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SECOND DIVISION ELVIRA FILED A NOTICE OF LIS PENDENS, WHICH WAS ANNOTATING THE AGREEMENT AND THE NOTICE

A NOTICE OF LIS PENDENS, WHICH WAS ANNOTATING THE AGREEMENT AND THE NOTICE OF LIS
MARIO SIOCHI, G.R. No. 169900 THEN ANNOTATED ON TCT NO. 5357. PENDENS ON TCT NO. M-10508.
Petitioner,
ON 31 AUGUST 1993, WHILE THE LEGAL SEPARATION ON 26 OCTOBER 1994, ALFREDO, BY VIRTUE OF A
CASE WAS STILL PENDING, ALFREDO AND SPECIAL POWER OF ATTORNEY[9] EXECUTED IN HIS
- versus - MARIO SIOCHI (MARIO) ENTERED INTO AN AGREEMENT FAVOR BY WINIFRED, SOLD THE PROPERTY TO INTER-
[5]
TO BUY AND SELL (AGREEMENT) INVOLVING THE DIMENSIONAL REALTY, INC. (IDRI) FOR P18
PROPERTY FOR THE PRICE OF P18 MILLION. AMONG THE MILLION.[10] IDRI PAID ALFREDO P18 MILLION,
ALFREDO GOZON, STIPULATIONS IN THE AGREEMENT WERE THAT REPRESENTING FULL PAYMENT FOR THE
WINIFRED GOZON, GIL TABIJE, ALFREDO WOULD: (1) SECURE AN AFFIDAVIT FROM PROPERTY.[11] SUBSEQUENTLY, THE REGISTER OF DEEDS
INTER-DIMENSIONAL REALTY, ELVIRA THAT THE PROPERTY IS ALFREDOS EXCLUSIVE OF MALABON CANCELLED TCT NO. M-
INC., and ELVIRA GOZON, PROPERTY AND TO ANNOTATE THE AGREEMENT AT THE 10508 AND ISSUED TCT NO. M-10976[12] TO IDRI.
Respondents. BACK OF TCT NO. 5357; (2) SECURE THE APPROVAL OF
THE CAVITE RTC TO EXCLUDE THE PROPERTY FROM MARIO THEN FILED WITH THE MALABON REGIONAL
x - - - - - - - - - - - - - - - - - - - - -x THE LEGAL SEPARATION CASE; AND (3) SECURE THE TRIAL COURT (MALABON RTC) A COMPLAINT FOR
REMOVAL OF THE NOTICE OF LIS PENDENS PERTAINING SPECIFIC PERFORMANCE AND DAMAGES, ANNULMENT
INTER-DIMENSIONAL REALTY, G.R. NO. 169977 TO THE SAID CASE AND ANNOTATED ON TCT NO. 5357. OF DONATION AND SALE, WITH PRELIMINARY
INC., Present: HOWEVER, DESPITE REPEATED DEMANDS FROM MARIO, MANDATORY AND PROHIBITORY INJUNCTION AND/OR
Petitioner, ALFREDO FAILED TO COMPLY WITH THESE TEMPORARY RESTRAINING ORDER.
CARPIO, J., STIPULATIONS. AFTER PAYING THEP5 MILLION EARNEST
CHAIRPERSON, MONEY AS PARTIAL PAYMENT OF THE PURCHASE ON 3 APRIL 2001, THE MALABON RTC RENDERED A
BRION, PRICE, MARIO TOOK POSSESSION OF THE PROPERTY IN DECISION,[13] THE DISPOSITIVE PORTION OF WHICH
- versus- SEPTEMBER 1993. ON 6 SEPTEMBER 1993, THE READS:
DEL CASTILLO,
ABAD, AND AGREEMENT WAS ANNOTATED ON TCT NO. 5357.
PEREZ, JJ. Meanwhile, on 29 June 1994, the Cavite RTC rendered a WHEREFORE, PREMISES
MARIO SIOCHI, ELVIRA GOZON, decision[6] in the legal separation case, the dispositive portion of CONSIDERED, JUDGMENT IS HEREBY
ALFREDO GOZON, AND Promulgated: which reads: RENDERED AS FOLLOWS:
WINIFRED GOZON, MARCH 18, 2010 01. On the preliminary mandatory and
Respondents. WHEREFORE, judgment is hereby rendered prohibitory injunction:
decreeing the legal separation between
petitioner and respondent. Accordingly, 1.1 THE SAME IS HEREBY MADE PERMANENT BY:
petitioner Elvira Robles Gozon is entitled to 1.1.1 ENJOINING DEFENDANTS ALFREDO
live separately from respondent GOZON, WINIFRED GOZON, INTER-
Alfredo Gozon without dissolution of their DIMENSIONAL REALTY, INC. AND GIL TABIJE,
X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - X marriage bond. The conjugal partnership of THEIR AGENTS, REPRESENTATIVES AND ALL
gains of the spouses is hereby declared PERSONS ACTING IN THEIR BEHALF FROM ANY
RESOLUTION DISSOLVED and LIQUIDATED. Being the ATTEMPT OF COMMISSION OR CONTINUANCE
offending spouse, respondent is deprived of OF THEIR WRONGFUL ACTS OF FURTHER
CARPIO, J.: his share in the net profits and the same is ALIENATING OR DISPOSING OF THE SUBJECT
awarded to their child Winifred PROPERTY;
R. Gozon whose custody is awarded to 1.1.2. ENJOINING DEFENDANT INTER-
This is a consolidation of two separate petitions for petitioner. DIMENSIONAL REALTY, INC. FROM ENTERING
review,[1] assailing the 7 July 2005 Decision[2] and the 30 September AND FENCING THE PROPERTY;
2005 Resolution[3] of the Court of Appeals in CA-G.R. CV No. FURTHERMORE, SAID PARTIES ARE REQUIRED TO 1.1.3. ENJOINING DEFENDANTS ALFREDO
74447. MUTUALLY SUPPORT THEIR CHILD WINIFRED R. GOZON GOZON, WINIFRED GOZON, INTER-
AS HER NEEDS ARISES. DIMENSIONAL REALTY, INC. TO RESPECT
THIS CASE INVOLVES A 30,000 SQ.M. PARCEL OF LAND PLAINTIFFS POSSESSION OF THE PROPERTY.
(PROPERTY) COVERED BY TCT NO. 5357.[4] THE PROPERTY SO ORDERED.[7] 02. THE AGREEMENT TO BUY AND
IS SITUATED IN MALABON, METRO MANILA AND IS SELL DATED 31 AUGUST 1993,
REGISTERED IN THE NAME OF As regards the property, the Cavite RTC held that it is deemed BETWEEN PLAINTIFF AND
ALFREDO GOZON (ALFREDO), MARRIED TO conjugal property. DEFENDANT ALFREDO GOZON IS
ELVIRA GOZON (ELVIRA). HEREBY APPROVED, EXCLUDING THE
ON 22 AUGUST 1994, ALFREDO EXECUTED A DEED OF PROPERTY AND RIGHTS OF
ON 23 DECEMBER 1991, ELVIRA FILED WITH DONATION OVER THE PROPERTY IN FAVOR OF THEIR DEFENDANT ELVIRA ROBLES-GOZON
THE CAVITE CITY REGIONAL TRIAL COURT DAUGHTER, WINIFRED GOZON (WINIFRED). THE TO THE UNDIVIDED ONE-HALF SHARE
(CAVITE RTC) A PETITION FOR LEGAL SEPARATION REGISTER OF DEEDS OF MALABON, GIL IN THE CONJUGAL PROPERTY
AGAINST HER HUSBAND ALFREDO. ON 2 JANUARY 1992, TABIJE, CANCELLED TCT NO. 5357 AND ISSUED TCT SUBJECT OF THIS CASE.
NO. M-10508[8] IN THE NAME OF WINIFRED, WITHOUT
03. THE DEED OF DONATION DATED 22 AUGUST 1994, 11.5 ONE HUNDRED THOUSAND PESOS (P100,000.00) AS EARNEST MONEY IN CONSIDERATION FOR THE SALE OF
ENTERED INTO BY AND BETWEEN DEFENDANTS LITIGATION EXPENSES. THE SUBJECT LAND;
ALFREDO GOZON AND WINIFRED GOZON IS HEREBY 11.6 THE ABOVE AWARDS ARE SUBJECT TO SET OFF OF 3. DEFENDANTS ALFREDO GOZON, WINIFRED GOZON
NULLIFIED AND VOIDED. PLAINTIFFS OBLIGATION IN PARAGRAPH 9 HEREOF. AND GIL TABIJE ARE HEREBY ORDERED TO PAY
04. THE DEED OF ABSOLUTE SALE DATED 26 OCTOBER 12. DEFENDANTS ALFREDO GOZON PLAINTIFF-APPELLANT SIOCHI JOINTLY AND
1994, EXECUTED BY DEFENDANT WINIFRED GOZON, AND WINIFRED GOZON ARE HEREBY SEVERALLY, THE FOLLOWING:
THROUGH DEFENDANT ALFREDO GOZON, IN FAVOR OF ORDERED TO PAY INTER- A) P100,000.00 AS MORAL DAMAGES;
DEFENDANT INTER-DIMENSIONAL REALTY, INC. IS DIMENSIONAL REALTY, INC. JOINTLY B) P100,000.00 AS EXEMPLARY DAMAGES;
HEREBY NULLIFIED AND VOIDED. AND SEVERALLY THE FOLLOWING: C) P50,000.00 AS ATTORNEYS FEES;
05. DEFENDANT INTER-DIMENSIONAL REALTY, INC. IS 12.1 EIGHTEEN MILLION D) P20,000.00 AS LITIGATION EXPENSES; AND
HEREBY ORDERED TO DELIVER ITS TRANSFER PESOS (P18,000,000.00) E) THE AWARDS OF ACTUAL AND
CERTIFICATE OF TITLE NO. M-10976 TO THE REGISTER OF WHICH CONSTITUTE THE COMPENSATORY DAMAGES
DEEDS OF MALABON, METRO MANILA. AMOUNT THE FORMER ARE HEREBY ORDERED
06. THE REGISTER OF DEEDS OF MALABON, METRO RECEIVED FROM THE DELETED FOR LACK OF
MANILA IS HEREBY ORDERED TO CANCEL CERTIFICATE LATTER PURSUANT TO BASIS.
OF TITLE NOS. 10508 IN THE NAME OF WINIFRED GOZON THEIR DEED OF ABSOLUTE 4. DEFENDANTS ALFREDO GOZON
AND M-10976 IN THE NAME OF INTER-DIMENSIONAL SALE DATED 26 OCTOBER AND WINIFRED GOZON ARE HEREBY
REALTY, INC., AND TO RESTORE TRANSFER CERTIFICATE 1994, WITH LEGAL INTEREST ORDERED TO PAY DEFENDANT-
OF TITLE NO. 5357 IN THE NAME OF ALFREDO GOZON, THEREFROM; APPELLANT IDRI JOINTLY AND
MARRIED TO ELVIRA ROBLES WITH THE AGREEMENT TO 12.2 ONE MILLION PESOS (P1,000,000.00) AS MORAL SEVERALLY THE FOLLOWING:
BUY AND SELL DATED 31 AUGUST 1993 FULLY DAMAGES; A) P100,000.00 AS MORAL DAMAGES;
ANNOTATED THEREIN IS HEREBY ORDERED. 12.3 FIVE HUNDRED THOUSAND PESOS (P500,000.00) AS B) P100,000.00 AS EXEMPLARY DAMAGES; AND
07. DEFENDANT ALFREDO GOZON IS HEREBY ORDERED EXEMPLARY DAMAGES; AND C) P50,000.00 AS ATTORNEYS FEES.
TO DELIVER A DEED OF ABSOLUTE SALE IN FAVOR OF 12.4 ONE HUNDRED THOUSAND PESOS (P100,000.00) AS
PLAINTIFF OVER HIS ONE-HALF UNDIVIDED SHARE IN ATTORNEYS FEES. DEFENDANT WINIFRED GOZON, WHOM THE UNDIVIDED
THE SUBJECT PROPERTY AND TO COMPLY WITH ALL THE 13. DEFENDANTS ALFREDO GOZON ONE-HALF SHARE OF DEFENDANT ALFREDO GOZON
REQUIREMENTS FOR REGISTERING SUCH DEED. AND WINIFRED GOZON ARE HEREBY WAS AWARDED, IS HEREBY GIVEN THE OPTION
08. ORDERING DEFENDANT ELVIRA ROBLES-GOZON TO ORDERED TO PAY COSTS OF SUIT. WHETHER OR NOT TO DISPOSE OF HER UNDIVIDED
SIT WITH PLAINTIFF TO AGREE ON THE SELLING PRICE SHARE IN THE SUBJECT LAND.
OF HER UNDIVIDED ONE-HALF SHARE IN THE SUBJECT SO ORDERED.[14]
PROPERTY, THEREAFTER, TO EXECUTE AND DELIVER A THE REST OF THE DECISION NOT INCONSISTENT WITH
DEED OF ABSOLUTE SALE OVER THE SAME IN FAVOR OF THIS RULING STANDS.
THE PLAINTIFF AND TO COMPLY WITH ALL THE ON APPEAL, THE COURT OF APPEALS AFFIRMED THE
REQUIREMENTS FOR REGISTERING SUCH DEED, WITHIN MALABON RTCS DECISION WITH MODIFICATION. THE SO ORDERED.[15]
FIFTEEN (15) DAYS FROM THE RECEIPT OF THIS DISPOSITIVE PORTION OF THE COURT OF APPEALS
DECISION. DECISION DATED 7 JULY 2005 READS:
09. THEREAFTER, PLAINTIFF IS HEREBY ORDERED TO WHEREFORE, PREMISES
PAY DEFENDANT ALFREDO GOZON THE BALANCE OF CONSIDERED, THE ASSAILED
FOUR MILLION PESOS (P4,000,000.00) IN HIS ONE-HALF DECISION DATED APRIL 3, 2001 OF Only Mario and IDRI appealed the decision of the Court of Appeals.
UNDIVIDED SHARE IN THE PROPERTY TO BE SET OFF BY THE RTC, BRANCH 74, MALABON IS In his petition, Mario alleges that the Agreement should be treated
THE AWARD OF DAMAGES IN PLAINTIFFS FAVOR. HEREBY AFFIRMED WITH as a continuing offer which may be perfected by the acceptance of
10. PLAINTIFF IS HEREBY ORDERED TO PAY THE MODIFICATIONS, AS FOLLOWS: the other spouse before the offer is withdrawn. Since Elviras
DEFENDANT ELVIRA ROBLES-GOZON THE PRICE THEY conduct signified her acquiescence to the sale, Mario prays for the
HAD AGREED UPON FOR THE SALE OF HER ONE-HALF 1. THE SALE OF THE SUBJECT LAND BY DEFENDANT Court to direct Alfredo and Elvira to execute a Deed of Absolute
UNDIVIDED SHARE IN THE SUBJECT PROPERTY. ALFREDO GOZON TO PLAINTIFF-APPELLANT SIOCHI IS Sale over the property upon his payment of P9 million to Elvira.
11. DEFENDANTS ALFREDO GOZON, WINIFRED GOZON DECLARED NULL AND VOID FOR THE FOLLOWING
AND GIL TABIJE ARE HEREBY ORDERED TO PAY THE REASONS: ON THE OTHER HAND, IDRI ALLEGES THAT IT IS A BUYER
PLAINTIFF, JOINTLY AND SEVERALLY, THE FOLLOWING: A) THE CONVEYANCE WAS DONE WITHOUT THE IN GOOD FAITH AND FOR VALUE. THUS, IDRI PRAYS
11.1 TWO MILLION PESOS CONSENT OF DEFENDANT-APPELLEE ELVIRA GOZON; THAT THE COURT SHOULD UPHOLD THE VALIDITY OF
(P2,000,000.00) AS ACTUAL B) DEFENDANT ALFREDO GOZONS ONE-HALF () IDRIS TCT NO. M-10976 OVER THE PROPERTY.
AND COMPENSATORY UNDIVIDED SHARE HAS BEEN FORFEITED IN FAVOR OF
DAMAGES; HIS DAUGHTER, DEFENDANT WINIFRED GOZON, BY WE FIND THE PETITIONS WITHOUT MERIT.
11.2 ONE MILLION PESOS (P1,000,000.00) AS MORAL VIRTUE OF THE DECISION IN THE LEGAL SEPARATION
DAMAGES; CASE RENDERED BY THE RTC, BRANCH 16, CAVITE; THIS CASE INVOLVES THE CONJUGAL PROPERTY OF
11.3 FIVE HUNDRED THOUSAND PESOS (P500,000.00) AS 2. DEFENDANT ALFREDO GOZON SHALL ALFREDO AND ELVIRA. SINCE THE DISPOSITION OF THE
EXEMPLARY DAMAGES; RETURN/DELIVER TO PLAINTIFF-APPELLANT SIOCHI THE PROPERTY OCCURRED AFTER THE EFFECTIVITY OF THE
11.4 FOUR HUNDRED THOUSAND PESOS (P400,000.00) AS AMOUNT OF P5 MILLION WHICH THE LATTER PAID AS FAMILY CODE, THE APPLICABLE LAW IS THE FAMILY
ATTORNEYS FEES; AND CODE. ARTICLE 124 OF THE FAMILY CODE PROVIDES:
CONJUGAL PARTNERSHIP
Art. 124. The administration and enjoyment ART. 63. THE DECREE OF LEGAL PROPERTY SHALL BE FORFEITED
of the conjugal partnership property shall SEPARATION SHALL HAVE THE IN FAVOR OF THE COMMON
belong to both spouses jointly. In case of FOLLOWING EFFECTS: CHILDREN OR, IF THERE ARE NONE,
disagreement, the husbands decision shall (1) THE SPOUSES SHALL BE THE CHILDREN OF THE GUILTY
prevail, subject to the recourse to the court by ENTITLED TO LIVE SPOUSE BY A PREVIOUS MARRIAGE
the wife for a proper remedy, which must be SEPARATELY FROM OR, IN DEFAULT OF CHILDREN, THE
availed of within five years from the date of EACH OTHER, BUT THE INNOCENT SPOUSE; (EMPHASIS
the contract implementing such decision. MARRIAGE BONDS SUPPLIED)
SHALL NOT BE
IN THE EVENT THAT ONE SPOUSE IS INCAPACITATED SEVERED; Thus, among the effects of the decree of legal separation is that the
OR OTHERWISE UNABLE TO PARTICIPATE IN THE (2) THE ABSOLUTE conjugal partnership is dissolved and liquidated and the offending
ADMINISTRATION OF THE CONJUGAL PROPERTIES, COMMUNITY OR THE spouse would have no right to any share of the net profits earned by
THE OTHER SPOUSE MAY ASSUME SOLE POWERS OF CONJUGAL the conjugal partnership. It is only Alfredos share in the net profits
ADMINISTRATION. THESE POWERS DO NOT INCLUDE PARTNERSHIP SHALL which is forfeited in favor of Winifred. Article 102(4) of the Family
THE POWERS OF DISPOSITION OR ENCUMBRANCE BE DISSOLVED AND Code provides that [f]or purposes of computing the net profits
WHICH MUST HAVE THE AUTHORITY OF THE COURT LIQUIDATED BUT THE subject to forfeiture in accordance with Article 43, No. (2) and 63,
OR THE WRITTEN CONSENT OF THE OTHER SPOUSE. OFFENDING SPOUSE No. (2), the said profits shall be the increase in value between the
IN THE ABSENCE OF SUCH AUTHORITY OR CONSENT, SHALL HAVE NO market value of the community property at the time of the
THE DISPOSITION OR ENCUMBRANCE SHALL BE RIGHT TO ANY SHARE celebration of the marriage and the market value at the time of its
VOID. HOWEVER, THE TRANSACTION SHALL BE OF THE NET PROFITS dissolution. Clearly, what is forfeited in favor of Winifred is not
CONSTRUED AS A CONTINUING OFFER ON THE PART OF EARNED BY THE Alfredos share in the conjugal partnership property but merely in
THE CONSENTING SPOUSE AND THE THIRD PERSON, AND ABSOLUTE the net profits of the conjugal partnership property.
MAY BE PERFECTED AS A BINDING CONTRACT UPON COMMUNITY OR THE
THE ACCEPTANCE BY THE OTHER SPOUSE OR CONJUGAL WITH REGARD TO IDRI, WE AGREE WITH THE COURT OF
AUTHORIZATION BY THE COURT BEFORE THE OFFER IS PARTNERSHIP, APPEALS IN HOLDING THAT IDRI IS NOT A BUYER IN
WITHDRAWN BY EITHER OR BOTH OFFERORS. WHICH SHALL BE GOOD FAITH. AS FOUND BY THE RTC MALABON AND
(EMPHASIS SUPPLIED) FORFEITED IN THE COURT OF APPEALS, IDRI HAD ACTUAL
ACCORDANCE WITH KNOWLEDGE OF FACTS AND CIRCUMSTANCES WHICH
In this case, Alfredo was the sole administrator of the property THE PROVISIONS OF SHOULD IMPEL A REASONABLY CAUTIOUS PERSON TO
because Elvira, with whom Alfredo was separated in fact, was ARTICLE 43(2); MAKE FURTHER INQUIRIES ABOUT THE VENDORS TITLE
unable to participate in the administration of the conjugal property. (3) THE CUSTODY OF THE TO THE PROPERTY. THE REPRESENTATIVE OF IDRI
However, as sole administrator of the property, Alfredo still cannot MINOR CHILDREN TESTIFIED THAT HE KNEW ABOUT THE EXISTENCE OF
sell the property without the written consent of Elvira or the SHALL BE AWARDED THE NOTICE OF LIS PENDENS ON TCT NO. 5357 AND THE
authority of the court. Without such consent or authority, the sale is TO THE INNOCENT LEGAL SEPARATION CASE FILED BEFORE THE CAVITE
void.[16] The absence of the consent of one of the spouse renders the SPOUSE, SUBJECT TO RTC. THUS, IDRI COULD NOT FEIGN IGNORANCE OF THE
entire sale void, including the portion of the conjugal property THE PROVISIONS OF CAVITE RTC DECISION DECLARING THE PROPERTY AS
pertaining to the spouse who contracted the sale.[17] Even if the other ARTICLE 213 OF THIS CONJUGAL.
spouse actively participated in negotiating for the sale of the CODE; AND
property, that other spouses written consent to the sale is still THE OFFENDING SPOUSE SHALL BE DISQUALIFIED FROM Furthermore, if IDRI made further inquiries, it would have known
required by law for its validity.[18] The Agreement entered into by INHERITING FROM THE INNOCENT SPOUSE BY that the cancellation of the notice of lis pendens was highly
Alfredo and Mario was without the written consent of Elvira. Thus, INTESTATE SUCCESSION. MOREOVER, PROVISIONS IN irregular. Under Section 77 of Presidential Decree No. 1529,[19] the
the Agreement is entirely void. As regards Marios contention that FAVOR OF THE OFFENDING SPOUSE MADE IN THE WILL notice of lis pendens may be cancelled (a) upon order of the court,
the Agreement is a continuing offer which may be perfected by OF THE INNOCENT SPOUSE SHALL BE REVOKED BY or (b) by the Register of Deeds upon verified petition of the party
Elviras acceptance before the offer is withdrawn, the fact that the OPERATION OF LAW. who caused the registration of the lis pendens. In this case,
property was subsequently donated by Alfredo to Winifred and then the lis pendens was cancelled by the Register of Deeds upon the
sold to IDRI clearly indicates that the offer was already withdrawn. Art. 43. The termination of the subsequent marriage referred to in request of Alfredo. There was no court order for the cancellation of
the preceding Article shall produce the following effects: the lispendens. Neither did Elvira, the party who caused the
However, we disagree with the finding of the Court of Appeals that XXX registration of the lis pendens, file a verified petition for its
the one-half undivided share of Alfredo in the property was already (2) THE ABSOLUTE cancellation.
forfeited in favor of his daughter Winifred, based on the ruling of COMMUNITY OF PROPERTY OR THE
the Cavite RTC in the legal separation case. The Court of Appeals CONJUGAL PARTNERSHIP, AS THE Besides, had IDRI been more prudent before buying the property,
misconstrued the ruling of the Cavite RTC that Alfredo, being the CASE MAY BE, SHALL BE DISSOLVED it would have discovered that Alfredos donation of the property to
offending spouse, is deprived of his share in the net profits and the AND LIQUIDATED, BUT IF EITHER Winifred was without the consent of Elvira. Under Article 125[20] of
same is awarded to Winifred. SPOUSE CONTRACTED SAID the Family Code, a conjugal property cannot be donated by one
MARRIAGE IN BAD FAITH, HIS OR spouse without the consent of the other spouse. Clearly, IDRI was
THE CAVITE RTC RULING FINDS SUPPORT IN THE HER SHARE OF THE NET PROFITS not a buyer in good faith.
FOLLOWING PROVISIONS OF THE FAMILY CODE: OF THE COMMUNITY PROPERTY OR
Nevertheless, we find it proper to reinstate the order of BRIGIDO B. QUIAO, G.R. No 176556
the Malabon RTC for the reimbursement of the P18 million paid by
IDRI for the property, which was inadvertently omitted in Petitioner, Antecedent Facts
the dispositive portion of the Court of Appeals decision.
WHEREFORE, we DENY the petitions. We AFFIRM the 7 July Present: On October 26, 2000, herein respondent Rita C. Quiao (Rita) filed a
2005 Decision of the Court of Appeals in CA-G.R. CV No. 74447 complaint for legal separation against herein petitioner Brigido B.
with the following MODIFICATIONS: Quiao (Brigido).[3] Subsequently, the RTC rendered a
Decision[4] dated October 10, 2005, the dispositive portion of which
(1) We DELETE the portions regarding the forfeiture of CARPIO, J., Chairperson, provides:
Alfredo Gozons one-half undivided share in favor of
Winifred Gozon and the grant of option to Winifred Gozon whether - versus - BRION,
or not to dispose of her undivided share in the property; and
PEREZ, WHEREFORE, viewed from the foregoing considerations,
judgment is hereby rendered declaring the legal separation of
(2) We ORDER Alfredo Gozon and Winifred Gozon to pay Inter- SERENO, and plaintiff Rita C. Quiao and defendant-respondent Brigido B. Quiao
Dimensional Realty, Inc. jointly and severally the Eighteen Million
pursuant to Article 55.
Pesos (P18,000,000) which was the amount paid by Inter- REYES, JJ.
Dimensional Realty, Inc. for the property, with legal interest
computed from the finality of this Decision. RITA C. QUIAO,
KITCHIE C. QUIAO, As such, the herein parties shall be entitled to live separately from
SO ORDERED. LOTIS C. QUIAO, each other, but the marriage bond shall not be severed.
ASSOCIATE JUSTICE PETCHIE C. QUIAO,
WE CONCUR: represented by their Promulgated:
mother RITA QUIAO,
July 4, 2012 Except for Letecia C. Quiao who is of legal age, the three minor
Respondents. children, namely, Kitchie, Lotis and Petchie, all surnamed Quiao
shall remain under the custody of the plaintiff who is the innocent
x------------------------------------------------------------------------------x spouse.

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

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


The family is the basic and the most important institution of
society. It is in the family where children are born and molded either 2. coffee mill in Durian, Las Nieves, Agusan del Norte;
to become useful citizens of the country or troublemakers in the
community. Thus, we are saddened when parents have to separate 3. corn mill in Casiklan, Las Nieves, Agusan del Norte;
and fight over properties, without regard to the message they send
4. coffee mill in Esperanza, Agusan del Sur;
to their children.Notwithstanding this, we must not shirk from our
obligation to rule on this case involving legal separation escalating 5. a parcel of land with an area of 1,200 square meters located in
to questions on dissolution and partition of properties. Tungao, Butuan City;

6. a parcel of agricultural land with an area of 5 hectares located


in Manila de Bugabos, Butuan City;
The Case
7. a parcel of land with an area of 84 square meters located in
Republic of the Philippines This case comes before us via Petition for Review
Tungao, Butuan City;
on Certiorari[1] under Rule 45 of the Rules of Court. The petitioner
Supreme Court seeks that we vacate and set aside the Order[2]dated January 8, 2007 8. Bashier Bon Factory located in Tungao, Butuan City;
of the Regional Trial Court (RTC), Branch 1, Butuan City. In lieu
Manila of the said order, we are asked to issue a Resolution defining the net
profits subject of the forfeiture as a result of the decree of legal
SECOND DIVISION separation in accordance with the provision of Article 102(4) of the shall be divided equally between herein [respondents] and
Family Code, or alternatively, in accordance with the provisions of [petitioner] subject to the respective legitimes of the children and
Article 176 of the Civil Code. the payment of the unpaid conjugal liabilities of [P]45,740.00
[Petitioners] share, however, of the net profits earned by the On July 6, 2006, the writ was partially executed with the petitioner ALL TOLD, the Court Order dated August 31, 2006 is hereby
conjugal partnership is forfeited in favor of the common children. paying the respondents the amount of P46,870.00, representing the ordered set aside. NET PROFIT EARNED, which is subject of
following payments: forfeiture in favor of [the] parties' common children, is ordered to
He is further ordered to reimburse [respondents] the sum of be computed in accordance [with] par. 4 of Article 102 of the Family
[P]19,000.00 as attorney's fees and litigation expenses of Code.[20]
[P]5,000.00[.]
(a) P22,870.00 as petitioner's share of the payment of the conjugal
SO ORDERED.[5] share;

(b) P19,000.00 as attorney's fees; and


On November 21, 2006, the respondents filed a Motion for
Neither party filed a motion for reconsideration and appeal within (c) P5,000.00 as litigation expenses.[11] Reconsideration,[21] praying for the correction and reversal of the
the period provided for under Section 17(a) and (b) of the Rule on Order dated November 8, 2006. Thereafter, on January 8,
Legal Separation.[6] 2007,[22] the trial court had changed its ruling again and granted the
respondents' Motion for Reconsideration whereby the Order dated
On July 7, 2006, or after more than nine months from the November 8, 2006 was set aside to reinstate the Order dated August
promulgation of the Decision, the petitioner filed before the RTC a 31, 2006.
On December 12, 2005, the respondents filed a motion for Motion for Clarification,[12] asking the RTC to define the term Net
execution[7] which the trial court granted in its Order dated Profits Earned.
December 16, 2005, the dispositive portion of which reads:
Not satisfied with the trial court's Order, the petitioner filed on
Wherefore, finding the motion to be well taken, the same is hereby February 27, 2007 this instant Petition for Review under Rule 45 of
granted. Let a writ of execution be issued for the immediate To resolve the petitioner's Motion for Clarification, the RTC issued the Rules of Court, raising the following:
enforcement of the Judgment. an Order[13] dated August 31, 2006, which held that the phrase NET
PROFIT EARNED denotes the remainder of the properties of the
parties after deducting the separate properties of each [of the] spouse
and the debts.[14] The Order further held that after determining the Issues
SO ORDERED.[8] remainder of the properties, it shall be forfeited in favor of the
common children because the offending spouse does not have any
right to any share of the net profits earned, pursuant to Articles 63,
No. (2) and 43, No. (2) of the Family Code.[15] The dispositive I
Subsequently, on February 10, 2006, the RTC issued a Writ of portion of the Order states:
Execution[9] which reads as follows: IS THE DISSOLUTION AND THE CONSEQUENT
LIQUIDATION OF THE COMMON PROPERTIES OF THE
HUSBAND AND WIFE BY VIRTUE OF THE DECREE OF
WHEREFORE, there is no blatant disparity when the sheriff intends LEGAL SEPARATION GOVERNED BY ARTICLE 125 (SIC) OF
NOW THEREFORE, that of the goods and chattels of the to forfeit all the remaining properties after deducting the payments THE FAMILY CODE?
[petitioner] BRIGIDO B. QUIAO you cause to be made the sums of the debts for only separate properties of the defendant-respondent
stated in the afore-quoted DECISION [sic], together with your shall be delivered to him which he has none.
lawful fees in the service of this Writ, all in the Philippine Currency.
II

The Sheriff is herein directed to proceed with the execution of the WHAT IS THE MEANING OF THE NET PROFITS EARNED BY
But if sufficient personal property cannot be found whereof to Decision. THE CONJUGAL PARTNERSHIP FOR PURPOSES OF
satisfy this execution and your lawful fees, then we command you EFFECTING THE FORFEITURE AUTHORIZED UNDER
that of the lands and buildings of the said [petitioner], you make the ARTICLE 63 OF THE FAMILY CODE?
said sums in the manner required by law. You are enjoined to strictly
observed Section 9, Rule 39, Rule [sic] of the 1997 Rules of Civil IT IS SO ORDERED.[16]
Procedure.
III

Not satisfied with the trial court's Order, the petitioner filed a Motion
You are hereby ordered to make a return of the said proceedings for Reconsideration[17] on September 8, 2006. Consequently, the
immediately after the judgment has been satisfied in part or in full RTC issued another Order[18]dated November 8, 2006, holding that WHAT LAW GOVERNS THE PROPERTY RELATIONS
in consonance with Section 14, Rule 39 of the 1997 Rules of Civil although the Decision dated October 10, 2005 has become final and BETWEEN THE HUSBAND AND WIFE WHO GOT MARRIED
Procedure, as amended.[10] executory, it may still consider the Motion for Clarification because IN 1977? CAN THE FAMILY CODE OF THE PHILIPPINES BE
the petitioner simply wanted to clarify the meaning of net profit GIVEN RETROACTIVE EFFECT FOR PURPOSES OF
earned.[19] Furthermore, the same Order held: DETERMINING THE NET PROFITS SUBJECT OF
FORFEITURE AS A RESULT OF THE DECREE OF LEGAL
SEPARATION WITHOUT IMPAIRING VESTED RIGHTS to the CA and Rule 45 governing appeals by certiorari to the upon an RTC, designated as the Family Court of a city, the exclusive
ALREADY ACQUIRED UNDER THE CIVIL CODE? Supreme Court. We also said, The new rule aims to regiment or original jurisdiction to hear and decide, among others, complaints or
make the appeal period uniform, to be counted from receipt of the petitions relating to marital status and property relations of the
order denying the motion for new trial, motion for reconsideration husband and wife or those living together.[32] The Rule on Legal
(whether full or partial) or any final order or resolution.[27] In other Separation[33] provides that the petition [for legal separation] shall
IV words, a party litigant may file his notice of appeal within a fresh be filed in the Family Court of the province or city where the
15-day period from his receipt of the trial court's decision or final petitioner or the respondent has been residing for at least six months
WHAT PROPERTIES SHALL BE INCLUDED IN THE order denying his motion for new trial or motion for prior to the date of filing or in the case of a non-resident respondent,
FORFEITURE OF THE SHARE OF THE GUILTY SPOUSE IN reconsideration. Failure to avail of the fresh 15-day period from the where he may be found in the Philippines, at the election of the
THE NET CONJUGAL PARTNERSHIP AS A RESULT OF THE denial of the motion for reconsideration makes the decision or final petitioner.[34] In the instant case, herein respondent Rita is found to
ISSUANCE OF THE DECREE OF LEGAL SEPARATION?[23] order in question final and executory. reside in Tungao, Butuan City for more than six months prior to the
date of filing of the petition; thus, the RTC, clearly has jurisdiction
over the respondent's petition below.Furthermore, the RTC also
Our Ruling acquired jurisdiction over the persons of both parties, considering
In the case at bar, the trial court rendered its Decision on October that summons and a copy of the complaint with its annexes were
10, 2005. The petitioner neither filed a motion for reconsideration served upon the herein petitioner on December 14, 2000 and that the
While the petitioner has raised a number of issues on the
nor a notice of appeal. On December 16, 2005, or after 67 days had herein petitioner filed his Answer to the Complaint on January 9,
applicability of certain laws, we are well-aware that the respondents
lapsed, the trial court issued an order granting the respondent's 2001.[35] Thus, without doubt, the RTC, which has rendered the
have called our attention to the fact that the Decision dated October
motion for execution; and on February 10, 2006, or after 123 days questioned judgment, has jurisdiction over the complaint and the
10, 2005 has attained finality when the Motion for Clarification was
had lapsed, the trial court issued a writ of execution. Finally, when persons of the parties.
filed.[24] Thus, we are constrained to resolve first the issue of the
the writ had already been partially executed, the petitioner, on July
finality of the Decision dated October 10, 2005 and subsequently
7, 2006 or after 270 days had lapsed, filed his Motion for
discuss the matters that we can clarify.
Clarification on the definition of the net profits earned. From the
foregoing, the petitioner had clearly slept on his right to question the From the aforecited facts, the questioned October 10, 2005
RTCs Decision dated October 10, 2005. For 270 days, the petitioner judgment of the trial court is clearly not void ab initio, since it was
The Decision dated October 10, 2005 has become final and never raised a single issue until the decision had already been rendered within the ambit of the court's jurisdiction. Being such, the
executory at the time the Motion for Clarification was filed on partially executed. Thus at the time the petitioner filed his motion same cannot anymore be disturbed, even if the modification is meant
July 7, 2006. for clarification, the trial courts decision has become final and to correct what may be considered an erroneous conclusion of fact
executory. A judgment becomes final and executory when the or law.[36]In fact, we have ruled that for [as] long as the public
reglementary period to appeal lapses and no appeal is perfected respondent acted with jurisdiction, any error committed by him or it
within such period. Consequently, no court, not even this Court, can in the exercise thereof will amount to nothing more than an error of
Section 3, Rule 41 of the Rules of Court provides: arrogate unto itself appellate jurisdiction to review a case or modify judgment which may be reviewed or corrected only by
a judgment that became final.[28] appeal.[37] Granting without admitting that the RTC's judgment
dated October 10, 2005 was erroneous, the petitioner's remedy
should be an appeal filed within the reglementary
Section 3. Period of ordinary appeal. - The appeal shall be taken period. Unfortunately, the petitioner failed to do this. He has already
within fifteen (15) days from notice of the judgment or final order The petitioner argues that the decision he is questioning is a void lost the chance to question the trial court's decision, which has
appealed from. Where a record on appeal is required, the appellant judgment. Being such, the petitioner's thesis is that it can still be become immutable and unalterable. What we can only do is to
shall file a notice of appeal and a record on appeal within thirty (30) disturbed even after 270 days had lapsed from the issuance of the clarify the very question raised below and nothing more.
days from notice of the judgment or final order. decision to the filing of the motion for clarification. He said that a
void judgment is no judgment at all. It never attains finality and
cannot be a source of any right nor any obligation.[29] But what
The period of appeal shall be interrupted by a timely motion for new precisely is a void judgment in our jurisdiction? When does a For our convenience, the following matters cannot anymore be
trial or reconsideration. No motion for extension of time to file a judgment becomes void? disturbed since the October 10, 2005 judgment has already become
motion for new trial or reconsideration shall be allowed. immutable and unalterable, to wit:
In Neypes v. Court of Appeals,[25] we clarified that to standardize the
appeal periods provided in the Rules and to afford litigants fair A judgment is null and void when the court which rendered it had
opportunity to appeal their cases, we held that it would be practical no power to grant the relief or no jurisdiction over the subject matter (a) The finding that the petitioner is the offending spouse since he
to allow a fresh period of 15 days within which to file the notice of or over the parties or both.[30] In other words, a court, which does not cohabited with a woman who is not his wife;[38]
appeal in the RTC, counted from receipt of the order dismissing a have the power to decide a case or that has no jurisdiction over the
motion for a new trial or motion for reconsideration.[26] subject matter or the parties, will issue a void judgment or a coram (b) The trial court's grant of the petition for legal separation of
non judice.[31] respondent Rita;[39]

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


In Neypes, we explained that the "fresh period rule" shall also apply
to Rule 40 governing appeals from the Municipal Trial Courts to the The questioned judgment does not fall within the purview of a void (d) The forfeiture of the petitioner's right to any share of the net
RTCs; Rule 42 on petitions for review from the RTCs to the Court judgment. For sure, the trial court has jurisdiction over a case profits earned by the conjugal partnership;[41]
of Appeals (CA); Rule 43 on appeals from quasi-judicial agencies involving legal separation. Republic Act (R.A.) No. 8369 confers
(e) The award to the innocent spouse of the minor children's Article 129 of the Family Code applies to the present case since
custody;[42] the parties' property relation is governed by the system of
relative community or conjugal partnership of gains. We respond in the negative.

The petitioner claims that the court a quo is wrong when it applied Indeed, the petitioner claims that his vested rights have been
(f) The disqualification of the offending spouse from inheriting from Article 129 of the Family Code, instead of Article 102. He impaired, arguing: As earlier adverted to, the petitioner acquired
the innocent spouse by intestate succession;[43] confusingly argues that Article 102 applies because there is no other vested rights over half of the conjugal properties, the same being
provision under the Family Code which defines net profits earned owned in common by the spouses. If the provisions of the Family
(g) The revocation of provisions in favor of the offending spouse subject of forfeiture as a result of legal separation. Code are to be given retroactive application to the point of
made in the will of the innocent spouse;[44] authorizing the forfeiture of the petitioner's share in the net
Offhand, the trial court's Decision dated October 10, 2005 held that remainder of the conjugal partnership properties, the same impairs
(h) The holding that the property relation of the parties is conjugal Article 129(7) of the Family Code applies in this case. We agree his rights acquired prior to the effectivity of the Family Code. [59] In
partnership of gains and pursuant to Article 116 of the Family Code, with the trial court's holding. other words, the petitioner is saying that since the property relations
all properties acquired during the marriage, whether acquired by one between the spouses is governed by the regime of Conjugal
or both spouses, is presumed to be conjugal unless the contrary is First, let us determine what governs the couple's property Partnership of Gains under the Civil Code, the petitioner acquired
proved;[45] relation. From the record, we can deduce that the petitioner and the vested rights over half of the properties of the Conjugal Partnership
respondent tied the marital knot on January 6, 1977. Since at the of Gains, pursuant to Article 143 of the Civil Code, which provides:
(i) The finding that the spouses acquired their real and personal time of the exchange of marital vows, the operative law was the All property of the conjugal partnership of gains is owned in
properties while they were living together;[46] Civil Code of the Philippines (R.A. No. 386) and since they did not common by the husband and wife.[60] Thus, since he is one of the
agree on a marriage settlement, the property relations between the owners of the properties covered by the conjugal partnership of
(j) The list of properties which Rizal Commercial Banking petitioner and the respondent is the system of relative community or gains, he has a vested right over half of the said properties, even
Corporation (RCBC) foreclosed;[47] conjugal partnership of gains.[55] after the promulgation of the Family Code; and he insisted that no
(k) The list of the remaining properties of the couple which must be provision under the Family Code may deprive him of this vested
Article 119 of the Civil Code provides: right by virtue of Article 256 of the Family Code which prohibits
dissolved and liquidated and the fact that respondent Rita was the
one who took charge of the administration of these properties;[48] retroactive application of the Family Code when it will prejudice a
Art. 119. The future spouses may in the marriage settlements agree person's vested right.
upon absolute or relative community of property, or upon complete
(l) The holding that the conjugal partnership shall be liable to separation of property, or upon any other regime.In the absence of
matters included under Article 121 of the Family Code and the marriage settlements, or when the same are void, the system of
conjugal liabilities totaling P503,862.10 shall be charged to the relative community or conjugal partnership of gains as established However, the petitioner's claim of vested right is not one which is
income generated by these properties;[49] in this Code, shall govern the property relations between husband written on stone. In Go, Jr. v. Court of Appeals,[61] we define and
and wife. explained vested right in the following manner:
(m) The fact that the trial court had no way of knowing whether the
petitioner had separate properties which can satisfy his share for the
support of the family;[50]
Thus, from the foregoing facts and law, it is clear that what governs A vested right is one whose existence, effectivity and extent do not
(n) The holding that the applicable law in this case is Article the property relations of the petitioner and of the respondent is depend upon events foreign to the will of the holder, or to the
129(7);[51] conjugal partnership of gains. And under this property relation, the exercise of which no obstacle exists, and which is immediate and
husband and the wife place in a common fund the fruits of their perfect in itself and not dependent upon a contingency. The term
(o) The ruling that the remaining properties not subject to any
separate property and the income from their work or industry.[56] The vested right expresses the concept of present fixed interest which, in
encumbrance shall therefore be divided equally between the
husband and wife also own in common all the property of the right reason and natural justice, should be protected against arbitrary
petitioner and the respondent without prejudice to the children's
conjugal partnership of gains.[57] State action, or an innately just and imperative right which
legitime;[52]
enlightened free society, sensitive to inherent and irrefragable
Second, since at the time of the dissolution of the petitioner and the individual rights, cannot deny.
(p) The holding that the petitioner's share of the net profits earned
respondent's marriage the operative law is already the Family Code,
by the conjugal partnership is forfeited in favor of the common
the same applies in the instant case and the applicable law in so far
children;[53] and
as the liquidation of the conjugal partnership assets and liabilities is
(q) The order to the petitioner to reimburse the respondents the sum concerned is Article 129 of the Family Code in relation to Article To be vested, a right must have become a titlelegal or equitableto
of P19,000.00 as attorney's fees and litigation expenses 63(2) of the Family Code. The latter provision is applicable because the present or future enjoyment of property.[62] (Citations omitted)
of P5,000.00.[54] according to Article 256 of the Family Code [t]his Code shall have
retroactive effect insofar as it does not prejudice or impair vested or
acquired rights in accordance with the Civil Code or other law.[58]
In our en banc Resolution dated October 18, 2005 for ABAKADA
After discussing lengthily the immutability of the Decision dated Guro Party List Officer Samson S. Alcantara, et al. v. The Hon.
October 10, 2005, we will discuss the following issues for the Executive Secretary Eduardo R. Ermita,[63] we also explained:
enlightenment of the parties and the public at large. Now, the petitioner asks: Was his vested right over half of the
common properties of the conjugal partnership violated when the
trial court forfeited them in favor of his children pursuant to Articles
63(2) and 129 of the Family Code? The concept of vested right is a consequence of the constitutional
guaranty of due process that expresses a present fixed interest
which in right reason and natural justice is protected against What does Article 102 of the Family Code say? Is the computation
arbitrary state action; it includes not only legal or equitable title to of net profits earned in the conjugal partnership of gains the same
the enforcement of a demand but also exemptions from new More, in Abalos v. Dr. Macatangay, Jr.,[68] we reiterated our long- with the computation of net profits earned in the absolute
obligations created after the right has become vested.Rights are standing ruling that: community?
considered vested when the right to enjoyment is a present interest,
absolute, unconditional, and perfect or fixed and
irrefutable.[64] (Emphasis and underscoring supplied)
[P]rior to the liquidation of the conjugal partnership, the interest of Now, we clarify.
each spouse in the conjugal assets is inchoate, a mere expectancy,
which constitutes neither a legal nor an equitable estate, and does First and foremost, we must distinguish between the applicable law
From the foregoing, it is clear that while one may not be deprived not ripen into title until it appears that there are assets in the as to the property relations between the parties and the applicable
of his vested right, he may lose the same if there is due process and community as a result of the liquidation and settlement. The interest law as to the definition of net profits. As earlier discussed, Article
such deprivation is founded in law and jurisprudence. of each spouse is limited to the net remainder orremanente 129 of the Family Code applies as to the property relations of the
liquido (haber ganancial) resulting from the liquidation of the parties. In other words, the computation and the succession of events
affairs of the partnership after its dissolution. Thus, the right of the will follow the provisions under Article 129 of the said Code.
husband or wife to one-half of the conjugal assets does not vest until Moreover, as to the definition of net profits, we cannot but refer to
In the present case, the petitioner was accorded his right to due the dissolution and liquidation of the conjugal partnership, or after Article 102(4) of the Family Code, since it expressly provides that
process. First, he was well-aware that the respondent prayed in her dissolution of the marriage, when it is finally determined that, after for purposes of computing the net profits subject to forfeiture under
complaint that all of the conjugal properties be awarded to her.[65] In settlement of conjugal obligations, there are net assets left which can Article 43, No. (2) and Article 63, No. (2), Article 102(4) applies. In
fact, in his Answer, the petitioner prayed that the trial court divide be divided between the spouses or their respective this provision, net profits shall be the increase in value between the
the community assets between the petitioner and the respondent as heirs.[69] (Citations omitted) market value of the community property at the time of the
circumstances and evidence warrant after the accounting and celebration of the marriage and the market value at the time of its
inventory of all the community properties of the dissolution.[72] Thus, without any iota of doubt, Article 102(4)
parties.[66] Second, when the Decision dated October 10, 2005 was applies to both the dissolution of the absolute community regime
promulgated, the petitioner never questioned the trial court's ruling Finally, as earlier discussed, the trial court has already decided in its under Article 102 of the Family Code, and to the dissolution of the
forfeiting what the trial court termed as net profits, pursuant to Decision dated October 10, 2005 that the applicable law in this case conjugal partnership regime under Article 129 of the Family Code.
Article 129(7) of the Family Code.[67] Thus, the petitioner cannot is Article 129(7) of the Family Code.[70] The petitioner did not file a Where lies the difference? As earlier shown, the difference lies in
claim being deprived of his right to due process. motion for reconsideration nor a notice of appeal. Thus, the the processes used under the dissolution of the absolute community
petitioner is now precluded from questioning the trial court's regime under Article 102 of the Family Code, and in the processes
decision since it has become final and executory. The doctrine of used under the dissolution of the conjugal partnership regime under
immutability and unalterability of a final judgment prevents us from Article 129 of the Family Code.
Furthermore, we take note that the alleged deprivation of the disturbing the Decision dated October 10, 2005 because final and
petitioner's vested right is one founded, not only in the provisions of executory decisions can no longer be reviewed nor reversed by this Let us now discuss the difference in the processes between the
the Family Code, but in Article 176 of the Civil Code. This Court.[71] absolute community regime and the conjugal partnership regime.
provision is like Articles 63 and 129 of the Family Code on the
forfeiture of the guilty spouse's share in the conjugal partnership
profits. The said provision says:
From the above discussions, Article 129 of the Family Code clearly
Art. 176. In case of legal separation, the guilty spouse shall forfeit applies to the present case since the parties' property relation is
his or her share of the conjugal partnership profits, which shall be governed by the system of relative community or conjugal On Absolute Community Regime:
awarded to the children of both, and the children of the guilty spouse partnership of gains and since the trial court's Decision has attained
had by a prior marriage. However, if the conjugal partnership finality and immutability. When a couple enters into a regime of absolute community, the
property came mostly or entirely from the work or industry, or from husband and the wife becomes joint owners of all the properties of
the wages and salaries, or from the fruits of the separate property of the marriage. Whatever property each spouse brings into the
the guilty spouse, this forfeiture shall not apply. marriage, and those acquired during the marriage (except those
The net profits of the conjugal partnership of gains are all the excluded under Article 92 of the Family Code) form the common
fruits of the separate properties of the spouses and the products mass of the couple's properties. And when the couple's marriage or
of their labor and industry. community is dissolved, that common mass is divided between the
In case there are no children, the innocent spouse shall be entitled to spouses, or their respective heirs, equally or in the proportion the
all the net profits. parties have established, irrespective of the value each one may have
originally owned.[73]

From the foregoing, the petitioner's claim of a vested right has no The petitioner inquires from us the meaning of net profits earned by
basis considering that even under Article 176 of the Civil Code, his the conjugal partnership for purposes of effecting the forfeiture Under Article 102 of the Family Code, upon dissolution of marriage,
share of the conjugal partnership profits may be forfeited if he is the authorized under Article 63 of the Family Code. He insists that since an inventory is prepared, listing separately all the properties of the
guilty party in a legal separation case. Thus, after trial and after the there is no other provision under the Family Code, which defines net absolute community and the exclusive properties of each; then the
petitioner was given the chance to present his evidence, the profits earned subject of forfeiture as a result of legal separation, debts and obligations of the absolute community are paid out of the
petitioner's vested right claim may in fact be set aside under the Civil then Article 102 of the Family Code applies. absolute community's assets and if the community's properties are
Code since the trial court found him the guilty party. insufficient, the separate properties of each of the couple will be
solidarily liable for the unpaid balance. Whatever is left of the Before we go into our disquisition on the Conjugal Partnership agreed upon in the marriage settlements or unless there has been a
separate properties will be delivered to each of them. The net Regime, we make it clear that Article 102(4) of the Family Code voluntary waiver or forfeiture of such share as provided in this
remainder of the absolute community is its net assets, which shall applies in the instant case for purposes only of defining net Code.
be divided between the husband and the wife; and for purposes of profit. As earlier explained, the definition of net profits in Article
computing the net profits subject to forfeiture, said profits shall be 102(4) of the Family Code applies to both the absolute community (8) The presumptive legitimes of the common children shall be
the increase in value between the market value of the community regime and conjugal partnership regime as provided for under delivered upon the partition in accordance with Article 51.
property at the time of the celebration of the marriage and the market Article 63, No. (2) of the Family Code, relative to the provisions on
value at the time of its dissolution.[74] Legal Separation. (9) In the partition of the properties, the conjugal dwelling and the
lot on which it is situated shall, unless otherwise agreed upon by the
Now, when a couple enters into a regime of conjugal partnership parties, be adjudicated to the spouse with whom the majority of the
of gains under Article 142 of the Civil Code, the husband and the common children choose to remain. Children below the age of seven
Applying Article 102 of the Family Code, the net profits requires wife place in common fund the fruits of their separate property and years are deemed to have chosen the mother, unless the court has
that we first find the market value of the properties at the time of the income from their work or industry, and divide equally, upon the decided otherwise. In case there is no such majority, the court shall
community's dissolution. From the totality of the market value of all dissolution of the marriage or of the partnership, the net gains or decide, taking into consideration the best interests of said children.
the properties, we subtract the debts and obligations of the absolute benefits obtained indiscriminately by either spouse during the
community and this result to the net assets or net remainder of the marriage.[76] From the foregoing provision, each of the couple has
properties of the absolute community, from which we deduct the his and her own property and debts. The law does not intend to effect
market value of the properties at the time of marriage, which then a mixture or merger of those debts or properties between the In the normal course of events, the following are the steps in the
results to the net profits.[75] spouses. Rather, it establishes a complete separation of capitals.[77] liquidation of the properties of the spouses:

Granting without admitting that Article 102 applies to the instant Considering that the couple's marriage has been dissolved under the (a) An inventory of all the actual properties shall be made, separately
case, let us see what will happen if we apply Article 102: Family Code, Article 129 of the same Code applies in the liquidation listing the couple's conjugal properties and their separate
of the couple's properties in the event that the conjugal partnership properties.[78] In the instant case, the trial court found that the
of gains is dissolved, to wit: couple has no separate properties when they married.[79] Rather,
the trial court identified the following conjugal properties, to wit:
(a) According to the trial court's finding of facts, both husband and
wife have no separate properties, thus, the remaining properties in 1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;
the list above are all part of the absolute community. And its market Art. 129. Upon the dissolution of the conjugal partnership regime,
value at the time of the dissolution of the absolute community the following procedure shall apply: 2. coffee mill in Durian, Las Nieves, Agusan del Norte;
constitutes the market value at dissolution.
(1) An inventory shall be prepared, listing separately all the 3. corn mill in Casiklan, Las Nieves, Agusan del Norte;
(b) Thus, when the petitioner and the respondent finally were legally properties of the conjugal partnership and the exclusive properties
separated, all the properties which remained will be liable for the 4. coffee mill in Esperanza, Agusan del Sur;
of each spouse.
debts and obligations of the community. Such debts and obligations
5. a parcel of land with an area of 1,200 square meters located
will be subtracted from the market value at dissolution. (2) Amounts advanced by the conjugal partnership in payment of
in Tungao, Butuan City;
personal debts and obligations of either spouse shall be credited to
(c) What remains after the debts and obligations have been paid from the conjugal partnership as an asset thereof. 6. a parcel of agricultural land with an area of 5 hectares
the total assets of the absolute community constitutes the net
located in Manila de Bugabos, Butuan City;
remainder or net asset. And from such net asset/remainder of the (3) Each spouse shall be reimbursed for the use of his or her
petitioner and respondent's remaining properties, the market value exclusive funds in the acquisition of property or for the value of his 7. a parcel of land with an area of 84 square meters located
at the time of marriage will be subtracted and the resulting totality or her exclusive property, the ownership of which has been vested in Tungao, Butuan City;
constitutes the net profits. by law in the conjugal partnership.
8. Bashier Bon Factory located in Tungao, Butuan City.[80]
(d) Since both husband and wife have no separate (4) The debts and obligations of the conjugal partnership shall be
properties, and nothing would be returned to each of them, what paid out of the conjugal assets. In case of insufficiency of said
will be divided equally between them is simply the net assets, the spouses shall be solidarily liable for the unpaid balance
profits. However, in the Decision dated October 10, 2005, the trial with their separate properties, in accordance with the provisions of (b) Ordinarily, the benefit received by a spouse from the conjugal
court forfeited the half-share of the petitioner in favor of his paragraph (2) of Article 121. partnership during the marriage is returned in equal amount to the
children. Thus, if we use Article 102 in the instant case (which assets of the conjugal partnership;[81]and if the community is
should not be the case), nothing is left to the petitioner since both (5) Whatever remains of the exclusive properties of the spouses shall enriched at the expense of the separate properties of either spouse, a
parties entered into their marriage without bringing with them any thereafter be delivered to each of them. restitution of the value of such properties to their respective owners
property. shall be made.[82]
(6) Unless the owner had been indemnified from whatever source,
the loss or deterioration of movables used for the benefit of the (c) Subsequently, the couple's conjugal partnership shall pay the
family, belonging to either spouse, even due to fortuitous event, debts of the conjugal partnership; while the debts and obligation of
On Conjugal Partnership Regime: shall be paid to said spouse from the conjugal funds, if any. each of the spouses shall be paid from their respective separate
properties. But if the conjugal partnership is not sufficient to pay all
(7) The net remainder of the conjugal partnership properties shall its debts and obligations, the spouses with their separate properties
constitute the profits, which shall be divided equally between shall be solidarily liable.[83]
husband and wife, unless a different proportion or division was
(d) Now, what remains of the separate or exclusive properties of the
husband and of the wife shall be returned to each of them.[84] In the
instant case, since it was already established by the trial court
that the spouses have no separate properties,[85] there is nothing
to return to any of them. The listed properties above are
considered part of the conjugal partnership. Thus, ordinarily, what
remains in the above-listed properties should be divided equally
between the spouses and/or their respective heirs.[86] However, since
the trial court found the petitioner the guilty party, his share from
the net profits of the conjugal partnership is forfeited in favor of the
common children, pursuant to Article 63(2) of the Family
Code. Again, lest we be confused, like in the absolute community
regime, nothing will be returned to the guilty party in the conjugal
partnership regime, because there is no separate property which
may be accounted for in the guilty party's favor.

In the discussions above, we have seen that in both instances, the


petitioner is not entitled to any property at all. Thus, we cannot but
uphold the Decision dated October 10, 2005 of the trial
court. However, we must clarify, as we already did above, the Order
dated January 8, 2007.

WHEREFORE, the Decision dated October 10, 2005 of the


Regional Trial Court, Branch 1 of Butuan City
is AFFIRMED. Acting on the Motion for Clarification dated July
7, 2006 in the Regional Trial Court, the Order dated January 8, 2007
of the Regional Trial Court is hereby CLARIFIED in accordance
with the above discussions.

SO ORDERED.

BIENVENIDO L. REYES

Associate Justice

WE CONCUR: