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

NUEGA

At bar is a petition for review on certiorari of the Decision1 dated May 14, 2010 and the Resolution2 dated July 21, 2010 of
the Court of Appeals (CA) in CA-G.R. CV No. 70235, which affirmed with modification the assailed Decision 3 dated
February 14, 2001 of the Regional Trial Court (RTC) of Marikina City, Branch 273, in Civil Case No. 96-274-MK

Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on September 1, 1990. 4 Sometime in
1988 when the parties were still engaged, Shirley was working as a domestic helper in Israel. Upon the request of Rogelio,
Shirley sent him money5 for the purchase of a residential lot in Marikina where they had planned to eventually build their
home. Rogelio was then also working abroad as a seaman. The following year, or on September 13, 1989, Rogelio
purchased the subject house and lot for One Hundred Two Thousand Pesos (P102,000.00)6 from Rodeanna Realty
Corporation. The subject property has an aggregate area of one hundred eleven square meters (111 sq. m.) covered by
Transfer Certificate of Title (TCT) No. N-133844.7 Shirley claims that upon her arrival in the Philippines sometime in 1989,
she settled the balance for the equity over the subject property with the developer through SSS 8 financing. She likewise
paid for the succeeding monthly amortizations. On October 19, 1989, TCT No. 171963 9 over the subject property was
issued by the Registry of Deeds of Marikina, Rizal solely under the name of Rogelio.

On September 1, 1990, Shirley and Rogelio got married and lived in the subject property. The following year, Shirley
returned to Israel for work. While overseas, she received information that Rogelio had brought home another woman,
Monica Escobar, into the family home. She also learned, and was able to confirm upon her return to the Philippines in
May 1992, that Rogelio had been introducing Escobar as his wife.

In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the Provincial Prosecution Office of
Rizal, and another for Legal Separation and Liquidation of Property before the RTC of Pasig City. Shirley later withdrew
the complaint for legal separation and liquidation of property, but re-filed10 the same on January 29, 1993. In between the
filing of these cases, Shirley learned that Rogelio had the intention of selling the subject property. Shirley then advised the
interested buyers - one of whom was their neighbor and petitioner Josefina V. Nobleza (petitioner) - of the existence of the
cases that she had filed against Rogelio and cautioned them against buying the subject property until the cases are closed
and terminated. Nonetheless, under a Deed of Absolute Sale11 dated December 29, 1992, Rogelio sold the subject property
to petitioner without Shirley's consent in the amount of Three Hundred Eighty Thousand Pesos (P380,000.00), including
petitioner's undertaking to assume the existing mortgage on the property with the National Home Mortgage Finance
Corporation and to pay the real property taxes due thereon.

Meanwhile, in a Decision12 dated May 16, 1994, the RTC of Pasig City, Branch 70, granted the petition for legal separation
and ordered the dissolution and liquidation of the regime of absolute community of property between Shirley and Rogelio,
viz.:chanroblesvirtuallawlibrary

WHEREFORE, in view of the foregoing, the Court hereby grants the instant petition for legal separation between the
subject spouses with all its legal effects as provided for in Art. 63 of the Family Code. Their community property is
consequently dissolved and must be liquidated in accordance with Art. 102 of the New Family Code. The respondent is
thus hereby enjoined from selling, encumbering or in any way disposing or alienating any of their community property
including the subject house and lot before the required liquidation. Moreover, he, being the guilty spouse, must forfeit the
net profits of the community property in favor of the petitioner who is the innocent spouse pursuant to Art. 43 of the
aforesaid law. Finally, in the light of the claim of ownership by the present occupants who have not been impleaded in the
instant case, a separate action must be instituted by the petitioner against the alleged buyer or buyers thereof to
determine their respective rights thereon.

Let a copy of this decision be furnished the Local Civil Registrar of Manila, the Register of Deeds of Marikina, Metro
Manila and the National Statistics Office (NSO), sta. Mesa, Manila.

SO ORDERED.13cralawlawlibrary
Rogelio appealed the above-quoted ruling before the CA which denied due course and dismissed the petition. It became
final and executory and a writ of execution was issued in August 1995.14

On August 27, 1996, Shirley instituted a Complaint15 for Rescission of Sale and Recoveiy of Property against petitioner
and Rogelio before the RTC of Marikina City, Branch 273. After trial on the merits, the trial court rendered its decision on
February 14, 2001, viz.:chanroblesvirtuallawlibrary
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of plaintiff Shirley Nuega and against
defendant Josefina Nobleza, as follows:

1) the Deed of Absolute Sale dated December 29, 1992 insofar as the 55.05 square meters representing the one half
(1/2) portion of plaintiff Shirley Nuega is concerned, is hereby ordered rescinded, the same being null and void;
2) defendant Josefina Nobleza is ordered to reconvey said 55.05 square meters to plaintiff Shirley Nuega, or in the
alternative to pay plaintiff Shirley Nuega the present market value of said 55.05 square meters; and
3) to pay plaintiff Shirley Nuega attorney's fees in the sum of Twenty Thousand Pesos (P20,000.00).

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

SO ORDERED.16
Petitioner sought recourse with the CA, while Rogelio did not appeal the ruling of the trial court. In its assailed Decision
promulgated on May 14, 2010, the appellate court affirmed with modification the trial court's ruling,
viz.:chanroblesvirtuallawlibrary
WHEREFORE, subject to the foregoing disquisition, the appeal is DENIED. The Decision dated 14 February 2001 of the
Regional Trial Court of Marikina City, Branch 273 in Civil Case No. 96-274-MK is AFFIRMED with MODIFICATION in that
the Deed of Absolute Sale dated 29 December 1992 is hereby declared null and void in its entirety, and defendant-
appellant Josefina V. Nobleza is ordered to reconvey the entire subject property to plaintiff-appellee Shirley B. Nuega and
defendant Rogelio Nuega, without prejudice to said defendant-appellant's right to recover from defendant Rogelio whatever
amount she paid for the subject property. Costs against defendant-appellant Nobleza.

SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration. In a Resolution dated July 21, 2010, the appellate court denied the motion for lack
of merit. Hence, this petition raising the following assignment of errors:chanroblesvirtuallawlibrary
[I.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE DECISION OF THE REGIONAL TRIAL
COURT BY SUSTAINING THE FINDING THAT PETITIONER WAS NOT A PURCHASER IN GOOD FAITH.
[II.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT MODIFIED THE DECISION OF THE REGIONAL TRIAL
COURT BY DECLARING AS NULL AND VOID THE DEED OF ABSOLUTE SALE DATED 29 DECEMBER 1992 IN ITS
ENTIRETY.18
We deny the petition.

Petitioner is not a buyer in good faith.

An innocent purchaser for value is one who buys the property of another, without notice that some other person has a
right or interest in the property, for which a full and fair price is paid by the buyer at the time of the purchase or before
receipt of any notice of claims or interest of some other person in the property.19 It is the party who claims to be an
innocent purchaser for value who has the burden of proving such assertion, and it is not enough to invoke the ordinary
presumption of good faith.20 To successfully invoke and be considered as a buyer in good faith, the presumption is that
first and foremost, the "buyer in good faith" must have shown prudence and due diligence in the exercise of his/her
rights. It presupposes that the buyer did everything that an ordinary person would do for the protection and defense of
his/her rights and interests against prejudicial or injurious concerns when placed in such a situation. The prudence
required of a buyer in good faith is "not that of a person with training in law, but rather that of an average man who
'weighs facts and circumstances without resorting to the calibration of our technical rules of evidence of which his
knowledge is nil.'"21 A buyer in good faith does his homework and verifies that the particulars are in order such as the
title, the parties, the mode of transfer and the provisions in the deed/contract of sale, to name a few. To be more specific,
such prudence can be shown by making an ocular inspection of the property, checking the title/ownership with the
proper Register of Deeds alongside the payment of taxes therefor, or inquiring into the minutiae such as the parameters or
lot area, the type of ownership, and the capacity of the seller to dispose of the property, which capacity necessarily
includes an inquiry into the civil status of the seller to ensure that if married, marital consent is secured when necessary.
In fine, for a purchaser of a property in the possession of another to be in good faith, he must exercise due diligence,
conduct an investigation, and weigh the surrounding facts and circumstances like what any prudent man in a similar
situation would do.22

In the case at bar, petitioner claims that she is a buyer in good faith of the subject property which is titled under the
name of the seller Rogelio A. Nuega alone as evidenced by TCT No. 171963 and Tax Declaration Nos. D-012-04723 and D-
012-04724.23 Petitioner argues, among others, that since she has examined the TCT over the subject property and found
the property to have been registered under the name of seller Rogelio alone, she is an innocent purchaser for value and
"she is not required to go beyond the face of the title in verifying the status of the subject property at the time of the
consummation of the sale and at the date of the sale."24

We disagree with petitioner.

A buyer cannot claim to be an innocent purchaser for value by merely relying on the TCT of the seller while ignoring all
the other surrounding circumstances relevant to the sale.

An analogous situation obtains in the case at bar.

The TCT of the subject property states that its sole owner is the seller Rogelio himself who was therein also described as
"single". However, as in the cases of Spouses Raymundo and Arrofo, there are circumstances critical to the case at bar
which convince us to affirm the ruling of both the appellate and lower courts that herein petitioner is not a buyer in good
faith.

First, petitioner's sister Hilda Bautista, at the time of the sale, was residing near Rogelio and Shirley's house - the subject
property - in Ladislao Diwa Village, Marikina City. Had petitioner been more prudent as a buyer, she could have easily
checked if Rogelio had the capacity to dispose of the subject property. Had petitioner been more vigilant, she could have
inquired with such facility - considering that her sister lived in the same Ladislao Diwa Village where the property is
located - if there was any person other than Rogelio who had any right or interest in the subject property.

To be sure, respondent even testified that she had warned their neighbors at Ladislao Diwa Village - including petitioner's
sister - not to engage in any deal with Rogelio relative to the purchase of the subject property because of the cases she
had filed against Rogelio. Petitioner denies that respondent had given such warning to her neighbors, which includes her
sister, therefore arguing that such warning could not be construed as "notice" on her part that there is a person other
than the seller himself who has any right or interest in the subject property. Nonetheless, despite petitioner's adamant
denial, both courts a quo gave probative value to the testimony of respondent, and the instant petition failed to present
any convincing evidence for this Court to reverse such factual finding. To be sure, it is not within our province to second-
guess the courts a quo, and the re-determination of this factual issue is beyond the reach of a petition for review on
certiorari where only questions of law may be reviewed.30

Second, issues surrounding the execution of the Deed of Absolute Sale also pose question on the claim of petitioner that
she is a buyer in good faith. As correctly observed by both courts a quo, the Deed of Absolute Sale was executed and dated
on December 29, 1992. However, the Community Tax Certificates of the witnesses therein were dated January 2 and 20,
1993.31 While this irregularity is not a direct proof of the intent of the parties to the sale to make it appear that the Deed
of Absolute Sale was executed on December 29, 1992 - or before Shirley filed the petition for legal separation on January
29, 1993 - it is circumstantial and relevant to the claim of herein petitioner as an innocent purchaser for value.

That is not all.

In the Deed of Absolute Sale dated December 29, 1992, the civil status of Rogelio as seller was not stated, while petitioner
as buyer was indicated as "single," viz.:chanroblesvirtuallawlibrary
ROGELIO A. NUEGA, of legal age, Filipino citizen and with postal address at 2-A-2 Ladislao Diwa St., Concepcion,
Marikina, Metro Manila, hereinafter referred to as the VENDOR

And

JOSEFINA V. NOBLEZA, of legal age, Filipino citizen, single and with postal address at No. L-2-A-3 Ladislao Diwa St.,
Concepcion, Marikina, Metro Manila, hereinafter referred to as the VENDEE.32cralawlawlibrary
It puzzles the Court that while petitioner has repeatedly claimed that Rogelio is "single" under TCT No. 171963 and Tax
Declaration Nos. D-012-04723 and D-012-04724, his civil status as seller was not stated in the Deed of Absolute Sale -
further creating a cloud on the claim of petitioner that she is an innocent purchaser for value.

As to the second issue, we rule that the appellate court did not err when it modified the decision of the trial court and
declared that the Deed of Absolute Sale dated December 29, 1992 is void in its entirety.

The trial court held that while the TCT shows that the owner of the subject property is Rogelio alone, respondent was able
to prove at the trial court that she contributed in the payment of the purchase price of the subject property. This fact was
also settled with finality by the RTC of Pasig City, Branch 70, and affirmed by the CA, in the case for legal separation and
liquidation of property docketed as JDRC Case No. 2510. The pertinent portion of the decision
reads:chanroblesvirtuallawlibrary
xxx Clearly, the house and lot jointly acquired by the parties prior to their marriage forms part of their community
property regime, xxx

From the foregoing, Shirley sufficiently proved her financial contribution for the purchase of the house and lot covered by
TCT 171963. Thus, the present lot which forms part of their community property should be divided equally between them
upon the grant of the instant petition for legal separation. Having established by preponderance of evidence the fact of her
husband's guilt in contracting a subsequent marriage xxx, Shirley alone should be entitled to the net profits earned by the
absolute community property.33cralawlawlibrary
However, the nullity of the sale made by Rogelio is not premised on proof of respondent's financial contribution in the
purchase of the subject property. Actual contribution is not relevant in determining whether a piece of property is
community property for the law itself defines what constitutes community property.

Article 91 of the Family Code thus provides:chanroblesvirtuallawlibrary

Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the community property shall consist of
all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.
The only exceptions from the above rule are: (1) those excluded from the absolute community by the Family Code; and (2)
those excluded by the marriage settlement.

Under the first exception are properties enumerated in Article 92 of the Family Code, which
states:chanroblesvirtuallawlibrary
Art. 92. The following shall be excluded from the community property:

(1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof,
if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community
property;

(2) Property for personal and exclusive use of either spouse; however, jewelry shall form part of the community property;

(3) Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the
fruits as well as the income, if any, of such property.
As held in Quiao v. Quiao:34ChanRoblesVirtualawlibrary
When a couple enters into a regime of absolute community, the husband and the wife becomes joint owners of all the
properties of the marriage. Whatever property each spouse brings into the marriage, and those acquired during the
marriage (except those excluded under Article 92 of the Family Code) form the common mass of the couple's properties.
And when the couple's marriage or community is dissolved, that common mass is divided between the spouses, or their
respective heirs, equally or in the proportion the parties have established, irrespective of the value each one may have
originally owned.
Since the subject property does not fall under any of the exclusions provided in Article 92, it therefore forms part of the
absolute community property of Shirley and Rogelio. Regardless of their respective contribution to its acquisition before
their marriage, and despite the fact that only Rogelio's name appears in the TCT as owner, the property is owned jointly by
the spouses Shirley and Rogelio.

Respondent and Rogelio were married on September 1, 1990. Rogelio, on his own and without the consent of herein
respondent as his spouse, sold the subject property via a Deed of Absolute Sale dated December 29, 1992 - or during the
subsistence of a valid contract of marriage. Under Article 96 of Executive Order No. 209, otherwise known as The Family
Code of the Philippines, the said disposition of a communal property is void, viz.:chanroblesvirtuallawlibrary
Art. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of
disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which
must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common
properties, the other spouse may assume sole powers of administration. These powers do not include the powers of
disposition or encumbrance without the authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall
be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a
binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by
either or both offerors.35cralawlawlibrary
It is clear under the foregoing provision of the Family Code that Rogelio could not sell the subject property without the
written consent of respondent or the authority of the court. Without such consent or authority, the entire sale is void. As
correctly explained by the appellate court:chanroblesvirtuallawlibrary
In the instant case, defendant Rogelio sold the entire subject property to defendant-appellant Josefina on 29 December
1992 or during the existence of Rogelio's marriage to plaintiff-appellee Shirley, without the consent of the latter. The
subject property forms part of Rogelio and Shirley's absolute community of property. Thus, the trial court erred in
declaring the deed of sale null and void only insofar as the 55.05 square meters representing the one-half (1/2) portion of
plaintiff-appellee Shirley. In absolute community of property, if the husband, without knowledge and consent of the wife,
sells (their) property, such sale is void. The consent of both the husband Rogelio and the wife Shirley is required and the
absence of the consent of one renders the entire sale null and void including the portion of the subject property pertaining
to defendant Rogelio who contracted the sale with defendant-appellant Josefina. Since the Deed of Absolute Sale x x x
entered into by and between defendant-appellant Josefina and defendant Rogelio dated 29 December 1992, during the
subsisting marriage between plaintiff-appellee Shirley and Rogelio, was without the written consent of Shirley, the said
Deed of Absolute Sale is void in its entirety. Hence, the trial court erred in declaring the said Deed of Absolute Sale as void
only insofar as the 1/2 portion pertaining to the share of Shirley is concerned.36cralawlawlibrary

Finally, consistent with our ruling that Rogelio solely entered into the contract of sale with petitioner and acknowledged
receiving the entire consideration of the contract under the Deed of Absolute Sale, Shirley could not be held accountable
to petitioner for the reimbursement of her payment for the purchase of the subject property. Under Article 94 of the
Family Code, the absolute community of property shall only be "liable for x x x [d]ebts and obligations contracted by either
spouse without the consent of the other to the extent that the family may have been benefited x x x." As correctly stated
by the appellate court, there being no evidence on record that the amount received by Rogelio redounded to the benefit of
the family, respondent cannot be made to reimburse any amount to petitioner.37
WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals dated May 14, 2010 and July 21, 2010, respectively, in CA-G.R. CV No. 70235 are AFFIRMED.

Costs against petitioner.

MUÑOZ, JR., vs RAMIREZ and ELISEO CARLOS, August 25, 2010

We resolve the present petition for review on certiorari1 filed by petitioner Francisco Muñoz, Jr. (petitioner) to challenge
the decision2 and the resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 57126.4 The CA decision set aside the
decision5 of the Regional Trial Court (RTC), Branch 166, Pasig City, in Civil Case No. 63665. The CA resolution denied the
petitioner’s subsequent motion for reconsideration.

Subject of the present case is a seventy-seven (77)-square meter residential house and lot located at 170 A. Bonifacio
Street, Mandaluyong City (subject property), covered by Transfer Certificate of Title (TCT) No. 7650 of the Registry of
Deeds of Mandaluyong City in the name of the petitioner.6

The residential lot in the subject property was previously covered by TCT No. 1427, in the name of Erlinda Ramirez,
married to Eliseo Carlos (respondents).7

On April 6, 1989, Eliseo, a Bureau of Internal Revenue employee, mortgaged TCT No. 1427, with Erlinda’s consent, to the
Government Service Insurance System (GSIS) to secure a ₱136,500.00 housing loan, payable within twenty (20) years,
through monthly salary deductions of ₱1,687.66.8 The respondents then constructed a thirty-six (36)-square meter, two-
story residential house on the lot.

On July 14, 1993, the title to the subject property was transferred to the petitioner by virtue of a Deed of Absolute Sale,
dated April 30, 1992, executed by Erlinda, for herself and as attorney-in-fact of Eliseo, for a stated consideration of
₱602,000.00.9

On September 24, 1993, the respondents filed a complaint with the RTC for the nullification of the deed of absolute sale,
claiming that there was no sale but only a mortgage transaction, and the documents transferring the title to the
petitioner’s name were falsified.

The respondents alleged that in April 1992, the petitioner granted them a ₱600,000.00 loan, to be secured by a first
mortgage on TCT No. 1427; the petitioner gave Erlinda a ₱200,000.0010 advance to cancel the GSIS mortgage, and made
her sign a document purporting to be the mortgage contract; the petitioner promised to give the ₱402,000.00 balance
when Erlinda surrenders TCT No. 1427 with the GSIS mortgage cancelled, and submits an affidavit signed by Eliseo
stating that he waives all his rights to the subject property; with the ₱200,000.00 advance, Erlinda paid GSIS
₱176,445.2711 to cancel the GSIS mortgage on TCT No. 1427;12 in May 1992, Erlinda surrendered to the petitioner the
clean TCT No. 1427, but returned Eliseo’s affidavit, unsigned; since Eliseo’s affidavit was unsigned, the petitioner refused
to give the ₱402,000.00 balance and to cancel the mortgage, and demanded that Erlinda return the ₱200,000.00 advance;
since Erlinda could not return the ₱200,000.00 advance because it had been used to pay the GSIS loan, the petitioner
kept the title; and in 1993, they discovered that TCT No. 7650 had been issued in the petitioner’s name, cancelling TCT
No.1427 in their name.

The petitioner countered that there was a valid contract of sale. He alleged that the respondents sold the subject property
to him after he refused their offer to mortgage the subject property because they lacked paying capacity and were
unwilling to pay the incidental charges; the sale was with the implied promise to repurchase within one year, 13 during
which period (from May 1, 1992 to April 30, 1993), the respondents would lease the subject property for a monthly rental
of ₱500.00;14 when the respondents failed to repurchase the subject property within the one-year period despite notice, he
caused the transfer of title in his name on July 14, 1993;15 when the respondents failed to pay the monthly rentals
despite demand, he filed an ejectment case16 against them with the Metropolitan Trial Court (MeTC), Branch 60,
Mandaluyong City, on September 8, 1993, or sixteen days before the filing of the RTC case for annulment of the deed of
absolute sale.

THE CASE FOR THE RESPONDENTS

The respondents submit that it is unnecessary to compare the respective values of the house and of the lot to determine
ownership of the subject property; it was acquired during their marriage and, therefore, considered conjugal property.
They also submit that the transaction between the parties was not a sale, but an equitable mortgage because (a) they
remained in possession of the subject property even after the execution of the deed of absolute sale, (b) they paid the 1993
real property taxes due on the subject property, and (c) they received ₱200,000.00 only of the total stated price of
₱602,000.00.
THE ISSUE

The issues in the present case boil down to (1) whether the subject property is paraphernal or conjugal; and, (2) whether
the contract between the parties was a sale or an equitable mortgage.

OUR RULING

We deny the present Petition but for reasons other than those advanced by the CA.

This Court is not a trier of facts. However, if the inference, drawn by the CA, from the facts is manifestly mistaken, as in
the present case, we can review the evidence to allow us to arrive at the correct factual conclusions based on the record.33

First Issue:

Paraphernal or Conjugal?

As a general rule, all property acquired during the marriage, whether the acquisition appears to have been made,
contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. 34

In the present case, clear evidence that Erlinda inherited the residential lot from her father has sufficiently rebutted this
presumption of conjugal ownership.35 Pursuant to Articles 9236 and 10937 of the Family Code, properties acquired by
gratuitous title by either spouse, during the marriage, shall be excluded from the community property and be the
exclusive property of each spouse.38 The residential lot, therefore, is Erlinda’s exclusive paraphernal property.

The CA, however, held that the residential lot became conjugal when the house was built thereon through conjugal funds,
applying the second paragraph of Article 158 of the Civil Code and Calimlim-Canullas.39 Under the second paragraph of
Article 158 of the Civil Code, a land that originally belonged to one spouse becomes conjugal upon the construction of
improvements thereon at the expense of the partnership. We applied this provision in Calimlim-Canullas,40 where we held
that when the conjugal house is constructed on land belonging exclusively to the husband, the land ipso facto becomes
conjugal, but the husband is entitled to reimbursement of the value of the land at the liquidation of the conjugal
partnership.

The CA misapplied Article 158 of the

Civil Code and Calimlim-Canullas

We cannot subscribe to the CA’s misplaced reliance on Article 158 of the Civil Code and Calimlim-Canullas.

As the respondents were married during the effectivity of the Civil Code, its provisions on conjugal partnership of gains
(Articles 142 to 189) should have governed their property relations. However, with the enactment of the Family Code on
August 3, 1989, the Civil Code provisions on conjugal partnership of gains, including Article 158, have been superseded
by those found in the Family Code (Articles 105 to 133). Article 105 of the Family Code states:

xxxx

The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired
in accordance with the Civil Code or other laws, as provided in Article 256.

Thus, in determining the nature of the subject property, we refer to the provisions of the Family Code, and not the Civil
Code, except with respect to rights then already vested.

Article 120 of the Family Code, which supersedes Article 158 of the Civil Code, provides the solution in determining the
ownership of the improvements that are made on the separate property of the spouses, at the expense of the partnership
or through the acts or efforts of either or both spouses. Under this provision, when the cost of the improvement and any
resulting increase in value are more than the value of the property at the time of the improvement, the entire property of
one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the
owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-
spouse, likewise subject to reimbursement of the cost of the improvement.41
In the present case, we find that Eliseo paid a portion only of the GSIS loan through monthly salary deductions. From
April 6, 198942 to April 30, 1992,43 Eliseo paid about ₱60,755.76,44 not the entire amount of the GSIS housing loan plus
interest, since the petitioner advanced the ₱176,445.2745 paid by Erlinda to cancel the mortgage in 1992. Considering the
₱136,500.00 amount of the GSIS housing loan, it is fairly reasonable to assume that the value of the residential lot is
considerably more than the ₱60,755.76 amount paid by Eliseo through monthly salary deductions.

Thus, the subject property remained the exclusive paraphernal property of Erlinda at the time she contracted with the
petitioner; the written consent of Eliseo to the transaction was not necessary. The NBI finding that Eliseo’s signatures in
the special power of attorney and affidavit were forgeries was immaterial.

Nonetheless, the RTC and the CA apparently failed to consider the real nature of the contract between the parties.

Second Issue:
Sale or Equitable Mortgage?

Jurisprudence has defined an equitable mortgage "as one which although lacking in some formality, or form or words, or
other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as
security for a debt, there being no impossibility nor anything contrary to law in this intent."46

Article 1602 of the Civil Code enumerates the instances when a contract, regardless of its nomenclature, may be
presumed to be an equitable mortgage: (a) when the price of a sale with right to repurchase is unusually inadequate; (b)
when the vendor remains in possession as lessee or otherwise; (c) when upon or after the expiration of the right to
repurchase another instrument extending the period of redemption or granting a new period is executed; (d) when the
purchaser retains for himself a part of the purchase price; (e) when the vendor binds himself to pay the taxes on
the thing sold; and, (f) in any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other obligation. These
instances apply to a contract purporting to be an absolute sale.47

For the presumption of an equitable mortgage to arise under Article 1602 of the Civil Code, two (2) requisites must
concur: (a) that the parties entered into a contract denominated as a contract of sale; and, (b) that their intention was to
secure an existing debt by way of a mortgage. Any of the circumstances laid out in Article 1602 of the Civil Code, not the
concurrence nor an overwhelming number of the enumerated circumstances, is sufficient to support the conclusion that a
contract of sale is in fact an equitable mortgage.48

Contract is an equitable mortgage

In the present case, there are four (4) telling circumstances pointing to the existence of an equitable mortgage.

First, the respondents remained in possession as lessees of the subject property; the parties, in fact, executed a one-year
contract of lease, effective May 1, 1992 to April 30, 1993.49

Second, the petitioner retained part of the "purchase price," the petitioner gave a ₱200,000.00 advance to settle the GSIS
housing loan, but refused to give the ₱402,000.00 balance when Erlinda failed to submit Eliseo’s signed affidavit of waiver
of rights.

Third, respondents paid the real property taxes on July 8, 1993, despite the alleged sale on April 30, 1992; 50 payment of
real property taxes is a usual burden attaching to ownership and when, as here, such payment is coupled with
continuous possession of the property, it constitutes evidence of great weight that the person under whose name the
realty taxes were declared has a valid and rightful claim over the land.51

Fourth, Erlinda secured the payment of the principal debt owed to the petitioner with the subject property. The records
show that the petitioner, in fact, sent Erlinda a Statement of Account showing that as of February 20, 1993, she owed
₱384,660.00, and the daily interest, starting February 21, 1993, was ₱641.10.52 Thus, the parties clearly intended an
equitable mortgage and not a contract of sale.

That the petitioner advanced the sum of ₱200,000.00 to Erlinda is undisputed. This advance, in fact, prompted the latter
to transfer the subject property to the petitioner. Thus, before the respondents can recover the subject property, they
must first return the amount of ₱200,000.00 to the petitioner, plus legal interest of 12% per annum, computed from April
30, 1992.
We cannot sustain the ballooned obligation of ₱384,660.00, claimed in the Statement of Account sent by the petitioner,53
sans any evidence of how this amount was arrived at. Additionally, a daily interest of ₱641.10 or ₱19,233.00 per month
for a ₱200,000.00 loan is patently unconscionable. While parties are free to stipulate on the interest to be imposed on
monetary obligations, we can step in to temper the interest rates if they are unconscionable. 54

In Lustan v. CA,55 where we established the reciprocal obligations of the parties under an equitable mortgage, we ordered
the reconveyance of the property to the rightful owner therein upon the payment of the loan within ninety (90) days from
the finality of the decision.56

WHEREFORE, in light of all the foregoing, we hereby DENY the present petition. The assailed decision and resolution of
the Court of Appeals in CA-G.R. CV No. 57126 are AFFIRMED with the following MODIFICATIONS:

1. The Deed of Absolute Sale dated April 30, 1992 is hereby declared an equitable mortgage; and

2. The petitioner is obligated to RECONVEY to the respondents the property covered by Transfer Certificate of Title
No. 7650 of the Register of Deeds of Mandaluyong City, UPON THE PAYMENT OF ₱200,000.00, with 12% legal
interest from April 30, 1992, by respondents within NINETY DAYS FROM THE FINALITY OF THIS DECISION.

AYALA INVESTMENT vs CA, February 12, 1998

Under Article 161 of the Civil Code, what debts and obligations contracted by the husband alone are considered "for the
benefit of the conjugal partnership" which are chargeable against the conjugal partnership? Is a surety agreement or an
accommodation contract entered into by the husband in favor of his employer within the contemplation of the said
provision?

These are the issues which we will resolve in this petition for review.

The petitioner assails the decision dated April 14, 1994 of the respondent Court of Appeals in "Spouses Alfredo and
Encarnacion Ching vs. Ayala Investment and Development Corporation, et. al.," docketed as CA-G.R. CV No. 29632,1
upholding the decision of the Regional Trial Court of Pasig, Branch 168, which ruled that the conjugal partnership
of gains of respondents-spouses Alfredo and Encarnacion Ching is not liable for the payment of the debts secured
by respondent-husband Alfredo Ching.

Philippine Blooming Mills (hereinafter referred to as PBM) obtained a P50,300,000.00 loan from petitioner Ayala
Investment and Development Corporation (hereinafter referred to as AIDC). As added security for the credit line
extended to PBM, respondent Alfredo Ching, Executive Vice President of PBM, executed security agreements on
December 10, 1980 and on March 20, 1981 making himself jointly and severally answerable with PBM's
indebtedness to AIDC.

PBM failed to pay the loan. Thus, on July 30, 1981, AIDC filed a case for sum of money against PBM and
respondent-husband Alfredo Ching with the then Court of First Instance of Rizal (Pasig), Branch VIII, entitled
"Ayala Investment and Development Corporation vs. Philippine Blooming Mills and Alfredo Ching," docketed as
Civil Case No. 42228.

After trial, the court rendered judgment ordering PBM and respondent-husband Alfredo Ching to jointly and
severally pay AIDC the principal amount of P50,300,000.00 with interests.

Pending appeal of the judgment in Civil Case No. 42228, upon motion of AIDC, the lower court issued a writ of
execution pending appeal. Upon AIDC's putting up of an P8,000,000.00 bond, a writ of execution dated May 12,
1982 was issued. Thereafter, petitioner Abelardo Magsajo, Sr., Deputy Sheriff of Rizal and appointed sheriff in
Civil Case No. 42228, caused the issuance and service upon respondents-spouses of a notice of sheriff sale dated
May 20, 1982 on three (3) of their conjugal properties. Petitioner Magsajo then scheduled the auction sale of the
properties levied.

AIDC filed a petition for certiorari before the Court of Appeals,3 questioning the order of the lower court
enjoining the sale. Respondent Court of Appeals issued a Temporary Restraining Order on June 25, 1982,
enjoining the lower court4 from enforcing its Order of June 14, 1982, thus paving the way for the scheduled
auction sale of respondents-spouses conjugal properties.

On September 3, 1983, AIDC filed a motion to dismiss the petition for injunction filed before Branch XIII of the
CFI of Rizal (Pasig) on the ground that the same had become moot and academic with the consummation of the
sale. Respondents filed their opposition to the motion arguing, among others, that where a third party who claim
is ownership of the property attached or levied upon, a different legal situation is presented; and that in this case,
two (2) of the real properties are actually in the name of Encarnacion Ching, a non-party to Civil Case No. 42228.

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

The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered DISMISSING the appeal.
The decision of the Regional Trial Court is AFFIRMED in toto.6

Petitioner filed a Motion for Reconsideration which was denied by the respondent.

Petitioner contends that the "respondent court erred in ruling that the conjugal partnership of private
respondents is not liable for the obligation by the respondent-husband."

Specifically, the errors allegedly committed by the respondent court are as follows:

I. RESPONDENT COURT ERRED IN RULING THAT THE OBLIGATION INCURRED

RESPONDENT HUSBAND DID NOT REDOUND TO THE BENEFIT OF THE CONJUGAL
PARTNERSHIP OF THE PRIVATE RESPONDENT.

II. RESPONDENT COURT ERRED IN RULING THAT THE ACT OF RESPONDENT

HUSBAND IN SECURING THE SUBJECT LOAN IS NOT PART OF HIS INDUSTRY,
BUSINESS OR CAREER FROM WHICH HE SUPPORTS HIS FAMILY.

We do not agree with petitioners that there is a difference between the terms "redounded to the benefit of" or
"benefited from" on the one hand; and "for the benefit of" on the other. They mean one and the same thing.
Article 161 (1) of the Civil Code and Article 121 (2) of the Family Code are similarly worded, i.e., both use the
term "for the benefit of." On the other hand, Article 122 of the Family Code provides that "The payment of
personal debts by the husband or the wife before or during the marriage shall not be charged to the conjugal
partnership except insofar as they redounded to the benefit of the family." As can be seen, the terms are used
interchangeably.

Petitioners further contend that the ruling of the respondent court runs counter to the pronouncement of this
Court in the case of Cobb-Perez vs. Lantin,9 that the husband as head of the family and as administrator of the
conjugal partnership is presumed to have contracted obligations for the benefit of the family or the conjugal
partnership.

Contrary to the contention of the petitioners, the case of Cobb-Perez is not applicable in the case at bar. This
Court has, on several instances, interpreted the term "for the benefit of the conjugal partnership."

From the foregoing jurisprudential rulings of this Court, we can derive the following conclusions:

(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services
to be used in or for his own business or his own profession, that contract falls within the term . . . . obligations for
the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit to
the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or
services, the family stands to benefit from the loan facility or services to be rendered to the business or
profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed.
Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and
rightly so, that such obligation will redound to the benefit of the conjugal partnership.

(B) On the other hand, if the money or services are given to another person or entity, and the husband acted only
as a surety or guarantor, that contract cannot, by itself, alone be categorized as falling within the context of
"obligations for the benefit of the conjugal partnership." The contract of loan or services is clearly for the benefit
of the principal debtor and not for the surety or his family. No presumption can be inferred that, when a husband
enters into a contract of surety or accommodation agreement, it is "for the benefit of the conjugal partnership."
Proof must be presented to establish benefit redounding to the conjugal partnership.
Thus, the distinction between the Cobb-Perez case, and we add, that of the three other companion cases, on the
one hand, and that of Ansaldo, Liberty Insurance and Luzon Surety, is that in the former, the husband contracted
the obligation for his own business; while in the latter, the husband merely acted as a surety for the loan
contracted by another for the latter's business.

The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed as surety for the P50M loan
contracted on behalf of PBM. petitioner should have adduced evidence to prove that Alfredo Ching's acting as
surety redounded to the benefit of the conjugal partnership. The reason for this is as lucidly explained by the
respondent court:

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

The aforequoted concurring opinion agreed with the majority decision that the conjugal partnership should not be
made liable for the surety agreement which was clearly for the benefit of a third party. Such opinion merely
registered an exception to what may be construed as a sweeping statement that in all cases actual profit or
benefit must accrue to the conjugal partnership. The opinion merely made it clear that no actual benefits to the
family need be proved in some cases such as in the Javier case. There, the husband was the principal obligor
himself. Thus, said transaction was found to be "one that would normally produce . . . benefit for the partnership."
In the later case of G-Tractors, Inc., the husband was also the principal obligor — not merely the surety.

In all our decisions involving accommodation contracts of the husband, 18 we underscored the requirement that:
"there must be the requisite showing . . . of some advantage which clearly accrued to the welfare of the spouses"
or "benefits to his family" or "that such obligations are productive of some benefit to the family." Unfortunately,
the petition did not present any proof to show: (a) Whether or not the corporate existence of PBM was prolonged
and for how many months or years; and/or (b) Whether or not the PBM was saved by the loan and its shares of
stock appreciated, if so, how much and how substantial was the holdings of the Ching family.

We agree with the respondent court. Indeed, considering the odds involved in guaranteeing a large amount
(P50,000,000.00) of loan, the probable prolongation of employment in PBM and increase in value of its stocks,
would be too small to qualify the transaction as one "for the benefit" of the surety's family. Verily, no one could
say, with a degree of certainty, that the said contract is even "productive of some benefits" to the conjugal
partnership.

We likewise agree with the respondent court (and this view is not contested by the petitioners) that the provisions
of the Family Code is applicable in this case. These provisions highlight the underlying concern of the law for the
conservation of the conjugal partnership; for the husband's duty to protect and safeguard, if not augment, not to
dissipate it.

This is the underlying reason why the Family Code clarifies that the obligations entered into by one of the
spouses must be those that redounded to the benefit of the family and that the measure of the partnership's
liability is to "the extent that the family is benefited."20

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

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

This theory is new as it is novel.

We are likewise of the view that no matter how often an executive acted or was persuaded to act, as a surety for
his own employer, this should not be taken to mean that he had thereby embarked in the business of suretyship
or guaranty.
This is not to say, however, that we are unaware that executives are often asked to stand as surety for their
company's loan obligations. This is especially true if the corporate officials have sufficient property of their own;
otherwise, their spouses' signatures are required in order to bind the conjugal partnerships.

The fact that on several occasions the lending institutions did not require the signature of the wife and the
husband signed alone does not mean that being a surety became part of his profession. Neither could he be
presumed to have acted for the conjugal partnership.

Article 121, paragraph 3, of the Family Code is emphatic that the payment of personal debts contracted by the
husband or the wife before or during the marriage shall not be charged to the conjugal partnership except to the
extent that they redounded to the benefit of the family.

Here, the property in dispute also involves the family home. The loan is a corporate loan not a personal one.
Signing as a surety is certainly not an exercise of an industry or profession nor an act of administration for the
benefit of the family.

On the basis of the facts, the rules, the law and equity, the assailed decision should be upheld as we now uphold
it. This is, of course, without prejudice to petitioner's right to enforce the obligation in its favor against the PBM
receiver in accordance with the rehabilitation program and payment schedule approved or to be approved by the
Securities & Exchange Commission.

WHEREFORE, the petition for review should be, as it is hereby, DENIED for lack of merit.

FRANCISCO VS GONZALES

Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the Court of Appeals (CA)
Decision dated April 30, 2007, which affirmed the Regional Trial Court (RTC) Orders dated June 4, 2003 and July 31,
2003, denying petitioners' motion to stop execution sale.

Petitioners Cleodia U. Francisco and Ceamantha U. Francisco are the minor children of Cleodualdo M. Francisco
(Cleodualdo) and Michele Uriarte Francisco (Michele). In a Partial Decision dated November 29, 2000 rendered by the RTC
of Makati, Branch 144, in Civil Case No. 93-2289 for Declaration of Nullity of Marriage, the Compromise Agreement
entered into by the estranged couple was approved. The Compromise Agreement contained in part the following
provisions:

7. In their desire to manifest their genuine concern for their children, Cleodia and Ceamantha, Cleodualdo and
Michelle have voluntarily agreed to herein set forth their obligations, rights and responsibilities on matters relating to
their children's support, custody, visitation, as well as to the dissolution of their conjugal partnership of gains as follows:

(a) Title and ownership of the conjugal property consisting of a house and lot
located in Ayala Alabang, Muntinlupa, Metro Manila shall be transferred by way of a deed
of donation to Cleodia and Ceamantha, as co-owners, when they reach nineteen (19) and
eighteen (18) years old, respectively, subject to the following conditions:

x x x1[1]
 The property subject of the Compromise Agreement is a house and lot covered by Transfer Certificate of Title No.
167907 in the name of Cleodualdo M. Francisco, married to Michele U. Francisco, with an area of 414 square meters, and
located in 410 Taal St., Ayala Alabang Village, Muntinlupa City.2[2]

Meanwhile, in a case for Unlawful Detainer with Preliminary Attachment filed by spouses Jorge C. Gonzales and
Purificacion W. Gonzales (respondents) against George Zoltan Matrai (Matrai) and Michele, the Metropolitan Trial Court
(MeTC) of Muntinlupa City, Branch 80, rendered a Decision dated May 10, 2001, ordering Matrai and Michele to vacate
the premises leased to them located in 264 Lanka Drive, Ayala Alabang Village, Muntinlupa City, and to pay back rentals,
unpaid telephone bills and attorney's fees.3[3]

Pending appeal with the RTC of Muntinlupa, Branch 256, an order was issued granting respondents' prayer for
the execution of the MeTC Decision.4[4] A notice of sale by execution was then issued by the sheriff covering the real
property under Transfer Certificate of Title No. T-167907 in the name of Cleodualdo M. Francisco, married to Michele U.
Francisco.5[5]

When petitioners' grandmother learned of the scheduled auction, she, as guardian-in-fact of petitioners, filed with
the RTC an Affidavit of Third Party Claim6[6] and a Very Urgent Motion to Stop Sale by Execution7[7] but this was denied
in the Order dated June 4, 2003.8[8] Petitioners' motion for reconsideration was denied per RTC Order dated July 31,
2003.9[9]
 Petitioners then filed a petition for certiorari with the CA.

Pending resolution by the CA, the RTC issued an Order dated July 8, 2005, granting respondents' petition for the
issuance of a new certificate of title.10[10] The RTC also issued an Order on February 13, 2006, granting respondents'
motion for the issuance of a writ of possession.11[11]

On April 30, 2007, the CA dismissed the petition, the dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is hereby DISMISSED. The Order(s), dated June 4, 2003 and July
31, 2003, of the Regional Trial Court of Muntinlupa City, Br. 256, in Civil Case No. 01-201, STAND. Costs against the
Petitioners.

SO ORDERED.12[12]

Hence, herein petition. As prayed for, the Court issued a temporary restraining order on July 11, 2007, enjoining
respondents, the RTC, the Register of Deeds, and the Sheriff from implementing or enforcing the RTC Order dated July 8,
2005, canceling TCT No. 167907 and Order dated February 13, 2006, issuing a writ of possession, until further orders
from the Court.13[13]

Petitioners argue that: (1) they are the rightful owners of the property as the Partial Decision issued by the RTC of
Makati in Civil Case No. 93-2289 had already become final; (2) their parents already waived in their favor their rights over
the property; (3) the adjudged obligation of Michele in the ejectment case did not redound to the benefit of the family; (4)
Michele's obligation is a joint obligation between her and Matrai, not joint and solidary.14[14]

The Court finds that it was grave error for the RTC to proceed with the execution, levy and sale of the subject
property. The power of the court in executing judgments extends only to properties unquestionably belonging to the
judgment debtor alone,15[15] in the present case to those belonging to Michele and Matrai. One man's goods shall not be
sold for another man's debts.16[16]

To begin with, the RTC should not have ignored that TCT No. 167907 is in the name of Cleodualdo M. Francisco,
married to Michele U. Francisco. On its face, the title shows that the registered owner of the property is not Matrai and
Michele but Cleodualdo, married to Michele. This describes the civil status of Cleodualdo at the time the property was
acquired.17[17]

Records show that Cleodualdo and Michele were married on June 12, 1986, prior to the effectivity of the Family
Code on August 3, 1988. As such, their property relations are governed by the Civil Code on conjugal partnership of gains.

The CA acknowledged that ownership of the subject property is conjugal in nature;18[18] however, it ruled that
since Michele's obligation was not proven to be a personal debt, it must be inferred that it is conjugal and redounded to
the benefit of the family, and hence, the property may be held answerable for it.19[19]

The Court does not agree.

A wife may bind the conjugal partnership only when she purchases things necessary for the support of the family,
or when she borrows money for that purpose upon her husband's failure to deliver the needed sum; when administration
of the conjugal partnership is transferred to the wife by the courts or by the husband; or when the wife gives moderate
donations for charity. Failure to establish any of these circumstances means that the conjugal asset may not be bound to
answer for the wife's personal obligation.20[20] Considering that the foregoing circumstances are evidently not present in
this case as the liability incurred by Michele arose from a judgment rendered in an unlawful detainer case against her and
her partner Matrai.

Furthermore, even prior to the issuance of the Notice of Levy on Execution on November 28, 2001,21[21] there was
already annotated on the title the following inscription:

Entry No. 23341-42/T-167907 Nullification of Marriage

By order of the Court RTC, NCR, Branch 144, Makati City dated July 4, 2001, which become final and executory
on October 18, 2001 declaring the Marriage Contract between Michelle Uriarte and Cleodualdo M. Francisco, Jr. is null &
void ab initio and title of ownership of the conjugal property consisting of the above-described property shall be
transferred by way of a Deed of Donation to Cleodia Michaela U. Francisco and Ceamantha Maica U. Francisco, as co-
owners when they reach nineteen (19) and eighteen (18) yrs. old to the condition that Cleodualdo, shall retain
usufructuary rights over the property until he reaches the age of 65 yrs. Old.

Date of instrument Oct 18, 2001

Date of inscription Oct 22, 2001.22[22]

This annotation should have put the RTC and the sheriff on guard, and they should not have proceeded with the
execution of the judgment debt of Michele and Matrai.

While the trial court has the competence to identify and to secure properties and interest therein held by the
judgment debtor for the satisfaction of a money judgment rendered against him, such exercise of its authority is premised
on one important fact: that the properties levied upon, or sought to be levied upon, are properties unquestionably owned
by the judgment debtor and are not exempt by law from execution.23[23] Also, a sheriff is not authorized to attach or levy
on property not belonging to the judgment debtor, and even incurs liability if he wrongfully levies upon the property of a
third person. A sheriff has no authority to attach the property of any person under execution except that of the judgment
debtor.24[24]

It should be noted that the judgment debt for which the subject property was being made to answer was incurred
by Michele and her partner,25[25] Matrai. Respondents allege that the lease of the property in Lanka Drive redounded to the
benefit of the family.26[26] By no stretch of one's imagination can it be concluded that said debt/obligation was incurred for
the benefit of the conjugal partnership or that some advantage accrued to the welfare of the family. In BA Finance
Corporation v. Court of Appeals,27[27] the Court ruled that the petitioner cannot enforce the obligation contracted by
Augusto Yulo against his conjugal properties with respondent Lily Yulo because it was not established that the obligation
contracted by the husband redounded to the benefit of the conjugal partnership under Article 161 of the Civil Code. The
Court stated:

In the present case, the obligation which the petitioner is seeking to enforce against the conjugal property
managed by the private respondent Lily Yulo was undoubtedly contracted by Augusto Yulo for his own benefit because at
the time he incurred the obligation he had already abandoned his family and had left their conjugal home. Worse, he
made it appear that he was duly authorized by his wife in behalf of A & L Industries, to procure such loan from the
petitioner. Clearly, to make A & L Industries liable now for the said loan would be unjust and contrary to the express
provision of the Civil Code. (Emphasis supplied)

Similarly in this case, Michele, who was then already living separately from Cleodualdo,28[28] rented the house in
Lanka Drive for her and Matrais own benefit. In fact, when they entered into the lease agreement, Michele and Matrai
purported themselves to be husband and wife.29[29] Respondents bare allegation that petitioners lived with Michele on the
leased property is not sufficient to support the conclusion that the judgment debt against Michele and Matrai in the
ejectment suit redounded to the benefit of the family of Michele and Cleodualdo and petitioners. Thus, in Homeowners
Savings and Loan Bank v. Dailo, the Court stated thus:

x x x Ei incumbit probatio qui dicit, non qui negat (he who asserts, not he who denies, must prove). Petitioners
sweeping conclusion that the loan obtained by the late Marcelino Dailo, Jr. to finance the construction of housing units
without a doubt redounded to the benefit of his family, without adducing adequate proof, does not persuade this Court.
Other than petitioners bare allegation, there is nothing from the records of the case to compel a finding that, indeed, the
loan obtained by the late Marcelino Dailo, Jr. redounded to the benefit of the family. Consequently, the conjugal
partnership cannot be held liable for the payment of the principal obligation.30[30]

To hold the property in Taal St. liable for the obligations of Michele and Matrai would be going against the spirit and
avowed objective of the Civil Code to give the utmost concern for the solidarity and well-being of the family as a unit.31[31]
 In justifying the levy against the property, the RTC went over the Compromise Agreement as embodied in the
Partial Decision dated November 29, 2000. Oddly, the RTC ruled that there was no effective transfer of ownership to the
siblings Cleodia and Ceamantha Francisco. In the same breath, the RTC astonishingly ruled that Michele is now the
owner of the property inasmuch as Cleodualdo already waived his rights over the property. The Compromise Agreement
must not be read piece-meal but in its entirety. It is provided therein, thus:

7. In their desire to manifest their genuine concern for their children, Cleodia and Ceamantha, Cleodualdo and
Michelle have voluntarily agreed to herein set forth their obligations, rights and responsibilities on matters relating to
their children's support, custody, visitation, as well as to the dissolution of their conjugal partnership of gains as follows:

(a) Title and ownership of the conjugal property consisting of a house and
lot located in Ayala Alabang, Muntinlupa, Metro Manila shall be transferred by way
of a deed of donation to Cleodia and Ceamantha, as co-owners, when they reach
nineteen (19) and eighteen (18) years old, respectively, subject to the following
conditions:

a.1. Cleodualdo shall retain usufructuary rights over the property until he
reaches the age of 65 years old, with the following rights and responsibilities:

x x x x32[32] (Emphasis supplied)

From the foregoing, it is clear that both Michele and Cleodualdo have waived their title to and ownership of the
house and lot in Taal St. in favor of petitioners. The property should not have been levied and sold at execution sale, for
lack of legal basis.

Verily, the CA committed an error in sustaining the RTC Orders dated June 4, 2003 and July 31, 2003.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision dated April 30, 2007, affirming
RTC Orders dated June 4, 2003 and July 31, 2003, are hereby NULLIFIED and SET ASIDE. The temporary restraining
order issued by the Court per Resolution of July 11, 2007 is hereby made PERMANENT.

Costs against respondents.