persons and family relations case 7-12

8/10/2019 Persons and Family Relations Case 7-12

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-25775 April 26, 1968

TOMASITA BUCOY,plaintiff-appellant,vs.REYNALDO PAULINO, ET AL.,defendants,REYNALDO PAULINO and EUFEMIA BERNARDO CRAMER,defendants-appellants,LEOPOLDO PAULINO,intervenor-appellant,PHILIPPINE COMMERCIAL and INDUSTRIAL BANK,intervenor-appellee,TINIO LUMBER CO., INC.,intervenor-appellee.

Celestino Ocampo and Victoriano David for plaintiff-appellant.Zoilo A. Andin, Dakila Castro and Associates for defendants-appellants.Benjamin C. Reyes for intervenor-appellant.San Juan, Africa and Benedicto for intervenor-appellee.

SANCHEZ, J.:

Plaintiff Tomasita Bucoy and defendant Reynaldo Paulino were married on October 29, 1956. The husbandoccupied himself with the business of buying and selling PX goods, second hand cars and householdappliances with the help of his wife. With their savings, they acquired seven parcels of land in Angeles,Pampanga: six lots, Lots 11, 12, 13, 14, 15 and 16, in 1960; and lot, Lot 10, in 1962 all from Severina

Realty Corporation, on installment basis.

In 1961, the spouses commenced the construction of Pauline's Motel on the six lots. This motel wasopened for business in July of 1962, was in full operation with 33 equipped rooms by August of the sameyear. As funds were not sufficient, some materials in the construction as well as the motel furnishings wereobtained on credit. Amongst the creditors was intervenor Tinio Lumber Company, Inc. The couple, too, hadto draw additional funds from intervenor Leopoldo Paulino, father of Reynaldo. Reynaldo also had toborrow from his co-defendant Eufemia Bernardo.

On the seventh lot (Lot 10) beside the motel, intervenor Leopoldo Paulino put up a bar, Pauline's Cavern,with his own money. Pauline's Cavern opened for business in January of 1963.

In the latter part of 1957, defendant Reynaldo Paulino was following up his father's loan with the GSIS inMalacaang. There, he met defendant Eufemia Bernardo, heretofore mentioned, single, who was a collegestudent taking the foreign service course in the University of the Philippines, at the time social secretary tothe First Lady. Soon, relations between Reynaldo and Eufemia became intimate. Eufemia and Reynaldoeven went to Hongkong, brought back articles which were disposed of at a profit. Eufemia ingratiatedherself to the parents and relatives of Reynaldo, who obtained favors from her. As early as 1958, Eufemiaknew that Reynaldo was a married man. She did not mind playing second fiddle to the legitimate wife. In


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February of 1963, she, however, did stop the tracks of another woman who appeared to show interest inReynaldo.

Back to the spouses Tomasita Bucoy and Reynaldo Paulino. Following their marriage, they took upresidence in Cavite City. Apparently by reason of their buy-and-sell business, Reynaldo frequented Angeles

City, while Tomasita remained in Cavite City. Reynaldo had varied interests. He was an actor in themovies, became a lawyer in 1957, at one time a BIR investigator, and in the late 1962 entered movieproduction through Pauline's Productions, Inc. It was only in 1959 that Tomasita started staying in AngelesCity, although she made trips to Cavite City.

Through remarks made by friends of Reynaldo, Tomasita became aware of the extra-legal relationshipbetween her husband and Eufemia Bernardo. She, too, came upon a letter dated May 1, 1961, addressedby Eufemia to Reynaldo with a complimentary close "I love you Femy".

On August 23, 1962, the Torrens title (TCT 30215-R) to the six lots (Lots 11, 12, 13, 14, 15 and 16) wasobtained in the name of Reynaldo Paulino, following registration of the deed of sale of the same date

executed in his favor by Severina Realty Corporation.

With the help of Eufemia Bernardo who is known to the Philippine Commercial and Industrial Bank (PCIB),Reynaldo Paulino obtained from said bank two real estate mortgage loans with the six lots (TCT 30215-R)as collateral: The first for P200,000 on December 12, 1962; and the second on January 2, 1963 forP50,000. On May 3, 1963, a third mortgage for P50,000 was executed on the seventh lot (Lot 10) coveredby TCT 32919-R issued to Reynaldo Paulino on April 4, 1963.

Upon the release of this third loan on May 6, 1963, the entire amount thereof was credited by PCIB to theaccount of Eufemia Bernardo. Reason for this is that for the construction of the motel, Reynaldo borrowedfrom Eufemia a total of P105,000. And, the amount of P50,000 (proceeds of the third loan) was added to

the P55,000 theretofore paid by Reynaldo to Eufemia, to liquidate the said P105,000 loan.

Tomasita Bucoy took part in the management of Pauline's Motel. She kept tab of the daily receipt since themotel opened for business in July, 1962 until February, 1963.

It was in this month February, 1963 that Tomasita Bucoy saw Eufemia Bernardo inside Pauline'sMotel1and learned that she was occupying a room therein with the consent of her husband, ReynaldoPaulino. Tomasita left for Cavite City and resided with her parents.

From here on, events happened in rapid succession. Reynaldo Paulino was beset by troubles. He had topay numerous creditors. There was the quarrel with his wife to cope with. He decided to dispose of theproperties. He turned to Eufemia Bernardo to look for buyers. A power of attorney in her favor was draftedin May, 1963. This remained unsigned. Because Eufemia decided to purchase the properties herself.Meanwhile, Eufemia stayed in the motel, received its income when Reynaldo was not around.

So it is, that on June 18, 1963, two deeds of absolute sale were executed by Reynaldo Paulino in favor ofEufemia Bernardo: one, covering the six lots, recites a consideration of P470,000; and the other, theseventh lot, for P25,000, both including the improvements thereon. In these two conveyances, a commonprovision appears:


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That the vendee do (es) hereby accept this Deed of Absolute Sale, and agree to all the conditionsprovided herein, and further, binds herself to assume any and all existing obligations which hereinvendor has at the time of the execution of this deed pertaining to the property subject matter of thisinstrument.2

Upon the execution of these two documents, Eufemia Bernardo issued two checks purportedly as partialpayment: one for P50,000 in favor of Reynaldo Paulino; and another for P48,500 payable to LeopoldoPaulino for the latter's advances in the construction of Pauline's Motel. To be noted is that at the back ofboth checks, Eufemia Bernardo wrote the following condition: "This check shall be due upon the counter-signature below of the maker." Both checks were never countersigned, never cashed.

On July 1, 1963, Eufemia Bernardo executed a real estate mortgage on all the seven lots in favor of PCIBto guarantee a principal obligation of P195,000. Parenthetically, this mortgage was confirmed in a"Confirmation of Real Estate Mortgage" executed by Eufemia Bernardo in favor of PCIB on March 23,1964, long after the present suit was started.

After the July 1 mortgage for P195,000 was executed by defendant Bernardo, PCIB noted that bothdocuments of sale of June 18 aforesaid stipulated an assumption by Eufemia Bernardo of obligations infavor of third parties and that the obligation in favor of PCIB was not clearly stated. Another deed, with thebank's specifications, was thereupon prepared. The deeds of June 18, 1963 were not registered.

Accordingly, a new deed of sale with assumption of the PCIB mortgages over the same seven lotsdescribed in the two June 18, 1963 conveyances, was executed by Reynaldo Paulino in favor o f EufemiaBernardo on July 5, 1963, stipulating:

Now, therefore, for and in consideration of the total amount of Four Hundred Ninety Five ThousandPesos (P495,000), Philippine Currency, of which the One Hundred Ninety Five Thousand Pesos,

(P195,000.00), Philippine Currency,is hereby acknowledged to have been received in cash

by theVendor and the remaining balance of Three Hundred Thousand Pesos (P300,000.00), PhilippineCurrency, to be in the form of Assumption of the Mortgages above-mentioned, the Vendor by thesepresents, hereby sells, transfers and conveys unto and in favor of the Vendee, [her] successor andassigns, the afore-described parcels of land together with the improvements thereon, free from allliens and encumbrances, except [that] the Real Estate Mortgages which are annotated on the backare assumed herein.3

Both the real estate mortgage of July 1, 1963 executed by Eufemia Bernardo in favor of PCIB and the July5, 1963 deed of sale with assumption of mortgages executed by Reynaldo Paulino and Eufemia Bernardowere recorded in the Office of the Register of Deeds on July 8 following. And, new transfer certificates oftitle (No. 33899-R for the six lot, and No. 33900-R for the seventh) were issued to Eufemia Bernardo.Recorded on these two titles, in addition to the three previous mortgages, is the mortgage of July 1, 1963for P195,000.

On the same day July 8, 1963 Eufemia Bernardo married Richard Cramer, a serviceman in theAmerican armed forces. Elated at learning this, Tomasita Bucoy made a trip in August to Angeles City.There, Tomasita learned of the sale of the properties.


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All these events culminated in the filing by Tomasita Bucoy of a complaint with the Court of First Instance ofPampanga4on September 19, 1963 seeking annulment of the deed of sale with assumption of mortgagesof July 5, 1963 and the cancellation of the titles issued in favor of Eufemia Bernardo. Plaintiff predicated heraction upon Article 173 of the New Civil Code. Eufemia Bernardo and Reynaldo Paulino were made partydefendants.

Traversing the complaint, Eufemia Bernardo avers that she is a purchaser for value in good faith who reliedon the titles of Reynaldo Paulino; and that even on the assumption that the allegations of the complaintwere true, plaintiff, by availing herself of the proceeds of the contract, has ratified the transaction betweensaid defendant and her co-defendant Reynaldo Paulino.

Reynaldo Paulino, upon the other hand, filed a cross-claim against Eufemia Bernardo, his co-defendant. Hecharges his co-defendant's refusal to pay the consideration, and fraud and misrepresentation, and seeksrescission of the two deeds of sale of June 18, 1963, and the annulment of the deed of sale withassumption of mortgages of July 5, 1963.

The following parties intervened: Leopoldo Paulino (and his wife, Virginia D. Paulino), alleging ownership of"Pauline's Cavern" and part ownership of "Pauline's Motel"; Tinio Lumber Co., Inc., upon a prior moneyjudgment in its favor against Reynaldo Paulino; and PCIB, praying that defendant Reynaldo Paulino bemade to pay the loans secured by the four mortgages heretofore mentioned in the total sum of P495,000,plus interests due, should the court "finally render judgment in favor of plaintiff."

On June 28, 1965, after trial, the lower court rendered judgment, viz:

WHEREFORE, the Court orders:

(1) Plaintiff's complaint for annulment dismissed;

(2) Defendant Reynaldo Paulino's cross-claim for P182,000.00 against Eufemia Bernardo granted.The latter shall pay the spouses Reynaldo Paulino and Tomasita Bucoy the said amount withinthirty (30) days after the decision becomes final;

(3) Failure on the part of defendant Bernardo to pay the spouses Reynaldo Paulino and TomasitaBucoy and the intervenor Tinio Lumber Company, Incorporated within the period of thirty (30) days,the court orders the contract of sale dated July 5, 1963, Exhibit 6-Bernardo, rescinded; the partiesshall be restored to their status quoprior to July 5, 1963, without prejudice [to] the above-mentioned real estate mortgages in favor of the Philippine Commercial and Industrial Bank;

(4) That defendant Bernardo shall pay Tinio Lumber Company, Incorporated the sum ofP13,568.00 with twelve (12%) per cent interest per annum and twenty-five (25%) per cent of theunpaid amount as attorney's fees within the same period of thirty (30) days;

(5) That the real estate mortgages of these properties in favor of the Philippine Commercial andIndustrial Bank to secure the amount of P495,000.00 loan extended to Reynaldo Paulino andEufemia Bernardo are considered valid and subsisting on said properties;


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(6) That Reynaldo Paulino shall pay Leopoldo Paulino the sum of P95,000.00 out of the unpaidpurchase price of P182,000.00 due from Eufemia Bernardo;

No pronouncement as to costs.5

Upon motions for reconsideration filed by Tomasita Bucoy, Reynaldo Paulino, and Eufemia Bernardo, thecourt, on September 29, 1965, issued a supplemental decision, the dispositive part of which reads:

Conformably to the foregoing considerations, the dispositive part of the decision dated June 28,1965, is hereby supplemented to read as follows:

1. That defendant, Eufemia Bernardo, shall pay an interest of 6% per annum [on] the sum ofP182,000.00 from the date of the decision, June 28, 1965, until full payment to the spousesTomasita Bucoy and Reynaldo Paulino.

2. That the appointment of a receiver is hereby denied.

3. That status quo continues Bernardo continues the possession of the motel; Leopoldo Paulinoof the Cavern, until the latter shall receive the sum of P50,000.00 out of the P182,000.00, above-mentioned when he vacates the Cavern in favor of Eufemia Bernardo, who will be placed inpossession of said Cavern;

4. That the defendant Eufemia Bernardo's bond shall expressly assume to pay the sum ofP182,000.00 together with the 6% interest if the decision is affirmed; defendant Bernardo shall filesaid bond of P200,0006with sufficient and good surety to be approved by the Court within ten (10)days from receipt of this supplemental decision.7

From the foregoing decisions, plaintiff Tomasita Bucoy, defendant Reynaldo Paulino, and defendantEufemia Bernardo appealed.

1. The lower court properly found that the properties involved in this litigation are conjugal. Thelands were acquired and the improvements thereon were constructed during the marriage ofTomasita Bucoy and Reynaldo Paulino. By Article 160 of the Civil Code, all the property of themarriage is presumed to belong to the conjugal partnership, "unless it be proved that it pertainsexclusively to the husband or to the wife." Defendant Eufemia Bernardo, who broached thequestion regarding the nature of the properties in litigation in her answer to the wife's complaint,failed to offer any evidence that would rebut the presumption that the properties are conjugal.Registration alone of the properties in the name of the husband does not destroy the conjugalnature of the properties.8

This brings us to the question: Why were Torrens titles No. 30215-R covering the six lots and No.32919-R for the seventh lot all in the name of Reynaldo Paulino alone is "single"?

It is to be recalled that during the time that Eufemia Bernardo and Reynaldo Paulino were havingtheir extra-marital relations, the former advanced to the latter sums of money totalling P105,000.This is admitted by both defendants. To protect the loan of P105,000 given by Eufemia Bernardo,


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and faced with a threat that she would not help Reynaldo Paulino procure loans with PCIB if in thedeed of sale dated August 23, 1962 executed by Severina Realty Corporation in favor of ReynaldoPaulino the typewritten word "married" is not cancelled and substituted with "single", Reynaldo'sresistance broke down. He was prevailed upon to take out titles in his name as "single". Although,of course, Eufemia Bernardo all along knew that Reynaldo Paulino was married to Tomasita

Bucoy.

It is well to remember that in the contracts to sell with the Severina Realty Corporation, thedocuments were in the name of Reynaldo Paulino, marriedto Tomasita B. Paulino.

But, Reynaldo had to yield. Thus it is, that in the deed of sale executed by Severina RealtyCorporation on August 23, 1962 covering the first six lots, the typewritten word "married" afterReynaldo Paulino had to be crossed out and substituted in ink with the word "single". Similarly, inthe second deed of sale covering the seventh lot executed by the same corporation on the 4th ofApril, 1963, Reynaldo Paulino was there mentioned as single, in spite of the fact that the contractto sell covering the same lot recited that he was "married to Tomasita B. Paulino." And finally,

when the mortgages in favor of PCIB and the deeds of sale in favor of Eufemia Bernardo wereexecuted by Reynaldo Paulino, he appeared as "single".

2. It is on the issue of estoppel that we next address ourselves. Specifically, we are asked toreverse the ruling below that plaintiff is in estoppel to assail the deed of sale with assumption ofmortgages dated July 5, 1963 as against Eufemia Bernardo.

The trial court lined up against Tomasita Budoy the alleged fact that "plaintiff tolerated thehusband's name to remain in the titles" and "never lifted a finger to correct such titles."9

Of course, plaintiff knew of the initial acquisition of the lands upon the two contracts to sell from

Severina Realty Corporation. But did she really have knowledge that the titles were taken out in thename of her husband Reynaldo Paulino as "single"? It would seem unnatural for a wife whoalready was aware of her husband's infidelity to give her assent to the Torrens titles to theproperties being taken in his name as "single." That is quite offensive to her intelligence; she is aBachelor of Music graduate. One thing, of course, is for a wife to suffer in silence the maritalindiscretions of the husband. As we weigh this behaviour of the wife in the scales of domesticrelations values, we perceive nothing wrong with it. But to say that she would permit her husbandto take the titles to their properties as singleis another thing. She must either be stupid, which sheis not; or, she must be in collusion with her husband, which is not the case.

The truth of the matter is that it was quite impossible for Tomasita to know the exact wording in thetitles taken in the name of her husband, because after the deeds of sale of August 23, 1962 andApril 4, 1963 were executed and the titles taken out, those titles were immediately presented toand deposited with PCIB, for purposes of securing the required loans. They were never shown tothe wife.

Nor is it proper to charge plaintiff with knowledge of the sale of the properties by Reynaldo Paulinoto his co-defendant Eufemia Bernardo. At that time, the relations between husband and wife werealready strained. Precisely, on the dates of the two documents of sale of June 18, 1963 and that of


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July 5, 1963, plaintiff was already living with her parents in Cavite. We have no difficulty in sayingthat no wife would consent to the sale of property worth a big fortune to her husband's paramour.Tomasita's unrebutted evidence, we should add, is that she was only informed of the sale whenshe went to Angeles City in August of 1963 after which she lost no time in verifying the informationresulting in the present suit.

The familiar elements of estoppel in paisare: (1) there must have been a representation orconcealment of material facts; (2) the representation must have been made with knowledge of thefacts; (3) the party to whom it was made must have been ignorant of the truth of the matter; and (4)it must have been made with the intention that the other party would act upon it.10Appropriately tobe considered here is Article 1437 of the Civil Code, which reads:

Art. 1437. When in a contract between third persons concerning immovable property, oneof them is misled by a person with respect to the ownership or real right over the realestate, the latter is precluded from asserting his legal title or interest therein, provided allthese requisites are present:

(1) There must be fraudulent representation or wrongful concealment of facts known to theparty estopped;

(2) The party precluded must intend that the other should act upon the facts asmisrepresented;

(3) The party misled must have been unaware of the true facts; and

(4) The party defrauded must have acted in accordance with the misrepresentation.

Plaintiff has concealed no material facts. She made no representation at all. And, even on theassumption that plaintiff really knew that the titles were taken out by Reynaldo Paulinoas singleand that the latter, as such, conveyed the properties to Eufemia Bernardo, no properlegal conclusion may be drawn against her as one in estoppel. For, clearly there was no necessityon her part to disclose or assert facts or rights to defendant Eufemia Bernardo. Because, saiddefendant was not a trusting victim; she wasnot misled; she knew all along that her lover,Reynaldo Paulino, was married to plaintiff. Her knowledge was not merely constructive; it wasactual. And if Reynaldo Paulino appears in the titles and deeds as single, this fact came aboutbecause this defendant, who now claims estoppel, precisely wanted it to be that way for thepurpose of insuring payment of the loans totalling P105,000 she granted to her co-defendant.In truth, with Reynaldo Paulino appearing as "single" in the titles, his wife was written off from thetransactions in connection therewith; it was quite an easy matter for Reynaldo alone to execute as he did contracts on the proper ties to insulate Eufemia Bernardo from loss on her loans,without the wife's intervention and to the latter's prejudice. In fact, after the third mortgage of May3, 1963 was executed by Reynaldo Paulino, theentire amountof that loan P50,000 was credited by PCIB to the account of Eufemia Bernardo, in final payment of the total amount ofP105,000.00 borrowed by Reynaldo from her. There was no bad faith on plaintiff's part.


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The net result is that as against defendant Eufemia Bernardo, plaintiff Tomasita Bucoy is not inestoppel. On the contrary, this case is a prime example of a third party defendant Bernardo who was not misled into dealing with an apparent owner.11She acquired the properties in questionin bad faith.

3. Adverted to elsewhere in his opinion is that plaintiff's suit against defendants is to enforce herright upon the provisions of Article 173 of the Civil Code, thus:

Art. 173. The wife may, during the marriage, and within ten years from the transactionquestioned, ask the courts for the annulment of any contract of the husband entered intowithout her consent, when such consent is required, or any act or contract of the husbandwhich tends to defraud her or impair her interest in the conjugal partnership property.Should the wife fail to exercise this right, she or her heirs, after the dissolution of themarriage, may demand the value of property fraudulently alienated by the husband.

As we go into the legal history of Article 173 of the Civil Code, we find a marked difference

between the same and its predecessor, Article 1413, paragraph 2, of the Spanish Civil Code, whichprovides that:

Nevertheless, no alienation or agreement which the husband may make with respect tosuch [conjugal] property in contravention of this code or in fraud of the wife shall prejudiceher or her heirs.

Where the old codal precept (Article 1413, par. 2, just quoted) speaks of prejudice to the wife orher heirs in an alienation "in contravention of this code," such prejudice to the wife is eliminated inArticle 173 of the new Civil Code when it comes to a contract "entered into without her consent."The obvious reason is that such consent is now required under Article 166 of the new Civil Code;

whereas, under the provisions of the first paragraph of Article 1413 of the Spanish Civil Code, thehusband, in addition to his power as manager, "may for a valuable consideration alienate andencumber the property of the conjugal partnership without the consent of the wife." As the statutenow stands, the right of the wife is directed at "the annulment of any contract," referring to realproperty of the conjugal partnership12entered into by the husband "without her consent."

The plain meaning attached to the plain language of the law is that the contract, in its entirety,executed by the husband without the wife's consent, may be annulled by the wife. Had Congressintended to limit such annulment in so far as the contract shall "prejudice" the wife, such limitationshould have been spelled out in the statute. It is not the legitimate concern of this Court to recastthe law. As Mr. Justice Jose B. L. Reyes of this Court and Judge Ricardo C. Puno of the Court ofFirst Instance correctly stated, "[t]he rule (in the first sentence of Article 173) revokes Baello vs.Villanueva, 54 Phil. 213 and Uy Coque vs. Navas Sioca, 45 Phil. 430," in which cases annulmentwas held to refer only to the extent of the one-half interest of the wife.13The two deeds of sale ofJune 18, 1963 and the deed of sale of July 5, 1963 are null and void in toto 14as againstEufemia Bernardo.

The necessity to strike down the contract of July 5, 1963 as a whole, not merely as to the share ofthe wife, is not without its basis in the common-sense rule. To be underscored here is that upon the


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provisions of Articles 161, 162 and 163 of the Civil Code, the conjugal partnership is liable for manyobligations while the conjugal partnership exists. Not only that. The conjugal property is evensubject to the payment of debts contracted by either spouse before the marriage, as those for thepayment of fines and indemnities imposed upon them after the responsibilities in Article 161 havebeen covered (Article 163, par. 3), if it turns out that the spouse who is bound thereby, "should

have no exclusive property or if it should be insufficient." These are considerations that go beyondthe mere equitable share of the wife in the property. These are reasons enough for the husband tobe stopped from disposing of the conjugal property without the consent of the wife. Even morefundamental is the fact that the nullity is decreed by the Code not on the basis of prejudice but lackof consent of an indispensable party to the contract under Article 166.

Plaintiff's right to the annulment of the July 5, 1963 deed, as against Eufemia Bernardo, is on twogrounds:First. There is the fact that the sale was entered into by the husband without the wife'sconsent. Second. That contract also "tends to defraud her" and "impair her interest in the conjugalpartnership property." Right from the time Eufemia Bernardo prevailed upon her co-defendantReynaldo Paulino to place the titles to the conjugal property in the name of the latter as "single,"

through the three mortgages in favor of PCIB in which Eufemia Bernardo intervened and the twosales of June 18, 1963, to the last sale of July 5, 1963, there was the deliberate intent to oustplaintiff from her interest in the conjugal property.

It is true that defendant Bernardo asserted in her answer that even granting that the averments ofthe complaint are true, plaintiff is not entitled to an annulment of the sale in question upon the claimthat plaintiff availed herself of the proceeds or benefits of the contract. But, there is no evidencethat plaintiff Tomasita Bucoy benefited in any way from that transaction.

Accordingly, we rule that plaintiff is entitled to annul in their entirety the sales in all the deeds ofsale executed by Reynaldo Paulino in favor of his co-defendant Eufemia Bernardo.

4. The argument that the two deeds of sale of June 18, 1963, as well as the deed of sale of July 5,1963, are all tainted with fraud and were executed without the payment of the consideration dueReynaldo Paulino, to our mind, deserves careful scrutiny. For, written documents offer no shieldagainst the true and real intent and agreement of the parties. It ill behooves defendant Bernardo tojustify non-liability by reliance on the wording of the deed of July 5. Her argument collapses fromthe ineluctable logic of the circumstances hereinafter to be recited.

It is conceded in all quarters that at the time the two deeds of sale for a total of P495,000 weresigned on June 18, 1963, no money crossed hands from vendee to vendor. The record disclosesthat all along it was the intention of the parties that Eufemia Bernardo would produce an additionalloan of P195,000 from PCIB and turn over the proceeds thereof to Reynaldo Paulino, and tointervenor Leopoldo Paulino who also had given out money for the motel project.

Paragraph 6 of the answer in intervention of PCIB stoutly lends support to this view. Says thebank: 1wph1.t

6. It denies the allegations of par. 9 for the reasons stated in par. 4 hereof, answeringIntervenor further alleges that defendant Bernardo assumed the outstanding obligation of


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defendant Paulino in the total sum of P300,000.00 in favor of answering Intervenorand has obtained a further loan of P195,000.00 from answering Intervenor, likewisesecured by the properties subject matter of the complaint, the proceeds of which loan wasto pay the balance of the purchase price of the properties under the Deed of Sale withAssumption of Mortgage.15

And yet, the said documents of June 18, 1963 speak of the money "receipt of which in full is herebyacknowledged and confessed to my entire satisfaction."

Likewise, in pursuance of defendant Reynaldo Paulino's desire to extricate himself from thepressure of his creditors, it was specifically stipulated in the deeds on June 18, 1963 that thevendee (Bernardo) was to assume all existing obligations of Reynaldo Paulino pertaining to theproperty sold.

Eufemia Bernardo got the loan on July 1, 1963. But, the two deeds of sale of June 18 were notregistered. Because, as aforestated, PCIB objected to the assumption by Eufemia Bernardo, this

time its mortgagor, of other obligations, and the obligation in favor of the bank was not clearlystated. Eufemia Bernardo asked the notary to destroy the June 18 documents. She went back tosee Reynaldo Paulino at the latter's office, Aurea Bldg., Rizal Avenue, Manila, in the afternoon ofJuly 5, 1963. After kissing Reynaldo, she told him to sign the new deed of sale (July 5, 1963) uponthe excuse that she wanted to save on insurance premium. She misrepresented Reynaldo that thedocument of July 5 is substantially similar in terms to the two previous documents of June18.16Reynaldo was then busy paying his employees. He did not have the chance to examine thedocument carefully. He signed it on the strength of Eufemia's word.

The deed of sale of July 5, 1963 paved the way for the subsequent acts of Eufemia Bernardo. OnJuly, 8, 1963, she assured herself by recording that deed of July 5 and the July 1 mortgage, andprocuring titles in her name; then married Cramer on the same day July 8. Thereafter, in answer toReynaldo's letter of September 4, 1963 demanding payment of the balance of the purchase priceand reformation of the deed, Eufemia for the first time adopted a stiff attitude and wanted to pinReynaldo down to the terms of the deed of July 5, 1963, when she said:

. . . I have no desire to change the terms of our deed of sale because to do so would beinjecting conditions not previously agreed upon by us into the document. In the secondplace the sale has been consummated with the delivery of the property to me and theregistration of the instrument of sale with the Register of Deeds of Pampanga and thecorresponding transfer of the titles to the property in my name. Therefore, there is nothingmore that could or should be done.17

x x x x x x x x x

I am not a lawyer. I do not profess to know the law. But, will you not agree with me thatwhen an agreement is reduced in writing, the writing is the best evidence of thatagreement? Do you not agree that in this jurisdiction the document is always the bestevidence of all terms, conditions and stipulations precedent to or contemporaneous withthe execution of the document? 18


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When confronted, in the cross-claim of Reynaldo Paulino, with the transactions of June 18, 1963,Eufemia Bernardo asserted in paragraphs 2, 3 and 4 of her answer to the said cross-claim19thatwhat was prepared on June 18 was merely the "draft" of the contract of sale with assumption ofmortgage; that what was signed by the parties as the deed of sale of July 5, 1963 was the samedraft prepared on June 18, 1963; and that the deed of sale signed on July 5, 1963 was the

"onlyone (1) contract of sale with assumption of mortgage entered into between the cross-claimantand cross-defendant."20In court, Eufemia Bernardo at first declared that "there was no definitedeed of sale before July 5, except that one."21Apparently confident that the deeds of June 18,1963 were destroyed by the notary, she denied in court that there was ever any understandingbetween her and Reynaldo about her assumption of the obligations to third persons. But when oneof the two deeds of sale of June 18, 1963 the deed covering the six parcels was shown her,she repeated that it was but adraft. It was, however, signed by her; it was notarized. And, sheadmitted her signature thereon.

Other circumstances there are which would clearly indicate that Reynaldo Paulino would not haveparted with that property unless his obligations in reference to the same were all assumed by

Eufemia Bernardo. Before the deeds of June 18 were executed, Eufemia knew all along who wereReynaldo's creditors. Her checks, Exhibits 20, 20-A to 20-D (Bernardo), issued by her in paymentof the obligations of Reynaldo to those creditors are sufficient evidence of that fact. The land andbuilding were assessed at more than P500,000.00. The loan value given by the bank isP495,000.00. Surely enough, the sales price must have included not only the P495,000.00 but alsothe obligations aforesaid.

It is clear then that the foregoing acts of Eufemia Bernardo were calculated to enable her to escapefrom her liability under the arrangement to pay third parties. She really wanted the deed of sale ofJuly 5, 1963 to cloak such intent with a mantle of legality.

Upon the execution of the deed of sale of July 5, 1963, neither was the considerationof P195,000.00paid by Eufemia Bernardo to Reynaldo Paulino. Says the court below on this point:

Considering the established facts on record, the Court opines that defendant Bernardo hasnot fully paid the remaining purchase price of P182,000.00 to her co-defendant ReynaldoPaulino. These circumstances are the basis of such conclusion, to wit:

First, While Bernardo was issuing checks right and left in favor of Reynaldo Paulino,she could not produce proof that she issued checks covering such remaining amount ofthe purchase price in the sum of P182,000.00 in favor of Reynaldo Paulino;

Second, The records of the Philippine Commercial and Industrial Bank could have beenproduced to show whatever checks were issued by Eufemia Bernardo in favor of ReynaldoPaulino if the former made efforts to bolster her contention. She did not make such move.

Third, Reynaldo Paulino signed that deed of sale (Exh. 3-Paulino) over the sameproperties on June 18, 1963, without receiving the cash purchase price of P195,000.00. Isit not also true that he signed the deed of sale, July 5, 1965, Exhibit 6-Bernardo, becauseof the agreement that the P195,000.00 cash should be paid by Bernardo when she


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obtained the same from the PCIB? This was the agreement between Paulino andBernardo at the time Exhibit 3-Paulino was executed or June 18, 1963.

If it were true that Bernardo paid in full the purchase price of P195,000.00 in cash on orbefore July 5, 1963, when the deed of sale with assumption of mortgage was signed by

Reynaldo Paulino, why did she not demand for the return of those two checks in theamount of P98,500.00 from Paulino? Those checks are still in the possession of ReynaldoPaulino, because the amount of P98,500.00 stated in those checks has not been deliveredto him.

Fourth, Leopoldo Paulino is still in the possession, enjoyment and use of the Cavern. Ifit were true that the total amount of P195,000.00 was already paid, then Leopoldo Paulinoshould have already received the sum of [P95,000.00] out of the purchase price asadmitted by his son, Reynaldo. The fact that Leopoldo is still in operation of the Cavernbuilt in one of the seven lots sold to Bernardo is a stubborn fact that the total purchaseprice of P195,000.00 in cash has not been paid by Bernardo until now.

Fifth, No other credible witnesses wore presented by Bernardo during the trial tocorroborate that the payment of P195,000.00 in cash was already received by ReynaldoPaulino. Instead the Philippine Commercial and Industrial Bank's records disclosed that anamount of P194,500.00 was credited in her favor only beginning July 9, 1963, until October24, 1963. These figures corroborated Reynaldo Paulino's testimony that Bernardo hadreally no money when he signed the deed of sale, but they made it appear in the deed ofsale that the full amount of P195,000.00 in cash was received by the vendor ReynaldoPaulino to enable Bernardo, the vendee, to obtain that loan of same amount from thePCIB. If it were true that Bernardo obtained his loan of P195,000.00 to pay her creditorswho advanced the cash to her [to] pay Reynaldo Paulino, she could present thosecreditors from whom she obtained the money or produced those checks she paid to them.She did not present any witness to corroborate her testimony on this point and no checkswere presented during the trial.

The foregoing circumstances are cogent reasons to warrant the conclusion that theP195,000.00 purchase price in cash was not fully paid by Eufemia G. Bernardo, thevendee, to Reynaldo Paulino, the vendor until now.22

In reality, on the question as to whether the P195,000.00 as stated in the July 5 deed was paid incash, Eufemia Bernardo was blowing hot and cold. First, her claim was that upon that deed theconsideration of P195,000.00 was "acknowledged to have been received in cash." She told thecourt that after the July 5 deed of sale was executed, the P195,000.00"was received by him [Reynaldo Paulino] in cash;" "[h]e received the P195,000.00 in cash."23Hertheory was that that cash was obtained by her from "friends and relatives." Asked if she could givethe names of the persons from whom she received the cash, her answer was: "I cannot give youthe exact names; I do not remember, because there are so many persons from whom I obtainedthe loans."24Then, she amended her testimony to state that on July 5, 1963, she only paid him"around P150,000.00, sir;"25afterwards, to say that she gave P35,000.00 in advance andP160,000.00 "[a]round that date, around that month."26Queried as to where she gave Reynaldo


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Paulino P160,000.00, she first declared [s]ome of it in our house, some of it in the bank."27Buteven as to this P160,000.00, she gave conflicting answers. When asked where she got theP160,000.00, her answer was, "some of it from my credit line in the bank."28And I notice thisanswer of defendant:

Q. You mean to say, Mrs. Cramer, that all this P195,000.00, which you allegedly paid on orbefore July 5, 1963, was borrowed from friends and relatives?

A. Oh, yes.29

To cap these all, her answer to the complaint reads:

9. That the cross-defendant specifically denies the truth of the allegations of paragraph "9",the truth being that as the document(Annex "A")statesthe amount of P195,000.00 waspaid by her in cashto the cross-claimant and therefore she could not have assumed to payany obligation in favor of the cross-claimant's father, Leopoldo Paulino."30

The evidence clear, convincing and more than merely preponderant thus demonstrated thatall the money that was received by defendant Reynaldo Paulino from his co-defendant EufemiaBernardo after the July 5 sale of the properties, as found by the court below was a total sumof P13,000.00 "for the purchase of a car."31

The pattern of conduct observed by defendant Bernardo in connection with the transactionsreveals unquestionably the intention to defraud. She saw to it that the title to the six lots be in thename of Reynaldo Paulino as "single." On the strength of that title, she got herself paid with amortgage thereon. She got the deeds of June 18 from Reynaldo alone without payment. Exceptof course the two checks totalling P98,500.00 which could not be as they were not cashed for

she had to countersign them, which she did not. These two checks obviously were but a deceitfulpalaver. She told the notary to destroy the documents of June 18. Then, she repudiated hercovenant of June 18 to pay Reynaldo Paulino's obligations to third persons. She procured from himthe deed of sale of July 5, 1963. She sought refuge in that document of sale to throw overboard herobligation to pay in full P195,000.00. When Reynaldo affixed his signature to this last document ofJuly 5, 1963, there was great probability that she had already made up her mind to junk him. For,three days thereafter (on July 8), she did two things: (1) she assured herself of Torrens titles in hername; and (2) married her present husband, Richard Cramer. Had Reynaldo on July 5 known thatEufemia was soon to get married, unquestionably, he would not have trusted her with the futurepayment of the P195,000.00 to be taken from the proceeds of a loan to be obtained from the bank.A quondam lover, he could not have done so if only out of pride. The hurt of it all came with therelease by PCIB to Bernardo of the total sum of P195,000.00. Even with this money, Bernardo didnot bother she refused to pay. That refusal was coupled with her adamant attitude that, bythe wording of the deed of July 5, she could not be held to pay; so she did not. Certainly, shecannot have the property and fraudulently refuse payment to the vendor. Fraus et jus nun-quamcohabitant.

5. Flowing from the foregoing facts is the right accorded defendant Reynaldo Paulino by Article1390 (2) of the Civil Code, to annul the two deeds of sale of June 18, 1963 and the deed of sale of


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July 5, 1963. For, his consent to those documents is vitiated by "undue influence or fraud." Therewas no ratification of said contracts.32On the contrary, Reynaldo Paulino wants them stricken out.

6. On the assumption that there was no fraud, nonetheless, there is failure to pay the price agreedupon. The deeds adverted to recite reciprocal obligations. The property sold was turned over to

defendant. Upon the broad principles set forth in the law of obligations, the right of ReynaldoPaulino to rescind the contracts is implied. This he has chosen to seek in his cross-claim.33

But, the lower court's decision gave defendant Eufemia Bernardo thirty (30) days, after the decisionbecomes final, to pay the P182,000.00, failing which, the contract of sale of July 5, 1963 shall berescinded. The court implicity applied the third paragraph of Article 1191 of the Civil Code, whichsays that "[t]he court shall decree the rescission claimed, unless there be just cause authorizing thefixing of a period." The record, however, is bereft of a just cause.

And then, considering the fact that the sale involves real property, the specific provision in Article1592 of the Civil Code governs. Says Article 1592:

Art. 1592. In the sale of immovable property, even though it may have been stipulated thatupon failure to pay the price at the time agreed upon the rescission of the contract shall ofright take place, the vendee may pay, even after the expiration of the period, as long as nodemand for rescission of the contract has been made upon him either judicially or by anotarial act. After the demand, the court may not grant him a new term.

There was a judicial demand; hence, "the court may not grant him a new term." Article 1582 isan exception to the general rule set forth in the third paragraph of Article 1191. Where then, ashere, the sale involves immovable property, "it is not within the scope of article 1191, but issubordinated to the stipulation made by the contracting parties and to the provisions of this article"

(1592).

34

7. We now come to the answer in intervention filed by PCIB. .

Nothing in the record would show that when the bank gave out money on the security of the threemortgages amounting to P300,000.00, said bank had knowledge of the fact that the mortgagor,Reynaldo Paulino, was married instead of single, the civil status which appeared in the titles givenas collateral. By accepting the mortgage of July 1, 1963 for the additional P195,000.00 executed byEufemia Bernardo in its favor, the bank is not to be tagged with bad faith. At that time, the bankhad before it the two deeds of June 18, 1963 executed by Reynaldo Paulino in favor of EufemiaBernardo covering all the seven lots then mortgaged to the bank. If later on those two deedsbecame unacceptable to the bank resulting in the deed of sale of July 5, 1963 executed by thesame Reynaldo Paulino in favor of Eufemia Bernardo, this circumstance alone would not amount tobad faith. For, as in the previous deeds, there was no change in the status of Reynaldo Paulino, asappearing in his Torrens titles. In fact, the bank was careful enough not to release the amount untilafter both the additional mortgage of July 1, 1963 and the deed of July 5, 1963 were recorded inthe Register of Deeds and annotated on the titles.


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Correctly then did the trial court, in its decision, state that those mortgages amounting toP495,000.00 in all are "considered valid and subsisting on said properties."

No pronouncement may be made on the bank's prayer that Reynaldo Paulino be made to pay theloans in favor of the bank. There is no evidence on the amount due. At any rate, the bank itself, in

its brief, merely seeks affirmance of the judgment.

8. This leads us to the claim of the two sets of intervenors, Leopoldo Paulino and his wife, andTinio Lumber Co., Inc. Having reached the conclusion that the two deeds of sale of June 18, 1963,as well as the deed of sale of July 5, 1963 are null and void, it necessarily follows that defendantEufemia Bernardo is not liable for any claim by third parties on the properties covered thereby.Both intervenors should then seek relief from Reynaldo Paulino.35

9. Since the sales are annulled, the parties thereto are to be governed by Article 1398 of the CivilCode whereunder they "shall restore to each other the things which have been the subject matterof the contract, with their fruits, and the price with interest, except in cases provided by law." The

same precept is substantially embodied in Article 1385 in reference to rescission of contracts.

Accordingly, defendant Eufemia Bernardo shall return to her co-defendant Reynaldo Paulino andhis wife the seven parcels of land and the spouses' improvements thereon, in consequence ofwhich her titles thereto shall be cancelled and new titles issued in the name of said spouses,Reynaldo Paulino and Tomasita Bucoy. Eufemia Bernardo, too, must restore the fruits of theproperty. In turn, Reynaldo Paulino is under obligation to pay back to Eufemia BernardoP13,000.00 with interest.

In addition, Eufemia Bernardo shall pay PCIB the sum of P195,000.00 subject to the terms andconditions of the mortgage she executed in favor of said bank on July 1, 1963.

10. Last to be considered is the indemnity equivalent to the value of the fruits under Articles 1385and 1398 of the Civil Code. The fruits consist of the income of Pauline's Motel, now DiamondApartments. On this point, both cross-plaintiff Reynaldo Paulino and cross-defendant EufemiaBernardo are in agreement. Thus, paragraph 19 of Reynaldo Paulino's cross-claim reads:

19. That the cross-claimant will suffer damages in the amount of P8,000.00 a month in theform of income of said motel during all the time that the cross-defendant is in possessionthereof and until the properties in litigation are returned to the cross-claimant.36

And cross-defendant Eufemia Bernardo, in her answer thereto, confirms: 1wph1.t

18. That the cross-defendant specifically admits the allegations of paragraphs "18" and"19".37

Eufemia Bernardo, therefore, should restore to Reynaldo Paulino and his wife the fruits of the propertiesfrom June 18, 1963, when she took possession, until said properties are returned.


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(6) dismissing the complaints in intervention filed by Tinio Lumber Co., Inc. and Leopoldo F. Paulino andhis wife, Virginia D. Paulino;

(7) ordering defendant Eufemia Bernardo (now Eufemia B. Cramer) to pay plaintiff Tomasita Bucoy and herhusband Reynaldo Paulino damages at the rate of Eight Thousand Pesos (P8,000.00) per month from

June 18, 1963, to the date the properties herein described are returned to the said spouses; and

(8) ordering defendant Reynaldo Paulino to pay to his co-defendant Eufemia Bernardo (now Eufemia C.Cramer) the sum of P13,000.00 with legal interest thereon from the date of the filing of the answer ofEufemia Bernardo to the cross-claim of Reynaldo Paulino.

Costs in both instances against defendant Eufemia Bernardo (now Eufemia B. Cramer). So ordered.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro, Angeles and Fernando, JJ., concur.1wph1.t Concepcion, C.J., is on leave.


Manila

FIRST DIVISION

G.R. No. 122749 July 31, 1996

ANTONIO A. S. VALDEZ, petitioner,

vs.REGIONAL TRIAL COURT, BRANCH 102, QUEZON CITY, and CONSUELO M. GOMEZ-VALDEZ, respondents.

VITUG, J.:p

The petition for new bewails, purely on the question of law, an alleged error committed by the RegionalTrial Court in Civil Case No. Q-92-12539. Petitioner avers that the court a quohas failed to apply thecorrect law that should govern the disposition of a family dwelling in a situation where a marriage is

declared void ab initiobecause of psychological incapacity on the part of either or both parties in thecontract.

The pertinent facts giving rise to this incident are, by large, not in dispute.

Antonio Valdez and Consuelo Gomez were married on 05 January 1971. Begotten during the marriagewere five children. In a petition, dated 22 June 1992, Valdez sought the declaration of nullity of themarriage pursuant to Article 36 of the Family code (docketed Civil Case No. Q-92-12539, Regional Trial


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Court of Quezon City, Branch 102). After the hearing the parties following the joinder of issues, the trialcourt,1in its decision of 29 July 1994, granted the petition, viz:

WHEREFORE, judgment is hereby rendered as follows:

(1) The marriage of petitioner Antonio Valdez and respondent Consuelo Gomez-Valdez is herebydeclared null and void under Article 36 of the Family Code on the ground of their mutualpsychological incapacity to comply with their essential marital obligations;

(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela Rosario shall choosewhich parent they would want to stay with.

Stella Eloisa and Joaquin Pedro shall be placed in the custody of their mother, herein respondentConsuelo Gomez-Valdes.

The petitioner and respondent shall have visitation rights over the children who are in the custody

of the other.

(3) The petitioner and the respondent are directed to start proceedings on the liquidation of theircommon propertiesas defined byArticle 147of the Family Code, and to comply with the provisionsofArticles 50, 51, and 52of the same code, within thirty (30) days from notice of this decision.

Let a copy of this decision be furnished the Local Civil Registrar of Mandaluyong, Metro Manila, forproper recording in the registry of marriages.2(Emphasis ours.)

Consuelo Gomez sought a clarification of that portion of the decision directing compliance with Articles 50,51 and 52 of the Family Code. She asserted that the Family Code contained no provisions on the

procedure for the liquidation of common property in "unions without marriage." Parenthetically, during thehearing of the motion, the children filed a joint affidavit expressing their desire to remain with their father,Antonio Valdez, herein petitioner.

In an order, dated 05 May 1995, the trial court made the following clarification:

Consequently, considering that Article 147 of the Family Code explicitly provides that the propertyacquired by both parties during their union, in the absence of proof to the contrary, are presumedto have been obtained through the joint efforts of the parties and will be owned by them in equalshares, plaintiff and defendant willown their "family home"and all their properties for that matter inequal shares.

In the liquidation and partition of properties owned in common by the plaintiff and defendant, theprovisions on ownership found in the Civil Code shall apply.3(Emphasis supplied.)

In addressing specifically the issue regarding the disposition of the family dwelling, the trial court said:


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Considering that this Court has already declared the marriage between petitioner and respondentas null and void ab initio, pursuant to Art. 147, the property regime of petitioner and respondentshall be governed by therules on ownership.

The provisions of Articles 102 and 129 of the Family Code finds no application since Article 102

refers to the procedure for the liquidation of the conjugal partnership property and Article 129 refersto the procedure for the liquidation of the absolute community of property.4

Petitioner moved for a reconsideration of the order. The motion was denied on 30 October 1995.

In his recourse to this Court, petitioner submits that Articles 50, 51 and 52 of the Family Code should beheld controlling: he argues that:

I

Article 147 of the Family Code does not apply to cases where the parties are psychologically

incapacitated.

II

Articles 50, 51 and 52 in relation to Articles 102 and 129 of the Family Code govern the dispositionof the family dwelling in cases where a marriage is declared void ab initio, including a marriagedeclared void by reason of the psychological incapacity of the spouses.

III

Assuming arguendothat Article 147 applies to marriages declared void ab initioon the ground of

the psychological incapacity of a spouse, the same may be read consistently with Article 129.

IV

It is necessary to determine the parent with whom majority of the children wish to stay. 5

The trial court correctly applied the law. In a void marriage, regardless of the cause thereof, the propertyrelations of the parties during the period of cohabitation is governed by the provisions of Article 147 orArticle 148, such as the case may be, of the Family Code. Article 147 is a remake of Article 144 of the CivilCode as interpreted and so applied in previous cases;6it provides:

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively witheach other as husband and wife without the benefit of marriage or under a void marriage, theirwages and salaries shall be owned by them in equal shares and the property acquired by both ofthem through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall bepresumed to have been obtained by their joint efforts, work or industry, and shall be owned bythem in equal shares. For purposes of this Article, a party who did not participate in the acquisition


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by the other party of any property shall be deemed to have contributed jointly in the acquisitionthereof in the former's efforts consisted in the care and maintenance of the family and of thehousehold.

Neither party can encumber or dispose by acts inter vivosof his or her share in the property

acquired during cohabitation and owned in common, without the consent of the other, until after thetermination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faithin the ownership shall be forfeited in favor of their common children. In case of default of or waiverby any or all of the common children or their descendants, each vacant share shall belong to theinnocent party. In all cases, the forfeiture shall take place upon the termination of the cohabitation.

This particular kind of co-ownership applies when a man and a woman, suffering no illegal impediment tomarry each other, so exclusively live together as husband and wife under a void marriage or without thebenefit of marriage. The term "capacitated" in the provision (in the first paragraph of the law) refers to

the legal capacityof a party to contract marriage, i.e., any "male or female of the age of eighteen years orupwards not under any of the impediments mentioned in Articles 37 and 38" 7of the Code.

Under this property regime, property acquired by both spouses through their work and industry shall begoverned by the rules on equal co-ownership. Any property acquired during the union isprimafaciepresumed to have been obtained through their joint efforts. A party who did not participate in theacquisition of the property shall be considered as having contributed thereto jointly if said party's "effortsconsisted in the care and maintenance of the family household."8Unlike the conjugal partnership of gains,the fruits of the couple's separate property are not included in the co-ownership.

Article 147 of the Family Code, in the substance and to the above extent, has clarified Article 144 of the

Civil Code; in addition, the law now expressly provides that

(a) Neither party can dispose or encumber by act intervivoshis or her share in co-ownership property,without consent of the other, during the period of cohabitation; and

(b) In the case of a void marriage, any party in bad faith shall forfeit his or her share in the co-ownership infavor of their common children; in default thereof or waiver by any or all of the common children, eachvacant share shall belong to the respective surviving descendants, or still in default thereof, to the innocentparty. The forfeiture shall take place upon the termination of the cohabitation9or declaration of nullity of themarriage. 10

When the common-law spouses suffer from a legal impediment to marry or when they do not liveexclusively with each other (as husband and wife), only the property acquired by both of them through theiractual joint contribution of money, property or industry shall be owned in common and in proportion to theirrespective contributions. Such contributions and corresponding shares, however, areprima faciepresumedto be equal. The share of any party who is married to another shall accrue to the absolute community orconjugal partnership, as the case may be, if so existing under a valid marriage. If the party who has actedin bad faith is not validly married to another, his or her share shall be forfeited in the manner alreadyheretofore expressed. 11


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In deciding to take further cognizance of the issue on the settlement of the parties' common property, thetrial court acted neither imprudently nor precipitately; a court which has jurisdiction to declare the marriagea nullity must be deemed likewise clothed in authority to resolve incidental and consequential matters. Nordid it commit a reversible error in ruling that petitioner and private respondent own the "family home" and alltheir common property in equal shares, as well as in concluding that, in the liquidation and partition of the

property owned in common by them, the provisions on co-ownership under the Civil Code, not Articles 50,51 and 52, in relation to Articles 102 and 129, 12of the Family Code, should aptly prevail. The rules set upto govern the liquidation of either the absolute community or the conjugal partnership of gains, the propertyregimes recognized for valid and voidable marriages (in the latter case until the contract is annulled), areirrelevant to the liquidation of the co-ownership that exists between common-law spouses. The firstparagraph of Articles 50 of the Family Code, applying paragraphs (2), (3), (4) and 95) of Article43, 13relates only, by its explicit terms, to voidablemarriages and, exceptionally, to void marriages underArticle 40 14of the Code, i.e., the declaration of nullity of a subsequent marriage contracted by a spouse ofa prior void marriage before the latter is judicially declared void. The latter is a special rule that somehowrecognizes the philosophy and an old doctrine that void marriages are inexistent from the very beginningand no judicial decree is necessary to establish their nullity. In now requiring forpurposes of remarriage, the

declaration of nullity by final judgment of the previously contracted void marriage, the present law aims todo away with any continuing uncertainty on the status of the second marriage. It is not then illogical for theprovisions of Article 43, in relation to Articles 41 15and 42, 16of the Family Code, on the effects of thetermination of a subsequent marriage contracted during the subsistence of a previous marriage to be madeapplicablepro hac vice. In all other cases, it is not to be assumed that the law has also meant to havecoincident property relations, on the one hand, between spouses in valid and voidable marriages (beforeannulment) and, on the other, between common-law spouses or spouses of void marriages, leaving toordain, on the latter case, the ordinary rules on co-ownership subject to the provisions of the Family Codeon the "family home," i.e., the provisions found in Title V, Chapter 2, of the Family Code, remain in forceand effect regardless of the property regime of the spouses.

WHEREFORE, the questioned orders, dated 05 May 1995 and 30 October 1995, of the trial court areAFFIRMED. No costs.

Padilla, Kapunan and Hermosisima, Jr., JJ., concur.

Bellosillo, J., is on leave.

SECOND DIVISION

JOHN ABING,Petitioner,

- versus -

JULIET WAEYAN,

G.R. No. 146294

Present:

PUNO, J., Chairperson,SANDOVAL-GUTIERREZ,CORONA,AZCUNA, andGARCIA, JJ.


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Respondent. Promulgated:

July 31, 2006

x------------------------------------------------------------------------------------x

D E C I S I O N

GARCIA, J.:

In this appeal by way of a petition for review under Rule 45 of the Rules of Court, petitioner

John Abing (John, hereafter) seeks to set aside the Decision [1]dated October 24, 2000 of the Court of

Appeals (CA) in CA-G.R. SP No. 48675, reversing that of the Regional Trial Court (RTC) of Benguet,

Branch 64, which affirmed an earlier decision of the Municipal Trial Court (MTC) of Mankayan, Benguet in

an ejectment suit thereat commenced by the petitioner against the respondent.

In the main, the controversy is between a man and a woman who, during the good old days, livedtogether as husband and wife without the benefit of marriage. During their cohabitation, they acquired

properties. Later, they parted ways, and with it this litigation between them involving one of their common

properties.

The facts:

Sometime in 1986, John and respondent Juliet Waeyan (Juliet, for short) met and fell in love with

each other. In time, the duo cohabited as husband and wife without the benefit of marriage. Together, the

couple bought a 2-storey residential house from one Benjamin Macua which was erected on a lot owned by

a certain Alejandro Dio on Aurora Street, Mankayan, Benguet. Consequent to the purchase, the tax

declaration of the 2-storey house was transferred in the name of Juliet.
http://sc.judiciary.gov.ph/jurisprudence/2006/july2006/G.R.%20No.%20146294.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2006/july2006/G.R.%20No.%20146294.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2006/july2006/G.R.%20No.%20146294.htm#_ftn1


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On December 2, 1991, Juliet left for overseas employment in Korea. She would send money to John

who deposited the same in their joint bank account.

In 1992, the original 2-storey residential house underwent renovation. To it was annexed a newstructure which housed a sari-sari store. This new structure and the sari-sari store thereat are the

properties involved in this case.

In 1994, Juliet returned from Korea and continued to live with John. She managed the sari-sari store

while John worked as a mine employee of the Lepanto Consolidated Mining, Inc.

In 1995, the relationship between the two turned from bad to worse. Hence, they decided to partition

their properties. For the purpose, they executed on October 7, 1995 aMemorandum of

Agreement. Unfortunately, the document was left unsigned by the parties although signed by the witnesses

thereto. Under their unsigned agreement, John shall leave the couples dwelling with Juliet paying him the

amount of P428,870.00 representing Johns share in all their properties. On the same dateOctober 7,

1995Juliet paid John the sum of P232,397.66 by way of partial payment of his share, with the balance

of P196,472.34 to be paid by Juliet in twelve monthly installment beginning November 1995.

Juliet, however, failed to make good the balance. On account thereof, John demanded of her to

vacate the annex structure housing the sari-sari store. Juliet refused, prompting John to file

an ejectment suit against her before the MTC of Mankayan, Benguet.

In his complaint, John alleged that he alone spent for the construction of the annex structure with his

own funds and thru money he borrowed from his relatives. In fact, he added that the tax declaration for the

structure was under his name. On this premise, John claimed exclusive ownership of the subject structure,

which thereby gave him the right to eject Juliet therefrom upon the latters failure to pay the agreed balance

due him under the aforementioned Memorandum of Agreement.


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In her answer, Juliet countered that their original house was renovated thru their common funds and

that the subject structure annexed thereto was merely an attachment or an extension of their original

residential house, hence the same pertained to the two of them in common.

In a decision[2]dated March 15, 1997, the MTC, on its finding that the money used in the construction

of the structure in question solely came from John, ruled that the same exclusively pertained to the latter,

and accordingly ordered Juliets evictiontherefrom, including the sari-sari store thereat, and required her to

surrender possession thereof to John, thus:

WHEREFORE, judgment is rendered in favor of the plaintiff (John) andagainst the defendant (Juliet).

Defendant is hereby ordered to vacate the premises of the store inlitigation covered by Tax Declaration No. 96-001-00445 in the name of the Plaintiffand turn over possession thereof to the latter.

Defendant is hereby further ordered to pay the Plaintiff the sumof P2,500.00 a month from the time she withheld possession of the store inlitigation in June 1996 until she vacates the same and turn over possessionthereof to the Plaintiff.

Defendant is finally ordered, to pay the sum of P5,000.00 to the Plaintiff byway of Attorneys fees; and to pay the costs.

SO ORDERED.

On Juliets appeal to the RTC, the latter, in its decision ofJuly 29, 1995, affirmed that of the MTC.

Undaunted, Juliet then went to the CA in CA-G.R. SP No. 48675.

As stated at the threshold hereof, the CA, in its Decision of October 24, 2000,[3]reversed that of the

RTC, to wit:

WHEREFORE, the petition is GRANTED. The assailed decision of theRegional Trial Court is hereby reversed and set aside. Petitioner, Juliet Waeyan isentitled to possess the property and maintain therein her business.

SO ORDERED.
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Partly says the CA in its reversal disposition:

It is undisputed that the parties lived together as husband and wife withoutthe benefit of marriage from 1986 to 1995 and that they acquired certain propertieswhich must be divided between them upon the termination of their common lawrelationship.

xx xxx xxx

. . . their property relations cannot be governed by the provision of the Civil Codeon conjugal partnership... but by the rule on co-ownership.

xxx xxx xxx

. . . the parties share in respect of the properties they have accumulated duringtheir cohabitation shall be equal unless there is proof to the contrary.

To the CA, Johns evidence failed to establish that he alone spent for the construction of the annex

structure. Hence, the same pertained to both, and being a co-owner herself, Juliet cannot be

evicted therefrom, adding that if ever, Johns cause of action should have been for a sum of money

because he claims that Juliet still owes him the payment for the extension. According to the

CA, ejectment cannot lie against Juliet because Juliets possession of the premises in dispute was not by

virtue of a contract, express or implied, nor did she obtain such possession thru force, intimidation, threat,

strategy or stealth.

Hence, Johns present recourse, submitting that the CA erred in

1. not giving effect to the partiesMemorandum of Agreement which shouldhave been binding between them albeit unsigned by both;

2. in holding that the subject premises (annex structure housing the sari-sari store) is owned by the two of them in common;

3. in ruling that the parties should settle their common properties in aseparate action for partition even as the community character of the subjectpremises has not been proven.


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We AFFIRMwith modification.

Essentially, the issues raised center on the core question of whether or not the property subject

of the suit pertains to the exclusive ownership of petitioner, John. Departing from the factual findings of the

two courts before it, the CA found that the premises in dispute is owned in common by Juliet and John, the

latter having failed to establish by the required quantum of proof that the money spent for the construction

thereof solely came from him. Being a co-owner of the same structure, Juliet may not be ejected therefrom.

While the question raised is essentially one of fact, of which the Court normally eschews from,

yet, given the conflicting factual findings of the three courts below, the Court shall go by the exception [4]to

the general rule and proceed to make its own assessment of the evidence.

First and foremost, it is undisputed that the parties hereto lived together as husband and wife

from 1986 to 1995 without the benefit of marriage. Neither is it disputed that sometime in December 1991,

Juliet left for Korea and worked thereat, sending money to John which the latter deposited in their joint

account. In fact, Juliet was still in Korea when the annex structure was constructed in 1992.

Other than Johns bare allegation that he alone, thru his own funds and money he borrowed from his

relatives, spent for the construction of the annex structure, evidence is wanting to support such naked

claim. For sure, John even failed to reveal how much he spent therefor. Neither did he divulge the names

of the alleged relatives from whom he made his borrowings, let alone the amount of money he borrowed

from them. All that petitioner could offer by way of reinforcing his claim of spending his own funds and

borrowed money in putting up the subject structure was the affidavit executed by a certain

Manuel Macaraeg to the effect that petitioner borrowed P30,000.00 from him. Even then, Macaraeg stated

in his affidavit that it was sometime in 1990when John borrowed said amount from him. With the

petitioners own admission that the subject structure was constructed only in 1992, or two years after he

borrowed P30,000.00 from Macaraeg, it is even doubtful whether the amount he allegedly borrowed from

the latter went into the construction of the structure in dispute. More, it is noted that while petitioner was

able to present in evidence the Macaraeg affidavit, he failed to introduce similar affidavits, if any, of his
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close relatives from whom he claimed to have made similar borrowings. For sure, not a single relative came

forward to confirm petitioners tale. In short, there is a paucity of evidence, testimonial or documentary, to

support petitioners self-serving allegation that the annex structure which housed the sari-sari store was put

up thru his own funds and/or money borrowed by him. Sure, petitioner has in his favor the tax declarationcovering the subject structure. We have, however, ruled time and again that tax declarations do not prove

ownership but at best an indicia of claims of ownership.[5] Payment of taxes is not proof of ownership, any

more than indicating possession in the concept of an owner.[6] Neither tax receipts nor declaration of

ownership for taxation purposes are evidence of ownership or of the right to possess realty when not

supported by other effective proofs.[7]

In this connection, Article 147 of the Family Code is instructive. It reads:

Art. 147. When a man and a woman who are capacitated to marry each other, liveexclusively with each other as husband and wife without the benefit of marriage or under avoid marriage, their wages and salaries shall be owned by them in equal shares and theproperty acquired by both of them through their work or industry shall be governed by therules on co-ownership.

In the absence of proof to the contrary, properties acquired while they livedtogether shall be presumed to have been obtained by their joint efforts, work or industry,and shall be owned by them in equal shares. For purposes of this Article, a party who did

not participate in the acquisition by other party of any property shall be deemed to havecontributed jointly in the acquisition thereof if the formersefforts consisted in the care andmaintenance of the family and of the household.

The law is clear. In the absence, as here, of proofs to the contrary, any property acquired by

common-law spouses during their period of cohabitation is presumed to have been obtained thru their joint

efforts and is owned by them in equal shares. Their property relationship is governed by the rules on co-

ownership. And under this regime, they owned their properties in common in equal shares.Being herself

a co-owner of the structure in question, Juliet, as correctly ruled by the CA, may not be ejected therefrom.

True it is that under Article 487[8]of the Civil Code, a co-owner may bring an action

for ejectment against a co-owner who takes exclusive possession and asserts exclusive ownership of a

common property. It bears stressing, however, that in this case, evidence is totally wanting to establish
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Johns or Juliets exclusive ownership of the property in question. Neither did Juliet obtain possession

thereof by virtue of a contract, express or implied, or thru intimidation, threat, strategy or stealth. As borne

by the record, Juliet was in possession of the subject structure and the sari-sari store thereat by virtue of

her being a co-owner thereof. As such, she is as much entitled to enjoy its possession and ownership asJohn.

We, however, disagree with the ruling of the CA that the subject Memorandum of Agreement, being

unsigned by Juliet and John, has no binding effect between them.

It is a matter of record that pursuant to said Agreement, Juliet did pay John the amount

of P232,397.66, as initial payment for Johns share in their common properties, with the balance

of P196,472.34 payable in twelve monthly installments beginning November 1995. It is also a matter of

record that the Agreement was signed by the witnesses thereto. Hence, the irrelevant circumstances that

the Agreement was left unsigned by Juliet and John cannot adversely affect its binding force or effect

between them, as evidently, Juliets initial payment ofP232,397.66 to John was in fulfillment of what the

parties had agreed upon thereunder. However, and as correctly held by the CA, Juliets failure to pay John

the balance of the latters share in their common properties could at best give rise to an action for a sum of

money against Juliet, or for rescission of the said agreement and not for ejectment.

WHEREFORE, the petition is DENIED and the assailed CA Decision is AFFIRMED, except that

portion thereof denying effect to the parties Memorandum of Agreement for being unsigned by both.

Costs against petitioner.

SO ORDERED.

CANCIO C. GARCIAAssociate Justice

WE CONCUR:


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REYNATO S. PUNO

Associate JusticeChairperson

ANGELINA SANDOVAL-GUTIERREZAssociate Justice

RENATO C. CORONAAssociate Justice

ADOLFO S. AZCUNA

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above decision were reached in consultation before the case wasassigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNOAssociate Justice

Chairperson, Second Division

C E R T I F I C A T I O N

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it ishereby certified that the conclusions in the above decision were reached in consultation before the casewas assigned to the writer of the opinion of the Court.

ARTEMIO V. PANGANIBANChief Justice


Manila


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FIRST DIVISION

G.R. No. L-50127-28 March 30, 1979

VICTOR JUANIZA, Heirs of Josefa P. Leus etc., et al., plaintiffs and appellees,

vs.EUGENIO JOSE, THE ECONOMIC INSURANCE COMPANY, INC., and ROSALIA ARROYO, defendantsand appellants.

Victoriano O. Javier and Ricardo A. Fabros, Jr. for appellees.

Luis Viscocho and Francisco E. Rodrigo, Jr. for appellants.

DE CASTRO, J.:

This case was certified by the Court of Appeals to this Court on the ground that the questions raised in theappeal of the decision of the Court of First Instance of Laguna are purely questions of law.

Eugenio Jose was the registered owner and operator of the passenger jeepney involved in an accident ofcollision with a freight train of the Philippine National Railways that took place on November 23, 1969 whichresulted in the death to seven (7) and physical injuries to five (5) of its passengers. At the time of theaccident, Eugenio Jose was legally married to Socorro Ramos but had been cohabiting with defendant-appellant, Rosalia Arroyo, for sixteen (16) years in a relationship akin to that of husband and wife.

In the resulting cages for damages filed in the Court of First Instance of Laguna, decision was rendered, the

dispositive part of which reads as follows:

(4) In Civil Case No. SP-867 ordering defendants Eugenio Jose and Rosalia Arroyo jointlyand severally to pay plaintiff Victor Juaniza the sum of P1,600.00 plus legal interest fromdate of complaint until fully paid and costs of suit;

(5) In Civil Case No. SP-872, ordering defendants Eugenio Jose and Rosalia Arroyo jointlyand severally to pay the respective heirs of the deceased Josefa P. Leus, Fausto Retrita,Nestor del Rosario Aonuevo and Arceli de la Cueva in the sum of P12,000.00 for the lifeof each of said deceased, with legal interest from date of complaint, and costs of suit. (pp.47-48, Rello).

Motion for reconsideration was filed by Rosalia Arroyo praying that the decision be reconsidered insofar asit condemns her to pay damages jointly and severally with her co-defendant, but was denied. The lowercourt based her liability on the provision of Article 144 of the Civil Code which reads:

When a man and woman driving together as husband and wife, but they are not married,or their marriage is void from the beginning, the property acquired by either or both of them


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through their work or industry or their wages and salaries shall be governed by the rules onco-ownership.

Rosalia Arroyo then filed her appeal with the Court of Appeals which, as previously stated, certified thesame to Us, the question raised being purely legal as may be seen from the lone assigned error as follows:

The lower court erred in holding defendant-appellant Rosalia Arroyo liable 'for damagesresulting from the death and physical injuries suffered by the passengers' of the jeepneyregistered in the name of Eugenio Jose, on the erroneous theory that Eugenio Jose andRosalia Arroyo, having lived together as husband and wife, without the benefit of marriage,are co- owners of said jeepney. (p. 2, Appellant's Brief).

The issues thus to be resolved are as follows: (1) whether or not Article 144 of the Civil Code is applicablein a case where one of the parties in a common-law relationship is incapacitated to marry, and (2) whetheror not Rosalia who is not a registered owner of the jeepney can be held jointly and severally liable fordamages with the registered owner of the same.

It has been consistently ruled by this Court that the co-ownership contemplated in Article 144 of the CivilCode requires that the man and the woman living together must not in any way be incapacitated to contractmarriage. (Camporedondo vs. Aznar, L-11483, February 4, 1958, 102 Phil. 1055, 1068; Osmea vs.Rodriguez, 54 OG 5526; Malajacan vs. Rubi, 42 OG 5576). Since Eugenio Jose is legally married toSocorro Ramos, there is an impediment for him to contract marriage with Rosalia Arroyo. Under theaforecited provision of the Civil Code, Arroyo cannot be a co-owner of the jeepney. The jeepney belongs tothe conjugal partnership of Jose and his legal wife. There is therefore no basis for the liability of Arroyo fordamages arising from the death of, and physical injuries suffered by, the passengers of the jeepney whichfigured in the collision.

Rosalia Arroyo, who is not the registered owner of the jeepney can neither be liable for damages caused byits operation. It is settled in our jurisprudence that only the registered owner of a public service vehicle isresponsible for damages that may arise from consequences incident to its operation, or maybe caused toany of the passengers therein. (De Peralta vs. Mangusang, L-18110, July 31, 1964, 11 SCRA 598; Tamayovs. Aquino, L-12634 and L-12720, May 29, 1959; Roque vs. Malibay Transit, L-8561, November 18,1955;Montoya vs. Ignacio, L-5868, December 29, 1953).

WHEREFORE, in view of the foregoing, Rosalia Arroyo is hereby declared free from any liability fordamages and the appealed decision is hereby modified accordingly. No costs.

Teehankee (Chairman), Makasiar, Fernandez, Guerrero, and Melencio-Herrera, JJ., concur.

THIRD DIVISION

EDGAR SAN LUIS, G.R. No. 133743

Petitioner,

Present:


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- versus - Ynares-Santiago, J. (Chairperson),

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

FELICIDAD SAN LUIS,

Respondent.

x ---------------------------------------------------- x

RODOLFO SAN LUIS, G.R. No. 134029

Petitioner,

- versus -

Promulgated:

FELICIDAD SAGALONGOS

alias FELICIDAD SAN LUIS,

Respondent. February 6, 2007

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Before us are consolidated petitions for review assailing the February 4, 1998 Decision [1]of the

Court of Appeals in CA-G.R. CV No. 52647, which reversed and set aside the September 12, 1995 [2]and

January 31, 1996[3]Resolutions of the Regional Trial Court of Makati City, Branch 134 in SP. Proc. No. M-

3708; and its May 15, 1998Resolution[4]denying petitioners motion for reconsideration.
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persons and family relations case 7-12

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