Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 139789

July 19, 2001

IN THE MATTER OF THE PETITION FOR HABEAS CORPUS OF

POTENCIANO ILUSORIO, ERLINDA K. ILUSORIO, petitioner,
vs.
ERLINDA K. ILUSORIO-BILDNER, SYLVIA K. ILUSORIO-YAP, JOHN DOES
and JANE DOES, respondents.
x---------------------------------------------------------x

On May 12, 2000, we dismissed the petition for habeas corpus4 for lack of
merit, and granted the petition5 to nullify the Court of Appeals' ruling6 giving
visitation rights to Erlinda K. Ilusorio.7
What is now before the Court is Erlinda's motion to reconsider the decision.8
On September 20, 2000, we set the case for preliminary conference on October
11, 2000, at 10:00 a. m., without requiring the mandatory presence of the
parties.
In that conference, the Court laid down the issues to be resolved, to wit:
(a)
To determine the propriety of a physical and medical examination of
petitioner Potenciano Ilusorio;

G.R. No. 139808 July 19, 2001

(b)

Whether the same is relevant; and

POTENCIANO ILUSORIO, MA. ERLINDA I. BILDNER and SYLVIA K.

ILUSORIO, petitioners,
vs.
HON. COURT OF APPEALS and ERLINDA K. ILUSORIO, respondents.

(c)

If relevant, how the Court will conduct the same.9

The parties extensively discussed the issues. The Court, in its resolution,
enjoined the parties and their lawyers to initiate steps towards an amicable
settlement of the case through mediation and other means.

RESOLUTION
PARDO, J.:
Once again we see the sad tale of a prominent family shattered by conflicts on
expectancy in fabled fortune.
On March 11, 1999, Erlinda K. Ilusorio, the matriarch who was so lovingly
inseparable from her husband some years ago, filed a petition with the Court of
Appeals1 for habeas corpus to have custody of her husband in consortium.
On April 5, 1999, the Court of Appeals promulgated its decision dismissing the
petition for lack of unlawful restraint or detention of the subject, Potenciano
Ilusorio.

On November 29, 2000, the Court noted the manifestation and compliance of
the parties with the resolution of October 11, 2000.10
On January 31, 2001, the Court denied Erlinda Ilusorio's manifestation and
motion praying that Potenciano Ilusorio be produced before the Court and be
medically examined by a team of medical experts appointed by the Court.11
On March 27, 2001, we denied with finality Erlinda's motion to reconsider the
Court's order of January 31 , 2001.12
The issues raised by Erlinda K. Ilusorio in her motion for reconsideration are
mere reiterations of her arguments that have been resolved in the decision.
Nevertheless, for emphasis, we shall discuss the issues thus:

Thus, on October 11, 1999, Erlinda K. Ilusorio filed with the Supreme Court an
appeal via certiorari pursuing her desire to have custody of her husband
Potenciano Ilusorio.2 This case was consolidated with another case3 filed by
Potenciano Ilusorio and his children, Erlinda I. Bildner and Sylvia K. Ilusorio
appealing from the order giving visitation rights to his wife, asserting that he
never refused to see her.

1 | Page

First. Erlinda K. Ilusorio claimed that she was not compelling Potenciano to live
with her in consortium and that Potenciano's mental state was not an issue.
However, the very root cause of the entire petition is her desire to have her
husband's custody.13 Clearly, Erlinda cannot now deny that she wanted
Potenciano Ilusorio to live with her.

Second. One reason why Erlinda K. Ilusorio sought custody of her husband was
that respondents Lin and Sylvia were illegally restraining Potenciano Ilusorio to
fraudulently deprive her of property rights out of pure greed.14 She claimed that
her two children were using their sick and frail father to sign away Potenciano
and Erlinda's property to companies controlled by Lin and Sylvia. She also
argued that since Potenciano retired as director and officer of Baguio Country
Club and Philippine Oversees Telecommunications, she would logically assume
his position and control. Yet, Lin and Sylvia were the ones controlling the
corporations.15
The fact of illegal restraint has not been proved during the hearing at the Court
of Appeals on March 23, 1999.16 Potenciano himself declared that he was not
prevented by his children from seeing anybody and that he had no objection to
seeing his wife and other children whom he loved.
Erlinda highlighted that her husband suffered from various ailments. Thus,
Potenciano Ilusorio did not have the mental capacity to decide for himself.
Hence, Erlinda argued that Potenciano be brought before the Supreme Court so
that we could determine his mental state.
We were not convinced that Potenciano Ilusorio was mentally incapacitated to
choose whether to see his wife or not. Again, this is a question of fact that has
been decided in the Court of Appeals.
As to whether the children were in fact taking control of the corporation, these
are matters that may be threshed out in a separate proceeding, irrelevant in
habeas corpus.
Third. Petitioner failed to sufficiently convince the Court why we should not rely
on the facts found by the Court of Appeals. Erlinda claimed that the facts
mentioned in the decision were erroneous and incomplete. We see no reason
why the High Court of the land need go to such length. The hornbook doctrine
states that findings of fact of the lower courts are conclusive on the Supreme
Court.17 We emphasize, it is not for the Court to weigh evidence all over
again.18 Although there are exceptions to the rule,19 Erlinda failed to show that
this is an exceptional instance.
Fourth. Erlinda states that Article XII of the 1987 Constitution and Articles 68
and 69 of the Family Code support her position that as spouses, they
(Potenciano and Erlinda) are duty bound to live together and care for each
other. We agree.
The law provides that the husband and the wife are obliged to live together,
observe mutual love, respect and fidelity.20 The sanction therefor is the

2 | Page

"spontaneous, mutual affection between husband and wife and not any legal
mandate or court order" to enforce consortium.21
Obviously, there was absence of empathy between spouses Erlinda and
Potenciano, having separated from bed and board since 1972. We defined
empathy as a shared feeling between husband and wife experienced not only
by having spontaneous sexual intimacy but a deep sense of spiritual
communion. Marital union is a two-way process.
Marriage is definitely for two loving adults who view the relationship with "amor
gignit amorem" respect, sacrifice and a continuing commitment to togetherness,
conscious of its value as a sublime social institution.22
On June 28, 2001, Potenciano Ilusorio gave his soul to the Almighty, his Creator
and Supreme Judge. Let his soul rest in peace and his survivors continue the
much prolonged fracas ex aequo et bono.
IN VIEW WHEREOF, we DENY Erlinda's motion for reconsideration. At any
rate, the case has been rendered moot by the death of subject.
SO ORDERED.

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
BRIGIDO B. QUIAO,
Petitioner,

This case comes before us via Petition for Review on Certiorari[1] under Rule
45 of the Rules of Court. The petitioner seeks that we vacate and set aside the
Order[2] dated January 8, 2007 of the Regional Trial Court (RTC), Branch 1,
Butuan City. In lieu of the said order, we are asked to issue a Resolution
defining the net profits subject of the forfeiture as a result of the decree of legal
separation in accordance with the provision of Article 102(4) of the Family Code,
or alternatively, in accordance with the provisions of Article 176 of the Civil
Code.
Antecedent Facts

- versus RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO,

represented by their mother RITA QUIAO,
Respondents.
G.R. No 176556

On October 26, 2000, herein respondent Rita C. Quiao (Rita) filed a complaint
for legal separation against herein petitioner Brigido B. Quiao (Brigido).[3]
Subsequently, the RTC rendered a Decision[4] dated October 10, 2005, the
dispositive portion of which provides:

Present:

WHEREFORE, viewed from the foregoing considerations, judgment is hereby

rendered declaring the legal separation of plaintiff Rita C. Quiao and defendantrespondent Brigido B. Quiao pursuant to Article 55.

CARPIO, J., Chairperson,

BRION,
PEREZ,
SERENO, and
REYES, JJ.

As such, the herein parties shall be entitled to live separately from each other,
but the marriage bond shall not be severed.

Promulgated:
July 4, 2012
x-----------------------------------------------------------------------------------------x

Except for Letecia C. Quiao who is of legal age, the three minor children,
namely, Kitchie, Lotis and Petchie, all surnamed Quiao shall remain under the
custody of the plaintiff who is the innocent spouse.

DECISION

Further, except for the personal and real properties already foreclosed by the
RCBC, all the remaining properties, namely:

The family is the basic and the most important institution of society. It is in the
family where children are born and molded either to become useful citizens of
the country or troublemakers in the community. Thus, we are saddened when
parents have to separate and fight over properties, without regard to the
message they send to their children. Notwithstanding this, we must not shirk
from our obligation to rule on this case involving legal separation escalating to
questions on dissolution and partition of properties.

1.
coffee mill in Balongagan, Las Nieves, Agusan del Norte;
2.
coffee mill in Durian, Las Nieves, Agusan del Norte;
3.
corn mill in Casiklan, Las Nieves, Agusan del Norte;
4.
coffee mill in Esperanza, Agusan del Sur;
5.
a parcel of land with an area of 1,200 square meters located in Tungao,
Butuan City;
6.
a parcel of agricultural land with an area of 5 hectares located in Manila de
Bugabos, Butuan City;
7.
a parcel of land with an area of 84 square meters located in Tungao,
Butuan City;
8.
Bashier Bon Factory located in Tungao, Butuan City;

REYES, J.:

The Case

3 | Page

shall be divided equally between herein [respondents] and [petitioner] subject to

the respective legitimes of the children and the payment of the unpaid conjugal
liabilities of [P]45,740.00.
[Petitioners] share, however, of the net profits earned by the conjugal
partnership is forfeited in favor of the common children.
He is further ordered to reimburse [respondents] the sum of [P]19,000.00 as
attorney's fees and litigation expenses of [P]5,000.00[.]
SO ORDERED.[5]

Neither party filed a motion for reconsideration and appeal within the period
provided for under Section 17(a) and (b) of the Rule on Legal Separation.[6]
On December 12, 2005, the respondents filed a motion for execution[7] which
the trial court granted in its Order dated December 16, 2005, the dispositive
portion of which reads:
Wherefore, finding the motion to be well taken, the same is hereby granted. Let
a writ of execution be issued for the immediate enforcement of the Judgment.
SO ORDERED.[8]
Subsequently, on February 10, 2006, the RTC issued a Writ of Execution[9]
which reads as follows:
NOW THEREFORE, that of the goods and chattels of the [petitioner] BRIGIDO
B. QUIAO you cause to be made the sums stated in the afore-quoted
DECISION [sic], together with your lawful fees in the service of this Writ, all in
the Philippine Currency.
But if sufficient personal property cannot be found whereof to satisfy this
execution and your lawful fees, then we command you that of the lands and
buildings of the said [petitioner], you make the said sums in the manner required
by law. You are enjoined to strictly observed Section 9, Rule 39, Rule [sic] of the
1997 Rules of Civil Procedure.
You are hereby ordered to make a return of the said proceedings immediately
after the judgment has been satisfied in part or in full in consonance with
Section 14, Rule 39 of the 1997 Rules of Civil Procedure, as amended.[10]

4 | Page

On July 6, 2006, the writ was partially executed with the petitioner paying the
respondents the amount of P46,870.00, representing the following payments:
(a) P22,870.00 as petitioner's share of the payment of the conjugal share;
(b) P19,000.00 as attorney's fees; and
(c) P5,000.00 as litigation expenses.[11]
On July 7, 2006, or after more than nine months from the promulgation of the
Decision, the petitioner filed before the RTC a Motion for Clarification,[12]
asking the RTC to define the term Net Profits Earned.
To resolve the petitioner's Motion for Clarification, the RTC issued an Order[13]
dated August 31, 2006, which held that the phrase NET PROFIT EARNED
denotes the remainder of the properties of the parties after deducting the
separate properties of each [of the] spouse and the debts.[14] The Order further
held that after determining the remainder of the properties, it shall be forfeited in
favor of the common children because the offending spouse does not have any
right to any share of the net profits earned, pursuant to Articles 63, No. (2) and
43, No. (2) of the Family Code.[15] The dispositive portion of the Order states:
WHEREFORE, there is no blatant disparity when the sheriff intends to forfeit all
the remaining properties after deducting the payments of the debts for only
separate properties of the defendant-respondent shall be delivered to him which
he has none.
The Sheriff is herein directed to proceed with the execution of the Decision.
IT IS SO ORDERED.[16]

Not satisfied with the trial court's Order, the petitioner filed a Motion for
Reconsideration[17] on September 8, 2006. Consequently, the RTC issued
another Order[18] dated November 8, 2006, holding that although the Decision
dated October 10, 2005 has become final and executory, it may still consider
the Motion for Clarification because the petitioner simply wanted to clarify the
meaning of net profit earned.[19] Furthermore, the same Order held:
ALL TOLD, the Court Order dated August 31, 2006 is hereby ordered set aside.
NET PROFIT EARNED, which is subject of forfeiture in favor of [the] parties'
common children, is ordered to be computed in accordance [with] par. 4 of
Article 102 of the Family Code.[20]

AS A RESULT OF THE ISSUANCE OF THE DECREE OF LEGAL

SEPARATION?[23]
On November 21, 2006, the respondents filed a Motion for Reconsideration,[21]
praying for the correction and reversal of the Order dated November 8, 2006.
Thereafter, on January 8, 2007,[22] the trial court had changed its ruling again
and granted the respondents' Motion for Reconsideration whereby the Order
dated November 8, 2006 was set aside to reinstate the Order dated August 31,
2006.
Not satisfied with the trial court's Order, the petitioner filed on February 27, 2007
this instant Petition for Review under Rule 45 of the Rules of Court, raising the
following:
Issues

Our Ruling
While the petitioner has raised a number of issues on the applicability of certain
laws, we are well-aware that the respondents have called our attention to the
fact that the Decision dated October 10, 2005 has attained finality when the
Motion for Clarification was filed.[24] Thus, we are constrained to resolve first
the issue of the finality of the Decision dated October 10, 2005 and
subsequently discuss the matters that we can clarify.
The Decision dated October 10, 2005 has become final and executory at the
time the Motion for Clarification was filed on July 7, 2006.

I
IS THE DISSOLUTION AND THE CONSEQUENT LIQUIDATION OF THE
COMMON PROPERTIES OF THE HUSBAND AND WIFE BY VIRTUE OF THE
DECREE OF LEGAL SEPARATION GOVERNED BY ARTICLE 125 (SIC) OF
THE FAMILY CODE?
II
WHAT IS THE MEANING OF THE NET PROFITS EARNED BY THE
CONJUGAL PARTNERSHIP FOR PURPOSES OF EFFECTING THE
FORFEITURE AUTHORIZED UNDER ARTICLE 63 OF THE FAMILY CODE?

Section 3, Rule 41 of the Rules of Court provides:

Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen
(15) days from notice of the judgment or final order appealed from. Where a
record on appeal is required, the appellant shall file a notice of appeal and a
record on appeal within thirty (30) days from notice of the judgment or final
order.
The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed.

III
WHAT LAW GOVERNS THE PROPERTY RELATIONS BETWEEN THE
HUSBAND AND WIFE WHO GOT MARRIED IN 1977? CAN THE FAMILY
CODE OF THE PHILIPPINES BE GIVEN RETROACTIVE EFFECT FOR
PURPOSES OF DETERMINING THE NET PROFITS SUBJECT OF
FORFEITURE AS A RESULT OF THE DECREE OF LEGAL SEPARATION
WITHOUT IMPAIRING VESTED RIGHTS ALREADY ACQUIRED UNDER THE
CIVIL CODE?
IV
WHAT PROPERTIES SHALL BE INCLUDED IN THE FORFEITURE OF THE
SHARE OF THE GUILTY SPOUSE IN THE NET CONJUGAL PARTNERSHIP

5 | Page

In Neypes v. Court of Appeals,[25] we clarified that to standardize the appeal

periods provided in the Rules and to afford litigants fair opportunity to appeal
their cases, we held that it would be practical to allow a fresh period of 15 days
within which to file the notice of appeal in the RTC, counted from receipt of the
order dismissing a motion for a new trial or motion for reconsideration.[26]
In Neypes, we explained that the "fresh period rule" shall also apply to Rule 40
governing appeals from the Municipal Trial Courts to the RTCs; Rule 42 on
petitions for review from the RTCs to the Court of Appeals (CA); Rule 43 on
appeals from quasi-judicial agencies to the CA and Rule 45 governing appeals
by certiorari to the Supreme Court. We also said, The new rule aims to regiment
or make the appeal period uniform, to be counted from receipt of the order

denying the motion for new trial, motion for reconsideration (whether full or
partial) or any final order or resolution.[27] In other words, a party litigant may
file his notice of appeal within a fresh 15-day period from his receipt of the trial
court's decision or final order denying his motion for new trial or motion for
reconsideration. Failure to avail of the fresh 15-day period from the denial of the
motion for reconsideration makes the decision or final order in question final and
executory.
In the case at bar, the trial court rendered its Decision on October 10, 2005. The
petitioner neither filed a motion for reconsideration nor a notice of appeal. On
December 16, 2005, or after 67 days had lapsed, the trial court issued an order
granting the respondent's motion for execution; and on February 10, 2006, or
after 123 days had lapsed, the trial court issued a writ of execution. Finally,
when the writ had already been partially executed, the petitioner, on July 7,
2006 or after 270 days had lapsed, filed his Motion for Clarification on the
definition of the net profits earned. From the foregoing, the petitioner had clearly
slept on his right to question the RTCs Decision dated October 10, 2005. For
270 days, the petitioner never raised a single issue until the decision had
already been partially executed. Thus at the time the petitioner filed his motion
for clarification, the trial courts decision has become final and executory. A
judgment becomes final and executory when the reglementary period to appeal
lapses and no appeal is perfected within such period. Consequently, no court,
not even this Court, can arrogate unto itself appellate jurisdiction to review a
case or modify a judgment that became final.[28]
The petitioner argues that the decision he is questioning is a void judgment.
Being such, the petitioner's thesis is that it can still be disturbed even after 270
days had lapsed from the issuance of the decision to the filing of the motion for
clarification. He said that a void judgment is no judgment at all. It never attains
finality and cannot be a source of any right nor any obligation.[29] But what
precisely is a void judgment in our jurisdiction? When does a judgment
becomes void?

the husband and wife or those living together.[32] The Rule on Legal
Separation[33] provides that the petition [for legal separation] shall be filed in
the Family Court of the province or city where the petitioner or the respondent
has been residing for at least six months prior to the date of filing or in the case
of a non-resident respondent, where he may be found in the Philippines, at the
election of the petitioner.[34] In the instant case, herein respondent Rita is found
to reside in Tungao, Butuan City for more than six months prior to the date of
filing of the petition; thus, the RTC, clearly has jurisdiction over the respondent's
petition below. Furthermore, the RTC also acquired jurisdiction over the persons
of both parties, considering that summons and a copy of the complaint with its
annexes were served upon the herein petitioner on December 14, 2000 and that
the herein petitioner filed his Answer to the Complaint on January 9, 2001.[35]
Thus, without doubt, the RTC, which has rendered the questioned judgment,
has jurisdiction over the complaint and the persons of the parties.
From the aforecited facts, the questioned October 10, 2005 judgment of the trial
court is clearly not void ab initio, since it was rendered within the ambit of the
court's jurisdiction. Being such, the same cannot anymore be disturbed, even if
the modification is meant to correct what may be considered an erroneous
conclusion of fact or law.[36] In fact, we have ruled that for [as] long as the
public respondent acted with jurisdiction, any error committed by him or it in the
exercise thereof will amount to nothing more than an error of judgment which
may be reviewed or corrected only by appeal.[37] Granting without admitting
that the RTC's judgment dated October 10, 2005 was erroneous, the petitioner's
remedy should be an appeal filed within the reglementary period. Unfortunately,
the petitioner failed to do this. He has already lost the chance to question the
trial court's decision, which has become immutable and unalterable. What we
can only do is to clarify the very question raised below and nothing more.
For our convenience, the following matters cannot anymore be disturbed since
the October 10, 2005 judgment has already become immutable and unalterable,
to wit:

A judgment is null and void when the court which rendered it had no power to
grant the relief or no jurisdiction over the subject matter or over the parties or
both.[30] In other words, a court, which does not have the power to decide a
case or that has no jurisdiction over the subject matter or the parties, will issue a
void judgment or a coram non judice.[31]

(a) The finding that the petitioner is the offending spouse since he cohabited
with a woman who is not his wife;[38]

The questioned judgment does not fall within the purview of a void judgment.
For sure, the trial court has jurisdiction over a case involving legal separation.
Republic Act (R.A.) No. 8369 confers upon an RTC, designated as the Family
Court of a city, the exclusive original jurisdiction to hear and decide, among
others, complaints or petitions relating to marital status and property relations of

(c) The dissolution and liquidation of the conjugal partnership;[40]

6 | Page

(b) The trial court's grant of the petition for legal separation of respondent Rita;
[39]

(d) The forfeiture of the petitioner's right to any share of the net profits earned by
the conjugal partnership;[41]

(e) The award to the innocent spouse of the minor children's custody;[42]
(f) The disqualification of the offending spouse from inheriting from the innocent
spouse by intestate succession;[43]

(q) The order to the petitioner to reimburse the respondents the sum of
P19,000.00 as attorney's fees and litigation expenses of P5,000.00.[54]
After discussing lengthily the immutability of the Decision dated October 10,
2005, we will discuss the following issues for the enlightenment of the parties
and the public at large.

(g) The revocation of provisions in favor of the offending spouse made in the will
of the innocent spouse;[44]
(h) The holding that the property relation of the parties is conjugal partnership of
gains and pursuant to Article 116 of the Family Code, all properties acquired
during the marriage, whether acquired by one or both spouses, is presumed to
be conjugal unless the contrary is proved;[45]
(i) The finding that the spouses acquired their real and personal properties while
they were living together;[46]
(j) The list of properties which Rizal Commercial Banking Corporation (RCBC)
foreclosed;[47]
(k) The list of the remaining properties of the couple which must be dissolved
and liquidated and the fact that respondent Rita was the one who took charge of
the administration of these properties;[48]
(l) The holding that the conjugal partnership shall be liable to matters included
under Article 121 of the Family Code and the conjugal liabilities totaling
P503,862.10 shall be charged to the income generated by these properties;[49]
(m) The fact that the trial court had no way of knowing whether the petitioner
had separate properties which can satisfy his share for the support of the family;
[50]
(n) The holding that the applicable law in this case is Article 129(7);[51]
(o) The ruling that the remaining properties not subject to any encumbrance
shall therefore be divided equally between the petitioner and the respondent
without prejudice to the children's legitime;[52]
(p) The holding that the petitioner's share of the net profits earned by the
conjugal partnership is forfeited in favor of the common children;[53] and

7 | Page

Article 129 of the Family Code applies to the present case since the parties'
property relation is governed by the system of relative community or conjugal
partnership of gains.
The petitioner claims that the court a quo is wrong when it applied Article 129 of
the Family Code, instead of Article 102. He confusingly argues that Article 102
applies because there is no other provision under the Family Code which
defines net profits earned subject of forfeiture as a result of legal separation.
Offhand, the trial court's Decision dated October 10, 2005 held that Article
129(7) of the Family Code applies in this case. We agree with the trial court's
holding.
First, let us determine what governs the couple's property relation. From the
record, we can deduce that the petitioner and the respondent tied the marital
knot on January 6, 1977. Since at the time of the exchange of marital vows, the
operative law was the Civil Code of the Philippines (R.A. No. 386) and since
they did not agree on a marriage settlement, the property relations between the
petitioner and the respondent is the system of relative community or conjugal
partnership of gains.[55] Article 119 of the Civil Code 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.

Thus, from the foregoing facts and law, it is clear that what governs the property
relations of the petitioner and of the respondent is conjugal partnership of gains.
And under this property relation, the husband and the wife place in a common
fund the fruits of their separate property and the income from their work or
industry.[56] The husband and wife also own in common all the property of the
conjugal partnership of gains.[57]

Second, since at the time of the dissolution of the petitioner and the
respondent's marriage the operative law is already the Family Code, the same
applies in the instant case and the applicable law in so far as the liquidation of
the conjugal partnership assets and liabilities is concerned is Article 129 of the
Family Code in relation to Article 63(2) of the Family Code. The latter provision
is applicable because according to Article 256 of the Family Code [t]his Code
shall have retroactive effect insofar as it does not prejudice or impair vested or
acquired rights in accordance with the Civil Code or other law.[58]
Now, the petitioner asks: Was his vested right over half of the common
properties of the conjugal partnership violated when the trial court forfeited them
in favor of his children pursuant to Articles 63(2) and 129 of the Family Code?
We respond in the negative.
Indeed, the petitioner claims that his vested rights have been impaired, arguing:
As earlier adverted to, the petitioner acquired vested rights over half of the
conjugal properties, the same being owned in common by the spouses. If the
provisions of the Family Code are to be given retroactive application to the point
of authorizing the forfeiture of the petitioner's share in the net remainder of the
conjugal partnership properties, the same impairs his rights acquired prior to the
effectivity of the Family Code.[59] In other words, the petitioner is saying that
since the property relations between the spouses is governed by the regime of
Conjugal Partnership of Gains under the Civil Code, the petitioner acquired
vested rights over half of the properties of the Conjugal Partnership of Gains,
pursuant to Article 143 of the Civil Code, which provides: All property of the
conjugal partnership of gains is owned in common by the husband and wife.[60]
Thus, since he is one of the owners of the properties covered by the conjugal
partnership of gains, he has a vested right over half of the said properties, even
after the promulgation of the Family Code; and he insisted that no provision
under the Family Code may deprive him of this vested right by virtue of Article
256 of the Family Code which prohibits retroactive application of the Family
Code when it will prejudice a person's vested right.
However, the petitioner's claim of vested right is not one which is written on
stone. In Go, Jr. v. Court of Appeals,[61] we define and explained vested right in
the following manner:
A vested right is one whose existence, effectivity and extent do not depend
upon events foreign to the will of the holder, or to the exercise of which no
obstacle exists, and which is immediate and perfect in itself and not dependent
upon a contingency. The term vested right expresses the concept of present

8 | Page

fixed interest which, in right reason and natural justice, should be protected
against arbitrary State action, or an innately just and imperative right which
enlightened free society, sensitive to inherent and irrefragable individual rights,
cannot deny.
To be vested, a right must have become a titlelegal or equitableto the present or
future enjoyment of property.[62] (Citations omitted)
In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List
Officer Samson S. Alcantara, et al. v. The Hon. Executive Secretary Eduardo R.
Ermita,[63] we also explained:
The concept of vested right is a consequence of the constitutional guaranty of
due process that expresses a present fixed interest which in right reason and
natural justice is protected against arbitrary state action; it includes not only
legal or equitable title to the enforcement of a demand but also exemptions from
new obligations created after the right has become vested. Rights are
considered vested when the right to enjoyment is a present interest, absolute,
unconditional, and perfect or fixed and irrefutable.[64] (Emphasis and
underscoring supplied)
From the foregoing, it is clear that while one may not be deprived of his vested
right, he may lose the same if there is due process and such deprivation is
founded in law and jurisprudence.
In the present case, the petitioner was accorded his right to due process. First,
he was well-aware that the respondent prayed in her complaint that all of the
conjugal properties be awarded to her.[65] In fact, in his Answer, the petitioner
prayed that the trial court divide the community assets between the petitioner
and the respondent as circumstances and evidence warrant after the
accounting and inventory of all the community properties of the parties.[66]
Second, when the Decision dated October 10, 2005 was promulgated, the
petitioner never questioned the trial court's ruling forfeiting what the trial court
termed as net profits, pursuant to Article 129(7) of the Family Code.[67] Thus,
the petitioner cannot claim being deprived of his right to due process.
Furthermore, we take note that the alleged deprivation of the petitioner's vested
right is one founded, not only in the provisions of the Family Code, but in Article
176 of the Civil Code. This provision is like Articles 63 and 129 of the Family
Code on the forfeiture of the guilty spouse's share in the conjugal partnership
profits. The said provision says:

Art. 176. In case of legal separation, the guilty spouse shall forfeit his or her
share of the conjugal partnership profits, which shall be awarded to the children
of both, and the children of the guilty spouse had by a prior marriage. However,
if the conjugal partnership property came mostly or entirely from the work or
industry, or from the wages and salaries, or from the fruits of the separate
property of the guilty spouse, this forfeiture shall not apply.
In case there are no children, the innocent spouse shall be entitled to all the net
profits.
From the foregoing, the petitioner's claim of a vested right has no basis
considering that even under Article 176 of the Civil Code, his share of the
conjugal partnership profits may be forfeited if he is the guilty party in a legal
separation case. Thus, after trial and after the petitioner was given the chance
to present his evidence, the petitioner's vested right claim may in fact be set
aside under the Civil Code since the trial court found him the guilty party.
More, in Abalos v. Dr. Macatangay, Jr.,[68] we reiterated our long-standing ruling
that:
[P]rior to the liquidation of the conjugal partnership, the interest of each spouse
in the conjugal assets is inchoate, a mere expectancy, which constitutes neither
a legal nor an equitable estate, and does not ripen into title until it appears that
there are assets in the community as a result of the liquidation and settlement.
The interest of each spouse is limited to the net remainder or remanente liquido
(haber ganancial) resulting from the liquidation of the affairs of the partnership
after its dissolution. Thus, the right of the husband or wife to one-half of the
conjugal assets does not vest until the dissolution and liquidation of the conjugal
partnership, or after dissolution of the marriage, when it is finally determined
that, after settlement of conjugal obligations, there are net assets left which can
be divided between the spouses or their respective heirs.[69] (Citations omitted)
Finally, as earlier discussed, the trial court has already decided in its Decision
dated October 10, 2005 that the applicable law in this case is Article 129(7) of
the Family Code.[70] The petitioner did not file a motion for reconsideration nor
a notice of appeal. Thus, the petitioner is now precluded from questioning the
trial court's decision since it has become final and executory. The doctrine of
immutability and unalterability of a final judgment prevents us from disturbing
the Decision dated October 10, 2005 because final and executory decisions can
no longer be reviewed nor reversed by this Court.[71]
From the above discussions, Article 129 of the Family Code clearly applies to
the present case since the parties' property relation is governed by the system

9 | Page

of relative community or conjugal partnership of gains and since the trial court's
Decision has attained finality and immutability.
The net profits of the conjugal partnership of gains are all the fruits of the
separate properties of the spouses and the products of their labor and industry.

The petitioner inquires from us the meaning of net profits earned by the conjugal
partnership for purposes of effecting the forfeiture authorized under Article 63 of
the Family Code. He insists that since there is no other provision under the
Family Code, which defines net profits earned subject of forfeiture as a result of
legal separation, then Article 102 of the Family Code applies.
What does Article 102 of the Family Code say? Is the computation of net profits
earned in the conjugal partnership of gains the same with the computation of
net profits earned in the absolute community?
Now, we clarify.
First and foremost, we must distinguish between the applicable law as to the
property relations between the parties and the applicable law as to the definition
of net profits. As earlier discussed, Article 129 of the Family Code applies as to
the property relations of the parties. In other words, the computation and the
succession of events will follow the provisions under Article 129 of the said
Code. Moreover, as to the definition of net profits, we cannot but refer to Article
102(4) of the Family Code, since it expressly provides that for purposes of
computing the net profits subject to forfeiture under Article 43, No. (2) and
Article 63, No. (2), Article 102(4) applies. In this provision, net profits shall be
the increase in value between the market value of the community property at
the time of the celebration of the marriage and the market value at the time of its
dissolution.[72] Thus, without any iota of doubt, Article 102(4) applies to both the
dissolution of the absolute community regime under Article 102 of the Family
Code, and to the dissolution of the conjugal partnership regime under Article
129 of the Family Code. Where lies the difference? As earlier shown, the
difference lies in the processes used under the dissolution of the absolute
community regime under Article 102 of the Family Code, and in the processes
used under the dissolution of the conjugal partnership regime under Article 129
of the Family Code.
Let us now discuss the difference in the processes between the absolute
community regime and the conjugal partnership regime.
On Absolute Community Regime:

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.[73]
Under Article 102 of the Family Code, upon dissolution of marriage, an inventory
is prepared, listing separately all the properties of the absolute community and
the exclusive properties of each; then the debts and obligations of the absolute
community are paid out of the absolute community's assets and if the
community's properties are insufficient, the separate properties of each of the
couple will be solidarily liable for the unpaid balance. Whatever is left of the
separate properties will be delivered to each of them. The net remainder of the
absolute community is its net assets, which shall be divided between the
husband and the wife; and for purposes of computing the net profits subject to
forfeiture, said profits shall be the increase in value between the market value of
the community property at the time of the celebration of the marriage and the
market value at the time of its dissolution.[74]
Applying Article 102 of the Family Code, the net profits requires that we first find
the market value of the properties at the time of the community's dissolution.
From the totality of the market value of all the properties, we subtract the debts
and obligations of the absolute community and this result to the net assets or
net remainder of the properties of the absolute community, from which we
deduct the market value of the properties at the time of marriage, which then
results to the net profits.[75]
Granting without admitting that Article 102 applies to the instant case, let us see
what will happen if we apply Article 102:
(a) According to the trial court's finding of facts, both husband and wife have no
separate properties, thus, the remaining properties in the list above are all part
of the absolute community. And its market value at the time of the dissolution of
the absolute community constitutes the market value at dissolution.
(b) Thus, when the petitioner and the respondent finally were legally separated,
all the properties which remained will be liable for the debts and obligations of
the community. Such debts and obligations will be subtracted from the market
value at dissolution.

10 | P a g e

(c) What remains after the debts and obligations have been paid from the total
assets of the absolute community constitutes the net remainder or net asset.
And from such net asset/remainder of the petitioner and respondent's remaining
properties, the market value at the time of marriage will be subtracted and the
resulting totality constitutes the net profits.
(d) Since both husband and wife have no separate properties, and nothing
would be returned to each of them, what will be divided equally between them is
simply the net profits. However, in the Decision dated October 10, 2005, the trial
court forfeited the half-share of the petitioner in favor of his children. Thus, if we
use Article 102 in the instant case (which should not be the case), nothing is left
to the petitioner since both parties entered into their marriage without bringing
with them any property.
On Conjugal Partnership Regime:
Before we go into our disquisition on the Conjugal Partnership Regime, we
make it clear that Article 102(4) of the Family Code applies in the instant case
for purposes only of defining net profit. As earlier explained, the definition of net
profits in Article 102(4) of the Family Code applies to both the absolute
community regime and conjugal partnership regime as provided for under Article
63, No. (2) of the Family Code, relative to the provisions on Legal Separation.
Now, when a couple enters into a regime of conjugal partnership of gains under
Article 142 of the Civil Code, the husband and the wife place in common fund
the fruits of their separate property and 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.
[76] From the foregoing provision, each of the couple has his and her own
property and debts. The law does not intend to effect a mixture or merger of
those debts or properties between the spouses. Rather, it establishes a
complete separation of capitals.[77]
Considering that the couple's marriage has been dissolved under the Family
Code, Article 129 of the same Code applies in the liquidation of the couple's
properties in the event that the conjugal partnership of gains is dissolved, to wit:
Art. 129. Upon the dissolution of the conjugal partnership regime, the following
procedure shall apply:
(1) An inventory shall be prepared, listing separately all the properties of the
conjugal partnership and the exclusive properties of each spouse.

(2) Amounts advanced by the conjugal partnership in payment of personal debts

and obligations of either spouse shall be credited to the conjugal partnership as
an asset thereof.

(a) An inventory of all the actual properties shall be made, separately listing the
couple's conjugal properties and their separate properties.[78] In the instant
case, the trial court found that the couple has no separate properties when they
married.[79] Rather, the trial court identified the following conjugal properties, to
wit:

(3) Each spouse shall be reimbursed for the use of his or her exclusive funds in
the acquisition of property or for the value of his or her exclusive property, the
ownership of which has been vested by law in the conjugal partnership.

1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;

2. coffee mill in Durian, Las Nieves, Agusan del Norte;

(4) The debts and obligations of the conjugal partnership shall be paid out of the
conjugal assets. In case of insufficiency of said assets, the spouses shall be
solidarily liable for the unpaid balance with their separate properties, in
accordance with the provisions of paragraph (2) of Article 121.
(5) Whatever remains of the exclusive properties of the spouses shall thereafter
be delivered to each of them.
(6) Unless the owner had been indemnified from whatever source, the loss or
deterioration of movables used for the benefit of the family, belonging to either
spouse, even due to fortuitous event, shall be paid to said spouse from the
conjugal funds, if any.
(7) The net remainder of the conjugal partnership properties shall constitute the
profits, which shall be divided equally between husband and wife, unless a
different proportion or division was agreed upon in the marriage settlements or
unless there has been a voluntary waiver or forfeiture of such share as provided
in this Code.
(8) The presumptive legitimes of the common children shall be delivered upon
the partition in accordance with Article 51.
(9) In the partition of the properties, the conjugal dwelling and the lot on which it
is situated shall, unless otherwise agreed upon by the parties, be adjudicated to
the spouse with whom the majority of the common children choose to remain.
Children below the age of seven years are deemed to have chosen the mother,
unless the court has decided otherwise. In case there is no such majority, the
court shall decide, taking into consideration the best interests of said children.

In the normal course of events, the following are the steps in the liquidation of
the properties of the spouses:

11 | P a g e

3. corn mill in Casiklan, Las Nieves, Agusan del Norte;

4. coffee mill in Esperanza, Agusan del Sur;
5. a parcel of land with an area of 1,200 square meters located in Tungao,
Butuan City;
6. a parcel of agricultural land with an area of 5 hectares located in Manila de
Bugabos, Butuan City;
7. a parcel of land with an area of 84 square meters located in Tungao, Butuan
City;
8. Bashier Bon Factory located in Tungao, Butuan City.[80]

(b) Ordinarily, the benefit received by a spouse from the conjugal partnership
during the marriage is returned in equal amount to the assets of the conjugal
partnership;[81] and if the community is enriched at the expense of the separate
properties of either spouse, a restitution of the value of such properties to their
respective owners shall be made.[82]
(c) Subsequently, the couple's conjugal partnership shall pay the debts of the
conjugal partnership; while the debts and obligation of each of the spouses shall
be paid from their respective separate properties. But if the conjugal partnership
is not sufficient to pay all its debts and obligations, the spouses with their
separate properties shall be solidarily liable.[83]
(d) Now, what remains of the separate or exclusive properties of the husband
and of the wife shall be returned to each of them.[84] In the instant case, since it
was already established by the trial court that the spouses have no separate
properties,[85] there is nothing to return to any of them. The listed properties

above are considered part of the conjugal partnership. Thus, ordinarily, what
remains in the above-listed properties should be divided equally between the
spouses and/or their respective heirs.[86] However, since the trial court found
the petitioner the guilty party, his share from the net profits of the conjugal
partnership is forfeited in favor of the common children, pursuant to Article 63(2)
of the Family Code. Again, lest we be confused, like in the absolute community
regime, nothing will be returned to the guilty party in the conjugal partnership
regime, because there is no separate property which may be accounted for in
the guilty party's favor.
In the discussions above, we have seen that in both instances, the petitioner is
not entitled to any property at all. Thus, we cannot but uphold the Decision
dated October 10, 2005 of the trial court. However, we must clarify, as we
already did above, the Order dated January 8, 2007.
WHEREFORE, the Decision dated October 10, 2005 of the Regional Trial
Court, Branch 1 of Butuan City is AFFIRMED. Acting on the Motion for
Clarification dated July 7, 2006 in the Regional Trial Court, the Order dated
January 8, 2007 of the Regional Trial Court is hereby CLARIFIED in accordance
with the above discussions.
SO ORDERED.

SECOND DIVISION
G.R. No. 163744

February 29, 2008

METROPOLITAN BANK AND TRUST CO., petitioner,

vs.
NICHOLSON PASCUAL a.k.a. NELSON PASCUAL, respondent.
DECISION
VELASCO, JR., J.:
Respondent Nicholson Pascual and Florencia Nevalga were married on
January 19, 1985. During the union, Florencia bought from spouses Clarito and
Belen Sering a 250-square meter lot with a three-door apartment standing
thereon located in Makati City. Subsequently, Transfer Certificate of Title (TCT)
No. S-101473/T-510 covering the purchased lot was canceled and, in lieu
thereof, TCT No. 1562831 of the Registry of Deeds of Makati City was issued in
the name of Florencia, "married to Nelson Pascual" a.k.a. Nicholson Pascual.
In 1994, Florencia filed a suit for the declaration of nullity of marriage under
Article 36 of the Family Code, docketed as Civil Case No. Q-95-23533. After
trial, the Regional Trial Court (RTC), Branch 94 in Quezon City rendered, on
July 31, 1995, a Decision,2 declaring the marriage of Nicholson and Florencia
null and void on the ground of psychological incapacity on the part of Nicholson.
In the same decision, the RTC, inter alia, ordered the dissolution and liquidation
of the ex-spouses conjugal partnership of gains. Subsequent events saw the
couple going their separate ways without liquidating their conjugal partnership.
On April 30, 1997, Florencia, together with spouses Norberto and Elvira
Oliveros, obtained a PhP 58 million loan from petitioner Metropolitan Bank and
Trust Co. (Metrobank). To secure the obligation, Florencia and the spouses
Oliveros executed several real estate mortgages (REMs) on their properties,
including one involving the lot covered by TCT No. 156283. Among the
documents Florencia submitted to procure the loan were a copy of TCT No.
156283, a photocopy of the marriage-nullifying RTC decision, and a document
denominated as "Waiver" that Nicholson purportedly executed on April 9, 1995.
The waiver, made in favor of Florencia, covered the conjugal properties of the
ex-spouses listed therein, but did not incidentally include the lot in question.

Republic of the Philippines

SUPREME COURT
Manila

12 | P a g e

Due to the failure of Florencia and the spouses Oliveros to pay their loan
obligation when it fell due, Metrobank, on November 29, 1999, initiated
foreclosure proceedings under Act No. 3135, as amended, before the Office of
the Notary Public of Makati City. Subsequently, Metrobank caused the

publication of the notice of sale on three issues of Remate.3 At the auction sale
on January 21, 2000, Metrobank emerged as the highest bidder.

that the disputed property may not be validly encumbered by Florencia without
Nicholsons consent.

Getting wind of the foreclosure proceedings, Nicholson filed on June 28, 2000,
before the RTC in Makati City, a Complaint to declare the nullity of the mortgage
of the disputed property, docketed as Civil Case No. 00-789 and eventually
raffled to Branch 65 of the court. In it, Nicholson alleged that the property, which
is still conjugal property, was mortgaged without his consent.

The RTC also found the deed of waiver Florencia submitted to Metrobank to be
fatally defective. For let alone the fact that Nicholson denied executing the same
and that the signature of the notarizing officer was a forgery, the waiver
document was allegedly executed on April 9, 1995 or a little over three months
before the issuance of the RTC decision declaring the nullity of marriage
between Nicholson and Florencia.

Metrobank, in its Answer with Counterclaim and Cross-Claim,4 alleged that the
disputed lot, being registered in Florencias name, was paraphernal. Metrobank
also asserted having approved the mortgage in good faith.
Florencia did not file an answer within the reglementary period and, hence, was
subsequently declared in default.
The RTC Declared the REM Invalid
After trial on the merits, the RTC rendered, on September 24, 2001, judgment
finding for Nicholson. The fallo reads:
PREMISES CONSIDERED, the Court renders judgment declaring the real
estate mortgage on the property covered by [TCT] No. 156283 of the Registry of
Deeds for the City of Makati as well as all proceedings thereon null and void.
The Court further orders defendants [Metrobank and Florencia] jointly and
severally to pay plaintiff [Nicholson]:

The trial court also declared Metrobank as a mortgagee in bad faith on account
of negligence, stating the observation that certain data appeared in the
supporting contract documents, which, if properly scrutinized, would have put
the bank on guard against approving the mortgage. Among the data referred to
was the date of execution of the deed of waiver.
The RTC dismissed Metrobanks counterclaim and cross-claim against the exspouses.
Metrobanks motion for reconsideration was denied. Undeterred, Metrobank
appealed to the Court of Appeals (CA), the appeal docketed as CA-G.R. CV No.
74874.
The CA Affirmed with Modification the RTCs Decision
On January 28, 2004, the CA rendered a Decision affirmatory of that of the
RTC, except for the award therein of moral damages and attorneys fees which
the CA ordered deleted. The dispositive portion of the CAs Decision reads:

1. PhP100,000.00 by way of moral damages;

2. PhP75,000.00 by way of attorneys fees; and

WHEREFORE, premises considered, the appealed decision is hereby

AFFIRMED WITH MODIFICATION with respect to the award of moral damages
and attorneys fees which is hereby DELETED.

3. The costs.
SO ORDERED.6
SO ORDERED.5
Even as it declared the invalidity of the mortgage, the trial court found the said
lot to be conjugal, the same having been acquired during the existence of the
marriage of Nicholson and Florencia. In so ruling, the RTC invoked Art. 116 of
the Family Code, providing that "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." To the trial court, Metrobank had not overcome the
presumptive conjugal nature of the lot. And being conjugal, the RTC concluded

13 | P a g e

Like the RTC earlier held, the CA ruled that Metrobank failed to overthrow the
presumption established in Art. 116 of the Family Code. And also decreed as
going against Metrobank was Florencias failure to comply with the prescriptions
of the succeeding Art. 124 of the Code on the disposition of conjugal partnership
property. Art. 124 states:
Art. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. In case of disagreement, the husbands
decision shall prevail, subject to recourse to the court by the wife for proper
remedy 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 disposition or
encumbrance without authority of the court or 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.
As to the deletion of the award of moral damages and attorneys fees, the CA, in
gist, held that Metrobank did not enter into the mortgage contract out of ill-will or
for some fraudulent purpose, moral obliquity, or like dishonest considerations as
to justify damages.
Metrobank moved but was denied reconsideration by the CA.
Thus, Metrobank filed this Petition for Review on Certiorari under Rule 45,
raising the following issues for consideration:
a. Whether or not the [CA] erred in declaring subject property as conjugal by
applying Article 116 of the Family Code.
b. Whether or not the [CA] erred in not holding that the declaration of nullity of
marriage between the respondent Nicholson Pascual and Florencia Nevalga
ipso facto dissolved the regime of community of property of the spouses.
c. Whether or not the [CA] erred in ruling that the petitioner is an innocent
purchaser for value.7

Art. 160 of the Civil Code applies when there is proof that the property was
acquired during the marriage. Metrobank adds, however, that for the
presumption of conjugal ownership to operate, evidence must be adduced to
prove that not only was the property acquired during the marriage but that
conjugal funds were used for the acquisition, a burden Nicholson allegedly
failed to discharge.
To bolster its thesis on the paraphernal nature of the disputed property,
Metrobank cites Francisco v. Court of Appeals9 and Jocson v. Court of
Appeals,10 among other cases, where this Court held that a property registered
in the name of a certain person with a description of being married is no proof
that the property was acquired during the spouses marriage.
On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance
Corporation11 and Wong v. IAC,12 contends that Metrobank failed to overcome
the legal presumption that the disputed property is conjugal. He asserts that
Metrobanks arguments on the matter of presumption are misleading as only
one postulate needs to be shown for the presumption in favor of conjugal
ownership to arise, that is, the fact of acquisition during marriage. Nicholson
dismisses, as inapplicable, Francisco and Jocson, noting that they are relevant
only when there is no indication as to the exact date of acquisition of the
property alleged to be conjugal.
As a final point, Nicholson invites attention to the fact that Metrobank had
virtually recognized the conjugal nature of the property in at least three
instances. The first was when the bank lumped him with Florencia in Civil Case
No. 00-789 as co-mortgagors and when they were referred to as "spouses" in
the petition for extrajudicial foreclosure of mortgage. Then came the published
notice of foreclosure sale where Nicholson was again designated as comortgagor. And third, in its demand-letter13 to vacate the disputed lot,
Metrobank addressed Nicholson and Florencia as "spouses," albeit the finality
of the decree of nullity of marriage between them had long set in.

Our Ruling
We find for Nicholson.
A modification of the CAs Decision is in order.
The Disputed Property is Conjugal
It is Metrobanks threshold posture that Art. 160 of the Civil Code providing that
"[a]ll property of the marriage is presumed to belong to the conjugal partnership,
unless it be prove[n] that it pertains exclusively to the husband or to the wife,"
applies. To Metrobank, Art. 116 of the Family Code could not be of governing
application inasmuch as Nicholson and Florencia contracted marriage before
the effectivity of the Family Code on August 3, 1988. Citing Manongsong v.
Estimo,8 Metrobank asserts that the presumption of conjugal ownership under

14 | P a g e

First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not Art.
116 of the Family Code, is the applicable legal provision since the property was
acquired prior to the enactment of the Family Code, it errs in its theory that,
before conjugal ownership could be legally presumed, there must be a showing
that the property was acquired during marriage using conjugal funds. Contrary
to Metrobanks submission, the Court did not, in Manongsong,14 add the matter
of the use of conjugal funds as an essential requirement for the presumption of
conjugal ownership to arise. Nicholson is correct in pointing out that only proof
of acquisition during the marriage is needed to raise the presumption that the
property is conjugal. Indeed, if proof on the use of conjugal is still required as a

necessary condition before the presumption can arise, then the legal
presumption set forth in the law would veritably be a superfluity. As we stressed
in Castro v. Miat:
Petitioners also overlook Article 160 of the New Civil Code. It provides that "all
property of the marriage is presumed to be conjugal partnership, unless it be
prove[n] that it pertains exclusively to the husband or to the wife." This article
does not require proof that the property was acquired with funds of the
partnership. The presumption applies even when the manner in which the
property was acquired does not appear.15 (Emphasis supplied.)
Second, Francisco and Jocson do not reinforce Metrobanks theory. Metrobank
would thrust on the Court, invoking the two cases, the argument that the
registration of the property in the name of "Florencia Nevalga, married to Nelson
Pascual" operates to describe only the marital status of the title holder, but not
as proof that the property was acquired during the existence of the marriage.

(7) The net remainder of the conjugal partnership properties shall constitute the
profits, which shall be divided equally between husband and wife, unless a
different proportion or division was agreed upon in the marriage settlements or
unless there has been a voluntary waiver or forfeiture of such share as provided
in this Code.
Apropos the aforequoted provision, Metrobank asserts that the waiver executed
by Nicholson, effected as it were before the dissolution of the conjugal property
regime, vested on Florencia full ownership of all the properties acquired during
the marriage.
Nicholson counters that the mere declaration of nullity of marriage, without
more, does not automatically result in a regime of complete separation when it
is shown that there was no liquidation of the conjugal assets.
We again find for Nicholson.

Metrobank is wrong. As Nicholson aptly points out, if proof obtains on the

acquisition of the property during the existence of the marriage, then the
presumption of conjugal ownership applies. The correct lesson of Francisco and
Jocson is that proof of acquisition during the marital coverture is a condition sine
qua non for the operation of the presumption in favor of conjugal ownership.
When there is no showing as to when the property was acquired by the spouse,
the fact that a title is in the name of the spouse is an indication that the property
belongs exclusively to said spouse.16
The Court, to be sure, has taken stock of Nicholsons arguments regarding
Metrobank having implicitly acknowledged, thus being in virtual estoppel to
question, the conjugal ownership of the disputed lot, the bank having named the
former in the foreclosure proceedings below as either the spouse of Florencia or
her co-mortgagor. It is felt, however, that there is no compelling reason to delve
into the matter of estoppel, the same having been raised only for the first time in
this petition. Besides, however Nicholson was designated below does not really
change, one way or another, the classification of the lot in question.
Termination of Conjugal Property Regime does
not ipso facto End the Nature of Conjugal Ownership
Metrobank next maintains that, contrary to the CAs holding, Art. 129 of the
Family Code is inapplicable. Art. 129 in part reads:
Art. 129. Upon the dissolution of the conjugal partnership regime, the following
procedure shall apply:
xxxx

15 | P a g e

While the declared nullity of marriage of Nicholson and Florencia severed their
marital bond and dissolved the conjugal partnership, the character of the
properties acquired before such declaration continues to subsist as conjugal
properties until and after the liquidation and partition of the partnership. This
conclusion holds true whether we apply Art. 129 of the Family Code on
liquidation of the conjugal partnerships assets and liabilities which is generally
prospective in application, or Section 7, Chapter 4, Title IV, Book I (Arts. 179 to
185) of the Civil Code on the subject, Conjugal Partnership of Gains. For, the
relevant provisions of both Codes first require the liquidation of the conjugal
properties before a regime of separation of property reigns.
In Dael v. Intermediate Appellate Court, we ruled that pending its liquidation
following its dissolution, the conjugal partnership of gains is converted into an
implied ordinary co-ownership among the surviving spouse and the other heirs
of the deceased.17
In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the
property relationship between the former spouses, where:
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. (Emphasis supplied.)

In the case at bar, Florencia constituted the mortgage on the disputed lot on
April 30, 1997, or a little less than two years after the dissolution of the conjugal
partnership on July 31, 1995, but before the liquidation of the partnership. Be
that as it may, what governed the property relations of the former spouses when
the mortgage was given is the aforequoted Art. 493. Under it, Florencia has the
right to mortgage or even sell her one-half (1/2) undivided interest in the
disputed property even without the consent of Nicholson. However, the rights of
Metrobank, as mortgagee, are limited only to the 1/2 undivided portion that
Florencia owned. Accordingly, the mortgage contract insofar as it covered the
remaining 1/2 undivided portion of the lot is null and void, Nicholson not having
consented to the mortgage of his undivided half.

obliquity or breach of a known duty for some interest or ill-will that partakes of
fraud that would justify damages.

The conclusion would have, however, been different if Nicholson indeed duly
waived his share in the conjugal partnership. But, as found by the courts a quo,
the April 9, 1995 deed of waiver allegedly executed by Nicholson three months
prior to the dissolution of the marriage and the conjugal partnership of gains on
July 31, 1995 bore his forged signature, not to mention that of the notarizing
officer. A spurious deed of waiver does not transfer any right at all, albeit it may
become the root of a valid title in the hands of an innocent buyer for value.

PREMISES CONSIDERED, the real estate mortgage on the property covered

by TCT No. 156283 of the Registry of Deeds of Makati City and all proceedings
thereon are NULL and VOID with respect to the undivided 1/2 portion of the
disputed property owned by Nicholson, but VALID with respect to the other
undivided 1/2 portion belonging to Florencia.

Upon the foregoing perspective, Metrobanks right, as mortgagee and as the

successful bidder at the auction of the lot, is confined only to the 1/2 undivided
portion thereof heretofore pertaining in ownership to Florencia. The other
undivided half belongs to Nicholson. As owner pro indiviso of a portion of the lot
in question, Metrobank may ask for the partition of the lot and its property rights
"shall be limited to the portion which may be allotted to [the bank] in the division
upon the termination of the co-ownership."18 This disposition is in line with the
well-established principle that the binding force of a contract must be
recognized as far as it is legally possible to do soquando res non valet ut ago,
valeat quantum valere potest.19

WHEREFORE, the petition is PARTLY GRANTED. The appealed Decision of

the CA dated January 28, 2004, upholding with modification the Decision of the
RTC, Branch 65 in Makati City, in Civil Case No. 00-789, is AFFIRMED with the
MODIFICATION that the REM over the lot covered by TCT No. 156283 of the
Registry of Deeds of Makati City is hereby declared valid only insofar as the pro
indiviso share of Florencia thereon is concerned.
As modified, the Decision of the RTC shall read:

The claims of Nicholson for moral damages and attorneys fees are DENIED for
lack of merit.
No pronouncement as to costs.
SO ORDERED.

In view of our resolution on the validity of the auction of the lot in favor of
Metrobank, there is hardly a need to discuss at length whether or not Metrobank
was a mortgagee in good faith. Suffice it to state for the nonce that where the
mortgagee is a banking institution, the general rule that a purchaser or
mortgagee of the land need not look beyond the four corners of the title is
inapplicable.20 Unlike private individuals, it behooves banks to exercise greater
care and due diligence before entering into a mortgage contract. The
ascertainment of the status or condition of the property offered as security and
the validity of the mortgagors title must be standard and indispensable part of
the banks operation.21 A bank that failed to observe due diligence cannot be
accorded the status of a bona fide mortgagee,22 as here.
But as found by the CA, however, Metrobanks failure to comply with the due
diligence requirement was not the result of a dishonest purpose, some moral

16 | P a g e

FIRST DIVISION

[G.R. No. 122749. July 31, 1996]

ANTONIO A. S. VALDES, petitioner, vs. REGIONAL TRIAL COURT, BRANCH
102, QUEZON CITY, and CONSUELO M. GOMEZ-VALDES, respondents.
DECISION
VITUG, J.:
The petition for review bewails, purely on a question of law, an alleged error
committed by the Regional Trial Court in Civil Case No. Q-92-12539. Petitioner
avers that the court a quo has failed to apply the correct law that should govern
the disposition of a family dwelling in a situation where a marriage is declared
void ab initio because of psychological incapacity on the part of either or both of
the parties to the contract.
The pertinent facts giving rise to this incident are, by and large, not in dispute.
Antonio Valdes and Consuelo Gomez were married on 05 January 1971.
Begotten during the marriage were five children. In a petition, dated 22 June
1992, Valdes sought the declaration of nullity of the marriage pursuant to Article
36 of the Family Code (docketed Civil Case No. Q-92-12539, Regional Trial
Court of Quezon City, Branch 102). After hearing the parties following the
joinder of issues, the trial court,[1] in its decision of 29 July 1994, granted the
petition; viz:
"WHEREFORE, judgment is hereby rendered as follows:
"(1) The marriage of petitioner Antonio Valdes and respondent Consuelo
Gomez-Valdes is hereby declared null and void under Article 36 of the Family
Code on the ground of their mutual psychological incapacity to comply with their
essential marital obligations;
"(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela
Rosario shall choose which parent they would want to stay with.

"Let a copy of this decision be furnished the Local Civil Registrar of

Mandaluyong, Metro Manila, for proper recording in the registry of
marriages."[2] (Italics ours)
Consuelo Gomez sought a clarification of that portion of the decision directing
compliance with Articles 50, 51 and 52 of the Family Code. She asserted that
the Family Code contained no provisions on the procedure for the liquidation of
common property in "unions without marriage." Parenthetically, during the
hearing on the motion, the children filed a joint affidavit expressing their desire
to remain with their father, Antonio Valdes, herein petitioner.
In an Order, dated 05 May 1995, the trial court made the following clarification:
"Consequently, considering that Article 147 of the Family Code explicitly
provides that the property acquired by both parties during their union, in the
absence of proof to the contrary, are presumed to have been obtained through
the joint efforts of the parties and will be owned by them in equal shares, plaintiff
and defendant will own their 'family home' and all their other properties for that
matter in equal shares.
"In the liquidation and partition of the properties owned in common by the
plaintiff and defendant, the provisions on co-ownership found in the Civil Code
shall apply."[3] (Italics supplied)
In addressing specifically the issue regarding the disposition of the family
dwelling, the trial court said:
"Considering that this Court has already declared the marriage between
petitioner and respondent as null and void ab initio, pursuant to Art. 147, the
property regime of petitioner and respondent shall be governed by the rules on
co-ownership.

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

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

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

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

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

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

17 | P a g e

"I

"Article 147 of the Family Code does not apply to cases where the parties are
psychological incapacitated.
"II
"Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code
govern the disposition of the family dwelling in cases where a marriage is
declared void ab initio, including a marriage declared void by reason of the
psychological incapacity of the spouses.
"III
"Assuming arguendo that Article 147 applies to marriages declared void ab initio
on the ground of the psychological incapacity of a spouse, the same may be
read consistently with Article 129.
"IV
"It is necessary to determine the parent with whom majority of the children wish
to stay."[5]
The trial court correctly applied the law. In a void marriage, regardless of the
cause thereof, the property relations of the parties during the period of
cohabitation is governed by the provisions of Article 147 or Article 148, such as
the case may be, of the Family Code. Article 147 is a remake of Article 144 of
the Civil Code as interpreted and so applied in previous cases;[6] it provides:
"ART. 147. When a man and a woman who are capacitated to marry each other,
live exclusively with each other as husband and wife without the benefit of
marriage or under a void marriage, their wages and salaries shall be owned by
them in equal shares and the property acquired by both of them through their
work or industry shall be governed by the rules on co-ownership.
"In the absence of proof to the contrary, properties acquired while they lived
together shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be owned by them in equal shares. For purposes of this
Article, a party who did not participate in the acquisition by the other party of any
property shall be deemed to have contributed jointly in the acquisition thereof if
the former's efforts consisted in the care and maintenance of the family and of
the household.
"Neither party can encumber or dispose by acts inter vivos of his or her share in
the property acquired during cohabitation and owned in common, without the
consent of the other, until after the termination of their cohabitation.

18 | P a g e

"When only one of the parties to a void marriage is in good faith, the share of
the party in bad faith in the co-ownership shall be forfeited in favor of their
common children. In case of default of or waiver by any or all of the common
children or their descendants, each vacant share shall belong to the respective
surviving descendants. In the absence of descendants, such share shall belong
to the innocent party. In all cases, the forfeiture shall take place upon
termination of the cohabitation."
This peculiar kind of co-ownership applies when a man and a woman, suffering
no legal impediment to marry each other, so exclusively live together as
husband and wife under a void marriage or without the benefit of marriage. The
term "capacitated" in the provision (in the first paragraph of the law) refers to the
legal capacity of a party to contract marriage, i.e., any "male or female of the
age of eighteen years or upwards not under any of the impediments mentioned
in Articles 37 and 38"[7] of the Code.
Under this property regime, property acquired by both spouses through their
work and industry shall be governed by the rules on equal co-ownership. Any
property acquired during the union is prima facie presumed to have been
obtained through their joint efforts. A party who did not participate in the
acquisition of the property shall still be considered as having contributed thereto
jointly if said party's "efforts consisted in the care and maintenance of the family
household."[8] Unlike the conjugal partnership of gains, the fruits of the couple's
separate property are not included in the co-ownership.
Article 147 of the Family Code, in substance and to the above extent, has
clarified Article 144 of the Civil Code; in addition, the law now expressly
provides that
(a) Neither party can dispose or encumber by act inter vivos his or her share in
co-ownership property, without the consent of the other, during the period of
cohabitation; and
(b) In the case of a void marriage, any party in bad faith shall forfeit his or her
share in the co-ownership in favor of their common children; in default thereof or
waiver by any or all of the common children, each vacant share shall belong to
the respective surviving descendants, or still in default thereof, to the innocent
party. The forfeiture shall take place upon the termination of the cohabitation[9]
or declaration of nullity of the marriage.[10]
When the common-law spouses suffer from a legal impediment to marry or
when they do not live exclusively with each other (as husband and wife ),only
the property acquired by both of them through their actual joint contribution of
money, property or industry shall be owned in common and in proportion to their
respective contributions. Such contributions and corresponding shares,

however, are prima facie presumed to be equal. The share of any party who is
married to another shall accrue to the absolute community or conjugal
partnership, as the case may be, if so existing under a valid marriage. If the
party who has acted in bad faith is not validly married to another, his or her
share shall be forfeited in the manner already heretofore expressed.[11]
In deciding to take further cognizance of the issue on the settlement of the
parties' common property, the trial court acted neither imprudently nor
precipitately; a court which has jurisdiction to declare the marriage a nullity must
be deemed likewise clothed with authority to resolve incidental and
consequential matters. Nor did it commit a reversible error in ruling that
petitioner and private respondent own the "family home" and all their common
property in equal shares, as well as in concluding that, in the liquidation and
partition of the property owned in common by them, the provisions on coownership under the Civil Code, not Articles 50, 51 and 52, in relation to Articles
102 and 129,[12] of the Family Code, should aptly prevail. The rules set up to
govern the liquidation of either the absolute community or the conjugal
partnership of gains, the property regimes recognized for valid and voidable
marriages (in the latter case until the contract is annulled ),are irrelevant to the
liquidation of the co-ownership that exists between common-law spouses. The
first paragraph of Article 50 of the Family Code, applying paragraphs (2 ),(3 ),(4)
and (5) of Article 43,[13] relates only, by its explicit terms, to voidable marriages
and, exceptionally, to void marriages under Article 40[14] of the Code, i.e., the
declaration of nullity of a subsequent marriage contracted by a spouse of a prior
void marriage before the latter is judicially declared void. The latter is a special
rule that somehow recognizes the philosophy and an old doctrine that void
marriages are inexistent from the very beginning and no judicial decree is
necessary to establish their nullity. In now requiring for purposes of remarriage,
the declaration of nullity by final judgment of the previously contracted void
marriage, the present law aims to do away with any continuing uncertainty on
the status of the second marriage. It is not then illogical for the provisions of
Article 43, in relation to Articles 41[15] and 42,[16] of the Family Code, on the
effects of the termination of a subsequent marriage contracted during the
subsistence of a previous marriage to be made applicable pro hac vice. In all
other cases, it is not to be assumed that the law has also meant to have
coincident property relations, on the one hand, between spouses in valid and
voidable marriages (before annulment) and, on the other, between common-law
spouses or spouses of void marriages, leaving to ordain, in the latter case, the
ordinary rules on co-ownership subject to the provision of Article 147 and Article
148 of the Family Code. It must be stressed, nevertheless, even as it may
merely state the obvious, that the provisions of the Family Code on the "family
home," i.e., the provisions found in Title V, Chapter 2, of the Family Code,
remain in force and effect regardless of the property regime of the spouses.

WHEREFORE, the questioned orders, dated 05 May 1995 and 30 October

1995, of the trial court are AFFIRMED. No costs.
SO ORDERED.

SECOND DIVISION
ALAIN M. DIO , G.R. No. 178044

19 | P a g e

Petitioner,
Present:

CARPIO, J., Chairperson,

- versus - NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
MA. CARIDAD L. DIO, Promulgated:
Respondent. January 19, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION

CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 18 October 2006
Decision2 and the 12 March 2007 Order3 of the Regional Trial Court of Las Pias
City, Branch 254 (trial court) in Civil Case No. LP-01-0149.
The Antecedent Facts
Alain M. Dio (petitioner) and Ma. Caridad L. Dio (respondent) were childhood
friends and sweethearts. They started living together in 1984 until they decided
to separate in 1994. In 1996, petitioner and respondent decided to live together
again. On 14 January 1998, they were married before Mayor Vergel Aguilar of
Las Pias City.
On 30 May 2001, petitioner filed an action for Declaration of Nullity of Marriage
against respondent, citing psychological incapacity under Article 36 of the
Family Code. Petitioner alleged that respondent failed in her marital obligation
to give love and support to him, and had abandoned her responsibility to the

20 | P a g e

family, choosing instead to go on shopping sprees and gallivanting with her

friends that depleted the family assets. Petitioner further alleged that respondent
was not faithful, and would at times become violent and hurt him.
Extrajudicial service of summons was effected upon respondent who, at the
time of the filing of the petition, was already living in the United States of
America. Despite receipt of the summons, respondent did not file an answer to
the petition within the reglementary period. Petitioner later learned that
respondent filed a petition for divorce/dissolution of her marriage with petitioner,
which was granted by the Superior Court of California on 25 May 2001.
Petitioner also learned that on 5 October 2001, respondent married a certain
Manuel V. Alcantara.
On 30 April 2002, the Office of the Las Pias prosecutor found that there were no
indicative facts of collusion between the parties and the case was set for trial on
the merits.
Dr. Nedy L. Tayag (Dr. Tayag), a clinical psychologist, submitted a psychological
report establishing that respondent was suffering from Narcissistic Personality
Disorder which was deeply ingrained in her system since her early formative
years. Dr. Tayag found that respondents disorder was long-lasting and by
nature, incurable.
In its 18 October 2006 Decision, the trial court granted the petition on the
ground that respondent was psychologically incapacited to comply with the
essential marital obligations at the time of the celebration of the marriage.
The Decision of the Trial Court
The trial court ruled that based on the evidence presented, petitioner was able
to establish respondents psychological incapacity. The trial court ruled that even
without Dr. Tayags psychological report, the allegations in the complaint,
substantiated in the witness stand, clearly made out a case of psychological
incapacity against respondent. The trial court found that respondent committed
acts which hurt and embarrassed petitioner and the rest of the family, and that
respondent failed to observe mutual love, respect and fidelity required of her
under Article 68 of the Family Code. The trial court also ruled that respondent
abandoned petitioner when she obtained a divorce abroad and married another
man.
The dispositive portion of the trial courts decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1.
Declaring the marriage between plaintiff ALAIN M. DIO and defendant MA.
CARIDAD L. DIO on January 14, 1998, and all its effects under the law, as
NULL and VOID from the beginning; and

partition, and distribution of the parties properties under Article 147 of the Family
Code.
The Ruling of this Court

2.

Dissolving the regime of absolute community of property.

The petition has merit.

A DECREE OF ABSOLUTE NULLITY OF MARRIAGE shall only be issued upon

compliance with Article[s] 50 and 51 of the Family Code.
Let copies of this Decision be furnished the parties, the Office of the Solicitor
General, Office of the City Prosecutor, Las Pias City and the Office of the Local
Civil Registrar of Las Pias City, for their information and guidance.

Petitioner assails the ruling of the trial court ordering that a decree of absolute
nullity of marriage shall only be issued after liquidation, partition, and distribution
of the parties properties under Article 147 of the Family Code. Petitioner argues
that Section 19(1) of the Rule on Declaration of Absolute Nullity of Null
Marriages and Annulment of Voidable Marriages6 (the Rule) does not apply to
Article 147 of the Family Code.

SO ORDERED.4
We agree with petitioner.
Petitioner filed a motion for partial reconsideration questioning the dissolution of
the absolute community of property and the ruling that the decree of annulment
shall only be issued upon compliance with Articles 50 and 51 of the Family
Code.
In its 12 March 2007 Order, the trial court partially granted the motion and
modified its 18 October 2006 Decision as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1) Declaring the marriage between plaintiff ALAIN M. DIO and defendant MA.
CARIDAD L. DIO on January 14, 1998, and all its effects under the law, as
NULL and VOID from the beginning; and
2) Dissolving the regime of absolute community of property.
A DECREE OF ABSOLUTE NULLITY OF MARRIAGE shall be issued after
liquidation, partition and distribution of the parties properties under Article 147 of
the Family Code.
Let copies of this Order be furnished the parties, the Office of the Solicitor
General, the Office of the City Prosecutor of Las Pias City and the Local Civil
Registrar of Las Pias City, for their information and guidance.5
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the trial court erred when it ordered that a
decree of absolute nullity of marriage shall only be issued after liquidation,

21 | P a g e

The Court has ruled in Valdes v. RTC, Branch 102, Quezon City that in a void
marriage, regardless of its cause, the property relations of the parties during the
period of cohabitation is governed either by Article 147 or Article 148 of the
Family Code.7 Article 147 of the Family Code applies to union of parties who
are legally capacitated and not barred by any impediment to contract marriage,
but whose marriage is nonetheless void,8 such as petitioner and respondent in
the case before the Court.
Article 147 of the Family Code provides:
Article 147. When a man and a woman who are capacitated to marry each
other, live exclusively with each other as husband and wife without the benefit of
marriage or under a void marriage, their wages and salaries shall be owned by
them in equal shares and the property acquired by both of them through their
work or industry shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they lived
together shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be owned by them in equal shares. For purposes of this
Article, a party who did not participate in the acquisition by the other party of any
property shall be deemed to have contributed jointly in the acquisition thereof if
the formers efforts consisted in the care and maintenance of the family and of
the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in
the property acquired during cohabitation and owned in common, without the
consent of the other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the
party in bad faith in the co-ownership shall be forfeited in favor of their common
children. In case of default of or waiver by any or all of the common children or
their descendants, each vacant share shall belong to the respective surviving
descendants. In the absence of descendants, such share shall belong to the
innocent party. In all cases, the forfeiture shall take place upon termination of
the cohabitation.
For Article 147 of the Family Code to apply, the following elements must be
present:
1.
2.
3.

The man and the woman must be capacitated to marry each other;
They live exclusively with each other as husband and wife; and
Their union is without the benefit of marriage, or their marriage is void.

All these elements are present in this case and there is no question that Article
147 of the Family Code applies to the property relations between petitioner and
respondent.
We agree with petitioner that the trial court erred in ordering that a decree of
absolute nullity of marriage shall be issued only after liquidation, partition and
distribution of the parties properties under Article 147 of the Family Code. The
ruling has no basis because Section 19(1) of the Rule does not apply to cases
governed under Articles 147 and 148 of the Family Code. Section 19(1) of the
Rule provides:
Sec. 19. Decision. - (1) If the court renders a decision granting the petition, it
shall declare therein that the decree of absolute nullity or decree of annulment
shall be issued by the court only after compliance with Articles 50 and 51 of the
Family Code as implemented under the Rule on Liquidation, Partition and
Distribution of Properties.
The pertinent provisions of the Family Code cited in Section 19(1) of the Rule
are:

Article 50. The effects provided for in paragraphs (2), (3), (4) and (5) of Article
43 and in Article 44 shall also apply in proper cases to marriages which are
declared void ab initio or annulled by final judgment under Articles 40 and 45.
The final judgment in such cases shall provide for the liquidation, partition and
distribution of the properties of the spouses, the custody and support of the

22 | P a g e

common children, and the delivery of their presumptive legitimes, unless such
matters had been adjudicated in previous judicial proceedings.
All creditors of the spouses as well as of the absolute community of the conjugal
partnership shall be notified of the proceedings for liquidation.
In the partition, the conjugal dwelling and the lot on which it is situated, shall be
adjudicated in accordance with the provisions of Articles 102 and 129.
Article 51. In said partition, the value of the presumptive legitimes of all common
children, computed as of the date of the final judgment of the trial court, shall be
delivered in cash, property or sound securities, unless the parties, by mutual
agreement judicially approved, had already provided for such matters.
The children of their guardian, or the trustee of their property, may ask for the
enforcement of the judgment.
The delivery of the presumptive legitimes
prejudice the ultimate successional rights
death of either or both of the parents; but
received under the decree of annulment or
as advances on their legitime.

herein prescribed shall in no way

of the children accruing upon the
the value of the properties already
absolute nullity shall be considered

It is clear from Article 50 of the Family Code that Section 19(1) of the Rule
applies only to marriages which are declared void ab initio or annulled by final
judgment under Articles 40 and 45 of the Family Code. In short, Article 50 of the
Family Code does not apply to marriages which are declared void ab initio
under Article 36 of the Family Code, which should be declared void without
waiting for the liquidation of the properties of the parties.
Article 40 of the Family Code contemplates a situation where a second or
bigamous marriage was contracted. Under Article 40, [t]he absolute nullity of a
previous marriage may be invoked for purposes of remarriage on the basis
solely of a final judgment declaring such previous marriage void. Thus we ruled:
x x x where the absolute nullity of a previous marriage is sought to be invoked
for purposes of contracting a second marriage, the sole basis acceptable in law,
for said projected marriage to be free from legal infirmity, is a final judgment
declaring a previous marriage void.
Article 45 of the Family Code, on the other hand, refers to voidable marriages,
meaning, marriages which are valid until they are set aside by final judgment of
a competent court in an action for annulment.12 In both instances under Articles
40 and 45, the marriages are governed either by absolute community of
property13 or conjugal partnership of gains14 unless the parties agree to a

complete separation of property in a marriage settlement entered into before the

marriage. Since the property relations of the parties is governed by absolute
community of property or conjugal partnership of gains, there is a need to
liquidate, partition and distribute the properties before a decree of annulment
could be issued. That is not the case for annulment of marriage under Article 36
of the Family Code because the marriage is governed by the ordinary rules on
co-ownership.
In this case, petitioners marriage to respondent was declared void under Article
3615 of the Family Code and not under Article 40 or 45. Thus, what governs the
liquidation of properties owned in common by petitioner and respondent are the
rules on co-ownership. In Valdes, the Court ruled that the property relations of
parties in a void marriage during the period of cohabitation is governed either by
Article 147 or Article 148 of the Family Code.16 The rules on co-ownership
apply and the properties of the spouses should be liquidated in accordance with
the Civil Code provisions on co-ownership. Under Article 496 of the Civil Code,
[p]artition may be made by agreement between the parties or by judicial
proceedings. x x x. It is not necessary to liquidate the properties of the spouses
in the same proceeding for declaration of nullity of marriage.
WHEREFORE, we AFFIRM the Decision of the trial court with the
MODIFICATION that the decree of absolute nullity of the marriage shall be
issued upon finality of the trial courts decision without waiting for the liquidation,
partition, and distribution of the parties properties under Article 147 of the Family
Code.
SO ORDERED.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164584

June 22, 2009

PHILIP MATTHEWS, Petitioner,

vs.
BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.
DECISION
NACHURA, J.:
Assailed in this petition for review on certiorari are the Court of Appeals (CA)
December 19, 2003 Decision1 and July 14, 2004 Resolution2 in CA-G.R. CV
No. 59573. The assailed decision affirmed and upheld the June 30, 1997
Decision3 of the Regional Trial Court (RTC), Branch 8, Kalibo, Aklan in Civil
Case No. 4632 for Declaration of Nullity of Agreement of Lease with Damages.
On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British subject,
married Joselyn C. Taylor (Joselyn), a 17-year old Filipina.4 On June 9, 1989,
while their marriage was subsisting, Joselyn bought from Diosa M. Martin a
1,294 square-meter lot (Boracay property) situated at Manoc-Manoc, Boracay
Island, Malay, Aklan, for and in consideration of P129,000.00.5 The sale was
allegedly financed by Benjamin.6 Joselyn and Benjamin, also using the latters
funds, constructed improvements thereon and eventually converted the property
to a vacation and tourist resort known as the Admiral Ben Bow Inn.7 All required
permits and licenses for the operation of the resort were obtained in the name of
Ginna Celestino, Joselyns sister.8
However, Benjamin and Joselyn had a falling out, and Joselyn ran away with
Kim Philippsen. On June 8, 1992, Joselyn executed a Special Power of Attorney
(SPA) in favor of Benjamin, authorizing the latter to maintain, sell, lease, and
sub-lease and otherwise enter into contract with third parties with respect to
their Boracay property.9

Republic of the Philippines

23 | P a g e

On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee,
entered into an Agreement of Lease10 (Agreement) involving the Boracay
property for a period of 25 years, with an annual rental of P12,000.00. The
agreement was signed by the parties and executed before a Notary Public.
Petitioner thereafter took possession of the property and renamed the resort as
Music Garden Resort.1avvphi1

Claiming that the Agreement was null and void since it was entered into by
Joselyn without his (Benjamins) consent, Benjamin instituted an action for
Declaration of Nullity of Agreement of Lease with Damages11 against Joselyn
and the petitioner. Benjamin claimed that his funds were used in the acquisition
and improvement of the Boracay property, and coupled with the fact that he was
Joselyns husband, any transaction involving said property required his consent.
No Answer was filed, hence, the RTC declared Joselyn and the petitioner in
defeault. On March 14, 1994, the RTC rendered judgment by default declaring
the Agreement null and void.12 The decision was, however, set aside by the CA
in CA-G.R. SP No. 34054.13 The CA also ordered the RTC to allow the
petitioner to file his Answer, and to conduct further proceedings.

The RTC considered the Boracay property as community property of Benjamin

and Joselyn; thus, the consent of the spouses was necessary to validate any
contract involving the property. Benjamins right over the Boracay property was
bolstered by the courts findings that the property was purchased and improved
through funds provided by Benjamin. Although the Agreement was evidenced by
a public document, the trial court refused to consider the alleged participation of
Benjamin in the questioned transaction primarily because his signature
appeared only on the last page of the document and not on every page thereof.

In his Answer,14 petitioner claimed good faith in transacting with Joselyn. Since
Joselyn appeared to be the owner of the Boracay property, he found it
unnecessary to obtain the consent of Benjamin. Moreover, as appearing in the
Agreement, Benjamin signed as a witness to the contract, indicating his
knowledge of the transaction and, impliedly, his conformity to the agreement
entered into by his wife. Benjamin was, therefore, estopped from questioning
the validity of the Agreement.

On appeal to the CA, petitioner still failed to obtain a favorable decision. In its
December 19, 2003 Decision,16 the CA affirmed the conclusions made by the
RTC. The appellate court was of the view that if, indeed, Benjamin was a willing
participant in the questioned transaction, the parties to the Agreement should
have used the phrase "with my consent" instead of "signed in the presence of."
The CA noted that Joselyn already prepared an SPA in favor of Benjamin
involving the Boracay property; it was therefore unnecessary for Joselyn to
participate in the execution of the Agreement. Taken together, these
circumstances yielded the inevitable conclusion that the contract was null and
void having been entered into by Joselyn without the consent of Benjamin.

There being no amicable settlement during the pre-trial, trial on the merits
ensued.

Aggrieved, petitioner now comes before this Court in this petition for review on
certiorari based on the following grounds:

On June 30, 1997, the RTC disposed of the case in this manner:

4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS NOT

REQUIRED IN THE AGREEMENT OF LEASE DATED 20 JULY 1992.
GRANTING ARGUENDO THAT HIS CONSENT IS REQUIRED, BENJAMIN
TAYLOR IS DEEMED TO HAVE GIVEN HIS CONSENT WHEN HE AFFIXED
HIS SIGNATURE IN THE AGREEMENT OF LEASE AS WITNESS IN THE
LIGHT OF THE RULING OF THE SUPREME COURT IN THE CASE OF
SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO. 141323, JUNE 8, 2005.

WHEREFORE, premises considered, judgment is hereby rendered in favor of

the plaintiff and against the defendants as follows:
1. The Agreement of Lease dated July 20, 1992 consisting of eight (8) pages
(Exhibits "T", "T-1", "T-2", "T-3", "T-4", "T-5", "T-6" and "T-7") entered into by and
between Joselyn C. Taylor and Philip Matthews before Notary Public Lenito T.
Serrano under Doc. No. 390, Page 79, Book I, Series of 1992 is hereby
declared NULL and VOID;
2. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum
of SIXTEEN THOUSAND (P16,000.00) PESOS as damages representing
unrealized income for the residential building and cottages computed monthly
from July 1992 up to the time the property in question is restored to plaintiff; and
3. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum
of TWENTY THOUSAND (P20,000.00) PESOS, Philippine Currency, for
attorneys fees and other incidental expenses.
SO ORDERED.15

24 | P a g e

4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT OF LEASE IS

THE EXCLUSIVE PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO CITIZEN,
IN THE LIGHT OF CHEESMAN VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.
4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE 96 OF THE
FAMILY CODE OF THE PHILIPPINES WHICH IS A PROVISION REFERRING
TO THE ABSOLUTE COMMUNITY OF PROPERTY. THE PROPERTY REGIME
GOVERNING THE PROPERTY RELATIONS OF BENJAMIN TAYLOR AND
JOSELYN TAYLOR IS THE CONJUGAL PARTNERSHIP OF GAINS BECAUSE
THEY WERE MARRIED ON 30 JUNE 1988 WHICH IS PRIOR TO THE
EFFECTIVITY OF THE FAMILY CODE. ARTICLE 96 OF THE FAMILY CODE
OF THE PHILIPPINES FINDS NO APPLICATION IN THIS CASE.

4.4. THE HONORABLE COURT OF APPEALS IGNORED THE

PRESUMPTION OF REGULARITY IN THE EXECUTION OF NOTARIAL
DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON THE
COUNTERCLAIM OF PETITIONER DESPITE THE FACT THAT IT WAS NOT
CONTESTED AND DESPITE THE PRESENTATION OF EVIDENCE
ESTABLISHING SAID CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of an Agreement of Lease of
a parcel of land entered into by a Filipino wife without the consent of her British
husband. In addressing the matter before us, we are confronted not only with
civil law or conflicts of law issues, but more importantly, with a constitutional
question.
It is undisputed that Joselyn acquired the Boracay property in 1989. Said
acquisition was evidenced by a Deed of Sale with Joselyn as the vendee. The
property was also declared for taxation purposes under her name. When
Joselyn leased the property to petitioner, Benjamin sought the nullification of the
contract on two grounds: first, that he was the actual owner of the property since
he provided the funds used in purchasing the same; and second, that Joselyn
could not enter into a valid contract involving the subject property without his
consent.
The trial and appellate courts both focused on the property relations of petitioner
and respondent in light of the Civil Code and Family Code provisions. They,
however, failed to observe the applicable constitutional principles, which, in fact,
are the more decisive.
Section 7, Article XII of the 1987 Constitution states:18
Section 7. 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.1avvphi1
Aliens, whether individuals or corporations, have been disqualified from
acquiring lands of the public domain. Hence, by virtue of the aforecited
constitutional provision, they are also disqualified from acquiring private
lands.19 The primary purpose of this constitutional provision is the conservation
of the national patrimony.20 Our fundamental law cannot be any clearer. The
right to acquire lands of the public domain is reserved only to Filipino citizens or
corporations at least sixty percent of the capital of which is owned by
Filipinos.21

25 | P a g e

In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we had the

occasion to explain the constitutional prohibition:
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:
"Section 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 appellants words, strictly agricultural." (Solicitor
Generals Brief, p. 6) That this is obnoxious to the conservative spirit of the
Constitution is beyond question.24
The rule is clear and inflexible: aliens are absolutely not allowed to acquire
public or private lands in the Philippines, save only in constitutionally recognized
exceptions.25 There is no rule more settled than this constitutional prohibition,
as more and more aliens attempt to circumvent the provision by trying to own
lands through another. In a long line of cases, we have settled issues that
directly or indirectly involve the above constitutional provision. We had cases
where aliens wanted that a particular property be declared as part of their
fathers estate;26 that they be reimbursed the funds used in purchasing a
property titled in the name of another;27 that an implied trust be declared in

their (aliens) favor;28 and that a contract of sale be nullified for their lack of
consent.29
In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen, acquired a parcel
of land, together with the improvements thereon. Upon his death, his heirs (the
petitioners therein) claimed the properties as part of the estate of their deceased
father, and sought the partition of said properties among themselves. We,
however, excluded the land and improvements thereon from the estate of Felix
Ting Ho, precisely because he never became the owner thereof in light of the
above-mentioned constitutional prohibition.
In Muller v. Muller,31 petitioner Elena Buenaventura Muller and respondent
Helmut Muller were married in Germany. During the subsistence of their
marriage, respondent purchased a parcel of land in Antipolo City and
constructed a house thereon. The Antipolo property was registered in the name
of the petitioner. They eventually separated, prompting the respondent to file a
petition for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said property. In
deciding the case in favor of the petitioner, the Court held that respondent was
aware that as an alien, he was prohibited from owning a parcel of land situated
in the Philippines. He had, in fact, declared that when the spouses acquired the
Antipolo property, he had it titled in the name of the petitioner because of said
prohibition. Hence, we denied his attempt at subsequently asserting a right to
the said property in the form of a claim for reimbursement. Neither did the Court
declare that an implied trust was created by operation of law in view of
petitioners marriage to respondent. We said that to rule otherwise would permit
circumvention of the constitutional prohibition.
In Frenzel v. Catito,32 petitioner, an Australian citizen, was married to Teresita
Santos; while respondent, a Filipina, was married to Klaus Muller. Petitioner and
respondent met and later cohabited in a common-law relationship, during which
petitioner acquired real properties; and since he was disqualified from owning
lands in the Philippines, respondents name appeared as the vendee in the
deeds of sale. When their relationship turned sour, petitioner filed an action for
the recovery of the real properties registered in the name of respondent,
claiming that he was the real owner. Again, as in the other cases, the Court
refused to declare petitioner as the owner mainly because of the constitutional
prohibition. The Court added that being a party to an illegal contract, he could
not come to court and ask to have his illegal objective carried out. One who
loses his money or property by knowingly engaging in an illegal contract may
not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner (an American
citizen) and Criselda Cheesman acquired a parcel of land that was later
registered in the latters name. Criselda subsequently sold the land to a third

26 | P a g e

person without the knowledge of the petitioner. The petitioner then sought the
nullification of the sale as he did not give his consent thereto. The Court held
that assuming that it was his (petitioners) 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; thus, the
sale as to him was null and void.
In light of the foregoing jurisprudence, we find and so hold that Benjamin has no
right to nullify the Agreement of Lease between Joselyn and petitioner.
Benjamin, being an alien, is absolutely prohibited from acquiring private and
public lands in the Philippines. Considering that Joselyn appeared to be the
designated "vendee" in the Deed of Sale of said property, she acquired sole
ownership thereto. This is true even if we sustain Benjamins claim that he
provided the funds for such acquisition. By entering into such contract knowing
that it was illegal, no implied trust was created in his favor; no reimbursement
for his expenses can be allowed; and no declaration can be made that the
subject property was part of the conjugal/community property of the spouses. In
any event, he had and has no capacity or personality to question the
subsequent lease of the Boracay property by his wife on the theory that in so
doing, he was merely exercising the prerogative of a husband in respect of
conjugal property. To sustain such a theory would countenance indirect
controversion of the constitutional prohibition. If the property were to be
declared conjugal, this would accord the alien husband a substantial interest
and right over the 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.34
In fine, the Agreement of Lease entered into between Joselyn and petitioner
cannot be nullified on the grounds advanced by Benjamin. Thus, we uphold its
validity.
With the foregoing disquisition, we find it unnecessary to address the other
issues raised by the petitioner.
WHEREFORE, premises considered, the December 19, 2003 Decision and July
14, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 59573, are
REVERSED and SET ASIDE and a new one is entered DISMISSING the
complaint against petitioner Philip Matthews.
SO ORDERED.
Republic of the Philippines
SUPREME COURT

Manila
THIRD DIVISION
G.R. No. 164201

December 10, 2012

EFREN PANA, Petitioner,

vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE, JR., Respondents.
DECISION

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 Efrens motion for reconsideration,13 prompting him to file the
present petition for review on certiorari.

ABAD, J.:
The Issue Presented
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 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 Melecias civil liability in the murder case.

The Facts and the Case

Ruling of the Court
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.

27 | P a g e

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 Melecias 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.

28 | P a g e

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 RTCs 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:

(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 selfimprovement; 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.1wphi1
Contrary to Efrens 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."

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

(1) The support of the spouse, their common children, and the legitimate
children of either spouse; however, the support of illegitimate children shall be
governed by the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the designated
administrator-spouse for the benefit of the conjugal partnership of gains, or by
both spouses or by one of them with the consent of the other;
(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;

29 | P a g e

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.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-68873 March 31, 1989
LUCILDA DAEL, EVERGISTO DAEL, DOMINGO DAEL, JR., CONRADO
DAEL, FEDERICO DURANA, JR., FREDISVINDA DURANA, FLEURDELIZADA
DURANA, FABIAN DURANA and FE PATRICIO DURANA, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, CARMENCITA CABUTIHAN, NONILON
CABUTIHAN,
ROMULO
CABUTIHAN,
LERMO
CABUTIHAN,
and
BIENVENIDO CABUTIHAN, respondents.
Ismael T. Porles for petitioners.
Primo L. Marquez for respondents.

thereafter or particularly on April 6, 1958 that Cesario Cabutihan married

Victorina Durana, sister of his first wife, Bienvenida Durana.
The first marriage of Cesario Cabutihan produced the following legitimate
children: Nonilon Carmencita, Romulo, Lermo and Bienvenido all surnamed
Cabutihan and who are the intervenors in this case although Carmencita
Cabutihan instituted the case as petitioner; the second marriage of Cesario
Cabutihan with Victorina Durana did not produce any issue; however, the latter's
heirs are the children of her two sisters and a brother namely: Bienvenida
Durana, Soledad Durana and Federico Durana Sr.; the latter is the father of the
oppositors, Federico, Jr., Flordelizada (sic), Fredizvinda, Fabian and Fe Patricio,
all surnamed Durana; while Soledad Durana is the mother of the other
oppsitors, Evaristo, Domingo Jr., Lucilda and Conrado, all surnamed Dael; the
other heirs of Vitorina Durana are the petitioner herself and the intervenors who
are all the children of Bienvenida Durana.
It is claimed by all the oppositors that they are entitled to 213 portion of the
estate of Victorina Durana considering that their predecessors-in-interest are
the brother and sister of Victorina Durana; while the remaining 1/3 portion
should devolve to the petitioner and the intervenors who represent their mother
Bienvenida Durana and the other sister of Victorina Durana.

Bienvenido C. Vera Cruz collaborating counsel for respondents.

Roman R. Ulendioro for respondent Administratrix Carmencita Cabutihan.

REGALADO, J.:
The reversal of the decision of the then Intermediate Appellate Court
promulgated on February 29, 1984 in AC-G.R. CV No. 69711, 1 which affirmed
in toto the decision, dated December 3, 1980, of the quondam Court of First
Instance of Quezon, Branch II, in Special Proceeding No. 4374 thereof, 2 as
well as the former's resolution of September 14, 1984 denying the motion for
reconsideration of the oppositors-appellants therein, are the twin objectives of
the present appeal by certiorari.
The assailed decision of the court a quo sets out the revelant background facts
and the dramatis personae in this controversy, thus:
It is not disputed that Victorina Durana died intestate on August 1, 1977 in
Manila; she was the wife of the deceased Cesario Cabutihan who died earlier
on June 9, 1972; Cesario Cabutihan was first married to Bienvenida Durana in
February, 1942; the latter died on May 2, 1957; it was less than a year

30 | P a g e

There is, therefore, no dispute concerning the relationship of the petitioner,

oppositors and the intervenors to the decedent Victorina Durana; there is
neither any question concerning the right of all the parties in this case to inherit
from the deceased Victorina Durana; 3
Likewise established is the fact that during the second marriage of Cesario and
Victorina, they were engaged in a copra business and a public transportation
business, with Victorina managing the former. After the demise of Cesario,
Victorina and the private respondents entered into a extra-judicial settlement of
his estate on December 30, 1973. Part of the properties adjudicated to Victorina
include the copra business abovementioned, as well as some of the vehicles
used in the transportation business. 4 Subsequently, however, the vehicles were
transferred to the private respondents by virtue of a "deed of sale" dated July
24, 1978. 5
This case was commenced in the aforementioned Court of First Instance of
Quezon by Carmencita Cabutihan, one of the private respondents herein, who
filed a petition for the settlement of the intestate estate of Victorina Durana,
wherein she also prayed for her appointment as administratrix. 6 Petitioners
herein filed an opposition, asking that the letters of administration be issued
instead to herein petitioner Lucilda Dael. 7 The other private respondents, on
their motion, intervened in the case. 8

On December 22, 1977, Honesto Cabutihan, Democrito Cabutihan and David

Cabutihan filed their claim against the estate for the payment of the harvest of
their property which had been entrusted to Victorina Durana for purposes of her
copra business but which obligation she failed to pay due to her untimely death.
9 Said claim, in the amount of P70,350.82, was approved by the probate court
on December 2, 1980. 10
Meanwhile, the court below appointed Amado Zoleta as special administrator of
the estate of the late Victorina Durana on May 24, 1978. 11 Said special
administrator, upon order of the probate court, submitted an inventory of the
properties of the estate on August 30, 1978, consisting of twenty (20) parcels of
land valued at P69,340.00, cash in bank amounting to P140,079.41, cattle and
livestock valued at P7,200.00, furniture valued at P5,120.00, fixtures in the
amount of P1,300.00, equipment worth P11,863.00, and other miscellaneous
items valued at P3,038.00. The total value of the properties included in this
inventory is P237,940.41. 12
On January 16, 1979, a "Supplementary Inventory" was filed by the special
administrator covering other real properties of the estate of Victorina, consisting
of the undivided shares in the inheritance of Cesario Cabutihan from his
parents, Bartolome Cabutihan and Natividad Daelo. The total value of the
properties listed in the supplementary inventory is P4,700.82. 13 It may be
mentioned that the properties that were adjudicated to Victorina in the
extrajudicial settlement of the estate of Cesario were included in the inventory
submitted by the special administrator. 14

properties listed in the inventories in her name or jointly with Cesario Cabutihan
do not belong to her exclusively; these properties in Exhibits 'A- SPA' and 'BSPA' are either the assets of Bienvenida Durana as her paraphernal property or
as the conjugal partnership assets of spouses Cesario Cabutihan (sic) or the
latter's capital inasmuch as the properties in the name of Victorina a Durana or
those jointly with her husband were acquired or purchased out of the fruits or
produce of the properties of Bienvenida Durana and/or Cesario Cabutihan or
out of the income of the copra business of the first marriage which was merely
managed and administered by Victorina Durana after the owners' deaths.
xxx

xxx

xxx

To determine, therefore, the extent of the estate of Victorina Durana from the list
of properties, real and personal, enumerated in the Inventories (Exhibits 'A-SPA'
and B-SPA') which erroneously include even the Estate of the First Marriage,
the conjugal estate of Cesario Cabutihan and Bienvenida Durana must be
settled or liquidated first; one-half of the conjugal estate shall be inherited by
Cesario Cabutihan and his five (5) children, namely: Nonilon Carmencita,
Romulo, Lermo and Bienvenido, all surnamed CABUTIHAN, share and share
alike; the inheritance of Cesario Cabutihan in the Estate of Bienvenida Durana
in addition to the other one (1/2) half which is his share in the conjugal
partnership with his wife Bienvenida shall constitute Cesario's estate which shall
be inherited by his heirs, namely: Victorina Durana, his second wife, and his
legitimate children by his first wife, namely: Nonilon Carmencita, Romulo, Lermo
and Bienvenido, all surnamed CABUTIHAN, share and share alike.

Private respondents moved for the disapproval of said inventories claiming that
the properties listed therein were either acquired during the first marriage of
Cesario Cabutihan or were merely the products or fruits of the properties of said
first union or otherwise acquired through the funds thereof. 15

xxx

In due course, the trial court rendered a decision holding that Victorina Durana
had no paraphernal properties brought or contributed to her marriage with
Cesario Cabutihan; that the copra business was formed in 1949 during the first
marriage; that Victorina used the same facilities, credit and capital in managing
the business; and that the main source of income not only of Cesario Cabutihan
and also of Victorina during their respective lifetimes was the copra business.
16

Unless any of the properties listed in Exhibits 'A-SPA' and B-SPA' exclusively
belong to Bienvenida Durana, all of said properties shall be presumed to be the
conjugal (sic) and/or the fruits and income of said partnership or of the copra
business of said partnership; therefore, the properties in said inventories shall
be computed, divided and partitioned as follows: five (5/12) twelve over the one
(1/2) half thereof to be adjudicated to Nonilon Carmencita, Romulo, Lermo and
Bienvenido, all surnamed CABUTIHAN as their shares in the inheritance of their
mother; the one (1/6) sixth portion out of the one (1/2) half of said properties
shall pertain to Cesario Cabutihan as his share in the inheritance of his first
wife; this share and the remaining one (1/2) half of the properties in the
Inventories which comprise his estate shall be inherited by his second wife
Victorina Durana with (whom he had no child) and his five children by his first
marriage, Nonilon Carmencita, Romulo, Lermo and Bienvenido, all surnamed
CABUTIHAN, at the proportion of one (1/6) sixth each of the said properties

On such factual findings, the lower court came up with the following
conclusions:
Not having any personal property which she brought to her marriage with
Cesario Cabutihan and the copra business not being her own or of her conjugal
partnership with her husband, the conclusion is inescapable; that all the

31 | P a g e

xxx

xxx

Hence, the extent of the Estate of Victorina Durana shall consist only of her
share in the inheritance of the Estate of Cesario Cabutihan.

over the seven (7/12) twelfth thereof; therefore, one (1/6) sixth out of the said
seven (7/12) twelfth of the said properties (Estate of Cesario) shall be the extent
of the Estate of Victorina Durana which she inherited from her husband; this
(1/6 of 7/12) portion shall be inherited by Durana's heirs; one (1/3) third thereof
to be adjudicated to petitioner and the Intervenors and the remaining two (2/3)
thirds thereof to the oppositors. 17
The probate court thereby disapproved both inventories and annulled the
extrajudicial settlement and deed of sale (Exhibit 1 Dael and Exhibit 3-Dael)
mentioned earlier. The latter two were annulled for being simulated or fictitious
and for involving conjugal properties of the first marriage, including properties of
Bienvenida, to which Victorina is not an heir. 18
As a consequence, petitioners appealed to the former Intermediate Appellate
Court on December 8, 1980. 19 On the same day, respondent Carmencita
Cabutihan filed a "motion for authority to withdraw funds" from the estate, in the
amount of P90,000.00 to be partitioned among the heirs in accordance with the
proportion provided for in the aforesaid decision of the probate court. 20 On
December 11, 1980, this motion was granted, 21 despite opposition thereto. 22
Thereafter, on December 12, 1980, petitioners herein filed a motion asking the
lower court to order the return of the amount of P70,350.82 allegedly paid to the
claimants Democrito Honesto and David Cabutihan, submitting as proof a
receipt allegedly signed on December 30, 1980 by Democrito Cabutihan in
behalf of all said claimants and assisted by their counsel, Euclides A. Abcede.
On February 9, 1984, respondent court promulgated its decision which, as
already stated, affirmed the decision of the lower court, hence this petition
assigning four errors which we will resolve seriatim.
1.
Petitioners submit that both the respondent and lower courts erred in
concluding that the copra business, as well as the properties listed in the
inventories as acquired during the second marriage, are assets of the conjugal
partnership of the first marriage between Cesario and Bienvenida. They argued
that to so hold would, in effect, maintain the theory that the marital community of
proprietary interest continued to exist even after the Cesario-Bienvenida
conjugal partnership had been dissolved by the death of Bienvenida.
It may be conceded that the factual findings of the trial court were based on
substantial documentary and testimonial evidence and are entitled to the
corresponding weight and respect.
Such established facts notwithstanding, We are not as equally disposed to yield
assent to the conclusions drawn by both the court a quo and the respondent

32 | P a g e

court which Would so simplistically adjudicate and consider the properties

involved as belonging in their entirety to the first marriage.
When Bienvenida Durana died on May 2, 1957, the first conjugal partnership
was automatically dissolved. 23 That conjugal partnership was then converted
into an implied ordinary co-ownership. 24 It was also at this point in time that the
inheritance was transmitted to the heirs of Bienvenida. 25 Thus, her heirs,
Cesario, Nonilon Carmencita Romulo, Lermo and Bienvenido, acquired
respective and definite rights over one-half (1/2) of the conjugal partnership
property which pertained to Bienvinida. Consequently, whatever fruits or income
may thereafter be derived from the properties, including the copra business,
would no longer be conjugal but would belong in part to the heirs in proportion
to their respective shares. The fruits and income of the other half of the property
of the conjugal partnership would exclusively belong to Cesario.
The marriage of Cesario and Victorina on April 6, 1952 also produced the
corresponding legal consequences. From that moment on, the fruits or income
of the separate properties of the spouses would be conjugal, including those
acquired through their industry. 26 Hence, the fruits and income of Cesario's
share in the inheritance from Bienvenida and of his conjugal share in the
property of the first conjugal partnership would form part of the conjugal
partnership properties of the second marriage. The fruits and income derived or
acquired through these last-mentioned properties would likewise be conjugal in
nature.
It would have been ideal had there been a liquidation of the conjugal partnership
properties of the first marriage between Cesario and Bienvenida. Unfortunately,
We cannot determine from the records the amount of such properties at the
time of Bienvenida's demise. There is a dearth of proof on this matter. What
appears evident, however, is that, considering the continuity in the operation of
the two businesses during the marital coverture between Cesario and Victorina
which spanned a period of fourteen (14) years, and the fact that after Cesario's
death Victorina still actively engaged in the same business until her own death
five (5) years later, the properties enumerated in the aforesaid inventories
submitted to the probate court could not all have been properties of the first
marriage.
Inevitably, the problem is how to apportion the properties involved between the
two conjugal partnerships. On this score, guidance should be sought from the
provisions of the Civil Code to the effect that whenever the liquidation of the
partnership of two or more marriages contracted by the same person should be
carried out at the same time and there is no evidence to show the capital or the
conjugal property belonging to each of the partnerships to be liquidated, the
total mass of the partnership property shall be divided between the different

partnerships in proportion to the duration of each and to the property belonging

to the respective spouses. 27
The first marriage existed for approximately fifteen (15) years (1942 to 1957),
while the second marriage lasted for about fourteen (14) years (1958 to 1972).
Applying the aforestated rule, the first conjugal partnership will be prorated a
share of fifteen twenty-ninths (15/29) of the properties included in the inventory
submitted on August 30, 1978, while the second conjugal partnership will get
fourteen twenty-ninths (14/29) thereof. Not to be included, however, are the real
properties listed in the supplementary inventory filed on January 16, 1979,
because they definitely belong to the estate of Cesario as the latter's inheritance
from his parents, Bartolome Cabutihan and Natividad Daelo.
One-half (1/2) of the properties that pertain to the first conjugal partnership
belong to Cesario as his conjugal share therein, while the other half shall be
considered as inherited by him and his five children as the heirs of Bienvenida.
The properties pertaining to the second partnership shall also be
divided, one-half (1/2) to belong to Cesario and the other to Victorina
respective shares in their conjugal partnership properties. The share of
should then be divided among his heirs, namely, Victorina and his
children.

equally
as their
Cesario
five (5)

To recapitulate, the estate of Victorina for distribution to her heirs shall consist of
her one-half (1/2) share in the conjugal properties of the aforesaid second
marriage and her one-sixth (1/6) share in the estate of Cesario as an heir.
2.
Petitioners also question the approval of the claims of Democrito
Honesto and David Cabutihan. Petitioners' effete opposition is anchored on their
allegation that said claim "was approved primarily on the basis of the testimony
of claimant Democrito Cabutihan" which, according to them, is inadmissible
under the Dead Man's Statute or the survivorship disqualification rule. 28 While
petitioners' arguments may have a juris tantum plausibility if considered alone,
We see no reason to dwell on this issue. It would be pointless since, as
correctly observed by the trial court, "even assuming the applicability of the
dead man's rule concerning the testimony of Democrito Cabutihan, the
testimony of Urbano Prado and Tirso Linosa are more than sufficient to
establish the claim and to bolster the documentary evidence in support thereof
as indicated on Exhibits 'B', 'B-1', to 'B-82-claim', 'C' and 'C-1' inclusive." 29
3.
Also challenged by petitioners is the order of the court below, dated
December 11, 1980, allowing the withdrawal of funds for distribution to the heirs
as advance inheritance. Said order is, however, within the contemplation and
authority of Rule 109, Section 2 whereof provides that "(n)otwithstanding a
pending controversy or appeal in proceedings to settle the estate of a decedent,

33 | P a g e

the court may, in its discretion and upon such terms as it may deem proper and
just, permit that such part of the estate as may not be affected by the
controversy or appeal be distributed among the heirs or legatees, upon
compliance with the conditions set forth in Rule 90 of these rules'. Said Rule 90,
on the other hand, provides in part that "(n)o distribution shall be allowed until
the payment of the obligations above mentioned has been made or provided for,
unless the distributees or any of them, give a bond, in a sum to be fixed by the
court, conditioned for the payment of said obligations within such time as the
court directs."
It is true that "partial distribution of the decedent's estate pending the final
termination of the testate or intestate proceedings should as much as possible
be discouraged by the courts and, unless in extreme cases, such form of
advances of inheritance should not be countenanced. The reason for this strict
rule is obvious courts should guard with utmost zeal and jealousy the estate of
the decedent to the end that the creditors thereof be adequately protected and
all the rightful heirs assured of their shares in the inheritance." 30
Nevertheless, after duly considering the foregoing rules, We sustain the validity
of the questioned order. The respondent court correctly held than "(i)f oppositors
would stand to share more in the inheritance than what was fixed for them in the
appealed judgment, We believe the estate has sufficient assets to ensure an
equitable distribution of the inheritance in accordance with law and final
judgment in the proceedings." 31 Also, it does not appear that there are unpaid
obligations, as contemplated in Rule 90, for which provisions should have been
made or a bond required. It is clear that the provisions of the Rules of Court, as
well as the jurisprudence thereon, were followed in this particular incident.
4.
With respect to the propriety of the alleged payment of the claims of
the Cabutihan brothers before the decision is this case became final and
executory, We are not in a position to rule on such issue because this Court is
not a trier of facts. Such issue requires the prior resolution of basic factual
questions, that is, whether or not such payment had actually been made to the
claimants and the circumstances under which the same was effected.
The probate court had not yet ruled on petitioners' "Motion to Order the Return
of the Amount Paid for Claim", when the instant petition was filed. Based on the
records of this appeal, the last action taken in the lower court was its order that
the private respondents comment on said motion, but no response thereto or
any subsequent development on this matter is reflected or reported. If the
petitioners have sufficient basis to complain on this matter, the same should
consequently be pursued and threshed out in the court below.

WHEREFORE, the decision of respondent court, which affirmed and adopted in

toto the decision of the court a quo, is MODIFIED and judgment is hereby
rendered as follows:
1.
So much of the judgments of both lower courts as declare that all the
properties listed in the two inventories, marked as Exhibits "A-SPA"and "B-SPA"
in Special Proceeding No. 4374 of the court of origin, are conjugal partnership
assets of the deceased spouses Cesario Cabutihan and Bienvenida Durana are
hereby SET ASIDE;
2.
The properties therein enumerated shall be divided in the following
manner: (a) Seven-twelfths (7/12) of fifteen twenty-ninths (15/29), and one-half
(1/2) of fourteen twenty-ninths (14/29), of the properties listed in the inventory
dated August 30, 1978, as well as all the properties listed in the supplementary
inventory dated January 16, 1979, shall constitute the estate of Cesario
Cabutihan. This estate shall be divided equally among his six (6) heirs, namely,
his second wife, Victorina, and his five (5) children, Nonilon Carmencita,
Romulo, Lermo and Bienvenido, all surnamed Cabutihan; and (b) The
remaining five-twelfths (5/12) of fifteen twenty-ninths (15/29) of the properties in
said inventory of August 30, 1978 shall belong to the said five (5) children, share
and share alike, as their respective participations in their mother's inheritance;

34 | P a g e

3.
The estate of Victorina Durana, which shall be the subject of
settlement and distribution in said Special Proceeding No. 4374, shall consist of
one-half (1/2) of the other portion constituting fourteen twenty-ninths (14/29) of
the properties in the inventory of August 30, 1978, which represents her share in
the conjugal properties of the second marriage, and one-sixth (1/6) of the estate
of Cesario Cabutihan as fixed herein, and said properties shall be divided
among her heirs enumerated and in the proportion allotted by the probate court
as qouted at the outset of this decision;
4.
The other pronouncements in the dispositive portion of the appealed
judgment of the court below and adopted by the respondent court, insofar as the
are not inconsistent with the foregoing dispositions; the order of the said lower
court, dated December 2, 1980, approving the claims of Honesto, Democrito
and David Cabutihan; and its order of December 11, 1980 allowing the
withdrawal of funds for distribution among the heirs are AFFIRMED; and
5.
All other incidents not otherwise disposed of herein shall be pursued
by the parties in and shall be resolved by the court a quo in accordance with the
terms of this judgment.
SO ORDERED.