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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-57757

August 31, 1987

PHILIPPINE NATIONAL BANK, petitioner,


vs.
THE HONORABLE COURT OF APPEALS, PRAGMACIO VITUG AND
MAXIMO VITUG, respondents.

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

they were mortgaged to PNB 3 and were free from all hens and
encumbrances. 4
Salvador Vitug failed to pay his account so the bank foreclosed the
mortgaged properties covered by TCT Nos. 2887 and 2888. They
were sold at public auction on May 20, 1968 in which the PNB was
the highest bidder. The titles thereto were thereafter consolidated
in the name of PNB.
Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their
accounts with the PNB so the latter foreclosed the properties
covered by TCT No. 2889 which were sold at public auction and
likewise PNB was the buyer thereof. On August 30, 1968, a
certificate of sale was issued by the Register of Deeds covering
said properties in favor of the PNB. When the title of the PNB was
consolidated a new title was issued in its name. 5
On September 2, 1969, the PNB sold the properties covered by TCT
Nos. 2887 and 2888 Pampanga to Jesus M. Vitug, Anunciacion V.
de Guzman, Prudencia V. Fajardo, Salvador Vitug and Aurora V.
Gutierrez in those names the corresponding titles were issued. 6
During the lifetime of Clodualdo Vitug he married two times. His
first wife was Gervacia Flores with whom he had 3 children,
namely, Victor, Lucina and Julio all surnamed Vitug. Victor now
dead is survived by his 5 children: Leonardo, Juan, Candida
Francisco and Donaciano, an surnamed Vitug. Juan Vitug is also
dead and is survived by his only daughter Florencia Vitug.
The second wife of Clodualdo Vitug was Donata Montemayor with
whom he had 8 children, namely, Pragmacio, Maximo, Jesus,
Salvador, Prudencio and Anunciacion, all surnamed Vitug, the late
Enrique Vitug represented by his wife Natalia Laquian, and the late
Francisco Vitug who is survived by 11 children, namely, Antonio,
Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno,
Eligio Jesus and Luz.
Clodualdo Vitug died intestate on May 20, 1929 so his estate was
settled and distributed in Special Proceeding No. 422 in the Court
of First Instance of Pampanga wherein Donata Montemayor was the
Administratrix. 7
Meanwhile, on May 12,1958, Donata Montemayor executed a
contract of lease of Lot No. 24, which is covered by TCT No. 2887-R

in favor of her children Pragmacio and Maximo both surnamed


Vitug. This lease was extended on August 31, 1963. By virtue of a
general power of attorney executed by Donata Montemayor on
Sept. 19, 1966 in favor of Pragmacio Vitug, the latter executed a
contract of lease on Sept. 19, 1967 of the said lot in favor of
Maximo Vitug. 8
On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an
action for partition and reconveyance with damages in the Court of
First Instance of Pampanga against Marcelo Mendiola, special
administrator of the intestate estate of Donata Montemayor who
died earlier, Jesus Vitug, Sr., Salvador, Natalia, Prudencia,
Anunciacion, all surnamed Vitug, Antonio, Francisco, Aurora, Pedro,
Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz, all
surnamed Fajardo and the PNB.
The subject of the action is 30 parcels of land which they claim to
be the conjugal property of the spouses Donata Montemayor and
Clodualdo Vitug of which they claim a share of 2/11 of 1/2 thereof.
They assailed the mortgage to the PNB and the public auction of
the properties as null and void. They invoked the case of Vitug vs.
Montemayor, L-5297 decided by this Court on Oct. 20, 1953 which
is an action for partition and liquidation of the said 30 parcels of
land wherein the properties were found to be conjugal in nature.
In a decision of Sept. 15, 1975, the lower court dismissed the
complaint with costs against the plaintiffs and ordered them to pay
attorney's fees of P5,000.00 to the defendant's counsel. Plaintiffs
then interposed an appeal to the Court of Appeals, wherein in due
course a decision was rendered on May 20, 1981, the dispositive
part of which reads as follows:
WHEREFORE, in the light of the foregoing, the decision appealed
from is hereby reversed and set aside, and another one entered in
accordance with the tenor of the prayer of appellant's complaint
with the modification that the sale at public auction of the 22
parcels be considered valid with respect to the 1/2 thereof. No
costs.
Hence the herein petition for certiorari filed by the PNB raising the
following assignments of error:
I

THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING TO THE


CASE AT BAR THE RULING OF THIS HONORABLE SUPREME COURT
IN FLORENCIA VITUG VS. DONATA MONTEMAYOR, ET AL., 91 PHIL.
286 (1953) BECAUSE:
A.
BETWEEN A PROVISION OF A SPECIAL LAW AND THE
JUDICIAL INTERPRETATION AND/OR APPLICATION OF A PROVISION
OF A GENERAL LAW, THE FORMER PREVAILS.
B.
THE DOCTRINE OF STARE DECISIS IS NOT A MECHANICAL
FORMULA OF ADHERENCE.
C.
PNB WAS NOT A PARTY, AND HAD NO KNOWLEDGE OF THE
ABOVECITED CASE.
D.
SIMILARLY, PRAGMACIO VITUG AND MAXIMO VITUG WERE
NOT PARTIES IN SAID CASE.
II
THE RESPONDENT COURT OF APPEALS ERRED IN NOT
RECOGNIZING THE CONCLUSIVENESS OF THE CERTIFICATE, OF
TITLE, AS PROVIDED IN ACT 496, AS AMENDED (THE LAND
REGISTRATION).
III
THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING THE
CONCLUSIVENESS OF OWNERSHIP OF DONATA MONTEMAYOR OVER
THE PROPERTIES WHICH WERE REGISTERED EXCLUSIVELY IN HER
NAME WHEN PRIVATE RESPONDENTS (PRAGMACIO VITUG AND
MAXIMO VITUG), AS LESSEES, ENTERED INTO A CONTRACT OF
LEASE WITH DONATA MONTEMAYOR AS THE OWNER-LESSOR.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING
THAT PNB WAS A MORTGAGEE IN BAD FAITH.
The petition is impressed with merit.
When the subject properties were mortgaged to the PNB they were
registered in the name of Donata Montemayor, widow. Relying on
the torrens certificate of title covering said properties the

mortgage loan applications of Donata were granted by the PNB and


the mortgages were duly constituted and registered in the office of
the Register of Deeds.

a mortgagee in goodfaith for at the time the mortgages covering


said properties were constituted the PNB was not aware to any flaw
of the title of the mortgagor. 14

In processing the loan applications of Donata Montemayor, the PNB


had the right to rely on what appears in the certificates of title and
no more. On its face the properties are owned by Donata
Montemayor, a widow. The PNB had no reason to doubt nor
question the status of said registered owner and her ownership
thereof. Indeed, there are no liens and encumbrances covering the
same.

True it is that in the earlier cases decided by this Court, namely


Vitug VS. Montemayor decided on May 15, 1952, which is an action
for recovery of possession of a share in said parcels of land, 15 and
in the subsequent action for partition between the same parties
decided on Oct. 20, 1953, 16 this court found the 30 parcels of
land in question to be conjugal in nature and awarded the
corresponding share to the property of Florencia Vitug, an heir of
the late Clodualdo Vitug from the first marriage. In said cases this
Court affirmed the decision of the lower court. In the dispositive
part of the decision of the trial court it made the observation that
"but from the conduct of Clodualdo Vitug and Donata Montemayor
during the existence of their marital life, the inference is clear that
Clodualdo had the unequivocal intention of transmitting the full
ownership of the 30 parcels of land to his wife Donata
Montemayor, thus considering the 1/2 of the funds of the conjugal
property so advanced for the purchase of said parcels of land as
reimbursible to the estate of Clodualdo Vitug on his death. 17 That
must be the reason why the property was registered in the name of
Donata Montemayor as widow after the death of Clodualdo Vitug.
18

The well-known rule in this jurisdiction is that a person dealing with


a registered land has a right to rely upon the face of the torrens
certificate of title and to dispense with the need of inquiring
further, except when the party concerned has actual knowledge of
facts and circumstances that would impel a reasonably cautious
man make such inquiry. 9
A torrens title concludes all controversy over ownership of the land
covered by a final degree of registration. 10 Once the title is
registered the owner may rest assured without the necessity of
stepping into the portals of the court or sitting in the mirador de su
casa to avoid the possibility of losing his land. 11
Article 160 of the Civil Code provides as follows:
Art. 160.
All property of the marriage is presumed to belong
to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife.
The presumption applies to property acquired during the lifetime of
the husband and wife. In this case, it appears on the face of the
title that the properties were acquired by Donata Montemayor
when she was already a widow. When the property is registered in
the name of a spouse only and there is no showing as to when the
property was acquired by said spouse, this is an indication that the
property belongs exclusively to said spouse. 12 And this
presumption under Article 160 of the Civil Code cannot prevail
when the title is in the name of only one spouse and the rights of
innocent third parties are involved. 13
The PNB had a reason to rely on what appears on the certificates of
title of the properties mortgaged. For all legal purposes, the PNB is

At any rate, although actions for recovery of real property and for
partition are real actions, however, they are actions in personam
that bind only the particular individuals who are parties thereto. 19
The PNB not being a party in said cases is not bound by the said
decisions. Nor does it appear that the PNB was aware of the said
decisions when it extended the above describe mortgage loans.
Indeed, if the PNB knew of the conjugal nature of said properties it
would not have approved the mortgage applications covering said
properties of Donata Montemayor without requiring the consent of
all the other heirs or co-owners thereof. Moreover, when said
properties were sold at public auction, the PNB was a purchaser for
value in good faith. So its right thereto is beyond question. 20
Pragmacio and Maximo Vitug are now estopped from questioning
the title of Donata Montemayor to the said properties. They never
raised the conjugal nature of the property nor took issue as to the
ownership of their mother, Donata Montemayor, over the same.
Indeed private respondents were among the defendants in said two
cases wherein in their answers to the complaint they asserted that

the properties in question are paraphernal properties belonging


exclusively to Donata Montemayor and are not conjugal in nature.
21 Thus they leased the properties from their mother Donata
Montemayor for many years knowing her to be the owner. They
were in possession of the property for a long time and they knew
that the same were mortgaged by their mother to the PNB and
thereafter were sold at public auction, but they did not do
anything. 22 It is only after 17 years that they remembered to
assert their rights. Certainly, they are guilty of laches. 23
Moreover, as correctly held by the lower court. Pragmacio and
Maximo Vitug as occupants and lessees of the property in question
cannot now dispute the ownership of their mother over the same
who was their lessor. 24
WHEREFORE, the subject decision of the respondent Court of
Appeals is hereby REVERSED and set aside and another decision is
hereby rendered DISMISSING the complaint and ordering private
respondents to pay attomey's fees and expenses of litigation to
petitioner PNB in the amount of P20,000.00 and the costs of the
suit.

SUPREME COURT
Manila

The Facts and the Case


The prosecution accused petitioner Efren Pana (Efren), his wife
Melecia, and others of murder before the. Regional Trial Court (RTC)
of Surigao City in Criminal Cases 4232 and 4233.1
On July 9, 1997 the RTC rendered a consolidated decision2
acquitting Efren of the charge for insufficiency of evidence but
finding Melecia and another person guilty as charged and
sentenced them to the penalty of death. The RTC ordered those
found guilty to pay each of the heirs of the victims, jointly and
severally, P50,000.00 as civil indemnity, P50,000.00 each as moral
damages, and P150,000.00 actual damages.

Upon motion for execution by the heirs of the deceased, on March


12, 2002 the RTC ordered the issuance of the writ,5 resulting in the
levy of real properties registered in the names of Efren and
Melecia.6 Subsequently, a notice of levy7 and a notice of sale on
execution8 were issued.

THIRD DIVISION
December 10, 2012

EFREN PANA, Petitioner,


vs.
HEIRS OF JOSE JUANITE,
Respondents.
DECISION

This case is about the propriety of levy and execution on conjugal


properties where one of the spouses has been found guilty of a
crime and ordered to pay civil indemnities to the victims' heirs.

On appeal to this Court, it affirmed on May 24, 2001 the conviction


of both accused but modified the penalty to reclusion perpetua.
With respect to the monetary awards, the Court also affirmed the
award of civil indemnity and moral damages but deleted the award
for actual damages for lack of evidentiary basis. In its place,
however, the Court made an award of P15,000.00 each by way of
temperate damages. In addition, the Court awarded P50,000.00
exemplary damages per victim to be paid solidarily by them.3 The
decision became final and executory on October 1, 2001.4

SO ORDERED.

G.R. No. 164201

ABAD, J.:

SR.

and

JOSE

JUANITE,

JR.,

On April 3, 2002, petitioner Efren and his wife Melecia filed a


motion to quash the writ of execution, claiming that the levied
properties were conjugal assets, not paraphernal assets of
Melecia.9 On September 16, 2002 the RTC denied the motion.10
The spouses moved for reconsideration but the RTC denied the
same on March 6, 2003.11

Claiming that the RTC gravely abused its discretion in issuing the
challenged orders, Efren filed a petition for certiorari before the
Court of Appeals (CA). On January 29, 2004 the CA dismissed the
petition for failure to sufficiently show that the RTC gravely abused
its discretion in issuing its assailed orders.12 It also denied Efrens
motion for reconsideration,13 prompting him to file the present
petition for review on certiorari.
The Issue Presented
The sole issue presented in this case is whether or not the CA erred
in holding that the conjugal properties of spouses Efren and
Melecia can be levied and executed upon for the satisfaction of
Melecias civil liability in the murder case.
Ruling of the Court
To determine whether the obligation of the wife arising from her
criminal liability is chargeable against the properties of the
marriage, the Court has first to identify the spouses property
relations.
Efren claims that his marriage with Melecia falls under the regime
of conjugal partnership of gains, given that they were married prior
to the enactment of the Family Code and that they did not execute
any prenuptial agreement.14 Although the heirs of the deceased
victims do not dispute that it was the Civil Code, not the Family
Code, which governed the marriage, they insist that it was the
system of absolute community of property that applied to Efren
and Melecia. The reasoning goes:
Admittedly, the spouses were married before the effectivity of the
Family Code. But that fact does not prevent the application of [A]rt.
94, last paragraph, of the Family Code because their property
regime is precisely governed by the law on absolute community.
This finds support in Art. 256 of the Family Code which states:
"This code shall have retroactive effect in so far as it does not
prejudice or impair vested or acquired rights in accordance with
the Civil Code or other laws."
None of the spouses is dead. Therefore, no vested rights have been
acquired by each over the properties of the community. Hence, the

liabilities imposed on the accused-spouse may properly be charged


against the community as heretofore discussed.15
The RTC applied the same reasoning as above.16 Efren and
Melecias property relation was admittedly conjugal under the Civil
Code but, since the transitory provision of the Family Code gave its
provisions retroactive effect if no vested or acquired rights are
impaired, that property relation between the couple was changed
when the Family Code took effect in 1988. The latter code now
prescribes in Article 75 absolute community of property for all
marriages unless the parties entered into a prenuptial agreement.
As it happens, Efren and Melecia had no prenuptial agreement. The
CA agreed with this position.17
Both the RTC and the CA are in error on this point. While it is true
that the personal stakes of each spouse in their conjugal assets are
inchoate or unclear prior to the liquidation of the conjugal
partnership of gains and, therefore, none of them can be said to
have acquired vested rights in specific assets, it is evident that
Article 256 of the Family Code does not intend to reach back and
automatically convert into absolute community of property relation
all conjugal partnerships of gains that existed before 1988
excepting only those with prenuptial agreements.
The Family Code itself provides in Article 76 that marriage
settlements cannot be modified except prior to marriage.
Art. 76. In order that any modification in the marriage settlements
may be valid, it must be made before the celebration of the
marriage, subject to the provisions of Articles 66, 67, 128, 135 and
136.
Clearly, therefore, the conjugal partnership of gains that governed
the marriage between Efren and Melecia who were married prior to
1988 cannot be modified except before the celebration of that
marriage.
Post-marriage modification of such settlements can take place only
where: (a) the absolute community or conjugal partnership was
dissolved and liquidated upon a decree of legal separation;18 (b)
the spouses who were legally separated reconciled and agreed to
revive their former property regime;19 (c) judicial separation of
property had been had on the ground that a spouse abandons the
other without just cause or fails to comply with his obligations to

the family;20 (d) there was judicial separation of property under


Article 135; (e) the spouses jointly filed a petition for the voluntary
dissolution of their absolute community or conjugal partnership of
gains.21 None of these circumstances exists in the case of Efren
and Melecia.
What is more, under the conjugal partnership of gains established
by Article 142 of the Civil Code, the husband and the wife place
only the fruits of their separate property and incomes from their
work or industry in the common fund. Thus:
Art. 142. By means of the conjugal partnership of gains the
husband and wife place in a common fund the fruits of their
separate property and the income from their work or industry, and
divide equally, upon the dissolution of the marriage or of the
partnership, the net gains or benefits obtained indiscriminately by
either spouse during the marriage.
This means that they continue under such property regime to enjoy
rights of ownership over their separate properties. Consequently,
to automatically change the marriage settlements of couples who
got married under the Civil Code into absolute community of
property in 1988 when the Family Code took effect would be to
impair their acquired or vested rights to such separate properties.
The RTC cannot take advantage of the spouses loose admission
that absolute community of property governed their property
relation since the record shows that they had been insistent that
their property regime is one of conjugal partnership of gains.22 No
evidence of a prenuptial agreement between them has been
presented.
What is clear is that Efren and Melecia were married when the Civil
Code was still the operative law on marriages. The presumption,
absent any evidence to the contrary, is that they were married
under the regime of the conjugal partnership of gains. Article 119
of the Civil Code thus provides:
Art. 119. The future spouses may in the marriage settlements
agree upon absolute or relative community of property, or upon
complete separation of property, or upon any other regime. In the
absence of marriage settlements, or when the same are void, the
system of relative community or conjugal partnership of gains as

established in this Code, shall govern the property relations


between husband and wife.
Of course, the Family Code contains terms governing conjugal
partnership of gains that supersede the terms of the conjugal
partnership of gains under the Civil Code. Article 105 of the Family
Code states:
"x x x x
The provisions of this Chapter [on the Conjugal Partnership of
Gains] shall also apply to conjugal partnerships of gains already
established between spouses before the effectivity of this Code,
without prejudice to vested rights already acquired in accordance
with the Civil Code or other laws, as provided in Article 256."23
Consequently, the Court must refer to the Family Code provisions
in deciding whether or not the conjugal properties of Efren and
Melecia may be held to answer for the civil liabilities imposed on
Melecia in the murder case. Its Article 122 provides:
Art. 122. The payment of personal debts contracted by the
husband or the wife before or during the marriage shall not be
charged to the conjugal properties partnership except insofar as
they redounded to the benefit of the family.
Neither shall the fines and pecuniary indemnities imposed upon
them be charged to the partnership.
However, the payment of personal debts contracted by either
spouse before the marriage, that of fines and indemnities imposed
upon them, as well as the support of illegitimate children of either
spouse, may be enforced against the partnership assets after the
responsibilities enumerated in the preceding Article have been
covered, if the spouse who is bound should have no exclusive
property or if it should be insufficient; but at the time of the
liquidation of the partnership, such spouse shall be charged for
what has been paid for the purpose above-mentioned.
Since Efren does not dispute the RTCs finding that Melecia has no
exclusive property of her own,24 the above applies. The civil
indemnity that the decision in the murder case imposed on her
may be enforced against their conjugal assets after the

responsibilities enumerated in Article 121 of the Family Code have


been covered.25 Those responsibilities are as follows:
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and the
legitimate children of either spouse; however, the support of
illegitimate children shall be governed by the provisions of this
Code on Support;
(2) All debts and obligations contracted during the marriage by the
designated administrator-spouse for the benefit of the conjugal
partnership of gains, or by both spouses or by one of them with the
consent of the other;
(3) Debts and obligations contracted by either spouse without the
consent of the other to the extent that the family may have
benefited;
(4) All taxes, liens, charges, and expenses, including major or
minor repairs upon the conjugal partnership property;
(5) All taxes and expenses for mere preservation made during the
marriage upon the separate property of either spouse;
(6) Expenses to enable either spouse to commence or complete a
professional, vocational, or other activity for self-improvement;
(7) Antenuptial debts of either spouse insofar as they have
redounded to the benefit of the family;
(8) The value of what is donated or promised by both spouses in
favor of their common legitimate children for the exclusive purpose
of commencing or completing a professional or vocational course
or other activity for self-improvement; and
(9) Expenses of litigation between the spouses unless the suit is
found to be groundless.

Contrary to Efrens contention, Article 121 above allows payment


of the criminal indemnities imposed on his wife, Melecia, out of the
partnership assets even before these are liquidated. Indeed, it
states that such indemnities "may be enforced against the
partnership assets after the responsibilities enumerated in the
preceding article have been covered."[26] No prior liquidation of
those assets is required. This is not altogether unfair since Article
122 states that "at the time of liquidation of the partnership, such
[offending] spouse shall be charged for what has been paid for the
purposes above-mentioned."
WHEREFORE, the Court AFFIRMS with MODIFICATION the
Resolutions of the Court of Appeals in CA-G.R. SP 77198 dated
January 29, 2004 and May 14, 2004. The Regional Trial Court of
Surigao City, Branch 30, shall first ascertain that, in enforcing the
writ of execution on the conjugal properties of spouses Efren and
Melecia Pana for the satisfaction of the indemnities imposed by
final judgment on the latter accused in Criminal Cases 4232 and
4233, the responsibilities enumerated in Article 121 of the Family
Code have been covered.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-12093

June 29, 1959

ESTANISLAO SERRANO, plaintiff-appellant,


vs.
MELCHOR SOLOMON, defendant-appellee.
Constante Pimentel for appellant.
Faustino B. Tobia, Eufrecino T. Tagayana, Pedro R. Arce and
Emmanuel U. Ujano for appellee.
MONTEMAYOR, J.:

If the conjugal partnership is insufficient to cover the foregoing


liabilities, the spouses shall be solidarily liable for the unpaid
balance with their separate properties.1wphi1

Estanislao Serrano is appealing the decision of the Court of First


Instance of Ilocos Sur, Judge Jose G. Bautista presiding, declaring
null and void the supposed donation propter nuptias on which his
complaint was based and dismissing the later upon motion of the

defendant. The motion for dismissal was filed before the hearing
but the trial court deferred action upon it until after submission of
evidence by the parties. Said parties entered into a stipulation of
facts after which they declined to submit any other evidence
except Exhibit "A", the supposed deed of donation propter nuptias,
the translation of which, for purposes of reference, is reproduced
below:
That, I Melchor Solomon, single, Filipino, of legal age, native of the
municipality of Sinait, province of Ilocos Sur and residing at present
in Sinait, having decided to get married with the consent of my
parents, brothers, or sisters and relatives, have announced and
manifested my determination and desire to Mr. Estanislao Serrano
to whose family the flower I intend to win belongs, namely Miss
Alejandria Feliciano single, born in Hawaii but is actually residing in
Cabugao, Ilocos Sur.
This ardent desire favored by good luck and accepted by the noble
lady the one concerned, is to be realized and complied with under
agreement or stipulation which affirms, promotes and vivifies the
union. This agreement donating all my exclusive properties in order
that we shall have a basic capital for our conjugal life and in order
that there will be ready maintenance and support of offsprings has
come out voluntarily and expontaneously from me, I the very one
concerned.
These which I am donating my exclusive properties because I have
honestly acquired the same with the sweat of my brows and I
donate them gladly, to wit . . .;
The referred to properties are donated in accordance with the
existing laws of the Philippines and our children out of the wedlock
will be the ones to inherit same inherit same with equal shares. But
if God will not bless our union with any child one half of all my
properties including the properties acquired our conjugal union will
be given the (to) my brothers or sisters or their heirs if I, the
husband will die before my wife and if my beloved wife will die
before me, one half of all my properties and those acquired by us
will be given to those who have reared my wife in token of my love
to her. . . . (Emphasis supplied)
Alejandria Feliciano, whose father went to Hawaii to seek his
fortune and who until now resides there, had been left to her
father's friend named Estanislao Serrano who took care of and

raised her from the age 12 until she reached womanhood. On June
21, 1948, defendant Melchor Solomon married Alejandria. On the
same day of the marriage but before the marriage ceremony he
executed the alleged Deed of Donation, Exhibit "A" above
reproduced. Less than nine months after marriage, or rather on
March 2, 1949, Alejandria died without issue. Several months
thereafter Estanislao Serrano commenced the present action to
enforce and implement the terms of the alleged donation
particularly that portion thereof to the effect that if Alejandria died
before her husband Melchor and left no children, then one half of
Melchor's properties and those acquired by him and his wife would
be given to those persons who had raised and taken care of her
namely, Estanislao Serrano.
Acting upon the motion for dismissal the trial court found that the
donation could not be regarded as a donation propter nuptias for
the reason that though it was executed before the marriage, it was
not made in consideration of the marriage and, what is more
important, that the donation was not made to one or both of the
(marriage) contracting parties, but to a third person.
After a careful study of the case, we fully agree with the trial court.
Article 1327 of the Old Civil Code reads:
Art. 1327. Donations by reasons of marriage are those bestowed
before its celebration in consideration of the same, upon one or
both of the spouses.
This article was reproduced in the Civil Code under Article 126.
Whether we apply Article 1327 for the reason that the document
Exhibit "A" was executed in 1948 before the promulgation of the
New Civil Code in 1950 or whether we apply Article 126 of the New
Civil Code the result would be the same.
Was the donation made in considerations of the marriage between
Melchor and Alejandria or was it made consideration of the death
of either of them in the absence of any children? True, the Deed of
Donation was executed on the occasion when they married. But,
the marriage in itself was not the only consideration or condition
under which terms of the donation would be carried out. The
marriage would have to be childless and one of the spouses would
have to die before the other before the donation would operate.
So, strictly, speaking, the donation may not be regarded as one
made in consideration of the marriage.

But assuming for the moment that it was made in consideration of


the marriage, still, we have the fact that the donation was being
made not in favor of Alejandria, the wife, but rather in favor of
those who acted as her parents and raised her from girlhood to
womanhood in the absence of her father. That does not place it
within the provisions of Article 1327 and Article 126 of the Old Civil
Code and the New Civil Code, respectively. Manresa, in his
commentary on Article 1327 of the Civil Code says the following:
Donations excluded are those (1) made in favor of the spouses
after the celebration of marriage; (2) executed in favor of the
future spouses but not in consideration of the marriage; and (3)
granted to persons other than the spouses even though they may
be founded on the marriage (6 M. 232).
Having come to the conclusion that the Deed of Donation does not
fulfill the requirements of a donation propter nuptias and that it
might be considered a donation inter vivos, can it be considered
valid and effective? Hardly, because it was never accepted by the
donee either in the same instrument or donation or in a separate
document as required by law.
Again, may the donation be regarded a donation mortis causa, and
given effect? The answer has to be in the negative for the reason
that this Tribunal has heretofore consistently held that a donation
to take effect after the death of the donor, is equivalent to a
disposition or bequest of property by last will, an it should be
executed in accordance with the requisites and strict provisions
governing the execution wills;1 and Exhibit "A" does not fulfill said
requirements. Moreover, in the present case, the donor is still alive
and naturally, even if the donation were otherwise valid, still, the
time and occasion have not arrived for considering its operation
and implementation.
In view of the foregoing, the appealed decision is hereby affirmed,
with costs.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 164584

June 22, 2009

NACHURA, J.:

Claiming that the Agreement was null and void since it was entered
into by Joselyn without his (Benjamins) consent, Benjamin
instituted an action for Declaration of Nullity of Agreement of Lease
with Damages11 against Joselyn and the petitioner. Benjamin
claimed that his funds were used in the acquisition and
improvement of the Boracay property, and coupled with the fact
that he was Joselyns husband, any transaction involving said
property required his consent.

Assailed in this petition for review on certiorari are the Court of


Appeals (CA) December 19, 2003 Decision1 and July 14, 2004
Resolution2 in CA-G.R. CV No. 59573. The assailed decision
affirmed and upheld the June 30, 1997 Decision3 of the Regional
Trial Court (RTC), Branch 8, Kalibo, Aklan in Civil Case No. 4632 for
Declaration of Nullity of Agreement of Lease with Damages.

No Answer was filed, hence, the RTC declared Joselyn and the
petitioner in defeault. On March 14, 1994, the RTC rendered
judgment by default declaring the Agreement null and void.12 The
decision was, however, set aside by the CA in CA-G.R. SP No.
34054.13 The CA also ordered the RTC to allow the petitioner to file
his Answer, and to conduct further proceedings.

On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a


British subject, married Joselyn C. Taylor (Joselyn), a 17-year old
Filipina.4 On June 9, 1989, while their marriage was subsisting,
Joselyn bought from Diosa M. Martin a 1,294 square-meter lot
(Boracay property) situated at Manoc-Manoc, Boracay Island,
Malay, Aklan, for and in consideration of P129,000.00.5 The sale
was allegedly financed by Benjamin.6 Joselyn and Benjamin, also
using the latters funds, constructed improvements thereon and
eventually converted the property to a vacation and tourist resort
known as the Admiral Ben Bow Inn.7 All required permits and
licenses for the operation of the resort were obtained in the name
of Ginna Celestino, Joselyns sister.8

In his Answer,14 petitioner claimed good faith in transacting with


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

PHILIP MATTHEWS, Petitioner,


vs.
BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.
DECISION

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


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

However, Benjamin and Joselyn had a falling out, and Joselyn ran
away with Kim Philippsen. On June 8, 1992, Joselyn executed a
Special Power of Attorney (SPA) in favor of Benjamin, authorizing
the latter to maintain, sell, lease, and sub-lease and otherwise
enter into contract with third parties with respect to their Boracay
property.9
On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews
as lessee, entered into an Agreement of Lease10 (Agreement)
involving the Boracay property for a period of 25 years, with an
annual rental of P12,000.00. The agreement was signed by the
parties and executed before a Notary Public. Petitioner thereafter
took possession of the property and renamed the resort as Music
Garden Resort.1avvphi1

WHEREFORE, premises considered, judgment is hereby rendered in


favor of the plaintiff and against the defendants as follows:
1. The Agreement of Lease dated July 20, 1992 consisting of eight
(8) pages (Exhibits "T", "T-1", "T-2", "T-3", "T-4", "T-5", "T-6" and "T7") entered into by and between Joselyn C. Taylor and Philip
Matthews before Notary Public Lenito T. Serrano under Doc. No.
390, Page 79, Book I, Series of 1992 is hereby declared NULL and
VOID;
2. Defendants are hereby ordered, jointly and severally, to pay
plaintiff the sum of SIXTEEN THOUSAND (P16,000.00) PESOS as
damages representing unrealized income for the residential

building and cottages computed monthly from July 1992 up to the


time the property in question is restored to plaintiff; and

THE CASE OF SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO. 141323,
JUNE 8, 2005.

3. Defendants are hereby ordered, jointly and severally, to pay


plaintiff the sum of TWENTY THOUSAND (P20,000.00) PESOS,
Philippine Currency, for attorneys fees and other incidental
expenses.

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


IS THE EXCLUSIVE PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO
CITIZEN, IN THE LIGHT OF CHEESMAN VS. IAC, G.R. NO. 74833,
JANUARY 21, 1991.

SO ORDERED.15

4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE 96 OF


THE FAMILY CODE OF THE PHILIPPINES WHICH IS A PROVISION
REFERRING TO THE ABSOLUTE COMMUNITY OF PROPERTY. THE
PROPERTY REGIME GOVERNING THE PROPERTY RELATIONS OF
BENJAMIN TAYLOR AND JOSELYN TAYLOR IS THE CONJUGAL
PARTNERSHIP OF GAINS BECAUSE THEY WERE MARRIED ON 30
JUNE 1988 WHICH IS PRIOR TO THE EFFECTIVITY OF THE FAMILY
CODE. ARTICLE 96 OF THE FAMILY CODE OF THE PHILIPPINES FINDS
NO APPLICATION IN THIS CASE.

The RTC considered the Boracay property as community property


of Benjamin and Joselyn; thus, the consent of the spouses was
necessary to validate any contract involving the property.
Benjamins right over the Boracay property was bolstered by the
courts findings that the property was purchased and improved
through funds provided by Benjamin. Although the Agreement was
evidenced by a public document, the trial court refused to consider
the alleged participation of Benjamin in the questioned transaction
primarily because his signature appeared only on the last page of
the document and not on every page thereof.
On appeal to the CA, petitioner still failed to obtain a favorable
decision. In its December 19, 2003 Decision,16 the CA affirmed the
conclusions made by the RTC. The appellate court was of the view
that if, indeed, Benjamin was a willing participant in the questioned
transaction, the parties to the Agreement should have used the
phrase "with my consent" instead of "signed in the presence of."
The CA noted that Joselyn already prepared an SPA in favor of
Benjamin involving the Boracay property; it was therefore
unnecessary for Joselyn to participate in the execution of the
Agreement. Taken together, these circumstances yielded the
inevitable conclusion that the contract was null and void having
been entered into by Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in this petition
for review on certiorari based on the following grounds:
4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS
NOT REQUIRED IN THE AGREEMENT OF LEASE DATED 20 JULY 1992.
GRANTING ARGUENDO THAT HIS CONSENT IS REQUIRED, BENJAMIN
TAYLOR IS DEEMED TO HAVE GIVEN HIS CONSENT WHEN HE
AFFIXED HIS SIGNATURE IN THE AGREEMENT OF LEASE AS
WITNESS IN THE LIGHT OF THE RULING OF THE SUPREME COURT IN

4.4. THE HONORABLE COURT OF APPEALS IGNORED THE


PRESUMPTION OF REGULARITY IN THE EXECUTION OF NOTARIAL
DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON
THE COUNTERCLAIM OF PETITIONER DESPITE THE FACT THAT IT
WAS NOT CONTESTED AND DESPITE THE PRESENTATION OF
EVIDENCE ESTABLISHING SAID CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of an
Agreement of Lease of a parcel of land entered into by a Filipino
wife without the consent of her British husband. In addressing the
matter before us, we are confronted not only with civil law or
conflicts of law issues, but more importantly, with a constitutional
question.
It is undisputed that Joselyn acquired the Boracay property in 1989.
Said acquisition was evidenced by a Deed of Sale with Joselyn as
the vendee. The property was also declared for taxation purposes
under her name. When Joselyn leased the property to petitioner,
Benjamin sought the nullification of the contract on two grounds:
first, that he was the actual owner of the property since he
provided the funds used in purchasing the same; and second, that

Joselyn could not enter into a valid contract involving the subject
property without his consent.
The trial and appellate courts both focused on the property
relations of petitioner and respondent in light of the Civil Code and
Family Code provisions. They, however, failed to observe the
applicable constitutional principles, which, in fact, are the more
decisive.
Section 7, Article XII of the 1987 Constitution states:18
Section 7. Save in cases of hereditary succession, no private lands
shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of
the public domain.1avvphi1
Aliens, whether individuals or corporations, have been disqualified
from acquiring lands of the public domain. Hence, by virtue of the
aforecited constitutional provision, they are also disqualified from
acquiring private lands.19 The primary purpose of this
constitutional provision is the conservation of the national
patrimony.20 Our fundamental law cannot be any clearer. The right
to acquire lands of the public domain is reserved only to Filipino
citizens or corporations at least sixty percent of the capital of
which is owned by Filipinos.21
In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we
had the occasion to explain the constitutional prohibition:
Under Section 1 of Article XIII of the Constitution, "natural
resources, with the exception of public agricultural land, shall not
be alienated," and with respect to public agricultural lands, their
alienation is limited to Filipino citizens. But this constitutional
purpose conserving agricultural resources in the hands of Filipino
citizens may easily be defeated by the Filipino citizens themselves
who may alienate their agricultural lands in favor of aliens. It is
partly to prevent this result that Section 5 is included in Article XIII,
and it reads as follows:
"Section 5. Save in cases of hereditary succession, no private
agricultural land will be transferred or assigned except to
individuals, corporations, or associations qualified to acquire or
hold lands of the public domain in the Philippines."

This constitutional provision closes the only remaining avenue


through which agricultural resources may leak into aliens hands. It
would certainly be futile to prohibit the alienation of public
agricultural lands to aliens if, after all, they may be freely so
alienated upon their becoming private agricultural lands in the
hands of Filipino citizens. x x x
xxxx
If the term "private agricultural lands" is to be construed as not
including residential lots or lands not strictly agricultural, the result
would be that "aliens may freely acquire and possess not only
residential lots and houses for themselves but entire subdivisions,
and whole towns and cities," and that "they may validly buy and
hold in their names lands of any area for building homes, factories,
industrial plants, fisheries, hatcheries, schools, health and vacation
resorts, markets, golf courses, playgrounds, airfields, and a host of
other uses and purposes that are not, in appellants words, strictly
agricultural." (Solicitor Generals Brief, p. 6) That this is obnoxious
to the conservative spirit of the Constitution is beyond question.24
The rule is clear and inflexible: aliens are absolutely not allowed to
acquire public or private lands in the Philippines, save only in
constitutionally recognized exceptions.25 There is no rule more
settled than this constitutional prohibition, as more and more
aliens attempt to circumvent the provision by trying to own lands
through another. In a long line of cases, we have settled issues that
directly or indirectly involve the above constitutional provision. We
had cases where aliens wanted that a particular property be
declared as part of their fathers estate;26 that they be reimbursed
the funds used in purchasing a property titled in the name of
another;27 that an implied trust be declared in their (aliens)
favor;28 and that a contract of sale be nullified for their lack of
consent.29
In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen,
acquired a parcel of land, together with the improvements thereon.
Upon his death, his heirs (the petitioners therein) claimed the
properties as part of the estate of their deceased father, and
sought the partition of said properties among themselves. We,
however, excluded the land and improvements thereon from the
estate of Felix Ting Ho, precisely because he never became the
owner thereof in light of the above-mentioned constitutional
prohibition.

In Muller v. Muller,31 petitioner Elena Buenaventura Muller and


respondent Helmut Muller were married in Germany. During the
subsistence of their marriage, respondent purchased a parcel of
land in Antipolo City and constructed a house thereon. The Antipolo
property was registered in the name of the petitioner. They
eventually separated, prompting the respondent to file a petition
for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said
property. In deciding the case in favor of the petitioner, the Court
held that respondent was aware that as an alien, he was prohibited
from owning a parcel of land situated in the Philippines. He had, in
fact, declared that when the spouses acquired the Antipolo
property, he had it titled in the name of the petitioner because of
said prohibition. Hence, we denied his attempt at subsequently
asserting a right to the said property in the form of a claim for
reimbursement. Neither did the Court declare that an implied trust
was created by operation of law in view of petitioners marriage to
respondent. We said that to rule otherwise would permit
circumvention of the constitutional prohibition.
In Frenzel v. Catito,32 petitioner, an Australian citizen, was married
to Teresita Santos; while respondent, a Filipina, was married to
Klaus Muller. Petitioner and respondent met and later cohabited in
a common-law relationship, during which petitioner acquired real
properties; and since he was disqualified from owning lands in the
Philippines, respondents name appeared as the vendee in the
deeds of sale. When their relationship turned sour, petitioner filed
an action for the recovery of the real properties registered in the
name of respondent, claiming that he was the real owner. Again, as
in the other cases, the Court refused to declare petitioner as the
owner mainly because of the constitutional prohibition. The Court
added that being a party to an illegal contract, he could not come
to court and ask to have his illegal objective carried out. One who
loses his money or property by knowingly engaging in an illegal
contract may not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner
(an American citizen) and Criselda Cheesman acquired a parcel of
land that was later registered in the latters name. Criselda
subsequently sold the land to a third person without the knowledge
of the petitioner. The petitioner then sought the nullification of the
sale as he did not give his consent thereto. The Court held that
assuming that it was his (petitioners) intention that the lot in

question be purchased by him and his wife, he acquired no right


whatever over the property by virtue of that purchase; and in
attempting to acquire a right or interest in land, vicariously and
clandestinely, he knowingly violated the Constitution; thus, the
sale as to him was null and void.
In light of the foregoing jurisprudence, we find and so hold that
Benjamin has no right to nullify the Agreement of Lease between
Joselyn and petitioner. Benjamin, being an alien, is absolutely
prohibited from acquiring private and public lands in the
Philippines. Considering that Joselyn appeared to be the designated
"vendee" in the Deed of Sale of said property, she acquired sole
ownership thereto. This is true even if we sustain Benjamins claim
that he provided the funds for such acquisition. By entering into
such contract knowing that it was illegal, no implied trust was
created in his favor; no reimbursement for his expenses can be
allowed; and no declaration can be made that the subject property
was part of the conjugal/community property of the spouses. In
any event, he had and has no capacity or personality to question
the subsequent lease of the Boracay property by his wife on the
theory that in so doing, he was merely exercising the prerogative
of a husband in respect of conjugal property. To sustain such a
theory would countenance indirect controversion of the
constitutional prohibition. If the property were to be declared
conjugal, this would accord the alien husband a substantial interest
and right over the land, as he would then have a decisive vote as
to its transfer or disposition. This is a right that the Constitution
does not permit him to have.34
In fine, the Agreement of Lease entered into between Joselyn and
petitioner cannot be nullified on the grounds advanced by
Benjamin. Thus, we uphold its validity.
With the foregoing disquisition, we find it unnecessary to address
the other issues raised by the petitioner.
WHEREFORE, premises considered, the December 19, 2003
Decision and July 14, 2004 Resolution of the Court of Appeals in
CA-G.R. CV No. 59573, are REVERSED and SET ASIDE and a new
one is entered DISMISSING the complaint against petitioner Philip
Matthews.
SO ORDERED.

MENDOZA GO & HENRY GO,


Petitioners, Present:
Panganiban, CJ,
Chairperson,
Ynares-Santiago,
- versus - Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ
Promulgated:
LEONARDO YAMANE,
Respondent. May 3, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---- -- -- -- -- x

DECISION

PANGANIBAN, CJ:

P
roperty purchased by spouses during the existence of their
marriage is presumed to be conjugal in nature. This presumption
stands, absent any clear, categorical, and convincing evidence that
the property is paraphernal. 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.
The Case
Before the Court is a Petition for Review[1] under Rule 45 of the
Rules of Court, challenging the November 22, 2002 Decision[2] and
the September 17, 2003 Resolution[3] of the Court of Appeals (CA)
in CA-GR CV No. 60939. The assailed Decision disposed as follows:

FIRST DIVISION

Spouses JOSEPHINE G.R. No. 160762

WHEREFORE, premises considered, the Decision appealed from is


hereby REVERSED and SET ASIDE. The Sheriffs Certificate of Sale
dated August 12, 1981 and the Final Sheriffs Certificate of Sale
dated August 26, 1982 are declared NULL and VOID.[4]

The CA denied reconsideration in its September 17, 2003


Resolution.

The Facts

The undisputed factual findings of the CA are as follows:


Involved in the suit is a 750 square meters (sic) parcel of lot
located at Res. Sec. K, Baguio City, registered in the name of Muriel
Pucay Yamane, wife of Leonardo Yamane, [respondent] herein,
under Transfer Certificate of Title No. 12491.
As a result of a motion for execution of a charging lien filed by Atty.
Guillermo F. De Guzman in Civil Case No. 1841, entitled Florence
Pucay De Gomez, Elsie Pucay Kiwas and Muriel Pucay Yamane v.
Cypress Corporation, which said counsel handled for the plaintiffs
therein, hereinafter collectively referred to as the Pucay sisters, the
subject property was levied to satisfy the lien for attorneys fees in
the amount of P10,000. The said property was scheduled to be sold
at public auction on August 11, 1981.
Four days prior to the auction sale, [respondent] filed a Third-Party
Claim with the Office of the Provincial Sheriff to stop the public
auction on the ground that the subject property is conjugal
property and, therefore, should not be held answerable for the
personal obligation of the Pucay sisters. However, the Sheriff
proceeded with the auction sale despite [respondents] protest. The
subject property was sold to spouses Josephine [and] Henry Go (or
[petitioners]) as highest bidder. No redemption having been made
during the one-year period, a Final Sheriffs Certificate of Sale was
eventually issued on August 26, 1982 conveying and transferring
the said property to [petitioners].
On September 4, 1984, [respondent] filed a Complaint with the
Regional Trial Court of Baguio City, docketed as Civil Case No. 417R, against [petitioners] and Sheriff Melgar for annulment and
cancellation of auction sale upon the same ground stated in the
abovementioned third-party claim. Citing the Order of the Regional
Trial Court of Baguio City, Branch V in LRC Case No. 2288, which

ordered the cancellation of TCT No. 12491 and directed the


Register of Deeds to issue new title in the name of Josephine Go x
x x, [petitioners] moved to dismiss the complaint on the ground of
res judicata. In the Order dated November 28, 1984, the motion
was denied by the trial court.
In their Answer filed on December 10, 1984, [petitioners] denied
the material allegations of the complaint and interposed the
following special affirmative defenses: that the cause of action was
barred by prior judgment; that [respondent] has not pursued any
lawful remedy to annul the execution proceeding; that there is no
flaw or irregularity in the auction sale; and that since the execution
sale was made in accordance with Section 21, Rule 39 of the
Revised Rules of Court, it is deemed final and any irregularity
committed in the course thereof will not vitiate its validity.
On December 28, 1984, Muriel likewise lodged a Complaint for
Damages, docketed as Civil Case No. 505-R, against [petitioners]
and Atty. Guillermo De Guzman alleging, in gist, fraud,
misrepresentation, manipulation and unlawful acts of the
defendants in causing the levy of the subject property with an
estimated commercial value of P200,000 as against a charging lien
in the amount of P10,000.
In its May 27, 1985 Order, the trial court ordered the joint hearing
of Civil Cases Nos. 417-R and 505-R. On August 30, 1985, Muriel
was declared non-suited for failure to appear in the hearing despite
due notice. As a consequence, Civil Case No. 505-R was dismissed
on October 15, 1985.[5]

In its Decision[6] dated March 25, 1998, the Regional Trial Court
(RTC) of Baguio City, Branch 4, held that the subject parcel of land
was the paraphernal property of the late Muriel Pucay Yamane -spouse of respondent -- and was not their conjugal property. The
appearance of his name on the Transfer Certificate of Title (TCT)
was deemed to be merely descriptive of the civil status of the
registered owner, his late wife. Hence, finding that he had no legal
standing to question the auction sale or to pray for its annulment
or cancellation, the RTC dismissed the case for lack of merit.
Upon receipt of the RTC Decision on April 8, 1998, respondent filed
a Motion,[7] in which he prayed that he be allowed to file his

Motion for Reconsideration of the Decision, on or before May 30,


1998. The trial court granted[8] his Motion; received the Motion for
Reconsideration,[9] which was filed on May 28, 1998; and
eventually denied it in its Order dated June 5, 1998.[10] He then
elevated the matter to the CA on June 15, 1998.
Ruling of the Court of Appeals
The CA reversed the RTCs Decision. The Sheriffs Certificate of Sale
dated August 12, 1981, and the Final Sheriffs Certificate of Sale
dated August 26, 1982, were declared null and void.
According to the appellate court, property acquired during
marriage is presumed to be conjugal, unless the exclusive funds of
one spouse are shown to have been used for the purpose. That the
land was acquired during the spouses coverture was sufficiently
established by the TCT and the Deed of Absolute Sale, both
indicating that Muriel Pucay Yamane was married to Leonardo
Yamane; and by the undisputed testimony of the previous owner,
Eugene Pucay. Because of petitioners failure to establish that the
land in question had been acquired by Muriel using her exclusive
funds, the CA concluded that the contested land was conjugal
property.
The appellate court further held thus:
x x x [T]he disputed property being a conjugal property of
[respondent] and his wife, and absent any showing of some
advantage or benefit that accrued to their conjugal partnership
from the transaction between the Pucay sisters and Atty. De
Guzman, the public auction sale of the subject property in favor of
[petitioners] is null and void.[11]

Hence, this Petition.[12]

I. The Court of Appeals gravely erred in taking cognizance of the


appeal and in not dismissing the same, despite the fact that the
respondent failed to perfect his appeal within the 15-day
reglementary period set by the Rules of Court.
II. The Court of Appeals gravely erred in declaring the subject
property as conjugal property, despite the existence of clear
evidence showing that the subject property is the exclusive
paraphernal property of Muriel who, even during her lifetime,
always claimed the said property as her own exclusive paraphernal
property and not as property co-owned with her husband, the
respondent herein.
III. The Court of Appeals, assuming, ex grati argumenti, that the
subject property is conjugal property between respondent and
Muriel, gravely erred in ruling that the same cannot answer for the
charging lien of Atty. Guillermo de Guzman in Civil Case No. 1841.
[13]

In the main, they posit two issues. They raise, first, the procedural
question of whether the CA erred in giving due course to
respondents lapsed appeal; and, second, the substantive issue of
whether the subject property is conjugal or paraphernal.

The Courts Ruling


The Petition has no merit.

Procedural Issue:
Whether Respondents Appeal
Should Be Given Due Course

Issues
Petitioners submit the following issues for our consideration:

Petitioners contend that the CA erred in giving due course to the


appeal filed by respondent beyond the 15-day reglementary
period.

Concededly, he received a copy of the RTC Decision on April 8,


1998. He had, therefore, until April 23, 1998, within which to file an
appeal. Prior to the latter date, however, he moved that his new
counsel be allowed to file a motion for reconsideration on May 30,
1998. It was eventually filed on May 28, 1998, but was denied.
Respondent subsequently filed a Notice of Appeal on June 15,
1998. By this time, the original period to appeal had expired. It
should be clear that the Rules prohibit an extension to file a motion
for reconsideration.[14]

The perfection of an appeal in the manner and within the period


prescribed by the Rules of Civil Procedure is not only mandatory,
but also jurisdictional; and the lapse of the appeal period of fifteen
days deprives a court of the jurisdiction to alter a final judgment.
[15]
There have been exceptions, however, in which the Court
dispensed with technical infirmities and gave due course to tardy
appeals. In some of those instances, the presence of any justifying
circumstance recognized by law -- such as fraud, accident, mistake
or excusable negligence -- properly vested the judge with
discretion to approve or admit an appeal filed out of time.[16] In
other instances, lapsed appeals were allowed in order to serve
substantial justice, upon consideration of a) matters of life, liberty,
honor or property; b) the existence of special or compelling
circumstances; c) the merits of the case; d) causes not entirely
attributable to the fault or negligence
of the party that would be favored by the suspension of the rules;
e) the failure to show that the review being sought was merely
frivolous and dilatory; and f) the fact that the other party would not
be unjustly prejudiced.[17]
Indeed, in some exceptional cases, the Court has allowed the
relaxation of the rules regulating the reglementary periods of
appeal. These exceptions were cited in Manila Memorial Park
Cemetery v. CA,[18] from which we quote:
In Ramos vs. Bagasao, the Court excused the delay of four days in
the filing of the notice of appeal because the questioned decision
of the trial court had been served upon appellant Ramos at a time

when her counsel of record was already dead. The new counsel
could only file the appeal four days after the prescribed
reglementary period was over. In Republic vs. Court of Appeals, the
Court allowed the perfection of an appeal by the Republic despite
the delay of six days to prevent a gross miscarriage of justice since
the Republic stood to lose hundreds of hectares of land already
titled in its name and had since then been devoted for public
purposes. In Olacao vs. National Labor Relations Commission, a
tardy appeal was accepted considering that the subject matter in
issue had theretofore been judicially settled with finality in another
case, and a dismissal of the appeal would have had the effect of
the appellant being ordered twice to make the same reparation to
the appellee.[19]

We believe that a suspension of the Rules is similarly warranted in


the present controversy. We have carefully studied the merits of
the case and noted that the review being sought has not been
shown to be merely frivolous and dilatory. The Court has come to
the conclusion that the Decision of the RTC, Branch 4 (in Civil Case
No. 417-R), must be set aside. It would be far better and more
prudent to attain the ends of justice, rather than to dispose of the
case on technicality and cause grave injustice in the process. Thus,
we would rather excuse a technical lapse and afford respondent a
review of the case on appeal.

Substantive Issue:
Paraphernal or Conjugal?

The purchase of the property had been concluded in 1967, before


the Family Code took effect on August 3, 1988.[20] Accordingly,
the transaction was aptly covered by the then governing provisions
of the New Civil Code. On the latter basis, therefore, we shall
resolve the issue of the nature of the contested property.

Article 160 of the New Civil Code provides that all property of the
marriage is presumed to belong to the conjugal partnership, unless
it be proved that it pertains exclusively to the husband or to the
wife.[21] As a conditio sine qua non for the operation of this article
in favor of the conjugal partnership,[22] the party who invokes the
presumption must first prove that the property was acquired during
the marriage.[23]
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.[24] Moreover, the presumption may be
rebutted only with strong, clear, categorical and convincing
evidence.[25] There must be strict proof of the exclusive ownership
of one of the spouses,[26] and the burden of proof rests upon the
party asserting it.[27]
The CA committed no error in declaring that the parcel of land
belonged to the conjugal partnership of Spouses Muriel and
Leonardo Yamane. They acquired it from Eugene Pucay on February
27, 1967,[28] or specifically during the marriage.[29] We then
follow the rule that proof of the acquisition of the subject property
during a marriage suffices to render the statutory presumption
operative. It is clear enough that the presently disputed piece of
land pertains to the conjugal partnership.
Petitioners concede that the property was acquired during the
subsistence of the marriage of Muriel to respondent.[30]
Nonetheless, they insist that it belonged exclusively to her for the
following reasons:
First. Respondent never denied nor opposed her claim in Civil Case
No. 505-R, which she had filed during her lifetime; or in AG-GR Sp.
No. 01616 (entitled Muriel Pucay Yamane v. Josephine Go), that the
disputed parcel of land was her exclusive paraphernal property.
They allege that his failure to file a denial or opposition in those
cases is tantamount to a judicial admission that militates against
his belated claim.
Second. The Deed of Absolute Sale of the property is in the sole
name of Muriel. Petitioners posit that, had the spouses jointly
purchased this piece of land, the document should have indicated
this fact or carried the name of respondent as buyer.

Third. The failure of respondent to redeem the parcel of land within


the redemption period after the auction sale indicated that he was
not its co-owner.
We will discuss the three arguments seriatim.
Unilateral Declaration
Respondents interest cannot be prejudiced by the claim of Muriel in
her Complaint in Civil Case No. 505-R that the subject parcel of
land was her paraphernal property. Significantly, the nature of a
property -- whether conjugal or paraphernal -- is determined by law
and not by the will of one of the spouses.[31] Thus, no unilateral
declaration by one spouse can change the character of a conjugal
property.[32]
Besides, the issue presented in Civil Case No. 505-R was not the
nature of the subject piece of land being levied upon, but whether
Atty. Guillermo de Guzman was entitled to a charging lien. In that
case, Muriel claimed that she had not officially retained him as
counsel, and that no lawyer-client relationship had been
established between them.[33]
Deed and Title in the
Name of One Spouse

Further, the mere registration of a property in the name of one


spouse does not destroy its conjugal nature.[34] Hence, it cannot
be contended in the present case that, simply because the title
and the Deed of Sale covering the parcel of land were in the name
of Muriel alone, it was therefore her personal and exclusive
property. In
concluding that it was paraphernal, the trial courts reliance on
Stuart v. Yatco[35] was clearly erroneous.
As stated earlier, to rebut the presumption of the conjugal nature
of the property, petitioners must present clear and convincing
evidence. We affirm and quote below, for easy reference, the
relevant dispositions of the CA:

x x x. We are unable to go along with [petitioners] contention that


the subject property was acquired by Muriel with her exclusive
funds. Mere registration of the contested property in the name of
the wife is not sufficient to establish the paraphernal nature of the
property. This reminds Us of the teaching in the recent case of
Diancin v. Court of Appeals, that all the property acquired by the
spouses, regardless of in whose name the same is registered,
during the marriage is presumed to belong to the conjugal
partnership of gains, unless it is proved that it pertains exclusively
to the husband or to the wife. To quote:
As a general rule, all property acquired by the spouses, regardless
of in whose name the same is registered, during the marriage is
presumed to belong to the conjugal partnership of gains, unless it
is proved that it pertains exclusively to the husband or to the wife.
In the case at bar, the fishpond lease right is not paraphernal
having been acquired during the coverture of the marriage
between Matilde and Tiburcio, which was on April 9, 1940. The fact
that the grant was solely in the name of Matilde did not make the
property paraphernal property. What was material was the time the
fishpond lease right was acquired by the grantee, and that was
during the lawful existence of Matildes marriage to Tiburcio.
x x x [T]his presumption is rebuttable, but only with strong, clear
and convincing evidence. The burden of proving that the property
belongs exclusively to the wife rests upon the party asserting
it. Mere assertion of the propertys paraphernal nature is not
sufficient.

The record as well as the foregoing established jurisprudence lead


us to conclude that the contested property was indeed acquired
during the marriage of herein [respondent] and Muriel. To prove
that it is nonetheless paraphernal property, it is incumbent upon
[petitioners] to adduce strong, clear and convincing evidence that
Muriel bought the same with her exclusive funds. [Petitioners]
failed to discharge the burden. Nowhere in the evidence presented
by them do We find any indication that the land in question was
acquired by Muriel with her exclusive funds. The presumption not
having been overthrown, the conclusion is that the contested land
is conjugal property.[36]

Non-Redemption
After the Auction Sale

The non-redemption of the property by respondent within the


period prescribed by law did not, in any way, indicate the absence
of his right or title to it. Contrary to petitioners allegation, the fact
is that he filed a Third-Party Claim[37] with the sheriff, upon
learning of the levy and impending auction sale. This fact was
specifically admitted by petitioners.[38] Respondent claimed that
the parcel of land was conjugal, and that he could not answer for
the separate obligation of his wife and her sisters.[39]
Notwithstanding his claim, the disputed piece of land was sold at a
public auction on August 11, 1981. Consequently issued were a
Sheriffs Certificate of Sale dated August 12, 1981, and a Final
Sheriffs Certificate of Sale dated August 26, 1982.[40]
Likewise, in his Opposition (Answer) to the Petition in LRC File Adm.
Case No. 2288,[41] respondent raised the issue of the conjugal
nature of the property and reserved his right to file an independent
action to annul the auction sale. In its March 30, 1983 Order,[42]
however, Branch 5 of the RTC of Baguio City did not rule on either
the actual ownership or the nature of the parcel of land. Rather, it
granted the Petition to issue a new certificate of title in favor of
Petitioner Josephine Mendoza Go. It found that, under Section 75 of
Presidential Decree 1529, respondent had no legal standing to
question the auction sale, because he was not the registered
owner of the property. Instead, his right to prove his claim in a
separate and independent action was upheld.[43] Thus, he
instituted the present case for annulment and cancellation of the
auction sale.
The foregoing points clearly explain the failure of respondent to
redeem the property. Misplaced is petitioners emphasis on his
failure to do so within the period required by law, because
redemption in this case would have been inconsistent with his
claim that the sale was invalid.[44] Redemption would have served
as an implied admission of the regularity of the sale and estopped
him from later impugning its validity on that ground.[45]
Since petitioners have failed to present convincing evidence that
the property is paraphernal, the presumption that it is conjugal
therefore stands. The next question before us is, whether the

charging lien of Atty. de Guzman may be properly enforced against


the piece of land in question.
Charging Lien Not Chargeable
Against Conjugal Property

It is indisputable that the services of Atty. de Guzman were


acquired during the marriage of respondent and Muriel. The
lawyers legal services were engaged to recover from Cypress
Corporation (in Civil Case No. 1841) the balance of the purchase
price of the sale of the exclusive property of Muriel and her sisters.
[46] The recovery was done during the marriage.[47]
The CA elucidated on this matter as follows:
x x x. The contract or transaction between Atty. De Guzman and
the Pucay sisters appears to have been incurred for the exclusive
interest of the latter. Muriel was acting privately for her exclusive
interest when she joined her two sisters in hiring the services of
Atty. De Guzman to handle a case for them. Accordingly, whatever
expenses were incurred by Muriel in the litigation for her and her
sisters private and exclusive interests, are her exclusive
responsibility and certainly cannot be charged against the
contested conjugal property.
Even on the remote assumption that the conjugal property could
be held liable, levy on execution of the same property should still
be denied in accordance with the ruling in Luzon Surety Co., Inc. v.
De Garcia that before a conjugal property could be held liable for
the obligation contracted by a spouse, there must be a showing of
some advantage or benefit that accrued to the conjugal
partnership. Concededly, the burden is on the [petitioners] to
prove that the services rendered by Atty. De Guzman in handling
Civil Case No. 1841 for the Pucay sisters had, somehow, redounded
to the benefit of the conjugal partnership of herein [respondent]
and Muriel. This onus, [petitioners], however, failed to discharge.
[48]

We find no reason to deviate from the CAs findings, which are


amply supported by evidence. The expenses incurred by Muriel for
the recovery of the balance of the purchase price of her
paraphernal property are her exclusive responsibility.[49] This
piece of land may not be used to pay for her indebtedness,
because her obligation has not been shown to be one of the
charges against the conjugal partnership.[50] Moreover, her rights
to the property are merely inchoate prior to the liquidation of the
conjugal partnership.
Under the New Civil Code, a wife may bind the conjugal
partnership only when she purchases things necessary for the
support of the family, or when she borrows money for that purpose
upon her husbands failure to deliver the needed sum;[51] when
administration of the conjugal partnership is transferred to the wife
by the courts[52] or by the husband;[53] or when the wife gives
moderate donations for charity.[54] Failure to establish any of
these circumstances in the present case means that the conjugal
asset may not be bound to answer for Muriels personal obligation.
The power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone.
[55] In this case, therefore, the property -- being conjugal in nature
-- cannot be levied upon.[56]
WHEREFORE, the Petition is DENIED, and the assailed Decision and
Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.

ERLINDA RAMIREZ and ELISEO CARLOS,


Respondents.
G.R. No. 156125
Present:
CARPIO MORALES, J., Chairperson,
BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
Promulgated:
August 25, 2010
x-----------------------------------------------------------------------------------------x
DECISION
BRION, J.:

THIRD DIVISION

FRANCISCO MUOZ, JR.,


Petitioner,

versus -

We resolve the present petition for review on certiorari[1] filed by


petitioner Francisco Muoz, Jr. (petitioner) to challenge the
decision[2] and the resolution[3] of the Court of Appeals (CA) in
CA-G.R. CV No. 57126.[4] The CA decision set aside the decision[5]
of the Regional Trial Court (RTC), Branch 166, Pasig City, in Civil
Case No. 63665. The CA resolution denied the petitioners
subsequent motion for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly
summarized below.
Subject of the present case is a seventy-seven (77)-square meter
residential house and lot located at 170 A. Bonifacio Street,
Mandaluyong City (subject property), covered by Transfer
Certificate of Title (TCT) No. 7650 of the Registry of Deeds of
Mandaluyong City in the name of the petitioner.[6]
The residential lot in the subject property was previously covered
by TCT No. 1427, in the name of Erlinda Ramirez, married to Eliseo
Carlos (respondents).[7]

On April 6, 1989, Eliseo, a Bureau of Internal Revenue employee,


mortgaged TCT No. 1427, with Erlindas consent, to the
Government Service Insurance System (GSIS) to secure a
P136,500.00 housing loan, payable within twenty (20) years,
through monthly salary deductions of P1,687.66.[8] The
respondents then constructed a thirty-six (36)-square meter, twostory residential house on the lot.
On July 14, 1993, the title to the subject property was transferred
to the petitioner by virtue of a Deed of Absolute Sale, dated April
30, 1992, executed by Erlinda, for herself and as attorney-in-fact of
Eliseo, for a stated consideration of P602,000.00.[9]
On September 24, 1993, the respondents filed a complaint with the
RTC for the nullification of the deed of absolute sale, claiming that
there was no sale but only a mortgage transaction, and the
documents transferring the title to the petitioners name were
falsified.
The respondents alleged that in April 1992, the petitioner granted
them a P600,000.00 loan, to be secured by a first mortgage on TCT
No. 1427; the petitioner gave Erlinda a P200,000.00[10] advance
to cancel the GSIS mortgage, and made her sign a document
purporting to be the mortgage contract; the petitioner promised to
give the P402,000.00 balance when Erlinda surrenders TCT No.
1427 with the GSIS mortgage cancelled, and submits an affidavit
signed by Eliseo stating that he waives all his rights to the subject
property; with the P200,000.00 advance, Erlinda paid GSIS
P176,445.27[11] to cancel the GSIS mortgage on TCT No. 1427;
[12] in May 1992, Erlinda surrendered to the petitioner the clean
TCT No. 1427, but returned Eliseos affidavit, unsigned; since
Eliseos affidavit was unsigned, the petitioner refused to give the
P402,000.00 balance and to cancel the mortgage, and demanded
that Erlinda return the P200,000.00 advance; since Erlinda could
not return the P200,000.00 advance because it had been used to
pay the GSIS loan, the petitioner kept the title; and in 1993, they
discovered that TCT No. 7650 had been issued in the petitioners
name, cancelling TCT No.1427 in their name.
The petitioner countered that there was a valid contract of sale. He
alleged that the respondents sold the subject property to him after
he refused their offer to mortgage the subject property because

they lacked paying capacity and were unwilling to pay the


incidental charges; the sale was with the implied promise to
repurchase within one year,[13] during which period (from May 1,
1992 to April 30, 1993), the respondents would lease the subject
property for a monthly rental of P500.00;[14] when the
respondents failed to repurchase the subject property within the
one-year period despite notice, he caused the transfer of title in his
name on July 14, 1993;[15] when the respondents failed to pay the
monthly rentals despite demand, he filed an ejectment case[16]
against them with the Metropolitan Trial Court (MeTC), Branch 60,
Mandaluyong City, on September 8, 1993, or sixteen days before
the filing of the RTC case for annulment of the deed of absolute
sale.
During the pendency of the RTC case, or on March 29, 1995, the
MeTC decided the ejectment case. It ordered Erlinda and her family
to vacate the subject property, to surrender its possession to the
petitioner, and to pay the overdue rentals.[17]
In the RTC, the respondents presented the results of the scientific
examination[18] conducted by the National Bureau of Investigation
of Eliseos purported signatures in the Special Power of Attorney[19]
dated April 29, 1992 and the Affidavit of waiver of rights dated
April 29, 1992,[20] showing that they were forgeries.
The petitioner, on the other hand, introduced evidence on the
paraphernal nature of the subject property since it was registered
in Erlindas name; the residential lot was part of a large parcel of
land owned by Pedro Ramirez and Fructuosa Urcla, Erlindas
parents; it was the subject of Civil Case No. 50141, a complaint for
annulment of sale, before the RTC, Branch 158, Pasig City, filed by
the surviving heirs of Pedro against another heir, Amado Ramirez,
Erlindas brother; and, as a result of a compromise agreement,
Amado agreed to transfer to the other compulsory heirs of Pedro,
including Erlinda, their rightful shares of the land.[21]

THE RTC RULING


In a Decision dated January 23, 1997, the RTC dismissed the
complaint. It found that the subject property was Erlindas exclusive
paraphernal property that was inherited from her father. It also
upheld the sale to the petitioner, even without Eliseos consent as

the deed of absolute sale bore the genuine signatures of Erlinda


and the petitioner as vendor and vendee, respectively. It concluded
that the NBI finding that Eliseos signatures in the special power of
attorney and in the affidavit were forgeries was immaterial
because Eliseos consent to the sale was not necessary.[22]
The respondents elevated the case to the CA via an ordinary
appeal under Rule 41 of the Revised Rules of Court.
THE CA RULING
The CA decided the appeal on June 25, 2002. Applying the second
paragraph of Article 158[23] of the Civil Code and CalimlimCanullas v. Hon. Fortun,[24] the CA held that the subject property,
originally Erlindas exclusive paraphernal property, became
conjugal property when it was used as collateral for a housing loan
that was paid through conjugal funds Eliseos monthly salary
deductions; the subject property, therefore, cannot be validly sold
or mortgaged without Eliseos consent, pursuant to Article 124[25]
of the Family Code. Thus, the CA declared void the deed of
absolute sale, and set aside the RTC decision.
When the CA denied[26] the subsequent motion for
reconsideration,[27] the petitioner filed the present petition for
review on certiorari under Rule 45 of the Revised Rules of Court.
THE PETITION
The petitioner argues that the CA misapplied the second paragraph
of Article 158 of the Civil Code and Calimlim-Canullas[28] because
the respondents admitted in the complaint that it was the
petitioner who gave the money used to cancel the GSIS mortgage
on TCT No. 1427; Article 120[29] of the Family Code is the
applicable rule, and since the value of the house is less than the
value of the lot, then Erlinda retained ownership of the subject
property. He also argues that the contract between the parties was
a sale, not a mortgage, because (a) Erlinda did not deny her
signature in the document;[30] (b) Erlinda agreed to sign a
contract of lease over the subject property;[31] and, (c) Erlinda
executed a letter, dated April 30, 1992, confirming the conversion
of the loan application to a deed of sale.[32]

THE CASE FOR THE RESPONDENTS


The respondents submit that it is unnecessary to compare the
respective values of the house and of the lot to determine
ownership of the subject property; it was acquired during their
marriage and, therefore, considered conjugal property. They also
submit that the transaction between the parties was not a sale, but
an equitable mortgage because (a) they remained in possession of
the subject property even after the execution of the deed of
absolute sale, (b) they paid the 1993 real property taxes due on
the subject property, and (c) they received P200,000.00 only of the
total stated price of P602,000.00.
THE ISSUE
The issues in the present case boil down to (1) whether the subject
property is paraphernal or conjugal; and, (2) whether the contract
between the parties was a sale or an equitable mortgage.
OUR RULING
We deny the present Petition but for reasons other than those
advanced by the CA.
This Court is not a trier of facts. However, if the inference, drawn
by the CA, from the facts is manifestly mistaken, as in the present
case, we can review the evidence to allow us to arrive at the
correct factual conclusions based on the record.[33]

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

In the present case, clear evidence that Erlinda inherited the


residential lot from her father has sufficiently rebutted this
presumption of conjugal ownership.[35] Pursuant to Articles 92[36]
and 109[37] of the Family Code, properties acquired by gratuitous
title by either spouse, during the marriage, shall be excluded from
the community property and be the exclusive property of each
spouse.[38] The residential lot, therefore, is Erlindas exclusive
paraphernal property.
The CA, however, held that the residential lot became conjugal
when the house was built thereon through conjugal funds, applying
the second paragraph of Article 158 of the Civil Code and CalimlimCanullas.[39] Under the second paragraph of Article 158 of the
Civil Code, a land that originally belonged to one spouse becomes
conjugal upon the construction of improvements thereon at the
expense of the partnership. We applied this provision in CalimlimCanullas,[40] where we held that when the conjugal house is
constructed on land belonging exclusively to the husband, the land
ipso facto becomes conjugal, but the husband is entitled to
reimbursement of the value of the land at the liquidation of the
conjugal partnership.
The CA misapplied Article 158 of the
Civil Code and Calimlim-Canullas
We cannot subscribe to the CAs misplaced reliance on Article 158
of the Civil Code and Calimlim-Canullas.
As the respondents were married during the effectivity of the Civil
Code, its provisions on conjugal partnership of gains (Articles 142
to 189) should have governed their property relations. However,
with the enactment of the Family Code on August 3, 1989, the Civil
Code provisions on conjugal partnership of gains, including Article
158, have been superseded by those found in the Family Code
(Articles 105 to 133). Article 105 of the Family Code states:

Thus, in determining the nature of the subject property, we refer to


the provisions of the Family Code, and not the Civil Code, except
with respect to rights then already vested.
Article 120 of the Family Code, which supersedes Article 158 of the
Civil Code, provides the solution in determining the ownership of
the improvements that are made on the separate property of the
spouses, at the expense of the partnership or through the acts or
efforts of either or both spouses. Under this provision, when the
cost of the improvement and any resulting increase in value are
more than the value of the property at the time of the
improvement, the entire property of one of the spouses shall
belong to the conjugal partnership, subject to reimbursement of
the value of the property of the owner-spouse at the time of the
improvement; otherwise, said property shall be retained in
ownership by the owner-spouse, likewise subject to reimbursement
of the cost of the improvement.[41]
In the present case, we find that Eliseo paid a portion only of the
GSIS loan through monthly salary deductions. From April 6,
1989[42] to April 30, 1992,[43] Eliseo paid about P60,755.76,[44]
not the entire amount of the GSIS housing loan plus interest, since
the petitioner advanced the P176,445.27[45] paid by Erlinda to
cancel the mortgage in 1992. Considering the P136,500.00 amount
of the GSIS housing loan, it is fairly reasonable to assume that the
value of the residential lot is considerably more than the
P60,755.76 amount paid by Eliseo through monthly salary
deductions.
Thus, the subject property remained the exclusive paraphernal
property of Erlinda at the time she contracted with the petitioner;
the written consent of Eliseo to the transaction was not necessary.
The NBI finding that Eliseos signatures in the special power of
attorney and affidavit were forgeries was immaterial.

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

Nonetheless, the RTC and the CA apparently failed to consider the


real nature of the contract between the parties.
Second Issue:

Sale or Equitable Mortgage?


Jurisprudence has defined an equitable mortgage "as one which
although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the
intention of the parties to charge real property as security for a
debt, there being no impossibility nor anything contrary to law in
this intent."[46]
Article 1602 of the Civil Code enumerates the instances when a
contract, regardless of its nomenclature, may be presumed to be
an equitable mortgage: (a) when the price of a sale with right to
repurchase is unusually inadequate; (b) when the vendor remains
in possession as lessee or otherwise; (c) when upon or after the
expiration of the right to repurchase another instrument extending
the period of redemption or granting a new period is executed; (d)
when the purchaser retains for himself a part of the purchase price;
(e) when the vendor binds himself to pay the taxes on the thing
sold; and, (f) in any other case where it may be fairly inferred that
the real intention of the parties is that the transaction shall secure
the payment of a debt or the performance of any other obligation.
These instances apply to a contract purporting to be an absolute
sale.[47]
For the presumption of an equitable mortgage to arise under
Article 1602 of the Civil Code, two (2) requisites must concur: (a)
that the parties entered into a contract denominated as a contract
of sale; and, (b) that their intention was to secure an existing debt
by way of a mortgage. Any of the circumstances laid out in Article
1602 of the Civil Code, not the concurrence nor an overwhelming
number of the enumerated circumstances, is sufficient to support
the conclusion that a contract of sale is in fact an equitable
mortgage.[48]

Contract is an equitable mortgage


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

First, the respondents remained in possession as lessees of the


subject property; the parties, in fact, executed a one-year contract
of lease, effective May 1, 1992 to April 30, 1993.[49]
Second, the petitioner retained part of the purchase price, the
petitioner gave a P200,000.00 advance to settle the GSIS housing
loan, but refused to give the P402,000.00 balance when Erlinda
failed to submit Eliseos signed affidavit of waiver of rights.
Third, respondents paid the real property taxes on July 8, 1993,
despite the alleged sale on April 30, 1992;[50] payment of real
property taxes is a usual burden attaching to ownership and when,
as here, such payment is coupled with continuous possession of
the property, it constitutes evidence of great weight that the
person under whose name the realty taxes were declared has a
valid and rightful claim over the land.[51]
Fourth, Erlinda secured the payment of the principal debt owed to
the petitioner with the subject property. The records show that the
petitioner, in fact, sent Erlinda a Statement of Account showing
that as of February 20, 1993, she owed P384,660.00, and the daily
interest, starting February 21, 1993, was P641.10.[52] Thus, the
parties clearly intended an equitable mortgage and not a contract
of sale.
That the petitioner advanced the sum of P200,000.00 to Erlinda is
undisputed. This advance, in fact, prompted the latter to transfer
the subject property to the petitioner. Thus, before the respondents
can recover the subject property, they must first return the amount
of P200,000.00 to the petitioner, plus legal interest of 12% per
annum, computed from April 30, 1992.
We cannot sustain the ballooned obligation of P384,660.00,
claimed in the Statement of Account sent by the petitioner,[53]
sans any evidence of how this amount was arrived at. Additionally,
a daily interest of P641.10 or P19,233.00 per month for a
P200,000.00 loan is patently unconscionable. While parties are free
to stipulate on the interest to be imposed on monetary obligations,
we can step in to temper the interest rates if they are
unconscionable.[54]
In Lustan v. CA,[55] where we established the reciprocal obligations
of the parties under an equitable mortgage, we ordered the

reconveyance of the property to the rightful owner therein upon


the payment of the loan within ninety (90) days from the finality of
the decision.[56]
WHEREFORE, in light of all the foregoing, we hereby DENY the
present petition. The assailed decision and resolution of the Court
of Appeals in CA-G.R. CV No. 57126 are AFFIRMED with the
following MODIFICATIONS:
1. The Deed of Absolute Sale dated April 30, 1992 is hereby
declared an equitable mortgage; and
2. The petitioner is obligated to RECONVEY to the respondents the
property covered by Transfer Certificate of Title No. 7650 of the
Register of Deeds of Mandaluyong City, UPON THE PAYMENT OF
P200,000.00, with 12% legal interest from April 30, 1992, by
respondents within NINETY DAYS FROM THE FINALITY OF THIS
DECISION.
Costs against the petitioner.

EN BANC

MANUEL O. FUENTES and G.R. No. 178902


LETICIA L. FUENTES,
Petitioners, Present:
Puno, C.J.,
Carpio,
Corona,
Carpio Morales,
Velasco, Jr.,
Nachura,
- versus - Leonardo-De Castro,
Brion,
Peralta,
Bersamin,
Del Castillo,
Abad,
Villarama, Jr.,
Perez, and
Mendoza, JJ.
CONRADO G. ROCA, ANNABELLE R.
JOSON, ROSE MARIE R. CRISTOBAL
and PILAR MALCAMPO, Promulgated:
Respondents.
April 21, 2010
x ---------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
This case is about a husbands sale of conjugal real property,
employing a challenged affidavit of consent from an estranged
wife. The buyers claim valid consent, loss of right to declare nullity
of sale, and prescription.
The Facts and the Case
Sabina Tarroza owned a titled 358-square meter lot in Canelar,
Zamboanga City. On October 11, 1982 she sold it to her son,
Tarciano T. Roca (Tarciano) under a deed of absolute sale.[1] But
Tarciano did not for the meantime have the registered title
transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners
Manuel and Leticia Fuentes (the Fuentes spouses). They arranged
to meet at the office of Atty. Romulo D. Plagata whom they asked
to prepare the documents of sale. They later signed an agreement
to sell that Atty. Plagata prepared[2] dated April 29, 1988, which
agreement expressly stated that it was to take effect in six months.
The agreement required the Fuentes spouses to pay Tarciano a
down payment of P60,000.00 for the transfer of the lots title to
him. And, within six months, Tarciano was to clear the lot of
structures and occupants and secure the consent of his estranged
wife, Rosario Gabriel Roca (Rosario), to the sale. Upon Tarcianos
compliance with these conditions, the Fuentes spouses were to
take possession of the lot and pay him an additional P140,000.00
or P160,000.00, depending on whether or not he succeeded in
demolishing the house standing on it. If Tarciano was unable to
comply with these conditions, the Fuentes spouses would become
owners of the lot without any further formality and payment.
The parties left their signed agreement with Atty. Plagata who then
worked on the other requirements of the sale. According to the
lawyer, he went to see Rosario in one of his trips to Manila and had
her sign an affidavit of consent.[3] As soon as Tarciano met the
other conditions, Atty. Plagata notarized Rosarios affidavit in
Zamboanga City. On January 11, 1989 Tarciano executed a deed of
absolute sale[4] in favor of the Fuentes spouses. They then paid
him the additional P140,000.00 mentioned in their agreement. A
new title was issued in the name of the spouses[5] who
immediately constructed a building on the lot. On January 28, 1990
Tarciano passed away, followed by his wife Rosario who died nine
months afterwards.
Eight years later in 1997, the children of Tarciano and Rosario,
namely, respondents Conrado G. Roca, Annabelle R. Joson, and
Rose Marie R. Cristobal, together with Tarcianos sister, Pilar R.
Malcampo, represented by her son, John Paul M. Trinidad
(collectively, the Rocas), filed an action for annulment of sale and
reconveyance of the land against the Fuentes spouses before the
Regional Trial Court (RTC) of Zamboanga City in Civil Case 4707.
The Rocas claimed that the sale to the spouses was void since
Tarcianos wife, Rosario, did not give her consent to it. Her signature
on the affidavit of consent had been forged. They thus prayed that

the property be reconveyed to them upon reimbursement of the


price that the Fuentes spouses paid Tarciano.[6]
The spouses denied the Rocas allegations. They presented Atty.
Plagata who testified that he personally saw Rosario sign the
affidavit at her residence in Paco, Manila, on September 15, 1988.
He admitted, however, that he notarized the document in
Zamboanga City four months later on January 11, 1989.[7] All the
same, the Fuentes spouses pointed out that the claim of forgery
was personal to Rosario and she alone could invoke it. Besides, the
four-year prescriptive period for nullifying the sale on ground of
fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting
experts at the trial. Comparing Rosarios standard signature on the
affidavit with those on various documents she signed, the Rocas
expert testified that the signatures were not written by the same
person. Making the same comparison, the spouses expert
concluded that they were.[8]
On February 1, 2005 the RTC rendered judgment, dismissing the
case. It ruled that the action had already prescribed since the
ground cited by the Rocas for annulling the sale, forgery or fraud,
already prescribed under Article 1391 of the Civil Code four years
after its discovery. In this case, the Rocas may be deemed to have
notice of the fraud from the date the deed of sale was registered
with the Registry of Deeds and the new title was issued. Here, the
Rocas filed their action in 1997, almost nine years after the title
was issued to the Fuentes spouses on January 18, 1989.[9]
Moreover, the Rocas failed to present clear and convincing
evidence of the fraud. Mere variance in the signatures of Rosario
was not conclusive proof of forgery.[10] The RTC ruled that,
although the Rocas presented a handwriting expert, the trial court
could not be bound by his opinion since the opposing expert
witness contradicted the same. Atty. Plagatas testimony remained
technically unrebutted.[11]
Finally, the RTC noted that Atty. Plagatas defective notarization of
the affidavit of consent did not invalidate the sale. The law does
not require spousal consent to be on the deed of sale to be valid.
Neither does the irregularity vitiate Rosarios consent. She
personally signed the affidavit in the presence of Atty. Plagata.[12]

On appeal, the Court of Appeals (CA) reversed the RTC decision.


The CA found sufficient evidence of forgery and did not give
credence to Atty. Plagatas testimony that he saw Rosario sign the
document in Quezon City. Its jurat said differently. Also, upon
comparing the questioned signature with the specimen signatures,
the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also
reinforced the conclusion that her signature had been forged.
Since Tarciano and Rosario were married in 1950, the CA concluded
that their property relations were governed by the Civil Code under
which an action for annulment of sale on the ground of lack of
spousal consent may be brought by the wife during the marriage
within 10 years from the transaction. Consequently, the action that
the Rocas, her heirs, brought in 1997 fell within 10 years of the
January 11, 1989 sale.
Considering, however, that the sale between the Fuentes spouses
and Tarciano was merely voidable, the CA held that its annulment
entitled the spouses to reimbursement of what they paid him plus
legal interest computed from the filing of the complaint until actual
payment. Since the Fuentes spouses were also builders in good
faith, they were entitled under Article 448 of the Civil Code to
payment of the value of the improvements they introduced on the
lot. The CA did not award damages in favor of the Rocas and
deleted the award of attorneys fees to the Fuentes spouses.[13]
Unsatisfied with the CA decision, the Fuentes spouses came to this
court by petition for review.[14]
The Issues Presented
The case presents the following issues:
1. Whether or not Rosarios signature on the document of consent
to her husband Tarcianos sale of their conjugal land to the Fuentes
spouses was forged;
2. Whether or not the Rocas action for the declaration of nullity of
that sale to the spouses already prescribed; and
3. Whether or not only Rosario, the wife whose consent was not
had, could bring the action to annul that sale.

The Courts Rulings


First. The key issue in this case is whether or not Rosarios signature
on the document of consent had been forged. For, if the signature
were genuine, the fact that she gave her consent to her husbands
sale of the conjugal land would render the other issues merely
academic.
The CA found that Rosarios signature had been forged. The CA
observed a marked difference between her signature on the
affidavit of consent[15] and her specimen signatures.[16] The CA
gave no weight to Atty. Plagatas testimony that he saw Rosario
sign the document in Manila on September 15, 1988 since this
clashed with his declaration in the jurat that Rosario signed the
affidavit in Zamboanga City on January 11, 1989.
The Court agrees with the CAs observation that Rosarios signature
strokes on the affidavit appears heavy, deliberate, and forced. Her
specimen signatures, on the other hand, are consistently of a
lighter stroke and more fluid. The way the letters R and s were
written is also remarkably different. The variance is obvious even
to the untrained eye.
Significantly, Rosarios specimen signatures were made at about
the time that she signed the supposed affidavit of consent. They
were, therefore, reliable standards for comparison. The Fuentes
spouses presented no evidence that Rosario suffered from any
illness or disease that accounted for the variance in her signature
when she signed the affidavit of consent. Notably, Rosario had
been living separately from Tarciano for 30 years since 1958. And
she resided so far away in Manila. It would have been quite
tempting for Tarciano to just forge her signature and avoid the risk
that she would not give her consent to the sale or demand a stiff
price for it.
What is more, Atty. Plagata admittedly falsified the jurat of the
affidavit of consent. That jurat declared that Rosario swore to the
document and signed it in Zamboanga City on January 11, 1989
when, as Atty. Plagata testified, she supposedly signed it about
four months earlier at her residence in Paco, Manila on September
15, 1988. While a defective notarization will merely strip the
document of its public character and reduce it to a private

instrument, that falsified jurat, taken together with the marks of


forgery in the signature, dooms such document as proof of
Rosarios consent to the sale of the land. That the Fuentes spouses
honestly relied on the notarized affidavit as proof of Rosarios
consent does not matter. The sale is still void without an authentic
consent.
Second. Contrary to the ruling of the Court of Appeals, the law that
applies to this case is the Family Code, not the Civil Code. Although
Tarciano and Rosario got married in 1950, Tarciano sold the
conjugal property to the Fuentes spouses on January 11, 1989, a
few months after the Family Code took effect on August 3, 1988.
When Tarciano married Rosario, the Civil Code put in place the
system of conjugal partnership of gains on their property relations.
While its Article 165 made Tarciano the sole administrator of the
conjugal partnership, Article 166[17] prohibited him from selling
commonly owned real property without his wifes consent. Still, if he
sold the same without his wifes consent, the sale is not void but
merely voidable. Article 173 gave Rosario the right to have the sale
annulled during the marriage within ten years from the date of the
sale. Failing in that, she or her heirs may demand, after dissolution
of the marriage, only the value of the property that Tarciano
fraudulently sold. Thus:
Art. 173. The wife may, during the marriage, and within ten years
from the transaction questioned, ask the courts for the annulment
of any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the
conjugal partnership property. Should the wife fail to exercise this
right, she or her heirs, after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the
husband.
But, as already stated, the Family Code took effect on August 3,
1988. Its Chapter 4 on Conjugal Partnership of Gains expressly
superseded Title VI, Book I of the Civil Code on Property Relations
Between Husband and Wife.[18] Further, the Family Code
provisions were also made to apply to already existing conjugal
partnerships without prejudice to vested rights.[19] Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to


conjugal partnerships of gains already established between
spouses before the effectivity of this Code, without prejudice to
vested rights already acquired in accordance with the Civil Code or
other laws, as provided in Article 256. (n)
Consequently, when Tarciano sold the conjugal lot to the Fuentes
spouses on January 11, 1989, the law that governed the disposal of
that lot was already the Family Code.
In contrast to Article 173 of the Civil Code, Article 124 of the Family
Code does not provide a period within which the wife who gave no
consent may assail her husbands sale of the real property. It simply
provides that without the other spouses written consent or a court
order allowing the sale, the same would be void. Article 124 thus
provides:
Art. 124. x x x In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the
conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of
disposition or encumbrance which must have the authority of the
court or the written consent of the other spouse. In the absence of
such authority or consent, the disposition or encumbrance shall be
void. x x x
Under the provisions of the Civil Code governing contracts, a void
or inexistent contract has no force and effect from the very
beginning. And this rule applies to contracts that are declared void
by positive provision of law,[20] as in the case of a sale of conjugal
property without the other spouses written consent. A void
contract is equivalent to nothing and is absolutely wanting in civil
effects. It cannot be validated either by ratification or prescription.
[21]
But, although a void contract has no legal effects even if no action
is taken to set it aside, when any of its terms have been
performed, an action to declare its inexistence is necessary to
allow restitution of what has been given under it.[22] This action,
according to Article 1410 of the Civil Code does not prescribe.
Thus:
Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.

Here, the Rocas filed an action against the Fuentes spouses in


1997 for annulment of sale and reconveyance of the real property
that Tarciano sold without their mothers (his wifes) written consent.
The passage of time did not erode the right to bring such an action.
Besides, even assuming that it is the Civil Code that applies to the
transaction as the CA held, Article 173 provides that the wife may
bring an action for annulment of sale on the ground of lack of
spousal consent during the marriage within 10 years from the
transaction. Consequently, the action that the Rocas, her heirs,
brought in 1997 fell within 10 years of the January 11, 1989 sale. It
did not yet prescribe.
The Fuentes spouses of course argue that the RTC nullified the sale
to them based on fraud and that, therefore, the applicable
prescriptive period should be that which applies to fraudulent
transactions, namely, four years from its discovery. Since notice of
the sale may be deemed given to the Rocas when it was registered
with the Registry of Deeds in 1989, their right of action already
prescribed in 1993.
But, if there had been a victim of fraud in this case, it would be the
Fuentes spouses in that they appeared to have agreed to buy the
property upon an honest belief that Rosarios written consent to the
sale was genuine. They had four years then from the time they
learned that her signature had been forged within which to file an
action to annul the sale and get back their money plus damages.
They never exercised the right.
If, on the other hand, Rosario had agreed to sign the document of
consent upon a false representation that the property would go to
their children, not to strangers, and it turned out that this was not
the case, then she would have four years from the time she
discovered the fraud within which to file an action to declare the
sale void. But that is not the case here. Rosario was not a victim of
fraud or misrepresentation. Her consent was simply not obtained at
all. She lost nothing since the sale without her written consent was
void. Ultimately, the Rocas ground for annulment is not forgery but
the lack of written consent of their mother to the sale. The forgery
is merely evidence of lack of consent.

Third. The Fuentes spouses point out that it was to Rosario, whose
consent was not obtained, that the law gave the right to bring an
action to declare void her husbands sale of conjugal land. But here,
Rosario died in 1990, the year after the sale. Does this mean that
the right to have the sale declared void is forever lost?
The answer is no. As stated above, that sale was void from the
beginning. Consequently, the land remained the property of
Tarciano and Rosario despite that sale. When the two died, they
passed on the ownership of the property to their heirs, namely, the
Rocas.[23] As lawful owners, the Rocas had the right, under Article
429 of the Civil Code, to exclude any person from its enjoyment
and disposal.
In fairness to the Fuentes spouses, however, they should be
entitled, among other things, to recover from Tarcianos heirs, the
Rocas, the P200,000.00 that they paid him, with legal interest until
fully paid, chargeable against his estate.
Further, the Fuentes spouses appear to have acted in good faith in
entering the land and building improvements on it. Atty. Plagata,
whom the parties mutually entrusted with closing and
documenting the transaction, represented that he got Rosarios
signature on the affidavit of consent. The Fuentes spouses had no
reason to believe that the lawyer had violated his commission and
his oath. They had no way of knowing that Rosario did not come to
Zamboanga to give her consent. There is no evidence that they
had a premonition that the requirement of consent presented some
difficulty. Indeed, they willingly made a 30 percent down payment
on the selling price months earlier on the assurance that it was
forthcoming.
Further, the notarized document appears to have comforted the
Fuentes spouses that everything was already in order when
Tarciano executed a deed of absolute sale in their favor on January
11, 1989. In fact, they paid the balance due him. And, acting on
the documents submitted to it, the Register of Deeds of
Zamboanga City issued a new title in the names of the Fuentes
spouses. It was only after all these had passed that the spouses
entered the property and built on it. He is deemed a possessor in
good faith, said Article 526 of the Civil Code, who is not aware that
there exists in his title or mode of acquisition any flaw which
invalidates it.

As possessor in good faith, the Fuentes spouses were under no


obligation to pay for their stay on the property prior to its legal
interruption by a final judgment against them.[24] What is more,
they are entitled under Article 448 to indemnity for the
improvements they introduced into the property with a right of
retention until the reimbursement is made. Thus:
Art. 448. The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate as
his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the building
or trees after proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the court shall fix
the terms thereof. (361a)
The Rocas shall of course have the option, pursuant to Article 546
of the Civil Code,[25] of indemnifying the Fuentes spouses for the
costs of the improvements or paying the increase in value which
the property may have acquired by reason of such improvements.
WHEREFORE, the Court DENIES the petition and AFFIRMS WITH
MODIFICATION the decision of the Court of Appeals in CA-G.R. CV
00531 dated February 27, 2007 as follows:
1. The deed of sale dated January 11, 1989 that Tarciano T. Roca
executed in favor of Manuel O. Fuentes, married to Leticia L.
Fuentes, as well as the Transfer Certificate of Title T-90,981 that
the Register of Deeds of Zamboanga City issued in the names of
the latter spouses pursuant to that deed of sale are DECLARED
void;
2. The Register of Deeds of Zamboanga City is DIRECTED to
reinstate Transfer Certificate of Title 3533 in the name of Tarciano
T. Roca, married to Rosario Gabriel;
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are ORDERED to pay petitioner

spouses Manuel and Leticia Fuentes the P200,000.00 that the latter
paid Tarciano T. Roca, with legal interest from January 11, 1989
until fully paid, chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are further ORDERED, at their option,
to indemnify petitioner spouses Manuel and Leticia Fuentes with
their expenses for introducing useful improvements on the subject
land or pay the increase in value which it may have acquired by
reason of those improvements, with the spouses entitled to the
right of retention of the land until the indemnity is made; and
5. The RTC of Zamboanga City from which this case originated is
DIRECTED to receive evidence and determine the amount of
indemnity to which petitioner spouses Manuel and Leticia Fuentes
are entitled.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 188289

August 20, 2014

DAVID A. NOVERAS, Petitioner,


vs.
LETICIA T. NOVERAS, Respondent.
DECISION
PEREZ, J.:
Before the Court is a petition for review assailing the 9 May 2008
Decision1 of the Court of Appeals in CA-G.R .. CV No. 88686, which
affirmed in part the 8 December 2006 Decision2 of the Regional
Trial Court (RTC) of Baler, Aurora, Branch 96.
The factual antecedents are as follow:

David A. Noveras (David) and Leticia T. Noveras (Leticia) were


married on 3 December 1988 in Quezon City, Philippines. They
resided in California, United States of America (USA) where they
eventually acquired American citizenship. They then begot two
children, namely: Jerome T.
Noveras, who was born on 4 November 1990 and JenaT. Noveras,
born on 2 May 1993. David was engaged in courier service
business while Leticia worked as a nurse in San Francisco,
California.
During the marriage, they acquired the following properties in the
Philippines and in the USA:
PHILIPPINES
PROPERTY
FAIR MARKET VALUE
House and Lot with an area of 150 sq. m. located at 1085 Norma
Street, Sampaloc, Manila (Sampaloc property)
P1,693,125.00
Agricultural land with an area of 20,742 sq. m. located at Laboy,
Dipaculao, Aurora
P400,000.00
A parcel of land with an area of 2.5 hectares located at Maria
Aurora, Aurora
P490,000.00
A parcel of land with an area of 175 sq.m. located at Sabang Baler,
Aurora
P175,000.00
3
3-has. coconut plantation in San Joaquin Maria Aurora, Aurora
P750,000.00
USA
PROPERTY
FAIR MARKET VALUE
House and Lot at 1155 Hanover Street, Daly City, California
$550,000.00
(unpaid debt of $285,000.00)
Furniture and furnishings
$3,000

Jewelries (ring and watch)


$9,000
2000 Nissan Frontier 4x4 pickup truck
$13,770.00
Bank of America Checking Account
$8,000
Bank of America Cash Deposit
Life Insurance (Cash Value)
$100,000.00
Retirement, pension, profit-sharing, annuities
$56,228.00
4
The Sampaloc property used to beowned by Davids parents. The
parties herein secured a loan from a bank and mortgaged the
property. When said property was about to be foreclosed, the
couple paid a total of P1.5 Million for the redemption of the same.
Due to business reverses, David left the USA and returned to the
Philippines in 2001. In December 2002,Leticia executed a Special
Power of Attorney (SPA) authorizing David to sell the Sampaloc
property for P2.2 Million. According to Leticia, sometime in
September 2003, David abandoned his family and lived with
Estrellita Martinez in Aurora province. Leticia claimed that David
agreed toand executed a Joint Affidavit with Leticia in the presence
of Davids father, Atty. Isaias Noveras, on 3 December 2003 stating
that: 1) the P1.1Million proceeds from the sale of the Sampaloc
property shall be paid to and collected by Leticia; 2) that David
shall return and pay to Leticia P750,000.00, which is equivalent to
half of the amount of the redemption price of the Sampaloc
property; and 3) that David shall renounce and forfeit all his rights
and interest in the conjugal and real properties situated in the
Philippines.5 David was able to collect P1,790,000.00 from the sale
of the Sampaloc property, leaving an unpaid balance of
P410,000.00.
Upon learning that David had an extra-marital affair, Leticia filed a
petition for divorce with the Superior Court of California, County of
San Mateo, USA. The California court granted the divorce on 24
June 2005 and judgment was duly entered on 29 June 2005.6 The

California court granted to Leticia the custody of her two children,


as well as all the couples properties in the USA.7
On 8 August 2005, Leticia filed a petition for Judicial Separation of
Conjugal Property before the RTC of Baler, Aurora. She relied on the
3 December 2003 Joint Affidavit and Davids failure to comply with
his obligation under the same. She prayed for: 1) the power to
administer all conjugal properties in the Philippines; 2) David and
his partner to cease and desist from selling the subject conjugal
properties; 3) the declaration that all conjugal properties be
forfeited in favor of her children; 4) David to remit half of the
purchase price as share of Leticia from the sale of the Sampaloc
property; and 5) the payment ofP50,000.00 and P100,000.00
litigation expenses.8
In his Answer, David stated that a judgment for the dissolution of
their marriage was entered on 29 June 2005 by the Superior Court
of California, County of San Mateo. He demanded that the conjugal
partnership properties, which also include the USA properties, be
liquidated and that all expenses of liquidation, including attorneys
fees of both parties be charged against the conjugal partnership.9
The RTC of Baler, Aurora simplified the issues as follow:
1. Whether or not respondent David A. Noveras committed acts of
abandonment and marital infidelity which can result intothe
forfeiture of the parties properties in favor of the petitioner and
their two (2) children.
2. Whether or not the Court has jurisdiction over the properties in
California, U.S.A. and the same can be included in the judicial
separation prayed for.
3. Whether or not the "Joint Affidavit" x x x executed by petitioner
Leticia T. Noveras and respondent David A. Noveras will amount to
a waiver or forfeiture of the latters property rights over their
conjugal properties.
4. Whether or not Leticia T. Noveras isentitled to reimbursement of
onehalf of the P2.2 [M]illion sales proceeds of their property in
Sampaloc, Manila and one-half of the P1.5 [M]illion used to redeem
the property of Atty. Isaias Noveras, including interests and
charges.

5. How the absolute community properties should be distributed.


6. Whether or not the attorneys feesand litigation expenses of the
parties were chargeable against their conjugal properties.
Corollary to the aboveis the issue of:
Whether or not the two common children of the parties are entitled
to support and presumptive legitimes.10
On 8 December 2006, the RTC rendered judgment as follows:
1. The absolute community of property of the parties is hereby
declared DISSOLVED;
2. The net assets of the absolute community of property ofthe
parties in the Philippines are hereby ordered to be awarded to
respondent David A. Noveras only, with the properties in the United
States of America remaining in the sole ownership of petitioner
Leticia Noveras a.k.a. Leticia Tacbiana pursuant to the divorce
decree issuedby the Superior Court of California, County of San
Mateo, United States of America, dissolving the marriage of the
parties as of June 24, 2005. The titles presently covering said
properties shall be cancelled and new titles be issued in the name
of the party to whom said properties are awarded;
3. One-half of the properties awarded to respondent David A.
Noveras in the preceding paragraph are hereby given to Jerome
and Jena, his two minor children with petitioner LeticiaNoveras
a.k.a. Leticia Tacbiana as their presumptive legitimes and said
legitimes must be annotated on the titles covering the said
properties.Their share in the income from these properties shall be
remitted to them annually by the respondent within the first half of
January of each year, starting January 2008;
4. One-half of the properties in the United States of America
awarded to petitioner Leticia Noveras a.k.a. Leticia Tacbiana in
paragraph 2 are hereby given to Jerome and Jena, her two minor
children with respondent David A. Noveras as their presumptive
legitimes and said legitimes must be annotated on the
titles/documents covering the said properties. Their share in the
income from these properties, if any, shall be remitted to them
annually by the petitioner within the first half of January of each
year, starting January 2008;

5. For the support of their two (2) minor children, Jerome and Jena,
respondent David A. Noveras shall give them US$100.00 as
monthly allowance in addition to their income from their
presumptive legitimes, while petitioner Leticia Tacbiana shall take
care of their food, clothing, education and other needs while they
are in her custody in the USA. The monthly allowance due from the
respondent shall be increased in the future as the needs of the
children require and his financial capacity can afford;
6. Of the unpaid amount of P410,000.00 on the purchase price of
the Sampaloc property, the Paringit Spouses are hereby ordered to
pay P5,000.00 to respondent David A. Noveras and P405,000.00 to
the two children. The share of the respondent may be paid to him
directly but the share of the two children shall be deposited with a
local bank in Baler, Aurora, in a joint account tobe taken out in
their names, withdrawal from which shall only be made by them or
by their representative duly authorized with a Special Power of
Attorney. Such payment/deposit shall be made withinthe period of
thirty (30) days after receipt of a copy of this Decision, with the
passbook of the joint account to be submitted to the custody of the
Clerk of Court of this Court within the same period. Said passbook
can be withdrawn from the Clerk of Court only by the children or
their attorney-in-fact; and
7. The litigation expenses and attorneys fees incurred by the
parties shall be shouldered by them individually.11
The trial court recognized that since the parties are US citizens, the
laws that cover their legal and personalstatus are those of the USA.
With respect to their marriage, the parties are divorced by virtue of
the decree of dissolution of their marriage issued by the Superior
Court of California, County of San Mateo on 24June 2005. Under
their law, the parties marriage had already been dissolved. Thus,
the trial court considered the petition filed by Leticia as one for
liquidation of the absolute community of property regime with the
determination of the legitimes, support and custody of the
children, instead of an action for judicial separation of conjugal
property.
With respect to their property relations, the trial court first
classified their property regime as absolute community of property
because they did not execute any marriage settlement before the
solemnization of their marriage pursuant to Article 75 of the Family

Code. Then, the trial court ruled that in accordance with the
doctrine of processual presumption, Philippine law should apply
because the court cannot take judicial notice of the US law since
the parties did not submit any proof of their national law. The trial
court held that as the instant petition does not fall under the
provisions of the law for the grant of judicial separation of
properties, the absolute community properties cannot beforfeited
in favor of Leticia and her children. Moreover, the trial court
observed that Leticia failed to prove abandonment and infidelity
with preponderant evidence.
The trial court however ruled that Leticia is not entitled to the
reimbursements she is praying for considering that she already
acquired all of the properties in the USA. Relying still on the
principle of equity, the Court also adjudicated the Philippine
properties to David, subject to the payment of the childrens
presumptive legitimes. The trial court held that under Article 89 of
the Family Code, the waiver or renunciation made by David of his
property rights in the Joint Affidavit is void.
On appeal, the Court of Appeals modified the trial courts Decision
by directing the equal division of the Philippine properties between
the spouses. Moreover with respect to the common childrens
presumptive legitime, the appellate court ordered both spouses to
each pay their children the amount of P520,000.00, thus:
WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4
and 6 of the assailedDecision dated December 8, 2006 of Branch
96, RTC of Baler, Aurora Province, in Civil Case No. 828 are hereby
MODIFIED to read as follows:
2. The net assets of the absolute community of property of the
parties in the Philippines are hereby divided equally between
petitioner Leticia Noveras a.k.a. Leticia Tacbiana (sic) and
respondent David A. Noveras;
xxx
4. One-half of the properties awarded to petitioner Leticia Tacbiana
(sic) in paragraph 2 shall pertain to her minor children, Jerome and
Jena, as their presumptive legitimes which shall be annotated on
the titles/documents covering the said properties. Their share in
the income therefrom, if any, shall be remitted to them by
petitioner annually within the first half of January, starting 2008;

xxx
6. Respondent David A. Noveras and petitioner Leticia Tacbiana
(sic) are each ordered to pay the amount ofP520,000.00 to their
two children, Jerome and Jena, as their presumptive legitimes from
the sale of the Sampaloc property inclusive of the receivables
therefrom, which shall be deposited to a local bank of Baler,
Aurora, under a joint account in the latters names. The
payment/deposit shall be made within a period of thirty (30) days
from receipt ofa copy of this Decision and the corresponding
passbook entrusted to the custody ofthe Clerk of Court a quowithin
the same period, withdrawable only by the children or their
attorney-in-fact.
A number 8 is hereby added, which shall read as follows:
8. Respondent David A. Noveras is hereby ordered to pay petitioner
Leticia Tacbiana (sic) the amount of P1,040,000.00 representing
her share in the proceeds from the sale of the Sampaloc property.

California in June 2005 wherein the court awarded all the


properties in the USA to Leticia. With respect to their properties in
the Philippines, Leticiafiled a petition for judicial separation
ofconjugal properties.
At the outset, the trial court erred in recognizing the divorce decree
which severed the bond of marriage between the parties. In Corpuz
v. Sto. Tomas,13 we stated that:
The starting point in any recognition of a foreign divorce judgment
is the acknowledgment that our courts do not take judicial notice of
foreign judgments and laws. Justice Herrera explained that, as a
rule, "no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country." This means
that the foreign judgment and its authenticity must beproven as
facts under our rules on evidence, together with the aliens
applicable national law to show the effect of the judgment on the
alien himself or herself. The recognition may be made in an action
instituted specifically for the purpose or in another action where a
party invokes the foreign decree as an integral aspect of his claim
or defense.14

The last paragraph shall read as follows:


Send a copy of this Decision to the local civil registry of Baler,
Aurora; the local civil registry of Quezon City; the Civil
RegistrarGeneral, National Statistics Office, Vibal Building, Times
Street corner EDSA, Quezon City; the Office of the Registry of
Deeds for the Province of Aurora; and to the children, Jerome
Noveras and Jena Noveras.
The rest of the Decision is AFFIRMED.12
In the present petition, David insists that the Court of Appeals
should have recognized the California Judgment which awarded the
Philippine properties to him because said judgment was part of the
pleading presented and offered in evidence before the trial court.
David argues that allowing Leticia to share in the Philippine
properties is tantamount to unjust enrichment in favor of Leticia
considering that the latter was already granted all US properties by
the California court.
In summary and review, the basic facts are: David and Leticia are
US citizens who own properties in the USA and in the Philippines.
Leticia obtained a decree of divorce from the Superior Court of

The requirements of presenting the foreign divorce decree and the


national law of the foreigner must comply with our Rules of
Evidence. Specifically, for Philippine courts to recognize a foreign
judgment relating to the status of a marriage, a copy of the foreign
judgment may be admitted in evidence and proven as a fact under
Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b)
of the Rules of Court.15
Under Section 24 of Rule 132, the record of public documents of a
sovereign authority or tribunal may be proved by: (1) an official
publication thereof or (2) a copy attested by the officer having the
legal custody thereof. Such official publication or copy must
beaccompanied, if the record is not kept in the Philippines, with a
certificate that the attesting officer has the legal custody thereof.
The certificate may be issued by any of the authorized Philippine
embassy or consular officials stationed in the foreign country in
which the record is kept, and authenticated by the seal of his
office. The attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof, asthe case
may be, and must be under the official seal of the attesting officer.

Section 25 of the same Rule states that whenever a copy of a


document or record is attested for the purpose of evidence, the
attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may be.
The attestation must be under the official seal of the attesting
officer, if there be any, or if hebe the clerk of a court having a seal,
under the seal of such court.
Based on the records, only the divorce decree was presented in
evidence. The required certificates to prove its authenticity, as well
as the pertinent California law on divorce were not presented.
It may be noted that in Bayot v. Court of Appeals,16 we relaxed the
requirement on certification where we held that "[petitioner
therein] was clearly an American citizenwhen she secured the
divorce and that divorce is recognized and allowed in any of the
States of the Union, the presentation of a copy of foreign divorce
decree duly authenticatedby the foreign court issuing said decree
is, as here, sufficient." In this case however, it appears that there is
no seal from the office where the divorce decree was obtained.
Even if we apply the doctrine of processual presumption17 as the
lower courts did with respect to the property regime of the parties,
the recognition of divorce is entirely a different matter because, to
begin with, divorce is not recognized between Filipino citizens in
the Philippines. Absent a valid recognition of the divorce decree, it
follows that the parties are still legally married in the Philippines.
The trial court thus erred in proceeding directly to liquidation.
As a general rule, any modification in the marriage settlements
must be made before the celebration of marriage. An exception to
this rule is allowed provided that the modification isjudicially
approved and refers only to the instances provided in Articles
66,67, 128, 135 and 136 of the Family Code.18
Leticia anchored the filing of the instant petition for judicial
separation of property on paragraphs 4 and 6 of Article 135 of the
Family Code, to wit:
Art. 135. Any of the following shall be considered sufficient cause
for judicial separation of property:
(1) That the spouse of the petitioner has been sentenced to a
penalty which carries with it civil interdiction;

(2) That the spouse of the petitioner has been judicially declared
an absentee;
(3) That loss of parental authority ofthe spouse of petitioner has
been decreed by the court;
(4) That the spouse of the petitioner has abandoned the latter or
failed to comply with his or her obligations to the family as
provided for in Article 101;
(5) That the spouse granted the power of administration in the
marriage settlements has abused that power; and
(6) That at the time of the petition, the spouses have been
separated in fact for at least one year and reconciliation is highly
improbable.
In the cases provided for in Numbers (1), (2), and (3), the
presentation of the final judgment against the guiltyor absent
spouse shall be enough basis for the grant of the decree ofjudicial
separation of property. (Emphasis supplied).
The trial court had categorically ruled that there was no
abandonment in this case to necessitate judicial separation of
properties under paragraph 4 of Article 135 of the Family Code.
The trial court ratiocinated:
Moreover, abandonment, under Article 101 of the Family Code
quoted above, must be for a valid cause and the spouse is deemed
to have abandoned the other when he/she has left the conjugal
dwelling without intention of returning. The intention of not
returning is prima facie presumed if the allegedly [sic] abandoning
spouse failed to give any information as to his or her whereabouts
within the period of three months from such abandonment.
In the instant case, the petitioner knows that the respondent has
returned to and stayed at his hometown in Maria Aurora,
Philippines, as she even went several times to visit him there after
the alleged abandonment. Also, the respondent has been going
back to the USA to visit her and their children until the relations
between them worsened. The last visit of said respondent was in
October 2004 when he and the petitioner discussed the filing by
the latter of a petition for dissolution of marriage with the

California court. Such turn for the worse of their relationship and
the filing of the saidpetition can also be considered as valid causes
for the respondent to stay in the Philippines.19

Under Article 102 of the same Code, liquidation follows the


dissolution of the absolute community regime and the following
procedure should apply:

Separation in fact for one year as a ground to grant a judicial


separation of property was not tackled in the trial courts decision
because, the trial court erroneously treated the petition as
liquidation of the absolute community of properties.

Art. 102. Upon dissolution of the absolute community regime, the


following procedure shall apply:

The records of this case are replete with evidence that Leticia and
David had indeed separated for more than a year and that
reconciliation is highly improbable. First, while actual abandonment
had not been proven, it is undisputed that the spouses had been
living separately since 2003 when David decided to go back to the
Philippines to set up his own business. Second, Leticia heard from
her friends that David has been cohabiting with Estrellita Martinez,
who represented herself as Estrellita Noveras. Editha Apolonio, who
worked in the hospital where David was once confined, testified
that she saw the name of Estrellita listed as the wife of David in the
Consent for Operation form.20 Third and more significantly, they
had filed for divorce and it was granted by the California court in
June 2005.
Having established that Leticia and David had actually separated
for at least one year, the petition for judicial separation of absolute
community of property should be granted.
The grant of the judicial separation of the absolute community
property automatically dissolves the absolute community regime,
as stated in the 4th paragraph of Article 99 ofthe Family Code,
thus:
Art. 99. The absolute community terminates:
(1) Upon the death of either spouse;
(2) When there is a decree of legal separation;
(3) When the marriage is annulled or declared void; or
(4) In case of judicial separation of property during the marriage
under Articles 134 to 138. (Emphasis supplied).

(1) An inventory shall be prepared, listing separately all the


properties of the absolute community and the exclusive properties
of each spouse.
(2) The debts and obligations of the absolute community shall be
paid out of its assets. In case of insufficiency of said assets, the
spouses shall be solidarily liable for the unpaid balance with their
separate properties in accordance with the provisions of the
second paragraph of Article 94.
(3) Whatever remains of the exclusive properties of the spouses
shall thereafter be delivered to each of them.
(4) The net remainder of the properties of the absolute community
shall constitute its net assets, which shall be divided equally
between husband and wife, unless a different proportion or division
was agreed upon in the marriage settlements, or unless there has
been a voluntary waiver of such share provided in this Code. For
purposes of computing the net profits subject to forfeiture in
accordance with Articles 43, No. (2) and 63, No. (2),the said profits
shall be the increase in value between the market value of the
community property at the time of the celebration of the marriage
and the market value at the time of its dissolution.
(5) The presumptive legitimes of the common children shall be
delivered upon partition, in accordance with Article 51.
(6) Unless otherwise agreed upon by the parties, in the partition of
the properties, the conjugal dwelling and the lot on which it is
situated shall be adjudicated tothe spouse with whom the majority
of the common children choose to remain. Children below the age
of seven years are deemed to have chosen the mother, unless the
court has decided otherwise. In case there is no such majority, the
court shall decide, taking into consideration the best interests of
said children. At the risk of being repetitious, we will not remand
the case to the trial court. Instead, we shall adopt the

modifications made by the Court of Appeals on the trial courts


Decision with respect to liquidation.
We agree with the appellate court that the Philippine courts did not
acquire jurisdiction over the California properties of David and
Leticia. Indeed, Article 16 of the Civil Code clearly states that real
property as well as personal property is subject to the law of the
country where it is situated. Thus, liquidation shall only be limited
to the Philippine properties.
We affirm the modification madeby the Court of Appeals with
respect to the share of the spouses in the absolutecommunity
properties in the Philippines, as well as the payment of their
childrens presumptive legitimes, which the appellate court
explained in this wise:
Leticia and David shall likewise have an equal share in the
proceeds of the Sampaloc property.1wphi1 While both claimed to
have contributed to the redemption of the Noveras property,
absent a clear showing where their contributions came from, the
same is presumed to have come from the community property.
Thus, Leticia is not entitled to reimbursement of half of the
redemption money.
David's allegation that he used part of the proceeds from the sale
of the Sampaloc property for the benefit of the absolute
community cannot be given full credence. Only the amount of
P120,000.00 incurred in going to and from the U.S.A. may be
charged thereto. Election expenses in the amount of P300,000.00

when he ran as municipal councilor cannot be allowed in the


absence of receipts or at least the Statement of Contributions and
Expenditures required under Section 14 of Republic Act No. 7166
duly received by the Commission on Elections. Likewise, expenses
incurred to settle the criminal case of his personal driver is not
deductible as the same had not benefited the family. In sum,
Leticia and David shall share equally in the proceeds of the sale net
of the amount of P120,000.00 or in the respective amounts of
P1,040,000.00.
xxxx
Under the first paragraph of Article 888 of the Civil Code, "(t)he
legitime of legitimate children and descendants consists of one-half
or the hereditary estate of the father and of the mother." The
children arc therefore entitled to half of the share of each spouse in
the net assets of the absolute community, which shall be
annotated on the titles/documents covering the same, as well as to
their respective shares in the net proceeds from the sale of the
Sampaloc property including the receivables from Sps. Paringit in
the amount of P410,000.00. Consequently, David and Leticia
should each pay them the amount of P520,000.00 as their
presumptive legitimes therefrom.21
WHEREFORE, the petition is DENIED. The assailed Decision of the
Court of Appeals in CA G.R. CV No. 88686 is AFFIRMED.
SO ORDERED