[1-1]
LIGA vs. ALLEGRO
1) LIGA vs. ALLEGRO RESOURCES
575 SCRA 310 (Art. 1159)
Facts:
· Ortigas & Company, Limited Partnership entered into a lease
agreement with La Paz Investment & Realty Corporation
wherein the former leased to the latter its parcel of land located
in San Juan. La Paz constructed the Greenhills Shopping
Arcade and divided it into several stalls and subleased them to
other people. One of the sub-lessees was Edsel Liga (Liga),
who obtained the leasehold right to Unit No. 26, Level A of the
GSA.
· As the lease expired, the stallholders made several attempts
to have their leasehold rights extended.
· Allegro Resources became the new lessee. As the new
lessee, Allegro offered to sublease Unit No. 26, Level A to
Liga. They entered into a lease agreement dubbed Rental
Information in which Liga agreed to pay rental of P40K
monthly. She also agreed to pay the back rentals due Ortigas.
Liga also gave P40K as one month advance rental and another
P40K as one month security deposit as provided in the
agreement.
· Liga failed to pay the subsequent due rent. Despite repeated
demands from Allegro, Liga had failed to pay her rentals for the
subleased property, as well as the back rentals from January
to August 2001 due Ortigas.
Issues:
1. WON Liga should pay to Ortigas back rentals covering the
period 1 January 2001 to 31 August 2001? NO
2. WON Liga should pay to Allegro back rentals in the amount
of P40K a month starting from 1 September 2001 until such
time as she vacates the leased property? YES
3. WON Liga should pay to Allegro the amount of P20K as
attorney's fees and the costs of suit? YES
Held:
1. (1) Ortigas is not a party to this case, whether as plaintiff or
otherwise. It is basic that no relief can be extended in a
judgment to a stranger or one who is not a party to a case. (2)
Allegro cannot justify the award as a legal representative by
virtue of a provision in its lease agreement with Ortigas. Allegro
did not aver in its complaint that it was acting as Ortigas's legal
representative and seeking the back rentals due Ortigas. (3)
There is no allegation or prayer in the complaint that Allegro
was seeking the collection of the back rentals due Ortigas.
2. The Court cannot countenance the obstinate refusal of Liga
to pay P40K a month to Allegro since she had already
acquiesced to pay such rental rate when she signed the Rental
Information. It is fundamental that a contract is the law
between the parties. Obligations arising from contracts have
the force of law between the contracting parties and should be
complied with in good faith.
It is a general principle of law that no one may be permitted to
change his mind or disavow and go back upon his own acts, or
to proceed contrary thereto, to the prejudice of the other party.
Likewise, it is settled that if the terms of the contract clearly
express the intention of the contracting parties, the literal
meaning of the stipulations would be controlling.
3. Law and jurisprudence support the award of attorney's fees
and costs of suit in favor of Allegro. Attorney's fees and costs
of litigation are awarded in instances where "the defendant
acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim." Having
delivered possession over the leased property to Liga, Allegro
had already performed its obligation under the lease
agreement. Liga should have exercised fairness and good
judgment in dealing with Allegro by religiously paying the
agreed monthly rental of P40,000.00.
1
MAKATI STOCK EXCHANGE, INC. VS MIGUEL CAMPOS
G.R. NO. 138814, APRIL 26, 2009
FACTS:
SEC Case No. 02-94-4678 was instituted on 10 February 1994 by respondent
Miguel V. Campos with the Securities, Investigation and Clearing Department (SICD)
of the Securities and Exchange Commission (SEC), a Petition against herein
petitioners Makati Stock Exchange, Inc. (MKSE).
The Petition, sought: (1) the nullification of the Resolution dated 3 June 1993 of
the MKSE Board of Directors, which allegedly deprived him of his right to participate
equally in the allocation of Initial Public Offerings (IPO) of corporations registered with
MKSE; (2) the delivery of the IPO shares he was allegedly deprived of, for which he
would pay IPO prices; and (3) the payment of P2 million as moral damages, P1 million
as exemplary damages, and P500,000.00 as attorney’s fees and litigation expenses.
The SICD issued an Order granting respondent’s prayer for the issuance of a
Temporary Restraining Order to enjoin petitioners from implementing or enforcing
the Resolution of the MKSE Board of Directors. Subsequently issued another Order
on 10 March 1994 granting respondent’s application for a Writ of Preliminary
Injunction, to continuously enjoin, during the pendency of SEC Case No. 02-94-4678,
the implementation or enforcement of the MKSE Board Resolution in question.
On 11 March 1994, petitioners filed a Motion to Dismiss respondent’s Petition
based on the following grounds: (1) the Petition became moot due to the cancellation of
the license of MKSE; (2) the SICD had no jurisdiction over the Petition; and (3) the
Petition failed to state a cause of action. The SICD denied petitioner’s Motion to
Dismiss. Petitioners again challenged Order of SICD before the SEC en banc through
another Petition for Certiorari.
The SEC en banc nullified the Order of SICD granting a Writ of Preliminary
Injunction in favour of respondent. SEC en banc annulled the Order of SICD in SEC
Case No. 02-94-4678 denying petitioners’ Motion to Dismiss, and accordingly ordered
the dismissal of respondent’s Petition before the SICD.
Respondent filed a Petition for Certiorari with the Court of Appeals. Petitioners
filed a Motion for Reconsideration but was denied by the Court of Appeals.
ISSUE: WHETHER OR NOT THE PETITION FAILED TO STATE A
CAUSE OF ACTION.
RULING:
The petition filled by the respondent, Miguel Campos should be dismissed for
failure to state a cause of action.
A cause of action is the act or omission by which a party violates a right of
another. A complaint states a cause of action where it contains three essential
elements of a cause of action, namely: (1) the legal right of the plaintiff, (2) the
correlative obligation of the defendant, and (3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint becomes
vulnerable to dismissal on the ground of failure to state a cause of action.
However, the terms right and obligation are not magic words that would
automatically lead to the conclusion that such Petition sufficiently states a cause of
action. Right and obligation are legal terms with specific legal meaning. A right is a
claim or title to an interest in anything whatsoever that is enforceable by law while an
obligation is defined in the Civil Code as a juridical necessity to give, to do or not to do.
Justice J.B.L. Reyes offers the definition given by Arias Ramos as a more complete desired extensions on the basis of the foregoing causes, thus putting Diesel in default
for a given
definition: contract of work. Furthermore, for every default situation, UPSI assessed Diesel for
An obligation is a juridical relation whereby a person (called liquidated
the creditor) may demand from another (called the debtor) the damages in the form of deductions from Diesel’s progress payments, as stipulated in
the
observance of a determinative conduct (the giving, doing or not
Agreement. On March 16, 2000, Diesel sent a letter notice to UPSI stating that the
doing), and in case of breach, may demand satisfaction from the Project has
assets of the latter. been completed as of the date. UPSI, however, disregarded the notice, and refused to
accept
delivery of the contracted premises, claiming that Diesel abandoned the Project
Art. 1157 of the Civil Code provides that Obligations arise from (1) Law; (2)
unfinished
Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5)
Diesel then filed a complaint compelling to pay the unpaid balance of UPSI of the
Quasi-delicts.
contract price,
plus damages and attorney’s fees. UPSI denied liability.
The mere assertion of a right and claim of an obligation in an initiatory
pleading, whether a Complaint or Petition, without identifying the basis or source ISSUE:
Whether or not Diesel can be entitled to full payment of the contract amount.
thereof, is merely a conclusion of fact and law. (In the case at bar, although the HELD:
Petition in SEC Case No. 02-94-4678 does allege respondent’s right to subscribe to As evidenced, by UPSI’s Progress Report No. 19 for the period ending March 22,
the IPOs of corporations listed in the stock market at their offering prices, and 2000,
Diesel’s scope of work , as of that date, was already 97.56% complete. Such level of
petitioners’ obligation to continue respecting and observing such right, the Petition work
utterly failed to lay down the source or basis of respondent’s right and/or petitioners’ accomplishment would, by any natural norm, be considered as substantial to warrant
obligation.) full
payment of the contract amount, less actual damages suffered by UPSI. Article 1234
of the Civil
Respondent merely quoted in his Petition the MKSE Board Resolution, passed Code says as much, “If the obligation had substantially performed in good faith, the
sometime in 1989, granting him the position of Chairman Emeritus of MKSE for obligor may
life. However, there is nothing in the said Petition from which the Court can deduce that recover as though there had been and complete fulfillment, less damages suffered by
the obligee
respondent, by virtue of his position as Chairman Emeritus of MKSE, was granted by
law, contract, or any other legal source, the right to subscribe to the IPOs of
corporations listed in the stock market at their offering prices. (allocation of IPO shares
Chavez vs. Gonzales
was merely alleged to have been done in accord with a practice normally observed by
the members of the stock exchange) A practice or custom is, as a general rule, not a G.R. No. L-27454 April 30, 1970
source of a legally demandable or enforceable right.

UPSI Property Holdings, Inc., V. Diesel Construction Co., Inc. and FGU
Insurance Corp.,
Rosendo O. Chavez, plaintiff-appellant
G.R. No. 154937, March 24, 2008

Facts: On August 26, 1995, Diesel, as contractor, and UPSI, as Owner, entered into a
Construction Agreement for the interior architectural construction works for the 14th
to the 16th floors of the UPSI Building 3 Meditel/Condotel Project located on Gen. Luna vs.
St., Ermita, Manila. Under the Agreement, as amended, Diesel, for PHP 12,739,099,
agreed to undertake the Project, payable by progress billing. As stipulated, Diesel
posted, through FGU Insurance corp.
(FGU), a performance bond in favor of UPSI.
The Agreement contained provisions and contract provisions on contract works and
Project completing, extensions of contract period, change/extra work orders, delays Fructuoso Gonzales, defendant-appellee
and damages
for negative slippage. Under the Agreement, the Project Prosecution proper was to
run for a
period of 90 days from August 2, 1999 to November 8, 1999. They later agreed to
move the
commencement date to August 21, 1999 and the completion was moved to November REYES, J.B.L., J.:
20, 1999.
Also this includes the section obliging the contractor, in case of unjustifiable delay, to
pay the
owner liquidated damages in the amount equivalent to one-fifth (1/5) of one (1)
percent of the
total Project cost for each calendar day of delay. Facts: On July 1963, Rosendo Chavez brought his typewriter to Fructuoso Gonzales
During the course of Project implantation, change orders were effective and extensive a typewriter repairman for the cleaning and servicing of the said typewriter but the
sought. Diesel requested for extension owing to the following causes or delaying latter was not able to finish the job. During October 1963, the plaintiff gave the amount
factors: (1) of P6.00 to the defendant which the latter asked from the plaintiff for the purchase of
Manual hauling of materials from the 14th spare parts, because of the delay of the repair the plaintiff decided to recover the
to 16th typewriter to the defendant which he wrapped it like a package. When the plaintiff
floors; (2) delayed supply of marble; (3) various
reached their home he opened it and examined that some parts and screws was lost.
change orders; and (4) delayed in the installation of shower assembly. UPSI
That on October 29, 1963 the plaintiff sent a letter to the defendant for the return of the
disapproved the
2
missing parts, the interior cover and the sum of P6.00 (Exhibit D). The following day,
the defendant returned to the plaintiff some of the missing parts, the interior cover and
the P6.00. The plaintiff brought his typewriter to Freixas Business Machines and the
repair cost the amount of P89.85. He commenced this action on August 23, 1965 in
the City Court of Manila, demanding from the defendant the payment of P90.00 as
actual and compensatory damages, P100.00 for temperate damages, P500.00 for
moral damages, and P500.00 as attorney’s fees. The defendant made no denials of
the facts narrated above, except the claim of the plaintiff that the cost of the repair
made by Freixas Business Machines be fully chargeable against him.
Issue: Whether or not the defendant is liable for the total cost of the repair made by
Freixas Business Machines with the plaintiff typewriter?
Ruling: No, he is not liable for the total cost of the repair made by Freixas Business
Machines instead he is only liable for the cost of the missing parts and screws. The
defendant contravened the tenor of his obligation in repairing the typewriter of the
plaintiff that he fails to repair it and returned it with the missing parts, he is liable under
“ART. 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost.
This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore it may be decreed that what has been poorly done he
undone.”
POLO S. PANTALEON VS AMERICAN EXPRESS INTERNATIONAL
CORPORATION2009-05-08 | G.R. No. 174269
TINGA, J.:FACTS:
The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina and
son Adrian Roberto, joined an escorted tour ofWestern Europe organized by Trafalgar
Tours of Europe, Ltd., in October of 1991.
The tour group arrived in Amsterdam only during the second to the last day of the trip,
late in the afternoon. Thus, it was agreed thatthe tour will be held on the following day,
last day of the tour.
To allow enough time to take in a guided city tour of Amsterdam, the group had agreed
to visit Coster Diamond House until 9:30amonly.
Mrs. Pantaleon had already planned to purchase even before the tour began a 2.5
karat diamond brilliant cut, and she found adiamond close enough in approximation
that she decided to buy in the Coster.
To pay for these purchases, Pantaleon presented his American Express credit card
together with his passport to the Coster sales clerkat around 9:15 am, or 15 minutes
before the tour group was slated to depart from the store.
3
Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not yet
been approved. Due to this delay in approval ofthe purchase, Pantaleon asked the
store clerk to cancel the sale, around 9:40 am.
But the store manager though asked plaintiff to wait a few more minutes, and after 15
minutes, the store manager informedPantaleon that respondent had demanded bank
references so Pantaleon supplied the names of his depositary banks, then
instructedhis daughter to return to the bus and apologize to the tour group for the
delay.
At around 10:00 am, Coster decided to release the items even without respondent's
approval of the purchase.
Due to the delay, the tour guide announced that the city tour of Amsterdam was to be
canceled due to lack of remaining time, asthey had to catch a 3:00 p.m. ferry at Calais,
Belgium to London.
It later emerged that Pantaleon's purchase was first transmitted for approval to
respondent's Amsterdam office at 9:20 a.m.,Amsterdam time, then referred to
respondent's Manila office at 9:33 a.m, then finally approved at 10:19 a.m.,
Amsterdam time. TheApproval Code was transmitted to respondent's Amsterdam
office at 10:38 a.m., several minutes after petitioner had already leftCoster, and 78
minutes from the time the purchases were electronically transmitted by the jewelry
store to respondent's Amsterdamoffice.
The Pantaleon Family went to United States before returing to Manila, and while in US,
Pantaleon continued to use his AmEx card,
several times without hassle or delay, but with two other incidents similar to the
Amsterdam’s.
After coming back to Manila, Pantaleon sent a letter through counsel to the American
Express, demanding an apology for the"inconvenience, humiliation and
embarrassment he and his family thereby suffered" for respondent's refusal to provide
creditauthorization for the aforementioned purchases.
In response, AmEx sent a letter stating that the delay in authorizing the purchase from
Coster was attributable to the circumstancethat the charged purchase of
US $13,826.00 "was out of the usual charge purchase pattern established."
Since respondent refused to accede to Pantaleon's demand for an apology, the
aggrieved cardholder instituted an action for damageswith the Regional Trial Court
(RTC) of Makati City, Branch 145.
Makati City RTC, Branch 145 rendered a decision in favor of Pantaleon, awarding
him P500,000.00 as moral damages, P300,000.00 asexemplary damages,
P100,000.00 as attorney's fees, and P85,233.01 as expenses of litigation.
A Notice of Appeal was then filed by respondent , while Pantaleon moved for partial
reconsideration
–
praying that amount of moraland exemplary damages be increased.
Court of Appeals rendered a decision reversing the award of damages in favor of
Pantaleon, holding that respondent had notbreached its obligations to petitioner.
ISSUE:
1. Whether the delay is mora accipiendi or mora solvendi?
Whether or not American Express committed delay in authorizing the purchase
of Mrs. Pantaleon?
 3. Whether or not American Express, in connection with the aforementioned
transactions, had committed a breach of its obligations toPantaleon, therefore
be liable for damages?
RULING:
1.The RTC concluded that based on testimonial representations of Pantaleon and
respondent's credit authorizer, Edgardo Jaurigue, thatthe normal approval time for
purchases was "a matter of seconds." Based on that standard, respondent had been
in clear delay withrespect to the three subject transactions. As it appears, the Court of
Appeals conceded that there had been delay on the part ofrespondent in approving
the purchases, and it has wrongly applied the principle of mora accipiendi, which
relates to delay on the partof the obligee in accepting the performance of the
obligation by the obligor. The SC, however, held that Atty. Pantaleon was
insteadcorrect in citing the principle of
mora solvendi
(delay on the part of the debtor to fulfill his obligation), not
mora accipiendi
. Thetraditional role of a credit card company as creditor applies when the cardholder
has already incurred a debt. In this case, the debthad not yet been created; the
purchase was still pending approval or disapproval by Amex. Thus, under
mora solvendi
, Amex is not
creditor but debtor “insofar as it has the obligation to the customer … to act promptly
on its purchases on credit.”
2.
The SC found culpable delay on the part of Amex citing the findings of the RTC where
both
parties admitted that “normal approvaltime for purchases was a matter of seconds”.
Notwithstanding the popular notion that credit card purchases are approved
"withinseconds," there really is no strict, legally determinative point of demarcation on
how long must it take for a credit card company toapprove or disapprove a customer's
purchase, much less one specifically contracted upon by the parties.
The culpable failure of AmEx herein is not the failure to timely approve petitioner’s
purchase,
but the more elemental failure totimely act on the same, whether favorably or unfavor
ably. Even assuming that respondent’s
credit authorizers did not have sufficientbasis on hand to make a judgment, we see no
reason why it could not have promptly informed Pantaleon the reason for the
delay,and duly advised him that resolving the same could take some time.3.
The delay committed by defendant was clearly attended by unjustified neglect and bad
faith, since it alleges to have consumed morethan one hour to s
imply go over plaintiff’s past credit history with defendant, his payment record and his
credit and bank references,
when all such data are already stored and readily available from its computer. This
Court also takes note of the fact that there isnothing
in plaintiff’s billing history that would warrant the imprudent suspension of action by
defendant in processing the purchase
,and no
“delinquencies”
found in Pantaleon
’s account.”
The reason why Pantaleon is entitled to damages is not simply because AmEx
incurred delay, but because the delay, for whichculpability lies under Article 1170, led
to the particular injuries under Article 2217 of the Civil Code for which moral damages
areremunerative. The somewhat unusual attending circumstances to the purchase at
Coster
–
that there was a deadline for thecompletion of that purchase by petitioner before any
delay would redound to the injury of his several traveling companions
– case Solar’s claim for reimbursement would still fail, as the circumstances would show
gaverise to the moral shock, mental anguish, serious anxiety, wounded feelings and
social humiliation sustained by Pantaleon, asconcluded by the RTC. The SC sustain
the amount of moral damages awarded to petitioner by the RTC.Wherefore, petition is
GRANTED, the assailed decision of the Court of Appeals is REVERSED and SET
ASIDE.
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Solar Harvest, Inc. v. Davao Corrugated Carton Corporation G.R. No. 176868 (July 26, 2
Facts:
1. The petitioner (Solar Harvest, Inc., Solar for brevity) entered into an
agreement with respondent, Davao Corrugated Carton Corporation (DCCC for
brevity), for the purchase of corrugated carton boxes, specifically designed for
petitioners business of exporting fresh bananas.
2. The agreement was not reduced into writing.
3. To start the production, Solar deposited in DCCC’s US Dollar Savings
Account with Westmont bank, as full payment for the ordered boxes.
4. Despite such payment, Solar did not receive any boxes from DCCC.
5. Solar wrote a demand letter for reimbursement of the amount paid.
6. DCCC replied that the boxes had been completed as early as April 3, 1998
and that Solar failed to pick them up from the formers warehouse 30 days from
completion, as agreed upon. It was also mentioned that Solar placed an additional
order, out of which, half had been manufactured without any advanced payment from
Solar. (Solar alleges that the agreement was for DCCC to deliver within 30 days from
payment the said cartons to Tagum Agricultural Development Corporation (TADECO)
which the latter failed to manufacture and deliver within such time.)
7. DCCC then demanded Solar to remove the boxes from the factory and to pay
the balance for the additional boxes.
Issue/s:
Whether or not the respondent (Davao Corrugated Carton Corporation) is in default.
Ruling:
No. It was unthinkable that, over a period of more than two years, Solar did not even
demand for the delivery of the boxes. Even assuming that the agreement was for
DCCC to deliver the boxes, the latter would not be liable for breach of contract as
Solar had not yet demanded from it the delivery of the boxes.
In reciprocal obligations, as in contract of sale, the general rule is that the fulfillment of
the parties respective obligation should be simultaneous. Hence, no demand is
generally necessary because, once a party fulfills his obligation and the other party
does not fulfill his, the latter automatically incurs delay. But when different dates for
performance of the obligation are fixed, the default for each obligation must be
determined, that is, the other party would incur in delay only from the moment the
other party demands fulfillment of the formers obligation. Thus, even in reciprocal
obligations, if the period for the fulfillment of the formers obligation is fixed, demand
upon the obliged is still necessary before the obligor can be considered in default and
before a cause of action for rescission will accrue.
Solar alleges that they made a follow-up upon respondent, which, however, would not
qualify as a demand for the fulfillment obligation. The former also testified that they
made a follow-up of the boxes, but not a demand.
Even assuming that a demand had been previously made before filling the present
that DCCC was not guilty of breach of contract.
Aside from the pictures of the finished boxes and the production report thereof, there
is ample showing that the boxes had already been manufactured by DCCC. There is
the testimony of Estanislao who accompanied Que to the factory, attesting that, during
the first visit to the company, they saw the pile of boxes and Que took a samples
thereof. Que, himself confirmed this incident. He testified that Tan pointed the boxes to
4
him and got a sample and saw that it was blank. Ques absolute assertion that the
boxes were not manufactured is, therefore, implausible and suspicious.
DCCC was willing to shoulder expenses for a representative of the court to visit the
plant and see the boxes. It also prays that Solar be ordered to remove the boxes from
its factory site, which would only mean that the boxes are, up to the present, still in
DCCC’s premises.
Assuming that DCCC was obliged to deliver the boxes, it could not have complied with
such obligation. Que, admitted that he did not given DCCC the authority to deliver the
boxes to TADECO. Surely, without such authority, TADECO would not have allowed
to deposite the boxes within its premises.
Villarroel vs Estrada 71 Phil 140 (1940)
Facts:
The mother of the John Villarroel owed money from the spouses Estrada in the
amount of P1,000 payable after 7 years. When the spouses Estrada died, leaving as
sole heir Bernandino Estrada, Villaroel was made to sign a document regarding the
debt. Estrada then instituted an action to recover the P1,000 debt. The CFO of Laguna
decided in favor of Estrada, condemning Villarroel to pay the full amount with legal
interest of 12% per year. Villaroel appealed.
Issue:
Whether or not, even if the original debt has already prescribed, Estrada still has the
right to recover.
Held:
As a general rule, if the debt has already prescribed, it can no longer be recovered.
However, in the case at bar, there was a novation by the parties, whereby Villarroel
agreed to assume the fulfillment of the obligation. As a prescribed debt constitutes a
moral or natural obligation as such, it can be the cause or consideration for a new
obligation in novation.
Prescription must be set up as a defense by the debtor in the complaint against him if
he does not want to be bound anymore under the obligation. Otherwise, the obligation
shall continue to subsist. The failure to put up prescription as a defense is equivalent
to waiver.
In the case at bar, there was already a novation when Villarroel agreed to resume the
obligation of his mother in law. Hence, he can no longer put up prescription as a
defense.
Fisher v. Robb
G.R. No. 46274, 2 November 1939
FACTS:
John C. Robb made a business trip to Shanghai as per request by the board of
directors of the Philippine Greyhound Club, Inc. to study the operation of a dog racing
course. The defendant stayed at American Club where he became acquainted with
Fisher. Upon knowing the purpose of the defendant the plaintiff himself asked the
defendant if he could be part of the stockholder. The defendant agreed to it, and the
plaintiff then paid the first installment.
5
The defendant went back to Manila and the board of directors of PGCI issued a call for
the payment of the second installment in which the plaintiff answered that he had
already paid the same. The PGCI was then replaced by The Philippine Racing Club.
The defendant then sends letters to plaintiff informing him of the critical condition of
the PGCI to reimburse the second installment out of moral responsibility.
ISSUE:
Whether or not there was sufficient consideration to justify the promise made by the
defendant-appellant in his letters
RULING:
No. The Supreme Court held that the promise made by an organizer of a dog racing
course to a stockholder to return to him certain amounts paid by the latter in
satisfaction of his subscription upon the belief of said organizer that he was morally
responsible because of the failure of the enterprise, is not the consideration required
by article 1261 of the Civil Code as an essential element for the legal existence of an
onerous contract which would bind the promisor to comply with his promise.
ART. 1261. There is no contract unless the following requisites exists:
1. The consent of the contracting parties;
2. A definite object which is the subject-matter of the contract;
3. A consideration for the obligation established.
In the present case, while the defendant-appellant told the plaintiff-appellee that he felt
morally responsible for the second payments which had been made to carry out his
plan, and that Mr. Hilscher and he would do everything possible so that the
stockholders who had made second payments may receive the amount paid by them
from their personal funds because they voluntarily assumed the responsibility to make
such payment as soon as they receive from the Philippine racing Club certain shares
for their services as promoters of said organization, it does not appear that the
plaintiff-appellee had consented to said form of reimbursement which he had directly
paid to the Philippine Greyhound Club, Inc., in satisfaction of the second installment.
The first essential requisite required by the cited article 1261 of the Civil Code for the
existence of a contract, does not exists.
Papa v. Valencia Digest
Papa v. Valencia
G.R. No. 105188 January 23, 1998
Banking; Checks
Facts:
1. The case arose from a sale of a parcel of land allegedly made to private respondent
Penarroyo by petitioner acting as attorney-in-fact of Anne Butte. The purchaser,
through Valencia, made a check payment in the amount of P40,000 and in cash,
P5,000. Both were accepted by petitioner as evidenced by various receipts. It
appeared that the said property has already been mortgaged to the bank previously
together with other properties of Butte.
2. When Butte passed away, the private respondent Penarroyo now demanded that
the title to the property be conveyed to him, however the bank refused. Hence, the
filing of a suit for specific performance by private respondents against the petitioner.
The lower court ruled in favor of the private respondents and ordered herein petitioner
the conveyance or the property or if not, its payment. The petitioner appealed the
lower court's decision alleging that the sale was not consummated as he never
encashed the check given as part of the purchase price.
3. The Court of Appeals affirmed with modifications the lower court's decision. It held
that there was a consummated sale of the subject property despite.
Issue: Whether or not the check is a valid tender of payment/Whether or not
there was a valid sale of the subject property
RULING: Yes. While it is true that the delivery of check produces payment only when
encashed (pursuant to Art. 1249, Civil Code), the rule is otherwise if the debtor is
prejudiced by the delay in presentment. (Here in this case, the petitioner now alleges
that he did not present the check, ten years after the same was paid to him as part of
the purchase price of the property.)
Check acceptance implied an undertaking of due diligence in presenting it for payment.
If the person who receives it sustains loss by want of this diligence, this will operated
as actual payment of the debt or obligation for which the check was given. The debtor
cannot now be held liable if non-presentment of the check was through the fault of the
creditor.
FACTS: Petitioner Citibank is a banking corporation duly authorized under the laws of
the USA to do commercial banking activities n the Philippines. Sabeniano was a client
of both Petitioners Citibank and FNCB Finance. Respondent filed a complaint against
petitioners claiming to have substantial deposits, the proceeds of which were
supposedly deposited automatically and directly to respondent’s account with the
petitioner Citibank and that allegedly petitioner refused to despite repeated demands.
Petitioner alleged that respondent obtained several loans from the former and in
default, Citibank exercised its right to set-off respondent’s outstanding loans with her
deposits and money. RTC declared the act illegal, null and void and ordered the
petitioner to refund the amount plus interest, ordering Sabeniano, on the other hand to
pay Citibank her indebtedness. CA affirmed the decision entirely in favor of the
respondent.
ISSUE: Whether petitioner may exercise its right to set-off respondent’s loans with her
deposits and money in Citibank-Geneva

RULING: Petition is partly granted with modification.

Salvador Chua and Violeta Chua, Petitioners, -vs- Rodrigo Timan, Ma.
Lynn Timan and Lydia Timan 1. Citibank is ordered to return to respondent the principal amount of P318,897.34 and
(August 13, 2008)GR # 170452 P203,150.00 plus 14.5% per annum
FACTS:
In February and March 1999, petitioners Salvador and Violeta Chua granted 2. The remittance of US $149,632.99 from respondent’s Citibank-Geneva account is
respondents Rodrigo, Ma. Lynn and LydiaTiman several loans. These loans were declared illegal, null and void, thus Citibank is ordered to refund said amount in
evidenced by promissory notes with interest of 7% per month, which was laterreduced Philippine currency or its equivalent using exchange rate at the time of payment.
to 5% per month. Rodrigo and Ma. Lynn issued five (5) postdated checks to secure
the loans, except for oneloan which was secured by a postdated check issued by 3. Citibank to pay respondent moral damages of P300,000, exemplary damages for
Lydia.Respondents paid the loans initially at &5 interest per month until September P250,000, attorney’s fees of P200,000.
1999 and then at 5% interest rate permonth from October to December 1999. 4. Respondent to pay petitioner the balance of her outstanding loans of P1,069,847.40
Sometime in March 2000, respondents offered to pay the principal amount of inclusive off interest
the loans through a Philippine National Bank manager’s check worth P764,000, but petitioners
refused to accept the
same insisting that the principal amount of the loans totalled P864,000On May 3, 2000,
respondents deposited P864,000 with the court and later, they filed a case for
consignation anddamages.Petitioners aver that the stipulated interest of 5% monthly
and higher cannot be considered unconscionable becausethese rates are not
usurious by virtue of Central Bank (C.B.) Circular No. 905-82 which had expressly
removed theinterest ceilings prescribed by the Usury Law. They add that respondents
were in pari delicto since they agreed on thestipulated interest rates of 7% and 5% per
month. They further aver they honestly believed that the interest rates they
imposed on respondents’ loans were not usurious.
Respondents counter that the stipulated interest rates of 7% and 5% per month are
G.R. No. 124290 January 16, 1998ALLIED BANKING CORPORATION
iniquitous, unconscionable andexorbitant, thus, they are entitled to the return of the
vs.
excessive interest paid. They also contend that petitioners cannotraise the defense of
CA
in pari delicto for the first time on appeal.
ISSUE:
WON the stipulated interest rates of 7% and 5% equivalent to 84% and 60%
per annum are unconscionable.YES
Facts:
HELD:
Spouses Tanqueco owned a 512-square meter lot. They leased the property
The petition is patently devoid of merit.
to Allied BankingCorporation (ALLIED).
The stipulated interest rates of 7% and 5% per month imposed on respondents’ loans must be
equitably reduced to 1%
The lease contract specifically states in its Provision No. 1 that "the term of
per month or 12% per annum. We need not settle the principle we had affirmed in a
thislease shall be fourteen (14) years commencing from April 1, 1978 and may be
plethora of cases that stipulatedinterest rates of 3% per month and higher are
renewed for a like term atthe option of the lessee."Sometime in February 1988 the
excessive, iniquitous, unconscionable and exorbitant. Such stipulationsare void for
Tanqueco spouses executed a deed of donation over the subjectproperty in favor of
being contrary to morals, if not against the law.While C.B. Circular No. 905-52, which
their four (4) children who accepted the donation in the same public instrument.A year
took effect on January 1, 1983, effectively removed the ceiling on interest rates forboth
before the expiration of the contract of lease, the Tanquecos notified ALLIED
secured and unsecured loans, regardless of maturity, nothing in the said circular could
that theywere no longer interested in renewing the lease.
possibly be read as grantingcarte blance authority to lenders to raise interest rates to
levels which would either enslave their borrowers or lead to ahemorrhaging of their
ALLIED replied that it was exercising its option to renewtheir lease under the same
assets.Petitioners cannot also raise the defenses of in pari delicto and good faith. The
terms with additional proposals.When the lease contract expired, an action for
defense of in pari delicto was not raisedin the RTC, hence, such an issue cannot be
ejectment was commenced before the MTC of Quezon City. The MTC, RTC and
raised for the first time on appeal. Petitioners must have seasonably raised itin the
CA ruled in favor of the Tanquecos. Hence, this present petition.
proceedings before the lower court, because questions raised on appeal are confined
only within the issuesframed by the parties.
Issues:
There are two (2) main issues in this petition for review:(a) Whether a stipulation in a
contract of lease to the effect that the contract "may be renewed for a like term at the
CITIBANK vs. SABENIANO Case Digest option of the lessee" is void for being potestative or violative of the principle of
mutualityof contracts under Art. 1308 of the Civil Code and, corollarily, what is the
CITIBANK vs. SABENIANO
meaning of the clause "may berenewed for a like term at the option of the lessee;"
G.R.No. 156132, October 16, 2006
6
and( b) W hether a l es s ee h as t h e le g a l p er s o na l i t y t o as s a i l th e v a li d it y
of a de e d of d o na t io n executed by the lessor over the leased premises.
Ruling:
We agree with ALLIED. Article 1308 of the Civil Code expresses what is
known in law as the
principle of mutuality of contracts
. It provides that "the contract must bind both the contracting parties; itsvalidity or
compliance cannot be left to the will of one of them." The ultimate purpose is to render
void acontract containing a condition which makes its fulfillment dependent solely
upon the uncontrolled will of one of the contracting parties.
An e xp re s s ag r e em e nt w hi ch giv es t h e l es s ee th e s ol e opt io n to
re new th e l ea s e i s frequent and subject to statutory restrictions, valid and
binding on the parties.
This option, which isprovided in the same lease agreement, is fundamentally part of
the consideration in the contract and is nodifferent from any other provision of the
lease carrying an undertaking on the part of the lessor to act conditioned on the
performance by the lessee. It is a purely executory contract and at most confers a
rightto obtain a renewal if there is compliance with the conditions on which the rights is
made to depend. Theright of renewal constitutes a part of the lessee's interest in the
land and forms a substantial and integralpart of the agreement.The fact that such
option is binding only on the lessor and can be exercised only by the
lesseedoes not render it void for lack of mutuality. After all, the lessor is free to give or
not to give the option tothe lessee.W ith respect to the meaning of the clause "may
be renewed for a like term at the option of thelessee, "
we sustain petitioner's contention that its exercise of the option resulted
in the automaticextension of the contract of lease under the same terms and
conditions.Finally, ALLIED cannot assail the validity of the deed of donation,
not being a party thereto. Aperson who is not principally or subsidiarily bound has
no legal capacity to challenge the validity of thecontract.WHEREFORE, the
Decision of the Court of Appeals is REVERSED and SET ASIDE. Consideringthat
ALLIED already vacated the leased premises, the renewed lease contract is deemed
terminated asof that date. However, ALLIED is required to pay rentals to lessors at the
rate provided in their existingcontract.
CF Sharp vs Northwest Airlines, 381SCRA314
Facts: On May 9, 1974, CF Sharp
was authorized to sell tickets of Northwest Airlines-Japan by entering an International
Passenger Sales Agency Agreement, however, CFSharp failed to remit the proceeds
of the ticket sales. This prompted Northwest Airlinesto file a collection suit against the
CF Sharp before the Toko Distirct Court. Judgmentwas rendered in its
favor, ordering CF Sharp to pay Northwest Airlines includingdamages for the delay.
Unable to execute the decision in Japan, the respondent filed
acase to enforce said judgment with the RTC. Thereafter, the RTC issued a writ of ex
ecution for foreign court’s decision. The petitioner filed for certiorari, assertingit
has already made partial payments. The CA lowered the amount to be
paid andincluded in its decision that the amount may be paid in local currency at rate
prevailingat time
payment. partly affirmed by the Supreme Court. CF Sharp was then ordered to pay N
orthwest sothat the RTC issued a writ of execution of decision ruling that Sharp is to
pay Northwestthe sum of 83,158,195 yen at the exchange rate prevailing on the date
of the foreign judgment plus 6% per annum until
fully paid, 6% damages and 6% interest. An appeal,the Court of Appeals reduced the
interest and it ruled that the basis of the conversion of Petitioner’s liability in its peso
equivalent should be the prevailing rate at the time
of payment and not the rate on the date of the foreign judgment.
Issue: Whether or not the basis for the payment of the amount due is the value
of thecurrency at the time of the establishment of the obligation.
Ruling: NO, the rule that the value of currency at the time of the establishment of
theobligation shall be the basis of payment finds application only when there is an
official pronouncement or declaration of the existence of an extraordinary inflation
or deflation.Hence, petitioners contention that Article 1250 of the Civil Code which
provides that
“incase of an extra ordinary inflation or deflation of the currency stipulated shouldsupe
rvene, the value of the currency at the time of establishment of the obligation shall
bethe basis of payment, unless there is an agreement to the contrary” shall apply in
this caseis untenable.Under RA 529, stipulations on the satisfaction of obligations
in foreign currencyare void. Payments of monetary obligations, subject to certain exce
ptions, shall bedischarged in the currency which is the legal tender of the
Philippines. But since the law
doesn't provide for the rate of exchange for the payment of foreign currencyobligation
s incurred after its enactment, jurisprudence held that the exchange rateshould be the
prevailing rate at time of payment. This law has been amended,
in payments for obligations to be made in currency other than Philippine currency but
then again, it failed to state what the exchange rate that should be
used. This being the case the jurisprudence regarding the use of the exchange rate at
time of payment shall be used
MIAA VS DING VELAYO
In MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner, vs. DING
VELAYO SPORTS CENTER, INC., Respondent, G.R. No. 161718, December 14,
2011, the Supreme Court held that the petitioner could not oppose the renewal of the
lease because of estoppel. It must be noted, however, that in MIAA, supra, the
Supreme Court held, inter alia, that “there is no estoppel when the statement or action
invoked as its basis did not mislead the adverse party”. Estoppel has been
characterized as harsh or odious, and not favored in law. “Estoppel cannot be
sustained by mere argument or doubtful inference”. It must be “clearly proved in all its
essential elements by clear, convincing and satisfactory evidence.” No party should be
precluded from making out his case according to its truth unless by force of some
positive principle of law, and, consequently, estoppel in pais must be applied strictly
and should not be enforced unless substantiated in every particular.
The Supreme Court held therein that the essential elements of estoppel in
pais may be considered in relation to the party sought to be estopped, and in relation
to the party invoking the estoppel in his favor. As related to the party to be estopped,
the essential elements are: (1) conduct amounting to false representation or
concealment of material facts; or at least calculated to convey the impression
that the facts are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) intent, or at least expectation that his
conduct shall be acted upon by, or at least influence, the other party; and (3)
knowledge, actual or constructive, of the real facts.
GF EQUITY INC VS VALENZONA
of
GF Equity Inc, vs. Arturo Valenzona
June 30, 2005 462 SCRA 466
Ponente: Justice Carpio-Morales
Facts: GF Equity hired Valenzona as Head Coach of the Alaska team in Philippine
Basketball Association under contract. Under the contract Valenzona will receive a
monthly salary of P35,000, net of taxes, a service vehicle with gasoline allowance.
Although, he had consulted his lawyer for the stipulations in the contract and was
pointed by his counsel that there is an one-sidedness face still he agreed to the
contract. Later on, he was terminated from being the Head Coach on grounds that the
management believes he did not comply of all his duties as coach. Valenzona filed in
RTC of Manila against the GF Equity of breach of contract with damages. The RTC
dismissed the complaint stating that the contract was valid and that he is aware of the
7
bad bargain. In the CA, where he appealed, the appellate court reversed the RTC’s
decision and thus ordered HF Equity liable for damages. Hence this petition.
Issue: Whether or not the contract violated the rules on mutuality of contract resulting
from breach of contract and therefore a recovery of damages can be awarded?
Held: The CA bases their judgment on Article 19 of the Civil Code, or the principle of
abuse of rights. The same code also provides for the mutuality of contracts where both
parties are bound and must adhere to the contract. The stipulation wherein, the
management, on its sole opinion can terminate the employment of the defendant is
violative and thus is null and void. GF Equity failed to consider the principle of abuse of
right clearly stated in Article 19 of the CC. The pre-termination is anchored which is
contrary to law and thereby abusing the right of Valenzona, entitles him of damages in
consonance with Article 19 in relation to Article 20 of the CC.
HEIRS OF CHRISTINA AYUSTE vs. COURT OF APPEALS
G.R. No. 118784, September 2, 1999
Facts: Christina and Rafael Ayuste bought a house and lot, the title to which was in
the name of Rafael Ayuste married to Christina Ayuste.
Rafael sold the property to Viena Malabonga in 1987 without the consent of
his wife. The deed of sale was registered and a TCT was issued in the name of the
buyer during the same year.
After her husband’s death in 1989, Christina discovered the unauthorized
sale. In 1990, she filed a complaint seeking the annulment of the sale against the
buyer. The TC annulled the sale. The CA however, reversed the decision invoking
Art. 172 CC, holding that the right of Christina to bring an action for the annulment of
the sale is barred for failure to file the same during the existence of the marriage.
Issue: Is the action of Christina barred for having been filed out of time?
Held: Yes. Art. 173 is clear. The wife may during the marriage and within 10
years from the transaction ask the courts for the annulment of any contract entered
into by the husband without her consent.
Although the action was filed within 10 years from the questioned transaction,
it was not brought during the existence of the marriage which was dissolved upon the
death of Rafael in 1989.
PERSONS (3) Case #9
HEIRS OF AYUSTE vs. CA
313 SCRA 493 (1999)
GONZAGA-REYES, J.:
TOPIC: Article 105-133, FC – Conjugal partnership of gains; Administration,
enjoyment, disposition/encumbrance of the conjugal property (Under the Civil Code)
8
LAWS:
Article 165, NCC
Article 166, NCC
Article 173, NCC
FACTS:
Rafael and Christina Ayuste were married in 1961. They lived in Manila but
operated a machine shop in Lucena City. The couple purchased a 180-sqm parcel of
land in Lucena City, on which a temporary residence may be built for Rafael, as he
manages their business. The land was registered in the ROD under the name of
Rafael, married to Christina.
Rafael sold the land in 1987 for PHP 40,000 to Viena Malabonga, as evidenced
by a Deed of Absolute Sale, pre-signed by Christina on the 2nd page. Rafael died in
1989.
Christina discovered that the land was sold in 1989, when she conducted an
inventory of their properties and found out that the title was missing. She claims that
the sale was made without her consent; her signature on the deed was forged. In
1990, she filed a complaint for the annulment of the sale and the cancellation of the
title issued to private respondent-buyer.
ISSUE:
Whether or not the sale of the property by Rafael without Christina’s consent was valid
and binding
RULING:
YES. The sale of the property by Rafael was valid and binding. According to Article
165 and 166 of the Civil Code:
Article 165. The husband is the administrator of the conjugal partnership. (1412a)
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift,
or is under civil interdiction or is confined in a leprosarium, the husband cannot
alienate or encumber any real property of the conjugal partnership without the wife's
consent. If she refuses unreasonably to give her consent, the court may compel her to
grant the same.
This article shall not apply to property acquired by the conjugal partnership before the
effective date of this Code. (1413a)
It is the general rule that a husband as the administrator of the conjugal partnership,
he cannot alienate or encumber any of their real property without the wife’s consent,
unless the situation falls under any of the exceptions in Article 166, paragraph 1.
The wife is not left without recourse, for she may file a petition in the courts for the
annulment of the disposition or encumbrance, provided that she files the petition
during the marriage and within 10 years from the transaction in question, as provided
for by Article 173.
In this case, although Christina’s petition was filed within 10 years, the marriage had
already been dissolved upon Rafael’s death in 1989. It was presumed that she was
notified of the transaction, as the sale was registered in the ROD in 1987.

Article 1390
Felipe vs. Heirs of Aldon 120 SCRA 514
Facts: Spouses sometime between 1948-1950, Maximo Aldon and Gimena Almosara
bought pieces of lands in Masbate. These lands herein mentioned were divided into
three parcels as follows; 1370, 1371, and 1415. A year later, Gimena Almosara, sold
the land to spouses Eduardo and Hermogena all surnamed Felipe, the petitioners
without the consent of her husband Maximino Aldon . In 1976, the widow Gimena
Almosara and their children Sofia and Salvador Aldon, filed a complaint in the Court of
First Instance of Masbate against the spouses Felipe claiming that they recovered the
land via mortgage but Felipe spouses will not honor the redemption of the property.
The Court favored the Felipe spouses stating that they are the lawful owner of the
property, declaring that that the complaint in the present action to be without merit and
ordered the case to be dismissed. Gimena Almosara and her children appealed the
decision to the Court of Appeals and hereby the appeal was granted. The Court of
Appeals reversed the decision in favor of Gimena Almosara and her children, stating
that the conveyance of the property from Gimena Almosara to the Felipe Spouses was
invalid due to the reason that Maximo Aldon has not issued his consent and that
property in question is considered as conjugal in nature. The petitioners assailed the
decision made by Court of Appeals.
Issue: Whether or not the contract between Gimena Almosara and Felipe Spouses is
null and void.
Held: The Supreme Court affirmed the decision of the Court of Appeals in reversing
the judgment made by the Court of First Instance of Masbate in favor of petitioners.
The sale made by respondent Almosora is invalid, as articulated in the Articles 165
and 166 of the Civil Code “The husband is the administrator of the conjugal
partnership…. Unless the wife has been declared a non compos mentis
Civil Law – Obligations and Contracts Page 116
or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the
husband cannot alienate or encumber any real property of the conjugal partnership
without the wife's consent. If she refuses unreasonably to give her consent, the court
may compel her to grant the same.” As stated in the facts, Gemina’s transaction was
beyond the knowledge of her husband. Furthermore, the “Deed of Purchase”,
considered as proof of transaction or contract, was identified as null and void as cited
in Article 1390 (1) “The following contracts are voidable or annullable, even though
there may have been no damage to the contracting parties: (1) Those where one of
the parties is incapable of giving consent to a contract”. As the husband Maximo
Aldon’s consent was not affixed on the sale, therefore invalidating the claim of the
petitioner that they legally owned the property. Moreover, the Supreme Court further
explained that the intention of the petitioners to claim the land is due to bad faith. The
idea was taken in the petitioner’s Vicente Felipe’s statement in attempting to have
Gimena Aldon sign the readymade document purporting to the self the disputed lots of
the respondents. Thus, drawing a question that they already knew they don’t own the
land but still they insisted that the document of sale is in their favor.
HEIRS OF DOMINGO HERNANDEZ vs. MINGOA
FACTS:
The subject matter of the action is a parcel of land with an area of 520.50 square
meterssituated in Diliman, Quezon City registered in the name of Domingo B.
Hernandez, Sr.married to Sergia V. Hernandez. Later, the TCT issued to the spouses
9
was cancelled anda new one was issued in favour of Melanie Mingoa.Domingo
apparently owned the property from an award by the Philippine Homesite andHousing
Corporation in 1958. Title to the property was only issued in 1966 after Domingopaid
in full to PHHC. However, Domingo never took possession of the
property.Respondents took possession of the property since 1966. A Deed of Transfer
of Rightswas executed by Domingo in favour of Dolores Camisura, expressly stating
that theformer, in consideration of the amount of PHP6,500.00, transfers his rights
over thesubject property to the latter. Although entitled as an SPA, this was in reality
an alienationof the subject property. It is now being questioned by petitioners on
whether the salewas valid since the property, being conjugal in nature, the consent of
the wife Sergia
must be obtained first. However, the wife’s signature on the SPA was falsified.
ISSUE:Whether or not the sale of the property was valid despite the falsity of the
wife’s signature in the SPA.
RULING:
Sergias lack of consent to the sale did not render the transfer of her share invalid.
The husband’s first act of disposition of the subject property occurred in 1963 when he
executed the SPA and the Deed of Transfer of Rights in favor of Dolores Camisura.
Thus,the right of action of the petitioners accrued in 1963, as Article 173 of the Civil
Codeprovides that the wife may file for annulment of a contract entered into by the
husbandwithout her consent within ten (10) years from the transaction questioned.
Petitionersfiled the action for reconveyance in 1995. Even if we were to consider that
their right ofaction arose when they learned of the cancellation of TCT No. 107534 and
the issuance
of TCT No. 290121 in Melanie Mingoa’s name in 1993, still, twelve (12) years have
lapsed
since such discovery, and they filed the petition beyond the period allowed by
law.Moreover, when Sergia Hernandez, together with her children, filed the action
forreconveyance, the conjugal partnership of property with Hernandez, Sr. had
already been
terminated by virtue of the latter’s death on April 16, 1983. Clearly, therefore,
petitioners’
action has prescribed.
SPOUSES AGGABAO V. PARULAN, JR. AND PARULAN
G.R. No. 165803, [September 1, 2010]
DOCTRINE(S):
The sale was made on March 18, 1991, or after Au-gust 3, 1988, the effectivity of the
Family Code. The proper law to apply is, therefore, Article 124 of the Family Code, for
it is settled that any alienation or encumbrance of conjugal property made during the
effectivity of the Family Code is governed by Article 124 of the Family Code.
According to Article 256 of the Family Code, the pro-visions of the Family Code
may apply retroactively provided no vested rights are impaired. In Tumlos v.
Fernandez, 330 SCRA 718 (2000), the Court rejected the petitioner’s argument that
the Family Code did not apply because the acquisition of the contested property had
occurred prior to the effectivity of the Family Code, and pointed out that Article 256
pro-vided that the Family Code could apply retroactively if the application would not
prejudice vested or ac-quired rights existing before the effectivity of the Family Code.
Herein, however, the petitioners did not show any vested right in the property acquired
prior to August 3, 1988 that exempted their situation from the retroactive application of
the Family Code.
FACTS:
In January 1991, real estate broker Marta K.Atanacio offered 2 lots located in
Parañaque to the petitioners. On February 2, 1991, the petitioners met up with Elena
Parulan at the site of the property and showed them the following documents: (a.)
Owner’s original copy of the TCT of the 2 lots; (b.) tax declarations; (c.) a copy of the
special power of attorney dated January 7, 1991 executed by Dionisio authorizing
Elena to sell the property. The petitioners paid P200,000.00 as earnest money for
which Elena executed a handwritten Receipt of Earnest Money which stipulated that
the peitioners would pay an additional payment of P130, 000.00 on February 4, 1991;
P650,000.00 on or before February 15, 1991 and P700, 000.00 on March 31, 1991
once Elena turned over the property.
On February 4, 1991, the petitioners, accompanied by the broker, went to the Office of
the Register of Deeds to verify the TCTs shown by Elena. There they discovered that
one of the lots had been encumbered to Banco Filipino, but that the encumbrance had
been cancelled due to the full payment of the obligation. They noticed that the loan
was effected through and SPA executed by Dionisio in favor of Elena. The other lot on
the other hand had an annotation of an existing mortgage in favor of Los Baños Rural
Bank, with the same SPA with a court order authorizing Elena to mortgage the lot to
secure the loan.
The petitioners and the broker next inquired about the mortgage and the court order at
the Los Baños Rural Bank. There, they met with Atty. Zarate, related that the bank had
asked for the court order because the lot involved was conjugal property.
Following their verification, the petitioners delivered P130,000.00 as additional down
payment on February 4, 1991; and P650,000.00 to the Los Baños Rural Bank on
February 12, 1991, which then released the owner’s duplicate copy of TCT to them.
On March 18, 1991, the petitioners delivered the final amount of P700,000.00 to
Elena, who executed a deed of absolute sale in their favor. However, Elena did not
turn over the owner’s duplicate copy of the TCT claiming that said copy was in the
possession of a relative who was then in Hongkong. She assured them that the
owner’s duplicate copy of TCT would be turned over after a week.
On March 19, 1991, TCT was cancelled and a new one was issued in the name of the
petitioners. Elena did not turn over the duplicate owner’s copy of TCT as promised. In
due time, the petitioners learned that the duplicate owner’s copy of TCT had been all
along in the custody of Atty. Jeremy Z. Parulan, who appeared to hold an SPA
executed by his brother Dionisio authorizing him to sell both lots. At Atanacio’s
instance, the petitioners met on March 25, 1991 with Atty. Parulan at the Manila
Peninsula. They were accompanied by one Atty. Olandesca. They recalled that Atty.
Parulan “smugly demanded P800,000.00” in exchange for the duplicate owner’s copy
of TCT, because Atty. Parulan represented the current value of the property to be P1.5
million. As a counter-offer, however, they tendered P250,000.00, which Atty. Parulan
declined, giving them only until April 5, 1991 to decide. Hearing nothing more from the
petitioners, Atty. Parulan decided to call them on April 5, 1991, but they informed him
that they had already fully paid to Elena.
Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an action
(Civil Case No. 91-1005 entitled Dionisio Z. Parulan, Jr., represented by Jeremy Z.
Parulan, as attorney in fact, v. Ma. Elena Parulan, Sps. Rex and Coney Aggabao),
praying for the declaration of the nullity of the deed of absolute sale executed by Ma.
Elena, and the cancellation of the title issued to the petitioners by virtue thereof. In
turn, the petitioners filed on July 12, 1991 their own action for specific performance
with damages against the respondents. Both cases were consolidated for trial and
judgment in the RTC.
On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati City annulled
the deed of absolute sale executed in favor of the petitioners covering two parcels of
registered land the respondents owned for want of the written consent of respondent
husband Dionisio Parulan, Jr. The CA affirmed the RTC decision.
ISSUE:
Which between Article 173 of the Civil Code and Article 124 of the Family Code
should apply to the sale of the conjugal property executed without the consent of
Dionisio?
HELD:
10
Article 124, Family Code, applies to sale of conjugal properties made after the
effectivity of the Family Code
RATIO:
The petitioners submit that Article 173 of the CivilCode, not Article 124 of the Family
Code, governed the property relations of the respondents because they had been
married prior to the effectivity of the Family Code; and that the second paragraph of
Article 124 of the Family Code should not apply because the other spouse held the
administration over the conjugal property. They argue that notwithstanding his
absence from the country Dionisio still held the administration of the conjugal property
by virtue of his execution of the SPA in favor of his brother; and that even assuming
that Article 124 of the Family Code properly applied, Dionisio ratified the sale through
Atty. Parulan’s counter-offer during the March 25, 1991 meeting.
To start with, Article 25427 the Family Code has expressly repealed several titles
under the Civil Code, among them the entire Title VI in which the provisions on the
property relations between husband and wife, Article 173 included, are found.
Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the
effectivity of the Family Code. The proper law to apply is, therefore, Article 124 of the
Family Code, for it is settled that any alienation or encumbrance of conjugal property
made during the effectivity of the Family Code is governed by Article 124 of the Family
Code.
Article 124 of the Family Code provides:
“Article 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. In case of disagreement, the husband’s decision
shall prevail, subject to recourse to the court by the wife for proper remedy, which
must be availed of within five years from the date of the contract implementing such
decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers
of administration. These powers do not include disposition or encumbrance without
authority of the court or the written consent of the other spouse. In the absence of
such authority or consent, the disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.”
Thirdly, according to Article 256 of the Family Code, the provisions of the Family Code
may apply retroactively provided no vested rights are impaired. In Tumlos v.
Fernandez, the Court rejected the petitioner’s argument that the Family Code did not
apply because the acquisition of the contested property had occurred prior to the
effectivity of the Family Code, and pointed out that Article 256 provided that the Family
Code could apply retroactively if the application would not prejudice vested or
acquired rights existing before the effectivity of the Family Code. Herein, however, the
petitioners did not show any vested right in the property acquired prior to August 3,
1988 that exempted their situation from the retroactive application of the Family Code.
Fourthly, the petitioners failed to substantiate their contention that Dionisio, while
holding the administration over the property, had delegated to his brother, Atty.
Parulan, the administration of the property, considering that they did not present in
court the SPA granting to Atty. Parulan the authority for the administration.
Nonetheless, we stress that the power of administration does not include acts of
disposition or encumbrance, which are acts of strict ownership. As such, an authority
to dispose cannot proceed from an authority to administer, and vice versa, for the two
powers may only be exercised by an agent by following the provisions on agency of
the Civil Code (from Article 1876 to Article 1878). Specifically, the apparent authority
of Atty. Parulan, being a special agency, was limited to the sale of the property in
question, and did not include or extend to the power to administer the property.
Lastly, the petitioners’ insistence that Atty. Parulan’s making of a counter-offer during
the March 25, 1991 meeting ratified the sale merits no consideration. Under Article
124 of the Family Code, the transaction executed sans the written consent of Dionisio
or the proper court order was void; hence, ratification did not occur, for a void contract
could not be ratified. On the other hand, we agree with Dionisio that the void sale was
a continuing offer from the petitioners and Ma. Elena that Dionisio had the option of
accepting or rejecting before the offer was withdrawn by either or both Ma. Elena and
the petitioners. The last sentence of the second paragraph of Article 124 of the Family On March 1, 1990, in the absence of his wife, Judie soldtheir one-half portion, and the
Code makes this clear, stating that in the absence of the other spouse’s consent, the house, for P30,000, andexecuted a
transaction should be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding contract upon the Deed of Transfer of Rights
acceptance by the other spouse or upon authorization by the court before the offer is in favor of spousesGuiang.5.
withdrawn by either or both offerors.

When Gilda returned, her husband was nowhere to befound.6.

GUIANG v. CA
Luzviminda filed a complaint before the Barangayauthorities against Gilda and her
26 June 1998 | Panganiban, J. | Void or Inexistent Contracts children, who continuedto stay in the house. The parties eventually signed an

amicable settlement

, wherein Gilda and her childrenagreed to leave on or before April 7, 1990.7.

GUIANG v. CA Later on, Gilda approached the Barangay Captainquestioning her signature and
26 June 1998 | Panganiban, J. | Void or Inexistent Contracts requesting for the annulmentof the settlement, but it was unheeded.8.

PETITIONER: Spouses Antonio and Luzviminda GuiangRESPONDENT: Court of

Appeals and Gilda CorpuzSUMMARY: She filed a complaint against her husband and spousesGuiang and the RTC held that
Judie Corpuz sold their conjugal house to the Sps. Guiang without the consent of his the
wife, Gilda, who was then in Manila. UponGilda’s return, she found her children living Deed of Transfer of Rights
in different households, while her husband was nowhere to be found. Gilda challenged
the validity ofthe sale. PETs averred that without Gilda’s consent the sale was merely and the
voidable, incorrectly applying CC1390. Court held that consent wasn’tvitiated as
amicable settlement
provided by 1390 but was completely absent and the contract, falling within the ambit
of FC 124 and was therefore void. are null and void. Gildais the rightful owner of the remaining one-half portion ofthe lot.
This was affirmed by the CA.
DOCTRINE:
ISSUES:
Art. 1390, par. 2, refers to contracts with vices of consent, entered into by a person
whose consent was obtained and vitiatedthrough mistake, violence, intimidation,
undue influence or fraud.
I. WON the contract of sale (Deed of Transfer of Rights) ismerely voidable? NO, the
FACTS: contract was void and could not havebeen ratified.
1.

RULING:
Spouses Petition DENIED.
Gilda RATIO:
(private RESP) and

Judie Corpuz I. NO, the contract was void and could not have been ratified.
bought a parcel of land Koranodal, South Cotabato, where theyestablished their
conjugal dwelling. A few years later, theysold one-half of said land to petitioners,
spouses •

Antonio

and Guiangs’ defense that the contract was merely voidablecannot hold due to an
erroneous application of Art. 1390 ofthe Civil Code, which enumerates voidable
Luzviminda Guiang contracts.
.2. •

Gilda went to Manila to look for work. After her departure,Judie rarely went home.3. A1390, par. 2

Harriet Corpuz informed her mother that her father wasgoing to sell their portion of the
lot, including the house, tothe Guiangs. Gilda replied that she was objecting to the
sale but Harriet only informed Luzviminda about it.4.
, refers to contracts visited by vices ofconsent, i.e., contracts which were entered into
by a personwhose
consent was obtained and vitiated
throughmistake, violence, intimidation, undue influence or fraud.

11
Gilda’s consent to the contract of sale of their conjugalproperty was totally inexistent or sought the declaration of a certain deed of sale, which involved the conjugal property
absent. of private respondent and her husband, null and void.

• ISSUE: WON contract without the consent of wife is void

The contract falls properly within Art. 124 of the FamilyCode.
• other spouse may assume sole powers of administration. These powers do not
“In the event that one spouse is incapacitated or otherwiseunable to participate in the
administration of the
conjugal properties, the other spouse may assume sole powers ofadministration.
These powers do not include disposition orencumbrance without authority of the court
or the writtenconsent of the other spouse.
In the absence of suchauthority or consent, the disposition or encumbranceshall be
void
HELD:
Yes. Art 124 of the FC rules that In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the conjugal properties, the
include the powers of disposition or encumbrance which must have the authority of the
court or the written consent of the other spouse. In the absence of such authority or
consent, the disposition or encumbrance shall be void.
Respondent’s consent to the contract of sale of their conjugal property was totally
inexistent or absent. The nullity of the contract of sale is premised on the absence of
private respondent’s consent. To constitute a valid contract, the Civil Code requires
the concurrence of the following elements: (1) cause, (2) object, and (3) consent, the
last element being indubitably absent in the case at bar.
A void contract cannot be ratified.

.” Neither can the “amicable settlement” be considered a continuing offer that was
accepted and perfected by the parties, following the last sentence of Article 124. The
order of the pertinent events is clear: after the sale, petitioners filed a complaint for
trespassing against private respondent, after which the barangay authorities secured
•
an “amicable settlement” and petitioners filed before the MTC a motion for its
execution. The settlement, however, does not mention a continuing offer to sell the
property or an acceptance of such a continuing offer. Its tenor was to the effect that
The fraud and the intimidation referred to by PETs private respondent would vacate the property. By no stretch of the imagination, can
were perpetrated in the execution of the the Court interpret this document as the acceptance mentioned in Article 124.
amicable settlement

( HOMEOWNERS SAVINGS VS DALIO

Gilda testified that brgy. authorities made her sign saiddocument through
misrepresentation and coercion)
•
Thus the amicable settlement couldn’t actually ratifyanything. Art 1422 provides that a
contract directlyresulting from a previous illegal contract is void.Doctrinally, Void
contracts can’t be ratified.
• On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of Attorney
The Civil Code supports the decision upon comparisonwith the Family Code. Art.166,
CC provides that thecontract above would be only voidable, but Art 173, CCallows the
wife to annul it. On the other hand, the fraud andintimidation that could vitiate consent
was present in theamicable settlement agreement.
GUIANG v. COURT OF APPEALS
June 26, 1998 (291 SCRA 372)
FACTS:
The sale of a conjugal property requires the consent of both the husband and the wife.
The absence of the consent of one renders the sale null and void, while the vitiation
thereof makes it merely voidable. Only in the latter case can ratification cure the
defect.
Over the objection of private respondent Gilda Corpuz and while she was in Manila
seeking employment (with the consent of her husband), her husband sold to the
petitioners-spouses Antonio and Luzviminda Guiang one half of their conjugal
peoperty, consisting of their residence and the lot on which it stood. Upon her return to
Cotabato, respondent gathered her children and went back to the subject property.
Petitioners filed a complaint for trespassing. Later, there was an amicable settlement
between the parties. Feeling that she had the shorter end of the bargain, respondent
filed an Amended Complaint against her husband and petitioners. The said Complaint
Facts:
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8, 1967.
During their marriage, the spouses purchased a house and lot situated at Barangay
San Francisco, San Pablo City from a certain Sandra Dalida. The subject property was
declared for tax assessment... purposes under Assessment of Real Property No.
94-051-2802. The Deed of Absolute Sale, however, was executed only in favor of the
late Marcelino Dailo, Jr. as vendee thereof to the exclusion of his wife.
(SPA) in favor of one Lilibeth Gesmundo, authorizing the latter to obtain a loan from
petitioner Homeowners Savings and Loan Bank to be secured by the spouses Dailo's
house and lot in San Pablo City.
Pursuant to the SPA, Gesmundo obtained a loan in the amount of P300,000.00 from
petitioner. As security therefor, Gesmundo executed on the same day a Real Estate
Mortgage constituted on the subject property in favor of petitioner.
The abovementioned transactions, including the... execution of the SPA in favor of
Gesmundo, took place without the knowledge and consent of respondent.
Upon maturity, the loan remained outstanding. As a result, petitioner instituted
extrajudicial foreclosure proceedings on the mortgaged property. After the extrajudicial
sale thereof, a Certificate of Sale was issued in favor of petitioner as the highest bidder.
After the lapse... of one year without the property being redeemed, petitioner, through
its vice-president, consolidated the ownership thereof by executing on June 6, 1996 an
Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her visits to
the subject property, respondent learned that petitioner had already employed a certain
Roldan Brion to clean its premises and that her car, a Ford sedan, was razed because
Brion allowed a... boy to play with fire within the premises.
Claiming that she had no knowledge of the mortgage constituted on the subject
property, which was conjugal in nature, respondent instituted with the Regional Trial
Court, Branch 29, San Pablo City, Civil Case No. SP-2222 (97) for Nullity of Real
Estate Mortgage and

12
Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of Sale,
Reconveyance with Prayer for Preliminary Injunction and Damages against petitioner.
petitioner prayed for the dismissal of the complaint on the ground... that the property in
question was the exclusive property of the late Marcelino Dailo, Jr.
Upon elevation of the case to the Court of Appeals, the appellate court affirmed the trial
court's finding that the subject property was conjugal in nature, in the absence of clear
and convincing evidence to rebut the presumption that the subject property acquired
during the... marriage of spouses Dailo belongs to their conjugal partnership
The appellate court declared as void the mortgage on the subject property because it
was constituted without the knowledge and consent of respondent, in accordance with
Article 124 of the
Family Code. Thus, it upheld the trial court's order to reconvey the subject property to
respondent
Issues:
WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO
DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER THEREOF IS VALID AS
TO HIS UNDIVIDED SHARE.
WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE
PAYMENT OF THE LOAN OBTAINED BY THE LATE MARCELINO DAILO, JR. THE
SAME HAVING REDOUNDED TO THE BENEFIT OF THE FAMILY
Ruling:
First, petitioner takes issue w 11 1 1q1Q1Q1
1Q 1q 1Q 1 1QQQ@aQ1Qa@Q1QQQ@a@aQ@a@a@aQQ1Q1Q1Q
ith the legal provision applicable to the factual milieu of this case. It contends that
Article 124 of the Family Code should be construed in relation to Article 493 of the Civil
Code, which states:
ART. 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except when personal rights are
involved.
But the effect of the alienation or the mortgage, with respect to the co-owners, shall
be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.
Article 124 of the Family Code provides in part:
ART. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. . . .
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance
which must have the... authority of the court or the written consent of the other spouse.
In the absence of such authority or consent, the disposition or encumbrance shall be
void. . . .
Petitioner argues that although Article 124 of the Family Code requires the consent of
the other spouse to the mortgage of conjugal properties, the framers of the law could
not have intended to curtail the right of a spouse from exercising full ownership over the
portion of the... conjugal property pertaining to him under the concept of co-ownership.
In applying Article 124 of the Family Code, this Court declared that the absence of... the
consent of one renders the entire sale null and void, including the portion of the
conjugal property pertaining to the husband who contracted the sale. The same
principle in Guiang squarely applies to the instant case. As shall be discussed next,
there is no... legal basis to construe Article 493 of the Civil Code as an exception to
Article 124 of the Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In the
absence of a marriage settlement, the system of relative community or conjugal
partnership of gains governed the property relations between respondent and her late
husband... ith the effectivity of the Family Code on August 3, 1988, Chapter 4 on
Conjugal Partnership of Gains in the Family Code was made applicable to conjugal
partnership of gains already established before its effectivity unless vested rights have
already... been acquired under the Civil Code or other laws.
The rules on co-ownership do not even apply to the property relations of respondent
and the late Marcelino Dailo, Jr. even in a suppletory manner. The regime of conjugal
13
partnership of gains is a special type of partnership, where the husband and wife place
in a common fund the... proceeds, products, fruits and income from their separate
properties and those acquired by either or both spouses through their efforts or by
chance.
Unlike the absolute community of property wherein the rules on co-ownership apply in
a suppletory... manner,[18] the conjugal partnership shall be governed by the rules on
contract of partnership in all that is not in conflict with what is expressly determined in
the chapter (on conjugal partnership of gains) or by the spouses in their marriage...
settlements.
Thus, the property relations of respondent and her late husband shall be governed,
foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code and,
suppletorily, by the rules on partnership under the Civil Code.
In case of conflict, the former prevails because the Civil Code provisions on partnership
apply only when the Family Code is silent on the matter.
The basic and established fact is that during his lifetime, without the knowledge and
consent of his wife, Marcelino Dailo, Jr. constituted a real estate mortgage on the
subject property, which formed part of their conjugal partnership. By express provision
of Article 124 of the
Family Code, in the absence of (court) authority or written consent of the other spouse,
any disposition or encumbrance of the conjugal property shall be void.
Second, petitioner imposes the liability for the payment of the principal obligation
obtained by the late Marcelino Dailo, Jr. on the conjugal partnership to the extent that it
redounded to the benefit of the family.
Under Article 121 of the Family Code, "[T]he conjugal partnership shall be liable for: . .
. (3) Debts and obligations contracted by either spouse without the consent of the
other to the extent that the family may have been benefited; . . . ." For the subject
property to... be held liable, the obligation contracted by the late Marcelino Dailo, Jr.
must have redounded to the benefit of the conjugal partnership. There must be the
requisite showing then of some advantage which clearly accrued to the welfare of the
spouses. Certainly, to make a... conjugal partnership respond for a liability that should
appertain to the husband alone is to defeat and frustrate the avowed objective of the
new Civil Code to show the utmost concern for the solidarity and well-being of the
family as a unit.
The burden of proof that the debt was contracted for the benefit of the conjugal
partnership of gains lies with the creditor-party litigant claiming as such.
Petitioner's sweeping conclusion that the loan obtained by the late Marcelino Dailo, Jr.
to finance the construction of housing units without a doubt redounded to the benefit of
his family, without adducing adequate proof, does not persuade... this Court. Other
than petitioner's bare allegation, there is nothing from the records of the case to compel
a finding that, indeed, the loan obtained by the late Marcelino Dailo, Jr. redounded to
the benefit of the family. Consequently, the conjugal partnership cannot be held... liable
for the payment of the principal obligation.
In addition, a perusal of the records of the case reveals that during the trial, petitioner
vigorously asserted that the subject property was the exclusive property of the late
Marcelino Dailo, Jr. Nowhere in the answer filed with the trial court was it alleged that
the proceeds... of the loan redounded to the benefit of the family. Even on appeal,
petitioner never claimed that the family benefited from the proceeds of the loan. When
a party adopts a certain theory in the court below, he will not be permitted to change his
theory on appeal, for to permit... him to do so would not only be unfair to the other party
but it would also be offensive to the basic rules of fair play, justice and due process.
Principles:
The regime of conjugal partnership of gains is a special type of partnership, where the
husband and wife place in a common fund the... proceeds, products, fruits and income
from their separate properties and those acquired by either or both spouses through
their efforts or by chance.
Unlike the absolute community of property wherein the rules on co-ownership apply in
a suppletory... manner,... the conjugal partnership shall be governed by the rules on
contract of partnership in all that is not in conflict with what is expressly determined in
the chapter (on conjugal partnership of gains) or by the spouses in their marriage...
settlements.
Under Article 121 of the Family Code, "[T]he conjugal partnership shall be liable for: . .
. (3) Debts and obligations contracted by either spouse without the consent of the
other to the extent that the family may have been benefited; . . . ."
The burden of proof that the debt was contracted for the benefit of the conjugal
partnership of gains lies with the creditor-party litigant claiming as such.

SPOUSES ALINAS

SPOUSES ONESIFORO and ROSARIO ALINAS SPOUSES VICTOR

and ELENA ALINASG.R. No. 158040;
April 14, 2008;
AUSTRIA-MARTINEZ,
J
.
Facts: Spouses Onesiforo and Rosario Alinas (petitioners)
separated sometime in 1982. They left behind two lots identified, one with
a bodega standing on it and the other with petitioners' house.
RespondentVictor Alinas is the brother of petitioner. Petitioners alleged that
they entrusted their properties to respondents.Sometime in 1993, petitioners
discovered that their two lots were already titled in the name of the
respondentspouses. Onesiforo’s signature appeared in an Absolute Deed of
Sale selling one of the lots to respondentspouses. Records also show a
notarized document whereby petitioner acknowledged that his brother used
hisown money to redeem one of the lots mortgaged and foreclosed and thus
his brother became the owner.Petitioners filed with the RTC a complaint for
the recovery of possession and ownership of their
conjugal properties with damages against respondent spouses.Issue: whether
or not the sale of conjugal property by the husband petitioner to respondent
spouses isvalid despite the lack of consent on the part of the wife.Ruling:
pursuant to Article 124 of the Family Code and jurisprudence, the sale of
petitioners' conjugal property made by petitioner
Onesiforo alone is void in its entirety. It should be noted
that respondent spouseswere well aware that the property is a conjugal
property of petitioners. They also knew that the disposition being made by
Onesiforo is without the consent of his wife, as they knew that petitioners had
separated, and,the sale documents do not bear the signature of petitioner
Rosario. The fact that Onesiforo had to execute theAbsolute Deed of Sale and
a notarized Agreement reveals that they had full knowledge of the
severeinfirmities of the sale. Such being the case, no injustice is being foisted
on respondent spouses as they riskedtransacting with Onesiforo alone despite
their knowledge that the subject property is a conjugal property.

14