Agapay vs. Palang GR No. 116668, July 28, 1997

FACTS: Miguel Palang contracted marriage with Carlina in Pangasinan on 1949. He left to work in Hawaii a few months after the wedding. Their only child Herminia was born in May 1950. The trial court found evident that as early as 1957, Miguel attempted to Divorce Carlina in Hawaii. When he returned for good in 1972, he refused to lived with Carlina and stayed alone in a house in Pozzorubio Pangasinan.

The 63 year old Miguel contracted a subsequent marriage with 19 year old Erlinda Agapay, herein petitioner. 2 months earlier, they jointly purchased a parcel of agricultural land located at Binalonan Pangasinan. A house and lot in the same place was likewise purchased. On the other hand, Miguel and Carlina executed a Deed of Donation as a form of compromise agreement and agreed to donate their conjugal property consisting of 6 parcels of land to their child Herminia.

Miguel and Erlinda’s cohabitation produced a son named Kristopher. In 1979, they were convicted of concubinage upon Carlina’s complaint. 2 years later, Miguel died. Carlina and her daughter instituted this case for recovery of ownership and possession with damages against petitioner. They sought to get back the land and the house and lot located at Binalonan allegedly purchase by Miguel during his cohabitation with petitioner. The lower court dismissed the complaint but CA reversed the decision.

ISSUE: Whether the agricultural land and the house and lot should be awarded in favor of Erlinda Agapay.

HELD: The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda. However, their marriage is void because of the subsisting marriage with Carlina. Only the properties acquired by both parties through their actual joint contribution shall be owned by them in proportion to their respective contributions. It is required that there be an actual contribution. If actual contribution is not proved, there will be no co-ownership and no presumption of equal shares.

Erlinda established in her testimony that she was engaged in the business of buy and sell and had a sari-sari store. However, she failed to persuade the court that she actually contributed money to but the subjected riceland. When the land was acquired, she was only around 20 years old compared to Miguel who was already 64 years old and a pensioner of the US Government. Considering his youthfulness, its unrealistic how she could have contributed the P3,750 as her share. Thus, the court finds no basis to justify the co-ownership with Miguel over the same. Hence, the Riceland should, as correctly held by CA, revert to the conjugal partnership property of the deceased and Carlina.

It is immaterial that Miguel and Carlina previously agreed to donate their conjugal property in favor of Herminia. Separation of property between spouses during the marriage shall not take place except by judicial order or without judicial conferment when there is an express stipulation in the marriage settlements. The judgment resulted from the compromise was not specifically for separation of property and should not be so inferred.

With respect to the house and lot, Atty Sagun, notary public who prepared the deed of conveyance for the property revealed the falshood of Erlinda’s claim that she bought such property for P20,000 when she was 22 years old. The lawyer testified that Miguel provided the money for the purchase price and directed Erlinda’s name alone be placed as the vendee.

The transaction made by Miguel to Erlinda was properly a donation and which was clearly void and inexistent by express provision of the law because it was made between persons guilty of adultery or concubinage at the time of the donation. Moreover, Article 87 of the Family Code, expressly provides that the prohibition against donation between spouses now applies to donations between persons living together as husband and wife without a valid marriage, for otherwise, the condition of those who incurred guilt would turn out to be better than those in legal union.

Arcaba vs. Tabancura Vda De Batocael GR No. 146683, November 22, 2001

1

FACTS: Francisco Comille and his wife Zosima Montallana became the registered owners of Lot No. 437-A located at Balintawak St. and Rizal Avenue in Dipolog City, Zamboanga del Norte in January 1956. Zosima died in 1980 hence Francisco and his mother in law executed a deed of extrajudicial partition with waiver of rights, where the latter waived her share consisting of ¼ of the property in favor of Francisco. Since Francisco do not have any children to take care of him after his retirement, he asked Leticia, his niece, Leticia’s cousin, Luzviminda and Cirila Arcaba, the petitioner, who was then a widow and took care of Francisco’s house as well as the store inside.

According to Leticia, Francisco and Cirila were lovers since they slept in the same room. On the other hand, Erlinda Tabancura, another niece of Francisco claimed that the latter told her that Cirila was his mistress. However, Cirila defensed herself that she was a mere helper who could enter the master’s bedroom when Francisco asked her to and that Francisco was too old for her. She denied having sexual intercourse with Francisco. When the nieces got married, Cirila who was then 34 year-old widow started working for Francisco who was 75 year old widower. The latter did not pay him any wages as househelper though her family was provided with food and lodging. Francisco’s health deteriorated and became bedridden. Tabancura testified that Francisco’s only source of income was the rentals from his lot near the public streets.

In January 1991, few months before Francisco died, he executed a “Deed of Donation Inter Vivos” where he ceded a portion of Lot 437-A composed of 150 sq m., together with his house to Cirila who accepted the same. The larger portion of 268 sq m. was left under his name. This was made in consideration of the 10 year of faithful services of the petitioner. Atty Lacaya notarized the deed and was later registered by Cirila as its absolute owner.

In Octoer 1991, Francisco died and in 1993, the lot received by Cirila had a market value of P57,105 and assessed value of P28,550. The decedent’s nephews and nieces and his heirs by intestate succession alleged that Cirila was the common-law wife of Francisco.

ISSUE: Whether or not the deed of donation inter vivos executed by Francisco in Arcaba’s favor was valid.

HELD: The court in this case considered a sufficient proof of common law relationship wherein donation is not valid. The conclusion was based on the testimony of Tabancura and certain documents bearing the signature of “Cirila Comille” such as application for business permit, sanitary permit and the death certificate of Francisco. Also, the fact that Cirila did not demand her wages is an indication that she was not simply a caregiver –employee.

Cohabitation means more than sexual intercourse, especially when one of the parties is already old and may no longer be interested in sex at the very least, cohabitation is a public assumption of men and women holding themselves out to the public as such.

Hence, the deed of donation by Francisco in favor of Cirila is void under Art. 87 of the Family Code.

BA Finance Corp vs CA GR 61464, May 28 1988

FACTS: Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and as a representative of A&L Industries. Augusto presented an alleged special power of attorney executed by his wife, Lily Yulo, who managed the business and under whose name the said business was registered, purportedly authorized the husband to procure the loan and sign the promissory note. 2months prior the procurement of the loan, Augusto left Lily and their children which in turn abandoned their conjugal home. When the obligation became due and demandable, Augusto failed to pay the same.

The petitioner prayed for the issuance of a writ of attachment alleging that said spouses were guilty of fraud consisting of the execution of Deed of Assignment assigning the rights, titles and interests over a construction contract executed by and between the spouses and A. Soriano Corporation. The writ hereby prayed for was issued by the trial court and not contented with the order, petitioner filed a motion for the examination of attachment debtor alleging that the properties attached by the sheriff

2

were not sufficient to secure the satisfaction of any judgment which was likewise granted by the court.

ISSUE: WON A&L Industries can be held liable for the obligations contracted by the husband.

HELD: A&L Industries is a single proprietorship, whose registered owner is Lily Yulo. The said proprietorship was established during the marriage and assets were also acquired during the same. Hence, it is presumed that the property forms part of the conjugal partnership of the spouses and be held liable for the obligations contracted by the husband. However, for the property to be liable, the obligation contracted by the husband must have redounded to the benefit of the conjugal partnership. The obligation was contracted by Augusto for his own benefit because at the time he incurred such obligation, he had already abandoned his family and left their conjugal home. He likewise made it appear that he was duly authorized by his wife in behalf of the company to procure such loan from the petitioner. Clearly, there must be the requisite showing that some advantage accrued to the welfare of the spouses.

Thus, the Court ruled that petitioner cannot enforce the obligation contracted by Augusto against his conjugal properties with Lily. Furthermore, the writ of attachment cannot be issued against the said properties and that the petitioner is ordered to pay Lily actual damages amounting to P660,000.00.

PNB vs. CA et al G.R. No. 121597 June 29, 2001

FACTS: The spouses Chua were the owners of a parcel of land covered by a TCT and registered in their names. Upon the husband’s death, the probate court appointed his son, private respondent Allan as special administrator of the deceased’s intestate estate. The court also authorized Allan to obtain a loan accommodation from PNB to be secured by a real estate mortgage over the above-mentioned parcel of land, which Allan did for P450,000.00 with interest.

For failure to pay the loan in full, the bank extrajudicially foreclosed the real estate mortgage. During the auction, PNB was the highest bidder.

However, the loan having a payable balance, to claim this deficiency, PNB instituted an action with the RTC, Balayan, Batangas, against both Mrs. Chua and Allan.

The RTC rendered its decision, ordering the dismissal of PNB’s complaint. On appeal, the CA affirmed the RTC decision by dismissing PNB’s appeal for lack of merit.

Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court.

ISSUE: The WON it was error for the CA to rule that petitioner may no longer pursue by civil action the recovery of the balance of indebtedness after having foreclosed the property securing the same.

HELD: petition is DENIED. The assailed decision of the CA is AFFIRMED.

No. Petitioner relies on Prudential Bank v. Martinez, 189 SCRA 612, 615 (1990), holding that in extrajudicial foreclosure of mortgage, when the proceeds of the sale are insufficient to pay the debt, the mortgagee has the right to recover the deficiency from the mortgagor.

However, it must be pointed out that petitioner’s cited cases involve ordinary debts secured by a mortgage. The case at bar, we must stress, involves a foreclosure of mortgage arising out of a settlement of estate, wherein the administrator mortgaged a property belonging to the estate of the decedent, pursuant to an authority given by the probate court. As the CA correctly stated, the Rules of Court on Special Proceedings comes into play decisively. The applicable rule is Section 7 of Rule 86 of the Revised Rules of Court ( which PNB contends is not.)

In the present case it is undisputed that the conditions under the aforecited rule have been complied with [see notes]. It follows that we must consider Sec. 7 of Rule 86, appropriately applicable to the controversy at hand, which in summary [and case law as well] grants to the mortgagee three distinct, independent and mutually exclusive remedies that can be

3

alternatively pursued by the mortgage creditor for the satisfaction of his credit in case the mortgagor dies, among them:

(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;

(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and

(3) to rely on the mortgage exclusively, foreclosing the same at any time before it is barred by prescription without right to file a claim for any deficiency.

Clearly petitioner herein has chosen the mortgage-creditor’s option of extrajudicially foreclosing the mortgaged property of the Chuas. This choice now bars any subsequent deficiency claim against the estate of the deceased. Petitioner may no longer avail of the complaint for the recovery of the balance of indebtedness against said estate, after petitioner foreclosed the property securing the mortgage in its favor. It follows that in this case no further liability remains on the part of respondents and the deceased’s estate.

NOTES:

Section 7, Rule 86 of the Rules of Court, which states that:

Sec. 7. Rule 86. Mortgage debt due from estate. — A creditor holding a claim against the deceased secured by mortgage or other collateral security, may abandon the security and prosecute his claim in the manner provided in this rule, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by action in court, making the executor or administrator a party defendant, and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may claim his deficiency judgment in the manner provided in the preceding section; or he may rely upon his mortgage or other security alone and foreclose the same at any time within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and

shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged by paying the debt for which it is hold as security, under the direction of the court if the court shall adjudge it to be for the interest of the estate that such redemption shall be made.

To begin with, it is clear from the text of Section 7, Rule 89, that once the deed of real estate mortgage is recorded in the proper Registry of Deeds, together with the corresponding court order authorizing the administrator to mortgage the property, said deed shall be valid as if it has been executed by the deceased himself. Section 7 provides in part:

Sec. 7. Rule 89. Regulations for granting authority to sell, mortgage, or otherwise encumber estate – The court having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell personal estate, or to sell, mortgage, or otherwise encumber real estate, in cases provided by these rules when it appears necessary or beneficial under the following regulations:

x x x

(f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold, mortgaged, or otherwise encumbered is situated, a certified copy of the order of the court, together with the deed of the executor or administrator for such real estate, which shall be valid as if the deed had been executed by the deceased in his lifetime.

Metrobank, et al. v. Jose Tan, et al., G.R. No. 163712, November 30, 2006

No presumption of conjugality.

In Metrobank, et al. v. Jose Tan, et al., G.R. No. 163712, November 30, 2006, a property was registered under the names “Jose Tan married to Eliza Go Tan”. The husband contracted an obligation secured by a mortgage over the property. Since the husband failed to pay, there was foreclosure of the mortgage which was objected to by the wife on the ground that the property was mortgaged without her consent, hence, it is void contending

4

that a conjugal property cannot be mortgaged without the consent of the spouse.

In brushing aside the contention, the SC

Held: The lack of consent to the mortgage covering the title in question would not render the encumbrance void under the second paragraph of Article 124 of the Family Code. For proof is wanting that the property covered by the title is conjugal – that it was acquired during respondents’ marriage which is what would give rise to the presumption that it is conjugal property. (Article 116, F.C.). The statement in the title that the property is “registered in accordance with the provisions of Section 103 of the Property Registration Decree in the name of JOSE B. TAN, of legal age, married to Eliza Go Tan does not prove or indicate that the property is conjugal. In Ruiz v. CA, G.R. No. 146942, April 22, 2003, 401 SCRA 410, it was ruled that the phrase “married to “ is merely descriptive of the civil status of a person and should not be construed to mean that the spouse is also a registered owner. Furthermore, registration of the property is not proof that such property was acquired during the marriage, and thus, is presumed to be conjugal. The property could have been acquired by a spouse while he was still single, and registered only after the marriage. Acquisition of title and registration thereof are two different acts. The presumption under Article 116 of the Family Code that properties acquired during the marriage are presumed to be conjugal cannot apply in the instant case. Before such presumption can apply, it must first be established that the property was in fact acquired during the marriage. In other words, proof of acquisition during the marriage is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. No such proof was offered nor presented in the case at bar.

Pelayo vs. Perez G.R. No. 141323

Facts: David Pelayo through a Deed of Absolute Sale executed a deed of sale and transferred to Melki Perez two parcel of agricultural lands. Loreza Pelayo and another one whose signature is eligible witnesses such execution of deed.

Loreza signed only on the third page in the space provided for witnesses, as such, Perez application was denied.

Perez asked Loreza to sign on the first and should pages of the deed of sale but she refused. He then filed a complaint for specific performance against the Pelayo spouses.

The spouses moved to dismiss the complaint on the ground for lack of marital consent as provided by art166 of the Civil Code.

Issue: Whether or not the deed of sale was null and viol for lack of marital consent.

Held: Under Art 173, in relation to Art166, both of the NCC, W/C was still in effect on January 11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of conjugal property does not make the contract viol of initio but Merely violable. Said provisions of law provide:

Art 166. Unless the wife has been declared a non compas mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property not the conjugal property w/o the wife’s consent. It she refuses unreasonable to give her consent, the court may compel her to grant the same.

Art 173. The wife may during the marriage and w/in 10 years the transaction questioned, ask the court for the annulment of any contract of the husband w/c tends to defraud her or impair interest in the conjugal partnership property. Should the wife fail to exercise this right she her heir, after the dissolution of the marriage may demand the value of property fraudulently alienated by the husband.

HOMEOWNERS SAVINGS & LOAN BANK vs. MIGUELA C. DAILO, G.R. No. 153802 March 11, 2005

FACTS: Miguela Dailo and Marcelino Dailo, Jr were married on August 8, 1967. During their marriage the spouses purchased a house and lot situated at San Pablo City from a certain Dalida. The subject property was declared for tax assessment purposes The Deed of Absolute Sale, however, was

5

executed only in favor of the late Marcelino Dailo, Jr. as vendee thereof to the exclusion of his wife.

Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in favor of one Gesmundo, authorizing the latter to obtain a loan from petitioner Homeowners Savings and Loan Bank to be secured by the spouses Dailo’s house and lot in San Pablo City. Pursuant to the SPA, Gesmundo obtained a loan from petitioner. As security therefor, Gesmundo executed on the same day a Real Estate Mortgage constituted on the subject property in favor of petitioner. The abovementioned transactions, including the execution of the SPA in favor of Gesmundo, took place without the knowledge and consent of respondent.[

Upon maturity, the loan remained outstanding. As a result, petitioner instituted extrajudicial foreclosure proceedings on the mortgaged property. After the extrajudicial sale thereof, a Certificate of Sale was issued in favor of petitioner as the highest bidder. After the lapse of one year without the property being redeemed, petitioner consolidated the ownership thereof by executing an Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.

In the meantime, Marcelino Dailo, Jr. died. In one of her visits to the subject property, Miguela learned that petitioner had already employed a certain Brion to clean its premises and that her car, a Ford sedan, was razed because Brion allowed a boy to play with fire within the premises.

Claiming that she had no knowledge of the mortgage constituted on the subject property, which was conjugal in nature, respondent instituted with the RTC San Pablo City a Civil Case for Nullity of Real Estate Mortgage and Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of Sale, Reconveyance with Prayer for Preliminary Injunction and Damages against petitioner. In the latter’s Answer with Counterclaim, petitioner prayed for the dismissal of the complaint on the ground that the property in question was the exclusive property of the late Marcelino Dailo, Jr.

After trial on the merits, the trial court rendered a Decision declaring the said documents null and void and further ordered the

defendant is ordered to reconvey the property subject of this complaint to the plaintiff, to pay the plaintiff the sum representing the value of the car which was burned, the attorney’s fees, moral and exemplary damages.

The appellate court affirmed the trial court’s Decision, but deleted the award for damages and attorney’s fees for lack of basis. Hence, this petition

ISSUE: 1. WON THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.

2. WON THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE PAYMENT OF THE LOAN OBTAINED BY THE LATE MARCELINO DAILO, JR. THE SAME HAVING REDOUNDED TO THE BENEFIT OF THE FAMILY.

HELD: the petition is denied.

1. NO. Article 124 of the Family Code provides in part:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. . . .

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. . . .

In applying Article 124 of the Family Code, this Court declared that the absence of the consent of one renders the entire sale null and void, including the portion of the conjugal property pertaining to the husband who contracted the sale.

Respondent and the late Marcelino. were married on August 8, 1967. In the absence of a marriage settlement, the system of relative community or conjugal partnership of gains governed the property relations

6

between respondent and her late husband. With the effectivity of the Family Code on August 3, 1988, Chapter 4 on Conjugal Partnership of Gains in the Family Code was made applicable to conjugal partnership of gains already established before its effectivity unless vested rights have already been acquired under the Civil Code or other laws.

The rules on co-ownership do not even apply to the property relations of respondent and the late Marcelino even in a suppletory manner. The regime of conjugal partnership of gains is a special type of partnership, where the husband and wife place in a common fund the proceeds, products, fruits and income from their separate properties and those acquired by either or both spouses through their efforts or by chance. Unlike the absolute community of property wherein the rules on co-ownership apply in a suppletory manner, the conjugal partnership shall be governed by the rules on contract of partnership in all that is not in conflict with what is expressly determined in the chapter (on conjugal partnership of gains) or by the spouses in their marriage settlements. Thus, the property relations of respondent and her late husband shall be governed, foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the rules on partnership under the Civil Code. In case of conflict, the former prevails because the Civil Code provisions on partnership apply only when the Family Code is silent on the matter.

The basic and established fact is that during his lifetime, without the knowledge and consent of his wife, Marcelino constituted a real estate mortgage on the subject property, which formed part of their conjugal partnership. By express provision of Article 124 of the Family Code, in the absence of (court) authority or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void.

The aforequoted provision does not qualify with respect to the share of the spouse who makes the disposition or encumbrance in the same manner that the rule on co-ownership under Article 493 of the Civil Code does. Where the law does not distinguish, courts should not distinguish. Thus, both the trial court and the appellate court are correct in declaring the

nullity of the real estate mortgage on the subject property for lack of respondent’s consent.

2. NO. Under Article 121 of the Family Code, “[T]he conjugal partnership shall be liable for: . . .

(1) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited; . . . .”

Certainly, to make a conjugal partnership respond for a liability that should appertain to the husband alone is to defeat and frustrate the avowed objective of the new Civil Code to show the utmost concern for the solidarity and well-being of the family as a unit.[

The burden of proof that the debt was contracted for the benefit of the conjugal partnership of gains lies with the creditor-party litigant claiming as such. Ei incumbit probatio qui dicit, non qui negat (he who asserts, not he who denies, must prove). Petitioner’s sweeping conclusion that the loan obtained by the late Marcelino to finance the construction of housing units without a doubt redounded to the benefit of his family, without adducing adequate proof, does not persuade this Court. Consequently, the conjugal partnership cannot be held liable for the payment of the principal obligation.

NOTES: In addition, a perusal of the records of the case reveals that during the trial, petitioner vigorously asserted that the subject property was the exclusive property of the late Marcelino Dailo, Jr. Nowhere in the answer filed with the trial court was it alleged that the proceeds of the loan redounded to the benefit of the family. Even on appeal, petitioner never claimed that the family benefited from the proceeds of the loan. When a party adopts a certain theory in the court below, he will not be permitted to change his theory on appeal, for to permit him to do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play, justice and due process. A party may change his legal theory on appeal only when the factual bases thereof would not require presentation

7

of any further evidence by the adverse party in order to enable it to properly meet the issue raised in the new theory.

SECURITY BANK AND TRUST COMPANY v. MAR TIERRA CORP, WILFRIDO MARTINEZ, MIGUEL LACSON, and RICARDO LOPA, November 29, 2006 (508 SCRA 419)

FACTS: Respondent Mar Tierra Corporation, through its president, Wilfrido C. Martinez, applied for a P12,000,000 credit accommodation with petitioner Security Bank and Trust Company. Petitioner approved the application and entered into a credit line agreement with respondent corporation. It was secured by an indemnity agreement executed by individual respondents Wilfrido C. Martinez, Miguel J. Lacson and Ricardo A. Lopa who bound themselves jointly and severally with respondent corporation for the payment of the loan.

Respondent corporation was not able to pay all its debt balance as it suffered business reversals, eventually ceasing operations. Petitioner filed a complaint against respondent corp and individual respondents.

RTC issued a writ of attachment on all real and personal properties of respondent corporation and individual respondent Martinez including the conjugal house and lot of the spouses but it found that it did not redound to the benefit of his family, hence, it ordered the lifting of the attachment on the conjugal house and lot of the spouses Martinez.

Petitioner appealed to CA. It affirmed RTC decision. Petitioned to SC.

ISSUE: WON the conjugal partnership may be held liable for an indemnity agreement entered into by the husband to accommodate a third party

HELD: No. SC upheld the CA. Under Article 161(1) of the Civil Code, the conjugal partnership is liable for “all debts and obligations contracted by the husband for the benefit of the conjugal partnership.”

The court ruled in Luzon Surety Co., Inc. v. de Garcia that, in acting as a guarantor or surety for another, the husband does not act for the benefit of the conjugal partnership as the benefit is clearly intended for a third party.

In Ayala Investment and Development Corporation v. Court of Appeals, we ruled that, if the husband himself is the principal obligor in the contract, i.e., the direct recipient of the money and services to be used in or for his own business or profession, the transaction falls within the term “obligations for the benefit of the conjugal partnership.” In other words, where the husband contracts an obligation on behalf of the family business, there is a legal presumption that such obligation redounds to the benefit of the conjugal partnership.

On the other hand, if the money or services are given to another person or entity and the husband acted only as a surety or guarantor, the transaction cannot by itself be deemed an obligation for the benefit of the conjugal partnership. It is for the benefit of the principal debtor and not for the surety or his family.

In the case at bar, the principal contract, the credit line agreement between petitioner and respondent corporation, was solely for the benefit of the latter. The accessory contract (the indemnity agreement) under which individual respondent Martinez assumed the obligation of a surety for respondent corporation was similarly for the latter’s benefit. Petitioner had the burden of proving that the conjugal partnership of the spouses Martinez benefited from the transaction. It failed to discharge that burden.

SECURITY BANK AND TRUST COMPANY v. MAR TIERRA CORP, WILFRIDO MARTINEZ, MIGUEL LACSON, and RICARDO LOPA, November 29, 2006 (508 SCRA 419)

Once again in Security Bank & Trust Co. v. Mar Tierra Corp., et al., G.R. No. 143382, November 29, 2006 (Corona, J), the basic question on the liability of the conjugal partnership for an indemnity agreement entered into by the husband to accommodate a third party was asked. It appears that Mar Tierra Corporation entered into a credit line agreement with SBTC. Wilfredo Martinez and others executed an indemnity agreement holding themselves solidarily liable for such obligation. There was no payment by the corporation, hence, a suit for collection of sum of money was filed.

8

Judgment was rendered and it became final and executory. May the conjugal properties of Martinez and his wife be made to answer for such obligation? Why?

Held: No. In acting as a guarantor or surety for another, the husband did not act for the benefit of the conjugal partnership but for a third party. (Luzon Surety Co., Inc. v. de Garcia, 140 Phil. 509 (1969)).

Under Article 121(2) of the Family Code the conjugal partnership is liable for “all debts and obligations contracted by the husband for the benefit of the conjugal partnership.”

In Ayala Investment and Development Corp. v. Court of Appeals, 349 Phil. 942 (1998) it was ruled that, if the husband himself is the principal obligor in the contract, i.e., the direct recipient of the money and services to be used in or for his own business or profession, the transaction falls within the term “obligations for the benefit of the conjugal partnership.” In other words, where the husband contracts an obligation on behalf of the family business, there is a legal presumption that such obligation redounds to the benefit of the conjugal partnership. (Security Bank & Trust Co. v. Mar Tierra Corp., et al., G.R No. 143382, November 29, 2006).

On the other hand, if the money or services are given to another person or entity and the husband acted only as a surety or guarantor, the transaction cannot by itself be deemed an obligation for the benefit of the conjugal partnership. It is for the benefit of the principal debtor and not for the surety or his family. No presumption is raised that, when a husband enters into a contract of surety or accommodation agreement, it is for the benefit of the conjugal partnership. Proof must be presented to establish the benefit redounding to the conjugal partnership. In the absence of any showing of benefit received by it, the conjugal partnership cannot be held liable on an indemnity agreement executed by the husband to accommodate a third party.

In this case, the principal contract, the credit line agreement between petitioner and respondent corporation, was solely for the benefit

of the latter. The accessory contract (the indemnity agreement) under which individual respondent Martinez assumed the obligation of a surety for respondent corporation was similarly for the latter’s benefit. Petitioner had the burden of proving that the conjugal partnership of the spouses Martinez benefited from the transaction. It failed to discharge that burden.

To hold the conjugal partnership liable for an obligation pertaining to the husband alone defeats the objective of the Civil Code to protect the solidarity and well being of the family as a unit. (Ching v. CA, G.R. No. 124642, February 24, 2004, 423 SCRA 356). The underlying concern of the law is the conservation of the conjugal partnership. (Ayala Investments & Dev. Corp. v. CA). Hence, it limits the liability of the conjugal partnership only to debts and obligations contracted by the husband for the benefit of the conjugal partnership.

Villanueva vs. Court of Appeals, G.R. No. 143286 April 14, 2004

FACTS: On 13 October 1988, Eusebia Retuya filed a complaint before the trial court against her husband Nicolas Retuya, Pacita Villanueva and Nicolas’ son with Pacita, Procopio Villanueva. Eusebia sought the reconveyance from Nicolas and Pacita of several properties (subject properties), claiming that such are her conjugal properties with Nicolas. Plaintiff Eusebia, is the legal wife of defendant Nicolas, having been married on October 7, 1926. Out of the lawful wedlock, they begot five (5) children. Spouses Retuya resided at Mandaue City. During their marriage, they acquired real properties and all improvements situated in Mandaue City, and Consolacion, Cebu. Nicolas is the co-owner of a parcel of land situated in Mandaue City which he inherited from his parents Esteban Retuya and Balbina Solon as well as the purchasers of hereditary shares of approximately eight (8) parcels of land in Mandaue City. Some of the properties earn income from coconuts leased to corporations

In 1945, Nicolas no longer lived with his legitimate family and cohabited with defendant, Pacita Villanueva, wherein Procopio Villanueva, is their illegitimate son. Nicolas, then, was the only person who received

9

the income of the properties. Pacita, from the time she started living in concubinage with Nicolas, has no occupation. She had no properties of her own from which she could derive income. From the time Nicolas suffered stroke until the present, his illegitimate son is already the one who has been receiving the income of his properties

Settlement between parties was asked but not met. Trial court in favor of Eusebia Natuya. Petitioners appealed. Eusebia died, and was then substituted by her heirs. CA upheld trial court’s decision

ISSUE: Whether or not the subject properties acquired during the marriage between Eusebia and Procopio are conjugal

HELD: YES, they are conjugal. Petition denied; decision of CA affirmed

RATIO: The Family Code provisions on conjugal partnerships govern the property relations between Nicolas and Eusebia even if they were married before the effectivity of Family Code.

Article 105 of the Family Code explicitly mandates that the Family Code shall apply to conjugal partnerships established before the Family Code without prejudice to vested rights already acquired under the Civil Code or other laws. Thus, under the Family Code, if the properties are acquired during the marriage, the presumption is that they are conjugal. The burden of proof is on the party claiming that they are not conjugal. This is counter-balanced by the requirement that the properties must first be proven to have been acquired during the marriage before they are presumed conjugal.

Nicolas and Eusebia were married on 7 October 1926. Nicolas and Pacita started cohabiting in 1936. Eusebia died on 23 November 1996. Pacita and Nicolas were married on 16 December 1996. Petitioners themselves admit that Lot No. 152 was purchased on 4 October 1957. The date of acquisition of Lot No. 152 is clearly during the marriage of Nicolas and Eusebia.

Since the subject properties, including Lot No. 152, were acquired during the marriage of Nicolas and Eusebia, the presumption under Article

116 of the Family Code is that all these are conjugal properties of Nicolas and Eusebia.

Villanueva vs. IAC GR No. 67582, October 29, 1987

FACTS: Modesto Aranas, husband of Victoria, inherited a land from his father. Dorothea and Teodoro, Modesto’s illegitimate children, borrowed money from private respondent Jesus Bernas, mortgaging as collateral their father’s property. In the loan agreement, Aranas described themselves as the absolute co-owners. Dorothea and Teodoro failed to pay the loan resulting to extrajudicial foreclosure of mortgage in 1977 and thereafter Bernas acquired the land as the highest bidder. Aftewards, the Aranases executed a deed of extrajudicial partition in 1978, in which they adjudicated the same land unto themselves in equal share pro-indiviso. Bernas then consolidated his ownership over the lot when the mortgagors failed to redeem it withn the reglementary period, and had the title in the name of Modesto cancelled and another TCT issued in his name.

In 1978, petitioner Consolacion Villanueva and Raymundo Aranas filed a complaint against respondents spouses Jesus and Remedios Bernas, for the cancellation of the TCT under the name of the Bernases, and they be declared co-owners of the land. Petitioner alleged that spouses Modesto and Victoria in 1987 and 1958 executed 2 separate wills: first bequeathing to Consolacion and Raymundo and to Dorothea and Teodoro, in equal shares pro diviso, all of said Victoria’s shares from the conjugal partnership property; and second Modesto’s interests in his conjugal partnership with Victoria as well as his separate properties bequeathed to Dorothea and Teodoro. Trial court dismissed the complaint, declaring herein respondents as the legal owners of the disputed property. IAC likewise affirmed the lower court’s decision.

ISSUE: WON Villanueva had a right over the land and the improvements thereon made by Victoria who rendered the lot as conjugal property.

HELD: The land was not a conjugal partnership property of Victoria and Modesto. It was Modesto’s exclusive property since he inherited it from his parents. Moreover, since Victoria died ahead of Modesto, Victoria did not

10

inherit said lot from him and therefore had nothing of the land to bequeath by will of otherwise to Consolacion.

Article 158 of the Civil Code says that improvements, whether for utility or adornment made on the separate property of the spouses through advancements from the partnership or through the industry of either spouse belong to the conjugal partnership, and buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who owns the same.

There was no proof presented by Villanueva. Such proof is needed at the time of the making or construction of the improvements and the source of the funds used thereof in order to determine the character of the improvements as belonging to the conjugal partnership or to one spouse separately. What is certain is that the land on which the improvements stand was the exclusive property of Modesto and that where the property is registered in the name of one spouse only and there is no showing of when precisely the property was acquired, the presumption is that is belongs exclusively to said spouse. It is not therefore possible to declare the improvements to be conjugal in character.

Furthermore, Bernas’ mode of acquisition of ownership over the property appears in all respect to be regular, untainted by any defect whatsoever. Bernas must therefore be deemed to have acquired indefeasible and clear title to the lot which cannot be defeated or negated by claims subsequently arising and of which he had no knowledge or means of knowing prior to their assertion and ventilation.

GENATO v. DE LORENZO, 23 SCRA 618

Donation in a public document

The delivery by the donor and the acceptance by done must be simultaneous and the acceptance by a person other than the true done must be authorized by a proper power of attorney set forth in a public document

FACTS: The property under dispute in this case is the 530 shares of stocks of Genato Commercal Corporation, which has P100 par value, of the deceased Simona B. De Genato (Director and secretary-treasurer of the said company). The petitioners herein, 2 heirs of Simona, are claiming that they own 530 shares of stocks of Genato Commercal Corporation because of the donation made by Simona to them.

Respondents (other remaining heirs), however, are trying to recover from the petitioners, their co-heirs, the said stocks so they can include it in the intestate estate which should later be distributed among all the surviving children of the decedent.

Four or five days after having Florentino Genato elected and designated as Assitant Secretary-Treasurer of the Corporation, 265 shares were issued in favour of Florentino Genato and another 265 were issued in favour of Francisco G. Genato. These were not presented as evidence in the course of the trial; they were merely mentioned by Florentino Genato in the course of his testimony as a witness.

ISSUE: Whether or not there was a valid donation?

RULING: NO. There was no valid donation for lack of proper acceptance. Incontestably, one of the two donees was not present at the delivery, and there is no showing that Francisco Genato had authorized his brother, Florentino to accept for both of them. The delivery by the donor and the acceptance by done must be simultaneous and the acceptance by a person other than the true done must be authorized by a proper power of attorney set forth in a public document. None has been claimed to exist in this case.

BPI vs. Posadas, GR No. 34583, October 22, 1931

FACTS: BPI, as administrator of the estate of deceased Adolphe Schuetze, appealed to CFI Manila absolving defendant, Collector of Internal Revenue, from the complaint filed against him in recovering the inheritance tax amounting to P1209 paid by the plaintiff, Rosario Gelano Vda de Schuetze, under protest, and sum of P20,150 representing the proceeds of the insurance policy of the deceased.

11

Rosario and Adolphe were married in January 1914. The wife was actually residing and living in Germany when Adolphe died in December 1927. The latter while in Germany, executed a will in March 1926, pursuant with its law wherein plaintiff was named his universal heir. The deceased possessed not only real property situated in the Philippines but also personal property consisting of shares of stocks in 19 domestic corporations. Included in the personal property is a life insurance policy issued at Manila on January 1913 for the sum of $10,000 by the Sun Life Assurance Company of Canada, Manila Branch. In the insurance policy, the estate of the deceased was named the beneficiary without any qualification. Rosario is the sole and only heir of the deceased. BPI, as administrator of the decedent’s estate and attorney in fact of the plaintiff, having been demanded by Posadas to pay the inheritance tax, paid under protest. Notwithstanding various demands made by plaintiff, Posadas refused to refund such amount.

ISSUE: WON the plaintiff is entitled to the proceeds of the insurance.

HELD: SC ruled that (1)the proceeds of a life-insurance policy payable to the insured's estate, on which the premiums were paid by the conjugal partnership, constitute community property, and belong one-half to the husband and the other half to the wife, exclusively; (2) if the premiums were paid partly with paraphernal and partly conjugal funds, the proceeds are likewise in like proportion paraphernal in part and conjugal in part; and (3)the proceeds of a life-insurance policy payable to the insured's estate as the beneficiary, if delivered to the testamentary administrator of the former as part of the assets of said estate under probate administration, are subject to the inheritance tax according to the law on the matter, if they belong to the assured exclusively, and it is immaterial that the insured was domiciled in these Islands or outside.

Hence, the defendant was ordered to return to the plaintiff one-half of the tax collected upon the amount of P20,150, being the proceeds of the insurance policy on the life of the late Adolphe Oscar Schuetze, after deducting the proportional part corresponding to the first premium.

JOCSON v. COURT OF APPEALS, February 16, 1989 (G.R. No. L-55322)

FACTS: Emilio Jocon and Alejandra Jocson were husband and wife. The wife died first intestate then the husband followed. Moises and Agustina are their children. Ernesto Vasquesz is the husband of Agustina.

The present controversy concerns the validity of three (3) documents executed by Emilio Jocson during his lifetime. These documents purportedly conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers almost all of his properties, including his one-third (1/3) share in the estate of his wife. Petitioner Moises Jocson assails these documents and prays that they be declared null and void and the properties subject matter therein be partitioned between him and Agustina as the only heirs of their deceased parents.

Petitioner claimed that the properties mentioned in Exhibits 3 and 4 are the unliquidated conjugal properties of Emilio Jocson and Alejandra Poblete which the former, therefore, cannot validly sell. They say it is conjugal properties of Emilio Jocson and Alejandra Poblete, because they were registered in the name of “Emilio Jocson, married to Alejandra Poblete”.

ISSUE: WON the property registered under the name of “Emilio Jocson, married to Alejandra Poblete” is conjugal property or exclusive property.

HELD: Exclusive. Article 60 of the CC proveides 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. The party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. In other words, proof of acquisition during the coverture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership.

It is thus clear that before Moises Jocson may validly invoke the presumption under Article 160 he must first present proof that the disputed properties were acquired during the marriage of Emilio Jocson and Alejandra Poblete. The certificates of title, however, upon which petitioner rests his claim is insufficient. The fact that the properties were registered in

12

the name of “Emilio Jocson, married to Alejandra Poblete” is no proof that the properties were acquired during the spouses’ coverture. Acquisition of title and registration thereof are two different acts. It is well settled that registration does not confer title but merely confirms one already existing (See Torela vs. Torela, supra). It may be that the properties under dispute were acquired by Emilio Jocson when he was still a bachelor but were registered only after his marriage to Alejandra Poblete, which explains why he was described in the certificates of title as married to the latter.

Contrary to petitioner’s position, the certificates of title show, on their face, that the properties were exclusively Emilio Jocson’s, the registered owner. This is so because the words “married to’ preceding “Alejandra Poblete’ are merely descriptive of the civil status of Emilio Jocson. In other words, the import from the certificates of title is that Emilio Jocson is the owner of the properties, the same having been registered in his name alone, and that he is married to Alejandra Poblete.

MARAMBA v. LOZANO, 20 SCRA 474

Facts: On November 3, 1948, the plaintiff filed an action against the defendant Nieves de Lozano and her husband Pascual Lozano for the collection of a sum of money. After trial, the court a quo on June 23, 1959 rendered its decision, the dispositive part of which is as follows:

WHEREFORE, the court hereby renders judgment, sentencing the defendants herein, Nieves de Lozano and Pascual Lozano, to pay unto the herein plaintiff, Hermogenes Maramba, the total sum of Three Thousand Five Hundred Pesos and Seven Centavos (P3,500.07), with legal interest thereon from date of the filing of the instant complaint until fully paid.

Not satisfied with the judgment, the defendants interposed an appeal to the Court of Appeals but the appeal was dismissed on March 30, 1960 for failure of the defendants to file their brief on time. After the record the case was remanded to the court a quo, a writ of execution was issued, and on August 18, 1960 levy was made upon a parcel of land covered by transfer certificate title No. 8192 of Pangasinan in the name of Nieves de

Lozano. The notice of sale at public auction was published in accordance with law and scheduled for September 16, 1960.

On that date, however, defendant Nieves de Lozano made a partial satisfaction of the judgment in the amount P2,000.00, and requested for an adjournment of the sale to October 26, 1960. On October 17, 1960, she filed amended motion, dated October 14, alleging that on November 11, 1952, during the pendency of the case, defendant Pascual Lozano died and that the property levied upon was her paraphernal property, and praying that her liability be fixed at one-half (½) of the amount awarded in the judgment and that pending the resolution of the issue an order be issued restraining the Sheriff from carrying out the auction sale scheduled on October 26, 1960. On that date the sale proceeded anyway, and the property of Nieves de Lozano which has been levied upon was sold to the judgment creditor, as the highest bidder, for the amount of P4,175.12, the balance of the judgment debt.

Issues:

1. Whether or not the decision of the lower court dated June 23, 1959 could still be questioned;

2. Whether or not the judgment was joint; and

3. Whether or not the judgment debt could be satisfied from the proceeds of the properties sold at public auction.

Held:

1. NO. It would entail a substantial amendment of the decision of June 23, 1959, which has long become final and in fact partially executed. A decision which has become final and executory can no longer be amended or corrected by the court except for clerical errors or mistakes, and however erroneous it may be, cannot be disobeyed; otherwise litigations would be endless and no questions could be considered finally settled. The amendment sought by appellee involves not merely clerical errors but the very substance of the controversy. And it cannot be accomplished by the issuance of a "nunc pro tunc" order such as that sought in this case. The

13

purpose of an "nunc pro tunc" is to make a present record of an which the court made at a previous term, but which not then recorded. It can only be made when the ordered has previously been made, but by inadvertence not been entered.

Now then, it is clear that the decision of June 23, 1959 does not specify the extent of the liability of each defendant. The rule is that when the judgment does not order the defendants to pay jointly and severally their liability is merely joint, and none of them may be compelled to satisfy the judgment in full. This is in harmony with Articles 1137 and 1138 of the Civil Code.

2. YES. The rule is that when the judgment does not order the defendants to pay jointly and severally their liability is merely joint, and none of them may be compelled to satisfy the judgment in full. This is in harmony with Articles 1137 and 1138 of the Civil Code.

3. NO. The presumption under Article 160 of the Civil Code to property acquired during the marriage. But in the instant case there is no showing as to when the property in question was acquired and hence the fact that the title is in the wife's name alone is determinative. Furthermore, appellant himself admits in his brief that the property in question is paraphernal.

Appellant next points out that even if the land levied upon were originally paraphernal, it became conjugal property by virtue of the construction of a house thereon at the expense of the common fund, pursuant to Article 158 paragraph 2 of the Civil Code. However, it has been by this Court that the construction of a house at conjugal expense on the exclusive property of one of the spouses does not automatically make it conjugal. It is true that meantime the conjugal partnership may use both in the land and the building, but it does so not as owner but in the exercise of the right of usufruct.

Wong vs. IAC, GR No. 70082, August 19, 1991

FACTS: Romario Henson married Katrina on January 1964. They had 3 children however, even during the early years of their marriage, the spouses had been most of the time living separately. During the marriage or on

about January 1971, the husband bought a parcel of land in Angeles from his father using the money borrowed from an officemate. Sometime in June 1972, Katrina entered an agreement with Anita Chan where the latter consigned the former pieces of jewelry valued at P321,830.95. Katrina failed to return the same within the 20 day period thus Anita demanded payment of their value. Katrina issued in September 1972, check of P55,000 which was dishonored due to lack of funds. The spouses Anita Chan and Ricky Wong filed action for collection of the sum of money against Katrina and her husband Romarico. The reply with counterclaim filed was only in behalf of Katrina. Trial court ruled in favor of the Wongs then a writ of execution was thereafter issued upon the 4 lots in Angeles City all in the name of Romarico Henson married to Katrina Henson. 2 of the lots were sold at public auction to Juanito Santos and the other two with Leonardo Joson. A month before such redemption, Romarico filed an action for annulment of the decision including the writ and levy of execution.

ISSUE: WON debt of the wife without the knowledge of the husband can be satisfied through the conjugal property.

HELD: The spouses had in fact been separated when the wife entered into the business deal with Anita. The husband had nothing to do with the business transactions of Katrina nor authorized her to enter into such. The properties in Angeles were acquired during the marriage with unclear proof where the husband obtained the money to repay the loan. Hence, it is presumed to belong in the conjugal partnership in the absence of proof that they are exclusive property of the husband and even though they had been living separately. A wife may bind the conjugal partnership only when she purchases things necessary for support of the family. The writ of execution cannot be issued against Romarico and the execution of judgments extends only over properties belonging to the judgment debtor. The conjugal properties cannot answer for Katrina’s obligations as she exclusively incurred the latter without the consent of her husband nor they did redound to the benefit of the family. There was also no evidence submitted that the administration of the partnership had been transferred to Katrina by Romarico before said obligations were incurred. In as much as the decision was void only in so far as Romarico and the conjugal properties

14

concerned, Spouses Wong may still execute the debt against Katrina, personally and exclusively.

LILIUS, ET AL. vs. THE MANILA RAILROAD COMPANY, G.R. No. L-39587, March 24, 1934

FACTS: Lilius was driving with his wife and daughter for sightseeing in Pagsanjan Laguna. It was his first time in the area and he was entirely unacquainted with the conditions of the road and had no knowledge of the existence of a railroad crossing. Before reaching the crossing in question, there was nothing to indicate its existence and, it was impossible to see an approaching train. At about seven or eight meters from the crossing the plaintiff saw an auto truck parked on the left side of the road. Several people, who seemed to have alighted from the said truck, were walking on the opposite side. He slowed down and sounded his horn for the people to get out of the way. With his attention thus occupied, he did not see the crossing but he heard two short whistles. Immediately afterwards, he saw a huge black mass fling itself upon him, which turned out to be locomotive No. 713 of the MRC’s train. The locomotive struck the plaintiff’s car right in the center. The 3 victims were injured and were hospitalized.

Lilus filed a case against MRC in the CFI. Answering the complaint, it denies each and every allegation thereof and, by way of special defense, alleges that the Lilius, with the cooperation of his wife and coplaintiff, negligently and recklessly drove his car, and prays that it be absolved from the complaint.

The CFI decided in favor of Lilius. The 2 parties appealed said decision, each assigning errors on said judgment.

ISSUE:

1) WON Manila Railroad Company is liable for damages

2) WON the sums of money fixed by the court a quo as indemnities for damages proper:

Injuries sutained by Lilius

for injuries sustained by wife and child

for loss of domestic service of wife to husband

HELD: The judgment appealed from is affirmed in toto, with the sole modification on interest to be added on the indemnity in favor of Lilius.

1. YES. Upon examination of the oral as well as of the documentary evidence, this court is of the opinion that the accident was due to negligence on the part of the defendant-appellant company alone, for not having had on that occasion any semaphore at the crossing to serve as a warning to passers-by of its existence in order that they might take the necessary precautions before crossing the railroad; and, on the part of its employees — the flagman and switchman, for not having remained at his post at the crossing in question to warn passers-by of the approaching train

Although it is probable that the defendant-appellant entity employed the diligence of a good father of a family in selecting its aforesaid employees, however, it did not employ such diligence in supervising their work and the discharge of their duties. The diligence of a good father of a family, which the law requires in order to avoid damage, is not confined to the careful and prudent selection of subordinates or employees but includes inspection of their work and supervision of the discharge of their duties.

2. a. With respect to the plaintiffs’ appeal, the first question to be decided is that raised by Lilius relative to the insufficiency of the sum of P5,000 which the trial court adjudicated to him by way of indemnity for damages consisting in the loss of his income as journalist and author as a result of his illness. As to the amount of P10,000 claimed by Lilius as damages for the loss of his wife’s services in his business, which services consisted in going over his writings, translating them into foreign languages and acting as his secretary, in addition to the fact that such services formed part of the work whereby he realized a net monthly income of P1,500, there is no sufficient evidence of the true value of said services nor to the effect that he needed them during her illness and had to employ a translator to act in her stead.

b. Taking into consideration the fact that the wife — in the language of the court, which saw her at the trial — “young and beautiful and the big scar,

15

which she has on her forehead caused by the lacerated wound received by her from the accident, disfigures her face and that the fracture of her left leg has caused a permanent deformity which renders it very difficult for her to walk”, and taking into further consideration her social standing, neither is the sum adjudicated to her for patrimonial and moral damages, excessive.

As to the indemnity in favor of the child neither is the same excessive, taking into consideration the fact that the lacerations received by her have left deep scars that permanently disfigure her face and that the fractures of both her legs permanently render it difficult for her to walk freely, continuous extreme care being necessary in order to keep her balance in addition to the fact that all of this unfavorably and to a great extent affect her matrimonial future.

c. Lilius also seeks to recover the sum of P2,500 for the loss of what is called Anglo-Saxon common law “consortium” of his wife, that is, “her services, society and conjugal companionship”, as a result of personal injuries which she had received from the accident now under consideration.

Under the law and the doctrine of this court, one of the husband’s rights is to count on his wife’s assistance. This assistance comprises the management of the home and the performance of household duties. However, nowadays when women, in their desire to be more useful to society and to the nation, are demanding greater civil rights and are aspiring to become man’s equal in all the activities of life, marriage has ceased to create the presumption that a woman complies with the duties to her husband and children, which the law imposes upon her, and he who seeks to collect indemnity for damages resulting from deprivation of her domestic services must prove such services. In the case under consideration, apart from the services of his wife as translator and secretary, the value of which has not been proven, Lilius has not presented any evidence showing the existence of domestic services and their nature, rendered by her prior to the accident, in order that it may serve as a basis in estimating their value.

Furthermore, inasmuch as a wife’s domestic assistance and conjugal companionship are purely personal and voluntary acts which neither of the spouses may be compelled to render, it is necessary for the party claiming

indemnity for the loss of such services to prove that the person obliged to render them had done so before he was injured and that he would be willing to continue rendering them had he not been prevented from so doing

NOTES:

However, in order that a victim of an accident may recover indemnity for damages from the person liable therefor, it is not enough that the latter has been guilty of negligence, but it is also necessary that the said victim has not, through his own negligence, , contributed to the accident.

It appears that Lilius took all precautions which his skill and the presence of his wife and child, driving his car at a speed which prudence demanded according to the circumstances and conditions of the road, slackening his speed in the face of an obstacle and blowing his horn upon seeing persons on the road. If he failed to stop, look and listen before going over the crossing, in spite of the fact that he was driving at 12 miles per hour after having been free from obstacles, it was because, his attention having been occupied in attempting to go ahead, he did not see the crossing in question, nor anything, nor anybody indicating its existence, as he knew nothing about it beforehand. The first and only warning, which he received of the impending danger, was two short blows from the whistle of the locomotive immediately preceding the collision and when the accident had already become inevitable.

Jovellanos v. CA, G.R. No. 100728 June 18, 1992

Facts: Daniel Jovellanos contracted with Philamlife a lease and conditional sale agreement of a property. When the agreement took place, Daniel was still married to his first wife, Leonor, with whom he had three children. Leonor died on January 2, 1959. On May 30, 1967, Daniel was remarried to Annette (respondent). On December 18, 1971, Mercy (daughter from first marriage) and her husband, built an extension at the back of the said property. On January 8, 1975, the lease was paid and Philamlife executed a deed of absolute sale to Daniel. The following day, he then donated the said

16

property to his children in the first marriage (petitioners). On September 8, 1985, Daniel died.

Annette now claims that the said property is the conjugal property belonging to the second marriage due to the fact that the deed of absolute sale was dated during the celebration of their marriage (Jan. 8, 1975).

Issue: To which marriage does the property belong to as conjugal property?

Held: The Court held that the said property belongs to the second marriage, but also proclaims that reimbursements should be made to the children of the first marriage (in line with ART 118 of the FC).

The contract entered into by Daniel and Philamlife is specifically denominated as a "Lease and Conditional Sale Agreement" with a lease period of twenty years. During the twenty-year period, Daniel had only the right of possession over the property. The lessor transfers merely the temporary use and enjoyment of the thing leased. Generally, ownership is transferred upon delivery, however, the ownership may still be with the seller until full payment of the price is made.

Only at the time when the payments are made in full will the deed of absolute sale be given, entitling the buyer (Daniel) as the true owner, rather than just having inchoate rights to the property. The time when he was able to pay the remaining balance, he was already married to his second wife, Annette, which makes the said property as their conjugal property.

ART 118 of FC: “any amount advanced by the partnership or by either or both spouses shall be reimbursed”

Depriving the children from the first will be unfair due to the fact that the lease was contracted during the first marriage, wherein a portion of the payment came from.

Ching v. CA, 423 SCRA 356, February 23, 2004

FACTS: Philippine Blooming Mills Company, Inc. (PBMCI) obtained two loans from the Allied Banking Corporation (ABC). (PBMCI) Executive Vice-

President Alfredo Ching executed a continuing guaranty with the ABC for the payment of the said loan. The PBMCI defaulted in the payment of all its loans so ABC filed a complaint for sum of money against the PBMCI. Trial court issued a writ of preliminary attachment against Alfredo Ching requiring the sheriff of to attach all the properties of said Alfredo Ching to answer for the payment of the loans. Encarnacion T. Ching, wife of Alfredo Ching, filed a Motion to Set Aside the levy on attachment allegeing inter alia that the 100,000 shares of stocks levied on by the sheriff were acquired by her and her husband during their marriage out of conjugal funds. Petitioner spouses aver that the source of funds in the acquisition of the levied shares of stocks is not the controlling factor when invoking the presumption of the conjugal nature of stocks under Art. 121 and that such presumption subsists even if the property is registered only in the name of one of the spouses, in this case, petitioner Alfredo Ching. According to the petitioners, the suretyship obligation was not contracted in the pursuit of the petitioner-husband’s profession or business.44

ISSUE: WON 100,000 shares of stocks may be levied on by the sheriff to answer for the loans guaranteed by petitioner Alfredo Ching

HELD: No.

RATIO: The CA erred in holding that by executing a continuing guaranty and suretyship agreement with the private respondent for the payment of the PBMCI loans, the petitioner-husband was in the exercise of his profession, pursuing a legitimate business.

The shares of stocks are, thus, presumed to be the conjugal partnership property of the petitioners. The private respondent failed to adduce evidence that the petitioner-husband acquired the stocks with his exclusive money.

The appellate court erred in concluding that the conjugal partnership is liable for the said account of PBMCI.

Article 121 provides: The conjugal partnership shall be liable for: (1) All debts and obligations contracted by the husband for the benefit of the

17

conjugal partnership, and those contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership.

For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must be a showing that some advantages accrued to the spouses.

In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was benefited by the petitioner-husband’s act of executing a continuing guaranty and suretyship agreement with the private respondent for and in behalf of PBMCI. The contract of loan was between the private respondent and the PBMCI, solely for the benefit of the latter. No presumption can be inferred from the fact that when the petitioner-husband entered into an accommodation agreement or a contract of surety, the conjugal partnership would thereby be benefited. The private respondent was burdened to establish that such benefit redounded to the conjugal partnership.

G.R. No. L-19346, Lacson et al. v. Diaz, 14 SCRA 183, May 31, 1965

The facts of this case are not disputed:

In connection with a final decision rendered by the Court of First Instance of Negros Occidental in Civil Case No. 5790 (Soledad L. Lacson, et al. v. Abelardo G. Diaz), sentencing therein defendant to pay the plaintiffs the sum of P97,532.93 with legal interest thereon from July 1, 1960 until fully paid, plus a sum equivalent to 25% of the total amount as attorney's fees, the court issued a writ of execution on August 1, 1961. On August 7, 1961, the Provincial Sheriff of Negros Occidental sent to the manager of Talisay-Silay Milling Company, wherein defendant Diaz was employed, a notice to garnish one-third of his monthly salary and of any other personal properties belonging to said defendant, to cover the total amount of P132,718.30.

Diaz filed with the court a motion to quash the writ of execution and to lift the notice of garnishment (of his salary), on the ground that the same are not enforceable against his present family. It was claimed that since the money-judgment arose out of a contract entered into by him during his first

marriage said judgment cannot be enforced against his salaries which form part of the conjugal properties of the second marriage. Plaintiffs opposed this motion, for the reason that re-marriage is not a cause for extinction of obligations. As his aforesaid motion after hearing was denied by the court for lack of merit, the defendant instituted the present appeal.

Appellant does not dispute the existence of the money-judgment against him in the amount abovestated, which decision was rendered in 1947 and affirmed by the appellate court in 1950. It appears, however, that appellant, who became a widower in 1951, remarried in 1960. The writ of execution and notice of garnishment in this case were issued and implemented in 1961. It is now contended that, as the conjugal partnership resulting of the second marriage is different from that of the first marriage, during which existence the obligation arose, such obligation, as far as the second conjugal partnership is concerned, is personal to the husband and cannot be charged against the properties of the second union. And, since his salaries form part of the conjugal asset the same cannot be garnished to satisfy his personal obligations. In support of this proposition, appellant cites Article 163 of the new Civil Code and the ruling of this Court that the right of the husband to one-half of the assets of the conjugal partnership does not vest until the dissolution of the marriage.[[1]]

Article 163 of the new Civil Code relied upon by the appellant provides:

ART. 163. The payment of debts contracted by the husband or the wife before the marriage shall not be charged to the conjugal partnership.

Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.

However, the payment of debts contracted by the husband or the wife before the marriage, and that of fines and indemnities imposed upon them, may be enforced against the partnership assets after the responsibilities enumerated in article 161 have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the time of the liquidation of the partnership such spouse shall be charged for what has been paid for the purpose above-mentioned.

18

As a general rule, therefore, debts contracted by the husband or the wife before the marriage,[[2]] as well as fines and pecuniary indemnities imposed thereon, are not chargeable to the conjugal partnership. However, such obligations may be enforced against the conjugal assets if the responsibilities enumerated in Article 161[[3]] of the new Civil Code have already been covered, and that the obligor has no exclusive property or the same is insufficient. Considering that the enforceability of the personal obligations of the husband or wife, against the conjugal assets, forms the exception to the general rule, it is incumbent upon the one who invokes this provision or the creditor to show that the requisites for its applicability are obtaining.

In the instant case, although it is not controverted that there is due and owing the plaintiffs-appellees a certain sum of money from the appellant-debtor — a personal obligation yet, it has not been established that the latter does not have properties of his own or that the same are not adequate to satisfy appellees' claim. Furthermore, there is no showing that the responsibilities named in Article 161 of the new Civil Code have already been covered in order that the personal obligation of the husband may be made chargeable against the properties of the second marriage.

IN VIEW OF THE FOREGOING CONSIDERATIONS, this case is hereby remanded to the court of origin for further proceedings, in accordance with the aforestated observation. No costs. So ordered.

People v. Lagrimas, G.R. No. L-25355, August 28, 1969

FACTS: Froilan Lagrimas was charged for the murder of Pelagio Cagro. Thereafter, the heirs of Cagro filed a motion for the issuance of a writ of preliminary attachment on the property of the accused, which was granted. Lagrimas was convicted and sentenced to suffer the penalty of reclusion perpetua and to indemnify the appellants. The judgment became final. The lower court issued a writ of execution to cover the civil indemnity. A levy was had on 11 parcels of land declared for tax purposes in the name of the accused and the sale thereof at public auction was scheduled. However, the wife of the accused, Mercedes Lagrimas, filed a petition to quash the said attachment contending that the property belonged to the conjugal

partnership and could not be held liable for pecuniary indemnity the husband was required to pay. Her petition was granted. Another judge set aside the said order. But upon Mercedes’ filing a motion for reconsideration, a third judge revived the original order, declaring such attachment and the writ of execution thereafter issued null and void.

ISSUE: WON properties from the conjugal properties of Mercedes and Froilan can be held liable for the pecuniary indemnity incurred by the latter.

HELD: Yes. Fines and indemnities imposed upon either husband or wife “may be enforced against the partnership assets after the responsibilities enumerated in article 161 have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; xxx.”

It is quite plain, therefore, that the period during which such a liability may be enforced presupposes that the conjugal partnership is still existing for the law speaks of “partnership assets.” That upon complying with the responsibilities enumerated in article 161, the fines and indemnities imposed upon a party of the conjugal partnership will be satisfied.

If the appealed order were to be upheld, Froilan would be in effect exempt therefrom and the heirs of the offended party being made to suffer still further; that for a transgression of the law by either husband or wife, the rest of the family may be made to bear burdens of an extremely onerous character.

Uy vs CA GR No 109557 November 29, 2000

FACTS: This case is a dispute between Teodoro L. Jardeleza (herein respondent) on the one hand, against his mother Gilda L. Jardeleza, and sister and brother-in-law, the spouses Jose Uy and Glenda Jardeleza (herein petitioners) on the other hand. The controversy came about as a result of Dr. Ernesto Jardeleza, Sr.’s suffering of a stroke which left him comatose and bereft of any motor or mental faculties. Said Ernesto Jardeleza, Sr. is the father of herein respondent Teodoro Jardeleza and husband of herein private respondent Gilda Jardeleza.

19

Respondent wife filed a petition for the declaration of incapacity of his husband and assumption of sole powers of administration of conjugal properties, and authorization to sell one piece of real properties.

RTC granted said petition. Respondent opposed and filed a Motion for Reconsideration contending that such petition is essentially a petition for guardianship of the person and properties of Jardeleza Sr and that a summary proceedings was irregularly applied.

RTC denied the motion. CA reversed RTC’s decision for lack of due process on the part of the incapacitated spouse; it did not require him to show cause why the petition should not be granted.

ISSUE: WON petitioner Gilda L. Jardeleza as the wife of Ernesto Jardeleza, Sr. who suffered a stroke, a cerebrovascular accident, rendering him comatose, without motor and mental faculties, and could not manage their conjugal partnership property may assume sole powers of administration of the conjugal property under Article 124 of the Family Code and dispose of a parcel of land with its improvements, worth more than twelve million pesos, with the approval of the court in a summary proceedings, to her co-petitioners, her own daughter and son-in-law, for the amount of eight million pesos.

RULING: NO. “ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for a proper remedy which must be availed of within five years from the date of the contract implementing such decision.

“In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the 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. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be

perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors..”

Art 124 does not apply to cases where the non-consenting spouse is incapacitated or incompetent to give consent. The situation contemplated in Art 124 is that one where the spouse is absent, or separated in fact or has abandoned the other or consent is withheld or cannot be obtained. . Such rules do not apply to cases where the non-consenting spouse is incapacitated or incompetent to give consent. In this case, the trial court found that the subject spouse "is an incompetent" who was in comatose or semi-comatose condition, a victim of stroke, cerebrovascular accident, without motor and mental faculties, and with a diagnosis of brain stem infarct. In such case, the proper remedy is a judicial guardianship proceedings under Rule 93 of the 1964 Revised Rules of Court.

Consequently, a spouse who desires to sell real property as such administrator of the conjugal property must observe the procedure for the sale of the ward’s estate required of judicial guardians under Rule 95, 1964 Revised Rules of Court, not the summary judicial proceedings under the Family Code. Court affirmed in toto CA’s decision.

20