PROCOPIO VILLANUEVA, NICOLAS RETUYA and PACITA VILLANUEVA, petitioners, vs. COURT OF APPEALS and THE HEIRS OF EUSEBIA NAPISA RETUYA, respondents.G.R. No. 143286 | April 14, 2004 (1D)

Facts: Eusebia Napisa Retuya, is the legal wife of petitioner Nicolas Retuya. Out of the lawful wedlock, they begot 5 children, namely, Natividad, Angela, Napoleon, Salome, and Roberta. During their marriage they acquired real properties and all improvements situated in Mandaue City, and Consolacion, Cebu. Also, petitioner, Nicolas Retuya, is co-owner of a parcel of land situated in Mandaue City which he inherited from his parents. Nicolas then no longer lived with his legitimate family and cohabited with petitioner Pacita Villanueva, wherein petitioner, Procopio Villanueva, is their illegitimate son. Nicolas, then, was the only person who received the income of the above-mentioned properties. When Nicolas suffered stroke, petitioner Procopio has been receiving the income of these properties. Natividad, on failure to negotiate with Procopio, complained to the Barangay Captain for reconciliation/mediation but no settlement was reached, hence, the said official issued a certification to file action The trial court rendered a decision ordering the transfer of the sole administration of conjugal properties of the spouses Eusebia Retuya and Nicolas Retuya in accordance with Art. 124 of the Family Code to Eusebia Napisa Retuya; On appeal, CA affirmed the trial courts decision. Hence this petition. The appellate court found that Pacita failed to rebut the presumption under Article 116 of the Family Code that the subject properties are conjugal. The appellate court dismissed Pacitas defense of prescription and laches since she failed to have the issue included in the pre-trial order after raising it in her answer with her co-petitioners.

Issue: W/N CA erred in not applying instead the presumption under Art. 148 of the Family Code in favor of co-ownership between the spouses

Held: No The only issue proper for resolution is the question of whether the subject properties are conjugal. Petitioners claim that the subject properties are exclusive properties of Nicolas except for Lot No. 152, which they claim is Pacitas exclusive property. 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. Petitioners argue that Eusebia failed to prove this pre-requisite. We disagree. The question of whether the subject properties were acquired during the marriage of Nicolas and Eusebia is a factual issue. Both the trial and appellate courts agreed that the subject properties were in fact acquired 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. The burden is on petitioners to prove that the subject properties are not conjugal. The presumption in Article 116, which subsists "unless the contrary is proved," stands as an obstacle to any claim the petitioners may have. The burden of proving that a property is exclusive property of a spouse rests on the party asserting it and the evidence required must be clear and convincing. Petitioners failed to meet this standard. Finally, petitioners reliance on Article 148 of the Family Code is misplaced. A reading of Article 148 readily shows that there must be proof of "actual joint contribution" by both the live-in partners before the property becomes co-owned by them in proportion to their contribution. The presumption of equality of contribution arises only in the absence of proof of their proportionate contributions, subject to the condition that actual joint contribution is proven first. Simply put, proof of actual contribution by both parties is required, otherwise there is no co-ownership and no presumption of equal sharing. Petitioners failed to show proof of actual contribution by Pacita in the acquisition of Lot No. 152. In short, petitioners failed to prove that Pacita bought Lot No. 152 with her own money, or that she actually contributed her own money to acquire it.

BRIGIDO B. QUIAO, Petitioner, vs. RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their mother RITA QUIAO, Respondents.G.R. No 176556 | July 4, 2012 (2D)

Facts: Herein respondent Rita C. Quiao filed a complaint for legal separation against herein petitioner Brigido B. Quiao. This was granted by the trial court. It was also ordered that the personal and real properties of the spouses shall be divided equally between them subject to the respective legitimes of the children and the payment of the unpaid conjugal liabilities Not satisfied with the trial court's Order, the petitioner filed a Motion for Reconsideration RTC: Although the Decision has become final and executory, it may still consider the Motion for Clarification because the petitioner simply wanted to clarify the meaning of "net profit earned." NET PROFIT EARNED, which is subject of forfeiture in favor of the parties' common children, is ordered to be computed in accordance with par. 4 of Article 102 of the Family Code. Not satisfied with the trial court's Order, the petitioner filed this instant Petition for Review

Issue: W/N the trial court erred when it applied Article 129 of the Family Code, instead of Article 102

Held: No Petitioner confusingly argues that Article 102 applies because there is no other provision under the Family Code which defines net profits earned subject of forfeiture as a result of legal separation. From the record, we can deduce that the petitioner and the respondent tied the marital knot on January 6, 1977. Since at the time of the exchange of marital vows, the operative law was the Civil Code of the Philippines (R.A. No. 386) and since they did not agree on a marriage settlement, the property relations between the petitioner and the respondent is the system of relative community or conjugal partnership of gains. Article 119 of the Civil Code provides:

Art. 119. The future spouses may in the marriage settlements agree upon absolute or relative community of property, or upon complete separation of property, or upon any other regime. In the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains as established in this Code, shall govern the property relations between husband and wife.

Thus, from the foregoing facts and law, it is clear that what governs the property relations of the petitioner and of the respondent is conjugal partnership of gains. And under this property relation, "the husband and the wife place in a common fund the fruits of their separate property and the income from their work or industry." The husband and wife also own in common all the property of the conjugal partnership of gains. Second, since at the time of the dissolution of the petitioner and the respondent's marriage the operative law is already the Family Code, the same applies in the instant case and the applicable law in so far as the liquidation of the conjugal partnership assets and liabilities is concerned is Article 129 of the Family Code in relation to Article 63(2) of the Family Code. The latter provision is applicable because according to Article 256 of the Family Code "[t]his Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other law."

Issue: Was petitioners vested right over half of the common properties of the conjugal partnership violated when the trial court forfeited them in favor of his children pursuant to Articles 63(2) and 129 of the Family Code?

Held: No The petitioner is saying that since the property relations between the spouses is governed by the regime of Conjugal Partnership of Gains under the Civil Code, the petitioner acquired vested rights over half of the properties of the Conjugal Partnership of Gains, pursuant to Article 143 of the Civil Code, which provides: "All property of the conjugal partnership of gains is owned in common by the husband and wife." Thus, since he is one of the owners of the properties covered by the conjugal partnership of gains, he has a vested right over half of the said properties, even after the promulgation of the Family Code; and he insisted that no provision under the Family Code may deprive him of this vested right by virtue of Article 256 of the Family Code which prohibits retroactive application of the Family Code when it will prejudice a person's vested right. Go, Jr. v. Court of Appeals: A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency. The term "vested right" expresses the concept of present fixed interest which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny.

To be vested, a right must have become a titlelegal or equitableto the present or future enjoyment of property. ABAKADA Guro Party List Officer Samson S. Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. Ermita: The concept of "vested right" is a consequence of the constitutional guaranty of due process that expresses a present fixed interest which in right reason and natural justice is protected against arbitrary state action; it includes not only legal or equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested. Rights are considered vested when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and irrefutable. From the foregoing, it is clear that while one may not be deprived of his "vested right," he may lose the same if there is due process and such deprivation is founded in law and jurisprudence. In the present case, the petitioner was accorded his right to due process. First, he was well-aware that the respondent prayed in her complaint that all of the conjugal properties be awarded to her. Second, when the Decision was promulgated, the petitioner never questioned the trial court's ruling forfeiting what the trial court termed as "net profits," pursuant to Article 129(7) of the Family Code. Thus, the petitioner cannot claim being deprived of his right to due process.

Issue: What is the meaning of the net profits earned by the conjugal partnership for purposes of effecting the forfeiture authorized under Article 63 of the Family Code

Held: The net profits of the conjugal partnership of gains are all the fruits of the separate properties of the spouses and the products of their labor and industry. Article 102(4) of the Family Code applies in the instant case for purposes only of defining "net profit." As earlier explained, the definition of "net profits" in Article 102(4) of the Family Code applies to both the absolute community regime and conjugal partnership regime as provided for under Article 63, No. (2) of the Family Code, relative to the provisions on Legal Separation. Now, when a couple enters into a regime of conjugal partnership of gains under Article 142 of the Civil Code, "the husband and the wife place in common fund the fruits of their separate property and income from their work or industry, and divide equally, upon the dissolution of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by either spouse during the marriage." From the foregoing provision, each of the couple has his and her own property and debts. The law does not intend to effect a mixture or merger of those debts or properties between the spouses. Rather, it establishes a complete separation of capitals. Considering that the couple's marriage has been dissolved under the Family Code, Article 129 of the same Code applies in the liquidation of the couple's properties in the event that the conjugal partnership of gains is dissolved

Section 2. Exclusive Property of Each Spouse

Art. 109. The following shall be the exclusive property of each spouse:

(1) That which is brought to the marriage as his or her own;(2) That which each acquires during the marriage by gratuitous title;(3) That which is acquired by right of redemption, by barter or by exchange with property belonging to only one of the spouses; and(4) That which is purchased with exclusive money of the wife or of the husband.

Art. 110. The spouses retain the ownership, possession, administration and enjoyment of their exclusive properties.

Either spouse may, during the marriage, transfer the administration of his or her exclusive property to the other by means of a public instrument, which shall be recorded in the registry of property of the place the property is located.

Art. 111. A spouse of age may mortgage, encumber, alienate or otherwise dispose of his or her exclusive property, without the consent of the other spouse, and appear alone in court to litigate with regard to the same. (n)

Art. 112. The alienation of any exclusive property of a spouse administered by the other automatically terminates the administration over such property and the proceeds of the alienation shall be turned over to the owner-spouse. (n)

Art. 113. Property donated or left by will to the spouses, jointly and with designation of determinate shares, shall pertain to the donee-spouses as his or her own exclusive property, and in the absence of designation, share and share alike, without prejudice to the right of accretion when proper.

Art. 114. If the donations are onerous, the amount of the charges shall be borne by the exclusive property of the donee spouse, whenever they have been advanced by the conjugal partnership of gains.

Art. 115. Retirement benefits, pensions, annuities, gratuities, usufructs and similar benefits shall be governed by the rules on gratuitous or onerous acquisitions as may be proper in each case. (n)

ISAAC VILLEGAS, petitioner, vs. VICTOR LINGAN and ATTY. ERNESTO CARREON, respondent.G.R. No. 153839 | June 29, 2007 (3D)

Facts: Petitioner was the registered owner of a parcel of land in Tuguegarao, Cagayan. In order to secure the payment of a loan from the Development Bank of the Philippines (DBP) the petitioner constituted a real estate mortgage over the said parcel of land in favor of DBP. The said loan and mortgage was subsequently transferred by the DBP to the Home Mutual Development Fund (HMDF). When the petitioner failed to settle his loan, the real estate mortgage he constituted over the property was foreclosed, the property was sold at public auction and, as the HMDF was itself the highest bidder at such public auction, a certificate of sheriffs sale was issued and, thereafter, registered with the Register of Deeds. By virtue of a power of attorney executed by petitioners wife, Marilou C. Villegas in favor of Gloria Roa Catral, the latter redeemed the property from the HMDF. Catral, by virtue of the same power of attorney, executed a Deed of Sale in favor of respondent. Petitioner claims that the power of attorney executed in favor of Catral, petitioners mother-in-law, created a principal-agent relationship only between his wife, Marilou Catral-Villegas (Marilou) as principal, and Catral, as agent, and then only for the latter to administer the properties of the former; that he never authorized Catral to administer his properties, particularly, herein subject property; and that Catral had no authority to execute the Deed of Absolute Sale in favor of the respondent, since from the very wordings of the power of attorney, she had no special authority to sell or convey any specific real property. RTC dismissed the complaint. Dissatisfied, the petitioner appealed the adverse judgment to the CA claiming that the trial court erred in finding that there was a principal-agent relationship between petitioner and Catral; and that the trial court erred in concluding that the power of attorney is a special power of attorney with an authority to sell. CA affirmed RTCs decision. Hence this petition.

Issue: W/N Marilou, the wife of the petitioner, as successor-in-interest, may validly redeem the property in question

Held: Yes Section 6 of Act No. 3135 provides:

Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors-in-interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of sale; and such redemption shall be governed by the provisions of section four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act. Section 27, Rule 39 of the 1997 Rules of Civil Procedure, provides:

SEC. 27. Who may redeem real property so sold. Real property sold as provided in the last preceding section, or any part thereof sold separately, may be redeemed in the manner hereinafter provided, by the following persons:

(a) The judgment obligor, or his successor-in-interest in the whole or any part of the property;

x x x x

The "successor-in-interest" of the judgment debtor referred to in the above provision includes a person who succeeds to his property by operation of law, or a person with a joint interest in the property, or his spouse or heirs. Section 33, Rule 39, Rules of Court, states:

SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property at the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. (emphasis supplied)

Under the above provision, petitioner could have redeemed the property from Marilou after she had redeemed it. The pleadings filed and the records of this case do not show that petitioner exercised said right. Consequently, as correctly held by the CA, Marilou acquired ownership of the subject property. All rights and title of the judgment obligor are transferred upon the expiration of the right of redemption. And where the redemption is made under a property regime governed by the conjugal partnership of gains, Article 109 of the Family Code provides that property acquired by right of redemption is the exclusive property of the spouses redeeming the property. Clearly, therefore, Marilou, as owner, had the right to sell the property to another. In the present case, there is no property right that exists in favor of the petitioner, and, with more reason, no such obligation arises in behalf of the defendant, herein respondent, to respect such right. There was no violation of a legal right of the petitioner. It must be stressed that there is no allegation or proof that Marilou redeemed the property in behalf of the petitionerMarilou did not act as agent of the petitioner. Rather, she exercised the right of redemption in her own right as successor-in-interest of the petitioner. Under the circumstances, should there be any right violated, the aggrieved party is Marilou, petitioners wife. The property in question was the exclusive property of Marilou by virtue of her redemption. Thus, petitioner has no valid cause of action against the respondent.Section 3. Conjugal Partnership Property; RA 10572

Art. 116. All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.

Art. 117. The following are conjugal partnership properties:

(1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses;(2) Those obtained from the labor, industry, work or profession of either or both of the spouses;(3) The fruits, natural, industrial, or civil, due or received during the marriage from the common property, as well as the net fruits from the exclusive property of each spouse;(4) The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found;(5) Those acquired through occupation such as fishing or hunting;(6) Livestock existing upon the dissolution of the partnership in excess of the number of each kind brought to the marriage by either spouse; and(7) Those which are acquired by chance, such as winnings from gambling or betting. However, losses therefrom shall be borne exclusively by the loser-spouse.

Art. 118. Property bought on installments paid partly from exclusive funds of either or both spouses and partly from conjugal funds belongs to the buyer or buyers if full ownership was vested before the marriage and to the conjugal partnership if such ownership was vested during the marriage. In either case, any amount advanced by the partnership or by either or both spouses shall be reimbursed by the owner or owners upon liquidation of the partnership. (n)

Art. 119. Whenever an amount or credit payable within a period of time belongs to one of the spouses, the sums which may be collected during the marriage in partial payments or by installments on the principal shall be the exclusive property of the spouse. However, interests falling due during the marriage on the principal shall belong to the conjugal partnership.

Art. 120. The ownership of improvements, whether for utility or adornment, made on the separate property of the spouses at the expense of the partnership or through the acts or efforts of either or both spouses shall pertain to the conjugal partnership, or to the original owner-spouse, subject to the following rules:

When the cost of the improvement made by the conjugal partnership and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement.

In either case, the ownership of the entire property shall be vested upon the reimbursement, which shall be made at the time of the liquidation of the conjugal partnership.

Civil Code Provision

Article 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.

METROPOLITAN BANK AND TRUST CO., petitioner, vs. NICHOLSON PASCUAL a.k.a. NELSON PASCUAL, respondent.G.R. No. 163744 | February 29, 2008 (2D)

Facts: Respondent Nicholson Pascual and Florencia Nevalga were married on January 19, 1985. During the union, Florencia bought from spouses Clarito and Belen Sering a 250-square meter lot. Florencia then filed a suit for the declaration of nullity of marriage under Article 36 of the Family Code, which was granted by the RTC. In the same decision, the RTC, inter alia, ordered the dissolution and liquidation of the ex-spouses conjugal partnership of gains. Subsequent events saw the couple going their separate ways without liquidating their conjugal partnership. Subsequently, Florencia, together with spouses Norberto and Elvira Oliveros, obtained a PhP 58 million loan from petitioner Metropolitan Bank and Trust Co. (MBTC). To secure the obligation, Florencia and the spouses Oliveros executed several real estate mortgages (REMs) on their properties, including one involving the aforesaid lot. Due to the failure of Florencia and the spouses Oliveros to pay their loan obligation, the REMs were foreclosed and eventually bought by petitioner bank in an auction sale. Getting wind of the foreclosure proceedings, Nicholson filed before the RTC a Complaint to declare the nullity of the mortgage of the disputed property, alleging that the property, which is still conjugal property, was mortgaged without his consent. RTC declared the REM invalid: Even as it declared the invalidity of the mortgage, the trial court found the said lot to be conjugal, the same having been acquired during the existence of the marriage of Nicholson and Florencia. In so ruling, the RTC invoked Art. 116 of the Family Code. The CA Affirmed with Modification the RTCs Decision. Hence this petition. MBTCs contention: Art. 116 of the Family Code could not be of governing application inasmuch as Nicholson and Florencia contracted marriage before the effectivity of the Family Code on August 3, 1988. Citing Manongsong v. Estimo, Metrobank asserts that the presumption of conjugal ownership under Art. 160 of the Civil Code applies when there is proof that the property was acquired during the marriage. To bolster its thesis on the paraphernal nature of the disputed property, Metrobank cites Francisco v. Court of Appeals and Jocson v. Court of Appeals, among other cases, where this Court held that a property registered in the name of a certain person with a description of being married is no proof that the property was acquired during the spouses marriage.

Issue: W/N CA erred in declaring subject property as conjugal by applying Article 116 of the Family Code.

Held: No First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not Art. 116 of the Family Code, is the applicable legal provision since the property was acquired prior to the enactment of the Family Code, it errs in its theory that, before conjugal ownership could be legally presumed, there must be a showing that the property was acquired during marriage using conjugal funds. Contrary to Metrobanks submission, the Court did not, in Manongsong vs. Estimo, add the matter of the use of conjugal funds as an essential requirement for the presumption of conjugal ownership to arise. Nicholson is correct in pointing out that only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. Indeed, if proof on the use of conjugal is still required as a necessary condition before the presumption can arise, then the legal presumption set forth in the law would veritably be a superfluity. As the Court stressed in Castro v. Miat: Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife." This article does not require proof that the property was acquired with funds of the partnership. The presumption applies even when the manner in which the property was acquired does not appear. (Emphasis supplied.) Second, Francisco and Jocson do not reinforce Metrobanks theory. As Nicholson aptly points out, if proof obtains on the acquisition of the property during the existence of the marriage, then the presumption of conjugal ownership applies. The correct lesson of Francisco and Jocson is that proof of acquisition during the marital coverture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. When there is no showing as to when the property was acquired by the spouse, the fact that a title is in the name of the spouse is an indication that the property belongs exclusively to said spouse.

FRANCISCO MUOZ, JR., Petitioner, vs. ERLINDA RAMIREZ and ELISEO CARLOS, RespondentsG.R. No. 156125 | August 25, 2010 (3D)

Facts: A residential lot, which is the subject property herein, was previously covered by TCT No. 1427, in the name of Erlinda Ramirez, married to Eliseo Carlos (respondents). Eliseo, with Erlindas consent, to secure a P136,500.00 housing loan from GSIS, mortgaged TCT No. 1427. The respondents then constructed a residential house on the lot. The title to the subject property was then transferred to the petitioner by virtue of a Deed of Absolute Sale, executed by Erlinda, for herself and as attorney-in-fact of Eliseo The respondents filed a complaint with the RTC for the nullification of the deed of absolute sale, claiming that there was no sale but only a mortgage transaction, and the documents transferring the title to the petitioners name were falsified. RTC dismissed the complaint. Applying the second paragraph of Article 158 of the Civil Code and Calimlim-Canullas v. Hon. Fortun, the CA held that the subject property, originally Erlindas exclusive paraphernal property, became conjugal property when it was used as collateral for a housing loan that was paid through conjugal funds Eliseos monthly salary deductions; the subject property, therefore, cannot be validly sold or mortgaged without Eliseos consent, pursuant to Article 124 of the Family Code. Thus, the CA declared void the deed of absolute sale, and set aside the RTC decision.

Issue: W/N the subject property is conjugal

Held: No As a general rule, all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. In the present case, clear evidence that Erlinda inherited the residential lot from her father has sufficiently rebutted this presumption of conjugal ownership. Pursuant to Articles 92 and 109 of the Family Code, properties acquired by gratuitous title by either spouse, during the marriage, shall be excluded from the community property and be the exclusive property of each spouse. The residential lot, therefore, is Erlindas exclusive paraphernal property. The CA misapplied Article 158 of the Civil Code and Calimlim-Canullas As the respondents were married during the effectivity of the Civil Code, its provisions on conjugal partnership of gains (Articles 142 to 189) should have governed their property relations. However, with the enactment of the Family Code on August 3, 1989, the Civil Code provisions on conjugal partnership of gains, including Article 158, have been superseded by those found in the Family Code (Articles 105 to 133). Thus, in determining the nature of the subject property, we refer to the provisions of the Family Code, and not the Civil Code, except with respect to rights then already vested. Article 120 of the Family Code, which supersedes Article 158 of the Civil Code, provides the solution in determining the ownership of the improvements that are made on the separate property of the spouses, at the expense of the partnership or through the acts or efforts of either or both spouses. Under this provision, when the cost of the improvement and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement. In the present case, we find that Eliseo paid a portion only of the GSIS loan through monthly salary deductions. From April 6, 198942 to April 30, 1992,43 Eliseo paid about P60,755.76,44 not the entire amount of the GSIS housing loan plus interest, since the petitioner advanced the P176,445.2745 paid by Erlinda to cancel the mortgage in 1992. Considering the P136,500.00 amount of the GSIS housing loan, it is fairly reasonable to assume that the value of the residential lot is considerably more than the P60,755.76 amount paid by Eliseo through monthly salary deductions. Thus, the subject property remained the exclusive paraphernal property of Erlinda at the time she contracted with the petitioner; the written consent of Eliseo to the transaction was not necessary.

ANTONIA R. DELA PEA and ALVIN JOHN B. DELA PEA, Petitioners, vs. GEMMA REMILYN C. AVILA and FAR EAST BANK & TRUST CO., Respondents.G.R. No. 187490 | February 8, 2012 (2D)

Facts: The suit concerns a 277 square meter parcel of residential land, together with the improvements thereon, situated in Marikina City and previously registered in the name of petitioner Antonia R. Dela Pea (Antonia), "married to Antegono A. Dela Pea" (Antegono). To obtain a loan from A.C. Aguila & Sons, Co. (Aguila), Antonio executed in favor of Aguila a notarized Deed of Real Estate Mortgage over the property, for the purpose of securing the payment of said loan obligation. Antonia then executed a notarized Deed of Absolute Sale over the property in favor of respondent Gemma Remilyn C. Avila (Gemma). Gemma also constituted a real estate mortgage over said parcel in favor of respondent Far East Bank and Trust Company. Subsequently, Antonia filed with the Register of Deeds an Affidavit of Adverse Claim to the effect, among others, that she was the true and lawful owner of the property which had been titled in the name of Gemma; and, that the Deed of Absolute Sale Gemma utilized in procuring her title was simulated. In view of Gemmas failure to pay the principal as well as the accumulated interest and penalties on the loans she obtained, on the other hand, FEBTC-BPI caused the extrajudicial foreclosure of the real estate mortgage constituted over the property. As the highest bidder at the public auction conducted in the premises, FEBTC-BPI later consolidated its ownership over the realty and caused the same to be titled in its name. Antonio and her son, petitioner Alvin, filed against Gemma the complaint for annulment of deed of sale, claiming that the subject realty was conjugal property, the Dela Peas alleged, among other matters, that the Deed of Real Estate Mortgage Antonia executed in favor of Aguila was not consented to by Antegono who had, by then, already died. RTC went on to render a Decision finding that the subject property was conjugal in nature and that the Deed of Absolute Sale Antonia executed in favor of Gemma was void as a disposition without the liquidation required under Article 130 of the Family Code. On appeal, CA rendered the herein assailed decision, reversing the RTCs appealed decision, upon finding that the property was paraphernal in nature for failure of the Dela Peas to prove that the same was acquired during Antonias marriage to Antegono.

Issue: W/N CA erred in reversing the RTC holding the subject house and lot conjugal property of the spouses Antegono and Antonia Dela Pea

Held: No Pursuant to Article 160 of the Civil Code of the Philippines, 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. Although it is not necessary to prove that the property was acquired with funds of the partnership, proof of acquisition during the marriage is an essential condition for the operation of the presumption in favor of the conjugal partnership. In the case of Francisco vs. Court of Appeals, this Court categorically ruled as follows:

Article 160 of the New Civil Code provides that "all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." However, the party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. Proof of acquisition during the coverture is a condition sine qua non for the operation of the presumption in favor of the conjugal partnership. The party who asserts this presumption must first prove said time element. Needless to say, the presumption refers only to the property acquired during the marriage and does not operate when there is no showing as to when property alleged to be conjugal was acquired. Moreover, this presumption in favor of conjugality is rebuttable, but only with strong, clear and convincing evidence; there must be a strict proof of exclusive ownership of one of the spouses.

As the parties invoking the presumption of conjugality under Article 160 of the Civil Code, the Dela Peas did not even come close to proving that the subject property was acquired during the marriage between Antonia and Antegono. Beyond Antonias bare and uncorroborated assertion that the property was purchased when she was already married, the record is bereft of any evidence from which the actual date of acquisition of the realty can be ascertained. When queried about the matter during his cross-examination, even Alvin admitted that his sole basis for saying that the property was owned by his parents was Antonias unilateral pronouncement to the effect. Considering that the presumption of conjugality does not operate if there is no showing of when the property alleged to be conjugal was acquired, we find that the CA cannot be faulted for ruling that the realty in litigation was Antonias exclusive property. Not having established the time of acquisition of the property, the Dela Peas insist that the registration thereof in the name of "Antonia R. Dela Pea, of legal age, Filipino, married to Antegono A. Dela Pea" should have already sufficiently established its conjugal nature. Confronted with the same issue in the case Ruiz vs. Court of Appeals, this Court ruled, however, that the phrase "married to" is merely descriptive of the civil status of the wife and cannot be interpreted to mean that the husband is also a registered owner. Because it is likewise possible that the property was acquired by the wife while she was still single and registered only after her marriage, neither would registration thereof in said manner constitute proof that the same was acquired during the marriage and, for said reason, to be presumed conjugal in nature. "Since there is no showing as to when the property in question was acquired, the fact that the title is in the name of the wife alone is determinative of its nature as paraphernal, i.e., belonging exclusively to said spouse."

EVANGELINE D. IMANI,* Petitioner, vs. METROPOLITAN BANK & TRUST COMPANY, RespondentG.R. No. 187023 | November 17, 2010 (2D)

Facts: Petitioner, together with some others, signed a Continuing Suretyship Agreement in favor of respondent Metropolitan Bank & Trust Company (Metrobank). As sureties, they bound themselves to pay Metrobank whatever indebtedness C.P. Dazo Tannery, Inc. (CPDTI) incurs. Later, CPDTI obtained loans. CPDTI then defaulted in the payment of its loans. Metrobank made several demands for payment upon CPDTI, but to no avail. This prompted Metrobank to file a collection suit against CPDTI and its sureties, including herein petitioner. RTC rendered a decision in favor of Metrobank. CA affirmed this decision. Consequently, the sheriff levied on a property registered in the name of petitioner. A public auction was conducted and the property was awarded to Metrobank, as the highest bidder. Metrobank undertook to consolidate the title covering the subject property in its name, and filed a Manifestation and Motion, praying that spouses Sina and Evangline Imani be directed to surrender the owners copy of the TCT of the subject property for cancellation. Petitioner opposed the motion, arguing that the subject property belongs to the conjugal partnership; as such, it cannot be held answerable for the liabilities incurred by CPDTI to Metrobank. RTC denied Metrobanks motion. On motion for reconsideration filed by Metrobank, RTC set aside its previous order. But on petitioners motion for reconsideration, RTC reinstated its first order. RTC relied on the affidavit of Crisanto Origen, and declared the property levied upon as conjugal, which cannot be held answerable for petitioners personal liability. CA then rendered the now challenged Decision reversing the RTC.

Issue: W/N CA erred in sustaining the writ of execution, the public auction, and the certificate of sale of the subject property, which the petitioner asserts as part of the conjugal partnership and as such, it cannot be made to answer for her obligation with Metrobank

Held: No Indeed, all property of the marriage is presumed to be conjugal. However, for this presumption to apply, the party who invokes it must first prove that the property was acquired during the marriage. Proof of acquisition during the coverture is a condition sine qua non to the operation of the presumption in favor of the conjugal partnership. Thus, the time when the property was acquired is material. Francisco v. CA is instructive, viz.:

Article 160 of the New Civil Code provides that "all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." However, the party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. Proof of acquisition during the coverture is a condition sine qua non for the operation of the presumption in favor of the conjugal partnership. The party who asserts this presumption must first prove said time element. Needless to say, the presumption refers only to the property acquired during the marriage and does not operate when there is no showing as to when property alleged to be conjugal was acquired. To support her assertion that the property belongs to the conjugal partnership, petitioner submitted the Affidavit of Crisanto Origen, attesting that petitioner and her husband were the vendees of the subject property, and the photocopies of the checks allegedly issued by Sina Imani as payment for the subject property. Unfortunately for petitioner, the said Affidavit can hardly be considered sufficient evidence to prove her claim that the property is conjugal. As correctly pointed out by Metrobank, the said Affidavit has no evidentiary weight because Crisanto Origen was not presented in the RTC to affirm the veracity of his Affidavit.

JESSIE V. PISUEA, petitioner, vs. HEIRS OF PETRA UNATING and AQUILINO VILLAR Represented by Salvador Upod and Dolores Bautista, respondents.G.R. No. 132803 | August 31, 1999 (3D)

Real property acquired during marriage is presumed to be conjugal. Such prima facie presumption, however, can be overturned by a cadastral courts' specific finding, which has long become final, that the lot in question was paraphernal in character. The title to the entire property shall pass by operation of law to the buyer once the seller acquires title over it by hereditary succession, even if at the time of the execution of the deed of sale, the seller owned only a portion of the property.

Facts: The subject lot in dispute is a registered land in the name of Petra Unating married to Aquilino Villar. During the lifetime of the registered owners, Aquilino entered into an oral partnership agreement for 10 years with Agustin Navarra involving the swampy portion of the lot in question. This arrangement continued until Aquilino died. Thereafter, his share in the income of the partnership was delivered by Agustin Navarra to Felix Villar and Catalina Villar. After the death of Agustin Navarra, his heirs executed a Deed of Extra Judicial Partition and Deed of Sale of the land in question in favor of the Spouses Jessie Pisuea and Rosalie Navarra. Respondents herein then filed an action for recovery of possession against herein petitioner. RTC: Since the disputed lot was the conjugal property of Spouses Petra Unating and Aquilino Villar, its purported sale by Felix and Catalina Villar to Agustin Navarra could be considered valid. The court, however, ruled that its validity pertained only to the share of the late Petra Unating, considering that at the time of the sale, Aquilino Villar was still alive. It likewise held that the respondents, as heirs of Aquilino Villar, were entitled to his one-half share in the disputed lot. On appeal, CA affirmed the trial court's ruling in toto, holding that the disputed lot belonged to the conjugal partnership of Petra Unating and Aquilino Villar. The lower court rejected the statement of the Court of First Instance of Capiz in Reconstitution Case No. 1408 that Lot 1201 was inherited by Petra Unating from her mother. We agree with the lower court when it found the phrase "having inherited said lot from her mother Margarita Argamaso" as a mere obiter, a finding of fact which we find no justifiable reason to set aside. It must be considered that the authority of the Court of First Instance of Capiz to declare Lot 1201 as having been inherited by Petra Unating from her mother is doubtful. We further agree with the lower court when it held that "in the absence [o]f any evidence o[f] any system [o]f property relation between Petra Unating and Aquilino Villar, it is presumed that it is one of conjugal partnership." Besides, it appears that Lot 1201 was acquired during the marriage of the Spouses Petra Unating and Aquilino Villar, since the Original Certificate of Title indicates that Lot 1201 was registered in the name of Petra Unating, married to Aquilino Villar. Thus, the property is presumed conjugal.

Issue: W/N CA erred in ruling that Lot 1201 belongs to the conjugal partnership of Petra Unating and Aquilino Villar

Held: Yes Both the CA and the RTC held that the disputed lot was conjugal and dismissed, as obiter, the phrase "having inherited said lot from her [Petra Unating's] mother, Margarita Argamaso" found in the dispositive portion of the Decision of the Court of First Insurance (CFI) of Capiz in Reconstitution Case No. 1408. They explained that the CFI had no authority to include the phrase, because the only objective of reconstitution was to "restore the certificate covering the property as it stood at the time of its loss or destruction, and should not be stretched to include later changes which alter of affect the title of the registered owner." The Supreme Court does not agree. It must be emphasized that the dispositive portion of the 1930 Decision, which was rendered by the same CFI of Capiz acting as a cadastral court, already contained the questioned phrase. Therefore, it cannot be said that the CFI in 1980 exceeded its authority when it ordered the reconstitution, in Petra Unating's name, of the original certificate of title covering the disputed lot or in stating therein that she had inherited it from her mother. After all, such disposition was copied from the same court's 1930 Decision, as evidenced by an authentic copy of it on file with the Bureau of Lands in Capiz. Cadastral proceedings are proceedings in rem; like ordinary registration proceedings, they are governed by the usual rules of practice, procedure and evidence. A cadastral decree and a certificate of title are issued only after the applicants prove that they are entitled to the claimed lots, all parties are heard, and evidence is considered. Thus, the finding of the cadastral court that Petra Unating inherited the lot in question from her mother cannot be dismissed as an obiter, which is "an observation by the court not necessary to the decision rendered." The conclusion of the cadastral court was found in the dispositive portion of its Decision, and it was material to the nature of Petra Unating's ownership of the lot. Furthermore, it was based on the evidence presented by the parties and considered by the said court. In any event, it must be pointed out that the Decision became final a long time ago, and a final judgment in a cadastral proceeding, or any other in rem proceeding for that matter, is binding and conclusive upon the whole world. Therefore, the lot in dispute can properly be considered as a paraphernal property of Petra Unating. Concededly, properties acquired during the marriage are presumed to be conjugal. However, this prima facie presumption cannot prevail over the cadastral court's specific finding, reached in adversarial proceedings, that the lot was inherited by Petra Unating from her mother. Noteworthy is the fact that the parties do not assail the validity of the cadastral court's Decision. The 1980 reconstitution of the title to the lot in the name of "Petra Unating, 40 years old, married to Aquilino Villar, Filipino and resident of Ivisan, Capiz, having inherited said lot from her mother Margarita Argamaso . . ." was notice to the world, including her heirs and successors-in-interest, that it belonged to Petra as her paraphernal property. Thus, the words "married to" were merely descriptive of Petra Unating's status at the time the lot was awarded and registered in her name.

JOSEFA BAUTISTA FERRER, Petitioner, vs. SPS. MANUEL M. FERRER & VIRGINIA FERRER and SPS. ISMAEL M. FERRER and FLORA FERRER, RespondentsG.R. No. 166496 | November 9, 2006 (1D)

Facts: In her Complaint for payment of conjugal improvements, sum of money, and accounting with prayer for injunction and damages, petitioner alleged that she is the widow of Alfredo Ferrer (Alfredo), a half-brother of respondents Manuel M. Ferrer (Manuel) and Ismael M. Ferrer (Ismael). Before petitioners marriage with Alfredo, the latter acquired a piece of lot. He applied for a loan with the Social Security System (SSS) to build improvements thereon, including a residential house and a two-door apartment building. However, it was during their marriage that payment of the loan was made using the couples conjugal funds. From their conjugal funds, petitioner posited, they constructed a warehouse on the lot. Moreover, petitioner averred that respondent Manuel occupied one door of the apartment building, as well as the warehouse; however, he stopped paying rentals thereon, alleging that he had acquired ownership over the property by virtue of a Deed of Sale executed by Alfredo in favor of respondents. It is petitioners contention that on 2 October 1989, when her husband was already bedridden, respondents Ismael and Flora Ferrer made him sign a document, purported to be his last will and testament. The document, however, was a Deed of Sale covering Alfredos lot and the improvements thereon. Learning of this development, Alfredo filed with the RTC of Pasig, a Complaint for Annulment of the said sale against respondents, docketed as Civil Case No. 61327. RTC dismissed the complaint. The dismissal was affirmed by the Court of Appeals. Subsequently, this Court, in G.R. No. L-117067, finding no reversible error committed by the appellate court in affirming the dismissal of the RTC, affirmed the Decision of the Court of Appeals. Further, in support of her Complaint, petitioner alluded to a portion of the Decision dated 22 June 1993 of the RTC in Civil Case No. 61327, which stated, to wit:

In determining which property is the principal and which is the accessory, the property of greater value shall be considered the principal. In this case, the lot is the principal and the improvements the accessories. Since Article 120 of the Family Code provides the rule that the ownership of accessory follows the ownership of the principal, then the subject lot with all its improvements became an exclusive and capital property of Alfredo with an obligation to reimburse the conjugal partnership of the cost of improvements at the time of liquidation of [the] conjugal partnership. Clearly, Alfredo has all the rights to sell the subject property by himself without need of Josefas consent. According to petitioner, the ruling of the RTC shows that, when Alfredo died on 29 September 1999, or at the time of the liquidation of the conjugal partnership, she had the right to be reimbursed for the cost of the improvements on Alfredos lot. RTC denied respondents motion to dismiss. CA, on appeal, granted respondents petition for certiorari.

Issue: W/N respondents have the correlative obligation to pay the value of the improvements on the subject lot

Held: No Petitioner was not able to show that there is an obligation on the part of the respondents to respect or not to violate her right. While we could concede that the Civil Case made a reference to the right of the spouse as contemplated in Article 120 of the Family Code to be reimbursed for the cost of the improvements, the obligation to reimburse rests on the spouse upon whom ownership of the entire property is vested. There is no obligation on the part of the purchaser of the property, in case the property is sold by the owner-spouse. Indeed, Article 120 provides the solution in determining the ownership of the improvements that are made on the separate property of the spouses at the expense of the partnership or through the acts or efforts of either or both spouses. Thus, when the cost of the improvement and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement. The subject property was precisely declared as the exclusive property of Alfredo on the basis of Article 120 of the Family Code.

Section 4. Charges Upon and Obligations of the Conjugal Partnership

Art. 121. The conjugal partnership shall be liable for:

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

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties.

Art. 122. The payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal properties partnership except insofar as they redounded to the benefit of the family.

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

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

Art. 123. Whatever may be lost during the marriage in any game of chance or in betting, sweepstakes, or any other kind of gambling whether permitted or prohibited by law, shall be borne by the loser and shall not be charged to the conjugal partnership but any winnings therefrom shall form part of the conjugal partnership property.

RA 10572: AN ACT ESTABLISHING THE LIABILITY OF THE ABSOLUTE COMMUNITY OR CONJUGAL PARTNERSHIP FOR AN OBLIGATION OF A SPOUSE WHO PRACTICES A PROFESSION AND THE CAPABILITY OF EITHER SPOUSE TO DISPOSE OF AN EXCLUSIVE PROPERTY WITHOUT THE CONSENT OF THE OTHER SPOUSE, AMENDING FOR THE PURPOSE ARTICLES 73 AND 111 OF EXECUTIVE ORDER NO. 209, ALSO KNOWN AS THE FAMILY CODE OF THE PHILIPPINES

SECTION 1. Article 73 of the Family Code, as amended, is hereby further amended to read as follows:

Art. 73. Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other. The latter may object only on valid, serious, and moral grounds.

In case of disagreement, the court shall decide whether or not:

(1) The objection is proper, and(2) Benefit has accrued to the family prior to the objection or thereafter. If the benefit accrued prior to the objection, the resulting obligation shall be enforced against the community property. If the benefit accrued thereafter, such obligation shall be enforced against the separate property of the spouse who has not obtained consent.

The foregoing provisions shall not prejudice the rights of creditors who acted in good faith.

SEC. 2. Article 111 of the Family Code, as amended, is hereby further amended to read as follows:

Art. 111. Either spouse may mortgage, encumber, alienate or otherwise dispose of his or her exclusive property.

ALFREDO CHING and ENCARNACION CHING, petitioners vs. THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.G.R. No. 124642 | February 23, 2004 (2D)

Facts: Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of P9,000,000.00 from the Allied Banking Corporation (ABC). By virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo Ching, executed a promissory note for the said amount. As added security for the said loan, Alfredo Ching, together with some others, executed a continuing guaranty with the ABC binding themselves to jointly and severally guarantee the payment of all the PBMCI obligations owing the ABC to the extent of P38,000,000.00. The PBMCI defaulted in the payment of all its loans. Hence, ABC filed a complaint for sum of money, wherein Ching was impleaded as co-defendant. ABCs application for a writ of preliminary attachment was granted. Subsequently, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to Set Aside the levy on attachment, alleging 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 after the Citycorp Investment Philippines was established in 1974. Furthermore, the indebtedness covered by the continuing guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the account of PBMCI did not redound to the benefit of the conjugal partnership. RTC then issued an order lifting the writ of preliminary attachment on the shares of stocks and ordering the sheriff to return the said stocks to the petitioners. On appeal by ABC, CA reversed RTCs judgment.

Issue: W/N CA erred in concluding that the conjugal partnership is liable for the payment of PBMCI loans

Held: Yes Article 161(1) of the New Civil Code (now Article 121[2 and 3] of the Family Code of the Philippines) provides:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership. The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the payment of the loan obtained by the PBMCI from the private respondent in the amount of P38,000,000. Ayala Investment and Development Corp. v. Court of Appeals: The signing as surety is certainly not an exercise of an industry or profession. It is not embarking in a business. No matter how often an executive acted on or was persuaded to act as surety for his own employer, this should not be taken to mean that he thereby embarked in the business of suretyship or guaranty. 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. Certainly, to make a conjugal partnership responsible for a liability that should appertain alone to one of the spouses is to frustrate the objective of the New Civil Code to show the utmost concern for the solidarity and well being of the family as a unit. The husband, therefore, is denied the power to assume unnecessary and unwarranted risks to the financial stability of the conjugal partnership. In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was benefited by the petitioner-husbands 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. It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and was one of its top twenty stockholders, and that the shares of stocks of the petitioner-husband and his family would appreciate if the PBMCI could be rehabilitated through the loans obtained; that the petitioner-husbands career would be enhanced should PBMCI survive because of the infusion of fresh capital. However, these are not the benefits contemplated by Article 161 of the New Civil Code. The benefits must be those directly resulting from the loan. They cannot merely be a by-product or a spin-off of the loan itself. This is different from the situation where the husband borrows money or receives services to be used for his own business or profession. In the Ayala case, we ruled that it is such a contract that is one within the term "obligation for the benefit of the conjugal partnership." Thus:

(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his own profession, that contract falls within the term " obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.

AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO MAGSAJO, petitioners, vs. COURT OF APPEALS and SPOUSES ALFREDO & ENCARNACION CHING, respondents.G.R. No. 118305 | February 12, 1998 (2D)

Facts: Philippine Blooming Mills (hereinafter referred to as PBM) obtained a P50,300,000.00 loan from petitioner Ayala Investment and Development Corporation (hereinafter referred to as AIDC). As added security for the credit line extended to PBM, respondent Alfredo Ching, Executive Vice President of PBM, executed security agreements making himself jointly and severally answerable with PBM's indebtedness to AIDC. PBM failed to pay the loan. Thus, AIDC filed a case for sum of money against PBM and respondent-husband Alfredo Ching. CFI rendered judgment ordering PBM and respondent-husband Alfredo Ching to jointly and severally pay AIDC the principal amount of P50,300,000.00 with interests. Upon motion of AIDC, the lower court issued a writ of execution pending appeal. Thereafter, petitioner Abelardo Magsajo, Sr., Deputy Sheriff of Rizal caused the issuance and service upon respondents-spouses of a notice of sheriff sale. Private respondents filed a case of injunction against petitioners to enjoin the auction sale alleging that petitioners cannot enforce the judgment against the conjugal partnership levied on the ground that, among others, the subject loan did not redound to the benefit of the said conjugal partnership. The lower court issued a temporary restraining order to prevent petitioner Magsajo from proceeding with the enforcement of the writ of execution and with the sale of the said properties at public auction. On a Petition for Certiorari filed by AIDC, CA issued TRO enjoining CFI from enforcing its order. The auction sale then took place where AIDC being the only bidder, was issued a Certificate of Sale by petitioner Magsajo AIDC then filed a motion to dismiss the petition for injunction filed before the CFI on the ground that the same had become moot and academic with the consummation of the sale. The lower court denied the motion to dismiss. Hence, trial on the merits proceeded. The trial court promulgated its decision declaring the sale on execution null and void. CA affirmed the decision. Hence this petition.

Issue: W/N a surety agreement or an accommodation contract entered into by the husband in favor of his employer within the contemplation of Article 161 of the Civil Code

Held: No Petitioners aver that the wordings of Article 161 of the Civil Code is very clear: for the partnership to be held liable, the husband must have contracted the debt "for the benefit of the partnership; that here is a difference between the phrases: "redounded to the benefit of" or "benefited from" (on the one hand) and "for the benefit of (on the other). The former require that actual benefit must have been realized; the latter requires only that the transaction should be one which normally would produce benefit to the partnership, regardless of whether or not actual benefit accrued. There is no difference between the terms "redounded to the benefit of" or "benefited from" on the one hand; and "for the benefit of" on the other. They mean one and the same thing. Article 161 (1) of the Civil Code and Article 121 (2) of the Family Code are similarly worded, i.e., both use the term "for the benefit of." On the other hand, Article 122 of the Family Code provides that "The payment of personal debts by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family." As can be seen, the terms are used interchangeably. Petitioners further contend that the ruling of the respondent court runs counter to the pronouncement of this Court in the case of Cobb-Perez vs. Lantin, that the husband as head of the family and as administrator of the conjugal partnership is presumed to have contracted obligations for the benefit of the family or the conjugal partnership. Jurisprudence on the said matter: Javier vs. Osmea: The debts contracted by the husband during the marriage relation, for and in the exercise of the industry or profession by which he contributes toward the support of his family, are not his personal and private debts, and the products or income from the wife's own property, which, like those of her husband's, are liable for the payment of the marriage expenses, cannot be excepted from the payment of such debts. Cobb-Perez vs. Lantin: Debts contracted by the husband for and in the exercise of the industry or profession by which he contributes to the support of the family, cannot be deemed to be his exclusive and private debts. Ansaldo vs. Sheriff of Manila: The fruits of the paraphernal property which form part of the assets of the conjugal partnership, are subject to the payment of the debts and expenses of the spouses, but not to the payment of the personal obligations (guaranty agreements) of the husband, unless it be proved that such obligations were productive of some benefit to the family. Liberty Insurance Corporation vs. Banuelos: When there is no showing that the execution of an indemnity agreement by the husband redounded to the benefit of his family, the undertaking is not a conjugal debt but an obligation personal to him. From the foregoing jurisprudential rulings of this Court, we can derive the following conclusions: If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his own profession, that contract falls within the term . . . . obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership. 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, that contract cannot, by itself, alone be categorized as falling within the context of "obligations for the benefit of the conjugal partnership." The contract of loan or services is clearly for the benefit of the principal debtor and not for the surety or his family. No presumption can be inferred that, when a husband enters into a contract of surety or accommodation agreement, it is "for the benefit of the conjugal partnership." Proof must be presented to establish benefit redounding to the conjugal partnership. In the case at bar, petitioner claims that the benefits the respondent family would reasonably anticipate were the following: The employment of co-respondent Alfredo Ching would be prolonged and he would be entitled to his monthly salary of P20,000.00 for an extended length of time because of the loan he guaranteed; The shares of stock of the members of his family would appreciate if the PBM could be rehabilitated through the loan obtained; His prestige in the corporation would be enhanced and his career would be boosted should PBM survive because of the loan. However, these are not the benefits contemplated by Article 161 of the Civil Code. The benefits must be one directly resulting from the loan. It cannot merely be a by-product or a spin-off of the loan itself. Such benefits (prospects of longer employment and probable increase in the value of stocks) might have been already apparent or could be anticipated at the time the accommodation agreement was entered into. Are indirect and remote probable benefits, the ones referred to in Article 161 of the Civil Code? The Court of Appeals in denying the motion for reconsideration, disposed of these questions in the following manner:

No matter how one looks at it, the debt/credit respondents-appellants is purely a corporate debt granted to PBM, with petitioner-appellee-husband merely signing as surety. While such petitioner-appellee-husband, as such surety, is solidarily liable with the principal debtor AIDC, such liability under the Civil Code provisions is specifically restricted by Article 122 (par. 1) of the Family Code, so that debts for which the husband is liable may not be charged against conjugal partnership properties. Article 122 of the Family Code is explicit "The payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family.

HONORIO L. CARLOS, petitioner, vs. MANUEL T. ABELARDO, respondent.G.R. No. 146504 | April 9, 2002 (1D)

Facts: Petitioner filed a complaint for a sum of money and damages against respondent Manuel Abelardo, his son-in-law, and the latters wife, Maria Theresa Carlos-Abelardo. In the said complaint, petitioner alleged that: Respondent and his wife approached him and requested him to advance the amount of US$25,000.00 for the purchase of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque. Thereafter, respondent expressed violent resistance to petitioners inquiries on the amount to the extent of making various death threats against petitioner. RTC rendered a decision in favor of petitioner. CA, on appeal, however reversed the lower courts decision.

Issue: W/N the loan incurred by the respondent is the liability of the conjugal partnership

Held: Yes The evidence adduced by petitioner sufficiently established his claim that the US$25,000.00 he advanced to respondent and his wife was a loan. The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family Code:

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(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other;

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

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties.

Xxx While respondent did not and refused to sign the acknowledgment executed and signed by his wife, undoubtedly, the loan redounded to the benefit of the family because it was used to purchase the house and lot which became the conjugal home of respondent and his family. Hence, notwithstanding the alleged lack of consent of respondent, under Art. 21 of the Family Code, he shall be solidarily liable for such loan together with his wife.

SECURITY BANK and TRUST COMPANY, Petitioner, vs. MAR TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL J. LACSON and RICARDO A. LOPA, Respondents.G.R. No. 143382 | November 29, 2006 (2D)

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. Unable to collect the balance of the loan, petitioner filed a complaint for a sum of money with a prayer for preliminary attachment against respondent corporation and individual respondents. RTC found that the obligation contracted by individual respondent Martinez did not redound to the benefit of his family, hence, it ordered the lifting of the attachment previously issued on the conjugal house and lot of the spouses Martinez. Dissatisfied with the RTC decision, petitioner appealed to the CA but the appellate court affirmed the trial courts decision in toto. Petitioner sought reconsideration but it was denied. Hence, this petition.

Issue: W/N RTC and CA were wrong in ruling that the conjugal partnership of the Martinez spouses could not be held liable for the obligation incurred by individual respondent Martinez

Held: No 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." But when are debts and obligations contracted by the husband alone considered for the benefit of and therefore chargeable against the conjugal partnership? Is a surety agreement or an accommodation contract entered into by the husband in favor of his employer within the contemplation of the said provision? Luzon Surety Co., Inc. v. de Garcia: 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. Ayala Investment and Development Corporation v. Court of Appeals: 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. 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 latters 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. The underlying concern of the law is the conservation of the conjugal partnership. 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.

JOE A. ROS and ESTRELLA AGUETE, Petitioners, vs. PHILIPPINE NATIONAL BANK - LAOAG BRANCH, Respondent.G.R. No. 170166 | April 6, 2011 (2D)

Facts: Spouses Jose A. Ros and Estrella Aguete filed a complaint for the annulment of the Real Estate Mortgage and all legal proceedings taken thereunder against PNB. The averments in the complaint disclosed that plaintiff-appellee Joe A. Ros obtained a loan of P115,000.00 from PNB and as security for the loan, plaintiff-appellee Ros executed a real estate mortgage involving a parcel of land. Upon maturity, the loan remained outstanding. As a result, PNB instituted extrajudicial foreclosure proceedings on the mortgaged property. After the extrajudicial sale thereof, a Certificate of Sale was issued in favor of PNB as the highest bidder. Claiming that she (plaintiff-appellee Estrella Aguete) has no knowledge of the loan obtained by her husband nor she consented to the mortgage instituted on the conjugal property a complaint was filed to annul the proceedings pertaining to the mortgage, sale and consolidation of the property interposing the defense that her signatures affixed on the documents were forged and that the loan did not redound to the benefit of the family. The trial court ruled in favor of petitioners. However, CA reversed the same. Assuming arguendo that Aguete did not give her consent to Ros loan, the appellate court ruled that the conjugal partnership is still liable because the loan proceeds redounded to the benefit of the family. The records of the case reveal that the loan was used for the expansion of the familys business. Therefore, the debt obtained is chargeable against the conjugal partnership.

Issue: W/N CA erred in declaring, without basis, that the loan contracted by husband Joe A. Ros with respondent Philippine National Bank Laoag redounded to the benefit of his family

Held: No The application for loan shows that the loan would be used exclusively "for additional working capital of buy & sell of garlic & virginia tobacco." In her testimony, Aguete confirmed that Ros engaged in such business, but claimed to be unaware whether it prospered. Aguete was also aware of loans contracted by Ros, but did not know where he "wasted the money." Debts contracted by the husband for and in the exercise of the industry or profession by which he contributes to the support of the family cannot be deemed to be his exclusive and private debts. If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his own profession, that contract falls within the term "x x x x obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership. For this reason, we rule that Ros loan from PNB redounded to the benefit of the conjugal partnership. Hence, the debt is chargeable to the conjugal partnership.

YOLANDA LEACHON CORPUZ, Complainant, vs. SERGIO V. PASCUA, Sheriff III. Municipal Trial Court in Cities, Trece Martires City, Cavite. Respondent.A.M. No. P-11-2972 (Formerly OCA I.P.I. No. 10-3430-P) | September 28, 2011 (1D)

Facts: Alicia Panganiban (Panganiban) instituted a criminal case against Juanito Corpuz for violations of Batas Pambansa Blg. 22. When Juanito failed to comply with his obligations under the Compromise Agreement in the said case, Panganiban filed Motions for Execution of the MTCC judgment. MTCC acted favorably on Panganibans Motions and issued a Writ of Execution addressed to the Sheriff of the MTCC of Trece Martires City When Yolanda, Juanitos wife, and her daughter were in her office at the Cavite Provincial Engineering Office of Trece Martires City, Sheriff Pascua arrived at Yolandas office and demanded that Yolanda surrender the Toyota Town Ace Noah with Plate No. 471, which was registered in Yolandas name, threatening to damage the said vehicle if Yolanda would refuse to do so. Offended, humiliated, and embarrassed, Yolanda was compelled to file the present administrative complaint4 against Sheriff Pascua. Sheriff Pascua argued that he only took Yolandas vehicle after verification from the Land Transportation Office (LTO) that it was registered in Yolandas name. Yolanda is the wife of Juanito, the accused in Criminal Case Nos. 2079 to 2082, and the vehicle is their conjugal property, which could be levied upon in satisfaction of a Writ of Execution against Juanito.

Issue: W/N the subject vehicle can be presumed as the conjugal property of the Juanito and Yolanda

Held: No Sheriff Pascua cannot rely on the presumption that the vehicle is the conjugal property of Juanito and Yolanda. Indeed, Article 160 of the New Civil Code provides that "all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." However, for this presumption to apply, the party who invokes it must first prove that the property was acquired during the marriage. Proof of acquisition during the coverture is a condition sine qua non to the operation of the presumption in favor of the conjugal partnership. Thus, the time when the property was acquired is material. There is no such proof in the records of the present case. Sheriff Pascuas assertions of diligence do not exculpate him from administrative liability. After inquiry from the LTO, he already discovered that the vehicle was registered in Yolandas name only. This fact should have already prompted Sheriff Pascua to gather more information, such as when Juanito and Yolanda were married and when did Yolanda acquire the vehicle, which, in turn, would have determined whether or not Sheriff Pascua could already presume that the said vehicle is conjugal property.

SPOUSES ROBERTO BUADO and VENUS BUADO, Petitioners, vs. THE HONORABLE COURT OF APPEALS, Former Division, and ROMULO NICOL, Respondents.G.R. No. 145222 | April 24, 2009 (2D)

Facts: Spouses Roberto and Venus Buado (petitioners) filed a complaint for damages against Erlinda Nicol (Erlinda). Said action originated from Erlinda Nicols civil liability arising from the criminal offense of slander filed against her by petitioners. The trial court rendered a decision ordering Erlinda to pay damages. Said decision was affirmed, successively, by the Court of Appeals and this Court. Finding Erlinda Nicols personal properties insufficient to satisfy the judgment, the Deputy Sheriff issued a notice of levy on real property on execution addressed to the Register of Deeds of Cavite. Romulo Nicol (respondent), the husband of Erlinda Nicol, filed a complaint for annulment of certificate of sale and damages with preliminary injunction against petitioners and the deputy sheriff. RTC dismissed respondents complaint. On appeal, the Court of Appeals reversed the trial court.

Issue: W/N the obligation of Erlinda arising from her criminal liability is chargeable to the conjugal partnership

Held: No There is no dispute that contested property is conjugal in nature. Article 122 of the Family Code16 explicitly provides that payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family. Unlike in the system of absolute community where liabilities incurred by either spouse by reason of a crime or quasi-delict is chargeable to the absolute community of property, in the absence or insufficiency of the exclusive property of the debtor-spouse, the same advantage is not accorded in the system of conjugal partnership of gains. The conjugal partnership of gains has no duty to make advance payments for the liability of the debt