G.R. No.

L-8715

October 24, 1914

MARIANO VELOSO, plaintiff-appellant,

vs.
LUCIA MARTINEZ, personally and as administratrix of the estate of Domingo
Franco, deceased-appellee.
Martin M. Levering for appellant.
Pantaleon E. del Rosario for appellee.

JOHNSON, J.:
On the 1st day of July, 1911, the plaintiff commenced an action in the Court of First Instance of
the Province of Cebu to recover of the defendant, personally and as administratrix of the estate
of Domingo Franco, deceased, the possession of a certain parcel of land particularly described in
the second paragraph of the complaint, together with the sum of P125 per month, from the 1st
day of June, 1911.
The defendant presented a demurrer to said complaint, which was overruled. No exception was
taken to the ruling of the court upon the demurrer. Later the defendant answered, setting up a
general denial and a special defense. The special defense consisted
First. Of a counterclaim in the sum of P18,500, as attorney's fees for services rendered by the
deceased, Domingo Franco, to the plaintiff; and, second, for the recovery of certain jewelry, of
the value of P6,000, particularly described in the answer of the defendant, alleged to be in the
possession of the plaintiff.
The first special defense, relating to attorney's fees, was later withdrawn by the defendant. The
only questions left for litigation were: .
First. Whether the plaintiff was entitled to the recovery of the parcel of land in question; and,
second, whether the defendant was entitled to recover from the plaintiff the jewelry described in
her answer.
After hearing the evidence, the Honorable Adoph Wislizenus, judge, in a carefully prepared
opinion, found that the plaintiff was entitled to recover the possession of the land in question,
together with the sum of P100 for each month from the month of June, 1911, until the possession
of the land was returned to him.
The lower court further found that the defendant was entitled to the possession of said jewelry,
and ordered the plaintiff to return the same to her and in case of the plaintiff's failure to return
said jewelry to the defendant, then and in that case, he shall pay to the defendant, for such
failure, the sum of P6,000.
From the judgment of the lower court, each of the parties, plaintiff and defendant, appealed to
this court. Later the defendant withdrew her appeal, thereby allowing that part of the judgment
relating to the plaintiff's right to the possession of the land in question, together with damages,
to become final. The only question remaining, therefore, for this court to decide is as to the
ownership and right of possession of said jewels. It is admitted that the jewels in question, before
the possession of the same was given to the plaintiff, belonged to the defendant personally and

that she had inherited the same from her mother. The defendant, Lucia Martinez, is the widow of
Domingo Franco, and after the death of her husband she was appointed administratrix of his
estate. The record further shows (Exhibit C) that a short time before the death of Domingo
Franco he borrowed from the plaintiff the sum of P4,500 and gave as security for the payment of
said sum the jewelry described in the complaint. The money was borrowed on the 7th day of
April, 1911, under promise to repay the same, with 12 per cent interest, on the 7th day of May,
1911. It is not clear whether or not the jewelry, at the time of the execution of said document
(Exhibit C), was in fact delivered to the plaintiff. Said exhibit states that the jewelry was
contained "dentro de una caja que queda cerrada despues de demonstradas las alhajas a D.
Mariano Veloso" (in a box which remains closed after the jewels were shown to Mariano Veloso).
The document further admits the "la llava quedara en poder de D. Domingo Franco" (the key
shall remain in possession of Domingo Franco). After the death of Domingo Franco it appears that
said jewelry was found in the same "caja" and that the key was in the possession of the
defendant. It is very doubtful, indeed, under the facts, whether the plaintiff ever obtained the
actual possession of the jewelry. His possession, however, seems to be admitted by the
defendant in the present action. So far as the record shows the jewelry was in the same box
where it was found at the time of the execution and delivery of said Exhibit C and that the
defendant still has the key to said box.
During the trial of the cause the plaintiff attempted to show that the jewels in question were
pawned to him by Domingo Franco, with the full knowledge and consent of the defendant. And
not only that, the plaintiff further attempts to show that after the death of Domingo Franco, the
defendant promised to pay the amount for which the said jewels were pawned. The defendant
positively denies that she knew that her husband had pawned her jewels or that she promised to
redeem the same by paying the amount due. No explanation is contained in the record why the
jewels were placed in said box (presumably a money safe). In view of the fact, however, that the
record shows that the jewels were the sole and separate property of the wife, acquired from her
mother, and in the absence of further proof, we must presume that they constituted a part of her
paraphernal property. As such paraphernal property she exercised dominion over the same.
(Article 1382, Civil Code.) She had the exclusive control and management of the same, until and
unless she had delivered it to her husband, before a notary public, with the intent that the
husband might administer it properly. (Article 1384, Civil Code.) There is no proof in the record
that she had ever delivered the same to her husband, in any manner, or for any purpose. That
being true, she could not be deprived of the same by any act of her husband, without her
consent, and without compliance with the provisions of the Civil Code above cited.1awphil.net
For the foregoing reasons, we find that the defendant is entitled to the possession of said jewels,
or to their value, amounting to P6,000.
The judgment of the lower court is therefore affirmed, with costs.
Arellano, C.J., Torres, Carson, Moreland, Trent and Araullo, JJ., concur.

G.R. No. L-20825

December 28, 1964

AMALIA PLATA, petitioner,

vs.
HON. NICASIO YATCO, Judge, Court of First Instance of Rizal, Branch V; BENITO
MACROHON, Sheriff of Quezon City and The Spouses CESAREA E. VILLANUEVA and
GREGORIO LEAO respondents.
Rosales & Montesa for petitioner.
Venida & Demonteverda Law Offices for respondents.
REYES J.B.L., J.:
Amalia Plata resorts to this Supreme Court for a writ of certiorari against the Court of First
Instance of Rizal, Branch V, Quezon City, to annul and set aside its order of 4 January 1963,
issued in its Civil Case No. Q-6250 (Cesarea Villanueva, et al. vs. Gaudencio Begosa) finding
petitioner Plata in contempt of court for refusing to vacate certain property, and sentencing her
to pay a fine of P100, with subsidiary imprisonment in case of insolvency, with a warning of more
drastic action should she persist in disobeying the writ issued by said court.
At petitioner's instance, a writ of preliminary injunction was issued to stay enforcement of the
order complained of, and respondents required to answer.
The pleadings and other papers on record disclose that Amalia Plata, in 1954, had purchased a
parcel of land (Lot. 23, Block 4-M, of Subdivision plan PSD-59) in Caloocan, Rizal, for which the
Provincial Register of Deeds issued Torrens Certificate of Title (Transfer) No. 25855 in the name of
Amalia Plata, single, Filipino citizen. On 13 February 1958, she sold the property to one Celso
Saldaa who obtained TCT No. 40459 therefor; but seven months afterwards, on 24 September
1958, Saldaa resold the same property to Amalia Plata, married to Gaudencio Begosa," (Ans.
Exh. 3) and a new certificate of Title No. 43520 was issued to the vendee, Amalia Plata (Exh. 3a).
On the same date, 24 September 1958, "Amalia Plata of legal age, Filipino, married to Gaudencio
Begosa," in consideration of a loan of P3,000, mortgaged to Cesarea Villanueva married to
Gregorio Leao, the identical property and its improvements "of which the mortgagor declares to
be hers as the absolute owner thereof." The mortgage was also signed by Gaudencio Begosa, as
co-mortgagor (Exh. 4).
For failure to pay the mortgage, the same was extrajudicially foreclosed under Act 3135, and sold
on 12 April 1960 to the mortgagee as the highest bidder; on 13 May 1961, the Sheriff issued a
final deed of sale on the strength of which the Register of Deeds issued the buyer TCT, No. 55949
(Exhs. 5, 6, 7). Subsequently, the respondent, Villanueva, sued Gaudencio Begosa alone for
illegal detainer (Annex C. Petition) in Case No. Q-6250, and obtained judgment against him in the
court of first instance, that became final (Annex D, Petition). A writ of execution was duly issued,
but Amalia Plata resisted all efforts to eject her from the property, and she filed a third party
claim, averring ownership of the property (Annex E). Upon motion of the judgment creditors, the
court below cited both Begosa and Plata for contempt (Annex H), and, finding her explanation
(Annex I) unsatisfactory, found her guilty and sentenced her, as stated at the beginning of this
decision.
The issue here is whether the petitioner, Amalia Plata, is bound by the detainer judgment against
Gaudencio Begosa in Civil Case No. Q-6250. Petitioner denies it, claiming that she was never

lawfully married to Begosa, and that she had acquired the property while still single, and was in
possession thereof when the Sheriff of Rizal attempted to enforce the writ of ejectment.
Respondent Villanueva and her husband maintain, on the other hand, that Plata had repeatedly
acknowledged being married to Begosa; that she had lived with him openly as his wife, and their
marriage is presumed; that, therefore, she is to be deemed as holding under Begosa, and is
bound by the judgment against the latter.
We are constrained to uphold as meritorious the petitioner's stand. Granting that the evidence
before us against the marriage of petitioner Amalia Plata to Gaudencio Begosa is weak,
considering the admissions of married status in public documents (Answer, Exhs. 3 and 4); the
well known presumption that persons openly living together as husband and wife are legally
married to each other, and that the prior marriage of Begosa to someone else does not
necessarily exclude the possibility of a valid subsequent marriage to herein petitioner; still the
respondents Villanueva could not ignore the paraphernal character of the property in question,
which had been unquestionably acquired by Plata while still single, as shown by Transfer
Certificate of Title No. 25855 of Rizal (Art. 148 of the New Civil Code). The subsequent
conveyance thereof to Celso Saldaa, and the reconveyance of her several months afterward of
the same property, did not transform it from paraphernal to conjugal property, there being no
proof that the money paid to Saldaa came from common or conjugal funds (Civ. Code, Art 153).
The deed of mortgage in favor of respondents Villanueva actually recites that the petitioner was
the owner of the tenement in question and so does the conveyance of it by Saldaa to her (Ans.,
Exhs. 3 and 4).
It is true that Gaudencio Begosa signed the mortgage (Exh. 4) as a co-mortgagor; but by itself
alone that circumstance would not suffice to convert the land into conjugal property, considering
that it was paraphernal in origin. This is particularly the case where the addition of Begosa as comortgagor was clearly an after thought, the text of the deed showing that Plata was the sole
mortgagor.
Since the property was paraphernal, and the creditors and purchasers were aware of it, the fact
being clearly spread on the land records, it is plain that Plata's possession, therefore, was not
derived from Gaudencio Begosa. The illegal detainer judgment against the husband alone cannot
bind nor affect the wife's possession of her paraphernal, which by law she holds and administers
independently, and which she may even encumber or alienate without his knowledge or consent
(Civ. Code, Arts. 136. 137, 140). Hence, as she was not made party defendant in the eviction
suit, the petitioner-wife could validly ignore the judgment of eviction against her husband, and it
was no contempt of court for her to do so, because the writ of execution was not lawful against
her (Chanco vs. Madrilejos, 9 Phil. 356; A. Jose Realty vs. Galao, et al., 76 Phil. 201; Segarro vs.
Maronilla, L-14428, July 26, 1960; Weigall vs. Shuster, 11 Phil. 340).
We need not decide here whether the property was validly conveyed to respondents Villanueva,
since that issue is the subject of an independent proceeding in the Court of First Instance of
Quezon City, Civil. Case No. Q6510 (Petition, Annex F).
The writ of certiorari prayed for is granted, and the order of the lower court, dated 4 January
1963, is annulled and set aside. The preliminary injunction is made permanent, with costs
against private respondents Villanueva.
Bengzon, C.J., Bautista Angelo, Concepcion, Barrera, Paredes, Dizon, Makalintal, Bengzon, J.P.,
and Zaldivar, JJ., concur.

Regala, J., took no part.

[G.R. No. 154645. July 13, 2004]

MILAGROS JOAQUINO a.k.a. MILAGROS J. REYES, petitioner, vs. LOURDES REYES,
MERCEDES, MANUEL, MIRIAM and RODOLFO JR. -- all surnamed REYES, respondents.
DECISION
PANGANIBAN, J.:
Though registered in the paramours name, property acquired with the salaries and earnings of a
husband belongs to his conjugal partnership with the legal spouse. The filiation of the paramours
children must be settled in a probate or special proceeding instituted for the purpose, not in an
action for recovery of property.
The Case
Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to nullify
the February 4, 2002 Decision[2] and the August 14, 2002 Resolution[3] of the Court of Appeals
(CA) in CA-GR CV No. 45883. The CA disposed as follows:
WHEREFORE, premises considered, the appeal is hereby partially DENIED and
the Decision dated May 30, 1994, of the Regional Trial Court of Pasay City, Branch 111 in Civil
Case No. 9722-P isMODIFIED to read, as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant as
follows:
a. Declaring the house and lot registered under Transfer Certificate of Title No. 90293 (26627-A)
of the Registry of Deeds of Metro Manila, District IV as conjugal partnership property of the late
Spouses Rodolfo and Lourdes Reyes;
b. Ordering the [petitioner] to surrender possession of said subject property, pursuant to the
applicable law on succession, to the respective estates of the late Rodolfo Reyes and Lourdes
Reyes and to pay a reasonable rental of P10,000.00 a month, to the same juridical entities, upon
their failure to do so until possession of the property is delivered; and
c. To pay [respondents] attorneys fees in the sum of P20,000.00 and to pay the costs. [4]
The questioned Resolution, on the other hand, denied petitioners Motion for Reconsideration.
The Facts
The CA narrated the facts as follows:
[Respondents] filed a Complaint for reconveyance and damages, dated January 23, 1982, before
the Court of First Instance of Rizal, containing the following allegations:
x x x The complaint alleges that [respondent] Lourdes P. Reyes is the widow of Rodolfo A. Reyes
who died on September 12, 1981; that [respondents] Mercedes, Manuel, Miriam and Rodolfo, Jr.
are the legitimate children of [respondent] Lourdes P. Reyes and the deceased Rodolfo A. Reyes;
that for years before his death, Rodolfo A. Reyes had illicit relations with [petitioner] Milagros B.
Joaquino; that before his death, x x x Rodolfo A. Reyes was Vice President and Comptroller of
Warner Barnes and Company with an income of P15,000.00 a month and, after retirement on

September 30, 1980, received from said company benefits and emoluments in the amount
of P315,0[1]1.79; that [respondent] wife was not the recipient of any portion of the said amount.
The complaint further alleges that on July 12, 1979, a [D]eed of [S]ale of a property consisting of
a house and lot at BF Homes, Paraaque, Metro Manila was executed by the spouses Ramiro Golez
and Corazon Golez in favor of [petitioner] Milagros B. Joaquino for which Transfer Certificate of
Title No. 90293 of the Register of Deeds of Metro Manila, District IV was issued in the name of
[petitioner] Milagros B. Joaquino; that the funds used to purchase this property were conjugal
funds and earnings of the deceased Rodolfo A. Reyes as executive of Warner Barnes and
Company as [petitioner] Joaquino was without the means to pay for the same; that [petitioner]
executed a Special Power of Attorney in favor of Rodolfo A. Reyes to mortgage the property to
Commonwealth Insurance Corporation in order to pay the balance of the purchase price; that
said Rodolfo A. Reyes executed a mortgage in favor of Commonwealth Insurance Corporation
for P140,000.00 and to guaranty payment thereof, he secured a life insurance [policy] with
Philam Life Insurance Corporation for the said amount, assigning the proceeds thereof to
Commonwealth Insurance Corporation; that the monthly amortizations of the mortgage were
paid by said Rodolfo A. Reyes before his death and at the time of his death, the outstanding
balance of P110,000.00 was to be paid out of his Philam Life Insurance [p]olicy.
The complaint finally alleges that the deceased had two cars in [petitioners] possession and that
the real and personal properties in [petitioners] possession are conjugal partnership propert[ies]
of the spouses Lourdes P. Reyes and Rodolfo A. Reyes and one-half belongs exclusively to
[respondent] Lourdes P. Reyes and the other half to the estate of Rodolfo A. Reyes to be
apportioned among the [other respondents] as his forced heirs. [Respondents] therefore, pray
that the property covered by T.C.T. No. 90293 be declared conjugal property of the spouses
Lourdes P. Reyes and Rodolfo A. Reyes and that [petitioner] be ordered to reconvey the property
in [respondents] favor; that the two cars in [petitioners] possession be delivered to [respondents]
and that [petitioner] be made to pay actual, compensatory and moral damages to [respondents]
as well as attorneys fees.
xxxxxxxxx
[Petitioner] eventually filed her Answer, dated August 1, 1982, the allegations of which have
been summarized by the trial court in the following manner:
In her Answer, [petitioner] Milagros B. Joaquino alleges that she purchased the real property in
question with her own exclusive funds and it was only for convenience that the late Rodolfo
Reyes facilitated the mortgage over the same; that although the late Rodolfo Reyes paid the
monthly amortization of the mortgage as attorney-in-fact of [petitioner], the money came
exclusively from [her].
[Petitioner] further alleges in her answer, by way of special and affirmative defenses, that during
all the nineteen (19) years that [she] lived with Rodolfo Reyes from 1962 continuously up to
September 12, 1981 when the latter died, [petitioner] never had knowledge whatsoever that he
was married to someone else, much less to [respondent] Lourdes P. Reyes; that [petitioner] was
never the beneficiary of the emoluments or other pecuniary benefits of the late Rodolfo Reyes
during his lifetime or after his death because [she] had the financial capacity to support herself
and her children begotten with the late Rodolfo Reyes. [Petitioner] prays for a judgment
dismissing [respondents] complaint and for the latter to pay unto [petitioner] moral and
exemplary damages in such amounts as may be determined during the trial, including
atto[r]neys fees and the costs of the suit. x x x.

xxxxxxxxx
On February 2, 1993, [respondent] Lourdes Reyes died.
Subsequently, the trial court granted the complaint based on the following factual findings:
Lourdes Reyes was legally married to Rodolfo Reyes on January 3, 1947 in Manila. They have four
children, namely: Mercedes, Manuel, Miriam and Rodolfo Jr., all surnamed Reyes and co[respondents] in this case. Rodolfo Reyes died on September 12, 1981. At the time of his death,
Rodolfo Reyes was living with his common-law wife, Milagros Joaquino, x x x with whom she
begot three (3) children namely: Jose Romillo, Imelda May and Charina, all surnamed Reyes.
During his lifetime, Rodolfo Reyes worked with Marsman and Company and later transferred to
Warner Barnes & Co., where he assumed the position of Vice-President [Comptroller] until he
retired onSeptember 30, 1980. His monthly salary at Warner Barnes & Co. was P15,000.00 x x x
and upon his separation or retirement from said company, Rodolfo Reyes received a lump sum
of P315,011.79 in full payment and settlement of his separation and retirement benefits.
During the common-law relationship of Rodolfo Reyes and [petitioner] Milagros Joaquino and
while living together, they decided to buy the house and lot situated at No. 12 Baghdad Street,
Phase 3, BF Homes, Paraaque, Metro Manila. A Deed of Absolute Sale dated July 12, 1979 was
executed in favor of [petitioner] Milagros Joaquino and Transfer Certificate of Title No. S-90293
covering the said property was issued in the name of [petitioner only] on July 20, 1979.
To secure the finances with which to pay the purchase price of the property in the amount
of P140,000.00, [petitioner] executed on July 20, 1979, a Special Power of Attorney in favor of
Rodolfo A. Reyes for the latter, as attorney-in-fact, to secure a loan from the Commonwealth
Insurance Company. An application for mortgage loan was filed by Rodolfo Reyes with the
Commonwealth Insurance Company and a Real Estate Mortgage Contract was executed as
collateral to the mortgage loan. The loan was payable in ten (10) years with a monthly
amortization of P1,166.67. The monthly amortizations were paid by Rodolfo Reyes and after his
death, the balance of P109,797.64 was paid in full to the Commonwealth Insurance by the Philam
Life Insurance Co. as insurer of the deceased Rodolfo A. Reyes. [5]
On appeal to the CA, petitioner questioned the following findings of the trial court: 1) that the
house and lot had been paid in full from the proceeds of the loan that Rodolfo Reyes obtained
from the Commonwealth Insurance Company; 2) that his salaries and earnings, which were his
and Lourdes conjugal funds, paid for the loan and, hence, the disputed property was conjugal;
and 3) that petitioners illegitimate children, not having been recognized or acknowledged by him
in any of the ways provided by law, acquired no successional rights to his estate.
Ruling of the Court of Appeals
Affirming the RTC, the CA held that the property had been paid out of the conjugal funds of
Rodolfo and Lourdes because the monthly amortizations for the loan, as well as the premiums for
the life insurance policy that paid for the balance thereof, came from his salaries and
earnings. Like the trial court, it found no sufficient proof that petitioner was financially capable of
buying the disputed property, or that she had actually contributed her own exclusive funds to
pay for it. Hence, it ordered her to surrender possession of the property to the respective estates
of the spouses.

The appellate court, however, held that the trial court should not have resolved the issue of the
filiation and the successional rights of petitioners children. Such issues, it said, were not properly
cognizable in an ordinary civil action for reconveyance and damages and were better ventilated
in a probate or special proceeding instituted for the purpose.
Hence, this Petition.[6]
Issues
Petitioner submits the following issues for the Courts consideration:
I.
Whether or not it has been indubitably established in a court of law and trier of facts, the
Regional Trial Court, that petitioners three [3] illegitimate children are x x x indeed the children of
the late Rodolfo Reyes.
II.
Whether or not it is legally permissible for [respondents] to make a mockery of the law by
denying [the] filiations of their [two] 2 illegitimate sisters and one [1] illegitimate brother when in
fact the very complaint filed by their mother, the lawful wife, Lourdes[,] shows that her husband
Rodolfo had illicit relations with the petitioner Milagros and had lived with her in a house and lot
at Baghdad Street.
III.
Whether or not the fact that the Court of Appeals made a finding that the house and lot at
Baghdad Street are conjugal property of lawfully wedded Rodolfo and Lourdes including the
insurance proceeds which was used to pay the final bill for the house and lot, this will prevail
over Articles 19 and 21 of the Civil Code.
IV.
Whether or not the Supreme Court should enforce the rule that the parties to a lawsuit should
only tell the truth at the trial and in [their] pleadings x x x.
V.
Whether or not the legitimate children of the late Rodolfo Reyes should respect their fathers
desire that his illegitimate children should have a home or a roof over their heads in consonance
with his duty to love, care and provide for his children even after his death. [7]
The issues boil down to the following: 1) the nature of the house and lot on Baghdad Street (BF
Homes Paraaque, Metro Manila); and 2) the propriety of ruling on the filiation and the
successional rights of petitioners children.
The Courts Ruling
The Petition is devoid of merit.
First Issue:
The Conjugal Nature of the Disputed Property

Before tackling the merits, we must first point out some undisputed facts and guiding principles.
As to the facts, it is undisputed that the deceased Rodolfo Reyes was legally married to
Respondent Lourdes Reyes on January 3, 1947.[8] It is also admitted that for 19 years or so, and
while their marriage was subsisting, he was actually living with petitioner. It was during this time,
in 1979, that the disputed house and lot was purchased and registered in petitioners name.
Plainly, therefore, the applicable law is the Civil Code of the Philippines. Under Article 145
thereof, a conjugal partnership of gains (CPG) is created upon marriage [9] and lasts until the legal
union is dissolved by death, annulment, legal separation or judicial separation of property.
[10]
Conjugal properties are by law owned in common by the husband and wife. [11] As to what
constitutes such properties are laid out in Article 153 of the Code, which we quote:
(1) That which is 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) That which is obtained by the industry, or work, or as salary of the spouses, or of either of
them;
(3) The fruits, rents or interests received or due during the marriage, coming from the common
property or from the exclusive property of each spouse.
Moreover, under Article 160 of the Code, all properties of the marriage, unless proven to pertain
to the husband or the wife exclusively, are presumed to belong to the CPG. For the rebuttable
presumption to arise, however, the properties must first be proven to have been acquired during
the existence of the marriage.[12]
The law places the burden of proof[13] on the plaintiffs (respondents herein) to establish their
claim by a preponderance of evidence [14] -- evidence that has greater weight or is more
convincing than that which is offered to oppose it. [15]
On the other hand, Article 144[16] of the Civil Code mandates a co-ownership between a man and
a woman who are living together but are not legally married. Prevailing jurisprudence holds,
though, that for Article 144 to apply, the couple must not be incapacitated to contract marriage.
[17]
It has been held that the Article is inapplicable to common-law relations amounting to
adultery or concubinage, as in this case. The reason therefor is the absurdity of creating a coownership in cases in which there exists a prior conjugal partnership between the man and his
lawful wife.[18]
In default of Article 144 of the Civil Code, Article 148 of the Family Code has been applied. [19] The
latter Article provides:
Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties
acquired by both of the parties through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their respective contributions. In the
absence of proof to the contrary, their contributions and corresponding shares are presumed to
be equal. The same rule and presumption shall apply to joint deposits of money and evidence of
credit.
If one of the parties is validly married to another, his or her share in the co-ownership shall
accrue to the absolute community or conjugal partnership existing in such valid marriage. If the

party which acted in bad faith is not validly married to another, his or her share shall be forfeited
in the manner provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.
Thus, when a common-law couple have a legal impediment to marriage, only the property
acquired by them -- through their actual joint contribution of money, property or industry -- shall
be owned by them in common and in proportion to their respective contributions.
With these facts and principles firmly settled, we now proceed to the merits of the first issue.
The present controversy hinges on the source of the funds paid for the house and lot in
question. Upon the resolution of this issue depends the determination of whether the property is
conjugal (owned by Rodolfo and Lourdes) or exclusive (owned by Milagros) or co-owned by
Rodolfo and Milagros.
The above issue, which is clearly factual, has been passed upon by both the trial and the
appellate courts, with similar results in favor of respondents. Such finding is generally conclusive;
it is not the function of this Court to review questions of fact. [20]
Moreover, it is well-settled that only errors of law and not of facts are reviewable by this Court in
cases brought to it from the Court of Appeals or under Rule 45 of the Rules of Court. [21]This
principle applies with greater force herein, because the CA came up with the same factual
findings as those of the RTC.
Even then, heeding petitioners plea, we have gone through the pleadings and the evidence
presented by the parties to find out if there is any circumstance that might warrant a reversal of
the factual findings. Unfortunately for petitioner, we have found none.
Indeed, a preponderance of evidence has duly established that the disputed house and lot was
paid by Rodolfo Reyes, using his salaries and earnings. By substantial evidence, respondents
showed the following facts: 1) that Rodolfo was gainfully employed as comptroller at Warner,
Barnes and Co., Inc. until his retirement on September 30, 1980, upon which he received a
sizeable retirement package;[22] 2) that at exactly the same time the property was allegedly
purchased,[23] he applied for a mortgage loan[24] -- intended for housing[25] -- from the
Commonwealth Insurance Company; 3) that he secured the loan with a real estate
mortgage[26] over the same property; 4) that he paid the monthly amortizations for the loan [27] as
well as the semi-annual premiums[28] for a Philam Life insurance policy, which he was required to
take as additional security; and 5) that with the proceeds of his life insurance policy, the balance
of the loan was paid to Commonwealth by Philam Life Insurance Company. [29]
All told, respondents have shown that the property was bought during the marriage of Rodolfo
and Lourdes, a fact that gives rise to the presumption that it is conjugal. More important, they
have established that the proceeds of the loan obtained by Rodolfo were used to pay for the
property; and that the loan was, in turn, paid from his salaries and earnings, which were conjugal
funds under the Civil Code.
In contrast, petitioner has failed to substantiate either of her claims -- that she was financially
capable of buying the house and lot, or that she actually contributed to the payments therefor.
Indeed, it does not appear that she was gainfully employed at any time after 1961 [30] when the
property was purchased. Hearsay are the Affidavits[31] and the undated Certification[32]she had

presented to prove that she borrowed money from her siblings and had earnings from a jewelry
business. Respondents had not been given any opportunity to cross-examine the affiants, who
had not testified on these matters. Based on the rules of evidence, the Affidavits and the
Certification have to be rejected. In fact, they have no probative value.[33] The CA was also
correct in disregarding petitioners allegation that part of the purchase money had come from the
sale of a drugstore[34] four years earlier.
Under the circumstances, therefore, the purchase and the subsequent registration of the realty in
petitioners name was tantamount to a donation by Rodolfo to Milagros. By express provision of
Article 739(1) of the Civil Code, such donation was void, because it was made between persons
who were guilty of adultery or concubinage at the time of the donation.
The prohibition against donations between spouses [35] must likewise apply to donations between
persons living together in illicit relations; otherwise, the latter would be better situated than the
former.[36] Article 87 of the Family Code now expressly provides thus:
Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the spouses
during the marriage shall be void, except moderate gifts which the spouses may give each other
on the occasion of any family rejoicing. The prohibition shall also apply to persons living together
as husband and wife without a valid marriage. (Italics supplied)
Regarding the registration of the property in petitioners name, it is enough to stress that a
certificate of title under the Torrens system aims to protect dominion; it cannot be used as an
instrument for the deprivation of ownership. [37] It has been held that property is conjugal if
acquired in a common-law relationship during the subsistence of a preexisting legal marriage,
even if it is titled in the name of the common-law wife. [38] In this case, a constructive trust is
deemed created under Article 1456 of the Civil Code, which we quote:
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.
The registration of the property in petitioners name was clearly designed to deprive Rodolfos
legal spouse and compulsory heirs of ownership. By operation of law, petitioner is deemed to
hold the property in trust for them. Therefore, she cannot rely on the registration in repudiation
of the trust, for this case is a well-known exception to the principle of conclusiveness of a
certificate of title.[39]
Second Issue:
Ruling on Illegitimate Filiation
Not Proper
It is petitioners alternative submission that her children are entitled to a share in the disputed
property, because they were voluntarily acknowledged by Rodolfo as his children. Claiming that
the issue of her childrens illegitimate filiation was duly established in the trial court, she faults
the CA for ruling that the issue was improper in the instant case.
Her position is untenable.

Indeed, it has been ruled that matters relating to the rights of filiation and heirship must be
ventilated in the proper probate court in a special proceeding instituted precisely for the purpose
of determining such rights.[40] Sustaining the appellate court in Agapay v. Palang,[41] this Court
held that the status of an illegitimate child who claimed to be an heir to a decedents estate could
not be adjudicated in an ordinary civil action which, as in this case, was for the recovery of
property.
Considerations of due process should have likewise deterred the RTC from ruling on the status of
petitioners children. It is evident from the pleadings of the parties that this issue was not
presented in either the original[42] or the Supplemental Complaint[43] for reconveyance of property
and damages; that it was not pleaded and specifically prayed for by petitioner in her
Answers[44] thereto; and that it was not traversed by respondents Reply to the Supplemental
Complaint.[45] Neither did petitioners Memorandum,[46] which was submitted to the trial court,
raise and discuss this issue. In view thereof, the illegitimate filiation of her children could not
have been duly established by the proceedings as required by Article 887 of the Civil Code. [47]
In view of the foregoing reasons, the CA cannot be faulted for tackling the propriety of the RTCs
ruling on the status of the children of petitioner, though she did not assign this matter as an
error. The general rule -- that only errors assigned may be passed upon by an appellate court
admits of exceptions. Even unassigned errors may be taken up by such court if the consideration
of those errors would be necessary for arriving at a just decision or for serving the interest of
justice.[48]
The invocation by petitioner of Articles 19[49] and 21[50] of the Civil Code is also
unmeritorious. Clearly, the illegitimate filiation of her children was not the subject of inquiry and
was in fact not duly established in this case. Thus, she could not have shown that respondents
had acted in bad faith or with intent to prejudice her children. These are conditions necessary to
show that an act constitutes an abuse of rights under Article 19. [51] She also failed to show that
respondents -- in violation of the provisions of Article 21 of the Civil Code -- had acted in a
manner contrary to morals, good customs or public policy.
Moreover, we note that the issue concerning the applicability of Articles 19 and 21 was not raised
by petitioner in the trial court or even in the CA. Hence, she should not be permitted to raise it
now. Basic is the rule that parties may not bring up on appeal issues that have not been raised
on trial.[52]
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution of the
Court of Appeals AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

G.R. No. L-9984

March 23, 1916

PETRONA JAVIER, plaintiff-appellee,

vs.
LAZARO OSMEA, as administrator of the estate of the deceased Tomas
Osmea, defendant-appellant.
Haussermann, Cohn and Fisher for appellant.
Southworth, Hargis, Adams and Jordain for appellee.
ARELLANO, C.J.:
Florentino Collantes, husband of Petrona Javier, became indebted to the estate of Tomas Osmea
in the sum of P26,467.94. On June 15, 1913, judgment for this amount was rendered in behalf of
the estate and the sheriff executed it by selling at public auction all the right, title, interest or
share which the judgment debtor, Collantes, had or might have in two parcels of improved real
estate situated in this city of Manila, and especially the usufructuary interest therein of Pascuala
Santos, the surviving widow of Felix Javier y Sanchez, which interest was acquired by Petrona
Javier, Collantes' wife, on March 20, 1911.
Petrona Javier, Collantes' wife, was the only daughter of Felix Javier and Matea Corunan, the
latter of whom died in 1901, and the former ion 1908. Felix Javier, after the death of his wife
Matea Corunan, married Pascuala Santos. It was in the year 1890 that Florentino Collantes and
Petrona Javier had contracted marriage. Felix Javier and his wife Matea Corunan left at their
death, as an inheritance to their only daughter Petrona Javier, two urban properties situated one
on Calle Carriedo, and the other on Calle San Sebastian. For the purpose of consolidating her full
ownership in and to both properties, Petrona Javier acquired from her father's second wife,
Pascuala Santos, the latter's usufructuary right in her deceased husband's estate for the sum of
P3,000, which amount, it appears, Javier was obliged to borrow, giving as security for the loan a
mortgage on the property she had inherited.
These properties that were inherited by Petrona Javier from her parents were those levied upon
by the sheriff in the execution of the judgment against Florentino Collantes, and notwithstanding
her protests the sale was carried out. The successful bidder therein was the Osmea estate itself
which paid P500 for each parcel of property, that is, P1,000 for Collantes' right in both parcels
and in the usufructuary interest acquired by his wife from Pascuala Santos.
Inasmuch as Petrona Javier claimed that her husband Collantes had no rights whatever in said
two pieces of property or in the usufructuary interest acquired by her, she filed claim of
intervention in order to recover her ownership of the properties and her right to usufruct after
the sheriff's sale should be annulled.
The defendant Osmea estate, in answer to the complaint, admitted plaintiff's exclusive right of
ownership in the said two aforementioned parcels of real estate, subject to the usufructuary right
of the second wife of plaintiff's father, and also admitted the purchase of this right by plaintiff.
Defendant claimed, however, that the money with which said usufructuary interest was
purchased belonged to the conjugal partnership and therefore that the right of usufruct so
acquired belonged to the said conjugal partnership. Defendant concluded by praying that the
court rendered judgment holding that the revenues from both properties are conjugal partnership
property of the married couple Collantes and Javier; that said revenues be made liable for the
payment of the judgment rendered in behalf of the Osmea estate; that for this purpose a

receiver be appointed to take charge of said two properties and manage them with the object of
applying the revenues obtained therefrom to the payment of the judgment obtained by the
Osmea estate against Collantes.
The Court of First Instance of Manila rendered judgment annulling only the sale of the two
properties and ordering the cancellation of their registration in the property registry, with the
costs of the suit.
Defendant appealed.
The question raised in this appeal is whether the sum owed by the husband to the Osmea
estate can and should be paid out of the fruits and revenues of the two aforementioned parcels
of real estate that exclusively belong to the wife, the herein plaintiff, as prayed for by the
appellant in his written answer.
To decide this question the nature of the debt must be inquired into the defined. The appellee
herself, in this instance, describes it thus:
A short while prior to 1892, Collantes was employed by appellee's father, Felix Javier, in a
commission business which the latter conducted in Manila. In 1902, Felix Javier retired from the
business and was succeeded therein by Collantes who, as a consequence, changed his
commercial status as an employee of his father-in-law to that of an independent commission
merchant, and continued that business for six years, or until 1908. One of the chief clients
(principals) both of Javier and Collantes, was Thomas Osmea , a merchant of Cebu, whom
Javier, and later Collantes, had represented as his agents in Manila for the sale of tobacco
consigned to them by Osmea from Cebu and for the investment of the profits, in Osmea 's
name and as his agent in Manila, in merchandise which these agents consigned to him at Cebu
(record, p. 2). When Javier retired from the commission business in 1902, it appears that he was
indebted to Tomas Osmea in the sum of four or five thousand pesos, and that this debt was
assumed by this successor Collantes. How this debt originated, the record does not show. In
1908, Collantes rendered a statement (they probably were accounts) to Osmea which showed
that his debt to the latter amounted to fourteen or fifteen thousand pesos. No steps were taken
by Osmea during his lifetime to collect this debt, but after his death a judgment for the same
was obtained by the administrator of his estate in June, 1913. This judgment was founded on the
statement made by Collantes in 1908 in which he admitted is debt, together with interest
thereon at the rate of 12 per centum per annum.
Although the appellee admits that the debt arose out of the business conducted by her father
and subsequently by her husband, there is no evidence that throws any light on the particular
transaction which was the cause of the indebtedness . . . . It must be observed that there is the
natural presumption of fact that whatever he (Collantes) may have contributed toward defraying
the expenses of his family, was contributed by him out of what he earned by the commission
paid him for the services he rendered to his clients as a broker (as commission merchant). It has
not been proven or alleged that any part of the debt to Osmea was originated by Collantes'
having paid the family expenses as they are defined in paragraph 5 of article 1408 of the Civil
Code. (Appellee's brief, pp. 3 and 4.)
The appellee herself having set forth the origin of the debt, which is none other than the balance
against Collantes resulting from the accounts rendered by him as commission-merchant to his
principal Osmea ; and the appellee also having set forth that "there is the natural presumption
of fact what whatever Collantes contributed by him out of what he earned by the commission

paid him for the services he rendered to his clients as commission merchant," it is decisive and
conclusive that the debt must be paid out of the community property of the marriage, since,
article 1408 of the Civil Code provides:
The conjugal partnership shall be liable for:
1. All the debts and obligations contracted during the marriage by the husband,
xxx

xxx

xxx

5. The support of the family . . . .

And inasmuch as "the fruits, revenue, or interest collected or accrued during the marriage
coming from the partnership property, or from that which belongs to either one of the spouses,"
is community property, according to article 1401; and, further, as the law expressly provides that
"the fruits of the paraphernal property form a part of the assets of the conjugal partnership, and
are liable for the payment of the marriage expenses" (art. 1385), hence it follows that the
creditor of the husband may bring his action, not against the paraphernal property, but against
the fruits and revenues of this private property of the wife.
This conclusion is not barred by the provision of article 1386, to wit, that "the personal obligation
of the husband cannot be paid out of the fruits of the paraphernal property unless it be proven
that they were incurred for the benefit of the family." It is chiefly upon this article that appellee's
whole brief is based.
The antecedents of this article of the Civil Code are not only the laws embraced in some of the
codes enacted prior thereto, but principally the numerous cases decided by the supreme court of
Spain which interpret the old law which the appellee says is identical with article 1386 of the
present Civil Code. Among the various decisions which might be cited, the most important is that
of June 9, 1883, because it covers the entire question at issue in this case: Quirico Casanovas
was a creditor of Jose Gimiso for the value of certain drafts protested for nonpayment; he
brought suit to recover and attached various properties belonging to the marriage partnership,
for Gimiso was married, and also several parcels of real estate that belonged to the debtor's wife,
Antonia Carruana. The latter filed a third party claim and alleged that this real estate was her
paraphernal property and that the fruits thereof were subject to the payment of the marriage
expenses; that the husband could dispose of such fruits only after the payment of such
expenses, among which his personal debts were not included; that this doctrine was sanctioned
by the decisions of the supreme court of March 1, 1867, and June 20, 1879, which hold that the
rights in the dowry and paraphernal fruits or revenue, granted by law to the husband as the head
of the family and manager of the conjugal partnership, are understood to be subordinate to the
preferred obligation of paying the marriage partnership expenses with such fruits or revenue.
Casanovas answered the complaint alleging, among other reasons, that Gimiso's debt arose from
shipments of paper and other articles connected with the business in which he was engaged, and
that the supreme court itself, in its decisions of October 26, 1863, November 25, 1864, October
8, 1866, and March 1 and October 27, 1867, had laid down the rule that, although the
management of the wife's paraphernal property pertains to her, it is understood to be without
prejudice to the husband's collecting and disposing of the products of such property, as the head
of the family and for the purpose of attending to its needs. The Audiencia of Valencia decided the
suit in favor of Casanovas. But Carruana took it in cassation to the supreme court, alleging that it
violated (second assignment of error) "The well-established rule reaffirmed by the supreme court
in its decision of February 21, 1881, and several others, to the effect that in order that a creditor

may secure preference over the rights of the wife with respect to the products and revenue of
the paraphernal property, he must prove at trial that the debt, the payment of which he
demands, was contracted by the husband to meet obligations of the conjugal partnership; that
this was not proven in the case at bar, and it is insufficient to say, as it is said in the judgment
appealed from, that among the resources declared by the husband and those for which the
revenue from the wife's property is liable, should be included the credit, that is, the debts, for,
according to well-settled jurisprudence of that supreme court, any money or sums borrowed by
the husband must by invested in business of the conjugal partnership."
The decision of the supreme court did not sustain the appeal in cassation:
Considering that the debts contracted by the husband during the marriage, for and in the
exercise of the industry or profession by which he contributes toward the support of his family,
cannot be deemed his personal and private debts, nor consequently, can they be excepted from
payment out of the products or revenue of the wife's own property which are liable, like those of
her husband's, for the discharge of the liabilities of the marriage couple; and considering that the
debt claimed by Don Quirico Casanovas, for the payment of which attachment has been levied
on certain property belonging to the petitioner, is of thisnature, inasmuch as it was contracted in
the exercise of the industry or business carried on by her husband; therefore, the doctrine cited
in the second assignment of error of the appeal, is inapplicable, and has not been violated by the
judgment appealed from, in holding, as it does, that intervention prayed for by the wife, cannot
be allowed.
The appellee herself established the presumption that whatever the husband contributed toward
the support of his family, he gave out of what he earned from his commissions and profession. In
conformity, then, with the aforecited decision on cassation, the debts contracted for and in the
exercise of such industry or profession cannot be considered as his personal and private debts,
nor can they be excepted from payment out of the products or revenue of the wife's own
property, which, like that of her husband's, is liable for the discharge of the marriage liabilities.
So far were they from being personal debts of the husband, that the wife herself avers that the
payment to Osmea of four or five thousand pesos of the twenty-six and odd thousand pesos of
the total debt, had been assumed by her husband, relieving her father therefrom. He would not
have assumed the payment for private purposes of his own, for his purely personal satisfaction,
and in the eyes of the law, notwithstanding his having assumed payment, relieving her father-inlaw therefrom, he was a perfect creditor of the latter's heir in the settlement of her father's
estate and could have deducted the amount of that credit of four or five thousand pesos from her
entire inheritance, that is, from that same property, subsequently called paraphernal, that his
wife inherited intact.
Subrogation transfers to the subrogated the credit, with the corresponding rights, either against
the debtor or against third persons, be they sureties or holders of mortgages. (Art. 1212, Civ.
Code.)
It is undeniable that if in the same manner as the 26,000 and odd pesos were a loss, the had
been a gain, the husband would not have been permitted to call the amount his personal and
private gain; in the same way, the debts or losses resulting from the business cannot be called
his personal and private debts or losses.
The petition of the defendant in his answer to the complaint, to wit, that the sum owed by the
husband to the Osmea estate can and ought to be paid out of the fruits or revenue of the two

parcels of real estate mentioned, which belong exclusively to the wife, now the plaintiff, is proper
and in accordance with the law.
Defendant also prayed in his answer that a receiver be appointed to take charge of the
management of the said two properties and apply their revenue to the payment of the judgment
rendered in behalf of the Osmea estate against Collantes.
According to article 1384, the wife shall have the management of her paraphernal property.
Pursuant to article 1412, the husband is the administrator of the community property of the
conjugal partnership and of the conjugal capital in general, and we have already said that the
fruits of the paraphernal property form a part of the assets of the conjugal partnership (art.
1385). To confide the management of the property and of its revenue to a receiver would be to
deprive the husband and the wife of their respective rights. In the case at bar, the wife has given
no cause for being deprived, nor has any reason whatever been advanced for depriving her, of
her right to manage her own property. The same may be said of the husband with respect to the
community property of the marriage. There is no reason to change the present status of affairs.
Neither has any sufficient reason been offered for the appointment of a receiver, nor has any of
the cases enumerated in section 174 of the Code of Civil Procedure, been invoked.
Therefore, the appellant's petition for the appointment of a receiver must be denied.
The lower court having failed to make any ruling on the declaration and the appointment prayed
for by appellant, the judgment appealed from is reversed in so far as regards this omission, and
we hold that the fruits and revenue from the two properties belonging to the wife, described in
the judgment appealed from, are liable for the payment of the debt owing by the husband, the
judgment debtor, and that there is no need for the appointment of a receiver. Without special
finding as to costs, it is so ordered.
Torres, Trent, and Araullo, JJ., concur.
Moreland, J., concurs in the result.
G.R. No. L-56479 November 15, 1982
SOCORRO L. VDA. DE STA. ROMANA, petitioner,
vs.
PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK and HON. SANCHO Y. INSERTO, as
Judge of Branch I, COURT OF FIRST INSTANCE OF ILOILO, respondents.
German M. Lopez for petitioner.
Tirol & Tirol Law Offices for private respondent.

VASQUEZ, J.:
In this petition for review by certiorari, petitioner seeks to annul and set aside an Order of the
respondent Judge of the Court of First Instance of Iloilo, Branch I, which dismissed Civil Case No.
13533, entitled Socorro L. Vda. de Sta. Romana, Plaintiff, versus The Philippine Commercial and
Industrial Bank, et al., Defendants. The petition was given due course in the Resolution dated July
29, 1981 and the parties have submitted their respective memoranda.

Civil Case No. 13533 is an offshoot of Civil Case No. 7678, entitled "PCIB, et al. versus Ramon.
Sta. Romana" which was filed way back on August 6, 1968. Civil Case No. 7678 was an action for
rescission with damages filed by herein private respondent PCIB as Administrator of the estate of
the deceased C.N. Hodges, and for the recovery of a parcel of land known as Lot No. 1258-G
which Ramon Sta. Romana purchased from the late C. N. Hodges under a Contract to Sell. On
motion of private respondent PCIB, a writ of preliminary attachment was issued in said case by
virtue of which the Sheriff levied on August 23, 1968 on the rights and interests of Ramon Sta.
Romana over Lot No. 1258-F and the improvements existing thereon, which lot Ramon Sta.
Romana also purchased from C. N, Hodges under another Contract to Sell. A third party claim
was filed by a certain Emilio Sta. Romana who claimed that Lot No. 1258-F and its improvements
had been sold to him by Ramon Sta. Romana on August 16,1963.
The trial court rendered its decision in Civil Case No. 7678 on June 16, 1975 rescinding the
Contract to Sell and ordering Ramon Sta. Romana to return the possession of Lot No. 1258-G to
the herein private respondent, as well as to pay rentals or damages for use and occupation
thereof. The decision was appealed to the Court of Appeals which affirmed the same and further
ordered Ramon Sta. Romana to pay the land taxes and the interest thereon.
On October 5, 1979, the trial judge issued a writ of execution by virtue of which the Sheriff issued
a notice of sale at public auction of the rights and interests of Ramon Sta. Romana as defendant
in the case over Lot No. 1258-F and its improvements for the satisfaction of the damages
awarded in the decision.
Ramon Sta. Romana died intestate on October 21, 1979. On November 26, 1949, herein
petitioner Socorro L. Vda. de Sta. Romana, the surviving spouse of Ramon Sta. Romana, filed a
motion to quash the writ of execution alleging principally that the proceedings in Civil Case No.
7678 did not affect her rights and interests over Lot No. 1258-G and Lot No. 1258-F inasmuch as
she was not a party in said action. The trial court denied the said motion to quash the writ of
execution. The public auction sale was held and the private respondent was issued the
corresponding certificate of sale. A Motion for Reconsideration filed by the herein petitioner was
likewise denied in the Order dated May 15, 1980.
On September 1, 1980, herein petitioner instituted Civil Case No. 13533 praying therein that the
writ of execution and the levy on execution made on Lot No. 1258-F and the improvements
existing thereon be annulled insofar as her ONE HALF (1/2) share in the said properties is
concerned, and that she be declared the lawful and absolute owner of said ONE-HALF (1/2) share
of the said properties. Private respondent filed a motion to dismiss the complaint in Civil Case
No. 13533 on the ground of res judicata. After the petitioner filed her opposition to the motion to
dismiss, the respondent court, in its Order dated November 30, 1980, granted the motion to
dismiss on the grounds of res judicata and laches. This is the order that the petitioner seeks to
annul in the present proceeding.
Petitioner assails the pronouncement by the respondent court that Civil Case No. 13533 is barred
by res judicataon the principal ground that, not being a party in Civil Case No. 7678, she could
not be bound by the judgment rendered in said case and, consequently, the writ of attachment
and the consequent writ of execution which levied on Lot No. 1258-F, together with its existing
improvements, are null and void insofar as her ONE-HALF (1/2) interest in said properties is
concerned.
We find no merit in this contention of the petitioner.

The action filed by private respondent against the petitioner Ramon Sta. Romana was clearly a
suit to enforce an obligation of the conjugal partnership. Civil Case No. 7678 arose out of the
failure of Ramon Sta. Romana to pay the purchase price of a lot he bought from C. N. Hodges
presumably in behalf of the conjugal partnership. Petitioner does not deny the conjugal nature of
both Lots Nos. 1258-G and 1258-F. Indeed, she bases her contention on the claim that at least
Lot No. 1258-F, together with its improvements existing thereon, constitutes property of the
conjugal partnership. It may not be denied, therefore, that the liability incurred by Ramon Sta.
Romana is chargeable against the conjugal partnership assets, it being undisputed that the said
obligation was contracted by the husband for the benefit of the conjugal partnership. (Art. 161
[1], Civil Code.)
The non-inclusion of the herein petitioner as a party-defendant in Civil Case No. 7678 is
immaterial. There is no rule or law requiring that in a suit against the husband to enforce an
obligation, either pertaining to him alone or one chargeable against the conjugal partnership, the
defendant husband must be joined by his wife. The contrary rule is prescribed in Section 4, Rule
3, of the Rules of Court and Article 113 of the Civil Code, but not the other way around, obviously
in recognition of the legal status of the husband as the administrator of the conjugal partnership.
(Art. 112, Civil Code.) There was, therefore, no need of including the petitioner as a party in Civil
Case No. 7678 for the purpose of binding the conjugal partnership properties for the satisfaction
of the judgment that could be rendered therein.
We likewise agree with the view that the issues raised by the petitioner in Civil Case No. 13533
may not be litigated anew, if not by the principle of res judicata but at least by conclusiveness of
judgment. The record reveals that the contentions being raised by the petitioner in Civil Case No.
13533 were squarely placed before and ruled upon by the respondent court in connection with
the execution proceedings in Civil Case No. 7678. After the writ of execution was issued on
October 5, 1979 (Annex E, Petition), herein petitioner filed a motion to quash the said writ of
execution (Annex F, Petition), In said motion, the petitioner raised the following issues:
xxx xxx xxx
3. That as will be noted from the records, the herein movant as spouse of the defendant was not
impleaded as a defendant in the above entitled case;
4. That on the other hand, it would appear from Exh. A, contract to sell dated October 6, 1956,
that the property in question, having been transacted and/or bought by the defendant during his
marriage life with the herein movant is a sort of a conjugal property or asset of the defendant
and the herein movant:
5. That accordingly, the herein movant would have been an indispensable party in the case at
bar; specially when the aforesaid transaction was perfected at the time the Civil Code of the
Philippines had already taken effect;
6. That the herein movant having been not impleaded in the case at bar; no jurisdiction over his
person had been vested in the proceedings; therefore whatever acts of levy on the property of
which she is or presumed to be a co-owner and which has never been liquidated yet is an ultra
viresfollowing a well-known principle that a person who is not a party in a given case cannot be
reached by any process or order of the given court;
7. Thus, the rule is well-settled in this jurisdiction that"on the contention that at least one-half of
the conjugal partnership belongs to the husband, and therefore could be validly levied upon to

satisfy the money judgment against said husband, it must be said that as long as the conjugal
partnership subsists, there can be no one-half share of the husband or the wife. Only when the
conjugal partnership is dissolved and liquidated between husband and wife. In the meantime, the
interest of each in the conjugal partnership property is inchoate and is a mere
expectancy. Therefore, any levy on the conjugal partnership property to satisfy the money
judgment against the husband is null and void. (Quintos Ansaldo vs. Sheriff of Manila, 64 Phil.
116). Conformably to the foregoing doctrine, it is therefore respectfully submitted that the writ of
execution, notice of levy if one has been made and the notice of sale in public auction are null
and void. (Rollo, pp. 38-39.)
The respondent court ruled on this motion by issuing the Order dated March 5, 1980 denying the
same for lack of merit. (Annex B, Petition, Rollo, p. 41.) The petitioner did not seek a further
review of the said order of denial either in the respondent court or in any other tribunal; instead,
she resorted to the remedy of filing on June 10, 1980 Civil Case No. 13533.
Technically speaking, if may be said that the judgment rendered in the main action Civil Case No.
7678 does not constitute res judicata with respect to Civil Case No. 13533. The causes of action
in the two (2) cases are not the same; neither is there Identity of the subject-matter involved.
Civil Case No. 7678 was essentially an action to rescind the Contract to Sell Lot No. 1258-G and
to recover Possession thereof plus damages. Civil Case No. 13533, on the other hand, is to annul
the levy and execution sale of Lot No. 1258-F and the improvements existing thereon with
respect to the ONE- HALF (1/2) interest claimed by the petitioner.
However, it may not be denied that the issues raised by the petitioner in Civil Case No. 13533
had already been litigated and finally decided in the subsequent proceedings taken to enforce
the judgment in Civil Case No. 7678. The parties involved in said proceedings are the same, and
so are the subject-matter involved and the cause of action relied upon by the petitioner in Civil
Case No. 13533. The only possible doubt as to whether res judicatamay be utilized as a bar to
the filing of Civil Case No. 13533 is that the pronouncement constituting the bar to a new action
was not in the main judgment in Civil Case No. 7678 but only in a subsequent incident therein.
It is Our considered opinion that such circumstance does not militate against the existence of res
judicata if all the requisites for its application are otherwise present. The order denying the
petitioner's motion to quash the writ of execution issued in Civil Case No. 7678 is not merely an
interlocutory order. It attained finality due to the failure of the petitioner to appeal or seek a
review of the same. It is not questioned that the trial court had jurisdiction to take cognizance of
the motion to quash the writ of execution and over the parties litigating the same. The order of
denial is on the merits of the motion. There was also Identity of parties involved in the motion to
quash the writ of execution, Identity of subject-matter and Identity of causes of action. The
requisites of res judicata being all present in the incident concerning the issuance of the writ of
execution, We feel no hesitancy in declaring that the filing of Civil Case No. 13533 is barred by
the principle of res judicata, The underlying philosophy of this doctrine is:
... that parties ought not to be permitted to litigate the same issue more than once; that, when a
right or fact has been judicially tried and determined by a court of competent jurisdiction, or an
opportunity for such trial has been given the judgment of the court, so long as it remains
unreversed, should be conclusive upon the parties and those in privity with them in law or
estat........ (2 Moran Rules of Court, p. 362, citing Sta. Ana v. Narvades, L-24390, Nov. 28, 1969,
30 SCRA 454, 463.)

To sanction the filing of Civil Case No. 13533 is to nullify altogether the proceedings had in
connection with the petitioner's motion to quash the writ of execution and the ruling made by the
respondent court thereon which had already attained the status of finality.
In the least, the institution of Civil Case No. 13533 may be deemed barred by the principle of
conclusiveness of judgment which is expressed in the Rules in the following terms:
Effect of judgments. The effect of a judgment or final order rendered by a court or judge of the
Philippines, having jurisdiction to pronounce the judgment or order, may be as follows:
xxx xxx xxx
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have an adjudged in a former judgment which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein or necessary thereto. (SEC. 49,
Rule 39, New Rules of Court.)
Even assuming, therefore, that Civil Case No. 13533 is on a different cause of action than that
involved in Civil Case No. 7678, the ruling in the latter on the motion for the quashing of the levy
on execution made on Lot 1258- F which involved the same subject-matter and parties litigating
Civil Case No. 13533 is rendered conclusive under the doctrine of conclusiveness of judgment.
Petitioner has further argued that her having filed the motion to quash the writ of execution in
Civil Case No. 7678 to assert her claim over ONE- HALF (1/2) interest in Lot No. 1258-F and its
improvements does not preclude her from filing a separate civil action to pursue the same claim.
She cites the case of Manila Fidelity and Surety Company vs. Teodoro, et al., 20 SCRA 463, which
holds that "'a third party claim is not an exclusive remedy; the same rule (Section 17, Rule 29),
provides that nothing therein shall prevent such third person from vindicating his claim to the
property by any proper action.'"
We find no merit in this argument. The petitioner did not merely file a third party claim on the
property levied upon in connection with the writ of execution issued in Civil Case No. 7678.
Instead of a third party claim which, under the rules, must be filed with the "officer making the
levy and a copy thereof upon the judgment creditor" (Sec. 17, Rule 39, Rules of Court), the
petitioner filed a "Motion to Quash Writ of Execution and All Subsequent Proceedings" (Record on
Appeal, p. 17) to which private respondent filed its Opposition (Ibid, pp. 20-24), and to which in
turn the petitioner filed her Reply to Opposition (Ibid, pp. 25-31). When the respondent court
issued its Order dated May 5, 1980 denying the aforesaid Motion to Quash Execution for lack of
merit (Ibid, p. 32), the petitioner filed a Motion for Reconsideration (Ibid, pp. 33-34) which was
opposedly the private respondent in writing (Ibid, pp. 35-35-B) and which in turn a Reply to
Opposition, was filed by the petitioner (Ibid., pp. 36-38). In said motions, oppositions and replies
repeatedly filed by the parties, the same issues sought to be reopened by the petitioner in Civil
Case No, 13533 had been fully and exhaustively ventilated. It was in the basis of such exposure
of those issues that the respondent court issued its Order denying the motion to quash the writ
of execution, and also the Order denying a motion for a reconsideration of the same.
WHEREFORE, the Petition is DENIED, and the Orders of the respondent Judge issued in Civil Case
No. 13533 dated March 5, 1980 and May 15, 1980 are hereby AFFIRMED. With costs against the
petitioner.
SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Relova and Gutierrez, JJ., concur.

G.R. No. L-57402 February 28, 1985

G-TRACTORS, INC., petitioner,
vs.
HONORABLE COURT OF APPEALS and LUIS R. NARCISO AND JOSEFINA SALAK
NARCISO, respondents.
Francisco, De Castro, Zulueta & Reyes Law Office for petitioner.
Fernando F. Villoria for private respondents.

CUEVAS, J.:
Assailed and challenged in this Petition for Review is the Decision dated April 29, 1977 of the
then Court of Appeals in its CA-G.R. No. SP-05920, the dispositive portion of which reads as
follows
WHEREFORE, the petition is hereby granted. The levy on execution dated February 11, 1976, the
sheriff's certificate of sale dated March 25, 1975 and final deed of sale, and the orders of the
respondent judge dated April 26, 1976, July 12, 1976 and August 26, 1976, are set aside and
declared null and void. The writ of preliminary injunction heretofore in force is made permanent.
Costs against private respondent.
SO ORDERED.
Private respondent Luis R. Narciso is a businessman. He is engaged in business as a producer
and exporter of Philippine mahogany logs and operates a logging concession at del Gallego,
Camarines Sur. He is legally married to the other private respondent Josefina Salak Narciso.
Petitioner G-Tractors, Inc. upon the other hand, is a domestic corporation engaged primarily in
the business of leasing heavy equipments such as tractors, bulldozers, and the like.
Sometime in February 26, 1973, private respondent Luis R. Narciso entered into a Contract of
Hire of Heavy Equipment with petitioner G-Tractors under the terms of which the latter leased to
the former tractors for the purpose of constructing switchroads and hauling felled trees at the
jobsite of Narciso's logging concession at del Gallego, Camarines Sur. The contract provided for
payment of rental for the use of said tractors.
Luis R. Narciso defaulted in his rental payments. Hence, on August 15, 1974, G-Tractors instituted
an action against him to collect the total amount of P155,410.25 with legal interest thereon,
representing unpaid rentals for the leased tractors, 25% thereof as liquidated damages,
P30,000.00 as and for attorney's fees, and the costs of suit, before the then Court of First
Instance of Rizal, Quezon City, Branch IX. The case was docketed thereat as Civil Case No. Q19173.
Luis R. Narciso was declared in default. On his representations, however, G-Tractors accepted his
offer for a compromise agreement. A compromise agreement was thereupon signed by GTractors and Luis R. Narciso and on the basis thereof, judgment thereon was rendered on October
10, 1974.

The compromise agreement stipulated for payment by Luis R. Narciso of the total claim of GTractors on an installment plan. Luis R. Narciso failed to comply and so on November 29, 1974, GTractors filed a motion for execution. This was opposed by Luis R. Narciso who asked for the
suspension of the issuance of a writ of execution on the ground that he allegedly has a pending
loan with a banking institution. The lower court, finding the allegation without legal basis, denied
the request for suspension and ordered the issuance of a writ of execution to enforce the
judgment based on the compromise agreement. The writ of execution was issued on February 7,
1975. 1 Levy was accrdingly made on February 19, 1975 by the City Sheriff of Quezon City on
certain personal properties of private respondents-at their residence at 208 Retiro Street, Quezon
City. Auction sale was held on March 1, 1975, and G-Tractors, being the highest bidder, was
awarded the sale by the City Sheriff of Quezon City of all the personal properties listed under the
levy, for the total amount of P4,090.00.
On March 5, 1975, Luis R. Narciso offered to redeem and/or buy back all the personal properties
sold to G-Tractors for the same amount of P4,090.00 which the latter agreed and for which a
Deed of Reconveyance was executed by G-Tractors.
Likewise, on February 12, 1975, the Sheriff of Quezon City made a levy on "all rights, interest,
title, participation which the defendant Luis R. Narciso" may have over a parcel of residential
land covered by TCT No. 120923 of the Registry of Deeds of Quezon City 2 which parcel of land is
allegedly the conjugal property of the spouses Luis R. Narciso and Josefina Salak Narciso.
On February 22, 1975, the Sheriff notified the general public, in his Notice of Sheriff's sale, that
on March 25, 1975 he would sell at public auction to the highest bidder for cash "the rights,
interest and participation of the aforementioned defendant Luis R. Narciso in the aforesaid real
estate property covered by Transfer Certificate of Title No. 120923, together with all the
improvements existing thereon" to satisfy the aforementioned writ of execution. 3
On March 25, 1975, a "Certificate of Sale" was issued to the effect that "on said date (March 25,
1975) by virtue of the writ of execution issued by the Honorable Ulpiano Sarmiento in Civil Case
No. Q-19173, the ex-oficio Sheriff of Quezon City sold at public auction to the highest bidder
(plaintiff G-Tractors, Inc.) for P180,000.00 the real estate property covered by TCT No. 120923,
Quezon City, and levied upon on February 12, 1975, together with all the improvements
thereon. 4 At that time, however, TCT No. 120923 was mortgaged to Mercantile Financing
Corporation to guarantee an outstanding unpaid account of Luis R. Narciso and his wife in the
amount of P74,327.52.
Soon after the issuance of the aforesaid Certificate of Sale, Luis R. Narciso and G-Tractors, Inc.
executed a contract of lease over the aforesaid property whereby the former obligated himself to
pay a monthly rental of P1,000.00 and by virtue of the said contract of lease, Luis R. Narciso
actually paid to G-Tractors, Inc. the amount of P12,000.00 as rental for one year.
On March 31, 1976, Josefina Salak Narciso and her husband Luis R. Narciso filed a complaint in
the same Court of First Instance of Quezon City for "declaration of nullity of levy on execution
and auction sale of plaintiff's conjugal property with damages and injunction," docketed as Civil
Case No. Q-21267. Among other things, the complaint alleged that whatever transpired in Civil
Case No. Q-19173 could be binding only on the husband Luis R. Narciso and could not affect or
bind the plaintiff-wife Josefina Salak Narciso who was not a party to that case; that the nature of
the Sheriff's sale clearly stated that only the property of the husband may be sold to satisfy the
money judgment against him; that the conjugal property of the plaintiffs-spouses could not be
made liable for the satisfaction of the judgment in Civil Case No. Q-19173 considering that the

subject matter of said case was never used for the benefit of the conjugal partnership or of the
family; and that the levy of the wife's share in the conjugal property to satisfy the money
judgment against her husband is null and void. 5
On April 5, 1976, the President of G-Tractors, Inc. executed an affidavit of consolidation of
ownership and on the next day, April 6, 1976, the sheriff issued a Sheriff's Final Deed of Sale.

On April 12, 1976, G-Tractors, Inc. filed in Civil Case No. Q-19173, a "Motion for Entry and
Issuance of New Torrens Certificate of Title" asking the Court to direct the Register of Deeds of
Quezon City to cancel TCT No. 120923 and to allow the entry and issuance of a new torrens title
in the name of G-Tractors, Inc.
On April 22, 1976, Luis R. Narciso filed an opposition to the aforesaid motion calling attention to
the fact that he and his wife had filed a complaint which was docketed as Civil Case No. Q-21267
and pointing out that the Sheriff's final deed of sale and affidavit of consolidation of ownership
would have no effect should the levy on execution and the subsequent auction sale of the
conjugal property be nullified. 7
Civil Case No. Q-21267 was subsequently transferred to Branch IX of the same Court of First
Instance which tried Civil Case No. Q-19173.
On April 26, 1976, Judge Sarmiento issued an Order cancelled TCT No. 120923 and directing the
Register of Deeds of Quezon City to issue in lieu thereof a new title in the name of G-Tractors,
Inc. 8
Luis R. Narciso move to reconsider the aforesaid order of April 26, 1976. This was followed by a
motion filed by the Narciso spouses for a preliminary injunction in Civil Case No. Q-21267.
Meanwhile, immediately after receiving a copy of the order of April 26, 1976, G-Tractors, Inc.
caused the cancellation of TCT No. 120923 and the issuance of TCT No. 218552 in its name.
On May 21, 1976, the lower court enjoined G-Tractors, Inc. from transferring, conveying or in any
manner alienating the property covered by TCT No. 218552 until the motion for reconsideration
of the order of April 26, 1976 has been resolved.
On July 12, 1976, two (2) orders were issued by the lower court, one denying the motion for
reconsideration and the other denying the motion for preliminary injunction. A motion to
reconsider the order denying the preliminary injunction was likewise denied.
Hence, on October 2, 1976, the spouses Luis R. Narciso and Josefina Salak Narciso filed before
the then Court of Appeals, a petition for certiorari with Preliminary Injunction, docketed in the
said court as CA-G.R. No. SP-05920, seekingA To annul, set aside and declare null and void the following:
(1) Levy on execution dated February 11, 1975;
(2) Sheriff's Certificate of sale dated March 25, 1975;
(3) Sheriff's Final Deed of Sale dated April 6, 1976;
(4) Order of respondent Judge dated April 26, 1976;
(5) Orders of the respondent Judge both dated July 12, 1976; and

(6) Order of the respondent Judge dated August 26, 1976.

B To restrain and enjoin the respondent from further giving force and effect to the levy and
sale on execution and to the disputed orders; the private respondent G-Tractors, Inc. from
alienating the Lot covered by TCT No. 218552 and from dispossessing the petitioners of said Lot
and the house standing thereon; the respondent Judge from further proceeding in Civil Case Nos.
Q-19173 and Q-21267; and
C To direct the Register of Deeds of Quezon City to cancel TCT No. 218552 in the name of GTractors, Inc. and to issue a new one in the name of petitioners-spouses.
On April 29, 1977, the then Court of Appeals rendered its now assailed Decision, annulling the
levy on execution dated February 11, 1975, the sheriff's certificate of sale dated March 25, 1975,
as well as the sheriff's final deed of sale; and the Orders dated April 26, July 12 and August
26,1976.
G-Tractors, Inc.'s motion for reconsideration having been denied, the instant petition for Review
on certiorari was filed before this Court, petitioner contending that respondent Court of Appeals
erred
1. In holding that a levy on a residential land does not include the residential house or any
improvement erected and existing thereon;
2. In holding that the judgment debt of private respondent Luis R. Narciso, subject of Civil Case
No. Q-19173, entitled G-Tractors, Inc. vs. Luis R. Narciso, Court of First Instance of Rizal, Quezon
City, Branch IX was not the conjugal debt of private respondents-spouses Luis R. Narciso and
Josefina Salak Narciso;
3. In not holding that there was laches and delay in the firing by private respondents-spouses of
CA-G.R. No. 05920-SP with the respondent Court of Appeals.
4. In granting the writs applied for by private respondents spouses in CA-G.R. No. 05920, the
petition itself not being the proper remedy.
The crucial issue that poses itself for our resolution in the instant petition is-whether or not the
judgment debt of private respondent Luis R. Narciso is a conjugal debt for which the conjugal
partnership property can be held answerable.
Article 161 of the New Civil Code provides that the conjugal partnership shall be liable for:
(1) All the 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.
There is no question that private respondent Luis R. Narciso is engage in business as a producer
and exporter of Philippine mahogany logs. He operates a logging concession at del Gallego,
Camarines Sur and holds office right in the conjugal dwelling at 208 Retiro Street, Talayan
Village, Quezon City, Metro Manila, where he and his family reside. His account with petitioner GTractors, Inc. represents rentals for the use of petitioner's tractors which he leased for the
purpose of constructing switchroads and hauling felled trees at the jobsite of the logging
concession at del Gallego, Camarines Sur which is not his exclusive property but that of his
family. There is no doubt then that his account with the petitioner was brought about in order to

enhance the productivity of said logging business, a commercial enterprise for gain which he had
the right to embark the conjugal partnership.
This is the finding of the trial court and we find no cogent reason to deviate therefrom. It held:
Lastly, the contention that the conjugal partnership is not liable because the obligation
contracted by the husband is personal in nature is not applicable in this case. The record shows
that Luis R. Narciso is a producer and exporter of Philippine mahogany logs and that the
bulldozers leased to him was used for the construction of switchroads for logging. It is very clear,
therefore, that the obligations were contracted in connection with his legitimate business as a
producer and exporter in mahogany logs and certainly benefited the conjugal partnership. Justice
J.B.L. Reyes is very liberal in interpreting Art. 161 of the Civil Code when he declared in Luzon
Surety Co., Inc. versus de Garcia (30 SCRA 118) that the words in said article "all debts and
obligations contracted by the husband for the benefit of the conjugal partnership "do not require
that actual profit or benefit must accrue to the conjugal partnership from the husband's
transaction", but it suffices that the transaction should be one that normally would produce such
benefit for the partnership. 9
In the case of Cobb-Perez vs. Lantin, 10 citing the case of Abella de Diaz vs- Erlanger and
Galinger, 11 and Javier vs. Osmena, 12 this court ruledThe aforesaid obligation was contracted in the purchase of leather used in the shoe
manufacturing business of the petitioner husband. Said business is an ordinary commercial
enterprise for gain, in the pursuit of which Damaso Perez had the right to embark the
partnership. It is well settled that the 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. (Emphasis supplied)
The husband is the administrator of the conjugal partnership and as long as he believes he is
doing right to his family, he should not be made to suffer and answer alone. 13 So that, if he
incurs an indebtedness in the legitimate pursuit of his career or profession or suffers losses in a
legitimate business, the conjugal partnership must equally bear the indebtedness and the losses,
unless he deliberately acted to the prejudice of his family. Such is the nature of the judgment
debt of private respondent Luis R. Narciso to petitioner. Consequently, the conjugal partnership
of gains of private respondents Narcisos, must answer for the same. 14 Necessarily the sale at
public auction by the Sheriff of Quezon City of TCT No. 120923 belonging to the conjugal
partnership of gains of the private respondents Narcisos in order to satisfy the judgment debt of
the private respondent Luis R. Narciso with petitioner, was validly and legally made in
accordance with law and not legally assailable as held in the analogous case of Vda. de Sta.
Romana vs. Philippine Commercial and Industrial Bank 15 where We laid down the following
dictum :
Petitioner assails the pronouncement by the respondent court that Civil Case No. 13553 is barred
byres judicata on the principal ground that, not being a party in Civil Case No. 7678, she could
not be bound by the judgment rendered in said case and, consequently, the writ of attachment
and the consequent writ of execution which levied on Lot No. 1258-F, together with its existing
improvements, are null and void insofar as her ONE-HALF () interest in said properties is
concerned.
We find no merit in this contention of the petitioner.

The action filed by private respondent against the petitioner Ramon Sta. Romana was clearly a
suit to enforce an obligation of the conjugal partnership. Civil Case No. 7678 arose out of the
failure of Ramon Sta. Romana to pay the purchase price of a lot he bought from C.N. Hodges
presumably in behalf of the conjugal partnership. Petitioner does not deny the conjugal nature of
both Lots Nos. 1258-G and 1258-F. Indeed, she bases her contention on the claim that at least
Lot No. 1258-F, together with its improvements existing thereon, constitutes property of the
conjugal partnership. It may not be denied, therefore, that the liability incurred by Ramon Sta.
Romana is chargeable against the conjugal partnership assets, it being undisputed that the said
obligation was contracted by the husband for the benefit of the conjugal partnership. (Art. 161(l),
Civil Code)
The non-inclusion of the herein petitioner as a party-defendant in Civil Case No. 7678 is
immaterial. There is no rule or law requiring that in a suit against the husband to enforce an
obligation, either pertaining to him alone or one chargeable against the conjugal partnership, the
defendant husband must be joined by his wife. The contrary rule is prescribed in Sec. 4, Rule 3,
of the Rules of Court and Article 113 of the Civil Code, but not the other way around, obviously in
recognition of the legal status of the husband as the administrator of the conjugal partnership.
(Art. 112, Civil Code) There was therefore, no need of including the petitioner as a party in Civil
Case No. 7678 for the purpose of binding the conjugal partnership properties for the satisfaction
of the judgment that could be rendered thereon. (Emphasis supplied)
WHEREFORE, the Decision of the then Court of Appeals sought to be reviewed is hereby
REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.
Makasiar, Aquino, Concepcion Jr., Abad Santos and Escolin JJ., concur.

G.R. No. L-48889 May 11, 1989

DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,
vs.
THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the Court of
First Instance of Iloilo and SPOUSES PATRICIO CONFESOR and JOVITA
VILLAFUERTE, respondents.

GANCAYCO, J.:
The issue posed in this petition for review on certiorari is the validity of a promissory note which
was executed in consideration of a previous promissory note the enforcement of which had been
barred by prescription.
On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural
loan from the Agricultural and Industrial Bank (AIB), now the Development of the Philippines
(DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by a promissory note of said
date whereby they bound themselves jointly and severally to pay the account in ten (10) equal
yearly amortizations. As the obligation remained outstanding and unpaid even after the lapse of
the aforesaid ten-year period, Confesor, who was by then a member of the Congress of the

Philippines, executed a second promissory note on April 11, 1961 expressly acknowledging said
loan and promising to pay the same on or before June 15, 1961. The new promissory note reads
as follows
I hereby promise to pay the amount covered by my promissory note on or before June 15, 1961.
Upon my failure to do so, I hereby agree to the foreclosure of my mortgage. It is understood that
if I can secure a certificate of indebtedness from the government of my back pay I will be allowed
to pay the amount out of it.
Said spouses not having paid the obligation on the specified date, the DBP filed a complaint
dated September 11, 1970 in the City Court of Iloilo City against the spouses for the payment of
the loan.
After trial on the merits a decision was rendered by the inferior court on December 27, 1976, the
dispositive part of which reads as follows:
WHEREFORE, premises considered, this Court renders judgment, ordering the defendants Patricio
Confesor and Jovita Villafuerte Confesor to pay the plaintiff Development Bank of the Philippines,
jointly and severally, (a) the sum of P5,760.96 plus additional daily interest of P l.04 from
September 17, 1970, the date Complaint was filed, until said amount is paid; (b) the sum of
P576.00 equivalent to ten (10%) of the total claim by way of attorney's fees and incidental
expenses plus interest at the legal rate as of September 17,1970, until fully paid; and (c) the
costs of the suit.
Defendants-spouses appealed therefrom to the Court of First Instance of Iloilo wherein in due
course a decision was rendered on April 28, 1978 reversing the appealed decision and dismissing
the complaint and counter-claim with costs against the plaintiff.
A motion for reconsideration of said decision filed by plaintiff was denied in an order of August
10, 1978. Hence this petition wherein petitioner alleges that the decision of respondent judge is
contrary to law and runs counter to decisions of this Court when respondent judge (a) refused to
recognize the law that the right to prescription may be renounced or waived; and (b) that in
signing the second promissory note respondent Patricio Confesor can bind the conjugal
partnership; or otherwise said respondent became liable in his personal capacity. The petition is
impressed with merit. The right to prescription may be waived or renounced. Article 1112 of Civil
Code provides:
Art. 1112. Persons with capacity to alienate property may renounce prescription already
obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation results from acts
which imply the abandonment of the right acquired.
There is no doubt that prescription has set in as to the first promissory note of February 10,
1940. However, when respondent Confesor executed the second promissory note on April 11,
1961 whereby he promised to pay the amount covered by the previous promissory note on or
before June 15, 1961, and upon failure to do so, agreed to the foreclosure of the mortgage, said
respondent thereby effectively and expressly renounced and waived his right to the prescription
of the action covering the first promissory note.
This Court had ruled in a similar case that

... when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new
contract recognizing and assuming the prescribed debt would be valid and enforceable ... . 1
Thus, it has been held
Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after
the same has prescribed and with full knowledge of the prescription he thereby waives the
benefit of prescription. 2
This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to
pay the debt. The consideration of the new promissory note is the pre-existing obligation under
the first promissory note. The statutory limitation bars the remedy but does not discharge the
debt.
A new express promise to pay a debt barred ... will take the case from the operation of the
statute of limitations as this proceeds upon the ground that as a statutory limitation merely bars
the remedy and does not discharge the debt, there is something more than a mere moral
obligation to support a promise, to wit a pre-existing debt which is a sufficient consideration for
the new the new promise; upon this sufficient consideration constitutes, in fact, a new cause of
action. 3
... It is this new promise, either made in express terms or deduced from an acknowledgement as
a legal implication, which is to be regarded as reanimating the old promise, or as imparting
vitality to the remedy (which by lapse of time had become extinct) and thus enabling the creditor
to recover upon his original contract. 4
However, the court a quo held that in signing the promissory note alone, respondent Confesor
cannot thereby bind his wife, respondent Jovita Villafuerte, citing Article 166 of the New Civil
Code which provides:
Art. 166. Unless the wife has been declared a non compos mentis or a spend thrift, or is under
civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any
real property of the conjugal partnership without, the wife's consent. If she ay compel her to
refuses unreasonably to give her consent, the court m grant the same.
We disagree. Under Article 165 of the Civil Code, the husband is the administrator of the conjugal
partnership. As such administrator, all debts and obligations contracted by the husband for the
benefit of the conjugal partnership, are chargeable to the conjugal partnership. 5 No doubt, in
this case, respondent Confesor signed the second promissory note for the benefit of the conjugal
partnership. Hence the conjugal partnership is liable for this obligation.
WHEREFORE, the decision subject of the petition is reversed and set aside and another decision
is hereby rendered reinstating the decision of the City Court of Iloilo City of December 27, 1976,
without pronouncement as to costs in this instance. This decision is immediately executory and
no motion for extension of time to file motion for reconsideration shall be granted.
SO ORDERED.
Narvasa and Cruz, JJ., concur.
Grio-Aquino, J., took no part.

G.R. No. L-51283 June 7, 1989

LOURDES MARIANO, petitioner,
vs.
COURT OF APPEALS, and DANIEL SANCHEZ, respondents.
Jose V. Natividad & Associates for petitioner .
Arturo S. Santos for respondents.

NARVASA, J.:
The proceedings at bar concern (1) an attempt by a married man to prevent execution against
conjugal property of a judgment rendered against his wife, for obligations incurred by the latter
while engaged in a business that had admittedly redounded to the benefit of the family, and (2)
the interference by a court with the proceedings on execution of a co-equal or coordinate court.
Both acts being proscribed by law, correction is called for and will hereby be effected.
The proceedings originated from a suit filed by Esther Sanchez against Lourdes Mariano in the
Court of First Instance at Caloocan City, 1 for recovery of the value of ladies' ready made dresses
allegedly purchased by and delivered to the latter. 2
A writ of preliminary attachment issued at Esther Sanchez' instance, upon a bond posted by
Veritas Insurance Company in the amount of P 11,000.00, and resulted in the seizure of Lourdes
Mariano's property worth P 15,000.00 or so. 3 Her motion for the discharge of the attachment
having been denied, 4 Lourdes Mariano went up to the Court of Appeals on certiorari. That Court
ordered 5 the Trial Court to receive evidence on whether or not the attachment had been
improvidently or irregularly issued. 6 The Trial Court did so, came to the conclusion that the
attachment had indeed been improperly issued, and consequently dissolved it. 7
Trial then ensued upon the issues arising from the complaint as well as Lourdes Mariano's answer
with counterclaim-which included a claim for damages resulting from wrongful attachment.
Thereafter judgment was rendered in favor of defendant Lourdes Mariano and against plaintiff
Esther Sanchez containing the following dispositions, to wit: 8
1. On the complaint, defendant is ordered to pay unto the plaintiff for the value of the dishonored
check (Exhs. G-1, H and I) in the total amount of P 1,512.00.
2. On the counterclaim, the plaintiff is ordered to pay unto defendant the following, as follows:
a) P 7,500.00 for loss of income of the defendant for 75 days;
b) P 16,000.00 for the value of attached goods;
c) P 25,000.00 for moral and exemplary damages;
d) P 5,000.00 as attorney's fees plus costs of suit.
The Veritas Insurance Company which issued the attachment bond is ordered to pay unto the
defendant the full insurance coverage of P 11,000.00 to answer for the total liability of the
plaintiff thereof

Esther Sanchez sought to perfect an appeal by filing a notice of appeal, an appeal bond and a
record on appeal.9
Pending approval of the record on appeal, Lourdes Mariano filed a motion for the immediate
execution of the judgment which the Court granted. 10 In virtue of the writ of execution which
afterwards issued in due course, the sheriff garnished the sum of P 11,000.00 from Veritas
Insurance Company, and levied on real and personal property belonging to the conjugal
partnership of Esther Sanchez and her husband, Daniel Sanchez. Esther Sanchez then filed a
petition for certiorari with the Court of Appeals, praying for the annulment of the execution
pending appeal authorized by the Trial Court; but her petition was adjudged to be without merit
and was accordingly dismissed. 11
Daniel Sanchez, Esther's husband, now made his move. He filed a complaint for annulment of the
execution in the Court of First Instance at Quezon City in his capacity as administrator of the
conjugal partnership. 12 He alleged that the conjugal assets could not validly be made to answer
for obligations exclusively contracted by his wife, and that, moreover, some of the personal
property levied on, such as household appliances and utensils necessarily used in the conjugal
dwelling, were exempt from execution. He also applied for a preliminary injunction pending
adjudication of the case on the merits. 13
The Quezon City Court issued an order setting the matter of the injunction for hearing, and
commanding the sheriff, in the meantime, to desist from proceeding with the auction sale of the
property subject of Daniel Sanchez' claim. 14 Lourdes Mariano filed a motion to dismiss the
action; this, the Court denied. 15 She then instituted a special civil action of certiorari in the Court
of Appeals 16 where she initially enjoyed some measure of success: her petition was given due
course, and the Quezon City Court was restrained by the Appellate Court's Seventh
Division 17 from further proceeding with the case. 18 Eventually, however, the Eighth
Division 19 came to the conclusion that there was no merit in her cause and dismissed her
petition. 20 It ruled that the Quezon City Court had not interfered with the execution process of
the Caloocan Court because Daniel Sanchez's action in the former court raised an issue-the
validity of the sheriffs levy on the conjugal partnership assets of the Sanchez spouses different
from those adjudicated in the Caloocan Court, and Sanchez was not a party to the case tried by
the latter.
From this verdict Lourdes Mariano has appealed to this Court, contending that the Appellate
Court committed reversible error1) in ruling that the conjugal partnership of Daniel and Esther Sanchez could not be made liable
for Esther's judgment obligation arising from the spouses' joint business with Lourdes Mariano;
2) in ruling that the Quezon City Court of First Instance had not interfered with the execution
process of the Caloocan Court of First Instance; and
3) when its Eighth Division decided the petition of Lourdes Mariano although the case had been
raffled to the Seventh Division and the latter had in fact given due course to the petition.
1. There is no dispute about the fact that Esther Sanchez was engaged in business not only
without objection on the part of her husband, Daniel, but in truth with his consent and
approval. 21 It is also established that, as expressly acknowledged by Esther herself and never
denied by Daniel, the profits from the business had been used to meet, in part at least, expenses
for the support of her family, i.e., the schooling of the children, food and other household

expenses. 22 Under the circumstances, Lourdes Mariano action against Esther Sanchez was
justified, the litigation being "incidental to the ... business in which she is engaged 23 and
consequently, the conjugal partnership of Daniel and Esther Sanchez was liable for the debts and
obligations contracted by Esther in her business since the income derived therefrom, having
been used to defray some of the expenses for the maintenance of the family and the education
of the children, had redounded to the benefit of the partnership. 24 It was therefore error for the
Court of Appeals to have ruled otherwise.
2. It was also error for the Court of Appeals to have held that there was no interference by the
Quezon City Court of First Instance with the execution process of the Caloocan Court.
The rule, one of great importance in the administration of justice, is that a Court of First Instance
has no power to restrain by means of injunction the execution of a judgment or decree of another
judge of concurrent or coordinate jurisdictions. 25 But this is precisely what was done by the
Quezon City Court of First Instance: it enjoined the execution of a judgment authorized and
directed by a co-equal and coordinate court, the Caloocan City Court of First Instance. It did so on
the claim of Daniel Sanchez that the property being levied on belonged to the conjugal
partnership and could not be made liable for the wife's obligations.
The question that arises is whether such a claim that property levied on in execution of a
judgment is not property of the judgment debtor, Daniel Sanchez's wife, but of the conjugal
partnership of the Sanchez Spouses is properly cognizable by a Court other than that which
rendered judgment adversely to the wife.
To be sure, Section 17, Rule 39 of the Rules of Court, authorizes a "third person," i.e., "any other
person than the judgment debtor or his agent," to vindicate "his claim to the property by any
proper action." The section reads as follows: 26
SEC. 17. Proceedings where property claimed by third person.-If property levied on be claimed by
any other person than the judgment debtor or his agent, and such person make an affidavit of
his title thereto or right to the possession thereof, stating the grounds of such right or title, and
serve the same upon the officer making the levy, and a copy thereof upon the judgment creditor,
the officer shall not be bound to keep the property, unless such judgment creditor or his agent,
on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater
than the value of the property levied on. In case of disagreement as to such value, the same
shall be determined by the court issuing the writ of execution.
The officer is not liable for damages, for the taking or keeping of the property, to any third-party
claimant, unless a claim is made by the latter and unless an action for damages is brought by
him against the officer within one hundred twenty (120) days from the date of the filing of the
bond. But nothing herein contained shall prevent such claimant or any third person from
vindicating his claim to the property by any proper action.
xxx xxx xxx
The "proper action" referred to in the section "is and should be an entirely separate and distinct
action from that in which execution has issued, if instituted by a stranger to the latter
suit:" 27 and in "such separate action, the court may issue a writ of preliminary injunction against
the sheriff enjoining him from proceeding with the execution sale." 28"Upon the other hand, if the
claim of impropriety on the part of the sheriff in the execution proceedings is made by a party to
the action, not a stranger thereto, any relief therefrom may be applied for with, and obtained

from, only the executing court; and this is true even if a new party has been impleaded in the
suit." 29
In the case at bar, the husband of the judgment debtor cannot be deemed a "stranger" to the
case prosecuted and adjudged against his wife. A strikingly similar situation was presented in a
case decided by this Court as early as 1976, Rejuso v. Estipona. 30 There, the sheriff tried to evict
petitioner Rejuso and his family from their house and lot which had been sold in execution of a
money judgment rendered by the Court of First Instance of Davao against Rejuso. What Rejuso
did was to institute, together with his wife, Felisa, a separate suit in the same court against the
sheriff and the judgment creditor, Estipona, for the purpose of annulling the levy, execution sale,
and writ of possession issued in the first action in respect of their residential house and lot, on
the theory that that property was conjugal in character and "hence, not subject to such
proceedings considering that Felisa was not a party to the previous case." The action was
however dismissed by the court on the ground that it had "no jurisdiction over the subject matter
of the action or the nature of the action and of the relief sought." 31 The dismissal was had on
motion of Estipona who argued that the court had no jurisdiction to "vacate or annul and/or
enjoin the enforcement of the process issued by another branch in another case," and since
Rejuso had already raised the same issues in the first case, without success, he should not be
allowed to "get from another branch ... what he failed to get ... (from) Branch l." This Court
affirmed that judgment of dismissal, 32 holding that Rejuso's action was barred by res adjudicata;
and "(a)s regards Felisa Rejuso, who is a new party in Civil Case No. 5102" (the second action) it
was ruled that... her remedy, if it has not yet been barred by the statute of limitations or become stale in some
other way, is within Civil Case No. 4435 (the first suit). Indeed, it is superfluous to start a new
action on a matter which can be more simply and conveniently litigated within a former
proceeding of which it is more logically and legally an integral part. (Ipekdjian Merchandising Co.,
Inc, v. CTA, 8 SCRA 59 [1963]). Actually, the court in which the former proceeding was pending
has exclusive jurisdiction thereof (De Leon vs. Salvador, 36 SCRA 567), the fact that the two
cases are in the same Branch of the same Court of First Instance and presided over by the same
Judge notwithstanding. After all, it is simpler and more convenient to observe such practice,
which insures also consistency in the resolutions of related questions because they are to be
determined in most if not all instances by the same judge.
In any case, whether by intervention in the court issuing the writ, or by separate action, it is
unavailing for either Esther Sanchez or her husband, Daniel, to seek preclusion of the
enforcement of the writ of possession against their conjugal assets. For it being established, as
aforestated, that Esther had engaged in business with her husband's consent, and the income
derived therefrom had been expended, in part at least, for the support of her family, the liability
of the conjugal assets to respond for the wife's obligations in the premises cannot be disputed.
The petitioner's appeal must therefore be sustained.
However, the petitioner's theory that the Eighth Division of the Appellate Court had improperly
taken cognizance of the case which had been raffled to the Seventh Division, must be rejected. It
is without foundation, and was evidently made without attempt to ascertain the relevant facts
and applicable rules. The case had originally been assigned to Mr. Justice Isidro C. Borromeo for
study and report while he was still a member of the Seventh Division. The case was brought by
him to the Eighth Division when he was subsequently transferred thereto; and he had ultimately

written the opinion for the division after due deliberation with his colleagues. All of this took
place in accordance with the Rules of the Court of Appeals.
WHEREFORE, the Decision of the Court of Appeals subject of the petition is REVERSED AND SET
ASIDE, and the Regional Trial Court (formerly Court of First Instance) at Quezon City is ORDERED
to dismiss Civil Case No. 20415 entitled "Daniel P. Sanchez v. Deputy Sheriff Mariano V. Cachero,
et al.," with prejudice. Costs against private respondents.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

G.R. No. L-25659

October 31, 1969

LUZON SURETY CO., INC., petitioner,

vs.
JOSEFA AGUIRRE DE GARCIA, VICENTE GARCIA and the FOURTH DIVISION OF THE
COURT OF APPEALS, respondents.
Tolentino and Garcia and D. R. Cruz for petitioner.
Rodolfo J. Herman for respondents.
FERNANDO, J.:
The crucial question in this petition for the review of a decision of the Court of Appeals, to be
passed upon for the first time, is whether or not a conjugal partnership, in the absence of any
showing of benefits received, could be held liable on an indemnity agreement executed by the
husband to accommodate a third party in favor of a surety company. The Court of Appeals held
that it could not. Petitioner Luzon Surety Co., Inc., dissatisfied with such a judgment, which was
an affirmance of a lower court decision, would have us reverse. We do not see it that way. The
Court of Appeals adjudicated the matter in accordance with law. We affirm what it did.
As noted in the brief of petitioner Luzon Surety Co., Inc., on October 18, 1960, a suit for
injunction was filed in the Court of First Instance of Negros Occidental against its Provincial
Sheriff by respondents-spouses, Josefa Aguirre de Garcia and Vicente Garcia "to enjoin [such
Sheriff] from selling the sugar allegedly owned by their conjugal partnership, pursuant to a writ
of garnishment issued by virtue of a writ of execution issued in Civil Case No. 3893 of the same
Court of First Instance ... against the respondent Vicente Garcia ... ." 1
There was a stipulation of facts submitted. There is no question as to one Ladislao Chavez, as
principal, and petitioner Luzon Surety Co., Inc., executing a surety bond in favor of the Philippine
National Bank, Victorias Branch, to guaranty a crop loan granted by the latter to Ladislao Chavez
in the sum of P9,000.00. On or about the same date, Vicente Garcia, together with the said
Ladislao Chavez and one Ramon B. Lacson, as guarantors, signed an indemnity agreement
wherein they bound themselves, jointly and severally, to indemnify now petitioner Luzon Surety
Co., Inc. against any and all damages, losses, costs, stamps, taxes, penalties, charges and
expenses of whatsoever kind and nature which the petitioner may at any time sustain or incur in
consequence of having become guarantor upon said bond, to pay interest at the rate of 12% per
annum, computed and compounded quarterly until fully paid; and to pay 15% of the amount
involved in any litigation or other matters growing out of or connected therewith for attorney's
fees.
It was likewise stipulated that on or about April 27, 1956, the Philippine National Bank filed a
complaint before the Court of First Instance of Negros Occidental, docketed as its Civil Case No.
3893, against Ladislao Chavez and Luzon Surety Co., Inc. to recover the amount of P4,577.95, in
interest, attorney's fees, and costs of the suit. On or about August 8, 1957, in turn, a third-party
complaint against Ladislao Chavez, Ramon B. Lacson and Vicente Garcia, based on the indemnity
agreement, was instituted by Luzon Surety Co., Inc.
Then, as set forth by the parties, on September 17, 1958, the lower court rendered a decision
condemning Ladislao Chavez and Luzon Surety Co., Inc., to pay the plaintiff jointly and severally
the amount of P4,577.95 representing the principal and accrued interest of the obligation at the
rate of 6% per annum as of January 6, 1956, with a daily interest of P0.7119 on P4,330.91 from

January 6, 1956, until fully paid, plus the sum of P100.00 as attorney's fees, and to pay the costs.
The same decision likewise ordered the third party defendants, Ladislao Chavez, Vicente Garcia,
and Ramon B. Lacson, to pay Luzon Surety Co., Inc., the total amount to be paid by it to the
plaintiff Philippine National Bank.
On July 30, 1960, pursuant to the aforesaid decision, the Court of First Instance of Negros
Occidental issued a writ of execution against Vicente Garcia for the satisfaction of the claim of
petitioner in the sum of P8,839.97. Thereafter, a writ of garnishment was issued by the Provincial
Sheriff of Negros Occidental dated August 9, 1960, levying and garnishing the sugar quedans of
the now respondent-spouses, the Garcias, from their sugar plantation, registered in the names of
both of them.2 The suit for injunction filed by the Garcia spouses was the result.
As noted, the lower court found in their favor. In its decision of April 30, 1962, it declared that the
garnishment in question was contrary to Article 161 of the Civil Code and granted their petition,
making the writ of preliminary injunction permanent. Luzon Surety, Inc. elevated the matter to
the Court of Appeals, which, as mentioned at the outset, likewise reached the same result. Hence
this petition for review.
We reiterate what was set forth at the opening of this opinion. There is no reason for a reversal of
the judgment. The decision sought to be reviewed is in accordance with law.
As explained in the decision now under review: "It is true that the husband is the administrator of
the conjugal property pursuant to the provisions of Art. 163 of the New Civil Code. However, as
such administrator the only obligations incurred by the husband that are chargeable against the
conjugal property are those incurred in the legitimate pursuit of his career, profession or business
with the honest belief that he is doing right for the benefit of the family. This is not true in the
case at bar for we believe that the husband in acting as guarantor or surety for another in an
indemnity agreement as that involved in this case did not act for the benefit of the conjugal
partnership. Such inference is more emphatic in this case, when no proof is presented that
Vicente Garcia in acting as surety or guarantor received consideration therefor, which may
redound to the benefit of the conjugal partnership." 3
In the decision before us, the principal error assigned is the above holding of the Court of
Appeals that under Article 161 of the Civil Code no liability was incurred by the conjugal
partnership. While fully conscious of the express language of Article 161 of the Civil Code,
petitioner, in its well-written brief submitted by its counsel, would impress on us that in this case
it could not be said that no benefit was received by the conjugal partnership. It sought to lend
some semblance of plausibility to this view thus: "The present case involves a contract of
suretyship entered into by the husband, the respondent Vicente Garcia, in behalf of a third
person. A transaction based on credit through which, by our given definitions, respondent
Vicente Garcia, by acting as guarantor and making good his guaranty, acquires the capacity of
being trusted, adds to his reputation or esteem, enhances his standing as a citizen in the
community in which he lives, and earns the confidence of the business community. He can thus
secure money with which to carry on the purposes of their conjugal partnership." 4
While not entirely, without basis, such an argument does not carry conviction. Its acceptance
would negate the plain meaning of what is expressly provided for in Article 161. In the most
categorical language, a conjugal partnership under that provision is liable only for such "debts
and obligations contracted by the husband for the benefit of the conjugal partnership." There
must be the requisite showing then of some advantage which clearly accrued to the welfare of
the spouses. There is none in this case. Nor could there be, considering that the benefit was

clearly intended for a third party, one Ladislao Chavez. While the husband by thus signing the
indemnity agreement may be said to have added to his reputation or esteem and to have earned
the confidence of the business community, such benefit, even if hypothetically accepted, is too
remote and fanciful to come within the express terms of the provision.
Its language is clear; it does not admit of doubt. No process of interpretation or construction
need be resorted to. It peremptorily calls for application. Where a requirement is made in explicit
and unambiguous terms, no discretion is left to the judiciary. It must see to it that its mandate is
obeyed. So it is in this case. That is how the Court of Appeals acted, and what it did cannot be
impugned for being contrary to law. 5
Moreover, it would negate the plain object of the additional requirement in the present Civil Code
that a debt contracted by the husband to bind a conjugal partnership must redound to its
benefit. That is still another provision indicative of the solicitude and tender regard that the law
manifests for the family as a unit. Its interest is paramount; its welfare uppermost in the minds of
the codifiers and legislators.
This particular codal provision in question rightfully emphasizes the responsibility of the husband
as administrator.6 He is supposed to conserve and, if possible, augment the funds of the conjugal
partnership, not dissipate them. If out of friendship or misplaced generosity on his part the
conjugal partnership would be saddled with financial burden, then the family stands to suffer. No
objection need arise if the obligation thus contracted by him could be shown to be for the benefit
of the wife and the progeny if any there be. That is but fair and just. Certainly, however, to make
a conjugal partnership respond for a liability that should appertain to the husband alone is to
defeat and frustrate the avowed objective of the new Civil Code to show the utmost concern for
the solidarity and well-being of the family as a unit. 7 The husband, therefore, as is wisely thus
made certain, is denied the power to assume unnecessary and unwarranted risks to the financial
stability of the conjugal partnership.
No useful purpose would be served by petitioner assigning as one of the errors the observation
made by the Court of Appeals as to the husband's interest in the conjugal property being merely
inchoate or a mere expectancy in view of the conclusion thus reached as to the absence of any
liability on the part of the conjugal partnership. Nor was it error for the Court of Appeals to refuse
to consider a question raised for the first time on appeal. Now as to the question of jurisdiction of
the lower court to entertain this petition for injunction against the Provincial Sheriff, to which our
attention is invited, neither the Court of Appeals nor the lower court having been asked to pass
upon it. Of course, if raised earlier, it ought to have been seriously inquired into. We feel,
however, that under all the circumstances of the case, substantial justice would be served if
petitioner be held as precluded from now attempting to interpose such a barrier. The conclusion
that thereby laches had intervened is not unreasonable. Such a response on our part can be
predicated on the authoritative holding in Tijam v. Sibonghanoy.8
WHEREFORE, the decision of the Court of Appeals of December 17, 1965, now under review, is
affirmed with costs against petitioner Luzon Surety Co., Inc.
Concepcion, C.J., Dizon, Makalintal, Zaldivar Sanchez, Castro, Teehankee and Barredo, JJ., concur.

G.R. No. L-61464 May 28, 1988

BA FINANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing business
under the name and style of A & L INDUSTRIES), respondents.

GUTIERREZ, JR., J.:

This is a petition for review seeking to set aside the decision of the Court of Appeals which
affirmed the decision of the then Court of First Instance of Manila, dismissing the complaint
instituted by the petitioner and ordering it to pay damages on the basis of the private
respondent's counterclaim.
On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the
amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and as
representative of the A & L Industries. Respondent Yulo presented an alleged special power of
attorney executed by his wife, respondent Lily Yulo, who manages A & L Industries and under
whose name the said business is registered, purportedly authorizing Augusto Yulo to procure the
loan and sign the promissory note. About two months prior to the loan, however, Augusto Yulo
had already left Lily Yulo and their children and had abandoned their conjugal home. When the
obligation became due and demandable, Augusto Yulo failed to pay the same.
On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto and
Lily Yulo on the basis of the promissory note. It also prayed for the issuance of a writ of
attatchment alleging that the said spouses were guilty of fraud in contracting the debt upon
which the action was brought and that the fraud consisted of the spouses' inducing the petitioner
to enter into a contract with them by executing a Deed of Assignment in favor of the petitioner,
assigning all their rights, titles and interests over a construction contract executed by and
between the spouses and A. Soriano Corporation on June 19, 1974 for a consideration of
P615,732.50 when, in truth, the spouses did not have any intention of remitting the proceeds of
the said construction contract to the petitioner because despite the provisions in the Deed of
Assignment that the spouses shall, without compensation or costs, collect and receive in trust for
the petitioner all payments made upon the construction contract and shall remit to the petitioner
all collections therefrom, the said spouses failed and refuse to remit the collections and instead,
misappropriated the proceeds for their own use and benefit, without the knowledge or consent of
the petitioner.
The trial court issued the writ of attachment prayed for thereby enabling the petitioner to attach
the properties of A & L Industries. Apparently not contented with the order, the petitioner filed
another motion for the examination of attachment debtor, alleging that the properties attached
by the sheriff were not sufficient to secure the satisfaction of any judgment that may be
recovered by it in the case. This was likewise granted by the court.
Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusta
Yulo and she are husband and wife, the former had abandoned her and their children five (5)
months before the filing of the complaint; that they were already separated when the promissory
note was executed; that her signature in the special power of attorney was forged because she
had never authorized Augusto Yulo in any capacity to transact any business for and in behalf of A

& L Industries, which is owned by her as a single proprietor, that she never got a single centavo
from the proceeds of the loan mentioned in the promissory note; and that as a result of the
illegal attachment of her properties, which constituted the assets of the A & L Industries, the
latter closed its business and was taken over by the new owner.
After hearing, the trial court rendered judgment dismissing the petitioner's complaint against the
private respondent Lily Yulo and A & L Industries and ordering the petitioner to pay the
respondent Lily Yulo P660,000.00 as actual damages; P500,000.00 as unrealized profits;
P300,000.00 as exemplary damages; P30,000.00 as and for attorney's fees; and to pay the costs.
The petitioner appealed. The Court of Appeals affirmed the trial court's decision except for the
exemplary damages which it reduced from P300,000.00 to P150,000.00 and the attorney's fees
which were reduced from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in holding that the signature of
respondent Lily Yulo in the special power of attorney was forged, the Court of Appeals said:
The crucial issue to be determined is whether or not the signatures of the appellee Lily Yulo in
Exhibits B and B-1 are forged. Atty. Crispin Ordoa, the Notary Public, admitted in open court that
the parties in the subject documents did not sign their signatures in his presence. The same were
already signed by the supposed parties and their supposed witnesses at the time they were
brought to him for ratification. We quote from the records the pertinent testimony of Atty.
Ordoa, thus:
Q. This document marked as Exhibit B-1, when this was presented to you by that common friend,
June Enriquez, it was already typewritten, it was already accomplished, all typewritten.?
A. Yes, sir.
Q And the parties had already affixed their signatures in this document?
A. Yes, sir.
Q. In this document marked as Exhibit B although it appears here that this is an
acknowledgment, you have not stated here that the principal actually acknowledged this
document to be her voluntary act and deed?
A This in one of those things that escaped my attention. Actually I have not gone over the second
page. I believed it was in order I signed it. (TSN pp. 13-14, Hearing of Nov. 26, 1976).
The glaring admission by the Notary Public that he failed to state in the acknowledgment portion
of Exhibit B-1 that the appellee Lily Yulo acknowledged the said document to be her own
voluntary act and deed, is a very strong and commanding circumstance to show that she did not
appear personally before the said Notary Public and did not sign the document.
Additionally, the Notary Public admitted that, while June Enriquez is admittedly a mutual friend of
his and the defendant Augusta Yulo, and who is also an instrumental witness in said Exhibit B-1.,
he could not recognize or tell which of the two signatures appearing therein, was the signature of
this June Enriquez.
Furthermore, as the issue is one of credibility of a witness, the findings and conclusions of the
trial court before whom said witness, Atty. Crispin Ordoa, the Notary Public before whom the
questioned document was supposedly ratified and acknowledged, deserve great respect and are

seldom disturbed on appeal by appellate tribunals, since it is in the best and peculiar advantage
of determining and observing the conduct, demeanor and deportment of a particular witness
while he is testifying in court, an opportunity not enjoyed by the appellate courts who merely
have to rely on the recorded proceedings which transpired in the court below, and the records
are bare of any circumstance of weight, which the trial court had overlooked and which if duly
considered, may radically affect the outcome of the case.
On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her signature in
Exhibit B-1, presented in court a handwriting expert witness in the person of Police Captain Yakal
Giron of the Integrated National Police Training Command, and who is also a Document Examiner
of the same Command's Crime Laboratory at Fort Bonifacio, Metro Manila. His experience as an
examiner of questioned and disputed documents, in our mind, is quite impressive. To qualify him
as a handwriting expert, he declared that he underwent extensive and actual studies and
examination of disputed or questioned document, both at the National Bureau of Investigation
Academy and National Bureau of Investigation Questioned Document Laboratory, respectively,
from July 1964, up to his appointment as Document Examiner in June, 1975, and, to further his
experience along this line, he attended the 297th Annual Conference of the American Society of
Questioned Docurnent Examiners held at Seattle, Washington, in August 1971, as a
representative of the Philippines, and likewise conducted an observation of the present and
modern trends of crime laboratories in the West Coast, U.S.A., in 1971; that he likewise had
conducted actual tests and examination of about 100,000 documents, as requested by the
different courts, administrative, and governmental agencies of the Government, substantial
portions of which relate to actual court cases.
In concluding that the signatures of the appellee Lily Yulo, in the disputed document in question
(Exh. B-1), were all forgeries, and not her genuine signature, the expert witness categorically
recited and specified in open court what he observed to be about twelve (12) glaring and
material significant differences, in his comparison of the signatures appearing in the genuine
specimen signatures of the said appellee and with those appearing in the questioned document
(Exhibit B-1). Indeed, we have likewise seen the supposed notable differences, found in the
standard or genuine signatures of the appellee which were lifted and obtained in the official files
of the government, such as the Bureau of Internal Revenue on her income tax returns, as
compared to the pretended signature of the appellee appearing in Exhibits B, B-1. It is also
noteworthy to mention that the appellant did not even bother to conduct a cross-examination of
the handwriting expert witness, Capt. Giron, neither did the appellant present another
handwriting expert, at least to counter-act or balance the appellee's handwriting expert.
Prescinding from the foregoing facts, we subscribe fully to the lower court's observations that the
signatures of the appellee Lily Yulo in the questioned document (Exh. B-1) were forged. Hence,
we find no factual basis to disagree. (pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily Yulo was forged or even if the
attached properties were her exclusive property, the same can be made answerable to the
obligation because the said properties form part of the conjugal partnership of the spouses Yulo,
the appellate court held that these contentions are without merit because there is strong
preponderant evidence to show that A & L Industries belongs exclusively to respondent Lily Yulo,
namely: a) The Certificate of Registration of A & L Industries, issued by the Bureau of Commerce,
showing that said business is a single proprietorship, and that the registered owner thereof is
only Lily Yulo; b) The Mayor's Permit issued in favor of A & L Industries, by the Caloocan City
Mayor's Office showing compliance by said single proprietorship company with the City

Ordinance governing business establishments; and c) The Special Power of Attorney itself,
assuming but without admitting its due execution, is tangible proof that Augusto Yulo has no
interest whatsoever in the A & L Industries, otherwise, there would have been no necessity for
the Special Power of Attorney if he is a part owner of said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed the findings of the trial court
that there was bad faith on the part of the petitioner as to entitle the private respondent to
damages as shown not only by the fact that the petitioner did not present the Deed of
Assignment or the construction agreement or any evidence whatsoever to support its claim of
fraud on the part of the private respondent and to justify the issuance of a preliminary
attachment, but also by the following findings:
Continuing and elaborating further on the appellant's mala fide actuations in securing the writ of
attachment, the lower court stated as follows:
Plaintiff not satisfied with the instant case where an order for attachment has already been
issued and enforced, on the strength of the same Promissory Note (Exhibit"A"), utilizing the Deed
of Chattel Mortgage (Exhibit "4"), filed a foreclosure proceedings before the Office of the Sheriff
of Caloocan (Exhibit"6") foreclosing the remaining properties found inside the premises formerly
occupied by the A & L Industries. A minute examination of Exhibit "4" will show that the
contracting parties thereto, as appearing in par. 1 thereof, are Augusto Yulo, doing business
under the style of A & L Industries (should be A & L Glass Industries Corporation), as mortgagor
and BA Finance Corporation as mortgagee, thus the enforcement of the Chattel Mortgage against
the property of A & L Industries exclusively owned by Lily T. Yulo appears to be without any
factual or legal basis whatsoever. The chattel mortgage, Exhibit "4" and the Promissory Note,
Exhibit A, are based on one and the same obligation. Plaintiff tried to enforce as it did enforce its
claim into two different modes a single obligation.
Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by virtue of a complaint
she filed with the Court of First Instance of Caloocan, seeking annulment of the Promissory Note,
the very basis of the plaintiff in filing this complaint, immediately after the day it filed a Motion
for the Issuance of an Alias Writ of Preliminary Attachment . . .Yet, inspite of the knowledge and
the filing of this Motion to Suspend Proceedings, the Plaintiff still filed a Motion for the Issuance of
a Writ of Attachment dated February 6, 1976 before this court. To add insult to injury, plaintiff
even filed a Motion for Examination of the Attachment Debtor, although aware that Lily Yulo had
already denied participation in the execution of Exhibits "A" and "B". These incidents and actions
taken by plaintiff, to the thinking of the court, are sufficient to prove and establish the element of
bad faith and malice on the part of plaintiff which may warrant the award of damages in favor of
defendant Lily Yulo. (Ibid., pp. 102-103).<re||an1w>
Indeed, the existence of evident bad faith on the appellant's part in proceeding against the
appellee Lily Yulo in the present case, may likewise be distressed on the fact that its officer Mr.
Abraham Co, did not even bother to demand the production of at least the duplicate original of
the Special Power of Attorney (Exhibit B) and merely contended himself with a mere xerox copy
thereof, neither did he require a more specific authority from the A & L Industries to contract the
loan in question, since from the very content and recitals of the disputed document, no authority,
express or implied, has been delegated or granted to August Yulo to contract a loan, especially
with the appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the petitioner should have
presented evidence to disprove or rebut the private respondent's claim but it remained quiet and

chose not to disturb the testimony and the evidence presented by the private respondent to
prove her claim.
In this petition for certiorari, the petitioner raises three issues. The first issue deals with the
appellate court's affirmance of the trial court's findings that the signature of the private
respondent on the Special Power of Attorney was forged. According to the petitioner, the Court of
Appeals disregarded the direct mandate of Section 23, Rule 132 of the Rules of Court which
states in part that evidence of handwriting by comparison may be made "with writings admitted
or treated as genuine by the party against whom the evidence is offered, or proved to be
genuine to the satisfaction of the judge," and that there is no evidence on record which proves or
tends to prove the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as "standards" for comparison with the
alleged signature of the private respondent in the Special Power of Attorney were those from the
latter's residence certificates in the years 1973, 1974 and 1975, her income tax returns for the
years 1973 and 1975 and from a document on long bond paper dated May 18, 1977. Not only
were the signatures in the foregoing documents admitted by the private respondent as hers but
most of the said documents were used by the private respondent in her transactions with the
government. As was held in the case of Plymouth Saving & Loan Assn. No. 2 v. Kassing (125 NE
488, 494):
We believe the true rule deduced from the authorities to be that the genuineness of a "standard"
writing may be established (1) by the admission of the person sought to be charged with the
disputed writing made at or for the purposes of the trial or by his testimony; (2) by witnesses
who saw the standards written or to whom or in whose hearing the person sought to be charged
acknowledged the writing thereof; (3) by evidence showing that the reputed writer of the
standard has acquiesced in or recognized the same, or that it has been adopted and acted upon
by him his business transactions or other concerns....
Furthermore, the judge found such signatures to be sufficient as standards. In the case of TaylorWharton Iron & Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:
When a writing is offered as a standard of comparison it is for the presiding judge to decide
whether it is the handwriting of the party to be charged. Unless his finding is founded upon error
of law, or upon evidence which is, as matter of law, insufficient to justify the finding, this court
will not revise it upon exceptions." (Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuez v.
Perry, 113 Mass, 274, 276.)
We cannot find any error on the part of the trial judge in using the above documents as
standards and also in giving credence to the expert witness presented by the private respondent
whose testimony the petitioner failed to rebut and whose credibility it likewise failed to impeach.
But more important is the fact that the unrebutted handwriting expert's testimony noted twelve
(12) glaring and material differences in the alleged signature of the private respondent in the
Special Power of Attorney as compared with the specimen signatures, something which the
appellate court also took into account. In Cesar v. Sandiganbayan (134 SCRA 105, 132), we ruled:
Mr. Maniwang pointed to other significant divergences and distinctive characteristics between
the sample signatures and the signatures on the questioned checks in his report which the
court's Presiding Justice kept mentioning during Maniwang's testimony.

In the course of his cross-examination, NBI expert Tabayoyong admitted that he saw the
differences between the exemplars used and the questioned signatures but he dismissed the
differences because he did not consider them fundamental. We rule that significant differences
are more fundamental than a few similarities. A forger always strives to master some similarities.
The second issue raised by the petitioner is that while it is true that A & L Industries is a single
proprietorship and the registered owner thereof is private respondent Lily Yulo, the said
proprietorship was established during the marriage and its assets were also acquired during the
same. Therefore, it is presumed that this property forms part of the conjugal partnership of the
spouses Augusto and Lily Yulo and thus, could be held liable for the obligations contracted by
Augusto Yulo, as administrator of the partnership.
There is no dispute that A & L Industries was established during the marriage of Augusta and Lily
Yulo and therefore the same is presumed conjugal and the fact that it was registered in the name
of only one of the spouses does not destroy its conjugal nature (See Mendoza v. Reyes, 124 SCRA
161, 165). However, for the said property to be held liable, the obligation contracted by the
husband must have redounded to the benefit of the conjugal partnership under Article 161 of the
Civil Code. In the present case, the obligation which the petitioner is seeking to enforce against
the conjugal property managed by the private respondent Lily Yulo was undoubtedly contracted
by Augusto Yulo for his own benefit because at the time he incurred the obligation he had
already abandoned his family and had left their conjugal home. Worse, he made it appear that he
was duly authorized by his wife in behalf of A & L Industries, to procure such loan from the
petitioner. Clearly, to make A & L Industries liable now for the said loan would be unjust and
contrary to the express provision of the Civil Code. As we have ruled in Luzon Surety Co., Inc. v.
De Gracia (30 SCRA 111, 115-117):
As explained in the decision now under review: "It is true that the husband is the administrator of
the conjugal property pursuant to the provisions of Art. 163 of the new Civil Code. However, as
such administrator the only obligations incurred by the husband that are chargeable against the
conjugal property are those incurred in the legitimate pursuit of his career, profession or business
with the honest belief that he is doing right for the benefit of the family. This is not true in the
case at bar for we believe that the husband in acting as guarantor or surety for another in an
indemnity agreement as that involved in this case did not act for the benefit of the conjugal
partnership. Such inference is more emphatic in this case, when no proof is presented that
Vicente Garcia in acting as surety or guarantor received consideration therefore, which may
redound to the benefit of the conjugal partnership.(Ibid, pp. 46-47).
xxx xxx xxx
xxx xxx xxx
In the most categorical language, a conjugal partnership under that provision is liable only for
such "debts and obligations contracted by the husband for the benefit of the conjugal
partnership." There must be the requisite showing then of some advantage which clearly accrued
to the welfare of the spouses. There is none in this case.
xxx xxx xxx
Moreover, it would negate the plain object of the additional requirement in the present Civil Code
that a debt contracted by the husband to bind a conjugal partnership must redound to its
benefit. That is still another provision indicative of the solicitude and tender regard that the law

manifests for the family as a unit. Its interest is paramount; its welfare uppermost in the minds of
the codifiers and legislators.
We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto Yulo
against his conjugal properties with respondent Lily Yulo. Thus, it follows that the writ of
attachment cannot issue against the said properties.
Finally, the third issue assails the award of actual damages according to the petitioner, both the
lower court and the appellate court overlooked the fact that the properties referred to are still
subject to a levy on attachment. They are, therefore, still under custodia legis and thus, the
assailed decision should have included a declaration as to who is entitled to the attached
properties and that assuming arguendo that the attachment was erroneous, the lower court
should have ordered the sheriff to return to the private respondent the attached properties
instead of condemning the petitioner to pay the value thereof by way of actual damages.
In the case of Lazatin v. Twao (2 SCRA 842, 847), we ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59, does not prescribed the remedies available to the
attachment defendant in case of a wrongful attachment, but merely provides an action for
recovery upon the bond, based on the undertaking therein made and not upon the liability
arising from a tortuous act, like the malicious suing out of an attachment. Under the first, where
malice is not essential, the attachment defendant, is entitled to recover only the actual damages
sustained by him by reason of the attachment. Under the second, where the attachment is
maliciously sued out, the damages recoverable may include a compensation for every injury to
his credit, business or feed (Tyler v. Mahoney, 168 NC 237, 84 SE 362; Pittsburg etc. 5 Wakefield,
etc., 135 NC 73, 47 SE 234). ...
The question before us, therefore, is whether the attachment of the properties of A & L Industries
was wrongful so as to entitle the petitioner to actual damages only or whether the said
attachment was made in bad faith and with malice to warrant the award of other kinds of
damages. Moreover, if the private respondent is entitled only to actual damages, was the court
justified in ordering the petitioner to pay for the value of the attached properties instead of
ordering the return of the said properties to the private respondent Yulo ?
Both the trial and appellate courts found that there was bad faith on the part of the petitioner in
securing the writ of attachment. We do not think so. "An attachment may be said to be wrongful
when, for instance, the plaintiff has no cause of action, or that there is no true ground therefore,
or that the plaintiff has a sufficient security other than the property attached, which is tantamout
to saying that the plaintiff is not entitled to attachment because the requirements of entitling
him to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco, Revised Rules of
Court).
Although the petitioner failed to prove the ground relied upon for the issuance of the writ of
attachment, this failure cannot be equated with bad faith or malicious intent. The steps which
were taken by the petitioner to ensure the security of its claim were premised, on the firm belief
that the properties involved could be made answerable for the unpaid obligation due it. There is
no question that a loan in the amount of P591,003.59 was borrowed from the bank.

We, thus, find that the petitioner is liable only for actual damages and not for exemplary
damages and attorney's fees. Respondent Lily Yulo has manifested before this Court that she no
longer desires the return of the attached properties since the said attachment caused her to
close down the business. From that time she has become a mere employee of the new owner of
the premises. She has grave doubts as to the running condition of the attached machineries and
equipments considering that the attachment was effected way back in 1975. She states as a
matter of fact that the petitioner has already caused the sale of the machineries for fear that
they might be destroyed due to prolonged litigation. We, therefore, deem it just and equitable to
allow private respondent Lily Yulo to recover actual damages based on the value of the attached
properties as proven in the trial court, in the amount of P660,000.00. In turn, if there are any
remaining attached properties, they should be permanently released to herein petitioner.
We cannot, however, sustain the award of P500,000.00 representing unrealized profits because
this amount was not proved or justified before the trial court. The basis of the alleged unearned
profits is too speculative and conjectural to show actual damages for a future period. The private
respondent failed to present reports on the average actual profits earned by her business and
other evidence of profitability which are necessary to prove her claim for the said amount (See G.
A. Machineries, Inc. v. Yaptinchay, 126 SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00 actual
damages representing unrealized profits, P150,000.00 for exemplary damages and P20,000.00
for attorney's fees. As stated earlier, the attached properties, should be released in favor of the
petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner is
ordered to pay the private respondent Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND
PESOS (P660,000.00) as actual damages. The remaining properties subject of the attachment are
ordered released in favor of the petitioner.
SO ORDERED.

G.R. No. L-25355

August 28, 1969

THE PEOPLE OF THE PHILIPPINES, plaintiff,

vs.
FROILAN LAGRIMAS, accused,
HEIRS OF PELAGIO CAGRO, heirs-appellants,
MERCEDES AGUIRRE DE LAGRIMAS, movant-appellee.
Socrates G. Desales for heirs-appellants.
Marciano Chitongco for movant-appellee.
FERNANDO, J.:
The Civil Code, under the conditions therein specified, recognizes the liability of the conjugal
partnership for fines and indemnities imposed upon either husband or wife "after the
responsibilities enumerated in article 161 have been covered," in the absence of any separate
property of the offending spouse or its insufficiency. 1 How such an obligation "may be enforced
against the partnership assets" is the question, one of first impression, raised in this appeal from
a lower court order, based on the assumption of the total exemption of the conjugal partnership
from the liability thus incurred, prior to the stage of liquidation. The result was to set aside the
preliminary attachment and thereafter the writ of execution in favor of the heirs of the murdered
victim, appellants before us, the judgment against the accused imposing not only the penalty of
reclusion perpetua but also the indemnification to such heirs having attained the status of
finality. In view of the failure, apparent on the face of the appealed order, to respect what the
Civil Code ordains, we reverse and remand the case for further proceedings.
The brief of appellants, the heirs of Pelagio Cagro, the murdered victim, discloses that on
February 19, 1960 an information was filed against the accused, Froilan Lagrimas, for the above
murder committed on February 15, 1960 in Pambujan, Samar. Thereafter, appellants as such
heirs, filed on February 27, 1960 a motion for the issuance of a writ of preliminary attachment on
the property of the accused, such motion being granted in an order of March 5, 1960. After trial,
the lower court found the accused guilty of the crime charged and sentenced him to suffer the
penalty of reclusion perpetua and to indemnify the appellants as such heirs in the sum of
P6,000.00 plus the additional sum of P10,000.00 in the concept of damages, attorney's fees and
burial expenses. An appeal from the judgment was elevated to this Court by the accused but
thereafter withdrawn, the judgment, therefore, becoming final on October 11, 1962.
A writ of execution to cover the civil indemnity was issued by the lower court upon motion of
appellants. A levy was had on eleven parcels of land in the province declared for tax purposes in
the name of the accused. The sale thereof at public auction was scheduled on January 5, 1965
but on December 29, 1964 the wife of the accused, Mercedes Aguirre de Lagrimas, filed a motion
to quash the writ of attachment as well as the writ of execution with the allegation that the
property levied upon belonged to the conjugal partnership and, therefore, could not be held
liable for the pecuniary indemnity the husband was required to pay. The then judge of the lower
court granted such motion declaring null and void the order of attachment and the writ of
execution, in accordance with Article 161 of the new Civil Code. Another judge of the same lower
court set aside the above order, sustaining the legality of the preliminary attachment as well as
the writ of execution. Thereafter, upon appellee filing a motion for the reconsideration of the
above order giving due course to the writ of execution, a third judge, then presiding over such
court, the Hon. Ignacio Mangosing, revived the original order of March 5, 1960, declaring such
attachment and the writ of execution thereafter issued as null and void.

This order of August 7, 1965, now on appeal, was premised on the following considerations: "It
can be readily seen from the above-quoted provisions of law that only debts contracted by the
husband or the wife before the marriage, and those of fines and indemnities imposed upon them,
may be enforced against the partnership assets after the charges enumerated in article 161
have been covered. So that as long as the obligations mentioned in said article 161 have not
been paid, the assets of the partnership cannot be made to answer for indemnities like the one
being sought to be enforced in the instant case. And, before the obligations enumerated in said
article 161 can be paid, the conjugal partnership properties should first, by necessity, be
liquidated, and liquidation can take place only after the dissolution of the partnership thru the
occurrence of any of the causes mentioned in article 175 of the same Code, one of which is
death of one of the spouses. Since both are still living there cannot be any dissolution,
imprisonment for life of the husband notwithstanding, in the absence of a judicial separation of
properly decreed in accordance with the provisions of article 191 thereof. Moreover, the fines and
indemnities sought to be charged against the ganancial properties of the accused and his wife
are not such debts and obligations contracted by said accused for the benefit of the conjugal
partnership." 2
The conclusion arrived at by Judge Mangosing follows: "We sympathize with the predicament of
the widow and other heirs of the deceased Pelagio Cagro, but the law is clear on the matter. The
indemnities adjudged by the Court in their favor may only be charged against the exclusive
properties of the accused if he has any, or against his share in the partnership assets after
liquidation thereof if any still remains after the payment of all the items enumerated in article
161 of the said Civil Code." 3
Hence, this appeal, the heirs of Pelagio Cagro assigning as sole error the quashing and annulling
of the writs of attachment and execution aforesaid. As stated at the outset, we find the appeal
meritorious.
The applicable Civil Code provision 4 is not lacking in explicitness. Fines and indemnities imposed
upon either husband or wife "may be enforced against the partnership assets after the
responsibilities enumerated in article 161 have been covered, if the spouse who is bound should
have no exclusive property or if it should be insufficient; ... ." It is quite plain, therefore, that the
period during which such a liability may be enforced presupposes that the conjugal partnership is
still existing. The law speaks of "partnership assets." It contemplates that the responsibilities to
which enumerated in Article 161, chargeable against such assets, must be complied with first. It
is thus obvious that the termination of the conjugal partnership is not contemplated as a
prerequisite. Whatever doubt may still remain should be erased by the concluding portion of this
article which provides that "at the time of the liquidation of the partnership such spouse shall be
charged for what has been paid for the purposes above-mentioned."
What other conclusion can there be than that the interpretation placed upon this provision in the
challenged order is at war with the plain terms thereof? It cannot elicit our acceptance. Nor is the
reason for such a codal provision difficult to discern. It is a fundamental postulate of our law that
every person criminally liable for felony is also civilly liable. 5 The accused, Froilan Lagrimas, was,
as noted, found guilty of the crime of murder and sentenced to reclusion perpetua as well as to
pay the indemnification to satisfy the civil liability incumbent upon him. If the appealed order
were to be upheld, he would be in effect exempt therefrom, the heirs of the offended party being
made to suffer still further.

It would follow, therefore, that the Civil Code provision, as thus worded, precisely minimizes the
possibility that such additional liability of an accused would be rendered nugatory. In doing
justice to the heirs of the murdered victim, no injustice is committed against the family of the
offender. It is made a condition under this article of the Civil Code that the responsibilities
enumerated in Article 161, covering primarily the maintenance of the family and the education of
the children of the spouses or the legitimate children of one of them as well as other obligations
of a preferential character, are first satisfied. It is thus apparent that the legal scheme cannot be
susceptible to the charge that for a transgression of the law by either husband or wife, the rest of
the family may be made to bear burdens of an extremely onerous character.
The next question is how practical effect would be given this particular liability of the conjugal
partnership for the payment of fines and indemnities imposed upon either husband or wife? In
the brief for appellants, the heirs of Pelagio Cagro, they seek the opportunity to present evidence
as to how the partnership assets could be made to respond, this on the assumption that the
property levied upon does not belong exclusively to the convicted spouse.
In Lacson v. Diaz, 6 which deals with the satisfaction of the debt contracted by husband or wife
before marriage by the conjugal partnership, likewise included in this particular article, it was
held: "Considering that the enforceability of the personal obligations of the husband or wife,
against the conjugal assets, forms the exception to the general rule, it is incumbent upon the one
who invokes this provision or the creditor to show that the requisites for its applicability are
obtaining."
Without departing from the principle thus announced, we make this further observation.
Considering that the obligations mentioned in Article 161 are peculiarly within the knowledge of
the husband or of the wife whose conjugal partnership is made liable, the proof required of the
beneficiaries of the indemnity should not be of the most exacting kind, ordinary credibility
sufficing. Otherwise, the husband or the wife, as the case may be, representing the conjugal
partnership, may find the temptation to magnify its obligation irresistible so as to defeat the right
of recovery of the family of the offended party. That result is to be avoided. The lower court
should be on the alert, therefore, in the appraisal of whatever evidence may be offered to assure
compliance with this codal provision.
WHEREFORE, the appealed order of August 7, 1965 is set aside and the case remanded to the
court of origin for the reception of evidence in accordance with this opinion. With costs against
appellee Mercedes Aguirre de Lagrimas.
Concepcion, C.J., Dizon, Makalintal, Sanchez, Castro, Capistrano, Teehankee and Barredo, JJ.,
concur.
Reyes, J.B.L. and Zaldivar, JJ., are on leave.

SECURITY BANK and TRUST G.R. No. 143382

COMPANY,
Petitioner, Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.

MAR TIERRA CORPORATION,

WILFRIDO C. MARTINEZ,
MIGUEL J. LACSON and
RICARDO A. LOPA,
Respondents. Promulgated:
November 29, 2006

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

DECISION
CORONA, J.:

May the conjugal partnership be held liable for an indemnity agreement entered into by the
husband to accommodate a third party?

This issue confronts us in this petition for review on certiorari assailing the November 9, 1999
decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 48107.

On May 7, 1980, 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.

On July 2, 1980, the credit line agreement was amended and increased to P14,000,000.
Individual respondents correspondingly executed a new indemnity agreement in favor of the
bank to secure the increased credit line.

On September 25, 1981, respondent corporation availed of its credit line and received the sum
of P9,952,000 which it undertook to pay on or before November 30, 1981. It was able to
pay P4,648,000 for the principal loan and P2,729,195.56 for the interest and other charges.
However, respondent corporation was not able to pay the balance as it suffered business
reversals, eventually ceasing operations in 1984.

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 in
the Regional Trial Court (RTC) of Makati, Branch 66. It was docketed as Civil Case No. 3947.
Subsequently, however, petitioner had the case dismissed with respect to individual
respondents Lacson and Lopa,[2] leaving Martinez as the remaining individual respondent.

On August 10, 1982, the RTC issued a writ of attachment on all real and personal properties of
respondent corporation and individual respondent Martinez. As a consequence, the conjugal
house and lot of the spouses Wilfrido and Josefina Martinez in Barrio Calaanan, Caloocan City
covered by Transfer Certificate of Title (TCT) No. 49158 was levied on.

The RTC rendered its decision[3] on June 20, 1994. It held respondent corporation and individual
respondent Martinez jointly and severally liable to petitioner for P5,304,000 plus 12% interest per
annum and 5% penalty commencing on June 21, 1982 until fully paid, plus P10,000 as attorneys
fees. It, however, 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 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.

Petitioner makes two basic assertions: (1) the RTC and CA erred in finding that respondent
corporation availed of P9,952,000 only from its credit line and not the entireP14,000,000 and (2)
the 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.

We uphold the CA.

Factual findings of the CA, affirming those of the trial court, will not be disturbed on appeal but
must be accorded great weight.[4] These findings are conclusive not only on the parties but on
this Court as well.[5]

The CA affirmed the finding of the RTC that the amount availed of by respondent corporation
from its credit line with petitioner was only P9,952,000. Both courts correctly pointed out that
petitioner itself admitted this amount when it alleged in paragraph seven of its complaint that
respondent corporation borrowed and received the principal sum of P9,952,000.[6] Petitioner was
therefore bound by the factual finding of the appellate and trial courts, as well as by its own
judicial admission, on this particular point.

At any rate, the issue of the amount actually availed of by respondent corporation is factual. It is
not within the ambit of this Courts discretionary power of judicial review under Rule 45 of the
Rules of Court which is concerned solely with questions of law. [7]

We now move on to the principal issue in this case.

Under Article 161(1) of the Civil Code,[8] 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?

We ruled as early as 1969 in Luzon Surety Co., Inc. v. de Garcia [9] that, in acting as a guarantor or
surety for another, the husband does not act for the benefit of the conjugal partnership as the
benefit is clearly intended for a third party.

In Ayala Investment and Development Corporation v. Court of Appeals,[10] we ruled that, if the
husband himself is the principal obligor in the contract, i.e., the direct recipient of the money and
services to be used in or for his own business or profession, the transaction falls within the term

obligations for the benefit of the conjugal partnership. In other words, where the husband
contracts an obligation on behalf of the family business, there is a legal presumption that such
obligation redounds to the benefit of the conjugal partnership. [11]

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. [12] 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. [13] 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. [14]

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.
[15]
The underlying concern of the law is the conservation of the conjugal partnership. [16] 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.

WHEREFORE, the petition is hereby DENIED.

G.R. No. L-60174 February 16, 1983

EDUARDO FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, petitioners,
vs.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON, SALVADOR
ALDON, AND THE HONORABLE COURT OF APPEALS, respondents.
Romulo D. San Juan for petitioner.
Gerundino Castillejo for private respondent.

ABAD SANTOS, J.:

Maximo Aldon married Gimena Almosara in 1936. The spouses bought several pieces of land
sometime between 1948 and 1950. In 1960-62, the lands were divided into three lots, 1370,
1371 and 1415 of the San Jacinto Public Land Subdivision, San Jacinto, Masbate.
In 1951, Gimena Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. Felipe.
The sale was made without the consent of her husband, Maximo.
On April 26, 1976, the heirs of Maximo Aldon, namely his widow Gimena and their children Sofia
and Salvador Aldon, filed a complaint in the Court of First Instance of Masbate against the
Felipes. The complaint which was docketed as Civil Case No. 2372 alleged that the plaintiffs were
the owners of Lots 1370, 1371 and 1415; that they had orally mortgaged the same to the
defendants; and an offer to redeem the mortgage had been refused so they filed the complaint
in order to recover the three parcels of land.
The defendants asserted that they had acquired the lots from the plaintiffs by purchase and
subsequent delivery to them. The trial court sustained the claim of the defendants and rendered
the following judgment:
a. declaring the defendants to be the lawful owners of the property subject of the present
litigation;
b. declaring the complaint in the present action to be without merit and is therefore hereby
ordered dismissed;
c. ordering the plaintiffs to pay to the defendants the amount of P2,000.00 as reasonable
attorney's fees and to pay the costs of the suit.
The plaintiffs appealed the decision to the Court of Appeals which rendered the following
judgment:
PREMISES CONSIDERED, the decision appealed from is hereby REVERSED and SET ASIDE, and a
new one is hereby RENDERED, ordering the defendants-appellees to surrender the lots in
question as well as the plaintiffs'-appellants' muniments of title thereof to said plaintiffsappellants, to make an accounting of the produce derived from the lands including expenses
incurred since 1951, and to solidarity turn over to the plaintiffs-appellants the NET monetary
value of the profits, after deducting the sum of P1,800.00. No attorney's fees nor moral damages
are awarded for lack of any legal justification therefor. No. costs.

The ratio of the judgment is stated in the following paragraphs of the decision penned by Justice
Edgardo L. Paras with the concurrence of Justices Venicio Escolin and Mariano A. Zosa:
One of the principal issues in the case involves the nature of the aforementioned conveyance or
transaction, with appellants claiming the same to be an oral contract of mortgage or antichresis,
the redemption of which could be done anytime upon repayment of the P1,800.00 involved
(incidentally the only thing written about the transaction is the aforementioned receipt re the
P1,800). Upon the other hand, appellees claim that the transaction was one of sale, accordingly,
redemption was improper. The appellees claim that plaintiffs never conveyed the property
because of a loan or mortgage or antichresis and that what really transpired was the execution of
a contract of sale thru a private document designated as a 'Deed of Purchase and Sale' (Exhibit
1), the execution having been made by Gimena Almosara in favor of appellee Hermogena V.
Felipe.
After a study of this case, we have come to the conclusion that the appellants are entitled to
recover the ownership of the lots in question. We so hold because although Exh. 1 concerning the
sale made in 1951 of the disputed lots is, in Our opinion, not a forgery the fact is that the sale
made by Gimena Almosara is invalid, having been executed without the needed consent of her
husband, the lots being conjugal. Appellees' argument that this was an issue not raised in the
pleadings is baseless, considering the fact that the complaint alleges that the parcels 'were
purchased by plaintiff Gimena Almosara and her late husband Maximo Aldon' (the lots having
been purchased during the existence of the marriage, the same are presumed conjugal) and
inferentially, by force of law, could not, be disposed of by a wife without her husband's consent.
The defendants are now the appellants in this petition for review. They invoke several grounds in
seeking the reversal of the decision of the Court of Appeals. One of the grounds is factual in
nature; petitioners claim that "respondent Court of Appeals has found as a fact that the 'Deed of
Purchase and Sale' executed by respondent Gimena Almosara is not a forgery and therefore its
authenticity and due execution is already beyond question." We cannot consider this ground
because as a rule only questions of law are reviewed in proceedings under Rule 45 of the Rules of
Court subject to well-defined exceptions not present in the instant case.
The legal ground which deserves attention is the legal effect of a sale of lands belonging to the
conjugal partnership made by the wife without the consent of the husband.
It is useful at this point to re-state some elementary rules: The husband is the administrator of
the conjugal partnership. (Art. 165, Civil Code.) Subject to certain exceptions, the husband
cannot alienate or encumber any real property of the conjugal partnership without the wife's
consent. (Art. 166, Idem.) And the wife cannot bind the conjugal partnership without the
husband's consent, except in cases provided by law. (Art. 172, Idem.)
In the instant case, Gimena, the wife, sold lands belonging to the conjugal partnership without
the consent of the husband and the sale is not covered by the phrase "except in cases provided
by law." The Court of Appeals described the sale as "invalid" - a term which is imprecise when
used in relation to contracts because the Civil Code uses specific names in designating defective
contracts, namely: rescissible (Arts. 1380 et seq.), voidable(Arts. 1390 et
seq.), unenforceable (Arts. 1403, et seq.), and void or inexistent (Arts. 1409 et seq.)
The sale made by Gimena is certainly a defective contract but of what category? The answer: it
is a voidable contract.

According to Art. 1390 of the Civil Code, among the voidable contracts are "[T]hose where one of
the parties is incapable of giving consent to the contract." (Par. 1.) In the instant case-Gimena
had no capacity to give consent to the contract of sale. The capacity to give consent belonged
not even to the husband alone but to both spouses.
The view that the contract made by Gimena is a voidable contract is supported by the legal
provision that contracts entered by the husband without the consent of the wife when such
consent is required, are annullable at her instance during the marriage and within ten years from
the transaction questioned. (Art. 173, Civil Code.)
Gimena's contract is not rescissible for in such contract all the essential elements are untainted
but Gimena's consent was tainted. Neither can the contract be classified as unenforceable
because it does not fit any of those described in Art. 1403 of the Civil Code. And finally, the
contract cannot be void or inexistent because it is not one of those mentioned in Art. 1409 of the
Civil Code. By process of elimination, it must perforce be a voidable contract.
The voidable contract of Gimena was subject to annulment by her husband only during the
marriage because he was the victim who had an interest in the contract. Gimena, who was the
party responsible for the defect, could not ask for its annulment. Their children could not likewise
seek the annulment of the contract while the marriage subsisted because they merely had an
inchoate right to the lands sold.
The termination of the marriage and the dissolution of the conjugal partnership by the death of
Maximo Aldon did not improve the situation of Gimena. What she could not do during the
marriage, she could not do thereafter.
The case of Sofia and Salvador Aldon is different. After the death of Maximo they acquired the
right to question the defective contract insofar as it deprived them of their hereditary rights in
their father's share in the lands. The father's share is one-half (1/2) of the lands and their share is
two-thirds (2/3) thereof, one-third (1/3) pertaining to the widow.
The petitioners have been in possession of the lands since 1951. It was only in 1976 when the
respondents filed action to recover the lands. In the meantime, Maximo Aldon died.
Two questions come to mind, namely: (1) Have the petitioners acquired the lands by acquisitive
prescription? (2) Is the right of action of Sofia and Salvador Aldon barred by the statute of
limitations?
Anent the first question, We quote with approval the following statement of the Court of Appeals:
We would like to state further that appellees [petitioners herein] could not have acquired
ownership of the lots by prescription in view of what we regard as their bad faith. This bad faith is
revealed by testimony to the effect that defendant-appellee Vicente V. Felipe (son of appellees
Eduardo Felipe and Hermogena V. Felipe) attempted in December 1970 to have Gimena
Almosara sign a ready-made document purporting to self the disputed lots to the appellees. This
actuation clearly indicated that the appellees knew the lots did not still belong to
them, otherwise, why were they interested in a document of sale in their favor? Again why did
Vicente V. Felipe tell Gimena that the purpose of the document was to obtain Gimena's consent
to the construction of an irrigation pump on the lots in question? The only possible reason for
purporting to obtain such consent is that the appellees knew the lots were not theirs. Why was
there an attempted improvement (the irrigation tank) only in 1970? Why was the declaration of

property made only in 1974? Why were no attempts made to obtain the husband's signature,
despite the fact that Gimena and Hermogena were close relatives? An these indicate the bad
faith of the appellees. Now then, even if we were to consider appellees' possession in bad faith
as a possession in the concept of owners, this possession at the earliest started in 1951, hence
the period for extraordinary prescription (30 years) had not yet lapsed when the present action
was instituted on April 26, 1976.
As to the second question, the children's cause of action accrued from the death of their father in
1959 and they had thirty (30) years to institute it (Art. 1141, Civil Code.) They filed action in
1976 which is well within the period.
WHEREFORE, the decision of the Court of Appeals is hereby modified. Judgment is entered
awarding to Sofia and Salvador Aldon their shares of the lands as stated in the body of this
decision; and the petitioners as possessors in bad faith shall make an accounting of the fruits
corresponding to the share aforementioned from 1959 and solidarity pay their value to Sofia and
Salvador Aldon; costs against the petitioners.
SO ORDERED.

G.R. No. 127876 December 17, 1999

ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM,
SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV,
MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS and DEPARTMENT
OF AGRARIAN REFORM ADJUDICATION BOARD,respondents.

PUNO, J.:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the validity
of the acquisition of these haciendas by the government under Republic Act No. 6657, the
Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas,
namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu,
Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer Certificate of
Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234
and 0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT No. 924 and covered
by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in area
and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency of then President Corazon C. Aquino. In
February 1986, President Aquino issued Proclamation No. 3 promulgating a Provisional
Constitution. As head of the provisional government, the President exercised legislative power
"until a legislature is elected and convened under a new Constitution." 1 In the exercise of this
legislative power, the President signed on July 22, 1987, Proclamation No. 131 instituting a
Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative
power from the President. 2 This Congress passed Republic Act No. 6657, the Comprehensive
Agrarian Reform Law (CARL) of 1988. The Act was signed by the President on June 10, 1988 and
took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary
offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and
Banilad were later placed under compulsory acquisition by respondent DAR in accordance with
the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform Officer
(MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner. The
Invitation was addressed to "Jaime Pimentel, Hda. Administrator, Hda. Palico." 3 Therein, the
MARO invited petitioner to a conference on October 6, 1989 at the DAR office in Nasugbu to
discuss the results of the DAR investigation of Hacienda Palico, which was "scheduled for
compulsory acquisition this year under the Comprehensive Agrarian Reform Program." 4

On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation
and ocular inspection of the Hacienda. In the first Report, the MARO found that 270 hectares
under Tax Declaration Nos. 465, 466, 468 and 470 were "flat to undulating (0-8% slope)" and
actually occupied and cultivated by 34 tillers of sugarcane. 5 In the second Report, the MARO
identified as "flat to undulating" approximately 339 hectares under Tax Declaration No. 0234
which also had several actual occupants and tillers of sugarcane; 6 while in the third Report, the
MARO found approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating"
with 33 actual occupants and tillers also of sugarcane. 7
On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by the
MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and Land Bank of the
Philippines (LBP), and by the Provincial Agrarian Reform Officer (PARO). The Report
recommended that 333.0800 hectares of Hacienda Palico be subject to compulsory acquisition at
a value of P6,807,622.20. 8 The following day, October 28, 1989, two (2) more Summary
Investigation Reports were submitted by the same officers and representatives. They
recommended that 270.0876 hectares and 75.3800 hectares be placed under compulsory
acquisition at a compensation of P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then Department Secretary Miriam D. Santiago
sent a "Notice of Acquisition" to petitioner. The Notice was addressed as follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.

10

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to
immediate acquisition and distribution by the government under the CARL; that based on the
DAR's valuation criteria, the government was offering compensation of P3.4 million for 333.0800
hectares; that whether this offer was to be accepted or rejected, petitioner was to inform the
Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of petitioner's
rejection or failure to reply within thirty days, respondent DAR shall conduct summary
administrative proceedings with notice to petitioner to determine just compensation for the land;
that if petitioner accepts respondent DAR's offer, or upon deposit of the compensation with an
accessible bank if it rejects the same, the DAR shall take immediate possession of the land. 11
Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP Land
Valuation Manager three (3) separate Memoranda entitled "Request to Open Trust Account." Each
Memoranda requested that a trust account representing the valuation of three portions of
Hacienda Palico be opened in favor of the petitioner in view of the latter's rejection of its offered
value. 12
Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of
Haciendas Palico and Banilad from agricultural to non-agricultural lands under the provisions of
the CARL. 13 On July 14, 1993, petitioner sent a letter to the DAR Regional Director reiterating its
request for conversion of the two haciendas. 14
Despite petitioner's application for conversion, respondent DAR proceeded with the acquisition of
the two Haciendas. The LBP trust accounts as compensation for Hacienda Palico were replaced
by respondent DAR with cash and LBP bonds. 15 On October 22, 1993, from the mother title of

TCT No. 985 of the Hacienda, respondent DAR registered Certificate of Land Ownership Award
(CLOA) No. 6654. On October 30, 1993, CLOA's were distributed to farmer beneficiaries. 16
Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas, sent a
notice to petitioner addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas

17

The MARO informed Pimentel that Hacienda Banilad was subject to compulsory acquisition under
the CARL; that should petitioner wish to avail of the other schemes such as Voluntary Offer to
Sell or Voluntary Land Transfer, respondent DAR was willing to provide assistance thereto. 18
On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel inviting the
latter to attend a conference on September 21, 1989 at the MARO Office in Nasugbu to discuss
the results of the MARO's investigation over Hacienda Banilad. 19
On September 21, 1989, the same day the conference was held, the MARO submitted two (2)
Reports. In his first Report, he found that approximately 709 hectares of land under Tax
Declaration Nos. 0237 and 0236 were "flat to undulating (0-8% slope)." On this area were
discovered 162 actual occupants and tillers of sugarcane. 20 In the second Report, it was found
that approximately 235 hectares under Tax Declaration No. 0390 were "flat to undulating," on
which were 92 actual occupants and tillers of sugarcane. 21
The results of these Reports were discussed at the conference. Present in the conference were
representatives of the prospective farmer beneficiaries, the BARC, the LBP, and Jaime Pimentel
on behalf of the landowner. 22After the meeting, on the same day, September 21, 1989, a
Summary Investigation Report was submitted jointly by the MARO, representatives of the BARC,
LBP, and the PARO. They recommended that after ocular inspection of the property, 234.6498
hectares under Tax Declaration No. 0390 be subject to compulsory acquisition and distribution by
CLOA. 23 The following day, September 22, 1989, a second Summary Investigation was submitted
by the same officers. They recommended that 737.2590 hectares under Tax Declaration Nos.
0236 and 0237 be likewise placed under compulsory acquisition for distribution. 24
On December 12, 1989, respondent DAR, through the Department Secretary, sent to petitioner
two (2) separate "Notices of Acquisition" over Hacienda Banilad. These Notices were sent on the
same day as the Notice of Acquisition over Hacienda Palico. Unlike the Notice over Hacienda
Palico, however, the Notices over Hacienda Banilad were addressed to:
Roxas y Cia. Limited
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila.

25

Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190 hectares and
P4,428,496.00 for 234.6498 hectares. 26
On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager a
"Request to Open Trust Account" in petitioner's name as compensation for 234.6493 hectares of
Hacienda Banilad. 27 A second "Request to Open Trust Account" was sent on November 18, 1991
over 723.4130 hectares of said Hacienda. 28
On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and P21,234,468.78
in cash and LBP bonds had been earmarked as compensation for petitioner's land in Hacienda
Banilad. 29
On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988 before the
effectivity of the CARL. The Hacienda has a total area of 867.4571 hectares and is covered by
four (4) titles TCT Nos. T-44662, T-44663, T-44664 and T-44665. On January 12, 1989,
respondent DAR, through the Regional Director for Region IV, sent to petitioner two (2) separate
Resolutions accepting petitioner's voluntary offer to sell Hacienda Caylaway, particularly TCT
Nos. T-44664 and T-44663. 30 The Resolutions were addressed to:
Roxas & Company, Inc.
7th Flr. Cacho-Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M

31

On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the LBP
Regional Manager requesting for the valuation of the land under TCT Nos. T-44664 and T44663. 32 On the same day, respondent DAR, through the Regional Director, sent to petitioner a
"Notice of Acquisition" over 241.6777 hectares under TCT No. T-44664 and 533.8180 hectares
under TCT No. T-44663. 33 Like the Resolutions of Acceptance, the Notice of Acquisition was
addressed to petitioner at its office in Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas, sent a letter
to the Secretary of respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang
Bayan of Nasugbu, Batangas allegedly authorized the reclassification of Hacienda Caylaway from
agricultural to non-agricultural. As a result, petitioner informed respondent DAR that it was
applying for conversion of Hacienda Caylaway from agricultural to other
uses. 34
In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a
reclassification of the land would not exempt it from agrarian reform. Respondent Secretary also
denied petitioner's withdrawal of the VOS on the ground that withdrawal could only be based on
specific grounds such as unsuitability of the soil for agriculture, or if the slope of the land is over
18 degrees and that the land is undeveloped. 35
Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, petitioner filed
its application for conversion of both Haciendas Palico and Banilad. 36 On July 14, 1993,

petitioner, through its President, Eduardo Roxas, reiterated its request to withdraw the VOS over
Hacienda Caylaway in light of the following:
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge, Department of Agriculture,
Region 4, 4th Floor, ATI (BA) Bldg., Diliman, Quezon City dated March 1, 1993 stating that the
lands subject of referenced titles "are not feasible and economically sound for further agricultural
development.
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas approving the Zoning
Ordinance reclassifying areas covered by the referenced titles to non-agricultural which was
enacted after extensive consultation with government agencies, including [the Department of
Agrarian Reform], and the requisite public hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas dated March 8, 1993
approving the Zoning Ordinance enacted by the Municipality of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the Municipal Planning &
Development, Coordinator and Deputized Zoning Administrator addressed to Mrs. Alicia P.
Logarta advising that the Municipality of Nasugbu, Batangas has no objection to the conversion
of the lands subject of referenced titles to non-agricultural. 37
On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR
Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by respondent DAR
in the name of several persons. Petitioner alleged that the Municipality of Nasugbu, where the
haciendas are located, had been declared a tourist zone, that the land is not suitable for
agricultural production, and that the Sangguniang Bayan of Nasugbu had reclassified the land to
non-agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the
prejudicial question of whether the property was subject to agrarian reform, hence, this question
should be submitted to the Office of the Secretary of Agrarian Reform for determination. 38
On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It
questioned the expropriation of its properties under the CARL and the denial of due process in
the acquisition of its landholdings.
Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on
November 8, 1993.
Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39 Petitioner moved
for reconsideration but the motion was denied on January 17, 1997 by respondent court. 40
Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S CAUSE OF
ACTION IS PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE
PATENT ILLEGALITY OF THE RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE CAUSED BY SAID
ILLEGAL ACTS, AND THE ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW ALL OF WHICH ARE EXCEPTIONS TO THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S
LANDHOLDINGS ARE SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE AGRARIAN REFORM

LAW, IN VIEW OF THE UNDISPUTED FACT THAT PETITIONER'S LANDHOLDINGS HAVE BEEN
CONVERTED TO NON-AGRICULTURAL USES BY PRESIDENTIAL PROCLAMATION NO. 1520 WHICH
DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST ZONE, AND THE ZONING
ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN PORTIONS OF
PETITIONER'S LANDHOLDINGS AS NON-AGRICULTURAL, BOTH OF WHICH PLACE SAID
LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST ENTITLE
PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT DAR.
C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO DECLARE THE
PROCEEDINGS BEFORE RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS,
CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED THE PROCEDURE FOR THE
ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO GIVE
DUE NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO
BE ACQUIRED.
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RECOGNIZE THAT
PETITIONER WAS BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST
COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE IT
WAS UNCEREMONIOUSLY STRIPPED OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S
TO ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A. 6657. 41
The assigned errors involve three (3) principal issues: (1) whether this Court can take cognizance
of this petition despite petitioner's failure to exhaust administrative remedies; (2) whether the
acquisition proceedings over the three haciendas were valid and in accordance with law; and (3)
assuming the haciendas may be reclassified from agricultural to non-agricultural, whether this
court has the power to rule on this issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that respondent Court of Appeals gravely erred in
finding that petitioner failed to exhaust administrative remedies. As a general rule, before a
party may be allowed to invoke the jurisdiction of the courts of justice, he is expected to have
exhausted all means of administrative redress. This is not absolute, however. There are instances
when judicial action may be resorted to immediately. Among these exceptions are: (1) when the
question raised is purely legal; (2) when the administrative body is in estoppel; (3) when the act
complained of is patently illegal; (4) when there is urgent need for judicial intervention; (5) when
the respondent acted in disregard of due process; (6) when the respondent is a department
secretary whose acts, as an alter ego of the President, bear the implied or assumed approval of
the latter; (7) when irreparable damage will be suffered; (8) when there is no other plain, speedy
and adequate remedy; (9) when strong public interest is involved; (10) when the subject of the
controversy is private land; and (11) in quo warranto proceedings. 42
Petitioner rightly sought immediate redress in the courts. There was a violation of its rights and
to require it to exhaust administrative remedies before the DAR itself was not a plain, speedy and
adequate remedy.
Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer beneficiaries
over portions of petitioner's land without just compensation to petitioner. A Certificate of Land
Ownership Award (CLOA) is evidence of ownership of land by a beneficiary under R.A. 6657, the
Comprehensive Agrarian Reform Law of 1988. 43 Before this may be awarded to a farmer
beneficiary, the land must first be acquired by the State from the landowner and ownership

transferred to the former. The transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner of the corresponding payment or
deposit by the DAR of the compensation with an accessible bank. Until then, title remains with
the landowner. 44 There was no receipt by petitioner of any compensation for any of the lands
acquired by the government.
The kind of compensation to be paid the landowner is also specific. The law provides that the
deposit must be made only in "cash" or "LBP bonds." 45 Respondent DAR's opening of trust
account deposits in petitioner' s name with the Land Bank of the Philippines does not constitute
payment under the law. Trust account deposits are not cash or LBP bonds. The replacement of
the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation; for
essentially, the determination of this compensation was marred by lack of due process. In fact, in
the entire acquisition proceedings, respondent DAR disregarded the basic requirements of
administrative due process. Under these circumstances, the issuance of the CLOA's to farmer
beneficiaries necessitated immediate judicial action on the part of the petitioner.
II. The Validity of the Acquisition Proceedings Over the Haciendas.
Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings
themselves. Before we rule on this matter, however, there is need to lay down the procedure in
the acquisition of private lands under the provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for two
(2) modes of acquisition of private land: compulsory and voluntary. The procedure for the
compulsory acquisition of private lands is set forth in Section 16 of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. For purposes of acquisition of private
lands, the following procedures shall be followed:
a). After having identified the land, the landowners and the beneficiaries, the DAR shall send its
notice to acquire the land to the owners thereof, by personal delivery or registered mail, and
post the same in a conspicuous place in the municipal building and barangay hall of the place
where the property is located. Said notice shall contain the offer of the DAR to pay a
corresponding value in accordance with the valuation set forth in Sections 17, 18, and other
pertinent provisions hereof.
b) Within thirty (30) days from the date of receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.
c) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase
price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor
of the Government and surrenders the Certificate of Title and other muniments of title.
d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land requiring the landowner, the LBP and
other interested parties to submit evidence as to the just compensation for the land, within
fifteen (15) days from receipt of the notice. After the expiration of the above period, the matter is
deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.

e) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR
of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries.
f) Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
In the compulsory acquisition of private lands, the landholding, the landowners and the farmer
beneficiaries must first be identified. After identification, the DAR shall send a Notice of
Acquisition to the landowner, by personal delivery or registered mail, and post it in a conspicuous
place in the municipal building and barangay hall of the place where the property is located.
Within thirty days from receipt of the Notice of Acquisition, the landowner, his administrator or
representative shall inform the DAR of his acceptance or rejection of the offer. If the landowner
accepts, he executes and delivers a deed of transfer in favor of the government and surrenders
the certificate of title. Within thirty days from the execution of the deed of transfer, the Land
Bank of the Philippines (LBP) pays the owner the purchase price. If the landowner rejects the
DAR's offer or fails to make a reply, the DAR conducts summary administrative proceedings to
determine just compensation for the land. The landowner, the LBP representative and other
interested parties may submit evidence on just compensation within fifteen days from notice.
Within thirty days from submission, the DAR shall decide the case and inform the owner of its
decision and the amount of just compensation. Upon receipt by the owner of the corresponding
payment, or, in case of rejection or lack of response from the latter, the DAR shall deposit the
compensation in cash or in LBP bonds with an accessible bank. The DAR shall immediately take
possession of the land and cause the issuance of a transfer certificate of title in the name of the
Republic of the Philippines. The land shall then be redistributed to the farmer beneficiaries. Any
party may question the decision of the DAR in the regular courts for final determination of just
compensation.
The DAR has made compulsory acquisition the priority mode of the land acquisition to hasten the
implementation of the Comprehensive Agrarian Reform Program (CARP). 46 Under Section 16 of
the CARL, the first step in compulsory acquisition is the identification of the land, the landowners
and the beneficiaries. However, the law is silent on how the identification process must be
made. To fill in this gap, the DAR issued on July 26, 1989 Administrative Order No.12, Series or
1989, which set the operating procedure in the identification of such lands. The procedure is as
follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the assistance of the pertinent Barangay Agrarian
Reform Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered under the CARP in his area of
responsibility. The masterlist shall include such information as required under the attached CARP
Masterlist Form which shall include the name of the landowner, landholding area, TCT/OCT
number, and tax declaration number.
2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding
covered under Phase I and II of the CARP except those for which the landowners have already

filed applications to avail of other modes of land acquisition. A case folder shall contain the
following duly accomplished forms:
a) CARP CA Form 1 MARO Investigation Report
b) CARP CA Form 2 Summary Investigation Report of Findings and Evaluation
c) CARP CA Form 3 Applicant's Information Sheet
d) CARP CA Form 4 Beneficiaries Undertaking
e) CARP CA Form 5 Transmittal Report to the PARO
The MARO/BARC shall certify that all information contained in the above-mentioned forms have
been examined and verified by him and that the same are true and correct.
3. Send a Notice of Coverage and a letter of invitation to a conference/meeting to the landowner
covered by the Compulsory Case Acquisition Folder. Invitations to the said conference/meeting
shall also be sent to the prospective farmer-beneficiaries, the BARC representative(s), the Land
Bank of the Philippines (LBP) representative, and other interested parties to discuss the inputs to
the valuation of the property. He shall discuss the MARO/BARC investigation report and solicit
the views, objection, agreements or suggestions of the participants thereon. The landowner shall
also be asked to indicate his retention area. The minutes of the meeting shall be signed by all
participants in the conference and shall form an integral part of the CACF.
4. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO).
B. The PARO shall:
1. Ensure that the individual case folders are forwarded to him by his MAROs.
2. Immediately upon receipt of a case folder, compute the valuation of the land in accordance
with A.O. No. 6, Series of 1988. 47 The valuation worksheet and the related CACF valuation forms
shall be duly certified correct by the PARO and all the personnel who participated in the
accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO through ocular inspection and
verification of the property. This ocular inspection and verification shall be mandatory when the
computed value exceeds = 500,000 per estate.
4. Upon determination of the valuation, forward the case folder, together with the duly
accomplished valuation forms and his recommendations, to the Central Office. The LBP
representative and the MARO concerned shall be furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau of Land Acquisition and Distribution
(BLAD), shall:
1. Within three days from receipt of the case folder from the PARO, review, evaluate and
determine the final land valuation of the property covered by the case folder. A summary review
and evaluation report shall be prepared and duly certified by the BLAD Director and the
personnel directly participating in the review and final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized representative, a Notice of
Acquisition (CARP CA Form 8) for the subject property. Serve the Notice to the landowner

personally or through registered mail within three days from its approval. The Notice shall
include, among others, the area subject of compulsory acquisition, and the amount of just
compensation offered by DAR.
3. Should the landowner accept the DAR's offered value, the BLAD shall prepare and submit to
the Secretary for approval the Order of Acquisition. However, in case of rejection or non-reply,
the DAR Adjudication Board (DARAB) shall conduct a summary administrative hearing to
determine just compensation, in accordance with the procedures provided under Administrative
Order No. 13, Series of 1989. Immediately upon receipt of the DARAB's decision on just
compensation, the BLAD shall prepare and submit to the Secretary for approval the required
Order of Acquisition.
4. Upon the landowner's receipt of payment, in case of acceptance, or upon deposit of payment
in the designated bank, in case of rejection or non-response, the Secretary shall immediately
direct the pertinent Register of Deeds to issue the corresponding Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. Once the property is transferred, the DAR,
through the PARO, shall take possession of the land for redistribution to qualified beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer
(MARO) keep an updated master list of all agricultural lands under the CARP in his area of
responsibility containing all the required information. The MARO prepares a Compulsory
Acquisition Case Folder (CACF) for each title covered by CARP. The MARO then sends the
landowner a "Notice of Coverage" and a "letter of invitation" to a "conference/meeting" over the
land covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries the
representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of the parties. At the meeting,
the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who
shall complete the valuation of the land. Ocular inspection and verification of the property by the
PARO shall be mandatory when the computed value of the estate exceeds P500,000.00. Upon
determination of the valuation, the PARO shall forward all papers together with his
recommendation to the Central Office of the DAR. The DAR Central Office, specifically, the
Bureau of Land Acquisition and Distribution (BLAD), shall review, evaluate and determine the
final land valuation of the property. The BLAD shall prepare, on the signature of the Secretary or
his duly authorized representative, a Notice of Acquisition for the subject property. 48 From this
point, the provisions of Section 16 of R.A. 6657 then apply. 49
For a valid implementation of the CAR program, two notices are required: (1) the Notice of
Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to
DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to the landowner under
Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the
conference, and its actual conduct cannot be understated. They are steps designed to comply
with the requirements of administrative due process. The implementation of the CARL is an
exercise of the State's police power and the power of eminent domain. To the extent that the
CARL prescribes retention limits to the landowners, there is an exercise of police power for the
regulation of private property in accordance with the Constitution. 50 But where, to carry out such

regulation, the owners are deprived of lands they own in excess of the maximum area allowed,
there is also a taking under the power of eminent domain. The taking contemplated is not a mere
limitation of the use of the land. What is required is the surrender of the title to and physical
possession of the said excess and all beneficial rights accruing to the owner in favor of the
farmer beneficiary. 51 The Bill of Rights provides that "[n]o person shall be deprived of life, liberty
or property without due process of law." 52 The CARL was not intended to take away property
without due process of law. 53 The exercise of the power of eminent domain requires that due
process be observed in the taking of private property.
DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was amended
in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of 1993. The
Notice of Coverage and letter of invitation to the conference meeting were expanded and
amplified in said amendments.
DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of Agricultural
Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to R.A. 6657,"
requires that:
B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including supporting documents.
2. Gathers basic ownership documents listed under 1.a or 1.b above and prepares corresponding
VOCF/CACF by landowner/landholding.
3. Notifies/invites the landowner and representatives of the LBP, DENR, BARC and prospective
beneficiaries of the schedule of ocular inspection of the property at least one week in advance.
4. MARO/LAND BANK FIELD OFFICE/BARC
a) Identify the land and landowner, and determine the suitability for agriculture and productivity
of the land and jointly prepare Field Investigation Report (CARP Form No. 2), including the Land
Use Map of the property.
b) Interview applicants and assist them in the preparation of the Application For Potential CARP
Beneficiary (CARP Form No. 3).
c) Screen prospective farmer-beneficiaries and for those found qualified, cause the signing of the
respective Application to Purchase and Farmer's Undertaking (CARP Form No. 4).
d) Complete the Field Investigation Report based on the result of the ocular
inspection/investigation of the property and documents submitted. See to it that Field
Investigation Report is duly accomplished and signed by all concerned.
5. MARO
a) Assists the DENR Survey Party in the conduct of a boundary/ subdivision survey delineating
areas covered by OLT, retention, subject of VOS, CA (by phases, if possible), infrastructures, etc.,
whichever is applicable.
b) Sends Notice of Coverage (CARP Form No. 5) to landowner concerned or his duly authorized
representative inviting him for a conference.

c) Sends Invitation Letter (CARP Form No. 6) for a conference/public hearing to prospective
farmer-beneficiaries, landowner, representatives of BARC, LBP, DENR, DA, NGO's, farmers'
organizations and other interested parties to discuss the following matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/public hearing to be guided by CARP Form No.
7.
e) Forwards the completed VOCF/CACF to the Provincial Agrarian Reform Office (PARO) using
CARP Form No. 8 (Transmittal Memo to PARO).
xxx xxx xxx
DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS) and
Compulsory Acquisition (CA) transactions involving lands enumerated under Section 7 of the
CARL. 54 In both VOS and CA. transactions, the MARO prepares the Voluntary Offer to Sell Case
Folder (VOCF) and the Compulsory Acquisition Case Folder (CACF), as the case may be, over a
particular landholding. The MARO notifies the landowner as well as representatives of the LBP,
BARC and prospective beneficiaries of the date of the ocular inspection of the property at least
one week before the scheduled date and invites them to attend the same. The MARO, LBP or
BARC conducts the ocular inspection and investigation by identifying the land and landowner,
determining the suitability of the land for agriculture and productivity, interviewing and
screening prospective farmer beneficiaries. Based on its investigation, the MARO, LBP or BARC
prepares the Field Investigation Report which shall be signed by all parties concerned. In addition
to the field investigation, a boundary or subdivision survey of the land may also be conducted by
a Survey Party of the Department of Environment and Natural Resources (DENR) to be assisted
by the MARO. 55 This survey shall delineate the areas covered by Operation Land Transfer (OLT),
areas retained by the landowner, areas with infrastructure, and the areas subject to VOS and CA.
After the survey and field investigation, the MARO sends a "Notice of Coverage" to the landowner
or his duly authorized representative inviting him to a conference or public hearing with the
farmer beneficiaries, representatives of the BARC, LBP, DENR, Department of Agriculture (DA),
non-government organizations, farmer's organizations and other interested parties. At the public
hearing, the parties shall discuss the results of the field investigation, issues that may be raised
in relation thereto, inputs to the valuation of the subject landholding, and other comments and
recommendations by all parties concerned. The Minutes of the conference/public hearing shall
form part of the VOCF or CACF which files shall be forwarded by the MARO to the PARO. The
PARO reviews, evaluates and validates the Field Investigation Report and other documents in the
VOCF/CACF. He then forwards the records to the RARO for another review.
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR A.O. No. 1,
Series of 1993 provided, among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/

Agency/Unit Document
(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP
to LO by personal delivery Form No. 2
with proof of service, or
registered mail with return
card, informing him that his
property is now under CARP
coverage and for LO to select
his retention area, if he desires
to avail of his right of retention;
and at the same time invites him
to join the field investigation to
be conducted on his property
which should be scheduled at
least two weeks in advance of
said notice.
A copy of said Notice shall CARP
be posted for at least one Form No. 17
week on the bulletin board of
the municipal and barangay
halls where the property is
located. LGU office concerned
notifies DAR about compliance
with posting requirements thru
return indorsement on CARP

Form No. 17.

6 DARMO Send notice to the LBP, CARP
BARC, DENR representatives Form No. 3
and prospective ARBs of the schedule of the field investigation
to be conducted on the subject
property.
7 DARMO With the participation of CARP
BARC the LO, representatives of Form No. 4
LBP the LBP, BARC, DENR Land Use
DENR and prospective ARBs, Map
Local Office conducts the investigation on
subject property to identify
the landholding, determines
its suitability and productivity;
and jointly prepares the Field
Investigation Report (FIR)
and Land Use Map. However,
the field investigation shall
proceed even if the LO, the
representatives of the DENR and
prospective ARBs are not available
provided, they were given due
notice of the time and date of
investigation to be conducted.
Similarly, if the LBP representative
is not available or could not come
on the scheduled date, the field
investigation shall also be conducted,
after which the duly accomplished

Part I of CARP Form No. 4 shall

be forwarded to the LBP
representative for validation. If he agrees
to the ocular inspection report of DAR,
he signs the FIR (Part I) and
accomplishes Part II thereof.
In the event that there is a
difference or variance between
the findings of the DAR and the
LBP as to the propriety of
covering the land under CARP,
whether in whole or in part, on
the issue of suitability to agriculture,
degree of development or slope,
and on issues affecting idle lands,
the conflict shall be resolved by
a composite team of DAR, LBP,
DENR and DA which shall jointly
conduct further investigation
thereon. The team shall submit its
report of findings which shall be
binding to both DAR and LBP,
pursuant to Joint Memorandum
Circular of the DAR, LBP, DENR
and DA dated 27 January 1992.
8 DARMO Screen prospective ARBs
BARC and causes the signing of CARP
the Application of Purchase Form No. 5
and Farmer's Undertaking

(APFU).
9 DARMO Furnishes a copy of the CARP
duly accomplished FIR to Form No. 4
the landowner by personal
delivery with proof of
service or registered mail
will return card and posts
a copy thereof for at least
one week on the bulletin
board of the municipal
and barangay halls where
the property is located.
LGU office concerned CARP
notifies DAR about Form No. 17
compliance with posting
requirement thru return
endorsement on CARP
Form No. 17.
B. Land Survey
10 DARMO Conducts perimeter or Perimeter
And/or segregation survey or
DENR delineating areas covered Segregation
Local Office by OLT, "uncarpable Survey Plan
areas such as 18% slope
and above, unproductive/
unsuitable to agriculture,
retention, infrastructure.
In case of segregation or
subdivision survey, the

plan shall be approved

by DENR-LMS.
C. Review and Completion
of Documents
11. DARMO Forward VOCF/CACF CARP
to DARPO. Form No. 6
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number of
government agencies involved in the identification and delineation of the land subject to
acquisition. 56 This time, the Notice of Coverage is sent to the landowner before the conduct of
the field investigation and the sending must comply with specific requirements. Representatives
of the DAR Municipal Office (DARMO) must send the Notice of Coverage to the landowner by
"personal delivery with proof of service, or by registered mail with return card," informing him
that his property is under CARP coverage and that if he desires to avail of his right of retention,
he may choose which area he shall retain. The Notice of Coverage shall also invite the landowner
to attend the field investigation to be scheduled at least two weeks from notice. The field
investigation is for the purpose of identifying the landholding and determining its suitability for
agriculture and its productivity. A copy of the Notice of Coverage shall be posted for at least one
week on the bulletin board of the municipal and barangay halls where the property is located.
The date of the field investigation shall also be sent by the DAR Municipal Office to
representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The field
investigation shall be conducted on the date set with the participation of the landowner and the
various representatives. If the landowner and other representatives are absent, the field
investigation shall proceed, provided they were duly notified thereof. Should there be a variance
between the findings of the DAR and the LBP as to whether the land be placed under agrarian
reform, the land's suitability to agriculture, the degree or development of the slope, etc., the
conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly
conduct further investigation. The team's findings shall be binding on both DAR and LBP. After
the field investigation, the DAR Municipal Office shall prepare the Field Investigation Report and
Land Use Map, a copy of which shall be furnished the landowner "by personal delivery with proof
of service or registered mail with return card." Another copy of the Report and Map shall likewise
be posted for at least one week in the municipal or barangay halls where the property is located.
Clearly then, the notice requirements under the CARL are not confined to the Notice of
Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage first laid
down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR A.O. No. 9, Series of
1990 and DAR A.O. No. 1, Series of 1993. This Notice of Coverage does not merely notify the
landowner that his property shall be placed under CARP and that he is entitled to exercise his
retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public
hearing, shall be conducted where he and representatives of the concerned sectors of society
may attend to discuss the results of the field investigation, the land valuation and other pertinent
matters. Under DAR A.O. No. 1, Series of 1993, the Notice of Coverage also informs the
landowner that a field investigation of his landholding shall be conducted where he and the other
representatives may be present.

B. The Compulsory Acquisition of Haciendas Palico and Banilad

In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a letter
of invitation entitled "Invitation to Parties" dated September 29, 1989 to petitioner corporation,
through Jaime Pimentel, the administrator of Hacienda Palico. 57 The invitation was received on
the same day it was sent as indicated by a signature and the date received at the bottom left
corner of said invitation. With regard to Hacienda Banilad, respondent DAR claims that Jaime
Pimentel, administrator also of Hacienda Banilad, was notified and sent an invitation to the
conference. Pimentel actually attended the conference on September 21, 1989 and signed the
Minutes of the meeting on behalf of petitioner corporation. 58 The Minutes was also signed by the
representatives of the BARC, the LBP and farmer beneficiaries. 59 No letter of invitation was sent
or conference meeting held with respect to Hacienda Caylaway because it was subject to a
Voluntary Offer to Sell to respondent DAR. 60
When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to the
various parties the Notice of Coverage and invitation to the conference, DAR A.O. No. 12, Series
of 1989 was already in effect more than a month earlier. The Operating Procedure in DAR
Administrative Order No. 12 does not specify how notices or letters of invitation shall be sent to
the landowner, the representatives of the BARC, the LBP, the farmer beneficiaries and other
interested parties. The procedure in the sending of these notices is important to comply with the
requisites of due process especially when the owner, as in this case, is a juridical entity.
Petitioner is a domestic
corporation, 61 and therefore, has a personality separate and distinct from its shareholders,
officers and employees.
The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by
"personal delivery or registered mail." Whether the landowner be a natural or juridical person to
whose address the Notice may be sent by personal delivery or registered mail, the law does not
distinguish. The DAR Administrative Orders also do not distinguish. In the proceedings before the
DAR, the distinction between natural and juridical persons in the sending of notices may be
found in the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of
pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of
Procedure. Notices and pleadings are served on private domestic corporations or partnerships in
the following manner:
Sec. 6. Service upon Private Domestic Corporation or Partnership. If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors or
partners.
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:
Sec. 13. Service upon private domestic corporation or partnership. If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors.
Summonses, pleadings and notices in cases against a private domestic corporation before the
DARAB and the regular courts are served on the president, manager, secretary, cashier, agent or
any of its directors. These persons are those through whom the private domestic corporation or
partnership is capable of action. 62

Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner
corporation. Is he, as administrator of the two Haciendas, considered an agent of the
corporation?
The purpose of all rules for service of process on a corporation is to make it reasonably certain
that the corporation will receive prompt and proper notice in an action against it. 63 Service must
be made on a representative so integrated with the corporation as to make it a priori supposable
that he will realize his responsibilities and know what he should do with any legal papers served
on him, 64 and bring home to the corporation notice of the filing of the action. 65Petitioner's
evidence does not show the official duties of Jaime Pimentel as administrator of petitioner's
haciendas. The evidence does not indicate whether Pimentel's duties is so integrated with the
corporation that he would immediately realize his responsibilities and know what he should do
with any legal papers served on him. At the time the notices were sent and the preliminary
conference conducted, petitioner's principal place of business was listed in respondent DAR's
records as "Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101
Aguirre St., Makati, Metro Manila."67 Pimentel did not hold office at the principal place of business
of petitioner. Neither did he exercise his functions in Plaza Cervantes, Manila nor in CachoGonzales Bldg., Makati, Metro Manila. He performed his official functions and actually resided in
the haciendas in Nasugbu, Batangas, a place over two hundred kilometers away from Metro
Manila.
Curiously, respondent DAR had information of the address of petitioner's principal place of
business. The Notices of Acquisition over Haciendas Palico and Banilad were addressed to
petitioner at its offices in Manila and Makati. These Notices were sent barely three to four months
after Pimentel was notified of the preliminary conference. 68Why respondent DAR chose to notify
Pimentel instead of the officers of the corporation was not explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices
and letters of invitation were validly served on petitioner through him, there is no showing that
Pimentel himself was duly authorized to attend the conference meeting with the MARO, BARC
and LBP representatives and farmer beneficiaries for purposes of compulsory acquisition of
petitioner's landholdings. Even respondent DAR's evidence does not indicate this authority. On
the contrary, petitioner claims that it had no knowledge of the letter-invitation, hence, could not
have given Pimentel the authority to bind it to whatever matters were discussed or agreed upon
by the parties at the preliminary conference or public hearing. Notably, one year after Pimentel
was informed of the preliminary conference, DAR A.O. No. 9, Series of 1990 was issued and this
required that the Notice of Coverage must be sent "to the landowner concerned or his duly
authorized representative." 69
Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the
areas found actually subject to CARP were not properly identified before they were taken over by
respondent DAR. Respondents insist that the lands were identified because they are all
registered property and the technical description in their respective titles specifies their metes
and bounds. Respondents admit at the same time, however, that not all areas in the haciendas
were placed under the comprehensive agrarian reform program invariably by reason of elevation
or character or use of the land. 70
The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but
only portions thereof. Hacienda Palico has an area of 1,024 hectares and only 688.7576 hectares
were targetted for acquisition. Hacienda Banilad has an area of 1,050 hectares but only 964.0688

hectares were subject to CARP. The haciendas are not entirely agricultural lands. In fact, the
various tax declarations over the haciendas describe the landholdings as "sugarland," and
"forest, sugarland, pasture land, horticulture and woodland." 71
Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that
the land subject to land reform be first identified. The two haciendas in the instant case cover
vast tracts of land. Before Notices of Acquisition were sent to petitioner, however, the exact
areas of the landholdings were not properly segregated and delineated. Upon receipt of this
notice, therefore, petitioner corporation had no idea which portions of its estate were subject to
compulsory acquisition, which portions it could rightfully retain, whether these retained portions
were compact or contiguous, and which portions were excluded from CARP coverage. Even
respondent DAR's evidence does not show that petitioner, through its duly authorized
representative, was notified of any ocular inspection and investigation that was to be conducted
by respondent DAR. Neither is there proof that petitioner was given the opportunity to at least
choose and identify its retention area in those portions to be acquired compulsorily. The right of
retention and how this right is exercised, is guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. . . . .
The right to choose the area to be retained, which shall be compact or contiguous, shall pertain
to the landowner; Provided, however, That in case the area selected for retention by the
landowner is tenanted, the tenant shall have the option to choose whether to remain therein or
be a beneficiary in the same or another agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area, he shall be considered a leaseholder and
shall lose his right to be a beneficiary under this Act. In case the tenant chooses to be a
beneficiary in another agricultural land, he loses his right as a leaseholder to the land retained by
the landowner. The tenant must exercise this option within a period of one (1) year from the time
the landowner manifests his choice of the area for retention.
Under the law, a landowner may retain not more than five hectares out of the total area of his
agricultural land subject to CARP. The right to choose the area to be retained, which shall be
compact or contiguous, pertains to the landowner. If the area chosen for retention is tenanted,
the tenant shall have the option to choose whether to remain on the portion or be a beneficiary
in the same or another agricultural land with similar or comparable features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of a
Voluntary Offer to Sell (VOS). The VOS in the instant case was made on May 6, 1988, 72 before
the effectivity of R.A. 6657 on June 15, 1988. VOS transactions were first governed by DAR
Administrative Order No. 19, series of 1989, 73 and under this order, all VOS filed before June 15,
1988 shall be heard and processed in accordance with the procedure provided for in Executive
Order No. 229, thus:
III. All VOS transactions which are now pending before the DAR and for which no payment has
been made shall be subject to the notice and hearing requirements provided in Administrative
Order No. 12, Series of 1989, dated 26 July 1989, Section II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall be heard and
processed in accordance with the procedure provided for in Executive Order No. 229.

xxx xxx xxx.

Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. The government shall purchase all agricultural lands it deems
productive and suitable to farmer cultivation voluntarily offered for sale to it at a valuation
determined in accordance with Section 6. Such transaction shall be exempt from the payment of
capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the identification of private land as set
forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure
of acquisition in Section 16, R.A. 6657. In other words, the E.O. is silent as to the procedure for
the identification of the land, the notice of coverage and the preliminary conference with the
landowner, representatives of the BARC, the LBP and farmer beneficiaries. Does this mean that
these requirements may be dispensed with regard to VOS filed before June 15, 1988? The answer
is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and
beneficiaries of the land subject to agrarian reform be identified before the notice of acquisition
should be issued. 74 Hacienda Caylaway was voluntarily offered for sale in 1989. The Hacienda
has a total area of 867.4571 hectares and is covered by four (4) titles. In two separate
Resolutions both dated January 12, 1989, respondent DAR, through the Regional Director,
formally accepted the VOS over the two of these four
titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only 648.8544
hectares thereof fell within the coverage of R.A. 6657. 76 Petitioner claims it does not know where
these portions are located.
Respondent DAR, on the other hand, avers that surveys on the land covered by the four titles
were conducted in 1989, and that petitioner, as landowner, was not denied participation therein,
The results of the survey and the land valuation summary report, however, do not indicate
whether notices to attend the same were actually sent to and received by petitioner or its duly
authorized representative. 77 To reiterate, Executive Order No. 229 does not lay down the
operating procedure, much less the notice requirements, before the VOS is accepted by
respondent DAR. Notice to the landowner, however, cannot be dispensed with. It is part of
administrative due process and is an essential requisite to enable the landowner himself to
exercise, at the very least, his right of retention guaranteed under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not subject to agrarian reform because they
have been declared for tourism, not agricultural
purposes. 78 In 1975, then President Marcos issued Proclamation No. 1520 declaring the
municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including the subject
haciendas, were allegedly reclassified as non-agricultural 13 years before the effectivity of R. A.
No. 6657. 79 In 1993, the Regional Director for Region IV of the Department of Agriculture
certified that the haciendas are not feasible and sound for agricultural development. 80 On March
20, 1992, pursuant to Proclamation No. 1520, the Sangguniang Bayan of Nasugbu, Batangas
adopted Resolution No. 19 reclassifying certain areas of Nasugbu as non-agricultural. 81 This
Resolution approved Municipal Ordinance No. 19, Series of 1992, the Revised Zoning Ordinance
of Nasugbu 82 which zoning ordinance was based on a Land Use Plan for Planning Areas for New
Development allegedly prepared by the University of the Philippines. 83 Resolution No. 19 of the

Sangguniang Bayan was approved by the Sangguniang Panlalawigan of Batangas on March 8,

1993. 84
Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991 when it
approved conversion of 1,827 hectares in Nasugbu into a tourist area known as the Batulao
Resort Complex, and 13.52 hectares in Barangay Caylaway as within the potential tourist
belt. 85 Petitioner present evidence before us that these areas are adjacent to the haciendas
subject of this petition, hence, the haciendas should likewise be converted. Petitioner urges this
Court to take cognizance of the conversion proceedings and rule accordingly. 6
We do not agree. Respondent DAR's failure to observe due process in the acquisition of
petitioner's landholdings does not ipso facto give this Court the power to adjudicate over
petitioner's application for conversion of its haciendas from agricultural to non-agricultural. The
agency charged with the mandate of approving or disapproving applications for conversion is the
DAR.
At the time petitioner filed its application for conversion, the Rules of Procedure governing the
processing and approval of applications for land use conversion was the DAR A.O. No. 2, Series of
1990. Under this A.O., the application for conversion is filed with the MARO where the property is
located. The MARO reviews the application and its supporting documents and conducts field
investigation and ocular inspection of the property. The findings of the MARO are subject to
review and evaluation by the Provincial Agrarian Reform Officer (PARO). The PARO may conduct
further field investigation and submit a supplemental report together with his recommendation
to the Regional Agrarian Reform Officer (RARO) who shall review the same. For lands less than
five hectares, the RARO shall approve or disapprove applications for conversion. For lands
exceeding five hectares, the RARO shall evaluate the PARO Report and forward the records and
his report to the Undersecretary for Legal Affairs. Applications over areas exceeding fifty hectares
are approved or disapproved by the Secretary of Agrarian Reform.
The DAR's mandate over applications for conversion was first laid down in Section 4 (j) and
Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and
Memorandum Circular No. 54, Series of 1993 of the Office of the President. The DAR's jurisdiction
over applications for conversion is provided as follows:
A. The Department of Agrarian Reform (DAR) is mandated to "approve or disapprove applications
for conversion, restructuring or readjustment of agricultural lands into non-agricultural uses,"
pursuant to Section 4 (j) of Executive Order No. 129-A, Series of 1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR, exclusive authority to approve or
disapprove applications for conversion of agricultural lands for residential, commercial, industrial
and other land uses.
C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988, likewise empowers the DAR to authorize under certain conditions, the conversion of
agricultural lands.
D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the President, provides
that "action on applications for land use conversion on individual landholdings shall remain as
the responsibility of the DAR, which shall utilize as its primary reference, documents on the
comprehensive land use plans and accompanying ordinances passed upon and approved by the

local government units concerned, together with the National Land Use Policy, pursuant to R.A.
No. 6657 and E.O. No. 129-A. 87
Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990 entitled
"Revised Rules and Regulations Governing Conversion of Private Agricultural Lands and NonAgricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled "Rules of Procedure Governing the
Processing and Approval of Applications for Land Use Conversion." These A.O.'s and other
implementing guidelines, including Presidential issuances and national policies related to land
use conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this recent
issuance, the guiding principle in land use conversion is:
to preserve prime agricultural lands for food production while, at the same time, recognizing the
need of the other sectors of society (housing, industry and commerce) for land, when coinciding
with the objectives of the Comprehensive Agrarian Reform Law to promote social justice,
industrialization and the optimum use of land as a national resource for public welfare. 88
"Land Use" refers to the manner of utilization of land, including its allocation, development and
management. "Land Use Conversion" refers to the act or process of changing the current use of
a piece of agricultural land into some other use as approved by the DAR. 89 The conversion of
agricultural land to uses other than agricultural requires field investigation and conferences with
the occupants of the land. They involve factual findings and highly technical matters within the
special training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with
specificity how the DAR must go about its task. This time, the field investigation is not conducted
by the MARO but by a special task force, known as the Center for Land Use Policy Planning and
Implementation (CLUPPI-DAR Central Office). The procedure is that once an application for
conversion is filed, the CLUPPI prepares the Notice of Posting. The MARO only posts the notice
and thereafter issues a certificate to the fact of posting. The CLUPPI conducts the field
investigation and dialogues with the applicants and the farmer beneficiaries to ascertain the
information necessary for the processing of the application. The Chairman of the CLUPPI
deliberates on the merits of the investigation report and recommends the appropriate action.
This recommendation is transmitted to the Regional Director, thru the Undersecretary, or
Secretary of Agrarian Reform. Applications involving more than fifty hectares are approved or
disapproved by the Secretary. The procedure does not end with the Secretary, however. The
Order provides that the decision of the Secretary may be appealed to the Office of the President
or the Court of Appeals, as the case may be, viz:
Appeal from the decision of the Undersecretary shall be made to the Secretary, and from the
Secretary to the Office of the President or the Court of Appeals as the case may be. The mode of
appeal/motion for reconsideration, and the appeal fee, from Undersecretary to the Office of the
Secretary shall be the same as that of the Regional Director to the Office of the Secretary. 90
Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence. 91Respondent DAR is in a better position to resolve
petitioner's application for conversion, being primarily the agency possessing the necessary
expertise on the matter. The power to determine whether Haciendas Palico, Banilad and
Caylaway are non-agricultural, hence, exempt from the coverage of the CARL lies with the DAR,
not with this Court.
Finally, we stress that the failure of respondent DAR to comply with the requisites of due process
in the acquisition proceedings does not give this Court the power to nullify the CLOA's already

issued to the farmer beneficiaries. To assume the power is to short-circuit the administrative
process, which has yet to run its regular course. Respondent DAR must be given the chance to
correct its procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's
were issued to 177 farmer beneficiaries in 1993. 92 Since then until the present, these farmers
have been cultivating their lands. 93 It goes against the basic precepts of justice, fairness and
equity to deprive these people, through no fault of their own, of the land they till. Anyhow, the
farmer beneficiaries hold the property in trust for the rightful owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over the three
haciendas are nullified for respondent DAR's failure to observe due process therein. In
accordance with the guidelines set forth in this decision and the applicable administrative
procedure, the case is hereby remanded to respondent DAR for proper acquisition proceedings
and determination of petitioner's application for conversion.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Purisima, Buena, Gonzaga-Reyes and De
Leon, Jr., JJ., concur.
Melo, J., please see concurring and dissenting opinion.
Ynares-Santiago, J., concurring and dissenting opinion.
Kapunan, J., I join in the concurring and dissenting opinion of Justice C. Y. Santiago.
Quisumbing, J., I join the in the concurring and dissenting opinion of J. Santiago.
Pardo, J., I join the concurring and dissenting opinion of J. Santiago.
Separate Opinions
MELO, J., concurring and dissenting opinion;
I concur in the ponencia of Justice Ynares-Santiago, broad and exhaustive as it is in its treatment
of the issues. However, I would like to call attention to two or three points which I believe are
deserving of special emphasis.
The apparent incongruity or shortcoming in the petition is DAR's disregard of a law which settled
the non-agricultural nature of the property as early as 1975. Related to this are the inexplicable
contradictions between DAR's own official issuances and its challenged actuations in this
particular case.
Presidential Proclamation No. 1520 has the force and effect of law unless repealed. This law
declared Nasugbu, Batangas as a tourist zone.
Considering the new and pioneering stage of the tourist industry in 1975, it can safely be
assumed that Proclamation 1520 was the result of empirical study and careful determination, not
political or extraneous pressures. It cannot be disregarded by DAR or any other department of
Government.
In Province of Camarines Sur, et al. vs. Court of Appeals, et al. (222 SCRA 173, 182 [1993]), we
ruled that local governments need not obtain the approval of DAR to reclassify lands from
agricultural to non-agricultural use. In the present case, more than the exercise of that power,

the local governments were merely putting into effect a law when they enacted the zoning
ordinances in question.
Any doubts as to the factual correctness of the zoning reclassifications are answered by the
February 2, 1993 certification of the Department of Agriculture that the subject landed estates
are not feasible and economically viable for agriculture, based on the examination of their slope,
terrain, depth, irrigability, fertility, acidity, and erosion considerations.
I agree with the ponencia's rejection of respondent's argument that agriculture is not
incompatible and may be enforced in an area declared by law as a tourist zone. Agriculture may
contribute to the scenic views and variety of countryside profiles but the issue in this case is not
the beauty of ricefields, cornfields, or coconut groves. May land found to be non-agricultural and
declared as a tourist zone by law, be withheld from the owner's efforts to develop it as such?
There are also plots of land within Clark Field and other commercial-industrial zones capable of
cultivation but this does not subject them to compulsory land reform. It is the best use of the
land for tourist purposes, free trade zones, export processing or the function to which it is
dedicated that is the determining factor. Any cultivation is temporary and voluntary.
The other point I wish to emphasize is DAR's failure to follow its own administrative orders and
regulations in this case.
The contradictions between DAR administrative orders and its actions in the present case may be
summarized:
1. DAR Administrative Order No. 6, Series of 1994, subscribes to Department of Justice Opinion
No. 44, Series of 1990 that lands classified as non-agricultural prior to June 15, 1988 when the
CARP Law was passed are exempt from its coverage. By what right can DAR now ignore its own
Guidelines in this case of land declared as forming a tourism zone since 1975?
2. DAR Order dated January 22, 1991 granted the conversion of the adjacent and contiguous
property of Group Developers and Financiers, Inc. (GDFI) into the Batulao Tourist Resort. Why
should DAR have a contradictory stance in the adjoining property of Roxas and Co., Inc. found to
be similar in nature and declared as such?
3. DAR Exemption Order, Case No. H-9999-050-97 dated May 17, 1999 only recently exempted
13.5 hectares of petitioner's property also found in Caylaway together, and similarly situated,
with the bigger parcel (Hacienda Caylaway) subject of this petition from CARL coverage. To that
extent, it admits that its earlier blanket objections are unfounded.
4. DAR Administrative Order No. 3, Series of 1996 identifies the land outside of CARP coverage
as:
(a) Land found by DAR as no longer suitable for agriculture and which cannot be given
appropriate valuation by the Land Bank;
(b) Land where DAR has already issued a conversion order;
(c) Land determined as exempt under DOJ Opinions Nos. 44 and 181; or
(d) Land declared for non-agricultural use by Presidential Proclamation.
It is readily apparent that the land in this case falls under all the above categories except the
second one. DAR is acting contrary to its own rules and regulations.

I should add that DAR has affirmed in a Rejoinder (August 20, 1999) the issuance and effectivity
of the above administrative orders.
DAR Administrative Order No. 3, Series of 1996, Paragraph 2 of Part II, Part III and Part IV outlines
the procedure for reconveyance of land where CLOAs have been improperly issued. The
procedure is administrative, detailed, simple, and speedy. Reconveyance is implemented by DAR
which treats the procedure as "enshrined . . . in Section 50 of Republic Act No. 6657"
(Respondent's Rejoinder). Administrative Order No. 3, Series of 1996 shows there are no
impediments to administrative or judicial cancellations of CLOA's improperly issued over exempt
property. Petitioner further submits, and this respondent does not refute, that 25 CLOAs covering
3,338 hectares of land owned by the Manila Southcoast Development Corporation also found in
Nasugbu, Batangas, have been cancelled on similar grounds as those in the case at bar.
The CLOAs in the instant case were issued over land declared as non-agricultural by a
presidential proclamation and confirmed as such by actions of the Department of Agriculture and
the local government units concerned. The CLOAs were issued over adjoining lands similarly
situated and of like nature as those declared by DAR as exempt from CARP coverage. The CLOAs
were surprisingly issued over property which were the subject of pending cases still undecided
by DAR. There should be no question over the CLOAs having been improperly issued, for which
reason, their cancellation is warranted.

YNARES-SANTIAGO, J., concurring and dissenting opinion;

I concur in the basic premises of the majority opinion. However, I dissent in its final conclusions
and the dispositive portion.
With all due respect, the majority opinion centers on procedure but unfortunately ignores the
substantive merits which this procedure should unavoidably sustain.
The assailed decision of the Court of Appeals had only one basic reason for its denial of the
petition, i.e., the application of the doctrine of non-exhaustion of administrative remedies. This
Court's majority ponencia correctly reverses the Court of Appeals on this issue.
The ponencia now states that the issuance of CLOA's to farmer beneficiaries deprived petitioner
Roxas & Co. of its property without just compensation. It rules that the acts of the Department of
Agrarian Reform are patently illegal. It concludes that petitioner's rights were violated, and thus
to require it to exhaust administrative remedies before DAR was not a plain, speedy, and
adequate remedy. Correctly, petitioner sought immediate redress from the Court of Appeals to
this Court.
However, I respectfully dissent from the judgment which remands the case to the DAR. If the acts
of DAR are patently illegal and the rights of Roxas & Co. violated, the wrong decisions of DAR
should be reversed and set aside. It follows that the fruits of the wrongful acts, in this case the
illegally issued CLOAs, must be declared null and void.
Petitioner Roxas & Co. Inc. is the registered owner of three (3) haciendas located in Nasugbu,
Batangas, namely: Hacienda Palico comprising of an area of 1,024 hectares more or less, covered
by Transfer Certificate of Title No. 985 (Petition, Annex "G"; Rollo, p. 203); Hacienda Banilad
comprising an area of 1,050 hectares and covered by TCT No. 924 (Petition, Annex "I"; Rollo, p.
205); and Hacienda Caylaway comprising an area of 867.4571 hectares and covered by TCT Nos.

T-44655 (Petition, Annex "O"; Rollo, p. 216), T-44662 (Petition, Annex "P";Rollo, p. 217), T-44663
(Petition, Annex "Q"; Rollo, p. 210) and T-44664 (Petition, Annex "R"; Rollo, p. 221).
Sometime in 1992 and 1993, petitioner filed applications for conversion with DAR. Instead of
either denying or approving the applications, DAR ignored and sat on them for seven (7) years. In
the meantime and in acts of deceptive lip-service, DAR excluded some small and scattered lots in
Palico and Caylaway from CARP coverage. The majority of the properties were parceled out to
alleged farmer-beneficiaries, one at a time, even as petitioner's applications were pending and
unacted upon.
The majority ponencia cites Section 16 of Republic Act No. 6657 on the procedure for acquisition
of private lands.
The ponencia cites the detailed procedures found in DAR Administrative Order No. 12, Series of
1989 for the identification of the land to be acquired. DAR did not follow its own prescribed
procedures. There was no valid issuance of a Notice of Coverage and a Notice of Acquisition.
The procedure on the evaluation and determination of land valuation, the duties of the Municipal
Agrarian Reform Officer (MARO), the Barangay Agrarian Reform Committee (BARC), Provincial
Agrarian Reform Officer (PARO) and the Bureau of Land Acquisition and Distribution (BLAD), the
documentation and reports on the step-by-step process, the screening of prospective Agrarian
Reform Beneficiaries (ARBs), the land survey and segregation survey plan, and other mandatory
procedures were not followed. The landowner was not properly informed of anything going on.
Equally important, there was no payment of just compensation. I agree with the ponencia that
due process was not observed in the taking of petitioner's properties. Since the DAR did not
validly acquire ownership over the lands, there was no acquired property to validly convey to any
beneficiary. The CLOAs were null and void from the start.
Petitioner states that the notices of acquisition were sent by respondents by ordinary mail only,
thereby disregarding the procedural requirement that notices be served personally or by
registered mail. This is not disputed by respondents, but they allege that petitioner changed its
address without notifying the DAR. Notably, the procedure prescribed speaks of only two modes
of service of notices of acquisition personal service and service by registered mail. The noninclusion of other modes of service can only mean that the legislature intentionally omitted
them. In other words, service of a notice of acquisition other than personally or by registered
mail is not valid. Casus omissus pro omisso habendus est. The reason is obvious. Personal
service and service by registered mail are methods that ensure the receipt by the addressee,
whereas service by ordinary mail affords no reliable proof of receipt.
Since it governs the extraordinary method of expropriating private property, the CARL should be
strictly construed. Consequently, faithful compliance with its provisions, especially those which
relate to the procedure for acquisition of expropriated lands, should be observed. Therefore, the
service by respondent DAR of the notices of acquisition to petitioner by ordinary mail, not being
in conformity with the mandate of R.A. 6657, is invalid and ineffective.
With more reason, the compulsory acquisition of portions of Hacienda Palico, for which no notices
of acquisition were issued by the DAR, should be declared invalid.
The entire ponencia, save for the last six (6) pages, deals with the mandatory procedures
promulgated by law and DAR and how they have not been complied with. There can be no

debate over the procedures and their violation. However, I respectfully dissent in the conclusions
reached in the last six pages. Inspite of all the violations, the deprivation of petitioner's rights,
the non-payment of just compensation, and the consequent nullity of the CLOAs, the Court is
remanding the case to the DAR for it to act on the petitioner's pending applications for
conversion which have been unacted upon for seven (7) years.
Petitioner had applications for conversion pending with DAR. Instead of deciding them one way or
the other, DAR sat on the applications for seven (7) years. At that same time it rendered the
applications inutile by distributing CLOAs to alleged tenants. This action is even worse than a
denial of the applications because DAR had effectively denied the application against the
applicant without rendering a formal decision. This kind of action preempted any other kind of
decision except denial. Formal denial was even unnecessary. In the case of Hacienda Palico, the
application was in fact denied on November 8, 1993.
There are indisputable and established factors which call for a more definite and clearer
judgment.
The basic issue in this case is whether or not the disputed property is agricultural in nature and
covered by CARP. That petitioner's lands are non-agricultural in character is clearly shown by the
evidence presented by petitioner, all of which were not disputed by respondents. The disputed
property is definitely not subject to CARP.
The nature of the land as non-agricultural has been resolved by the agencies with primary
jurisdiction and competence to decide the issue, namely (1) a Presidential Proclamation in
1975; (2) Certifications from the Department of Agriculture; (3) a Zoning Ordinance of the
Municipality of Nasugbu, approved by the Province of Batangas; and (4) by clear inference and
admissions, Administrative Orders and Guidelines promulgated by DAR itself.
The records show that on November 20, 1975 even before the enactment of the CARP law, the
Municipality of Nasugbu, Batangas was declared a "tourist zone" in the exercise of lawmaking
power by then President Ferdinand E. Marcos under Proclamation No. 1520 (Rollo, pp. 122-123).
This Presidential Proclamation is indubitably part of the law of the land.
On 20 March 1992 the Sangguniang Bayan of Nasugbu promulgated its Resolution No. 19, a
zonification ordinance (Rollo, pp. 124-200), pursuant to its powers under Republic Act No.
7160, i.e., the Local Government Code of 1991. The municipal ordinance was approved by the
Sangguniang Panlalawigan of Batangas (Rollo, p. 201). Under this enactment, portions of the
petitioner's properties within the municipality were re-zonified as intended and appropriate for
non-agricultural uses. These two issuances, together with Proclamation 1520, should be sufficient
to determine the nature of the land as non-agricultural. But there is more.
The records also contain a certification dated March 1, 1993 from the Director of Region IV of the
Department of Agriculture that the disputed lands are no longer economically feasible and sound
for agricultural purposes (Rollo, p. 213).
DAR itself impliedly accepted and determined that the municipality of Nasugbu is nonagricultural when it affirmed the force and effect of Presidential Proclamation 1520. In an Order
dated January 22, 1991, DAR granted the conversion of the adjoining and contiguous
landholdings owned by Group Developer and Financiers, Inc. in Nasugbu pursuant to the
Presidential Proclamation. The property alongside the disputed properties is now known as
"Batulao Resort Complex". As will be shown later, the conversion of various other properties in

Nasugbu has been ordered by DAR, including a property disputed in this petition, Hacienda
Caylaway.
Inspite of all the above, the Court of Appeals concluded that the lands comprising petitioner's
haciendas are agricultural, citing, among other things, petitioner's acts of voluntarily offering
Hacienda Caylaway for sale and applying for conversion its lands from agricultural to nonagricultural.
Respondents, on the other hand, did not only ignore the administrative and executive decisions.
It also contended that the subject land should be deemed agricultural because it is neither
residential, commercial, industrial or timber. The character of a parcel of land, however, is not
determined merely by a process of elimination. The actual use which the land is capable of
should be the primordial factor.
RA 6657 explicitly limits its coverage thus:
The Comprehensive Agrarian Reform Law of 1998 shall cover, regardless of tenurial arrangement
and commodity produced, all public and private agricultural lands as provided in Proclamation
No. 131 and Executive Order No. 229, including other lands of the public domain suitable for
agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform
Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture.
No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account, ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress in
the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for a agriculture regardless of the agricultural
products raised or that can be raised thereon." (RA 6657, Sec. 4; emphasis provided)
In Luz Farms v. Secretary of the Department of Agrarian Reform and Natalia Realty,
Inc. v. Department of Agrarian Reform, this Court had occasion to rule that agricultural lands are
only those which are arable and suitable.
It is at once noticeable that the common factor that classifies land use as agricultural, whether it
be public or private land, is its suitability for agriculture. In this connection, RA 6657 defines
"agriculture" as follows:
Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil,
planting of crops, growing of fruit trees, raising of livestock, poultry or fish, including the
harvesting of such farm products, and other farm activities, and practices performed by a farmer
in conjunction with such farming operations done by persons whether natural or juridical. (RA
6657, sec. 3[b])
In the case at bar, petitioner has presented certifications issued by the Department of Agriculture
to the effect that Haciendas Palico, Banilad and Caylaway are not feasible and economically

viable for agricultural development due to marginal productivity of the soil, based on an
examination of their slope, terrain, depth, irrigability, fertility, acidity, and erosion factors
(Petition, Annex "L", Rollo, p. 213; Annex "U", Rollo, p. 228). This finding should be accorded
respect considering that it came from competent authority, said Department being the agency
possessed with the necessary expertise to determine suitability of lands to agriculture. The DAR
Order dated January 22, 1991 issued by respondent itself stated that the adjacent land now
known as the Batulao Resort Complex is hilly, mountainous, and with long and narrow ridges and
deep gorges. No permanent sites are planted. Cultivation is by kaingin method. This confirms the
findings of the Department of Agriculture.
Parenthetically, the foregoing finding of the Department of Agriculture also explains the validity
of the reclassification of petitioner's lands by the Sangguniang Bayan of Nasugbu, Batangas,
pursuant to Section 20 of the Local Government Code of 1991. It shows that the condition
imposed by respondent Secretary of Agrarian Reform on petitioner for withdrawing its voluntary
offer to sell Hacienda Caylaway, i.e., that the soil be unsuitable for agriculture, has been
adequately met. In fact, the DAR in its Order in Case No. A-9999-050-97, involving a piece of land
also owned by petitioner and likewise located in Caylaway, exempted it from the coverage of
CARL (Order dated May 17, 1999; Annex "D" of Petitioner's Manifestation), on these grounds.
Furthermore, and perhaps more importantly, the subject lands are within an area declared in
1975 by Presidential Proclamation No. 1520 to be part of a tourist zone. This determination was
made when the tourism prospects of the area were still for the future. The studies which led to
the land classification were relatively freer from pressures and, therefore, more objective and
open-minded. Respondent, however, contends that agriculture is not incompatible with the lands'
being part of a tourist zone since "agricultural production, by itself, is a natural asset and, if
properly set, can command tremendous aesthetic value in the form of scenic views and variety
of countryside profiles." (Comment, Rollo, 579).
The contention is untenable. Tourist attractions are not limited to scenic landscapes and lush
greeneries. Verily, tourism is enhanced by structures and facilities such as hotels, resorts, rest
houses, sports clubs and golf courses, all of which bind the land and render it unavailable for
cultivation. As aptly described by petitioner:
The development of resorts, golf courses, and commercial centers is inconsistent with
agricultural development. True, there can be limited agricultural production within the context of
tourism development. However, such small scale farming activities will be dictated by, and
subordinate to the needs or tourism development. In fact, agricultural use of land within Nasugbu
may cease entirely if deemed necessary by the Department of Tourism (Reply, Rollo, p. 400).
The lands subject hereof, therefore, are non-agricultural. Hence, the voluntary offer to sell
Hacienda Caylaway should not be deemed an admission that the land is agricultural. Rather, the
offer was made by petitioner in good faith, believing at the time that the land could still be
developed for agricultural production. Notably, the offer to sell was made as early as May 6,
1988, before the soil thereon was found by the Department of Agriculture to be unsuitable for
agricultural development (the Certifications were issued on 2 February 1993 and 1 March 1993).
Petitioner's withdrawal of its voluntary offer to sell, therefore, was not borne out of a whimsical or
capricious change of heart. Quite simply, the land turned out to be outside of the coverage of the
CARL, which by express provision of RA 6657, Section 4, affects only public and private
agricultural lands. As earlier stated, only on May 17, 1999, DAR Secretary Horacio Morales, Jr.
approved the application for a lot in Caylaway, also owned by petitioner, and confirmed the

seven (7) documentary evidences proving the Caylaway area to be non-agricultural (DAR Order
dated 17 May 1999, in Case No. A-9999-050-97, Annex "D" Manifestation).
The DAR itself has issued administrative circulars governing lands which are outside of CARP and
may not be subjected to land reform. Administrative Order No. 3, Series of 1996 declares in its
policy statement what landholdings are outside the coverage of CARP. The AO is explicit in
providing that such non-covered properties shall be reconveyed to the original transferors or
owners.
These non-covered lands are:
a. Land, or portions thereof, found to be no longer suitable for agriculture and, therefore, could
not be given appropriate valuation by the Land Bank of the Philippines (LBP);
b. Those were a Conversion Order has already been issued by the DAR allowing the use of the
landholding other than for agricultural purposes in accordance with Section 65 of R.A. No. 6657
and Administrative Order No. 12, Series of 1994;
c. Property determined to be exempted from CARP coverage pursuant to Department of Justice
Opinion Nos. 44 and 181; or
d. Where a Presidential Proclamation has been issued declaring the subject property for certain
uses other than agricultural. (Annex "F", Manifestation dated July 23, 1999)
The properties subject of this Petition are covered by the first, third, and fourth categories of the
Administrative Order. The DAR has disregarded its own issuances which implement the law.
To make the picture clearer, I would like to summarize the law, regulations, ordinances, and
official acts which show beyond question that the disputed property is non-agricultural, namely:
(a) The Law. Proclamation 1520 dated November 20, 1975 is part of the law of the land. It
declares the area in and around Nasugbu, Batangas, as a Tourist Zone. It has not been repealed,
and has in fact been used by DAR to justify conversion of other contiguous and nearby properties
of other parties.
(b) Ordinances of Local Governments. Zoning ordinance of the Sangguniang Bayan of Nasugbu,
affirmed by the Sangguniang Panlalawigan of Batangas, expressly defines the property as tourist,
not agricultural. The power to classify its territory is given by law to the local governments.
(c) Certification of the Department of Agriculture that the property is not suitable and viable for
agriculture. The factual nature of the land, its marginal productivity and non-economic feasibility
for cultivation, are described in detail.
(d) Acts of DAR itself which approved conversion of contiguous or adjacent land into the Batulao
Resorts Complex. DAR described at length the non-agricultural nature of Batulao and of portion
of the disputed property, particularly Hacienda Caylaway.
(e) DAR Circulars and Regulations. DAR Administrative Order No. 6, Series of 1994 subscribes to
the Department of Justice opinion that the lands classified as non-agricultural before the CARP
Law, June 15, 1988, are exempt from CARP. DAR Order dated January 22, 1991 led to the Batulao
Tourist Area. DAR Order in Case No. H-9999-050-97, May 17, 1999, exempted 13.5 hectares of
Caylaway, similarly situated and of the same nature as Batulao, from coverage. DAR

Administrative Order No. 3, Series of 1996, if followed, would clearly exclude subject property
from coverage.
As earlier shown, DAR has, in this case, violated its own circulars, rules and regulations.
In addition to the DAR circulars and orders which DAR itself has not observed, the petitioner has
submitted a municipal map of Nasugbu, Batangas (Annex "E", Manifestation dated July 23, 1999).
The geographical location of Palico, Banilad, and Caylaway in relation to the GDFI property, now
Batulao Tourist Resort, shows that the properties subject of this case are equally, if not more so,
appropriate for conversion as the GDFI resort.
Petitioner's application for the conversion of its lands from agricultural to non-agricultural was
meant to stop the DAR from proceeding with the compulsory acquisition of the lands and to seek
a clear and authoritative declaration that said lands are outside of the coverage of the CARL and
can not be subjected to agrarian reform.
Petitioner assails respondent's refusal to convert its lands to non-agricultural use and to
recognize Presidential Proclamation No. 1520, stating that respondent DAR has not been
consistent in its treatment of applications of this nature. It points out that in the other case
involving adjoining lands in Nasugbu, Batangas, respondent DAR ordered the conversion of the
lands upon application of Group Developers and Financiers, Inc. Respondent DAR, in that case,
issued an Order dated January 22, 1991 denying the motion for reconsideration filed by the
farmers thereon and finding that:
In fine, on November 27, 1975, or before the movants filed their instant motion for
reconsideration, then President Ferdinand E. Marcos issued Proclamation No. 1520, declaring the
municipalities of Maragondon and Ternate in the province of Cavite and the municipality of
Nasugbu in the province of Batangas as tourist zone. Precisely, the landholdings in question are
included in such proclamation. Up to now, this office is not aware that said issuance has been
repealed or amended (Petition, Annex "W"; Rollo, p. 238).
The DAR Orders submitted by petitioner, and admitted by DAR in its Rejoinder (Rejoinder of DAR
dated August 20, 1999), show that DAR has been inconsistent to the extent of being arbitrary.
Apart from the DAR Orders approving the conversion of the adjoining property now called
Batulao Resort Complex and the DAR Order declaring parcels of the Caylaway property as not
covered by CARL, a major Administrative Order of DAR may also be mentioned.
The Department of Justice in DOJ Opinion No. 44 dated March 16, 1990 (Annex "A" of Petitioner's
Manifestation) stated that DAR was given authority to approve land conversions only after June
15, 1988 when RA 6657, the CARP Law, became effective. Following the DOJ Opinion, DAR issued
its AO No. 06, Series of 1994 providing for the Guidelines on Exemption Orders (Annex "B", Id.).
The DAR Guidelines state that lands already classified as non-agricultural before the enactment
of CARL are exempt from its coverage. Significantly, the disputed properties in this case were
classified as tourist zone by no less than a Presidential Proclamation as early as 1975, long
before 1988.
The above, petitioner maintains, constitute unequal protection of the laws. Indeed, the
Constitution guarantees that "(n)o person shall be deprived of life, liberty or property without
due process of law, nor shall any person be denied the equal protection of the laws"
(Constitution, Art. III, Sec. 1). Respondent DAR, therefore, has no alternative but to abide by the

declaration in Presidential Proclamation 1520, just as it did in the case of Group Developers and
Financiers, Inc., and to treat petitioners' properties in the same way it did the lands of Group
Developers, i.e., as part of a tourist zone not suitable for agriculture.
On the issue of non-payment of just compensation which results in a taking of property in
violation of the Constitution, petitioner argues that the opening of a trust account in its favor did
not operate as payment of the compensation within the meaning of Section 16 (e) of RA 6657.
In Land Bank of the Philippines v. Court of Appeals (249 SCRA 149, at 157 [1995]), this Court
struck down as null and void DAR Administrative Circular No. 9, Series of 1990, which provides
for the opening of trust accounts in lieu of the deposit in cash or in bonds contemplated in
Section 16 (e) of RA 6657.
It is very explicit therefrom (Section 16 [e]) that the deposit must be made only in "cash" or in
"LBP bonds." Nowhere does it appear nor can it be inferred that the deposit can be made in any
other form. If it were the intention to include a "trust account" among the valid modes of deposit,
that should have been made express, or at least, qualifying words ought to have appeared from
which it can be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in
Section 16(e) of RA 6657 to warrant an expanded construction of the term "deposit."
xxx xxx xxx
In the present suit, the DAR clearly overstepped the limits of its powers to enact rules and
regulations when it issued Administrative Circular No. 9. There is no basis in allowing the opening
of a trust account in behalf of the landowner as compensation for his property because, as
heretofore discussed, section 16(e) of RA 6657 is very specific that the deposit must be made
only in "cash" or in "LBP bonds." In the same vein, petitioners cannot invoke LRA Circular Nos.
29, 29-A and 54 because these implementing regulations cannot outweigh the clear provision of
the law. Respondent court therefore did not commit any error in striking down Administrative
Circular No. 9 for being null and void.
There being no valid payment of just compensation, title to petitioner's landholdings cannot be
validly transferred to the Government. A close scrutiny of the procedure laid down in Section 16
of RA 6657 shows the clear legislative intent that there must first be payment of the fair value of
the land subject to agrarian reform, either directly to the affected landowner or by deposit of
cash or LBP bonds in the DAR-designated bank, before the DAR can take possession of the land
and request the register of deeds to issue a transfer certificate of title in the name of the
Republic of the Philippines. This is only proper inasmuch as title to private property can only be
acquired by the government after payment of just compensation In Association of Small
Landowners in the Philippines v. Secretary of Agrarian Reform (175 SCRA 343, 391 [1989]), this
Court held:
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt of the landowner of the corresponding payment or the deposit by the DAR
of the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains
with the landowner. No outright change of ownership is contemplated either.
Necessarily, the issuance of the CLOAs by respondent DAR on October 30, 1993 and their
distribution to farmer-beneficiaries were illegal inasmuch as no valid payment of compensation
for the lands was as yet effected. By law, Certificates of Land Ownership Award are issued only to
the beneficiaries after the DAR takes actual possession of the land (RA 6657, Sec. 24), which in
turn should only be after the receipt by the landowner of payment or, in case of rejection or no

response from the landowner, after the deposit of the compensation for the land in cash or in LBP
bonds (RA 6657, Sec. 16[e]).
Respondents argue that the Land Bank ruling should not be made to apply to the compulsory
acquisition of petitioner's landholdings in 1993, because it occurred prior to the promulgation of
the said decision (October 6, 1995). This is untenable. Laws may be given retroactive effect on
constitutional considerations, where the prospective application would result in a violation of a
constitutional right. In the case at bar, the expropriation of petitioner's lands was effected
without a valid payment of just compensation, thus violating the Constitutional mandate that
"(p)rivate property shall not be taken for public use without just compensation" (Constitution, Art.
III, Sec. 9). Hence, to deprive petitioner of the benefit of the Land Bank ruling on the mere
expedient that it came later than the actual expropriation would be repugnant to petitioner's
fundamental rights.
The controlling last two (2) pages of the ponencia state:
Finally, we stress that the failure of respondent DAR to comply with the requisites of due process
in the acquisition proceedings does not give this Court the power to nullify the CLOA's already
issued to the farmer beneficiaries. To assume the power is to short-circuit the administrative
process, which has yet to run its regular course. Respondent DAR must be given the chance to
correct its procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's
were issued to 177 farmer beneficiaries in 1993. Since then until the present, these farmers have
been cultivating their lands. It goes against the basic precepts of justice, fairness and equity to
deprive these people, through no fault of their own, of the land they till. Anyhow, the farmer
beneficiaries hold the property in trust for the rightful owner of the land.
I disagree with the view that this Court cannot nullify illegally issued CLOA's but must ask the
DAR to first reverse and correct itself.
Given the established facts, there was no valid transfer of petitioner's title to the Government.
This being so, there was also no valid title to transfer to third persons; no basis for the issuance
of CLOAs.
Equally important, CLOAs do not have the nature of Torrens Title. Administrative cancellation of
title is sufficient to invalidate them.
The Court of Appeals said so in its Resolution in this case. It stated:
Contrary to the petitioner's argument that issuance of CLOAs to the beneficiaries prior to the
deposit of the offered price constitutes violation of due process, it must be stressed that the
mere issuance of the CLOAs does not vest in the farmer/grantee ownership of the land described
therein.
At most the certificate merely evidences the government's recognition of the grantee as the
party qualified to avail of the statutory mechanisms for the acquisition of ownership of the
land. Thus failure on the part of the farmer/grantee to comply with his obligations is a ground for
forfeiture of his certificate of transfer. Moreover, where there is a finding that the property is
indeed not covered by CARP, then reversion to the landowner shall consequently be made,
despite issuance of CLOAs to the beneficiaries. (Resolution dated January 17, 1997, p. 6)
DAR Administrative Order 03, Series of 1996 (issued on August 8, 1996; Annex "F" of Petitioner's
Manifestation) outlines the procedure for the reconveyance to landowners of properties found to

be outside the coverage of CARP. DAR itself acknowledges that they can administratively cancel
CLOAs if found to be erroneous. From the detailed provisions of the Administrative Order, it is
apparent that there are no impediments to the administrative cancellation of CLOAs improperly
issued over exempt properties. The procedure is followed all over the country. The DAR Order
spells out that CLOAs are not Torrens Titles. More so if they affect land which is not covered by
the law under which they were issued. In its Rejoinder, respondent DAR states:
3.2. And, finally, on the authority of DAR/DARAB to cancel erroneously issued Emancipation
Patents (EPs) or Certificate of Landownership Awards (CLOAs), same is enshrined, it is
respectfully submitted, in Section 50 of Republic Act No. 6657.
In its Supplemental Manifestation, petitioner points out, and this has not been disputed by
respondents, that DAR has also administratively cancelled twenty five (25) CLOAs covering
Nasugbu properties owned by the Manila Southcoast Development Corporation near subject
Roxas landholdings. These lands were found not suitable for agricultural purposes because of soil
and topographical characteristics similar to those of the disputed properties in this case.
The former DAR Secretary, Benjamin T. Leong, issued DAR Order dated January 22, 1991
approving the development of property adjacent and contiguous to the subject properties of this
case into the Batulao Tourist Resort. Petitioner points out that Secretary Leong, in this Order, has
decided that the land
1. Is, as contended by the petitioner GDFI "hilly, mountainous, and characterized by poor soil
condition and nomadic method of cultivation, hence not suitable to agriculture."
2. Has as contiguous properties two haciendas of Roxas y Cia and found by Agrarian Reform
Team Leader Benito Viray to be "generally rolling, hilly and mountainous and strudded (sic) with
long and narrow ridges and deep gorges. Ravines are steep grade ending in low dry creeks."
3. Is found in an. area where "it is quite difficult to provide statistics on rice and corn yields
because there are no permanent sites planted. Cultivation is by Kaingin Method."
4. Is contiguous to Roxas Properties in the same area where "the people entered the property
surreptitiously and were difficult to stop because of the wide area of the two haciendas and that
the principal crop of the area is sugar . . .." (emphasis supplied).
I agree with petitioner that under DAR AO No. 03, Series of 1996, and unlike lands covered by
Torrens Titles, the properties falling under improperly issued CLOAs are cancelled by mere
administrative procedure which the Supreme Court can declare in cases properly and
adversarially submitted for its decision. If CLOAs can under the DAR's own order be cancelled
administratively, with more reason can the courts, especially the Supreme Court, do so when the
matter is clearly in issue.
With due respect, there is no factual basis for the allegation in the motion for intervention that
farmers have been cultivating the disputed property.
The property has been officially certified as not fit for agriculture based on slope, terrain, depth,
irrigability, fertility, acidity, and erosion. DAR, in its Order dated January 22, 1991, stated that "it
is quite difficult to provide statistics on rice and corn yields (in the adjacent property) because
there are no permanent sites planted. Cultivation is by kaingin method." Any allegations of
cultivation, feasible and viable, are therefore falsehoods.

The DAR Order on the adjacent and contiguous GDFI property states that "(T)he people entered
the property surreptitiously and were difficult to stop . . .."
The observations of Court of Appeals Justices Verzola and Magtolis in this regard, found in their
dissenting opinion (Rollo, p. 116), are relevant:
2.9 The enhanced value of land in Nasugbu, Batangas, has attracted unscrupulous individuals
who distort the spirit of the Agrarian Reform Program in order to turn out quick profits. Petitioner
has submitted copies of CLOAs that have been issued to persons other than those who were
identified in the Emancipation Patent Survey Profile as legitimate Agrarian Reform beneficiaries
for particular portions of petitioner's lands. These persons to whom the CLOAs were awarded,
according to petitioner, are not and have never been workers in petitioner's lands. Petitioners say
they are not even from Batangas but come all the way from Tarlac. DAR itself is not unaware of
the mischief in the implementation of the CARL in some areas of the country, including Nasugbu.
In fact, DAR published a "WARNING TO THE PUBLIC" which appeared in the Philippine Daily
Inquirer of April 15, 1994 regarding this malpractice.
2.10 Agrarian Reform does not mean taking the agricultural property of one and giving it to
another and for the latter to unduly benefit therefrom by subsequently "converting" the same
property into non-agricultural purposes.
2.11 The law should not be interpreted to grant power to the State, thru the DAR, to choose who
should benefit from multi-million peso deals involving lands awarded to supposed agrarian
reform beneficiaries who then apply for conversion, and thereafter sell the lands as nonagricultural land.
Respondents, in trying to make light of this problem, merely emphasize that CLOAs are not titles.
They state that "rampant selling of rights", should this occur, could be remedied by the
cancellation or recall by DAR.
In the recent case of "Hon. Carlos O. Fortich, et. al. vs. Hon. Renato C. Corona, et. al." (G.R. No.
131457, April 24, 1998), this Court found the CLOAs given to the respondent farmers to be
improperly issued and declared them invalid. Herein petitioner Roxas and Co., Inc. has presented
a stronger case than petitioners in the aforementioned case. The procedural problems especially
the need for referral to the Court of Appeals are not present. The instant petition questions the
Court of Appeals decision which acted on the administrative decisions. The disputed properties in
the present case have been declared non-agricultural not so much because of local government
action but by Presidential Proclamation. They were found to be non-agricultural by the
Department of Agriculture, and through unmistakable implication, by DAR itself. The zonification
by the municipal government, approved by the provincial government, is not the only basis.
On a final note, it may not be amiss to stress that laws which have for their object the
preservation and maintenance of social justice are not only meant to favor the poor and
underprivileged. They apply with equal force to those who, notwithstanding their more
comfortable position in life, are equally deserving of protection from the courts. Social justice is
not a license to trample on the rights of the rich in the guise of defending the poor, where no act
of injustice or abuse is being committed against them. As we held in Land Bank (supra.):
It has been declared that the duty of the court to protect the weak and the underprivileged
should not be carried out to such an extent as to deny justice to the landowner whenever truth
and justice happen to be on his side. As eloquently stated by Justice Isagani Cruz:

. . . social justice or any justice for that matter is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we
are called upon to tilt the balance in favor of the poor simply because they are poor, to whom the
Constitution fittingly extends its sympathy and compassion. But never is it justified to prefer the
poor simply because they are poor, or to eject the rich simply because they are rich, for justice
must always be served, for poor and rich alike, according to the mandate of the law.
IN THE LIGHT OF THE FOREGOING, I vote to grant the petition for certiorari; and to declare
Haciendas Palico, Banilad and Caylaway, all situated in Nasugbu, Batangas, to be nonagricultural and outside the scope of Republic Act No. 6657. I further vote to declare the
Certificates of Land Ownership Award issued by respondent Department of Agrarian Reform null
and void and to enjoin respondents from proceeding with the compulsory acquisition of the lands
within the subject properties. I finally vote to DENY the motion for intervention.

G.R. No. 96227 February 1, 1993

TELESFORO OPENA, petitioner,
vs.
HONORABLE COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents.
Simplicio M. Sevilleja for petitioner.

NOCON, J.:
This is a Petition for Review by certiorari of the decision rendered by the Court of Appeals dated
January 2, 1989 in CA-G.R. CR No. 06576, affirming in toto the judgment of conviction rendered
by Branch 48 of the Regional Trial Court of Pangasinan in Criminal Case No. U-3011, entitled
"People of the Philippines vs. Telesforo Opena" for falsification of public document by a private
individual. In the same light, petitioner seeks to annul the order of the Court of Appeals dated
November 5, 1990 issued in the same case denying their motion for reconsideration.
The facts of the case are as follows:
Spouses Julian Gotgotao and Guillerma Opena are the registered owners of Lot No. 1584-B
located at Barangay Cayambanan, Urdaneta, Pangasinan, as evidenced by Transfer Certificate of
Title No. 61957 duly issued by the Register of Deeds of Pangasinan, which property they
mortgaged 1 to the Rural Bank of Mangaldan, Inc. for the sum of Two Thousand (P2,000.00) Pesos
and which mortgage was annotated on the second page of the title. 2
However, when spouses Gotgotao went to the Bank to check on their Certificate of Title, they got
the shock of their life when the bank employees said that Telesforo Opena, the half brother of
Guillerma Opena, withdrew the said Certificate of Title from the bank by presenting a Special
Power of Attorney purportedly executed by the Gotgotao spouses in favor of Telesforo Opena.
Upon verification with the Register of Deeds of Pangasinan in Lingayen to check on their title,
they were informed that Telesforo Opena had caused the transfer of the title in his name by
presenting a Deed of Absolute Sale allegedly executed by them. They also discovered that their
Transfer Certificate of Title No. 61957 had been cancelled and a new one, Transfer Certificate of
Title
No. 131474 had been issued in the name of Telesforo Opena, married to Carolina Sanidad. 3
Consequently, a complaint for falsification of public documents was filed against Telesforo Opena
resulting in his conviction of said crime. On appeal to the Court of Appeals, accused-appellant's
conviction was affirmed in toto.
Hence, this appeal.
The errors presented by herein petitioner are the following:
1. That the appellate court and the trial court erred in not acquitting petitioner when they found
him not to have forged the thumbmark of Julian Gotgotao nor is there solid evidence that
petitioner forged the signature of Guillerma Opena Gotgotao.
2. That both the appellate court and the trial court erred in finding that the defense is guilty of
suppression of evidence.

3. That said courts erred in not finding that spouses Julian Gotgotao and Guillerma Opena validly
conveyed the land in question in favor of petitioner; and
4. In annulling the Deed of Sale dated April 10, 1978 executed by spouses Julian Gotgotao and
Guillerma Opena in favor of petitioner and his wife.
We find no merit in the instant petition.
Petition contends that the crime of falsification of public documents has not been committed in
this case, considering that the thumbmark of Julian Gotgotao on the Absolute Deed of Sale was
declared to be genuine and not a forgery by Questioned Document Expert Arturo B. Marasigan of
the P.C. Crime Laboratory who issued a dactyloscopy report thereon. 4
But while this may be true with respect to Julian Gotgotao's thumbmark on the Deed of Sale, the
fact remains that Guillerma Gotgotao's signature on the same document was indubitably
confirmed to be counterfeit and forged, both by the testimony of Guillerma herself and by the
testimony of the handwriting expert Jovito R. Gutierrez of the P.C. Crime Laboratory who
examined the same. 5
We agree with the trial court when it said:
With respect to the questioned signature of complaining witness Guillerma Opea, (sic) the Court
believes that the accuses Telesforo Opea (sic) either forged the signature himself or caused it to
be forged on the questioned deed of absolute sale dated April 10, 1978 (Exh. "B" and "2").
The said belief of the Court is based on the findings that the questioned signature of complaining
witness Guillerma Opea (sic) appearing in the questioned deed of absolute sale dated April 10,
1978 is nothing but a forgery (Questioned Document Report No. 125-82, Exh. "E"). The Court
relied on the aforesaid findings of the examining handwriting expert from the Philippine
Constabulary Crime Laboratory, Camp Crame, Quezon City in the light of the accused Telesforo
Opea's (sic) and former Barangay Captain Esteban Valdez's testimonies that both did not see
the complaining witness Guillerma Opea (sic) sign her name on the aforesaid deed of absolute
sale because she was not present during the preparation and execution of the said deed of
absolute sale at the law office of
Atty. Caoayan in Poblacion, Urdaneta, Pangasinan. Further, said complaining witness denied
having executed a deed of absolute sale in favor of the herein accused.
Even assuming arguendo that Julian Gotgotao's thumbmark on the subject document is genuine,
still the counterfeit signature of Guillerma Gotgotao invalidates the whole instrument, since her
signature thereon is essential to the validity of the alleged deed of sale, as warranted by Article
165 and 166 of the Civil Code which provides:
Art. 165 The husband is the administrator of the conjugal partnership.
Article 166 Unless the wife has been declared a non compos mentis or a spendthrift, or is
under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber
any real property of the conjugal partnership without the wife's consent. If she refuses
unreasonably to give her consent, the court may compel her to grant the same.
Petitioner's argument that the prosecution failed to establish the counterfeit nature of Guillerma
Gotgotao's signature in the Deed of Absolute Sale, because "she could not identify and recognize

her signature in said exhibit because she could not read and she had poor and defective
eyesight" had already been disposed of correctly by the trial court, as follows:
The Court finds the said objection bereft of merit. There is no need for the complaining witness
Guillerma Opea (sic) to identify her forged signature appearing in the questioned deed of
absolute sale because her denial of not having executed the said deed of absolute sale in favor
of Telesforo Opea (sic) goes to show that she did not affix her signature in the said document. 6
As aptly found by the Court of Appeals:
The signature used as "standards" are compared with the questioned signature of appellee
Guillerma Opea (sic) in the Deed of Absolute Sale were her voter's I.D. Card, Promissory Note to
the Letter of the Land Bank, Discount and Computation Slip issued by the Rural Bank of
Mangaldan, Residence Certificate, and a long bond paper containing her signatures 1 to 25.
These signatures are admitted by the appellee as hers and were used by her in her business
transactions and her transactions with the government. This case thus falls squarely within the
third method referred to by the High Tribunal.
Appellant, moreover, did not rebut the testimony of the expert witness Jovito Gutierrez and
likewise did not impeach him. In fact, appellant and his witnesses hewed their testimonies to his
findings by admitting that they did not see appellee Guillerma Opea (sic) sign the questioned
document. Hence, the trial court correctly gave credence to the expert witness and his findings
that the signature of Guillerma Opea (sic) is a forgery. 7
As to the claim that the trial court and the Court of Appeals erred in stating that his counsel
suppressed evidence which would otherwise have been material to his defense, We find nothing
in the records to justify the same.
The trial court ruled:
Noteworthy is the dispensation by the defense of the testimony of Atty. Anastacio Caoayan, the
Notary Public of the questioned deed of absolute sale dated April 10, 1978 despite the issuance
of several subpoena duces tecum issued upon him, on November 4, 1983, December 12, 1983,
December 21, 1983, February 15, 1984, April 10, 1984, May 28, 1984, July 18, 1984 and August
8, 1984. The unexplained facts leads to the presumption that the defense's counsel suppressed
evidence which is detrimental to his client's cause. 8
Atty. Caoayan's testimony could have weighed heavily in favor of the petitioner's defense, if
petitioner is to be believed, since Atty. Caoayan was ostensibly the lawyer who notarized the
alleged deed of absolute sale, and could therefore have validated petitioner's claim that
Guillerma Gotgotao's signature on the said document was genuine. Thus, petitioner's failure to
present this material witness creates the presumption that if such testimony had been given, it
would have been adverse to the petitioner's claim.
Likewise, the Court of Appeals concurred with the trial court's assessment of the situation, to wit:
The trial court was justified in holding the appellant as having suppressed evidence when it
dispensed with the testimony of the notary public who notarized the questioned Deed of Sale
(Exh. "2", "B"). It appears that Atty. Anastacio Caoayan was subpoenaed no less than eight times
(November 14, 1983; December 12, 1983; December 21, 1983; February 15, 1984; April 10,
1984; May 28, 1984; July 18, 1984 and August 8, 1984). At the hearing on April 5, 1984,

indications that the defense was not really interested in presenting Atty. Caoayan was shown,
thus:
Atty. Sevilleja:
Yes, Your Honor. Your Honor, may we request that a subpoena be issued to Emilio Latore of
Poblacion, Villasis, Pangasinan?
Court:
What about Atty. Caoayan. There as a subpoena issued to him. He comes here every now and
then. He should be punished for contempt of court for his failure to come despite subpoena duly
served to him.
Atty. Sevilleja:
We just subpoena him in the next hearing. In fact I talked with him only this morning.
Court:.
As if you do not want to present him anymore. It is up to you.
Atty. Sevilleja:
No. Your Honor, We will just subpoena him, Your Honor. 9
However, on August 7, 1984, when by coincidence, Atty. Caoayan happened to be in the sala of
the judge hearing the falsification case and the judge called the attention of the appellant's
counsel to present him as a witness, the latter refused. Thus:
Court:
You will present Atty. Caoayan? He is here finally.
Atty. Sevilleja:
We will present the other witness from Villasis, Emilio Latore, Your Honor.
Court:
Latore?
Atty. Sevilleja:
Yes, Your Honor.
Court:
You are dispensing with the testimony of Atty. Caoayan? He is finally here because this is in a
coincidence he has a case.
Atty. Sevilleja:
I will talk with him first, Your Honor.
Court:

The court has issued several subpoena duces tecum. Now he is here, take the chance.
xxx xxx xxx
Atty. Sevilleja:
Your Honor, after minutely studying the case and our documentary evidence which are
voluminous, we can prove the innocence of the accused without the testimony of Atty. Caoayan,
Your Honor.
Court:
So you are now dispensing with his testimony?
Atty. Sevilleja:
We are now dispensing the testimony of Atty. Caoayan, Your
Honor. 10
Furthermore, the Court of Appeals likewise correctly concluded that even Julian Gotgotao's
admittedly genuine thumbmark appearing on the questioned Deed is questionable, thus:
[E]ven granting hypothetically, that Julian Gotgotao may have had some knowledge of the
forgery, we do not believe he has the required cunning to, by himself and without appellant's
instigation and active participation, develop the idea and proceed to have his wife's signature
forged, considering the level of his intelligence as demonstrated in his testimony at the trial.
(T.S.N., August 13, 1987, September 15, 1987) We are convinced, as was the trial court, that it
was appellant himself, the one who used, took advantage, and profited by the forged signature
who authored the same. Besides, while the finding is that Julian Gotgotao's thumbmark is
genuine, he denied having knowingly thumbmarked any document selling their land. 11
The Court of Appeals observed further:
It is likewise alleged that the appellee did not dispute or deny the contract of sale dated
November 5, 1976 (Exh. "11") allegedly thumbmarked by Julian Gotgotao and the receipt dated
June 20, 1977
(Exh. "12"). In fact, the prosecution witnesses have denied these documents when appellees and
their witnesses asserted that they never borrowed money from the accused-appellant in 1976 or
in 1977 (T.S.N., April 11, 1983, p. 10; October 22, 1986, pp. 15-18; December 9, 1987, pp. 21-23;
June 25, 1987, pp. 3-5; August 13, 1987, p. 4), when Julian Gotgotao denied that there was ever
a time he agreed to sell the land to the accused (T.S.N., August 13, 1987, p. 12) or that he
delivered a deed of sale on April 11, 1978 to appellant in his house for which the alleged
borrowings were part of the consideration (T.S.N., September 15, 1978, p. 2); and when appellee
Guillerma Opena testified that appellant had no right and had no authority to take the owner's
copy of the title to the land in question from the bank (T.S.N., April 11, 1983, pp. 7-8). 12
Finally, petitioner's claim that spouses Gotgotao conveyed the subject property in his favor in
view of previous loans extended to them has been resolved by the trial court in this wise, to
which We concur:
In an effort to justify the due execution of the deed of sale dated April 10, 1978, the accused
Telesforo Opea (sic) claimed that the consideration in the amount of P18,000.00 represents the
total borrowings of the Gotgotao family from him. However, the aggregate amount shelled out by

the herein accused (P6,370.00, Exh. 11; P12,300.00, Exh. 12; P4,700.00 given after the
execution of the said deed of absolute sale and P2,138.10, Exh. 13 or a total of P25,508.10) is
more than what the herein accused bargained with the Gotgotao family at P3.00 per square
meter of the said lot in dispute containing an area of 6,190 square meters and 6,190 multiplied
by P3.00 amounts to P18,570.00. The conflicting amounts of money testified to by the herein
accused gives truth to the saying that "No falsification is perfect in all its parts." Further,
"defense evidence which is replete with inconsistencies does not inspire belief" (People vs.
Radomes, 141 SCRA 548) "Contradictory and inconsistent on material points render testimonies
doubtful." (People vs. Quison, 142 SCRA 362).
WHEREFORE, there being no reversible error in the decision appealed herefrom, the same is
hereby AFFIRMEDin toto. Costs against appellant.
SO ORDERED.
Narvasa, C.J., Feliciano, Regalado and Campos, Jr., JJ., concur.

G.R. No. L-48184 March 12, 1990

PAULA GARCIA, FRANCISCO GARCIA, JUSTO GARCIA, CLAUDIA GARCIA, CRISPINA
GARCIA, CATALINA GARCIA, BASILISA GARCIA, ZACARIAS GARCIA, AGUSTIN GARCIA,
CANDIDA GARCIA, PABLEO PACULAN, ANECITA PACULAN, AGAPITO PACULAN,
MARCOSA PACULAN, and ILUMINADO SOLITE,petitioners,
vs.
ANDRES GONZALES, RAMON EAMIGUEL NICASIO PARILLA and COURT OF
APPEALS, respondents.
Antonio R. Rabago for petitioners.
Federico V. Noel for Andres Gonzales.
Francisco E. F. Remorigue for Eamiguel and Parilla.

FERNAN, C.J.:
In this petition on for review on certiorari, petitioners seek the reversal of the May 5, 1977
decision of the Court of Appeals in CA-GR No. 48032-R entitled "Paula Garcia, et al. v. Andres
Gonzales, et al." modifying the decision of the Court of First Instance of Leyte in Civil Case No. B0134 which among others adjudicated the whole parcel No. 2 in favor of Andres Gonzales and
ordered the plaintiffs therein jointly and severally to pay moral damages and attorney's fees.
This case arose from the complaint for recovery of real properties, partition and accounting filed
by the nephews and nieces of a deceased childless couple against the transferees of two parcels
of land which said couple had sold during their lifetime and another parcel of land which the wife
sold to her own nephew after her husband's death.
The record shows that on July 3, 1911, Agustin Manco Garcia donated to the spouses Fructuoso
Garcia and Quintina Gonzales two parcels of land. One parcel, with an area of more than three
hectares, is located in barrio Caraycaray in Naval, Leyte (parcel No. 3) and the other lot, with an
area of more than two hectares, is located in sitio Calumpang, also in barrio Caraycaray (parcel
No. 4). On December 4, 1921, Fructuoso and his wife executed an "escritura de venta" over said
two parcels of land in favor of Sergio Eamiguel, a parish priest, in consideration of the amount of
P2,500. 1 The following year, 1922, Fructuoso died.
In 1930, Father Eamiguel declared as his own parcel No. 3 under tax declaration No. 7370 2 and
parcel No. 4 under tax declaration No. 7389. 3 On June 5, 1937, he executed an "escritura de
donacion" bestowing ownership over said property to his nephews, Pedro and Ramon Eamiguel.

Pedro later exchanged his share over parcel No. 3 with another parcel owned by his brother
Rosendo thereby making the latter a co-owner of said property. 5 While thus in possession of
parcel No. 3, the Eamiguel brothers, through Ramon, executed deeds of sale with right to
repurchase over portions of the property in favor of different persons. 6
On October 24, 1954, after the properties had been repurchased, Rosendo sold a one-half portion
of parcel No. 3 to the spouses Nicasio Parilla and Purificacion Manco for P3,200. 7 On October 31,
1954, Ramon also sold his one-half portion of the property to the Parilla spouses for

P3,500. 8 Since then, the Parilla spouses have been in possession of the 3-hectare property
paying taxes thereon. On the other hand, parcel No. 4 remained in the possession of Ramon.
Fructuoso Garcia also owned a 1.7 hectare lot in Anas, Antipolo, also in the municipality of Naval
(parcel No. 1) and another 2.3 hectare land in the same municipality (parcel No. 2). On January
26, 1945, Fructuoso's widow, Quintina Gonzales Garcia, who was then a centenarian, sold parcel
No. 2 to her nephew, Andres Gonzales, in consideration of the amount of P400. 9 Since then,
Gonzales has declared said property as his own and paid taxes thereon. 10
On June 15, 1967, the herein petitioners, nephews and nieces of Fructuoso, filed the
aforementioned complaint against Andres Gonzales for the recovery of parcels Nos. 1 and 2, on
the premise that under Article 995 of the New Civil Code, as such relatives of Fructuoso, they are
entitled to one-half of the intestate estate of Quintina who allegedly misrepresented in the deed
of sale in favor of Gonzales that parcels Nos. 1 and 2 were her paraphernal properties. The
complaint was later amended to include parcels Nos. 3 and 4 as subjects of the complaint and to
include Ramon Eamiguel and Nicasio Parilla as defendants. With regard to these two defendants,
the complaint alleged that Eamiguel a grandnephew of Quintina, took possession of parcel No. 4
after Quintina's death on March 16, 1945 and that Parilla was also unlawfully in possession of
parcel No. 3.
The trial court ruled that since nobody claimed parcel No. 1, "the same has remained the
property of the plaintiffs." 11 In holding that parcel No. 2 rightfully belongs to Andres Gonzales,
the court stated that except for their oral testimonies, the plaintiffs failed to successfully assail
the validity and due execution of the deed of sale in favor of Gonzales. The trial court also ruled
that the plaintiffs may no longer question the validity of the sale to Father Eamiguel of parcels
Nos. 3 and 4 because after a copy of the December 4, 1921 deed of sale was furnished the
plaintiffs, "nothing has been done thereabout" and that said document, being more than 47
years old and a public instrument, is in full force and effect unless impugned by strong complete
and conclusive proof. 12 The dispositive portion of the trial court's June 1970 decision 13 reads:
WHEREFORE, decision is hereby rendered in favor of the defendants and against the plaintiffs,
hereby declaring and adjudicating Parcel No. 2 in favor of defendant Andres Gonzales; Parcel No.
3 in favor of Nicasio Parilla; Parcel No. 4 in favor of defendant Ramon Eamiguel further ordering
the plaintiffs jointly and severally to pay each of the defendants the sum of P1,000.00 for and as
moral damages, plus the sum of P500.00 for and as attorney's fees, with costs against the
plaintiffs.
SO ORDERED.

14

[G.R. No. 153802. March 11, 2005]

HOMEOWNERS SAVINGS & LOAN BANK, petitioner, vs. MIGUELA C. DAILO, respondent.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, assailing
the Decision[1] of the Court of Appeals in CA-G.R. CV No. 59986 rendered on June 3, 2002, which
affirmed with modification the October 18, 1997 Decision[2] of the Regional Trial Court, Branch 29,
San Pablo City, Laguna in Civil Case No. SP-4748 (97).
The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8, 1967. During
their marriage, the spouses purchased a house and lot situated at Barangay San Francisco, San
Pablo City from a certain Sandra Dalida. The subject property was declared for tax assessment
purposes under Assessment of Real Property No. 94-051-2802. The Deed of Absolute Sale,
however, was executed only in favor of the late Marcelino Dailo, Jr. as vendee thereof to the
exclusion of his wife.[3]
On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in favor of
one Lilibeth Gesmundo, authorizing the latter to obtain a loan from petitioner Homeowners
Savings and Loan Bank to be secured by the spouses Dailos house and lot in San Pablo City.
Pursuant to the SPA, Gesmundo obtained a loan in the amount of P300,000.00 from petitioner. As
security therefor, Gesmundo executed on the same day a Real Estate Mortgage constituted on
the subject property in favor of petitioner. The abovementioned transactions, including the
execution of the SPA in favor of Gesmundo, took place without the knowledge and consent of
respondent.[4]
Upon maturity, the loan remained outstanding. As a result, petitioner instituted extrajudicial
foreclosure proceedings on the mortgaged property. After the extrajudicial sale thereof, a
Certificate of Sale was issued in favor of petitioner as the highest bidder. After the lapse of one
year without the property being redeemed, petitioner, through its vice-president, consolidated
the ownership thereof by executing on June 6, 1996 an Affidavit of Consolidation of Ownership
and a Deed of Absolute Sale.[5]
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her visits to the
subject property, respondent learned that petitioner had already employed a certain Roldan
Brion to clean its premises and that her car, a Ford sedan, was razed because Brion allowed a
boy to play with fire within the premises.
Claiming that she had no knowledge of the mortgage constituted on the subject property, which
was conjugal in nature, respondent instituted with the Regional Trial Court, Branch 29, San Pablo
City, Civil Case No. SP-2222 (97) for Nullity of Real Estate Mortgage and Certificate of Sale,
Affidavit of Consolidation of Ownership, Deed of Sale, Reconveyance with Prayer for Preliminary
Injunction and Damages against petitioner. In the latters Answer with Counterclaim, petitioner
prayed for the dismissal of the complaint on the ground that the property in question was the
exclusive property of the late Marcelino Dailo, Jr.

After trial on the merits, the trial court rendered a Decision on October 18, 1997. The dispositive
portion thereof reads as follows:
WHEREFORE, the plaintiff having proved by the preponderance of evidence the allegations of the
Complaint, the Court finds for the plaintiff and hereby orders:
ON THE FIRST CAUSE OF ACTION:
1. The declaration of the following documents as null and void:
(a) The Deed of Real Estate Mortgage dated December 1, 1993 executed before Notary Public
Romulo Urrea and his notarial register entered as Doc. No. 212; Page No. 44, Book No. XXI, Series
of 1993.
(b) The Certificate of Sale executed by Notary Public Reynaldo Alcantara on April 20, 1995.
(c) The Affidavit of Consolidation of Ownership executed by the defendant
(c) The Affidavit of Consolidation of Ownership executed by the defendant over the residential lot
located at Brgy. San Francisco, San Pablo City, covered by ARP No. 95-091-1236 entered as Doc.
No. 406; Page No. 83, Book No. III, Series of 1996 of Notary Public Octavio M. Zayas.
(d) The assessment of real property No. 95-051-1236.
2. The defendant is ordered to reconvey the property subject of this complaint to the plaintiff.
ON THE SECOND CAUSE OF ACTION
1. The defendant to pay the plaintiff the sum of P40,000.00 representing the value of the car
which was burned.
ON BOTH CAUSES OF ACTION
1. The defendant to pay the plaintiff the sum of P25,000.00 as attorneys fees;
2. The defendant to pay plaintiff P25,000.00 as moral damages;
3. The defendant to pay the plaintiff the sum of P10,000.00 as exemplary damages;
4. To pay the cost of the suit.
The counterclaim is dismissed.
SO ORDERED.[6]
Upon elevation of the case to the Court of Appeals, the appellate court affirmed the trial courts
finding that the subject property was conjugal in nature, in the absence of clear and convincing
evidence to rebut the presumption that the subject property acquired during the marriage of
spouses Dailo belongs to their conjugal partnership. [7] The appellate court declared as void the
mortgage on the subject property because it was constituted without the knowledge and consent
of respondent, in accordance with Article 124 of the Family Code. Thus, it upheld the trial courts
order to reconvey the subject property to respondent. [8] With respect to the damage to
respondents car, the appellate court found petitioner to be liable therefor because it is
responsible for the consequences of the acts or omissions of the person it hired to accomplish

the assigned task.[9] All told, the appellate court affirmed the trial courtsDecision, but deleted the
award for damages and attorneys fees for lack of basis. [10]
Hence, this petition, raising the following issues for this Courts consideration:
1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO DAILO, JR. ON THE
SUBJECT PROPERTY AS CO-OWNER THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.
2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE PAYMENT OF THE LOAN
OBTAINED BY THE LATE MARCELINO DAILO, JR. THE SAME HAVING REDOUNDED TO THE BENEFIT
OF THE FAMILY.[11]
First, petitioner takes issue with the legal provision applicable to the factual milieu of this case. It
contends that Article 124 of the Family Code should be construed in relation to Article 493 of the
Civil Code, which states:
ART. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the co-ownership.
Article 124 of the Family Code provides in part:
ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to
both spouses jointly. . . .
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance which
must have the authority of the court or the written consent of the other spouse. In the absence
of such authority or consent, the disposition or encumbrance shall be void. . . .
Petitioner argues that although Article 124 of the Family Code requires the consent of the other
spouse to the mortgage of conjugal properties, the framers of the law could not have intended to
curtail the right of a spouse from exercising full ownership over the portion of the conjugal
property pertaining to him under the concept of co-ownership. [12] Thus, petitioner would have this
Court uphold the validity of the mortgage to the extent of the late Marcelino Dailo, Jr.s share in
the conjugal partnership.
In Guiang v. Court of Appeals,[13] it was held that the sale of a conjugal property requires the
consent of both the husband and wife. [14] In applying Article 124 of the Family Code, this Court
declared that the absence of the consent of one renders the entire sale null and void, including
the portion of the conjugal property pertaining to the husband who contracted the sale. The
same principle in Guiang squarely applies to the instant case. As shall be discussed next, there is
no legal basis to construe Article 493 of the Civil Code as an exception to Article 124 of the
Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In the absence of a
marriage settlement, the system of relative community or conjugal partnership of gains
governed the property relations between respondent and her late husband. [15] With the effectivity
of the Family Code on August 3, 1988, Chapter 4 on Conjugal Partnership of Gainsin the Family

Code was made applicable to conjugal partnership of gains already established before its
effectivity unless vested rights have already been acquired under the Civil Code or other laws. [16]
The rules on co-ownership do not even apply to the property relations of respondent and the late
Marcelino Dailo, Jr. even in a suppletory manner. The regime of conjugal partnership of gains is a
special type of partnership, where the husband and wife place in a common fund the proceeds,
products, fruits and income from their separate properties and those acquired by either or both
spouses through their efforts or by chance. [17] Unlike the absolute community of property wherein
the rules on co-ownership apply in a suppletory manner, [18] the conjugal partnership shall be
governed by the rules on contract of partnership in all that is not in conflict with what is
expressly determined in the chapter (on conjugal partnership of gains) or by the spouses in their
marriage settlements.[19] Thus, the property relations of respondent and her late husband shall be
governed, foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code and,
suppletorily, by the rules on partnership under the Civil Code. In case of conflict, the former
prevails because the Civil Code provisions on partnership apply only when the Family Code is
silent on the matter.
The basic and established fact is that during his lifetime, without the knowledge and consent of
his wife, Marcelino Dailo, Jr. constituted a real estate mortgage on the subject property, which
formed part of their conjugal partnership. By express provision of Article 124 of the Family Code,
in the absence of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void.
The aforequoted provision does not qualify with respect to the share of the spouse who makes
the disposition or encumbrance in the same manner that the rule on co-ownership under Article
493 of the Civil Code does. Where the law does not distinguish, courts should not distinguish.
[20]
Thus, both the trial court and the appellate court are correct in declaring the nullity of the real
estate mortgage on the subject property for lack of respondents consent.
Second, petitioner imposes the liability for the payment of the principal obligation obtained by
the late Marcelino Dailo, Jr. on the conjugal partnership to the extent that it redounded to the
benefit of the family.[21]
Under Article 121 of the Family Code, [T]he conjugal partnership shall be liable for: . . . (3) Debts
and obligations contracted by either spouse without the consent of the other to the extent that
the family may have been benefited; . . . . For the subject property to be held liable, the
obligation contracted by the late Marcelino Dailo, Jr. must have redounded to the benefit of the
conjugal partnership. There must be the requisite showing then of some advantage which clearly
accrued to the welfare of the spouses. Certainly, to make a conjugal partnership respond for a
liability that should appertain to the husband alone is to defeat and frustrate the avowed
objective of the new Civil Code to show the utmost concern for the solidarity and well-being of
the family as a unit.[22]
The burden of proof that the debt was contracted for the benefit of the conjugal partnership of
gains lies with the creditor-party litigant claiming as such. [23] Ei incumbit probatio qui dicit, non
qui negat (he who asserts, not he who denies, must prove). [24] Petitioners sweeping conclusion
that the loan obtained by the late Marcelino Dailo, Jr. to finance the construction of housing units
without a doubt redounded to the benefit of his family, without adducing adequate proof, does
not persuade this Court. Other than petitioners bare allegation, there is nothing from the records
of the case to compel a finding that, indeed, the loan obtained by the late Marcelino Dailo, Jr.

redounded to the benefit of the family. Consequently, the conjugal partnership cannot be held
liable for the payment of the principal obligation.
In addition, a perusal of the records of the case reveals that during the trial, petitioner vigorously
asserted that the subject property was the exclusive property of the late Marcelino Dailo, Jr.
Nowhere in the answer filed with the trial court was it alleged that the proceeds of the loan
redounded to the benefit of the family. Even on appeal, petitioner never claimed that the family
benefited from the proceeds of the loan. When a party adopts a certain theory in the court
below, he will not be permitted to change his theory on appeal, for to permit him to do so would
not only be unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.[25] A party may change his legal theory on appeal only when the factual
bases thereof would not require presentation of any further evidence by the adverse party in
order to enable it to properly meet the issue raised in the new theory. [26]
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

G.R. No. L-19565

January 30, 1968

ESTRELLA DE LA CRUZ, plaintiff-appellee,

vs.
SEVERINO DE LA CRUZ, defendant-appellant.
Estacion and Paltriguera for plaintiff-appellee.
Manuel O. Soriano and Pio G. Villoso for defendant-appellant.
CASTRO, J.:
The plaintiff Estrella de la Cruz filed a complaint on July 22, 1958 with the Court of First Instance
of Negros Occidental, alleging in essence that her husband, the defendant Severino de la Cruz,
had not only abandoned her but as well was mismanaging their conjugal partnership properties,
and praying for (1) separation of property, (2) monthly support of P2,500 during the pendency of
the action, and (3) payment of P20,000 as attorney's fees, and costs.
The court a quo forthwith issued an order allowing the plaintiff the amount prayed for as
alimony pendente lite, which however, upon defendant's motion, was reduced to P2,000.
On June 1, 1961 the trial court rendered judgment ordering separation and division of the
conjugal assets, and directing the defendant to pay to the plaintiff the sum of P20,000 as
attorney's fees, with legal interest from the date of the original complaint, that is, from July 22,
1958, until fully paid, plus costs. From this judgment the defendant appealed to the Court of
Appeals, which certified the case to us, "it appearing that the total value of the conjugal assets is
over P500,000".
The basic facts are not controverted. The plaintiff and the defendant were married in Bacolod
City on February 1, 1938. Six children were born to them, namely, Zenia (1939), Ronnie (1942),
Victoria (1944), Jessie 1945), Bella (1946), and Felipe (1948). During their coverture they
acquired seven parcels of land of the Bacolod Cadastre, all assessed at P45,429, and three
parcels of the Silay Cadastre, all assessed at P43,580. All these parcels are registered in their
names. The hacienda in Silay yielded for the year 1957 a net profit of P3,390.49.
They are also engaged in varied business ventures with fixed assets valued as of December 31,
1956 at P496,006.92, from which they obtained for that year a net profit of P75,655.78. The net
gain of the Philippine Texboard Factory, the principal business of the spouses, was P90,454.48 for
the year 1957. As of December 31, 1959, the total assets of the various enterprises of the
conjugal partnership were valued at P1,021,407.68, not including those of the Top Service Inc., of
which firm the defendant has been the president since its organization in 1959 in Manila with a
paid-up capital of P50,000, P10,000 of which was contributed by him. This corporation was the
Beverly Hills Subdivision in Antipolo, Rizal, the Golden Acres Subdivision and the Green Valley
Subdivision in Las Pias, Rizal, and a lot and building located at M. H. del Pilar, Manila purchased
for P285,000, an amount borrowed from the Manufacturer's Bank and Trust Company.
The spouses are indebted to the Philippine National Bank and the Development Bank of the
Philippines for loans obtained, to secure which they mortgaged the Philippine Texboard Factory,
the Silay hacienda, their conjugal house, and all their parcels of land located in Bacolod City.
The essential issues of fact may be gleaned from the nine errors the defendant imputes to the
court a quo, namely,

1. In finding that the only visit, from May 15, 1955 to the rendition of the decision, made by the
defendant to the conjugal abode to see his wife was on June 15, 1955;
2. In finding that the letter exh. 3 was written by one Nenita Hernandez and that she and the
defendant are living as husband and wife;
3. In finding that since 1951 the relations between the plaintiff and the defendant were far from
cordial, and that it was from 1948 that the former has been receiving an allowance from the
latter;
4. In finding that the defendant has abandoned the plaintiff;
5. In finding that the defendant since 1956 has not discussed with his wife the business activities
of the partnership, and that this silence constituted "abuse of administration of the conjugal
partnerships";
6. In declaring that the defendant mortgaged the conjugal assets without the knowledge of the
plaintiff and thru false pretences to which the latter was prey;
7. In allowing the plaintiff, on the one hand, to testify on facts not actually known by her, and, on
the other hand, in not allowing the defendant to establish his special defenses;
8. In ordering separation of the conjugal partnership properties; and
9. In sentencing the defendant to pay to the plaintiff attorney's fees in the amount of P20,000,
with interest at the legal rate.1wph1.t
Two issues of law as well emerge, requiring resolution petition: (1) Did the separation of the
defendant from the plaintiff constitute abandonment in law that would justify a separation of the
conjugal partnership properties? (2) Was the defendant's failure and/or refusal to inform the
plaintiff of the state of their business enterprises such an abuse of his powers of administration
of the conjugal partnership as to warrant a division of the matrimonial assets?
The plaintiff's evidence may be summarized briefly. The defendant started living in Manila in
1955, although he occasionally returned to Bacolod City, sleeping in his office at the Philippine
Texboard Factory in Mandalagan, instead of in the conjugal home at 2nd Street, Bacolod City.
Since 1955 the defendant had not slept in the conjugal dwelling, although in the said year he
paid short visits during which they engaged in brief conversations. After 1955 up to the time of
the trial, the defendant had never visited the conjugal abode, and when he was in Bacolod, she
was denied communication with him. He has abandoned her and their children, to live in Manila
with his concubine, Nenita Hernandez. In 1949 she began to suspect the existence of illicit
relations between her husband and Nenita. This suspicion was confirmed in 1951 when she found
an unsigned note in a pocket of one of her husband's polo shirt which was written by Nenita and
in which she asked "Bering" to meet her near the church. She confronted her husband who
forthwith tore the note even as he admitted his amorous liaison with Nenita. He then allayed her
fears by vowing to forsake his mistress. Subsequently, in November 1951, she found in the iron
safe of her husband a letter, exh. C, also written by Nenita. In this letter the sender (who signed
as "D") apologized for her conduct, and expressed the hope that the addressee ("Darling") could
join her in Baguio as she was alone in the Patria Inn and lonely in "a place for honeymooners".
Immediately after her husband departed for Manila the following morning, the plaintiff enplaned
for Baguio, where she learned that Nenita had actually stayed at the Patria Inn, but had already
left for Manila before her arrival. Later she met her husband in the house of a relative in Manila

from whence they proceeded to the Avenue Hotel where she again confronted him about Nenita.
He denied having further relations with this woman.
Celia Baez, testifying for the plaintiff, declared that she was employed as a cook in the home of
the spouses from May 15, 1955 to August 15, 1958, and that during the entire period of her
employment she saw the defendant in the place only once. This declaration is contradicted,
however, by the plaintiff herself who testified that in 1955 the defendant "used to have a short
visit there," which statement implies more than one visit.
The defendant, for his part, denied having abandoned his wife and children, but admitted that in
1957, or a year before the filing of the action, he started to live separately from his wife. When
he transferred his living quarters to his office in Mandalagan, Bacolod City, his intention was not,
as it never has been, to abandon his wife and children, but only to teach her a lesson as she was
quarrelsome and extremely jealous of every woman. He decided to live apart from his wife
temporarily because at home he could not concentrate on his work as she always quarreled with
him, while in Mandalagan he could pass the nights in peace. Since 1953 he stayed in Manila for
some duration of time to manage their expanding business and look for market outlets for their
texboard products. Even the plaintiff admitted in both her original and amended complaints that
"sometime in 1953, because of the expanding business of the herein parties, the defendant
established an office in the City of Manila, wherein some of the goods, effects and merchandise
manufactured or produced in the business enterprises of the parties were sold or disposed of".
From the time he started living separately in Mandalagan up to the filing of the complaint, the
plaintiff herself furnished him food and took care of his laundry. This latter declaration was not
rebutted by the plaintiff.
The defendant, with vehemence, denied that he has abandoned his wife and family, averring
that he has never failed, even for a single month, to give them financial support, as witnessed by
the plaintiff's admission in her original and amended complaints as well as in open court that
during the entire period of their estrangement, he was giving her around P500 a month for
support. In point of fact, his wife and children continued to draw allowances from his office of a
total ranging from P1,200 to P1,500 a month. He financed the education of their children, two of
whom were studying in Manila at the time of the trial and were not living with the plaintiff. While
in Bacolod City, he never failed to visit his family, particularly the children. His wife was always in
bad need of money because she played mahjong, an accusation which she did not traverse,
explaining that she played mahjong to entertain herself and forget the infidelities of her
husband.
Marcos V. Ganaban, the manager of the Philippine Texboard Factory, corroborated the testimony
of the defendant on the matter of the support the latter gave to his family, by declaring in court
that since the start of his employment in 1950 as assistant general manager, the plaintiff has
been drawing an allowance of P1,000 to P1,500 monthly, which amount was given personally by
the defendant or, in his absence, by the witness himself.
The defendant denied that he ever maintained a mistress in Manila. He came to know Nenita
Hernandez when she was barely 12 years old, but had lost track of her thereafter. His constant
presence in Manila was required by the pressing demands of an expanding business. He denied
having destroyed the alleged note which the plaintiff claimed to have come from Nenita, nor
having seen, previous to the trial, the letter exh. C. The allegation of his wife that he had a
concubine is based on mere suspicion. He had always been faithful to his wife, and not for a
single instance had he been caught or surprised by her with another woman.

On the matter of the alleged abuse by the defendant of his powers of administration of the
conjugal partnership, the plaintiff declared that the defendant refused and failed to inform her of
the progress of their various business concerns. Although she did not allege, much less prove,
that her husband had dissipated the conjugal properties, she averred nevertheless that her
husband might squander and dispose of the conjugal assets in favor of his concubine. Hence, the
urgency of separation of property.
The defendant's answer to the charge of mismanagement is that he has applied his industry,
channeled his ingenuity, and devoted his time, to the management, maintenance and expansion
of their business concerns, even as his wife threw money away at the mahjong tables. Tangible
proof of his endeavors is that from a single cargo truck which he himself drove at the time of
their marriage, he had built up one business after another, the Speedway Trucking Service, the
Negros Shipping Service, the Bacolod Press, the Philippine Texboard Factory, and miscellaneous
other business enterprises worth over a million pesos; that all that the spouses now own have
been acquired through his diligence, intelligence and industry; that he has steadily expanded the
income and assets of said business enterprises from year to year, contrary to the allegations of
the complainant, as proved by his balance sheet and profit and loss statements for the year 1958
and 1959 (exhibits 1 and 2); and that out of the income of their enterprises he had purchased
additional equipment and machineries and has partially paid their indebtedness to the Philippine
National Bank and the Development Bank of the Philippines.
It will be noted that the plaintiff does not ask for legal separation. The evidence presented by her
to prove concubinage on the part of the defendant, while pertinent and material in the
determination of the merits of a petition for legal separation, must in this case be regarded
merely as an attempt to bolster her claim that the defendant had abandoned her, which
abandonment, if it constitutes abandonment in law, would justify separation of the conjugal
assets under the applicable provisions of article 178 of the new Civil Code which read: "The
separation in fact between husband and wife without judicial approval, shall not affect the
conjugal partnership, except that . . . if the husband has abandoned the wife without just cause
for at least one year, she may petition the court for a receivership, or administration by her of
the conjugal partnership property, or separation of property". In addition to abandonment as a
ground, the plaintiff also invokes article 167 of the new Civil Code in support of her prayer for
division of the matrimonial assets. This article provides that "In case of abuse of powers of
administration of the conjugal partnership property by the husband, the courts, on the petition of
the wife, may provide for a receivership, or administration by the wife, or separation of property".
It behooves us, therefore, to inquire, in the case at bar, whether there has been abandonment, in
the legal sense, by the defendant of the plaintiff, and/or whether the defendant has abused his
powers of administration of the conjugal partnership property, so as to justify the plaintiff's plea
for separation of property.
We have made a searching scrutiny of the record, and it is our considered view that the
defendant is not guilty of abandonment of his wife, nor of such abuse of his powers of
administration of the conjugal partnership, as to warrant division of the conjugal assets.
The extraordinary remedies afforded to the wife by article 178 when she has been abandoned by
the husband for at least one year are the same as those granted to her by article 167 in case of
abuse of the powers of administration by the husband. To entitle her to any of these remedies,
under article 178, there must be real abandonment, and not mere separation. 1 The
abandonment must not only be physical estrangement but also amount to financial and moral
desertion.

Although an all-embracing definition of the term "abandonment " is yet to be spelled out in
explicit words, we nevertheless can determine its meaning from the context of the Law as well as
from its ordinary usage. The concept of abandonment in article 178 may be established in
relation to the alternative remedies granted to the wife when she has been abandoned by the
husband, namely, receivership, administration by her, or separation of property, all of which are
designed to protect the conjugal assets from waste and dissipation rendered imminent by the
husband's continued absence from the conjugal abode, and to assure the wife of a ready and
steady source of support. Therefore, physical separation alone is not the full meaning of the term
"abandonment", if the husband, despite his voluntary departure from the society of his spouse,
neither neglects the management of the conjugal partnership nor ceases to give support to his
wife.
The word "abandon", in its ordinary sense, means to forsake entirely; to forsake or renounce
utterly. 2 The dictionaries trace this word to the root idea of "putting under a bar". The emphasis
is on the finality and the publicity with which some thing or body is thus put in the control of
another, and hence the meaning of giving up absolutely, with intent never again to resume or
claim one's rights or interests. 3 When referring to desertion of a wife by a husband, the word has
been defined as "the act of a husband in voluntarily leaving his wife with intention to forsake her
entirely, never to return to her, and never to resume his marital duties towards her, or to claim
his marital rights; such neglect as either leaves the wife destitute of the common necessaries of
life, or would leave her destitute but for the charity of others." 4 The word "abandonment", when
referring to the act of one consort of leaving the other, is "the act of the husband or the wife who
leaves his or her consort wilfully, and with an intention of causing per perpetual
separation." 5 Giving to the word "abandoned", as used in article 178, the meaning drawn from
the definitions above reproduced, it seems rather clear that to constitute abandonment of the
wife by the husband, there must be absolute cessation of marital relations and duties and rights,
with the intention of perpetual separation.
Coming back to the case at bar, we believe that the defendant did not intend to leave his wife
and children permanently. The record conclusively shows that he continued to give support to his
family despite his absence from the conjugal home. This fact is admitted by the complainant,
although she minimized the amount of support given, saying that it was only P500 monthly.
There is good reason to believe, however, that she and the children received more than this
amount, as the defendant's claim that his wife and children continued to draw from his office
more than P500 monthly was substantially corroborated by Marcos Ganaban, whose declarations
were not rebutted by the plaintiff. And then there is at all no showing that the plaintiff and the
children were living in want. On the contrary, the plaintiff admitted, albeit reluctantly, that she
frequently played mahjong, from which we can infer that she had money; to spare.
The fact that the defendant never ceased to give support to his wife and children negatives any
intent on his part not to return to the conjugal abode and resume his marital duties and rights.
In People v. Schelske, 6 it was held that where a husband, after leaving his wife, continued to
make small contributions at intervals to her support and that of their minor child, he was not
guilty of their "abandonment", which is an act of separation with intent that it shall be perpetual,
since contributing to their support negatived such intent. In re Hoss' Estate, supra, it was ruled
that a father did not abandon his family where the evidence disclosed that he almost always did
give his wife part of his earnings during the period of their separation and that he gradually paid
some old rental and grocery bills.

With respect to the allegation that the defendant maintained a concubine, we believe, contrary
to the findings of the court a quo, that the evidence on record fails to preponderate in favor of
the plaintiff's thesis. The proof that Nenita Hernandez was the concubine of the defendant and
that they were living as husband and wife in Manila, is altogether too indefinite. Aside from the
uncorroborated statement of the plaintiff that she knew that Nenita Hernandez was her
husband's concubine, without demonstrating by credible evidence the existence of illicit relations
between Nenita and the defendant, the only evidence on record offered to link the defendant to
his alleged mistress is exh. C. The plaintiff however failed to connect authorship of the said letter
with Nenita, on the face whereof the sender merely signed as "D" and the addressee was one
unidentified "Darling". The plaintiff's testimony on cross-examination, hereunder quoted,
underscores such failure:
Q. You personally never received any letter from Nenita?
A. No.
Q. Neither have you received on any time until today from 1949 from Nenita?
A. No.
Q. Neither have you written to her any letter yourself until now?
A. Why should I write a letter to her.
Q. In that case, Mrs. De la Cruz, you are not familiar with the handwriting of Nenita. Is that right?
A. I can say that Nenita writes very well.
Q. I am not asking you whether she writes very well or not but, my question is this: In view of the
fact that you have never received a letter from Nenita, you have ot sent any letter to her, you
are not familiar with her handwriting?
A. Yes.
Q. You have not seen her writing anybody?
A. Yes.
Anent the allegation that the defendant had mismanaged the conjugal partnership property, the
record presents a different picture. There is absolutely no evidence to show that he has
squandered the conjugal assets. Upon the contrary, he proved that through his industry and zeal,
the conjugal assets at the time of the trial had increased to a value of over a million pesos.
The lower court likewise erred in holding that mere refusal or failure of the husband as
administrator of the conjugal partnership to inform the wife of the progress of the family
businesses constitutes abuse of administration. For "abuse" to exist, it is not enough that the
husband perform an act or acts prejudicial to the wife. Nor is it sufficient that he commits acts
injurious to the partnership, for these may be the result of mere inefficient or negligent
administration. Abuse connotes willful and utter disregard of the interests of the partnership,
evidenced by a repetition of deliberate acts and/or omissions prejudicial to the latter. 7
If there is only physical separation between the spouses (and nothing more), engendered by the
husband's leaving the conjugal abode, but the husband continues to manage the conjugal

properties with the same zeal, industry, and efficiency as he did prior to the separation, and
religiously gives support to his wife and children, as in the case at bar, we are not disposed to
grant the wife's petition for separation of property. This decision may appear to condone the
husband's separation from his wife; however, the remedies granted to the wife by articles 167
and 178 are not to be construed as condonation of the husband's act but are designed to protect
the conjugal partnership from waste and shield the wife from want. Therefore, a denial of the
wife's prayer does not imply a condonation of the husband's act but merely points up the
insufficiency or absence of a cause of action.1wph1.t
Courts must need exercise judicial restraint and reasoned hesitance in ordering a separation of
conjugal properties because the basic policy of the law is homiletic, to promote healthy family
life and to preserve the union of the spouses, in person, in spirit and in property.
Consistent with its policy of discouraging a regime of separation as not in harmony with the unity
of the family and the mutual affection and help expected of the spouses, the Civil Code (both old
and new) requires that separation of property shall not prevail unless expressly stipulated in
marriage settlements before the union is solemnized or by formal judicial decree during the
existence of the marriage (Article 190, new Civil Code, Article 1432, old Civil Code): and in the
latter case, it may only be ordered by the court for causes specified in Article 191 of the new Civil
Code. 8
Furthermore, a judgment ordering the division of conjugal assets where there has been no real
abandonment, the separation not being wanton and absolute, may altogether slam shut the door
for possible reconciliation. The estranged spouses may drift irreversibly further apart; the already
broken family solidarity may be irretrievably shattered; and any flickering hope for a new life
together may be completely and finally extinguished.
The monthly alimony in the sum of P2,000 which was allowed to the wife in 1958, long before the
devaluation of the Philippine peso in 1962, should be increased to P3,000.
On the matter of attorney's fees, it is our view that because the defendant, by leaving the
conjugal abode, has given cause for the plaintiff to seek redress in the courts, and ask
for adequate support, an award of attorney's fees to the plaintiff must be made. Ample authority
for such award is found in paragraphs 6 and 11 of article 2208 of the new Civil Code which
empower courts to grant counsel's fees "in actions for legal support" and in cases "where the
court deems it just and equitable that attorney's fees . . . should be recovered." However, an
award of P10,000, in our opinion, is, under the environmental circumstances, sufficient.
This Court would be remiss if it did not, firstly, remind the plaintiff and the defendant that the law
enjoins husband and wife to live together, and, secondly, exhort them to avail of mutually,
earnestly and steadfastly all opportunities for reconciliation to the end that their marital
differences may be happily resolved, and conjugal harmony may return and, on the basis of
mutual respect and understanding, endure.
ACCORDINGLY, the judgment a quo, insofar as it decrees separation of the conjugal properties, is
reversed and set aside. Conformably to our observations, however, the defendant is ordered to
pay to the plaintiff, in the concept of support, the amount of P3,000 per month, until he shall
have rejoined her in the conjugal home, which amount may, in the meantime, be reduced or
increased in the discretion of the court a quo as circumstances warrant. The award of attorney's
fees to the plaintiff is reduced to P10,000, without interest. No pronouncement as to costs.

G.R. No. 82606 December 18, 1992

PRIMA PARTOSA-JO, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and HO HANG (with aliases JOSE JO and
CONSING), respondents.

CRUZ, J.:
The herein private respondent, Jose Jo, admits to having cohabited with three women and
fathered fifteen children. The first of these women, the herein petitioner, claims to be his legal
wife whom he begot a daughter, Monina Jo. The other women and their respective offspring are
not parties of these case.
In 1980, the petitioner filed a complaint against Jo for judicial separation of conjugal property,
docketed as Civil Case No. 51, in addition to an earlier action for support, also against him and
docketed as Civil Case No. 36, in the Regional Trial Court of Negros Oriental, Branch 35.
The two cases were consolidated and tried jointly. On November 29, 1983, Judge German G. Lee,
Jr. rendered an extensive decision, the dispositive portion of which read:
WHEREFORE, in view of all the foregoing arguments and considerations, this court hereby holds
that the plaintiff Prima Partosa was legally married to Jose Jo alias Ho Hang, alias Consing, and,
therefore, is entitled to support as the lawfully wedded wife and the defendant is hereby ordered
to give a monthly support of P500.00 to the plaintiff Prima Partosa, to be paid on or before the
5th day of every month, and to give to the plaintiff the amount of P40,000.00 for the
construction of the house in Zamboanguita, Negros Oriental where she may live separately from
the defendant being entitled under the law to separate maintenance being the innocent spouse
and to pay the amount of P19,200.00 to the plaintiff by way of support in arrears and to pay the
plaintiff the amount of P3,000.00 in the concept of attorney's fees.
As will be noticed, there was a definite disposition of the complaint for support but none of the
complaint for judicial separation of conjugal property.
Jo elevated the decision to the Court of Appeals, which affirmed the ruling of the trial court in the
complaint for support. 1 The complaint for judicial separation of conjugal property was dismissed
for lack of a cause of action and on the ground that separation by agreement was not covered by
Article 178 of the Civil Code.
When their motions for reconsideration were denied, both parties came to this Court for relief.
The private respondent's petition for review on certiorari was dismissed for tardiness in our
resolution dated February 17, 1988, where we also affirmed the legality of the marriage between
Jose and Prima and the obligation of the former to support her and her daughter.
This petition deals only with the complaint for judicial separation of conjugal property.
It is here submitted that the Court of Appeals erred in holding that: a) the judicial separation of
conjugal property sought was not allowed under Articles 175, 178 and 191 of the Civil Code; and
b) no such separation was decreed by the trial court in the dispositive portion of its decision.

The private respondent contends that the decision of the trial court can longer be reviewed at
this time because it has a long since become final and executory. As the decretal portion clearly
made no disposition of Civil Case No. 51, that case should be considered impliedly dismissed.
The petitioner should have called the attention of the trial court to the omission so that the
proper rectification could be made on time. Not having done so, she is now concluded by the said
decision, which can no longer be corrected at this late hour.
We deal first with the second ground.
While admitting that no mention was made of Civil Case No. 51 in the dispositive portion of the
decision of the trial court, the petitioner argues that a disposition of the case was nonetheless
made in the penultimate paragraph of the decision reading as follows:
It is, therefore, hereby ordered that all properties in question are considered properties of Jose Jo,
the defendant in this case, subject to separation of property under Article 178, third paragraph of
the Civil Code, which is subject of separate proceedings as enunciated herein.
The petitioner says she believed this to be disposition enough and so did not feel it was
necessary for her to appeal, particularly since the order embodied in that paragraph was in her
favor. It was only when the respondent court observed that there was no dispositive portion
regarding that case and so ordered its dismissal that she found it necessary to come to this Court
for relief.
The petitioner has a point.
The dispositive portion of the decision in question was incomplete insofar as it carried no ruling
on the complaint for judicial separation of conjugal property although it was extensively
discussed in the body of the decision. The drafting of the decision was indeed not exactly careful.
The petitioner's counsel, noting this, should have taken immediate steps for the rectification for
the omission so that the ruling expressed in the text of the decision could have been embodied
in the decretal portion. Such alertness could have avoided this litigation on a purely technical
issue.
Nevertheless, the technicality invoked in this case should not be allowed to prevail over
considerations of substantive justive. After all, the technical defect is not insuperable. We have
said time and again that where there is an ambiguity caused by an omission or a mistake in the
dispositive portion of the decision, this Court may clarify such an ambiguity by an amendment
even after the judgment have become final. 2 In doing so, the Court may resort to the pleading
filed by the parties and the findings of fact and the conclusions of law expressed in the text or
body of the decision. 3
The trial court made definite findings on the complaint for judicial separation of conjugal
property, holding that the petitioner and the private respondent were legally married and that
the properties mentioned by the petitioner were acquired by Jo during their marriage although
they were registered in the name of the apparent dummy.
There is no question therefore that the penultimate paragraph of the decision of the trial court
was a ruling based upon such findings and so should have been embodied in the dispositive
portion. The respondent court should have made the necessary modification instead of
dismissing Civil Case No. 51 and thus upholding mere form over substance.

In the interest of substantive justice, and to expedite these proceedings, we hereby make such
modification.
And now to the merits of Civil Case No. 51.
The Court of Appeals dismissed the complaint on the ground that the separation of the parties
was due to their agreement and not because of abondonment. The respondent court relied
mainly on the testimony of the petitioner, who declared under oath that she left Dumaguete City,
where she and Jo were living together "because that was our agreement." It held that a
agreement to live separately without just cause was void under Article 221 of the Civil Code and
could not sustain any claim of abandonment by the aggrieved spouse. Its conclusion was that
the only remedy availabe to the petitioner was legal separation under Article 175 of the Civil
Code, 4 by virtue of which the conjugal partnership of property would be terminated.
The petitioner contends that the respondent court has misinterpreted Articles 175, 178 and 191
of the Civil Code. She submits that the agreement between her and the private respondent was
for her to temporarily live with her parents during the initial period of her pregnancy and for him
to visit and support her. They never agreed to separate permanently. And even if they did, this
arrangement was repudiated and ended in 1942, when she returned to him at Dumaguete City
and he refused to accept her.
The petitioner invokes Article 178 (3) of the Civil Code, which reads:
Art. 178. The separation in fact between husband and wife without judicial approval, shall not
affect the conjugal partnership, except that:
xxx xxx xxx
(3) If the husband has abandoned the wife without just cause for at least one year, she may
petition the court for a receivership, or administration by her of the conjugal partnership property
or separation of property.
The above-quoted provision has been superseded by Article 128 of the Family Code, which
states:
Art. 128. If a spouse without just cause abandons the other or fails to comply with his or her
obligations to the family, the aggrieved spouse may petition the court for receivership, for
judicial separation of property, of for authority to be the sole administrator of the conjugal
partnership property, subject to such precautionary conditions as the court may impose.
The obligations to the family mentioned in the preceding paragraph refer to martial, parental or
property relations.
A spouse is deemed to have abondoned the other when he or she has left the conjugal dwelling
without any intention of returning. The spouse who has left the conjugal dwelling for a period of
three months or has failed within the same period to give any information as to his or her
whereabouts shall be prima facie presumed to have no intention of returning to the conjugal
dwelling.
Under the this provision, the aggrieved spouse may petition for judicial separation on either of
these grounds:
1. Abondonment by a spouse of the other without just cause; and

2. Failure of one spouse to comply with his or her obligations to the family without just cause,
even if she said spouse does not leave the other spouse.
Abandonment implies a departure by one spouse with the avowed intent never to return,
followed by prolonged absence without just cause, and without in the meantime providing in the
least for one's family although able to do so. 5 There must be absolute cessation of marital
relations, duties and rights, with the intention of perpetual separation. 6This idea is clearly
expressed in the above-quoted provision, which states that "a spouse is deemed to have
abandoned the other when he or she has left the conjugal dwelling without any intention of
returning."
The record shows that as early as 1942, the private respondent had already rejected the
petitioner, whom he denied admission to their conjugal home in Dumaguete City when she
returned from Zamboanguita. The fact that she was not accepted by Jo demonstrates all too
clearly that he had no intention of resuming their conjugal relationship. Moreover, beginning
1968 until the determination by this Court of the action for support in 1988, the private
respondent refused to give financial support to the petitioner. The physical separation of the
parties, coupled with the refusal by the private respondent to give support to the petitioner,
sufficed to constitute abandonment as a ground for the judicial separation of their conjugal
property.
In addition, the petitioner may also invoke the second ground allowed by Article 128, for the fact
is that he has failed without just cause to comply with his obligations to the family as husband or
parent. Apart form refusing to admit his lawful wife to their conjugal home in Dumaguete City, Jo
has freely admitted to cohabiting with other women and siring many children by them. It was his
refusal to provide for the petitioner and their daughter that prompted her to file the actions
against him for support and later for separation of the conjugal property, in which actions,
significantly, he even denied being married to her. The private respondent has not established
any just cause for his refusal to comply with his obligations to his wife as dutiful husband.
Their separation thus falls also squarely under Article 135 of the Family Code, providing as
follows:
Art. 135. Any of the following shall be considered sufficient cause for judicial separation of
property:
xxx xxx xxx
(6) That at the time of the petition, the spouse have been separated in fact for at least one year
and reconciliation is highly improbable.
The amendments introduced in the Family Code are applicable to the case before us although
they became effective only on August 3, 1988. As we held in Ramirez v. Court of Appeals: 7
The greater weight of authority is inclined to the view that an appellate court, in reviewing a
judgment on appeal, will dispose of a question according to the law prevailing at the term of such
disposition, and not according to the law prevailing at the time of rendition of the appealed
judgement. The court will therefore reverse a judgement which was correct at the time it was
originally rendered where, by statute, there has been an intermediate change in the law which
renders such judgement erroneous at the time the case was finally disposed of on appeal.

The order of judicial separation of the properties in question is based on the finding of both the
trial and respondent courts that the private respondent is indeed their real owner. It is these
properties that should now be divided between him and the petitioner, on the assumption that
they were acquired during coverture and so belong to the spouses half and half. As the private
respondent is a Chinese citizen, the division must include such properties properly belonging to
the conjugal partnership as may have been registered in the name of other persons in violation
of the Anti-Dummy Law.
The past has caught up with the private respondent. After his extramarital flings and a
succession of illegitimate children, he must now make an accounting to his lawful wife of the
properties he denied her despite his promise to their of his eternal love and care.
WHEREFORE, the petition is GRANTED and the assailed decision of the respondent court is
MODIFIED. Civil Case No. 51 is hereby decided in favor the plaintiff, the petitioner herein, and the
conjugal property of the petitioner and the private respondent is hereby ordered divided between
them, share and share alike. This division shall be implemented by the trial court after
determination of all the properties pertaining to the said conjugal partnership, including those
that may have been illegally registered in the name of the persons.
SO ORDERED.