G.R. No. L-9984 March 23, 1916 years, or until 1908.
years, or until 1908. One of the chief clients (principals) both of Javier and Collantes,
PETRONA JAVIER, plaintiff-appellee,
vs.
LAZARO OSMEA, as administrator of the estate of the deceased Tomas Osmea,
defendant-appellant.
Haussermann, Cohn and Fisher for appellant.
Southworth, Hargis, Adams and Jordain for appellee.
ARELLANO, C.J.:
Florentino Collantes, husband of Petrona Javier, became indebted to the estate of
Tomas Osmea in the sum of P26,467.94. On June 15, 1913, judgment for this
amount was rendered in behalf of the estate and the sheriff executed it by selling at
public auction all the right, title, interest or share which the judgment debtor,
Collantes, had or might have in two parcels of improved real estate situated in this
city of Manila, and especially the usufructuary interest therein of Pascuala Santos,
the surviving widow of Felix Javier y Sanchez, which interest was acquired by Petrona
Javier, Collantes' wife, on March 20, 1911.
Petrona Javier, Collantes' wife, was the only daughter of Felix Javier and Matea
Corunan, the latter of whom died in 1901, and the former ion 1908. Felix Javier, after
the death of his wife Matea Corunan, married Pascuala Santos. It was in the year
1890 that Florentino Collantes and Petrona Javier had contracted marriage. Felix
Javier and his wife Matea Corunan left at their death, as an inheritance to their only
daughter Petrona Javier, two urban properties situated one on Calle Carriedo, and
the other on Calle San Sebastian. For the purpose of consolidating her full ownership
in and to both properties, Petrona Javier acquired from her father's second wife,
Pascuala Santos, the latter's usufructuary right in her deceased husband's estate for
the sum of P3,000, which amount, it appears, Javier was obliged to borrow, giving as
security for the loan a mortgage on the property she had inherited.
These properties that were inherited by Petrona Javier from her parents were those
levied upon by the sheriff in the execution of the judgment against Florentino
Collantes, and notwithstanding her protests the sale was carried out. The successful
bidder therein was the Osmea estate itself which paid P500 for each parcel of
property, that is, P1,000 for Collantes' right in both parcels and in the usufructuary
interest acquired by his wife from Pascuala Santos.
Inasmuch as Petrona Javier claimed that her husband Collantes had no rights
whatever in said two pieces of property or in the usufructuary interest acquired by
her, she filed claim of intervention in order to recover her ownership of the
properties and her right to usufruct after the sheriff's sale should be annulled.
The defendant Osmea estate, in answer to the complaint, admitted plaintiff's
exclusive right of ownership in the said two aforementioned parcels of real estate,
subject to the usufructuary right of the second wife of plaintiff's father, and also
admitted the purchase of this right by plaintiff. Defendant claimed, however, that
the money with which said usufructuary interest was purchased belonged to the
conjugal partnership and therefore that the right of usufruct so acquired belonged to
the said conjugal partnership. Defendant concluded by praying that the court
rendered judgment holding that the revenues from both properties are conjugal
partnership property of the married couple Collantes and Javier; that said revenues
be made liable for the payment of the judgment rendered in behalf of the Osmea
estate; that for this purpose a receiver be appointed to take charge of said two
properties and manage them with the object of applying the revenues obtained
therefrom to the payment of the judgment obtained by the Osmea estate against
Collantes.
The Court of First Instance of Manila rendered judgment annulling only the sale of
the two properties and ordering the cancellation of their registration in the property
registry, with the costs of the suit.
Defendant appealed.
The question raised in this appeal is whether the sum owed by the husband to the
Osmea estate can and should be paid out of the fruits and revenues of the two
aforementioned parcels of real estate that exclusively belong to the wife, the herein
plaintiff, as prayed for by the appellant in his written answer.
To decide this question the nature of the debt must be inquired into the defined.
The appellee herself, in this instance, describes it thus:
A short while prior to 1892, Collantes was employed by appellee's father, Felix Javier,
in a commission business which the latter conducted in Manila. In 1902, Felix Javier
retired from the business and was succeeded therein by Collantes who, as a
consequence, changed his commercial status as an employee of his father-in-law to
that of an independent commission merchant, and continued that business for six
was Thomas Osmea , a merchant of Cebu, whom Javier, and later Collantes, had
represented as his agents in Manila for the sale of tobacco consigned to them by
Osmea from Cebu and for the investment of the profits, in Osmea 's name and as
his agent in Manila, in merchandise which these agents consigned to him at Cebu
(record, p. 2). When Javier retired from the commission business in 1902, it appears
that he was indebted to Tomas Osmea in the sum of four or five thousand pesos,
and that this debt was assumed by this successor Collantes. How this debt
originated, the record does not show. In 1908, Collantes rendered a statement (they
probably were accounts) to Osmea which showed that his debt to the latter
amounted to fourteen or fifteen thousand pesos. No steps were taken by Osmea
during his lifetime to collect this debt, but after his death a judgment for the same
was obtained by the administrator of his estate in June, 1913. This judgment was
founded on the statement made by Collantes in 1908 in which he admitted is debt,
together with interest thereon at the rate of 12 per centum per annum.
Although the appellee admits that the debt arose out of the business conducted by
her father and subsequently by her husband, there is no evidence that throws any
light on the particular transaction which was the cause of the indebtedness . . . . It
must be observed that there is the natural presumption of fact that whatever he
(Collantes) may have contributed toward defraying the expenses of his family, was
contributed by him out of what he earned by the commission paid him for the
services he rendered to his clients as a broker (as commission merchant). It has not
been proven or alleged that any part of the debt to Osmea was originated by
Collantes' having paid the family expenses as they are defined in paragraph 5 of
article 1408 of the Civil Code. (Appellee's brief, pp. 3 and 4.)
The appellee herself having set forth the origin of the debt, which is none other than
the balance against Collantes resulting from the accounts rendered by him as
commission-merchant to his principal Osmea ; and the appellee also having set
forth that "there is the natural presumption of fact what whatever Collantes
contributed by him out of what he earned by the commission paid him for the
services he rendered to his clients as commission merchant," it is decisive and
conclusive that the debt must be paid out of the community property of the
marriage, since, article 1408 of the Civil Code provides:
The conjugal partnership shall be liable for:
1. All the debts and obligations contracted during the marriage by the
husband,
xxx xxx xxx
5. The support of the family . . . .
And inasmuch as "the fruits, revenue, or interest collected or accrued during the
marriage coming from the partnership property, or from that which belongs to
either one of the spouses," is community property, according to article 1401; and,
further, as the law expressly provides that "the fruits of the paraphernal property
form a part of the assets of the conjugal partnership, and are liable for the payment
of the marriage expenses" (art. 1385), hence it follows that the creditor of the
husband may bring his action, not against the paraphernal property, but against the
fruits and revenues of this private property of the wife.
This conclusion is not barred by the provision of article 1386, to wit, that "the
personal obligation of the husband cannot be paid out of the fruits of the
paraphernal property unless it be proven that they were incurred for the benefit of
the family." It is chiefly upon this article that appellee's whole brief is based.
The antecedents of this article of the Civil Code are not only the laws embraced in
some of the codes enacted prior thereto, but principally the numerous cases decided
by the supreme court of Spain which interpret the old law which the appellee says is
identical with article 1386 of the present Civil Code. Among the various decisions
which might be cited, the most important is that of June 9, 1883, because it covers
the entire question at issue in this case: Quirico Casanovas was a creditor of Jose
Gimiso for the value of certain drafts protested for nonpayment; he brought suit to
recover and attached various properties belonging to the marriage partnership, for
Gimiso was married, and also several parcels of real estate that belonged to the
debtor's wife, Antonia Carruana. The latter filed a third party claim and alleged that
this real estate was her paraphernal property and that the fruits thereof were
subject to the payment of the marriage expenses; that the husband could dispose of
such fruits only after the payment of such expenses, among which his personal debts
were not included; that this doctrine was sanctioned by the decisions of the
supreme court of March 1, 1867, and June 20, 1879, which hold that the rights in the
dowry and paraphernal fruits or revenue, granted by law to the husband as the head
of the family and manager of the conjugal partnership, are understood to be
subordinate to the preferred obligation of paying the marriage partnership expenses
with such fruits or revenue. Casanovas answered the complaint alleging, among
other reasons, that Gimiso's debt arose from shipments of paper and other articles
connected with the business in which he was engaged, and that the supreme court
itself, in its decisions of October 26, 1863, November 25, 1864, October 8, 1866, and
March 1 and October 27, 1867, had laid down the rule that, although the
management of the wife's paraphernal property pertains to her, it is understood to
be without prejudice to the husband's collecting and disposing of the products of
such property, as the head of the family and for the purpose of attending to its
needs. The Audiencia of Valencia decided the suit in favor of Casanovas. But
Carruana took it in cassation to the supreme court, alleging that it violated (second
assignment of error) "The well-established rule reaffirmed by the supreme court in
its decision of February 21, 1881, and several others, to the effect that in order that
a creditor may secure preference over the rights of the wife with respect to the
products and revenue of the paraphernal property, he must prove at trial that the
debt, the payment of which he demands, was contracted by the husband to meet
obligations of the conjugal partnership; that this was not proven in the case at bar,
and it is insufficient to say, as it is said in the judgment appealed from, that among
the resources declared by the husband and those for which the revenue from the
wife's property is liable, should be included the credit, that is, the debts, for,
according to well-settled jurisprudence of that supreme court, any money or sums
borrowed by the husband must by invested in business of the conjugal partnership."
depriving her, of her right to manage her own property. The same may be said of the
husband with respect to the community property of the marriage. There is no reason
to change the present status of affairs. Neither has any sufficient reason been
offered for the appointment of a receiver, nor has any of the cases enumerated in
section 174 of the Code of Civil Procedure, been invoked.
Therefore, the appellant's petition for the appointment of a receiver must be denied.
The lower court having failed to make any ruling on the declaration and the
appointment prayed for by appellant, the judgment appealed from is reversed in so
far as regards this omission, and we hold that the fruits and revenue from the two
properties belonging to the wife, described in the judgment appealed from, are
liable for the payment of the debt owing by the husband, the judgment debtor, and
that there is no need for the appointment of a receiver. Without special finding as to
costs, it is so ordered.

The decision of the supreme court did not sustain the appeal in cassation:

Considering that the debts contracted by the husband during the marriage, for and
in the exercise of the industry or profession by which he contributes toward the
support of his family, cannot be deemed his personal and private debts, nor
consequently, can they be excepted from payment out of the products or revenue of
the wife's own property which are liable, like those of her husband's, for the
discharge of the liabilities of the marriage couple; and considering that the debt
claimed by Don Quirico Casanovas, for the payment of which attachment has been
levied on certain property belonging to the petitioner, is of this nature, inasmuch as
it was contracted in the exercise of the industry or business carried on by her
husband; therefore, the doctrine cited in the second assignment of error of the
appeal, is inapplicable, and has not been violated by the judgment appealed from, in
holding, as it does, that intervention prayed for by the wife, cannot be allowed.

The appellee herself established the presumption that whatever the husband
contributed toward the support of his family, he gave out of what he earned from
his commissions and profession. In conformity, then, with the aforecited decision on
cassation, the debts contracted for and in the exercise of such industry or profession
cannot be considered as his personal and private debts, nor can they be excepted
from payment out of the products or revenue of the wife's own property, which, like
that of her husband's, is liable for the discharge of the marriage liabilities. So far
were they from being personal debts of the husband, that the wife herself avers that
the payment to Osmea of four or five thousand pesos of the twenty-six and odd
thousand pesos of the total debt, had been assumed by her husband, relieving her
father therefrom. He would not have assumed the payment for private purposes of
his own, for his purely personal satisfaction, and in the eyes of the law,
notwithstanding his having assumed payment, relieving her father-in-law therefrom,
he was a perfect creditor of the latter's heir in the settlement of her father's estate
and could have deducted the amount of that credit of four or five thousand pesos
from her entire inheritance, that is, from that same property, subsequently called
paraphernal, that his wife inherited intact.

Subrogation transfers to the subrogated the credit, with the corresponding rights,
either against the debtor or against third persons, be they sureties or holders of
mortgages. (Art. 1212, Civ. Code.)

It is undeniable that if in the same manner as the 26,000 and odd pesos were a loss,
the had been a gain, the husband would not have been permitted to call the amount
his personal and private gain; in the same way, the debts or losses resulting from the
business cannot be called his personal and private debts or losses.

The petition of the defendant in his answer to the complaint, to wit, that the sum
owed by the husband to the Osmea estate can and ought to be paid out of the
fruits or revenue of the two parcels of real estate mentioned, which belong
exclusively to the wife, now the plaintiff, is proper and in accordance with the law.

Defendant also prayed in his answer that a receiver be appointed to take charge of
the management of the said two properties and apply their revenue to the payment
of the judgment rendered in behalf of the Osmea estate against Collantes.

According to article 1384, the wife shall have the management of her paraphernal
property. Pursuant to article 1412, the husband is the administrator of the
community property of the conjugal partnership and of the conjugal capital in
general, and we have already said that the fruits of the paraphernal property form a
part of the assets of the conjugal partnership (art. 1385). To confide the
management of the property and of its revenue to a receiver would be to deprive
the husband and the wife of their respective rights. In the case at bar, the wife has
given no cause for being deprived, nor has any reason whatever been advanced for
G.R. No. L-56479 November 15, 1982
SOCORRO L. VDA. DE STA. ROMANA, petitioner,
vs.
PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK and HON. SANCHO Y. INSERTO,
as Judge of Branch I, COURT OF FIRST INSTANCE OF ILOILO, respondents.
German M. Lopez for petitioner.
Tirol & Tirol Law Offices for private respondent.
VASQUEZ, J.:
In this petition for review by certiorari, petitioner seeks to annul and set aside an
Order of the respondent Judge of the Court of First Instance of Iloilo, Branch I, which
dismissed Civil Case No. 13533, entitled Socorro L. Vda. de Sta. Romana, Plaintiff,
versus The Philippine Commercial and Industrial Bank, et al., Defendants. The
petition was given due course in the Resolution dated July 29, 1981 and the parties
have submitted their respective memoranda.
Civil Case No. 13533 is an offshoot of Civil Case No. 7678, entitled "PCIB, et al. versus
Ramon. Sta. Romana" which was filed way back on August 6, 1968. Civil Case No.
7678 was an action for rescission with damages filed by herein private respondent
PCIB as Administrator of the estate of the deceased C.N. Hodges, and for the
recovery of a parcel of land known as Lot No. 1258-G which Ramon Sta. Romana
purchased from the late C. N. Hodges under a Contract to Sell. On motion of private
respondent PCIB, a writ of preliminary attachment was issued in said case by virtue
of which the Sheriff levied on August 23, 1968 on the rights and interests of Ramon
Sta. Romana over Lot No. 1258-F and the improvements existing thereon, which lot
Ramon Sta. Romana also purchased from C. N, Hodges under another Contract to
Sell. A third party claim was filed by a certain Emilio Sta. Romana who claimed that
Lot No. 1258-F and its improvements had been sold to him by Ramon Sta. Romana
on August 16,1963.
The trial court rendered its decision in Civil Case No. 7678 on June 16, 1975
rescinding the Contract to Sell and ordering Ramon Sta. Romana to return the
possession of Lot No. 1258-G to the herein private respondent, as well as to pay
rentals or damages for use and occupation thereof. The decision was appealed to
the Court of Appeals which affirmed the same and further ordered Ramon Sta.
Romana to pay the land taxes and the interest thereon.
On October 5, 1979, the trial judge issued a writ of execution by virtue of which the
Sheriff issued a notice of sale at public auction of the rights and interests of Ramon
Sta. Romana as defendant in the case over Lot No. 1258-F and its improvements for
the satisfaction of the damages awarded in the decision.
Ramon Sta. Romana died intestate on October 21, 1979. On November 26, 1949,
herein petitioner Socorro L. Vda. de Sta. Romana, the surviving spouse of Ramon Sta.
Romana, filed a motion to quash the writ of execution alleging principally that the
proceedings in Civil Case No. 7678 did not affect her rights and interests over Lot No.
1258-G and Lot No. 1258-F inasmuch as she was not a party in said action. The trial
court denied the said motion to quash the writ of execution. The public auction sale
was held and the private respondent was issued the corresponding certificate of
sale. A Motion for Reconsideration filed by the herein petitioner was likewise denied
in the Order dated May 15, 1980.
On September 1, 1980, herein petitioner instituted Civil Case No. 13533 praying
therein that the writ of execution and the levy on execution made on Lot No. 1258-F
and the improvements existing thereon be annulled insofar as her ONE HALF (1/2)
share in the said properties is concerned, and that she be declared the lawful and
absolute owner of said ONE-HALF (1/2) share of the said properties. Private
respondent filed a motion to dismiss the complaint in Civil Case No. 13533 on the
ground of res judicata. After the petitioner filed her opposition to the motion to
dismiss, the respondent court, in its Order dated November 30, 1980, granted the
motion to dismiss on the grounds of res judicata and laches. This is the order that
the petitioner seeks to annul in the present proceeding.
Petitioner assails the pronouncement by the respondent court that Civil Case No.
13533 is barred by res judicata on the principal ground that, not being a party in Civil
Case No. 7678, she could not be bound by the judgment rendered in said case and,
consequently, the writ of attachment and the consequent writ of execution which
levied on Lot No. 1258-F, together with its existing improvements, are null and void
insofar as her ONE-HALF (1/2) interest in said properties is concerned.
We find no merit in this contention of the petitioner.
The action filed by private respondent against the petitioner Ramon Sta. Romana
was clearly a suit to enforce an obligation of the conjugal partnership. Civil Case No.
7678 arose out of the failure of Ramon Sta. Romana to pay the purchase price of a
lot he bought from C. N. Hodges presumably in behalf of the conjugal partnership.
Petitioner does not deny the conjugal nature of both Lots Nos. 1258-G and 1258-F.
Indeed, she bases her contention on the claim that at least Lot No. 1258-F, together
with its improvements existing thereon, constitutes property of the conjugal
partnership. It may not be denied, therefore, that the liability incurred by Ramon
Sta. Romana is chargeable against the conjugal partnership assets, it being
undisputed that the said obligation was contracted by the husband for the benefit of
the conjugal partnership. (Art. 161 [1], Civil Code.)
The non-inclusion of the herein petitioner as a party-defendant in Civil Case No.
7678 is immaterial. There is no rule or law requiring that in a suit against the
husband to enforce an obligation, either pertaining to him alone or one chargeable
against the conjugal partnership, the defendant husband must be joined by his wife.
The contrary rule is prescribed in Section 4, Rule 3, of the Rules of Court and Article
113 of the Civil Code, but not the other way around, obviously in recognition of the
legal status of the husband as the administrator of the conjugal partnership. (Art.
112, Civil Code.) There was, therefore, no need of including the petitioner as a party
in Civil Case No. 7678 for the purpose of binding the conjugal partnership properties
for the satisfaction of the judgment that could be rendered therein.
We likewise agree with the view that the issues raised by the petitioner in Civil Case
No. 13533 may not be litigated anew, if not by the principle of res judicata but at
least by conclusiveness of judgment. The record reveals that the contentions being
raised by the petitioner in Civil Case No. 13533 were squarely placed before and
ruled upon by the respondent court in connection with the execution proceedings in
Civil Case No. 7678. After the writ of execution was issued on October 5, 1979
(Annex E, Petition), herein petitioner filed a motion to quash the said writ of
execution (Annex F, Petition), In said motion, the petitioner raised the following
issues:
xxx xxx xxx
3. That as will be noted from the records, the herein movant as spouse of
the defendant was not impleaded as a defendant in the above entitled case;
4. That on the other hand, it would appear from Exh. A, contract to sell dated
October 6, 1956, that the property in question, having been transacted and/or
bought by the defendant during his marriage life with the herein movant is a sort of
a conjugal property or asset of the defendant and the herein movant:
5. That accordingly, the herein movant would have been an indispensable
party in the case at bar; specially when the aforesaid transaction was perfected at
the time the Civil Code of the Philippines had already taken effect;
6. That the herein movant having been not impleaded in the case at bar; no
jurisdiction over his person had been vested in the proceedings; therefore whatever
acts of levy on the property of which she is or presumed to be a co-owner and which
has never been liquidated yet is an ultra vires following a well-known principle that a
person who is not a party in a given case cannot be reached by any process or order
of the given court;
7. Thus, the rule is well-settled in this jurisdiction that"on the contention
that at least one-half of the conjugal partnership belongs to the husband, and
therefore could be validly levied upon to satisfy the money judgment against said
husband, it must be said that as long as the conjugal partnership subsists, there can
be no one-half share of the husband or the wife. Only when the conjugal partnership
is dissolved and liquidated between husband and wife. In the meantime, the interest
of each in the conjugal partnership property is inchoate and is a mere expectancy.
Therefore, any levy on the conjugal partnership property to satisfy the money
judgment against the husband is null and void. (Quintos Ansaldo vs. Sheriff of
Manila, 64 Phil. 116). Conformably to the foregoing doctrine, it is therefore
respectfully submitted that the writ of execution, notice of levy if one has been
made and the notice of sale in public auction are null and void. (Rollo, pp. 38-39.)
The respondent court ruled on this motion by issuing the Order dated March 5, 1980
denying the same for lack of merit. (Annex B, Petition, Rollo, p. 41.) The petitioner
did not seek a further review of the said order of denial either in the respondent
court or in any other tribunal; instead, she resorted to the remedy of filing on June
10, 1980 Civil Case No. 13533.
Technically speaking, if may be said that the judgment rendered in the main action
Civil Case No. 7678 does not constitute res judicata with respect to Civil Case No.
13533. The causes of action in the two (2) cases are not the same; neither is there
Identity of the subject-matter involved. Civil Case No. 7678 was essentially an action
to rescind the Contract to Sell Lot No. 1258-G and to recover Possession thereof plus
damages. Civil Case No. 13533, on the other hand, is to annul the levy and execution
sale of Lot No. 1258-F and the improvements existing thereon with respect to the
ONE- HALF (1/2) interest claimed by the petitioner.
However, it may not be denied that the issues raised by the petitioner in Civil Case petitioner (Ibid., pp. 36-38). In said motions, oppositions and replies repeatedly filed
No. 13533 had already been litigated and finally decided in the subsequent by the parties, the same issues sought to be reopened by the petitioner in Civil Case
proceedings taken to enforce the judgment in Civil Case No. 7678. The parties No, 13533 had been fully and exhaustively ventilated. It was in the basis of such
involved in said proceedings are the same, and so are the subject-matter involved exposure of those issues that the respondent court issued its Order denying the
and the cause of action relied upon by the petitioner in Civil Case No. 13533. The motion to quash the writ of execution, and also the Order denying a motion for a
only possible doubt as to whether res judicata may be utilized as a bar to the filing of reconsideration of the same.
Civil Case No. 13533 is that the pronouncement constituting the bar to a new action
was not in the main judgment in Civil Case No. 7678 but only in a subsequent WHEREFORE, the Petition is DENIED, and the Orders of the respondent Judge issued
incident therein. in Civil Case No. 13533 dated March 5, 1980 and May 15, 1980 are hereby
AFFIRMED. With costs against the petitioner.
It is Our considered opinion that such circumstance does not militate against the
existence of res judicata if all the requisites for its application are otherwise present. SO ORDERED.
The order denying the petitioner's motion to quash the writ of execution issued in
Civil Case No. 7678 is not merely an interlocutory order. It attained finality due to
the failure of the petitioner to appeal or seek a review of the same. It is not
questioned that the trial court had jurisdiction to take cognizance of the motion to
quash the writ of execution and over the parties litigating the same. The order of
denial is on the merits of the motion. There was also Identity of parties involved in
the motion to quash the writ of execution, Identity of subject-matter and Identity of
causes of action. The requisites of res judicata being all present in the incident
concerning the issuance of the writ of execution, We feel no hesitancy in declaring
that the filing of Civil Case No. 13533 is barred by the principle of res judicata, The
underlying philosophy of this doctrine is:

... that parties ought not to be permitted to litigate the same issue more than once;
that, when a right or fact has been judicially tried and determined by a court of
competent jurisdiction, or an opportunity for such trial has been given the judgment
of the court, so long as it remains unreversed, should be conclusive upon the parties
and those in privity with them in law or estat........ (2 Moran Rules of Court, p. 362,
citing Sta. Ana v. Narvades, L-24390, Nov. 28, 1969, 30 SCRA 454, 463.)

To sanction the filing of Civil Case No. 13533 is to nullify altogether the proceedings
had in connection with the petitioner's motion to quash the writ of execution and
the ruling made by the respondent court thereon which had already attained the
status of finality.

In the least, the institution of Civil Case No. 13533 may be deemed barred by the
principle of conclusiveness of judgment which is expressed in the Rules in the
following terms:

Effect of judgments. The effect of a judgment or final order rendered by a court or

judge of the Philippines, having jurisdiction to pronounce the judgment or order,
may be as follows:

xxx xxx xxx

(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have an adjudged in a former judgment which
appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto. (SEC. 49, Rule 39, New Rules of
Court.)

Even assuming, therefore, that Civil Case No. 13533 is on a different cause of action
than that involved in Civil Case No. 7678, the ruling in the latter on the motion for
the quashing of the levy on execution made on Lot 1258- F which involved the same
subject-matter and parties litigating Civil Case No. 13533 is rendered conclusive
under the doctrine of conclusiveness of judgment.

Petitioner has further argued that her having filed the motion to quash the writ of
execution in Civil Case No. 7678 to assert her claim over ONE- HALF (1/2) interest in
Lot No. 1258-F and its improvements does not preclude her from filing a separate
civil action to pursue the same claim. She cites the case of Manila Fidelity and Surety
Company vs. Teodoro, et al., 20 SCRA 463, which holds that "'a third party claim is
not an exclusive remedy; the same rule (Section 17, Rule 29), provides that nothing
therein shall prevent such third person from vindicating his claim to the property by
any proper action.'"

We find no merit in this argument. The petitioner did not merely file a third party
claim on the property levied upon in connection with the writ of execution issued in
Civil Case No. 7678. Instead of a third party claim which, under the rules, must be
filed with the "officer making the levy and a copy thereof upon the judgment
creditor" (Sec. 17, Rule 39, Rules of Court), the petitioner filed a "Motion to Quash
Writ of Execution and All Subsequent Proceedings" (Record on Appeal, p. 17) to
which private respondent filed its Opposition (Ibid, pp. 20-24), and to which in turn
the petitioner filed her Reply to Opposition (Ibid, pp. 25-31). When the respondent
court issued its Order dated May 5, 1980 denying the aforesaid Motion to Quash
Execution for lack of merit (Ibid, p. 32), the petitioner filed a Motion for
Reconsideration (Ibid, pp. 33-34) which was opposedly the private respondent in
writing (Ibid, pp. 35-35-B) and which in turn a Reply to Opposition, was filed by the
G.R. No. L-57402 February 28, 1985
G-TRACTORS, INC., petitioner,
vs.
HONORABLE COURT OF APPEALS and LUIS R. NARCISO AND JOSEFINA SALAK
NARCISO, respondents.
Francisco, De Castro, Zulueta & Reyes Law Office for petitioner.
Fernando F. Villoria for private respondents.
CUEVAS, J.:
Assailed and challenged in this Petition for Review is the Decision dated April 29,
1977 of the then Court of Appeals in its CA-G.R. No. SP-05920, the dispositive
portion of which reads as follows
WHEREFORE, the petition is hereby granted. The levy on execution dated February
11, 1976, the sheriff's certificate of sale dated March 25, 1975 and final deed of sale,
and the orders of the respondent judge dated April 26, 1976, July 12, 1976 and
August 26, 1976, are set aside and declared null and void. The writ of preliminary
injunction heretofore in force is made permanent. Costs against private respondent.
SO ORDERED.
Private respondent Luis R. Narciso is a businessman. He is engaged in business as a
producer and exporter of Philippine mahogany logs and operates a logging
concession at del Gallego, Camarines Sur. He is legally married to the other private
respondent Josefina Salak Narciso.
Petitioner G-Tractors, Inc. upon the other hand, is a domestic corporation engaged
primarily in the business of leasing heavy equipments such as tractors, bulldozers,
and the like.
Sometime in February 26, 1973, private respondent Luis R. Narciso entered into a
Contract of Hire of Heavy Equipment with petitioner G-Tractors under the terms of
which the latter leased to the former tractors for the purpose of constructing
switchroads and hauling felled trees at the jobsite of Narciso's logging concession at
del Gallego, Camarines Sur. The contract provided for payment of rental for the use
of said tractors.
Luis R. Narciso defaulted in his rental payments. Hence, on August 15, 1974, G-
Tractors instituted an action against him to collect the total amount of P155,410.25
with legal interest thereon, representing unpaid rentals for the leased tractors, 25%
thereof as liquidated damages, P30,000.00 as and for attorney's fees, and the costs
of suit, before the then Court of First Instance of Rizal, Quezon City, Branch IX. The
case was docketed thereat as Civil Case No. Q-19173.
Luis R. Narciso was declared in default. On his representations, however, G-Tractors
accepted his offer for a compromise agreement. A compromise agreement was
thereupon signed by G-Tractors and Luis R. Narciso and on the basis thereof,
judgment thereon was rendered on October 10, 1974.
The compromise agreement stipulated for payment by Luis R. Narciso of the total
claim of G-Tractors on an installment plan. Luis R. Narciso failed to comply and so on
November 29, 1974, G-Tractors filed a motion for execution. This was opposed by
Luis R. Narciso who asked for the suspension of the issuance of a writ of execution
on the ground that he allegedly has a pending loan with a banking institution. The
lower court, finding the allegation without legal basis, denied the request for
suspension and ordered the issuance of a writ of execution to enforce the judgment
based on the compromise agreement. The writ of execution was issued on February
7, 1975. 1 Levy was accrdingly made on February 19, 1975 by the City Sheriff of
Quezon City on certain personal properties of private respondents-at their residence
at 208 Retiro Street, Quezon City. Auction sale was held on March 1, 1975, and G-
Tractors, being the highest bidder, was awarded the sale by the City Sheriff of
Quezon City of all the personal properties listed under the levy, for the total amount
of P4,090.00.
On March 5, 1975, Luis R. Narciso offered to redeem and/or buy back all the
personal properties sold to G-Tractors for the same amount of P4,090.00 which the
latter agreed and for which a Deed of Reconveyance was executed by G-Tractors.
Likewise, on February 12, 1975, the Sheriff of Quezon City made a levy on "all rights,
interest, title, participation which the defendant Luis R. Narciso" may have over a
parcel of residential land covered by TCT No. 120923 of the Registry of Deeds of
Quezon City 2 which parcel of land is allegedly the conjugal property of the spouses
Luis R. Narciso and Josefina Salak Narciso.
On February 22, 1975, the Sheriff notified the general public, in his Notice of Sheriff's
sale, that on March 25, 1975 he would sell at public auction to the highest bidder for
cash "the rights, interest and participation of the aforementioned defendant Luis R.
Narciso in the aforesaid real estate property covered by Transfer Certificate of Title
No. 120923, together with all the improvements existing thereon" to satisfy the
aforementioned writ of execution. 3
On March 25, 1975, a "Certificate of Sale" was issued to the effect that "on said date
(March 25, 1975) by virtue of the writ of execution issued by the Honorable Ulpiano
Sarmiento in Civil Case No. Q-19173, the ex-oficio Sheriff of Quezon City sold at
public auction to the highest bidder (plaintiff G-Tractors, Inc.) for P180,000.00 the
real estate property covered by TCT No. 120923, Quezon City, and levied upon on
February 12, 1975, together with all the improvements thereon. 4 At that time,
however, TCT No. 120923 was mortgaged to Mercantile Financing Corporation to
guarantee an outstanding unpaid account of Luis R. Narciso and his wife in the
amount of P74,327.52.
Soon after the issuance of the aforesaid Certificate of Sale, Luis R. Narciso and G-
Tractors, Inc. executed a contract of lease over the aforesaid property whereby the
former obligated himself to pay a monthly rental of P1,000.00 and by virtue of the
said contract of lease, Luis R. Narciso actually paid to G-Tractors, Inc. the amount of
P12,000.00 as rental for one year.
On March 31, 1976, Josefina Salak Narciso and her husband Luis R. Narciso filed a
complaint in the same Court of First Instance of Quezon City for "declaration of
nullity of levy on execution and auction sale of plaintiff's conjugal property with
damages and injunction," docketed as Civil Case No. Q-21267. Among other things,
the complaint alleged that whatever transpired in Civil Case No. Q-19173 could be
binding only on the husband Luis R. Narciso and could not affect or bind the plaintiff-
wife Josefina Salak Narciso who was not a party to that case; that the nature of the
Sheriff's sale clearly stated that only the property of the husband may be sold to
satisfy the money judgment against him; that the conjugal property of the plaintiffs-
spouses could not be made liable for the satisfaction of the judgment in Civil Case
No. Q-19173 considering that the subject matter of said case was never used for the
benefit of the conjugal partnership or of the family; and that the levy of the wife's
share in the conjugal property to satisfy the money judgment against her husband is
null and void. 5
On April 5, 1976, the President of G-Tractors, Inc. executed an affidavit of
consolidation of ownership and on the next day, April 6, 1976, the sheriff issued a
Sheriff's Final Deed of Sale. 6
On April 12, 1976, G-Tractors, Inc. filed in Civil Case No. Q-19173, a "Motion for Entry
and Issuance of New Torrens Certificate of Title" asking the Court to direct the
Register of Deeds of Quezon City to cancel TCT No. 120923 and to allow the entry
and issuance of a new torrens title in the name of G-Tractors, Inc.
On April 22, 1976, Luis R. Narciso filed an opposition to the aforesaid motion calling
attention to the fact that he and his wife had filed a complaint which was docketed
as Civil Case No. Q-21267 and pointing out that the Sheriff's final deed of sale and
affidavit of consolidation of ownership would have no effect should the levy on
execution and the subsequent auction sale of the conjugal property be nullified. 7
Civil Case No. Q-21267 was subsequently transferred to Branch IX of the same Court
of First Instance which tried Civil Case No. Q-19173.
On April 26, 1976, Judge Sarmiento issued an Order cancelled TCT No. 120923 and
directing the Register of Deeds of Quezon City to issue in lieu thereof a new title in
the name of G-Tractors, Inc. 8
Luis R. Narciso move to reconsider the aforesaid order of April 26, 1976. This was
followed by a motion filed by the Narciso spouses for a preliminary injunction in Civil
Case No. Q-21267. Meanwhile, immediately after receiving a copy of the order of
April 26, 1976, G-Tractors, Inc. caused the cancellation of TCT No. 120923 and the
issuance of TCT No. 218552 in its name.
On May 21, 1976, the lower court enjoined G-Tractors, Inc. from transferring,
conveying or in any manner alienating the property covered by TCT No. 218552 until
the motion for reconsideration of the order of April 26, 1976 has been resolved.
On July 12, 1976, two (2) orders were issued by the lower court, one denying the
motion for reconsideration and the other denying the motion for preliminary
injunction. A motion to reconsider the order denying the preliminary injunction was
likewise denied.
Hence, on October 2, 1976, the spouses Luis R. Narciso and Josefina Salak Narciso
filed before the then Court of Appeals, a petition for certiorari with Preliminary
Injunction, docketed in the said court as CA-G.R. No. SP-05920, seeking-
A To annul, set aside and declare null and void the following:
(1) Levy on execution dated February 11, 1975;
(2) Sheriff's Certificate of sale dated March 25, 1975;
(3) Sheriff's Final Deed of Sale dated April 6, 1976;
(4) Order of respondent Judge dated April 26, 1976;
(5) Orders of the respondent Judge both dated July 12, 1976; and
(6) Order of the respondent Judge dated August 26, 1976.
B To restrain and enjoin the respondent from further giving force and effect to
the levy and sale on execution and to the disputed orders; the private respondent G-
Tractors, Inc. from alienating the Lot covered by TCT No. 218552 and from
dispossessing the petitioners of said Lot and the house standing thereon; the
respondent Judge from further proceeding in Civil Case Nos. Q-19173 and Q-21267;
and
C To direct the Register of Deeds of Quezon City to cancel TCT No. 218552 in the
name of G-Tractors, Inc. and to issue a new one in the name of petitioners-spouses.
On April 29, 1977, the then Court of Appeals rendered its now assailed Decision,
annulling the levy on execution dated February 11, 1975, the sheriff's certificate of
sale dated March 25, 1975, as well as the sheriff's final deed of sale; and the Orders
dated April 26, July 12 and August 26,1976.
G-Tractors, Inc.'s motion for reconsideration having been denied, the instant petition
for Review on certiorari was filed before this Court, petitioner contending that
respondent Court of Appeals erred
1. In holding that a levy on a residential land does not include the residential
house or any improvement erected and existing thereon;
2. In holding that the judgment debt of private respondent Luis R. Narciso,
subject of Civil Case No. Q-19173, entitled G-Tractors, Inc. vs. Luis R. Narciso, Court
of First Instance of Rizal, Quezon City, Branch IX was not the conjugal debt of private
respondents-spouses Luis R. Narciso and Josefina Salak Narciso;
3. In not holding that there was laches and delay in the firing by private
respondents-spouses of CA-G.R. No. 05920-SP with the respondent Court of Appeals.
4. In granting the writs applied for by private respondents spouses in CA-
G.R. No. 05920, the petition itself not being the proper remedy.
The crucial issue that poses itself for our resolution in the instant petition is-whether
or not the judgment debt of private respondent Luis R. Narciso is a conjugal debt for
which the conjugal partnership property can be held answerable.
Article 161 of the New Civil Code provides that the conjugal partnership shall be
liable for:
(1) All the debts and obligations contracted by the husband for the benefit of
the conjugal partnership, and those contracted by the wife, also for the same
purpose, in the cases where she may legally bind the partnership.
There is no question that private respondent Luis R. Narciso is engage in business as
a producer and exporter of Philippine mahogany logs. He operates a logging
concession at del Gallego, Camarines Sur and holds office right in the conjugal
dwelling at 208 Retiro Street, Talayan Village, Quezon City, Metro Manila, where he
and his family reside. His account with petitioner G-Tractors, Inc. represents rentals
for the use of petitioner's tractors which he leased for the purpose of constructing
switchroads and hauling felled trees at the jobsite of the logging concession at del
Gallego, Camarines Sur which is not his exclusive property but that of his family.
There is no doubt then that his account with the petitioner was brought about in
order to enhance the productivity of said logging business, a commercial enterprise
for gain which he had the right to embark the conjugal partnership.
This is the finding of the trial court and we find no cogent reason to deviate
therefrom. It held:
Lastly, the contention that the conjugal partnership is not liable because the
obligation contracted by the husband is personal in nature is not applicable in this
case. The record shows that Luis R. Narciso is a producer and exporter of Philippine
mahogany logs and that the bulldozers leased to him was used for the construction
of switchroads for logging. It is very clear, therefore, that the obligations were
contracted in connection with his legitimate business as a producer and exporter in
mahogany logs and certainly benefited the conjugal partnership. Justice J.B.L. Reyes
is very liberal in interpreting Art. 161 of the Civil Code when he declared in Luzon
Surety Co., Inc. versus de Garcia (30 SCRA 118) that the words in said article "all
debts and obligations contracted by the husband for the benefit of the conjugal
partnership "do not require that actual profit or benefit must accrue to the conjugal
partnership from the husband's transaction", but it suffices that the transaction
should be one that normally would produce such benefit for the partnership.9
In the case of Cobb-Perez vs. Lantin, 10 citing the case of Abella de Diaz vs- Erlanger
and Galinger, 11 and Javier vs. Osmena, 12 this court ruled-
The aforesaid obligation was contracted in the purchase of leather used in the shoe
manufacturing business of the petitioner husband. Said business is an ordinary
commercial enterprise for gain, in the pursuit of which Damaso Perez had the right
to embark the partnership. It is well settled that the debts contracted by the
husband for and in the exercise of the industry or profession by which he contributes
to the support of the family cannot be deemed to be his exclusive and private debts.
(Emphasis supplied)
The husband is the administrator of the conjugal partnership and as long as he
believes he is doing right to his family, he should not be made to suffer and answer
alone.13 So that, if he incurs an indebtedness in the legitimate pursuit of his career
or profession or suffers losses in a legitimate business, the conjugal partnership must
equally bear the indebtedness and the losses, unless he deliberately acted to the
prejudice of his family. Such is the nature of the judgment debt of private
respondent Luis R. Narciso to petitioner. Consequently, the conjugal partnership of
gains of private respondents Narcisos, must answer for the same. 14 Necessarily the
sale at public auction by the Sheriff of Quezon City of TCT No. 120923 belonging to
the conjugal partnership of gains of the private respondents Narcisos in order to
satisfy the judgment debt of the private respondent Luis R. Narciso with petitioner,
was validly and legally made in accordance with law and not legally assailable as held
in the analogous case of Vda. de Sta. Romana vs. Philippine Commercial and
Industrial Bank 15 where We laid down the following dictum :
Petitioner assails the pronouncement by the respondent court that Civil Case No.
13553 is barred by res judicata on the principal ground that, not being a party in Civil
Case No. 7678, she could not be bound by the judgment rendered in said case and,
consequently, the writ of attachment and the consequent writ of execution which
levied on Lot No. 1258-F, together with its existing improvements, are null and void
insofar as her ONE-HALF () interest in said properties is concerned.
We find no merit in this contention of the petitioner.
The action filed by private respondent against the petitioner Ramon Sta. Romana
was clearly a suit to enforce an obligation of the conjugal partnership. Civil Case No.
7678 arose out of the failure of Ramon Sta. Romana to pay the purchase price of a
lot he bought from C.N. Hodges presumably in behalf of the conjugal partnership.
Petitioner does not deny the conjugal nature of both Lots Nos. 1258-G and 1258-F.
Indeed, she bases her contention on the claim that at least Lot No. 1258-F, together
with its improvements existing thereon, constitutes property of the conjugal
partnership. It may not be denied, therefore, that the liability incurred by Ramon
Sta. Romana is chargeable against the conjugal partnership assets, it being
undisputed that the said obligation was contracted by the husband for the benefit of
the conjugal partnership. (Art. 161(l), Civil Code)
The non-inclusion of the herein petitioner as a party-defendant in Civil Case No.
7678 is immaterial. There is no rule or law requiring that in a suit against the
husband to enforce an obligation, either pertaining to him alone or one chargeable
against the conjugal partnership, the defendant husband must be joined by his wife.
The contrary rule is prescribed in Sec. 4, Rule 3, of the Rules of Court and Article 113
of the Civil Code, but not the other way around, obviously in recognition of the legal
status of the husband as the administrator of the conjugal partnership. (Art. 112,
Civil Code) There was therefore, no need of including the petitioner as a party in Civil
Case No. 7678 for the purpose of binding the conjugal partnership properties for the
satisfaction of the judgment that could be rendered thereon. (Emphasis supplied)
WHEREFORE, the Decision of the then Court of Appeals sought to be reviewed is
hereby REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.
G.R. No. L-48889 May 11, 1989
DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,
vs.
THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the Court of
First Instance of Iloilo and SPOUSES PATRICIO CONFESOR and JOVITA VILLAFUERTE,
respondents.
GANCAYCO, J.:
The issue posed in this petition for review on certiorari is the validity of a promissory
note which was executed in consideration of a previous promissory note the
enforcement of which had been barred by prescription.
On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an
agricultural loan from the Agricultural and Industrial Bank (AIB), now the
Development of the Philippines (DBP), in the sum of P2,000.00, Philippine Currency,
as evidenced by a promissory note of said date whereby they bound themselves
jointly and severally to pay the account in ten (10) equal yearly amortizations. As the
obligation remained outstanding and unpaid even after the lapse of the aforesaid
ten-year period, Confesor, who was by then a member of the Congress of the
Philippines, executed a second promissory note on April 11, 1961 expressly
acknowledging said loan and promising to pay the same on or before June 15, 1961.
The new promissory note reads as follows
I hereby promise to pay the amount covered by my promissory note on or before
June 15, 1961. Upon my failure to do so, I hereby agree to the foreclosure of my
mortgage. It is understood that if I can secure a certificate of indebtedness from the
government of my back pay I will be allowed to pay the amount out of it.
Said spouses not having paid the obligation on the specified date, the DBP filed a
complaint dated September 11, 1970 in the City Court of Iloilo City against the
spouses for the payment of the loan.
After trial on the merits a decision was rendered by the inferior court on December
27, 1976, the dispositive part of which reads as follows:
WHEREFORE, premises considered, this Court renders judgment, ordering the
defendants Patricio Confesor and Jovita Villafuerte Confesor to pay the plaintiff
Development Bank of the Philippines, jointly and severally, (a) the sum of P5,760.96
plus additional daily interest of P l.04 from September 17, 1970, the date Complaint
was filed, until said amount is paid; (b) the sum of P576.00 equivalent to ten (10%) of
the total claim by way of attorney's fees and incidental expenses plus interest at the
legal rate as of September 17,1970, until fully paid; and (c) the costs of the suit.
Defendants-spouses appealed therefrom to the Court of First Instance of Iloilo
wherein in due course a decision was rendered on April 28, 1978 reversing the
appealed decision and dismissing the complaint and counter-claim with costs against
the plaintiff.
A motion for reconsideration of said decision filed by plaintiff was denied in an order
of August 10, 1978. Hence this petition wherein petitioner alleges that the decision
of respondent judge is contrary to law and runs counter to decisions of this Court
when respondent judge (a) refused to recognize the law that the right to
prescription may be renounced or waived; and (b) that in signing the second
promissory note respondent Patricio Confesor can bind the conjugal partnership; or
otherwise said respondent became liable in his personal capacity. The petition is
impressed with merit. The right to prescription may be waived or renounced. Article
1112 of Civil Code provides:
Art. 1112. Persons with capacity to alienate property may renounce prescription
already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation
results from acts which imply the abandonment of the right acquired.
There is no doubt that prescription has set in as to the first promissory note of
February 10, 1940. However, when respondent Confesor executed the second
promissory note on April 11, 1961 whereby he promised to pay the amount covered
by the previous promissory note on or before June 15, 1961, and upon failure to do
so, agreed to the foreclosure of the mortgage, said respondent thereby effectively
and expressly renounced and waived his right to the prescription of the action
covering the first promissory note.
This Court had ruled in a similar case that
... when a debt is already barred by prescription, it cannot be enforced by the
creditor. But a new contract recognizing and assuming the prescribed debt would be
valid and enforceable ... . 1
Thus, it has been held
Where, therefore, a party acknowledges the correctness of a debt and promises to
pay it after the same has prescribed and with full knowledge of the prescription he
thereby waives the benefit of prescription. 2
This is not a mere case of acknowledgment of a debt that has prescribed but a new
promise to pay the debt. The consideration of the new promissory note is the pre-
existing obligation under the first promissory note. The statutory limitation bars the
remedy but does not discharge the debt.
A new express promise to pay a debt barred ... will take the case from the operation
of the statute of limitations as this proceeds upon the ground that as a statutory
limitation merely bars the remedy and does not discharge the debt, there is
something more than a mere moral obligation to support a promise, to wit a pre-
existing debt which is a sufficient consideration for the new the new promise; upon
this sufficient consideration constitutes, in fact, a new cause of action. 3
... It is this new promise, either made in express terms or deduced from an
acknowledgement as a legal implication, which is to be regarded as reanimating the
old promise, or as imparting vitality to the remedy (which by lapse of time had
become extinct) and thus enabling the creditor to recover upon his original contract.
4
However, the court a quo held that in signing the promissory note alone, respondent
Confesor cannot thereby bind his wife, respondent Jovita Villafuerte, citing Article
166 of the New Civil Code which provides:
Art. 166. Unless the wife has been declared a non compos mentis or a spend thrift,
or is under civil interdiction or is confined in a leprosarium, the husband cannot
alienate or encumber any real property of the conjugal partnership without, the
wife's consent. If she ay compel her to refuses unreasonably to give her consent, the
court m grant the same.
We disagree. Under Article 165 of the Civil Code, the husband is the administrator of
the conjugal partnership. As such administrator, all debts and obligations contracted
by the husband for the benefit of the conjugal partnership, are chargeable to the
conjugal partnership. 5 No doubt, in this case, respondent Confesor signed the
second promissory note for the benefit of the conjugal partnership. Hence the
conjugal partnership is liable for this obligation.
WHEREFORE, the decision subject of the petition is reversed and set aside and
another decision is hereby rendered reinstating the decision of the City Court of
Iloilo City of December 27, 1976, without pronouncement as to costs in this instance.
This decision is immediately executory and no motion for extension of time to file
motion for reconsideration shall be granted.
SO ORDERED.
G.R. No. L-51283 June 7, 1989
LOURDES MARIANO, petitioner,
vs.
COURT OF APPEALS, and DANIEL SANCHEZ, respondents.
Jose V. Natividad & Associates for petitioner .
Arturo S. Santos for respondents.
NARVASA, J.:
The proceedings at bar concern (1) an attempt by a married man to prevent
execution against conjugal property of a judgment rendered against his wife, for
obligations incurred by the latter while engaged in a business that had admittedly
redounded to the benefit of the family, and (2) the interference by a court with the
proceedings on execution of a co-equal or coordinate court. Both acts being
proscribed by law, correction is called for and will hereby be effected.
The proceedings originated from a suit filed by Esther Sanchez against Lourdes
Mariano in the Court of First Instance at Caloocan City, 1 for recovery of the value of
ladies' ready made dresses allegedly purchased by and delivered to the latter. 2
A writ of preliminary attachment issued at Esther Sanchez' instance, upon a bond
posted by Veritas Insurance Company in the amount of P 11,000.00, and resulted in
the seizure of Lourdes Mariano's property worth P 15,000.00 or so. 3 Her motion for
the discharge of the attachment having been denied, 4 Lourdes Mariano went up to
the Court of Appeals on certiorari. That Court ordered 5 the Trial Court to receive
evidence on whether or not the attachment had been improvidently or irregularly
issued. 6 The Trial Court did so, came to the conclusion that the attachment had
indeed been improperly issued, and consequently dissolved it. 7
Trial then ensued upon the issues arising from the complaint as well as Lourdes
Mariano's answer with counterclaim-which included a claim for damages resulting
from wrongful attachment. Thereafter judgment was rendered in favor of defendant
Lourdes Mariano and against plaintiff Esther Sanchez containing the following
dispositions, to wit: 8
1. On the complaint, defendant is ordered to pay unto the plaintiff for the
value of the dishonored check (Exhs. G-1, H and I) in the total amount of P 1,512.00.
2. On the counterclaim, the plaintiff is ordered to pay unto defendant the
following, as follows:
a) P 7,500.00 for loss of income of the defendant for 75 days;
b) P 16,000.00 for the value of attached goods;
c) P 25,000.00 for moral and exemplary damages;
d) P 5,000.00 as attorney's fees plus costs of suit.
The Veritas Insurance Company which issued the attachment bond is ordered to pay
unto the defendant the full insurance coverage of P 11,000.00 to answer for the
total liability of the plaintiff thereof
Esther Sanchez sought to perfect an appeal by filing a notice of appeal, an appeal
bond and a record on appeal. 9
Pending approval of the record on appeal, Lourdes Mariano filed a motion for the
immediate execution of the judgment which the Court granted. 10 In virtue of the
writ of execution which afterwards issued in due course, the sheriff garnished the
sum of P 11,000.00 from Veritas Insurance Company, and levied on real and personal
property belonging to the conjugal partnership of Esther Sanchez and her husband,
Daniel Sanchez. Esther Sanchez then filed a petition for certiorari with the Court of
Appeals, praying for the annulment of the execution pending appeal authorized by
the Trial Court; but her petition was adjudged to be without merit and was
accordingly dismissed. 11
Daniel Sanchez, Esther's husband, now made his move. He filed a complaint for
annulment of the execution in the Court of First Instance at Quezon City in his
capacity as administrator of the conjugal partnership. 12 He alleged that the conjugal
assets could not validly be made to answer for obligations exclusively contracted by
his wife, and that, moreover, some of the personal property levied on, such as
household appliances and utensils necessarily used in the conjugal dwelling, were
exempt from execution. He also applied for a preliminary injunction pending
adjudication of the case on the merits. 13
The Quezon City Court issued an order setting the matter of the injunction for
hearing, and commanding the sheriff, in the meantime, to desist from proceeding
with the auction sale of the property subject of Daniel Sanchez' claim. 14 Lourdes
Mariano filed a motion to dismiss the action; this, the Court denied. 15 She then
instituted a special civil action of certiorari in the Court of Appeals 16 where she
initially enjoyed some measure of success: her petition was given due course, and
the Quezon City Court was restrained by the Appellate Court's Seventh Division 17
from further proceeding with the case. 18 Eventually, however, the Eighth Division
19 came to the conclusion that there was no merit in her cause and dismissed her
petition. 20 It ruled that the Quezon City Court had not interfered with the execution
process of the Caloocan Court because Daniel Sanchez's action in the former court
raised an issue-the validity of the sheriffs levy on the conjugal partnership assets of
the Sanchez spouses different from those adjudicated in the Caloocan Court, and
Sanchez was not a party to the case tried by the latter.
From this verdict Lourdes Mariano has appealed to this Court, contending that the
Appellate Court committed reversible error-
1) in ruling that the conjugal partnership of Daniel and Esther Sanchez could
not be made liable for Esther's judgment obligation arising from the spouses' joint
business with Lourdes Mariano;
2) in ruling that the Quezon City Court of First Instance had not interfered
with the execution process of the Caloocan Court of First Instance; and
3) when its Eighth Division decided the petition of Lourdes Mariano
although the case had been raffled to the Seventh Division and the latter had in fact
given due course to the petition.
1. There is no dispute about the fact that Esther Sanchez was engaged in
business not only without objection on the part of her husband, Daniel, but in truth
with his consent and approval. 21 It is also established that, as expressly
acknowledged by Esther herself and never denied by Daniel, the profits from the
business had been used to meet, in part at least, expenses for the support of her
family, i.e., the schooling of the children, food and other household expenses. 22
Under the circumstances, Lourdes Mariano action against Esther Sanchez was
justified, the litigation being "incidental to the ... business in which she is engaged 23
and consequently, the conjugal partnership of Daniel and Esther Sanchez was liable
for the debts and obligations contracted by Esther in her business since the income
derived therefrom, having been used to defray some of the expenses for the
maintenance of the family and the education of the children, had redounded to the
benefit of the partnership. 24 It was therefore error for the Court of Appeals to have
ruled otherwise.
2. It was also error for the Court of Appeals to have held that there was no
interference by the Quezon City Court of First Instance with the execution process of
the Caloocan Court.
The rule, one of great importance in the administration of justice, is that a Court of
First Instance has no power to restrain by means of injunction the execution of a
judgment or decree of another judge of concurrent or coordinate jurisdictions. 25
But this is precisely what was done by the Quezon City Court of First Instance: it
enjoined the execution of a judgment authorized and directed by a co-equal and
coordinate court, the Caloocan City Court of First Instance. It did so on the claim of
Daniel Sanchez that the property being levied on belonged to the conjugal
partnership and could not be made liable for the wife's obligations.
The question that arises is whether such a claim that property levied on in execution
of a judgment is not property of the judgment debtor, Daniel Sanchez's wife, but of
the conjugal partnership of the Sanchez Spouses is properly cognizable by a Court
other than that which rendered judgment adversely to the wife.
To be sure, Section 17, Rule 39 of the Rules of Court, authorizes a "third person," i.e.,
"any other person than the judgment debtor or his agent," to vindicate "his claim to
the property by any proper action." The section reads as follows: 26
SEC. 17. Proceedings where property claimed by third person.-If property levied on
be claimed by any other person than the judgment debtor or his agent, and such
person make an affidavit of his title thereto or right to the possession thereof,
stating the grounds of such right or title, and serve the same upon the officer making
the levy, and a copy thereof upon the judgment creditor, the officer shall not be
bound to keep the property, unless such judgment creditor or his agent, on demand
of the officer, indemnify the officer against such claim by a bond in a sum not greater
than the value of the property levied on. In case of disagreement as to such value,
the same shall be determined by the court issuing the writ of execution.
The officer is not liable for damages, for the taking or keeping of the property, to any
third-party claimant, unless a claim is made by the latter and unless an action for
damages is brought by him against the officer within one hundred twenty (120) days
from the date of the filing of the bond. But nothing herein contained shall prevent
such claimant or any third person from vindicating his claim to the property by any
proper action.

xxx xxx xxx

The "proper action" referred to in the section "is and should be an entirely separate
and distinct action from that in which execution has issued, if instituted by a stranger
to the latter suit:" 27 and in "such separate action, the court may issue a writ of
preliminary injunction against the sheriff enjoining him from proceeding with the
execution sale." 28 "Upon the other hand, if the claim of impropriety on the part of
the sheriff in the execution proceedings is made by a party to the action, not a
stranger thereto, any relief therefrom may be applied for with, and obtained from,
only the executing court; and this is true even if a new party has been impleaded in
the suit." 29

In the case at bar, the husband of the judgment debtor cannot be deemed a
"stranger" to the case prosecuted and adjudged against his wife. A strikingly similar
situation was presented in a case decided by this Court as early as 1976, Rejuso v.
Estipona. 30 There, the sheriff tried to evict petitioner Rejuso and his family from
their house and lot which had been sold in execution of a money judgment rendered
by the Court of First Instance of Davao against Rejuso. What Rejuso did was to
institute, together with his wife, Felisa, a separate suit in the same court against the
sheriff and the judgment creditor, Estipona, for the purpose of annulling the levy,
execution sale, and writ of possession issued in the first action in respect of their
residential house and lot, on the theory that that property was conjugal in character
and "hence, not subject to such proceedings considering that Felisa was not a party
to the previous case." The action was however dismissed by the court on the ground
that it had "no jurisdiction over the subject matter of the action or the nature of the
action and of the relief sought." 31 The dismissal was had on motion of Estipona who
argued that the court had no jurisdiction to "vacate or annul and/or enjoin the
enforcement of the process issued by another branch in another case," and since
Rejuso had already raised the same issues in the first case, without success, he
should not be allowed to "get from another branch ... what he failed to get ... (from)
Branch l." This Court affirmed that judgment of dismissal, 32 holding that Rejuso's
action was barred by res adjudicata; and "(a)s regards Felisa Rejuso, who is a new
party in Civil Case No. 5102" (the second action) it was ruled that-

... her remedy, if it has not yet been barred by the statute of limitations or become
stale in some other way, is within Civil Case No. 4435 (the first suit). Indeed, it is
superfluous to start a new action on a matter which can be more simply and
conveniently litigated within a former proceeding of which it is more logically and
legally an integral part. (Ipekdjian Merchandising Co., Inc, v. CTA, 8 SCRA 59 [1963]).
Actually, the court in which the former proceeding was pending has exclusive
jurisdiction thereof (De Leon vs. Salvador, 36 SCRA 567), the fact that the two cases
are in the same Branch of the same Court of First Instance and presided over by the
same Judge notwithstanding. After all, it is simpler and more convenient to observe
such practice, which insures also consistency in the resolutions of related questions
because they are to be determined in most if not all instances by the same judge.

In any case, whether by intervention in the court issuing the writ, or by separate
action, it is unavailing for either Esther Sanchez or her husband, Daniel, to seek
preclusion of the enforcement of the writ of possession against their conjugal assets.
For it being established, as aforestated, that Esther had engaged in business with her
husband's consent, and the income derived therefrom had been expended, in part at
least, for the support of her family, the liability of the conjugal assets to respond for
the wife's obligations in the premises cannot be disputed.

The petitioner's appeal must therefore be sustained.

However, the petitioner's theory that the Eighth Division of the Appellate Court had
improperly taken cognizance of the case which had been raffled to the Seventh
Division, must be rejected. It is without foundation, and was evidently made without
attempt to ascertain the relevant facts and applicable rules. The case had originally
been assigned to Mr. Justice Isidro C. Borromeo for study and report while he was
still a member of the Seventh Division. The case was brought by him to the Eighth
Division when he was subsequently transferred thereto; and he had ultimately
written the opinion for the division after due deliberation with his colleagues. All of
this took place in accordance with the Rules of the Court of Appeals.

WHEREFORE, the Decision of the Court of Appeals subject of the petition is

REVERSED AND SET ASIDE, and the Regional Trial Court (formerly Court of First
Instance) at Quezon City is ORDERED to dismiss Civil Case No. 20415 entitled "Daniel
P. Sanchez v. Deputy Sheriff Mariano V. Cachero, et al.," with prejudice. Costs against
private respondents.

SO ORDERED.
G.R. No. L-25659 October 31, 1969
LUZON SURETY CO., INC., petitioner,
vs.
JOSEFA AGUIRRE DE GARCIA, VICENTE GARCIA and the FOURTH DIVISION OF THE
COURT OF APPEALS, respondents.
FERNANDO, J.:
The crucial question in this petition for the review of a decision of the Court of
Appeals, to be passed upon for the first time, is whether or not a conjugal
partnership, in the absence of any showing of benefits received, could be held liable
on an indemnity agreement executed by the husband to accommodate a third party
in favor of a surety company. The Court of Appeals held that it could not. Petitioner
Luzon Surety Co., Inc., dissatisfied with such a judgment, which was an affirmance of
a lower court decision, would have us reverse. We do not see it that way. The Court
of Appeals adjudicated the matter in accordance with law. We affirm what it did.
As noted in the brief of petitioner Luzon Surety Co., Inc., on October 18, 1960, a suit
for injunction was filed in the Court of First Instance of Negros Occidental against its
Provincial Sheriff by respondents-spouses, Josefa Aguirre de Garcia and Vicente
Garcia "to enjoin [such Sheriff] from selling the sugar allegedly owned by their
conjugal partnership, pursuant to a writ of garnishment issued by virtue of a writ of
execution issued in Civil Case No. 3893 of the same Court of First Instance ... against
the respondent Vicente Garcia ... ."1
There was a stipulation of facts submitted. There is no question as to one Ladislao
Chavez, as principal, and petitioner Luzon Surety Co., Inc., executing a surety bond in
favor of the Philippine National Bank, Victorias Branch, to guaranty a crop loan
granted by the latter to Ladislao Chavez in the sum of P9,000.00. On or about the
same date, Vicente Garcia, together with the said Ladislao Chavez and one Ramon B.
Lacson, as guarantors, signed an indemnity agreement wherein they bound
themselves, jointly and severally, to indemnify now petitioner Luzon Surety Co., Inc.
against any and all damages, losses, costs, stamps, taxes, penalties, charges and
expenses of whatsoever kind and nature which the petitioner may at any time
sustain or incur in consequence of having become guarantor upon said bond, to pay
interest at the rate of 12% per annum, computed and compounded quarterly until
fully paid; and to pay 15% of the amount involved in any litigation or other matters
growing out of or connected therewith for attorney's fees.
It was likewise stipulated that on or about April 27, 1956, the Philippine
National Bank filed a complaint before the Court of First Instance of Negros
Occidental, docketed as its Civil Case No. 3893, against Ladislao Chavez and Luzon
Surety Co., Inc. to recover the amount of P4,577.95, in interest, attorney's fees, and
costs of the suit. On or about August 8, 1957, in turn, a third-party complaint against
Ladislao Chavez, Ramon B. Lacson and Vicente Garcia, based on the indemnity
agreement, was instituted by Luzon Surety Co., Inc.
Then, as set forth by the parties, on September 17, 1958, the lower court
rendered a decision condemning Ladislao Chavez and Luzon Surety Co., Inc., to pay
the plaintiff jointly and severally the amount of P4,577.95 representing the principal
and accrued interest of the obligation at the rate of 6% per annum as of January 6,
1956, with a daily interest of P0.7119 on P4,330.91 from January 6, 1956, until fully
paid, plus the sum of P100.00 as attorney's fees, and to pay the costs. The same
decision likewise ordered the third party defendants, Ladislao Chavez, Vicente
Garcia, and Ramon B. Lacson, to pay Luzon Surety Co., Inc., the total amount to be
paid by it to the plaintiff Philippine National Bank.
On July 30, 1960, pursuant to the aforesaid decision, the Court of First Instance of
Negros Occidental issued a writ of execution against Vicente Garcia for the
satisfaction of the claim of petitioner in the sum of P8,839.97. Thereafter, a writ of
garnishment was issued by the Provincial Sheriff of Negros Occidental dated August
9, 1960, levying and garnishing the sugar quedans of the now respondent-spouses,
the Garcias, from their sugar plantation, registered in the names of both of them.2
The suit for injunction filed by the Garcia spouses was the result.
As noted, the lower court found in their favor. In its decision of April 30, 1962, it
declared that the garnishment in question was contrary to Article 161 of the Civil
Code and granted their petition, making the writ of preliminary injunction
permanent. Luzon Surety, Inc. elevated the matter to the Court of Appeals, which, as
mentioned at the outset, likewise reached the same result. Hence this petition for
review.
We reiterate what was set forth at the opening of this opinion. There is no reason for
a reversal of the judgment. The decision sought to be reviewed is in accordance with
law.
As explained in the decision now under review: "It is true that the husband is the
administrator of the conjugal property pursuant to the provisions of Art. 163 of the
New Civil Code. However, as such administrator the only obligations incurred by the
husband that are chargeable against the conjugal property are those incurred in the
legitimate pursuit of his career, profession or business with the honest belief that he
is doing right for the benefit of the family. This is not true in the case at bar for we
believe that the husband in acting as guarantor or surety for another in an indemnity
agreement as that involved in this case did not act for the benefit of the conjugal
partnership. Such inference is more emphatic in this case, when no proof is
presented that Vicente Garcia in acting as surety or guarantor received consideration
therefor, which may redound to the benefit of the conjugal partnership."3
In the decision before us, the principal error assigned is the above holding of the
Court of Appeals that under Article 161 of the Civil Code no liability was incurred by
the conjugal partnership. While fully conscious of the express language of Article 161
of the Civil Code, petitioner, in its well-written brief submitted by its counsel, would
impress on us that in this case it could not be said that no benefit was received by
the conjugal partnership. It sought to lend some semblance of plausibility to this
view thus: "The present case involves a contract of suretyship entered into by the
husband, the respondent Vicente Garcia, in behalf of a third person. A transaction
based on credit through which, by our given definitions, respondent Vicente Garcia,
by acting as guarantor and making good his guaranty, acquires the capacity of being
trusted, adds to his reputation or esteem, enhances his standing as a citizen in the
community in which he lives, and earns the confidence of the business community.
He can thus secure money with which to carry on the purposes of their conjugal
partnership."4
While not entirely, without basis, such an argument does not carry conviction. Its
acceptance would negate the plain meaning of what is expressly provided for in
Article 161. In the most categorical language, a conjugal partnership under that
provision is liable only for such "debts and obligations contracted by the husband for
the benefit of the conjugal partnership." There must be the requisite showing then
of some advantage which clearly accrued to the welfare of the spouses. There is
none in this case. Nor could there be, considering that the benefit was clearly
intended for a third party, one Ladislao Chavez. While the husband by thus signing
the indemnity agreement may be said to have added to his reputation or esteem
and to have earned the confidence of the business community, such benefit, even if
hypothetically accepted, is too remote and fanciful to come within the express terms
of the provision.
Its language is clear; it does not admit of doubt. No process of interpretation or
construction need be resorted to. It peremptorily calls for application. Where a
requirement is made in explicit and unambiguous terms, no discretion is left to the
judiciary. It must see to it that its mandate is obeyed. So it is in this case. That is how
the Court of Appeals acted, and what it did cannot be impugned for being contrary
to law.5
Moreover, it would negate the plain object of the additional requirement in the
present Civil Code that a debt contracted by the husband to bind a conjugal
partnership must redound to its benefit. That is still another provision indicative of
the solicitude and tender regard that the law manifests for the family as a unit. Its
interest is paramount; its welfare uppermost in the minds of the codifiers and
legislators.
This particular codal provision in question rightfully emphasizes the responsibility of
the husband as administrator.6 He is supposed to conserve and, if possible, augment
the funds of the conjugal partnership, not dissipate them. If out of friendship or
misplaced generosity on his part the conjugal partnership would be saddled with
financial burden, then the family stands to suffer. No objection need arise if the
obligation thus contracted by him could be shown to be for the benefit of the wife
and the progeny if any there be. That is but fair and just. Certainly, however, to make
a conjugal partnership respond for a liability that should appertain to the husband
alone is to defeat and frustrate the avowed objective of the new Civil Code to show
the utmost concern for the solidarity and well-being of the family as a unit.7 The
husband, therefore, as is wisely thus made certain, is denied the power to assume
unnecessary and unwarranted risks to the financial stability of the conjugal
partnership.
No useful purpose would be served by petitioner assigning as one of the errors the
observation made by the Court of Appeals as to the husband's interest in the
conjugal property being merely inchoate or a mere expectancy in view of the
conclusion thus reached as to the absence of any liability on the part of the conjugal
partnership. Nor was it error for the Court of Appeals to refuse to consider a
question raised for the first time on appeal. Now as to the question of jurisdiction of
the lower court to entertain this petition for injunction against the Provincial Sheriff,
to which our attention is invited, neither the Court of Appeals nor the lower court
having been asked to pass upon it. Of course, if raised earlier, it ought to have been
seriously inquired into. We feel, however, that under all the circumstances of the
case, substantial justice would be served if petitioner be held as precluded from now
attempting to interpose such a barrier. The conclusion that thereby laches had
intervened is not unreasonable. Such a response on our part can be predicated on
the authoritative holding in Tijam v. Sibonghanoy.8
WHEREFORE, the decision of the Court of Appeals of December 17, 1965, now under
review, is affirmed with costs against petitioner Luzon Surety Co., Inc.
BA FINANCE CORPORATION, petitioner vs. HON. COURT OF APPEALS and ROBERTO
M. REYES, respondents.
DECISION
VITUG, J.:
The case at bar is a suit for replevin and damages. The petition for review on
certiorari assails the decision of the Court of Appeals[1] in CA- G.R. CV No. 23605
affirming that of the Regional Trial Court of Manila, Branch XX,[2] which has
disposed of its Civil Case No. 87-42270 in this wise:
"WHEREFORE, the case against defendant-spouses (sic) Reynaldo Manahan is hereby
dismissed without prejudice, for failure to prosecute. Plaintiff having failed to show
the liability of defendant John Doe in the person of Roberto M. Reyes, the case
against the latter should likewise be dismissed. Moreover, plaintiff is hereby directed
to return the vehicle seized by virtue of the order of seizure issued by this Court with
all its accessories to the said Roberto M. Reyes."[3]
The decisions of both the appellate court and the court a quo are based on a like
finding of the facts hereinafter briefly narrated.
The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a
promissory note[4] binding themselves to pay Carmasters, Inc., the amount of
P83,080.00 in thirty-six monthly installments commencing 01 July 1980. To secure
payment, the Manahan spouses executed a deed of chattel mortgage[5] over a
motor vehicle, a Ford Cortina 1.6 GL, with motor and serial number CUBFWE-
801010. Carmasters later assigned[6] the promissory note and the chattel mortgage
to petitioner BA Finance Corporation with the conformity of the Manahans. When
the latter failed to pay the due installments, petitioner sent demand letters. The
demands not having been heeded, petitioner, on 02 October 1987, filed a complaint
for replevin with damages against the spouses, as well as against a John Doe, praying
for the recovery of the vehicle with an alternative prayer for the payment of a sum
of money should the vehicle not be returned. Upon petitioner's motion and the filing
of a bond in the amount of P169,161.00, the lower court issued a writ of replevin.
The court, however, cautioned petitioner that should summons be not served on the
defendants within thirty (30) days from the writ's issuance, the case would be
dismissed for failure to prosecute.[7] The warning was based on what the court
perceived to be the deplorable practice of some mortgagees of "freezing (the)
foreclosure or replevin cases" which they would so "conveniently utilize as a
leverage for the collection of unpaid installments on mortgaged chattels."[8]
The service of summons upon the spouses Manahan was caused to be served by
petitioner at No. 35 Lantana St., Cubao, Quezon City. The original of the summons
had the name and the signature of private respondent Roberto M. Reyes indicating
that he received, on 14 October 1987, a copy of the summons and the complaint.[9]
Forthwith, petitioner, through its Legal Assistant, Danilo E. Solano, issued a
certification to the effect that it had received from Orson R. Santiago, the deputy
sheriff of the Regional Trial Court of Manila, Branch 20, the Ford Cortina seized from
private respondent Roberto M. Reyes, the John Doe referred to in the complaint,[10]
in Sorsogon, Sorsogon.[11] On 20 October 1987, the lower court came out with an
order of seizure.
Alleging possession in good faith, private respondent filed, on 26 October 1987, a
motion for an extension of time within which to file his answer and/or a motion for
intervention. The court granted the motion.
A few months later, or on 18 February 1988, the court issued an order which, in part,
stated:
"Perusal of the record shows that an order for the seizure of personal property was
issued on October 20, 1987 in pursuance to a previous order of the Court dated
October 13, 1987. However, to date, there is no showing that the principal
defendants were served with summons inspite of the lapse of four (4) months.
"Considering, this is a replevin case and to forestall the evils that arise from this
practice, plaintiff failing to heed the Order dated October 13, 1987, particularly
second paragraph thereof, the above-entitled case is hereby ordered DISMISSED for
failure to prosecute and further ordering the plaintiff to return the property seized
with all its accessories to defendant John Doe in the person of Roberto M. Reyes.
"SO ORDERED."[12]
On 26 February 1988, petitioner filed a notice of dismissal of the case "without
prejudice and without pronouncement as to costs, before service of Summons and
Answer, under Section 1, Rule 17, of the Rules of Court."[13] It also sought in
another motion the withdrawal of the replevin bond. In view of the earlier dismissal
of the case (for petitioner's failure to prosecute), the court, on 02 March 1988,
merely noted the notice of dismissal and denied the motion to withdraw the
replevin bond considering that the writ of replevin had meanwhile been
implemented.[14]
On 09 March 1988, private respondent filed a motion praying that petitioner be
directed to comply with the court order requiring petitioner to return the vehicle to
him. In turn, petitioner filed, on 14 March 1988, a motion for the reconsideration of
the orders of 18 February 1988 and 02 March 1988 contending that: (a) the dismissal
of the case was tantamount to adjudication on the merits that thereby deprived it
with the remedy to enforce the promissory note, the chattel mortgage and the deed
of assignment, under Section 3, Rule 117, of the Rules of Court; (b) the order to
return the vehicle to private respondent was a departure from jurisprudence
recognizing the right of the mortgagor to foreclose the property to respond to the
unpaid obligation secured by the chattel mortgage, and (c) there were no legal and
factual bases for the court's view that the filing of the replevin case was
"characterized (by) evil practices."[15]
On 20 April 1988, the court granted petitioner's motion for reconsideration and
accordingly recalled the order directing the return of the vehicle to private
respondent, set aside the order dismissing the case, directed petitioner "to cause the
service of summons together with a copy of the complaint on the principal
defendants within five (5) days from receipt"[16] thereof at petitioner's expense,
and ordered private respondent to answer the complaint.
A few months later, or on 02 August 1988, petitioner filed a motion to declare
private respondent in default. The court granted the motion on that same day and
declared private respondent "in default for his failure to file the x x x answer within
the reglementary period."[17] The court likewise granted petitioner's motion to set
the case for the presentation, ex parte, of evidence. Petitioner, thereupon,
submitted the promissory note, the deed of chattel mortgage, the deed of
assignment, a statement of account in the name of Florencia Manahan and two
demand letters.
On 27 February 1989, the trial court rendered a decision dismissing the complaint
against the Manahans for failure of petitioner to prosecute the case against them. It
also dismissed the case against private respondent for failure of petitioner to show
any legal basis for said respondent's liability. The court ratiocinated:
"x x x. Roberto M. Reyes is merely ancillary debtor in this case. The defendant
spouses Manahan being the principal debtor(s) and as there is no showing that the
latter has been brought before the jurisdiction of this court, it must necessarily
follow that the plaintiff has no cause of action against said Roberto M. Reyes herein
before referred to as defendant John Doe. Under the circumstances, it is incumbent
upon the plaintiff to return the seized vehicle unto the said Roberto M. Reyes."[18]
In its appeal to the Court of Appeals, petitioner has asserted that a suit for replevin
aimed at the foreclosure of the chattel is an action quasi in rem which does not
necessitate the presence of the principal obligors as long as the court does not
render any personal judgment against them. This argument did not persuade the
appellate court, the latter holding that-
"x x x. In action quasi in rem an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation or lien burdening
the property, such as proceedings having for their sole object the sale or disposition
of the property of the defendant, whether by attachment, foreclosure, or other form
of remedy (Sandejas vs. Robles, 81 Phil. 421). In the case at bar, the court cannot
render any judgment binding on the defendants spouses for having allegedly
violated the terms and conditions of the promissory note and the contract of chattel
mortgage on the ground that the court has no jurisdiction over their persons, no
summons having been served on them. That judgment, if rendered, is void for having
denied the defendants spouses due process of law which contemplates notice and
opportunity to be heard before judgment is rendered, affecting one's person or
property (Macabingkil vs. Yatco, 26 SCRA 150, 157).
"It is next contended by appellant that as between appellant, as mortgagee, and
John Doe, whose right to possession is dubious if not totally non-existent, it is the
former which has the superior right of possession.
"We cannot agree.
"It is an undisputed fact that the subject motor vehicle was taken from the
possession of said Roberto M. Reyes, a third person with respect to the contract of
chattel mortgage between the appellant and the defendants spouses Manahan.
"The Civil Code expressly provides that every possessor has a right to be respected in
his possession (Art. 539, New Civil Code); that good faith is always presumed, and
upon him who alleges bad faith on the part of a possessor rests the burden of proof
(Art. 527, ibid.); and that the possession of movable property acquired in good faith
is equivalent to a title; nevertheless, one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the
same (Art. 559, ibid.). Thus, it has been held that a possessor in good faith is entitled
to be respected and protected in his possession as if he were the true owner thereof
until a competent court rules otherwise (Chus Hai vs. Kapunan, 104 Phil. 110; Yu, et
al. vs. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did
not err in holding that the complaint does not state any cause of action against
Roberto M. Reyes, and in ordering the return of the subject chattel to him."[19]
The appellate court, subsequently, denied petitioner's motion for reconsideration.
In the instant appeal, petitioner insists that a mortgagee can maintain an action for
replevin against any possessor of the object of a chattel mortgage even if the latter
were not a party to the mortgage.
Replevin, broadly understood, is both a form of principal remedy and of a provisional
relief. It may refer either to the action itself, i.e., to regain the possession of personal
chattels being wrongfully detained from the plaintiff by another, or to the
provisional remedy that would allow the plaintiff to retain the thing during the
pendency of the action and hold it pendente lite.[20] The action is primarily
possessory in nature and generally determines nothing more than the right of
possession. Replevin is so usually described as a mixed action, being partly in rem
and partly in personam-in rem insofar as the recovery of specific property is
concerned, and in personam as regards to damages involved. As an "action in rem,"
the gist of the replevin action is the right of the plaintiff to obtain possession of
specific personal property by reason of his being the owner or of his having a special
interest therein.[21] Consequently, the person in possession of the property sought
to be replevied is ordinarily the proper and only necessary party defendant, and the
plaintiff is not required to so join as defendants other persons claiming a right on the
property but not in possession thereof. Rule 60 of the Rules of Court allows an
application for the immediate possession of the property but the plaintiff must show
that he has a good legal basis, i.e., a clear title thereto, for seeking such interim
possession.
Where the right of the plaintiff to the possession of the specific property is so
conceded or evident, the action need only be maintained against him who so
possesses the property. In rem actio est per quam rem nostram quae ab alio
possidetur petimus, et semper adversus eum est qui rem possidet. In Northern
Motors, Inc. vs. Herrera,[22] the Court has said:
"There can be no question that persons having a special right of property in the
goods the recovery of which is sought, such as a chattel mortgagee, may maintain an
action for replevin therefor. Where the mortgage authorizes the mortgagee to take
possession of the property on default, he may maintain an action to recover
possession of the mortgaged chattels from the mortgagor or from any person in
whose hands he may find them."[23]
In effect then, the mortgagee, upon the mortgagor's default, is constituted an
attorney-in-fact of the mortgagor enabling such mortgagee to act for and in behalf of
the owner. Accordingly, that the defendant is not privy to the chattel mortgage
should be inconsequential. By the fact that the object of replevin is traced to his
possession, one properly can be a defendant in an action for replevin. It is here
assumed that the plaintiff's right to possess the thing is not or cannot be disputed.
In case the right of possession on the part of the plaintiff, or his authority to claim
such possession or that of his principal, is put to great doubt (a contending party
might contest the legal bases for plaintiff's cause of action or an adverse and
independent claim of ownership or right of possession is raised by that party), it
could become essential to have other persons involved and accordingly impleaded
for a complete determination and resolution of the controversy. For instance, in
Servicewide Specialists, Inc., vs. Court of Appeals, et al., G.R. No. 103301, 08
December 1995, this Court ruled:
"While, in its present petition for review on certiorari, Servicewide has raised a
number of points, the crucial issue still remains, however, to be whether or not an
action filed by the mortgagee for replevin to effect a foreclosure of the property
covered by the chattel mortgage would require that the mortgagor be so impleaded
as an indispensable party thereto.
"Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of
possession of personal property, to apply for a writ of replevin if it can be shown that
he is `the owner of the property claimed x x x or is entitled to the possession thereof.
The plaintiff need not be the owner so long as he is able to specify his right to the
possession of the property and his legal basis therefor. The question then, insofar as
the matter finds relation to the instant case, is whether or not the plaintiff (herein
petitioner) who has predicated his right on being the mortgagee of a chattel
mortgage should implead the mortgagor in his complaint that seeks to recover
possession of the encumbered property in order to effect its foreclosure.
"The answer has to be in the affirmative. In a suit for replevin, a clear right of
possession must be established. A foreclosure under a chattel mortgage may
properly be commenced only once there is default on the part of the mortgagor of
his obligation secured by the mortgage. The replevin in the instant case has been
sought to pave the way for the foreclosure of the object covered by the chattel
mortgage. The conditions essential for that foreclosure would be to show, firstly, the
existence of the chattel mortgage and, secondly, the default of the mortgagor. These
requirements must be established since the validity of the plaintiff's exercise of the
right of foreclosure are inevitably dependent thereon. It would thus seem,
considering particularly an adverse and independent claim of ownership by private
respondent, that the lower court acted improvidently when it granted the dismissal
of the complaint against Dollente, albeit on petitioner's (then plaintiff) plea, on the
ground that the non-service of summons upon Ernesto Dollente (would) only delay
the determination of the merits of the case, to the prejudice of the parties' In Imson
v. Court of Appeals, we have explained:
x x x. An indispensable party is one whose interest will be affected by the court's
action in the litigation, and without whom no final determination of the case can be
had. The party's interest in the subject matter of the suit and in the relief sought are
so inextricably intertwined with the other parties that his legal presence as a party to
the proceeding is an absolute necessity. In his absence there cannot be a resolution
of the dispute of the parties before the court which is effective, complete, or
equitable.
`Conversely, a party is not indispensable to the suit if his interest in the controversy
or subject matter is distinct and divisible from the interest of the other parties and
will not necessarily be prejudiced by a judgment which does complete justice to the
parties in court. He is not indispensable if his presence would merely permit
complete relief between him and those already parties to the action or will simply
avoid multiple litigation.'
"Without the presence of indispensable parties to a suit or proceeding, a judgment
of a court cannot attain real finality." (Footnotes omitted.)
A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the possession
of the property unless and until the mortgagor defaults and the mortgagee
thereupon seeks to foreclose thereon. Since the mortgagee's right of possession is
conditioned upon the actual fact of default which itself may be controverted, the
inclusion of other parties, like the debtor or the mortgagor himself, may be required
in order to allow a full and conclusive determination of the case. When the
mortgagee seeks a replevin in order to effect the eventual foreclosure of the
mortgage, it is not only the existence of, but also the mortgagor's default on, the
chattel mortgage that, among other things, can properly uphold the right to replevy
the property. The burden to establish a valid justification for that action lies with the
plaintiff. An adverse possessor, who is not the mortgagor, cannot just be deprived of
his possession, let alone be bound by the terms of the chattel mortgage contract,
simply because the mortgagee brings up an action for replevin.
The appellate court, accordingly, acted well in arriving at its now questioned
judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No costs.
SO ORDERED.
G.R. No. L-25355 August 28, 1969
THE PEOPLE OF THE PHILIPPINES, plaintiff,
vs.
FROILAN LAGRIMAS, accused,
HEIRS OF PELAGIO CAGRO, heirs-appellants,
MERCEDES AGUIRRE DE LAGRIMAS, movant-appellee.
Socrates G. Desales for heirs-appellants.
Marciano Chitongco for movant-appellee.
FERNANDO, J.:
The Civil Code, under the conditions therein specified, recognizes the liability of the
conjugal partnership for fines and indemnities imposed upon either husband or wife
"after the responsibilities enumerated in article 161 have been covered," in the
absence of any separate property of the offending spouse or its insufficiency. 1 How
such an obligation "may be enforced against the partnership assets" is the question,
one of first impression, raised in this appeal from a lower court order, based on the
assumption of the total exemption of the conjugal partnership from the liability thus
incurred, prior to the stage of liquidation. The result was to set aside the preliminary
attachment and thereafter the writ of execution in favor of the heirs of the
murdered victim, appellants before us, the judgment against the accused imposing
not only the penalty of reclusion perpetua but also the indemnification to such heirs
having attained the status of finality. In view of the failure, apparent on the face of
the appealed order, to respect what the Civil Code ordains, we reverse and remand
the case for further proceedings.
The brief of appellants, the heirs of Pelagio Cagro, the murdered victim, discloses
that on February 19, 1960 an information was filed against the accused, Froilan
Lagrimas, for the above murder committed on February 15, 1960 in Pambujan,
Samar. Thereafter, appellants as such heirs, filed on February 27, 1960 a motion for
the issuance of a writ of preliminary attachment on the property of the accused,
such motion being granted in an order of March 5, 1960. After trial, the lower court
found the accused guilty of the crime charged and sentenced him to suffer the
penalty of reclusion perpetua and to indemnify the appellants as such heirs in the
sum of P6,000.00 plus the additional sum of P10,000.00 in the concept of damages,
attorney's fees and burial expenses. An appeal from the judgment was elevated to
this Court by the accused but thereafter withdrawn, the judgment, therefore,
becoming final on October 11, 1962.
A writ of execution to cover the civil indemnity was issued by the lower court upon
motion of appellants. A levy was had on eleven parcels of land in the province
declared for tax purposes in the name of the accused. The sale thereof at public
auction was scheduled on January 5, 1965 but on December 29, 1964 the wife of the
accused, Mercedes Aguirre de Lagrimas, filed a motion to quash the writ of
attachment as well as the writ of execution with the allegation that the property
levied upon belonged to the conjugal partnership and, therefore, could not be held
liable for the pecuniary indemnity the husband was required to pay. The then judge
of the lower court granted such motion declaring null and void the order of
attachment and the writ of execution, in accordance with Article 161 of the new Civil
Code. Another judge of the same lower court set aside the above order, sustaining
the legality of the preliminary attachment as well as the writ of execution.
Thereafter, upon appellee filing a motion for the reconsideration of the above order
giving due course to the writ of execution, a third judge, then presiding over such
court, the Hon. Ignacio Mangosing, revived the original order of March 5, 1960,
declaring such attachment and the writ of execution thereafter issued as null and
void.
This order of August 7, 1965, now on appeal, was premised on the following
considerations: "It can be readily seen from the above-quoted provisions of law that
only debts contracted by the husband or the wife before the marriage, and those of
fines and indemnities imposed upon them, may be enforced against the partnership
assets after the charges enumerated in article 161 have been covered. So that as
long as the obligations mentioned in said article 161 have not been paid, the assets
of the partnership cannot be made to answer for indemnities like the one being
sought to be enforced in the instant case. And, before the obligations enumerated in
said article 161 can be paid, the conjugal partnership properties should first, by
necessity, be liquidated, and liquidation can take place only after the dissolution of
the partnership thru the occurrence of any of the causes mentioned in article 175 of
the same Code, one of which is death of one of the spouses. Since both are still living
there cannot be any dissolution, imprisonment for life of the husband
notwithstanding, in the absence of a judicial separation of properly decreed in
accordance with the provisions of article 191 thereof. Moreover, the fines and
indemnities sought to be charged against the ganancial properties of the accused
and his wife are not such debts and obligations contracted by said accused for the
benefit of the conjugal partnership." 2
The conclusion arrived at by Judge Mangosing follows: "We sympathize with the
predicament of the widow and other heirs of the deceased Pelagio Cagro, but the
law is clear on the matter. The indemnities adjudged by the Court in their favor may
only be charged against the exclusive properties of the accused if he has any, or
against his share in the partnership assets after liquidation thereof if any still
remains after the payment of all the items enumerated in article 161 of the said Civil
Code." 3
Hence, this appeal, the heirs of Pelagio Cagro assigning as sole error the quashing
and annulling of the writs of attachment and execution aforesaid. As stated at the
outset, we find the appeal meritorious.
The applicable Civil Code provision 4 is not lacking in explicitness. Fines and
indemnities imposed upon either husband or wife "may be enforced against the
partnership assets after the responsibilities enumerated in article 161 have been
covered, if the spouse who is bound should have no exclusive property or if it should
be insufficient; ... ." It is quite plain, therefore, that the period during which such a
liability may be enforced presupposes that the conjugal partnership is still existing.
The law speaks of "partnership assets." It contemplates that the responsibilities to
which enumerated in Article 161, chargeable against such assets, must be complied
with first. It is thus obvious that the termination of the conjugal partnership is not
contemplated as a prerequisite. Whatever doubt may still remain should be erased
by the concluding portion of this article which provides that "at the time of the
liquidation of the partnership such spouse shall be charged for what has been paid
for the purposes above-mentioned."
What other conclusion can there be than that the interpretation placed upon this
provision in the challenged order is at war with the plain terms thereof? It cannot
elicit our acceptance. Nor is the reason for such a codal provision difficult to discern.
It is a fundamental postulate of our law that every person criminally liable for felony
is also civilly liable. 5 The accused, Froilan Lagrimas, was, as noted, found guilty of
the crime of murder and sentenced to reclusion perpetua as well as to pay the
indemnification to satisfy the civil liability incumbent upon him. If the appealed
order were to be upheld, he would be in effect exempt therefrom, the heirs of the
offended party being made to suffer still further.
It would follow, therefore, that the Civil Code provision, as thus worded, precisely
minimizes the possibility that such additional liability of an accused would be
rendered nugatory. In doing justice to the heirs of the murdered victim, no injustice
is committed against the family of the offender. It is made a condition under this
article of the Civil Code that the responsibilities enumerated in Article 161, covering
primarily the maintenance of the family and the education of the children of the
spouses or the legitimate children of one of them as well as other obligations of a
preferential character, are first satisfied. It is thus apparent that the legal scheme
cannot be susceptible to the charge that for a transgression of the law by either
husband or wife, the rest of the family may be made to bear burdens of an
extremely onerous character.
The next question is how practical effect would be given this particular liability of the
conjugal partnership for the payment of fines and indemnities imposed upon either
husband or wife? In the brief for appellants, the heirs of Pelagio Cagro, they seek the
opportunity to present evidence as to how the partnership assets could be made to
respond, this on the assumption that the property levied upon does not belong
exclusively to the convicted spouse.
In Lacson v. Diaz, 6 which deals with the satisfaction of the debt contracted by
husband or wife before marriage by the conjugal partnership, likewise included in
this particular article, it was held: "Considering that the enforceability of the
personal obligations of the husband or wife, against the conjugal assets, forms the
exception to the general rule, it is incumbent upon the one who invokes this
provision or the creditor to show that the requisites for its applicability are
obtaining."
Without departing from the principle thus announced, we make this further
observation. Considering that the obligations mentioned in Article 161 are peculiarly
within the knowledge of the husband or of the wife whose conjugal partnership is
made liable, the proof required of the beneficiaries of the indemnity should not be
of the most exacting kind, ordinary credibility sufficing. Otherwise, the husband or
the wife, as the case may be, representing the conjugal partnership, may find the
temptation to magnify its obligation irresistible so as to defeat the right of recovery
of the family of the offended party. That result is to be avoided. The lower court
should be on the alert, therefore, in the appraisal of whatever evidence may be
offered to assure compliance with this codal provision.
WHEREFORE, the appealed order of August 7, 1965 is set aside and the case
remanded to the court of origin for the reception of evidence in accordance with this
opinion. With costs against appellee Mercedes Aguirre de Lagrimas.
G.R. NO. 143382 : November 29, 2006]
SECURITY BANK and TRUST COMPANY, Petitioner, v. MAR TIERRA CORPORATION,
WILFRIDO C. MARTINEZ, MIGUEL J. LACSON and RICARDO A. LOPA, Respondents.
DECISION
CORONA, J.:
May the conjugal partnership be held liable for an indemnity agreement entered
into by the husband to accommodate a third party?cralawlibrary
This issue confronts us in this Petition for Review on Certiorari assailing the
November 9, 1999 decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 48107.
On May 7, 1980, respondent Mar Tierra Corporation, through its president, Wilfrido
C. Martinez, applied for a P12,000,000 credit accommodation with petitioner
Security Bank and Trust Company. Petitioner approved the application and entered
into a credit line agreement with respondent corporation. It was secured by an
indemnity agreement executed by individual respondents Wilfrido C. Martinez,
Miguel J. Lacson and Ricardo A. Lopa who bound themselves jointly and severally
with respondent corporation for the payment of the loan.
On July 2, 1980, the credit line agreement was amended and increased to
P14,000,000. Individual respondents correspondingly executed a new indemnity
agreement in favor of the bank to secure the increased credit line.
On September 25, 1981, respondent corporation availed of its credit line and
received the sum of P9,952,000 which it undertook to pay on or before November
30, 1981. It was able to pay P4,648,000 for the principal loan and P2,729,195.56 for
the interest and other charges. However, respondent corporation was not able to
pay the balance as it suffered business reversals, eventually ceasing operations in
1984.
Unable to collect the balance of the loan, petitioner filed a complaint for a sum of
money with a prayer for preliminary attachment against respondent corporation and
individual respondents in the Regional Trial Court (RTC) of Makati, Branch 66. It was
docketed as Civil Case No. 3947.
Subsequently, however, petitioner had the case dismissed with respect to individual
respondents Lacson and Lopa,2 leaving Martinez as the remaining individual
respondent.
On August 10, 1982, the RTC issued a writ of attachment on all real and personal
properties of respondent corporation and individual respondent Martinez. As a
consequence, the conjugal house and lot of the spouses Wilfrido and Josefina
Martinez in Barrio Calaanan, Caloocan City covered by Transfer Certificate of Title
(TCT) No. 49158 was levied on.
The RTC rendered its decision3 on June 20, 1994. It held respondent corporation and
individual respondent Martinez jointly and severally liable to petitioner for
P5,304,000 plus 12% interest per annum and 5% penalty commencing on June 21,
1982 until fully paid, plus P10,000 as attorney's fees. It, however, found that the
obligation contracted by individual respondent Martinez did not redound to the
benefit of his family, hence, it ordered the lifting of the attachment on the conjugal
house and lot of the spouses Martinez.
Dissatisfied with the RTC decision, petitioner appealed to the CA but the appellate
court affirmed the trial court's decision in toto. Petitioner sought reconsideration but
it was denied. Hence, this petition.
Petitioner makes two basic assertions: (1) the RTC and CA erred in finding that
respondent corporation availed of P9,952,000 only from its credit line and not the
entire P14,000,000 and (2) the RTC and CA were wrong in ruling that the conjugal
partnership of the Martinez spouses could not be held liable for the obligation
incurred by individual respondent Martinez.
We uphold the CA.
Factual findings of the CA, affirming those of the trial court, will not be disturbed on
appeal but must be accorded great weight.4 These findings are conclusive not only
on the parties but on this Court as well.5
The CA affirmed the finding of the RTC that the amount availed of by respondent
corporation from its credit line with petitioner was only P9,952,000. Both courts
correctly pointed out that petitioner itself admitted this amount when it alleged in
paragraph seven of its complaint that respondent corporation "borrowed and
received the principal sum of P9,952,000."6 Petitioner was therefore bound by the
factual finding of the appellate and trial courts, as well as by its own judicial
admission, on this particular point.
At any rate, the issue of the amount actually availed of by respondent corporation is
factual. It is not within the ambit of this Court's discretionary power of judicial
review under Rule 45 of the Rules of Court which is concerned solely with questions
of law.7
We now move on to the principal issue in this case.
Under Article 161(1) of the Civil Code,8 the conjugal partnership is liable for "all
debts and obligations contracted by the husband for the benefit of the conjugal
partnership." But when are debts and obligations contracted by the husband alone
considered for the benefit of and therefore chargeable against the conjugal
partnership? Is a surety agreement or an accommodation contract entered into by
the husband in favor of his employer within the contemplation of the said
provision?cralawlibrary
We ruled as early as 1969 in Luzon Surety Co., Inc. v. de Garcia9 that, in acting as a
guarantor or surety for another, the husband does not act for the benefit of the
conjugal partnership as the benefit is clearly intended for a third party.
In Ayala Investment and Development Corporation v. Court of Appeals,10 we ruled
that, if the husband himself is the principal obligor in the contract, i.e., the direct
recipient of the money and services to be used in or for his own business or
profession, the transaction falls within the term "obligations for the benefit of the
conjugal partnership." In other words, where the husband contracts an obligation on
behalf of the family business, there is a legal presumption that such obligation
redounds to the benefit of the conjugal partnership.11
On the other hand, if the money or services are given to another person or entity
and the husband acted only as a surety or guarantor, the transaction cannot by itself
be deemed an obligation for the benefit of the conjugal partnership.12 It is for the
benefit of the principal debtor and not for the surety or his family. No presumption is
raised that, when a husband enters into a contract of surety or accommodation
agreement, it is for the benefit of the conjugal partnership. Proof must be presented
to establish the benefit redounding to the conjugal partnership.13 In the absence of
any showing of benefit received by it, the conjugal partnership cannot be held liable
on an indemnity agreement executed by the husband to accommodate a third
party.14
In this case, the principal contract, the credit line agreement between petitioner and
respondent corporation, was solely for the benefit of the latter. The accessory
contract (the indemnity agreement) under which individual respondent Martinez
assumed the obligation of a surety for respondent corporation was similarly for the
latter's benefit. Petitioner had the burden of proving that the conjugal partnership of
the spouses Martinez benefited from the transaction. It failed to discharge that
burden.
To hold the conjugal partnership liable for an obligation pertaining to the husband
alone defeats the objective of the Civil Code to protect the solidarity and well being
of the family as a unit.15 The underlying concern of the law is the conservation of
the conjugal partnership.16 Hence, it limits the liability of the conjugal partnership
only to debts and obligations contracted by the husband for the benefit of the
conjugal partnership.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.