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CASES UNDER ARTICLE 147

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 Regional Trial Court in Civil Case No. Q-92-12539. Petitioner

avers that the court a quohas failed to apply the correct 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 the contract.

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 marriage were five children. In a petition, dated 22 June 1992, Valdez

sought the declaration of nullity of the marriage pursuant to Article 36 of the

Family code (docketed Civil Case No. Q-92-12539, Regional Trial Court of Quezon

City, Branch 102). After the hearing the parties following the joinder of issues, the

trial court,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 hereby declared null and void under Article 36 of the Family Code on the

ground of their mutual psychological incapacity to comply with their essential

marital obligations;

(2) The three older children, Carlos Enrique III, Antonio Quintin and Angela

Rosario shall choose which parent they would want to stay with.

Stella Eloisa and Joaquin Pedro shall be placed in the custody of their mother,

herein respondent Consuelo 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 their common propertiesas defined byArticle 147of the Family

Code, and to comply with the provisions ofArticles 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, for proper 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 the

hearing of the motion, the children filed a joint af fidavit expressing their desire to

remain with their father, Antonio Valdez, herein petitioner.

n 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 property acquired by both parties during their union, in the absence of

proof to the contrary, are presumed to have been obtained through the joint

efforts of the parties and will be owned by them in equal shares, plaintiff and

defendant willown their "family home"and all their properties for that matte

equal shares.

In the liquidation and partition of properties owned in common by the plaint

and defendant, the provisions 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:

Considering that this Court has already declared the marriage between petiti

and respondent as null and void ab initio, pursuant to Art. 147, the property

regime of petitioner and respondent shall be governed by therules on owners

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 refers to the procedure for the liquidatio

the absolute community of property.4

Petitioner moved for a reconsideration of the order. The motion was denied

30 October 1995.

In his recourse to this Court, petitioner submits that Articles 50, 51 and 52 of

Family Code should be held 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 disposition of the family dwelling in cases where a marriage is

declared void ab initio, including a marriage declared 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 ma

read consistently with Article 129.

IV

It is necessary to determine the parent with whom majority of the children w

to stay.5

The trial court correctly applied the law. In a void marriage, regardless of the

cause thereof, the property relations of the parties during the period of

cohabitation is governed by the provisions of Article 147 or Article 148, such

the case may be, of the Family Code. Article 147 is a remake of Article 144 of

Civil Code as interpreted and so applied in previous cases;6it provides:

Art. 147. When a man and a woman who are capacitated to marry each othelive exclusively with each other as husband and wife without the benefit of

marriage or under a void marriage, their wages and salaries shall be owned b

them in equal shares and the property acquired by both of them through the

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 be presumed to have been obtained by their joint efforts, wor

industry, and shall be owned by them in equal shares. For purposes of this Ar

a party who did not participate in the acquisition by the other party of any

property shall be deemed to have contributed jointly in the acquisition there

the former's efforts consisted in the care and maintenance of the family and

the household.

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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 the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the

party in bad faith in the ownership shall be forfeited in favor of their common

children. In case of default of or waiver by any or all of the common children or

their descendants, each vacant share shall belong to the innocent 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 to marry each other, so exclusively live together as

husband and wife under a void marriage or without the benefit 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 or upwards not under any of the impediments mentioned

n Articles 37 and 38"7

of the Code.

Under this property regime, property acquired by both spouses through their

work and industry shall be governed by the rules on equal co-ownership. Any

property acquired during the union isprima faciepresumed to have been

obtained through their joint efforts. A party who did not participate in the

acquisition of the property shall be considered as having contributed thereto

ointly if said party's "efforts consisted 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 in favor of their common children; in default thereof or

waiver by any or all of the common children, each vacant share shall belong to

the respective surviving descendants, or still in default thereof, to the innocent

party. The forfeiture shall take place upon the termination of the cohabitation9

ordeclaration of nullity of the marriage.

10

When the common-law spouses suffer from a legal impediment to marry or when

they do not live exclusively with each other (as husband and wife), only the

property acquired by both of them through their actual joint contribution of

money, property or industry shall be owned in common and in proportion to their

respective contributions. Such contributions and corresponding shares, however,

areprima faciepresumed to be equal. The share of any party who is married to

another shall accrue to the absolute community or conjugal partnership, as the

case may be, if so existing under a valid marriage. If the party who has acted in

bad faith is not validly married to another, his or her share shall be forfeited in

the manner already heretofore expressed.11

n deciding to take further cognizance of the issue on the settlement of theparties' common property, the trial court acted neither imprudently nor

precipitately; a court which has jurisdiction to declare the marriage a nullity must

be deemed likewise clothed in authority to resolve incidental and consequential

matters. Nor did it commit a reversible error in ruling that petitioner and private

respondent own the "family home" and all their 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 up to govern the liquidation of

either the absolute community or the conjugal partnership of gains, the property

regimes recognized for valid and voidable marriages (in the latter case until the

contract is annulled), are irrelevant to the liquidation of the co-ownership that

exists between common-law spouses. The first paragraph of Articles 50 of the

Family Code, applying paragraphs (2), (3), (4) and 95) of Article 43,13relates o

by its explicit terms, to voidablemarriages and, exceptionally, to void marriag

under Article 4014

of the Code, i.e., the declaration of nullity of a subsequent

marriage contracted by a spouse of a prior void marriage before the latter is

judicially declared void. The latter is a special rule that somehow recognizes t

philosophy and an old doctrine that void marriages are inexistent from the ve

beginning and no judicial decree is necessary to establish their nullity. In now

requiring forpurposes of remarriage, the declaration of nullity by final judgme

of the previously contracted void marriage, the present law aims to do away

any continuing uncertainty on the status of the second marriage. It is not the

illogical for the provisions of Article 43, in relation to Articles 4115and 42, 16o

the Family Code, on the effects of the termination of a subsequent marriagecontracted during the subsistence of a previous marriage to be made

applicablepro hac vice. In all other cases, it is not to be assumed that the law

also meant to have coincident property relations, on the one hand, between

spouses in valid and voidable marriages (before annulment) and, on the othe

between common-law spouses or spouses of void marriages, leaving to ordai

on the latter case, the ordinary rules on co-ownership subject to the provisio

the Family Code on the "family home," i.e., the provisions found in Title V,

Chapter 2, of the Family Code, remain in force and effect regardless of the

property regime of the spouses.

WHEREFORE, the questioned orders, dated 05 May 1995 and 30 October 199

the trial court are AFFIRMED. No costs.

G.R. No. 127358 March 31, 2005

NOEL BUENAVENTURA,Petitioner,

vs.

COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA, respondent

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

G.R. No. 127449 March 31, 2005

NOEL BUENAVENTURA,Petitioner,

vs.

COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA,Respondent

D E C I S I O N

AZCUNA,J.:

These cases involve a petition for the declaration of nullity of marriage, which

was filed by petitioner Noel Buenaventura on July 12, 1992, on the ground of

alleged psychological incapacity of his wife, Isabel Singh Buenaventura, herei

respondent. After respondent filed her answer, petitioner, with leave of cour

amended his petition by stating that both he and his wife were psychological

incapacitated to comply with the essential obligations of marriage. In respon

respondent filed an amended answer denying the allegation that she was

psychologically incapacitated.1

On July 31, 1995, the Regional Trial Court promulgated a Decision, the dispos

portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1) Declaring and decreeing the marriage entered into between plaintiff Noel

Buenaventura and defendant Isabel Lucia Singh Buenaventura on July 4, 1979

null and void ab initio;

2) Ordering the plaintiff to pay defendant moral damages in the amount of 2

million pesos and exemplary damages of 1 million pesos with 6% interest from

the date of this decision plus attorneys fees ofP100,000.00;

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3) Ordering the plaintiff to pay the defendant expenses of litigation

of P50,000.00, plus costs;

4) Ordering the liquidation of the assets of the conjugal partnership property[,]

particularly the plaintiffs separation/retirement benefits received from the Far

East Bank [and] Trust Company[,] by ceding, giving and paying to her fifty percent

(50%) of the net amount of P3,675,335.79 or P1,837,667.89 together with 12%

nterest per annum from the date of this decision and one-half (1/2) of his

outstanding shares of stock with Manila Memorial Park and Provident Group of

Companies;

5) Ordering him to give a regular support in favor of his son Javy Singh

Buenaventura in the amount ofP15,000.00 monthly, subject to modification as

the necessity arises;

6) Awarding the care and custody of the minor Javy Singh Buenaventura to his

mother, the herein defendant; and

7) Hereby authorizing the defendant to revert back to the use of her maiden

family name Singh.

Let copies of this decision be furnished the appropriate civil registry and registries

of properties.

SO ORDERED.2

Petitioner appealed the above decision to the Court of Appeals. While the case

was pending in the appellate court, respondent filed a motion to increase

the P15,000 monthly supportpendente liteof their son Javy Singh Buenaventura.

Petitioner filed an opposition thereto, praying that it be denied or that such

ncident be set for oral argument.3

On September 2, 1996, the Court of Appeals issued a Resolution increasing the

supportpendente liteto P20,000.4Petitioner filed a motion for reconsideration

questioning the said Resolution.5

On October 8, 1996, the appellate court promulgated a Decision dismissing

petitioners appeal for lack of merit and affirming in toto the trial courts

decision.6Petitioner filed a motion for reconsideration which was denied. From

the abovementioned Decision, petitioner filed the instant Petition for Review

on Certiorari.

On November 13, 1996, through another Resolution, the Court of Appeals denied

petitioners motion for reconsideration of the September 2, 1996 Resolution,

which increased the monthly support for the son.7Petitioner filed a Petition

for Certiorarito question these two Resolutions.

On July 9, 1997, the Petition for Review on Certiorari8and the Petition

for Certiorari9were ordered consolidated by this Court.

10

n the Petition for Review on Certioraripetitioner claims that the Court of Appeals

decided the case not in accord with law and jurisprudence, thus:

1. WHEN IT AWARDED DEFENDANT-APPELLEE MORAL DAMAGES IN THE

AMOUNT OF P2.5 MILLION AND EXEMPLARY DAMAGES OF P1 MILLION, WITH 6%

NTEREST FROM THE DATE OF ITS DECISION, WITHOUT ANY LEGAL AND MORAL

BASIS;

2. WHEN IT AWARDED P100,000.00 ATTORNEYS FEES ANDP50,000.00 EXPENSES

OF LITIGATION, PLUS COSTS, TO DEFENDANT-APPELLEE, WITHOUT FACTUAL AND

LEGAL BASIS;

3. WHEN IT ORDERED PLAINTIFF-APPELLANT NOEL TO PAY DEFENDANT-APPELLEE

ONE-HALF ORP1,837,667.89 OUT OF HIS RETIREMENT BENEFITS RECEIVED FROM

THE FAR EAST BANK AND TRUST CO., WITH 12% INTEREST THEREON FROM THE

DATE OF ITS DECISION, NOTWITHSTANDING THAT SAID RETIREMENT BENEFITS

ARE GRATUITOUS AND EXCLUSIVE PROPERTY OF NOEL, AND ALSO TO DELIVER TO

DEFENDANT-APPELLEE ONE-HALF OF HIS SHARES OF STOCK WITH THE MANILA

MEMORIAL PARK AND THE PROVIDENT GROUP OF COMPANIES, ALTHOUGH S

SHARES OF STOCK WERE ACQUIRED BY NOEL BEFORE HIS MARRIAGE TO

RESPONDENT ISABEL AND ARE, THEREFORE, AGAIN HIS EXCLUSIVE PROPERTI

AND

4. WHEN IT AWARDED EXCLUSIVE CARE AND CUSTODY OVER THE PARTIES

MINOR CHILD TO DEFENDANT-APPELLEE WITHOUT ASKING THE CHILD (WHO

WAS ALREADY 13 YEARS OLD AT THAT TIME) HIS CHOICE AS TO WHOM,

BETWEEN HIS TWO PARENTS, HE WOULD LIKE TO HAVE CUSTODY OVER HIS

PERSON.11

In the Petition for Certiorari, petitioner advances the following contentions:

THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT REFUSE

SET RESPONDENTS MOTION FOR INCREASED SUPPORT FOR THE PARTIES SO

FOR HEARING.12

THERE WAS NO NEED FOR THE COURT OF APPEALS TO INCREASE JAVYS

MONTHLY SUPPORT OF P15,000.00 BEING GIVEN BY PETITIONER EVEN AT

PRESENT PRICES.13

IN RESOLVING RESPONDENTS MOTION FOR THE INCREASE OF JAVYS SUPPO

THE COURT OF APPEALS SHOULD HAVE EXAMINED THE LIST OF EXPENSES

SUBMITTED BY RESPONDENT IN THE LIGHT OF PETITIONERS OBJECTIONS

THERETO, INSTEAD OF MERELY ASSUMING THAT JAVY IS ENTITLED TO A P5,0

INCREASE IN SUPPORT AS SAID AMOUNT IS "TOO MINIMAL."14

LIKEWISE, THE COURT OF APPEALS SHOULD HAVE GIVEN PETITIONER AN

OPPORTUNITY TO PROVE HIS PRESENT INCOME TO SHOW THAT HE CANNOT

AFFORD TO INCREASE JAVYS SUPPORT.15

With regard to the first issue in the main case, the Court of Appeals articulate

On Assignment of Error C, the trial court, after findings of fact ascertained fro

the testimonies not only of the parties particularly the defendant-appellee bu

likewise, those of the two psychologists, awarded damages on the basis of

Articles 21, 2217 and 2229 of the Civil Code of the Philippines.

Thus, the lower court found that plaintiff-appellant deceived the defendant-

appellee into marrying him by professing true love instead of revealing to he

that he was under heavy parental pressure to marry and that because of prid

married defendant-appellee; that he was not ready to enter into marriage as

fact his career was and always would be his first priority; that he was unable t

relate not only to defendant-appellee as a husband but also to his son, Javy, a

father; that he had no inclination to make the marriage work such that in tim

trouble, he chose the easiest way out, that of leaving defendantappellee an

their son; that he had no desire to keep defendant-appellee and their son as

proved by his reluctance and later, refusal to reconcile after their separation;

the aforementioned caused defendant-appellee to suffer mental anguish,

anxiety, besmirched reputation, sleepless nights not only in those years the

parties were together but also after and throughout their separation.

Plaintiff-appellant assails the trial courts decision on the ground that unlike t

arising from a breach in ordinary contracts, damages arising as a consequencmarriage may not be awarded. While it is correct that there is, as yet, no dec

case by the Supreme Court where damages by reason of the performance or

performance of marital obligations were awarded, it does not follow that no

award for damages may be made.

Defendant-appellee, in her amended answer, specifically prayed for moral an

exemplary damages in the total amount of 7 million pesos. The lower court, i

the exercise of its discretion, found full justification of awarding at least half o

what was originally prayed for. We find no reason to disturb the ruling of the

court.16

The award by the trial court of moral damages is based on Articles 2217 and 2

the Civil Code, which read as follows:

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ART. 2217. Moral damages include physical suffering, mental anguish, fright,

serious anxiety, besmirched reputation, wounded feelings, moral shock, social

humiliation, and similar injury. Though incapable of pecuniary computation,

moral damages may be recovered if they are the proximate result of the

defendants wrongful act or omission.

ART. 21. Any person who wilfully causes loss or injury to another in a manner that

s contrary to morals, good customs or public policy shall compensate the latter

for the damage.

The trial court referred to Article 21 because Article 221917of the Civil Code

enumerates the cases in which moral damages may be recovered and it mentions

Article 21 as one of the instances. It must be noted that Article 21 states that the

ndividual must willfully cause loss or injury to another. There is a need that the

act is willful and hence done in complete freedom. In granting moral damages,

therefore, the trial court and the Court of Appeals could not but have assumed

that the acts on which the moral damages were based were done willfully and

freely, otherwise the grant of moral damages would have no leg to stand on.

On the other hand, the trial court declared the marriage of the parties null and

void based on Article 36 of the Family Code, due to psychological incapacity of

the petitioner, Noel Buenaventura. Article 36 of the Family Code states:

A marriage contracted by any party who, at the time of the celebration, was

psychologically incapacitated to comply with the essential marital obligations of

marriage, shall likewise be void even if such incapacity becomes manifest onlyafter its solemnization.

Psychological incapacity has been defined, thus:

. . no less than a mental (not physical) incapacity that causes a party to be truly

ncognitive of the basic marital covenants that concomitantly must be assumed

and discharged by the parties to the marriagewhich, as so expressed by Article

68 of the Family Code, include their mutual obligations to live together, observe

ove, respect and fidelity and render help and support. There is hardly any doubt

that the intendment of the law has been to confine the meaning of "psychological

ncapacity" to the most serious cases of personality disorders clearly

demonstrative of an utter insensitivity or inability to give meaning and

significance to the marriage. . . .18

The Court of Appeals and the trial court considered the acts of the petitioner

after the marriage as proof of his psychological incapacity, and therefore a

product of his incapacity or inability to comply with the essential obligations of

marriage. Nevertheless, said courts considered these acts as willful and hence as

grounds for granting moral damages. It is contradictory to characterize acts as a

product of psychological incapacity, and hence beyond the control of the party

because of an innate inability, while at the same time considering the same set of

acts as willful. By declaring the petitioner as psychologically incapacitated, the

possibility of awarding moral damages on the same set of facts was negated. The

award of moral damages should be predicated, not on the mere act of entering

nto the marriage, but on specific evidence that it was done deliberately and with

malice by a party who had knowledge of his or her disability and yet willfully

concealed the same. No such evidence appears to have been adduced in this

case.

For the same reason, since psychological incapacity means that one is truly

ncognitive of the basic marital covenants that one must assume and discharge as

a consequence of marriage, it removes the basis for the contention that the

petitioner purposely deceived the private respondent. If the private respondent

was deceived, it was not due to a willful act on the part of the petitioner.

Therefore, the award of moral damages was without basis in law and in fact.

Since the grant of moral damages was not proper, it follows that the grant of

exemplary damages cannot stand s ince the Civil Code provides that exemplary

damages are imposed in additionto moral, temperate, liquidated or

compensatory damages.19

With respect to the grant of attorneys fees and expenses of litigation the tria

court explained, thus:

Regarding Attorneys fees, Art. 2208 of the Civil Code authorizes an award of

attorneys fees and expenses of litigation, other than judicial costs, when as i

this case the plaintiffs act or omission has compelled the defendant to litigat

and to incur expenses of litigation to protect her interest (par. 2), and where

Court deems it just and equitable that attorneys fees and expenses of li tigat

should be recovered. (par. 11)20

The Court of Appeals reasoned as follows:

On Assignment of Error D, as the award of moral and exemplary damages is f

justified, the award of attorneys fees and costs of litigation by the trial court

likewise fully justified.21

The acts or omissions of petitioner which led the lower court to deduce his

psychological incapacity, and his act in filing the complaint for the annulment

his marriage cannot be considered as unduly compelling the private responde

to litigate, since both are grounded on petitioners psycholog ical incapacity,

which as explained above is a mental incapacity causing an utter inability to

comply with the obligations of marriage. Hence, neither can be a ground for

attorneys fees and litigation expenses. Furthermore, since the award of mor

and exemplary damages is no longer justified, the award of attorneys fees an

expenses of litigation is left without basis.

Anent the retirement benefits received from the Far East Bank and Trust Co.

the shares of stock in the Manila Memorial Park and the Provident Group of

Companies, the trial court said:

The third issue that must be resolved by the Court is what to do with the asse

the conjugal partnership in the event of declaration of annulment of the

marriage. The Honorable Supreme Court has held that the declaration of null

of marriage carries ipso factoa judgment for the liquidation of property

(Domingo v. Court of Appeals, et al., G.R. No. 104818, Sept. 17, 1993, 226 SCR

pp. 572573, 586). Thus, speaking through Justice Flerida Ruth P. Romero, it

ruled in this case:

When a marriage is declared void ab initio, the law states that the f inal judgm

therein shall provide for the liquidation, partition and distribution of theproperties of the spouses, the custody and support of the common children a

the delivery of their presumptive legitimes, unless such matters had been

adjudicated in the previous proceedings.

The parties here were legally married on July 4, 1979, and therefore, all prop

acquired during the marriage, whether the acquisition appears to have been

made, contracted or registered in the name of one or both spouses, is presum

to be conjugal unless the contrary is proved (Art. 116, New Family Code; Art.

Civil Code). Art. 117 of the Family Code enumerates what are conjugal

partnership properties. Among others they are the following:

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

the spouses;

2) Those obtained from the labor, industry, work or profession of either or bo

of the spouses;

3) The fruits, natural, industrial, or civil, due or received during the marriage

the common property, as well as the net fruits from the exclusive property of

each spouse. . . .

Applying the foregoing legal provisions, and without prejudice to requiring an

inventory of what are the parties conjugal properties and what are the exclu

properties of each spouse, it was disclosed during the proceedings in this cas

that the plaintiff who worked first as Branch Manager and later as Vice-Presid

of Far East Bank & Trust Co. received separation/retirement package from th

said bank in the amount ofP3,701,500.00 which after certain deductions

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amounting to P26,164.21 gave him a net amount ofP3,675,335.79 and actually

paid to him on January 9, 1995 (Exhs. 6, 7, 8, 9, 10, 11). Not having shown debts

or obligations other than those deducted from the said retirement/separation

pay, under Art. 129 of the Family Code "The net remainder of the conjugal

partnership properties shall constitute the profits, which shall be divided equally

between husband and wife, unless a different proportion or division was agreed

upon in the marriage settlement or unless there has been a voluntary waiver or

forfeiture of such share as provided in this Code." In this particular case,

however, there had been no marriage settlement between the parties, nor had

there been any voluntary waiver or valid forfeiture of the defendant wifes share

n the conjugal partnership properties. The previous cession and transfer by the

plaintiff of his one-half (1/2) share in their residential house and lot covered byT.C.T. No. S-35680 of the Registry of Deeds of Paraaque, Metro Manila, in favor

of the defendant as stipulated in their Compromise Agreement dated July 12,

1993, and approved by the Court in its Partial Decision dated August 6, 1993, was

actually intended to be in full settlement of any and all demands for past support.

n reality, the defendant wife had allowed some concession in favor of the

plaintiff husband, for were the law strictly to be followed, in the process of

iquidation of the conjugal assets, the conjugal dwelling and the lot on which it is

situated shall, unless otherwise agreed upon by the parties, be adjudicated to the

spouse with whom their only child has chosen to remain (Art. 129, par. 9). Here,

what was done was one-half (1/2) portion of the house was ceded to defendant

so that she will not claim anymore for past unpaid support, while the other half

was transferred to their only child as his presumptive legitime.

Consequently, nothing yet has been given to the defendant wife by way of hershare in the conjugal properties, and it is but just, lawful and fair, that she be

given one-half (1/2) share of the separation/retirement benefits received by the

plaintiff the same being part of their conjugal partnership properties having been

obtained or derived from the labor, industry, work or profession of said

defendant husband in accordance with Art. 117, par. 2 of the Family Code. For

the same reason, she is entitled to one-half (1/2) of the outstanding shares of

stock of the plaintiff husband with the Manila Memorial Park and the Provident

Group of Companies.22

The Court of Appeals articulated on this matter as follows:

On Assignment of Error E, plaintiff-appellant assails the order of the trial court for

him to give one-half of his separation/retirement benefits from Far East Bank &

Trust Company and half of his outstanding shares in Manila Memorial Park and

Provident Group of Companies to the defendant-appellee as the latters share in

the conjugal partnership.

On August 6, 1993, the trial court rendered a Partial Decision approving the

Compromise Agreement entered into by the parties. In the same Compromise

Agreement, the parties had agreed that henceforth, their conjugal partnership is

dissolved. Thereafter, no steps were taken for the liquidation of the conjugal

partnership.

Finding that defendant-appellee is entitled to at least half of the

separation/retirement benefits which plaintiff-appellant received from Far East

Bank & Trust Company upon his retirement as Vice-President of said company for

the reason that the benefits accrued from plaintiffappellants service for the

bank for a number of years, most of which while he was married to defendant-

appellee, the trial court adjudicated the same. The same is true with the

outstanding shares of plaintiff-appellant in Manila Memorial Park and Provident

Group of Companies. As these were acquired by the plaintiff-appellant at the

time he was married to defendant-appellee, the latter is entitled to one-half

thereof as her share in the conjugal partnership. We find no reason to disturb the

ruling of the trial court.23

Since the present case does not involve the annulment of a bigamous marriage,

the provisions of Article 50 in relation to Articles 41, 42 and 43 of the Family

Code, providing for the dissolution of the absolute community or conjugal

partnership of gains, as the case may be, do not apply. Rather, the general rule

applies, which is that in case a marriage is declared void ab initio, the property

regime applicable and to be liquidated, partitioned and distributed is that of

equal co-ownership.

InValdes v. Regional Trial Court, Branch 102, Quezon City,24

this Court expou

on the consequences of a void marriage on the property relations of the spou

and specified the applicable provisions of law:

The trial court correctly applied the law. In a void marriage, regardless of the

cause thereof, the property relations of the parties during the period of

cohabitation is governed by the provisions of Article 147 or Article 148, such

the case may be, of the Family Code. Article 147 is a remake of Article 144 of

Civil Code as interpreted and so applied in previous cases; it provides:

ART. 147. When a man and a woman who are capacitated to marry each othe

live exclusively with each other as husband and wife without the benefit of

marriage or under a void marriage, their wages and salaries shall be owned b

them in equal shares and the property acquired by both of them through the

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 be presumed to have been obtained by their joint efforts, wor

industry, and shall be owned by them in equal shares. For purposes of this Ar

a party who did not participate in the acquisition by the other party of any

property shall be deemed to have contributed jointly in the acquisition there

the former's efforts consisted in the care and maintenance of the family and

the household.

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

the property acquired during cohabitation and owned in common, without th

consent of the other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of

party in bad faith in the co-ownership shall be forfeited in favor of their comm

children. In case of default of or waiver by any or all of the common children

their descendants, each vacant share shall belong to the respective surviving

descendants. In the absence of descendants, such share shall belong to the

innocent party. In all cases, the forfeiture shall take place upon termination o

cohabitation.

This peculiar kind of co-ownership applies when a man and a woman, sufferinno legal impediment to marry each other, so exclusively live together as husb

and wife under a void marriage or without the benefit of marriage. The term

"capacitated" in the provision (in the first paragraph of the law) refers to the

capacityof a party to contract marriage, i.e., any "male or female of the age o

eighteen years or upwards not under any of the impediments mentioned in

Articles 37 and 38" of the Code.

Under this property regime, property acquired by both spouses through

their workand industryshall be governed by the rules on equal co-ownership

Any property acquired during the union is prima facie presumed to have bee

obtained through their joint efforts. A party who did not participate in the

acquisition of the property shall still be considered as having contributed the

jointly if said party's "efforts consisted in the care and maintenance of the fa

household." Unlike the conjugal partnership of gains, the fruits of the coupleseparate property are not included in the co-ownership.

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

Article 144 of the Civil Code; in addition, the law now expressly provides that

(a) Neither party can dispose or encumber by act[s] inter vivos [of] his or her

share in co-ownership property, without the 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 he

share in the co-ownership in favor of their common children; in default there

waiver by any or all of the common children, each vacant share shall belong t

the respective surviving descendants, or still in default thereof, to the innoce

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party. The forfeiture shall take place upon the termination of the cohabitation or

declaration of nullity of the marriage.

n deciding to take further cognizance of the issue on the settlement of the

parties' common property, the trial court acted neither imprudently nor

precipitately; a court which had jurisdiction to declare the marriage a nullity must

be deemed likewise clothed with authority to resolve incidental and

consequential matters. Nor did it commit a reversible error in ruling that

petitioner and private respondent own the "family home" and all their 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, of the Family Code, should aptly prevail. The rules set up to govern

the liquidation of either the absolute community or the conjugal partnership of

gains, the property regimes recognized for valid and voidable marriages (in the

atter case until the contract is annulled), are irrelevant to the liquidation of the

co-ownership that exists between common-law spouses. The first paragraph of

Article 50 of the Family Code, applying paragraphs (2), (3), (4) and (5) of Article

43, relates only, by its explicit terms, to voidablemarriages and, exceptionally,

to voidmarriages under Article 40 of the Code, i.e., the declaration of nullity of a

subsequent marriage contracted by a spouse of a prior void marriage before the

atter is judicially declared void. The latter is a special rule that somehow

recognizes the philosophy and an old doctrine that void marriages are inexistent

from the very beginning and no judicial decree is necessary to establish theirnullity. In now requiring forpurposes of remarriage, the declaration of nullity by

final judgment of the previously contracted void marriage, the present law aims

to do away with any continuing uncertainty on the status of the second marriage.

t is not then illogical for the provisions of Article 43, in relation to Articles 41 and

42, of the Family Code, on the effects of the termination of a subsequent

marriage contracted during the subsistence of a previous marriage to be made

applicablepro hac vice. In all other cases, it is not to be assumed that the law has

also meant to have coincident property relations, on the one hand, between

spouses in valid and voidable marriages (before annulment) and, on the other,

between common-law spouses or spouses of void marriages, leaving to ordain, in

the latter case, the ordinary rules on co-ownership subject to the provision of

Article 147 and Article 148 of the Family Code. It must be stressed, nevertheless,

even as it may merely state the obvious, that the provisions of the Family Code

on the "family home," i.e., the provisions found in Title V, Chapter 2, of the Family

Code, remain in force and effect regardless of the property regime of the

spouses.25

Since the properties ordered to be distributed by the court a quo were found,

both by the trial court and the Court of Appeals, to have been acquired during the

union of the parties, the same would be covered by the co-ownership. No fruits

of a separate property of one of the parties appear to have been included or

nvolved in said distribution. The liquidation, partition and distribution of the

properties owned in common by the parties herein as ordered by the court a

quoshould, therefore, be sustained, but on the basis of co-ownership and not of

the regime of conjugal partnership of gains.

As to the issue on custody of the parties over their only child, Javy Singh

Buenaventura, it is now moot since he is about to turn twenty-five years of age

on May 27, 200526

and has, therefore, attained the age of majority.

With regard to the issues on support raised in the Petition for Certiorari, these

would also now be moot, owing to the fact that the son, Javy Singh

Buenaventura, as previously stated, has attained the age of majority.

WHEREFORE, the Decision of the Court of Appeals dated October 8, 1996 and its

Resolution dated December 10, 1996 which are contested in the Petition for

Review (G.R. No. 127449), are hereby MODIFIED, in that the award of moral and

exemplary damages, attorneys fees, expenses of litigation and costs are deleted.

The order giving respondent one-half of the retirement benefits of petitioner

from Far East Bank and Trust Co. and one-half of petitioners shares of stock in

Manila Memorial Park and in the Provident Group of Companies is sustained but

on the basis of the liquidation, partition and distribution of the co-ownersh

and not of the regime of conjugal partnership of gains. The rest of said Decis

and Resolution are AFFIRMED.

The Petition for Review on Certiorari(G.R. No. 127358) contesting the Court

Appeals Resolutions of September 2, 1996 and November 13, 1996 which

increased the supportpendente litein favor of the parties son, Javy Singh

Buenaventura, is now MOOT and ACADEMIC and is, accordingly, DISMISSED.

No costs.

SO ORDERED.

G.R. No. 146294 July 31, 2006

JOHN ABING,petitioner,

vs.

JULIET WAEYAN,respondent.

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 Co

petitioner John Abing (John, hereafter) seeks to set aside the Decision1datedOctober 24, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 48675, rever

that of the Regional Trial Court (RTC) of Benguet, Branch 64, which affirmed a

earlier decision of the Municipal Trial Court (MTC) of Mankayan, Benguet in a

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, lived together as husband and wife without the benefit of

marriage. During their cohabitation, they acquired properties. Later, they par

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

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 own

by a certain Alejandro Dio on Aurora Street, Mankayan, Benguet. Conseque

the purchase, the tax declaration of the 2-storey house was transferred in the

name of Juliet.

On December 2, 1991, Juliet left for overseas employment in Korea. She wou

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 w

annexed a new structure which housed a sari-sari store. This new structure a

the sari-saristore thereat are the properties involved in this case.

In 1994, Juliet returned from Korea and continued to live with John. She man

the sari-saristore 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,

decided to partition their properties. For the purpose, they executed on Octo

7, 1995 a Memorandum of Agreement. Unfortunately, the document was left

unsigned by the parties although signed by the witnesses thereto. Under thei

unsigned agreement, John shall leave the couples' dwelling with Juliet paying

the amount of P428,870.00 representing John's share in all their properties. O

the same dateOctober 7, 1995Juliet paid John the sum of P232,397.66 b

way of partial payment of his share, with the balance of P196,472.34 to be pa

by Juliet in twelve monthly installment beginning November 1995.

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

demanded of her to vacate the annex structure housing the sari-saristore. Juliet

refused, prompting John to file an ejectment suit against her before the MTC of

Mankayan, Benguet.

n 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

atter's failure to pay the agreed balance due him under the

aforementionedMemorandum of Agreement

.

n 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.

n a decision2dated March 15, 1997, the MTC, on its finding that the money used

n the construction of the structure in question solely came from John, ruled that

the same exclusively pertained to the latter, and accordingly ordered Juliet's

eviction therefrom, including the sari-saristore thereat, and required her to

surrender possession thereof to John, thus:

WHEREFORE, judgment is rendered in favor of the plaintiff (John) and against the

defendant (Juliet).

Defendant is hereby ordered to vacate the premises of the store in litigation

covered by Tax Declaration No. 96-001-00445 in the name of the Plaintiff and

turn over possession thereof to the latter.

Defendant is hereby further ordered to pay the Plaintiff the sum of P2,500.00 a

month from the time she withheld possession of the store in litigation in June

1996 until she vacates the same and turn over possession thereof to the Plaintiff.

Defendant is finally ordered, to pay the sum of P5,000.00 to the Plaintiff by way

of Attorney's fees; and to pay the costs.

SO ORDERED.

On Juliet's appeal to the RTC, the latter, in its decision of July 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,

2000,3reversed that of the RTC, to wit:

WHEREFORE, the petition is GRANTED. The assailed decision of the Regional Trial

Court is hereby reversed and set as ide. Petitioner, Juliet Waeyan is entitled to

possess the property and maintain therein her business.

SO ORDERED.

Partly says the CA in its reversal disposition:

t is undisputed that the parties lived together as husband and wife without the

benefit of marriage from 1986 to 1995 and that they acquired certain properties

which must be divided between them upon the termination of their common law

relationship.

xxx xxx xxx

. . their property relations cannot be governed by the provision of the Civil Code

on conjugal partnership... but by the rule on co-ownership.

xxx xxx xxx

. . the parties' share in respect of the properties they have accumulated during

their cohabitation shall be equal unless there is proof to the contrary.

To the CA, John's 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 e

John's cause of action should have been for a sum of money "because he clai

that Juliet still owes him the payment for the extension." According to the CA

ejectment cannot lie against Juliet because Juliet's possession of the premise

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, John's present recourse, submitting that the CA erred in

1. not giving effect to the parties' Memorandum of Agreementwhich should

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 a separa

action for partition even as the community character of the subject premises

not been proven.

We AFFIRM with modification.

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

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, th

latter having failed to establish by the required quantum of proof that the mo

spent for the construction thereof solely came from him. Being a co-owner of

same structure, Juliet may not be ejected therefrom.

While the question raised is essentially one of fact, of which the Court norma

eschews from, yet, given the conflicting factual findings of the three courts

below, the Court shall go by the exception4to the general rule and proceed t

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. Neithe

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 accoIn fact, Juliet was still in Korea when the annex structure was constructed in 1

Other than John's bare allegation that he alone, thru his own funds and mone

borrowed from his relatives, spent for the construction of the annex structur

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 o

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 putti

up the subject structure was the affidavit executed by a certain Manuel Maca

to the effect that petitioner borrowed P30,000.00 from him. Even then, Maca

stated in his affidavit that it was sometime in 1990 when John borrowed said

amount from him. With the petitioner's own admission that the subject struc

was constructed only in 1992, or two years after he borrowed P30,000.00 froMacaraeg, it is even doubtful whether the amount he allegedly borrowed fro

the latter went into the construction of the structure in dispute. More, it is no

that while petitioner was able to present in evidence the Macaraeg affidavit,

failed to introduce similar affidavits, if any, of his close relatives from whom h

claimed to have made similar borrowings. For sure, not a single relative came

forward to confirm petitioner's tale. In short, there is a paucity of evidence,

testimonial or documentary, to support petitioner's self-serving allegation th

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 ta

declaration covering 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.5Payment of taxes is not proof of ownership, any more t

indicating possession in the concept of an owner.6Neither tax receipts nor

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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

n 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,

ive exclusively with each other as husband and wife without the benefit of

marriage or under a void marriage, their wages and salaries shall be owned by

them in equal shares and the property acquired by both of them through their

work or industry shall be governed by the rules on co-ownership.

n the absence of proof to the contrary, properties acquired while they lived

together shall be presumed to have been obtained by their joint efforts, work or

ndustry, 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 have contributed jointly in the acquisition thereof if the

former's efforts consisted in the care and maintenance 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 4878of 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 John's or Juliet's 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-saristore thereat by virtue of her being a co-owner

thereof. As such, she is as much entitled to enjoy its possession and ownership as

John.

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 betweenthem.

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

amount of P232,397.66, as initial payment for John's share in their common

properties, with the balance of P196,472.34 payable in twelve monthly

nstallments 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, Juliet's

nitial payment of P232,397.66 to John was in fulfillment of what the parties had

agreed upon thereunder. However, and as correctly held by the CA, Juliet's failure

to pay John the balance of the latter's 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 DENIEDand 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.

G.R. No. 163744 February 29, 2008

METROPOLITAN BANK AND TRUST CO.,petitioner,

vs.

NICHOLSON PASCUAL a.k.a. NELSON PASCUAL,respondent.

D E C I S I O N

VELASCO, JR.,J.:

Respondent Nicholson Pascual and Florencia Nevalga were married on Janua

19, 1985. During the union, Florencia bought from spouses Clarito and Belen

Sering a 250-square meter lot with a three-door apartment standing thereon

located in Makati City. Subsequently, Transfer Certificate of Title (TCT) No. S-

101473/T-510 covering the purchased lot was canceled and, in lieu thereof, T

No. 1562831of the Registry of Deeds of Makati City was issued in the name o

Florencia, "married to Nelson Pascual" a.k.a. Nicholson Pascual.

In 1994, Florencia filed a suit for the declaration of nullity of marriage under

Article 36 of the Family Code, docketed as Civil Case No. Q-95-23533. After tr

the Regional Trial Court (RTC), Branch 94 in Quezon City rendered, on July 31

1995, a Decision,2declaring the marriage of Nicholson and Florencia null and

on the ground of psychological incapacity on the part of Nicholson. In the sam

decision, the RTC, inter alia,ordered the dissolution and liquidation of the ex

spouses conjugal partnership of gains. Subsequent events saw the couple go

their separate ways without liquidating their conjugal partnership.

On April 30, 1997, Florencia, together with spouses Norberto and Elvira Olive

obtained a PhP 58 million loan from petitioner Metropolitan Bank and Trust C

(Metrobank). To secure the obligation, Florencia and the spouses Oliveros

executed several real estate mortgages (REMs) on their properties, including

involving the lot covered by TCT No. 156283. Among the documents Florenci

submitted to procure the loan were a copy of TCT No. 156283, a photocopy o

marriage-nullifying RTC decision, and a document denominated as "Waiver" t

Nicholson purportedly executed on April 9, 1995. The waiver, made in favor o

Florencia, covered the conjugal properties of the ex-spouses listed therein, b

did not incidentally include the lot in question.

Due to the failure of Florencia and the spouses Oliveros to pay their loan

obligation when it fell due, Metrobank, on November 29, 1999, initiatedforeclosure proceedings under Act No. 3135, as amended, before the Office o

the Notary Public of Makati City. Subsequently, Metrobank caused the

publication of the notice of sale on three issues of Remate.3At the auction sa

January 21, 2000, Metrobank emerged as the highest bidder.

Getting wind of the foreclosure proceedings, Nicholson filed on June 28, 2000

before the RTC in Makati City, a Complaint to declare the nullity of the mortg

of the disputed property, docketed as Civil Case No. 00-789 and eventually ra

to Branch 65 of the court. In i t, Nicholson alleged that the property, which is

conjugal property, was mortgaged without his consent.

Metrobank, in itsAnswer with Counterclaim and Cross-Claim,4alleged that th

disputed lot, being registered in Florencias name, was paraphernal. Metroba

also asserted having approved the mortgage in good faith.

Florencia did not file an answer within the reglementary period and, hence, w

subsequently declared in default.

The RTC Declared the REM Invalid

After trial on the merits, the RTC rendered, on September 24, 2001, judgmen

finding for Nicholson. Thefalloreads:

PREMISES CONSIDERED, the Court renders judgment declaring the real estate

mortgage on the property covered by [TCT] No. 156283 of the Registry of Dee

for the City of Makati as well as all proceedings thereon null and void.

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The Court further orders defendants [Metrobank and Florencia] jointly and

severally to pay plaintiff [Nicholson]:

1. PhP100,000.00 by way of moral damages;

2. PhP75,000.00 by way of attorneys fees; and

3. The costs.

SO ORDERED.5

Even as it declared the invalidity of the mortgage, the trial court found the said

ot to be conjugal, the same having been acquired during the existence of themarriage of Nicholson and Florencia. In so ruling, the RTC invoked Art. 116 of the

Family Code, providing that "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." To the trial court, Metrobank had not overcome the presumptive

conjugal nature of the lot. And being conjugal, the RTC concluded that the

disputed property may not be validly encumbered by Florencia without

Nicholsons consent.

The RTC also found the deed of waiver Florencia submitted to Metrobank to be

fatally defective. For let alone the fact that Nicholson denied executing the same

and that the signature of the notarizing officer was a forgery, the waiver

document was allegedly executed on April 9, 1995 or a little over three months

before the issuance of the RTC decision declaring the nullity of marriage between

Nicholson and Florencia.

The trial court also declared Metrobank as a mortgagee in bad faith on account of

negligence, stating the observation that certain data appeared in the supporting

contract documents, which, if properly scrutinized, would have put the bank on

guard against approving the mortgage. Among the data referred to was the date

of execution of the deed of waiver.

The RTC dismissed Metrobanks counterclaim and cross-claim against the ex-

spouses.

Metrobanks motion for reconsideration was denied. Undeterred, Metrobank

appealed to the Court of Appeals (CA), the appeal docketed as CA-G.R. CV No.

74874.

The CA Affirmed with Modification the RTCs Decision

On January 28, 2004, the CA rendered a Decision affirmatory of that of the RTC,

except for the award therein of moral damages and attorneys fees which the CA

ordered deleted. The dispositive portion of the CAs Decision reads:

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED

WITH MODIFICATION with respect to the award of moral damages and attorneys

fees which is hereby DELETED.

SO ORDERED.6

Like the RTC earlier held, the CA ruled that Metrobank failed to overthrow the

presumption established in Art. 116 of the Family Code. And also decreed as

going against Metrobank was Florencias failure to comply with the prescriptions

of the succeeding Art. 124 of the Code on the disposition of conjugal partnership

property. Art. 124 states:

Art. 124. The administration and enjoyment of the conjugal partnership property

shall belong to both spouses jointly. In case of disagreement, the husbands

decision shall prevail, subject to recourse to the court by the wife for proper

remedy x x x.

n the event that one spouse is incapacitated or otherwise unable to participate

n the administration of the conjugal properties, the other spouse may assume

sole powers of administration. These powers do not include disposition or

encumbrance without authority of the court or written consent of the other

spouse. In the absence of such authority or consent, the disposition or

encumbrance shall be void. However, the transaction shall be construed as a

continuing offer on the part of the consenting spouse and the third person, a

may be perfected as a binding contract upon the acceptance by the other spo

or authorization by the court before the offer is withdrawn by either or both

offerors.

As to the deletion of the award of moral damages and attorneys fees, the CA

gist, held that Metrobank did not enter into the mortgage contract out of ill-w

or for some fraudulent purpose, moral obliquity, or like dishonest considerat

as to justify damages.

Metrobank moved but was denied reconsideration by the CA.

Thus, Metrobank filed this Petition for Review on Certiorari under Rule 45, ra

the following issues for consideration:

a. Whether or not the [CA] erred in declaring subject property as conjugal by

applying Article 116 of the Family Code.

b. Whether or not the [CA] erred in not holding that the declaration of nullity

marriage between the respondent Nicholson Pascual and Florencia Nevalga i

factodissolved the regime of community of property of the spouses.

c. Whether or not the [CA] erred in ruling that the petitioner is an innocent

purchaser for value.7

Our Ruling

A modification of the CAs Decision is in order.

The Disputed Property is Conjugal

It is Metrobanks threshold posture that Art. 160 of the Civil Code providing t

"[a]ll property of the marriage is presumed to belong to the conjugal partner

unless it be prove[n] that it pertains exclusively to the husband or to the wife

applies. To Metrobank, Art. 116 of the Family Code could not be of governing

application inasmuch as Nicholson and Florencia contracted marriage before

effectivity of the Family Code on August 3, 1988. CitingManongsong v.

Estimo,8Metrobank asserts that the presumption of conjugal ownership unde

Art. 160 of the Civil Code applies when there is proof that the property was

acquired during the marriage. Metrobank adds, however, that for the

presumption of conjugal ownership to operate, evidence must be adduced to

prove that not only was the property acquired during the marriage but that

conjugal funds were used for the acquisition, a burden Nicholson allegedly fa

to discharge.

To bolster its thesis on the paraphernal nature of the disputed property,

Metrobank cites Francisco v. Court of Appeals9andJocson v. Court of

Appeals,10among other cases, where this Court held that a property register

the name of a certain person with a description of being married is no proof t

the property was acquired during the spouses marriage.

On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance

Corporation11

and Wong v. IAC,12

contends that Metrobank failed to overcom

legal presumption that the disputed property is conjugal. He asserts that

Metrobanks arguments on the matter of presumption are misleading as only

postulate needs to be shown for the presumption in favor of conjugal owners

to arise, that is, the fact of acquisition during marriage. Nicholson dismisses,

inapplicable, FranciscoandJocson,noting that they are relevant only when th

is no indication as to the exact date of acquisition of the property alleged to b

conjugal.

As a final point, Nicholson invites attention to the fact that Metrobank had

virtually recognized the conjugal nature of the property in at least three

instances. The first was when the bank lumped him with Florencia in Civil Cas

No. 00-789 as co-mortgagors and when they were referred to as "spouses" in

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petition for extrajudicial foreclosure of mortgage. Then came the published

notice of foreclosure sale where Nicholson was again designated as co-

mortgagor. And third, in its demand-letter13to vacate the disputed lot,

Metrobank addressed Nicholson and Florencia as "spouses," albeit the finality of

the decree of nullity of marriage between them had long set in.

We find for Nicholson.

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, inManongsong,14

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 we stressed

n 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 thepartnership.The presumption applies even when the manner in which the

property was acquired does not appear.15

(Emphasis supplied.)

Second,FranciscoandJocsondo not reinforce Metrobanks theory. Metrobank

would thrust on the Court, invoking the two cases, the argument that the

registration of the property in the name of "Florencia Nevalga, married to Nelson

Pascual" operates to describe only the marital status of the title holder, but not

as proof that the property was acquired during the existence of the marriage.

Metrobank is wrong. 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 andJocsonis that proof of acquisition during the marital coverture is

a condition sine qua nonfor the operation of the presumption in favor of conjugalownership. 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.16

The Court, to be sure, has taken stock of Nicholsons arguments regarding

Metrobank having implicitly acknowledged, thus being in virtual estoppel to

question, the conjugal ownership of the disputed lot, the bank having named the

former in the foreclosure proceedings below as either the spouse of F lorencia or

her co-mortgagor. It is felt, however, that there is no compelling reason to delve

nto the matter of estoppel, the same having been raised only for the first time in

this petition. Besides, however Nicholson was designated below does not really

change, one way or another, the classification of the lot in question.

Termination of Conjugal Property Regime doesnot ipso factoEnd the Nature of Conjugal Ownership