BA Finance Corp vs.

CA
GR 61464, May 28 1988
FACTS:
Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as
evidenced by a promissory note he signed in his own behalf and as a
representative of A&L Industries. Augusto presented an alleged special power of
attorney executed by his wife, Lily Yulo, who managed the business and under
whose name the said business was registered, purportedly authorized the
husband to procure the loan and sign the promissory note. 2months prior the
procurement of the loan, Augusto left Lily and their children which in turn
abandoned their conjugal home. When the obligation became due and
demandable, Augusto failed to pay the same.
The petitioner prayed for the issuance of a writ of attachment alleging that said
spouses were guilty of fraud consisting of the execution of Deed of Assignment
assigning the rights, titles and interests over a construction contract executed
by and between the spouses and A. Soriano Corporation. The writ hereby
prayed for was issued by the trial court and not contented with the order,
petitioner filed a motion for the examination of attachment debtor alleging that
the properties attached by the sheriff were not sufficient to secure the
satisfaction of any judgment which was likewise granted by the court.
ISSUE: WON A&L Industries can be held liable for the obligations contracted by
the husband.
HELD:
A&L Industries is a single proprietorship, whose registered owner is Lily Yulo.
The said proprietorship was established during the marriage and assets were
also acquired during the same. Hence, it is presumed that the property forms
part of the conjugal partnership of the spouses and be held liable for the
obligations contracted by the husband. However, for the property to be liable,
the obligation contracted by the husband must have redounded to the benefit of
the conjugal partnership. The obligation was contracted by Augusto for his own
benefit because at the time he incurred such obligation, he had already

abandoned his family and left their conjugal home. He likewise made it appear
that he was duly authorized by his wife in behalf of the company to procure such
loan from the petitioner. Clearly, there must be the requisite showing that some
advantage accrued to the welfare of the spouses.
Thus, the Court ruled that petitioner cannot enforce the obligation contracted by
Augusto against his conjugal properties with Lily. Furthermore, the writ of
attachment cannot be issued against the said properties and that the petitioner
is ordered to pay Lily actual damages amouting to P660,000.00.
Marmont Resort Hotel v. Guiang
G.R. No. 79734 December 8, 1988, 250 PHIL 372-383
Article 94 pars.2,3: Debts and obligations contracted during marriage; consent
Even if the debt or obligation were not for the benefit of the community, the absolute community of property shall be liable if such
debt or obligation were contracted during marriage by both spouses or by any of them with the consent of the other. Consent may
be express or implied. (Sta. Maria, p.477)

FELICIANO, J:
FACTS: The present Petition for Review seeks the reversal of the Decision of the
Court of Appeals and RTC of Olongapo City dismissing the complaint filed by
petitioner company against private respondent spouses.
A first Memorandum of Agreement (MOA) was executed between Maris
Trading and petitioner Marmont Resort Hotel Enterprises, Inc. ("Marmont") wherein
the former will drill for water and install and complete a water supply facility to
service the Marmont Resort Hotel in Olongapo, for P40,000.00. Maris Trading then
drilled a well and installed a water pump on a portion of a parcel of land then
occupied by respondent spouses Federico and Aurora Guiang. Five (5) months later,
a second MOA was executed between Maris Trading and Aurora Guiang, with
Federico Guiang signing as witness, in essential part read: "That the First Party
[Maris Trading] has dug, drilled and tapped water source for Marmont Resort,
located at Bo. Barretto, Olongapo City in accordance with first MOA and notarized x
x x on the land owned by the Second Party [Aurora Guiang] with the latter's
permission. That for and in consideration of the sum of P1,500.00 the Second Party
hereby Sell, Transfer and Cede all possessory rights, interest and claims over
that portion of the lot wherein the water source of Marmont Resort is located unto
and in favor of Maris Trading."
Later on, when the water supply of the Marmont became inadequate to meet
the hotel's water requirements, petitioner Marmont called on another contractor to
install additional submersible pump. However, when Juan Montelibano, Jr., manager
of the Marmont Resort, sought permission from the Guiang spouses to inspect the
water pump and to make the necessary additional installations on the portion of
land previously occupied by the spouses (already sold to Maris Trading per second
MOA), it was not granted. Thus, petitioner Marmont filed a Complaint against the
Guiang spouses for damages as a result of losses suffered by the hotels disrupted
operations. The Guiang spouses moved to dismiss the Complaint, which was

however later on denied, assailing among others, the validity of the second MOA
and alleging that the subject matter thereof involved conjugal property
alienated by Aurora Guiang without the marital consent of her husband,
Federico Guiang.
Subsequently, the trial court dismissed the complaint after finding that
Aurora Guiang had validly alienated her rights over the disputed portion of land to
Maris Trading, but held that the evidence failed to show that Maris Trading, in turn,
had transferred such rights to petitioner Marmont. Petitioner Marmont appealed to
the Court of Appeals which affirmed the decision of the trial court and dismissed the
appeal for lack of merit. The appellate court held that, in any event, neither the first
or second MOA showed that Marmont had in fact acquired from Maris Trading
whatever rights the latter had over the land in dispute. In the instant Petition for
Review, petitioner contends that the Court of Appeals erred in deciding that
ownership belongs to Maris Trading hence, private respondent Guiang can prohibit
Marmont Resort from entering the land.
ISSUE:
[original issue per full text]: WON defendants are liable for damages under the
human relations provision of the Civil Code; [in relation to Art. 94: WON the absolute
community of property shall be liable for said contract/second MOA]
RULING: YES to both. The Supreme Court considered briefly respondent spouses'
argument that the second MOA was invalid for having been executed by Aurora
Guiang without the marital consent of Federico, contrary to Articles 165 and 172 of
the Civil Code which state the general principle under our civil law, that the wife
may not validly bind the conjugal partnership without the consent of the husband,
who is legally the administrator of the conjugal partnership. In this particular case,
however, as noted earlier, the second MOA, although ostensibly contracted
solely by Aurora Guiang with Maris Trading, was also signed by her
husband Federico, as one of the witnesses thereto. This circumstance
indicates not only that Federico was present during the execution of the
agreement but also that he had, in fact, given his consent to the execution
thereof by his wife Aurora. Otherwise, he should not have appended his
signature to the document as witness. Respondent spouses cannot now
disown the second MOA as their effective consent thereto is sufficiently
manifested in the document itself. (as quoted in Sta. Maria, p.477)
Finally, respondent spouses allege that dismissal of the complaint by the trial
court was proper as petitioner Marmont was not privy to the second MOA hence
petitioner had no valid cause of action against respondents. A closer scrutiny of the
second MOA established, among other things, that construction work had been
performed by Maris Trading on the land occupied by respondent spouses and with
their knowledge and consent, and that the purpose of the work was to build a water
supply facility for petitioner Marmont. In fact, said stipulations appear to have been
designed precisely to benefit petitioner and, thus, partake of the nature of
stipulations pour autrui, contemplated in Article 1311 of the Civil Code. [check note
below for info on pour autrui in case asked in recits]

WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED. The

assailed Decision of the CA and RTC are REVERSED. This case is REMANDED to the
trial court for determination of the amount of damages petitioner is entitled to
receive from respondent spouses. No pronouncement as to costs.
Notes:
A stipulation pour autrui is a stipulation in favor of a third person conferring a clear and
deliberate favor upon him, which stipulation is found in a contract entered into by parties
neither of whom acted as agent of the beneficiary. We believe and so hold that the purpose
and intent of the stipulating parties (Maris Trading and respondent spouses) to benefit the
third person (petitioner Marmont) is sufficiently clear in the second MOA. Marmont was not
of course a party to that second Agreement but, as correctly pointed out by the trial court
and the appellate court, the respondent spouses could not have prevented Maris Trading
from entering the property possessory rights over which had thus been acquired by Maris
Trading. That respondent spouses remained in physical possession of that particular bit of
land, is of no moment; they did so simply upon the sufferance of Maris Trading. Had Maris
Trading, and not the respondent spouses, been in physical possession, we believe that
Marmont would have been similarly entitled to compel Maris Trading to give it (Marmont)
access to the site involved. The two (2) courts below failed to take adequate account of the
fact that the sole purpose of Maris Trading in acquiring possessory rights over that specific
portion of the land where well and pump and piping had been installed, was to supply the
water requirements of petitioner's hotel. That said purpose was known by respondent
spouses, is made explicit by the second MOA. Maris Trading itself had no need for a water
supply facility; neither did the respondent spouses. The water facility was intended solely for
Marmont Resort Hotel. The interest of Marmont cannot therefore be regarded as merely
"incidental." Finally, even if it be assumed (for purposes of argument merely) that the
second MOA did not constitute a stipulation pour autrui, still respondent spouses, in the
circumstances of this case, must be regarded as having acted contrary to the principles of
honesty, good faith and fair dealing embodied in Articles 19 and 21 of the Civil Code when
they refused petitioner Marmont access to the water facility to inspect and repair the same
and to increase its capacity and thereby to benefit from it. In so doing, respondent spouses
forced petitioner Marmont to locate an alternative source of water for its hotel which of
course involved expenditure of money and perhaps loss of hotel revenues. We believe they
should respond in damages.

PNB vs. CA
[G.R. No. L-19565. January 30, 1968.]
PARTIES:
Petitioner
Respondents
FACTS:
Preliminary

:
:

PNB
CA, Pragmacio and Maximo Vitug

During the lifetime of Clodualdo Vitug he married two times. His first wife was Gervacia
Flores with whom he had 3 children. The second wife of Clodualdo Vitug was Donata
Montemayor with whom he had 8 children.
Clodualdo Vitug died intestate so his estate was settled and distributed in
Special Proceeding wherein Donata Montemayor was the Administratrix.
During the lifetime of Donata, the 30 lots were mortgaged in favor of PNB to
secure two loans obtained by her children. Said properties were all in the name of
Donata Montemayor, of legal age, Filipino, widow and a resident of Lubao,
Pampanga at the time they were mortgaged to PNB and were free from all liens
and encumbrances.
These properties were foreclosed by PNB for failure for failure to pay the loan
and thereafter, PNB sold the properties to Jesus M. Vitug, Anunciacion V. de
Guzman, Prudencia V. Fajardo, Salvador Vitug and Aurora V. Gutierrez in whose
names the corresponding titles were issued.
On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for
partition and reconveyance with damages in the Court of First Instance of
Pampanga against Marcelo Mendiola, special administrator of the intestate estate of
Donata Montemayor who died earlier, Jesus Vitug, Sr., Salvador, Natalia, Prudencia,
Anunciacion, all surnamed Vitug, Antonio, Francisco, Aurora, Pedro, Honorio,
Corazon, Anselmo, Benigno, Eligio, Jesus and Luz, all surnamed Fajardo and the PNB.
The subject of the action is 30 parcels of land which they claim to be the
conjugal property of the spouses Donata Montemayor and Clodualdo Vitug of which
they claim a share of 2/11 of 1/2 thereof. They assailed the mortgage to the PNB
and the public auction of the properties as null and void. They invoked the case of
Vitug vs. Montemayor, L-5297 decided by this Court on Oct. 20, 1953 which is an
action for partition and liquidation of the said 30 parcels of land wherein the
properties were found to be conjugal in nature.

Procedural history
LC

CA
:
parcels be

dismissed the complaint with costs against the plaintiffs

reversed the Decision but held that the sale at public auction of the 22
considered valid with respect to the 1/2 thereof.

Hence the herein petition for certiorari filed by the PNB.

ISSUE: Whether or not the subject properties are conjugal properties of Donata and Clodualdo.
HELD: NO
RULE: 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.
APPLICATION:

The presumption applies to property acquired during the lifetime of the

husband and wife. In this case, it appears on the face of the title that the properties
were acquired by Donata Montemayor when she was already a widow. When the
property is registered in the name of a spouse only and there is no showing as to
when the property was acquired by said spouse, this is an indication that the
property belongs exclusively to said spouse. And this presumption under Article 160
of the Civil Code cannot prevail when the title is in the name of only one spouse and
the rights of innocent third parties are involved.
The PNB had a reason to rely on what appears on the certificates of title of
the properties mortgaged. For all legal purposes, the PNB is a mortgagee in good
faith for at the time the mortgages covering said properties were constituted the
PNB was not aware to any flaw of the title of the mortgagor.
True it is that in the earlier cases decided by this Court, namely Vitug vs.
Montemayor decided on May 15, 1952, this court found the 30 parcels of land in
question to be conjugal in nature and awarded the corresponding share to the
property of Florencia Vitug, an heir of the late Clodualdo Vitug from the first
marriage. In said cases this Court affirmed the decision of the lower court. In the
dispositive part of the decision of the trial court it made the observation that "but
from the conduct of Clodualdo Vitug and Donata Montemayor during the existence
of their marital life, the inference is clear that Clodualdo had the unequivocal
intention of transmitting the full ownership of the 30 parcels of land to his wife
Donata Montemayor, thus considering the 1/2 of the funds of the conjugal property
so advanced for the purchase of said parcels of land as reimbursable to the estate
of Clodualdo Vitug on his death." That must be the reason why the property was
registered in the name of Donata Montemayor as widow after the death of
Clodualdo Vitug.
At any rate, although actions for recovery of real property and for partition
are real actions, however, they are actions in personam that bind only the particular
individuals who are parties thereto. The PNB not being a party in said cases is not
bound by the said decisions. Nor does it appear that the PNB was aware of the said
decisions when it extended the above described mortgage loans. Indeed, if the PNB
knew of the conjugal nature of said properties it would not have approved the
mortgage applications covering said properties of Donata Montemayor without
requiring the consent of all the other heirs or co-owners thereof. Moreover, when
said properties were sold at public auction, the PNB was a purchaser for value in
good faith so its right thereto is beyond question.
Pragmacio and Maximo Vitug are now estopped from questioning the title of
Donata Montemayor to the said properties. They never raised the conjugal nature of
the property nor took issue as to the ownership of their mother, Donata
Montemayor, over the same. Indeed private respondents were among the
defendants in said two cases wherein in their answers to the complaint they
asserted that the properties in question are paraphernal properties belonging

exclusively to Donata Montemayor and are not conjugal in nature.They even leased
the properties from their mother for many years.

DISPOSITIVE PORTION:
WHEREFORE, the subject decision of the respondent Court of Appeals is hereby
REVERSED and set aside and another decision is hereby rendered DISMISSING the complaint
and ordering private respondents to pay attorney's fees and expenses of litigation to petitioner
PNB in the amount of P20,000.00 and the costs of the suit.
G.R. No. L-19565

January 30, 1968

ESTRELLA DE LA CRUZ, plaintiff-appellee,

vs.
SEVERINO DE LA CRUZ, defendant-appellant.
CASTRO, J.:
Estrella De la Cruz and Severino De la Cruz were married in Bacolod City on February 1, 1938
and had six children. During their coverture they acquired seven parcels of land of the Bacolod
Cadastre, all assessed at P45,429, and three parcels of the Silay Cadastre, all assessed at P43,580.
All these parcels are registered in their names. The hacienda in Silay yielded for the year 1957 a
net profit of P3,390.49.
They are also engaged in varied business ventures with fixed assets valued as of December 31,
1956 at P496,006.92, from which they obtained for that year a net profit of P75,655.78. The net
gain of the Philippine Texboard Factory, the principal business of the spouses, was P90,454.48
for the year 1957. As of December 31, 1959, the total assets of the various enterprises of the
conjugal partnership were valued at P1,021,407.68.The spouses are indebted to the Philippine
National Bank and the Development Bank of the Philippines for loans obtained, to secure which
they mortgaged the Philippine Texboard Factory, the Silay hacienda, their conjugal house, and all
their parcels of land located in Bacolod City.
On July 22, 1958 the plaintiff Estrella de la Cruz filed a complaint with the Court of First
Instance of Negros Occidental, alleging that her husband, the defendant, had not only abandoned
her but as well was mismanaging their conjugal partnership properties, and praying for (1)
separation of property, (2) monthly support of P2,500 during the pendency of the action, and (3)
payment of P20,000 as attorney's fees, and costs.
The CFI of Negros Occidental issued an order allowing the plaintiff the amount prayed for as
alimony pendente lite, which however, upon defendant's motion, was reduced to P2,000. And on
June 1, 1961 the trial court rendered judgment ordering separation and division of the conjugal
assets, and directing the defendant to pay to the plaintiff the sum of P20,000 as attorney's fees,
with legal interest from the date of the original complaint, that is, from July 22, 1958, The
judgement was appealed to the Court of Appeals to which the case was referred to the Supreme
Court. The defendant appealed on the ground the CFI erred in finding that the (1)separation of
him and the plaintiff constituted to abandonment,(2) that the court only allowed the plaintiff to

establish her version of the facts but not allowing his establishment of defense and (3) that there
has been abused of administration of conjugal partnership.
It was recounted by the plaintiff that in 1955 the defendant had been staying in Manila and that
during his stay it was alleged that the defendant had a mistress by the name of Nenita Hernandez,
and that a letter was seen by the plaintiff, asking that her husband meet her at a hotel in Baguio.
However the defendant vehemently denied accusation, and that even when he is separated from
his family he had not failed in providing assistance such as a monthly allowance and other fees
for his children. And as to the abuse of management of properties, the defendant countered the
accusation by presenting Balance sheets of Profit and Loss statements and that out of the income
of their enterprises he had purchased additional equipment and machineries and has partially
paid their indebtedness to the Philippine National Bank and the Development Bank of the
Philippines. He also countered that the loss was due to the mahjong hobbies of the plaintiff.
ISSUE: Whether or not the defendant is guilty of abandonment (2) Was the defendant's failure
and/or refusal to inform the plaintiff of the state of their business enterprises such an abuse of his
powers of administration of the conjugal partnership as to warrant a division of the matrimonial
assets?
RULING: No. The Court finds that the defendant is not guilty of abandonment. Physical
separation alone is not the full meaning of the term "abandonment", if the husband, despite his
voluntary departure from the society of his spouse, neither neglects the management of the
conjugal partnership nor ceases to give support to his wife." At the case at bar, the defendant had
not failed in giving financial assistance monthly and also the plaintiff had been withdrawing
from the account of the defendant. With regard to the allegation of having a concubine, the Court
finds this indefinite, aside from the uncorroborated statement of the plaintiff that she knew that
Nenita Hernandez was her husband's concubine, without demonstrating by credible evidence the
existence of illicit relations between Nenita and the defendant, the only evidence on record
offered to link the defendant to his alleged mistress was a letter to which the plaintiff however
failed to connect authorship of the said letter with Nenita.
No. The Court finds that "there is absolutely no evidence to show that he has squandered the
conjugal assets. Upon the contrary, he proved that through his industry and zeal, the conjugal
assets at the time of the trial had increased to a value of over a million pesos. And that for
"abuse" to exist, it is not enough that the husband perform an act or acts prejudicial to the wife.
Nor is it sufficient that he commits acts injurious to the partnership, for these may be the result of
mere inefficient or negligent administration. Abuse connotes willful and utter disregard of the
interests of the partnership, evidenced by a repetition of deliberate acts and/or omissions
prejudicial to the latter."
Thus the judgment a quo, insofar as it decrees separation of the conjugal properties, is reversed
and set aside.The defendant is ordered to pay to the plaintiff, in the concept of support, the
amount of P3,000 per month, until he shall have rejoined her in the conjugal home, which
amount may, in the meantime, be reduced or increased in the discretion of the court a quo as

circumstances warrant. The award of attorney's fees to the plaintiff is reduced to P10,000,
without interest. No pronouncement as to costs.