CPG Exclusive property G.R. No. L-23352 December 31, 1925 THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO.

, LTD., INC., plaintiff-appellee, vs. JUAN M. POIZAT, ET AL., defendants. GABRIELA ANDREA DE COSTER, appellant. Antonio M. Opisso for appellant. Eusebio Orense and Fisher, DeWitt, Perkins & Brady for appellee. STATEMENT August 25, 1905, the appellant, with his consent executed to and in favor of her husband, Juan M. Poizat, a general power of attorney, which among other things, authorized him to do in her name, place and stead, and making use of her rights and actions, the following things: To loan or borrow any amount in cash or fungible conditions he may deem convenient collecting or paying the principal or interest, for the time, and under the principal of the interest, when they respectively should or private documents, and making there transactions with or without mortgage, pledge or personal securities. November 2, 1912, Juan M. Poizat applied for and obtained from the plaintiff a credit for the sum of 10,000 Pounds Sterling to be drawn on the" Banco Espanol del Rio de la Plata" in London not later than January, 1913. Later, to secure the payment of the loan, he executed a mortgage upon the real property of his wife, the material portions of which are as follows: This indenture entered into the City of Manila, P.I., by and between Juan M. Poizat, merchant, of legal age, married and residing in the City of Manila, in his own behalf and in his capacity also as attorney in fact of his wife Dona Gabriela Andrea de Coster by virtue of the authority vested in him by the power of attorney duly executed and acknowledge in this City of Manila, etc. First. That in the name of Dona Gabriela Andrea de Coster, wife of Don Juan M. Poizat, there is registered on page 89 (back) of Book 3, Urban Property consisting of a house and six adjacent warehouse, all of strong material and constructed upon her own land, said property being Nos. 5, 3, and 1 of Calle Urbiztondo, and No. 13 of Calle Barraca in the District of Binondo in the City of Manila, etc. Second. That the marriage of Don Juan M. Poizat and Dona Gabriela Andrea de Coster being subsisting and undissolved, and with the object of constructing a new building over the land hereinabove described, the aforesaid house with the six warehouse thereon constructed were demolished and in their stead a building was erected, by permission of the Department of Engineering and Public Works of this City issued November 10, 1902, said building being of strong material which, together with the land, now forms only one piece of real estate, etc; which property must be the subject of a new description in which it must appear that the land belongs in fee simple and in full ownership as paraphernal property to the said Dona Gabriela Andrea de Coster and the new building thereon constructed to the conjugal partnership of Don Juan M. Poizat and the said Dona Gabriela Andrea de Coster, etc. Third. That the Philippine Sugar Estates Development Company, Ltd., having granted to Don Juan M. Poizat a credit of Ten Thousand Pounds

Sterling with a mortgage upon the real property above described, etc. (a) That the Philippine sugar Estated Development Company, Ltd. hereby grants Don Juan M. Poizat a credit in the amount of Ten Thousand Pounds sterling which the said Mr. Poizat may use within the entire month of January of the coming year, 1913, upon the bank established in the City of London, England, known as 'Banco Espanol del Rio de la Plata, which shall be duly advised, so as to place upon the credit of Mr. Poizat the said amount of Ten Thousand Pounds Sterling, after executing the necessary receipts therefore. (c) That Don Juan M. Poizat personally binds himself and also binds his principal Dona Gabriela Andrea de Coster to pay the Philippine Sugar Estates Development Company, Ltd., for the said amount of Ten Thousand Pounds Sterling at the yearly interest of 9 per cent which shall be paid at the end of each quarter, etc. (d) Don Juan M. Poizat also binds himself personally and his principal Dona Gabriela Andrea de Coster to return to the Philippine Sugar Estates Development Company, Ltd., the amount of Ten Thousand Pounds Sterling within four years from the date that the said Mr. Poizat shall receive the aforesaid sum as evidenced by the receipt that he shall issue to the 'BAnco Espanol del Rio de la Plata.' (e) As security for the payment of the said credit, in the case Mr. Poizat should receive the money, together with its interest hereby constitutes a voluntary especial mortgage upon the Philippine Sugar Estates Development Company, Ltd., f the urban property above described, etc. (f) Don Juan M. Poizat in the capacity above mentioned binds himself, should he receive the amount of the credit, and while he may not return the said amount of Ten thousand Pounds Sterling to the Philippine Sugar Estates Development Company, Ltd., to insure against fire the mortgaged property in an amount not less than One hundred Thousand Pesos, etc. Fourth. Don Buenaventura Campa in the capacity that he holds hereby accepts this indenture in the form, manner, and condition executed by Don Juan M. Poizat by himself personally and in representation of his wife Dona Gabriela Andrea de Coster, in favor of the Philippine Sugar Estates Development Company, Ltd., In witness whereof, we have signed these presents in Manila, this November 2, 1912. (Sgd.) JUAN M. POIZAT THE PHILIPPINE SUGAR ESTATES DEVELOPMENT COMPANY, LTD. The President BUENAVENTURA CAMPA Signed in the presence of: (Sgd.) MANUEL SAPSANO JOSE SANTOS UNITED STATES OF AMERICA PHILIPPINE ISLANDS CITY OF MANILA In the City of Manila P.I., this November 2, 1912, before me Enrique Barrera y Caldes, a Notary Public for said city, personally appeared before me Don Juan M. Poizat and Don Buenaventura Campa, whom i know to be the persons who executed the

foregoing document and acknowledged same before me as an act of their free will and deed; the first exhibited to me his certificate of registry No. 14237, issued in Manila, February 6, 1912, the second did not exhibit any cedula, being over sixty years old; this document bears No. 495, entered on page 80 of my Notarial registry. Before me: (Sgd.) Dr. ENRIQUE BARRERA Y CALDES [NOTARIAL SEAL] Notary Public Up to the 31st of December , 1912 For failure to pay the loan, on November 12, 1923, the plaintiff brought an action against the defendants to foreclose the mortgage. In this action, the summons was served upon the defendant Juan M. Poizat only, who employed the services of Antonio A. Sanz to represent the defendants. The attorneys filed a general appearance for all of them, and later an answer in the nature of a general denial. February 18, 1924, when the case was called for trial, Jose Galan y Blanco in open court admitted all of the allegations made in the compliant, and consented that judgment should be rendered as prayed for . Later, Juan M. Poizat personally, for himself and his codefendants, file an exception to the judgment and moved for a new trial, which was denied March 31, 1924. August 22, 1924, execution was issued directing the sale of the mortgaged property to satisfy the judgment.itc@alf September 18, 1924, the property, which had an assessed value of P342,685, was sold to the plaintiff for the sum of P100,000. September 23, 1924, and for the first time, the appellant personally appeared by her present attorney, and objected to the confirmation of the sale, among other things, upon illegally executed, and is null and void, because the agent of this defendant was not authorized to execute it. That there was no consideration. That the plaintiff, with full knowledge that J. M. Poizat was acting beyond the scope of his authority, filed this action to subject the property of this defendant to the payment of the debt which, as to appellant, was not a valid contract. That the judgment was rendered by confession when the plaintiff and J. M. Poizat knew that Poizat was not authorized to confess judgment, and that the proceeding was a constructive fraud. That at the time the action was filed and the judgment rendered, this defendant was absent from the Philippine Islands, and had no knowledge of the execution of the mortgage. That after the judgment of foreclosure became final and order of the sale of the property was made, that this defendant for the first time learned that he mortgage contract was tainted with fraud, and that she first knew and learned of such things on the 11th of September, 1924. That J. M. Poizat was not authorized to bind her property to secure the payment of his personal debts. That the plaintiff knew that the agent of the defendant was not authorized to bind her or her property. That the mortgage was executed to secure a loan of 10,000 Pounds which was not made to this defendant or for her benefit, but was made to him personally and for the personal use and benefit of J. M. Poizat. Among other things, the mortgage in question, marked Exhibit B, was introduced in evidence, and made a part of the record. All of such objections to the confirmation of the sale were overruled, from which Gabriela Andrea de Coster appealed and assigns the following errors: I. The lower court erred in finding that Juan M. Poizat was, under the power of attorney which he had from Gabriela Andrea de Coster, authorized to mortgage her paraphernal property as security for a JOHNS, J.:

loan made to him personally by the Philippine Sugar Estates Development Company, Ltd., to him; II. The lower court erred in not finding that under the power of attorney, Juan M. Poizat had no authority to make Gabriela Andrea de Coster jointly liable with him for a loan of 10,000 pound made by the Philippine Sugar Estates Development Co., Ltd., to him; III. The lower court erred in not finding that the Philippine Sugar Estates Development Company, Ltd., had knowledge and notice of the lack of authority of Don Juan M. Poizat to execute the mortgage deed Exhibit A of the plaintiff; IV. The lower court erred in holding that Gabriela Andrea de Coster was duly summoned in this case; and in holding that Attorney Jose Galan y Blanco could lawfully represent her or could, without proof of express authority, confess judgment against Gabriela Andrea de Coster; V. The court erred in holding that the judgment in this case has become final and res judicata; VI. The court erred in approving the judicial sale made by the sheriff at an inadequate price; VII. The lower court erred in not declaring these proceedings, the judgment and the sale null and void.

For the reasons stated in the decision of this court in the Bank of the Philippine Islands vs. De Coster, the alleged service of the summons in the foreclosure suit upon the appellant was null and void. In fact, it was made on J. M. Poizat only, and there is no claim or pretense that any service of summons was ever made upon her. After service was made upon him, the attorneys in question entered their appearance for all of the defendants in the action, including the appellant upon whom no service was ever made, and file an answer for them. Later, in open court, it was agreed that judgment should be entered for the plaintiff as prayed for in its complaint. The appellant contends that the appearance made by the attorneys for her was collusive and fraudulent, and that it was made without her authority, and there maybe some truth in that contention. It is very apparent that t the attorneys made no effort to protect or defend her legal rights, but under our view of the case, that question is not material to this decision. The storm center of this case is the legal force and effect of the real mortgage in question , by whom and for whom it was executed, and upon whom is it binding, and whether or not it is null and void as to the appellant. It is admitted that the appellant gave her husband, J. M. Poizat, the power of attorney in question, and that it is in writing and speaks for itself. If the mortgage was legally executed by her attorney in fact for her and in her name as her act and deed, it would be legal and binding upon her and her property. If not so executed, it is null and void. It appears upon the face of the instrument that J. M. Poizat as the husband of the wife, was personally a party to the mortgage, and that he was the only persona who signed the mortgage. and the he was the only person who signed the mortgage. It does not appear from his signature that he signed it for his wife or as her agent or attorney in fact, and there is nothing in his signature that would indicate that in the signing of it by him, he intended that his signature should bind his wife. It also appears from the acknowledgment of the instrument that he executed it as his personal act and deed

only, and there is nothing to show that he acknowledge it as the agent or attorney in fact of his wife, or as her act and deed. The mortgage recites that it was entered into by and between Juan M. Poizat in his own behalf and as attorney in fact of his wife. That the record title of the mortgaged property is registered in the name of his wife, Dona Gabriela Andrea de Coster. That they were legally married, and that the marriage between them has never been dissolved. That with the object of constructing a new building on the land. the six warehouses thereon were demolished, and that a new building was erected. That the property is the subject of a new registration in which it must be made to appear that the land belongs in fee simple and in full ownership as the paraphernal property of the wife, and that the new building thereon is the property of the conjugal partnership. "That the Philippine Sugar Estates Development Company, Ltd., having granted to Don Juan M. Poizat a credit of 10,000 Pounds Sterling with the mortgage upon the real property above described," that the Development Company "hereby grants Don Juan M. Poizat a credit in the amount of 10,000 Pounds Sterling which the said Mr. Poizat may use, etc." That should he personally or on behalf of his wife use the credit he acknowledges, that he and his principal are indebted to the Development Company in the sum of 10,000 Pounds Sterling which "they deem to have received as a loan from the said commercial entity." That he binds himself and his wife to pay that amount with a yearly interest of 9 per cent, payable quarterly. That as security for the payment of said credit in the case Mr. Poizat should receive the money at any time, with its interest, "the said Mr. Poizat in the dual capacity that above mentioned binds himself, should he receive the amount of the credit." It thus appears that at the time the power of attorney and the mortgage were executed, Don Juan M. Poizat and Gabriela Andrea de Coster were husband and wife, and that the real property upon which the mortgage was her sole property before her marriage, and that it was her paraphernal property at the time the mortgage was executed, and that the new building constructed on the land was the property of the conjugal partnership. The instrument further recites that the Development Company "hereby grants Don Juan M. Poizat a credit in the amount of 10,000 Pounds Sterling which the said Mr. Poizat may use within the entire month of January of the coming year, 1913." In other words, it appears upon the face of the mortgage that the loan was made to the husband with authority to use the money for his sole use and benefit. With or without a power of attorney, the signature of the husband would be necessary to make the instrument a valid mortgage upon the property of the wife, even though she personally signed the mortgage. It is contended that the instrument upon its face shows that its purpose and intent was to bind the wife. But it also shows upon its face that the credit was granted to Don Juan M. Poizat which he might use within the "entire month of January." Any authority which he had to bind his wife should be confined and limited to his power of attorney. Giving to it the very broadest construction, he would not have any authority to mortgage her property, unless the mortgage was executed for her "and in her name, place or stead," and as her act and deed. The mortgage in question was not so executed. it was signed by Don Juan M. Poizat in his own name, his own proper person, and by him only, and it was acknowledge by him in his personal capacity, and there is nothing in either the signature or acknowledgment which shows or tends to show that it was executed for or on behalf of his wife or "in her name, place or stead." It is contended that the instrument shows upon its face that it was intended to make the wife liable for his debt, and to mortgage her property to secure its payment, and that his personal signature should legally be construed as the joined or dual signature of both the husband and that of the wife as

her agent. That is to say, construing the recitals in the mortgage and the instrument as a whole, his lone personal signature should be construed in a double capacity and binding equally and alike both upon the husband and the wife. No authority has been cited, and none will ever be found to sustain such a construction. As the husband of the wife, his signature was necessary to make the mortgage valid. In other words, to make it valid, it should have been signed by the husband in his own proper person and by him as attorney in fact for his wife, and it should have been executed by both husband and wife, and should have been so acknowledged. There is no principle of law by which a person can become liable on a real mortgage which she never executed either in person or by attorney in fact. It should be noted that this is a mortgage upon real property, the title to which cannot be divested except by sale on execution or the formalities of a will or deed. For such reasons, the law requires that a power of attorney to mortgage or sell real property should be executed with all of the formalities required in a deed. For the same reason that the personal signature of Poizat, standing alone, would not convey the title of his wife in her own real property, such a signature would not bind her as a mortgagor in real property, the title to which was in her name. We make this broad assertion that upon the facts shown in the record, no authority will ever be found to hold the wife liable on a mortgage of her real property which was executed in the form and manner in which the mortgage in question was executed. The real question involved is fully discussed in Mechem on Agency, volume 1, page 784, in which the author says: It is to be observed that the question here is not how but how such an authority is to be executed. it is assumed that the agent was authorized to bind his principal, but the question is, has he done so. That is the question here. Upon that point, there is a full discussion in the following sections, and numerous authorities are cited: SEC. 1093. Deed by agent must purport to be made and sealed in the name of the principal. It is a general rule in the law of agency that in order to bind the principal by a deed executed by an agent, the deed must upon its grace purport to be made, signed and sealed in the name of the principal. If, on the contrary, though the agent describes name, the words of grant, covenant and the like, purport upon the face of the instrument to be his, and the seal purports to be his seal, the deed will bind the agent if any one and not the principal. SEC. 1101. Whose deed is a given deed. How question determined. In determining whether a given deed is the deed of the principal, regard may be had First, to the party named as grantor. Is the deed stated to be made by the principal or by some other person? Secondly, to the granting clause. Is the principal or the agent the person who purports to make the grant? Thirdly, to the covenants, if any. Are these the covenants of the principal? Fourthly, to the testimonium clause. Who is it who is to set his name and seal in testimony of the grant? Is it the principal or the agent? And Fifthly, to the signature and seal. Whose signature and seal are these? Are they those of the principal or of the agent? If upon such an analysis the deed does not upon its face purport to be the deed of the principal, made, signed, sealed and delivered in his name and his deed, it cannot take effect as such.

SEC. 1102. Not enough to make deed the principal's that the agent is described as such. It is not enough merely that not acted in the name of the principal. Nor is it ordinarily sufficient that he describes himself in the deed as acting by virtue of a power of attorney or otherwise, or for or in behalf, or as attorney, of the principal, or as a committee, or as trustee of a corporation, etc.; for these expressions are usually but descriptio personae, and if, in fact, he has acted of action thereon accrue to and against him personally and not to or against the principal, despite these recital. SEC. 1103. Not principal's deed where agent appears as grantor and signer. Neither can the deed ordinarily be deemed to be the deed of the principal where the agent is the one who is named as the grantor or maker, and he is also the one who signs and seals it. . . . SEC. 1108. . . . But however clearly the body of the deed may show an intent that it shall be the act of he principal, yet unless its executed by his attorney for him, it is not his deed, but the deed of the attorney or of no one. The most usual and approved form of executing a deed by attorney is by his writing the name of the principal and adding by A B his attorney or by his attorney A B.' That is good law. Applying it to the facts, under his power of attorney, Juan M. Poizat may have had authority to borrow money and mortgage the real property of his wife, but the law specifies how and in what manner it must be done, and the stubborn fact remains that, as to the transaction in question, that power was never exercised. The mortgage in question was executed by him and him only, and for such reason, it is not binding upon the wife, and as to her, it is null and void. It follows that the whole decree against her and her paraphernal property and the sale of that property to satisfy the mortgage are null and void, and that any title she may have had in or to her paraphernal property remains and is now vested in the wife as fully and as absolutely as if the mortgage had never been executed, the decree rendered or the property sold. As to Don Juan M. Poizat, the decree is valid and binding, and remains in full force and effect. It is an undisputed fact, which appears in the mortgage itself, that the land in question was the paraphernal property of the wife, but after the marriage the old buildings on the property were torn down and a new building constructed and, in the absence of evidence to the contrary, it must be presumed that the new building is conjugal property of the husband and wife. As such, it is subject of the debts of the conjugal partnership for the payment or security of which the husband has the power to mortgage or otherwise encumber the property . It is very probable that his particular question was not fully presented to or considered by the lower court. The mortgage as to the paraphernal property of the wife is declared null and void ab initio, and as to her personally, the decree is declared null and void, and as to her paraphernal property, the sale is set aside and vacated, and held for naught, leaving it free and clear from the mortgage, decree and sale, and in the same condition as if the mortgage had never been executed, with costs in favor of the appellant. So ordered. Johnson, Malcolm, Ostrand, and Romualdez, JJ., concur. [G.R. No. 143297. February 11, 2003] SPOUSES VIRGILIO and MICHELLE CASTRO, MOISES B. MIAT and ALEXANDER V. MIAT, petitioners, vs. ROMEO V. MIAT, respondent.

PUNO, J.: This is a petition for review on certiorari of the decision rendered by the Court of Appeals in CA-G.R. CV No. 43053, entitled Romeo V. Miat vs. Spouses Virgilio and Michelle Castro, Moises B. Miat and Alexander V. Miat, dated November 29, 1999.[1] The evidence shows that the spouses Moises and Concordia Miat bought two (2) parcels of land during their coverture. The first is located at Wawa La Huerta, Airport Village, Paraaque, Metro Manila[2] and covered by TCT No. S33535.[3] The second is located at Paco, Manila,[4] and covered by TCT No. 163863.[5] Concordia died on April 30, 1978. They had two (2) children: Romeo and Alexander. While at Dubai, United Arab Emirates, Moises agreed that the Paraaque and Paco properties would be given to Romeo and Alexander.[6] However, when Moises returned in 1984, he renegotiated the agreement with Romeo and Alexander. He wanted the Paraaque property for himself but would leave the Paco property to his two (2) sons. They agreed.[7] It appears that Moises and Concordia bought the Paco property on installment basis on May 17, 1977.[8] However, it was only on December 14, 1984 that Moises was able to pay its balance.[9] He secured the title over the property in his name as a widower.[10] According to Romeo, Moises violated the agreement that their (Romeos and Alexanders) names would be registered in the title once the balance was paid.[11] Upon demand, Moises gave the owners duplicate of the Paco property title to Romeo. Romeo and Alexander lived on the Paco property. They paid its realty taxes and fire insurance premiums.[12] In early August 1985, Alexander and his first wife left the house for personal reasons. In April 1988, Alexander agreed to sell to Romeo his share in the Paco property for P42,750.00.[13] He received a partial payment of P6,000.00 from Romeo.[14] Nonetheless, he never executed a deed of assignment in favor of Romeo, as he had lots of work to do and had no time and x x x there [wa]s nothing to worry [as] the title [wa]s in *Romeos+ possession.*15+ In February 1988, Romeo learned from his godmother in his wedding, Mrs. Rosalina Castro, mother of petitioner Virgilio Castro, that she had given Moises P30,000.00 as downpayment for the sale by Moises of the Paco property to her son Virgilio.[16] On December 1, 1988, Romeo was brought by petitioner Virgilio Castro to the chambers of Judge Anunciacion of the Metropolitan Trial Court of Manila where the status of the Paco property was discussed.[17] On December 16, 1988, he received a letter from petitioner Castros lawyer asking for a conference. Romeo was informed that the Paco property had been sold to Castro by Moises by virtue of a deed of sale dated December 5, 1988[18] for ninety-five thousand (P95,000.00) pesos.[19] Ceferino Miat, brother of petitioner Moises,[20] testified that even before the death of Concordia[21] there was already an agreement that the Paco property would go to Romeo and Alexander.[22] This was reiterated at the deathbed of Concordia.[23] When Moises returned to Manila for good, the agreement was reiterated[24] in front of the extended Miat family members.[25] Initially, Romeo and Alexander orally[26] divided the Paco property between themselves.[27] Later, however, Alexander sold his share to Romeo.[28] Alexander was given P6,000.00 as downpayment. This was corroborated by Pedro Miranda and Virgilio Miat. Miranda worked with Moises at the Bayview Hotel and the Hotel

DECISION

Filipinas.[29] His wife is the cousin of Romeo and Alexander.[30] Virgilio is the brother of Moises. Moises confirmed that he and his wife Concordia bought the Paco property on installment from the Fraval Realty, Inc. There was still a balance of P12,000.00 on the lot at the time of his wifes death.*31+ He paid P3,500.00 in 1981[32] and P8,500.00 in 1984.[33] He registered the title in his name. Romeo then borrowed the title as he was going to mortgage it to his friend Lorenzo.[34] Later, Moises ran into financial difficulties and he mortgaged for P30,000.00 the Paco property to the parents of petitioner Virgilio Castro.[35] He informed Romeo and Alexander that he would be forced to sell the Paco property if they would not redeem the mortgage. He accompanied his children to the Manila City Hall to discuss its sale with a judge and a lawyer. Also present in the meeting were petitioner Virgilio Castro and his parents. After the conference, he proceeded to sell the property to the petitioners-spouses Castro.[36] Alexander testified that after the sale, his father got one-third (1/3) of the proceeds while he received two-thirds (2/3). Romeo did not get a single centavo but was given the right to till their Nueva Ecija property.[37] From his share of the proceeds, Alexander intended to return to Romeo the P6,000.00 given him earlier by the latter. He considered the money to be a personal debt due Romeo, not Romeos downpayment of his share in the Paco property.[38] The buyer of the property, petitioner Virgilio P. Castro, testified that he informed Romeo that his father Moises was selling the Paco property. Romeo replied: Bahala siya.*39+ The second time he informed Romeo about the pending sale was when he brought Romeo, Alexander and Moises to Judge Anunciacion to consult him *as to+ who has *the+ right over the *Paco+ property.*40+ He further declared that he went to the Metropolitan Trial Court because [he] wanted to be sure whether *he+ could buy the property.*41+ During the meeting, he was told by Romeo that the Paco property was already given to him (Romeo) by Moises. He admitted knowing that the title to the Paco property was in the possession of Romeo.[42] However, he proceeded with the sale. Moises assured him that he would be able to get the title from Romeo.[43] These events precipitated the case at bar. Romeo filed an action to nullify the sale between Moises and the Castro spouses; to compel Moises and Alexander to execute a deed of conveyance or assignment of the Paco property to him upon payment of the balance of its agreed price; and to make them pay damages.[44] After trial, the Regional Trial Court rendered its decision,[45] which in its dispositive portion states as follows: WHEREFORE, in view of the foregoing, the Court hereby orders the following: 1) Defendant Alexander V. Miat to execute a deed of sale of his share in the property upon payment by plaintiff Romeo of the balance of the purchase price in the sum of P36,750.00; 2) Plaintiff Romeo V. Miat to recognize as valid the sale of defendant Moises share in the house and lot located at No. 1495-C Fabie Estate, Paco, Manila; 3) the dismissal of defendants counter-claim; and 4) defendants to pay the costs of suit. Both parties appealed to Court of Appeals. On November 29, 1999, the appellate Court modified the Decision as follows:[46] WHEREFORE, the appealed decision is MODIFIED as follows:

(1) The deed of sale entered into between defendantsappellants Moises Miat and spouses Virgilio and Michelle Castro is hereby NULLIFIED. (2) Defendant-appellants Moises Miat and Alexander Miat are ordered to execute a deed of conveyance over the Paco property with TCT No. 16383 (sic) in favor of plaintiffappellant Romeo Miat, upon payment by Romeo Miat of the balance of the purchase price in the sum of P36,750.00. (3) Defendants-appellants are ordered, jointly and severally, to pay plaintiff-appellant attorneys fees in the amount of P30,000.00 and to pay the costs of suit. Reconsideration was denied on May 17, 2000. Hence, this petition where the petitioners assign the following errors: THE RESPONDENT COURT OF APPEALS GRAVELY ERRED AND DID PETITIONERS AN INJUSTICE IN MODIFYING OR REVERSING THE DECISION OF THE TRIAL COURT DATED MARCH 17, 1993 WHICH ORDERED RESPONDENT ROMEO MIAT TO RECOGNIZE AS VALID THE DEED OF SALE ENTERED INTO BETWEEN PETITIONERS MOISES MIAT AND SPS. VIRGILIO AND MICHELLE CASTRO PERTAINING TO PETITIONER MOISES MIATS SHARE IN THE HOUSE AND LOT LOCATED IN PACO, MANILA, WHEN IT DECLARED SAID DEED OF SALE NULLIFIED. THE RESPONDENT COURT OF APPEALS PATENTLY ERRED IN AFFIRMING OR UPHOLDING THE TRIAL COURTS DECISION ORDERING ALEXANDER MIAT AND INCLUDING MOISES MIAT TO EXECUTE A DEED OF CONVEYANCE OVER THE PACO PROPERTY WITH TCT NO. 16383 IN FAVOR OF ROMEO MIAT UPON PAYMENT BY THE LATTER OF THE BALANCE OF THE PURCHASE PRICE IN THE SUM OF P36,750.00. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN FURTHER ORDERING PETITIONERS TO PAY RESPONDENT, JOINTLY AND SEVERALLY, ATTORNEYS FEES IN THE AMOUNT OF P30,000.00 AND AFFIRMING THE COURT A QUOS ORDER FOR THE PETITIONERS TO PAY THE COST OF SUIT.*47+ The issues can be simplified thus: 1. Whether the Paco property is conjugal or capital; 2. Whether there was a valid oral partition covering the said property; and 3. Whether the spouses Castro were buyers in good faith.

The petitioners contend that the Paco property is the capital property of Moises. They allege that the spouses Moises and Concordia purchased the property on installment basis in 1977 but stress that it was Moises who paid the balance of twelve thousand (P12,000.00) pesos in 1984. At that time, Concordia had long been dead. She died in 1978. We disagree. Since Moises and Concordia were married before the effectivity of the Family Code, the provisions of the New Civil Code apply. Article 153(1) of the New Civil Code[48] provides as follows: The following are conjugal partnership property:

(1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; x x x. The records show that the Paco property was acquired by onerous title during the marriage out of the common fund. It is clearly conjugal property. Petitioners also overlook Article 160 of the New Civil Code. It provides that all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. This article does not require proof that the property was acquired with funds of the partnership. The presumption applies even when the manner in which the property was acquired does not appear.[49] Petitioners reliance on Lorenzo vs. Nicolas*50+ is misplaced. That case involved two (2) parcels of land that Magdalena Clemente purchased on installment and started paying for when she was not yet married to Manuel Lorenzo. When she married Manuel Lorenzo she continued to pay the installments in her own name. Upon completion of payment, the deed of final conveyance was executed in her sole favor and the land was registered in the exclusive name of Magdalena Clemente. The Court ruled that the two (2) parcels of land were the paraphernal properties of Magdalena Clemente, thus: x x x the fact that all receipts for installments paid even during the lifetime of the late husband Manuel Lorenzo were issued in the name of Magdalena Clemente and that the deed of sale or conveyance of parcel no. 6 was made in her name in spite of the fact that Manuel Lorenzo was still alive shows that the two parcels of land belonged to Magdalena Clemente.*51+ (emphasis supplied) In the case at bar, Moises and Concordia bought the Paco property during their marriage Moises did not bring it into their marriage, hence it has to be considered as conjugal. Likewise, Jovellanos vs. Court of Appeals[52] cited by the petitioners is inapropos. In said case, Daniel Jovellanos, while he was still married to his first wife, Leonor Dizon, entered into a contract of lease and conditional sale with Philamlife. He continued paying the rental after the death of his first wife and during the subsistence of his marriage with his second wife, Anette Jovellanos. He completed the payment during the existence of his second marriage. The Court ruled that the property belonged to the conjugal partnership with the second wife as Daniel Jovellanos acquired ownership thereof only upon full payment of the said amount hence, although he had been in possession of the premises since September 2, 1955, it was only on January 8, 1975 that the Philamlife executed the deed of absolute sale thereof in his favor. x x x Since as early as 1967, he was already married to Annette H. Jovellanos, this property necessarily belonged to his conjugal partnership with his second wife.*53+ In the case at bar, Moises and Concordia executed a Deed of Sale with Mortgage. The contract is one of sale the title passed to them upon delivery of the Paco property.[54] In fine, title was gained during the conjugal partnership. II The next issue is whether the oral partition between Moises and his sons, Romeo and Alexander, involving the said property is valid. In ruling in favor of its validity which we affirm, the appellate court relied on a portion of Moises letter to Romeo, which reads as follows:[55] KAYA PAG-USAPAN LANG NINYONG MABUTI ANG ANONG BALAK AT GUSTO NINYONG PAGHATI SA BAHAY, AT YAN AY PAGPAPASIYAHAN KO KONG (sic) MAKAKABUTI SA INYONG

DALAWA. AT WALA AKONG HIGIT NA PAPABURAN SA INYONG DALAWA PAREHO KAYONG MAHAL SA AKIN, HINDI AKO TULAD SA IBANG MAGULANG NA HINDI PAREHO ANG PAGTINGIN SA MGA ANAK. ANG BAHAY[56] AY PARA SA INYONG DALAWA, LALO NA NGAYONG MAY ASAWA NA KAYONG PAREHO. x x x *All caps in the original+ Ceferino Miat, brother of Moises, testified that before Concordia died, there was an agreement that the Paraaque property would go to Moises while the Paco property would go to Romeo and Alexander. This was reiterated at the deathbed of Concordia. When Moises returned to Manila for good, the agreement was affirmed in front of the extended Miat family members. Initially, Romeo and Alexander orally divided the Paco property between them. Later, Alexander sold his share to Romeo. This agreement was attested to by the extended Miat Family members in a document marked as Exhibit D, which reads as follows:[57] Pebrero 18, 1989

SINUMPAANG SALAYSAY SA MGA KINAUUKULAN, Kami, na nakalagda sa ibaba, ay nanunumpa sa harapan ng Punong Barangay, na si G. REYNALDO P. WONG: Na kami ay mga saksi sa kasunduan nina G. MOISES B. MIAT, asawa ng yumao na, na si Gng. CONCORDIA VALENZUELA MIAT, at mga anak nitong sina G. ROMEO V. MIAT at G. ALEXANDER V. MIAT: Na ang kasunduan ay ang mga sumusunod: 1. Na ang pag-aaring lupa (132 sq. m.) ng mag-asawa (MOISES at CONCORDIA) sa Airport Village sa Paraaque, Metro Manila ay mapupunta kay G. MOISES B. MIAT; 2. Na ang pag-aaring lupa at bahay (70 sq. m.) ng mag-asawa ring nabanggit ay sa magkapatid na ROMEO at ALEXANDER mapupunta at ito ay nasa address na 1495-C FABIE, PACO, MANILA. MGA SUMUMPA:[58] (Sgd.) 1) Ceferino B. Miat (kapatid ni Moises) (Sgd.) 2) Avelina J. Miat (asawa ni Ceferino) (Sgd.) 3) Virgilio Miat (kapatid ni Moises) (Sgd.) 4) Aurea Miat-Joson (kapatid ni Moises) (Sgd.) 5) Jose A. Joson (asawa ni Aurea) (Sgd.) 6) Lorenzo C. Valenzuela (kapatid ni Concordia) (Sgd.) 7) Patricio C. Valenzuela (kapatid ni Concordia) (Sgd.) 8) Victor C. Valenzuela (kapatid ni Concordia) (Sgd.) 9) Elsa P. Miranda

(Sgd.) REYNALDO P. WONG Kapitan ng Barangay Sta. Maria, Licab, N.E.(emphasis supplied) The consideration for the grant to Romeo and Alexander of the Paco property was best expressed by Moises himself in his letter to Romeo, which reads as follows:

Labis akong nagpapasalamat at nauunawaan ninyo ang mga pagkakamali ko at mga kasalanan kong nagawa sa inyong mag-iina, huwag kayong mag-alala at lahat nang naipundar namin nang (sic) inyong nanay ay sa inyong dalawang magkapatid mapupunta.*59+ We also hold that the oral partition between Romeo and Alexander is not covered by the Statute of Frauds. It is enforceable for two reasons. Firstly, Alexander accepted the six thousand (P6,000.00) pesos given by Romeo as downpayment for the purchase of his share in the Paco property. Secondly, Romeo and his witnesses, Ceferino Miat and Pedro Miranda, who testified regarding the sale of Alexanders share to Romeo, were intensely questioned by petitioners counsel.*60+ In the recent case of Pada-Kilario vs. Court of Appeals, we held:[61] *N+o law requires partition among heirs to be in writing and be registered in order to be valid. The requirement in Sec. 1, Rule 74 of the Revised Rules of Court that a partition be put in a public document and registered, has for its purpose the protection of creditors and the heirs themselves against tardy claims. The object of registration is to serve as constructive notice to others. It follows then that the intrinsic validity of partition not executed with the prescribed formalities is not undermined when no creditors are involved. Without creditors to take into consideration, it is competent for the heirs of an estate to enter into an agreement for distribution thereof in a manner and upon a plan different from those provided by the rules from which, in the first place, nothing can be inferred that a writing or other formality is essential for the partition to be valid. The partition of inherited property need not be embodied in a public document so as to be effective as regards the heirs that participated therein. The requirement of Article 1358 of the Civil Code that acts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property, must appear in a public instrument, is only for convenience, non-compliance with which does not affect the validity or enforceability of the acts of the parties as among themselves. And neither does the Statute of Frauds under Article 1403 of the New Civil Code apply because partition among heirs is not legally deemed a conveyance of real property, considering that it involves not a transfer of property from one to the other but rather, a confirmation or ratification of title or right of property that an heir is renouncing in favor of another heir who accepts and receives the inheritance. x x x. III The appellate court also correctly held that the petitionersspouses Castro were not buyers in good faith. A purchaser in good faith is one who buys property and pays a full and fair price for it at the time of the purchase or before any notice of some other persons claim on or interest in it. The rule is settled that a buyer of real property, which is in the possession of persons other than the seller, must be wary and should investigate the rights of those in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as buyer in good faith.[62] This finding of the appellate court that the Castro spouses were not buyers in good faith is supported by evidence. Petitioner Virgilio Castro admitted in his testimony that Romeo told him that Moises had given the Paco property to them. In fact, they consulted Judge Anunciacion on who had the right to the property Moises or Romeo. As well pointed out by the appellate court:

In the case at bench, the said spouses have actual knowledge of the adverse claim of plaintiff-appellant. The most protuberant index that they are not buyers in good faith is that before the sale, Virgilio Castro talked with Romeo Miat on the supposed sale. Virgilio testified that together with Romeo, Alexander and Moses Miat, they went to Judge Anunciacion of Manila in order to find out if Romeo has a right over the property. Romeo told Virgilio in that meeting that Romeo has a right over the Paco property by virtue of an oral partition and assignment. Virgilio even admitted that he knew Romeo was in possession of the title and Romeo then insisted that he is the owner of the property. Virgilio Castro is further aware that plaintiff is in possession of the property, they being neighbors. A purchaser who was fully aware of another persons possession of the lot he purchased cannot successfully pretend to be an innocent purchaser for value.*63+ It is abundantly clear that the petitioners-spouses Castro did not buy the Paco property in good faith. They have no right to the property. WHEREFORE, the decision of the appellate court in CA-G.R. CV No. 43053 is affirmed. Costs against petitioners. SO ORDERED. G.R. No. L-55322 February 16, 1989 MOISES JOCSON, petitioner, vs. HON. COURT OF APPEALS, AGUSTINA JOCSON-VASQUEZ, ERNESTO VASQUEZ, respondents. Dolorfino and Dominguez Law Officers for petitioner. Gabriel G. Mascardo for private respondents. MEDIALDEA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court of the decision of the Court of Appeals in CAG.R. No. 63474, promulgated on April 30, 1980, entitled "MOISES JOCSON, plaintiff-appellee, versus AGUSTINA JOCSON-VASQUEZ and ERNESTO VASQUEZ, defendantappellants," upholding the validity of three (3) documents questioned by Moises Jocson, in total reversal of the decision of the then Court of First Instance of Cavite, Branch I, which declared them as null and void; and of its resolution, dated September 30, 1980, denying therein appellee's motion for reconsideration. Petitioner Moises Jocson and respondent Agustina JocsonVasquez are the only surviving offsprings of the spouses Emilio Jocson and Alejandra Poblete, while respondent Ernesto Vasquez is the husband of Agustina. Alejandra Poblete predeceased her husband without her intestate estate being settled. Subsequently, Emilio Jocson also died intestate on April 1, 1972. As adverted to above, the present controversy concerns the validity of three (3) documents executed by Emilio Jocson during his lifetime. These documents purportedly conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers almost all of his properties, including his one-third (1/3) share in the estate of his wife. Petitioner Moises Jocson assails these documents and prays that they be declared null and void and the properties subject matter therein be partitioned between him and Agustina as the only heirs of their deceased parents. The documents, which were presented as evidence not by Moises Jocson, as the party assailing its validity, but rather by herein respondents, are the following:

1) "Kasulatan ng Bilihan ng Lupa," marked as Exhibit 3 (pp. 12-13, Records) for the defendant in the court a quo, dated July 27, 1968. By this document Emilio Jocson sold to Agustina JocsonVasquez six (6) parcels of land, all located at Naic, Cavite, for the sum of ten thousand P10,000.00 pesos. On the same document Emilio Jocson acknowledged receipt of the purchase price, thus: Na ngayon, alang-alang sa halagang SAMPUNG LIBONG PISO (P10,000) salaping Pilipino na aking tinanggap ng buong kasiyahan loob at ang pagkakatanggap ay aking hayagang inaamin sa pamamagitan ng kasulatang ito, sa aking anak na si Agustina Jocson, na may sapat na gulang, mamamayang Pilipino, asawa ni Ernesto Vasquez, at naninirahan sa Poblacion, Naic, Cavite, ay aking ipinagbile ng lubusan at kagyat at walang ano mang pasubali ang nabanggit na anim na pirasong lupa na nasa unang dahon ng dokumentong ito, sa nabanggit na Agustina Jocson, at sa kaniyang tagapagmana o makakahalili at gayon din nais kong banggitin na kahit na may kamurahan ang ginawa kong pagbibile ay dahilan sa ang nakabile ay aking anak na sa akin at mapaglingkod, madamayin at ma-alalahanin, na tulad din ng isa ko pang anak na lalaki. Ang kuartang tinanggap ko na P10,000.00, ay gagamitin ko sa aking katandaan at mga huling araw at sa aking mga ibang mahahalagang pangangailangan. [Emphasis supplied] Na nais ko ring banggitin na ang ginawa kong ito ay hindi labag sa ano mang batas o kautusan, sapagkat ang aking pinagbile ay akin at nasa aking pangalan. Ang mga lupang nasa pangalan ng aking nasirang asawa ay hindi ko ginagalaw ni pinakikialaman at iyon ay dapat na hatiin ng dalawa kong anak alinsunod sa umiiral na batas (p. 13, Records.) 2) "Kasulatan ng Ganap na Bilihan,"dated July 27,1968, marked as Exhibit 4 (p. 14, Records). On the face of this document, Emilio Jocson purportedly sold to Agustina Jocson-Vasquez, for the sum of FIVE THOUSAND (P5,000.00) PESOS, two rice mills and a camarin (camalig) located at Naic, Cavite. As in the first document, Moises Jocson acknowledged receipt of the purchase price: 'Na alang-alang sa halagang LIMANG LIBONG PISO (P5,000.00) salaping Pilipino na aking tinanggap ng buong kasiyahan loob sa aking anak na Agustina Jocson .... Na ang halagang ibinayad sa akin ay may kamurahan ng kaunti ngunit dahil sa malaking pagtingin ko sa kaniya ... kaya at pinagbile ko sa kaniya ang mga nabanggit na pagaari kahit na hindi malaking halaga ... (p. 14, Records). 3) Lastly, the "Deed of Extrajudicial Partition and Adjudication with Sale, "dated March 9, 1969, marked as Exhibit 2 (p. 10-11, Records), whereby Emilio Jocson and Agustina Jocson-Vasquez, without the participation and intervention of Moises Jocson, extrajudicially partitioned the unsettled estate of Alejandra Poblete, dividing the same into three parts, one-third (1/3)

each for the heirs of Alejandra Poblete, namely: Emilio Jocson, Agustina JocsonVasquez and Moises Jocson. By the same instrument, Emilio sold his one- third (1/3) share to Agustin for the sum of EIGHT THOUSAND (P8,000.00) PESOS. As in the preceding documents, Emilio Jocson acknowledged receipt of the purchase price: Now for and in consideration of the sum of only eight thousand (P8,000.00) pesos, which I, the herein Emilio Jocson had received from my daughter Agustina Jocson, do hereby sell, cede, convey and transfer, unto the said Agustina Jocson, her heirs and assigns, administrators and successors in interests, in the nature of absolute and irrevocable sale, all my rights, interest, shares and participation, which is equivalent to one third (1/3) share in the properties herein mentioned and described the one third being adjudicated unto Agustina Jocson and the other third (1/3) portion being the share of Moises Jocson. (p. 11, Records). These documents were executed before a notary public. Exhibits 3 and 4 were registered with the Office of the Register of Deeds of Cavite on July 29, 1968 and the transfer certificates of title covering the properties therein in the name of Emilio Jocson, married to Alejandra Poblete," were cancelled and new certificates of title were issued in the name of Agustina Jocson-Vasquez. Exhibit 2 was not registered with the Office of the Register of Deeds. Herein petitioner filed his original complaint (Record on Appeal, p. 27, Rollo) on June 20,1973 with the then Court of First Instance of Naic, Cavite (docketed as Civil Case No. TM531), and which was twice amended. In his Second Amended Complaint (pp. 47-58, Record on Appeal), herein petitioner assailed the above documents, as aforementioned, for being null and void. It is necessary to partly quote the allegation of petitioner in his complaint for the reason that the nature of his causes of action is at issue, thus: 8. [With regard the first document, that] the defendants, through fraud, deceit, undue pressure and influence and other illegal machinations, were able to induce, led, and procured their father ... to sign [the] contract of sale ..., for the simulated price of P10,000.00, which is a consideration that is shocking to the conscience of ordinary man and despite the fact that said defendants have no work or livelihood of their own ...; that the sale is null and void, also, because it is fictitious, simulated and fabricated contract x x x (pp. 52-53, Record on Appeal). [Emphasis supplied] xxx xxx xxx 12. [With regards the second and third document, that they] are null and void because the consent of the father, Emilio Jocson, was obtained with fraud, deceit, undue pressure, misrepresentation and unlawful machinations and trickeries committed by the defendant on him; and that the said contracts are simulated, fabricated and fictitious, having been made deliberately to exclude the plaintiff from participating and with the dishonest and selfish motive on the part of the defendants to defraud him of his legitimate share on said properties

[subject matter thereof]; and that without any other business or employment or any other source of income, defendants who were just employed in the management and administration of the business of their parents, would not have the sufficient and ample means to purchase the said properties except by getting the earnings of the business or by simulated consideration ... (pp. 54-55, Record on Appeal). [Emphasis supplied] Petitioner explained that there could be no real sale between a father and daughter who are living under the same roof, especially so when the father has no need of money as the properties supposedly sold were all income-producing. Further, petitioner claimed that the properties mentioned in Exhibits 3 and 4 are the unliquidated conjugal properties of Emilio Jocson and Alejandra Poblete which the former, therefore, cannot validly sell (pp. 53, 57, Record on Appeal). As far as Exhibit 2 is concerned, petitioner questions not the extrajudicial partition but only the sale by his father to Agustina of the former's 1/3 share (p. 13, Rollo). The trial court sustained the foregoing contentions of petitioner (pp. 59-81, Record on Appeal). It declared that the considerations mentioned in the documents were merely simulated and fictitious because: 1) there was no showing that Agustina Jocson-Vasquez paid for the properties; 2) the prices were grossly inadequate which is tantamount to lack of consideration at all; and 3) the improbability of the sale between Emilio Jocson and Agustina Jocson-Vasquez, taking into consideration the circumstances obtaining between the parties; and that the real intention of the parties were donations designed to exclude Moises Jocson from participating in the estate of his parents. It further declared the properties mentioned in Exhibits 3 and 4 as conjugal properties of Emilio Jocson and Alejandra Poblete, because they were registered in the name of "Emilio Jocson, married to Alejandra Poblete" and ordered that the properties subject matter of all the documents be registered in the name of herein petitioners and private respondents. On appeal, the Court of Appeals in CA-G.R. No. 63474-R rendered a decision (pp. 29-42, Rollo) and reversed that of the trial court's and ruled that: 1. That insofar as Exhibits 3 and 4 are concerned the appellee's complaint for annulment, which is indisputably based on fraud, and undue influence, is now barred by prescription, pursuant to the settled rule that an action for annulment of a contract based on fraud must be filed within four (4) years, from the discovery of the fraud, ... which in legal contemplation is deemed to be the date of the registration of said document with the Register of Deeds ... and the records admittedly show that both Exhibits 3 and 4, were all registered on July 29, 1968, while on the other hand, the appellee's complaint was filed on June 20, 1973, clearly beyond the aforesaid four-year prescriptive period provided by law; 2. That the aforesaid contracts, Exhibits 2, 3, and 4, are decisively not simulated or fictitious contracts, since Emilio Jocson actually and really intended them to be effective and binding against him, as to divest him of the full dominion and ownership over the properties subject of said assailed contracts, as in fact all his titles over the same were all cancelled and new ones issued to appellant Agustina Jocson-Vasquez ...; 3. That in regard to Exhibit 2, the same is valid and subsisting, and the partition

with sale therein made by and between Emilio Jocson and Agustina JocsonVasquez, affecting the 2/3 portion of the subject properties described therein have all been made in accordance with Article 996 of the New Civil Code on intestate succession, and the appellee's (herein petitioner) remaining 1/3 has not been prejudiced (pp. 41-42, Rollo). In this petition for review, Moises Jocson raised the following assignments of errors: 1. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE SUIT FOR THE ANNULMENT OF CONTRACTS FILED BY PETITIONERS WITH THE TRIAL COURT IS "BASED ON FRAUD" AND NOT ON ITS INEXISTENCE AND NULLITY BECAUSE OF IT'S BEING SIMULATED OR FICTITIOUS OR WHOSE CAUSE IS CONTRARY TO LAW, MORALS AND GOOD CUSTOMS? II. HAS THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE COMPLAINT FILED BY PETITIONER IN THE TRIAL COURT IS BARRED BY PRESCRIPTION? III. HAS THE RESPONDENT COURT OF APPEALS ERRED IN NOT DECLARING AS INEXISTENT AND NULL AND VOID THE CONTRACTS IN QUESTION AND IN REVERSING THE DECLARING DECISION OF THE TRIAL COURT? (p. 2, Rollo) I. The first and second assignments of errors are related and shall be jointly discussed. According to the Court of Appeals, herein petitioner's causes of action were based on fraud. Under Article 1330 of the Civil Code, a contract tainted by vitiated consent, as when consent was obtained through fraud, is voidable; and the action for annulment must be brought within four years from the time of the discovery of the fraud (Article 1391, par. 4, Civil Code), otherwise the contract may no longer be contested. Under present jurisprudence, discovery of fraud is deemed to have taken place at the time the convenant was registered with the Register of Deeds (Gerona vs. De Guzman, No. L-19060, May 29,1964, 11 SCRA 153). Since Exhibits 3 and 4 were registered on July 29, 1968 but Moises Jocson filed his complaint only on June 20, 1973, the Court of Appeals ruled that insofar as these documents were concerned, petitioner's "annulment suit" had prescribed. If fraud were the only ground relied upon by Moises Jocson in assailing the questioned documents, We would have sustained the above pronouncement. But it is not so. As pointed out by petitioner, he further assailed the deeds of conveyance on the ground that they were without consideration since the amounts appearing thereon as paid were in fact merely simulated. According to Article 1352 of the Civil Code, contracts without cause produce no effect whatsoever. A contract of sale with a simulated price is void (Article 1471; also Article 1409 [3]]), and an action for the declaration of its nullity does not prescribe (Article 1410, Civil Code; See also, Castillo v. Galvan, No. L-27841, October 20, l978, 85 SCRA 526). Moises Jocsons saction, therefore, being for the judicial declaration of nullity of Exhibits 3 and 4 on the ground of simulated price, is imprescriptible. II.

For petitioner, however, the above discussion may be purely academic. The burden of proof in showing that contracts lack consideration rests on he who alleged it. The degree of proof becomes more stringent where the documents themselves show that the vendor acknowledged receipt of the price, and more so where the documents were notarized, as in the case at bar. Upon consideration of the records of this case, We are of the opinion that petitioner has not sufficiently proven that the questioned documents are without consideration. Firstly, Moises Jocson's claim that Agustina Jocson-Vasquez had no other source of income other than what she derives from helping in the management of the family business (ricefields and ricemills), and which was insufficient to pay for the purchase price, was contradicted by his own witness, Isaac Bagnas, who testified that Agustina and her husband were engaged in the buy and sell of palay and rice (p. 10, t.s.n., January 14, 1975). Amazingly, petitioner himself and his wife testified that they did not know whether or not Agustina was involved in some other business (p. 40, t.s.n., July 30, 1974; p. 36, t.s.n., May 24, 1974). On the other hand, Agustina testified that she was engaged in the business of buying and selling palay and rice even before her marriage to Ernesto Vasquez sometime in 1948 and continued doing so thereafter (p. 4, t.s.n., March 15, 1976). Considering the foregoing and the presumption that a contract is with a consideration (Article 1354, Civil Code), it is clear that petitioner miserably failed to prove his allegation. Secondly, neither may the contract be declared void because of alleged inadequacy of price. To begin with, there was no showing that the prices were grossly inadequate. In fact, the total purchase price paid by Agustina Jocson-Vasquez is above the total assessed value of the properties alleged by petitioner. In his Second Amended Complaint, petitioner alleged that the total assessed value of the properties mentioned in Exhibit 3 was P8,920; Exhibit 4, P3,500; and Exhibit 2, P 24,840, while the purchase price paid was P10,000, P5,000, and P8,000, respectively, the latter for the 1/3 share of Emilio Jocson from the paraphernal properties of his wife, Alejandra Poblete. And any difference between the market value and the purchase price, which as admitted by Emilio Jocson was only slight, may not be so shocking considering that the sales were effected by a father to her daughter in which case filial love must be taken into consideration (Alsua-Betts vs. Court of Appeals, No. L-4643031, April 30, 1979, 92 SCRA 332). Further, gross inadequacy of price alone does not affect a contract of sale, except that it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract (Article 1470, Civil Code) and there is nothing in the records at all to indicate any defect in Emilio Jocson's consent. Thirdly, any discussion as to the improbability of a sale between a father and his daughter is purely speculative which has no relevance to a contract where all the essential requisites of consent, object and cause are clearly present. There is another ground relied upon by petitioner in assailing Exhibits 3 and 4, that the properties subject matter therein are conjugal properties of Emilio Jocson and Alejandra Poblete. It is the position of petitioner that since the properties sold to Agustina Jocson-Vasquez under Exhibit 3 were registered in the name of "Emilio Jocson, married to Alejandra Poblete," the certificates of title he presented as evidence (Exhibits "E', to "J', pp. 4-9, Records) were enough proof to show that the properties covered therein were acquired during the marriage of their parents, and, therefore, under Article 160 of the Civil Code, presumed to be conjugal properties. Article 160 of the Civil Code provides that: All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.

In Cobb-Perez vs. Hon. Gregorio Lantin, No. L-22320, May 22, 1968, 23 SCRA 637, 644, We held that: Anent their claim that the shares in question are conjugal assets, the spouses Perez adduced not a modicum of evidence, although they repeatedly invoked article 160 of the New Civil Code which provides that ... . As interpreted by this Court, the party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. In other words, proof of acquisition during the coverture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. Thus in Camia de Reyes vs. Reyes de Ilano [62 Phil. 629, 639], it was held that "according to law and jurisprudence, it is sufficient to prove that the Property was acquired during the marriage in order that the same may be deemed conjugal property." In the recent case of Maramba vs. Lozano, et. al. [L-21533, June 29, 1967, 20 SCRA 474], this Court, thru Mr. Justice Makalintal, reiterated that "the presumption under Article 160 of the Civil Code refers to property acquired during the marriage," and then concluded that since "there is no showing as to when the property in question was acquired...the fact that the title is in the wife's name alone is determinative." Similarly, in the case at bar, since there is no evidence as to when the shares of stock were acquired, the fact that they are registered in the name of the husband alone is an indication that the shares belong exclusively to said spouse.' This pronouncement was reiterated in the case of Ponce de Leon vs. Rehabilitation Finance Corporation, No. L-24571, December 18, 1970, 36 SCRA 289, and later in Torela vs. Torela, No. 1,27843, October 11, 1979, 93 SCRA 391. It is thus clear that before Moises Jocson may validly invoke the presumption under Article 160 he must first present proof that the disputed properties were acquired during the marriage of Emilio Jocson and Alejandra Poblete. The certificates of title, however, upon which petitioner rests his claim is insufficient. The fact that the properties were registered in the name of "Emilio Jocson, married to Alejandra Poblete" is no proof that the properties were acquired during the spouses' coverture. Acquisition of title and registration thereof are two different acts. It is well settled that registration does not confer title but merely confirms one already existing (See Torela vs. Torela, supra). It may be that the properties under dispute were acquired by Emilio Jocson when he was still a bachelor but were registered only after his marriage to Alejandra Poblete, which explains why he was described in the certificates of title as married to the latter. Contrary to petitioner's position, the certificates of title show, on their face, that the properties were exclusively Emilio Jocson's, the registered owner. This is so because the words "married to' preceding "Alejandra Poblete' are merely descriptive of the civil status of Emilio Jocson Litam v. Rivera, 100 Phil. 354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143; Magallon v. Montejo, G.R. No. L-73733, December 16, 1986, 146 SCRA 282). In other words, the import from the certificates of title is that Emilio Jocson is the owner of the properties, the same having been registered in his name alone, and that he is married to Alejandra Poblete. We are not unmindful that in numerous cases We consistently held that registration of the property in the name of only one spouse does not negate the possibility of it being conjugal (See Bucoy vs. Paulino, No. L-25775, April 26, 1968, 23 SCRA 248). But this ruling is not inconsistent with the above pronouncement for in those cases there was proof that the properties, though registered in the name of only one spouse, were indeed conjugal properties, or that they have been acquired during the marriage of the spouses, and therefore, presumed conjugal, without the adverse party having presented proof to rebut the presumption (See Mendoza vsReyes, No. L-31618, August 17, 1983, 124 SCRA 154). In the instant case, had petitioner, Moises Jocson, presented sufficient proof to show that the disputed properties were acquired during his parents' coverture. We would have ruled

that the properties, though registered in the name of Emilio Jocson alone, are conjugal properties in view of the presumption under Article 160. There being no such proof, the condition sine qua non for the application of the presumption does not exist. Necessarily, We rule that the properties under Exhibit 3 are the exclusive properties of Emilio Jocson. There being no showing also that the camarin and the two ricemills, which are the subject of Exhibit 4, were conjugal properties of the spouses Emilio Jocson and Alejandra Poblete, they should be considered, likewise, as the exclusive properties of Emilio Jocson, the burden of proof being on petitioner. ACCORDINGLY, the petition is DISMISSED and the decision of the Court of Appeals is AFFIRMED. SO ORDERED. G.R. No. L-28589 January 8, 1973 RAFAEL ZULUETA, ET AL., plaintiffs-appellees, vs. PAN AMERICAN WORLD AIRWAYS, INC., defendantappellant. Alfredo L. Benipayo for plaintiffs-appellee Rafael Zulueta and Carolina Zulueta. Justo L. Albert for plaintiff-appellee Telly Albert Zulueta. V.E. del Rosario and Associates and Salcedo, Del Rosario, Bito, Misa and Lozada for defendant-appellant. RESOLUTION

damages may be recovered if they are the proximate result of the defendant's wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary" pursuant to Article 2216 of the same Code "in order that moral ... damages may be adjudicated." And "(t)he assessment of such damages ... is left to the discretion of the court" - said article adds - "according to the circumstances of each case." Appellees' complaint is, therefore, within the original jurisdiction of courts of first instance, which includes "all civil actions in which the subject of the litigation is not capable of pecuniary estimation." 2 Thirdly, in its answer to plaintiffs' original and amended complainants, defendant had set up a counterclaim in the aggregate sum of P12,000, which is, also, within the original jurisdiction of said courts, thereby curing the alleged defect if any, in plaintiffs' complaint. 3 We need not consider the jurisdictional controversy as to the amount the appellant sues to recover because the counterclaim interposed establishes the jurisdiction of the District Court. Merchants' Heat & Light Co. v. James B. Clow & Sons, 204 U.S. 286, 27 S. Ct. 285, 51 L. Ed. 488; O. J. Lewis Mercantile Co. v. Klepner, 176 F. 343 (C.C.A. 2), certiorari denied 216 U.S. 620, 30 S Ct. 575, 54 L. Ed. 641. ... . 4 ... courts have said that "when the jurisdictional amount is in question, the tendering of a counterclaim in an amount which in itself, or added to the amount claimed in the petition, makes up a sum equal to the amount necessary to the jurisdiction of this court, jurisdiction is established, whatever may be the state of the plaintiff's complaint." American Sheet & Tin Plate Co. v. Winzeler (D.C.) 227 F. 321, 324. 5 Thus, in Ago v. Buslon, 6 We held: ... . Then, too, petitioner's counterclaim for P37,000.00 was, also, within the exclusive original jurisdiction of the latter courts, and there are ample precedents to the effect that "although the original claim involves less than the jurisdictional amount, ... jurisdiction can be sustained if the counterclaim (of the compulsory type)" such as the one set up by petitioner herein, based upon the damages allegedly suffered by him in consequence of the filing of said complaint "exceeds the jurisdictional amount." (Moore Federal Practice, 2nd ed. [1948], Vol. 3, p. 41; Ginsburg vs. Pacific Mutual Life Ins. Co. of California, 69 Fed. [2d] 97; Home Life Ins. Co. vs. Sipp., 11 Fed. [2d]474; American Sheet & Tin Plate Co. vs. Winzeler [D.C.], 227 Fed. 321, 324; Brix vs. People's Mutual Life Ins. Co., 41 P. 2d. 537, 2 Cal. 2d. 446; Emery vs. Pacific Employees Ins. Co., 67 P. 2d. 1046, 8 Cal. 2d. 663). Needless to say, having not only failed to question the jurisdiction of the trial court either in that court or in this Court, before the rendition of the latter's decision, and even subsequently thereto, by filing the aforementioned motion for reconsideration and seeking the reliefs therein prayed for but, also, urged both courts to exercise jurisdiction over the merits of the case, defendant is now estopped from impugning said jurisdiction. 7 Before taking up the specific questions raised in defendant's motion for reconsideration, it should be noted that the same is mainly predicated upon the premise that plaintiffs' version is inherently incredible, and that this Court should accept the theory of the defense to the effect that petitioner was offloaded because of a bomb-scare allegedly arising from his delay in boarding the aircraft and subsequent refusal to open his bags for inspection. We need not repeat here the reasons given in Our decision for rejecting defendant's contention and not disturbing the findings of fact of His Honor, the Trial

CONCEPCION, C.J.: Both parties in this case have moved for the reconsideration of the decision of this Court promulgated on February 29, 1972. Plaintiffs maintain that the decision appealed from should be affirmed in toto. The defendant, in turn, prays that the decision of this Court be "set aside ... with or without a new trial, ... and that the complaint be dismissed, with costs; or, in the alternative, that the amount of the award embodied therein be considerably reduced." . Subsequently to the filing of its motion for reconsideration, the defendant filed a "petition to annul proceedings and/or to order the dismissal of plaintiffs-appellees' complaint" upon the ground that "appellees' complaint actually seeks the recovery of only P5,502.85 as actual damages, because, for the purpose of determining the jurisdiction of the lower court, the unspecified sums representing items of alleged damages, may not be considered, under the settled doctrines of this Honorable Court," and "the jurisdiction of courts of first instance when the complaint in the present case was filed on Sept. 30, 1965" was limited to cases "in which the demand, exclusive of interest, or the value of the property in controversy amounts to more than ten thousand pesos" and "the mere fact that the complaint also prays for unspecified moral damages and attorney's fees, does not bring the action within the jurisdiction of the lower court." We find no merit in this contention. To begin with, it is not true that "the unspecified sums representing items or other alleged damages, may not be considered" for the purpose of determining the jurisdiction of the court "under the settled doctrines of this Honorable Court." In fact, not a single case has been cited in support of this allegation. Secondly, it has been held that a clam for moral damages is one not susceptible of pecuniary estimation. 1 In fact, Article 2217 of the Civil Code of the Philippines explicitly provides that "(t)hough incapable of pecuniary computation, moral

Judge, who had the decided advantage denied to Us of observing the behaviour of the witnesses in the course of the trial and found those of the plaintiffs worthy of credence, not the evidence for the defense. It may not be amiss however, to stress the fact that, in his written report, made in transit from Wake to Manila or immediately after the occurrence and before the legal implications or consequences thereof could have been the object of mature deliberation, so that it could, in a way, be considered as part of the res gestae Capt. Zentner stated that Zulueta had been off-loaded "due to drinking" and "belligerent attitude," thereby belying the story of the defense about said alleged bomb-scare, and confirming the view that said agent of the defendant had acted out of resentment because his ego had been hurt by Mr. Zulueta's adamant refusal to be bullied by him. Indeed, had there been an iota of truth in said story of the defense, Capt. Zentner would have caused every one of the passengers to be frisked or searched and the luggage of all of them examined as it is done now before resuming the flight from Wake Island. His failure to do so merely makes the artificious nature of defendant's version more manifest. Indeed, the fact that Mrs. Zulueta and Miss Zulueta were on board the plane shows beyond doubt that Mr. Zulueta could not possibly have intended to blow it up. The defense tries to explain its failure to introduce any evidence to contradict the testimony of Mr. Zulueta as to why he had gone to the beach and what he did there, alleging that, in the very nature of things, nobody else could have witnessed it. Moreover, the defense insists, inter alia, that the testimony of Mr. Zulueta is inherently incredible because he had no idea as to how many toilets the plane had; it could not have taken him an hour to relieve himself in the beach; there were eight (8) commodes at the terminal toilet for men ; if he felt the need of relieving himself, he would have seen to it that the soldiers did not beat him to the terminal toilets; he did not tell anybody about the reason for going to the beach, until after the plane had taken off from Wake. We find this pretense devoid of merit. Although Mr. Zulueta had to look for a secluded place in the beach to relieve himself, beyond the view of others, defendant's airport manager, whom Mr. Zulueta informed about it, soon after the departure of the plane, could have forthwith checked the veracity of Mr. Zulueta's statement by asking him to indicate the specific place where he had been in the beach and then proceeding thereto for purposes of verification. Then, again, the passenger of a plane seldom knows how many toilets it has. As a general rule, his knowledge is limited to the toilets for the class first class or tourist class in which he is. Then, too, it takes several minutes for the passengers of big aircrafts, like those flying from the U.S. to the Philippines, to deplane. Besides, the speed with which a given passenger may do so depends, largely, upon the location of his seat in relation to the exit door. He cannot go over the heads of those nearer than he thereto. Again, Mr. Zulueta may have stayed in the toilet terminal for some time, expecting one of the commodes therein to be vacated soon enough, before deciding to go elsewhere to look for a place suitable to his purpose. But he had to walk, first, from the plane to the terminal building and, then, after vainly waiting therein for a while, cover a distance of about 400 yards therefrom to the beach, and seek there a place not visible by the people in the plane and in the terminal, inasmuch as the terrain at Wake Island is flat. What is more, he must have had to takeoff part, at least, of his clothing, because, without the facilities of a toilet, he had to wash himself and, then, dry himself up before he could be properly attired and walk back the 400 yards that separated him from the terminal building and/or the plane. Considering, in addition to the foregoing, the fact that he was not feeling well, at that time, We are not prepared to hold that it could not have taken him around an hour to perform the acts narrated by him. But, why asks the defendant did he not reveal the same before the plane took off? The record shows that, even before Mr. Zulueta had reached the ramp leading to the plane, Capt. Zentner was already demonstrating at him in an intemperate

and arrogant tone and attitude ("What do you think you are?), thereby impelling Mr. Zulueta to answer back in the same vein. As a consequence, there immediately ensued an altercation in the course of which each apparently tried to show that he could not be cowed by the other. Then came the order of Capt. Zentner to off-load all of the Zuluetas, including Mrs. Zulueta and the minor Miss Zulueta, as well as their luggage, their overcoats and other effects handcarried by them; but, Mr. Zulueta requested that the ladies be allowed to continue the trip. Meanwhile, it had taken time to locate his four (4) pieces of luggage. As a matter of fact, only three (3) of them were found, and the fourth eventually remained in the plane. In short, the issue between Capt. Zentner and Mr. Zulueta had been limited to determining whether the latter would allow himself to be browbeaten by the former. In the heat of the altercation, nobody had inquired about the cause of Mr. Zulueta's delay in returning to the plane, apart from the fact that it was rather embarrassing for him to explain, in the presence and within the hearing of the passengers and the crew, then assembled around them, why he had gone to the beach and why it had taken him some time to answer there a call of nature, instead of doing so in the terminal building. Defendant's motion for reconsideration assails: (1) the amount of damages awarded as excessive; (2) the propriety of accepting as credible plaintiffs' theory; (3) plaintiffs' right to recover either moral or exemplary damages; (4) plaintiffs' right to recover attorney's fees; and (5) the non-enforcement of the compromise agreement between the defendant and plaintiff's wife, Mrs. Zulueta. Upon the other hand, plaintiffs' motion for reconsideration contests the decision of this Court reducing the amount of damages awarded by the trial court to approximately one-half thereof, upon the ground, not only that, contrary to the findings of this Court, in said decision, plaintiff had not contributed to the aggravation of his altercation or incident with Capt. Zentner by reacting to his provocation with extreme belligerency thereby allowing himself to be dragged down to the level on which said agent of the defendant had placed himself, but, also, because the purchasing power of our local currency is now much lower than when the trial court rendered its appealed decision, over five (5) years ago, on July 5, 1967, which is an undeniable and undisputed fact. Precisely, for this reason, defendant's characterization as exorbitant of the aggregate award of over P700,000 by way of damages, apart from attorney's fees in the sum of P75,000, is untenable. Indeed, said award is now barely equivalent to around 100,000 U. S. dollars. It further support of its contention, defendant cites the damages awarded in previous cases to passengers of airlines, 8 as well as in several criminal cases, and some cases for libel and slander. None of these cases is, however, in point. Said cases against airlines referred to passengers who were merely constrained to take a tourist class accommodation, despite the fact that they had first class tickets, and that although, in one of such cases, there was proof that the airline involved had acted as it did to give preference to a "white" passenger, this motive was not disclosed until the trial in court. In the case at bar, plaintiff Rafael Zulueta was "off-loaded" at Wake Island, for having dared to retort to defendant's agent in a tone and manner matching, if not befitting his intemperate language and arrogant attitude. As a consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta had boomeranged against him (Zentner), in the presence of the other passengers and the crew. It was, also, in their presence that defendant's agent had referred to the plaintiffs as "monkeys," a racial insult not made openly and publicly in the abovementioned previous cases against airlines. In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft and its passengers, but to retaliate and punish him for the embarrassment and loss of face thus suffered by defendant's agent. This vindictive motive is made more manifest by the note delivered to Mr. Zulueta by defendant's airport manager at Wake Island, Mr. Sitton, stating that the former's stay therein would be "for a minimum of one week," during which he would be charged $13.30 per day. This reference to a "minimum of one week" revealed the intention to keep him there stranded that long, for no other plane, headed for Manila, was expected within said period of time, although Mr. Zulueta managed to board,

days later, a plane that brought him to Hawaii, whence he flew back to the Philippines, via Japan. Neither may criminal cases, nor the cases for libel and slander cited in the defendant's motion for reconsideration, be equated with the present case. Indeed, in ordinary criminal cases, the award for damages is, in actual practice, of purely academic value, for the convicts generally belong to the poorest class of society. There is, moreover, a fundamental difference between said cases and the one at bar. The Zuluetas had a contract of carriage with the defendant, as a common carrier, pursuant to which the latter was bound, for a substantial monetary consideration paid by the former, not merely to transport them to Manila, but, also, to do so with "extraordinary diligence" or "utmost diligence." 9 The responsibility of the common carrier, under said contract, as regards the passenger's safety, is of such a nature, affecting as it does public interest, that it "cannot be dispensed with" or even "lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise." 10 In the present case, the defendant did not only fail to comply with its obligation to transport Mr. Zulueta to Manila, but, also, acted in a manner calculated to humiliate him, to chastise him, to make him suffer, to cause to him the greatest possible inconvenience, by leaving him in a desolate island, in the expectation that he would be stranded there for a "minimum of one week" and, in addition thereto, charged therefor $13.30 a day. It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to Article 2231 of our Civil Code, except when the defendant has acted with "gross negligence," and that there is no specific finding that it had so acted. It is obvious, however, that in off-loading plaintiff at Wake Island, under the circumstances heretofore adverted to, defendant's agents had acted with malice aforethought and evident bad faith. If "gross negligence" warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. Thus, in Lopez v. PANAM, 11 We held: The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. Defendant having breached its contracts in bad faith, the court, as stated earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil Code.) Similarly, in NWA v. Cuenca, 12 this Court declared that an award for exemplary damages was justified by the fact that the airline's "agent had acted in a wanton, reckless and oppressive manner" in compelling Cuenca, upon arrival at Okinawa, to transfer, over his objection, from the first class, where he was accommodated from Manila to Okinawa, to the tourist class, in his trip to Japan, "under threat of otherwise leaving him in Okinawa," despite the fact that he had paid in full the first class fare and was issued in Manila a first class ticket. Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not liable for exemplary damages owing to acts of his agent unless the former has participated in said acts or ratified the same. Said case involved, however, the subsidiary civil liability of an employer arising from criminal acts of his employee, and "exemplary damages ... may be imposed when the crime was committed with one or more aggravating circumstances." 14 Accordingly, the Rotea case is not in point, for the case at bar involves a breach of contract, as well as a quasi-delict. Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be equated with the case at bar. The Palisoc case dealt with the liability of school officials for damages arising from the death of a student (Palisoc) due to fist blows given by another student (Daffon), in the course of a quarrel between them, while in a laboratory room of the Manila Technical Institute. In an action for damages, the head thereof and the teacher in charge of said laboratory were held jointly and severally liable with the student who caused said death, for failure of the school to provide "adequate supervision over the activities of the students in the school premises," to protect them "from harm, whether at the hands of fellow

students or other parties." Such liability was predicated upon Article 2180 of our Civil Code, the pertinent part of which reads: ART. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. xxx xxx xxx Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. xxx xxx xxx Obviously, the amount of damages warded in the Palisoc case is not and cannot serve as the measure of the damages recoverable in the present case, the latter having been caused directly and intentionally by an employee or agent of the defendant, whereas the student who killed the young Palisoc was in no wise an agent of the school. Moreover, upon her arrival in the Philippines, Mrs. Zulueta reported her husband's predicament to defendant's local manager and asked him to forthwith have him (Mr. Zulueta) brought to Manila, which defendant's aforementioned manager refused to do, thereby impliedly ratifying the off-loading of Mr. Zulueta at Wake Island. It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta was bound to be present at the time scheduled for the departure of defendant's plane and that he had, consequently, violated said contract when he did not show up at such time. This argument might have had some weight had defendant's plane taken off before Mr. Zulueta had shown up. But the fact is that he was ready, willing and able to board the plane about two hours before it actually took off, and that he was deliberately and maliciously offloaded on account of his altercation with Capt. Zentner. It should, also, be noted that, although Mr. Zulueta was delayed some 20 to 30 minutes, the arrival or departure of planes is often delayed for much longer periods of time. Followed to its logical conclusion, the argument adduced by the defense suggests that airlines should be held liable for damages due to the inconvenience and anxiety, aside from actual damages, suffered by many passengers either in their haste to arrive at the airport on scheduled time just to find that their plane will not take off until later, or by reason of the late arrival of the aircraft at its destination. PANAM impugns the award of attorney's fees upon the ground that no penalty should be imposed upon the right to litigate; that, by law, it may be awarded only in exceptional cases; that the claim for attorney's fees has not been proven; and that said defendant was justified in resisting plaintiff's claim "because it was patently exorbitant." Nothing, however, can be farther from the truth. Indeed apart from plaintiff's claim for actual damages, the amount of which is not contested, plaintiffs did not ask any specific sum by way of exemplary and moral damages, as well as attorney's fees, and left the amount thereof to the "sound discretion" of the lower court. This, precisely, is the reason why PANAM, now, alleges without justification that the lower court had no jurisdiction over the subject matter of the present case. Moreover, Article 2208 of our Civil Code expressly authorizes the award of attorney's fees "when exemplary damages are awarded," as they are in this case as well as "in any other case where the court deems it just and equitable that attorney's fees ... be recovered," and We so deem it just and equitable in the present case, considering the "exceptional" circumstances obtaining therein, particularly the bad faith with which defendant's agent had acted, the place where and the conditions under which Rafael Zulueta was left at Wake Island, the absolute refusal of defendant's manager in Manila to take any step whatsoever to alleviate Mr. Zulueta's predicament at Wake and have him brought to Manila

which, under their contract of carriage, was defendant's obligation to discharge with "extra-ordinary" or "utmost" diligence and, the "racial" factor that had, likewise, tainted the decision of defendant's agent, Capt. Zentner, to off-load him at Wake Island. As regards the evidence necessary to justify the sum of P75,000 awarded as attorney's fees in this case, suffice it to say that the quantity and quality of the services rendered by plaintiffs' counsel appearing on record, apart from the nature of the case and the amount involved therein, as well as his prestige as one of the most distinguished members of the legal profession in the Philippines, of which judicial cognizance may be taken, amply justify said award, which is a little over 10% of the damages (P700,000) collectible by plaintiffs herein. Indeed, the attorney's fees in this case is proportionally much less than that adjudged in Lopez v. PANAM 16 in which the judgment rendered for attorney's fees (P50,000) was almost 20% of the damages (P275,000) recovered by the plaintiffs therein. The defense assails the last part of the decision sought to be reconsidered, in which relying upon Article 172 of our Civil Code, which provides that "(t)he wife cannot bind the conjugal partnership without the husband's consent, except in cases provided by law," and it is not claimed that this is one of such cases We denied a motion, filed by Mrs. Zulueta, for the dismissal of this case, insofar as she is concerned - she having settled all her differences with the defendant, which appears to have paid her the sum of P50,000 therefor "without prejudice to this sum being deducted from the award made in said decision." Defendant now alleges that this is tantamount to holding that said compromise agreement is both effective and ineffective. This, of course, is not true. The payment is effective, insofar as it is deductible from the award, and, because it is due (or part of the amount due) from the defendant, with or without its compromise agreement with Mrs. Zulueta. What is ineffective is the compromise agreement, insofar as the conjugal partnership is concerned. Mrs. Zulueta's motion was for the dismissal of the case insofar as she was concerned, and the defense cited in support thereof Article 113 of said Code, pursuant to which "(t)he husband must be joined in all suits by or against the wife except: ... (2) If they have in fact been separated for at least one year." This provision, We held, however, refers to suits in which the wife is the principal or real party in interest, not to the case at bar, "in which the husband is the main party in interest, both as the person principally aggrieved and as administrator of the conjugal partnership ... he having acted in this capacity in entering into the contract of carriage with PANAM and paid the amount due to the latter, under the contract, with funds of the conjugal partnership," to which the amounts recoverable for breach of said contract, accordingly, belong. The damages suffered by Mrs. Zulueta were mainly an in accident of the humiliation to which her husband had been subjected. The Court ordered that said sum of P50,00 paid by PANAM to Mrs. Zulueta be deducted from the aggregate award in favor of the plaintiffs herein for the simple reason that upon liquidation of the conjugal partnership, as provided by law, said amount would have to be reckoned with, either as part of her share in the partnership, or as part of the support which might have been or may be due to her as wife of Rafael Zulueta. It would surely be inane to sentence the defendant to pay the P700,000 due to the plaintiffs and to direct Mrs. Zulueta to return said P50,000 to the defendant. In this connection, it is noteworthy that, for obvious reasons of public policy, she is not allowed by law to waive her share in the conjugal partnership, before the dissolution thereof. 17 She cannot even acquire any property by gratuitous title, without the husband's consent, except from her ascendants, descendants, parents-in-law, and collateral relatives within the fourth degree. 18 It is true that the law favors and encourages the settlement of litigations by compromise agreement between the contending parties, but, it certainly does not favor a settlement with one of the spouses, both of whom are plaintiffs or defendants in a common cause, such as the defense of the rights of the

conjugal partnership, when the effect, even if indirect, of the compromise is to jeopardize "the solidarity of the family" which the law 19 seeks to protect by creating an additional cause for the misunderstanding that had arisen between such spouses during the litigation, and thus rendering more difficult a reconciliation between them. It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that neither is there any evidence that the money used to pay the plane tickets came from the conjugal funds and that the award to Mrs. Zulueta was for her personal suffering or injuries. There was, however, no individual or specific award in favor of Mrs. Zulueta or any of the plaintiffs. The award was made in their favor collectively. Again, in the absence of said proof, the presumption is that the purpose of the trip was for the common benefit of the plaintiffs and that the money had come from the conjugal funds, for, unless there is proof to the contrary, it is presumed "(t)hat things have happened according to the ordinary course of nature and the ordinary habits of life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when the source of the money used therefor is not established, even if the purchase had been made by the wife. 22 And this is the rule obtaining in the Philippines. Even property registered, under the Torrens system, in the name of one of the spouses, or in that of the wife only, if acquired during the marriage, is presumed to belong to the conjugal partnership, unless there is competent proof to the contrary. 23 PANAM maintains that the damages involved in the case at bar are not among those forming part of the conjugal partnership pursuant to Article 153 of the Civil Code, reading: ART. 153. The following are conjugal partnership property: (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. Considering that the damages in question have arisen from, inter alia, a breach of plaintiffs' contract of carriage with the defendant, for which plaintiffs paid their fare with funds presumably belonging to the conjugal partnership, We hold that said damages fall under paragraph (1) of said Article 153, the right thereto having been "acquired by onerous title during the marriage ... ." This conclusion is bolstered up by Article 148 of our Civil Code, according to which: ART. 148. The following shall be the exclusive property of each spouse: (1) That which is brought to the marriage as his or her own; (2) That which each acquires, during the marriage, by lucrative title; (3) That which is acquired by right of redemption or by exchange with other property belonging to only one of the spouses; (4) That which is purchased with exclusive money of the wife or of the husband. The damages involved in the case at bar do not come under any of these provisions or of the other provisions forming part of Chapter 3, Title VI, of Book I of the Civil Code, which chapter is entitled "Paraphernal Property." What is more, if

"(t)hat which is acquired by right of redemption or by exchange with other property belonging to only one of the spouses," and "(t)hat which is purchased with exclusive money of the wife or of the husband," 24 belong exclusively to such wife or husband, it follows necessarily that that which is acquired with money of the conjugal partnership belongs thereto or forms part thereof. The rulings in Maramba v. Lozano 25 and Perez v. Lantin, 26 cited in defendant's motion for reconsideration, are, in effect, adverse thereto. In both cases, it was merely held that the presumption under Article 160 of our Civil Code to the effect that all property of the marriage belong to the conjugal partnership does not apply unless it is shown that it was acquired during marriage. In the present case, the contract of carriage was concededly entered into, and the damages claimed by the plaintiffs were incurred, during marriage. Hence, the rights accruing from said contract, including those resulting from breach thereof by the defendant, are presumed to belong to the conjugal partnership of Mr. and Mrs. Zulueta. The fact that such breach of contract was coupled, also, with a quasi-delict constitutes an aggravating circumstance and can not possibly have the effect of depriving the conjugal partnership of such property rights. Defendant insists that the use of conjugal funds to redeem property does not make the property redeemed conjugal if the right of redemption pertained to the wife. In the absence, however, of proof that such right of redemption pertains to the wife and there is no proof that the contract of carriage with PANAM or the money paid therefor belongs to Mrs. Zulueta the property involved, or the rights arising therefrom, must be presumed, therefore, to form part of the conjugal partnership. It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and moral damages" awarded to a young and beautiful woman by reason of a scar in consequence of an injury resulting from an automobile accident which disfigured her face and fractured her left leg, as well as caused a permanent deformity, are her paraphernal property. Defendant cites, also, in support of its contention the following passage from Colin y Capitant: No esta resuelta expresamente en la legislacion espaola la cuestion de si las indemnizaciones debidas por accidentes del trabaho tienen la consideracion de gananciales, o son bienes particulares de los conyuges. Inclinan a la solucion de que estas indemnizaciones deben ser consideradas como gananciales, el hecho de que la sociedad pierde la capacidad de trabajocon el accidente, que a ella le pertenece, puesto que de la sociedad son losfrutos de ese trabajo; en cambio, la consideracion de que igual manera que losbienes que sustituyen a los que cada conyuge lleva al matrimonio como propiostienen el caracter de propios, hace pensar que las indemnizaciones que vengana suplir la capacidad de trabajo aportada por cada conyuge a la sociedad, debenser juridicamente reputadas como bienes propios del conyuge que haya sufrido elaccidente. Asi se llega a la misma solucion aportada por la jurisprudencia francesca. 28 This opinion is, however, undecisive, to say the least. It should be noted that Colin y Capitant were commenting on the French Civil Code; that their comment referred to indemnities due in consequence of "accidentes del trabajo "resulting in physical injuries sustained by one of the spouses (which Mrs. Zulueta has not suffered); and that said commentators admit that the question whether or not said damages are paraphernal property or belong to the conjugal partnership is not settled under the Spanish law. 29 Besides, the French law and jurisprudence to which the comments of Planiol and Ripert, likewise, refer are inapposite to the question under consideration, because they differ basically from the Spanish law in the treatment of the property relations between husband and wife. Indeed, our Civil Code, like the Spanish Civil Code, favors the system of conjugal partnership of gains. Accordingly, the former provides that, "(i)n the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains ... shall

govern the property relations between" the spouses. 30 Hence, "(a)ll property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." 31 No similar rules are found in the French Civil Code. What is more, under the provisions thereof, the conjugal partnership exists only when so stipulated in the "capitulaciones matrimoniales" or by way of exception. In the language of Manresa Prescindimos de los preceptos de los Condigos de Francia, Italia, Holanda, Portugal, Alemania y Suiza, porsue solo excepcionalmente, o cuando asi se pacta en las capitulaciones, admiten el sistema de gananciales. 32 Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered for physical injuries suffered by the wife. In the case at bar, the party mainly injured, although not physically, is the husband. Accordingly, the other Philippine cases 33 and those from Louisiana whose civil law is based upon the French Civil Code cited by the defendant, which similarly refer to moral damages due to physical injuries suffered by the wife, are, likewise, inapplicable to the case at bar. We find, therefore, no plausible reason to disturb the views expressed in Our decision promulgated on February 29, 1972. WHEREFORE, the motions for reconsideration above-referred to should be, as they are hereby denied. G.R. No. 130768 March 21, 2002

CRISANTO L. FRANCISCO, petitioners, vs. THE COURT OF APPEALS and REGINO B. RELOVA, JR., respondents. YNARES-SANTIAGO, J.: Before us is a petition for review of the decision 1 dated June 11, 1997 of the Court of Appeals in CA-G.R. CV No. 50104, affirming the decision2 dated January 25, 1995 of the Regional Trial Court of Antipolo, Rizal, Branch 73, in Land Registration Case No. 91-1016, LRA Record No. N-62367. On October 2, 1991, respondent Regino G. Relova filed a petition3 with the trial court for the registration of two parcels of land described as Lots Nos. 1834 and 1832, Cad-688-D of the Cainta-Taytay Cadastre, situated in Barangay San Juan, Taytay, Rizal. He alleged that he has been in open, continuous, exclusive and notorious possession of the said parcels of land since 1958 and, therefore, has acquired the same by prescription. The Republic of the Philippines, through the Office of the Solicitor General, registered its written opposition to the petition.4 At the initial hearing of the petition on February 28, 1992, nobody appeared to oppose the petition. After respondent Relova presented evidence to establish the jurisdictional facts, the trial court ordered that a general default be entered against the whole world except the Republic of the Philippines. The trial court designated a hearing commissioner to receive evidence ex-parte in support of the petition.5 During the course of the proceedings, the Land Registration Authority (LRA) submitted its report6 stating that discrepancies were found after plotting the plans pertaining to the land applied for. Thus, the LRA recommended that the appropriate government agencies be ordered to submit their reports to determine whether the land or any portion thereof are covered by land patents are within the forest zone.

After the reception of evidence before the trial commissioner, and based on its report,7 the trial court rendered its decision, the dispositive portion of which reads: WHEREFORE, premises considered, the Court hereby confirms the title of herein petitioner Regino B. Relova, Jr. to the parcels Lot No. 1834 Cad-688-D covered by Plan Ap04-006273 and Lot No. 1832 Cad-688-D covered by Plan Ap-006183 situated in Barangay San Juan, Municipality of Taytay, Province of Rizal containing an area of three hundred thirty nine (339) square meters and seventeen thousand four hundred nine (17,409) square meters respectively and orders their registration in the name of herein applicant Regino B. Relova, Jr. who is married to Lourdes S. Guino with all the rights and privileges appertaining thereto. Let an order for issuance of a Decree be issued upon finality of this decision and payment of taxes and fees due on the subject parcels of land. SO ORDERED.8 Subsequently, the LRA filed with the trial court a Supplementary Report, submitting the corrected technical boundaries of the technical descriptions for Lots 1832 and 1834. The report further states: WHEREFORE, the foregoing report is respectfully submitted to the Honorable Court for its information and guidance with the recommendation that (a) the corrected technical description of lot 1832, Cad 688-D, Cainta-Taytay Cadastre (Annex J) be approved and (b) the applicant be ordered to publish in the Official Gazette the corrected technical description of Lot 1834, Cad 688-D, Cainta-Taytay Cadastre (Annex K), and thereafter, an order be issued approving the said technical description to be utilized in the issuance of the corresponding decree of registration pursuant to the decision dated January 25, 1993 and Order for the issuance of the Decree dated April 1, 1993.9 On October 28, 1993, the trial court issued the following Order: Considering the Report of the Land Registration Authority (LRA) dated September 20, 1993 as well as the "Urgent ExParte Motion" of the applicant through counsel, the court hereby approves the corrected technical description of Lot 1832, Cad-688-D, Cainta Taytay Cadastre. Moreover, the recommendation that the corrected technical description of lot 1834, Cad-688-D Cainta-Taytay Cadastre be published in the Official Gazette is hereby DENIED for the reason that the correction (amendment) does not appear to be substantial inasmuch as the boundaries affected are both owned by the applicant in the above-entitled case.1wphi1.nt SO ORDERED.10 Upon motion of respondent Relova, the trial court ordered the issuance of a writ of possession on December 7, 1993.11 On January 14, 1994, petitioner Crisanto L. Francisco entered his appearance as oppositor and filed a Motion to Quash Writ of Possession.12 He alleged that he has been in actual possession of Lot 1832; that no notice of the motion for writ of possession was furnished to him; and that the land registration court has no authority to issue a writ of possession. Subsequently, petitioner filed a Petition for Reopening and Review13 of the decree of registration pursuant to Article 32 of P.D. 1529 and a Supplemental Petition and Reply.14 He reiterated the grounds alleged in his motion to quash the writ of possession and further alleged that respondent failed to republish the notice of initial hearing containing the

corrections in the technical description of Lot 1832 made by the Bureau of Land Management; that respondent falsely and fraudulently testified that the disputed lot was part of the land purchased by his predecessor, Francisco Santana, from Maximo Cruz; that it is not true that respondents possession was undisturbed; that respondent declared the land for taxation purposes only in March 1991; that petitioners claim of ownership over the disputed land was annotated on the said tax declaration; and that even respondents predecessorin-interest and other adjacent lot owners recognized petitioner as the owner of the dispute land. In its order dated February 27, 1995, the trial court ruled as follows: It appears that the Decree of Registration in the above-entitled case with No. N-205474 was issued on February 28, 1994 while oppositors "Petition for Reopening and Review" and "Supplemental Petition" were filed on March 2, 1994 and on August 9, 1994, respectively. It appears also, that the applicant has not yet transferred the subject land to an innocent purchaser for value, hence the court is of the considered view that the oppositor may avail himself of the remedy provided under article 32 of PD 1529 otherwise known as the Property Registration Decree which grants to "any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Regional Trial Court a petition for reopening and review of the decree of registration not later than one year from and after the date of entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest thereon, whose rights may be prejudiced" The allegations of the oppositor as to the actual fraud allegedly committed by the applicant in the latters application for registration of title of lot 1832 necessarily requires proof which can only be adduced in a proper hearing or trial. Corollary, thereto, is the requirement of the law for the oppositor, to prove his real or dominical right over the lot in question. In view thereof, the Motion for Leave to File and Admission of Supplemental Petition is hereby GRANTED. The above-entitled case is therefore, re-opened insofar as Lot 1832 is concerned. In the meantime, the execution of the writ of possession issued in the above-entitled case is hereby held in abeyance insofar as lot 1832 is concerned, pending resolution of the petition for review of herein oppositor. Let this case be set for reception of evidence for oppositor Crisanto Francisco on April 6, 1995 at 9:00 A.M. SO ORDERED.15 Upon a motion for reconsideration of respondent,16 the trial court reversed its previous order, to wit: Wherefore, premises considered, the court therefore reconsiders its order of February 27, 1995 and hereby reiterates its decision in this case for the registration of lots applied for by the applicants. The court also approves the motion for issuance of the writ of possession as prayed for by the

applicants and hereby orders the issuance of said writ. SO ORDERED.17 Petitioner filed a motion for reconsideration,18 arguing that he was denied due process of law when he was deprived the opportunity to prove the allegation of fraud committed by the applicant in securing a decree of registration on the land in dispute. The motion for reconsideration was, however, denied.19 Petitioner appealed to the Court of Appeals, where the same was docketed as CA-G.R. CV No. 50104. On June 11, 1997, the Court of Appeals affirmed the order of the trial court denying the petition for reopening and review of the decree of registration.20 Petitioners motion for reconsideration was denied on September 16, 1997.21 Hence, this petition raising the following issues: Whether a court can refuse to receive evidence on allegations of fraud, in a petition for review of an application for registration, committed by the applicant in his application and in the proceedings, legally sufficient to nullify and set aside such decision approving registration and the decree and certificate of title subsequently issued, and then reiterate its original decision and decree without trying and resolving if the alleged frauds were committed or not? Whether such refusal to hear and receive evidence on the petition for review is a denial of due process that renders the courts orders, decisions and proceedings void and annullable for lack, excess, or abuse of jurisdiction? Whether an appellate court that affirms such void decision and orders of the trial court and refuse to remand below the appealed case for trial on the merits, equally commits a violation of due process and acts without, in excess or with abuse of jurisdiction? Whether lack of jurisdiction on the part of the trial court for applicants failure to prove jurisdictional requirement of publication in a newspaper of general circulation of the application and date of initial hearing, because the evidence or affidavit of publication presented as proof thereof is a falsified one and, therefore, null and void, can be raised in any stage of the proceedings, and cause the dismissal of the application or the nullification or setting aside of the decision granting registration for lack of jurisdiction? The core issue in this appeal is whether or not petitioner was denied due process when the trial court denied the petition for the reopening and review of the decree of registration, thereby depriving petitioner of the opportunity to substantiate the allegations of fraud. In reversing its earlier order granting the petition to reopen, the trial court ruled: The issue to be resolved in the instant motion for reconsideration is whether or not there was fraud committed by the applicant in this case. To the mind of the court there is no fraud committed. It should be noted that the Report of the LRA that was submitted to the court states that there are some corrections in the technical descriptions of the property but the area of the property has remained the same as applied for. That is why this court in its order dated October 28, 1993 granted the motion of counsel for the applicant to approve the technical corrections for the reason that the correction without need for the republication

amendment does not appear to be substantial. It should be noted also that the order of the Land Registration Authority recommended the corrected technical description of Lot 1832 Cad-688-D CaintaTaytay Cadastre be approved and the applicant be ordered to publish in the Official Gazette the corrected technical description of Lot 1834 Cad688-D Cainta-Taytay Cadastre. Thereafter, an order be issued approving the said technical description to be utilized in the issuance of the corresponding decree of registration. So it is clear that with respect to Lot 1832, which is the subject matter of the opposition in this case, the LRA merely stated that the corrected technical description of Lot 1832 be approved. This court approved the said corrected technical description of Lot 1832 as recommended by LRA. There is therefore no fraud upon a review by the court of the motion for reconsideration and the opposition thereto as well as taking into account the oral arguments of both counsels for the applicant and the oppositor on the matter of a legal fraud committed in this case. The court merely complied with the recommendation of the LRA for the approval of the corrected technical description of Lot 1832. The court did not order to republish in the Official Gazette the corrected technical description therein as it is not substantial for the area of the land still remains the same. Wherefore, premises considered, the court therefore reconsiders its order of February 27, 1995 and hereby reiterates its decision in this case for the registration of lots applied for by the applicants. The court also approves the motion for issuance of the writ of possession as prayed for by the applicants and hereby orders the issuance of said writ.22 A careful scrutiny of the assailed order reveals that the trial court did not entirely consider the allegations of fraud or falsity in the petition to reopen and review the decree of registration. The trial court only resolved the issue of republication of the corrected technical description of Lot 1832 and found that the area of the property was the same as that applied for. It summarily dismissed the petition to review the decree of registration. In the petition to reopen and review the decree of registration, petitioner alleged that the first publication of the hearing of respondents application contained an erroneous technical description of Lot 1832, which was later corrected; that application with the corrected technical description was not republished; that respondent falsely represented that Lot 1832 was part of the land which his predecessors-in-interest, Francisco Santana, purchased from Maximo Cruz, but the same was omitted in the original registration proceeding in LRC Case No. N-2710 of the Court of First Instance of Pasig, Rizal, Branch VI; and that it is petitioner, by himself and through his predecessors-in-interest, who has been in actual possession and use of said Lot 1832 as owner, openly, continuously and exclusively, for more than fifty years before the filing of respondents application. Furthermore, petitioner alleged that respondent is guilty of fraud in making it appear in Tax Declaration No. 04-13781, which was obtained only in March 1991, that he paid the arrears for the past ten years. Petitioner also argues that the notation "Ownership of this property is also claimed by CRISANTO L. FRANCISCO," is inscribed on the tax declaration. Thus, respondent undeniably had notice of petitioners claim of ownership and possession of said Lot 1832 long before he actually declared it for taxation and applied for registration. Other documents also prove petitioners prior right and possession, namely, the tax receipts for 1936 and 1937 both in the name of Miguel Francisco, petitioners grandfather and predecessor-ininterest, Tax Declaration No. 13296 (1945-1974), Tax Declaration No. 03-2348 (1980-1984), and Tax Declaration No. 03-3127 (1985 to date), all of which indicate petitioners possession of Lot 1832 as owner thereof.23

The foregoing are serious allegations which should have necessitated a reopening of the application if only to ensure that the claims of respondent of acquisitive prescription were valid. This was done by the trial court in its order dated February 27, 1995 granting the reopening of the case, wherein it stated that "the allegations of the oppositor as to the actual fraud allegedly committed by the applicant in the latters application for registration of title of lot 1832 necessarily requires proof which can only be adduced in a proper hearing or trial."24 Subsequently, however, it reversed its order and denied the petition to reopen and review the decree of registration, thereby depriving petitioner the opportunity to substantiate his allegations and protect his claims over the property. In this regard, the trial courts act was reversible error and an unwarranted deviation from both substantive and procedural norms. In the early case of Minlay v. Sandoval,25 we held: Perhaps the trial judge had reasons to doubt the veracity of the supposed fraudulent acts, attributed to respondents. This doubt, however, should not have been made the basis of dismissal, because if a court doubts the veracity of the allegations in the petition, the best thing it could do would have been to deny the motion to dismiss and proceed with hearing on the merits, of the petition. A person deprived of land or any estate or interest therein by adjudication or confirmation of title obtained by actual fraud may seek the reopening and review of a decree of registration. The Torrens System is intended to guarantee the integrity and conclusiveness of the certificate of registration but it cannot be used for the perpetuation of fraud against the real owner of the registered land.26 WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals dated June 11, 1997 is REVERSED and SET ASIDE. The Regional Trial Court of Antipolo, Rizal, Branch 73 is ordered to reopen Land Registration Case No. 91-1016 and afford petitioner and respondent full opportunity to substantiate their respective claims.1wphi1.nt SO ORDERED. G.R. No. L-31618 August 17, 1983 EFREN R. MENDOZA and INOCENCIA R. DE MENDOZA, petitioner, vs. PONCIANO S. REYES and THE COURT OF APPEALS, respondents. G.R. No. L-31625 August 17, 1983 JULIA R. DE REYES, petitioner, vs. PONCIANO S. REYES and COURT OF APPEALS, respondents. Conrado B. Enriquez and Elpidio G. Navarro for petitioners. Pacifico M. Castro for respondents.

Mendoza, covering lots 5 and 6, Block No. 132 of Subdivision Plan Psd. 14841, situated at Retiro Street, Quezon City, is hereby declared null and void with respect to one- half share of appellant therein; (c) the Register of Deeds of Quezon City is hereby directed to cancel TCT Nos. 5611 0 and 56111, now covering said lots, and to issue, in lieu thereof, certificates of title in favor of appellant Ponciano S. Reyes for one-half (1/2) pro-indiviso and the spouses Efren V. Mendoza and Inocencia Mendoza for one-half (1/2) also pro-indiviso; (d) the appellees Mendozas are hereby ordered to pay unto the appellant the accrued rentals of style properties in litigation due to the share corresponding to said appellant, at the rate of P350.00 a month from March 3, 1961 until the finality of this decision, with legal interest thereon; and (e) said appellees are likewise ordered to pay unto the appellant the amount of THREE THOUSAND (P3,000.00) PESOS as attorney's fees, plus the costs in both instances. This case originated with the filing of a complaint by Ponciano S. Reyes with the Court of First Instance of Rizal docketed as Civil Case No. Q-6905, for the annulment of a deed of sale of two parcels of land with their improvements, executed by his wife, Julia R. De Reyes as vendor and the spouses Efren V. Mendoza and Inocencia R. De Mendoza, as vendees. Ponciano S. Reyes averred that said properties were conjugal properties of himself and his wife and that she had sold them to petitioners "all by herself" and without his knowledge or consent. Petitioners Efren V. Mendoza and Inocencia R. De Mendoza alleged in their answer that the properties were paraphernal properties of Julia R. de Reyes and that they had purchased the same in good faith and for adequate consideration. In a separate answer, petitioner Julia R. De Reyes, supported the spouses Mendozas' contentions. In its decision, the Court of First Instance of Rizal dismissed the complaint and declared the properties in question exclusive and paraphernal properties of petitioner Julia R. De Reyes. It ruled that she could validly dispose of the same without the consent of her husband and that the Mendozas are innocent purchasers. As earlier stated, the Court of Appeals reversed the decision of the court a quo. The petitioners filed separate petitions for review on certiorari. Efren V. Mendoza and Inocencia R. De Mendoza raised the following assignments of errors: I THE COURT OF APPEALS ERRED NOT MERELY IN GIVING CREDENCE, BUT IN FACT IN CONSIDERING AT ALL, PROOF OF THE ALLEGED CONJUGAL CHARACTER OF THE PROPERTIES l-, QUESTION, AND IN NOT INVOKING THE DOCTRINE -E OF ESTOPPEL TO RULE OUT ANY AND ALL SUCH PROOF ALTOGETHER. II THE COURT OF APPEALS ERRED IN FINDING PETITIONERS GUILTY OF BAD FAITH IN PURCHASING THE PROPERTIES LITIGATED FOR WITHOUT EVIDENCE OF SUCH FACT BEING PRESENTED AND, ON THE STRENGTH MERELY OF A SIMPLE PRESUMPTION UNWARRANTEDLY DRAWN FROM ONE OF ITS OWN

GUTIERREZ, JR., J.: Questioned in these consolidated petitions for review on certiorari is the decision of the Court of Appeals, now Intermediate Appellate Court, reversing the decision of the Court of First Instance of Rizal, Quezon City Branch. The dispositive portion of the appellate decision reads: WHEREFORE, (a) the judgment appealed from is hereby reversed; (b) the deed of sale executed by appellee Julia de Reyes on March 3, 1961 in favor of appellees Efren V. Mendoza and Inocencia R.

OBSCURE AND HARDLY AUTHORITATIVE RULINGS, AND AGAINST ABUNDANT, POSITIVE AND UNCONTRADICTED PROOF OF GOOD FAITH. III THE COURT OF APPEALS ERRED UPON EQUITABLE GROUNDS IN, IN EFFECT, GIVING JUDICIAL FLAT To THE UNJUST ENRICHMENT OR BENEFIT OF ONE PERSON AT THE EXPENSE OF ANOTHER OR OTHERS. On the other hand, Julia R. De Reyes made the following assignments of errors in her petition for review. THE COURT OF APPEALS ERRED IN DECLARING THAT THE PROPERTIES IN QUESTION ARE THE CONJUGAL PROPERTIES OF THE RESPONDENT PONCIANO S. REYES AND THE PETITIONER IN SPITE OF THE CATEGORICAL JUDICIAL DECLARATION AND ADMISSION BY SAID RESPONDENT THAT THE SAID PROPERTIES ARE THE EXCLUSIVE AND PARAPHERNAL PROPERTIES OF HIS WIFE, THE PETITIONER HEREIN. THE COURT OF APPEALS ERRED IN HAVING DECIDED THE CASE NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS ON THE MATTER IN THE SENSE, PARTICULARLY, THAT THE ACT AND DECLARATION OF A PARTY AGAINST HIS INTERESTS CAN NOT BE CONTRADICTED BY HIM, AND IN SO DOING THE DECISION AMOUNTED TO SANCTIONING A PERJURED TESTIMONY. On the first issue regarding the alleged paraphernal character of the disputed properties, we find that the records sustain the findings of the Court of Appeals The fact are: xxx xxx xxx ... Ponciano Reyes and Julia de Reyes-to be herein referred to as Ponciano and Julia alone for brevity-were married in 1915. The properties in question consisting of Lots 5 and 6, Block No. 132, situated at Retiro Street, Quezon Cityplus the buildings erected thereon, were bought from J. M. Tuason & Co., represented by Gregorio Araneta, Inc. to be herein mentioned as "Araneta"February, 1947 on installment basis. (Testimony of Julia, t.s.n., p. 74, February 15, 1963). The first installment on Lot No. 5 was P69.96 and on Lot No. 6 was P102.00 (Exh. 'H' and uncontradicted testimony of Ponciano, t.s.n., p. 4, July 20, 1964). The spouses were always in arrears in the payment of the installments to Araneta due to lack of money (t.s.n., pp. 5-7, July 20, 1964) so they had to borrow money from the Rehabilitation Finance Corporation-herein after referred to as RFC for short. Thus, on November 26, 1948, they jointly obtained a loan of P12,000.00 from the RFC for the following exclusive purposes only: 'to complete the construction of one-storey residential building on 9th Street, La

Loma Quezon City; and to pay the balance of the price of the lot offered as security' which is Lot 5, (Deed of Mortgage, Exh. 'A') l'). Out of this loan, the amount of P5,292.00 was paid to Araneta as price of Lot 5. The corresponding deed of absolute sale thereof was executed by Araneta on November 27, 1948 (Exh. 'A'). On October 2, 1952, the spouses secured an additional loan of P8,000.00 from the RFC 'to pay the balance of the lot herein offered (Lot No. 6) as additional security, and to defray the expenses incurred in the repairs of the building' as the deed of mortgage so recites (Exh. 'B- l'). From the amount of this loan, the sum of P7,719.60, as price of Lot No. 6, was paid and the deed of absolute sale was forthwith executed by Araneta (Exh. 'B'). In the deed of sale, the vendee named is 'Julia de Reyes'. Her signatures appear over the caption vendee and those of Ponciano under the phrase: 'with my marital consent. As a result of these sales, Transfer Certificates of Title Nos. 8550 (Exh. 'F') and 19998 (Exh. 'G') were issued for Lots 5 and 6, respectively, by the Register of Deeds of Quezon City, in the name of "JULIA REYES married to PONCIANO REYES." The mortgage contracts (Exhs. 'A-1' and 'B-1') executed by the spouses in favor of the RFC were duly registered and annotated on the said transfer Certificates of Title (Exhs. 'F' and 'G'). As promised to the RFC, the spouses built a house and later a camarin on the two lots. The camarin was leased as a school building to the Quezon City Elementary School of La Loma for the period of two years (1950-51) at P500.00 a month. When the school was transferred to another place, the camarin was leased on December 10, 1952 to Mr. and Mrs. Mendoza, appellees, for ten years at P600.00 a month for the first year and P700.00 for the remaining nine years. The contract of lease was signed by Julia as lessor, with the marital consent of Ponciano. The camarin was converted into a movie house and used as such by the lessees. (Exh. 'G'). In spite of the good rentals they had been receiving for the building, the spouses failed to pay seasonably their obligations to the RFC so, as late as November 28, 1958, they had to ask for an extension of 5 years from the Development Bank of the Philippines or DBP, as successor of the RFC, for the payment of an outstanding balance of P7,876.13 (Exh. 'D'). On March 3, 1961, while Ponciano was absent attending his farm in Arayat, Pampanga, Julia sold absolutely the lots in question, together with their improvements to appellees Mendozas for the sum of P80,000.00 without the knowledge and consent of Ponciano (Exh. 'I'-Mendoza). At the same time the spouses were living separately and were not in speaking terms. By virtue of such sale, Transfer Certificates of Title Nos. 561 10 and 56111 were subsequently issued in the name of the Mendozas.

The applicable provision of law is Article 153 of the Civil Code which provides: ART. 153. The following are conjugal partnership property: (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; xxx xxx xxx The presumption found in Article 160 of the Civil Code must also be overcome by one who contends that the disputed property is paraphernal Article 160 provides: ART. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. The presumption is a strong one. As stated in Camia de Reyes v. Reyes de Ilano (63 Phil. 629, 639), "it is sufficient to prove that the property was acquired during the marriage in order that the same may be deemed conjugal property." And in Laluan v. Malpaya (65 SCRA 494, 504) we stated, "proof of acquisition of the property in dispute during the marriage suffices to render the statutory presumption operative." There is no question that the disputed property was acquired by onerous title during the marriage. But were the funds used to buy the lot and build the improvements at the expense of the common fund? The records show that the funds came from loans obtained by the spouses from the Rehabilitation Finance Corporation. Under Article 161 of the Civil Code, all debts and obligations contracted by the husband and the wife for the benefit of the conjugal partnership are liabilities of the partnership. As stated in Castillo, Jr. vs. Pasco (1 1 SCRA 102, 107): ... The position thus taken by appellants is meritorous, for the reason that the deeds show the loans to have been made by Dr. Nicanor Jacinto and by Gabriel and Purificacion Gonzales, to both spouses Marcelo Castillo and Macaria Pasco, as joint borrowers. The loans thus became obligations of the conjugal partnership of both debtor spouses and the money loaned is logically conjugal property. Citing Palanca v. Smith Bell & Co. (9 Phil. 13 1) interpreting Par. 3, Article 1401 of the old Civil Code, the Court in Castillo v. Pasco stated: If money borrowed by the husband alone on the security of his wife's property is conjugal in character, a fortiori should it be conjugal when borrowed by both spouses. The reason obviously is that the loan becomes an obligation of the conjugal partnership which is the one primarily bound for its repayment. To rebut the presumption and the evidence of the conjugal character of the property, the petitioners have only the testimony of Julia de Reyes to offer. Mrs. Reyes testified that she bought the two parcels of land on installment basis and that the first payment of a little less than P2,000.00 came from her personal funds: The receipt issued by Araneta, however, shows that the first installment on one lot was only P69.96 and on the other lot, P102.00.

Mrs. Reyes also testified that she paid the entire purchase price and the construction of the buildings from her personal funds and money borrowed from the Philippine National Bank. The mortgage contracts, however, show that the properties were paid out of the loan from RFC. As a matter of fact, Mrs. Reyes' testimony about a loan from Mrs. Rosa Borja, the sale of a lot in Cabiao, Nueva Ecija given by her mother, and the loan from PNB only emphasize the conjugal nature of the disputed properties because she stated that these sums were also used to put up their gravel and sand business, a poultry farm, and a banana plantation plus a jeepney transportation line although according to her, every business venture handled by her husband failed. The two were establishing businesses and buying properties together as husband and wife, in happier times. The Court of Appeals ruled upon the testimony of Julia De Reyes as follows: Julia's testimony that she had sold her Cabiao property to Rosa Borja is not supported by the deed of sale (Exh. 'I') which shows that the property was sold to Encarnacion Goco and Mariano Robles. Again, her claim that said Cabiao property was donated to her by her mother is negated by the deeds of sale (Exhs. 'J' and 'K') which show that said property was donated to her and her two brothers, Pablo and Jose del Rosario, who afterwards sold their participation thereof to the spouses, Ponciano and Julia. Her claim of exclusive ownership is further belied by the Income Tax Returns (Exhs. 'N' to 'N'- 3') which she herself prepared and filed in behalf of the conjugal partnership wherein she made the statement that the rentals paid by her co-appellees were income of the conjugal partnership; and by the Income Tax Returns (Exhs. 'O' to '0-4') also filed by her for the conjugal partnership, were she made to appear the properties in question as capital assets of the conjugal partnership. It should be noted that Julia did not care to deny the truth of said statements. Neither did she endeavor to offer any explanation for such damaging averments. Petitioners also raised the issue of estoppel in their assignments of errors. They alleged: Even so, petitioners would have small legal cause to dispute the respondent Court's giving credence to the husband's pretensions did there not also exist in the record plain and indisputable evidence that he had on a former occasion both solemnly confirmed the paraphernal character of the very properties now in question and disclaimed the existence of any conjugal partnership funds or properties of himself and his wife. (Petitioner's Brief, L-31616, p. 7). It turns out that in 1948, Ponciano Reyes was sued in the then Municipal Court of Manila for ejectment from a leased hotel that he was then operating. Judgment was rendered against Reyes in favor of the lessors, the brothers named Gocheco Having failed in a bid to garnish the rentals of the disputed buildings because the municipal court stated that it had no jurisdiction to decide the paraphernal or conjugal nature of the properties, the Gocheco brothers filed Civil Case No. 24772 for revival of judgment with the Court of First Instance of Manila.

It was in this latter case where Mr. Reyes stated in his special defenses that he and his wife never had any kind of fund which could be called conjugal partnership funds, that they acted independently from one another whenever either one engaged in any business, andThat the herein plaintiff has not limited his action in the present case against defendant Ponciano S. Reyes as he did in the original case above-mentioned, that is, Civil Case No. 7524 of the Manila Municipal Court which the instant case derived from, but has included the defendant's wife Julia Reyes, with the only intended purpose and design of going over and against the paraphernal properties of said Julia Reyes. (par. 4, Special Defenses, Answer, Exh. II; Petitioner's Brief, L-31618, pp. 9-10). Article 1437 of the Civil Code on estoppel involving immovable property provides: Art. 1437. When in a contract between third persons concerning immovable property, one of them is misled by a person with respect to the ownership or real right over the real estate, the latter is precluded from asserting his legal title or interest therein, provided all these requisites are present: (1) There must be fraudulent representation or wrongful concealment of facts known to the party estopped; (2) The party precluded must intend that the other should act upon the facts as misrepresented; (3) The party misled must have been unaware of the true facts; and (4) The party defrauded must have acted in accordance with the representation. The principle of estoppel rests on the rule that whenever a party has, by his declaration, act or omission, intentionally and deliberately led the other to believe a particular thing true and to act, upon such belief he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it. (Sotto v. Teves, 86 SCRA 154.) Estoppel can only be invoked between the person making the misrepresentation and the person to whom it was addressed. It is essential that the latter shag have relied upon the misrepresentation and had been influenced and misled thereby. There is no showing that the respondent had intentionally and deliberately led the petitioners Mendozas to believe what was contained in the pleading, "Exh. 11", and to make them act upon it. As observed by the respondent, they were not even a party in the case where the said pleadin was filed. Neither is there any assertion by the Mendozas that the said pleading was shown to them or that they happened to see it or to have any knowledge about it before they purchased the properties in question. The alleged representation was never addressed to the petitioners, much less made with the intention that they would act upon it. Moreover, there is no specific and clear reference to the disputed lots as paraphernal in the cited answer. The petitioners cannot invoke estoppel in these petitions. May the Mendoza spouses be considered buyers in good faith? The proof that the petitioners in L-31618 are purchasers in good faith comes from the testimony of Mrs. Inocencia

Mendoza herself. Mrs. Mendoza testified that Mrs. Julia R. De Reyes assured her that the properties were paraphernal that her lawyer verified the titles being in the name of Mrs. Julia R. De Reyes, and that she never dealt with Mr. Ponciano Reyes when she and her husband were still renting the properties they later purchased. On cross-examination, Mrs. Mendoza admitted that she learned of the RFC mortgage when the lots were about to be purchased. Property acquired during a marriage is presumed to be conjugal and the fact that the land is later registered in the name of only one of the spouses does not destroy its conjugal nature. (Bucoy v. Paulino, 23 SCRA 249). Section 46 of P.D. 1529, the Property Registration Decree, reiterates the proviso in Section 70 of the former Land Registration Act that registration cannot be construed to relieve registered land or the owners thereof from any rights incident to the relation of husband and wife. (See also: Marigsa v. Macabuntoc 17 Phil. 107, 109; Romero de Pratts v. Menzi & Co., Inc., 53 Phil. 51, 54; Padilla v. Padilla, 74 Phil. 377, 382-384; Vitug v. Montemayor, 91 Phil. 286, 290, 291, citing Guinguing v. Abuton, 48 Phil. 144; Sideco v. Aznar, 92 Phil. 952, 961-962, citing Flores v. Flores, 48 Phil. 288; Guinoo v. Court of Appeals, 97 Phil. 235, 238; Silos v. Ramos, 97 Phil. 263, 270, citing Commonwealth v. Sandiko 72 Phil. 258, 260; and Alvarez v. Espiritu, 14 SCRA 893). If the fact that property acquired during marriage was registered in the name of the husband alone does not affect its conjugal nature, neither does registration in the name of the wife. Any person who buys land registered in the married name of the wife is put on notice about its conjugal nature. The mortgage contracts (Exhs. "A-1 " and "B-1 ") executed by the spouses Ponciano S. Reyes and Julia Reyes in favor of RFC were duly registered in the Registry of Deeds of Quezon City and seasonably annotated on transfer certificates of title Nos. 8550 (Exh. "F") and 19998 (Exh. "G"), which were issued in the name of Julia Reyes "married to Ponciano Reyes". Their dates of inscription were November 29, 1948 and October 11, 1952, respectively. On December 10, 1952, the lots and the building were leased by Julia, with the marital consent of Ponciano to the petitioners Mendozas The contract of lease was registered in the Registry of Deeds and was annotated in the transfer certificates of title on May 5, 1952. At that time, the RFC mortgages were already noted at the back of the transfer certificates of title. The petitioners, therefore, are unquestionably charged with notice of the existence and contents of said mortgages, their joint execution by the spouses Ponciano Reyes and Julia Reyes and the application of the loans to the payment to Araneta of the purchase price of the lots in question. Furthermore, the consent of the Ponciano Reyes to the mere lease of the properties was demanded by the Mendozas allegedly for their own protection, yet when it came to the deed of sale which entailed a greater transfer of rights such consent was not required. The final argument refers to the alleged unjust enrichment by Ponciano Reyes if the deed of sale is nullified This petitioners admit that the benefit including that represented by one-half of the purchase price, accrued not to the respondent but to his wife. Since Mr. Reyes did not receive any part of the proceeds of the sale and his wife has been aligning herself with the Mendoza couple, there could be no unjust enrichment as alleged. The assignments of errors have no merit. WHEREFORE, the petitions for review on certiorari are hereby DENIED for lack of merit. The judgment of the Court of Appeals is affirmed. SO ORDERED.

Art 118 fc

G.R. No. L-4085 July 30, 1952 AGAPITO LORENZO, ET AL., petitioners, vs. FLORENCIO NICOLAS ET AL., respondents. Engracio F. Clemena and Senon S. Ceniza for petitioners. Bustos and De Guzman for respondents.
PADILLA, J.: This is a petition for a writ of certiorari to review a judgment of the Court of Appeals the dispositive part of which reads, as follows: IN VIEW HEREOF, the Court reverses the judgement appealed from, with respects to Parcels Nos. 5 and 6, declares the same to be paraphernal properties of the deceased Magdalena Clemente; declares the sale (Exhibit D) made by Magdalena Clemente in favor of the Defendants-Appellants of said Parcel of Land No. 6, on June 26, 1916, binding lawful and effective; orders the partition by and among the plaintiffs and defendants of Parcels of Land Nos. 2, 3 and 4, in the proportion of one-half () for the Plaintiffs and the other half () for the Defendants; dismisses the complaint, with respect to Parcels of land Nos. 1, 5, 6 and 7, without special pronouncement as to costs; orders the Defendants to pay to the conjugal partnership one-half of the whole amount paid to the Bureau of Lands, with legal interest thereon, from the date of the filing of the complaint, after deducting from said amount the initial payments made on the said lots Nos. 5 and 6; and further orders the Plaintiffs to pay to pay the Defendants the sum of P50.00, representing of the attorneys' fees paid by said Defendants in connection with parcel No. 2. The facts of the case as found by the Court of Appeals are as follows: Prior to 1910, Magdalena Clemente was the surviving widow of the deceased Gregorio Nicolas, Manuel Lorenzo, former husband of the deceased Carlosa Santamaria, was also at that time a widower. On January 16, 1910, Magdalena Clemente and Manuel Lorenzo contracted marriage. Manuel Lorenzo died on January 7, 1929, while Magdalena died on January 31, 1934. During their coverture, the two had no children. In his first marriage, however, Manuel Lorenzo left, as heirs, the plaintiffs Agapito and Marcela Lorenzo and Policarpio Lorenzo, deceased, who had been succeeded by his children, the plaintiffs Faustina, Federico, Guillermo and Manuel all surnamed Lorenzo; while Magdalena Clemente, in her first marriage, left as heirs, the deceased Gerardo Nicholas, father of the defendants Florencio, Elena, Felix, Trinidad, Cecilia and Basilisa, all surnamed Nicolas. . . . . xxx xxx xxx

themselves, demonstrate that they were paid in her own name. On August 21, 1928, the deed of final conveyance was executed in the sole favor of Magdalena Clemente, notwithstanding the fact that Manuel Lorenzo was then alive. This parcel of land was registered under the Torrens System, in the exclusive name of Magdalena Clemente. The real estate tax receipts, covering this particular parcel, are under the exclusive name of Magdalena Clemente. The presumption of continuity of condition is also in favor of Magdalena Clemente. The status of the land from the time she acquired it and before her marriage to Lorenzo, contained until it is otherwise changed, for it is presumed that a thing once proved to exist continues as long as is usual with things of that nature. All the acts just mentioned are also acts of ownership. And again, it is to be presumed that a person is the owner of a property from exercising acts of ownership over it [Sec. 69 (j) (dd), Rule 123; Heirs of Junero vs. Lizares, 17 Phil., 112]. These are presumptions which the plaintiffs should but failed to rebut. And Manuel Lorenzo, indoubtedly recognizing that Magdalena Clemente had the right of ownership over the land, did not even as much as care to place the title to the land in the name of the conjugal partnership, even after the payment of the installments paid by Magdalena Clemente during the marriage. However, the evidence is not clear as to the source of the money with which the payment of the installments was made, except the advanced payment, which was admittedly paid from her own purse. "Any useful expenditures made for the benefit of the separate property of either one of the spouses by means of the advances made by the partnership or by the industry of the husband or wife, are partnership property." (Art. 1404, Civil Code). The amount spent for the payments of installments due during the marriage, or obligations affecting the separate property of Magdalena Clemente, is certainly a useful expenditures because it preserves her right to the ownership of the land, and is, therefore, a credit which belongs to the conjugal partnership, and must be reimbursed to it by her. (9 Manresa, 606; 5 Sanchez Roman, 840.) In other words, while the ownership of the land remains with Magdalena Clemente, the conjugal partnership is entitled to the reimbursement of paid installments. (Ona vs. Regala, 58 Phil. 881.) The learned trial court sustained plaintiffs pretension on the strength of Article 1407 of the Civil Code which declares that "all the property of the spouses shall be deemed partnership property, in the absence of proof that it belongs exclusively to the husband or to the wife", thereby establishing a presumption which may be "overcome by the introduction of competent evidence to the contrary" (Casino vs. Samaniego, 30 Phil., 135). We hold that the evidence adduced to rebut this presumption, is not only most competent but also convincing, as has heretofore been discussed. As to Parcel of land No. 5. This parcel was also purchased by Magdalena Clemente from the Bureau of Lands on October 17, 1908 (Exhibit E), for P967.16, of which amount P116.84 had previously been paid by her, before her marriage to Manuel Lorenzo. According to the terms of the sale, the balance of P850.32 was payable by installments: namely, P52.32 on June 1, 1909, and P42.00 annually on June 1, of each succeeding year. Payments on account of the installments were made by her, the receipts therefor were issued in her own name by the Bureau of Lands (Exhibits I-A to I-M). On October 7, 1933 or 4 years after the death of Manuel Lorenzo, the final, certificate of sale was executed by the Director of Lands in her favor and in her name. By virtue thereof, Transfer Certificate of Title No. 13269 was issued in the sole name of Magdalena Clemente. The legal principles hereinabove discussed apply with equal force to this parcel of land No. 5. On October 12, 1932, parcel of land No. 6, together with lots Nos. 226 and 216 of the Friars Lands

As to Parcel of land No. 6. This parcel of land which is lot No. 72 of the Friars Land Subdivision in Guiguinto, Bulacan, was purchased in her own name by Magdalena Clemente, for her own exclusive benefit on October 17, 1908 (Exhibit 7), prior to her marriage with Manuel Lorenzo. She had paid the sum of P169.16 on account of the purchase price before her marriage with Lorenzo and, according to the terms of the contract of the sale, the balance of P833.32 was payable on installments, namely: P25.32 on June 1, 1909, and the balance in annual payment of P42.00 each, payable on the first day of June of each year, plus interest of 4% per annum. The receipts, evidencing the payments of these installments (Exhibits I-A to I-M), presented by Plaintiffs

Subdivision in Guiguinto, were conveyed in absolute sale for valuable consideration by Magdalena Clemente in favor of herein Defendants (Exhibit J). The trial court considered the sale as having been made in bad faith and consequently annulled the same. In view of our conclusion, that parcels Nos. 5 and 6 are paraphernal properties of Magdalena Clemente, further discussion of this assignment of error would be deemed unnecessary. However, we propose to pass upon this point in order to settle, once and for all, the validity of the sale which is precisely one of the basis of Defendant's title to the lands under litigation. The sale took place about 3 years after Manuel Lorenzo's death on January 7, 1921 it was duly registered in the Registry of Deeds of Bulacan, and the corresponding T.C.T. No. 17786 was issued in their favor, Aside from the presumption of good faith, connection with this transaction (Art. 434, Civil Code), there is no evidence at all showing that defendants were aware of the flaw in the title of their immediate transferor, Magdalena Clemente. At the time of the purchase of this parcel of land, Defendants did not have any notice of the claim or interest of the herein Plaintiffs over the said property. The price was paid. During the lifetime of Magdalena Clemente, Plaintiffs did not dispute at all her exclusive right over said land, and it was only two years after her death that they filed the claim against the Defendants. Fraud in the transaction should be proven clearly; it should not solely be predicated upon a mere presumption arising from the relationship of the vendor and the vendees. Defendants took possession of the land completely relying upon the fact that it was the sole property of Magdalena Clemente. Furthermore, every purchaser of registered land should take and hold the same free and clear from any and all prior claims, liens and encumbrances, except those set forth in the decree of registration and those expressly mentioned in the Land Registration Act as having been preserved against it. (Sec. 39, Act No. 496; De Jesus vs. City of Manila, 29 Phil., 73; Anderson & Co. vs. Garcia, 64 Phil., 506.) No such claim, liens or encumbrances are set forth on the certificate of title. Plaintiffs tried to prove fraud by the presentation of Exhibit 1, the deed of sale in 1934, in favor of Martina Rodrigo of the parcel of land No. 7. This deed does not in any way prove fraud in the sale of parcels of land Nos. 1 and 6, for this deed refers only to parcel No. 7, as to which, Plaintiffs' complaint had been dismissed by the trial court. The imputation of fraud is belied by the statement in Exhibit J that lot No. 216 was sold to Martina Rodrigo for the purpose only of defraying the expenses of the last illness of Magdalena Clemente. The court below, by dismissing the complaint as to parcel No. 7 covered by the deed of sale, Exhibit J, impliedly recognized the validity of the said deed of sale, Exhibit J. It is, therefore, evident that the annullment of the deed of sale, Exhibit J, by the court a quo, is an error. In view of this conclusion, the query posed by Defendants, whether in an action for partition, the question of the nullity of Exhibit J. on the ground of fraud, can be drawn collaterally, need not to be determined. The same thing may be said with respect to the question of estoppel by laches raised by the Defendants. In support of the petition for review the petitioners claim that: (a) That the Honorable Court of Appeals in declaring parcels of land Nos. 5 and 6 paraphernal properties of the deceased Magdalena Clemente has committed an error of law.

(b) That the Honorable Court of Appeals has committed an error which amounts to serious abuse of discretion by declaring that parcels of land Nos. 5 and 6 were acquired by Magdalena Clemente before her marriage to Manuel Lorenzo.. (c) That the Honorable Court of Appeals has committed an error which amounts to a grave abuse of discretion by not declaring the deed of sale Exhibit "J" null and void. So the petitioners question only the correctness of the judgment of the Court of Appeals as to parcels Nos. 5 and 6 held to be paraphernal properties of the late Magdalena Clemente reversing the judgment of the Court of First Instance of Bulacan which held that they were conjugal, The third assignment of error involves a question of fact. Upon the presumption that the parcels of land Nos. 5 and 6 continued to be the exclusive properties of Magdalena Clemente until shown otherwise and because she had paid the sum of P116.84 for parcel No. 5 and P169.16 for parcel No. 6 before her marriage to the late Manuel Lorenzo, the ancestor of the petitioners, from whom they claim the deprive their rights to one-half of the parcels of land, the Court of Appeals is of the opinion that they were paraphernal properties of the late Magdalena Clemente. What she had paid during coverture for said parcels of land was declared conjugal and deemed useful expenditures for which the conjugal partnership is entitled to reimbursement. The two parcel of land in question were part of the Friar Lands the alienation of which is provided for in Act No. 1120. Section 11 of Act No, 1120 provides: Should any person who is the actual and bona fide settler upon and occupant of any portion of said land . . . desire to purchase the land so occupied by him, he shall be entitled to do so at the actual cost thereof to the Government, and shall be allowed ten years from the date of purchase within which to pay for the same in equal annual installments, if he so desires, all deferred payments to bear interest at the rate of four per centum per annum. Section 12 of the same Act partly provides: . . . When the cost thereof shall have been thus ascertained the Chief of the Bureau of Public Lands shall give the said settler and occupant a certificate which shall set forth in detail that the Government has agreed to sell to such settler and occupant the amount of land so held by him, at the prize so fixed, payable as provided in this Act ... and that upon the payment of the final installment together with all accrued interest the Government will convey to such settler and occupant the said land so held by him by proper instrument of conveyance, which shall be issued and become effective in the manner provide in section one hundred and twenty-two of the Land Registration Act. . . . . Section 16 thereof in part provides: In the event of the death of a holder of a certificate the issuance of which is provided for in section twelve hereof, prior to the execution of a deed by the Government to any purchaser, his window shall be entitled to received a deed of the land stated in the certificate upon showing that she has complied with the requirements of law for the purchase of the same. In case a holder of a certificate dies before the giving of the deed and does not leave a widow, then the interest of the holder of the certificate shall descend and deed shall issue to the persons who under the laws of the Philippine Islands would have taken had the title been perfected before the death of the holder of the

certificate, upon proof of the holders thus entitled of compliance with all the requirements of the certificate. . . . From these provision it is apparent that the pervading legislative intent is to sell the friar lands acquired by the Government to actual settlers and occupants of the same. In case of death of a holder of a certificate which is only an agreement to sell it is not the heirs but the widow who succeeds in the parcels of land to be sold by the Government. Only do the heirs succeed in the rights of the deceased holder of a certificate if no widow survives him. The fact that all receipts for installments paid even during the lifetime of the late husband Manuel Lorenzo were issued in the name of Magdalena Clemente and that the deed of sale or conveyance of parcel No. 6 was made in her name in spite of the fact that Manuel Lorenzo was still alive shows that the two parcels of land belonged to Magdalena Clemente. The petitioner, the heirs of the late Manuel Lorenzo, are not entitled to one-half of the two parcels of land. But the installments paid during coverture are deemed conjugal, there being no evidence that they were paid out of funds belonging exclusively to the late Magdalena Clemente. Upon these grounds and reasons the judgment of the Court of Appeals under review is affirmed, without cost.

In its original judgment, respondent Court principally declared DAGUINES "as the lawful owner of the land in question as well as the one-half () of the house erected on said land." Upon reconsideration prayed for by MERCEDES, however, respondent Court resolved: WHEREFORE, the dispositive portion of the Decision of this Court, promulgated on October 6, 1980, is hereby amended to read as follows: (1) Declaring plaintiff as the true and lawful owner of the land in question and the 10 coconut trees; (2) Declaring as null and void the sale of the conjugal house to plaintiff on April 15, 1980 (Exhibit A) including the 3 coconut trees and other crops planted during the conjugal relation between Fernando Canullas (vendor) and his legitimate wife, herein defendant Mercedes Calimlim- Canullas; xxx xxx xxx The issues posed for resolution are (1) whether or not the construction of a conjugal house on the exclusive property of the husband ipso facto gave the land the character of conjugal property; and (2) whether or not the sale of the lot together with the house and improvements thereon was valid under the circumstances surrounding the transaction. The determination of the first issue revolves around the interpretation to be given to the second paragraph of Article 158 of the Civil Code, which reads: xxx xxx xxx Buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who owns the same. We hold that pursuant to the foregoing provision both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot, 1 which value would be reimbursed at the liquidation of the conjugal partnership. 2 In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404), Manresa stated: El articulo cambia la doctrine; los edificios construidos durante el matrimonio en suelo propio de uno de los conjuges son gananciales, abonandose el valor del suelo al conj uge a quien pertenezca. It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent Judge, it was held that the land belonging to one of the spouses, upon which the spouses have built a house, becomes conjugal property only when the conjugal partnership is liquidated and indemnity paid to the owner of the land. We believe that the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following was explained: As to the above properties, their conversion from paraphernal to conjugal assets should be deemed to retroact to the time the conjugal buildings were first constructed thereon or at the very latest, to the time immediately before the death of Narciso A. Padilla that ended the conjugal partnership. They can not be considered to have become conjugal property only as of the time their values were paid to the estate of the widow Concepcion Paterno because by that time the conjugal partnership no longer existed and it could not acquire the ownership of said properties. The acquisition by the partnership of these properties was, under the 1943 decision, subject to the suspensive

Art 120 fc

G.R. No. L-57499 June 22, 1984 MERCEDES CALIMLIM- CANULLAS, petitioner, vs. HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch I, and CORAZON DAGUINES, respondents.
MELENCIO-HERRERA, J.: Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the Resolution on the Motion for Reconsideration, dated November 27, 1980, of the then Court of First Instance of Pangasinan, Branch I, in Civil Case No. 15620 entitled "Corazon DAGUINES vs. MERCEDES CalimlimCanullas," upholding the sale of a parcel of land in favor of DAGUINES but not of the conjugal house thereon' The background facts may be summarized as follows: Petitioner MERCEDES Calimlim-Canullas and FERNANDO Canullas were married on December 19, 1962. They begot five children. They lived in a small house on the residential land in question with an area of approximately 891 square meters, located at Bacabac, Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO inherited the land. In 1978, FERNANDO abandoned his family and was living with private respondent Corazon DAGUINES. During the pendency of this appeal, they were convicted of concubinage in a judgment rendered on October 27, 1981 by the then Court of First Instance of Pangasinan, Branch II, which judgment has become final. On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO described the house as "also inherited by me from my deceased parents." Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19, 1980 for quieting of title and damages against MERCEDES. The latter resisted and claimed that the house in dispute where she and her children were residing, including the coconut trees on the land, were built and planted with conjugal funds and through her industry; that the sale of the land together with the house and improvements to DAGUINES was null and void because they are conjugal properties and she had not given her consent to the sale,

condition that their values would be reimbursed to the widow at the liquidation of the conjugal partnership; once paid, the effects of the fulfillment of the condition should be deemed to retroact to the date the obligation was constituted (Art. 1187, New Civil Code) ... The foregoing premises considered, it follows that FERNANDO could not have alienated the house and lot to DAGUINES since MERCEDES had not given her consent to said sale. 4 Anent the second issue, we find that the contract of sale was null and void for being contrary to morals and public policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived and from whence they derived their support. That sale was subversive of the stability of the family, a basic social institution which public policy cherishes and protects. 5 Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy are void and inexistent from the very beginning. Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public order, or public policy." Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain exceptions. 6 Similarly, donations between spouses during marriage are prohibited. 7 And this is so because if transfers or con conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, 8 as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the wig of the parties. That was the ruling in Buenaventura vs. Bautista, also penned by Justice JBL Reyes (CA) 50 O.G. 3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the pertinent dissertation on this point: We reach a different conclusion. While Art. 133 of the Civil Code considers as void a donation between the spouses during the marriage, policy considerations of the most exigent character as wen as the dictates of morality require that the same prohibition should apply to a common-law relationship. As announced in the outset of this opinion, a 1954 Court of Appeals decision, Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of the old Civil Code speaks unequivocally. If the policy of the law is, in the language of the opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit donations in favor of the other consort and his descendants because of fear of undue influence and improper pressure upon the donor, a prejudice deeply rooted in our ancient law, ..., then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without benefit of nuptials. For it is not to be doubted that assent to such irregular connection for thirty years bespeaks greater influence of one party over the other, so that the danger that the law seeks to avoid is correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1), "It would not be just that such donations should subsist, lest the conditions of those who incurred guilt should turn out to be better." So long as marriage remains the cornerstone of our family law, reason and morality alike demand that the disabilities attached to marriage should likewise attach to concubinage (Emphasis supplied),

WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of November 27, 1980 on petitioner's Motion for Reconsideration, are hereby set aside and the sale of the lot, house and improvements in question, is hereby declared null and void. No costs. SO ORDERED.