr. (who was then a Central Bank employee)
and his spouse Sergia V. Hernandez were awarded a piece of real property by the Philippine Homesite and
Housing Corporation (PHHC) by way of salary deduction. On October 18, 1963, the [petitioners] then having paid
in full the entire amount of P6,888.96, a Deed of Absolute Sale of the property was executed by the PHHC in
their favor. TCT No. 107534, covering the property was issued to the [petitioners] on May 23, 1966. It bears an
annotation of the retention period of the property by the awardee (i.e., restriction of any unauthorized sale to
third persons within a certain period). Tax payments due on the property were religiously paid (until 1955) by the
[petitioners] as evidenced by receipts under the [petitioners’] name.
Hernandez, Sr. died intestate in April 1983 and it was only after his burial that his heirs found out that TCT No.
107534 was already cancelled a year before (in 1982), and in lieu thereof, TCT No. 290121 was issued to the
[respondents]. Upon diligent inquiry, [petitioners] came to know that the cancellation of TCT (No. 107534) in
favor of the [respondents’] xxx TCT (No. 290121) was based upon three sets of documents, namely, (1)
Irrevocable Power of Attorney; (2) Irrevocable Special Power of Attorney; and (3) Deed of Absolute Sale.
[Petitioners] also allege that because of financial difficulties, they were only able to file a complaint on February
11, 1995 after consulting with several lawyers.
xxxx
[Respondents] xxx on the other hand do not deny that Hernandez, Sr. was indeed awarded a piece of real
property by the PHHC. According to the [respondents] xxx, Hernandez, Sr. was awarded by the PHHC the Right to
Purchase the property in question; however, the late Hernandez, Sr. failed to pay all the installments due on the
said property. Thus, afraid that he would forfeit his right to purchase the property awarded to him, Hernandez,
Sr. sold to Dolores Camisura his rights for the sum of P6,500.00 on February 14, 1963, through a deed of transfer
of rights, seemingly a printed form from the PHHC. Simultaneous to this, Hernandez, Sr. and his spouse executed
an irrevocable special power of attorney, appointing Dolores Camisura as their attorney-in-fact with express
power to sign, execute and acknowledge any contract of disposition, alienation and conveyance of her right over
the aforesaid parcel of land.
Apparently, this special power of attorney was executed for the purpose of securing her right to transfer the
property to a third person considering that there was a prohibition to dispose of the property by the original
purchaser within one (1) year from full payment. Else wise stated, the irrevocable power of attorney was
necessary in order to enable the buyer, Dolores Camisura, to sell the lot to another, Plaridel Mingoa, without the
need of requiring Hernandez, to sign a deed of conveyance.
On May 9, 1964, Dolores Camisura sold her right over the said property to Plaridel Mingoa for P7,000.00.
Camisura then executed a similar irrevocable power of attorney and a deed of sale of right in a residential land
and improvements therein in favor of Plaridel Mingoa. Upon such payment and on the strength of the said
irrevocable power of attorney, Plaridel Mingoa took possession of the said property and began paying all the
installments due on the property to PHHC. Plaridel Mingoa further secured TCT No. 107534 (issued in the name
of Domingo Hernandez, Sr.) on May, 1966. On July 9, 1978, Plaridel Mingoa sold to his eldest child, Melanie
Mingoa, the property in question for P18,000.00. TCT No. 107534 was thus cancelled and TCT No. 290121 was
issued in the name of Melanie Mingoa. It is further claimed that since 1966 until 1982, Plaridel Mingoa
religiously paid all the taxes due on the said property; and that from 1983 up to the present, Melanie Mingoa
paid all the property taxes due thereon aside from having actual possession of the said property. (words in
brackets ours)
On May 9, 1996, the RTC rendered a decision19 in favor of the petitioners, with the following dispositive portion:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs as follows:
1) TCT No. 290121 and all its derivative titles are hereby declared null and void;
2) Ordering the Register of Deeds of Quezon City to cancel TCT No. 290121 issued in the name of defendant
Melanie Mingoa and corresponding owner’s duplicate certificate and all its derivative title[s];
3) Ordering defendant Melanie Mingoa and all derivative owners to surrender owner’s duplicate copies of
transfer certificate of title to the Register of Deeds of Quezon City for cancellation upon finality of this decision;
4) Ordering the defendants except the Register of Deeds of Quezon City to turn over to the plaintiffs the peaceful
possession of the subject property; and
5) Ordering the defendants except the Register of Deeds of Quezon City to jointly and severally (sic) pay the
plaintiffs the sum of P10,000.00 as attorney’s [fees] and to pay the costs of suit.
SO ORDERED.
In ruling in favor of petitioners, the trial court reasoned as follows:20
The two (2) parties in the case at bar gave out conflicting versions as to who paid for the subject property. The
plaintiffs claim that they were the ones who paid the entire amount out of the conjugal funds while it is the
contention of the defendant Mingoa that the former were not able to pay. The defendant alleged that the right
to purchase was sold to him and he was able to pay the whole amount. The Court is of the opinion that
petitioners’ version is more credible taken together with the presence of the irrevocable power of attorney
which both parties admitted. In light of the version of the defendants, it is highly improbable that a Power of
Attorney would be constituted by the plaintiffs authorizing the former to sell the subject property. This is
because for all intents and purposes, the land is already the defendants’ for if we are to follow their claim, they
paid for the full amount of the same. It can be safely concluded then that the Power of Attorney was
unnecessary because the defendants, as buyers, can compel the plaintiff-sellers to execute the transfer of the
said property after the period of prohibition has lapsed. The defendants, as owners, will have the right to do
whatever they want with the land even without an Irrevocable Power of Attorney. Since the presence of the
Irrevocable Power of Attorney is established, it is now the task of this Court to determine the validity of the sale
made by virtue of the said Power of Attorney. As what was said earlier, the Court subscribes to the points raised
by the plaintiffs. It was proved during trial that the signature of the wife was falsified. Therefore, it is as if the
wife never authorized the agent to sell her share of the subject land, it being conjugal property. It follows that
the sale of half of the land is invalid. However, it must be pointed out that the signature of the deceased husband
was never contested and is therefore deemed admitted. We now come to the half which belongs to the
deceased husband. The Law on Sales expressly prohibits the agent from purchasing the property of the principal
without the latter’s consent (Article 1491 of the Civil Code). It was established from the records that defendant
Plaridel Mingoa sold the subject land to his daughter Melanie. It is now for the Court to decide whether this
transaction is valid. x x x Considering that the sale took place in July 1978, it follows from simple mathematical
computation that Melanie was then a minor (20 years of age) when she allegedly bought the property from her
father. Since Melanie’s father is the sub-agent of the deceased principal, he is prohibited by law from purchasing
the land without the latter’s consent. This being the case, the sale is invalid for it appears that Plaridel Mingoa
sold the land to himself. It should be noted that the defendants could have easily presented Melanie’s birth
certificate, it being at their disposal, but they chose not to. Because of this, this Court is of the belief that the
presumption that evidence willfully suppressed would be adverse if produced arises.
The trial court denied respondents’ motion for reconsideration of the aforementioned decision in its Order21 of
August 22, 1996.
Aggrieved, the respondents appealed to the CA, where their case was docketed as CA-G.R. CV No. 54896.
Holding that the petitioners were barred by prescription and laches to take any action against the respondents,
the CA, in its herein assailed Decision22 dated September 7, 2000, reversed and set aside the appealed decision,
thereby dismissing the complaint filed by the petitioners before the trial court. In full, the disposition reads:
WHEREFORE, in view of the foregoing, the Decision of the RTC Branch 92, Quezon City, in Civil Case No. Q-94-
19276, entitled, "Heirs of Domingo Hernandez, Sr. vs. Dolores Camisura, et. al.," is hereby REVERSED AND SET
ASIDE. A new one is hereby entered, DISMISSING the complaint in Civil Case No. Q-94-19276 entitled, "Heirs of
Domingo Hernandez, Sr. vs. Dolores Camisura, et. al.," filed by the plaintiffs-appellees before the RTC Branch 92,
Quezon City for lack of merit.
SO ORDERED.
Petitioners’ subsequent motion for reconsideration was denied by the CA in its impugned Resolution23 dated
December 29, 2000.
Hence, petitioners are now before this Court via the present recourse. The ten (10) assigned errors set forth in
the petition all boil down to the essential issue of whether the title of the subject property in the name of
respondent Melanie Mingoa may still be reconveyed to the petitioners. As we see it, the resolution thereof
hinges on these two pivotal questions: (1) whether there was a valid alienation involving the subject property;
and (2) whether the action impugning the validity of such alienation has prescribed and/or was barred by laches.
The Court shall deal first with the procedural issues raised by the respondents in their Comment.24
We held in Vera-Cruz v. Calderon25 that:
As a general rule, only questions of law may be raised in a petition for review on certiorari to the Supreme Court.
Although it has long been settled that findings of fact are conclusive upon this Court, there are exceptional
circumstances which would require us to review findings of fact of the Court of Appeals, to wit:
(1) the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (2) the inference made
is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of
facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its
findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of
Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of
specific evidence on which they are based; (9) the facts set forth in the decision as well as in the petitioner’s
main and reply briefs are not disputed by the respondents; (10) the finding of fact of the Court of Appeals is
premised on the supposed absence of evidence and is contradicted by evidence on record. (emphasis ours)
The petition before us raises factual issues which are not proper in a petition for review under Rule 45 of the
Rules of Court. However, we find that one of the exceptional circumstances qualifying a factual review by the
Court exists, that is, the factual findings of the CA are at variance with those of the trial court. We shall then give
due course to the instant petition and review the factual findings of the CA.
Even if only petitioner Domingo Hernandez, Jr. executed the Verification/Certification26 against forum-shopping,
this will not deter us from proceeding with the judicial determination of the issues in this petition. As we
ratiocinated in Heirs of Olarte v. Office of the President:27
The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and
the signature of only one of them is insufficient. However, the Court has also stressed that the rules on forum
shopping were designed to promote and facilitate the orderly administration of justice and thus should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of
substantial compliance may be availed of with respect to the contents of the certification. This is because the
requirement of strict compliance with the provisions regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be altogether dispensed with or its
requirements completely disregarded. Thus, under justifiable circumstances, the Court has relaxed the rule
requiring the submission of such certification considering that although it is obligatory, it is not jurisdictional.
In HLC Construction and Development Corporation v. Emily Homes Subdivision Homeowners Association, it was
held that the signature of only one of the petitioners in the certification against forum shopping substantially
complied with rules because all the petitioners share a common interest and invoke a common cause of action or
defense.
The same leniency was applied by the Court in Cavile v. Heirs of Cavile, because the lone petitioner who
executed the certification of non-forum shopping was a relative and co-owner of the other petitioners with
whom he shares a common interest. x x x
xxx
In the instant case, petitioners share a common interest and defense inasmuch as they collectively claim a right
not to be dispossessed of the subject lot by virtue of their and their deceased parents’ construction of a family
home and occupation thereof for more than 10 years. The commonality of their stance to defend their alleged
right over the controverted lot thus gave petitioners xxx authority to inform the Court of Appeals in behalf of the
other petitioners that they have not commenced any action or claim involving the same issues in another court
or tribunal, and that there is no other pending action or claim in another court or tribunal involving the same
issues. x x x
Here, all the petitioners are immediate relatives who share a common interest in the land sought to be
reconveyed and a common cause of action raising the same arguments in support thereof. There was sufficient
basis, therefore, for Domingo Hernandez, Jr. to speak for and in behalf of his co-petitioners when he certified
that they had not filed any action or claim in another court or tribunal involving the same issues. Thus, the
Verification/Certification that Hernandez, Jr. executed constitutes substantial compliance under the Rules.
Anent the contention that the petition erroneously impleaded the CA as respondent in contravention of Section
4(a)28 of Rule 45 of the 1997 Rules of Civil Procedure, we shall apply our ruling in Simon v. Canlas,29 wherein we
held that:
x x x [The] Court agrees that the correct procedure, as mandated by Section 4, Rule 45 of the 1997 Rules of Civil
Procedure, is not to implead the lower court which rendered the assailed decision. However, impleading the
lower court as respondent in the petition for review on certiorari does not automatically mean the dismissal of
the appeal but merely authorizes the dismissal of the petition. Besides, formal defects in petitions are not
uncommon. The Court has encountered previous petitions for review on certiorari that erroneously impleaded
the CA. In those cases, the Court merely called the petitioners’ attention to the defects and proceeded to resolve
the case on their merits.
The Court finds no reason why it should not afford the same liberal treatment in this case. While unquestionably,
the Court has the discretion to dismiss the appeal for being defective, sound policy dictates that it is far better to
dispose of cases on the merits, rather than on technicality as the latter approach may result in injustice. This is in
accordance with Section 6, Rule 1 of the 1997 Rules of Civil Procedure which encourages a reading of the
procedural requirements in a manner that will help secure and not defeat justice.
We now come to the substantive issues.
As correctly found by the appellate court, the following facts are undisputed:30
1. Domingo Hernandez, Sr. was awarded a piece of real property in 1958 by the PHHC as part of the
government’s housing program at the time. Title over the said property was issued in 1966 in the name of
Hernandez, Sr., after full payment for the property was received by the PHHC.
2. Neither [petitioners] nor Hernandez, Sr., took possession of the said property. On the other hand, the
[respondents] took possession of the said property in 1966 and are in actual and physical possession thereof up
to the present, and have made considerable improvements thereon, including a residential house where they
presently reside.
3. The Owner’s Duplicate Copy of the title over the property given by the PHHC to Hernandez, Sr. was in the
possession of Plaridel Mingoa, the latter being able to facilitate the cancellation of the said title and [the
issuance of] a new TCT xxx in the name of Melanie Mingoa.
4. The realty taxes have been paid by [respondents], albeit in the name of Hernandez, Sr., but all official receipts
of tax payments are kept by the [respondents].
5. From 1966 (the time when the [respondents] were able to possess the property) to 1983 (the time when the
[petitioners] had knowledge that the TCT in the name of Hernandez, Sr. had already been cancelled by the
Registry of Deeds of Quezon City) covers almost a span of 17 years; and from 1983 to 1995 (the time when the
Heirs filed the original action) is a period of another 12 years.
The SPA31 in favor of Dolores Camisura pertinently states that the latter is the lawful attorney-in-fact of Domingo
B. Hernandez, Sr., married to Sergia Hernandez, to do and perform, among others, the following acts and deeds:
1. To sign, execute and acknowledge all such contracts, deeds or other instruments which may be required by the
People’s Homesite and Housing Corporation with respect to the purchase of that certain parcel of land known
and designated as Lot No. 15 Block E-89 of the Malaya Avenue Subdivision, situated in Quezon City and
containing an area of 520 square meters, more or less, which I have acquired thru the CENTRAL BANK STAFF
HOUSING CORPORATION;
2. To sign, execute and acknowledge all such contracts or other instruments which may deem necessary or be
required to sign, execute and acknowledge for the purpose of selling, transferring, conveying, disposing of or
alienating whatever rights I may have over that parcel of land mentioned above;
x x x.
The Deed of Transfer of Rights,32 also executed by Hernandez, Sr. in Camisura’s favor, expressly states that the
former, in consideration of the amount of ₱6,500.00, transfers his rights over the subject property to the latter.
Notably, such deed was simultaneously executed with the SPA on February 14, 1963.
From the foregoing, the Court cannot but conclude that the SPA executed by Hernandez, Sr. in respondent
Camisura's favor was, in reality, an alienation involving the subject property. We particularly note that
Hernandez, Sr., aside from executing said SPA, likewise sold his rights and interests over the property awarded by
the PHHC to Camisura. The CA committed no error when it ruled:33
x x x Appreciating the case in its entirety, the purported SPA appear to be merely a grant of authority to Camisura
(and then to Plaridel Mingoa) to sell and dispose of the subject property as well as a grant of right to purchase
the said property; but in essence, such SPA are disguised deeds of sale of the property executed in circumventing
the retention period restriction over the said property. Verily, the parties knew that the land in question could
not be alienated in favor of any third person within one (1) year without the approval of the PHHC.
Having ruled that the SPA in favor of Camisura was a contract of sale, the next question is whether or not such
sale was valid.
To constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1) cause, (2)
object, and (3) consent.
The consent of Domingo Hernandez, Sr. to the contract is undisputed, thus, the sale of his ½ share in the conjugal
property was valid. With regard to the consent of his wife, Sergia Hernandez, to the sale involving their conjugal
property, the trial court found that it was lacking because said wife’s signature on the SPA was falsified. Notably,
even the CA observed that the forgery was so blatant as to be remarkably noticeable to the naked eye of an
ordinary person. Having compared the questioned signature on the SPA34 with those of the documents35
bearing the sample standard signature of Sergia Hernandez, we affirm both lower courts' findings regarding the
forgery.
However, Sergia’s lack of consent to the sale did not render the transfer of her share invalid.
Petitioners contend that such lack of consent on the part of Sergia Hernandez rendered the SPAs and the deed of
sale fictitious, hence null and void in accordance with Article 140936 of the Civil Code. Petitioners likewise
contend that an action for the declaration of the non-existence of a contract under Article 141037 does not
prescribe.
We find, after meticulous review of the facts, that Articles 1409 and 1410 are not applicable to the matter now
before us.
It bears stressing that the subject matter herein involves conjugal property. Said property was awarded to
Domingo Hernandez, Sr. in 1958. The assailed SPAs were executed in 1963 and 1964. Title in the name of
Domingo Hernandez, Sr. covering the subject property was issued on May 23, 1966. The sale of the property to
Melanie Mingoa and the issuance of a new title in her name happened in 1978. Since all these events occurred
before the Family Code took effect in 1988, the provisions of the New Civil Code govern these transactions. We
quote the applicable provisions, to wit:
Art. 165. The husband is the administrator of the conjugal partnership.
her to grant the same. x x x.
marriage, may demand the value of property fraudulently alienated by the husband. (Emphasis ours.)
Notwithstanding the foregoing, petitioners argue that the disposition of conjugal property made by a husband
without the wife’s consent is null and void and the right to file an action thereon is imprescriptible, in accordance
with Garcia v. CA38 and Bucoy v. Paulino.39 .
Concededly, in the aforementioned cases of Garcia and Bucoy, the contracts involving the sale of conjugal
property by the husband without the wife's consent were declared null and void by this Court. But even in Bucoy,
we significantly ruled, in reference to Article 173, that:
The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the
husband without the wife’s consent, may be annulled by the wife.40 (emphasis ours)
In succeeding cases, we held that alienation and/or encumbrance of conjugal property by the husband without
the wife’s consent is not null and void but merely voidable.
In Sps. Alfredo v. Sps. Borras,41 we held that:

The Family Code, which took effect on 3 August 1988, provides that any alienation or encumbrance made by the
husband of the conjugal partnership property without the consent of the wife is void. However, when the sale is
made before the effectivity of the Family Code, the applicable law is the Civil Code.
Article 173 of the Civil Code provides that the disposition of conjugal property without the wife's consent is not
void but merely voidable.
We likewise made the same holding in Pelayo v. Perez :42
xxx [Under] Article 173, in relation to Article 166, both of the New Civil Code, which was still in effect on January
11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of conjugal
property does not make the contract void ab initio but merely voidable.
In Vera-Cruz v. Calderon,43 the Court noted the state of jurisprudence and elucidated on the matter, thus:
In the recent case of Heirs of Ignacia Aguilar-Reyes v. Spouses Mijares, we reiterated the rule that the husband
cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife,
otherwise, the contract is voidable. To wit:
Indeed, in several cases the Court has ruled that such alienation or encumbrance by the husband is void. The
better view, however, is to consider the transaction as merely voidable and not void. This is consistent with
Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10 years from the
questioned transaction, seek its annulment.
xxx
Likewise, in the case of Heirs of Christina Ayuste v. Court of Appeals, we declared that:
husband without the consent of his wife is voidable. The action for annulment must be brought during the
marriage and within ten years from the questioned transaction by the wife. Where the law speaks in clear and
categorical language, there is no room for interpretation – there is room only for application.
x x x (Emphasis ours.)
Here, the husband’s first act of disposition of the subject property occurred in 1963 when he executed the SPA
and the Deed of Transfer of Rights in favor of Dolores Camisura. Thus, the right of action of the petitioners
accrued in 1963, as Article 173 of the Civil Code provides that the wife may file for annulment of a contract
entered into by the husband without her consent within ten (10) years from the transaction questioned.
Petitioners filed the action for reconveyance in 1995. Even if we were to consider that their right of action arose
when they learned of the cancellation of TCT No. 107534 and the issuance of TCT No. 290121 in Melanie
Mingoa’s name in 1993, still, twelve (12) years have lapsed since such discovery, and they filed the petition
beyond the period allowed by law. Moreover, when Sergia Hernandez, together with her children, filed the
action for reconveyance, the conjugal partnership of property with Hernandez, Sr. had already been terminated
by virtue of the latter's death on April 16, 1983. Clearly, therefore, petitioners’ action has prescribed.
And this is as it should be, for in the same Vera-Cruz case, we further held that:44
xxx [Under] Article 173 of the New Civil Code, an action for the annulment of any contract entered into by the
husband without the wife’s consent must be filed (1) during the marriage; and (2) within ten years from the
transaction questioned. Where any one of these two conditions is lacking, the action will be considered as
having been filed out of time.
In the case at bar, while respondent filed her complaint for annulment of the deed of sale on July 8, 1994, i.e.,
within the ten-year period counted from the execution of the deed of sale of the property on June 3, 1986, the
marriage between her and Avelino had already been dissolved by the death of the latter on November 20, 1993.
In other words, her marriage to Avelino was no longer subsisting at the time she filed her complaint. Therefore,
the civil case had already been barred by prescription. (Emphasis ours.)
Thus, the failure of Sergia Hernandez to file with the courts an action for annulment of the contract during the
marriage and within ten (10) years from the transaction necessarily barred her from questioning the sale of the
subject property to third persons.
As we held in Vda. De Ramones v. Agbayani:45
In Villaranda v. Villaranda, et al., this Court, through Mr. Justice Artemio V. Panganiban, ruled that without the
wife’s consent, the husband’s alienation or encumbrance of conjugal property prior to the effectivity of the
Family Code is not void, but merely voidable. However, the wife’s failure to file with the courts an action for
annulment of the contract during the marriage and within ten (10) years from the transaction shall render the
sale valid. x x x (emphasis ours)
More than having merely prescribed, petitioners’ action has likewise become stale, as it is barred by laches.
In Isabela Colleges v. Heirs of Nieves-Tolentino,46 this Court held:
Laches means the failure or neglect for an unreasonable and unexplained length of time to do that which, by
observance of due diligence, could or should have been done earlier. It is negligence or omission to assert a right
within a reasonable time, warranting the presumption that the party entitled to assert his right either has
abandoned or declined to assert it. Laches thus operates as a bar in equity.
xxx
The time-honored rule anchored on public policy is that relief will be denied to a litigant whose claim or demand
has become "stale," or who has acquiesced for an unreasonable length of time, or who has not been vigilant or
who has slept on his rights either by negligence, folly or inattention. In other words, public policy requires, for
peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to
the assertion or enforcement of a right which has become, under the circumstances, inequitable or unfair to
permit.
Pertinently, in De la Calzada-Cierras v. CA,47 we ruled that a complaint to recover the title and possession of the
lot filed 12 years after the registration of the sale is considered neglect for an unreasonably long time to assert a
right to the property.
Here, petitioners' unreasonably long period of inaction in asserting their purported rights over the subject
property weighs heavily against them. We quote with approval the findings of the CA that:48
It was earlier shown that there existed a period of 17 years during which time Hernandez, Sr. xxx never even
questioned the defendants-appellants possession of the property; also there was another interval of 12 years
after discovering that the TCT of the property in the name of Hernandez, Sr. before the Heirs of Hernandez
instituted an action for the reconveyance of the title of the property.1avvphi1
xxx
The fact that the Mingoa's were able to take actual possession of the subject property for such a long period
without any form of cognizable protest from Hernandez, Sr. and the plaintiffs-appellees strongly calls for the
application of the doctrine of laches. It is common practice in the real estate industry, an ocular inspection of the
premises involved is a safeguard to the cautious and prudent purchaser usually takes, and should he find out that
the land he intends to buy is occupied by anybody else other than the seller who is not in actual possession, it
could then be incumbent upon the purchaser to verify the extent of the occupant's possessory rights. The
plaintiffs-appellees asseverate that the award was made in favor of Hernandez, Sr. in 1958; full payment made in
1963; and title issued in 1966. It would thus be contrary to ordinary human conduct (and prudence dictates
otherwise) for any awardee of real property not to visit and inspect even once, the property awarded to him and
find out if there are any transgressors in his property.
Furthermore, Hernandez, Sr.'s inaction during his lifetime lends more credence to the defendants-appellants
assertion that the said property was indeed sold by Hernandez, Sr. by way of the SPAs, albeit without the consent
of his wife. xxx
In addition, the reasons of poverty and poor health submitted by the plaintiffs-appellees could not justify the 12
years of delay in filing a complaint against the defendants-appellants. The records are bereft of any evidence to
support the idea that the plaintiffs-appellees diligently asserted their rights over the said property after having
knowledge of the cancellation of the TCT issued in Hernandez name. Moreover the Court seriously doubts the
plausibility of this contention since what the plaintiffs-appellees are trying to impress on this Court's mind is that
they did not know anything at all except only shortly before the death of Hernandez. To accept that not even the
wife knew of the transactions made by Hernandez, Sr. nor anything about the actual possession of the
defendants-appellants for such a long period is to Us absurd if not fantastic.
In sum, the rights and interests of the spouses Hernandez over the subject property were validly transferred to
respondent Dolores Camisura. Since the sale of the conjugal property by Hernandez, Sr. was without the consent
of his wife, Sergia, the same is voidable; thus, binding unless annulled. Considering that Sergia failed to exercise
her right to ask for the annulment of the sale within the prescribed period, she is now barred from questioning
the validity thereof. And more so, she is precluded from assailing the validity of the subsequent transfers from
Camisura to Plaridel Mingoa and from the latter to Melanie Mingoa. Therefore, title to the subject property
cannot anymore be reconveyed to the petitioners by reason of prescription and laches. The issues of prescription
and laches having been resolved, it is no longer necessary to discuss the other issues raised in this petition.
WHEREFORE, the instant petition is DENIED and the assailed Decision dated September 7, 2000 and Resolution
dated December 29, 2000 of the Court of Appeals are hereby AFFIRMED.
Costs against the petitioners.
SO ORDERED.
[ GR No. 190995, Aug 09, 2017 ]
BENJAMIN A. KO v. VIRGINIA DY ARAMBURO +
DECISION
TIJAM, J.:
This is a Petition for Review on Certiorari[1] under Rule 45, assailing the Decision[2] dated September 22, 2009 of
the Court of Appeals (CA) in CA-G.R. CV No. 89611, affirming the Decision dated February 16, 2006 of the
Regional Trial Court (RTC) of Tabaco City, Branch 15, in Civil Case No. T-1693.
Factual and Procedural Antecedents
Respondent Virginia Dy Aramburo (Virginia) is Corazon Aramburo Ko's (Corazon) sister-in-law, the former being
the wife of the latter's brother, Simeon Aramburo (Simeon). Corazon and Simeon have another sibling, Augusto
Aramburo (Augusto), who predeceased them. Virginia's co respondents herein are the heirs of Augusto, while
the petitioners in the instant case are the heirs of Corazon who substituted the latter after she died while the
case was pending before the CA.[3]
On November 26, 1993, Virginia, together with her co-respondents herein, filed a Complaint for Recovery of
Ownership with Declaration of Nullity and/or Alternatively Reconveyance and Damages with Preliminary
Injunction against Corazon, docketed as Civil Case No. T-1693.[4]
Subject of this case are seven parcels of land located in Tabaco City, Albay, to wit: (1) Transfer Certificate of Title
(TCT) No. T-41187 with an area of 176,549 square meters, more or less; (2) TCT No. T-41183 with an area of
217,732 sq m, more or less; (3) TCT No. T-41184 with an area of 39,674 sq m, more or less; (4) TCT No. T-28161
with an area of 86,585 sq m, more or less; (5) TCT No. T-41186 with an area of 4,325 sq m, more or less; (6) TCT
No. 49818 with an area of 27,281 sq m, more or less; and (7) TCT No. 49819 with an area of 35,760 sq m, more
or less (subject properties), now all under the name of Corazon.[5]
The complaint alleged that Virginia and her husband Simeon (Spouses Simeon and Virginia), together with
Corazon and her husband Felix (Spouses Felix and Corazon), acquired the subject properties from Spouses
Eusebio and Epifania Casaul (Spouses Eusebio and Epifania) through a Deed of Cession dated April 10, 1970.[6]
On April 13, 1970, Spouses Simeon and Virginia and Spouses Felix and Corazon executed a Deed of Cession in
favor of Augusto's heirs, subject of which is the one-third pro-indiviso portion of the subject properties.[7]
However, allegedly with the use of falsified documents, Corazon was able to have the entire subject properties
transferred exclusively to her name, depriving her co-owners Virginia and Augusto's heirs of their pro-indiviso
share, as well as in the produce of the same.[8]
For her part, Corazon admitted having acquired the subject properties through cession from their uncle and
auntie, Spouses Eusebio and Epifania. She, however, intimated that although the said properties were previously
registered under Spouses Eusebio and Epifania's name, the same were, in truth, owned by their parents, Spouses
Juan and Juliana Aramburo (Spouses Juan and Juliana). Hence, when her parents died, Spouses Eusebio and
Epifania allegedly merely returned the said properties to Spouses Juan and Juliana by ceding the same to their
children, Corazon and Simeon. She further averred that the said properties were ceded only to her and Simeon,
in that, her husband Felix's name and Virginia's name appearing in the Deed were merely descriptive of her and
Simeon's civil status, being married to Felix and Virginia, respectively.[9]
Corazon alleged that she and Simeon thought of sharing a third of the subject properties with the heirs of their
brother Augusto who predeceased them, hence they executed a Deed of Cession on April 13, 1970 but later on
decided to recall and not implement the same. In fine, thus, Corazon insisted that only she and Simeon share
one-half portion each of the subject properties. [10]
Corazon further alleged that on December 14, 1974, Simeon sold and conveyed his entire one-half share in the
co-owned properties in her favor. Hence, Corazon became the sole owner thereof and consequently, was able to
transfer the titles of the same to her name. Corazon argued that the subject properties belong to Simeon's
exclusive property, hence, Virginia's conformity to such sale was not necessary.[11]
Corazon also raised in her Answer to the complaint, that respondents' action was barred by prescription.[12]
Ruling of the RTC
During trial, it was established that Simeon and Virginia's marriage had been on bad terms. In fact, since
February 4, 1973 Simeon and Virginia had lived separately. Simeon lived with his sister Corazon in Tabaco City,
Albay, while Virginia and their children lived in Paco, Manila. From these circumstances, the trial court deduced
that it is highly suspicious that thereafter, Virginia would sign a deed of sale, consenting to her husband's
decision to sell their conjugal assets to Corazon. Virginia vehemently disowned the signature appearing in the
December 14, 1974 Deed of Absolute Sale. Verily, the National Bureau of Investigation (NBI) examination report
concluded that the questioned signature and the specimen signatures of Virginia were not written by one and
the same person and thus, the former is a forgery. [13]
Without the conformity of Virginia, according to the trial court, Simeon cannot alienate or encumber any real
property of the conjugal partnership.[14]
The trial court concluded, thus, that the December 14, 1974 Deed of Absolute Sale, being falsified, is not a valid
instrument to transfer the one third share of the subject properties.[15]
The trial court also did not accept Corazon's allegation that the April 13, 1970 Deed of Cession in favor of
Augusto's heirs as to the other one third portion of the subject properties, was cancelled and not implemented.
The trial court noted Corazon's testimony during trial that she was merely administering the said portion for
Augusto's heirs, her nephews and nieces, who were still minors at that time.[16]
On February 16, 2006, the trial court rendered a Decision in favor of herein respondents, thus:
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of the plaintiffs:
(1)
Declaring the plaintiffs Virginia Dy-Arambulo and Vicky Aramburo-Lee together with the interested parties the
owner of ONE-THIRD (1/3) portion of the property subject mater of this case;
(2)
Declaring the co-plaintiffs (heirs of Augusto Aramburo) likewise the owners of One-third (1/3) portion of the
property subject matter of this case;
(3)
Ordering the Cancellation of [TCT] Nos. T-41187,T-41183, T-41184, T-41185, T-41186, T-48918[4] [sic] and T-
49819 and another ones issued upon proper steps taken in the names of the plaintiffs and interested parties;
and the other plaintiffs, Heirs of Augusto Aramburo, conferring ownership over TWO-THIRDS (2/3) PORTION of
the properties subject matter of this case;
(4)
Ordering the defendant to reimburse the plaintiffs TWO-THIRDS (2/3) of the produce of the properties, subject
matter of this case from the time she appropriated it to herself in 1974 until such time as the 2/3 share are duly
delivered to them; and
(5)
Ordering the defendant to pay plaintiffs by way of damages the amount of Fifty Thousand (P50,000.00) as
attorney's fees; and
(6)
To pay the cost of suit.
SO ORDERED.[17]
Ruling of the CA
On appeal, Corazon maintained that the subject properties are not part of Spouses Simeon and Virginia's
conjugal properties. This, according to her, is bolstered by the fact that the subject properties are not included in
the case for dissolution of conjugal partnership docketed as Special Proceeding No. 67, and in the separation of
properties case docketed as Civil Case No. T-1032 between Simeon and Virginia.[18]
Respondents argued otherwise. Particularly, Virginia insisted that only a third portion of the subject properties is
owned by Simeon and that the same is conjugally-owned by her and Simeon since it was acquired during their
marriage. As such, the disposition by Simeon of the one-half portion of the subject properties in favor of Corazon
is not only void but also fictitious not only because Simeon does not own the said one-half portion, but also
because Virginia's purported signature in the December 14, 1974 Deed of Absolute Sale as the vendor's wife was
a forgery as found by the NBI, which was upheld by the trial court.[19]
In its September 22, 2009 assailed Decision,[20] the CA affirmed the trial court's findings and conclusion in its
entirety, thus:
WHEREFORE, the present appeal is DISMISSED. Consequently, the Decision of the [RTC], Branch 15, Tabaco City,
in Civil Case No. T-1693 is hereby AFFIRMED in toto.
SO ORDERED.[21]
Petitioners then, substituting deceased Corazon, filed a Motion for Reconsideration,[22] which was likewise
denied by the CA in its Resolution[23] dated January 13, 2010:
WHEREFORE, there being no cogent reason for US to depart from Our assailed Decision, WE hereby DENY the
Motion for Partial Reconsideration.
SO ORDERED.[24]
Hence, this petition.
Issue
Did the CA correctly sustain the RTC decision, declaring the parties as co-owners of the subject properties? In the
affirmative, may the subject titles be nullified and transferred to the parties as to their respective portions?
This Court's Ruling
The petition is partly meritorious.
At the outset, let it be stated that the law which governs the instant case is the Old Civil Code, not the Family
Code, as the circumstances of this case all occurred before the effectivity of the Family Code on August 3, 1988.
Proceeding, thus, to the issue of ownership, We find no reason to depart from the RTC's ruling as affirmed by the
CA.
Augusto's heirs own one-third pro-indiviso share in the subject properties

Respondents' (Augusto's heirs) claim concerning one-third of the subject properties, is anchored upon the April
13, 1970 Deed of Cession executed by Spouses Felix and Corazon and Spouses Simeon and Virginia in favor of
Augusto's children. Petitioners, however, maintain that the said deed was never given effect as it was recalled by
the said spouses.
The courts a quo found that the said deed, ceding a third of the subject properties to Augusto's heirs, was in fact
implemented as evidenced by Corazon's testimony that she was merely administering the said properties for
Augusto's heirs as her nephews and nieces were still minors at that time.
We find no cogent reason to depart from the the courts a quo's findings as to the existence and effectivity of the
April 13, 1970 Deed of Cession giving rights to Augusto's children over the one-third portion of the subject
property. For one, basic is the rule that factual findings of the trial court, especially if affirmed by the appellate
court, are binding and conclusive upon this Court absent any clear showing of abuse, arbitrariness, or
capriciousness committed by the trial court.[25] In addition, We are not convinced of Corazon's bare assertion
that the said document was cancelled merely because she and her brother . Simeon decided not to implement it
anymore. Moreover, as can be gleaned from the testimony of respondent July Aramburo, one of Augusto's heirs,
which was notably quoted by the petitioners in this petition, it is clear that he, together with his co-heirs, are co-
owners of the subject properties along with Spouses Simeon and Virginia and Spouses Felix and Corazon, by
virtue of the Deed of Cession executed in their favor. The said testimony clearly stated that Simeon was also
merely administering the subject properties.[26]
Simeon's heirs, which include Virginia, also own one-third pro-indiviso share in the subject properties
Respondent Virginia's claim as to the other one-third portion of the subject properties is ultimately anchored
upon the April 10, 1970 Deed of Cession. Corazon, however, countered that inasmuch as her husband Felix's
name in the said Deed of Cession was merely descriptive of her status as being married to the latter, Virginia's
name likewise appeared in the said Deed of Cession merely to describe Simeon's status as being married to
Virginia. In fine, Corazon argued that the properties subject of the said Deed were given exclusively to her and
Simeon. Consequently, the one-half portion thereof pertains to Simeon's exclusive property and does not belong
to Simeon and Virginia's conjugal property. This, according to Corazon, was bolstered by the fact that Simeon's
share in the subject properties was not included in the petition for separation of properties between Virginia and
Simeon. Petitioners maintain this argument.
We uphold the courts a quo's conclusion that one-third portion of the subject properties is indeed part of
Simeon and Virginia's conjugal properties.
It is undisputed that the subject properties were originally registered in the name of Spouses Eusebio and
Epifania. It is also undisputed that in a Deed of Cession dated April 10, 1970, these parcels of land were ceded to
Spouses Felix and Corazon, and Spouses Simeon and Virginia. There is likewise no question that the subject
properties were ceded to the said spouses during Spouses Simeon and Virginia's marriage.
Article 160 of the Old Civil Code, which is the applicable provision since the property was acquired prior to the
enactment of the Family Code as stated above, provides that "all property of the marriage is presumed to belong
to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife."[27]
This presumption in favor of conjugality is rebuttable, but only with a strong, clear and convincing evidence;
there must be a strict proof of exclusive ownership of one of the spouses,[28] and the burden of proof rests
upon the party asserting it.[29]
Thus, in this case, the subject properties, having been acquired during the marriage, are still presumed to belong
to Simeon and Virginia's conjugal properties.
Unfortunately, Corazon, or the petitioners for that matter, failed to adduce ample evidence that would convince
this Court of the exclusive character of the properties.
Petitioners' argument that Virginia's name was merely descriptive of Simeon's civil status is untenable. It bears
stressing that if proof obtains on the acquisition of the property during the existence of the marriage, as in this
case, then the presumption of conjugal ownership remains unless a strong, clear and convincing proof was
presented to prove otherwise. In fact, even the registration of a property in the name of one spouse does not
destroy its conjugal nature. What is material is the time when the property was acquired.[30]
We also give scant consideration on petitioners' bare allegation that the subject properties were actually from
the estate of Simeon and Corazon's parents, intimating that the same were inherited by Simeon and Corazon,
hence, considered their exclusive properties. The records are bereft of any proof that will show that the subject
properties indeed belonged to Simeon and Corazon's parents. Again, what is established is that the subject
properties were originally registered under Spouses Eusebio and Epifania's name and thus, ceded by the latter.
Petitioners' bare allegation on the matter is so inadequate for the Court to reach a conclusion that the
acquisition of the subject properties was in a nature of inheritance than a cession.
Likewise, the fact that the subject properties were not included in the cases for separation of properties between
Simeon and Virginia does not, in any way, prove that the same are not part of Simeon and Virginia's conjugal
properties. Such fact cannot be considered as a strong, clear and convincing proof that the said properties
exclusively belong to Simeon. Besides, We note respondents' allegation in their Comment to this petition that
the case for separation of properties between Simeon and Virginia was not resolved by the trial court on the
merits as Simeon died during the pendency thereof, and also because there was actually a disagreement as to
the inventory the properties included therein. This could mean that precisely, other properties may be part of
the said spouses' conjugal properties and were not included in the said case. Notably, such allegation was not
denied by the petitioners.
At any rate, the question of whether petitioners were able to adduce proof to overthrow the presumption of
conjugality is a factual issue best addressed by the trial court. It cannot be over-emphasized that factual
determinations of the trial courts, especially when confirmed by the appellate court, are accorded great weight
by the Court and, as a rule, will not be disturbed on appeal, except for the most compelling reasons, which We
do not find in the case at bar.[31]
Simeon could not have validly sold the one-third share of Augusto's heirs, as well as the one-third portion of his
and Virginia's conjugal share without the latter's consent, to Corazon
We now proceed to determine the validity of the December 14, 1974 Deed of Absolute Sale executed by Simeon
in favor of Corazon, covering one-half of the subject properties which was his purported share.
As for the one-third portion of the subject properties pertaining to Augusto's heirs, We are one with the CA in
ruling that the Deed of Absolute Sale is void as the said portion is owned by Augusto's heirs as above-discussed
and thus, Simeon had no right to sell the same. It is basic that the object of a valid sales contract must be owned
by the seller.[32] Nemo dat quod non habet, as an ancient Latin maxim says. One cannot give what one does not
have.[33]
However, as to the one-third portion commonly-owned by Spouses Simeon and Virginia, Simeon's alienation of
the same through sale without Virginia's conformity is merely voidable.
Article 166[34] of the Old Civil Code explicitly requires the consent of the wife before the husband may alienate
or encumber any real property of the conjugal partnership except when there is a showing that the wife is
incapacitated, under civil interdiction, or in like situations.
In this case, Virginia vehemently denies having conformed to the December 14, 1974 sale in favor of Corazon. In
fact, during trial, it has already been satisfactorily proven, through the NBI's findings as upheld by the trial court,
that Virginia's signature appearing on the said Deed of Absolute Sale is a forgery. Concedingly, a finding of
forgery does not depend entirely on the testimonies of handwriting experts as even this Court may conduct an
independent examination of the questioned signature in order to arrive at a reasonable conclusion as to its
authenticity. We, however, do not have any means to evaluate the questioned signature in this case as even the
questioned Deed of Absolute Sale is not available in the records before Us. Hence, We are constrained to the
general rule that the factual findings of the RTC as affirmed by the CA should not be disturbed by this Court
unless there is a compelling reason to deviate therefrom.
In addition, as correctly observed by the courts a quo, We cannot turn a blind eye on the circumstances
surrounding the execution of the said Deed of Absolute Sale. The CA, quoting the RTC, held thus:
[T]he dubiety of its execution at a time that [Virginia] and her husband's marital relationship was already stale is
not to be taken for granted. It is a fact that [Virginia] had lived separately from bed and board with her husband
[Simeon] as of February 4, 1973. It is, therefore, highly suspicious that [later on], x x x she would consent to her
husband's decision selling their conjugal assets to [Corazon]. Precisely, her signature appearing in said Deed of
Absolute Sale dated December 14, 1974 x x x is being disowned by her as being a forgery. Undoubtedly, the NBI
Examination report anent this x x x conducted by Sr. Document Examiner Rhoda B. Flores gave the conclusion
that the questioned and the standard/sample signatures of "[Virginia]" was not written by one and the same
person. x x x.[35]
The CA also correctly observed that the forgery, as found by the RTC, is evident from the admitted fact of
strained marital relationship between Simeon and Virginia and the fact that at the time the question Deed of
Absolute Sale was executed, Simeon had been living with Corazon in Tabaco City, Albay, while Virginia and her
children were living in Paco, Manila.[36]
Accordingly, without Virginia's conformity, the Deed of Absolute Sale executed on December 14, 1974 between
Simeon and Corazon purportedly covering one-half of the subject properties is voidable.
As for Augusto's heirs, the action to nullify the sale of their share, being void is imprescriptible; as for Virginia,
the action to nullify the sale of her share, being merely voidable, is susceptible to prescription
At this juncture, We differ from the CA's pronouncement that since the deed of sale involved is a void contract,
the action to nullify the same is imprescriptible.
We qualify.
For the share of Augusto's heirs sold by Simeon in the December 14, 1974 Deed of Absolute Sale, the sale of the
same is void as the object of such sale, not being owned by the seller, did not exist at the time of the transaction.
[37] Being a void contract, thus, the CA correctly ruled that the action to impugn the sale of the same is
imprescriptible pursuant to Article 1410[38] of the New Civil Code (NCC).
As for the share pertaining to Simeon and Virginia, We must emphasize that the governing law in this case is the
Old Civil Code. Under the said law, while the husband is prohibited from selling the commonly-owned real
property without his wife's consent, still, such sale is not void but merely voidable.[39] Article 173 thereof gave
Virginia the right to have the sale annulled during the marriage within ten years from the date of the sale. Failing
in that, she or her heirs may demand, after dissolution of the marriage, only the value of the property that
Simeon erroneously sold.[40] Thus:
In contrast, the Family Code does not provide a period within which the wife who gave no consent may assail her
husband's sale of real property. It simply provides that without the other spouse's written consent or a court
order allowing the sale, the same would be void.[41] Thus, the provisions of the NCC governing contracts is
applied as regards the issue on prescription. Under the NCC, a void or inexistent contract has no force and effect
from the very beginning, and this rule applies to contracts that are declared void by positive provision of law as
in the case of a sale of conjugal property without the other spouse's written consent.[42] Under Article 1410 of
the NCC, the action or defense for the declaration of the inexistence of a contract does not prescribe.
As this case, as far as Virginia is concerned, falls under the provisions of the Old Civil Code, the CA erred in ruling
that the subject Deed of Absolute Sale is void for the lack of the wife's conformity thereto and thus, applying
Article 1410 of the NCC stating that the action to question a void contract is imprescriptible. Again, Simeon's sale
of their conjugal property without his wife's conformity under the Old Civil Code is merely voidable not void. The
imprescriptibility of an action assailing a void contract under Article 1410 of the NCC, thus, does not apply in
such case. The 10-year prescriptive period under Article 173 of the Old Civil Code, therefore, should be applied in
this case.
Here, the invalid sale was executed on December 14, 1974 while the action questioning the same was filed in
1993, which is clearly way beyond the 10-year period prescribed under Article 173 of the Old Civil Code.
Virginia's recourse is, therefore, to demand only the value of the property, i.e., the one-third portion of the
subject properties invalidly sold by Simeon without Virginia's conformity pursuant to the same provision.
In fine, while We uphold the courts a quo's findings that the parties herein are co-owners of the subject
properties, We reverse and set aside the said courts' ruling, ordering the cancellation of titles of the entire
subject properties and the transfer of the two-thirds portion of the same to the respondents. While Augusto's
heirs are entitled to the recovery of their share in the subject properties, Virginia is only entitled to demand the
value of her share therefrom pursuant to Article 173 of the Old Civil Code above-cited.
WHEREFORE, premises considered, the petition is PARTLY GRANTED. The Decision dated September 22, 2009 of
the Court of Appeals in CA-G.R. CV No. 89611, affirming the Decision dated February 16, 2006 of the Regional
Trial Court of Tabaco City, Branch 15, in Civil Case No. T-1693 is hereby AFFIRMED in all aspects EXCEPT insofar as
it ordered the cancellation of the titles of the entire subject properties.
Accordingly, petitioners Heirs of Corazon Aramburo Ko, respondents Virginia Dy Aramburo and all persons
claiming under her, as Heirs of Simeon Aramburo, and respondents Heirs of Augusto Aramburo are deemed co-
owners pro-indiviso of the subject properties in equal one-third (1/3) share. As such, the titles over the subject
properties are ORDERED cancelled insofar as the heirs of Augusto Aramburo's share is concerned. Virginia Dy
Aramburo and all persons claiming under her have the right to demand for the value of their one-third (1/3)
share in a proper case.
SO ORDERED.
G.R. No. 125172 June 26, 1998
Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,

vs.
COURT OF APPEALS and GILDA COPUZ, respondents.
PANGANIBAN, J.:
The sale of a conjugal property requires the consent of both the husband and the wife. The absence of the
consent of one renders the sale null and void, while the vitiation thereof makes it merely voidable. Only in the
latter case can ratification cure the defect.
The Case
These were the principles that guided the Court in deciding this petition for review of the Decision 1 dated
January 30, 1996 and the Resolution 2 dated May 28, 1996, promulgated by the Court of Appeals in CA-GR CV
No. 41758, affirming the Decision of the lower court and denying reconsideration, respectively.
On May 28, 1990, Private Respondent Gilda Corpuz filed an Amended Complainant 3 against her husband Judie
Corpuz and Petitioner-Spouses Antonio and Luzviminda Guiang. The said Complaint sought the declaration of a
certain deed of sale, which involved the conjugal property of private respondent and her husband, null and void.
The case was raffled to the Regional Trial Court of Koronadal, South Cotabato, Branch 25. In due course, the trial
court rendered a Decision 4 dated September 9, 1992, disposing as follow: 5
ACCORDINGLY, judgment is rendered for the plaintiff and against the defendants,
1. Declaring both the Deed of Transfer of Rights dated March 1, 1990 (Exh. "A") and the "amicable
settlement" dated March 16, 1990 (Exh. "B") as null void and of no effect;
2. Recognizing as lawful and valid the ownership and possession of plaintiff Gilda Corpuz over the
remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409 which has been the subject of the Deed of
Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse defendants Luzviminda Guiang the amount of NINE
THOUSAND (P9,000.00) PESOS corresponding to the payment made by defendants Guiangs to Manuel Callejo for
the unpaid balance of the account of plaintiff in favor of Manuel Callejo, and another sum of P379.62
representing one-half of the amount of realty taxes paid by defendants Guiangs on Lot 9, Block 8, (LRC) Psd-
165409, both with legal interests thereon computed from the finality of the decision.
No pronouncement as to costs in view of the factual circumstances of the case.
Dissatisfied, petitioners-spouses filed an appeal with the Court of Appeals. Respondent Court, in its challenged
Decision, ruled as follow: 6
WHEREFORE, the appealed of the lower court in Civil Case No. 204 is hereby AFFIRMED by this Court. No costs
considering plaintiff-appellee's failure to file her brief despite notice.
Reconsideration was similarly denied by the same court in its assailed Resolution: 7
Finding that the issues raised in defendants-appellants motion for reconsideration of Our decision in this case of
January 30, 1996, to be a mere rehash of the same issues which we have already passed upon in the said
decision, and there [being] no cogent reason to disturb the same, this Court RESOLVED to DENY the instant
motion for reconsideration for lack of merit.
The Facts
The facts of this case are simple. Over the objection of private respondent and while she was in Manila seeking
employment, her husband sold to the petitioners-spouses one half of their conjugal peoperty, consisting of their
residence and the lot on which it stood. The circumstances of this sale are set forth in the Decision of
Respondent Court, which quoted from the Decision of the trial court as follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie Corpuz are legally married spouses. They were married on
December 24, 1968 in Bacolod City, before a judge. This is admitted by defendants-spouses Antonio and
Luzviminda Guiang in their answer, and also admitted by defendant Judie Corpuz when he testified in court (tsn.
p. 3, June 9, 1992), although the latter says that they were married in 1967. The couple have three children,
namely: Junie — 18 years old, Harriet — 17 years of age, and Jodie or Joji, the youngest, who was 15 years of age
in August, 1990 when her mother testified in court.
Sometime on February 14, 1983, the couple Gilda and Judie Corpuz, with plaintiff-wife Gilda Corpuz as vendee,
bought a 421 sq. meter lot located in Barangay Gen. Paulino Santos (Bo. 1), Koronadal, South Cotabato, and
particularly known as Lot 9, Block 8, (LRC) Psd-165409 from Manuel Callejo who signed as vendor through a
conditional deed of sale for a total consideration of P14,735.00. The consideration was payable in installment,
with right of cancellation in favor of vendor should vendee fail to pay three successive installments (Exh. "2", tsn
p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda and Judie Corpuz sold one-half portion of their Lot No. 9,
Block 8, (LRC) Psd-165409 to the defendants-spouses Antonio and Luzviminda Guiang. The latter have since then
occupied the one-half portion [and] built their house thereon (tsn. p. 4, May 22, 1992). They are thus adjoining
neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime in June 1989. She was trying to look for work abroad, in
[the] Middle East. Unfortunately, she became a victim of an unscrupulous illegal recruiter. She was not able to go
abroad. She stayed for sometime in Manila however, coming back to Koronadal, South Cotabato, . . . on March
11, 1990. Plaintiff's departure for Manila to look for work in the Middle East was with the consent of her
husband Judie Corpuz (tsn. p. 16, Aug. 12, 1990; p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant Judie Corpuz seldom went home to the conjugal dwelling. He
stayed most of the time at his place of work at Samahang Nayon Building, a hotel, restaurant, and a cooperative.
Daughter Herriet Corpuz went to school at King's College, Bo. 1, Koronadal, South Cotabato, but she was at the
same time working as household help of, and staying at, the house of Mr. Panes. Her brother Junie was not
working. Her younger sister Jodie (Jojie) was going to school. Her mother sometimes sent them money (tsn. p.
14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned that her father intended to sell the remaining one-half
portion including their house, of their homelot to defendants Guiangs. She wrote a letter to her mother
informing her. She [Gilda Corpuz] replied that she was objecting to the sale. Harriet, however, did not inform her
father about this; but instead gave the letter to Mrs. Luzviminda Guiang so that she [Guiang] would advise her
father (tsn. pp. 16-17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda Corpuz, defendant Judie Corpuz pushed through the sale of the
remaining one-half portion of Lot 9, Block 8, (LRC) Psd-165409. On March 1, 1990, he sold to defendant
Luzviminda Guiang thru a document known as "Deed of Transfer of Rights" (Exh. "A") the remaining one-half
portion of their lot and the house standing thereon for a total consideration of P30,000.00 of which P5,000.00
was to be paid in June, 1990. Transferor Judie Corpuz's children Junie and Harriet signed the document as
witness.
Four (4) days after March 1, 1990 or on March 5, 1990, obviously to cure whatever defect in defendant Judie
Corpuz's title over the lot transferred, defendant Luzviminda Guiang as vendee executed another agreement
over Lot 9, Block 8, (LRC) Psd-165408 (Exh. "3"), this time with Manuela Jimenez Callejo, a widow of the original
registered owner from whom the couple Judie and Gilda Corpuz originally bought the lot (Exh. "2"), who signed
as vendor for a consideration of P9,000.00. Defendant Judie Corpuz signed as a witness to the sale (Exh. "3-A").
The new sale (Exh. "3") describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408 but it is obvious from the mass
of evidence that the correct lot is Lot 8, Block 9, (LRC) Psd-165409, the very lot earlier sold to the couple Gilda
and Judie Corpuz.
5. Sometimes on March 11, 1990, plaintiff returned home. She found her children staying with other
households. Only Junie was staying in their house. Harriet and Joji were with Mr. Panes. Gilda gathered her
children together and stayed at their house. Her husband was nowhere to be found. She was informed by her
children that their father had a wife already.
6. For staying in their house sold by her husband, plaintiff was complained against by defendant Luzviminda
Guiang and her husband Antonio Guiang before the Barangay authorities of Barangay General Paulino Santos
(Bo. 1), Koronadal, South Cotabato, for trespassing (tsn. p. 34, Aug. 17, 1990). The case was docketed by the
barangay authorities as Barangay Case No. 38 for "trespassing". On March 16, 1990, the parties thereat signed a
document known as "amicable settlement". In full, the settlement provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children, namely: Junie, Hariet and Judie to leave voluntarily
the house of Mr. and Mrs. Antonio Guiang, where they are presently boarding without any charge, on or before
April 7, 1990.
FAIL NOT UNDER THE PENALTY OF THE LAW.
Believing that she had received the shorter end of the bargain, plaintiff to the Barangay Captain of Barangay
Paulino Santos to question her signature on the amicable settlement. She was referred however to the Office-In-
Charge at the time, a certain Mr. de la Cruz. The latter in turn told her that he could not do anything on the
matter (tsn. p. 31, Aug. 17, 1990).
This particular point not rebutted. The Barangay Captain who testified did not deny that Mrs. Gilda Corpuz
approached him for the annulment of the settlement. He merely said he forgot whether Mrs. Corpuz had
approached him (tsn. p. 13, Sept. 26, 1990). We thus conclude that Mrs. Corpuz really approached the Barangay
Captain for the annulment of the settlement. Annulment not having been made, plaintiff stayed put in her house
and lot.
7. Defendant-spouses Guiang followed thru the amicable settlement with a motion for the execution of the
amicable settlement, filing the same with the Municipal Trial Court of Koronadal, South Cotabato. The
proceedings [are] still pending before the said court, with the filing of the instant suit.
8. As a consequence of the sale, the spouses Guiang spent P600.00 for the preparation of the Deed of
Transfer of Rights, Exh. "A", P9,000.00 as the amount they paid to Mrs. Manuela Callejo, having assumed the
remaining obligation of the Corpuzes to Mrs. Callejo (Exh. "3"); P100.00 for the preparation of Exhibit "3"; a total
of P759.62 basic tax and special education fund on the lot; P127.50 as the total documentary stamp tax on the
various documents; P535.72 for the capital gains tax; P22.50 as transfer tax; a standard fee of P17.00;
certification fee of P5.00. These expenses particularly the taxes and other expenses towards the transfer of the
title to the spouses Guiangs were incurred for the whole Lot 9, Block 8, (LRC) Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial court's ruling that any alienation or encumbrance by the
husband of the conjugal propety without the consent of his wife is null and void as provided under Article 124 of
the Family Code. It also rejected petitioners' contention that the "amicable sttlement" ratified said sale, citing
Article 1409 of the Code which expressly bars ratification of the contracts specified therein, particularly those
"prohibited or declared void by law."
Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public respondent the following errors: 10
Whether or not the assailed Deed of Transfer of Rights was validly executed.
II
Whether or not the Cour of Appeals erred in not declairing as voidable contract under Art. 1390 of the Civil Code
the impugned Deed of Transfer of Rights which was validly ratified thru the execution of the "amicable
settlement" by the contending parties.
III
Whether or not the Court of Appeals erred in not setting aside the findings of the Court a quo which recognized
as lawful and valid the ownership and possession of private respondent over the remaining one half (1/2)
portion of the properly.
In a nutshell, petitioners-spouses contend that (1) the contract of sale (Deed of Transfer of Rights) was merely
voidable, and (2) such contract was ratified by private respondent when she entered into an amicable sttlement
with them.
This Court's Ruling

The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was validly executed by the parties-litigants in
good faith and for valuable consideration. The absence of private respondent's consent merely rendered the
Deed voidable under Article 1390 of the Civil Code, which provides:
Art. 1390. The following contracts are voidable or annullable, even though there may have been no
damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of
ratification.(n)
The error in petitioners' contention is evident. Article 1390, par. 2, refers to contracts visited by vices of consent,
i.e., contracts which were entered into by a person whose consent was obtained and vitiated through mistake,
violence, intimidation, undue influence or fraud. In this instance, private respondent's consent to the contract of
sale of their conjugal property was totally inexistent or absent. Gilda Corpuz, on direct examination, testified
thus: 11
Q Now, on March 1, 1990, could you still recall where you were?
A I was still in Manila during that time.
xxx xxx xxx
ATTY. FUENTES:
Q When did you come back to Koronadal, South Cotabato?
A That was on March 11, 1990, Ma'am.
Q Now, when you arrived at Koronadal, was there any problem which arose concerning the ownership of
your residential house at Callejo Subdivision?
A When I arrived here in Koronadal, there was a problem which arose regarding my residential house and
lot because it was sold by my husband without my knowledge.
This being the case, said contract properly falls within the ambit of Article 124 of the Family Code, which was
correctly applied by the teo lower court:
Art. 124. The administration and enjoyment of the conjugal partnerhip properly shall belong to both
spouses jointly. In case of disgreement, the husband's decision shall prevail, subject recourse to the court by the
wife for proper remedy, which must be availed of within five years from the date of the contract implementing
such decision.
conjugal properties, the other spouse may assume sole powers of administration. These powers do not include
the powers of disposition or encumbrance which must have the authority of the court or the written consent of
the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void.
However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors. (165a) (Emphasis supplied)
Comparing said law with its equivalent provision in the Civil Code, the trial court adroitly explained the
amendatory effect of the above provision in this wise: 12
The legal provision is clear. The disposition or encumbrance is void. It becomes still clearer if we compare the
same with the equivalent provision of the Civil Code of the Philippines. Under Article 166 of the Civil Code, the
husband cannot generally alienate or encumber any real property of the conjugal partnershit without the wife's
consent. The alienation or encumbrance if so made however is not null and void. It is merely voidable. The
offended wife may bring an action to annul the said alienation or encumbrance. Thus the provision of Article 173
of the Civil Code of the Philippines, to wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the
marriage, may demand the value of property fraudulently alienated by the husband.(n)
This particular provision giving the wife ten (10) years . . . during [the] marriage to annul the alienation or
encumbrance was not carried over to the Family Code. It is thus clear that any alienation or encumbrance made
after August 3, 1988 when the Family Code took effect by the husband of the conjugal partnership property
without the consent of the wife is null and void.
Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners were perpetrated in
the execution of the document embodying the amicable settlement. Gilda Corpuz alleged during trial that
barangay authorities made her sign said document through misrepresentation and
coercion. 13 In any event, its execution does not alter the void character of the deed of sale between the
husband and the petitioners-spouses, as will be discussed later. The fact remains that such contract was entered
into without the wife's consent.
In sum, the nullity of the contract of sale is premised on the absence of private respondent's consent. To
constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1) cause, (2)
object, and (3) consent, 14 the last element being indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners aver that it was duly ratified by the contending
parties through the "amicable settlement" they executed on March 16, 1990 in Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts have resolved this issue in favor of the private
respondent. The trial court correctly held: 15
By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to Transfer of Rights (Exh. "A")
cannot be ratified, even by an "amicable settlement". The participation by some barangay authorities in the
"amicable settlement" cannot otherwise validate an invalid act. Moreover, it cannot be denied that the
"amicable settlement (Exh. "B") entered into by plaintiff Gilda Corpuz and defendent spouses Guiang is a
contract. It is a direct offshoot of the Deed of Transfer of Rights (Exh. "A"). By express provision of law, such a
contract is also void. Thus, the legal provision, to wit:
Art. 1422. Acontract which is the direct result of a previous illegal contract, is also void and inexistent. (Civil
Code of the Philippines).
In summation therefore, both the Deed of transfer of Rights (Exh. "A") and the "amicable settlement" (Exh. "3")
are null and void.
Doctrinally and clearly, a void contract cannot be ratified. 16
Neither can the "amicable settlement" be considered a continuing offer that was accepted and perfected by the
parties, following the last sentence of Article 124. The order of the pertinent events is clear: after the sale,
petitioners filed a complaint for trespassing against private respondent, after which the barangay authorities
secured an "amicable settlement" and petitioners filed before the MTC a motion for its execution. The
settlement, however, does not mention a continuing offer to sell the property or an acceptance of such a
continuing offer. Its tenor was to the effect that private respondent would vacate the property. By no stretch of
the imagination, can the Court interpret this document as the acceptance mentioned in Article 124.
WHEREFORE, the Court hereby DENIES the petition and AFFIRMS the challenged Decision and Resolution. Costs
against petitioners.
SO ORDERED.
G.R. No. 147978 January 23, 2002
THELMA A. JADER-MANALO, petitioner,

vs.
NORMA FERNANDEZ C. CAMAISA and EDILBERTO CAMAISA, respondents.
KAPUNAN, J.:
The issue raised in this case is whether or not the husband may validly dispose of a conjugal property without
the wife's written consent.
The present controversy had its beginning when petitioner Thelma A. Jader-Manalo allegedly came across an
advertisement placed by respondents, the Spouses Norma Fernandez C. Camaisa and Edilberto Camaisa, in the
Classified Ads Section of the newspaper BULLETIN TODAY in its April, 1992 issue, for the sale of their ten-door
apartment in Makati, as well as that in Taytay, Rizal.
As narrated by petitioner in her complaint filed with the Regional Trial Court of Makati, Metro Manila, she was
interested in buying the two properties so she negotiated for the purchase through a real estate broker, Mr.
Proceso Ereno, authorized by respondent spouses.1 Petitioner made a visual inspection of the said lots with the
real estate broker and was shown the tax declarations, real property tax payment receipts, location plans, and
vicinity maps relating to the properties.2 Thereafter, petitioner met with the vendors who turned out to be
respondent spouses. She made a definite offer to buy the properties to respondent Edilberto Camaisa with the
knowledge and conformity of his wife, respondent Norma Camaisa in the presence of the real estate broker.3
After some bargaining, petitioner and Edilberto agreed upon the purchase price of ₱1,500,000.00 for the Taytay
property and ₱2,100,000.00 for the Makati property4 to be paid on installment basis with downpayments of
₱100,000.00 and ₱200,000.00, respectively, on April 15, 1992. The balance thereof was to be paid as follows5 :
Taytay Property
Makati Property
6th month
P200,000.00
P300,000.00
12th month
700,000.00
1,600,000.00
18th month
500,000.00
This agreement was handwritten by petitioner and signed by Edilberto.6 When petitioner pointed out the
conjugal nature of the properties, Edilberto assured her of his wife's conformity and consent to the sale.7 The
formal typewritten Contracts to Sell were thereafter prepared by petitioner. The following day, petitioner, the
real estate broker and Edilberto met in the latter's office for the formal signing of the typewritten Contracts to
Sell.8 After Edilberto signed the contracts, petitioner delivered to him two checks, namely, UCPB Check No.
62807 dated April 15, 1992 for ₱200,000.00 and UCPB Check No. 62808 also dated April 15, 1992 for
₱100,000.00 in the presence of the real estate broker and an employee in Edilberto's office.9 The contracts were
given to Edilberto for the formal affixing of his wife's signature.
The following day, petitioner received a call from respondent Norma, requesting a meeting to clarify some
provisions of the contracts.10 To accommodate her queries, petitioner, accompanied by her lawyer, met with
Edilberto and Norma and the real estate broker at Cafe Rizal in Makati.11 During the meeting, handwritten
notations were made on the contracts to sell, so they arranged to incorporate the notations and to meet again
for the formal signing of the contracts.12
When petitioner met again with respondent spouses and the real estate broker at Edilberto's office for the
formal affixing of Norma's signature, she was surprised when respondent spouses informed her that they were
backing out of the agreement because they needed "spot cash" for the full amount of the consideration.13
Petitioner reminded respondent spouses that the contracts to sell had already been duly perfected and Norma's
refusal to sign the same would unduly prejudice petitioner. Still, Norma refused to sign the contracts prompting
petitioner to file a complaint for specific performance and damages against respondent spouses before the
Regional Trial Court of Makati, Branch 136 on April 29, 1992, to compel respondent Norma Camaisa to sign the
contracts to sell.
A Motion to Dismiss14 was filed by respondents which was denied by the trial court in its Resolution of July 21,
1992.15
Respondents then filed their Answer with Compulsory Counter-claim, alleging that it was an agreement between
herein petitioner and respondent Edilberto Camaisa that the sale of the subject properties was still subject to
the approval and conformity of his wife Norma Camaisa.16 Thereafter, when Norma refused to give her consent
to the sale, her refusal was duly communicated by Edilberto to petitioner.17 The checks issued by petitioner
were returned to her by Edilberto and she accepted the same without any objection.18 Respondent further
claimed that the acceptance of the checks returned to petitioner signified her assent to the cancellation of the
sale of the subject properties.19 Respondent Norma denied that she ever participated in the negotiations for the
sale of the subject properties and that she gave her consent and conformity to the same.20
On October 20, 1992, respondent Norma F. Camaisa filed a Motion for Summary Judgment21 asserting that
there is no genuine issue as to any material fact on the basis of the pleadings and admission of the parties
considering that the wife's written consent was not obtained in the contract to sell, the subject conjugal
properties belonging to respondents; hence, the contract was null and void.
On April 14, 1993, the trial court rendered a summary judgment dismissing the complaint on the ground that
under Art. 124 of the Family Code, the court cannot intervene to authorize the transaction in the absence of the
consent of the wife since said wife who refused to give consent had not been shown to be incapacitated. The
dispositive portion of the trial court's decision reads:
WHEREFORE, considering these premises, judgment is hereby rendered:

1. Dismissing the complaint and ordering the cancellation of the Notice of Lis Pendens by reason of its filing on
TCT Nos. (464860) S-8724 and (464861) S-8725 of the Registry of Deeds at Makati and on TCT Nos. 295976 and
295971 of the Registry of Rizal.
2. Ordering plaintiff Thelma A. Jader to pay defendant spouses Norma and Edilberto Camaisa, FIFTY THOUSAND
(₱50,000.00) as Moral Damages and FIFTY THOUSAND (₱50,000.00) as Attorney's Fees.
Costs against plaintiff.22
Petitioner, thus, elevated the case to the Court of Appeals. On November 29, 2000, the Court of Appeals affirmed
the dismissal by the trial court but deleted the award of ₱50,000.00 as damages and ₱50,000.00 as attorney's
fees.
The Court of Appeals explained that the properties subject of the contracts were conjugal properties and as
such, the consent of both spouses is necessary to give effect to the sale. Since private respondent Norma
Camaisa refused to sign the contracts, the sale was never perfected. In fact, the downpayment was returned by
respondent spouses and was accepted by petitioner. The Court of Appeals also stressed that the authority of the
court to allow sale or encumbrance of a conjugal property without the consent of the other spouse is applicable
only in cases where the said spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal property.
Hence, the present recourse assigning the following errors:
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RENDERING SUMMARY JUDGMENT IN DISMISSING
THE COMPLAINT ENTIRELY AND ORDERING THE CANCELLATION OF NOTICE OF LIS PENDENS ON THE TITLES OF
THE SUBJECT REAL PROPERTIES;
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN FAILING TO CONSIDER THAT THE SALE OF REAL
PROPERTIES BY RESPONDENTS TO PETITIONER HAVE ALREADY BEEN PERFECTED, FOR AFTER THE LATTER PAID
P300,000.00 DOWNPAYMENT, RESPONDENT MRS. CAMAISA NEVER OBJECTED TO STIPULATIONS WITH RESPECT
TO PRICE, OBJECT AND TERMS OF PAYMENT IN THE CONTRACT TO SELL ALREADY SIGNED BY THE PETITIONER,
RESPONDENT MR. CAMAISA AND WITNESSES MARKED AS ANNEX "G" IN THE COMPLAINT EXCEPT, FOR MINOR
PROVISIONS ALREADY IMPLIED BY LAW, LIKE EJECTMENT OF TENANTS, SUBDIVISION OF TITLE AND RESCISSION
IN CASE OF NONPAYMENT, WHICH PETITIONER READILY AGREED AND ACCEDED TO THEIR INCLUSION;
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT CONTRACT OF
SALE IS CONSENSUAL AND IT IS PERFECTED BY THE MERE CONSENT OF THE PARTIES AND THE APPLICABLE
PROVISIONS ARE ARTICLES 1157, 1356, 1357, 1358, 1403, 1405 AND 1475 OF THE CIVIL CODE OF THE
PHILIPPINES AND GOVERNED BY THE STATUTE OF FRAUD.23
The Court does not find error in the decisions of both the trial court and the Court of Appeals.
Petitioner alleges that the trial court erred when it entered a summary judgment in favor of respondent spouses
there being a genuine issue of fact. Petitioner maintains that the issue of whether the contracts to sell between
petitioner and respondent spouses was perfected is a question of fact necessitating a trial on the merits.
The Court does not agree. A summary judgment is one granted by the court upon motion by a party for an
expeditious settlement of a case, there appearing from the pleadings, depositions, admissions and affidavits that
there are no important questions or issues of fact involved, and that therefore the moving party is entitled to
judgment as a matter of law.24 A perusal of the pleadings submitted by both parties show that there is no
genuine controversy as to the facts involved therein.
Both parties admit that there were negotiations for the sale of four parcels of land between petitioner and
respondent spouses; that petitioner and respondent Edilberto Camaisa came to an agreement as to the price
and the terms of payment, and a downpayment was paid by petitioner to the latter; and that respondent Norma
refused to sign the contracts to sell. The issue thus posed for resolution in the trial court was whether or not the
contracts to sell between petitioner and respondent spouses were already perfected such that the latter could
no longer back out of the agreement.
The law requires that the disposition of a conjugal property by the husband as administrator in appropriate cases
requires the written consent of the wife, otherwise, the disposition is void. Thus, Article 124 of the Family Code
provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses
jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife
for a proper remedy, which must be availed of within five years from the date of the contract implementing such
decision.
the other spouse. In the absence of such authority or consent the disposition or encumbrance shall be void.
However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors. (Underscoring ours.)
The properties subject of the contracts in this case were conjugal; hence, for the contracts to sell to be effective,
the consent of both husband and wife must concur.
Respondent Norma Camaisa admittedly did not give her written consent to the sale. Even granting that
respondent Norma actively participated in negotiating for the sale of the subject properties, which she denied,
her written consent to the sale is required by law for its validity. Significantly, petitioner herself admits that
Norma refused to sign the contracts to sell. Respondent Norma may have been aware of the negotiations for the
sale of their conjugal properties. However, being merely aware of a transaction is not consent.25
Finally, petitioner argues that since respondent Norma unjustly refuses to affix her signatures to the contracts to
sell, court authorization under Article 124 of the Family Code is warranted.
The argument is bereft of merit. Petitioner is correct insofar as she alleges that if the written consent of the
other spouse cannot be obtained or is being withheld, the matter may be brought to court which will give such
authority if the same is warranted by the circumstances. However, it should be stressed that court authorization
under Art. 124 is only resorted to in cases where the spouse who does not give consent is incapacitated.26
In this case, petitioner failed to allege and prove that respondent Norma was incapacitated to give her consent to
the contracts. In the absence of such showing of the wife's incapacity, court authorization cannot be sought.
Under the foregoing facts, the motion for summary judgment was proper considering that there was no genuine
issue as to any material fact. The only issue to be resolved by the trial court was whether the contract to sell
involving conjugal properties was valid without the written consent of the wife.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated November 29, 2000
in CA-G.R. CV No. 43421 AFFIRMED.
SO ORDERED.
G.R. No. 153802. March 11, 2005
HOMEOWNERS SAVINGS & LOAN BANK, Petitioner,

vs.
MIGUELA C. DAILO, Respondents.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, assailing the Decision1 of
the Court of Appeals in CA-G.R. CV No. 59986 rendered on June 3, 2002, which affirmed with modification the
October 18, 1997 Decision2 of the Regional Trial Court, Branch 29, San Pablo City, Laguna in Civil Case No. SP-
4748 (97).
The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8, 1967. During their marriage, the
spouses purchased a house and lot situated at Barangay San Francisco, San Pablo City from a certain Sandra
Dalida. The subject property was declared for tax assessment purposes under Assessment of Real Property No.
94-051-2802. The Deed of Absolute Sale, however, was executed only in favor of the late Marcelino Dailo, Jr. as
vendee thereof to the exclusion of his wife.3
On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in favor of one Lilibeth
Gesmundo, authorizing the latter to obtain a loan from petitioner Homeowners Savings and Loan Bank to be
secured by the spouses Dailo’s house and lot in San Pablo City. Pursuant to the SPA, Gesmundo obtained a loan
in the amount of ₱300,000.00 from petitioner. As security therefor, Gesmundo executed on the same day a Real
Estate Mortgage constituted on the subject property in favor of petitioner. The abovementioned transactions,
including the execution of the SPA in favor of Gesmundo, took place without the knowledge and consent of
respondent.4
Upon maturity, the loan remained outstanding. As a result, petitioner instituted extrajudicial foreclosure
proceedings on the mortgaged property. After the extrajudicial sale thereof, a Certificate of Sale was issued in
favor of petitioner as the highest bidder. After the lapse of one year without the property being redeemed,
petitioner, through its vice-president, consolidated the ownership thereof by executing on June 6, 1996 an
Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.5
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her visits to the subject property,
respondent learned that petitioner had already employed a certain Roldan Brion to clean its premises and that
her car, a Ford sedan, was razed because Brion allowed a boy to play with fire within the premises.
Claiming that she had no knowledge of the mortgage constituted on the subject property, which was conjugal in
nature, respondent instituted with the Regional Trial Court, Branch 29, San Pablo City, Civil Case No. SP-2222 (97)
for Nullity of Real Estate Mortgage and Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of Sale,
Reconveyance with Prayer for Preliminary Injunction and Damages against petitioner. In the latter’s Answer with
Counterclaim, petitioner prayed for the dismissal of the complaint on the ground that the property in question
was the exclusive property of the late Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision on October 18, 1997. The dispositive portion thereof
reads as follows:
WHEREFORE, the plaintiff having proved by the preponderance of evidence the allegations of the Complaint, the
Court finds for the plaintiff and hereby orders:
ON THE FIRST CAUSE OF ACTION:
1. The declaration of the following documents as null and void:
(a) The Deed of Real Estate Mortgage dated December 1, 1993 executed before Notary Public Romulo Urrea and
his notarial register entered as Doc. No. 212; Page No. 44, Book No. XXI, Series of 1993.
(b) The Certificate of Sale executed by Notary Public Reynaldo Alcantara on April 20, 1995.
(c) The Affidavit of Consolidation of Ownership executed by the defendant
(c) The Affidavit of Consolidation of Ownership executed by the defendant over the residential lot located at
Brgy. San Francisco, San Pablo City, covered by ARP No. 95-091-1236 entered as Doc. No. 406; Page No. 83, Book
No. III, Series of 1996 of Notary Public Octavio M. Zayas.
(d) The assessment of real property No. 95-051-1236.
2. The defendant is ordered to reconvey the property subject of this complaint to the plaintiff.
ON THE SECOND CAUSE OF ACTION
1. The defendant to pay the plaintiff the sum of ₱40,000.00 representing the value of the car which was burned.
ON BOTH CAUSES OF ACTION
1. The defendant to pay the plaintiff the sum of ₱25,000.00 as attorney’s fees;
2. The defendant to pay plaintiff ₱25,000.00 as moral damages;
3. The defendant to pay the plaintiff the sum of ₱10,000.00 as exemplary damages;
4. To pay the cost of the suit.
The counterclaim is dismissed.
SO ORDERED.6
Upon elevation of the case to the Court of Appeals, the appellate court affirmed the trial court’s finding that the
subject property was conjugal in nature, in the absence of clear and convincing evidence to rebut the
presumption that the subject property acquired during the marriage of spouses Dailo belongs to their conjugal
partnership.7 The appellate court declared as void the mortgage on the subject property because it was
constituted without the knowledge and consent of respondent, in accordance with Article 124 of the Family
Code. Thus, it upheld the trial court’s order to reconvey the subject property to respondent.8 With respect to the
damage to respondent’s car, the appellate court found petitioner to be liable therefor because it is responsible
for the consequences of the acts or omissions of the person it hired to accomplish the assigned task.9 All told,
the appellate court affirmed the trial court’s Decision, but deleted the award for damages and attorney’s fees for
lack of basis.10
Hence, this petition, raising the following issues for this Court’s consideration:
1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO DAILO, JR. ON THE SUBJECT
PROPERTY AS CO-OWNER THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.
2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE PAYMENT OF THE LOAN OBTAINED BY THE
LATE MARCELINO DAILO, JR. THE SAME HAVING REDOUNDED TO THE BENEFIT OF THE FAMILY.11
First, petitioner takes issue with the legal provision applicable to the factual milieu of this case. It contends that
Article 124 of the Family Code should be construed in relation to Article 493 of the Civil Code, which states:
ART. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.
Article 124 of the Family Code provides in part:
ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses
jointly. . . .
the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. . . .
Petitioner argues that although Article 124 of the Family Code requires the consent of the other spouse to the
mortgage of conjugal properties, the framers of the law could not have intended to curtail the right of a spouse
from exercising full ownership over the portion of the conjugal property pertaining to him under the concept of
co-ownership.12 Thus, petitioner would have this Court uphold the validity of the mortgage to the extent of the
late Marcelino Dailo, Jr.’s share in the conjugal partnership.
In Guiang v. Court of Appeals,13 it was held that the sale of a conjugal property requires the consent of both the
husband and wife.14 In applying Article 124 of the Family Code, this Court declared that the absence of the
consent of one renders the entire sale null and void, including the portion of the conjugal property pertaining to
the husband who contracted the sale. The same principle in Guiang squarely applies to the instant case. As shall
be discussed next, there is no legal basis to construe Article 493 of the Civil Code as an exception to Article 124
of the Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In the absence of a marriage
settlement, the system of relative community or conjugal partnership of gains governed the property relations
between respondent and her late husband.15 With the effectivity of the Family Code on August 3, 1988, Chapter
4 on Conjugal Partnership of Gains in the Family Code was made applicable to conjugal partnership of gains
already established before its effectivity unless vested rights have already been acquired under the Civil Code or
other laws.16
The rules on co-ownership do not even apply to the property relations of respondent and the late Marcelino
Dailo, Jr. even in a suppletory manner. The regime of conjugal partnership of gains is a special type of
partnership, where the husband and wife place in a common fund the proceeds, products, fruits and income
from their separate properties and those acquired by either or both spouses through their efforts or by
chance.17 Unlike the absolute community of property wherein the rules on co-ownership apply in a suppletory
manner,18 the conjugal partnership shall be governed by the rules on contract of partnership in all that is not in
conflict with what is expressly determined in the chapter (on conjugal partnership of gains) or by the spouses in
their marriage settlements.19 Thus, the property relations of respondent and her late husband shall be
governed, foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the
rules on partnership under the Civil Code. In case of conflict, the former prevails because the Civil Code
provisions on partnership apply only when the Family Code is silent on the matter.
The basic and established fact is that during his lifetime, without the knowledge and consent of his wife,
Marcelino Dailo, Jr. constituted a real estate mortgage on the subject property, which formed part of their
conjugal partnership. By express provision of Article 124 of the Family Code, in the absence of (court) authority
or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void.
The aforequoted provision does not qualify with respect to the share of the spouse who makes the disposition or
encumbrance in the same manner that the rule on co-ownership under Article 493 of the Civil Code does. Where
the law does not distinguish, courts should not distinguish.20 Thus, both the trial court and the appellate court
are correct in declaring the nullity of the real estate mortgage on the subject property for lack of respondent’s
consent.
Second, petitioner imposes the liability for the payment of the principal obligation obtained by the late
Marcelino Dailo, Jr. on the conjugal partnership to the extent that it redounded to the benefit of the family.21
Under Article 121 of the Family Code, "[T]he conjugal partnership shall be liable for: . . . (3) Debts and obligations
contracted by either spouse without the consent of the other to the extent that the family may have been
benefited; . . . ." For the subject property to be held liable, the obligation contracted by the late Marcelino Dailo,
Jr. must have redounded to the benefit of the conjugal partnership. There must be the requisite showing then of
some advantage which clearly accrued to the welfare of the spouses. Certainly, to make a conjugal partnership
respond for a liability that should appertain to the husband alone is to defeat and frustrate the avowed objective
of the new Civil Code to show the utmost concern for the solidarity and well-being of the family as a unit.22
The burden of proof that the debt was contracted for the benefit of the conjugal partnership of gains lies with
the creditor-party litigant claiming as such.23 Ei incumbit probatio qui dicit, non qui negat (he who asserts, not
he who denies, must prove).24 Petitioner’s sweeping conclusion that the loan obtained by the late Marcelino
Dailo, Jr. to finance the construction of housing units without a doubt redounded to the benefit of his family,
without adducing adequate proof, does not persuade this Court. Other than petitioner’s bare allegation, there is
nothing from the records of the case to compel a finding that, indeed, the loan obtained by the late Marcelino
Dailo, Jr. redounded to the benefit of the family. Consequently, the conjugal partnership cannot be held liable for
the payment of the principal obligation.
In addition, a perusal of the records of the case reveals that during the trial, petitioner vigorously asserted that
the subject property was the exclusive property of the late Marcelino Dailo, Jr. Nowhere in the answer filed with
the trial court was it alleged that the proceeds of the loan redounded to the benefit of the family. Even on
appeal, petitioner never claimed that the family benefited from the proceeds of the loan. When a party adopts a
certain theory in the court below, he will not be permitted to change his theory on appeal, for to permit him to
do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.25 A party may change his legal theory on appeal only when the factual bases thereof
would not require presentation of any further evidence by the adverse party in order to enable it to properly
meet the issue raised in the new theory.26
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
G.R. No. 190846, February 03, 2016
TOMAS P. TAN, JR., Petitioner, v. JOSE G. HOSANA, Respondent.
DECISION
BRION, J.:
Before us is a petition for review on certiorari1 challenging the August 28, 2009 decision2 and November 17,
2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 88645.chanRoblesvirtualLawlibrary
The Facts
The respondent Jose G. Hosana (Jose) married Milagros C. Hosana (Milagros) on January 14, 1979.4 During their
marriage, Jose and Milagros bought a house and lot located at Tinago, Naga City, which lot was covered by
Transfer Certificate of Title (TCT) No. 21229.5chanroblesvirtuallawlibrary
On January 13, 1998, Milagros sold to the petitioner Tomas P. Tan, Jr. (Tomas) the subject property, as evidenced
by a deed of sale executed by Milagros herself and as attorney-in-fact of Jose, by virtue of a Special Power of
Attorney (SPA) executed by Jose in her favor.6 The Deed of Sale stated that the purchase price for the lot was
P200,000.00.7 After the sale, TCT No. 21229 was cancelled and TCT No. 32568 was issued in the name of
Tomas.8chanroblesvirtuallawlibrary
On October 19, 2001, Jose filed a Complaint for Annulment of Sale/Cancellation of Title/Reconveyance and
Damages against Milagros, Tomas, and the Register of Deeds of Naga City.9 The complaint was filed before the
Regional Trial Court (RTC), Branch 62, Naga City. In the complaint, Jose averred that while he was working in
Japan, Milagros, without his consent and knowledge, conspired with Tomas to execute the SPA by forging Jose's
signature making it appear that Jose had authorized Milagros to sell the subject property to
In his Answer, Tomas maintained that he was a buyer in good faith and for value.11 Before he paid the full
consideration of the sale, Tomas claimed he sought advice from his lawyer-friend who told him that the title of
the subject lot was authentic and in order.12 Furthermore, he alleged that the SPA authorizing Milagros to sell
the property was annotated at the back of the title.13chanroblesvirtuallawlibrary
Tomas filed a cross-claim against Milagros and claimed compensatory and moral damages, attorney's fees, and
expenses, for litigation, in the event that judgment be rendered in favor of Jose.14chanroblesvirtuallawlibrary
The RTC declared Milagros in default for her failure to file her answer to Jose's complaint and Tomas' cross-
claim.15 On the other hand, it dismissed Tomas' complaint against the Register of Deeds since it was only a
nominal party.16chanroblesvirtuallawlibrary
After the pre-trial conference, trial on the merits ensued.17chanroblesvirtuallawlibrary
Jose presented his brother, Bonifacio Hosana (Bonifacio), as sole witness. Bonifacio testified that he learned of
the sale of the subject property from Milagros' son.18 When Bonifacio confronted Milagros that Jose would get
angry because of the sale, Milagros retorted that she sold the property because she needed the money.
Bonifacio immediately informed Jose, who was then in Japan, of the sale.19chanroblesvirtuallawlibrary
Jose was furious when he learned of the sale and went back to the Philippines. Jose and Bonifacio verified with
the Register of Deeds and discovered that the title covering the disputed property had been transferred to
Bonifacio further testified that Jose's signature in the SPA was forged.21 Bonifacio presented documents
containing the signature of Jose for comparison: Philippine passport, complaint-affidavit, duplicate original of
SPA dated 16 February 2002, notice of lis pendens, community tax certificate, voter's affidavit, specimen
signatures, and a handwritten letter.22chanroblesvirtuallawlibrary
On the other hand, Tomas submitted his own account of events as corroborated by Rosana Robles (Rosana), his
goddaughter. Sometime in December 1997, Tomas directed Rosana to go to the house of Milagros to confirm if
Jose knew about the sale transaction. Through a phone call by Milagros to Jose, Rosana was able to talk to Jose
who confirmed that he was aware of the sale and had given his wife authority to proceed with the sale. Rosana
informed Tomas of Jose's confirmation.23chanroblesvirtuallawlibrary
With the assurance that all the documents were in order, Tomas made a partial payment of P350,000.00 and
another P350,000.00 upon the execution of the Deed of Absolute Sale (Deed of Sale). Tomas noticed that the
consideration written by Milagros on the Deed of Sale was only P200,000.00; he inquired why the written
consideration was lower than the actual consideration paid. Milagros explained that it was done to save on taxes.
Tomas also learned from Milagros that she needed money badly and had to sell the house because Jose had
stopped sending her money.24chanRoblesvirtualLawlibrary
The RTC Ruling
In its decision dated December 27, 2006,25 the RTC decided in favor of Jose and nullified the sale of the subject
property to Tomas. The RTC held that the SPA dated June 10, 1996, wherein Jose supposedly appointed Milagros
as his attorney-in-fact, was actually null and void.
Tomas and Milagros were ordered to jointly and severally indemnify Jose the amount of P20,000.00 as
temperate damages.26chanRoblesvirtualLawlibrary
The CA Ruling
Tomas appealed the RTC's ruling to the CA.
In a decision dated August 28, 2009,27 the CA affirmed the RTC ruling that the deed of sale and the SPA were
void. However, the CA modified the judgment of the RTC: first, by deleting the award of temperate damages; and
second, by directing Jose and Milagros to reimburse Tomas the purchase price of P200,000.00, with interest,
under the principle of unjust enrichment. Despite Tomas' allegation that he paid P700,000.00 for the subject lot,
the CA found that there was no convincing evidence that established this claim.28chanroblesvirtuallawlibrary
Tomas filed a motion for the reconsideration of the CA decision on the ground that the amount of P200,000.00
as reimbursement for the purchase price of the house and lot was insufficient and not supported by the
evidence formally offered before and admitted by the RTC. Tomas contended that the actual amount he paid as
consideration for the sale was P700,000.00, as supported by his testimony before the
RTC.29chanroblesvirtuallawlibrary
The C A denied the motion for reconsideration for lack of merit" in a resolution dated November 17,
2009.30chanRoblesvirtualLawlibrary
The Petition
Tomas filed the present petition for review on certiorari to challenge the CA ruling which ordered the
reimbursement of P200,000.00 only, instead of the actual purchase price he paid in the amount of
P700,000.00.31chanroblesvirtuallawlibrary
Tomas argues that, first, all matters contained in the deed of sale, including the consideration stated, cannot be
used as evidence since it was declared null and void; second, the deed of sale was not specifically offered to
prove the actual consideration of the sale;32third, his testimony establishing the actual purchase price of
P700,000.00 paid was uncontroverted;33 and, fourth, Jose must return the full amount actually paid under the
principle of solutio indebiti.34chanroblesvirtuallawlibrary
Jose, on the other hand, argues that first, Jose is estopped from questioning the purchase price indicated in the
deed of dale for failing to immediately raise this question; and second, the terms of an agreement reduced into
writing are deemed to include all the terms agreed upon and no other evidence can be admitted other than the
terms of the agreement itself.35chanRoblesvirtualLawlibrary
The Issues
The core issues are (1) whether the deed of sale can be used as the basis for the amount of consideration paid;
and (2) whether the testimony of Tomas is sufficient to establish the actual purchase price of the
sale.chanRoblesvirtualLawlibrary
OUR RULING
We affirm the CA ruling and deny the petition.
Whether Tomas paid the purchase price of P700,000.00 is a question of fact not proper in a petition for review
on certiorari. Appreciation of evidence and inquiry on the correctness of the appellate court's factual findings are
not the functions of this Court, as we are not a trier of facts.36chanroblesvirtuallawlibrary
This Court does not address questions of fact which require us to rule on "the truth or falsehood of alleged
facts,"37 except in the following cases:ChanRoblesVirtualawlibrary
(1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference
made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the
judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making
its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record.38chanroblesvirtuallawlibrary
The present case does not fall under any of these exceptions.
Whether Tomas sufficiently proved that he paid P700,000.00 for the subject property is a factual question that
the CA had already resolved in the negative.39 The CA found Tomas' claim of paying P700,000.00 for the subject
property to be unsubstantiated as he failed to tender any convincing evidence to establish his claim.
We uphold the CA's finding.
In civil cases, the basic rule is that the party making allegations has the burden of proving them by a
preponderance of evidence.40 Moreover, the parties must rely on the strength of their own evidence, not upon
the weakness of the defense offered by their opponent.41chanroblesvirtuallawlibrary
Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side and is
usually considered to be synonymous with the term "greater weight of the evidence" or "greater weight of the
credible evidence."42 Preponderance of evidence is a phrase that, in the last analysis, means probability of the
truth. It is evidence that is more convincing to the court as it is worthier of belief than that which is offered in
opposition thereto.43chanroblesvirtuallawlibrary
We agree with the CA that Tomas' bare allegation that he paid Milagros the sum of P700,000.00 cannot be
considered as proof of payment, without any other convincing evidence to establish this claim. Tomas' bare
allegation, while uncontroverted, does not automatically entitle it to be given weight and credence.
It is settled in jurisprudence that one who pleads payment has the burden of proving it;44 the burden rests on
the defendant to prove payment, rather than on the plaintiff to prove non-payment.45 A mere allegation is not
evidence,46 and the person who alleges has the burden of proving his or her allegation with the requisite
quantum of evidence, which in civil cases is preponderance of evidence.
The force and effect of a void contract is distinguished from its admissibility as evidence.
The next question to be resolved is whether the CA correctly ordered the reimbursement of P200,000.00, which
is the consideration stated in the Deed of Sale, based on the principle of unjust enrichment.
The petitioner argues that the CA erred in relying on the consideration stated in the deed of sale as basis for the
reimbursable amount because a null and void document cannot be used as evidence.
We find no merit in the petitioner's argument.
A void or inexistent contract has no force and effect from the very beginning.47 This rule applies to contracts
that are declared void by positive provision of law, as in the case of a sale of conjugal property without the other
spouse's written consent.48 A void contract is equivalent to nothing and is absolutely wanting in civil effects.49 It
cannot be validated either by ratification or prescription.50 When, however, any of the terms of a void contract
have been performed, an action to declare its inexistence is necessary to allow restitution of what has been
given under it.51chanroblesvirtuallawlibrary
It is basic that if a void contract has already "been performed, the restoration of what has been given is in
order."52 This principle springs from Article 22 of the New Civil Code which states that "every person who
through an act of performance by another, or any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall return the same." Hence, the restitution of what
each party has given is a consequence of a void and inexistent contract.
While the terms and provisions of a void contract cannot be enforced since it is deemed inexistent, it does not
preclude the admissibility of the contract as evidence to prove matters that occurred in the course of executing
the contract, i.e., what each party has given in the execution of the contract.
Evidence is the means of ascertaining in a judicial proceeding the truth respecting a matter of fact, sanctioned by
the Rules of Court.53 The purpose of introducing documentary evidence is to ascertain the truthfulness of a
matter at issue, which can be the entire content or a specific provision/term in the document.
The deed of sale as documentary evidence may be used as a means to ascertain the truthfulness of the
consideration stated and its actual payment. The purpose of introducing the deed of sale as evidence is not to
enforce the terms written in the contract, which is an obligatory force and effect of a valid contract. The deed of
sale, rather, is used as a means to determine matters that occurred in the execution of such contract, i.e., the
determination of what each party has given under the void contract to allow restitution and prevent unjust
enrichment.
Evidence is admissible when it is relevant to the issue and is not excluded by the law of these rules.54 There is no
provision in the Rules of Evidence which excludes the admissibility of a void document. The Rules only require
that the evidence is relevant and not excluded by the Rules for its admissibility.55chanroblesvirtuallawlibrary
Hence, a void document is admissible as evidence because the purpose of introducing it as evidence is to
ascertain the truth respecting a matter of fact, not to enforce the terms of the document itself.
It is also settled in jurisprudence that with respect to evidence which appears to be of doubtful relevancy,
incompetency, or admissibility, the safer policy is to be liberal and not reject them on doubtful or technical
grounds, but admit them unless plainly irrelevant, immaterial, or incompetent; for the reason that their rejection
places them beyond the consideration of the court, if they are thereafter found relevant or competent. On the
other hand, their admission, if they turn out later to be irrelevant or incompetent, can easily be remedied by
completely discarding them or ignoring them.56chanroblesvirtuallawlibrary
In the present case, the deed of sale was declared null and void by positive provision of the law prohibiting the
sale of conjugal property without the spouse's consent. It does not, however, preclude the possibility that Tomas
paid the consideration stated therein. The admission of the deed of sale as evidence is consistent with the liberal
policy of the court to admit the evidence: which appears to be relevant in resolving an issue before the courts.
An offer to prove the regular execution of the deed of sale is basis for the court to determine the presence of the
essential elements of the sale, including the consideration paid.
Tomas argues that the Deed of Sale was not specifically offered to prove the actual consideration of the sale and,
hence, cannot be considered by the court. Tomas is incorrect.
The deed of sale in the present case was formally offered by both parties as evidence.57 Tomas, in fact, formally
offered it for the purpose of proving its execution and the regularity of the sale.58chanroblesvirtuallawlibrary
The offer of the deed of sale to prove its regularity necessarily allowed the; lower courts to consider the terms
written therein to determine whether all the essential elements59 for a valid contract of sale are present,
including the consideration of the sale. The fact that the sale was declared null and void does not prevent the
court from relying on consideration stated in the deed of sale to determine the actual amount paid by the
petitioner for the purpose of preventing unjust enrichment.
Hence, the specific offer of the Deed of Sale to prove the actual consideration of the sale is not necessary since it
is necessarily included in determining the regular execution of the sale.
The consideration stated in the notarized Deed of Sale is prima facie evidence of the amount paid by the
petitioner.
The notarized deed of sale is a public document and is prima facie evidence of the truth of the facts stated
therein.60chanroblesvirtuallawlibrary
Prima facie evidence is defined as evidence good and sufficient on its face. Such evidence as, in the judgment of
the law, is sufficient to establish a given fact, or the group or chain of facts constituting the party's claim or
defense and which if not rebutted or contradicted, will remain sufficient.61chanroblesvirtuallawlibrary
In the present case, the consideration stated in the deed of sale constitutes prima facie evidence of the amount
paid by Tomas for the transfer of the property to his name. Tomas failed to adduce satisfactory evidence to rebut
or contradict the consideration stated as the actual consideration and amount paid to Milagros and Jose.
The deed of sale was declared null and void by a positive provision of law requiring the consent of both spouses
for the sale of conjugal property. There is, however, no question on the presence of the consideration of the sale,
except with respect to the actual amount paid. While the deed of sale has no force and effect as a contract, it
remains prima facie evidence of the actual consideration paid.
As earlier discussed, Tomas failed to substantiate his claim that he paid to Milagros the amount of P700,000.00,
instead of the amount of P200,000.00 stated in the deed of sale. No documentary or testimonial evidence to
prove payment of the higher amount was presented, apart from Tomas' sole testimony. Tomas' sole testimony of
payment is self-serving and insufficient to unequivocally prove that Milagros received P700,000.00 for the
subject property.
Hence, the consideration stated in the deed of sale remains sufficient evidence of the actual amount the
petitioner paid and the same amount which should be returned under the principle of unjust enrichment.
Unjust enrichment exists "when a person unjustly retains a benefit at the loss of another, or when a person
retains money or property of another against the fundamental principles of justice, equity, and good
conscience."62 The prevention of unjust enrichment is a recognized public policy of the State and is based on
Article 22 of the Civil Code.63chanroblesvirtuallawlibrary
The principle of unjust enrichment requires Jose to return what he or Milagros received under the void contract
which presumably benefitted their conjugal partnership.
Accordingly, the CA correctly ordered Jose to return the amount of P200,000.00 since this the consideration
stated in the Deed of Sale and given credence by the lower court. Indeed, even Jose expressly stated in his
comment that Tomas is entitled to recover the money paid by him in the amount of P200,000.00 as appearing in
the contract.
WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated August 28, 2009 and the
resolution dated November 17, 2009, of the Court of Appeals in CA-G.R. CV No. 88645 is AFFIRMED. Costs
against the petitioner.
SO ORDERED.
G.R. No. 178902 April 21, 2010
MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners,

vs.
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR MALCAMPO, Respondents.
DECISION
ABAD, J.:
This case is about a husband’s sale of conjugal real property, employing a challenged affidavit of consent from an
estranged wife. The buyers claim valid consent, loss of right to declare nullity of sale, and prescription.
The Facts and the Case
Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On October 11, 1982 she sold it
to her son, Tarciano T. Roca (Tarciano) under a deed of absolute sale.1 But Tarciano did not for the meantime
have the registered title transferred to his name.
Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and Leticia Fuentes (the Fuentes
spouses). They arranged to meet at the office of Atty. Romulo D. Plagata whom they asked to prepare the
documents of sale. They later signed an agreement to sell that Atty. Plagata prepared2 dated April 29, 1988,
which agreement expressly stated that it was to take effect in six months.
The agreement required the Fuentes spouses to pay Tarciano a down payment of ₱60,000.00 for the transfer of
the lot’s title to him. And, within six months, Tarciano was to clear the lot of structures and occupants and secure
the consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon Tarciano’s compliance with
these conditions, the Fuentes spouses were to take possession of the lot and pay him an additional ₱140,000.00
or ₱160,000.00, depending on whether or not he succeeded in demolishing the house standing on it. If Tarciano
was unable to comply with these conditions, the Fuentes spouses would become owners of the lot without any
further formality and payment.
The parties left their signed agreement with Atty. Plagata who then worked on the other requirements of the
sale. According to the lawyer, he went to see Rosario in one of his trips to Manila and had her sign an affidavit of
consent.3 As soon as Tarciano met the other conditions, Atty. Plagata notarized Rosario’s affidavit in Zamboanga
City. On January 11, 1989 Tarciano executed a deed of absolute sale4 in favor of the Fuentes spouses. They then
paid him the additional ₱140,000.00 mentioned in their agreement. A new title was issued in the name of the
spouses5 who immediately constructed a building on the lot. On January 28, 1990 Tarciano passed away,
followed by his wife Rosario who died nine months afterwards.
Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents Conrado G. Roca, Annabelle
R. Joson, and Rose Marie R. Cristobal, together with Tarciano’s sister, Pilar R. Malcampo, represented by her son,
John Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and reconveyance of the land
against the Fuentes spouses before the Regional Trial Court (RTC) of Zamboanga City in Civil Case 4707. The
Rocas claimed that the sale to the spouses was void since Tarciano’s wife, Rosario, did not give her consent to it.
Her signature on the affidavit of consent had been forged. They thus prayed that the property be reconveyed to
them upon reimbursement of the price that the Fuentes spouses paid Tarciano.6
The spouses denied the Rocas’ allegations. They presented Atty. Plagata who testified that he personally saw
Rosario sign the affidavit at her residence in Paco, Manila, on September 15, 1988. He admitted, however, that
he notarized the document in Zamboanga City four months later on January 11, 1989.7 All the same, the Fuentes
spouses pointed out that the claim of forgery was personal to Rosario and she alone could invoke it. Besides, the
four-year prescriptive period for nullifying the sale on ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting experts at the trial. Comparing Rosario’s
standard signature on the affidavit with those on various documents she signed, the Rocas’ expert testified that
the signatures were not written by the same person. Making the same comparison, the spouses’ expert
concluded that they were.8
On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that the action had already
prescribed since the ground cited by the Rocas for annulling the sale, forgery or fraud, already prescribed under
Article 1391 of the Civil Code four years after its discovery. In this case, the Rocas may be deemed to have notice
of the fraud from the date the deed of sale was registered with the Registry of Deeds and the new title was
issued. Here, the Rocas filed their action in 1997, almost nine years after the title was issued to the Fuentes
spouses on January 18, 1989.9
Moreover, the Rocas failed to present clear and convincing evidence of the fraud. Mere variance in the
signatures of Rosario was not conclusive proof of forgery.10 The RTC ruled that, although the Rocas presented a
handwriting expert, the trial court could not be bound by his opinion since the opposing expert witness
contradicted the same. Atty. Plagata’s testimony remained technically unrebutted.11
Finally, the RTC noted that Atty. Plagata’s defective notarization of the affidavit of consent did not invalidate the
sale. The law does not require spousal consent to be on the deed of sale to be valid. Neither does the irregularity
vitiate Rosario’s consent. She personally signed the affidavit in the presence of Atty. Plagata.12
On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient evidence of forgery and
did not give credence to Atty. Plagata’s testimony that he saw Rosario sign the document in Quezon City. Its jurat
said differently. Also, upon comparing the questioned signature with the specimen signatures, the CA noted
significant variance between them. That Tarciano and Rosario had been living separately for 30 years since 1958
also reinforced the conclusion that her signature had been forged.
Since Tarciano and Rosario were married in 1950, the CA concluded that their property relations were governed
by the Civil Code under which an action for annulment of sale on the ground of lack of spousal consent may be
brought by the wife during the marriage within 10 years from the transaction. Consequently, the action that the
Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale.
Considering, however, that the sale between the Fuentes spouses and Tarciano was merely voidable, the CA held
that its annulment entitled the spouses to reimbursement of what they paid him plus legal interest computed
from the filing of the complaint until actual payment. Since the Fuentes spouses were also builders in good faith,
they were entitled under Article 448 of the Civil Code to payment of the value of the improvements they
introduced on the lot. The CA did not award damages in favor of the Rocas and deleted the award of attorney’s
fees to the Fuentes spouses.13
Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for review.14
The Issues Presented

The case presents the following issues:
1. Whether or not Rosario’s signature on the document of consent to her husband Tarciano’s sale of their
conjugal land to the Fuentes spouses was forged;
2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the spouses already prescribed;
and
3. Whether or not only Rosario, the wife whose consent was not had, could bring the action to annul that sale.
The Court’s Rulings
First. The key issue in this case is whether or not Rosario’s signature on the document of consent had been
forged. For, if the signature were genuine, the fact that she gave her consent to her husband’s sale of the
conjugal land would render the other issues merely academic.
The CA found that Rosario’s signature had been forged. The CA observed a marked difference between her
signature on the affidavit of consent15 and her specimen signatures.16 The CA gave no weight to Atty. Plagata’s
testimony that he saw Rosario sign the document in Manila on September 15, 1988 since this clashed with his
declaration in the jurat that Rosario signed the affidavit in Zamboanga City on January 11, 1989.
The Court agrees with the CA’s observation that Rosario’s signature strokes on the affidavit appears heavy,
deliberate, and forced. Her specimen signatures, on the other hand, are consistently of a lighter stroke and more
fluid. The way the letters "R" and "s" were written is also remarkably different. The variance is obvious even to
the untrained eye.
Significantly, Rosario’s specimen signatures were made at about the time that she signed the supposed affidavit
of consent. They were, therefore, reliable standards for comparison. The Fuentes spouses presented no evidence
that Rosario suffered from any illness or disease that accounted for the variance in her signature when she
signed the affidavit of consent. Notably, Rosario had been living separately from Tarciano for 30 years since 1958.
And she resided so far away in Manila. It would have been quite tempting for Tarciano to just forge her signature
and avoid the risk that she would not give her consent to the sale or demand a stiff price for it.
What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent. That jurat declared that
Rosario swore to the document and signed it in Zamboanga City on January 11, 1989 when, as Atty. Plagata
testified, she supposedly signed it about four months earlier at her residence in Paco, Manila on September 15,
1988. While a defective notarization will merely strip the document of its public character and reduce it to a
private instrument, that falsified jurat, taken together with the marks of forgery in the signature, dooms such
document as proof of Rosario’s consent to the sale of the land. That the Fuentes spouses honestly relied on the
notarized affidavit as proof of Rosario’s consent does not matter. The sale is still void without an authentic
consent.
Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family Code, not
the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the
Fuentes spouses on January 11, 1989, a few months after the Family Code took effect on August 3, 1988.
When Tarciano married Rosario, the Civil Code put in place the system of conjugal partnership of gains on their
property relations. While its Article 165 made Tarciano the sole administrator of the conjugal partnership, Article
16617 prohibited him from selling commonly owned real property without his wife’s consent. Still, if he sold the
same without his wife’s consent, the sale is not void but merely voidable. Article 173 gave Rosario the right to
have the sale annulled during the marriage within ten years from the date of the sale. Failing in that, she or her
heirs may demand, after dissolution of the marriage, only the value of the property that Tarciano fraudulently
sold. Thus:
But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal Partnership of
Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and
Wife.18 Further, the Family Code provisions were also made to apply to already existing conjugal partnerships
without prejudice to vested rights.19 Thus:
Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already established
between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in
accordance with the Civil Code or other laws, as provided in Article 256. (n)
Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11, 1989, the law that
governed the disposal of that lot was already the Family Code.
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period within which
the wife who gave no consent may assail her husband’s sale of the real property. It simply provides that without
the other spouse’s written consent or a court order allowing the sale, the same would be void. Article 124 thus
provides:
Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of administration. These
powers do not include the powers of disposition or encumbrance which must have the authority of the court or
the written consent of the other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. x x x
Under the provisions of the Civil Code governing contracts, a void or inexistent contract has no force and effect
from the very beginning. And this rule applies to contracts that are declared void by positive provision of law,20
as in the case of a sale of conjugal property without the other spouse’s written consent. A void contract is
equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by ratification or
prescription.21
But, although a void contract has no legal effects even if no action is taken to set it aside, when any of its terms
have been performed, an action to declare its inexistence is necessary to allow restitution of what has been
given under it.22 This action, according to Article 1410 of the Civil Code does not prescribe. Thus:
Art. 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe.
Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale and reconveyance of
the real property that Tarciano sold without their mother’s (his wife’s) written consent. The passage of time did
not erode the right to bring such an action.
Besides, even assuming that it is the Civil Code that applies to the transaction as the CA held, Article 173
provides that the wife may bring an action for annulment of sale on the ground of lack of spousal consent during
the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in
1997 fell within 10 years of the January 11, 1989 sale. It did not yet prescribe.
The Fuentes spouses of course argue that the RTC nullified the sale to them based on fraud and that, therefore,
the applicable prescriptive period should be that which applies to fraudulent transactions, namely, four years
from its discovery. Since notice of the sale may be deemed given to the Rocas when it was registered with the
Registry of Deeds in 1989, their right of action already prescribed in 1993.
But, if there had been a victim of fraud in this case, it would be the Fuentes spouses in that they appeared to
have agreed to buy the property upon an honest belief that Rosario’s written consent to the sale was genuine.
They had four years then from the time they learned that her signature had been forged within which to file an
action to annul the sale and get back their money plus damages. They never exercised the right.
If, on the other hand, Rosario had agreed to sign the document of consent upon a false representation that the
property would go to their children, not to strangers, and it turned out that this was not the case, then she
would have four years from the time she discovered the fraud within which to file an action to declare the sale
void. But that is not the case here. Rosario was not a victim of fraud or misrepresentation. Her consent was
simply not obtained at all. She lost nothing since the sale without her written consent was void. Ultimately, the
Rocas ground for annulment is not forgery but the lack of written consent of their mother to the sale. The
forgery is merely evidence of lack of consent.
Third. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that the law gave
the right to bring an action to declare void her husband’s sale of conjugal land. But here, Rosario died in 1990,
the year after the sale. Does this mean that the right to have the sale declared void is forever lost?
The answer is no. As stated above, that sale was void from the beginning. Consequently, the land remained the
property of Tarciano and Rosario despite that sale. When the two died, they passed on the ownership of the
property to their heirs, namely, the Rocas.23 As lawful owners, the Rocas had the right, under Article 429 of the
Civil Code, to exclude any person from its enjoyment and disposal.1avvphi1
In fairness to the Fuentes spouses, however, they should be entitled, among other things, to recover from
Tarciano’s heirs, the Rocas, the ₱200,000.00 that they paid him, with legal interest until fully paid, chargeable
against his estate.
Further, the Fuentes spouses appear to have acted in good faith in entering the land and building improvements
on it. Atty. Plagata, whom the parties mutually entrusted with closing and documenting the transaction,
represented that he got Rosario’s signature on the affidavit of consent. The Fuentes spouses had no reason to
believe that the lawyer had violated his commission and his oath. They had no way of knowing that Rosario did
not come to Zamboanga to give her consent. There is no evidence that they had a premonition that the
requirement of consent presented some difficulty. Indeed, they willingly made a 30 percent down payment on
the selling price months earlier on the assurance that it was forthcoming.
Further, the notarized document appears to have comforted the Fuentes spouses that everything was already in
order when Tarciano executed a deed of absolute sale in their favor on January 11, 1989. In fact, they paid the
balance due him. And, acting on the documents submitted to it, the Register of Deeds of Zamboanga City issued
a new title in the names of the Fuentes spouses. It was only after all these had passed that the spouses entered
the property and built on it. He is deemed a possessor in good faith, said Article 526 of the Civil Code, who is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it.
As possessor in good faith, the Fuentes spouses were under no obligation to pay for their stay on the property
prior to its legal interruption by a final judgment against them.24 What is more, they are entitled under Article
448 to indemnity for the improvements they introduced into the property with a right of retention until the
reimbursement is made. Thus:
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (361a)
The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code,25 of indemnifying the
Fuentes spouses for the costs of the improvements or paying the increase in value which the property may have
acquired by reason of such improvements.
WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the decision of the Court of
Appeals in CA-G.R. CV 00531 dated February 27, 2007 as follows:
1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor of Manuel O. Fuentes, married
to Leticia L. Fuentes, as well as the Transfer Certificate of Title T-90,981 that the Register of Deeds of Zamboanga
City issued in the names of the latter spouses pursuant to that deed of sale are DECLARED void;
2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate of Title 3533 in the
name of Tarciano T. Roca, married to Rosario Gabriel;
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar Malcampo are ORDERED
to pay petitioner spouses Manuel and Leticia Fuentes the ₱200,000.00 that the latter paid Tarciano T. Roca, with
legal interest from January 11, 1989 until fully paid, chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar Malcampo are further
ORDERED, at their option, to indemnify petitioner spouses Manuel and Leticia Fuentes with their expenses for
introducing useful improvements on the subject land or pay the increase in value which it may have acquired by
reason of those improvements, with the spouses entitled to the right of retention of the land until the indemnity
is made; and
5. The RTC of Zamboanga City from which this case originated is DIRECTED to receive evidence and determine
the amount of indemnity to which petitioner spouses Manuel and Leticia Fuentes are entitled.
SO ORDERED.
June 19, 2017
G.R. No. 206114
DOLORES ALEJO, Petitioner

vs.
SPOUSES ERNESTO CORTEZ and PRISCILLA SAN PEDRO, SPOUSES JORGE LEONARDO and JACINTA LEONARDO
and THE REGISTER OF DEEDS OF BULACAN, Respondents
DECISION
TIJAM, J.:
Assailed in this Petition for Review1 under Rule 45 are the Decision2 dated October 3, 2012 and Resolution3
dated February 26, 2013 of the Court of Appeals4 (CA) in CA-G.R. CV No. 95432, which reversed the Decision5 of
the Regional Trial Court (R TC), 6 Branch 19 in the City of Malolos, Bulacan. In its assailed Decision and
Resolution, the CA declared void the parties' agreement for the sale of a conjugal property for lack of written
consent of the husband.
The Facts and Antecedent Proceedings
At the heart of the instant controversy is a parcel of land measuring 255 square meters located .at Cut-cot,
Pulilan, Bulacan and covered by Transfer Certificate of Title No. T-118170. The property belonged to the conjugal
property/absolute community of property7 of the respondent Spouses Jorge and Jacinta Leonardo (Spouses
Leonardo) and upon which their residential house was built.
It appears that sometime in March 1996, Jorge's father, Ricardo, approached his sister, herein petitioner Dolores
Alejo (Dolores), to negotiate the sale of the subject property.8 Accordingly, on March 29, 1996, Jacinta executed
a Kasunduan with Dolores for the sale of the property. for a purchase price of PhP500,000. Under the
Kasunduan, Dolores was to pay PhP70,000 as down payment,, while PhP230,000 is to be paid on April 30, 1996
and the remaining balance of PhP200,000 was to be paid before the end of the year 1996.9 The Kasunduan was
signed by Jacinta and Ricardo as witness. Jorge, however, did not sign the agreement.
It further appears that the down payment of PhP70,000 and the PhP230,000 were paid by Dolores10 on the
dates agreed upon and thereafter, Dolores was allowed to possess the property and introduce improvements
thereon. 11
However, 9n July 3, 1996, Jorge wrote a letter to Dolores denying knowledge and consent to the Kasunduan.
Jorge further informed Dolores that Jacinta was retracting her consent to the Kasunduan due to Dolores' failure
to comply with her obligations. This was followed by another letter dated September 29, 1996 from Jorge to
Dolores demanding that the latter pay the balance of PhP200,000 on or before October 5, 1996, otherwise the
purchase price shall be increased to PhP700,000. 12 According to Dolores, she was being compelled by Jorge to
sign the agreement but that she refused to do so. As a result, Jorge went to her house, destroyed its water pump
and disconnected the electricity. Before· the officials of the Barangay, Dolores tendered the balance of
PhP200,000 but Jorge refused to accept the same. Instead, Jorge filed cases for ejectment13 and annulment of
sale, reconveyance and recovery of possession14 against her. 15 These cases were later on dismissed by the trial
court on technical grounds.
However, during the pendency of said cases, the subject property was sold by Jorge and Jacinta to respondents
Spouses Ernesto Cortez and Priscilla San Pedro (Spouses Cortez) under a Deed of Absolute Sale dated September
4, 1998 for a purchase price of PhP700,000. A new transfer certificate of title was Issued in the latter's names. At
the time of said sale, Dolores was in possession of the subject property. 16
Consequently, Dolores filed the case a quo for annulment of deed of sale and damages against the Spouses
Cortez and the Spouses Leonardo.
The Ruling of the RTC
In its Decision, the RTC noted that while the Kasunduan patently lacks the written consent of Jorge, the latter's
acts reveal that he later on acquiesced and accepted the same. In particular, the RTC observed that Jorge did not
s~asonably and ~xpressly repudiate the Kasunduan but instead demanded from Dolores compliance therewith
and that he allowed Dolores to take possession of the property. Further, the RTC noted that the case for
annulment of sale, reconveyance and recovery of possession filed by Jorge. against Dolores had been dismissed
and said dismissal attained finality. As such, res judicata set in preventing Jorge from further assailing the
Kasunduan. 17
Accordingly, the RTC declared the Kasunduan as a perfected contract and Dolores as the rightful owner of the
property. It further ordered the cancellation of titles issued in the names of the Spouses Leonardo and the
Spouses Cortez and the issuance of a new title in the name of Dolores. Finally, the RTC ordered Dolores to pay
the balance of PhP200,000 and the Spouses Leonardo to pay moral damages, attorney's fees, litigation expenses
and costs of suit. 18
In disposal, the RTC pronounced:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Dolores Alejo and against defendants [S]pouses
Leonardo and Cortez, as follows:
1.) Declaring the "Kasunduan" dated March 29, 1996 a perfected contract, legal, binding and subsisting having
been accepted by defendant Jorge Leonardo;
2.) Declaring the plaintiff the true, legal and rightful owner of the subject property;
3.) Declaring TCT Nb. 18170 in the names of Spouses Jorge Leonardo, Jacinta Leonardo cancelled and of no legal
force and effect;
4.) Declaring TCT No. 121491 in the names of Spouses Ernesto Cortez and Priscilla San Pedro null and void and
therefore should be ordered cancelled and of no legal force and effect;
5.) In lieu thereof, ordering the Register of Deeds of the Province of Bulacan to issue a new title in the name of
plaintiff Dolores Alejo;
6.) Ordering plaintiff Dolores Alejo to pay defendants Spouses Leonardo the sum of Php200,000.00 to complete
her obligation under the "Kasunduan";
7.) Ordering defendants Spouses Leonardo to pay plaintiff the sum of Phpl00,000.00 as and by way of moral
damages;
8.) Ordering defendants Spouses Leonardo to pay plaintiff the sum of Php50,000.00, as and by way of attorney's
fees and litigation expenses;
9.) Ordering defendants Spouses Leonardo to pay the cost of suit.
The claim of Php500,000.00 actual damages as well as Php 100,000.00 as exemplary damages are denied for lack
of legal as well as factual basis.· All other claims and counterclaim are denied for lack of merit.
SO ORDERED. 19
The Spouses Leonardo and the Spouses Cortez seasonably appealed.
The Ruling of the CA
The CA granted the appeal. 20 Contrary to the findings of the R TC, the CA held that Jorge, by imposing a new
period within which Dolores was to pay the remaining balance and by increasing the purchase price, only
qualifiedly accepted the Kasunduan. Being a qualified acceptance, the same partakes of a counter-offer and is a
rejection of the original offer. Consequently, the CA declared the Kasunduan as void absent Jorge's consent and
acceptance. Nevertheless, the CA found Dolores to be a possessor in good faith who is entitled to
reimbursement for the useful improvements introduced on the land or to the increase in the value thereof, at
the option of the Spouses Leonardo.
The CA accordingly disposed:
WHEREFORE, the appeal is hereby GRANTED. The assailed 14 January 2010 Decision of the Regional Trial Court,
Branch 19 of Malolos City, Bulacan is her.eby REVERSED and SET ASIDE. The Kasunduan dated 29 March 1996 is
hereby declared VOID. TCT No. 121491 in the names of Spouses Cortez and San Pedro is hereby declared VALID
and SUBSISTING. Appellants Spouses Leonardo are ORDERED to reimburse Dolores Alejo the amount of
Php300,000.00 that the latter paid to Jacinta Leonardo, with legal interest until fully paid. Appellants Spouses
Leonardo are likewise ORDERED, at their option, to indemnify Dolores Alejo with her expenses for introducing
useful improvements on the subject land or pay the increase in value which it may have acquired by reason of
those improvements, with Alejo entitled to the right of retention of the land until the indemnity is made. Finally,
the Regional Trial Court of Malolos City, Bulacan from which this case originated is DIRECTED to receive evidence
and determine the amount of indemnity to which appellee Dolores Alejo is entitled.
SO ORDERED.21
Dolores' motion for reconsideration was denied, hence the instant petition.
The Issues
Dolores argues that the Spouses Leonardo's and Spouses Cortez' appeals ought to have been outrightly
dismissed for failure to comply with the requirements of Section 13, Rule 44. On the substantive issue, Dolores ·
maintains that the Kasunduan is a perfected and binding contract as it was accepted by Jorge through his overt
acts. She also argues that the dismissal of Jorge's complaint for annulment of sale constitutes res judicata thus
preventing Jorge from further questioning the validity of the Kasunduan. Finally, she contends that the Spouses
Cortez were not buyers in good faith as they knew that the property was being occupied by other persons.
The Ruling of this Court
The petition is denied.
Dismissal of Appeal Lies within the Sound Discretion of the Appellate Court
Technically, the CA may dismiss the appeal for failure to comply with the requirements under Sec. 13, Rule 44.
Thus, Section 1, Rule 50 provides that an appeal may be dismissed by the Court of Appeals, on its own motion or
on that of the appellee upon the ground, among others, of absence of specific assignment of errors in the
appellant's brief, or of page references to the record.
Nevertheless, it has been consistently held that such provision confers a power, not a duty, on the appellate
court.22 The dismissal is directory, not mandatory, and as such, not a ministerial duty of the appellate court.23 In
other words, the CA enjoys ample discretion to dismiss or not to dismiss the appeal. What is more, the exercise
of such discretion is presumed to have been sound and regular and it is thus incumbent upon Dolores to offset
such presumption. Yet, the records before this Court do not satisfactorily show that the CA has gravely abused its
discretion in not dismissing the Spouses Leonardo's and Spouses Cortez' appeals.
On the contrary, We are of the view that the ends of justice will be better served if the instant case is determined
on the merits, after full opportunity to ventilate their respective claims and defenses is afforded to all parties.
After all, it is far better to decide a case on the merits, as the ultimate end, rather on a technicality.
The key issue in this case is whether the Kasunduan for the sale of a conjugal real property between Jacinta and
Dolores as a continuing offer has been converted to a perfected and binding contract. For, if Jorge has not
accepted or consented to the said sale, the Kasunduan is considered void rendering the other issues raised
herein merely academic.
Sale by one Spouse of Conjugal Real Property is Void Without the Written Consent of the other Spouse
Any alienation or encumbrance of conjugal property made during the effectivity of the Family Code is governed
by Article 124 thereof which provides:
Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses
jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife
for proper remedy, which must be availed of within five years from the date of the contract implementing such
decision.
disposition or encumbrance without authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction
shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before
the offer is withdrawn by either or both offerors. (Emphasis supplied.)
The law is therefore unequivocal when it states that the disposition of conjugal property of one spouse sans the
written consent of the other is void. Here, it is an established fact that the Kasunduan was entered into solely by
Jacinta and signed by her alone. By plain terms of the law therefore, the Kasunduan is void.
Nevertheless, We agree with the RTC and the CA when it held that the void Kasunduan constitutes a continuing
offer from Jacinta and Dolores and that Jorge had the option of either accepting or rejecting the offer before it
was withdrawn by either, or both, Jacinta and Dolores.
The point of contention is whether Jorge accepted such continuing offer. If so, then the Kasunduan is perfected
as a binding contract; otherwise, the Kasunduan remains void .
The RTC opined that Jorge's failure to expressly repudiate the Kasunduan and his demand that Dolores comply
with her undertakings therein show Jorge's acceptance of the sale of the conjugal property. On the other hand,
the CA noted that in varying the terms of the Kasunduan, i.e., in the time of payment and the purchase price,
Jorge is deemed to have only qualifiedly accepted the same.1âwphi1
We agree with the CA.
It is undisputed that after the execution of the Kasunduan, Jorge sent two letters to Dolores: one, in forming her
that he did not consent to the sale; and the other, demanding that' Dolores pay the balance of the purchase
price on or before October 5, 1996 and failing which, the purchase price shall be increased to PhP700,000.
Clearly, Jorge's first letter was an outright and express repudiation of the Kasunduan. The second letter, while
ostensibly a demand for compliance with Dolores' obligation under the Kasunduan, varied its terms on material
points, i.e., the date of payment of the balance and the purchase price. Consequently, such counter-offer cannot
be construed as evidencing Jorge's consent to or acceptance of the Kasunduan for it is settled that where the
other spouse's putative consent to the sale of the conjugal property appears in a separate document which does
not contain the same terms and conditions as in the first document signed by the other spouse, a valid
transaction could not have arisen.24
Neither can Jorge's subsequent letters to Dolores be treated as a ratification of the Kasunduan for the basic
reason that a void contract is not susceptible to ratification. Nor can Jorge's alleged participation in the
negotiation for the sale of the property or his acquiescence to Dolores' transfer to and possession of the subject
property be treated as converting· such continuing offer into a binding contract as the law distinctly requires
nothing less than a written consent to the sale for its validity. Suffice to say that participation in or awareness of
the negotiations is not consent. 25
As above intimated, a determination that the Kasunduan is void renders the other issues raised by Dolores
academic, i.e., whether the doctrine of res judicata applies and whether the Spouses Cortez are buyers in bad
faith; hence they merit no further discussion .
The CA Correctly Ruled that Dolores is a Possessor in Good Faith
While the Kasunduan was void from the beginning, Dolores is, in all fairness, entitled to recover from the
Spouses Leonardo the amount of PhP300,000 with legal Interest until fully paid.
Moreover, the CA correctly appreciated Dolores' standing as a possessor in good faith. It appears that Dolores
acted in good faith in entering the subject property and building improvements on it. Ricardo represented that
"Jacinta and Jorge wanted to sell the subject property. Dolores had no reason to believe that Ricardo and Jacinta
were lying. Indeed, upon her own brother's prodding, Dolores willingly parted with her money and paid the
down payment on the selling price and later, a portion of the remaining balance. The signatures of Jacinta and of
Ricardo (as witness) as well as her successful entry to the property appear to have comforted Dolores that
everything was in order. Article 526 of the Civil Code provides that she is deemed a possessor in good faith, who
is not aware that there exists in her title or mode of acquisition any flaw that invalidates it.
Likewise, as correctly held by the CA, Dolores, as possessor in good faith, is under no obligation to pay for her
stay on the property prior to its legal interruption by a final judgment. She is further entitled under Article 448 to
indemnity for the improvements introduced on the property with a right of retention until reimbursement is
made. The Spouses Leonardo have the option under Article 546 of the Civil Code of indemnifying Dolores for the
cost of the improvements or paying the increase in value which the property may have acquired by reason of
such improvements. 26
WHEREFORE, the petition is DENIED. The Decision dated October 3, 2012 and Resolution dated February 26,
2013 of the Court of Appeals in CA G.R. CV No. 95432 which (1) declared void the Kasunduan dated 29 March
1996; (2) declared valid the title issued in the names of Spouses Cortez and San Pedro; (3) ordered the
reimbursement of PhP300,000 with legal interest to Dolores Alejo; (3) ordered the Spouses
Leonardo, at their option, to indemnify Dolores Alejo of her expenses on the useful improvements or pay the
increase in value on the subject property, with retention rights until indemnity is made; and (4) remanded the
case to the RTC for purposes of receiving evidence and determining the amount of said indemnity are AFFIRMED
in toto.
SO ORDERED.
G.R. No. 166496 November 9, 2006
JOSEFA BAUTISTA FERRER, Petitioner,

vs.
SPS. MANUEL M. FERRER & VIRGINIA FERRER and SPS. ISMAEL M. FERRER and FLORA FERRER, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is an Appeal by Certiorari which assails the Decision1 of the Court of Appeals dated 16 August
2004 in CA-G.R. SP No. 78525, reversing and setting aside the Order2 dated 16 December 2002 of the Regional
Trial Court (RTC), Mandaluyong City, Branch 212 in Civil Case No. MC02-1780. The Court of Appeals ordered the
dismissal of the Complaint3 filed by petitioner Josefa Bautista Ferrer against respondents Sps. Manuel M. Ferrer
and Virginia Ferrer, and Sps. Ismael M. Ferrer and Flora Ferrer in the aforesaid Civil Case No. MC02-1780.
In her Complaint for payment of conjugal improvements, sum of money, and accounting with prayer for
injunction and damages, petitioner alleged that she is the widow of Alfredo Ferrer (Alfredo), a half-brother of
respondents Manuel M. Ferrer (Manuel) and Ismael M. Ferrer (Ismael). Before her marriage to Alfredo, the latter
acquired a piece of lot, covered by Transfer Certificate of Title (TCT) No. 67927.4 He applied for a loan with the
Social Security System (SSS) to build improvements thereon, including a residential house and a two-door
apartment building. However, it was during their marriage that payment of the loan was made using the couple’s
conjugal funds. From their conjugal funds, petitioner posited, they constructed a warehouse on the lot.
Moreover, petitioner averred that respondent Manuel occupied one door of the apartment building, as well as
the warehouse; however, in September 1991, he stopped paying rentals thereon, alleging that he had acquired
ownership over the property by virtue of a Deed of Sale executed by Alfredo in favor of respondents, Manuel
and Ismael and their spouses. TCT No. 67927 was cancelled, and TCT. No. 2728 was issued and registered in the
names of respondents.
It is petitioner’s contention that on 2 October 1989, when her husband was already bedridden, respondents
Ismael and Flora Ferrer made him sign a document, purported to be his last will and testament. The document,
however, was a Deed of Sale covering Alfredo’s lot and the improvements thereon. Learning of this
development, Alfredo filed with the RTC of Pasig, a Complaint for Annulment of the said sale against
respondents, docketed as Civil Case No. 61327.5 On 22 June 1993, the RTC dismissed the same.6 The RTC found
that the terms and conditions of the Deed of Sale are not contrary to law, morals, good customs, and public
policy, and should be complied with by the parties in good faith, there being no compelling reason
under the law to do otherwise. The dismissal was affirmed by the Court of Appeals. Subsequently, on 7
November 1994, this Court, in G.R. No. L-117067, finding no reversible error committed by the appellate court in
affirming the dismissal of the RTC, affirmed the Decision of the Court of Appeals.7
Further, in support of her Complaint, petitioner alluded to a portion of the Decision dated 22 June 1993 of the
RTC in Civil Case No. 61327, which stated, to wit:
In determining which property is the principal and which is the accessory, the property of greater value shall be
considered the principal. In this case, the lot is the principal and the improvements the accessories. Since Article
120 of the Family Code provides the rule that the ownership of accessory follows the ownership of the principal,
then the subject lot with all its improvements became an exclusive and capital property of Alfredo with an
obligation to reimburse the conjugal partnership of the cost of improvements at the time of liquidation of [the]
conjugal partnership. Clearly, Alfredo has all the rights to sell the subject property by himself without need of
Josefa’s consent.8
According to petitioner, the ruling of the RTC shows that, when Alfredo died on 29 September 1999, or at the
time of the liquidation of the conjugal partnership, she had the right to be reimbursed for the cost of the
improvements on Alfredo’s lot. She alleged that the cost of the improvements amounted to ₱500,000.00; hence,
one-half thereof should be reimbursed and paid by respondents as they are now the registered owners of
Alfredo’s lot. She averred that respondents cannot claim lack of knowledge about the fact that the
improvements were constructed using conjugal funds as they had occupied one of the apartment buildings on
Alfredo’s lot, and even paid rentals to petitioner. In addition, petitioner prayed that respondents be ordered to
render an accounting from September, 1991, on the income of the boarding house constructed thereon which
they had appropriated for themselves, and to remit one-half thereof as her share. Finally, petitioner sought from
respondents moral and exemplary damages, litigation and incidental expenses.
For their part, respondents filed a Motion to Dismiss,9 contending that petitioner had no cause of action against
them, and that the cause of action was barred by prior judgment.
On 16 December 2002, the RTC rendered an Order,10 denying the Motion to Dismiss. According to the RTC, no
pronouncement as to the improvements constructed on Alfredo’s lot has been made in Civil Case No. 61327, and
the payment of petitioner’s share in the conjugal partnership constitutes a separate cause of action. A
subsequent Order11 dated 17 January 2003 was issued by the RTC, denying respondents’ Motion for
Reconsideration.
Aggrieved, respondents elevated the case to the Court of Appeals by way of a Petition for Certiorari, alleging
grave abuse of discretion amounting to lack or excess of jurisdiction on the RTC in denying the dismissal.
On 16 August 2004, the Court of Appeals rendered a Decision granting the Petition. It held that petitioner’s
Complaint failed to state a cause of action. The appellate court rationalized as follows:
[W]e believe that the instant complaint is not the proper action for the respondent to enforce her right of
reimbursement of the cost of the improvement[s] on the subject property. As correctly pointed out by the
petitioners, the same should be made and directed in the settlement of estate of her deceased husband Alfredo
Ferrer pursuant to Article 12912 of the Family Code. Such being the case, it appears that the complaint herein
fails to state a cause of action against the petitioners, the latter not being the proper parties against whom the
subject action for reimbursement must be directed to. A complaint states a cause of action where it contains
three essential elements of a cause of action, namely: (1) the legal right of the plaintiff; (2) the correlative
obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right. If these
elements are absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state
a cause of action. Albeit the respondent herein has the legal right to be reimbursed of the cost of the
improvements of the subject property, it is not the petitioners but the estate of her deceased husband which has
the obligation to pay the same. The complaint herein is therefore dismissible for failure to state a cause of action
against the petitioners. Needless to say, the respondent is not without any further recourse as she may file her
claim against the estate of her deceased husband.
In light of the foregoing, we find that the public respondent committed grave abuse of discretion in denying the
petitioners’ motion to dismiss for failure to state a cause of action.13
Aggrieved, petitioner filed a Motion for Reconsideration thereon. However, on 17 December 2004, the Court of
Appeals rendered a Resolution14 denying the motion.
Hence, the present recourse.
Petitioner submits the following grounds for the allowance of the instant Petition, to wit:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER’S COMPLAINT FAILS TO STATE A
CAUSE OF ACTION AGAINST THE RESPONDENTS, THE LATTER NOT BEING THE PROPER PARTIES AGAINST WHOM
THE SUBJECT ACTION FOR REIMBURSEMENT MUST BE DIRECTED TO.
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PUBLIC RESPONDENT, HON. RIZALINA T.
CAPCO-UMALI, COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING THE [RESPONDENTS’] MOTION TO
DISMISS FOR FAILURE TO STATE A CAUSE OF ACTION.15
Both arguments raise the sole issue of whether the Court of Appeals erred in dismissing petitioner’s Complaint
for failure to state a cause of action.
Section 1(g) Rule 1616 of the 1997 Rules of Civil Procedure makes it clear that failure to make a sufficient
allegation of a cause of action in the complaint warrants the dismissal thereof. Section 2, Rule 2 of the 1997
Rules of Civil Procedure defines a cause of action as the act or omission by which a party violates the right of
another. It is the delict or the wrongful act or omission committed by the defendant in violation of the primary
right of the plaintiff.17
A cause of action has the following essential elements, viz:
(1) A right in favor of the plaintiff by whatever means and under whatever law it arises or is created;
(2) An obligation on the part of the named defendant to respect or not to violate such right; and
(3) Act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach
of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of
damages or other appropriate relief.18
A complaint states a cause of action only when it has the three indispensable elements.19
In the determination of the presence of these elements, inquiry is confined to the four corners of the complaint.
Only the statements in the Complaint may be properly considered.20 The absence of any of these elements
makes a complaint vulnerable to a Motion to Dismiss on the ground of a failure to state a cause of action.21
After a reading of the allegations contained in petitioner’s Complaint, we are convinced that the same failed to
state a cause of action.
In the case at bar, petitioner asserts a legal right in her favor by relying on the Decision of the RTC in Civil Case
No. 61327. It can be recalled that the aforesaid case is an action for Annulment filed by Alfredo and petitioner
against the respondents to seek annulment of the Deed of Sale, executed by Alfredo in respondents’ favor and
covering the herein subject premises. The Complaint was dismissed by the RTC, and subsequently affirmed by
the Court of Appeals and by this Court in G.R. No. L-117067.
According to petitioner, while the RTC in Civil Case No. 61327 recognized that the improvements constructed on
Alfredo’s lots were deemed as Alfredo’s exclusive and capital property, the court also held that petitioner, as
Alfredo’s spouse, has the right to claim reimbursement from the estate of Alfredo. It is argued by petitioner that
her husband had no other property, and his only property had been sold to the respondents; hence, she has the
legal right to claim for reimbursement from the respondents who are now the owners of the lot and the
improvements thereon. In fine, petitioner asseverates that the Complaint cannot be dismissed on the ground of
failure to state a cause of action because the respondents have the correlative obligation to pay the value of the
improvements.
Petitioner was not able to show that there is an obligation on the part of the respondents to respect or not to
violate her right. While we could concede that Civil Case No. 61327 made a reference to the right of the spouse
as contemplated in Article 12022 of the Family Code to be reimbursed for the cost of the improvements, the
obligation to reimburse rests on the spouse upon whom ownership of the entire property is vested. There is no
obligation on the part of the purchaser of the property, in case the property is sold by the owner-spouse.
Indeed, Article 120 provides the solution in determining the ownership of the improvements that are made on
the separate property of the spouses at the expense of the partnership or through the acts or efforts of either or
both spouses. Thus, when the cost of the improvement and any resulting increase in value are more than the
value of the property at the time of the improvement, the entire property of one of the spouses shall belong to
the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time
of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise
subject to reimbursement of the cost of the improvement. The subject property was precisely declared as the
exclusive property of Alfredo on the basis of Article 120 of the Family Code.
What is incontrovertible is that the respondents, despite the allegations contained in the Complaint that they are
the buyers of the subject premises, are not petitioner’s spouse nor can they ever be deemed as the owner-
spouse upon whom the obligation to reimburse petitioner for her costs rested. It is the owner-spouse who has
the obligation to reimburse the conjugal partnership or the spouse who expended the acts or efforts, as the case
may be. Otherwise stated, respondents do not have the obligation to respect petitioner’s right to be reimbursed.
On this matter, we do not find an act or omission on the part of respondents in violation of petitioner’s rights.
The right of the respondents to acquire as buyers the subject premises from Alfredo under the assailed Deed of
Sale in Civil Case No. 61327 had been laid to rest. This is because the validity of the Deed of Sale had already
been determined and upheld with finality. The same had been similarly admitted by petitioner in her Complaint.
It can be said, thus, that respondents’ act of acquiring the subject property by sale was not in violation of
petitioner’s rights. The same can also be said of the respondents’ objection to reimburse petitioner. Simply, no
correlative obligation exists on the part of the respondents to reimburse the petitioner. Corollary thereto, neither
can it be said that their refusal to reimburse constituted a violation of petitioner’s rights. As has been shown in
the foregoing, no obligation by the respondents under the law exists. Petitioner’s Complaint failed to state a
cause of action against the respondents, and for this reason, the Court of Appeals was not in error in dismissing
the same.
WHEREFORE, the Petition is DENIED. The Decision dated 16 August 2004 and the Resolution dated 17 December
2004 of the Court of Appeals in CA G.R. SP. No. 78525 are AFFIRMED. Costs de oficio.
SO ORDERED.
G.R. No. 149615 August 29, 2006
IN RE: PETITION FOR SEPARATION OF PROPERTY ELENA BUENAVENTURA MULLER, Petitioner,

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

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Persons & Family Relations 3rd Exam | 1

G.R. No. 193038, March 11, 2015

JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B. NUEGA, Respondent.

VILLARAMA, JR., J.:

For lack of merit, defendant's counterclaim is hereby DENIED.

Petitioner is not a buyer in good faith.

We disagree with petitioner.

That is not all.

Article 91 of the Family Code thus provides:chanroblesvirtuallawlibrary

Costs against petitioner.

G.R. No. 156125 August 25, 2010

FRANCISCO MUÑOZ, JR., Petitioner,

THE RTC RULING

THE CASE FOR THE RESPONDENTS

The CA misapplied Article 158 of the

Contract is an equitable mortgage

Costs against the petitioner.

G.R. No. 118305 February 12, 1998

AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO, petitioners,

xxx xxx xxx

The dispositive portion of the decision reads:

Art. 161. The conjugal partnership shall be liable for:

xxx xxx xxx

This theory is new as it is novel.

The respondent court correctly observed that:

G.R. No. 124642 February 23, 2004

ALFREDO CHING and ENCARNACION CHING, petitioners

CALLEJO, SR., J.:

The following facts are undisputed:

Art. 161. The conjugal partnership shall be liable for:

G.R. No. 168338 February 15, 2008

FRANCISCO CHAVEZ, petitioner,

5. On June 11, 2005, the NTC issued this press release: 11

xxx xxx xxx

D. The Procedural Threshold: Legal Standing

E. Re-examining The law on freedom of speech,

E.1. Abstraction of Free Speech

E.2. Differentiation: The Limits & Restraints of Free Speech

E.3. In Focus: Freedom of the Press

E.4. Anatomy of Restrictions: Prior Restraint, Content-Neutral and Content-Based Regulations

E.5. Dichotomy of Free Press: Print v. Broadcast Media

xxx xxx xxx

Similar considerations apply in the area of national security.

F. The Case At Bar

G.R. No. 145222 April 24, 2009

SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners,

The case stemmed from the following factual backdrop:

On 20 November 1992, a notice of sheriff’s sale was issued.

On 4 February 1993, a certificate of sale was issued in favor of petitioners.

Respondent moved for reconsideration but it was denied on 26 July 1994.

Sec. 16. Proceedings where property claimed by third person.

G.R. No. 164201 December 10, 2012

EFREN PANA, Petitioner,

The Facts and the Case

The Issue Presented

Ruling of the Court

Art. 121. The conjugal partnership shall be liable for:

G.R. No. L-61464 May 28, 1988

BA FINANCE CORPORATION, petitioner,

GUTIERREZ, JR., J.:

There is no merit in this contention.

xxx xxx xxx