91,93,95 Banaue, Cebu City acquired sometime in 1970.
Pursuant to the provisions of Article 494
Villanueva vs. Court of Appeals, G.R. No. 143286 April 14, 2004
FACTS: On 13 October 1988, Eusebia Retuya filed a complaint before the trial court
against her husband Nicolas Retuya, Pacita Villanueva and Nicolas’ son with Pacita,
Procopio Villanueva. Eusebia sought the reconveyance from Nicolas and Pacita of several
properties (subject properties), claiming that such are her conjugal properties with
Nicolas. Plaintiff Eusebia, is the legal wife of defendant Nicolas, having been married on
October 7, 1926. Out of the lawful wedlock, they begot five (5) children. Spouses Retuya
resided at Mandaue City. During their marriage, they acquired real properties and all
improvements situated in Mandaue City, and Consolacion, Cebu. Nicolas is the co-owner
of a parcel of land situated in Mandaue City which he inherited from his parents Esteban
Retuya and Balbina Solon as well as the purchasers of hereditary shares of
approximately eight (8) parcels of land in Mandaue City. Some of the properties earn
income from coconuts leased to corporations
In 1945, Nicolas no longer lived with his legitimate family and cohabited with
defendant, Pacita Villanueva, wherein Procopio Villanueva, is their illegitimate
son. Nicolas, then, was the only person who received the income of the properties.
Pacita, from the time she started living in concubinage with Nicolas, has no occupation.
She had no properties of her own from which she could derive income. From the time
Nicolas suffered stroke until the present, his illegitimate son is already the one who has
been receiving the income of his properties
Settlement between parties was asked but not met. Trial court in favor of
Eusebia Natuya. Petitioners appealed. Eusebia died, and was then substituted by her
heirs. CA upheld trial court’s decision
ISSUE: Whether or not the subject properties acquired during the marriage between
Eusebia and Procopio are conjugal
Ruling: YES, they are conjugal. Petition denied; decision of CA affirmed
RATIO: The Family Code provisions on conjugal partnerships govern the property
relations between Nicolas and Eusebia even if they were married before the effectivity of
Family Code.
Article 105 of the Family Code explicitly mandates that the Family Code shall
apply to conjugal partnerships established before the Family Code without prejudice to
vested rights already acquired under the Civil Code or other laws. Thus, under the
Family Code, if the properties are acquired during the marriage, the presumption is that
they are conjugal. The burden of proof is on the party claiming that they are not
conjugal. This is counter-balanced by the requirement that the properties must first be
proven to have been acquired during the marriage before they are presumed conjugal.
Nicolas and Eusebia were married on 7 October 1926. Nicolas and Pacita started
cohabiting in 1936. Eusebia died on 23 November 1996. Pacita and Nicolas were married
on 16 December 1996. Petitioners themselves admit that Lot No. 152 was purchased on
4 October 1957. The date of acquisition of Lot No. 152 is clearly during the marriage of
Nicolas and Eusebia.
Since the subject properties, including Lot No. 152, were acquired during the
marriage of Nicolas and Eusebia, the presumption under Article 116 of the Family Code
is that all these are conjugal properties of Nicolas and Eusebia.
TAN VS CA
G.R. No. 120594 June 10, 1997
FACTS:
On April 17, 1989, a case for partition and accounting was instituted by the spouses
Alfonso and Eteria Tan against Alfonso's brothers, Celestino and Maximo, and their
respective wives, Rosario and Teresita. It was alleged in the complaint that the parties are
co-owners of a 906-square meter residential lot with improvements thereon situated at
of the New Civil Code, the spouses Alfonso and Eteria Tan, being co-owners to the extent
of one-third (1/3) portion of the aforesaid lot, sought partition of the same. Anent the
action for accounting, the spouses claimed that on August 15, 1963, the brothers together
with other siblings put up a business which they registered as Bel Air Auto Supply
Company and was engaged in the sale and distribution of auto spare parts. They alleged
that they are entitled to the fruits, proceeds and profits of the said family business, so
that, an accounting of the assets and liabilities of the partnership, as well as the interest
and participation of each member, is proper in the premises. Eteria testified that she and
Alfonso were married but were legally separated in 1977. Meanwhile, respondents claim
that Alfonso and Eteria have no claims over the business since the business has long been
dissolved and shares of the owners have been delivered upon the business’ dissolution.
Private respondents further alleged that the land was an inheritance from their late
mother.
ISSUE:
Whether or not the one – third share of Alfonso must be partitioned between Alfonso and
his wife Eteria as part of their conjugal partnership upon their legal separation.
Ruling:
Note that the marriage of Eteria and Alfonso and a decree of legal separation both took
place prior to the effectivity of the Family Code. Thus, the default property regime in the
absence of a marriage settlement is conjugal partnership of gains. Under the New Civil
Code, all properties of the marriage is presumed to belong to the conjugal partnership
unless it be proved that it pertains to the husband or to the wife (Art. 160, NCC). However,
private respondents were able to prove that they inherited the land from their late mother.
There is documentary proof to support the testimony of Maximo Tan that indeed the
property in dispute was inherited by Alfonso, Celestino and Maximo from their late mother,
Trinidad Uy Tan. We note that the 906-square meter lot is registered in the name of:
ALFONSO U. TAN, Filipino, of legal age, married to Eteria Teves; CELESTINO U. TAN,
Filipino, of legal age, married to Rosario Dy Kushin and MAXIMO U. TAN, Filipino, of legal
age, single. The Court also held that if spouses were co-owners, the title should say
“spouses Alfonso and Eteria”. There can be no doubt then, that although acquired during
Alfonso's marriage to Eteria, the one-third portion of the property should be regarded as
Alfonso's own exclusively, as a matter of law pursuant to Article 148 of the Civil Code
which provides that: Art. 148. The following shall be the exclusive property of each spouse:
(2) That which each acquires, during the mathe rriage, by lucrative titleThe Court held
that Eteria was failed to prove, that the lot was acquired by her and her husband with
their funds. Neither was her allegation that the house was constructed with the loan she
and her husband obtained duly substantiated. From whom the loan was obtained was not
even revealed. Thus, the one – third portion of the subject land cannot be partitioned
between Eteria and Alfonso since it does not belong to the conjugal partnership.
.
ABSOLUTE COMMUINTY PARTY (EXCLUDED PROPERTY)
CHING vs. COURT OF APPEALS
G.R. No. 124642 February
23, 2004
Facts:
On September 1978, Philippine Blooming Mills Company (PBMCI) obtained a 9-
million peso loan from Allied Banking Corporation (ABC).Alfredo Ching together with two
other persons executed a continuing guarantee with ABC binding themselves jointly and
severally liable for the PBMCI obligations.The extent of their guarantee is up to 38 million
pesos.
PBMCI failed to settle the loans which amounted to P12,612,972.88 (exclusive of interests,
penalties and other bank charges.)Together with the writ of preliminary attachment, the
sheriff levied (seized) the 100,000 common shares of City Corporation stocks registered
solely to Alfredo Ching.Mrs. Ching filed a petition to set aside the levy of the 100,000
common shares.According to her, the shares were purchased out of the conjugal
funds.She also argued that the loan of PBMCI did not redound to the benefit of the conjugal
partnership (or family).
Issue:
Whether or not the argument of Mrs. Ching is tenable.
Ruling:
Yes.. ABC has the burden of proof to show that the common shares registered
solely to the name of Alfredo Ching were owned by the latter. Just because Mr. Ching’s
name appeared as the sole registrant of the shares in the corporate books of CityCorp,
that doesn’t mean that it is his exclusive property and not to the conjugal partnership.
As held in the case of Ayala Investment and Development Corporation vs. Court
of Appeals, the court said that “signing as a surety is certainly not an exercise of an
industry or profession. It is not embarking in a business.”
For the conjugal partnership to become liable, it is important to show that the
family received benefits and advantages from the liability incurred. There is no
presumption that when a husband entered into an accommodation agreement or a
contract of surety, the conjugal partnership would be benefited.
The benefits must be those directly resulting from the loan.
Therefore, Mr. Alfredo Ching’s common shares must not be levied because he is
not the sole owner of such stocks. The shares belong to the conjugal partnership.
Under Article 121 of the Family Code.
PHILIP MATTHEWS vs. BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR
-ARTICLE 96
G.R. No. 164584 June 22, 2009
Brion, J.:
Facts:
1. On June 30, 1988, respondent Benjamin, a British subject, married Joselyn, a 17-
year old Filipina.
2. On June 9, 1989, while their marriage was subsisting, Joselyn bought from Diosa M.
Martin a lot in Boracay. The sale was allegedly financed by Benjamin.
3. Joselyn and Benjamin, also using the latter’s funds, constructed improvements
thereon and eventually converted the property to a vacation and tourist resort known as
the Admiral Ben Bow Inn.
4. All required permits and licenses for the operation of the resort were obtained in the
name of Ginna Celestino, Joselyn’s sister.
5. However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim
Philippsen. On June 8, 1992, Joselyn executed a 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.
6. Thereafter, on July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as
lessee, entered into an Agreement of Lease involving the Boracay property for a period of
25 years, with an annual rental of P12,000.00.
7. Petitioner thereafter took possession of the property and renamed the resort as Music
Garden Resort.
8. Claiming that the Agreement was null and void since it was entered into by Joselyn
without Benjamin’s consent, Benjamin instituted an action for Declaration of Nullity of
Agreement of Lease with Damages against Joselyn and the petitioner.
9. Benjamin claimed that his funds were used in the acquisition and improvement of the
Boracay property, and coupled with the fact that he was Joselyn’s husband, any
transaction involving said property required his consent.
Issue:
1. Whether or not the Lease Agreement of a parcel of land entered into by a Filipino wife
without the consent of her British husband is valid.
Ruling:
No. Section 7, Article XII of the 1987 Constitution states that:
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.
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. The primary purpose of this constitutional
provision is the conservation of the national patrimony. 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.
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.
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.
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 Benjamin’s claim is sustained, 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.
DISSOLUTION
IN RE ELENA BUEANAVENTURA MULLER vs. HELMUT MULLER
GR. No. 149615
August 29, 2006
Facts:
Elena Muller, petitioner, got married in to Helmut Muller, a German national, on
Hamburg dated Sept. 22, 1989. Then they resided there in a house owned by Helmut’ s
parents but later on sometime 1992 they permanently resided in the Philippines. Helmut
inherited the house in Germany from his parents which he subsequently sold and used
the proceeds for the purchase of a parcel of land in Antipolo as well as for the construction
of a house. That property was registered in the name of Elena Muller. During their
marriage they had some incompatibilities and Helmut was alleged womanizing, drinking,
and maltreatment. With that, the spouses eventually got separated. On September 26,
1994, Helmut, respondent, filed a petition for separation of properties before the Regional
Trial Court of Quezon City.
RTC terminated the regime of absolute community of property. It ruled that the
separation of properties shall be applied between the petitioner and respondent. The RTC
ordered the equal partition of personal properties located within the Philippines, except
those acquired by gratuitous title during their marriage. In relation to the property,
respondent cannot recover his funds expensed since it was a violation of Section7, Article
XII of the Constitution which prohibits aliens from procuring private lands.
The Court of Appeals ruled that there was no provision in the Constitution which
specifically prevents Helmut from procuring private land. With that decision it also ordered
Elena to reimburse him accordingly.
Issue:
Whether or not Helmut Muller, respondent, is entitled to be reimbursed by Elena
Muller, petitioner, with the funds used to purchase the property in Antipolo and to
construct the house.
Ruling:
No, Helmut cannot seek reimbursement because it was clear that he willingly
and knowingly bought the property using the proceeds of his sold inherited property in
Germany despite the constitutional prohibition. It is provided in the Constitution that alien
can’t own lands here in the Philippines and this provision is absolute only to the exception
of lands here in the Philippines inherited. With that violation he is not favored in any way
in the case. Also, reimburse is considered a fruit of the property, with that Helmut can’t
claim the fruits as well.
ABSOLUTE COMMUNITY PROPERTY (COMPONENTS)
NAVARRO vs. ESCOBIDO
G.R. No 153788 November
27, 2009
Facts:
Private respondent (Karen Go) files a complaint with a prayer for the issuance of
a writ of replevin against petitioner (Navarro) for the seizure of 2 motor vehicles under
lease agreement. Petitioner maintains among others in the case at bar that the complaints
were premature because no prior demand was made on him to comply with the provisions
of the lease agreements before the complaints for replevin were filed.
Issue:
Whether or not prior demand is a condition precedent to an action for a writ of
replevin.
Ruling:
No. Petitioner erred in arguing that prior demand is required before an action for
a writ of replevin is filed since we cannot liken a replevin action to an unlawful detainer.
The registration of the trade name in the name of one person - a woman - does not
necessarily lead to the conclusion that the trade name as a property is hers alone,
particularly when the woman is married. By law, 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.21 Our examination of the records of the case does not show any proof that Kargo
Enterprises and the properties or contracts in its name are conjugal. If at all, only the
bare allegation of Navarro to this effect exists in the records of the case.
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.
Art. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. In case of disagreement, the husband's decision
shall prevail, subject to recourse to the court by the wife for proper remedy, which must
be availed of within five years from the date of the contract implementing such decision.
Art. 108. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this
Chapter or by the spouses in their marriage settlements.
This provision is practically the same as the Civil Code provision it superseded:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of Indubitably, petitioner utterly failed to substantiate her claim that the property belongs to
partnership in all that is not in conflict with what is expressly determined in this the conjugal partnership.Thus, it cannot be rightfully said that the CA reversed the RTC
Chapter. ruling without valid basis
COMPONENTS OF CONJUGAL PARTNERSHIP GAINS
In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner
ANTONIA R. DELA PEÑA vs GEMMA REMILYN C. AVILA
with the other partners of specific partnership property." Taken with the presumption of
G.R. No. 187490
the conjugal nature of the funds used to finance the four checks used to pay for
February 8, 2012
petitioners' stock subscriptions, and with the presumption that the credits themselves
are part of conjugal funds,
Facts:
FACTS: Antonia Dela Pena, who was married to Antegono Dela Pena, obtained a
loan from Aguila Sons and Co. As a security for the payment of the said loan, Antonia
executed a Deed of Real Estate Mortgage in favour of Aguila on their residential lot in
ABSOLUTE COMMUNITY PROPERTY (COMPONENTS) Marikina. However, Antonia also executed a Deed Of absolute sale in favour of Gemma
Avila over the same property because of Antonia’s failure to pay her obligation from
IMANI vs. METROPOLITAN BANK & TRUST COMPANY Aguila. Gemma Avila also mortgaged the same property to Far East Bank and Trust
G.R. No. 187023 November 17, Company (FEBTC-BPI) to secure a loan from the bank. Antonia, together with her son
2010 Alvin John, filed against Gemma praying for the annulment of the said deed of sale. She
claims that the said property was conjugal property and was sold without the consent of
Facts: his husband who already died by that time. She also invokes the presumption of
Conjugality under Art. 160 of the Civil Code. The RTC ruled in favour of Antonia and
Imani signed a Continuing Suretyship Agreement in favour of Metrobank with 6 other co- upheld the presumption of conjugality. The CA ruled otherwise. Thus, this petition.
sureties binding themselves to pay whatever indebtedness C.P. Dazo Tannery, Inc. (CPDTI)
incurs, but not exceeding 6 Million php. CPDTI incurred an indebtednessaround 164,000 ISSUE: W/N the said property that was sold is part of the Conjugal Partnership
php to which it defaulted in paying Metrobank. This prompted Metrobank to file a
collection suit against CPDTI and its sureties. Metrobank won, and the sheriff levied a Ruling: The presumption mentioned in the Art. 160 of the Civil Code applies only for the
property owned by Imani and filed to consolidate the title to its name. property acquired during marriage and does not operate when there is no showing as to
when the property was acquired. Moreover, the presumption in favour of the conjugality
Imani opposed, stating that it is part of her conjugal property. The RTC ruled in favour of is rebuttable, but only with strong, clear and convincing proof of exclusive ownership.
Imani, reasoning that the loan proceeds never redounded to the benefit of the family of
Imani. RTC annulled the sale and levy. Metrobank appealed, and the CA reversed the As the parties invoking the presumption of conjugality under Art. 160 of the Civil Code,
decision of the RTC. the Dela Penas did not even come close to proving that the subject property was acquired
during the Marriage between Antonia and Antegono. The record is bereft of evidence that
Thus, petitioner appeals to the Supreme Court. from which the actual acquisition of the property by Antonia was during the Marriage.

ISSUES:
Although the title stated in its registration that it is under the name of, “Antonia Dela
1. Whether or not the CA erred in reversing the decision of the RTC. Pena, married to Antegono dela Pena,” such is merely a description of the civil status of
the wife and cannot mean that the husband is also a registered owner. The reason for
2. Whether the property was subject to execution, it being a road right of way under PD the inconclusiveness of the said description is that it is possible that the property was
1529. acquired when she was single but only registered when she got married

Ruling:

No.

Civil Law: Conjugal Property

All property of the marriage is presumed to be conjugal. However, for this presumption to
apply, the party who invokes it must first prove that the property was acquired during the
marriage.Proof of acquisition during the coverture is a conditionsine qua nonto the
operation of the presumption in favor of the conjugal partnership.Thus, the time when the
property was acquired is material.

As aptly ruled by the CA, the fact that the land was registered in the name ofEvangelina
Dazo-Imani married to Sina Imaniis no proof that the property was acquired during the
spouses coverture. Acquisition of title and registration thereof are two different acts. It is
well settled that registration does not confer title but merely confirms one already existing.
 Rosario Vda. De Andrade was the registered owner of four parcels of which she
mortgaged to one Simon Diu, who foreclosed on the same. When the redemption period
was about to expire, Rosario sought the assistance of Bobby Tan who agreed to redeem
the subject properties. Thereafter, Rosario sold the same to Bobby and her son, Proceso
as evidenced by a Deed of Absolute Sale.
COMPONENTS OF CONJUGAL PARTNERSHIP GAINS

TITAN CONSTRUCTION CORPORATION vs. MANUEL DAVID SR.

G.R. No. 169548 Proceso executed a Deed of Assignment, ceding to Bobby his interests over the
March 15, 2010 properties. The Deed of Assignment was signed by Henry, one of Rosario’s sons, as
instrumental witness. Bobby extended an Option to Buy the subject properties to
Facts:
Proceso, giving the latter until 7:00 in the evening of July 31, 1984 to purchase the
Manuel A. David, Sr. (Manuel) and Martha S. David (Martha) were married
on March 25, 1957. In 1970, the spouses acquired a lot located at White Plains, Quezon properties for the sum of P310,000. When Proceso failed to purchase them, Bobby
City. In 1976, the spouses separated, and no longer communicated with each other. March consolidated his ownership over the properties, and the TCTs were issued in his name.
1995, Manuel discovered that Martha had previously sold the property to Titan
Construction Corporation (Titan) with which the previous title registered in the Register of
Deeds was replaced. March 13, 1996, Manuel filed a Complaintfor Annulment of Contract
against Titan CC. Manuel alleged that the sale executed by Martha in favor of Titan was On October 7, 1997, Rosario’s children, including Proceso and Henry, filed a complaint
without his knowledge therefore void. He prayed that the Deed of Sale be invalidated, that for reconveyance and annulment of deeds and damages against Bobby before the RTC.
the property be returned to the spouses with a new title be issued in their names.
They alleged that the initial transaction between Rosario and Bobby was actually an
Titan claimed that it was a buyer in good faith and for value because it relied on equitable mortgage which was entered into to secure Rosario’s indebtedness with Bobby.
a Special Power of Attorney (SPA) by Manuel which authorized Martha to dispose of the They also claimed that since the subject properties were inherited by them from their
property on behalf of the spouses. Manuel claimed that the SPA was spurious, and that father, the subject properties were conjugal in nature, and thus, Rosario had no right to
the signature purporting to be his was a forgery; hence, Martha was wholly without dispose of their respective shares.
authority to sell the property. Subsequently, Manuel filed a Motion for Leave to File
Amended Complaintwhich was granted by the trial court. Thus, on October 15, 1996,
Manuel filed an Amended Complaint. Martha failed to file an answer so she was declared
in default.
The RTC dimissed the complaint. On appeal, the CA upheld the trial court’s ruling.
Issue:
Whether or not the deed of sale is null and void.

Ruling: ISSUE: Whether the properties belong to the conjugal partnership of Rosario and her late
Yes, since the property was undoubtedly part of the conjugal partnership, the husband and co-owned by her and her children
sale to Titan required the consent of both spouses. Article 165 of the Civil Code expressly
provides that “the husband is the administrator of the conjugal partnership”. Likewise,
Article 172 of the Civil Code ordains that “the wife cannot bind the conjugal partnership
without the husband’s consent, except in cases provided by law”. Similarly, Article 124 of
HELD: NO
the Family Code requires that any disposition or encumbrance of conjugal property must
have the written consent of the other spouse, otherwise, such disposition is void.

Tan v. Andrade Pertinent to the resolution of this second issue is Article 160 of the Civil Code38 which
states that "[a]ll property of the marriage is presumed to belong to the conjugal
GR No. 171904 and 172017 partnership, unless it be proved that it pertains exclusively to the husband or to the
wife." For this presumption to apply, the party invoking the same must, however,
Perlas-Bernabe, J.: preliminarily prove that the property was indeed acquired during the marriage. As held
in Go v. Yamane:
Petition for Review on Certiorari

Persons and Family Relations: Property Relations

x x x As a condition sine qua non for the operation of [Article 160] in favor of the
conjugal partnership, the party who invokes the presumption must first prove that the
property was acquired during the marriage.

In other words, the presumption in favor of conjugality does not operate if there is no
showing of when the property alleged to be conjugal was acquired. Moreover, the
presumption may be rebutted only with strong, clear, categorical and convincing
evidence. There must be strict proof of the exclusive ownership of one of the spouses,
and the burden of proof rests upon the party asserting it.
In this case, records reveal that the conjugal partnership of Rosario and her husband
was terminated upon the latter’s death on August 7, 1978 while the transfer certificates
of title over the subject properties were issued on September 28, 1979 and solely in the
name of "Rosario Vda. de Andrade, of legal age, widow, Filipino." Other than their bare
allegation, no evidence was adduced by the Andrades to establish that the subject
properties were procured during the coverture of their parents or that the same were
bought with conjugal funds. Moreover, Rosario’s declaration that she is the absolute
owner of the disputed parcels of land in the subject deed of sale was not disputed by her
son Proceso, Jr., who was a party to the same. Hence, by virtue of these incidents, the
Court upholds the RTC’s finding that the subject properties were exclusive or sole
properties of Rosario.
March 29, 2017
G.R. No. 193887
SPOUSES DENNIS ORSOLINO AND MELODY ORSOLINO, Petitioners
vs
VIOLETA FRANY, Respondent
DECISION
REYES, J.:
Assailed in this petition for review on certiorari1 under Rule 45 of the Rules 9f Court are
the Decision2 dated March 30, 2010 and Resolution3 dated September 1, 2010 of the
Court of Appeals.(CA) in CA-G.R. SP No. 108220, which reversed and set aside the
Decision4 dated March 5, 2009, of the Regional Trial Court (RTC) of Quezon City, Branch
98, in Civil Case No. Q-07-61602, and reinstated the Decision5 dated September 19,
2007 of the Metropolitan Trial Court (MeTC) of Quezon City, Branch 39, in Civil Case No.
35190 for Unlawful Detainer.
The Facts
This petition stemmed from a complaint for ejectment over a house and lot located at No.
37 Ilang-Ilang Street corner Camias Street, Barangay Capri, Novaliches, Quezon City,
filed by Spouses Noel and Violeta Frany (respondent) (Spouses Frany) against petitioners
Spouses Dennis and Melody Orso lino (Spouses Orsolino ), and all persons claiming
rights under them.6
Spouses Frany claimed that Carolina Orsolino (Carolina), the mother of petitioner
Dennis, authorized her other son Sander Orsolino (Sander), to sell the subject property
as evidenced by a Special Power of Attorney7 (SPA) dated November 20, 2004. On the
same date, Sander sold the subject property to Spouses Frany for the sum of
₱200,000.00, evidenced by a Deed of Sale.8 The respondent said that it was agreed upon
that Spouses Orsolino, who are the current occupants of the subject property, shall
vacate and peacefully surrender the possession of the same to Spouses Frany on or
before the end of November 2004. However, despite repeated demands to vacate the
subject property, the petitioners failed to do so. The said matter was also brought before
the barangay for conciliation but no settlement was reached.9
For their part, the Spouses Orsolino claimed that the subject property is a government
property which is being used as a relocation site. They said that they had been
occupying the subject property since May 2000 and they derived their right to stay
therein from their mother Carolina, who has bought her right to the subject property
from Julieta Guaniso in August of 1998. The Spouses Orsolino also alleged that: a) they
were not aware of the sale made in favor of Spouses Frany; b) petitioner Dennis has no
brother by the name of Sander; c) the signature of Carolina appearing in the SP A and
Deed of Sale is a forgery; d) the SP A and the Deed of Sale are spurious documents; e)
they did not receive any demand letter from Spouses Frany; and t) there was no real
confrontation before the barangay.10
On September 19, 2007, the MeTC rendered its judgment11 in favor of Spouses Frany
and declared the sale of the subject property as valid upon finding that there was no
forgery and, thereby dismissing the complaint in the following wise:
In view of the foregoing, judgment is hereby rendered ordering [Spouses Orsolino], and
all those claiming rights under them, to vacate and peacefully surrender possession over
the subject premises to [Spouses Frany]; and pay [Spouses Frany] the following:
1. the sum of ₱5,000.[00], representing reasonable compensation for the use and
compensation of the premises, reckoned from July 29, 2005, until the subject premises
is finally vacated; and
2. cost of suit.
SO ORDERED.12
The MeTC took note of the fact that petitioner Dennis admitted to having a brother by
the name of Lysander Wilson Ray Orsolino (Lysander), and that petitioner Dennis did not
categorically deny that the one who signed tinder the name of Sander in the Deed of Sale
was not his brother Lysander. The MeTC ruled that the presumption that the Deed of
Sale was duly executed exists, same with the SP A, since there was no evidence to
overturn the presumption as to the authenticity and due execution of the said
documents.13
Aggrieved, the Spouses Orsolino filed an appeal before the RTC.14
Ruling of the RTC
In a Decision15 dated March 5, 2009, the RTC granted the appeal and set aside the
MeTC's ruling, to wit:
WHEREFORE, premises considered, the instant appeal filed by [Spouses Orsolino] is WHETHER OR NOT THE AUTHENTICITY AND DUE EXECUTION OF THE SPA AND
hereby GRANTED. Accordingly, the assailed Decision dated September 19, 2007 issued DEED OF ABSOLUTE SALE HA VE BEEN SUFFICIENTLY ESTABLISHED.
by the [MeTC] of Quezon City, Branch 39, is hereby REVERSED and SET ASIDE, and a
new one is rendered ordering the instant Complaint for Unlawful Detainer filed by
Ruling of the Court
[Spouses Frany] to be [DISMISSED] for no transfer of rights was conveyed between the
parties herein.
The petition is bereft of merit.
SO ORDERED.16
At the outset, it is definite that the issues raised in this petition are mainly factual which
calls for the reassessment of the evidence presented by the parties and is beyond the
Contrary to the findings of the MeTC, the RTC concluded that. both the SP A and Deed of
ambit of the Court's review. However, this petition is properly given due course because
Sale showed patent irregularities and alterations which render it null and void ab
of the contradictory findings of facts and rulings of the MeTC and the CA on one hand,
initio. According to the RTC, these glaring and strange circumstances overcome the
and the RTC on the other. But even if the Court were to re-evaluate the evidence
presumption of the authenticity and due execution of the said documents since there
presented, considering the divergent positions of the courts below, the petition would still
has been no explanation on the said alterations. The RTC also said that nothing was
fail.
adduced in this case to reconcile the variance in the place of execution of the subject
documents and the place where it was acknowledged before the notary public.17
The bone of contention in the instant case lies on the divergent evaluation of the SP A
and the Deed of Sale submitted as. evidence by the respondent. Spouses Orsolino mainly
Ruling of the CA
dispute said documents by alleging that the signatures of Carolina on the said
documents were falsified. To bolster their argument, they presented the Panunumpa sa
On appeal,18 the CA granted the petition in its Decision19 dated March 30, 2010 and Katungkulan,24 Statement of Assets, Liabilities and Networth (SALN),25 and Performance
reinstated the MeTC's judgment. In overturning the RTC ruling, the CA said that: Appraisal Report26 of Carolina from her previous employer to prove that Carolina's
alleged genuine signature which when compared to the signature in the SP A and the
Deed of Sale, showed some difference. Spouses Orsolino also question the authenticity
The courts a quo failed to appreciate the documentary evidence marked as Exhibits "F"
and due execution of the said documents inasmuch as it is marred by unexplained
and "G" which is an acknowledgment receipt executed by [Sander] and [Lysander],
erasures and alterations.
acknowledging his receipt of the amounts of ₱6,000.00 and ₱194,000.00, respectively,
representing full payment of the rights over the property, subject matter of this case.
This acknowledgment receipt was attested to not just by [the respondent], as shown in To begin with, it bears to emphasize that both trial courts and the CA are unison in
Exhibit "F", but also by Leynardo T. Tiston, as shown in Exhibit "G". This showed that finding that no forgery was proven. The RTC even declared that there is no sufficient
[Sander] and [Lysander] are one and the same person, who received the amount of basis to ascertain the authenticity of Carolina's signature since the allegation of Spouses
₱200,000.00 .from [the respondent], for he signed as a vendor in Exhibit "F" and as an Orsolino that a comparison of the forged and genuine signatures of Carolina showed
attorney-in-fact in Exhibit "G". This gives credence to [the respondent's] assertion that patent dissimilarities is not substantiated by the evidence made available in this case.
[Sander] and/or [Lysander] was the attorney-in- fact of [Carolina], who sold the property, Evidently, the CA and the trial courts found that Spouses Orsolino have failed to
and negates the claim of [Spouses Orsolino] that no [Sander] exists but admits that one overcome the burden of proving their allegation of forgery.
[Lysander] is his brother. Moreover, a perusal of the [SPA] executed on November 20,
2004 and authorization dated November 1, 2004, shows that the two documents were
Basic is the rule that forgery cannot be presumed and must be proved by clear, positive
witnessed by one Leynardo T. Tiston who was also the witness in the document marked
and convincing evidence, thus, the burden of proof lies on the party alleging forgery. One
as Exhibit "G". Thus, it cannot be said that the signature of [Carolina] on the said [SPA]
who alleges forgery has the burden to establish his case by a preponderance of
is forged.20 (Citations omitted)
evidence.27

According to the CA, Spouses Orsolino failed to present any evidence to prove the forgery
The Court sustains the findings of the lower courts that the bases presented by Spouses
except to point to the alterations in the place of execution in the SP A and Deed of Sale.
Orsolino were inadequate to sustain their allegation of forgery. Mere variance of the
They did not present evidence of the fact of forgery which can be established by
signatures cannot be considered as conclusive proof that the same were forged. The
comparing the alleged false signature with the authentic or genuine signature of
Spouses Orsolino failed to prove their allegation and simply relied on the apparent
Carolina. The CA upheld the validity of the SP A and Deed of Sale which were duly
difference of the signatures. Moreso, they were not able to establish that the signatures
notarized since the same carry evidentiary weight with respect to their due execution and
on the said documents were not Carolina's signatures since there had never been an
this presumption was not rebutted by clear and convincing evidence to the contrary by
accurate examination of the questioned signatures.
Spouses Orsolino.211âwphi1

Upset by the foregoing disquisition, the Spouses Orsolino moved for
reconsideration,22 but it was denied by the CA, in its Resolution23 dated September 1,
2010. Hence, the present petition for review on certiorari.
The Issue
In imputing discrepancy in the signatures appearing in the SPA and the Deed of Sale,
Spouses Orsolino should have conducted an examination of the signatures before the
court. Evidently, the foregoing testimonial and documentary evidence adduced by
Spouses Orsolino does not suffice the requirement needed to show the genuineness of
handwriting as set forth by Section 2228 of Rule 132 of the Rules of Court. A comparison
of both the differences and similarities in the questioned signatures should have been
made to satisfy the demands of evidence.29
In this case, the Court cannot accept the claim of forgery where no comparison of
Carolina's signatures were made and no witness except for Spouses Orsolino themselves
were presented to testify on the same, much less an expert witness called. All that was
presented were Spouses Orsolino's testimonies and the following documentary
evidence: Panunumpa sa Katungkulan, SALN, and Performance Appraisal Report of
Carolina from her previous employer. Aside from these, no other evidence was submitted
by Spouses Orsolino to prove their allegation of forgery.
As to the main issue of this case on whether the authenticity and due execution of the
SP A and Deed of Sale have been sufficiently established, the Court agrees with the
conclusion of the CA and the MeTC that the validity of the said documents must be
upheld on the ground that it enjoys the presumption of regularity of a public document
since the same carry evidentiary weight with respect to their due execution.
Furthermore, the fact of forgery is not established by the patent irregularities and
alterations in the said documents, such as the changing of names of the places and the
date written thereon.
A review of the records of this case would show that, notwithstanding, the unexplained
erasures and alterations in the said documents after it was signed by Carolina, no
sufficient allegation indicates that the alleged alterations had changed the meaning of
the documents, or that the details differed from those intended by Carolina at the time
that she signed it. Thus, it can only be concluded that Carolina had voluntarily executed
the subject documents, with the intention of giving effect thereto. Spouses Orsolino's
bare allegation that the said alterations invalidated the sale does not equate with the
necessary allegation that the alterations were false or had changed the intended meaning
of the documents.
As to the unexplained erasures and alterations in the said documents, the findings of the
CA on this matter are informative:
The RTC was referring to the alterations on the date and place of execution of the [SPA]
and the Deed of Sale from November 20, 2004 to December 2004 and intercalating
therein Catarman, N. Samar. This Court scrutinized Exhibits "F" and "G'', wherein the
partial payment of ₱6,000.00 was made on November 16, 2004 while the balance of
₱194,000.00 representing full payment for the house and lot was made on December 29,
2004. Although the RTC stated that no explanation was made as to the alterations on
the date and place of execution of the Deed of Sale, it did not however consider Exhibits
"F" and "G", regarding the payments received by [Spouses Orsolino], particularly the date
of receipt of the payments. This is the reason why the .Deed of Sale was signed on
November 20, 2004 and notarized only in December 2004, after full payment was
received by the attorney-in-fact. The said evidence was never rebutted by [Spouses
Orsolino].30
The Court also took note of the fact that Sander, the person who prepared the said
documents, was never confronted during the trial nor was any affidavit from him
presented by Spouses Orsolino.
Lastly, the Court does not agree with the RTC's finding that the sale was void because
the subject property was conjugal at the time Carolina sold it to the respondent. Article
160 of the Civil Code provides that all property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that it pertains exclusively to the husband
or to the wife. However, the presumption under said article applies only when there is
proof that the property was acquired during the marriage. Proof of acquisition during the
marriage is an essential. condition for the operation of the presumption in favor of the
conjugal partnership.31
Here, the RTC's conclusion that the subject property was conjugal was not based on
evidence since Spouses Orsolino failed to present any evidence to establish that Carolina
acquired the subject property during her marriage. Consequently, there is no basis for
applying the presumption under Article 160 of the Civil Code to the present case.
The Court has also observed that Spouses Orsolino presented nothing to support their
claim of their right to possess the subject property. There is no dispute with the fact that
Spouses Orsolino were not even the registered owners of the subject property. Spouses
Orsolino were not able to prove by preponderance of evidence that they are now the new
owners· and the rightful possessors of the subject property since they have not presented
any solid proof to bolster their claim. The sad truth is that they were merely allowed to
stay on the subject property by mere tolerance of Carolina. Thus, their unsubstantiated
arguments are not, by themselves, enough to offset the respondent's right as the new
owner of the subject property.
Lastly, the other issues raised by Spouses Orsolino, specifically their failure to receive
the demand letter and the lack of prior conciliation proceeding before the barangay, are
contradicted by the evidence on record. As found by the MeTC, the respondent tried to
have a copy of the demand letter personally delivered to Spouses Orsolino on August 5,
2005 but the latter refused to receive the same, thus, the respondent left a copy of the
demand. letter in the premises.32 Similarly, the Certificate to File. Action issued by
the Punong Barangay suffices to prove that the case was referred to the barangay for
possible conciliation.
In sum, the Court finds no cogent reason to annul the findings and conclusions of the
CA. Since the SP A and Deed of Sale are valid, the respondent is deemed as recognized
owner of the subject property and consequently has the better right to its possession.
WHEREFORE, the petition is DENIED. The Decision dated March 30, 2010 and
Resolution dated September 1, 2010 of the Court of Appeals in CA-G.R. SP No. 108220
are AFFIRMED.
Ayala Investment v. CA, G.R. No. 118305, February 12, 1988
FACTS: Philippine Blooming Mills (PBM) obtained a P50,300,000 loan from petitioner
Ayala Investment and Development Corporation (AIDC). Respondent Alfredo Ching made
himself jointly answerable to the debt as added security. Upon PBM’s failure to pay the
loan, AIDC filed a case for sum of money against PBM and respondent Ching in the CFI
of Pasig.
After trial, the court rendered decision in favor of AIDC ordering PBM and Alfredo Ching
to jointly and severally pay AIDC the principal amount of the loan with interests. Pending
the appeal of the judgment, RTC issued a writ of execution and thereafter, the deputy
sheriff caused the issuance and service upon respondent spouses of the notice of sheriff
sale on three of their conjugal properties.
Respondent spouses then filed an injunction contending that subject loan did not
redound to the benefit of the conjugal partnership. Nevertheless, a certificate of sale was
issued to AIDC, being the only bidder for the property.
ISSUE: WON the debts and obligations contracted by the husband alone is considered
“for the benefit of the conjugal partnership.”
HELD: No. Petition is DENIED.
RATIO: The loan obtained by the husband from AIDC was for the benefit of PBM and not
for the benefit of the conjugal partnership of Ching.
PBM has a personality which is distinct from that of Ching’s family despite their being
stockholders of the said company. The debt incurred by Ching is a corporate debt and
the right of recourse to respondent as surety is only to the extent of his corporate stocks.
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.
Ros/ AGUETE V. PHILIPPINE NATIONAL BANK
G.R. No. 170166, [April 6, 2011]
DOCTRINE:
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.
FACTS:
Spouses Jose Ros and Estrella Aguete filed acomplaint for annulment against PNB before
the Court of First Instance of Rizal.
Jose Ros previously obtained a loan in the amount of P115,000.00 from PNB and as
security, a real estate mortgage over a parcel of land with TCT. No. T-9646 was executed.
Upon maturity, the loan remained unpaid and an extrajudicial foreclosure proceeding on
the mortgaged property was instituted by PNB. After the lapse of a year, the property was
consolidated and registered in the name of PNB.
Estrella Aguete, claiming she had no knowledge of the said loan nor the mortgage
constituted on the land which is part of their conjugal property, contested the transactions
and filed for an annulment of the proceedings. She interposed in her defense that the
signatures affixed on the documents were forged and that the proceeds of the loan did not
redound to the benefit of the family.
RTC ruled for the spouses, stating that Aguete may during their marriage and within ten
years from the transaction mentioned, may ask the court for an annulment of the case. On
notice of appeal by PNB, Court of Appeals reversed this ruling and found for PNB, stating
that forgery was concluded without adequate proof. It also found that the loan was used
in the expansion of the family business.
Hence, this petition.
ISSUE:
How is the benefit to the family proven so as to render the loan contracted by the husband
binding upon the conjugal property?
Ruling:
If the husband himself is the principal obligor in the contract, that contract falls within
the term “x x x x obligations for the benefit of the conjugal partnership.”
Here, no actual benefit may be proved. It is enough that the benefit to the family is
apparent at the signing of the contract. 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.
Court denies the petition.
RATIO:
Annulment of the contract will only be granted upon a finding that the wife did not give
her consent to the transaction. Even as Aguete disavows the documents supposedly
acknowledged before the notary public, the document carries the evidentiary weight
conferred upon it with respect to its due exececution. It has in its favor the presumption
of regularity which may only be rebutted by evidence so clear, strong and convincing as to
exclude all controversy as to the falsity of the certificate.
Petitioners did not present any corroborating witness, such as a handwriting expert, who
could authoritatively declare that Aguete’s signatures were really forged.
In her testimony, Aguete confirmed that Ros engaged in such business, but claimed to be
unaware whether it prospered. Debts contracted by the husband for and in the exercise of
the industry or profession by which he contributes to the support of the family cannot be
deemed to be his exclusive and private debts. It is immaterial, if in the end, his business
or profession fails or does not succeed, such may still be charged against
the conjugal property of the spouses.
SECOND DIVISION
[G.R. No. 179010, April 11 : 2011]
ELENITA M. DEWARA, REPRESENTED BY HER ATTORNEY-IN-FACT, FERDINAND
MAGALLANES, PETITIONER, VS. SPOUSES RONNIE AND GINA LAMELA AND
 STENILE ALVERO, RESPONDENTS.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the Decision[1] dated November 6, 2006 and the Resolution[2] dated July 10,
2007 of the Court of Appeals (CA) in CA-G.R. CV No. 64936, which reversed and set
aside the Decision[3] dated September 2, 1999 of the Regional Trial Court (RTC), Branch
54, Bacolod City, in Civil Case No. 93-7942.
The Facts
Eduardo Dewara (Eduardo) and petitioner Elenita Magallanes Dewara (Elenita) were
married before the enactment of the Family Code. Thus, the Civil Code governed their
marital relations. Husband and wife were separated-in-fact because Elenita went to work
in California, United States of America, while Eduardo stayed in Bacolod City.
On January 20, 1985, Eduardo, while driving a private jeep registered in the name of
Elenita,[4] hit respondent Ronnie Lamela (Ronnie). Ronnie filed a criminal case for serious
physical injuries through reckless imprudence[5] against Eduardo before the Municipal
Trial Court in Cities (MTCC), Branch IV, Bacolod City. The MTCC found Eduardo guilty
of the charge and sentenced him to suffer the penalty of imprisonment of two (2) months
and one (1) day to (3) months, and to pay civil indemnity of Sixty-Two Thousand Five
Hundred Ninety-Eight Pesos and Seventy Centavos (P62,598.70) as actual damages and
Ten Thousand Pesos (P10,000.00) as moral damages. On appeal, the RTC[6] affirmed the
decision of the MTCC[7] and it became final and executory.[8]
The writ of execution on the civil liability was served on Eduardo, but it was returned
unsatisfied because he had no property in his name. Ronnie requested the City Sheriff,
respondent Stenile Alvero, to levy on Lot No. 234-C, Psd. 26667 of the Bacolod Cadastre,
with an area of One Thousand Four Hundred Forty (1,440) square meters (sq m), under
Transfer Certificate of Title (TCT) No. T-80054, in the name of “ELENITA M. DEWARA,
of legal age, Filipino, married to Eduardo Dewara, and resident of Bacolod City,― to
satisfy the judgment on the civil liability of Eduardo. The City Sheriff served a notice of
embargo on the title of the lot and subsequently sold the lot in a public auction. In the
execution sale, there were no interested buyers other than Ronnie. The City Sheriff
issued a certificate of sale to spouses Ronnie and Gina Lamela to satisfy the civil liability
in the decision against Eduardo.[9] Ronnie then caused the consolidation of title in a
Cadastral Proceeding before the RTC, which ordered the cancellation of TCT No. T-80054
in the name of Elenita and the issuance of a new certificate of title in the name of
respondent spouses.[10]
The levy on execution, public auction, issuance of certificate of sale, and cancellation of
title of the lot in the name of Elenita were done while Elenita was working in
California.[11] Thus, Elenita, represented by her attorney-in-fact, Ferdinand Magallanes,
filed a case for annulment of sale and for damages against respondent spouses and ex-
officio sheriff Stenile Alvero before the RTC of Bacolod City. Petitioner claimed that the
levy on execution of Lot No. 234-C was illegal because the said property was her
paraphernal or exclusive property and could not be made to answer for the personal
liability of her husband. Furthermore, as the registered owner of the property, she
received no notice of the execution sale. She sought the annulment of the sale and the
annulment of the issuance of the new TCT in the name of respondent spouses.[12]
On the other hand, respondent spouses averred that the subject lot was the conjugal
property of petitioner Elenita and Eduardo. They asserted that the property was acquired
by Elenita during her marriage to Eduardo; that the property was acquired with the
money of Eduardo because, at the time of the acquisition of the property, Elenita was a
plain housewife; that the jeep involved in the accident was registered in the name of
petitioner; and that Elenita did not interpose any objection pending the levy on execution
of the property.[13] On September 2, 1999, the RTC rendered a decision in favor of
petitioner, the fallo of which reads:
WHEREFORE, judgment is hereby rendered in favor of the [petitioner] and against the
[respondents]:
1. The levy on execution on Lot No. 234-C of the Bacolod Cadastre
covered by TCT No. 80054 in the name of [petitioner] Elenita M.
Dewara, the public auction of the property, and the consolidation of
the title and issuance of new TCT No. 167403 in the name of
[respondent] Ronnie Lamela, are hereby declared null and void;
2. The Register of Deeds of Bacolod City is ordered to cancel TCT No.
167403 in the name of [respondent] Ronnie Lamela and TCT No.
80054 be reinstated or a new one issued in the name of [petitioner]
Elenita M. Dewara;
3. There is no pronouncement on damages with cost de officio.
SO ORDERED.[14]
The RTC declared that said property was paraphernal in nature. It arrived at this
conclusion by tracing how Elenita acquired the subject property. Based on the
documentary evidence submitted, Elenita’s grandfather, Exequiel Magallanes,
originally owned Lot No. 234-C. Upon his demise, his children, Jesus (Elenita’s
father), Salud, and Concepcion, inherited the property, each entitled to a share equal to
one-third (1/3) of the total area of the land. They were issued a new title (TCT No. T-
17541) for the property. On July 6, 1966, petitioner’s aunt, Salud, executed a waiver
of rights duly registered with the Office of the Register of Deeds under Entry No. 76392,
thereby waiving her rights and participation over her 1/3 share of the property in favor
of her siblings, Jesus and Concepcion. The two siblings then became the owners of the
property, each owning one-half (1/2) of the property. Jesus subsequently sold his share
to his daughter, Elenita, for the sum of Five Thousand Pesos (P5,000.00), based on the
deed of sale dated March 26, 1975. The deed of sale was duly registered with the Register
of Deeds under Entry No. 76393. Concepcion also sold her share to her niece, Elenita,
for the sum of Ten Thousand Pesos (P10,000.00), based on the deed of sale dated April
29, 1975, which was duly registered with the Register of Deeds under Entry No. 76394.
By virtue of the sale transactions, TCT No. T-17541 was cancelled and a new title, TCT
No. T-80054, was issued in the name of Elenita.[15]
The RTC gave credence to the testimony of Elenita on the circumstances surrounding the
sale of the property. First, it was sold to her by her father and her aunt so that the family
would remain on the lot. Second, the minimal and inadequate consideration for the
1,440 sq m property was for the purpose of helping her expand her capital in her
business at the time. Thus, the sale was essentially a donation and was therefore
gratuitous in character.[16]
Having declared that the property was the paraphernal property of Elenita, the RTC
ruled that the civil liability of Eduardo, which was personal to him, could not be charged
to the exclusive property of his wife.[17]
On appeal, the CA reversed the decision of the RTC. The dispositive portion of the
Decision reads:
WHEREFORE, in view of all the foregoing, the instant appeal is GRANTED. The assailed
decision of the Regional Trial Court of Bacolod City, Branch 54, dated September 2,
1999, in Civil Case No. 93-7942 is hereby REVERSED and SET ASIDE, and a new
Decision is entered DISMISSING the complaint for lack of merit. Let a copy of this
Decision be furnished to the Office of the Register of Deeds of Bacolod City, Negros
Occidental [which] is hereby ordered to cancel Transfer Certificate of Title No. T-80054
or any transfer certificate of title covering Lot No. 234-C issued in the name of Elenita M.
Dewara, and reinstate Transfer Certificate of Title No. 167403 or issue a new transfer
certificate of title covering Lot No. 234-C in the name of Ronnie Lamela. No
pronouncement as to costs.
SO ORDERED.[18]
In reversing the decision of the RTC, the CA elucidated that the gross inadequacy of the
price alone does not affect a contract of sale, except that it may indicate a defect in the
consent, or that the parties really intended a donation or some other act or contract.
Except for the assertions of Elenita, there was nothing in the records that would indicate
a defect in Jesus and Concepcion Magallanes’ consent to the sale.[19] The CA ruled
that Elenita and Eduardo acquired the property by onerous title during their marriage
through their common fund. Thus, it belonged to the conjugal partnership of gains and
might be levied upon to answer for civil liabilities adjudged against Eduardo.[20]
Hence, this petition.
The Issue
The sole issue for resolution is whether the subject property is the paraphernal/exclusive
property of Elenita or the conjugal property of spouses Elenita and Eduardo.
The answer to this question will define whether the property may be subject to levy and
execution sale to answer for the civil liability adjudged against Eduardo in the criminal
case for serious physical injuries, which judgment had already attained finality.
The Ruling of the Court
All property of the marriage is presumed to belong to the conjugal partnership, unless it
be proved that it pertains exclusively to the husband or to the wife.[21] Registration in the
name of the husband or the wife alone does not destroy this presumption.[22] The
separation-in-fact between the husband and the wife without judicial approval shall not
affect the conjugal partnership. The lot retains its conjugal nature.[23] Moreover, the
presumption of conjugal ownership applies even when the manner in which the property
was acquired does not appear. The use of the conjugal funds is not an essential
requirement for the presumption to arise.[24]
There is no dispute that the subject property was acquired by spouses Elenita and
Eduardo during their marriage. It is also undisputed that their marital relations are
governed by the conjugal partnership of gains, since they were married before the
enactment of the Family Code and they did not execute any prenuptial agreement as to
their property relations. Thus, the legal presumption of the conjugal nature of the
property applies to the lot in question. The presumption that the property is conjugal
property may be rebutted only by strong, clear, categorical, and convincing
evidence—there must be strict proof of the exclusive ownership of one of the spouses,
and the burden of proof rests upon the party asserting it.[25]
Aside from the assertions of Elenita that the sale of the property by her father and her
aunt was in the nature of a donation because of the alleged gross disparity between the
actual value of the property and the monetary consideration for the sale, there is no
other evidence that would convince this Court of the paraphernal character of the
property. Elenita proffered no evidence of the market value or assessed value of the
subject property in 1975. Thus, we agree with the CA that Elenita has not sufficiently
proven that the prices involved in the sales in question were so inadequate for the Court
to reach a conclusion that the transfers were in the nature of a donation rather than a
sale.
Furthermore, gross inadequacy of the price does not affect a contract of sale, except as it
may indicate a defect in the consent, or that the parties really intended a donation or
some other act or contract.[26] The records are bereft of proof that the consent of
petitioner’s father and her aunt were vitiated or that, in reality, they intended the
sale to be a donation or some other contract. Inadequacy of the price per se will not rule
out the transaction as one of sale; the price must be grossly inadequate or shocking to
the conscience, such that the mind would revolt at it and such that a reasonable man
would neither directly nor indirectly consent to it.[27]
However, even after having declared that Lot No. 234-C is the conjugal property of
spouses Elenita and Eduardo, it does not necessarily follow that it may automatically be
levied upon in an execution to answer for debts, obligations, fines, or indemnities of one
of the spouses. Before debts and obligations may be charged against the conjugal
partnership, it must be shown that the same were contracted for, or the debts and
obligations should have redounded to, the benefit of the conjugal partnership. Fines and
pecuniary indemnities imposed upon the husband or the wife, as a rule, may not be
charged to the partnership. However, if the spouse who is bound should have no
exclusive property or if the property should be insufficient, the fines and indemnities
may be enforced upon the partnership assets only after the responsibilities enumerated
in Article 161 of the Civil Code have been covered.
In this case, it is just and proper that Ronnie be compensated for the serious physical
injuries he suffered. It should be remembered that even though the vehicle that hit
Ronnie was registered in the name of Elenita, she was not made a party in the said
criminal case. Thus, she may not be compelled to answer for Eduardo’s liability.
Nevertheless, their conjugal partnership property may be held accountable for it since
Eduardo has no property in his name. The payment of indemnity adjudged by the RTC of
Bacolod City in Criminal Case No. 7155 in favor of Ronnie may be enforced against the
partnership assets of spouses Elenita and Eduardo after the responsibilities enumerated
under Article 161 of the Civil Code have been covered. This remedy is provided for under
Article 163 of the Civil Code, viz.:
Art. 163. The payment of debts contracted by the husband or the wife before the
marriage shall not be charged to the conjugal partnership.
Neither shall the fines and pecuniary indemnities imposed upon them be charged
to the partnership.
However, the payment of debts contracted by the husband or the wife before the
marriage, and that of fines and indemnities imposed upon them, may be enforced
against the partnership assets after the responsibilities enumerated in Article 161
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 purposes above-mentioned.[28]
Article 161 of the Civil Code enumerates the obligations which the conjugal partnership
may be held answerable, viz.:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the benefit of the conjugal
partnership, and those contracted by the wife, also for the same purpose, in the cases
where she may legally bind the partnership;
(2) Arrears or income due, during the marriage, from obligations which constitute a
charge upon property of either spouse or of the partnership;
(3) Minor repairs or for mere preservation made during the marriage upon the separate
property of either the husband or the wife; major repairs shall not be charged to the
partnership;
(4) Major or minor repairs upon the conjugal partnership property;
(5) The maintenance of the family and the education of the children of both the husband
and wife, and of legitimate children of one of the spouses;
(6) Expenses to permit the spouses to complete a professional, vocational or other
course.
The enumeration above-listed should first be complied with before the conjugal
partnership may be held to answer for the liability adjudged against Eduardo.
Finally, the indemnity imposed against Eduardo shall earn an interest at the rate of
twelve percent per annum, in accordance with our ruling in Eastern Shipping Lines, Inc.
v. Court of Appeals.[29]
WHEREFORE, in view of the foregoing, the Decision dated November 6, 2006 and the
Resolution dated July 10, 2007 of the Court of Appeals in CA-G.R. CV No. 64936 are
hereby ANNULLED and SET ASIDE. The decision dated September 2, 1999 of the
Regional Trial Court of Bacolod City in Civil Case No. 93-7942 is hereby REINSTATED
WITH MODIFICATION that the conjugal properties of spouses Elenita Dewara and
Eduardo Dewara shall be held to answer for the judgment of Seventy-Two Thousand Five
Hundred Ninety-Eight Pesos and Seventy Centavos (P72,598.70), plus an interest rate of
twelve (12) percent per annum from the date of finality of the decision of the Regional
Trial Court of Bacolod City in Criminal Case No. 7155, after complying with the
provisions of Article 161 of the Civil Code.
SO ORDERED.
March 20, 2017
G.R. No. 215820
ERLINDA DINGLASAN DELOS SANTOS and her daughters, namely, VIRGINIA,
AUREA, and BINGBING, all surnamed DELOS SANTOS, Petitioners
vs
ALBERTO ABEJON and the estate of TERESITA DINGLASAN ABEJON, Respondents
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated March 19, 2014
and the Resolution3 dated December 11, 2014 of the Court of Appeals (CA) in CA-G.R.
CV No. 96884, which affirmed with modification the Decision4 dated August 25, 2010 of
the Regional Trial Court of Makati City, Branch 132 (RTC), and accordingly, ordered
petitioners Erlinda Dinglasan-Delos Santos (Erlinda) and her daughters, Virginia, Aurea,
and Bingbing, all surnamed Delos Santos (petitioners), to pay respondents Alberto
Abejon and the estate of his spouse, Teresita Dinglasan-Abejon (Teresita; collectively,
respondents) the aggregate amount of ₱2,200,000.00 plus legal interest, among others.
The Facts
The instant case arose from a Complaint for Cancellation of Title with collection of sum
of money5 filed by respondents against petitioners before the RTC. The complaint alleged
that Erlinda and her late husband Pedro Delos Santos (Pedro) borrowed the amount of
₱l00,000.00 from the former's sister, Teresita, as evidenced by a Promissory Note dated
April 8, 1998. As security for the loan, Erlinda and Pedro mortgaged their property
consisting of 43.50 square meters situated at 2986 Gen. Del Pilar Street, Bangkal,
Makati City covered by Transfer Certificate of Title (TCT) No. 131753 (subject land) which
mortgage was annotated on the title. After Pedro died, Erlinda ended up being unable to
pay the loan, and as such, agreed to sell the subject land to Teresita for ₱l50,000.00, or
for the amount of the loan plus an additional ₱50,000.00. On July 8, 1992, they
executed a Deed of Sale and a Release of Mortgage, and eventually, TCT No. 131753 was
cancelled and TCT No. 180286 was issued in the name of "Teresita, Abejon[,] married to
Alberto S. Abejon." Thereafter, respondents constructed a three (3)-storey building worth
₱2,000,000.00 on the subject land. Despite the foregoing, petitioners refused to
acknowledge the sale, pointing out that since Pedro died in 1989, his signature in the
Deed of Sale executed in 1992 was definitely forged. As such, respondents demanded
from petitioners the amounts of ₱l50,000.00 representing the consideration for the sale
of the subject land and ₱2,000,000.00 representing the construction cost of the three (3)-
storey building, but to no avail. Thus, respondents filed the instant case.6
In defense, petitioners denied any participation relative to the spurious Deed of Sale, and
instead, maintained that it was Teresita who fabricated the same and caused its
registration before the Register of Deeds of Makati City. They likewise asserted that
Erlinda and Pedro never sold the subject land to Teresita for ₱l50,000.00 and that they
did not receive any demand for the payment of ₱l00,000.00 representing the loan, as well
as the ₱2,000,000.00 representing the construction cost of the building. Finally, they
claimed that the improvements introduced by Teresita on the subject land were all
voluntary on her part.7
During the pre-trial proceedings, the parties admitted and/or stipulated that: (a) the
subject land was previously covered by TCT No. 131753 in the name of Erlinda and
Pedro, but such title was cancelled and replaced by TCT No. 180286 in the name of
Teresita; (b) the Deed of Sale and Release of Mortgage executed on July 8, 1992 were
forged, and thus, should be cancelled; (c) in view of said cancellations, TCT No. 180286
should likewise be cancelled and TCT No. 131753 should be reinstated; (d) from the time
when the spurious Deed of Sale was executed until the present, petitioners have been
the actual occupants of the subject land as well as all improvements therein, including
the three (3)-storey building constructed by respondents; and (e) the ₱l00,000.00 loan
still subsists and that respondents paid for the improvements being currently occupied
by petitioners, i.e., the three (3)-storey building. In view of the foregoing stipulations and
admissions, the RTC limited the issue as to who among the parties should be held liable
for damages and attorney's fees.8
The RTC Ruling
In a Decision9 dated August 25, 2010, the RTC: (a) declared the Deed of Sale null and
void; (b) ordered the cancellation of TCT No. 180286 and the reinstatement of TCT No.
131753; and (c) ordered petitioners to pay respondents the following amounts: (1)
₱l00,000.00 plus twelve percent (12%) per annum computed from July 8, 1992 until fully
paid representing the loan obligation plus legal interest; (2) ₱2,000,000.00 representing
the construction cost of the three (3)-storey building; and (3) another ₱l00,000.00 as
attorney's fees and litigation expenses.10
The RTC ruled that respondents should be reimbursed for the amount of the loan, as
well as the expenses incurred for the construction of the three (3)-storey building in view
of petitioners' categorical admission of their indebtedness to her, as well as the
construction of the building from which they derived benefit being the actual occupants
of the property.11 Finally, it found that respondents are entitled to attorney's fees for
being forced to litigate.12
Aggrieved, petitioners appealed to the CA.13
The CA Ruling
In a Decision14 dated March 19, 2014, the CA affirmed the RTC ruling with
modifications: (a) cancelling the Release of Mortgage; (b) adjusting the twelve percent
(12%) per annum interest imposed on the loan obligation, in that it should be computed
from November 25, 1997, or from the filing of the instant complaint; and (c) imposing a
six percent (6%) interest per annum on the construction cost of the three (3)-storey
building from the finality of the decision until its full satisfaction.15
Anent the loan obligation, the CA ruled that since petitioners admitted their
indebtedness to Teresita during the pre-trial proceedings, respondents should be allowed
to recover the amount representing the same, including the appropriate interest. In this
relation, the CA opined that while it is true that the loan obligation was contracted by
Erlinda and Pedro and not by their children, the children (who joined Erlinda in this case
as petitioners) may still be held liable for such obligation having inherited the same from
Pedro upon the latter's death.16
As to the construction cost of the three (3)-storey building, the CA held that in view of
petitioners' admission that they knew of and allowed said construction of the building,
and thereafter, started occupying the same for more than two (2) decades up to the
present, it is only proper that they reimburse respondents of the cost of such building.17
Undaunted, petitioners moved for reconsideration,18 which was, however, denied in a
Resolution19 dated December 11, 2014; hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the CA correctly held that
petitioners should be held liable to respondents in the aggregate amount of
₱2,200,000.00, consisting of the loan obligation of ₱l00,000.00, the construction cost of
the three (3)-storey building in the amount of ₱2,000,000.00, and attorney's fees and
costs of suit amounting to ₱l00,000.00.
The Court's Ruling
The petition is partly meritorious.
At the outset, it must be emphasized that a pre-trial is a procedural device intended to
clarify and limit the basic issues raised by the parties and to take the trial of cases out of
the realm of surprise and maneuvering. More significantly, a pre-trial has been
institutionalized as the answer to the clarion call for the speedy disposition of cases.
Hailed as the most important procedural innovation in Anglo-Saxon justice in the
nineteenth century, it paves the way for a less cluttered trial and resolution of the case.
It is, thus, mandatory for the trial court to conduct pre-trial in civil cases in order to
realize the paramount objective of simplifying, abbreviating, and expediting trial.20
In the case at bar, it must be reiterated that during the pre-trial proceedings, the parties
agreed/stipulated that: (a) the subject land was previously covered by TCT No. 131753 in
the name of Erlinda and Pedro, but such title was cancelled and replaced by TCT No.
180286 in the name of Teresita; (b) the Deed of Sale and Release of Mortgage both
executed on July 8, 1992 were forged, and thus, should be cancelled; (c) in view of said
cancellations, TCT No. 180286 should likewise be cancelled and TCT No. 131753 should
be reinstated; (d) from the time when the spurious deed of sale was executed until the
present, petitioners have been the actual occupants of the subject land as well as all
improvements therein, including the three (3)-storey building constructed by
respondents; and (e) the ₱l00,000.00 loan still subsists and that respondents paid for the
improvements being currently occupied by petitioners, i.e., the three (3)storey
building.21 As such, the parties in this case are bound to honor the admissions and/or
stipulations they made during the pre-trial.22
Thus, in view of the foregoing admissions and/or stipulations, there is now a need to
properly determine to whom the following liabilities should devolve: (a) the ₱l00,000.00
loan obligation; (b) the ₱50,000.00 extra consideration Teresita paid for the sale of the
subject land, which was already declared void - a matter which the R TC and the CA
completely failed to resolve; and (c) the ₱2,000,000.00 construction cost of the three (3)-
storey building that was built on the subject land.
I.
While petitioners admitted the existence of the ₱l00,000.00 loan obligation as well as
respondents' right to collect on the same, it does not necessarily follow that respondents
should collect the loan amount from petitioners, as concluded by both the RTC and the
CA. It must be pointed out that such loan was contracted by Erlinda, who is only one (1)
out of the four (4) herein petitioners, and her deceased husband, Pedro, during the
latter's lifetime and while their marriage was still subsisting.23 As they were married
before the effectivity of the Family Code of the Philippines24 and absent any showing of
any pre-nuptial agreement between Erlinda and Pedro, it is safe to conclude that their
property relations were governed by the system of conjugal partnership of gains. Hence,
pursuant to Article 12125 of the Family Code, the ₱l00,000.00 loan obligation, including
interest, if any, is chargeable to Erlinda and Pedro's conjugal partnership as it was a
debt contracted by the both of them during their marriage; and should the conjugal
partnership be insufficient to cover the same, then Erlinda and Pedro (more particularly,
his estate as he is already deceased) shall be solidarily liable for the unpaid balance with
their separate properties. While the portion attributable to Pedro was not considered
extinguished by his death, it is merely passed on to his estate; and thus, his
heirs, i.e., herein petitioners, could not be held directly answerable for the same,
contrary to the CA's conclusion.26 In sum, both the RTC and the CA erred in holding
petitioners liable to respondents for the loan obligation in the amount of ₱l00,000.00.
Alternative to the collection of the said sum, respondents may also choose to foreclose
the mortgage on the subject land as the same was duly constituted to secure the
₱l00,000.00 loan obligation. In other words, respondents have the option to either file a
personal action for collection of sum of money or institute a real action to foreclose on
the mortgage security. The aforesaid remedies are alternative, meaning the choice of one
will operate to preclude the other.27
II.
It is settled that "the declaration of nullity of a contract which is void ab initio operates to
restore things to the state and condition in which they were found before the execution
thereof."28 Pursuant to this rule, since the Deed of Sale involving the subject land stands
to be nullified in view of the parties' stipulation to this effect, it is incumbent upon the
parties to return what they have received from said sale. Accordingly, Erlinda and the
rest of petitioners (as Pedro's heirs) are entitled to the return of the subject land as
stipulated during .the pre-trial. To effect the same, the Register of Deeds of Makati City
should cancel TCT No. 180286 issued in the name of Teresita, and thereafter, reinstate
TCT No. 131753 in the name of Pedro and Erlinda and, restore the same to its previous
state before its cancellation, i.e., with the mortgage executed by the parties annotated
thereon. On the other hand, respondents, as Teresita's successors-in-interest, are
entitled to the refund of the additional PS0,000.00 consideration she paid for such sale.
However, it should be clarified that the liability for the said amount will not fall on all
petitioners, but only on Erlinda, as she was the only one among the petitioners who was
involved in the said sale. Pursuant to Nacar v. Gallery Frames,29 the amount of
PS0,000.00 shall be subjected to legal interest of six percent (6%) per annum from the
finality of this Decision until fully paid.30
III.
As correctly argued by petitioners, it is more accurate to apply31 the rules on accession
with respect to immovable property, specifically with regard to builders, planters, and
sowers,32 as this case involves a situation where the landowner (petitioners) is different
from the owner of the improvement built therein, i.e., the three (3)-storey building
(respondents). Thus, there is a need to determine whether petitioners as landowners on
the one hand, and respondents on the other, are in good faith or bad faith.
The terms builder, planter, or sower in good faith as used in reference to Article 448 of
the Civil Code, refers to one who, not being the owner of the land, builds, plants, or sows
on that land believing himself to be its owner and unaware of the defect in his title or
mode of acquisition. "The essence of good faith lies in an honest belief in the validity of
one's right, ignorance of a superior claim, and absence of intention to overreach
another."33 On the other hand, bad faith may only be attributed to a landowner when the
act of building, planting, or sowing was done with his knowledge and without opposition
on his part.34
In this case, it bears stressing that the execution of the Deed of Sale involving the
subject land was done in 1992. However, and as keenly pointed out by Justice Alfredo
Benjamin S. Caguioa during the deliberations of this case, Teresita was apprised of
Pedro's death as early as 1990 when she went on a vacation in the Philippines.35 As
such, she knew all along that the aforesaid Deed of Sale - which contained a signature
purportedly belonging to Pedro, who died in 1989, or three (3) years prior to its execution
- was void and would not have operated to transfer any rights over the subject land to
her name. Despite such awareness of the defect in their title to the subject land,
respondents still proceeded in constructing a three (3)-storey building thereon.
Indubitably, they should be deemed as builders in bad faith.
On the other hand, petitioners knew of the defect in the execution of the Deed of Sale
from the start, but nonetheless, still acquiesced to the construction of the three (3)-
storey building thereon. Hence, they should likewise be considered as landowners in bad
faith.
In this relation, Article 453 of the Civil Code provides that where both the landowner and
the builder, planter, or sower acted in bad faith, they shall be treated as if both of them
were in good faith, viz.:
Article 453. If there was bad faith, not only on the part of the person who built, planted
or sowed on the land of another, but also on the part of the owner of such land, the
rights of one and the other shall be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the landowner whenever the act
was done with his knowledge and without opposition on his part.
Whenever both the landowner and the builder/planter/sower are in good faith (or in bad
faith, pursuant to the afore-cited provision), the landowner is given two (2) options under
Article 44836 of the Civil Code, namely: (a) he may appropriate the improvements for
himself after reimbursing the buyer (the builder in good faith) the necessary and useful
expenses under Articles 54637 and 54838 of the Civil Code; or (b) he may sell the land to
the buyer, unless its value is considerably more than that of the improvements, in which
case, the buyer shall pay reasonable rent.39
Applying the aforesaid rule in this case, under the first option, petitioner may
appropriate for themselves the three (3)-storey building on the subject land after
payment of the indemnity provided for in Articles 546 and 548 of the Civil Code, as
applied in existing jurisprudence.1âwphi1 Under this option, respondents would have a
right of retention over the three (3)-storey building as well as the subject land until
petitioners complete the reimbursement. Under the second option, petitioners may sell
the subject land to respondents at a price equivalent to the current market value thereof.
However, if the value of the subject land is considerably more than the value of the three
(3)-storey building, respondents cannot be compelled to purchase the subject land.
Rather, they can only be obliged to pay petitioners reasonable rent.40
Thus, following prevailing jurisprudence, the instant case is remanded to the court a
quo for the purpose of determining matters necessary for the proper application of
Articles 448 and 453, in relation to Articles 546 and 548 of the Civil Code,41 as applied in
existing jurisprudence.
IV.
Finally, anent the issue on attorney's fees, the general rule is that the same cannot be
recovered as part of damages because of the policy that no premium should be placed on
the right to litigate.1âwphi1 They are not to be awarded every time a party wins a
suit.42 The power of the court to award attorney's fees under Article 2208 43 of the Civil
Code demands factual, legal, and equitable justification. In this case, the Court finds no
justification for the award of attorney's fees to either party. Accordingly, any award for
attorney's fees made by the courts a quo must be deleted.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated March 19,
2014 and the Resolution dated December 11, 2014 of the Court of Appeals in CA-G.R.
CV No. 96884 are hereby AFFIRMED with MODIFICATIONS as follows:
(a) The Deed of Sale and the Release of Mortgage both dated July 8, 1992 are
declared NULL and VOID;
(b) The Register of Deeds of Makati City is ordered to CANCEL Transfer Certificate of Title
No. 180286 in the name of Teresita D. Abejon, married to Alberto S. Abejon,
and REINSTATE Transfer Certificate of Title No. 131753 in the name of Pedro Delos
Santos and Erlinda DinglasanDelos Santos, and restore the same to its previous state
before its cancellation, i.e., with the mortgage executed by the parties annotated thereon;
and
(c) The entire fourth paragraph44 of the dispositive portion of the Decision dated March
19, 2014 of the Court of Appeals is hereby SET ASIDE, and in lieu thereof:
I. The ₱l00,000.00 loan obligation is DECLARED to be the liability of the conjugal
partnership of petitioner Erlinda Dinglasan Delos Santos and her deceased husband
Pedro Delos Santos which may be recovered by herein respondents in accordance with
this Decision;
II. Petitioner Erlinda Dinglasan Delos Santos is ORDERED to return to respondents the
amount of ₱50,000.00 representing the additional consideration Teresita D. Abejon paid
for in the sale, with legal interest of six percent (6%) per annum from the finality of this
Decision until fully paid;
III. For the purpose of determining the proper indemnity for the 3- storey building, the
case is REMANDED to the Regional Trial Court of Makati City, Branch 132 for further
proceedings consistent with the proper application of Articles 448, 453, 546, and 548 of
the Civil Code, as applied in existing jurisprudence; and
IV. The award of attorney's fees and litigation expenses in the amount of ₱l00,000.00
is DELETED.
BORLONGAN v. BDO
Carmelita Borlongan, Petitioner, vs. Banco de Oro, Respondent
G.R. No. 217617
April 5, 2017
FACTS:
In 1976, Eliseo Borlongan, Jr. and his wife Carmelita, acquired a real property covered
by Transfer Certificate of Title. In 2012, they went to the Registry of Deeds of Pasig City
to obtain a copy of the TCT in preparation for a prospective sale of the subject property.
To their surprise, the title contained an annotation that the property covered thereby was
the subject of an execution sale in a Civil Case pending before Branch 134 of Makati
RTC. Petitioner immediately procured a copy of the records and found out that
respondent Banco de Oro (BDO), formerly Equitable PCI Bank, filed a complaint for sum
of money against Tancho Corporation, the principal debtor of loan obligations obtained
from the bank. Likewise impleaded were several persons, including Carmelita, who
supposedly signed four (4) security agreements totaling ₱13, 500,000 to guarantee the
obligations of Tancho Corporation.
On July 2, 2003, the Makati RTC issued an Order directing the service of summons to all
the defendants at the business address of Tancho Corporation and IT appears that
respondent BDO already foreclosed the said Fumakilla Compound as early as August 21,
2000, following Tancho Corporation's failure to pay its obligation. BDO already
consolidated its ownership of the property on November 16, 2001. On July 31, 2003, the
process server filed an Officer's Return stating that summons remained unserved as the
"defendants are no longer holding office at [Fumakilla Compound]."
After the single attempt at personal service on Carmelita and her co-defendants, BDO
moved for leave to serve the summons by publication and the RTC granted the motion.
BDO filed an ex-parte Motion for the Issuance of a Writ of Attachment against the
defendants, including Carmelita. During the hearing on the motion, BDO submitted a
copy of the title of the subject property. The Makati RTC thereafter granted BDO's motion
and a Writ of Attachment was issued against the defendants effectively attaching the
subject property on behalf of BDO.
On December 20, 2005, BDO filed an ex-parte motion praying, among others, that the
summons and the complaint be served against Carmelita at the subject property. The
Makati RTC granted the motion. On February 9, 2006, the Sheriff filed a return stating
that no actual personal service was made as Carmelita "is no longer residing at the given
address and the said address is for 'rent,' as per information gathered from the security
guard on duty." BDO filed a manifestation stating that it had complied with the October
28, 2003 Order of the Makati RTC having caused the publication of the alias summons
and the complaint in People's Taliba on May 15, 2006. Thereafter, upon BDO's motion,
the Makati RTC declared the defendants including Carmelita, in default. BDO soon after
proceeded to present its evidence ex-parte. On November 29, 2007, the Makati RTC
rendered a Decision holding the defendants liable to pay BDO ₱32,543,856.33 plus 12%
interest per annum from the time of the filing of the complaint until fully paid and
attorney's fees.
Following the discovery of the sale of their property, Eliseo executed an affidavit of
adverse claim and filed a Complaint for Annulment of Surety Agreements, Notice of Levy
on Attachment, Auction Sale and Other Documents with the Regional Trial Court of
Pasig City alleging in his Complaint that the subject property is a family home that
belongs to the conjugal partnership of gains he established with his wife. He further
averred that the alleged surety agreements upon which the attachment of the property
was anchored were signed by his wife without his consent and did not redound to benefit
their family. Thus, he prayed that the surety agreements and all other documents and
processes, including the ensuing attachment, levy and execution sale, based thereon be
nullified.
BDO filed a Motion to Dismiss the Complaint, asserting that the Pasig RTC has no
jurisdiction to hear Eliseo's complaint and the complaint failed to state a cause of action.
The Pasig RTC dismissed the case citing lack of jurisdiction and held that it could not
pass upon matters already brought before the RTC Makati and, citing Spouses Ching
v.Court of Appeals, the husband of a judgment debtor is not a stranger to a case who
can file a separate and independent action to determine the validity of the levy and sale
of a property.
On a motion for reconsideration filed by Eliseo, the Pasig RTC reinstated the case with
qualification. Relying on Buado v. Court of Appeals, the Pasig RTC held that since
majority of Eliseo's causes of action were premised on a claim that the obligation
contracted by his wife has not redounded to their family, and, thus, the levy on their
property was illegal, his filing of a separate action is not an encroachment on the
jurisdiction of the Makati RTC, which ordered the attachment and execution in the first
place. The Pasig RTC clarified, however, that it cannot annul the surety agreements
supposedly signed by Carmelita since Eliseo was not a party to those agreements and
the validity and efficacy of these contracts had already been decided by the Makati RTC.
Both Eliseo and BDO referred the Pasig RTC's Decision to the Court of Appeals (CA).
Eliseo moved for, but was denied, reconsideration by the appellate court. Hence, he
elevated the matter to the SC via a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, docketed as G.R. No. 218540. The Court issued a Resolution denying
Eliseo's petition. Meanwhile, on an ex-parte omnibus motion filed by BDO, the Makati
RTC ordered the issuance of a Writ of Possession and the issuance of a new TCT covering
the subject property in favor of the respondent bank. Arguing that the Makati RTC had
not acquired jurisdiction over her person as the service of the summons and the other
processes of the court was defective, Carmelita filed a Petition for Annulment of
Judgment (With Urgent Prayer for Issuance of Temporary Restraining Order and/or Writ
of Preliminary Injunction) which was denied by the appellate court. Aggrieved, Carmelita
interposed a motion for the reconsideration of the CA's November 12, 2014 Resolution
but was again denied. Thus, on April 27, 2015, Carmelita filed a Petition for Review,
docketed as G.R. No. 217617 ascribing to the appellate court the commission of serious
reversible errors. Hence, Carmelita interposed a Motion for Reconsideration urging the
Court to take a second hard look at the facts of the case and reconsider its stance.
Considering that both cases originated from the same facts and involved interrelated
issues, on January 25, 2016, the Court resolved to consolidate G.R. No. 218540 with
G.R. No. 217617.
ISSUE/S:
1. Whether or not the CA erred in refusing to issue a TRO and/or WPI stopping the
consolidation of BDO’s ownership over the subject property.
2. Whether or not Pasig RTC has jurisdiction to hear and decide a case filed by the non-
debtor husband to annul the levy and execution sale of the subject property ordered by
the Makati RTC against his wife.
HELD:
Yes. It is clear that a writ of preliminary injunction is warranted where there is a
showing that there exists a right to be protected and that the acts against which the writ
is to be directed violate an established right. Otherwise stated, for a court to decide on
the propriety of issuing a TRO and/or a WPI, it must only inquire into the existence of
two things: (1) a clear and unmistakable right that must be protected; and (2) an urgent
and paramount necessity for the writ to prevent serious damage. The primary prayer of
the Petition for Annulment before the appellate court is the declaration of the nullity of
the proceedings in the RTC and its Decision dated November 29, 2007; it is not merely
confined to the prevention of the issuance of the writ of possession and the consolidation
of the ownership of the subject property in BDO's name-the concerns of the prayer for
the TRO and/or WPI. Indeed, the petitioner's prayer for the issuance of a TRO and/or
WPI was intended to preserve the status quo ante, and not to pre-empt the appellate
court's decision on the merits of her petition for annulment. Thus, it was a grievous error
on the part of the CA to deny her of this provisional remedy.
As to the question of the Pasig RTC’s jurisdiction to hear Eliseo's complaint, Section 16,
Rule 39 of the Rules of Court allows third-party claimants of properties under execution
to vindicate their claims to the property in a separate action with another court. The
officer shall not be liable for damages for the taking or keeping of the property, to any
third-party claimant if such bond is filed. Nothing shall prevent such claimant or any
third person from vindicating his claim to the property in a separate action, or prevent
the judgment obligee from claiming damages in the same or a separate action against a
third-party claimant who filed a frivolous or plainly spurious claim. The availability of the
remedy provided under the foregoing provision requires only that that the claim is a
third-party or a "stranger" to the case. The poser then is this: is the husband, who was
not a party to the suit but whose conjugal property was executed on account of the other
spouse's debt, a "stranger" to the suit? In Buado v. Court of Appeals, the Supreme Court
had the opportunity to clarify that, to resolve the issue, it must first be determined
whether the debt had redounded to the benefit of the conjugal partnership or not. In the
negative, the spouse is a stranger to the suit who can file an independent separate
action, distinct from the action in which the writ was issued. A third-party claim must be
filed [by] a person other than the judgment debtor or his agent. In other words, only a
stranger to the case may file a third-party claim.
Pursuant to Mariano however, it must further be settled whether the obligation of the
judgment debtor redounded to the benefit of the conjugal partnership or not. By no
stretch of imagination can it be concluded that the civil obligation arising from the crime
of slander committed by Erlinda redounded to the benefit of the conjugal partnership.
Conjugal property cannot be held liable for the personal obligation contracted by one
spouse, unless some advantage or benefit is shown to have accrued to the conjugal
partnership. Hence, the filing of a separate action by respondent is proper and
jurisdiction is thus vested on Branch 21. Thus, to now deny Eliseo the opportunity to
question the attachment made by the RTC Makati in a separate and independent action
will be to, again, refuse him the due process of law before their property is taken. As the
Court is duty-bound to protect and enforce Constitutional rights, this it will not allow.
Hence the petitions are granted.
November 27, 2017
G.R. No. 193228
BOSTON EQUITY RESOURCES, INC., and WILLIAM HERNANDEZ, Petitioners
vs.
EDGARDO D. DEL ROSARIO, Respondent
DECISION
BERSAMIN, J.:
The two-bidder rule is not applicable during the public auction of the mortgaged assets
foreclosed pursuant to Act No. 3135.1 But the mortgage itself and the extrajudicial
foreclosure thereof should nonetheless be nullified for lack of the written consent to the
mortgage of conjugal assets by the spouse of the mortgagor.
The Case
Petitioner Boston Equity Resources, Inc. (Boston Equity), the mortgagee who was also
the highest bidder of the assets under mortgage, hereby seeks the review and reversal of
the adverse decision promulgated on April 28, 2010,2 whereby the Court of Appeals (CA)
annulled the real estate mortgage (REM), its amendment and the foreclosure proceedings
taken pursuant to the REM.
Antecedents
The assailed decision of the CA recited the following factual and procedural
antecedents, viz.:
Plaintiff-appellant Edgardo Del Rosario ... was married to herein plaintiff-intervenor-
appellant Rosie Gonzales Del Rosario on March 9, 1968 and their marriage has been
blessed with three children, herein plaintiffs-intervenors-appellants, Christina, Peter and
Paul, all surnamed Del Rosario.
Defendant-appellee Boston Equity Resources, Inc., ... is a private corporation duly
registered and operating under the laws of the Philippines with defendant-appellee
William Hernandez as its president.
Defendant Mercedes Gatmaitan is impleaded in her capacity as Ex-Officio Sheriff of the
Quezon City Regional Trial Court.
On April 12, 1999, Del Rosario and Boston entered into a Real Estate Mortgage whereby
the former, representing himself as single, mortgaged six (6) parcels of land located at
300 Kanlaon St., Sta Mesa Heights, Quezon City to the latter for Seventeen Million Pesos
(Phpl7,000,000.00) at an interest rate of 4 per centum (4%) monthly within a period of
six (6) months. Said parcels of land registered under the name of Del Rosario has a total
land area of four thousand five hundred thirty three and 60/100 (4,533.60) square
meters and are covered by transfer certificates of title numbered as follows: RT-71666
(375141), RT- 71665 (375139), RT-71668 (375142), RT-71669 (375140), RT-71667
(375138) and RT-72517 (129992). The fair market value of the said parcels of land is
One Hundred Thirteen Million and Three Hundred Forty Five Thousand Pesos
(Phpl13,345,000.00).
However, records indicated that only two certificates of title were attached. On May 3,
1968, the Register of Deeds of Quezon City issued TCT No. RT-72517 (129992) covering
Six Hundred Thirty Seven Square Meters and Eighty Square Decimeters (637.8) to
Edgardo del Rosario. Likewise, TCT No.RT-71665 (375139) was issued to Edgardo del
Rosario on February 3, 1988. This title covered Five Hundred Forty Seven Square Meters
and Ninety Square Decimeters (547.9).
Thereafter, additional loan obligations amounting to Fifteen Million Pesos
(Php15,000,000.00) was obtained by Del Rosario. Thus, on September 8, 1999, the Real
Estate Mortgage previously executed was amended to include the Fifteen Million Pesos
additional loan and adopting therein all the terms and conditions stated in the Real
Estate Mortgage.
On various dates, Del Rosario paid a total amount of Three Million One Hundred Seventy
Eight Thousand Six Hundred Sixty Seven Pesos (Php3,178,667.00) represented by
encashed Checks and Twenty Five Million Pesos (Php25,000,000.00) on December 8,
1999, as evidenced by the Official Receipt No. 14019 in favor of Boston to obtain a
release from the Thirty Two Million Pesos (Php32,000,000.00) loan as stated in the
Certification issued by Josephine Sha, Finance Manager of Boston.
On December 9, 1999, Boston issued a Cash Voucher to Del Rosario representing the
excess payment by the latter of Seven Million Two Hundred Fifty Seven Thousand and
Two Hundred Pesos (Php 7,257,200.00) on the Thirty Two Million Peso[s] loan.
On various dates in the year 2000, Del Rosario again obtained several loans totaling
Thirty Four Million Four Hundred Thousand Pesos (Php 34,400,000.00) but because
Boston made an advanced deduction of interest (Php 11,660,347.00), he was able to
receive only Twenty Two Million Seven Hundred Thirty Nine Thousand and Six Hundred
Fifty Three Pesos (Php22,739,653.00) from the said loan.
Thereafter, on February 21, 2001, Boston sent a Demand Letter to Del Rosario for the
payment of Fifty Two Million and Nine Hundred Thousand Pesos (Php 52,900,000.00),
claiming it to be the principal amount Del Rosario owed to the former excluding penalties
and other charges. In response to Boston's demand letter, Del Rosario sent a Letter
dated March 8, 2001 asking Boston to furnish him an accurate and specific statement of
account, so that he can properly settle his obligation as the amount alleged in the
demand letter was not accurate since it included the commission of Nelia So.
Instead of heeding Del Rosario's requests for an accurate statement of account, on
March 13, 2001, Boston sent another Demand Letter to Del Rosario this time seeking the
payment for the amount of Fifty One Million Four Hundred Thousand Pesos (Php
51,400,000.00). Through a Letter dated May 31, 2001, Del Rosario asked for [an]
additional time to settle his obligation.
Boston did not grant Del Rosario's request for time to settle his loan but proceeded to
foreclose Del Rosario's properties by causing the publication of the Notice of Foreclosure
in Maharlika Pilipinas on May 31, June 7 and June 14, 2001.
As a consequence, the Ex-Officio Sheriff of Quezon City sent a Notice of Extra-Judicial
Sale of Real Property Under Act 3135 (As Amended) dated May 28, 2001 to Del Rosario
saying that the parcels of land shall be sold at a public auction on June 27, 2001 in
order to satisfy his Php 52.9 Million debt with Boston. In the said sale, Boston was
declared the sole bidder for the properties in the amount of Seventy Five Million Pesos
(Php 75,000,000.00).3
As the offshoot of the foregoing antecedents, Edgardo brought his complaint for the
declaration of the nullity of the extra judicial foreclosure of the REM and the sheriff's sale
on May 8, 2002 against Boston Equity in the Regional Trial Court in Quezon City (RTC).
The case, docketed as Civil Case No. Q-02-46788, was initially assigned to Branch 78.4
On May 14, 2002, the RTC granted Edgardo's prayer for the issuance of the temporary
restraining order (TRO), and enjoined Boston Equity from consolidating title and from
obtaining a writ of possession respecting the mortgaged properties.5
On May 21, 2002, the late Rosie Gonzales Del Rosario (Rosie), the spouse of Edgardo,
and their children, namely: Christina, Peter and Paul, all surnamed Del Rosario, filed in
the RTC their motion to admit their complaint-in-intervention on the basis that they had
a legal interest as the co-owners of the mortgaged properties by reason of the same
forming part of the conjugal partnership of gains of Rosie and Edgardo. They joined the
prayer of Edgardo for the declaration of the nullity of the promissory notes, the REM and
its amendment, and the extrajudicial foreclosure of the REM and the ensuing sheriff's
sale.6
On August 27, 2007,7 the RTC dismissed Edgardo's complaint, disposing thusly:
WHEREFORE, in view of the foregoing, the instant Complaint for Declaration of Nullity of
Extrajudicial Foreclosure & Sheriff's Sale is hereby DISMISSED for lack of merit.
Accordingly, the Writ of Preliminary Injunction issued on June 19, 2002 is hereby lifted.
SO ORDERED.8
Edgardo, Rosie and the Del Rosario children separately appealed to the CA, which
ultimately overturned the RTC's ruling through the assailed decision of April 28, 2010,
decreeing as follows:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The
Decision of RTC Branch 224 of Quezon City in Civil Case No. Q-02-46788 is REVERSED
AND SET ASIDE and a new one entered declaring the nullity of the subject Real Estate
Mortgage and its Amendment, and all the proceedings emanating therefrom.
SO ORDERED.9
The CA opined that the REM, having involved conjugal properties, had required the
written consent of Rosie for its validity; that the REM and its amendment were
consequently null and void; that the extrajudicial foreclosure sale was further null and
void for failure to comply with the procedure mandated by A.M. No. 99-10-05-
0 (Procedure in Extra-Judicial Foreclosure of Mortgage) requiring at least two bidders
during the public auction; and that Boston Equity could not validly consider Edgardo's
loan account to be in default without first giving him a proper accounting.10
With the CA denying their motion for reconsideration on August 6, 2010,11 the
petitioners appeal.
Issues
The petitioners insist on the following errors:
I creditor, may participate in the bidding and purchase under the same conditions as any
THE COURT OF APPEALS ERRED IN RULING THAT THE MORTGAGE EXECUTED BY
EDGARDO IS NULL AND VOID BECAUSE OF THE ALLEGED LACK OF CONSENT OF
ROSIE, WIFE OF EDGARDO IN THE MORTGAGE CONTRACT AND ITS AMENDMENT.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE EXTRAJUDICIAL
FORECLOSURE SALE OF THE PROPERTIES MORTGAGED WAS NULL AND VOID FOR
ITS FAIL URE TO COMPLY WITH A.M. NO. 99-10-05-0 WHICH ALLEGEDLY REQUIRES
AT LEAST TWO OR MORE PARTICIPATING BIDDERS IN THE AUCTION SALE.
III
THE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED AN ERROR WHEN
IT DECLARED THAT PLAINTIFFAPPELLANT IS ENTITLED TO A "PROPER ACCOUNTING"
OF HIS OUTSTANDING OBLIGATION.12
Ruling of the Court
The appeal, albeit meritorious on the non-applicability of the two-bidder rule and the
efficacy of the publication of the public auction, should fail on the ground that the REM
and its amendment were void for lack of the written consent to the mortgage of Rosie, the
spouse.
I.
The CA erred in annulling the extrajudicial
foreclosure sale for failure to have at least
two bidders during the foreclosure sale
That only Boston Equity had participated in the bidding during the foreclosure sale did
not constitute a defect that nullified or voided the foreclosure sale considering that the
Court had already dispensed with the two-bidder rule for purposes of the foreclosure sale
of private properties.13
The extrajudicial foreclosure of a mortgage with the special power of attorney to sell the
security being inserted in or attached to the deed of mortgage is governed by Act No.
3135, particularly the following provisions:
Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days
in at least three public places of the municipality or city where the property is situated,
and if such property is worth more than four hundred pesos, such notice shall also be
published once a week for at least three consecutive weeks in a newspaper of general
circulation in the municipality or city.
Sec. 4. The sale shall be made at public auction, between the hours or nine in the
morning and four in the afternoon; and shall be under the direction of the sheriff of the
province, the justice or auxiliary justice of the peace of the municipality in which such
sale has to be made, or a notary public of said municipality, who shall be entitled to
collect a fee of five pesos each day of actual work performed, in addition to his expenses.
Sec. 5. At any sale, the creditor, trustee, or other persons authorized to act for the
other bidder, unless the contrary has been expressly provided in the mortgage or trust
deed under which the sale is made.
Sec. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property subsequent
to the mortgage or deed of trust under which the property is sold, may redeem the same
at any time within the term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four hundred and sixty-four
to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these
are not inconsistent with the provisions of this Act.
As its aforequoted provisions indicate, Act No. 3135 does not require the participation
of at least two bidders at the public auction. In A.M. No. 99-10-05-0 dated January 30,
2001 (Re: Procedure in Extra-Judicial Foreclosure of Mortgage), therefore, the Court,
acting on letters containing observations and proposals about the rules of procedure to
be undertaken in the extrajudicial foreclosure of mortgages as embodied in Circular A.M.
No. 99-10-05-0 (inclusive of the bidding requirements, and the publication of notices),
expressly resolved:
After due deliberation on the points raised by the parties and considering the report of
the OCA, the Court resolved as follows:
1. Paragraph 5 of the Circular A.M. No. 99-10-05-0 provides:
No auction sale shall be held unless there are at least two (2) participating bidders,
otherwise the sale shall be postponed to another date. If on the new date set for the sale
there shall not be at least two bidders, the sale shall then proceed. The names of the
bidders shall be reported by the sheriff or the notary public who conducted the sale to
the Clerk of Court before the issuance of the certificate of sale.
It is contended that this requirement is not found in Act No. 3135 and that it is
impractical and burdensome, considering that not all auction sales are commercially
attractive to prospective bidders.
The observation is well taken. Neither Act No. 3135 nor the previous circulars issued by
the Court governing extrajudicial foreclosures provide for a similar requirement. The two-
bidder rule is provided under P.D. No. 1594 and its implementing rules with respect to
contracts for government infrastructure projects because of the public interest involved.
Although there is a public interest in the regularity of extrajudicial foreclosure of
mortgages, the private interest is predominant. The reason, therefore, for the
requirement that there must be at least two bidders is not as exigent as in the case of
contracts for government infrastructure projects.
On the other hand, the new requirement will necessitate republication of the notice of
auction sale in case only one bidder appears at the scheduled auction sale. This is not
only costly but, more importantly, it would render naught the binding effect of the
publication of the originally scheduled sale. Prior publication of the extrajudicial
foreclosure sale in a newspaper of general circulation operates as constructive notice to
the whole world. (Bold underscoring supplied for emphasis only)
Conformably with the foregoing, the foreclosure sale of the mortgaged properties at the
public auction held on June 27, 2007 could not be invalidated for its non-compliance
with the two-bidder rule.
II.
Publication of the notice of the foreclosure sale
in Maharlika Pilipinas was not void
The respondents submit that the publication of the notice of the foreclosure sale in the
newspaper Maharlika Pilipinas was ineffectual because Maharlika Pilipinas was not a
newspaper of general circulation as required by Section 3 of Act No. 3135, supra.14 In
support of their submission, they cite Metropolitan Bank and Trust Company, Inc. v.
Penajiel,15 where the Court held that Maharlika Pilipinas was not a newspaper of general
circulation. The petitioners counter that the publication had been made in a newspaper
of general circulation in Quezon City.
The submission of the respondents fails to persuade.
The respondents, as the parties alleging the non-compliance with the requisite of
publication in the extrajudicial foreclosure of the mortgage pursuant to Act No. 3135,
had the burden of proving their allegation. They failed in that regard, for a reading of the
ruling in Metropolitan Bank and Trust Company, Inc. v. Peñafiel only indicates that
Maharlika Pilipinas was not considered a newspaper of general circulation in
Mandaluyong City, the place where the public auction of the property in question took
place.16 With the public auction involved herein having been held in Quezon City, and
there being no showing by the respondents that Maharlika Pilipinas was not a
newspaper of general circulation in Quezon City, the publication undertaken by Boston
Equity was presumed as compliant with Section 3 of Act No. 3135.17
III.
There was no need for an accounting
of Edgardo's obligation
before he could be held in default
The CA concluded that the petitioners had hastily considered Edgardo to have been
already in default despite the discrepancy in the amount demandable from him; and that
he was entitled to a proper accounting in order to properly inform him of his outstanding
obligation.
The petitioners disagree with the CA's conclusions, and contend that the discrepancy as
to the amount of Edgardo's obligation between the two demand letters given by Boston
Equity to him was reconcilable as ruled by the RTC. They dismiss the CA's conclusions
as predicated on surmises, conjectures, and suppositions to the effect that he had not
really known his total obligations.18
The CA's conclusions were legally and factually unwarranted.
The foreclosure of the REM is proper once the debtor has incurred default or delay in
performing his obligation. Mora solvendi, or debtor's default, is defined as the delay in
the fulfillment of an obligation by reason of a cause imputable to the debtor. Three
requisites are necessary to support a finding of default - first, the obligation is already
demandable and liquidated; second, the debtor delays his performance; and third, the
creditor judicially or extrajudicially requires the debtor's performance.19
"A debt is liquidated when the amount is known or is determinable by inspection of the
terms and conditions of the relevant promissory notes and related
documentation."20 Thus, the failure of Boston Equity to furnish the detailed statement of
account to Edgardo did not ipso facto result in his obligation being still unliquidated.
Indeed, the terms and conditions of his obligation were readily ascertainable and
determinable from the REM and its amendment; hence, the petitioners had properly
considered him in default upon his having failed to settle his obligation despite their
demand. For this reason, any discrepancy in the amounts stated in the demand letters of
Boston Equity did not genuinely hinder the legitimate effort to recover on the obligation.
IV.
The petitioners could not raise for the first time
on appeal the issue of Rosie's consent to the
mortgage contract and its amendment
The petitioners are submitting for the first time in this appeal that Rosie had consented
to the REM and its amendment by affixing her signature as a witness thereto, as
Edgardo's spouse; and that the proceeds of the loan obtained by Edgardo had redounded
to the benefit of the family, and thus rendered the mortgaged properties, albeit conjugal
in character, liable for the obligation. They argue that changing the legal theory of one's
defense was not altogether prohibited as long as the factual basis of such theory would
not require the presentation of evidence that was not yet part of the records of the case.21
The respondents posit, however, that the documentary evidence belatedly submitted by
the petitioners to prove the supposed consent of Rosie to the REM and its amendment
was inadmissible for lack of proper authentication;22 that the petitioners' insistence that
Rosie had known of the REM and its amendment was a factual matter that went beyond
the purview of the Court's review in this appeal; that the petitioners thereby changed
their theory for the first time in this appeal; and that the REM and its amendment were
null and void for lack of the written consent of Rosie as the mortgagor's spouse.23
We uphold the respondents' position.
The submission by the petitioners regarding Rosie's having consented to the REM and its
amendment by virtue of her signature thereon as an instrumental witness was not
among the issues framed and joined by the parties during the trial in the RTC. For the
petitioners to make the submission only now is impermissible. Questions raised on
appeal must be within the issues the parties framed at the start; hence, issues not raised
before the trial court cannot be raised for the first time on appeal. The Court will not deal
with and resolve issues not properly raised and ventilated in the lower courts. To allow
such new issues on appeal contravenes the basic rule of fair play and justice, and is
violative of the adverse party's constitutional right to due process.24 Verily, points of law,
theories, issues, and arguments not brought to the attention of the trial court are barred
by estoppels, and cannot be considered by a reviewing court.25
The petitioners propose that this case falls within the exception, and urge the Court to
allow the change of legal theory on appeal because the factual bases for the new theory
would not require the presentation of further evidence by the adverse party as to enable
it to properly meet the issue raised under the new theory. They argue that their new
theory could be verified from documents already forming part of the records of the case.
They cite in support of their urging the ruling in Homeowners Savings & Loan
Bank v. Dailo.26
The petitioners' proposition is unacceptable.
The application of the exception allowing a change of theory on appeal provided no
additional evidence was necessary, has been explained in Philippine Geothermal, Inc.
Employees Union v. Unocal Philippines, Inc. (now known as Chevron Geothermal
Philippines Holdings, Inc.)27 thusly:
Respondent's contention that it falls within the exception to the rule likewise does not lie.
Respondent cites Quasha Ancheta Pena and Nolasco Law Office v. LCN Construction
Corp. and claims that it falls within the exception since it did not present any additional
evidence on the matter:
In the interest of justice and within the sound discretion of the appellate court, a party
may change his legal theory on appeal, only when the factual bases thereof would not
require presentation of any further evidence by the adverse party in order to enable it to
properly meet the issue raised in the new theory.
However, this paragraph states that it is the adverse party that should no longer be
required to present additional evidence to contest the new claim, and not the party
presenting the new theory on appeal. Thus, it does not matter that respondent no longer
presented additional evidence to support its new claim. The petitioner, as the adverse
party, should not have to present further evidence on the matter before the new issue
may be considered. x x x
The exception is still not proper. Although the respondents, who are considered the
adverse party, could belie the petitioners' claim by merely maintaining their position that
Rosie had not consented to the REM and its amendment, the petitioners' new contention
would still entail the presentation of additional evidence by the respondents to enable
them to properly meet and respond to the new theory. As such, allowing the petitioners
to raise the new theory was still not permissible. Moreover, to allow the new theory to be
pursued would also necessarily involve the Court in the consideration and ascertainment
of factual issues, a task that the Court could not discharge through this mode of appeal
that is limited to the consideration and determination of questions of law.
As a consequence, the findings of the CA on the lack of Rosie's written consent to the
REM and its amendment stand unrefuted.1âwphi1 Such findings warrant the
nullification not only of the REM and its amendment, but also of all the proceedings
taken to foreclose the REM. Such invalidity applied to the entire mortgage, even to the
portion corresponding to the share of Edgardo in the conjugal estate.28 Article 124 of
the Family Code clearly so provides:
Art. 124. The administration and enjoyment of the conjugal partnership shall belong to
both spouses jointly. In case of disagreement, the husband's decision shall prevail,
subject to recourse to the court by the wife for proper remedy, which must be availed of
within five years from the date of the contract implementing such decision.
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 the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract upon the acceptance
by the other spouse or authorization by the court before the offer is withdrawn by either
or both offerors. (165a)
The petitioners' assertion that the mortgaged properties could be made liable for the
obligation contracted solely by Eduardo on the basis that the proceeds of the loan had
redounded to the benefit of the family is also unwarranted. The mortgage was but an
accessory agreement, and was distinct from the principal contract of loan. What the CA
declared void was the REM. Since the REM was an encumbrance on the conjugal
properties, the contracting thereof by Edgardo sans the written consent of Rosie
rendered only the REM void and legally inexistent.29 The petitioners could still recover
the loan from the conjugal partnership in a proper case for the purpose.30 Where the
mortgage was not valid, the principal obligation that the mortgage guaranteed was not
thereby rendered null and void. The liability of the debtor under the principal contract of
the loan subsisted despite the illegality of the REM. That obligation matured and became
demandable in accordance with the stipulation pertaining to it. What was lost was only
the right to foreclose the REM as a special remedy for satisfying or settling the debt that
was the principal obligation. In case of its nullity, the mortgage deed remained as
evidence or proof of the debtor's personal obligation, and the amount due to the creditor
could be enforced in an ordinary action.31
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
decision promulgated on April 28, 2010; and ORDERS the petitioners to pay the costs of
suit.
SO ORDERED.
HEIRS OF PROTACIO GO, SR. et. al. v. SERVACIO and GO
G.R. No. 157537, [September 7, 2011]
FACTS:
Gaviola and Protacio, Jr. entered into a contract ofsale of a parcel of land. 23 years later,
Protacio, Jr executed an Affidavit of Renunciation and Waiver affirming under oath that it
was his father Protacio Go, Sr.(Married to Marta Go) who purchased the said property.
Subsequently, Protacio Go together with his son Rito Go sold a portion of the property to SIOCHI VS. GOZON
herein respondent Ester Servacio. On March 2, 2001, the petitioners demanded the return
of the property, but Servacio refused to heed their demand; hence this case for the
G.R. No. 169900 March 18, 2010 MARIO SIOCHI, Petitioner, vs. ALFREDO GOZON, et
annulment of sale of the property. The contention of the petitioner was that following
al., Respondents. G.R. No. 169977 INTER-DIMENSIONAL REALTY, INC., Petitioner, vs.
Protacio, Jr.’s renunciation, the property became conjugal property; and that the sale of
MARIO SIOCHI, ELVIRA GOZON, et al., Respondents. CARPIO, J.:
the property to Servacio without the prior liquidation of the community property between
Protacio, Sr. and Marta was null and void pursuant to Article 130 of the Family Code.
Servacio and Rito countered that Article 130 of the Family Code was inapplicable; that the
want of the liquidation prior to the sale did not render the sale invalid, because the sale Facts:
was valid to the extent of the portion that was finally allotted to the vendors as his share;
and that the sale did not also prejudice any rights of the petitioners as heirs, considering
that what the sale disposed of was within the aliquot portion of the property that the Elvira Gozon filed with the RTC Cavite a petition for legal separation against her
vendors were entitled to as heirs. husband Alfredo Gozon.

The RTC declared that the property was the conjugal property of Protacio, Sr. and Marta,
not the exclusive property of Protacio, Sr. Nonetheless, the RTC affirmed the validity of the
sale of the property. Aggrieved, the petitioners went all the way up to the Supreme Court.
ISSUE:
Then, while the pending case of Legal Separation of both parties, Alfredo and Mario
entered into Agreement of Buy and Sell involving their conjugal property for the price of
18 million pesos. Mario pays the partial payment of the said price and he took the
possession of the property.

Whether Article 130 of the Family Code was applicable. When the Court granted the legal separation of Elvira and Mario, their property was
dissolved and liquidated. Being the offending spouse, Alfredo is deprived of his share in
the net profits and the same is awarded to their child Winifred R. Gozon whose custody
HELD:
is awarded to Elvira.

The appeal lacks merit.

Under Article 130 in relation to Article 105 of the Family Code,any disposition of the
conjugal property after the dissolution of the conjugal partnership must be made only after
the liquidation; otherwise, the disposition is void. Upon Marta’s death in 1987, the
conjugal partnership was dissolved, pursuant to Article 175 (1) of the Civil Code, and an
implied ordinary co-ownership ensued among Protacio, Sr. and the other heirs of Marta
with respect to her share in the assets of the conjugal partnership pending a liquidation
following its liquidation.
On Oct, 26, 1994 Alfredo sold that property into Inter Dimensional Realty Inc. for 18
million pesos in his favor by Winnifred. And the IDRI paid it in full payment.
Because of that Mario, filed a complaint with RTC Malabon for specific performance and
damages, annulment of donation and sale, with preliminary mandatory and prohibitory
injunction and/or temporary restraining order.

Protacio, Sr., although becoming a co-owner with his children in respect of Marta’s share The Court held, the agreement between Alfredo and IDRI is null and void for their
in the conjugal partnership, could not yet assert or claim title to any specific portion of attempt of commission or continuance of their wrongful acts, further alienating or
Marta’s share without an actual partition of the property being first done either by disposing of the subject property. Also the agreement of Alfredo and Mario is null and
agreement or by judicial decree. Until then, all that he had was an ideal or abstract quota void, for the absence of written consent of Elvira Gozon for her property rights to the
in Marta’s share. Nonetheless, a co-owner could sell his undivided share; hence, Protacio, undivided one-half share in the conjugal property of this case.
Sr. had the right to freely sell and dispose of his undivided interest, but not the interest of
his co-owners. Consequently, the sale by Protacio, Sr. and Rito as co-owners without the
consent of the other co-owners was not necessarily void, for the rights of the selling co- Issue:
owners were thereby effectively transferred, making the buyer (Servacio) a co-owner of
Marta’s share. Article 105 of the Family Code, supra, expressly provides that the
applicability of the rules on dissolution of the conjugal partnership is “without prejudice Whether or not the offending spouse, Alfredo Gozon has right to sell their conjugal
to vested rights already acquired in accordance with the Civil Code or other laws.” partnership without the consent of the other spouse, and share of the net profits earned
by the conjugal partnership.
The proper action in cases like this is not for the nullification of the sale or for the recovery
of possession of the thing owned in common from the third person who substituted the
co-owner or co-owners who alienated their shares, but the DIVISION of the common Ruling:
property as if it continued to remain in the possession of the co-owners who possessed
and administered it [Mainit v. Bandoy, supra] In the meanwhile, Servacio would be a
trustee for the benefit of the co-heirs of her vendors in respect of any portion that might No,
not be validly sold to her.
 The absence of the consent of one of the spouse renders the entire sale void, including
the portion of the conjugal property pertaining to the spouse who contracted the sale.
Even if the other spouse actively participated in negotiating for the sale of the property,
that other spouse’s written consent to the sale is still required by law for its validity. And
the offending spouse in an action for legal separation is deprived of his share in the net
profits of the conjugal properties.
Under Article 63 (2) of the Family Code, the absolute community or the conjugal
partnership shall be dissolved and liquidated but the offending spouse shall have no
right to any share of the net profits earned by the absolute community or the conjugal
partnership, which shall be forfeited in accordance with the provisions of article
SPOUSES AGGABAO V. PARULAN, JR. AND PARULAN
G.R. No. 165803, [September 1, 2010]
DOCTRINE(S):
1. The sale was made on March 18, 1991, or after Au-gust 3, 1988, the effectivity of the
Family Code. The proper law to apply is, therefore, Article 124 of the Family Code, for it is
settled that any alienation or encumbrance of conjugal property made during the
effectivity of the Family Code is governed by Article 124 of the Family Code.
2. According to Article 256 of the Family Code, the pro-visions of the Family Code
may apply retroactively provided no vested rights are impaired. In Tumlos v. Fernandez,
330 SCRA 718 (2000), the Court rejected the petitioner’s argument that the Family Code
did not apply because the acquisition of the contested property had occurred prior to the
effectivity of the Family Code, and pointed out that Article 256 pro-vided that the Family
Code could apply retroactively if the application would not prejudice vested or ac-quired
rights existing before the effectivity of the Family Code. Herein, however, the petitioners
did not show any vested right in the property acquired prior to August 3, 1988 that
exempted their situation from the retroactive application of the Family Code.
FACTS:
In January 1991, real estate broker Marta K.Atanacio offered 2 lots located in Parañaque
to the petitioners. On February 2, 1991, the petitioners met up with Elena Parulan at the
site of the property and showed them the following documents: (a.) Owner’s original copy
of the TCT of the 2 lots; (b.) tax declarations; (c.) a copy of the special power of attorney
dated January 7, 1991 executed by Dionisio authorizing Elena to sell the property. The
petitioners paid P200,000.00 as earnest money for which Elena executed a handwritten
Receipt of Earnest Money which stipulated that the peitioners would pay an additional
payment of P130, 000.00 on February 4, 1991; P650,000.00 on or before February 15,
1991 and P700, 000.00 on March 31, 1991 once Elena turned over the property.
On February 4, 1991, the petitioners, accompanied by the broker, went to the Office of
the Register of Deeds to verify the TCTs shown by Elena. There they discovered that one
of the lots had been encumbered to Banco Filipino, but that the encumbrance had been
cancelled due to the full payment of the obligation. They noticed that the loan was effected
through and SPA executed by Dionisio in favor of Elena. The other lot on the other hand
had an annotation of an existing mortgage in favor of Los Baños Rural Bank, with the
same SPA with a court order authorizing Elena to mortgage the lot to secure the loan.
The petitioners and the broker next inquired about the mortgage and the court order at
the Los Baños Rural Bank. There, they met with Atty. Zarate, related that the bank
had asked for the court order because the lot involved was conjugal property.
Following their verification, the petitioners delivered P130,000.00 as additional down
payment on February 4, 1991; and P650,000.00 to the Los Baños Rural Bank on February
12, 1991, which then released the owner’s duplicate copy of TCT to them.
On March 18, 1991, the petitioners delivered the final amount of P700,000.00 to Elena,
who executed a deed of absolute sale in their favor. However, Elena did not turn over the
owner’s duplicate copy of the TCT claiming that said copy was in the possession of a
relative who was then in Hongkong. She assured them that the owner’s duplicate copy of
TCT would be turned over after a week.
On March 19, 1991, TCT was cancelled and a new one was issued in the name of the
petitioners. Elena did not turn over the duplicate owner’s copy of TCT as promised. In due
time, the petitioners learned that the duplicate owner’s copy of TCT had been all along in
the custody of Atty. Jeremy Z. Parulan, who appeared to hold an SPA executed by his
brother Dionisio authorizing him to sell both lots. At Atanacio’s instance, the petitioners
met on March 25, 1991 with Atty. Parulan at the Manila Peninsula. They were
accompanied by one Atty. Olandesca. They recalled that Atty. Parulan “smugly demanded
P800,000.00” in exchange for the duplicate owner’s copy of TCT, because Atty. Parulan
represented the current value of the property to be P1.5 million. As a counter-offer,
however, they tendered P250,000.00, which Atty. Parulan declined, giving them only until
April 5, 1991 to decide. Hearing nothing more from the petitioners, Atty. Parulan decided
to call them on April 5, 1991, but they informed him that they had already fully paid to
Elena.
Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an action (Civil Case
No. 91-1005 entitled Dionisio Z. Parulan, Jr., represented by Jeremy Z. Parulan, as
attorney in fact, v. Ma. Elena Parulan, Sps. Rex and Coney Aggabao), praying for the
declaration of the nullity of the deed of absolute sale executed by Ma. Elena, and the
cancellation of the title issued to the petitioners by virtue thereof. In turn, the petitioners
filed on July 12, 1991 their own action for specific performance with damages against the
respondents. Both cases were consolidated for trial and judgment in the RTC.
On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati City annulled
the deed of absolute sale executed in favor of the petitioners covering two parcels
of registered land the respondents owned for want of the written consent of respondent
husband Dionisio Parulan, Jr. The CA affirmed the RTC decision.
ISSUE:
Which between Article 173 of the Civil Code and Article 124 of the Family Code
should apply to the sale of the conjugal property executed without the consent of Dionisio?
Ruling:
Article 124, Family Code, applies to sale of conjugal properties made after the effectivity of
the Family Code
RATIO:
The petitioners submit that Article 173 of the CivilCode, not Article 124 of the Family Code,
governed the property relations of the respondents because they had been married prior
to the effectivity of the Family Code; and that the second paragraph of Article 124 of the
Family Code should not apply because the other spouse held the administration over the
conjugal property. They argue that notwithstanding his absence from the country Dionisio
still held the administration of the conjugal property by virtue of his execution of the SPA
in favor of his brother; and that even assuming that Article 124 of the Family Code properly
applied, Dionisio ratified the sale through Atty. Parulan’s counter-offer during the March
25, 1991 meeting.
To start with, Article 25427 the Family Code has expressly repealed several titles under
the Civil Code, among them the entire Title VI in which the provisions on the property
relations between husband and wife, Article 173 included, are found.
Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the effectivity of
the Family Code. The proper law to apply is, therefore, Article 124 of the Family Code, for
it is settled that any alienation or encumbrance of conjugal property made during the
effectivity of the Family Code is governed by Article 124 of the Family Code.
(from Article 1876 to Article 1878). Specifically, the apparent authority of Atty. Parulan,
being a special agency, was limited to the sale of the property in question, and did not
include or extend to the power to administer the property.
Lastly, the petitioners’ insistence that Atty. Parulan’s making of a counter-offer during the
March 25, 1991 meeting ratified the sale merits no consideration. Under Article 124 of the
Family Code, the transaction executed sans the written consent of Dionisio or the proper
court order was void; hence, ratification did not occur, for a void contract could not be
ratified. On the other hand, we agree with Dionisio that the void sale was a continuing
offer from the petitioners and Ma. Elena that Dionisio had the option of accepting or
rejecting before the offer was withdrawn by either or both Ma. Elena and the petitioners.
The last sentence of the second paragraph of Article 124 of the Family Code makes this
clear, stating that in the absence of the other spouse’s consent, the transaction should 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
upon authorization by the court before the offer is withdrawn by either or both offerors.
Fuentes vs. Roca

Article 124 of the Family Code provides: G.R. No. 178902, [April 21, 2010]

“Article 124. The administration and enjoyment of the conjugal partnership property shall FACTS:
belong to both spouses jointly. In case of disagreement, the husband’s decision shall
prevail, subject to recourse to the court by the wife for proper remedy, which must be
Sabina Tarroza owned a land in Canelar,Zamboanga City and she sold it to her son,
availed of within five years from the date of the contract implementing such decision.
Tarciano T. Roca (Tarciano) under a deed of absolute sale. Six years later in 1988, Tarciano
offered to sell the lot to petitioners Manuel and Leticia Fuentes (the Fuentes spouses). They
In the event that one spouse is incapacitated or otherwise unable to participate in the met in the office of Atty. Romulo D. Plagata whom they asked to prepare the documents of
administration of the conjugal properties, the other spouse may assume sole powers of sale and signed an agreement to sell that Atty. Plagata prepared. It expressly stated that
administration. These powers do not include disposition or encumbrance the sale was to take effect in six months. Within six months, Tarciano was to clear the lot
without authority of the court or the written consent of the other spouse. In the absence of structures and occupants and secure the consent of his estranged wife, Rosario Gabriel
of such authority or consent, the disposition or encumbrance shall be void. However, the Roca (Rosario), to the sale.
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
Upon Tarciano’s compliance with these conditions, the Fuentes spouses were to take
the other spouse or authorization by the court before the offer is withdrawn by either or
possession of the lot and pay him an additional pay besides the downpayment, depending
both offerors.”
on whether or not he succeeded in demolishing the house standing on it. If Tarciano was
unable to comply with these conditions, the Fuentes spouses would become owners of the
Thirdly, according to Article 256 of the Family Code, the provisions of the Family Code lot without any further formality and payment.
may apply retroactively provided no vested rights are impaired. In Tumlos v. Fernandez,
the Court rejected the petitioner’s argument that the Family Code did not apply because
The parties left their signed agreement with Atty. Plagata who then worked on the
the acquisition of the contested property had occurred prior to the effectivity of the Family
other requirements of the sale. According to the lawyer, he went to see Rosario in one of
Code, and pointed out that Article 256 provided that the Family Code could apply
his trips to Manila and had her sign an affidavit of consent. After 6 months, a new title
retroactively if the application would not prejudice vested or acquired rights existing before
was issued in the name of the spouses who immediately constructed a building on the lot.
the effectivity of the Family Code. Herein, however, the petitioners did not show any vested
Thereafter Tarciano passed away, followed by his wife Rosario who died nine months
right in the property acquired prior to August 3, 1988 that exempted their situation from
afterwards.
the retroactive application of the Family Code.

Eight years later in 1997, the children of Tarciano and Rosario, namely,
Fourthly, the petitioners failed to substantiate their contention that Dionisio, while holding
respondents(collectively, the Rocas), filed an action for annulment of sale and re-
the administration over the property, had delegated to his brother, Atty. Parulan, the
conveyance of the land against the Fuentes spouses before the RTC.
administration of the property, considering that they did not present in court the SPA
granting to Atty. Parulan the authority for the administration.
The Rocas claimed that the sale to the spouses was void since Tarciano’s wife, Rosario, did
not give her consent to it. Her signature on the affidavit of consent had been forged. They
Nonetheless, we stress that the power of administration does not include acts of
thus prayed that the property be reconveyed to them upon reimbursement of the price
disposition or encumbrance, which are acts of strict ownership. As such, an authority to
that the Fuentes spouses paid Tarciano.
dispose cannot proceed from an authority to administer, and vice versa, for the two powers
may only be exercised by an agent by following the provisions on agency of the Civil Code
 The spouses denied the Rocas’ allegations. They presented Atty. Plagata who testified that
he personally saw Rosario sign the affidavit at her residence. He admitted, however,that
he notarized the document in Zamboanga City four months later. All the same, the
Fuentes spouses pointed out that the claim of forgery was personal to Rosario and she
alone could invoke it. Besides, the four-year prescriptive period for nullifying the sale on
ground of fraud had already lapsed.
ISSUES:
1. Whether Rosario’s signature on the document of consent to her husband Tarciano’s sale
of their conjugal land to the Fuentes spouses was forged?
2. Whether the Rocas’ action for the declaration of nullity of that sale to the spouses
already prescribed?
3. Whether or not only Rosario, the wife whose consent was not had, could bring the action
to annul that sale?
Ruling:
1. It was forged
2. It did not prescribe
3. The heirs of Rosario may bring an action to annul the sale.
RATIO:
1. The key issue in this case is whether or not Rosario’s signature on the document of
consent had been forged. For, if the signature were genuine, the fact that she gave her
consent to her husband’s sale of the conjugal land would render the other issues merely
academic. The SC agreed with the CA that the signature was forged.
While a defective notarization will merely strip the document of its public character and
reduce it to a private instrument, that falsified jurat, taken together with the marks of
forgery in the signature, dooms such document as proof of Rosario’s consent to the sale of
the land. That the Fuentes spouses honestly relied on the notarized affidavit as proof of
Rosario’s consent does not matter. The sale is still void without an authentic consent.
2. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the
Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950,
Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few
months after the Family Code took effect on August 3, 1988.
When Tarciano married Rosario, the Civil Code put in place the system of conjugal
partnership of gains on their property relations. While its Article 165 made Tarciano the
sole administrator of the conjugal partnership, Article 166 prohibited him from selling
commonly owned real property without his wife’s consent. Still, if he sold the same without
his wife’s consent, the sale is merely voidable. Article 173 gave Rosario the right to have
the sale annulled during the marriage within ten years from the date of the sale. Failing in
that, she or her heirs may demand, after dissolution of the marriage, only the value of the
property that Tarciano fraudulently sold.
But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on
Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on
Property Relations Between Husband and Wife. Further, the Family Code provisions were
also made to apply to already existing conjugal partnerships without prejudice to vested
rights.
Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of
gains already established between spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance with the Civil Code or other laws,
as provided in Article 256.
(n)
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide
a period within which the wife who gave no consent may assail her husband’s sale of the
real property. It simply provides that without the other spouse’s written consent or a court
order allowing the sale, the same would be void.
Under the provisions of the Civil Code governing contracts, a void or inexistent contract
has no force and effect from the very beginning. And this rule applies to contracts that are
declared void by positive provision of law, as in the case of a sale of conjugal property
without the other spouse’s written consent. But, although a void contract has no legal
effects even if no action is taken to set it aside, when any of its terms have been performed,
an action to declare its inexistence is necessary to allow restitution of what has been given
under it. This action, according to Article 1410 of the Civil Code does not prescribe.
Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale
and re-conveyance of the real property that Tarciano sold without their mother’s (his wife’s)
written consent. The passage of time did not erode the right to bring such an action.
3. As stated above, that sale was void from the beginning. Consequently, the land remained
the property of Tarciano and Rosario despite that sale. When the two died, they passed on
the ownership of the property to their heirs,
G.R. No. 206008 Delfin Domingo Dadis vs. Spouses Magtanggol De Guzman and
Nora Q. De Guzman, and The Register of Deeds of Talavera, Nueva Ecija
Facts: Petitioner Delfin Domingo Dadis (Delfin) filed a Complaint for reconveyance and
damages against respondents Spouses De Guzman(Magtanggol). Delfin alleged, among
others, that: he and his deceased wife, Corazon Pajarillaga Dadis (Corazon), were the
registered owners of a parcel of land; their daughter, Marissa P. Dadis (Marissa), entered
into a contract of real estate mortgage (REM) over the subject property in favor of
Magtanggol to secure a loan obligation; 7 the Spouses De Guzman made it appear that
Marissa was authorized by the Spouses Dadis by virtue of a Special Power of Attorney
(SPA); the SPA was a forged document because it was never issued by him or Corazon as
the signatures contained therein are not theirs, especially so since he was in the United
States of America (USA) at the time.
In their Answer with Motion to Dismiss, the Spouses De Guzman stated that: they have
no knowledge as regards the supposed falsity of the SPA presented by Marissa and
Corazon at the time the latter pleaded to accommodate them into entering a mortgage
contract; they have no knowledge that Delfin was not in the Philippines at the time of the
execution of the SPA, which, as a duly-notarized document, was presumed to have been
done regularly; and they were in good faith from the time the property was mortgaged
until it was foreclosed and they were able to help Delfin’s family, who was financially
distressed at the time.
After trial, the RTC established that Delfin was not in the Philippines, thus, he could not
have signed the SPA authorizing Marissa to mortgage the property. Without his written
consent, the mortgage is void since such act is not merely an act of administration but of
ownership or dominion on the part of Corazon. The CA reversed and set aside the RTC
Decision. It conceded that, as found by the RTC and undisputed by the parties, the SPA
had been forged. As to the issue of whether Magtanggol is a mortgagee in good faith and
for value, it resolved in the affirmative and noted that the purported SPA bears the
signatures of both Corazon Pajarillaga-Dadis and the plaintiff-appellee Delfin Domingo
Dadis, the registered owners of the property subject of the real estate mortgage and that
it was duly notarized.
Issue: Whether Magtanggol is a mortgagee in good faith.
Ruling: No. Cavite Development Bank v. Spouses Lim explained the doctrine of
mortgagee in good faith in this wise:
There is, however, a situation where, despite the fact that the mortgagor is not the owner
of the mortgaged property, his title being fraudulent, the mortgage contract and any
foreclosure sale arising therefrom are given effect by reason of public policy. This is the
doctrine of “the mortgagee in good faith” based on the rule that all persons dealing with
the property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not
required to go beyond what appears on the face of the title. The public interest in
upholding the indefeasibility of a certificate of title, as evidence of lawful ownership of the
land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith,
relied upon what appears on the face of the certificate of title.
The doctrine of mortgagee in good faith presupposes that the mortgagor, who is not the
rightful owner of the property, has already succeeded in obtaining a Torrens title over the
property in his or her name and that, after obtaining the said title, he or she succeeds in
mortgaging the property to another who relies on what appears on the said title.
In this case, Marissa is undoubtedly not the registered owner of the subject lot; and the
certificate of title was in the name of her parents at the time of the mortgage transaction.
She merely acted as the attorney-in-fact of Corazon and Delfin by virtue of the falsified
SPA. The protection accorded by law to mortgagees in good faith cannot be extended to
mortgagees of properties that are not yet registered with the RD or registered but not
under the mortgagor’s name.
When the mortgagee does not directly deal with the registered owner of the real property,
like an attorney-in-fact of the owner, it is incumbent upon the mortgagee to exercise
greater care and a higher degree of prudence in dealing with such mortgagor.
As Abad v. Sps. Guimba reminded: x x x A person who deals with registered land through
someone who is not the registered owner is expected to look behind the certificate of title
and examine all factual circumstances, in order to determine if the mortgagor/vendee has
the capacity to transfer any interest in the land. One has the duty to ascertain the identity
of the person with whom one is dealing, as well as the latter’s legal authority to convey.
The law “requires a higher degree of prudence from one who buys from a person who is
not the registered owner, although the land object of the transaction is registered. While
one who buys from the registered owner does not need to look behind the certificate of
title, one who buys from one who is not the registered owner is expected to examine not
only the certificate of title but all factual circumstances necessary for [one] to determine
if there are any flaws in the title of the transferor, or in [the] capacity to transfer the
land.” Although the instant case does not involve a sale but only a mortgage, the same
rule applies inasmuch as the law itself includes a mortgagee in the term “purchaser.”
Similar to a buyer, the status of a mortgagee in good faith is never presumed but must
be proven by the person invoking it. Good faith connotes an honest intention to abstain
from taking unconscientious advantage of another. “Good faith, or the lack of it, is a
question of intention. In ascertaining intention, courts are necessarily controlled by the
evidence as to the conduct and outward acts by which alone the inward motive may,
with safety, be determined.”
We rule that, based on his own disclosures during the trial, Magtanggol could not be
considered as a mortgagee in good faith because he had actual notice of facts that
should have put him on deeper inquiry into Marissa’s capacity to sell. He could not feign
ignorance of Delfin’s absence or whereabouts. The subject SPA was not yet existing at
the time he first met Corazon and Marissa.
We rule that the evidentiary weight conferred upon the subject SPA with respect to its
due execution and the presumption of regularity in its favor was rebutted by clear and
convincing evidence. Both testimonial and documentary evidence presented by Delfin
effectively overcame and negated the legal presumptions. In the witness stand, he
categorically denied that he signed the SP A and that he executed such document before
a notary public. Considering that the notarization of the SPA is irregular, no probative
value can be given thereto.
The falsity of the SPA could not be cured even if Magtanggol later on informed Delfin of
the mortgage transaction and of the proceedings leading to the property’s foreclosure,
consolidation of title, and issuance of a new title. The sale (or encumbrance) of conjugal
property without the consent of the husband was not merely voidable but void; hence, it
could not be ratified. A void contract is equivalent to nothing and is absolutely wanting
in civil effects; it cannot be validated either by ratification or prescription. Similar to
other cases, Spouses Ravina v. Villa Abrille, et al. already settled:
Significantly, a sale or encumbrance of conjugal property concluded after the effectivity
of the Family Code on August 3, 1988, is governed by Article 124 of the same Code that
now treats such a disposition to be void if done (a) without the consent of both the
husband and the wife, or (b) in case of one spouses inability, the authority of the court.
Article 124 of the Family Code, the governing law at the time the assailed sale was
contracted, is explicit:
ART. 124. xxx These powers do not include the powers of disposition or encumbrance
which must have the authority of the court or the written consent of the other spouse. In
the absence of such authority or consent, the disposition or encumbrance shall be void.
CORAZON KO v. VIRGINIA DY ARAMBURO GR No. 190995, Aug 09, 2017 Co- (2) Whether or not there was a valid sale between Corazon and Simeon.
ownership, Sale, Void vs. Voidable Sale, Prescription
(3) If co-ownership of the subject properties exist, whether or not the co-owners are
FACTS: entitled to the recovery of their share in the subject properties.

Corazon is the sister of Virginia’s husband Simeon. Corazon and Simeon have another RULING:
sibling, Augusto, who predeceased them. Virginia and the heirs of Augusto filed a
Complaint for Recovery of Ownership with Declaration of Nullity and/or Alternatively The petition is partly meritorious.
Reconveyance and Damages with Preliminary Injunction against Corazon.
(1) The law which governs the instant case is the Old Civil Code, not the Family Code.
The complaint alleged that Virginia and Simeon, together with Corazon and her husband
Felix, acquired the subject properties through a Deed of Cession. Proceeding, thus, to the issue of ownership, We find no reason to depart from the RTC’s
ruling as affirmed by the CA.
They executed a Deed of Cession in favor of Augusto’s heirs, subject of which is the one-
third pro-indiviso portion of the subject properties.
Augusto’s heirs own one-third pro-indiviso share in the subject properties
However, allegedly with the use of falsified documents, Corazon was able to have the
entire subject properties transferred exclusively to her name, depriving her co-owners
Virginia and Augusto’s heirs of their pro-indiviso share, as well as in the produce of the Respondents, (Augusto’s heirs) claim one-third of the subject properties.
same.
We find no cogent reason to depart from the the courts a quo‘s findings as to the
Corazon insisted that only she and Simeon share one-half portion each of the subject existence and effectivity of the Deed of Cession giving rights to Augusto’s children over
properties. She alleged that Simeon sold and conveyed his entire one-half share in the the one-third portion of the subject property.
co-owned properties in her favor. Hence, Corazon became the sole owner thereof and
consequently, was able to transfer the titles of the same to her name.
Simeon’s heirs, which include Virginia, also own one-third pro-indiviso share in the subject prop
During trial, it was established that Simeon and Virginia’s marriage had been on bad
terms and they’ve been living separately. The trial court was highly suspicious that
Respondent Virginia’s claim as to the other one-third portion of the subject properties is
Virginia would sign a deed of sale, consenting to her husband’s decision to sell their
conjugal assets to Corazon. Virginia vehemently disowned the signature appearing in the ultimately anchored upon the Deed of Cession.
Deed of Absolute Sale.
We uphold the courts a quo‘s conclusion that one-third portion of the subject properties
is indeed part of Simeon and Virginia’s conjugal properties.
Without the conformity of Virginia, according to the trial court, Simeon cannot alienate
or encumber any real property of the conjugal partnership.
In this case, the subject properties, having been acquired during the marriage, are still
presumed to belong to Simeon and Virginia’s conjugal properties.
The trial court concluded, thus, that the Deed of Absolute Sale, being falsified, is not a
valid instrument to transfer the one third share of the subject properties.
(2) We now proceed to determine the validity of the Deed of Absolute Sale executed by
Simeon in favor of Corazon, covering one-half of the subject properties which was his
The trial court rendered a Decision (1) declaring the plaintiffs Virginia as owner of ONE-
purported share.
THIRD (1/3) portion of the subject property, and the heirs of Augusto as owners of ONE-
THIRD (1/3) portion of the subject property, (2) cancelling the TCT’s in the name of
As for the one-third portion of the subject properties pertaining to Augusto’s heirs, We
Corazon, (3) that Corazon reimburse the plaintiffs TWO-THIRDS (2/3) of the produce of
are one with the CA in ruling that the Deed of Absolute Sale is void as the said portion is
the properties, subject matter of this case from the time she appropriated it to herself in
owned by Augusto’s heirs as above-discussed and thus, Simeon had no right to sell the
1974 until such time as the 2/3 share are duly delivered to them, and (4) to pay
same.
damages in favor of the plaintiffs.
It is basic that the object of a valid sales contract must be owned by the seller. Nemo dat
The trial court’s Decision was affirmed in toto by the CA.
quod non habet, as an ancient Latin maxim says. One cannot give what one does not
have.
ISSUE:

(1) Whether or not the parties are co-owners of the subject properties.
However, as to the one-third portion commonly-owned by Spouses Simeon and Virginia,
Simeon’s alienation of the same through sale without Virginia’s conformity is merely
voidable.
Article 166 of the Old Civil Code explicitly requires the consent of the wife before the
husband may alienate or encumber any real property of the conjugal partnership except
when there is a showing that the wife is incapacitated, under civil interdiction, or in like
situations.
Accordingly, without Virginia’s conformity, the Deed of Absolute Sale between Simeon
and Corazon purportedly covering one-half of the subject properties is voidable.
(3)
For the share of Augusto’s heirs, the sale of the same is void as the object of such sale,
not being owned by the seller, did not exist at the time of the transaction. Being a void
contract, thus, the CA correctly ruled that the action to impugn the sale of the same is
imprescriptible.
As for the share pertaining to Simeon and Virginia, We must emphasize that the
governing law in this case is the Old Civil Code. Under the said law, while the husband is
prohibited from selling the commonly-owned real property without his wife’s consent,
still, such sale is not void but merely voidable. Article 173 thereof gave Virginia the right
to have the sale annulled during the marriage within ten years from the date of the sale.
Failing in that, she or her heirs may demand, after dissolution of the marriage, only the
value of the property that Simeon erroneously sold.
As far as Virginia is concerned, the Old Civil Code applies, and the CA erred in ruling
that the subject Deed of Absolute Sale is void for the lack of the wife’s conformity thereto.
The 10-year prescriptive period under Article 173 of the Old Civil Code should be applied
in this case.
SUMMARY OF THE RULING:
In fine, while We uphold the courts a quo‘s findings that the parties herein are co-owners
of the subject properties.
We reverse and set aside the said courts’ ruling, ordering the cancellation of titles of the
entire subject properties and the transfer of the two-thirds portion of the same to the
respondents.
While Augusto’s heirs are entitled to the recovery of their share in the subject properties,
Virginia is only entitled to demand the value of her share therefrom pursuant to Article
173 of the Old Civil Code.
June 19, 2017
G.R. No. 206114
DOLORES ALEJO, Petitioner
vs.
SPOUSES ERNESTO CORTEZ and PRISCILLA SAN PEDRO, SPOUSES JORGE
LEONARDO and JACINTA LEONARDO and THE REGISTER OF DEEDS OF BULACAN,
Respondents
DECISION
TIJAM, J.:
Assailed in this Petition for Review1 under Rule 45 are the Decision2 dated October 3,
2012 and Resolution3 dated February 26, 2013 of the Court of Appeals4 (CA) in CA-G.R.
CV No. 95432, which reversed the Decision5 of the Regional Trial Court (R TC), 6 Branch
19 in the City of Malolos, Bulacan. In its assailed Decision and Resolution, the CA
declared void the parties' agreement for the sale of a conjugal property for lack of written
consent of the husband.
The Facts and Antecedent Proceedings
At the heart of the instant controversy is a parcel of land measuring 255 square meters
located .at Cut-cot, Pulilan, Bulacan and covered by Transfer Certificate of Title No. T-
118170. The property belonged to the conjugal property/absolute community of
property7 of the respondent Spouses Jorge and Jacinta Leonardo (Spouses Leonardo)
and upon which their residential house was built.
It appears that sometime in March 1996, Jorge's father, Ricardo, approached his sister,
herein petitioner Dolores Alejo (Dolores), to negotiate the sale of the subject
property.8 Accordingly, on March 29, 1996, Jacinta executed a Kasunduan with Dolores
for the sale of the property. for a purchase price of PhP500,000. Under
the Kasunduan, Dolores was to pay PhP70,000 as down payment,, while PhP230,000 is
to be paid on April 30, 1996 and the remaining balance of PhP200,000 was to be paid
before the end of the year 1996.9 The Kasunduan was signed by Jacinta and Ricardo as
witness. Jorge, however, did not sign the agreement.
It further appears that the down payment of PhP70,000 and the PhP230,000 were paid
by Dolores10 on the dates agreed upon and thereafter, Dolores was allowed to possess the
property and introduce improvements thereon. 11
However, 9n July 3, 1996, Jorge wrote a letter to Dolores denying knowledge and
consent to the Kasunduan. Jorge further informed Dolores that Jacinta was retracting
her consent to the Kasunduan due to Dolores' failure to comply with her obligations. This
was followed by another letter dated September 29, 1996 from Jorge to Dolores
demanding that the latter pay the balance of PhP200,000 on or before October 5, 1996,
otherwise the purchase price shall be increased to PhP700,000. 12 According to Dolores,
she was being compelled by Jorge to sign the agreement but that she refused to do so. As
a result, Jorge went to her house, destroyed its water pump and disconnected the
electricity. Before· the officials of the Barangay, Dolores tendered the balance of
PhP200,000 but Jorge refused to accept the same. Instead, Jorge filed cases for
ejectment13 and annulment of sale, reconveyance and recovery of possession14 against
her. 15 These cases were later on dismissed by the trial court on technical grounds.
However, during the pendency of said cases, the subject property was sold by Jorge and
Jacinta to respondents Spouses Ernesto Cortez and Priscilla San Pedro (Spouses Cortez)
under a Deed of Absolute Sale dated September 4, 1998 for a purchase price of
PhP700,000. A new transfer certificate of title was Issued in the latter's names. At the
time of said sale, Dolores was in possession of the subject property. 16
Consequently, Dolores filed the case a quo for annulment of deed of sale and damages
against the Spouses Cortez and the Spouses Leonardo.
The Ruling of the RTC
In its Decision, the RTC noted that while the Kasunduan patently lacks the written
consent of Jorge, the latter's acts reveal that he later on acquiesced and accepted the
same. In particular, the RTC observed that Jorge did not s~asonably and ~xpressly
repudiate the Kasunduan but instead demanded from Dolores compliance therewith and
that he allowed Dolores to take possession of the property. Further, the RTC noted that
the case for annulment of sale, reconveyance and recovery of possession filed by Jorge.
against Dolores had been dismissed and said dismissal attained finality. As such, res
judicata set in preventing Jorge from further assailing the Kasunduan. 17
Accordingly, the RTC declared the Kasunduan as a perfected contract and Dolores as the
rightful owner of the property. It further ordered the cancellation of titles issued in the
names of the Spouses Leonardo and the Spouses Cortez and the issuance of a new title
in the name of Dolores. Finally, the RTC ordered Dolores to pay the balance of
PhP200,000 and the Spouses Leonardo to pay moral damages, attorney's fees, litigation
expenses and costs of suit. 18
In disposal, the RTC pronounced:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Dolores Alejo and
against defendants [S]pouses Leonardo and Cortez, as follows:
1.) Declaring the "Kasunduan" dated March 29, 1996 a perfected contract, legal, binding
and subsisting having been accepted by defendant Jorge Leonardo;
2.) Declaring the plaintiff the true, legal and rightful owner of the subject property;
3.) Declaring TCT Nb. 18170 in the names of Spouses Jorge Leonardo, Jacinta Leonardo
cancelled and of no legal force and effect;
4.) Declaring TCT No. 121491 in the names of Spouses Ernesto Cortez and Priscilla San
Pedro null and void and therefore should be ordered cancelled and of no legal force and
effect;
5.) In lieu thereof, ordering the Register of Deeds of the Province of Bulacan to issue a
new title in the name of plaintiff Dolores Alejo;
6.) Ordering plaintiff Dolores Alejo to pay defendants Spouses Leonardo the sum of
Php200,000.00 to complete her obligation under the "Kasunduan";
7.) Ordering defendants Spouses Leonardo to pay plaintiff the sum of Phpl00,000.00 as
and by way of moral damages;
8.) Ordering defendants Spouses Leonardo to pay plaintiff the sum of Php50,000.00, as
and by way of attorney's fees and litigation expenses;
9.) Ordering defendants Spouses Leonardo to pay the cost of suit.
The claim of Php500,000.00 actual damages as well as Php 100,000.00 as exemplary
damages are denied for lack of legal as well as factual basis.· All other claims and
counterclaim are denied for lack of merit.
SO ORDERED. 19
The Spouses Leonardo and the Spouses Cortez seasonably appealed.
The Ruling of the CA
The CA granted the appeal. 20 Contrary to the findings of the R TC, the CA held that
Jorge, by imposing a new period within which Dolores was to pay the remaining balance
and by increasing the purchase price, only qualifiedly accepted the Kasunduan. Being a
qualified acceptance, the same partakes of a counter-offer and is a rejection of the
original offer. Consequently, the CA declared the Kasunduan as void absent Jorge's
consent and acceptance. Nevertheless, the CA found Dolores to be a possessor in good
faith who is entitled to reimbursement for the useful improvements introduced on the
land or to the increase in the value thereof, at the option of the Spouses Leonardo.
The CA accordingly disposed:
WHEREFORE, the appeal is hereby GRANTED. The assailed 14 January 2010 Decision
of the Regional Trial Court, Branch 19 of Malolos City, Bulacan is her.eby REVERSED
and SET ASIDE. The Kasunduan dated 29 March 1996 is hereby declared VOID. TCT
No. 121491 in the names of Spouses Cortez and San Pedro is hereby declared VALID
and SUBSISTING. Appellants Spouses Leonardo are ORDERED to reimburse Dolores
Alejo the amount of Php300,000.00 that the latter paid to Jacinta Leonardo, with legal
interest until fully paid. Appellants Spouses Leonardo are likewise ORDERED, at their
option, to indemnify Dolores Alejo with her expenses for introducing useful
improvements on the subject land or pay the increase in value which it may have
acquired by reason of those improvements, with Alejo entitled to the right of retention of
the land until the indemnity is made. Finally, the Regional Trial Court of Malolos City,
Bulacan from which this case originated is DIRECTED to receive evidence and determine
the amount of indemnity to which appellee Dolores Alejo is entitled.
SO ORDERED.21
Dolores' motion for reconsideration was denied, hence the instant petition.
The Issues
Dolores argues that the Spouses Leonardo's and Spouses Cortez' appeals ought to have
been outrightly dismissed for failure to comply with the requirements of Section 13, Rule
44. On the substantive issue, Dolores · maintains that the Kasunduan is a perfected and
binding contract as it was accepted by Jorge through his overt acts. She also argues that
the dismissal of Jorge's complaint for annulment of sale constitutes res judicata thus
preventing Jorge from further questioning the validity of the Kasunduan. Finally, she
contends that the Spouses Cortez were not buyers in good faith as they knew that the
property was being occupied by other persons.
The Ruling of this Court
The petition is denied.
Dismissal of Appeal Lies within the Sound Discretion of the Appellate Court
Technically, the CA may dismiss the appeal for failure to comply with the requirements
under Sec. 13, Rule 44. Thus, Section 1, Rule 50 provides that an appeal may be
dismissed by the Court of Appeals, on its own motion or on that of the appellee upon the
ground, among others, of absence of specific assignment of errors in the appellant's brief,
or of page references to the record.
Nevertheless, it has been consistently held that such provision confers a power, not a
duty, on the appellate court.22 The dismissal is directory, not mandatory, and as such,
not a ministerial duty of the appellate court.23 In other words, the CA enjoys ample
discretion to dismiss or not to dismiss the appeal. What is more, the exercise of such
discretion is presumed to have been sound and regular and it is thus incumbent upon
Dolores to offset such presumption. Yet, the records before this Court do not
satisfactorily show that the CA has gravely abused its discretion in not dismissing the
Spouses Leonardo's and Spouses Cortez' appeals.
Nevertheless, We agree with the RTC and the CA when it held that the
void Kasunduan constitutes a continuing offer from Jacinta and Dolores and that Jorge
had the option of either accepting or rejecting the offer before it was withdrawn by either,
or both, Jacinta and Dolores.
The point of contention is whether Jorge accepted such continuing offer. If so, then
the Kasunduan is perfected as a binding contract; otherwise, the Kasunduan remains
void .
The RTC opined that Jorge's failure to expressly repudiate the Kasunduan and his
demand that Dolores comply with her undertakings therein show Jorge's acceptance of
the sale of the conjugal property. On the other hand, the CA noted that in varying the
terms of the Kasunduan, i.e., in the time of payment and the purchase price, Jorge is
deemed to have only qualifiedly accepted the same.1âwphi1
We agree with the CA.

On the contrary, We are of the view that the ends of justice will be better served if the
It is undisputed that after the execution of the Kasunduan, Jorge sent two letters to
instant case is determined on the merits, after full opportunity to ventilate their
Dolores: one, in forming her that he did not consent to the sale; and the other,
respective claims and defenses is afforded to all parties. After all, it is far better to decide
demanding that' Dolores pay the balance of the purchase price on or before October 5,
a case on the merits, as the ultimate end, rather on a technicality.
1996 and failing which, the purchase price shall be increased to PhP700,000.

The key issue in this case is whether the Kasunduan for the sale of a conjugal real
property between Jacinta and Dolores as a continuing offer has been converted to a
perfected and binding contract. For, if Jorge has not accepted or consented to the said
sale, the Kasunduan is considered void rendering the other issues raised herein merely
academic.
Sale by one Spouse of Conjugal Real Property is Void Without the Written Consent of the
other Spouse
Any alienation or encumbrance of conjugal property made during the effectivity of the
Family Code is governed by Article 124 thereof which provides:
Article 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. In case of disagreement, the husband's decision shall
prevail, subject to recourse to the court by the wife for proper remedy, which must be
availed of within five years from the date of the contract implementing such decision.
Clearly, Jorge's first letter was an outright and express repudiation of
the Kasunduan. The second letter, while ostensibly a demand for compliance with
Dolores' obligation under the Kasunduan, varied its terms on material points, i.e., the
date of payment of the balance and the purchase price. Consequently, such counter-offer
cannot be construed as evidencing Jorge's consent to or acceptance of
the Kasunduan for it is settled that where the other spouse's putative consent to the sale
of the conjugal property appears in a separate document which does not contain the
same terms and conditions as in the first document signed by the other spouse, a valid
transaction could not have arisen.24
Neither can Jorge's subsequent letters to Dolores be treated as a ratification of
the Kasunduan for the basic reason that a void contract is not susceptible to ratification.
Nor can Jorge's alleged participation in the negotiation for the sale of the property or his
acquiescence to Dolores' transfer to and possession of the subject property be treated as
converting· such continuing offer into a binding contract as the law distinctly requires
nothing less than a written consent to the sale for its validity. Suffice to say that
participation in or awareness of the negotiations is not consent. 25

In the event that one spouse is incapacitated or otherwise unable to participate in the
As above intimated, a determination that the Kasunduan is void renders the other issues
administration of the conjugal properties, the other spouse may assume sole powers of
raised by Dolores academic, i.e., whether the doctrine of res judicata applies and whether
administration. These powers do not include disposition or encumbrance without
the Spouses Cortez are buyers in bad faith; hence they merit no further discussion .
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 The CA Correctly Ruled that Dolores is a Possessor in Good Faith
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
While the Kasunduan was void from the beginning, Dolores is, in all fairness, entitled to
or both offerors. (Emphasis supplied.)
recover from the Spouses Leonardo the amount of PhP300,000 with legal Interest until
fully paid.
The law is therefore unequivocal when it states that the disposition of conjugal property
of one spouse sans the written consent of the other is void. Here, it is an established fact
Moreover, the CA correctly appreciated Dolores' standing as a possessor in good faith. It
that the Kasunduan was entered into solely by Jacinta and signed by her alone. By plain
appears that Dolores acted in good faith in entering the subject property and building
terms of the law therefore, the Kasunduan is void.
improvements on it. Ricardo represented that "Jacinta and Jorge wanted to sell the
subject property. Dolores had no reason to believe that Ricardo and Jacinta were lying.
Indeed, upon her own brother's prodding, Dolores willingly parted with her money and
paid the down payment on the selling price and later, a portion of the remaining balance.
The signatures of Jacinta and of Ricardo (as witness) as well as her successful entry to
the property appear to have comforted Dolores that everything was in order. Article 526
of the Civil Code provides that she is deemed a possessor in good faith, who is not aware
that there exists in her title or mode of acquisition any flaw that invalidates it.
Likewise, as correctly held by the CA, Dolores, as possessor in good faith, is under no
obligation to pay for her stay on the property prior to its legal interruption by a final
judgment. She is further entitled under Article 448 to indemnity for the improvements
introduced on the property with a right of retention until reimbursement is made. The
Spouses Leonardo have the option under Article 546 of the Civil Code of indemnifying
Dolores for the cost of the improvements or paying the increase in value which the
property may have acquired by reason of such improvements. 26
WHEREFORE, the petition is DENIED. The Decision dated October 3, 2012 and
Resolution dated February 26, 2013 of the Court of Appeals in CA G.R. CV No. 95432
which (1) declared void the Kasunduan dated 29 March 1996; (2) declared valid the title
issued in the names of Spouses Cortez and San Pedro; (3) ordered the reimbursement of
PhP300,000 with legal interest to Dolores Alejo; (3) ordered the Spouses
Leonardo, at their option, to indemnify Dolores Alejo of her expenses on the useful
improvements or pay the increase in value on the subject property, with retention rights
until indemnity is made; and (4) remanded the case to the RTC for purposes of receiving
evidence and determining the amount of said indemnity are AFFIRMED in toto.
[G.R. No. 234533. June 27, 2018.]
SPOUSES JULIETA B. CARLOS and FERNANDO P. CARLOS
VS. JUAN CRUZ TOLENTINO
FACTS:
The subject matter of the action is a parcel of land with an area of 1,000 square meters
and all the improvements thereon located in Novaliches, QC, which was acquired on March
17, 1967 and registered in the name of Juan C. Tolentino, married to Mercedes Tolentino.
Without Juan's knowledge and consent, Mercedes and Kristoff (grandson of the
respondent), who were then residing in the subject property, allegedly forged a Deed of
Donation dated February 15, 2011, thereby making it appear that Juan and Mercedes
donated the subject property to Kristoff.
In April 2011, Kristoff offered the sale of the subject property to Julieta's brother, Felix
Bacal.
After a series of negotiations, Kristoff and Julieta executed a Memorandum of Agreement
(MOA) dated April 12, 2011 stating that Kristoff is selling the subject property to
Julieta in the amount of Two Million Three Hundred Thousand Pesos
(P2,300,000.00), payable in two (2) installments.
On May 28, 2011, Julieta made the first payment in the amount of Two Million Pesos
(P2,000,000.00) while the second payment in the amount of Three Hundred Thousand
Pesos (P300,000.00) was made on June 30, 2011. On the same day, a Deed of Absolute
Sale was executed between Kristoff and Julieta.
RESPONDENT:
Juan also filed a criminal complaint for Falsication of Public Document before the Office
of the City Prosecutor of Quezon City against Kristoff. He also filed for Adverse Claim over
the said property stating thereof that he had no knowledge on the Deed of Donation nor
consent thereto.
ISSUE (s):
a. Whether or not the Deed of Donation executed by Mercedes in favor of Kristoff
was valid
b. Whether or not the subject property was validly sold by Kristoff in its entirety
HELD:
 A. YES, as to her share
Since the subject property was acquired on March 17, 1967 during the marriage of Juan
and Mercedes, it formed part of their conjugal partnership. It follows then that Juan and
Mercedes are the absolute owners of their undivided one-half interest, respectively, over
the subject property.
Meanwhile, as in any other property relations between husband and wife, the conjugal
partnership is terminated upon the death of either of the spouses.
In respondent Juan's Comment filed before the Court, the Verification which he
executed on February 9, 2018 states that he is already a widower. Hence, the Court
takes due notice of the fact of Mercedes' death which inevitably results in the dissolution
of the conjugal partnership.
RULING: In retrospect, as absolute owners of the subject property may validly exercise
rights of ownership by executing deeds, which transfer title thereto such as Deed of
Donation.
In the present case, while it has been settled that the congruence of the wills of the spouses
is essential for the valid disposition of conjugal property, it cannot be ignored that
Mercedes' consent to the disposition of her one-half interest in the subject property
remained undisputed. It is apparent that Mercedes, during her lifetime, relinquished
all her rights thereon in favor of her grandson, Kristoff.
In consonance with justice and equity, we deem it proper to uphold the validity of the Deed
of Donation dated February 15, 2011 but only to the extent of Mercedes' one-half share
in the subject property. Especially in the instant case, since the conjugal partnership
had already been terminated upon Mercedes' death.
B. NO, it is limited only as to Mercedes’ share. Accordingly, the right of Kristoff, as donee,
is limited only to the one-half undivided portion that Mercedes owned.
The Deed of Donation insofar as it covered the remaining one-half undivided portion of the
subject property is null and void, Juan not having consented to the donation of his
undivided half.
Upon the foregoing perspective, Spouses Carlos' right, as vendees in the subsequent sale
of the subject property, is conned only to the one-half undivided portion thereof.
As owners pro in diviso of a portion of the lot in question, either Spouses Carlos or Juan
may ask for the partition of the lot and their property rights shall be limited to the portion,
which may be allotted to them in the division upon the termination of the co-ownership.

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 so — quando res non valet
ut ago, valeat quantum valere potest.